Hint Water’s Most Effective Marketing Channels | Exit Strategy S1E3

Moiz Ali

Welcome back to the third episode of the Exit Strategy podcast. I'm here with one of my favorite founders, her name's Kara, and she's the founder and CEO of Hint Water. Kara, thanks so much for doing this! I'm super excited to chat with you.

Kara Goldin

absolutely thanks for having me

Moiz Ali

I feel like you and I have met plenty of times in the past, but rarely have we had the opportunity to do an in-depth one-on-one discussion. I'm really excited to do this.

Kara Goldin

yeah me too

Moiz Ali

So, just a quick background on the history of Hint Water. You guys started in Twin in 2005. Much like what you're drinking right now, you make a flavored water that's generally flavored with fruit. The water is generally non-carbonated, although you have a carbonated version. There's no sugar, stevia, calories, or artificial sweeteners in the water. Does all of that sound right? Am I messing up?

Kara Goldin

What Hint Water is? That's absolutely right! We have over 20 flavors of our water. A few years ago, we came out with a carbonated version and then a caffeinated version of the product too.

Moiz Ali

And so, you started the business back in 2005 when you were making the switch from Diet Coke because you just didn't feel healthy drinking the 8 to 12 cans that you were consuming. Is that right?

Kara Goldin

yeah I just you know I I never realized this about myself but I you know was really I just I really just wasn't happy with where I was at from a health perspective and I had gained a few pounds but I had also I'd also developed really bad adult acne which I had never even had as a kid and I really felt like my energy levels were low too and I couldn't really figure out what was going on and you know we were I was at a time when I had taken I had had 3 I have 4 kids now but I had 3 kids at the time so I was taking a little break from work I had left aol where I was running their ecommerce platform and I just you know was interviewing for jobs we were my we my husband and I were redoing a house in san francisco and I just took the time to kinda you know get in shape and it it's funny I mean I always tell people when I'm out speaking about sort of my background story I really thought I mean I I probably wouldn't have admitted it but I really thought that my pathway to get healthy was just shopping at whole foods like if I went into whole foods and I went shopping there then I was good to go like I was like you know I was gonna be healthy and then I was like okay well I'm not really getting any healthier things aren't really changing for me and I had been an athlete growing up I was a gymnast and so I you know started I knew how to train and so I thought okay I'm really gonna start working out and training and and you know continuing to shop at and buy you know better for you products but then nothing was still working and so I I ended up going to a few different doctors who basically said you know look you're probably having too many cupcakes and I'm you know and and that's why you're gaining all this weight and that's why you're having this problem with your skin or you know hormones or you've had babies too close to one another and none of it really made sense to me so

Moiz Ali

your response wasn't like the cupcakes are from whole foods though sound like that

Kara Goldin

Yeah, no, I really... you know, I said, "No, that's not really what's going on." So, at that point, I really started to take a closer look. One of the doctors said, "Hey, keep a diary of everything that you're eating and everything that you're doing." I don't even think I really counted my diet soda consumption because I didn't really think of it as food. I viewed it as just something else that I'm doing, and there's nothing wrong with it, so why count it? But then one day, I was looking at the label on... you know, Diet Coke was my favorite. The Pepsi people love me because I always talk about, you know, Diet Coke.

Moiz Ali

sort of

Kara Goldin

my problem with diet coke not my problem with diet pepsi

Moiz Ali

not pepsi

Kara Goldin

And I realized how many ingredients I've had. So many of the ingredients I just didn't really even understand. I thought, "I don't know, maybe I'll just put it to the side for now and just see what happens," but not really thinking that there would be any dramatic change. I swapped out my diet sodas for plain water, and at that point, I really realized that things were getting better. My energy levels were coming back, my skin was better, and I was losing weight. In two and a half weeks, it was a pretty dismal two and a half weeks. I felt like I had a really bad case of the flu; I just didn't feel right. I now look back on it as a detox. I didn't call it that then, but I was really getting off of, you know, at that time it was Splenda, NutraSweet, and some of the other sweeteners that were going into these diet drinks that I was consuming. I had lost 24 pounds in two and a half weeks. My skin had cleared up, my energy levels were back, and that's when I was like, "God, I've actually been marketed to." I've been told that something is better for me because it has the word "diet." That, for me, was like this epiphany. Again, I had grown up in the publishing industry and the tech industry, and I had never really paid attention to, you know, labels on food as being tricky.

Kara Goldin

You know, I was kind of living my life and let another 6 months pass. I kept losing weight and started wondering if I was actually really sick because I was losing weight so much faster. My skin continued to stay great, and my energy level was high. By the time 6 months rolled around, I had lost 55 pounds, which was kind of my college weight; it was like my goal weight. It was dramatic. People would see me and say, "Gosh, you look like you lost a lot of weight!" I would respond, "Yeah, I did." Then everyone would ask, "Are you okay?" and I would say, "Yeah, no, I'm really good. I feel really good." They would then ask, "What diet were you on?" and I would explain, "I wasn't really on a diet. I actually stopped drinking diet soda." That's when I realized I was educating so many people about my experience, including the guy who was stocking the shelves at Whole Foods. When I decided I really wanted to drink water, I realized I wasn't a water drinker after all. I thought, "I don't know how long I can do this because I just am so bored by drinking water."

