Clayton Christopher is the Founder of Astō Consumer Partners, a CPG-focused investment firm. He is also the former CEO and Founder of Sweet Leaf Tea, an organic bottled tea company he started with only $10,000 before selling it to Nestlé. Clayton co-founded and was the Chairman for Deep Eddy Vodka, which became one of the fastest-growing spirits brands under his leadership. As a serial entrepreneur in the CPG space, he co-founded Waterloo Sparkling Water and Rhythm Super Foods, among other brands. Clayton is also a board member and investor in various CPG brands and was awarded the Ernst & Young Entrepreneur of the Year for Central Texas.

Here’s a glimpse of what you’ll learn:

• [2:50] How Clayton Christopher entered the beverage industry and founded Sweet Leaf Tea
• [7:39] Clayton’s early lessons in prioritization and mindset shifts
• [13:57] The challenges of building, scaling, and selling a perishable beverage brand
• [17:43] How Sweet Leaf Tea inspired Deep Eddy Vodka’s flavors
• [23:46] Gaining awareness in a hyper-competitive market
• [28:59] Why Clayton transitioned Waterloo’s manufacturing in-house
• [34:31] Advice for encouraging consumers to sample your products
• [37:17] Strategic billboard and packaging approaches
• [47:52] How to transition from DTC to retail
• [56:48] Developing a leadership framework to grow your brand
• [1:07:41] Clayton’s criteria for investing in brands
• [1:12:06] Clayton gets personal with William Harris

In this episode…

As a digitally native brand, getting your products into consumers’ hands before launching them isn’t always feasible. Expanding into retail channels allows you to reach a wider audience and promote your products. What should you know before transitioning into retail, and how can you optimize your presence in the market?

Digitally native brands that transition to retail often lose some DTC customers to competitors. Multipreneur Clayton Christopher suggests building a core customer base by offering samples at music festivals or creating memorable in-store experiences to showcase product quality and drive loyalty. He also recommends refining packaging to communicate key product attributes effectively and ensuring organizational focus on strategic priorities to support retail success. These approaches strengthen retail performance, enhance brand visibility, and create lasting consumer relationships.

In this week’s episode of the Up Arrow Podcast, Clayton Christopher, the Founder of Astō Consumer Partners, joins William Harris to talk about launching CPG brands into retail channels. Clayton explains the importance of launching in a niche market first, his leadership framework for brand growth, and how he built, scaled, and sold his brands.

Resources mentioned in this episode‍

• William Harris on LinkedIn
• Elumynt
• Clayton Christopher on LinkedIn
• Astō Consumer Partners
• “It’s Lonely at the Top: The Real Life of C-Suite Executives With Robert Gilbreath” on the Up Arrow Podcast‍

Quotable Moments

• "I knew that I wanted to work for myself. I knew that I wanted to start a business."
• "Sometimes you succeed, and sometimes you learn."
• "Leave everything on the field but hold the outcome so lightly."
• "It's the never-ending pursuit of perfection. It's never going to be perfect, but it's never done."
• "What lasts are the memories, the relationships. We'll never regret over-investing in relationships."

Action Steps

1. Embrace a growth mindset and learn from setbacks: Clayton Christopher emphasizes the importance of viewing challenges as learning opportunities rather than failures. By adopting a growth mindset, entrepreneurs can remain resilient and turn obstacles into stepping stones for success.
2. Focus on narrow and deep market penetration: Clayton's strategy of dominating the Texas market before expanding nationally with Deep Eddy Vodka highlights the effectiveness of deep market penetration. This approach helps build a strong brand presence and maximizes word-of-mouth, reducing the risk of overextending resources.
3. Prioritize product quality and authenticity: Throughout his ventures, Clayton stresses the importance of maintaining high product standards, such as using real ingredients in Deep Eddy Vodka and Waterloo Sparkling Water. This ensures product quality builds consumer trust and differentiates the brand in competitive markets.
4. Leverage strategic partnerships and mentorship: Clayton's success is partly due to surrounding himself with experienced mentors and hiring top talent. Building a network of knowledgeable partners can provide valuable guidance and support, helping entrepreneurs navigate complex business challenges.
5. Optimize brand messaging and packaging consistency: By frequently auditing brand collateral and ensuring consistency across all marketing materials, Clayton maintains a cohesive brand image. This attention to detail in packaging and messaging reinforces brand identity and aids in consumer recognition and loyalty.

Sponsor for this episode

This episode is brought to you by Elumynt. Elumynt is a performance-driven e-commerce marketing agency focused on finding the best opportunities for you to grow and scale your business.

Our paid search, social, and programmatic services have proven to increase traffic and ROAS, allowing you to make more money efficiently.

To learn more, visit www.elumynt.com.

Episode Transcript

Intro  0:03  

Welcome to the Up Arrow Podcast with William Harris, featuring top business leaders, sharing strategies and resources to get to the next level. Now let's get started with the show.

William Harris  0:15

Hey everyone. I'm William Harris. I'm the founder and CEO of Elumynt and the host of the Up Arrow Podcast, where I feature the best minds in e-commerce to help you scale from 10 million to 100 million and beyond as you up arrow your business and your personal life, I'm really excited about the guest today, Clayton Christopher Clayton is passionate about entrepreneurship and loves helping small food and beverage companies to scale. He is the founder and former CEO of Sweet Leaf Tea and Deep Eddy Vodka. Clayton is also the co-founder of Waterloo Sparkling Water, Rhythm Super Foods, Naturally Austin Bridge Leasing Group, and SKU, the largest consumer product accelerator in the US in both 2006 and 2020 he was awarded the Ernst and Young Entrepreneur of the Year for Central Texas. He is also the recipient of the Austin Under 40, Austin Night of the Year award. Ian Clayton has served on the University of Texas president's Innovation Board and the advisory board of Big Brothers, Big Sisters. You're not busy at all. I'm excited to have you here, Clayton,

Clayton Christopher  1:12  

so glad to be here. William. Really appreciate you bringing me, bringing me on. And especially the day before Thanksgiving, you know, and then we're all start to think about Turkey and family, Yeah, but why not a little more education and jumping into some fun conversation? You know, before we head out for the holiday, 100%

William Harris  1:31  

and I get to give a shout out to Robert Gilbreath for putting us in touch, former CMO of ship station, friend and previous guest of the upper real podcast, actually, episode number four. If you guys want to go back, check that out. It's a really good one as well. But thank you, Robert for putting us in touch. Excited to chat with Clayton. Here. We are talking about dnvb to retail, learning about omni channel, CPG secrets from three time nine figure founder, Clayton, Christopher. But before we do, I do want to announce our sponsor. This episode is brought to you by Elumynt. Elumynt is an award winning advertising agency optimizing e-commerce campaigns around profit. In fact, we've helped 13 of our customers get acquired, with the largest one selling for nearly 800,000,001 that ipoed recently. You learn more on our website@Elumynt.com which is spelled E, l, u, m, y, N, t.com. That said on to the good stuff. Like I said, again, three time, nine figure founder So Sweet Leaf Tea, which was acquired by Nestlé, Deep Eddie Vodka, acquired by Heaven Hill distilleries and Waterloo Sparkling Water, acquired by Flexus capital. You've built not one, but three of these. Clearly, you have figured out some secrets that I think are going to be beneficial to a lot of people listening in today. But let's start at the beginning. What got you into the beverage industry with Sweet Leaf Tea?

Clayton Christopher  2:50  

I'll take you way back here. I was living on a sailboat down in the Florida Keys in the Bahamas is a charter boat captain. So, you know, it sounds like a glamorous lifestyle, but there was a lot of washing dishes, unclogging stop toilets, learning how to work on on diesel engines and in the middle of the night. So it was an amazing experience. It was, it was a wonderful year, but I had a little bit of an epiphany that if I was ever going to own the boat I was working on, I couldn't work on the boat. Also, I need to get a real job and and make more money. So I knew that I wanted to work for myself. I knew that I wanted to start a business. My father was was an entrepreneur. And you know, when you grow up in that lifestyle, you kind of take it for granted that it's doesn't seem like some enormous risk to take, take that leap of faith and start your own business. I kind of saw it as like, that's likely what you do at a certain age. So really, the question came down to, what is it that I want to do? And I was, I was lucky enough to meet a guy named Ronnie Carlton who had a company called Milo's tea, which is a very successful ice tea company based in Birmingham, Alabama, and on a road trip back to Texas. I met, I met Ronnie Carlton. He was nice enough to spend an hour with me and telling me his story and tasting his product. I said, you know, this is the best tasting bottle iced tea I've ever had in my life. It's way better than anything on the market. We didn't have anything like it in Texas, so I thought, if I could create something like this in Texas. Maybe there's a business here, and, you know, so I had $14,000 which is my life savings, not a lot, to start a beverage distribution and manufacturing and branding company. But that's, that's how it started,

William Harris  4:56  

yeah, and it was your, your, I think you said it was your 14 year overnight. Success, right? It's like a lot of people see what happens, but it's there's 14 years of hustle and grind in that. That's

Clayton Christopher  5:05

right. You know, sometimes you look at the chart and they think, Oh, wow, it's all kind of up and to the right, and there's lots of peaks and valleys along the way there. But yeah, it was actually my grandmother's recipe. She had an amazing ice tea recipe, and I thought, okay, if I can figure out how to do this 100 gallons at a time, instead of just one gallon at a time, you know, maybe we have something here. So, yeah, it was brewing tea and pillowcases and filling bottles with garden hoses. Literally, was

William Harris  5:33

grandma okay with you, uh, sharing her secret tea recipe. She, she,

Clayton Christopher  5:38  

she was, she was, yeah, she, loved, but I even put her an image of her likeness on the bottle. So unfortunately, Sweet Leaf is not around anymore. It's very hard to find Nestlé did not do a very good job stewarding that brand. I think they kind of realized they're better at swinging cases and pallets than single serve through DSD, so it's a very different business model for them.

