#30 - Reinventing the Energy Drink

We were at like a party and I'm handing out 5-HTP, milk thistle, B vitamins because, you know, we're up for basically 2 and a half days dancing, having a good time. You know, my business partner now, Orion, and I started talking the day after taking all the supplements. He's like, hey, we thought we should package these supplements up instead of having to buy full bottles of each. We thought, well, let's put all these in a beverage, right? Can we actually pull this off? So we go super thin because we burned through all our savings starting the company, and I mean, we're eating like mac and cheese and tuna every night. I got 2 kids at the time, living in a 400-square-foot trailer. We were doing like 8 cases a month there. So we're like, shit, there's something here. We used to ring the bell in the office, you know, when we get a new gym. And it was like, oh, the first month we got like 12 gyms. We were so stoked. The next month we got 30, then we got 50, then we were hitting like 200 a month. Wow. Right? So it starts adding up quick. It went from $700 grand to $4 million in 1 year.

So where do you think this goes? How big does this get?

Over a billion.

$5 million is not enough. $10 million. $15 million.

$20 million. $100 million.

It's a half a billion in revenue.

Any company with $50 million.

One or two people in a bedroom actually put threats to these like giant multi-billion dollar companies because you have creativity and you have nothing to lose. Add another zero to that price, buddy. Add two more zeros.

$500 million.

Every week we sit down with self-made millionaires and ask them How did you do it? I didn't start a podcast. I started my own personal business school, and the teachers are the successful entrepreneurs behind the biggest brands and businesses that you find today. I wanted to know the real stories with all the details, like how did you get your first 100 customers? What did it feel like when shit hit the fan? I ask them, how'd you spend your money now that you're rich? And what would you do if you were starting over from scratch again today?

If you're like me and you want to own your own business instead of living a 9-to-5 job, this is the podcast for you. The Hustle presents My First Million. So I, I just took a sip of LifeAid's new CBD drink. So I'm here with founder of LifeAid, Aaron Hind. LifeAid is a new sort of energy drink company. Do you like being called energy drink? Functional beverage. That's less catchy.

It's less catchy, but there's a lot of negativity associated with energy.

Yeah.

So that's, you know, got to be a $100 million company. Not many people have done that in the sort of beverage space.

And so we're going to learn— 99% failure rate.

Right.

We're going to learn how you did it, a little bit about you and what it takes to get something like this off the ground. Because I think I get— couple different types of guests, right? You get like the high-tech entrepreneur, and if you're not a programmer, you're not into software, those are sort of— it's just a different beast altogether.

Sure.

But this is something where like, you know, I remember in college when I saw 5-Hour Energy and I was like, what's the backstory? How do you start one of these? And look, you fucking— you started one of these, you did it. Give me two things. I want you to first give me the generic backstory, which is, you know, I was just tired of my options and I wanted to make something better.

Then you want the truth?

And then I want the truth. Yeah, give me both. Give me both. They're both— they're probably related. I don't think they're opposite. One has more depth.

Okay, no, I've never I've never been asked that question, and so I appreciate that because you're right, there are kind of two versions. I'd say the generic story is, you know, I was a sports chiropractor for 10 years, grew up in Santa Cruz. I met my business partner Orion at a CrossFit gym, CrossFit North Santa Cruz, right? Uh, he's a certified financial planner. We both were writing for the paper, started hanging out. He's a very accomplished DJ. My wife and I love house music, and we both had two young kids. Our daughters are actually best friends, met in kindergarten. Our wives became friends. We started hanging out for a couple years and brainstorming ideas. And, you know, part— we were both very frustrated with the lack of healthy, better Beverages on the market, especially marketed to kids, you know, what our kids are going towards. You know, the kids weren't reaching back in 2011 for kombucha or coconut water, right? They were reaching for Monsters and Red Bulls. It's like, I was offended. I'm like, I can't have my 6-year-old reaching for this garbage because it's a bunch of shit. So it's really out of ignorance and passion we started LifeV8. So that's more the corporate line, which is 100% true, right? The backstory, yes, is we were at like a pre-compression, a pre-Burning Man party called Three Degrees. I had been part of the founding team for that, for, you know, helping throw for several years. So I invited him and his wife. We had, had recently met, and, uh, because, you know, I knew he'd enjoy the DJs. There's like 22 DJs, and we're— I'm handing out 5-HTP, milk thistle, B vitamins, because, you know, we're up for basically 2 and a half days dancing and having a good time.