Moiz Ali

I started

Kara Goldin

Slicing up fruit and throwing it in water, I went looking at my favorite Whole Foods in San Francisco for that product. Everything had sweeteners in it that contained fruit, and a lot of times, the fruit wasn't even real fruit. They were using lots of other stuff. I really saw this need in the market, but I never really thought, "Oh, I should become a beverage entrepreneur." I mean, I really saw it as, you know, this is criminal what I've experienced. So many people really do want health, but I have a really hard time finding it.

Moiz Ali

And so you have this epiphany and you say, "Okay, you know what? Water is boring. It's hard to drink just plain tap water or bottled water week after week." Adding fruit sort of changes that dramatically, right? It's good for you, and it's still water, but it's got flavor. It lets you drink it consistently. So you start this business. How do you make it in the first year? Do you go to third-party manufacturers and say, "Hey, I'm interested in making Hint Water," or are you making it at home? I'm always curious: are you cutting up fruit? Is a third-party manufacturer doing that? How do you guys make this stuff?

Kara Goldin

yeah so we so initially I mean I was making it at home and and literally cutting up fruit and throwing it in water and then what I realized pretty quickly I don't know if anyone's ever sliced up fruit and thrown it into a pitcher but if you you know even if you put that in the refrigerator what you need to do you know from a bacteria standpoint you can't leave it out on the counter for too long but it's sort of I used to say it would get like smeggy looking like it would have you know the water or the fruit would actually get sort of soft it would just like the pulp would be sort of funky after a while and it just wouldn't taste as good so I started to try and figure out like why was that and then what I realized is that if we actually took you know the skins and oils of the fruit and created our own extracts and and then dropped a few of those into the water then we could actually you know still be using fruit but you know we're oftentimes we're using the rind so people like we just recently came out with a lime or a lemon flavor and people were asking us for years like you know why don't you have a lemon flavor it's really odd and yes because a lot of times we're actually using the skins and most of the time we're using the skins and oils and so it would almost taste like you know the the lemon naturally has like a you know it can taste almost like a turpentine almost like a furniture polish like sort of smell to it naturally and so you know it's just again it was trying to figure out exactly how we could do that in the right way that it wasn't you know like reminding people of of that I mean same with cherry I mean cherry so so often reminds people of bad cherry medicine cough medicine that they used to take as a kid and you know that was the same thing it was like you know we just wanted to make sure and again we're not using sugars or diet or any type of you know stevia or diet sweeteners in it too so it's really there's not a whole lot to hide behind it's really a matter of the type of lemon the type of cherry the process and you know so oftentimes you know people will say to us well you know how do you get that well rounded taste like year round and and oftentimes we're using actually grape skins to actually round it out but again it's all you know vegan and I say that but a lot of people say like oh it's fruit of course it's it's vegan and I'm like well actually that's not the case I mean that was my epiphany when I was looking at a lot of these you know so called diet diet drinks that were out there a lot of them that are claiming to be you know fruit are actually using things like bone marrow natural the term natural in general has a pretty wide definition and so so you know cockroach wings for example are considered you know natural they're they're oftentimes used for food coloring the red color in particular

Moiz Ali

so you

Kara Goldin

You know, I always tell people that even bone marrow... Even if you are okay with eating bone marrow at a French restaurant, a lot of people think that the fact that they're actually drinking bone marrow in some of their drinks is kind of, you know, gross. And the fact that we're not actually calling that out in all [cocktail] drinks is just... yeah, that is criminal, right?

Moiz Ali

Yeah, criminal. Criminal, yeah. Like, I'm okay... I'd be okay eating chocolate-covered cockroach wings once in my life, but I'd want to know what I was eating. If there were cockroach wings in, you know, a Blow Pop because it was red, I'd want to know that before I put it in my mouth. That type of transparency seems like it should be table stakes these days in the food and beverage industry.

Kara Goldin

Yeah, and also, like, bone marrow. I mean, you know, even... yeah, you know, that's one where we're seeing more and more people, you know, not that they're vegetarians or vegan. And sure, it's like they are... there's some mainstream drinks that are out there that they've thought they've been drinking for years that actually have that. So, for me, that was really kind of... we probably spent close to a year actually trying to figure it out. We looked at a lot of flavor houses because I had run into... I was trying to find a co-packer to actually bottle it. We kept getting pointed to all these flavor houses, and that's the challenge. We couldn't actually... I mean, this was 15 years ago. We couldn't really figure out what was in all of these flavors, and a lot of the flavors just were not as real as we wanted them to be. So, that was when we started creating our own.

Moiz Ali

And so, can you talk to me a little bit about that? What does it look like today at your co-packer or your bottling facility? Do they have like the rinds of lemons, pineapples, grapes, and oils? Does that happen in a third-party facility? How does that work? I'm always amazed at businesses like yours, not only because the drink is so spectacular, but just the process of making it. You know, I'm reading this book about McDonald's, and they're talking about how they perfected the French fry. For a while, they were like, "Okay, we gotta make sure we get the oil right and the time right." Then it turns out that that's not the only thing that matters. If you throw cold potatoes into oil, it's very different than if you throw warm potatoes in. It also matters in terms of the sugar and starch that's already in the potato. They ultimately had to go back all the way to the manufacturer of the potato in Idaho in order to make a consistent French fry. For a product like yours, you're talking about rinds and oils of lemons, grapefruits, and grapes. Is your co-packer doing that? Are they getting these rinds and mixing them with water? What does that operational complexity look like?

