Spindrift: Bill Creelman

I knew where the risk was or at least I thought I did, but ultimately there's just risk embedded in between the coolers and going up against the big soda guys and trying to do something really different in terms of the ingredients. All of that just was going to be challenging. So yeah, it was terrifying. The common PR is how I built this. I'll show about innovators, entrepreneurs, idealists and the stories behind the movements they built. I'm Guy Raaz and on the show today, how Bill Creelman started out with a business plan to sell male order smoked fish, but instead ended up creating spindrift and selling $100 million of sparkling water a year. So, back in 2019, the World Health Organization revised its guidelines for sugar intake. Sugar, it turns out, is actually worse for us than we thought and too much can be deadly. Now I say this by the way, as I finish this delicious sugar cookie my kids made last night. Anyway, the new guidelines now suggest adults should not consume more than 25 grams of added sugar a day. Now, think about this for a moment. A single 12 ounce can of Coca-Cola has 39 grams of added sugar. That is a day and a half of sugar in a can of coke. And if you go to the movies and get a 32 ounce cup, you will burn through nearly five days of your sugar allotment before you get to the credits. So what to do? Well, the obvious answer is drink less sugar, which clearly is advice lots of people are taking because the last year, the sparkling water industry hit in all time high in sales, nearly two and a half billion dollars according to Nielsen. And it's why the beverage aisle of your local supermarket is now jam packed with La Croix and Tobotchico and Bubbly and Poland Springs and Waterloo and several other brands. And it's also why big players like Coca-Cola, Pepsi and Nestle are all pushing into the sector. One of the fastest growing independent brands in sparkling water is called Spin Drift. And unlike virtually every other Bubbly Water brand out there, Spin Drift's water is as basic as it gets. Literally just a mixture of sparkling water and fresh squeezed juice, which may not sound all that innovative, but it's actually an incredibly challenging thing to make because fresh squeezed juice does not stay fresh forever. The Spin Drift founder, Bill Creelman, took years to figure out how to make it all work. And along the way, he struggled to find bottlers and distributors who would work with him. But the story of how he was inspired to create Spin Drift probably begins much, much earlier back in his childhood. Bill's parents chose to raise the family on a farm in Western Massachusetts. His dad worked for the sporting goods company Spalding. His mom was at home with the family, and pretty much all the food they ate was local and fresh. The thing I remember the most is just that all of the food seemed to come from our farm or the farms around us. So we had a sugar house up the street from us. We had milk that was delivered with a huge head of cream on the top, unbasturized. We would make butter from that. I think the key learning for me was just a very clear idea of where our food was coming from because it seemed to always be delivered from our neighbors or just off of our own farm. Food that was local and available. And just to be clear, I mean, we're not talking about like the 1930s or 40s. I believe at the time of this recording, you were 45 years old. So this is like the 80s. This is not that long ago. It really wasn't. And that's what I mean. It was really a choice. I'm not sure what the message was. We were supposed to take away from it. I would say my mom, she loved this idea of being out in the woods and being on a farm and surviving off of nature. And she was surrounded by friends that felt the same way. And we had almost no rules. Honestly, we, she had this philosophy that, you know, have fun, do your own thing and be adventurous. I think she sort of thought of the farm as our playground, our self-expression. And I think the thing I remember is that the farm land just kind of continued in all directions. And so we had farmers to the left and right and around us. And even to this day, this neighborhood and in Western Mass is really still the same way. It's virtually unchanged today. Do you remember how quiet it was at night from like December to let's say the end of March? Because I'm imagining there was so much snow, it was absorbing all of the sound at night and it was just silent, maybe a little wind. I remember that really keenly. And I actually think of that often because now, you know, in the suburbs of Boston, you know, you, that level of silence, that type of silence, you know, was really hard to find. You know, we would keep by firewood for the most part. We had a big wood stove. And when that fire would burn down to nothing, there was really no sound left in the house, save, you know, your breathing or the shuffling of, you know, of a sibling. Was it an old house? It would like, wood and floorboards? Yeah, it was an old red. I mean, just where you imagine, a red farm house, big red barn, creaking floorboards for sure. So I guess you knew if someone got up during the night, but other than that, it was completely silent. So, I read that eventually your family moved off of that farm to the town of Deerfield, which is also in, I guess, in Western Massachusetts. And you went to high school there. Yeah. And then to college in Washington, D.C. at Georgetown. And when you, when you got to college, like when you were 18 years old, did you have like any idea of what you wanted to do with your life? Yeah. So now I was kind of out of the big sort of grasps of Western Massachusetts. And I was really starting to, for the first time, think about what I wanted to do professionally. And, you know, I should mention that kind of in high school. And then as I started college, I was starting to work on the fishing boats off of the Cape and Islands. Off Cape Cod or like Nantucket or Martha's Vineyard, is that right? That's right. And, you know, it was just, it was just magical. You know, you're on the boat all day. You're fishing for whatever you could catch, dry pass and bluefish. And so when I got to Georgetown, I really, I was working in the summers and then going to school during the year. And I started to really sort of solidify, crystallize, you know, what I thought I wanted to do, which was kind of try to figure out, you know, a business that would be interesting to me. So as I was finishing up Georgetown, I took my coast guard test and then eventually got my captain's license right after graduation. And by the way, why you were at Georgetown, you met somebody who became, I guess, for somebody who became a girlfriend today, your wife, right? Is it, is it right? That's right. Yeah. Very lucky to meet my wife, Harley, while we were at Georgetown and we started dating when we were 19. And so we've been, yeah, together ever, ever since. I'm not sure she quite knew what she was getting into way back then. So while I was at Georgetown, I took an entrepreneurship class in my senior year and she, she got to see me present my, my sort of first business plan. So I guess she had some sense of what she was getting into even in the 90s. And what was your business plan that you pitched to the class? It was called Nantucket Smokehouse. So