Yeah. What are those things you just said? I've never taken any of those.

Okay, so they're all supplements. One's for serotonin, if you're having serotonin. One's good for the liver.

One— so these are more like vitamin— these aren't party—

these are all natural. These are all natural recovery stuff.

Okay.

Yeah, recovery stuff, right? And I had an eye drop business at the time called Irie Eyes Eyedrops. So I sold eye drops to stoners, basically.

Okay, and that's the most Santa Cruz thing I've ever heard.

You're just buying domains.

Wow.

Let us know if anything becomes available. A week later we get a phone call, hey, I got 2 pallets of silver bullets for you guys to buy. Wow. That was the beginning of it.

We filled 2 pallets of silver bullets. And was that a, I like that little life hack you did there. So most people wouldn't do that. What was the, what was the deal? —thinking, you know, to, to, to keep that lead warm when I've been there before when people are like, look, you don't know what you're doing. You're way, you're way in over your head here. Um, look, I'm gonna help you out and, and just tell you no now so you don't sort of go further down this road. But you didn't, you didn't take no for an answer. You didn't get a chip on your shoulder. You were like, no, let's, let's warm this guy up and see if, you know, something comes through.

Right. Okay, so you get the silver bullets, and now you're in the game a little bit. You're like, okay. We're in the game. This idea is alive.

The idea is alive. So we go down to the flavor house, barely make it.

What's a flavor house? Can I go to a flavor house?

That sounds awesome. Anyone can. I mean, it's basically like a little food science lab. Okay. Yeah, so it's just like if you went into, you know, your college chemistry class, it's like everyone's in little white smocks, and they've got test tubes and scoops, scales and shit's getting mixed together. Great. And, uh, so we went down, I had everything formulated, and the, the, the scientists looked at the formulation, said, wow, this is great, but if you don't want to use, you know, artificial sweeteners and, um, you know, this— you can't put this level of active ingredients in a drink, it's going to cost too much, and you can't do it without artificial sweeteners, or your sugar level would be too high. Like, okay, well, we'll go somewhere else then. So we literally started to turn around and walk out the door, and she's like, wait, wait, let's give it a shot. Because we were ignorant and we were just uncompromising, like, okay, we want to make the cleanest products on the market. So no sucralose, no aspartame, you know, low to no sugar.

And why was that important to you? Because obviously as a consumer I appreciate that, uh, but it seems like that was a part of your lifestyle. You weren't just doing it because you thought that's where the opportunity was. It was like a fun— it seems like it's a fundamental part of you. Uh, why was that the case?

Yeah, I mean, look, Orion grew up on goat's milk in the Santa Cruz Mountains. I live completely off the grid currently, you know. I, I live off the grid. I've got chicken and solar batteries, you know. It's, it's just— so how does that work? What does it mean to live off the grid? I don't even know Anyone who lives off the grid, it means you're not connected to PG&E. So I have my own well, I have my own septic tank, and I create my own power. Holy shit. Yeah. So when all these rolling blackouts and everything, I'm just kind of laughing, right?

I go, and so you, uh, you do that. Does that take up like a massive amount of your time to maintain all of those sort of life utilities for yourself?