Kara Goldin

No, we actually have... We now have a third party that just works for us that creates that for us. So they do have that, but we send... We have multiple co-packers. We are only distributing in the US today, but we send that into our co-packers. Gotcha. So, yes, there are...

Moiz Ali

Any like crazy stats there? Can you say, like, you know, I looked at something about Panda Express and they're like, "We use £30,000 of chicken every X number of days" or something to that effect. Do you like, are you like, "Oh my God, we're one of the largest consumers of grapefruit skins in the country?"

Kara Goldin

Yeah, you know, I don't think we... I mean, we use such a tiny amount. In every bottle, there's only like 2 to 3 drops of the oil. So, I wouldn't actually say that we are a major producer of it. What's really interesting about it is that people always ask us, "Do you use organic fruit?" We try to use organic whenever we can, but you know, the key thing for us is **no pesticides**. What I always tell people about organic fruit is that when you go into these co-packers... Our original co-packing plant that we used, and still use every once in a while, is on an apple orchard. They have lots of apples and they do other people's products and send fruit in. I'm just amazed at how much fruit actually gets produced into juices that has mold on it. So, you know, I mean, it's a problem. That's sort of another reason why we really want to produce our own flavors too, because we have a lot more control over that. We can see that we are getting what we need, you know, that doesn't have mold on it. But just in terms of complexity, I mean, we make it easy to drink our water. It looks pretty simple on the outside, but the truth is, it's not that simple because of temperature.

Moiz Ali

oh yeah

Kara Goldin

And you know, everything else about it. But I always, you know, you and I have talked as founders. I mean, there are all these founder stories. Actually, my book is coming out in October, and it really dives into a lot of these nightmare stories along the way. You know, of creating not just Hint, but also other stuff from AOL. I was in the early days of CNN, so it's sort of a lifeline a little bit. I've learned a lot along the way. But, you know, it's interesting. We produced the first non-alcoholic water company that didn't have fruit in it and didn't have preservatives. For me, I really just didn't trust the word "preservative" when I first started. I thought, you know, it can be done.

Moiz Ali

it's like natural

Kara Goldin

right and it it's just and I thought I kept asking the question I go to these co packers and I kept asking the question like you know why do we need preservatives and they're like because in order to have a shelf life to go be on the shelf at target you need to have you know extended shelf life otherwise you know you're you're not gonna be able to grow this company and so you know there was a. Probably a year into being you know in whole foods we were probably a little over half the country and we almost just shut the company down because we just couldn't figure out how to do it and you know my husband theo who's our chief operating officer I mean I really give him full credit I mean we literally like thought we had tried aseptic packaging and and you know really just we're looking at all different ways to ultimately do this and then finally I remember him getting up in the middle of the night and I heard him out in the kitchen really trying to figure this out and I said what are you doing and he was like you know I'm just trying to figure out if we can use heat and just to actually you know but it's tricky because of the sugars and you know you don't want you know to turn the fruit and I always tell people you know just in in layman's terms it's like a cooked carrot versus a raw carrot or a you know raw raw strawberry versus a cooked strawberry very different type of thing and so you have to be very careful with it and so it's not a straight shot of heat there's actually you know ups and downs along the way in order to make sure that that doesn't you know change and so when I when I talk about like this is a product that is not easy I mean it's probably you know the biggest reason why companies like have have had a hard time replicating it over the years because it's it's you know it takes time and it's you know it's an artisan product that is that is really you know priced as a mainstream product for you know anyone to enjoy but it's not a

Moiz Ali

And so the heat, is that like a form of pasteurization that you're doing in order to provide shelf life? Gotcha. Okay, and so that was like one of [the challenges] early on. You're basically like, "We cannot put this on the shelf anywhere because the shelf life is several weeks as opposed to, you know, a year or two," which is what you really need to get into [stores] like Target.

Kara Goldin

And so, we used to... I mean, this is a segment in my book. It's, you know, it's funny now, but it wasn't funny then. We used to go into Whole Foods and we'd stock the shelves there. We actually had inventory in our warehouse and in our garage, but we would just tell them, "Oh, this is all we have. We're out of stock." They would yell at us because they were like, "You guys don't have enough stock to maintain this relationship." The truth was that we were really nervous that we didn't have the stability on the product. Sure, and you know, I always tell entrepreneurs this too. Theo, who's my husband and our Chief Operating Officer, was an attorney prior to helping me start Hint. He had worked on the case... I don't know if you remember Adwalla when they had the E. coli outbreak. A few kids died; it was horrible. They were not pasteurizing the product, and it was awful. He learned a lot about shelf stability but also the dangers of it. So, every single day, literally in the early days of Hint, we were taking our product to a lab to make sure that it was actually safe. We believed it was safe and knew that we didn't want to mess around with people's lives at all. But when I see that... I've talked to many entrepreneurs, especially in the food space, and it's just frightening to me sometimes when I hear people say, "Oh yeah, no, we haven't really figured it out because our volumes aren't that big." I'm...