William Harris  5:59

I did notice that, because I've had it, and I was like, wait, I haven't had this in a while. I need to go see if I can find some. And I started going on trying to find it. And I ended up on like, this Reddit thread of basically everybody being like, where is it? This was my favorite thing. This was, like, my childhood. Why can't I find it? Yeah, that's a bummer, but I get it too, yeah. Well,

Clayton Christopher  6:18

it's a typical story that I'm sure you've heard, we've seen before. It's, you know, in strategics, oftentimes think they're much better at running the companies than the founder and the core team. And, you know, in the case of Nestlé, unfortunately, it was, I mean, they had laid off 80% of our employees within the first few months of the business, and tried to kind of just completely integrate it. And it's, you know, we were still an infant within, you know, they were doing this, a $70 billion revenue company at the time. We're only doing, like 100 million. I mean, we were like a toddler learning how to crawl. Still, you know, you have to hit, you have to handle those, those those size companies very different. They're still, you know, susceptible to, you know, lots of injuries as they're growing up. So they learn the hard way. But there's, you know, it does seem like strategics now have been much more thoughtful in leaving these brands semi independent.

William Harris  7:17  

Let's some of the injuries, if you would, if you would call them that. But like some of the things that you ran into so 14 years growing a business, there are likely challenges that you run into. What are some of the things that you discovered as you were building this that you're like, I had no idea when you got into the business, and you're like, Oh, this is, this is tough. I got to dig through this. Yeah. I mean,

Clayton Christopher  7:39

I think a lot of it is just knowing what to focus on, knowing what priorities to focus on. So, you know, gosh, in the early days of the business, just not knowing what I didn't know held us back a lot. And I would say within that, you know, ideally, you overcome that by hiring incredibly smart people and surrounding yourself with really sharp mentor mentors that have gone before you. But that was also something in the early days that you know Beaumont, Texas is not necessarily the CPG capital Sure, of America, so we really it was kind of hard to find mentors. And I also feel like my insecurity in the early days really held the company back. You know, I was intimidated in the early days by, you know, people that were smarter than me, and I was probably, you know, scared to ask questions that I didn't, you know, know the answers to because in fear of sounding dumb. So, you know, now I'll probably ask more questions than anybody in the room when I'm in board meetings. But in the early days, you know, a lot of my just in security, I would say, held the company back. And it wasn't until we really began to hire world class talent that we began and me getting out of their way, that we began to grow. You know, in the early days, I used to think, I can't afford to hire these, these, you know, really sharp people, because they're so expensive. And, you know, in my second business, the petty vodka was, like, right out of the gate, we hired ninjas everywhere. You know, I can't, I can't not afford to have them.

William Harris  9:16  

And that's a common founder issue, right? You're like, I can't afford to hire them. I can't afford not to hire them. And the ego can get in the way. How did you break through that? When did you finally come to that realization of, like, I need to hire these people? Ego set aside. Like, was it a mentor we got in the way, a book that you read like, What helped you shift that mindset?

Clayton Christopher  9:39  

You know, I had a wonder. I was. I was fortunate enough to have a wonderful board member and mentor, guy named Bill mcgoy, who had a phenomenal track record in the CPG industry. Owned a big Snapple distributorship in Los Angeles. He was a CFO of a public consumer products company, and he was an invest he was an investor. Officer joined our board, and he really encouraged me to find a strong CFO, someone that can really focus on finance, the operational side of finance, the commercial side, you know, kind of finance, if it's good, it touches every part of the business. And so he really encouraged me to find somebody there. And I was lucky enough, when we were raising capital, there was a firm in Birmingham, Alabama that I met with, and I was letting everybody know, like, yeah, we're looking for capital, but what I'm really needing as a partner here someone you know that can compliment kind of what I'm good at, which was mainly just running through a brick wall. And so I was lucky enough, so I met a guy named Brian Goldberg who became our CFO and then our COO. Brian still my partner to this day. He's phenomenal, and he was like Clayton. I love the idea of running through the wall, but let's just focus it 10 degrees to the right and we can run through the door. So he was, he really, he's may have saved the company. I don't know, Sweet Leaf would have made it, but that, yeah, and so, but to get back, I want to it was, it was so that helped. But what really happened, William, is it was forced upon me, because Nestlé eventually, and El catterton, who was our lead institutional partner, they removed me or asked me to step down as CEO. Oh, that was painful. Yeah, that so there was a, there was a we had brought, you know, we initially, initially bought 30% of the company. They had a call option to buy the rest of the business over the next couple of years, and they were promising all these things that they could do for us in terms of supply chain, you know, help with with retail relationships and such. And so I knew that in order to, or I felt like listen, in order to, you know, they were not hitting their P and L, they only own 30% of us, so they can't really create, you know, bonus structure around some of their team. So we need someone that is on the inside at Nestlé that can really call in favor. So I approached the board about said, I think we need to hire someone from Nestlé that can call in favor. So we brought in, kind of a gray haired executive from Nestlé that became president of Sweet Leaf Tea. And it only took about 60 days. But I kind of realized, you know, while this guy was quote, reporting to me on the org chart, he wasn't really reporting to me. I think he's like, What am I doing reporting up to this punk? You know, I forgot more than he knows. And so we started to butt heads a little bit, probably more my fault than his. And then I had a bit of a run in with the former CEO of Nestlé waters in one of our first board meetings, they were talking about changing the formulation to save money, and of course, that I was not in agreement on that. So shortly thereafter, they asked me to step down, and I stayed on the board. But you know, knew it was probably a fight not worth having, given that, you know, they had control of the board between catterton and Nestlé, and it was, it was so painful, like it was like being emotionally eviscerated. I mean, my name was on the back of the bottle. It was my grandmother sings underneath the cap, but it was the absolute best thing that ever happened to me. Yeah,

William Harris  13:18  

I've heard that from other founders, how painful that is when that transition takes place, whether it's voluntary or involuntary, it still stings when you make that transition. And to be fair, the product matters. The product is what made it what it was, and so changing the formulation is a big deal when it's not owned by Nestlé at that point in time, that's what sets you apart in the marketplace. And you had spent a lot of time getting to that formulation, if I remember correctly, that's one of the challenges that you ran into, was the idea of, like, a perishable product. Like, what were some of the things that you had to fight to be able to figure out there? Yeah, well,

Clayton Christopher  13:57  

I'm the biggest. Was moving from a we were perishable, like, the worst business model ever. Sure, had like, a three week shelf life on the product. It was like, you know, had to come in and rotate it make sure that, you know, there wasn't spoiled product on the shelf. So it was really a kind of over time, we realized it was a broken business model and we needed to get into shelf stable. But it was really difficult to find any CO packers that would actually manufacture with loose leaf tea, they all wanted high fructose corn syrup. They wanted caramel coloring, tea flavoring, and we were using granulated organic cane sugar and loose leaf tea. So we really had to teach some co packers how to brew tea and kind of invent that ourselves. So it was but, you know, that's what made it special, and that's why I think I probably also held on really tightly when Nestlé was wanting to tinker with the formulation to save, save a few pennies. Yeah,

William Harris  14:54

which is, which is fair. There was another story you told me that I appreciate it. I hope it's okay if we bring this up here. As well that was forging insurance papers like the thing. Before we get into the story here, the reason why I like this is because this is very true for a lot of founders, where you are, you will do whatever it takes. You've been putting in 100 hours a week to get to where you are, and it's painful, and you need to figure out those ways to pivot and navigate a lot of very tumultuous things. And the reality is, there's usually something that's falling in the fire and many things at one time, and you got to pick which, which, you know, thing you're saving from the fire. And so this story I really appreciated. Are you okay with sharing it?