Yeah, it's, it's, it could be a full-time job just taking care of the property, which is eventually what I want to get to. Um, but I'm balancing here now taking care of the property. We, I had my chiropractic practice still cuz that's paying the bills and you know, after we started getting a little bit of traction. So we bought this property. It was just a deer trail. I went through with my wife, we hiked down this deer trail. I had a little chainsaw and I'm like, shit, I think you can see the ocean from here. And she climbed up this tree and we're like, yeah, we could see the ocean. So we had this idea, well, let's buy this property. It's off the grid. We're going to— we have 2 kids at the time, 2 small kids or 1 kid. We had the other kid there actually. We're going to move in on a little trailer, a little 400-square-foot trailer, and we'll live in a trailer and then we'll build our treehouse on top because I'm a chiro. I'm making good money. It's all referrals, you know, fairly easy practice. I'm only working like 26 hours a week. And so that was the plan. Well, then LifeAid comes along and we're doing this thing on the side. And after about a year, we started getting a little traction. And my business partner and I are like, shit, we got to sell our practices, burn the ships to the shore and go all in, right? It's time to do that. Like, if this thing has some life to it, it has legs. So we both sell our practices. And then the guy I sold it to, I sell my golden goose and he kills it in 6 months, goes BK. So I literally have no income. Right. LifeAid's not paying me money. The practice is not now, now paying me no money.

And he was supposed to continually pay you for some amount of time.

she's down for the cause or she's like, hey, we need to get back into like mainstream society. Oh, my wife.

My wife was from the city here, so she was full city slicker. She had never done anything. I'm like handing her chainsaws like, okay, honey, this is how you do it. Don't cut your arm off. Let's go.

She's my hero. She's a trooper. She is a trooper. Okay. So that sounds tough. That, how long was that period of like, so that lasted, I don't wanna call it rock bottom, but like definitely like a, it was a tougher time.

Challenging. Yeah. That lasted, uh, like 6 months. And then we were starting, uh, to be able to draw $1,000 a month from, from LifeAid. And then it was like, oh, that was such a relief. Relief. Yeah. You know, cuz it's like a little bit of income coming in and then it got to like $3,000 a month. And then it was like, we were in heaven, like, oh, $3,000 a month. We can actually, you know, rent a movie once in a while. Right. And then it, you know, it just continued to grow and grow and grow from there. And fortunately we made mistakes off-Broadway, and we're both ignorant to the industry, which I think helped us out quite a bit. I mean, we used like old-school direct marketing to get our initial traction, not trying to go into, you know, every grocery store out there.

Right. Okay, so let's, let's rewind. You're back at the food scientist lab. She tells you this thing's not gonna taste good unless you add all the sweeteners because you have so much, so much on the sort of supplement side. How did you guys resolve that? You guys almost walk out.

She's like, yeah, she said, no, no, wait. And we just went into the lab and started pounding it out, and our first rendition tasted horrible, horrible. But we kept working at it. And as anything, you know, after a couple of years now, now this is the first one. Yeah, this tastes good. I don't know if I'm—

if it's coming on the microphone because I keep drinking this thing. It actually tastes good.

Yeah, yeah, yeah. So all of our drinks are great now. But I mean, it— there's alternative sweeteners out there like monk fruit, which is all natural, zero calorie, you know, better forms of stevia. And I mean, the longer you stay in the game, it's just like anything you learn, you figure it out.

You figure it out. And so you guys kept working with the flavor house. You got the flavor to where after a few iterations, it's like palatable, right? And how do you get the first 100 customers? You said something about direct marketing. Yeah. What were you— where did you— how did you go from zero to your first kind of 100 or 1,000 customers?

Yeah, good question. So we started out just like every beverage company. It's like, oh, we want to get in stores and that kind of thing. You know, that model was flawed because consumers in a grocery store, in a convenience store, especially for 30 seconds, they know exactly what kind of drink they want. You know, it's not a great place for trial. Maybe Whole Foods is okay for trial. So we started with our golf raid. Product and selling it in person. Alright, let's take a second to talk about Howard Stern.

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So we were sampling in golf courses where people need it most. Drink one at— when you tee off, one at the turn. We started getting traction there. We were able to raise a little bit of money, and then we started selling to CrossFit gyms because we were, you know, in the CrossFit community from the very early days. And Basically, we use direct mail. So you own a CrossFit gym. Yep. I don't know you from Adam. I force upon you— I send you 4 cans of product.

You have this drink.

And were you looking— were you— did you go back and try to figure out the Red Bull playbook from their beginnings, or did you— did you not do that type of research?