Moiz Ali

thinking about that that's nuts

Kara Goldin

yeah it's nuts possibly

Moiz Ali

I think that’s okay. There was actually a deodorant startup brand that launched a couple of years ago. They got into Target but had stability issues. All of their deodorant would melt basically three months into their shelf life, and they got recalled at Target. Target ended up giving Native their shelf space, and it was a complete disaster. From that perspective, it’s bad both from a brand perspective and from a customer perspective because Target doesn’t really trust your brand any longer. From a consumer perspective, selling an inferior product, especially an ingestible product that could harm a consumer, is unforgivable. It is. Yeah, it’s crazy. I do want to talk a little bit more about that. In preparation for this podcast, I did a bunch of research on Hint. You guys are a massive company. There was this guy who worked at Native who would not drink any water; he would only drink Hint water. I’m pretty sure he brushes his teeth with Hint water. Anytime we had to travel, he would have to Instacart Hint water to the hotel before we landed. So, we’d go to places like Vegas, New Orleans, and Minneapolis, and he was Instacarting water. It was crazy! He was a huge fan of Hint water. From what I can tell, I’ve seen articles from 2006 and 2018 stating you guys were somewhere in the $90 to $100 million run rate back then. What were the numbers looking like in 2005, and where were you getting sales from? This is 15 years ago; direct-to-consumer isn’t nearly what it is today. Where were those sales from, and what did those sales look like?

Kara Goldin

so it's so you know we started out I mean literally delivering cases and and you know I was doing it initially I just had my 4th child and and you know I I joke about this but I think theo just really thought I was out of my mind I mean I have 4 kids at the age of 6 and I'm you know a previous vice president at you know a tech company and you know it's he's like wait I get that it got you really healthy but why do you really wanna do this I mean you're you know you can go get a a job somewhere else and you know go make a lot of money and and I thought you know for me it was really about you know resetting health for people and and like I didn't care whether or not I didn't set off in my business plan to to actually go build a $1,000,000,000 company or become the next red bull or vitamin water or whatever for me it was really about you know helping people change health and I really believe when I described this company to people I said if I can actually just get it in the hands of people especially the people that are drinking these you know flavored waters or vitamin waters or diet sodas or even you know full fledged sugar sodas and get them to drink our product maybe they'll eventually get to water maybe they'll never get to plain water ever but like we could actually change health in you know the world and you know in our little you know area or whatever and you know that that did not only mean you know helping people to like we were hearing early on that this was you know and I saw it myself helping me lose weight but it was also you know type 2 diabetes at that time was probably 2% of the population I mean it's you know upwards of 45% of the population just in the us have you know type 2 diabetes or pre pre diabetes and heart disease and lots of other things so I thought you know that how do I get it in the hands of people and so when we initially went into whole foods I mean that was the first retailer around the bay area went into some others I was actually interviewing sort of like not seriously interviewing but had had a few conversations with this guy omid khordasani who was at Google at the time and he worked with my husband at at netscape and and so ahmed was talking to me about a job at Google and you know he was really nice and kept upping the salary that he was talking to me about and after a while I was just like you know what ahmed like you know it's really nice and you're I consider you a friend yeah

Moiz Ali

but I want this job

Kara Goldin

Feel like you a lot, but for me, it's really about... it's not about an offer right now. It's about I don't really want to commute down to Palo Alto and Mountain View. I really want to stay up in the Bay Area. But then I really, you know, I just want to go and do this and see if I can actually help lots of people. That was a major turning point for him because Omid said to me, somewhat jokingly, "Oh, well, do you have a sample of this product?" I pulled it out of my bag, and he was like, "Of course you have a sample of the product."

Moiz Ali

so you're actually selling him during a job interview in order to get hint water into mountain view's offices

Kara Goldin

yeah but I never even thought of it as

Moiz Ali

like Google that's what it turned

Kara Goldin

Into though, yeah. But he said to me, he was like, "Oh, you know, we have this guy Charlie who is our chef. We'll talk to Charlie about it and see." I was like, "Okay, cool. Yeah, if you guys want it in your offices, that'd be really fun." I had no idea what I had stumbled upon. Charlie ends up calling, saying, "Hey, I really like the meat a lot. Can you send me some samples of the drink?" I said, "Yeah, we'll give it a try and see what happens." We've been doing food, and it's going well, but let's give him a try as well. He called back a couple of days later and he's like, "Do you guys have more supply?" I'm like, "Yeah, do you have another office?" He said, "Oh, we're just going through this like crazy." So very quickly, within like two weeks of that conversation, Google became our number one retailer. I mean, they... wow!

Moiz Ali

Is it your number two account, Whole Foods, then Google? Sort of like, if they... and it's a Whole Foods, gotcha.

Kara Goldin

Yeah, they quickly overtook it. I mean, like I say, "retailer" in quotes... yeah, right. They weren't really a retailer, but I mean, it was such a...

Moiz Ali

place yeah

Kara Goldin

Yeah, and they were... You know, it's interesting because Google was really trying to make sure that they had healthier and better-for-you products. Not just drinks, but also food. They were... I mean, they were really aware of it and very early. And what year is this? So that was like the beginning of 2006.

Moiz Ali

wow okay

Kara Goldin

I mean, that was... and again, we were still trying to get our shelf life. Our shelf life was maybe 6 months, and we were trying to figure out if we could get it higher. I mean, today our shelf life is 2 years.