Clayton Christopher  15:34  

Yeah, I think the statute of limitations has run out, so they can't come after me, you know. But, but in the early days, and this was a bit before there was, oh, let's come up with a business plan and a select deck and go raise a million dollars. You know, this was, I had $14,000 to start the business with. And, like, That's it, like, and it's, and it's beverage, which we, you know, a lot of people that kind of know different, different categories within CPG. Can appreciate how expensive beverages, you know, particularly kind of D supporting the DSD network. But yeah, in the early days, it was literally sometimes the question was, do I make payroll or, you know, do I figure out another way to stretch the dollars and, you know, and it was like, do I pay this month's, you know, liability insurance, and do I pay this month's car insurance for our delivery trucks because we were doing our own distribution? Or do I make payroll? Everybody knows what happens when you don't make payroll, you go out of business. And so, you know, running the running the vehicle insurance and the product liability insurance, you know, through the scanner and changing those dates was, was the solution to stay alive. Luckily, we grew enough to where I didn't have to do that for very long. But, you know, those are sometimes it's like, Okay, I've got my I've got my leg caught in a trap here, you know, the bear trap, I can either lay down and die, and perhaps everybody says, You know what? At least he tried really hard I can, or I can chew my leg off and I keep hopping. Such

William Harris  17:11  

a good metaphor, very graphic and visual, but it very real too, and I appreciate that. Let's move into Deep Eddy Vodka. Then just this idea of embracing this pivot. So you've got a new idea you're going to pivot off of what you were doing with sweet tea, and you have sweet tea vodka. Was this something that you're like, in the back your mind, you're like, yeah, it's time for us to do this. Or was it kind of like, Aha, I've got this idea in the shower, as I'm showering, it was like, this is the thing that I want to do. Like, what made you say, Yeah, we're gonna do this. Sure,

Clayton Christopher  17:43  

sure, yeah. And going back a little bit to, like, it was the biggest blessing, you know, such a blessing in disguise, which most of our challenges are, you know, it's called, I'd say it's like, sometimes you succeed and sometimes you learn. And so getting fired from Sweet Leaf. I mean, the first thing, and this will lead into Deep Eddy. But, you know, I decided I was like, I need to go get my head screwed back on, because my identity is so tied up in this business and not a healthy way. And so I said, I need I went up to the mountains. I went to Telluride. I brought a journal. I brought the Bible, which I hadn't met, read much of the time, and a couple of other books for and I went up there for four days, I skied, I journaled, I read a bunch. And at the end of those four days, I extended my trip by another four days, and I skied some more, read some more, journaled, some more. And you know, the epiphany over that, that long week, was, I'm never going to have my self worth tied up in something that can be taken away, taken away from me. So it was, it was a little bit of a, you know, spiritual awakening. I couldn't even put my finger on that at the time, but it really led to kind of a lifelong journey of just really doing the work, of chipping away everything that holds us back in life, and really just focusing on, you know, those times where our identity gets attached to outcomes. So, yeah, it's, it started kind of a lifelong journey. And then from that, I came back and I thought, Okay, what's what's next? I had some friends that were that sent me some, some bottles of Firefly and Jeremy weed, which were kind of two sweet tea vodkas at the time. And they were, they were under my desk at Sweet Leaf, and as soon as I tasted him, I was like, Oh my gosh, these guys are using high fructose corn syrup. They're not using real tea leaves. And not that I was a vodka expert at the time. I became one. But I was like, it's this tastes like hot, kind of cheap vodka as well. And I was like, I know I can make something better than that. So I was put in contact. He actually reached out to me, a guy named Chad Haller who had a vodka distillery, who was making phenomenal vodka. And we basically partnered and used that distillery that Deep Eddie ended up eventually acquiring, and came up with with Deep Eddie Vodka. And first we started with with sweet tea vodka. And strategy was I took everything that I learned it sweet made plenty of mistakes, but took so much of what I learned at Sweet Leaf, and I was just really eager to put everything that I had learned over those 14 years and practice at Deep buddy well,

William Harris  20:31

and then you continue to innovate. And I think that's the thing that I like about this, because it didn't just, you know, sure, first it was a Sweet Leaf, but then you or the sweet tea vodka, but then you innovated other flavors. I think you guys had, what? If you remember the first flavored vodka with real fruit juice as well? Right? Right?

Clayton Christopher  20:48  

It was. And if you look at this, I'm sure you've seen this countless times. It's so often, not all the times, but So oftentimes, what gets an entrepreneur to the proverbial top of the mountain is not what they started with, you know. So I think it's being very and the best entrepreneurs, I found, is they're far more committed to getting to the proverbial top of the mountain than they are, like, being right, you know, because if it's being right, it's like, they will fall on the sword and die over, like being right over. You know, a product's not working, but they keep throwing money at it and keep throwing money at it, being like, Let's learn. Let's pivot. Let's take what we learned and put it into practice to change direction, if we need to, for the company. So you know, we one of the biggest change in strategy that we made in Deep Eddy, right out of the gate is like, at Sweet Leaf, I expanded way too quickly, too many markets, too many geographies, too many stores. It made for a very capital inefficient business model. So I kind of learned the hard way there. Luckily it was, it was a great outcome. Nestlé ended up acquiring the business. But at Deep Eddie, right out of the gate, it was the mantra was narrow and deep versus wide and shallow. So I said, okay, the sweet tea vodka category is a small category. It's growing quickly. I said, unless we're number one in Texas, we have no chance of being number two nationally. And we at least need to be number two in this little category nationally to have a shot at a big exit. And so it took us, I said, we're not setting foot outside of Texas until we're number one in this category. In Texas, we also didn't have enough money to be, you know, number one in multiple states and hire lots of sales people, because we hired really sharp people. My mantra now is like, hire the best and the brightest. You just put a shorter leash on them. The expectations are a lot higher. So it took us only about 14 months. And within 14 months, I mean, we were laser focused on Texas. We couldn't afford to compete against SAS RAC with Jeremy weed or Diageo with Firefly. Or, excuse me, it's the other way around, with their brands nationally, but we could compete with them head to head on an investment basis in Texas, like I knew I could capitalize the business that well. So we just focused on Texas. We became number one in that category within about 14 months, and that gave us just a phenomenal platform to then begin to thoughtfully expand the next year, we only went into three other states, you know, I said basically, until we're number two and all three of these states, because as soon as we move out of those states, it's just going to take resources away from these existing markets. So it was, it was a very different strategy, and it absolutely paid off. It was kind of a little slower in the early days, but, I mean, we got to bigger than Sweet Leaf was. We got to, we hit 100 million, you know, in under five years. It was very profitable when we we eventually sold the business.

William Harris  23:46  

Yeah, so the first 114's years, five years. It's like you're excelling your timeline. Here, the thing that I like about starting and really focusing on one key market when, when we do advertising, a lot of times we open it up nationally for a lot of the e-commerce brands that we're working with, and one of the benefits there is the algorithm does a good job of finding the lowest cost next sale, no matter where it's at. But one of the benefits that I think is overlooked by focusing on a market like what you were talking about, is it maximizes word of mouth. You actually start to get, like, a recognizable share of mind within the consumer, where they're thinking about it and they're sharing about it without even realizing it

Clayton Christopher  24:24  

completely. And that's what that, you know, we were able to drive significant awareness in Texas. You know, people sometimes forget, like entrepreneur, you know, it is so much more valuable to create a company that's doing 10 million in one state, versus 10 million across 30 states, or even 20 million out of one state. I mean, Texas is big enough in a lot of categories where you can be doing 20 million just in Texas. I mean, we were doing north of 3 million revenue just in Austin. That was a long time ago when Austin was less than half the size that. It is now. So Austin was just a cash cow. It was spitting off a lot, a lot of cash for us. So, you know, after, after, we became number one in the sweet tea vodka category in several states, we said, Okay, we feel like we have more than just a great product here and great little business. We really started to feel like we had a brand, and we were getting that feedback, we spent a lot of time on branding, on packaging. You know, we, I think we went through six packaging changes in five years. A lot of those were minor, but it's like the never ending pursuit of perfection. So once we started to really feel like we had a brand in the quality, we knew the quality of the product, of the liquid, was much higher quality than what was out there on in the sweetie vodka category. We we decided to start to move into flavored vodka. We actually initially created a straight vodka, but we just launched it in Texas. We didn't put it in those other three states. We moved into. And then once that started to do well, we stumbled on to ruby red, which was a grapefruit vodka. And that was really a huge turning point. The business had been growing well, but once we kind of discovered, we came up with that one, because it was palomas for some of our you know, or that Greyhound was kind of one of our favorite cocktails around the office. So we thought, wow, if we could make this in kind of almost like a ready to drink concentrated format, and use real fruit juice and natural flavors instead of artificial flavors, because all the flavored vodkas on the market were made with artificial flavors, which is why they're clear. We use natural flavors. We use real fruit juice, and it looked better. It had real color from the fruit it tasted so much better, and it just took off. And it was so strange, because the strategy, as I'd mentioned, was like very much narrow and deep versus wide and shallow, which is the right strategy. When you're in a very competitive environment, you know, you need to have intense, intense focus. But once we stumbled on the ruby red, I mean, it was flying off the shelves, we could barely keep up with production. And it happened in a very short period of time, I realized this is more like first mover technology advantage? Yeah, there's going to be fast followers coming from much bigger companies. So we need to get on the shelf everywhere as quickly as possible. So we it went from like, adding just a couple of states or a few States every year to like, we need to be in all states as quickly as possible. That was literally