No, no, we definitely looked at their model and what made them so successful in street sampling and dominating the bar market and that type of thing, and applied some of that and then put our own twist on it, right?

And you guys— and when did you tell the CrossFit gyms, like, look, we're in the community, we've been doing CrossFit for X amount of years? Absolutely.

Yeah, absolutely. We pulled on our CrossFit background, our, uh, you know, my, my background as a sports chiropractor and treating CrossFit HQ in Santa Cruz. That's how I even got into CrossFit. We signed one of the— You're a fit guy.

There's a podcast, so people can't see you, but you're a fit guy. It feels like, you know, if you made a product, I would sort of believe, okay, this guy lives a healthy lifestyle. Yeah, I think that's key, right?

We got one of the athletes and influencers in the space that was influential to help kind of put a stamp of validity on it. And then we started direct-to-consumer marketing. You know, we started building our Instagram following, marketing direct-to-consumer, and basically creating irresistible offers, you know, like, this is such a no-brainer offer to, uh, to, to come into the top of our funnel. And we know our conversion rates. So just having confidence in your math and your funnel and knowing that you have a great product and great follow-up. And we built out our customer service team as the very first, uh, team that we built out before any salespeople. We had robust customer service. What are the issues going on, you know, one-on-one with our customers? How can we overdeliver constantly? And just providing a ton of value.

And did you have any mentors from that sort of CPG or, or food and beverage space? Not from CPG, more on the marketing side.

And so what's a good— what's a good adoption rate? What's a good repurchase rate that you were— guys, you guys were looking at, you're like, that's promising. This, even though it's small today, I believe these rates are like where we need to be.

Yep. And so, and so you guys, you guys found that playbook that you start milking on the CrossFit side. And, and today you actually do have the multiple brands. So did you go sort of narrow and then go back out broad again, or how did that happen?

Yeah, so we went, you know, continued to go deep in with FitAid, and we love CrossFit. We're still, you know, official recovery drink at the CrossFit Games. Spartan Race, we got our heavy in that community as well. And then started really creating products around our lifestyle, you know. It's like, I'm really big into nootropics and brain health. So then we created FocusAid, which is our nootropic drink. And, you know, we're traveling, we were traveling all the time, like 52 flights a couple years ago, a few years ago now, you know, just constantly every weekend on the road. It's like, oh, we need ImmunityAid for our immune system when we're traveling. And just creating products that we would use ourselves and that we'd feel good about giving our kids.

And so give people, give the people a sense of the hustle it takes to get this going. Like you mentioned, you know, we're doing a golf event, quick change clothes, you're at the, at this, you're in the city for a party, change clothes, you're going to this CrossFit gym. Um, what was it like getting this thing off the ground? Tell me some more stories about like how, um, what it took to get the thing going on the hustle side.

Well, you can see my hair. I was completely black-haired 10 years ago and I'm fairly gray now. So yeah, I got some grays on the side here. I mean, what's it take? It takes resilience to a level that you can't even imagine. It takes checking your ego at the door, you know, in a very, very big way. I mean, there's so many things that can sink a company, right? It takes 100 things all aligning to have success. It takes one thing to completely sink you.

Did you guys ever face that sort of, oh shit, this might, this might, you know, this thing might fall through once you got a little bit of momentum? Did you ever have like a daily? Yeah, daily. What were some of the big disasters that came up? I mean, financial.

Is a big, big one, you know, like having $3,000, $4,000 in payroll due and having $2,000 in the bank account, like, oh shit, we're supposed to pay these people tomorrow. And we only had a couple employees, it was like, we literally don't have the money to pay them, you know, from hiring the wrong people out of desperation, like, oh, we really need to hire people, and then it just crushing culture. And, you know, from building a culture, becoming a manager and a boss where my biggest team was 4 people prior to this and now we have 70, you know, it's There's, uh, to having blowout arguments with my business partner, but because we both felt so passionately, it could have been easy, like, fuck you, fuck you, we're done, right? I mean, that could have happened 100 times, right? You know, um, to, to, uh, having, you know, product not run on the line. One time they ran our product, it was under-carbonated, so we couldn't sell any of it, and that sucked up all our cash flow. Like, there's so many challenges, you know, as an entrepreneur, but that's also what makes it so fun. Yeah, you know, I mean, you're like constantly living on edge, like, oh shit, you know, can we make— can we actually pull this off? And, you know, sometimes things just continue to align. And I have, you know, really deep faith that this company just was meant to be because there's so many times we would have completely gone out of business and something just worked out at the last second.