Moiz Ali

So, do those B2B sales still make up a significant part of your revenue? Like, you know, you sell them to Google. I know I discovered your product at a startup as well when I was working out of somebody else's office and it was in the refrigerator. Do those B2B sales make up a significant percentage of your revenue today? Or is it sort of like now you're in Whole Foods and Target and Walmart and sell on Amazon, and so it's still nice but less significant?

Kara Goldin

Well, it's interesting. I mean, we're obviously taping this during a crazy time in history. Sure.

Moiz Ali

yeah that's a great.

Kara Goldin

It's, yeah, right. So, our food service sales, you know, just because nobody is going into offices, have actually cut. What's interesting is we're actually talking to a lot of the executives at some of these companies. Some of them are even sending cases home to their employees, just as a gifting gesture, to say, "Hey, continue to stay healthy." But, you know, food service has really been... I mean, the sort of corporate food service has been massive for us. It started with the tech companies in Silicon Valley that just really embraced this. Then they would embrace us and go into their local store and say, "Hey..."

Moiz Ali

for the product yeah

Kara Goldin

yeah that's

Moiz Ali

great what a great like flywheel effect

Kara Goldin

Yeah, no, and I always tell entrepreneurs too, it's like, you know, it wasn't strategic that we... I said, "God, if I can just go get Google or I can go get Facebook." I mean, I remember when Sheryl Sandberg's assistant, when she left Google and she went to Facebook, she called me and said, "Hey, you know, would you guys deliver to this company, Facebook?" They were still in Palo Alto at the time. I was like, "Sure, you know, no problem." I hadn't tried... and so that's... and...

Moiz Ali

So, when did you realize that your business could be more than just delivering products? In 2005, you got Whole Foods, and then in 2006, Google and Facebook came along. At some point, something must have set in your mind where you thought, "This can be a legitimately large business." Did you raise money? Compared to most of the startups I speak with in San Francisco that have not been around for 15 years, it's pretty recent. Their first check usually won't be more than 5 or 6 years ago. When did you guys first raise money in the lifecycle of your business? I think it was early 2007. We sort of did this a little bit differently. I mean, maybe to some extent, you know, I think...

Kara Goldin

You very similar where, you know, we really thought early on that I still wanted to have dinner with my friends and not have them asking me, "How's the business going?" I was able to... I mean, we had made a little bit of money with Netscape and AOL. We thought, "You know, we have to be careful, but let's just try and see how long we could go with self-funding." I always tell entrepreneurs too, we had an amazing house in San Francisco that we had remodeled. All four kids were... we had a baby at the time, but the three kids were in private preschools and private schools in San Francisco. I remember looking at Theo one night and saying, "You know, this is not really that sustainable. If we're going to be sitting here trying to pay for school, how can we actually conserve money and put it into our company?" That's when we decided to find good public schools around the Bay Area. And, you know, that's what we did. We moved out to Marin County. Again, Marin is gorgeous and nice; it wasn't like we were sacrificing. Yeah, still tell us about... Yeah, sure.

Moiz Ali

Yeah, and so today, can you talk a little bit about how much you've raised over the last 15 years?

Kara Goldin

Yeah, I mean, we've raised... this part is all public, I think it's a little over $60,000,000. But we've raised it in sort of a different way. We haven't done venture or, you know, no private equity. We have a family office out of Brussels which was... you know, they've got a little more money into the company or into their family office than they originally did. But it really stemmed off of the Stella Bir family, and so...

Moiz Ali

Why did you like the family office versus a VC? It's apparent to me, to be clear. I just want to make sure listeners understand: why is a family office different or better for you than a VC?

Kara Goldin

yeah I mean I sort of I didn't know back

Moiz Ali

then when when we necessarily took money but these guys

Kara Goldin

Had actually been investors in Vitamin Water, and Vitamin Water had sold to Coca-Cola. Part of their thinking was, "We really want to invest in healthy lifestyle and better-for-you products outside of Europe." So, they were looking at Hint and approached us, saying, "Why wouldn't you take money?" We had an advisory role with Vitamin Water and were big investors. That was really our thinking back then. But, you know, I laugh, and I don't know if you've ever talked to Silicon Valley investors. I mean, we are stocked in most of the Silicon Valley offices. When we were going out and raising money, we would pitch some of these people. What's interesting is that so many of these people love drinking Hint. It would always start off like, "Oh, we drink Hint all the time."

Moiz Ali

the time

Kara Goldin

We love your product; everything's great. But many of those people, you know, people always invest in what they know and what they think they can add value to. So, I think that they viewed us as a company that, if we were actually doing it right, then, you know, Coca-Cola would come in and they would just knock us off. The truth is, I mean, this sort of... you know, I'm skipping to the end game on this, but the truth is, like, you know, Coca-Cola has knocked us off like six times. I mean, every time it's just not what their core competency is.

Moiz Ali

Sure, you know, when people ask me, "Why didn't P&G build their own version of Native?" I'm like, it's the same reason that when you look at a bird, you don't think, "Oh, now I know how to fly." Just because you've seen something grow doesn't mean that it's in your DNA. The people who work at Coca-Cola didn't start Coca-Cola. They're stewards of multibillion-dollar brands like Sprite, Diet Coke, and Powerade. Their skill set is to steward those brands and grow them as fast as possible, but in a very different way than going from 0 to 50 million. The difference between going from $1 billion to $1.5 billion is very different than going from $1 million to $50 million. It's a very different skill set.