William Harris  27:21  

gonna be my next question was, okay, you know, one of the problems that you have with like that perfection mindset, right? Is that you can open up a lot of, I don't know, like a vacuum for other people to come and fill in what you have. But to your point, you're already doing, you know, sweet tea, vodka. There are already other people out there. So now you're just getting into a hyper competitive market. But once you had something that was first mover technology, then you're like, yeah, now get out there as fast as you can, make sure you capture the market completely. But

Clayton Christopher  27:48  

what happens? We ended up kind of outgrowing our team as well, outgrowing our distribution. Yeah, we just need, you know, it's kind of sometimes you're like, Okay, we've got the right people to kind of take us from zero to 50 million. But now we really started to think about, like, okay, 50 to 200 plus million. You know, how we need to start thinking about the business and, you know, we had to start upgrading, you know, some of the, some of the talent in the organization, which is painful because those are, those are relationships. And I'm, I tend to be a little over, you know, very focused on the on the relationships. And, yeah, there was a lot of growing pains. I mean, we were running our plant, our little our little distillery was running seven days a week, you know, almost three shifts on a lot of days. And it was the wheels were shaking, but it was, it was fun times. Yeah,

William Harris  28:38

I want to move into the Waterloo, then the sparkling water and one of the biggest things that I wanted to call it here was, you know, building in house. And you kind of built in-house, I think, more or less from the get go, where there was a pivot that happened, right? But why? Why did, why were you frustrated with the way that things were currently being done, and deciding, you know, we're going to do this in house. So,

Clayton Christopher  28:59  

so Waterloo by by that point, I was, I had a firm that I co founded called Cabo consumer partners, and we were in our second fund. And, you know, like a lot of these investors and funds, you know, you're kind of working on different thesis. Is different white papers. And one of them that I was really focused on is I just had a strong thesis and belief in the sparkling water category. I mean, you had, you know, 60 ish billion dollar carbonated soft drink industry that was in decline, you know, kind of still is. And people weren't drinking less, they're they're just drinking healthier. And so really had believed that Lacroix, you know, if you know much about that, that company, it's, I strongly believe, like they've kind of just succeeded despite themselves, versus their brilliant moves that they made. You know, especially when you kind of look at the leadership there, we interviewed quite a few people from La Croix. There's some crazy stories. So it's like it. And because of that, I felt like there was a real opportunity to kind of improve on what they were doing. We looked to invest in a brand, you know, probably met with five different companies in the space, and I felt like it was either a founder issue, a strategy or product issue, or there was one situation where it just couldn't we're so far part of valuation. And so I said, let's just do it ourselves. And decided to incubate it in house. So we incubated it in house. Hired kind of a MBA type General Manager to kind of get QuickBooks set up. And manufacturing hired some people I knew to help with R&D, and with marketing to literally came up with the name, which is the name of Austin. Before Austin was Austin, Texas, it was water realized that, yeah, so Austin was named after Stephen F Austin, you know, kind of the first president in Texas. But Waterloo was a, was a settlement on the edge of the Colorado River where Austin is now. And so really wanted so many of my brands that kind of hearke back to the DNA of Austin, this city that I live in. And so, yeah, we we incubated it kind of inside our office at Kabu in the basement, and then until we kind of really got it launched, and then they moved out. But eventually we brought on a CEO who's still CEO there that has been a phenomenal steward of the business, and just kind of helped them build their team out. And it was a tremendous outcome. Brand still doing well. We sold our our share to, as you mentioned, kind of flex this capital, which is also your razio, out of Europe, a large private equity firm. Yeah. And

William Harris  31:42

then this one was your fastest growth to 100,000,003 years. I think you said roughly. And one of the things that I love is, you know, you see this almost logarithmic more scale, from 14 years to five years to three years, obviously, piggybacking off of knowledge that you have relationships, that you have things that you've learned over the time of you know, doing this once or twice, the mistakes that you've learned, the things you did successfully. But one of the things that you told me about that was really important for this was liquid to lips. And I liked the way that you phrased it. What is liquid to lips?

Clayton Christopher  32:16  

I've been fortunate enough at least all three of the companies that I've started and have been acquired have all been liquid to lips, because, you know, when you have a better whether it's a food or whether it's a beverage, when you have a better tasting product, you can talk about how much better tasting your product is, but nothing is going to make a consumer more of a believer than actually having them taste it. So you know, in all three the companies that I've started, we've spent a disproportionate amount of our marketing spend on liquid develops, on getting people to taste the product, and not just taste the product, but it's also important to think about kind of how they taste it, where they taste it. Are you going to are you going to have a gray haired lady? Nothing against gray haired ladies like sampling it in a hair net in a liquor store. Are you gonna, you know, have them tasting it for the first time at a music festival that you've sponsored, you know? So we were really thoughtful in making sure it's like, how do we create a love affair with the consumer? And so much of that is like, where they taste that product for the first time. So

William Harris  33:23  

I've never heard anybody say it that way. But I like that, you know, I remember, would have been Dr Wayne Johnson, my psychology professor back in college. I can remember him saying something about, like, Hey, if you ever want to, you know, make sure that the girl likes you or something. It's like, take her to a scary movie. Do some push ups before here. But he's like, all these psychological things where it's like, well, the scary movie kind of, like, releases these things in her brain and blah, blah, blah, right? But it was just really this funny thing. But to your point where the environment does make a big difference, the experience that they have with that says a lot about how they're going to even perceive the taste of it, let alone whether it actually does taste better. That's

Clayton Christopher  33:58  

right. Are you going to take that first date to McDonald's? No, are you gonna show up with roses, you know, and take her to a fancy restaurant, roll out the red carpet, absolutely.

William Harris  34:07  

And so I like where you went with that. How, like, Okay, you spent, you sponsored, you know, a music festival, and that makes sense. Like, what are some other tips that you had for people to do the things that don't scale necessarily? Like you said, it's like, you said, it's like a disproportionate amount, but you're going to have to get there, you know, not just at the supermarket, and supermarket can be part of it, but what are some other ways that people can get liquid ellipse in smart, yeah, you

Clayton Christopher  34:31  

know. So events, demos, I mean, you know, I think a great example I could at Deep Eddie when we were doing because we did demos and liquor stores. But instead of, you know, just hiring again, the gray haired, you know, lady with the hair net, we went and we did this. Where else we Yeah, deep Buddy was the main place we did but we went to modeling agencies. Like the vast majority. Of people that work at these modeling agencies, they're not doing this full time, right? You know, they may be making coffee at Starbucks, you know, or working at the car wash, or going to college and doing this just as a little side hustle to make some money. So when we looked at like the the general hourly rate that we would have to pay someone that was in a modeling agency that looked a lot more attractive, because, let's face it, whoever is representing your brand out there in the marketplace, you don't want them, you know, 100 pounds overweight with ketchup all over their shirt and, you know, dirt on their Jean, on their on their jeans. You know, you want their reflection of your brand. So we, we didn't have to pay much more than we would pay a typical demo, a Demo, demo agency, or hiring them ourselves to go to a modeling agency. We would get very attractive people. We made sure they are charismatic and well spoken, and we made sure that they had a look to them. And it was a look that really exuded the personality of the brand. We call it was the it was the pin up girl. So my wife, my wife, came up with kind of the look. I mean, we already had a look, just the pin up girl in the bottle, but it was red or blue, polka dot, you know, skirts and tops, big bow in their hair, their head hair, had to have a certain kind of look and be really made up, bright red lipstick. But it really, it left an impression where it's like, you go in a liquor store on a weekend, and big one, it's like they all are kind of wearing a black shirt, black collared shirt, black pants. And our girls, I mean, they stood out. Sure again, it was just any another way to reinforce that touch point. So when they taste the product, it makes it that much more memorable. And, you know, it's hard to do that when you're doing a demo inside a store. It's a lot easier, you know, to create that love affair when you're at a, you know, a fun music festival, whether it's a lot of Palooza or ACL festival or Bonnar room, and we sponsored all those. But, you know, we figured out I feel like how to do it kind of inside even of liquor stores. I love that.

William Harris  37:02  

It's you did a lot of very interesting things with this that I appreciate. One of the other ones you told me about was using billboards to target key decision makers. How did you use billboards in a strategic way?

Clayton Christopher  37:17  

We had a couple of situations where we were having a really tough time getting a call back from the buyer. One in particular, think it was specs down, which is the largest liquor chain in Texas, and they're out there, out of Houston, and they're kind of known for having a, you know, all these buyers are unique snowflakes, and this one was particularly unique. And so we were having a really tough time getting a call, getting a time of day from this buyer when we should have, because the brand was doing really well. We just didn't have distribution in the largest liquor store in Texas, which is a problem. So found out where, you know, found, like any scrappy entrepreneur, found out where he lived, knew where the corporate office was, kind of saw there was only two ways for him to get to that office, and we bought up all the small little billboards along the way. We kind of stayed off the interstate. Didn't want to spend that much money, but the smaller billboards, which are really affordable, we kind of bought them all up on the way, on the way home, both the routes that he could take. And about 30 days later, we got a call, and he's like, You guys are everywhere. Y'all are blowing up. Y'all need to come into my office immediately.