the idea was taking smoke bluefish and striped bass and other things and creating a smokehouse out on island that we would then offer the products from all over the US. Turned out to, luckily, not an idea we ended up pursuing. But, you know, the seed was planted for sure. All right. So you, you graduate from Georgetown in 1996 and what did you do? Where did you go work? So the first thing I did was go back out to Nantucket and actually continue now with my captain's license and hand continue working on the, on the fishing boats. You know, I was probably my fifth year and so I went out there with an idea of kind of finishing that summer and then, and then ultimately going out to the Pacific Northwest to pursue the smoked food world or at least learn more about it. And so my wife, Harley, who was living in, her girlfriend at the time was living in Seattle and we piled into her VW and drove up the coast and basically just started hitting smoke houses and asking them, you know, what the industry was like. Today like it, today not like it, would they recommend going into it and I'll never forget finishing a tour and the guy who's leading me on the tour pulled me aside and said, let me do you favor, never get into this business. You know, it's fish, it's fire. You know, it is a shrinking industry, you know, it's nothing we would recommend. And was that enough to convince you? It was at least enough for me to second guess it and so I am incredibly grateful for that person's advice for sure and the business idea that ended up kind of coming out of it was a company called Nantucket Harvest and Nantucket Harvest offered smoked food items. that were already being produced, even though it ultimately long-term was not terribly successful, it was much better than where we would have landed. Right. Okay. So you decide I'm going to go back to Massachusetts. I'm going to start a business where I basically what, like, source food from Nantucket and create like a mail order business. That's right. In mid-90s, Nantucket had all these really interesting producers that, you know, I had gotten to know some of them over the years. What were they making or what, what did they produce? Yes. So they had, you know, it's 30 miles offshore. So it kind of has some really interesting, unique products, only really only available out there. There was already a smoked bluivish pate, really beach plumb jelly, really interesting jelly, base scallops, you know, lobsters, ice cream. So part of these this was, well, people love these in the summer. I bet they would love to buy them the other nine months of the year and we wanted to provide them with a solution to do that. So Bill, first of all, who's who's we? You keep saying we, who's the we? So in this case, my business partner was a childhood friend named Gil McClean. So we had grown up together. He actually lived in the farming community and lever it. And so I recruited him to join me in this business. And this is like really pre-ecommerce, right? Because like imagine today, you would just have to put in some search terms into Facebook and or like, you know, ad words in Google and you could reach people like in an instant. Back then, you had to like mail these catalogs out and what and you and your partner would just like sit around and wait for the phone to ring? Yeah, it's almost hard to believe, really. But that's exactly what we did. And we started, you know, with waiting for the phone to ring and then gradually kind of into the 90s and early 2000s, we migrated to more of a kind of a call center model. But we really were pre-internet towards the very end. We were able to take orders online, but really the bulk of our business was all taken by phone. So you would set up like a storefront or like an office, bring in stuff from NANDTucket and you set up, where did you set up your office? So we set it up in an old mill town and kind of the port city to NANDTucket called New Bedford. Sure. It took a couple thousand square feet. We put in refrigeration, freezer unit and we went to work in 1997. Where did you have the money to start the business? Well, we didn't. It's really this short answer. I had some savings from the fishing industry and, you know, our parents helped us add a little bit. But ultimately we didn't and so we actually turned to the town of New Bedford in a few other kind of economic incentive areas in southeastern mass and that's you provided our seed capital for us to get the business off the ground. What do you mean you like applied for grants from the town? We apply for grants from the New Bedford Economic Development Court. They lent us $25,000 to start the business. All right. So explain to me what you are going to do. We're going to bring in base scallops and bluefish, pate and ice creams and like on boats from NANDTucket and you were going to do what with those products. Yes. We were excited about really kind of storytelling around their product and so we created a catalog literally, you know, four and then eventually 16 page cataloged featuring their products. We would mail it out and the end of the summer as the tourists were leaving the island and what we learned is that people really, you know, other than maybe a birthday or a special occasion, the big time for mail order food was really kind of going into Thanksgiving and then you know, for that all of December, it was just crazy every day. We packed hundreds and hundreds of these things and drive them up, you know, just as the UPS store was closing and the loading dock was closing and so yeah, we were literally receiving orders in the morning packing things by hand as much as many of we could get out and then we would sort of count our shackles at the end of December and hope that, you know, we'd sort of broken even. It sounds like you couldn't really make a six week, you know, sales window into a sustainable business. We never could. It really never, you know, and that was really the decision for us was do we stay with this kind of on this crazy annual cycle or do we try to diversify and it was really through that hard kind of thinking that we were fortunate enough for us to stumble on the wholesale side of the business, which is to say the side where you sell to stores on a regular basis. And I guess like when you started wholesaling products like at that point, you kind of, you met someone who really set your business up in a completely different directions, is that right? Almost, yes. So one of the products that we were featuring in the catalog was called Nantucket Offshore Seasonings and it was a dry rub for grilling. It was in a silver tin, a really colorful label on the outside and it was started out on island by husband and wife had kind of a cold following, maybe a half a million dollar of business. And so we were really fulfilling his customers orders in the beginning. And it ended up happening, which was really sort of unexpected for us as that. He was a real creative guy. He was always thinking about different ways to provide seasonings and he stumbled one day upon a cocktail seasonings, so assault for margaritas. And we put it in a tin just like the other seasonings and suddenly the consumer just sort of woke up and at the time cocktails were just beginning to become interesting and marked, you know, as the time of sex in the city and mojitos and this sort of