Kara Goldin

I mean, I remember when that... oh, sorry, when the first time they came in and knocked us off. I always talk about it as a timeline; that was a really bad day. I'm sure you guys had the same experience with one of these big companies. What I realized is that it actually helped us to get more space because they eventually gave up. There are probably internal fights, especially when you look at the mother ship of these soda companies. It's sugar, which is totally counter to what we're doing. We're just getting people to drink water that tastes better, and that's it. Every single time they've come out with a drink that is a competitor, we've noticed it's hard for them, and we end up getting more shelf space. Just going back to your VC question, we would talk to these VCs, and first of all, a lot of these VCs... I mean, the core consumer for Diet Coke is female. It's no surprise that there are a lot of VCs who are not female, especially 12 or 13 years ago when I was pitching. I'd be in there talking about my Diet Coke addiction, and they would look at me like, "Well, that wasn't really an addiction, was it?" I was like, "Oh no, it was real." It was right up there with, you know, cigarette addiction or on the same timeline. They were like, "Really? People actually have that?" Again, it was just not what they knew. They would still keep ordering cases and cases of Hint to consume. In fact, some VCs have told me that they won't invest in tech companies unless they have Hint in the office because they really believe that they understand what their employees need to stay healthy. I mean, crazy stories like that align... wow.

Moiz Ali

that's nuts

Kara Goldin

But yeah, I mean, they just wouldn't end up investing. So we ended up, you know, going a different route and... we just raised from a lot of individuals. We have over 100 investors in the company and people, yeah.

Moiz Ali

So, John Legend is on your cap table. I think my brother, actually, in all transparency, is also on your cap table. But I want to fast forward a little bit to today. You know, I've heard you talk a lot about how about **40%** of your business is online now versus brick and mortar, which is crazy because I think it's like... I want to talk to you a little bit about shipping costs later on in this conversation and how you sort of manage those. Because, you know, shipping water is not an easy thing to do. But let's talk a little... You know, **40%** of it is online, **60%** is in brick and mortar stores. Can you talk a little bit about the brick and mortar stores that you're in right now?

Kara Goldin

Yeah, it's... you know, we've started in sort of the specialty store market, which is like the Whole Foods, Sprouts, and some of the local ones. Then we went into conventional grocery. I think where we really had the toughest challenge in conventional grocery was that we just didn't have the bandwidth and the people that the big soda companies have. We would just get knocked off the shelf. We wouldn't have the slotting fees, and lots of stuff was going on. I think that's where we really started to realize, not only from a revenue standpoint, but also that it just wasn't as challenging to compete inside of these tech firms. Then, you know, lots of other... it wasn't just Silicon Valley, but lots of offices in New York were cropping up that were extensions of Silicon Valley or LA or whatever. So we started getting into more and more companies that wanted to be like Facebook and Google. They would recruit people, and they would end up putting us in. So, you know, we became pretty giant in those companies. Then, you know, we finally got into Target a few years ago in a pretty decent-sized way. We started out with a few feet of space. I mean, again, like I'm sure you and I could swap stories on this. It's just... you know, we had gotten to a...

Kara Goldin

Where we sort of understood that if we didn't have enough shelf space, then we just wouldn't.

Moiz Ali

be seeing to use the product yeah

Kara Goldin

Of course, yeah. So we would look little, and I remember reading a case study on Tom's. You know, the Tom's... I mean their toothpaste.

Moiz Ali

toms of maine yep

Kara Goldin

Lots of it, Tom's of Maine and lots of things. This was, you know, before they were acquired, but I remember hearing sort of their sales plans. They talked about how they got to a point where they would tell buyers, "You know, if you don't give us this kind of space..." Their sales team would just say, "I... you're just not ready for [our product]."

Moiz Ali

us sure

Kara Goldin

like we'll come back like it's all good and so we really started saying that you know to these large retailers because we knew that we would fail unless we actually had a certain presence and so we we ended up going into target and then you know really got smarter about the data too and and started realizing I mean it's I'll I'll give you a crazy statistic I mean in in target we do more dollars per square foot than some of the large brands like a vitamin water for example yeah and and so that is like when you can actually take that kind of data and you can't do that when you're first starting a company right and you're not even gonna register on this data but when you start being able to articulate that to these buyers I mean you you know you're just getting smarter about you know the data and sort of what you're doing and I think just sort of how that relates for us into the ecommerce side of the business too I mean that you know is is sort of its own story I mean we started we we had gotten into starbucks another big food service company we were in 11,000 starbucks and you know which was a great day when we rolled out in starbucks and we were only one flavor it was the blackberry and but we were you know rolling along and doing you know 2 to 3 times what their goals were for us and and one day we got a call from a buyer at starbucks that said hey we're you know we're gonna bounce you out of here because because howard schultz said that you know we're only gonna have beverage brands in here that are distributed by pepsi because pepsi is actually doing the distribution for us for our ready to drink starbucks drink and and so I always you know my big lesson learned from that day was you know don't have too many eggs in one basket I mean we really that was a bad day and you know I don't cry very often but I went home and I cried and I thought how am I gonna tell my investors and board about this and then I remember a couple weeks later you know I resurfaced and I'm like look I'm not gonna lie it was really bad that we got bounced out of there but at the end of the day we just need to find these consumers because we were doing well and starbucks actually paid us for product and they exposed us to places like chicago and sure you know lots of places texas and and places where we didn't even have distribution and so a couple of weeks after that happened we got another email from from you know another big brand they weren't even that big back well they were pretty big but they didn't have a grocery business I guess it was 6 7 years ago at amazon and they were sharing grocery business and I I you know took the email and I said you know tell me about this grocery business and I I mean I had dealt with jeff bezos in the early days when he was just a book you know retailer when I was running when I was running aol's business and I I really believed that or or I wasn't I didn't know if I really believed it I wasn't sure whether or not this was a serious business because I thought amazon gets into little businesses and sometimes you hear about them and sometimes you don't and yeah I wasn't sure whether or not they could be serious in in the grocery business because of weight and all kinds of issues I thought I don't know maybe they have it figured out because they're doing books and those are pretty heavy and so but I had a lot of you know blackberry hint in the warehouse that was supposed to be you know going to starbucks and so I