William Harris  38:30  

That's it's so smart. I will say, we've done this on the Facebook ad side with people that are trying to get into different retailers, where we'll say, okay, great. I'll target, give me your five best articles talking about why you're so amazing, and whatever, right? And then we're going to target those articles around the global corporate headquarters of whoever those people are on Facebook, or just to make sure everybody that works at Target Walmart, whoever it is you're trying to target, we're going to make sure that they see just over and over again. It's like, this is the best, this is the best, this is the best. And so and so, saying so and so saying, it could be, you know, couple 100 bucks, but now you've made sure that they are definitely aware of you. And then when you make that phone call out there, you're like, Hey, okay, likelihood of getting the call is a lot, a lot higher. But billboards is a new one for me. I haven't heard

Clayton Christopher  39:16  

anyone so much. It's so much of, as you mentioned, it's like about looking, in some ways, acting like a company that's much more, much bigger and much more sophisticated than you actually are. You know, the having really thoughtful website design, even if you're a small business just getting started, paying maniacal attention to detail, you know, on the font, on the colors, on the user interface, on the packaging, you know, packaging, my mantra was always like, it's the never ending pursuit of perfection. It's never going to be perfect, but it's never done. You know, packaging. It's like a living, breathing human it evolves like even the big companies go. Oak. I mean, the packaging that they have now, if you look at their bottles, is different than what it was 10 years ago, much different than it was, you know, 50 years ago. So I think kind of taking that lens is so important to packaging, just having a very dynamic viewpoint of like, this is a living, breathing human. It's got a personality. It's a never ending pursuit of perfection. I mean, we're constantly tweaking, like, can we emboss the glass? Can we add a little texture to the label? Can we add some foil on the label? How about our logo on top of the cap? I mean, we would guess that we went through six real packaging changes, and some that were more minor. You know, in a five year period at the Betty. I

William Harris  40:38  

want to come back to the packaging in just a second. But I have a quick tangent that I want to jump back to on the signs that just, I don't know, jumped into my little ADHD brain here, if you really want to take it further, and I'd love somebody to actually do this now, rather than just Facebook ads or billboard ads you're talking about, this is almost like a single person that you were going after, like, find out where they're even, like, using the bathroom. You know, sometimes bathrooms even have, like, the little ads as you go. It's like, I want this guy seeing it when he's using the urine. I want somebody to tell me that they did this, because I think it'd be really fun. It's like taking it up a notch. But okay, back to packaging. How do you go about making sure that you're doing packaging well, and that it's the investment is worth it? Because I know I talked to will leach, who was at Pepsi a long time ago. He was on the podcast, and he told me about, I think it was, Oh, what was it? Sun Chips. Maybe came out with like this, this biodegradable bag or something or another, but it was the loudest bag that existed on the planet. When you touched it, it was just like, oh, shocking. And people would touch and they were like, die. I don't want to buy that. And they didn't know that until they actually had it on the shelves. So how do you make sure that you know you're investing in packaging that's actually going to make a difference versus I think this looks cool. Somebody in the office was like, This is what I want. I want it to have this swirl, and we need to have that swirl.

Clayton Christopher  41:55  

Yeah, no, that's and I think I read that story somewhere about the Sun Chips. It's, it's so surprising that it happened with a company like Pepsi, because, you know, they do consumer testing out the wazoo. I guess they just forgot to test for that particular experience. But, yeah, obviously consumer testing is really important. You know, it starts to sound really expensive when you're a smaller brand. It's like, okay, we're really going to hire some third party agency to go spend however many 10s of 1000s of dollars sometimes, like, you can do that stuff on the cheap. You know, there's always a like Survey Monkey. You know, we use Survey Monkey a lot. I know a lot of you know, some companies that I work with will use, like Facebook with their, you know, kind of their hard core fans. But, you know, doing, you know, sourcing, crowd sourcing, is an easy way to say of these three variations in the label, which one do you like first, which one do you like second, and which one do you like third most? And so I think that's those are some inexpensive ways to, kind of, to really test and see if it, you know, improve, if you if you're making an improvement versus neutral, and certainly hope not negative, going going going backwards. But another thing that we do that I think a lot of brands kind of fail to do, especially when you're doing a lot of retail activation and have a lot of point of sale material, is, you know, we we started doing it like, I think, twice a year, where we would put all the collateral, all the ancillary kind of collateral, point of sale material and marketing material up in a conference room, and then all and then all of our packaging, and just it's sometimes amazing when you start looking at all the header cards, the stickers, the windows stickers that you might put in a convenience store, the displays the just put it all up on a wall and start looking like, does it all fit together? Seamless, seamlessly, well, like it looks like it was all created by the same person at the same time. And it's scary. I mean, sometimes it is scary. How far of a drift, and when you start, you know, really using different tag lines and different sayings, like, is it of the same voice? You know, does this voice report back to the DNA of the brand? So I felt like that was always a really good litmus test that we would do a couple of times a year, just to make sure that we were keeping everything tightly within the guardrails, because, again, it's so hard to touch those consumers multiple times, but it takes multiple touch points, and it takes the less effective and the more your marketing and visual marketing digresses and isn't super consistent. It just makes the ROI that much worse. You have to touch them that many more times to really be remembered, and the tighter it is, the less you have to touch that consumer to be remembered. And the more you're remembered, the more free. If you've got a good product, you should see the benefit of that from revenue and sales and retention, because you only

William Harris  44:54  

get so much mind share of somebody, right? And so if you're trying to say two or three four different things, then the. Like, literally than remembering any one of those goes down significantly. Whereas, if you could just really integrate one thought into their mind that you are this, you are this mentality, yeah,

Clayton Christopher  45:11  

you've probably seen this too well. We're like, like, inside, like, internally, inside of a company. Sometimes people, you can get so tired with a marketing campaign. You're like, we've been doing this for a while. It feels like old. It feels stale, but like externally, you start to do surveys on the number of people that have actually seen that campaign, like and it's so low. So I've seen and it's expensive. When you start to try to change a new, you know, to a new campaign, a new activation partner, you know, she started to kind of go up the funnel with more consumer marketing, you know, versus kind of bottom of the funnel, easy conversion, but just having that real consistent messaging, even though sometimes it feels repetitive internally, you know, just be on I'm always like Be on guard of what may sound old and stale to you may be incredibly new and fresh to consumers, even if you feel like you've been using it for the past year,

William Harris  46:09  

that reminds me of something a buddy of mine told me, Brendan Shirley, he actually played keys for a band called 10th Ave north, and they would do shows you know, all over the All over the world, and as you can imagine, anytime a musician is doing the same song for the 3000 time to them, maybe almost lacks the same sincerity that it did when they first wrote it or when they first played it, but to the audience, even if they've heard it 10 or few 500 times, to them, it still impacts them significantly because they're not hearing it as often. It's one that they maybe even know the words to, and so they're singing along with it. And that's even better than one that they don't know. I can't sing along to this one. And so that experience is amplified by their knowledge of the words. And so that's one of the things I think he mentioned.

Clayton Christopher  46:55  

That's such a great analogy. That's such I'm gonna I'm gonna quit. That's such a great analogy. Yeah, I was like, the band's so sick of it, they've been playing it over and over. You're like, I've only heard this band one time, you know, like, I want to hear my favorite song again. It's not old at all.

William Harris  47:10  

Yeah, yeah. So it sounds like we've kind of really shifted into this idea of, like, what are some of the things that DNV BS need to understand when they're going retail and packaging? Being one of them, and this making sure that all of your sales collateral is saying the same thing, has the same persona and voice and texture and everything. What are some other things that DMV bees oftentimes miss when they start going into retail locations that you're like, you can tell that they're green in the retail space, and they need to level

Clayton Christopher  47:39  

up on this. And William, what's DMV? BS, yeah, digitally

William Harris  47:44  

native value brands, whatever, or, let's say, like, you know, they've only done existed online, and now they're really trying to get into retail locations totally,

Clayton Christopher  47:52  

I mean, the biggest one is, like, obviously, you know, when you're, when you're a digitally native brand, you've got a captive audience, you know, you can really, you have the luxury being able to bring that brand to life, you know, in a very captive environment, that is the opposite situation. When you're in retail, you're on a shelf, you know, amongst 1000s of other products, and they all have sirens, you know, and going off, and you're trying to stand out. And so, you know, one of the first things that we do is we're, you know, we're bringing brands into retail is like a real packaging and brand audit. You know, a lot of times, you know, there's product attributes and there's brand attributes and really understanding, like why a consumer is buying a particular product and buying a particular category that you compete in, and is that that small amount of incredibly valuable real estate that you have on your packaging communicating in the same level of hierarchy in terms of how much real estate you're actually giving those, let's call it a product attribute. Are you communicating what's going to resonate with the consumer the most on why they're purchasing this product? So a lot of times you'll have, you know, a company that may focus way too much on brand when they really need to be focusing on product attributes, or vice versa. So yeah, I think that's kind of one of the most basic quick ones, is figuring out, you know, what are the top four or five reasons that consumers are purchasing this category, what's driving purchase intent? And then take a look at your packaging, and are you communicating the right things? You'll see brands like, you know, brand that can say high in protein, if protein is and it's also how you communicate it, you know. So think about like, one example, like high in protein. If protein is a really important attribute as to why a consumer is purchasing obviously, like protein powder, you know, that's the whole reason. But one brand can say high in protein. If you look at the back, maybe it's got 30 grams of protein per serving. The other one may only have. 15. But if it says 15 grams of protein, the consumer is going to pick the one that actually has the stated amount on the outside of the package. So interesting.