thing. And the idea of like a colored salt on the rim of the glass was actually pretty new at the time and it was exciting to us and the consumers seem to think it was pretty fun. And so that's how we got into the business. All right. So you had this company called an antucket harvest. That was an okay business, right? It was kind of, was it barely profitable at a tight? Was it profitable? It was never profitable, you know. I would say break even would be generous. Got it. Okay. But I guess at a certain point you decide, hey, let's just focus on these cocktail seasonings and salts and whatever and forget about the other antucket harvest products like the smoked fish and the scallops, right? Yeah, that's exactly what happened. So, you know, throughout all of these years it's really just about survival, you know, trying to find something that to keep us going, you know, year round and just really through a whole bunch of trial and error that we landed on cocktails and so we really ultimately got into the cocktail business as a result of the other businesses really not showing that kind of promise. So at what point did you say that this was going to be a completely new brand? So what happened was two things. One was at our partner that I mentioned and decided he and his wife were sort of ready to move on and my business partner and I guild just, you know, kind of asked ourselves, like, is this something that we want to pursue on our own and we actually purchased him out of the business. So that was a big step. And then kind of within that we recognized that Nantucket offshore seasonings may not necessarily fully represent our full idea and the opportunity and we sort of got together and engaged a whole bunch of people, anyone that would listen to say, you know, we want to create a platform and really just focus on cocktails. We want to be the premium cocktail business and we ended up calling it stirrings. We love the name and ultimately that was really the big idea that kind of catapulted us into, you know, kind of a national brand. And it wasn't just the salts and the sugars which was really that was what cut you a lot of attention but it was it was mixers and like soda and stuff and how were you coming up with recipes for this stuff where you just did you work with other people? Did you have somebody make it for you? Did you make it yourselves? So this is where I would say we knew enough to be dangerous. You know, we knew what a good margarita tasted like. I think and bloody marries. You know, I remember standing in my kitchen with, you know, kind of tomatoes everywhere and really the value of the brand initially was just in helping kind of demystify a cocktail and making it accessible to a much bigger audience. We saw that there was an opportunity if you made the product interesting enough visually and you know, the label was sort of elegant. Consumers would proudly display it in their, you know, spirit cabinet or fridge wherever it was and it really helped make the product much more accessible and drove a lot more interest in brand awareness. I mean, was it pretty quick after you kind of created this line of products for stirrings that it started to make money? What happened is the sales really took off. So eventually a number of liquor distributors ended up bringing it on. But it was a really expensive, challenging product to make, you know, just for us to be shipping it around the country and doing so we were chasing break even throughout the entire business. You know, that the food business is really like that. You know, you're always faced with the decision, do we want to go after the next level of growth? or be satisfied with where we are and try to manage it to more break. Even in I would say we chose to really sort of chase growth and make the brand, you know, the cocktail mix in the US. But how are you funding the production of all these orders? Did you have to eventually raise money? You know, crazy enough, we really didn't. We never took outside capital at stirrings. We borrowed like crazy. I mean, we were leveraged personally. You know, I had, you know, millions of dollars of notes that I was responsible for. We just tried to be as creative as we could and our supply partners worked with us on terms and that sort of thing. So it was really sort of moving, moving deck chairs around, trying to figure out where to, you know, who to pay and what day. Do you remember how many employees you had? Our high point was around 60 employees or so. So because from the outside, people must have thought, oh my God, you're just swimming in cash here. Like you guys are so, you're crushing it. But meantime, all of the revenue was going to just make more product. Yeah, I think that was really challenging because you're exactly right. You have, you know, we had a big team at this point. We were showing up at everyone's sort of corner store, liquor store. And yet we were from a kind of a business economics fundamentals perspective. We were just making payroll, you know, I can remember. Wow. Being in the north end of Boston, you know, hearing that we needed to move, find money to cover payroll that was three hours, you know, later in the day and having to find the cash somewhere. So that absolutely was a huge lesson for us. Just how the optics of a brand and the expense associated with growing, you know, isn't necessarily sustainable out of just cash flow alone, even when you're on fire the way we were. All right. So you've got this product that's just, you know, all the rage and people are doing their sex in the city home parties and using your kind of mixers and brand. And at the same time, neither you nor your partner are probably even able to pay ourselves that much. And I guess around like 2006, you get an offer from Diagio, one of the biggest liquor companies in the world to buy you out. That's right. Yeah, they had this huge portfolio and they were seeing the cocktail craze and we were lucky enough to get an article on the Wall Street Journal right around the holidays, you know, talking about how stirrings was helping to demystify cocktails. And the next week we got an inbound from their business development lead who said he was interested in meeting with us and talking about partnering up to ultimately pair their spirits with our cocktail mixes. So yeah, it was. They owned like Smirnov, Bailey's Guinness. I mean, some of the biggest beers and and blickers in the world. That's right. You know, there was there was a lot of synergies between what we did and what they did. And you know, they had this huge network and 30,000 people and distributors and marketers. And we had a cocktail line that kind of went perfectly with everything they did. And so the prospect of working with this sort of global powerhouse and selling not just in the US, but potentially in around the world. I mean, all of that was intoxicating, you know, and the plumbing was that we ultimately ended up selling them, you know, percentage of the business with the idea that we would then exit the business to them entirely, pending kind of growth and trajectory of the business. All right. So basically you came to terms and you agreed, I guess, to stay on for a couple more years before you left in 2000. You would leave in 2009, is that right? Yeah. So actually what was interesting to me back then was the idea of