Moiz Ali

you sold it to amazon instead

Kara Goldin

I sold it to Amazon, and that was the only flavor we had on Amazon. Very quickly, they told us, "You guys are one of the number one products in grocery." In addition to that, what we're seeing is that, you know, this goes back to the data side of the story. They said, "We're seeing that your consumer is also buying things like, you know, better-for-you products." Yeah, and I thought, "Wow, that's really interesting." I asked Amazon for the emails of these consumers because I was like, "I'd really like to reach out to them." They said, "No way, you're not getting us."

Moiz Ali

actually I'd love to ask you

Kara Goldin

yeah sorry

Moiz Ali

Go ahead, no worries. Well, I'd love to ask you a little bit more about the data side of things, which you were talking about. Look, at Native, we were entirely direct-to-consumer through our own website. So, we understood things like Average Order Value (AOV) really well, as well as repeat purchase rate. We knew when customers would purchase, and if they didn't within a certain number of days, we knew what we should be doing in order to retain them. However, once we launched into Target, Walmart, CVS, and Walgreens, that data became a lot more gray to us. It was hard to understand the repeat purchase rate because we didn't know if a customer bought at our store, on our site, or at Target. Did they buy in Target and then on our website? We don't know if it's their first purchase or their second. Did you guys experience the same type of fuzziness with your data once you launched? You know, going from selling everything yourself in 2005 to now having a robust online store, a robust Amazon store, and a big Target business? Do you guys experience that data fuzziness, or is there something that you're doing to help you through that morass?

Kara Goldin

So, you know, we obviously have sales numbers that go in by store. And I say "obvious" like, you know, again, you get to a certain level in these stores and they'll start to give you some of this data. For somebody like Target, we definitely have that. Then we can match that with how we're doing on our own website, which is what we did after, you know, Amazon. But it's still very difficult for us to see that, you know, Lisa Smith is purchasing on drinkhint.com and then, yeah, they're also going...

Moiz Ali

purchasing at target

Kara Goldin

yeah but I think

Moiz Ali

the holy grail that's the holy grail of attribution

Kara Goldin

Yeah, and I think it's really tough. I mean, the only way... you know, I think electronics have been able to do it because they get you to, like, get a warranty plan.

Moiz Ali

home or something yeah yeah yeah

Kara Goldin

Right, but for consumer products like ours, I think what online has allowed us to do is, for example, we can go back into, you know, picking on Target or Costco. We're going nationwide into Costco in the next few weeks. So, it's interesting because we're able to say to them, "Here are our top 10 markets or cities inside of, you know, our drinkhint.com." We can also match that to a major retailer. We don't necessarily have to say, "Oh, this is Target's data," but we can say, "This is a major retailer," and we can show this. And, you know, again, you get in front of a buyer that really understands the data, and it's just obvious that they're missing...

Moiz Ali

sure

Kara Goldin

Right, and then also, I think from the standpoint of the one other thing that I'll just say really quickly is that it allows us to do... You know, I always say to entrepreneurs that if, for example, a major retailer that's in Florida were to just come and turn you off as a consumer, you know, just decide, "We're going to kick you out of here, and you're no longer going to be in here." What I realized is that with having our own online site, we're actually able to go in and market. So, you're really hedging your bets.

Moiz Ali

sure

Kara Goldin

And it allows you to grow the business. I mean, what I've realized now is that retailers need to do what they need to do, right? And I need to do what I need to do for Hant as well. The more options you can have out there, especially during this whole corona incident, I mean, we're considered essential, so we're still in stores. I'm doing my part to help the sales team once a day by going in and checking on supply, etc. I think being able to have a direct-to-consumer business that is now higher than 40% of our overall business has allowed us to really grow when these restocking issues are someone else's problem. Unfortunately, products get hit by it.

Moiz Ali

Yeah, and then to like, you know, you were talking about getting into Costco in the next few weeks, which is amazing! Congratulations, first! When it comes to that, do you find there are pricing issues among the retailers that you have on Amazon? Like for Native, it was hard to hold the price consistently everywhere. You know, today Walmart will sell for $11.97 and Target will sell for $11.99, but that's basically the same price. One of our concerns was that we would all of a sudden have somebody drop the price to $9 or $8 and then have to deal with something like that. Do you guys have any of those issues, or are you sort of good when it comes to pricing on the product?