So you guys got from, you know, obviously the zero-to-one stage where you got this thing off the ground, you're starting to pay yourself $3,000 a month or whatever. And at what point were you like, okay, this, this might be big?

When we finally got our first PE round from like a very respectable private equity firm, which was— how far, how far into of the business, or where were you guys at? A year, uh, let me think. We were at year— between year 4 and 5, I believe. Okay. Yeah, we were doing about— we were doing like $8-9 million, something like that.

And you approached them, they approached you?

Uh, we were out kind of testing the waters, dipping our toes in. We got an introduction from a mutual friend, and they flew out to our office in Santa Cruz, and we met, uh, met them. And just like super cool guys, like all their money, long horizons. It was just a lot of alignment compared to a lot of the other companies we were meeting with that was just more like turn and burn, like, okay, we got 5 years, 7 years, and you know, you gotta, you gotta execute in that time. These guys were like, hey, let's continue to grow something that's built to last, a durable brand here. And you approach business from a different perspective when you're like, okay, what's in the best long-term benefit for this community versus how do we maximize profits to flip this thing in 2 years?

For sure. So where do you think this goes? How big does this get? Over a billion. And what does it take to get there?

I mean, it's just continuing to keep it on, keep on keeping on.

100%.

And so, um, so you've, you've, uh, you've grown this thing now. And how do the big competitors respond? I mean, have you seen a change from the sort of Red Bulls of the world where they look at this and they say, this is a competitive threat? Have they turned their attention yet?

Absolutely. Absolutely. I mean, they're not dumb. They see their numbers, which are much bigger than our numbers, but even, you know, little 1% shift in their numbers is a big number. So, I mean, we flew out, Nestlé had us out the other day to give a presentation on food as medicine. Like all the big companies are paying attention. They're, most of them aren't good at, you know, creating their own better for you, you know, in-house. They just, for whatever reason, they can't do it, but they've been on acquisitions. You know, they'll take minority share in different companies. And so I like it because it's changing the trajectory. And as long as we continue to change the health trajectory in this company in a positive direction, then over time the expectations change and then people are just healthier. Like the fact that diabetes rates are higher than they've ever been in the history of this country is ridiculous. Right. You know, it's ridiculous. So, and not just that, It's everything, you know, like health is not improving. So the current model's broken. A big part of that is, you know, food and beverage. We've been poisoning people with sugar and artificial ingredients for, you know, 100 years now.

How do you build that trust? Right? Because I'll be honest with you, when I first looked up the company, I was like, okay, it's a drink company. I've seen so many of these that are either just straight up, they're bad for you, or they say they're good for you, but they're actually bad for you. They just changed the profile and it's like, it's no sugar. Okay. But it's something else instead. Yep. Like I know in the, in the gaming community, cause I'm at Twitch right now, the gaming has G Fuel, which is like some, you know, bullshit to me, right? Like, so, so how do you build that trust? Or, or am I just Mr. Skeptical and everybody else is like kind of down, you know, everybody else sort of buys in right away?

Yeah, that's great. And what do you do business-wise now? So we were talking on our way in, you said, you know, once you're, quote was, once you're a made man, uh, it becomes easier to make money, right? Because, uh, as you taste some success and you get a reputation, now opportunities, deals, different things start coming to you. Talk a little bit about that, uh, that phenomenon and what you're doing, how you're, how you're thinking about approaching that.