actually taking the business abroad to other markets. And so I actually moved now my wife and our two very young children over to London and lived and worked with their international team out of London for two years. That was intended to be the term of the partnership. What ended up happening is in 2008. Business and the partnership really kind of hadn't fulfilled the potential that we had all imagined. And there were a variety of factors for that one was the economy changing. The other was sort of the fit between their big business and our tiny business. And so we ended up agreeing to exit the business to them earlier just because it made sense for both of us. So you walk away from Diagio and Stirring's. Reportedly they bought it for $25 million. Obviously you didn't get all that money and you've got to pay taxes and all that stuff. But you did pretty well. You come out of that pretty well. And at this point, I mean, you're like 34. Did you know that you were going to go to the next, onto the next thing or did you think, you know, let me just kind of, and just take some time to just breathe. And I don't know what was going on in your head. And you left. I was exhausted, honestly. At that point, we had pulled forward this agreement with Diagio, which was sort of hard fod and not quite the result we expected. It really was quite a difficult deal to finalize. And I felt like I had been going for a long time at that point and needed a break. I mean, I'm just curious, did you walk out of that deal? Because people listening might think, wow, you know, he sold it to Diagio. He walked over the few million bucks like Triumph, you know, he's pumping his fist. He's feeling great. Is that, is that how you were feeling? Were you feeling great, Triumph? But this was awesome. I'm so happy that it turned out this way. No, it was, it was really hard actually on the team side. It was really hard despite some financial rewards, it was, you know, it was really just sort of disbanded and then ultimately walk away from it. So I would say that disappointment for me was a motivator though. You know, I was still in my early 30s, mid 30s and I felt like there was a way to do it a whole lot better than what we had just experienced. Coming up in just a moment, how stepping away from one business gave Bill the space to come up with a whole new idea. And then how he spent a lot of that money he just made, trying to make that new idea work. Stay with us. I'm Guy Ross and you're listening to How I Built This from NPR. Hey, welcome back to How I Built This. I'm Guy Ross. So it's 2009. Bill Krillman is in his mid 30s and he's just sold his cocktail supply business to Diagio. And he decides to move his family back to Boston from the UK. And for the next several months Bill is kind of in a holding pattern. I was, I was sort of, I would say in, in receiving position waiting for an idea or thought or inspiration. And I still loved being around food. I mean, it was, you know, I just get a charge out of walking down Main Street, you know, looking at what's happening in the world, observing people and what they're eating and drinking. And I was really sort of paying attention to the trends, you know, more than maybe just an average person would. And so at the time I was a big diet coke guy. So, you know, the absurdity of starting a really interesting meal and going out and shopping for fun ingredients, which is what my wife and I love to do. And then in the same afternoon, you know, drinking three diet coaks. I mean, it just, it was at a certain point. It became confusing really because the kids didn't understand why, you know, the two messages around eating healthy and then why they couldn't have soda. You know, I was having a hard time reconciling it. And so my idea started to coalesce around soda and how there might be an opportunity to do something different. All right. So you are trying to figure out something. I have to assume that you signed some kind of agreement with Diasia that you could not do anything in the cocktail space, right? I mean, that's usually how these things go. That's right. Yep. But you could do something in the beverage space that wasn't, and you knew a little bit about beverages given that you were selling cocktail mixers. Yeah, that's exactly right. And, you know, I was still around my team, you know, so stirrings was still kind of going as a business now with Indiagio. And I think it was hard to ignore back then the kind of soda challenge. And so you'll recall, this is when sodas were getting pulled out of public buildings and taxes were starting to get levied. And so this is like 2000, around 2010, right? Yep. 2009, 2000. I think New York was trying to, considering banning like the 32 ounce drink, for example. That's exactly right. It was super exciting for me to start to think like, what is going to happen with this decline in soda? So does going to go away. Carbonation going to go away. And what's the root cause of all this? Is it sugar? Is it diet? And so that puzzle, that idea was just hard for me to ignore. All right. So meantime, um, you are a parent, right? And, and you've got kids and like most parents, I know and probably, you know, you prefer that they not drink soda because it's going to rot their teeth and, um, it's really bad for them. They won't eat their dinner. Um, but just full disclosure, I do let my kids have soda on vacation. Um, so in your mind, you have this idea, maybe there's something in soda and then how does it, what's the first step you take towards trying to make something? Well, so I, so going back to my, my childhood, I mean, I was really interested in ingredients. You know, I started to look at taking real ingredients that, you know, something you would start a meal with, a lemon and orange, a grapefruit and what if this could become the base for, you know, sparkling beverage and, um, so I was, I was in my house with a soda stream. I was cutting up fruit and squeezing it and seeing how it responded and settled and carbonated water and tasting it with my wife and our kids and, I mean, the idea is not complicated. Everyone has lemons and, you know, has access to sparkling water, but the flavor that that this created was just as anyone that's ordered a sparkling water, you know, with a wedge of lemon, at lunch or whatever. I mean, it really is quite unusual. It has a lot more dimension of flavor. It's got a little bit of sweetness, a little tart, or earthiness to it. It's very different than what was out there. And so I began to research whether this was a unique idea or not or something that had been done before. And that was really the genesis of, of spin drift. So that, I mean, that is literally like the conversation you start to have in your head with yourself. Like, wait, this is great. Why isn't this a product available for sale? Exactly. And it actually didn't take all that long to figure out why. And the reason is because it's incredibly challenging. I mean, that flavor that you get from squeezing something fresh and putting sparkling water over the top of it is much, much harder to translate than I think I imagined and, you know, others may. I mean, it, so what I did literally was, you know, go online. Luckily, there was the internet at this point. I'm going online and really dig in. And at the end, Spark, you know, this whole other