William Harris  50:09  

Yeah, it makes sense. What about what are some timing things pros and cons of moving into retail either too soon or too late?

Clayton Christopher  50:22  

Yeah, it's, I mean, retail is expensive, you know, we I just, I love, with the advent of direct to consumer, with with Amazon, we've seen more and more of these businesses that are able to grow profitably. From the very early stage, you're able to capture a lot more margin, you know, when you're selling direct to the consumer, even through Amazon, than you are when you go through a retailer, certainly, if you're having to go through a distributor to that retailer that's taking much margin. And so finding, you know, holding off raising capital as long as you possibly can, I'm a huge fan of it. It also, you know, raising capital early on can create some really bad habits. So you know, you're going to make lots of mistakes along the way. Make them when they're small. Dollars at stake, you're a lot faster on your own dollar than you will on somebody else's dollar. And so, yeah, we I really think the longer that you can stay out of retail, building your brand to where you really have, you know, strong you're doing really well online, and building up a real core consumer base, it's just going to cause when you do move into retail, it's going to allow you to get profitable at retail much sooner, because you're going to be doing, you know, more volume at retail. You're going to be shipping full truck loads and try to less less than truck loads. So it's going to bring logistics and great costs down significantly. You're not going to have to do trade. You're not going to have to be promoting near as deeply, as aggressively as you would, in order to kind of establish that relationship with the consumer for the first time. So, you know, we had a company physician's choice that I'm on the board, I'm very involved in. They were, as a company, was already doing 70 million ish on Amazon in the probiotics category before they ever set foot into retail. Now, once they went it went into retail. They did a small test in Walmart, and what they crushed it right out of the gate, because now all of a sudden, yeah, I mean, some of it was cannibalistic to some of their their online business, but what it showed the buyer was that they had brought a lot it was incremental to the category. They weren't just cannibalizing sales from other competitors in the category, they're actually bringing new consumers into the category. So if you can create a big enough brand online, first, you can show incrementality in the category, and that is the holy grail. You can show incrementality to a category that you're bringing new consumers in. That is the calling card that you need to get into the rest of the stores on good terms and and, frankly, any retailer in the in the state, you know, in the country, that you want to so, yeah, I'm a big fan. Push, push it off as long as possible. And then when you do go into retail, just being really thoughtful around channel strategy and price pack architecture. You know, we talked a little bit about packaging, but just really thinking through price pack architecture, you know, doing a lot of competitive analysis in the category that you're moving into, on how are my competitors priced? How I How should I be priced? In terms of what's my value proposition here, and what's the right, you know, size of packaging, and count packaging that that I should be moving into. So all those things are really important when you move into retail.

William Harris  53:48  

Yeah, you called out cannibalism. And I want to, I want to draw a couple of things on that one too. As soon as brands go from, let's just say their their their DTC site, on Shopify, and then they add on Amazon, and then they add on retail locations. There is some cannibalization of their current customer base. It's like, oh, great, you're on Amazon now I'm gonna buy there now instead, because I have prime and so for whatever reason, or, Oh, great, you're in Walmart now I'm gonna go and buy there because I just happen to be already getting my groceries there. Whatever that might be, that's okay. I would say the biggest thing that we look at from an advertising side is make sure that you understand how incremental your advertising dollars are to those channels as well. And so we see this a lot of times, where maybe you're at a four to one, MER return right on on your advertising on the website, maybe there's some cannibalization that's taken place. And so the website now is only at a three and a half to one, or three to one, but what is the overall incrementality within all of those different channels? And so how is that impacting Amazon? How is that impacting the the Walmart sales? And so what we like to do is set up geo holdout tests, so that way we actually know how much is happening here. So we'll say, we'll run these in these areas. We'll run. On the ads still that we're running just driving to the website. We're not necessarily driving people to Walmart, but we'll run the ads just about the brand still driving to the website to make that purchase there in these states, and not in these states, or in these, you know, cities or zip codes or whatever that might be, wherever we decide to get to from a granularity standpoint, and then we'll be able to see, okay, it's actually still, from a holistic standpoint, driving a five to one, or whatever that might be. So now you can understand that, okay, it's driving X amount here, X amount here, X amount on the website. So three to one to the website reported return on ad spend is actually still a five to one across the board. Let's go ahead and continue to crank and run with it, versus worrying about whether or not you're at the numbers that you need to be for just the website

Clayton Christopher  55:41  

that completely, that's, that's a great example. I mean, you see the same thing like on tick tock shops right now, with a lot of brands, you know, sometimes it doesn't have the ROI that they might have on on Amazon, but when you look at them combined, you know, aggregated, a lot of that marketing on tick tock is actually driving consumers to Amazon. So we're still seeing it kind of generally incremental overall. But if you were to look at it just on TikTok and say, oh gosh, I don't know if this is going to be the Ri that we need to continue to push product here, but if you look at it in aggregate, we've seen that it's been extremely beneficial, incremental. I want to talk

William Harris  56:19  

to you a little bit about leadership and frameworks and what has allowed you to do this. So one of the things that I think is incredible is, you know, and you call this out, you have to find the people that are smart enough to be able to do these different things that you want to do, and get out of the way and let them do that. But how do you, how do you set up the right leadership framework, or what does this look like? What kind of advice would you give to brands that are growing and building to be able to make sure that they are the leader that they need to be within their organization?

Clayton Christopher  56:48  

You know, a lot of people. It's funny. I was having a breakfast this morning within with an old friend, who's CMO, the CMO of a large company. They're doing close to 600 million in revenue, high growth, and he's really wanting, he feels like he wants to be CEO of a company. Feels like he's ready. He's intimidated by it, you know, kind of scared to make that jump. But, you know, so we were kind of talking about, what are the best qualities that I've seen in and CEOs and leaders, and I've been fortunate and blessed enough to haven't been able to work with quite a few and, you know, servant leadership, really, it's is huge of giving credit to the organization, and I don't care, there's different personality types, different things, things motivate different people. So I do believe in speaking to people's listening, but at the end of the day, encouraging people, telling them that they're doing a great job, giving them feedback, real explicit if they're not. You know, clarity is kindness. Brene Brown says, but consistent qualities that I've seen among some of the best CEOs are intense prioritization throughout the organization. It is repet it sometimes it sounds so repetitive, but literally on these monthly calls, like with the executive leadership team when we're doing, you know, just kind of going over financials. It is there so clear on here are five or six strategic priorities for the company. Here's exactly how we're going to measure them. Here is who is in charge of executing on this. Here's who is support basically everyone in the organization, knowing which of these straight strategic priorities they have responsibility over and how they flow into that, and knowing exactly here's how we're going to measure success, action plan around it, who, what, when, but we spend more time talking about those strategic priorities and initiatives than we do going over financials or anything like that. So that's a something that I've seen is very consistent amongst the best leaders, is being able to make sure that the entire organization knows exactly one of the things that we do consistently, like when we're doing diligence on a business is, I love talking to different people in the leadership team, just saying, what are your top as an organization? What are your top three priorities? Sometimes we get a deer in the headlights look, and they try to babble off a few things, you know. And that's that's a red light, you know, but sometimes they are crystal clear. And whenever I get really excited when you kind of see the whole leadership team was crystal clear on what their priorities are in the organization,

William Harris  59:30  

yeah, again, going back to almost like, favorite song. I mean, it's like, you might think that that message is old that you have out there, but if it's not something that people can instantly rattle off, then the message hasn't been said enough, and so continuing to repeat that until it's second nature, almost.

Clayton Christopher  59:46  

Yeah, the other, the other one too, is, I would say, is, like, you know, with these, depending on the size of the company, is really thinking through right what are the right systems and processes that we need to put in place? You. Burden an organization with too much of that when it's really young, and it can bog the business down. It can, you know, create just unnecessary headwind for the organization you don't put it in soon enough, as it begins to scale, and wheels can come off the bus. You know, it can be extremely expensive, you know, you run out of products, you have supply chain issues. So it's really, you know, also thinking through what are the right systems and processes? Are we innovating too quickly? A lot of these brands, especially online brands, innovate, you know, it's, it's kind of okay when you're an online brand, sometimes to throw some spaghetti at the wall if you're just online, like trying out new innovation. But you cannot do that when you go into retail. When you go into retail, you need to be really thoughtful around what is your product assortment, you know, what is the promotional strategy? Which retail are we going to launch with? But, you know, that's like it. I'll give you another example, like a physician's choice. I mean, they had a lot of different products that they had created a lot of different SKUs. They'd gone into a lot of different categories, within BMS, within vitamins, mineral supplements. And one of the things that we saw when we were, you know, really doing diligence and doing a deep, competitive dive analysis on on their business, was, guys, we just need to win in probiotics. If we can be the number one probiotic in America, we're going to have so many options as to what we want to do in the future. And so we discontinued 22 skews right out of the gate. You know, God bless Logan, the founder who was CEO at the time. We brought in kind of a professional CEO to help him scale that business. But, you know, he agreed. We also convinced him to take price by 10% we felt like he was priced too low when we looked at the category, was creating some confusion with the consumer, and so he took price. We actually saw velocities increase. Not only did we get the benefit of a 10% bump in price, but we also saw the benefit and velocity, because it became a much more clear value proposition for the consumer. So yeah, I think kind of once you start to move into retail, is just getting laser focused on product strategy.