And what has been a splurge that you've done now that, you know, 'cause you went from mac and cheese and tuna. Yeah. And now, you know, you guys doing well. Yeah. Um, where have you sort of— how have you been able to celebrate that? What's your use of this money? Because the last podcast I did, the guy had a great, uh, phrase. It's not rocket science, but he just said, you know, I just view money as a tool to enable a better quality of life. And so how are you using money as a tool for you to have a, you know, more interesting, more adventurous, more fun? Yeah.

That's amazing. I love that. I, I, um, tried to do a similar thing myself where I said to my wife, I said, let's spend one month out of every year, um, just living somewhere else. And so we did Buenos Aires, um, the first year. We had a baby this year, so I don't know if we're going to be able to pull it off necessarily, but, uh, but, uh, highly recommend that. And in fact, uh, the easy excuse is like, I'm too busy, or, you know, my work won't let me do it, or whatever. And I'd say, uh, if you think you want to do that, you should be, just go for it. Just go ask and say, hey, I wanna work out of this other country. I'll work, I'm not necessarily taking, you know, full month off, but I wanna go experience something else.

And it's a— Buenos Aires is on my shortlist for sure. That and Croatia.

That's amazing. And so what about, you strike me as somebody who is like the, when you said you lived off the grid and you, you know, you're into nootropics and all this stuff, I think you have, you're thinking for yourself, right? So you have a sort of, that's, those are contrarian things right now. Those not like, society's not spoonfeeding those to you. I was asked this question, not long ago, and it's kind of a hard question, so you can take a second to think about it. But the question was this, it's like a dinner party conversation, which is if you, um, if you could change 3 things and, and you could do 1, 2, or 3, whatever you want. If you could change 3 things about the way that society works, so things that societal norms today. Yep. Um, but that, you know, don't fit your worldview. What 3 would you change if you could snap your finger and then society sort of changes in that way? What would you change?

I'd eliminate all, Uh, television. So TV gone, like CNBC, Fox News, CNN. It's all BS. Like it drives me insane. I haven't had TV in my house for 17 years. Right. Don't miss a thing. Right. You know, so I'd get rid of it. TV gone. I would have public funding for, uh, for politicians. Uh, as long as they got a certain amount of signatures, there'd be, here's your whatever, $100 grand, million dollars, whatever it is. You can't spend a penny more than that. Everything has to be accounted for. Go. Put everybody on a level playing field.

Take the special interest of money outta politics.

Yeah, and then third, I would, you know, all these artificial ingredients that, you know, are in food and beverage, you know, those need to go bye-bye. It's like we don't put lead in our paint anymore, we don't have asbestos in our ceilings. Like, it's just a matter of time when we look back at this era and go, well, no wonder, you know, cancer rates are high and diabetes and all these chronic diseases and Alzheimer's, you know, on the upswing. Look at what we were doing to our body. So I think there's those aha things that are out there right now that we need to just get past. Oh, and fourth thing, I would eliminate single-use plastic. Plastic. Mm-hmm. Big on that. Like, uh, it's gotta go, right? It's gotta go. Come on. Uh, this is awesome.

Uh, so gimme a, uh, as we sort of sign off, um, how should people who are listening to this who are like, you know what, this guy's awesome. Uh, I want to get in touch with him. I want to send him, you know, my business that I'm working on, have him take a look, or I wanna ask a question. I just wanna say thanks. How do, how do we, how should people get ahold of you? Where should they follow you? And, uh, who are you looking for to reach out to you? Like, cuz a lot of people are gonna listen to this. And so who should reach out to you?

I think my, my specialty, our specialty is CPG. So, you know, I could give some things on team building and stuff with people in tech, but if anyone's really looking into consumer packaged goods, you know, feel free to reach out to me. It's basically my name, A-A-R-O-N Hind, H-I-N-D-E, mainly on Instagram, LinkedIn, Facebook, or, you know, go to our website, lifeaidbevco.com. You can check us out.

All right, brother, thank you for coming in. This is awesome. And thank you for the drink. I, uh, I love it.

You're welcome.

That's what I need. Hey, hey. Well, I need a dollar, dollar, dollar. That's what I need. Hey, hey. Said I need a dollar, dollar, dollar. That's what I need. And if I share with you my story, would you share your dollar with me?