workstream to really then decide why, you know, was it because these ingredients weren't available 12 months a year? Was it because the product couldn't be made and then sold commercially for some regulation reason? Um, was there not the consumer demand? And those are the questions that I set out to, to solve. So what, what did you do? I mean, you're living in Charlestown in Boston. And did you say, all right, I'm going to get an office and I'm going to start pursuing this. Yeah. So I set up shop and our basement and I went about solving all of those problems. So I found really at the time the only fresh juice supplier out on the West Coast and flew out there and saw how they were squeezing juice and, and found at the time a bottler that was willing to handle all of this fresh juice. They had the facility cold storage and I started a fresh supply chain. So the only way we could make the product then was to refrigerate it. So we, I would run a batch in Worcester, Massachusetts. I would ship it to a cold warehouse where it would remain chilled. In Taunton, Massachusetts. And then I would load samples in the back of my Prius and drive up and down the East Coast, you know, Boston, Portland, Port Smith, Nantucket, K. Pylons, and I would sell it. I would get people excited about the brand, follow up with them a week later and ship them product direct. So initially the drink was going to be fresh squeezed fruits into soda water, sparkling water in a bottle. And it had to stay refrigerated because that's how it would be preserved. That's right. Yeah, there was no other way to maintain that incredible fresh flavor that we were talking about at the time without keeping it cold. I mean, it just was too volatile a product. Maybe I'll just add to that that it was also more of a soda profile at the time. So it had a little bit of sugar in it. Natural flavors and color, you know, just sort of whatever. There were things added early on as we were just trying to dial in the flavor and, and, um, in order to make it sellable. This is the point, right? And we've had these conversations with entrepreneurs where you go to somebody and you say, I've got this great idea. Now you had a track record. So people are going to take you a little bit more seriously because you're in your mid 30s, you've already sold a business. But you're going to go to people and you're going to say, hey, soda with a squeeze of lemon or orange. And someone's going to say, well, if it's such a great idea, Bill, why doesn't it exist already? Right? I mean, usually people would say that must exist or they thought they were already getting that and whatever they were buying today or at that time. And so I actually didn't mind that people were questioning the ingredients and wondering why it hadn't been done or was it really being done? What we really doing, what we were saying, that was enough motivation for me to double down and say, okay, now we, I think we can really make a business out of this. As long as we're clear about communicating what is so special about this product. Was that hard to find somebody who's going to bottle this? And even before you were making it, you know, in mass quantities, you just need to make small amounts to, right, to see if there would be interest. It was terrifying. I mean, you know, because you had minimum production quantities, we made, I think, 500 cases of each flavor. We had four flavors, so 2,000 cases. And you had to make 500 cases just for the initial run. Just to turn the equipment on, yeah. And you had to fund this yourself. Presumably, you're funding this with the proceeds from the sale of stirrings. That's right. So, you know, we had to produce a minimum quantity and then we had to go out and shuffle it door to door. And the challenging part really, so the product was very expensive. It was $3 a bottle. So it really forced us to think hard about where, who would be interested in something like this. And obviously with the decline of soda, there was a little bit of interest in alternatives. And that's that's really how we positioned it. But you'd have to sell a lot of bottles at $2.99 to break even to be sustainable. I mean, were you thinking like, okay, hopefully Target will sell it and put it in the refrigerated case. And I mean, were you going to some of your customers that had bought stirrings brand? We didn't. I think we, we recognized pretty early on that the great thing about soda and sparkling water, unlike cocktail mixes, is that everyone sold it. So the challenge was actually more to figure out who could we really get to champion this, this product? Where we ultimately found our people, if you will, is in the fast casual space, the people that were making delicious sandwiches or salads or that now we're looking for a product that had a similar ingredient profile to what they were offering and their other food. Got it. All right. Okay. So you've got this product and it's in some stores and I should be clear. Like you had at this point, two lines of of beverages, you had the sparkling water with fresh fruit, but you also had like a soda with sugar, right? Exactly. Yep. And then, and then what? I guess at a certain point you say, hey, maybe we need to go to like lunch places, like food places where people are just ordering lunch to try and get our product in front of them. We needed a place to tell our story really. So we went where people were excited about our brand and it happened to be the small independent for the most part, sandwich shops and salad shops and this was the time of sweet green and and Kava and Panero was changing their menu to be more health conscious and we solved a problem for them because often they were a lot of them were trying to tell a health and well in the story with a big soda machine. And so we could come in oftentimes we actually even brought our own equipment, refrigerated equipment and and we would actually work with them. I mean, we'd sit down and say, okay, you're launching a cranberry, salad or sandwich this fall. We have an cranberry raspberry. It's delicious. You know, let's storytelling together and that made for a pretty good partnership. And this was being made in Massachusetts, like just outside of Austin. You had like a facility that would make your drink for you and bottle it and then put a label on it. Yeah. So what I would do is I would bring a truck in and the truck would take the batch, whatever we made, you know, 500 cases of each and we would bring it to a cold storage facility in Tontan, Massachusetts, called a miracle. And they would, you know, they had all kinds of other fresh items, you know, they were staging vegetables for the next day or cranberries or whatever, you know, they were huge, gigantic warehouse. And so we would talk our little pallets into their huge warehouse and then whenever I needed a sample, I would just drive down there. I would put on a gigantic freezer refrigerator coat, go out and pull product and then I would take it out into the market. That food service focus with me and now my small team was really all we did for the first four or five years in our business. And how did you come up with a name, Spindrift? So spin-rift is the whitewash of a wave. When it's windy outside a wave will kind of crest and the wind will shear the top of the wave off creating this mist and that wind blow and