William Harris  1:02:11  

Yeah, that's good. You mentioned, the wheels could fall off if you don't have the right process in place. Let's talk about a CPG fiasco, prime energy drink. Logan Paul, what do you think? What did they do well, and what did they not do? Well,

Clayton Christopher  1:02:27  

gosh, you know, I have not studied that real closely, from what I've heard from. I mean, listen, they already had a phenomenal business with Alney new, you know, as the platform. So they had the voice, you know, they had the ear of the distributors. They had a large sales force. They had the ear of the retailers. They had proven, you know, they'd already proven success. So that gives you a lot of credibility. You're going to get a lot of yeses right out of the gate. And they expanded incredibly quickly with prime from what I've heard, the product doesn't taste very good. I heard liquid ellipse. Liquid ellipse at the end of the day. It doesn't matter. You know what the nutritional panel looks like. It has to be a product that tastes great. Consumers vote with their wallet and they vote with their palate, and it has to be a product that tastes great. You know, consume, they'll tell you, it has to be good for you. But if the nutrition panel looks amazing and it doesn't taste good, they're not going to come back. So you can't compromise on on flavor, you can't compromise on taste. And back to Waterloo. You know, that was the one of the things that we felt, we felt like there was an opportunity to convert some of these consumers that were drinking soda, were drinking diet soda, that they knew sugar was wasn't good for you, but making the jump to a La Croix was just way too big from a taste perspective. And so we basically said, let's you know, what are all the things that we can do different and improve upon? So we pushed flavor much, much harder than La Croix did. So if you taste the Lacroix or you taste a Waterloo, Waterloo is much more flavor forward. We use significantly more flavor than La Croix. We also use all natural flavors. We push carbonation more than La Croix did. We were targeting Topo Chico on carbonation. Carbonation actually brings out and enhances the flavors. We use some natural sweetener enhancer there that was all natural, but gave it a kind of a sweeter taste. So it really tasted like fruit. And because of that, we heard from consumers, and some of our consumer testing that we were actually able to get some consumers that were drinking diet sodas to begin to migrate, and made the migration to Waterloo when La Croix was much too big. We also did things like we were the first BPA can BPA free can on the market. We launched with whole foods. Foods. So that was really important to that consumer there, that gave us, you know, a lot of shelf space at Whole Foods we probably otherwise would not have been able to deserve. But, you know, I was thinking about like, there's the experience economy, Whole Foods, air one, you know, consumers are less price sensitive, and we're trying the new product, you know, open to trying new products, looking at the back of the label, and then you got, like, the commodity economy, you know, Walmart, if you will. And so I think kind of really thinking through the retailers that you're talking to on that spectrum, and where should your brand be launching? Because most of the people listening to this podcast, most of these entrepreneurs were never going to be the low cost provider? No, you know, we've got to be a provider of higher quality. So I think it's really important to think about, you know, how you're going to launch, and knowing, like, when you're going to say no and when you're going to say yes, the entrepreneurs usually are so desperate for growth, they're just like, yes, yes, yes, yes, yes, yes. And you can yes yourself to death. I just think it's really good, before you ever talk to a retailer, knowing, like, what are the what are the guardrails I'm going to set here for when I say yes and when I say no, and being really disciplined there. I love it when entrepreneurs walk away from business with retailers. Yeah,

William Harris  1:06:12  

Warren Bundes really good at saying no, right? That's the thing that a mantra that he's always said is saying no to 90% of the stuff that comes across his desk. And I'd say the opposite of that is Jim Carrey in the movie Yes man, where he says yes to absolutely everything, and you can see the fiascos that he goes into and the the adventures and so yeah, knowing what you will and won't say yes or no to, I think that's that's important.

Clayton Christopher  1:06:34  

Yeah, there's a speaking of Warren Buffet. There's a little story I love to quote, Warren Buffet and Bill Gates were asked separately to write down a piece of paper what is their number one reason for success? Both of them wrote down the word focus. Just maniacal focus. And it's definitely something that, over the years, I've become, I spend very little time on email. You know, 90% of emails or somebody else's agenda, I spend very little time on social media, typically, unless I'm researching a company, I don't have any sort of notifications or pop ups on my phone, and it is just anything that can create maniacal focus. So important,

William Harris  1:07:20  

aside from maniacal focus, what are other things that you look for as an investor? Because you've, you, you're, you're, you've got the accelerator. SKU, what are the things that you're looking for when you make investments, you say, this is a brand that we want to get involved with, a leader that's focused. What else sure we,

Clayton Christopher  1:07:41  

you know, I generally focus on high growth. I want to see, you know, significant differentiation with a company within the cat perspective category or categories that they compete in. You know, generally, these are better for you or better for the planet, whether they're using recycled plastic and recycled corrugated or, you know, organic, low no sugar, more efficacy if it's energy drinks or vitamins, mineral supplements. But first and foremost, it starts with team, you know, a and especially the earlier stage the business, the more important you're betting on that founder, you know, like I said, kind of two of my three businesses that I started like, what we ended up with was very different than what we started with, but what I was insanely committed to was succeeding. And, you know, I've seen, unfortunately, some entrepreneurs that the going gets tough, and they think, you know what, I can go get a six figure job working for a big company I'm out of here, you're like, what you're You're kidding. You're quitting. Our money's gone. You lost all the investors money. So I think you know, just having a founder that is insanely passionate about what they're doing and just exhibits all the characteristics that you believe they will die on the field before they ever give up. So, yeah, first and foremost, I'd say it's founders. You know, outside of that, you know, growing categories, it's a lot easier to win. You know, when the winds hit your back versus when you're you know, fighting a flat or declining category, great margins, you know, within the prospective categories that a company competes in. We, you know, over the years, I've kind of moved away from early stage investing really focused now more on kind of lower middle market growth, you know, profitable, largely profitable businesses. And just seeing that companies have actually realized those margins. I've seen too many times where it's like, oh, when we double revenue, our margins are going to increase by 12 points. Like, it's a lot of times that doesn't happen, or they run into some missteps along the way. So yeah, either that or it's like, showed the contracts need to ask. Be in hand in some cases, like I help you get those contracts in hand and the final and I'd say this also kind of goes back to the right sort of founder, not just maniacal and extremely passionate, but I call it a learner's mindset versus a knowers mindset. And knowers are really dangerous, because I used to be one, sure, and it really held my first business back. And so, you know, looking for someone that is intellectually curious, ideally, and sometimes we'll notice this, like in our first meeting, they're asking as many questions as they are pitching their business. Now, I find someone is asking, you know, because it's like, okay, I'm sitting down with you here. There's not a whole lot of folks that you probably sat down with that have built and sold, you know, three companies for nine figure exits on all three in this category. Like, we've been here for an hour and a half, and all you're doing is talking the entire time. So you know, when I when I find entrepreneurs that really have a learner's mentality and are very intellectually curious, and that just tells me that they are going to be much more open to feedback versus taking it personally. You know, I found that knowers kind of can get easily offended and get their feathers ruffled because they're having securities. So, yeah, that's that's a big one. I've made that mistake a couple of times,

William Harris  1:11:24  

and I'd say that's also somewhat comment of a founder in general. And they have to work through that, oftentimes completely.