mist is called Spendrift. And one of my captains when I was working out on the island introduced me to this name when I was probably 14 or 15 and for whatever reason I don't know why it really sort of resonated with me. I just thought it was really interesting word and spin and drift were interesting words too. So I talked it away and so when I was thinking about what I wanted to call this now refreshing sparkling beverage for you know it suddenly made sense to kind of recycle it again. Now here's the thing right you were funding this business with the proceeds from the sale to Diagio but I mean what was your limit at what point were you going to be like oh I cannot use any more of my money because I'm going to blow it all on this thing. Like was there for a point where you were a little nervous that you were just going to spend all the cash that you had on this thing that might fail? Yeah sure I was terrified you know I'd come out of this now it was still very early and sort of the rebound out of the recession so yeah these were real fears and beverage is expensive you know I knew that even more so than my prior business this was going to be a capital intensive business. I mean just it was clear right away that between the coolers and going up against the big soda guys and trying to do something really different in terms of the ingredients all of that just was going to be challenging so you know we from a family perspective you know we invested as much as we could and then we knew we were going to have to kind of make some lifestyle changes and also think about bringing it outside capital because just with your own money your runway probably wasn't going to be that long right? Yeah exactly so what we ended up doing is basically putting mortgages on our house and but again now you're talking about buying inventory and starting to hire a team. Wait this is nuts you would you would sold a business you made a good amount of cash and now you're taking a mortgage on your house to fund your next business like you'd already done the crazy risky stuff in your 20s you're doing this again in your 30s? I mean yeah I guess the benefit of having gone through it before was that I knew where the risk was or at least I thought I did so ultimately there's just risk embedded in startups and in food beverage in particularly in single-served beverage space so I would say we took calculated risks like I would I would bet on launching a market or a particular customer and make sure that that was up and running and successful and then I would reinvest it again in launching the next customer. And then and then round what 2014 or 2015 you guys eventually had kind of a breakthrough because you finally figured out a way to to store the spin drift on a like on a shelf with no refrigeration right? Exactly yep that's right so how did you figure out how to do that? At a certain point we were on our own and there was really no we had no one in the industry that could help Kitus in this area. I don't I don't think I would have gotten into this business had I known how complicated it was and again the unpredictability of of the ingredients you're starting with I mean the magic of every time you cut into a grapefruit you're not totally sure what that grapefruit's going to taste like is it sweet is it tart is it sour we have those same challenges with our product the fundamentals are that when you squeeze a lemon or an orange or grapefruit it is alive I mean it you know you put it in your fridge you know as you know last a few days and then it no longer tastes like orange juice or lemon juice so our challenges how do you preserve that incredible flavor and the answer was to move very fast to refrigerate like crazy and then do it in a predictable way so it also just required a lot of investment you know that was not a small decision to make especially for you know a small business with a small team that you know still with a very unsure future. I mean I have imagined you have to like find food scientists who could figure this out I mean were there people who said to you built this is just you can't do this it's not possible or it's not really possible to do this at scale. We've only frankly heard that I mean when we have our initial call with one of our bottling facilities you know this I O G's you know I hope this isn't spin drift is it because we've heard about you guys I mean you know it's and the reason is the unpredictability you know when we show up with a tanker of fresh squeeze lemon juice you know it is it is a problem for these plants because they have to run it right away it's got pulp you know which no one particularly wants to deal with. Wait why don't they want to deal with pulp? So pulp pulp is really fussy I mean pulp obviously is sticky it's bits it can get into these lines and then get sort of clogged or you know and so okay so there there wasn't a single carbonated beverage plan in the U.S. that it ever handled the product like this the closest was something like orangeina you know in Europe and they you know had figured out how to deal deal with pulp but really none of these guys wanted to be in the business of dealing with you know fresh juice and then carbonation it really took us handholding them and you know the brewing industry has some of this you know particularly temperature sensitivity but it took them really just focusing on it and deciding it it was important and that we were willing to kind of stay with it until we got to a successful outcome. And when does that happen when do you like at what point do you figure it out do you get the grape fruits and the lemons in the soda water and then you could just put them on a shelf and you didn't have to refrigerate it. The first we made one batch of raspberry lime it was the first time we moved the product over from a bottle into a can and it was really just on the back of that you know remaining stable that we decided we were now comfortable enough to roll that out so it was 2014-15 we finally broke broke through. I guess around what 2016 you got into Trader Joe's was that like a total game changer for you in terms of visibility? It was a seminal moment for the business. At the time we really didn't have any customers for the sparkling water the soda was doing well in those food service accounts but the sparkling water the unsweetened version was really not anywhere and they yeah they just were incredibly brave and took on the product and initially just took it in the east and we were lucky enough to then get expanded and they really have just been a real believer. It really changed our business we're honestly because we without that belief I'm not sure that we would have had the conviction to continue to expand further into retail. I mean you had been in a position with your previous business stirrings where you just saw this like hockey stick sales growth right like all of a sudden it's just selling like crazy but you're still not able to keep up you're sometimes worried that you're going to make payroll were you in the same kind of situation in 2016? So by then we had we had really made a decision once the product was stable and there was clearly an audience for the retail version. We really said to ourselves like are we going to make a run at this and we took the step to bring in some outside capital we brought on an incredible