Clayton Christopher  1:11:30  

Sometimes they need to get fired and go off into the mountains, which

William Harris  1:11:35  

is a good transition, because I want to ask a couple of questions about who is Clayton here. And one of the questions that I wanted to start with, because you were talking about this, this personality that is so passionate that you would die on the hill before you would ever not succeed. Was there something in your childhood that made you this way

Clayton Christopher  1:11:58  

Interesting? Okay, mommy, daddy, stuff getting into

William Harris  1:12:02  

Yes. Freud, here, come lay down on the couch here, my

Clayton Christopher  1:12:06  

wife showed me this, this tick tock once, and it was they were interviewing with someone that had retired. They were real senior at the CIA, and they said their best agents consistently when they went back and looked at all the interviews they had like just enough childhood trauma, but not too much, like too much childhood trauma, and all of a sudden you've got, like, you know, drug abuse, addiction problems, you know, perhaps they're passing the abuse on to someone else, but like, just a little, just that the right amount of childhood trauma can create someone that's incredibly motivated and just intense desire to succeed. So, I mean, I grew up in bowling, Texas, very small town, you know, went to a Catholic school. Parents were divorced. I think I was about 11 years old, and, you know, there was a lot of shame around that I was like, the first kid that I knew of, any kid in the neighborhood or in my school, whose parents were divorced, so I remember having some shame around that also. My father was a successful entrepreneur, but worked a time he was very high integrity. I mean, he had a mantra that said, you know, do the right thing. You know, integrity is doing the right thing when no one's watching, but seeing his intense work ethic. And there was definitely some performance based love in there. Kind of like, I love you when you do this, if you do this, and so, I mean, I always knew I was loved, but there was definitely some of that performance based love that, you know, I've spent a lot of money and a lot of therapy, moving moving past, but I would say a lot of those elements is really it's made me incredibly driven. You know, I took, I was a I made a very humble living racing bikes for a while. I raced bikes all over the US. I was on the pro tour for a couple of years. I took, obviously, not near good enough to make a living at it and be on the European Pro Tour, but took a lot of that competitive element that that drive and just overcoming adversity and kind of push that into into business. So yeah, that's it. That's kind of some of some of the background that keeps me intensely motivated. But I would say now, like the mantra, especially after all that work and I do daily work, is leave nothing, leave everything on the field, but hold the outcome so lightly. Like I really do I leave every I want to know that I've left everything on the field, incredibly competitive, but it's all good. Like, hold the outcome so lightly. Don't be attached to it. It's really good. I just I trust that everything is unfolding as exactly as it should, should be unfolding. That's

William Harris  1:14:47  

very stoic mindset too, which I appreciate.

Clayton Christopher  1:14:52  

Hello, Ryan Holiday

William Harris  1:14:53  

there. Yeah, exactly the way, right. Yeah. You mentioned that you have a very good. Good morning routine, and that's one of the things that helps kind of keep you in this right mindset. What is your morning routine like?

Clayton Christopher  1:15:07  

And I think, I think it's almost like the Alcoholics Anonymous. It's like my morning routine is kind of what helps me deal with my addiction, yeah, and it's, listen, I have a saying that, like, work doesn't create stress. It's our relationship with work that creates stress. And, you know, we all go through insanely busy seasons sometimes, and put more on our plate than we can we can digest. But, you know, regardless, and I'm in a very intense work season right now, but it's like, there's really no stress around it. And, you know, so my morning routine that I feel like, if I don't have the routine, the wheels will start shaking, and eventually one of the wheels will come off. And I know what that looks like. It's not good, you know, almost, almost ruin my marriage because of that. So it's my morning routine is like the first thing, and I feel like it's so important to do it first thing in the morning, because it sets the tone and the relationship for the entire day. So first, generally, 30 minutes. Sometimes it's longer, but usually it's about first 30 minutes of every day. I get up before the kids and before the family gets up, I light a candle, I go into into my office, and I pray and meditate for, for, for, that's the first thing I do for about 15 minutes, just clear the mind, stop the chatter upstairs in my head, and get connected to the Divine, to something much larger than me. You know, because I feel like, if we listen to the Western world, and we don't do things like that. We start thinking that we're at the center of things and that things are happening to us, versus is when we get connected with something much larger than us, the universe. We realize life is happening through us and not to us, and it just makes any of the curve balls that inevitably come our way much easier to catch. So, yeah, that's the first and then I usually do some some reading. You know, usually have a couple of spiritual books going. And I love reading from other religious traditions. I'm a Christian, but, I mean, I love Sufism and Buddhism, and again, I so I love reading from different religious traditions as well, just anything that helps me get connected, to realize I'm a tiny piece and something big, big and more big than we can imagine, and beautiful. Yeah,

William Harris  1:17:31  

there's truth found throughout all different types of books or wisdoms that have been throughout, right? Like there's things that have been tried and tested over 1000s of years that we can learn from, and you had to know how to filter that. But there's a lot that we learned

Clayton Christopher  1:17:49  

completely. There's so many similar stories, you know, across so many of the religious traditions that I don't get overly caught up on particulars, but, you know, I call it to like, when you do that first thing in the morning, like, figure out whatever your practice is that works for you, but like, it helps me work on the business, and not in the business, you know, because I, when I, when I start working too much in the business, I can lose My temper with things. I can be short with people. I can get attached to outcomes. I let my emotion, you know, it becomes sometimes not in check. And, you know, start making emotionally based decisions, which that is never a good thing. I want to make very objective decisions and set my you know, I like it now, like, when I when, when i As long as I'm keeping on I want to practice. It's like, it's really hard to offend me. And it used to be real when I was younger, it was, like, really easy to offend me. Like, now it's like, I just don't take a part. You didn't reply to my text message. Who cares? My first assumption is going to be that you didn't see it. You know, didn't reply, didn't get an email reply. Like, give it a few days. I'm gonna just totally assume they just didn't see it. Like, and then if they didn't again, like, I do that to people I don't read most of my emails, like, 1000s of unread emails. I just, I don't have time. So it's like, yeah, so why should I if I'm doing that? Like, Why should I be offended? So, yeah, I love that, but if I didn't have that daily practice, I'd fall off the wagon, and it wouldn't be good, because this western world tells us, like, you know, it's like, more like, you're trying to fill a cup that has, you know, no, no bottom in it, yeah. Now, like somebody said, what's your number? I'm like it got it a long time ago. I do this because I love it. It's one of the reasons I've spent most of the year in Jackson, hole Wyoming, like just being surrounded, even if you just get outside a little bit each day, being surrounded by intense beauty really helps us get outside of ourselves and get connected to completely grieving us.

William Harris  1:19:59

Yeah, I'd say similar to you. I tell my girls this all the time as well, that the best time to have a routine is the morning routine. So it's one of the only times that you actually get to dictate a little bit about how your day is going to go. For the most part, if you decide you want to work out at night time, there's always something that's going to come up that it's, oh, we've got this going on, we've got this going on, but it's like the morning you can really set that apart. And similarly, I wake up, I do my workout, I read my Bible, I read the Daily stoic and then I pray, and it's it's every day just like that, because it's that time that I've set aside. And similarly to you, I'd say that that's really what allows me to stay really focused and grounded. Because like a typical founder, I can get a little hot headed and a little bit frustrated and a little bit whatever, and I need that to kind of keep me centered.

Clayton Christopher  1:20:45  

That's awesome way. And I didn't know he had that in common. Yeah, you know, the other thing that I love hearing you say is, like, you know, your girls, like every day they're looking at but at us saying, how should I act? How should I show up in this world, you know, what are the practices I should develop, you know, I want my kids saying oh yeah every time. Or whenever we got up there, Daddy was in his office, yeah, with the with the candle, that

William Harris  1:21:11  

I like the candle, I don't do that reading. I need to do that. I

Clayton Christopher  1:21:14  

think that, you know, there's almost like something, some people like light incense. There's something just kind of like a, you know, like the tea, you know, like the tea practice, like making the tea. It's not about making the tea, you know. It's about the process, you know. And it's like so many people are chasing this proverbial top of the mountain when, you know, having been there a few times and been in front row seats and a good bit of other times whether it's an investor board member, it's like, it's, it's always a little anticlimactic. Sometimes get that anti climactic when you get there, you have the bank account, may change a little, you know, extra zero or whatever, but like, you're probably going to have the same friends, definitely have the same family, may even have the same house, like I but you know, it's like the end of a great book that you don't want to end, and all of a sudden it's come to an end. Oftentimes, lots of employees are going to be let go. If there's intense integration after an acquisition, for sure, the culture is going to change. Even if they try to leave the company semi independent. It's inevitable that the culture is going to change. And, you know, it's just, it's remembering, like the journey is as important, if not more important than the destination, because what lasts are the memories, are the relationships. You know, it's the bank account, whatever, like, I eat the same food now that I was eating 20 years ago when my balance sheet look different. Have the same friends. So it's the relationships along the way. We'll never regret invest over investing in relationships. Brilliant

William Harris  1:22:50  

advice. I have one more thing that I need you to do. You kind of sound like you have the you are the vocal twin of Matthew McConaughey. I don't know if anybody's ever told you that, but at least that sounds like me. I need you to just say, All right,

Clayton Christopher  1:23:03  

I bet my wife just wish I looked like him.

William Harris  1:23:07  

I did see you say, all right, all right, all right, like all right,

Clayton Christopher  1:23:10  

all right, all right.

William Harris  1:23:12  

It's so good. It's been absolutely amazing having you on the show, talking to you, learning from you, if people wanted to work with you, follow you, learn from you, what's the best way for them to do that? Yeah,

Clayton Christopher  1:23:24  

Astō Consumer Partners is the name of our fund, and Astō is Latin for to assist, to help, and that's what it's all about in life. It's not about not about us. It's about helping entrepreneurs and their companies reach their fullest fruition.

William Harris  1:23:42  

Clayton, it's been absolutely amazing talking to you today. I appreciate your time and knowledge and wisdom. Thanks everyone for joining in. Have a great rest of your day.

Outro  1:23:50  

Thanks for listening to the Up Arrow Podcast with William Harris. We'll see you again next time, and be sure to click Subscribe to get future episodes.

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