team and really said we're going to go sort of heads down and really I would say really that was the inflection point we now are going to try to compete with the big guys you know and ideally define or find our own space you know in this big and in crowded category. All right you've got this product you figured out the technology you're in trader Joe's and 2017 you make a decision that is kind of crazy you decide to stop selling the because you've got two product lines you've got the sparkling water and juice and you've got the sodas which actually is more or less the same thing but with sugar you decide even though that's profitable from what I understand that you decide we're not going to make that anymore we're just going to make the sparkling water with the squeeze of fruits. Yeah that was that was a really important moment for us and what we were experiencing even just in our day-to-day lives was just the concern around sugar and so we had a low very low sugar soda but even that among our team was confusing you know you know people say well I don't drink soda and say well wait this actually isn't a soda and so it was sort of the perfect storm so we made the hard decision to shut down it was about a five million dollar business super profitable and just focus our resources on on the sparkling water. And I mean if it was a profitable business you did this for the sole reason that you thought let's just focus on this thing we do let's just make this a company about you know sparkling water with the squeeze of fruit. Yeah I think it was the recognition that in you know 2016 or 2017 there were there's been a lot of innovation coming into beverage and the risk was for us that if we didn't really stand for one single thing that we were going to go down the path of so many other businesses where you sort of try to do everything pretty well and nothing really, really great. Both businesses are resource-intensive. You have two inventories, two supply chains, two of everything. And so we said, "Look, if we're going to really be as successful as we think we can be, we just can't do everything twice." So I would say though it was purely on the belief that this was a big idea, and in order to get there we had to do what we call "simplify, amplify," you know, basically really get behind the business we had. So I guess at the same time you decided to drop the sugar soda, you also decide to stop using natural flavors in your drinks. And when I see natural flavors, I'm assuming it's like essential oils, like essence of cherry or lemon, just like a couple of drops in the drink. And then you've got the drink, is that what natural flavors are? So we were at the time we had natural flavors in our drinks. And we started to get people writing in asking what natural flavors were. Natural flavors is the word that the government asked you to use to kind of describe the whole world of these essences that your page has described. So we actually reached out to our flavor houses and asked them, "Can you just give us a little bit more information? We're being asked by our consumers, is it really just the lemon oils that are being squeezed?" You know, they would say, "Let me get back to you. I just need to confirm that myself." Or they would say, "We don't disclose that." And no one would tell us what they were. And so that's where, you know, we had to go rogue and really sort of start to investigate further on our own. I mean, I just think we were called conversation with a food scientist who was working for a flavor house at the time. And he said, "Let me go into a closet because I'm afraid if I have this conversation at the open that I'm going to get in trouble." And so here I was, you know, decade plus in the business. And I was putting an ingredient in that I couldn't totally be sure what it was. And it really for us was a problem. Okay, but before that point, right, you were still making drinks with natural flavors, because everybody was, because it sounds fine, right? But then you started to say, "Well, if I don't know what's in it, and my suppliers won't tell me what's in it, maybe this is a problem, like that's what started to go through your head." Yeah, I mean, we went through, we reverse engineer the ingredients, we got in scientists, when we spent a lot of money to really understand even what we were buying. I mean, I'm a little embarrassed to say, because we just didn't know. There really is no standard for a natural flavor. There may very well be all of the things you described, but there's no assurance of that. And I don't think anyone felt they were doing anything bad with natural flavors. It was more for us, a decision that we made as a business, that we wanted to stand for what was in the product. And so we made the hard decision to get out of natural flavors entirely. That's really the kind of our position in the market. Your growth from 2015 to just 2017 was like 800%. I think in 2017, you did like $33 million in revenue. In this year, you're projected to more than 100 million. I mean, what explains it? Is it just more visibility? More people are just being exposed to it? Yeah, I think so. The growth has been attributable to I think just this incredible team that brought people into real ingredients. And obviously, we've been very fortunate with the turn of drinks to more of a less sweet profile. I think lastly, people really starting to care about ingredients and transparency and what they put in their body. And so I think we've been lucky to benefit from all of those things happening simultaneously. You need all of them in different amounts. Bill, you started this company in 2010. You grew up with your mom was at home. Your dad had to work hard to support the family, traveled a lot. I have to imagine it's been kind of similar for you for the last nine or 10 years trying to get this off the ground. I mean, have there been personal sacrifices you've had to make to get this business up and running and to make it successful? I think anyone that gets into startup space and I guess specifically food and beverage, I think sort of knows they're going to be sacrificing a big part of sort of their life outside of work. I mean, it's just you have to be 100% in or you know, it's probably not the right vocation for you. What I've tried to do is really focus on the business and my family and I don't know any other way to do it. I've tried in the past, but I think particularly in a dynamic space like this, you really have to be 100% committed or it's probably not it's not going to end up successful. What keeps you up at night? I mean, you're doing 100 million revenue. It's super successful. Like, do you still get nervous and anxious? Are you like chilled out and able to kind of relax a little bit? No, we still have, we feel like we really are just getting started. You know, if you look at the landscape of sparkling beverages and there are some incredible brands out there and we are, we're really kind of the new guy. So that's incredibly motivating for us. There's always risk to these businesses and so I'm keenly aware of that. I never for a minute take any of this for granted. The challenge is how do you maintain everything you love about the business? What guy you into it as the business grows? I think the businesses that really get sort of lost are the ones that lose their identity. And so we're trying to do everything we can to ensure that doesn't happen. How big do you want this company to be? I mean, what is being a billion dollar company important to you? Not captured that way. I mean, I think what I'm learning now with kids and kind of the world changing the way it is. For me, I think it's important that we are big enough to survive, you know, kind of through twists and turns. I just have incredible respect for brands that have survived, you know, decades, centuries and are part of the fabric of culture. I mean, that's really interesting and exciting to me. So how do you measure that? I'm not sure. But I think we're marching forward and not really thinking about or being distracted by the other stuff today. Bill, when you think about your journey and you've had two successful businesses, which not, you know, one would be amazing, but very few people can say they've had two. How much do you attribute that to your intelligence and work ethic and how much do you think that's just because you've got lucky? I think it's a combination. So, you know, I thought a lot about that question and we talk about it even just internally a lot. We are all incredible workers in our commitment level. The company is insane and has had to be for a long time. And what that allowed us to do is see opportunities when they surfaced, you know, when the world was moving out of sweeten beverages and sugar, we were positioned well to be able to see that and take advantage of those changes. So is that good luck? Is that, you know, why did we why we're repositioned that way? It's not clear to me, but I think we needed, we needed a good dose of both of those to get to where we are today. That's Bill Krillman, the founder and CEO of Spin Drift. By the way, back around 2015, Bill almost had to give up the name Spin Drift. There was a legal problem with the trademarts that had to be resolved and Bill was just days away from changing the name. And if Spin Drift hadn't worked out, the company's more than 100 employees would today be working for a beverage manufacturer called PressCraft. Hey, thanks for sticking around because it's time now for how you built that. And this week's story starts with Garov Chavla, who grew up in Western India, where like almost everywhere else in the country, people drink a ton of chai. People have it four or five times per day. Like, you know, people who get bored, they make chai, they want to relax, they get chai, they want to sleep. And for the non-chai drinkers out there, chai is a deliciously soulful blend of black tea and cinnamon, cardamom and ginger, often spiked with some hot milk. So chai is like, you know, ever present in all aspects of life. But actually, Garov only started drinking chai when he moved to California after college. His roommate used to make it every morning. And in those cold, burky mornings, you know, with the fog rolling in, I wanted to try something warm and that's how I started, you know, getting into chai and that's our loving. it. Loving it, but kind of hating it too because Chai is so time consuming to make, measuring the tea and the spices, heating the milk, and then hovering obsessively over the stove. You're making the chai and you just look away at the wrong time. If somebody calls you at the wrong time and the chai boils over, you know, the milk goes everywhere, it sticks to the stove, so the stove is a mess to clean. Now you could just go to Starbucks and get a venti chai, right? But as Gareth will tell you, Chai made from a concentrate is just not the same. And because Gareth is an engineer, he started to think about designing his way out of the problem. And then I started thinking, oh, wait, on the coffee side, there are so many machines and brewers. Why are there no chai machines in the market? Gareth started doing a little research. And I found out that there are product designers and then there are tea companies. And the tea companies have never been product designers and product designers or coffee machine makers. They don't care about the tea market. So that intersection hasn't happened. Well, it hadn't happened until Gareth got there. He quit his day job working as an engineer at Salesforce. And he set out to make a brewing machine for chai, a little like a curry or nispresso. When I started working on this, the first thing I did was I took a rice cooker and modified it and I programmed it myself. And after that first basic prototype actually worked, he kept tinkering. I would tell everyone I met that hey, I'm working on making a chai machine. And initially they would not understand whether I'm saying chai machine or time machine. And once they figured out, oh, I was talking about chai, like their faces would light up. They would be like, oh my god, I'll be your first customer. And even at that very early stage, Gareth was able to get a few angel investors interested in his project. And he raised enough money to hire more engineers and to find a factory in China to develop the chai machine. And I know I just said all that in a few seconds, but this whole process, it took five years. It is tough and it's not something that you can just like, you know, in the software world you could just make something on a weekend and people can use it and give you feedback, you change it, it's very fast. Here every single change takes weeks, so it was really tough. And while all of that was going on, Gareth was also working with a partner to source the black tea and the spices from India and to get it all packed fresh into these little capsules. And we have five different kinds of capsules. So one is just plain black assam tea. Other ones are with cardamom, with ginger, with ginger cardamom. Alright, so basically the way this all works is you choose your flavor, you fill the back of the machine with water, you put milk in the front, then you press the button, the machine brews the tea and heats the milk. And about three minutes later, you've got a cup of chai. And you can smell the spices. Gareth calls his company Chai and late last year he raised $100,000 on Indiegogo. And for us, the goal is to, you know, have this kind of machine available everywhere. So wherever you go at home, at work, in cafe and hotels, like, you know, there should be an easy way to get your chai. But that's still a ways off. Right now, Gareth and his team are focused on filling hundreds of orders from Indiegogo. But of course, he already has a chai sitting in his own kitchen and he says he'd never go back to the old way of making it. Absolutely not. Like, I would never go back. Like, I have better things to do than to watch me a milk and water bite right. If you want to find out more about chai or hear previous episodes, head to our podcast page, how I built this dot NPR dot org. And of course, if you want to tell us your story, go to build dot NPR dot org. And thanks so much for listening to the show this week. You can subscribe at Apple Podcasts or wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at [email protected]. And if you want to send a tweet, it's @how I built this or @gyraz. Our show is produced this week by Casey Herman with Music composed by Rumpteen Aero Bluey. Thanks also to Candice Lim, Julia Karney, Niva Grant, and Jeff Rogers. Our intern is Sequoia Carillo. I'm Guy Ross and you've been listening to How I Built This.