Kara Goldin

So, we never try to... you know, we give a suggested retail price. Yeah, and people have different margins that they're working on. But, you know, look, Walmart and Target have amazing algorithms that will change on a dime, depending on... you know. And so, we have consumers who write to us and ask us, "Should we buy on your site or should we go to Target and buy the product?" You know, they're like, "We just want to know where's the..."

Moiz Ali

best for the small business for you

Kara Goldin

Right, and... or and so we always say to people, "You're the consumer, you're in charge. Any place that we deal with is..." You know, like we're excited that they're growing the business, sure.

Moiz Ali

your business yeah

Kara Goldin

There's always gonna be people that are going to come to Native's site or Hint's site and, yeah, you know, buy. I think there's this perception that it's like fresher if you get the product on our site, and you know, that's not true. I mean, as soon as we make our product and...

Moiz Ali

you know

Kara Goldin

I mean, we actually... it's a longer conversation, but that's sort of another thing. We really don't... we pretty much are making our product on demand. I mean, as soon as we... we spend very little money on warehousing because we're making it and it is going out the door. It's constantly running, but we've got sort of the supply chain thing where, you know, I think we're pretty advanced about that. So even through this whole Corona situation, you know, I saw early on, probably a week before people were even talking about sort of these hoarding issues and out-of-stock issues. I said to our sales team, "This whole auto replenishment thing is not working at many, many stores that I've been into."

Moiz Ali

sure

Kara Goldin

And you know, the response I got back from our team was like, "Well, they keep telling us that they're on auto replenishment." You know, I mean, we also have a product where, depending on how much space we have in stores, if people come in and buy 10 bottles of Hint [water brand], which is common, they'll wipe out the shelf.

Moiz Ali

the shelf right yeah that's crazy

Kara Goldin

And so, it should... and so it's supposed to match with registered data to say, "Oh, you've got to automatically reorder it." But the stores have never seen anything like this, not just for Hint but for other products as well. They just couldn't keep up with it. So, we went around to all of the buyers of all of our companies that we work with and we said, "Look, there's definitely an auto replenishment product somewhere in here, but we're not going to try and figure this out. We don't expect you to go figure this out either. If you want to order from us directly, we've got trucks that will deliver our product right to you." I'd say over 50% of the people we deal with just said, "Yeah, let's do that," even if it's just for a couple of truckloads to catch us up. But again, the number of shelves that I look at now that are just empty... I think we watch it really carefully. People are like, "How did you know that?" and I said, "I just... I don't know. I've been watching it." It's what great founders and CEOs need to do. You need to really understand why this is happening. I'm sure once everybody gets back to work and goes back into an office, the number one thing that a lot of these grocery retailers are going to do is figure out this auto replenishment thing because it's a mess. It's absolutely a mess, and I don't know who owns those companies and those software systems, but they're not perfect.

Moiz Ali

Sure, I would love to shift the conversation really quickly to marketing. I have a couple of questions here. One, have you guys had a booth at Expo West in the past? I'm pretty certain you have, or you've been to Expo West. Do you find those types of events helpful to your business? Do you find those types of events helpful for networking with buyers? I'm sure there are a lot of people who are listening who are going to be starting food service businesses or who are in the food or beverage industry. They may not want to spend the money it takes to get into Expo West. Did you find that to be helpful when you were growing Hint?

Kara Goldin

yeah for sure I mean our first one our first show was at fancy food in new york

Moiz Ali

yeah

Kara Goldin

And a few weeks after we actually put the first bottle on the shelf at Whole Foods, I mean, I literally got the worst space possible in New York. I had no idea. You know, I had been to some tech booths, but I just thought... I mean, it happened so last minute. I literally brought my own table in and set it up. It was just super bare bones, and we had every buyer from Whole Foods lining up. So I always tell entrepreneurs too, it's like sometimes when you actually look pretty scrappy but you have a great product, they're going to come by you and they'll recognize that you're authentic and real. I mean, I laugh now because I had no idea what UNFI was and some of these distributors. Yeah, they'd sort of seen Cisco trucks around, but I had never really figured that whole world out. So that was our first experience. Then, I would say a couple of years later, Expo West, which is in Anaheim every year, has been a great show. I think the one on the East Coast has been an okay show as well, but the real big one... yeah, we've been doing it for 14 years. Unlike some brands, I mean, some brands actually write orders there at the shows. That's never really been our purpose and our goal. We use these trade shows not only to get with buyers but also to really understand what else is going on in the marketplace from a marketing standpoint and just talk to other people there. And now it's gotten to a...

Kara Goldin

You know, it's just a time... We have over 200 people in the company now, and so for us, we actually try to staff our booth with people that don't usually get to work the trade show booths. We don't hire, you know, the "booth babes" or whatever you want to call them to come in. Sure, you know...

Moiz Ali

you have yeah

Kara Goldin

right we get we get our team in there you know who just like love being there

Moiz Ali

They're passionate about the product. I've always heard things like, when you're sampling at Costco, for instance, you can either get the Costco employees to hand out samples, in which case you'll barely move any product. But if you put your own team member there, who's really excited about a product like Hint Water, they will go through samples really quickly and drive sales much faster. This is because they have someone who's authentic, believes in the brand, and is passionate, as opposed to someone who's just hanging out, handing out tiny samples and saying, "Go on your way." They actually know the brand, and when a consumer asks about it, they can respond to a ton of questions. I've also noticed that this year, you guys had a Super Bowl commercial.

Kara Goldin

yeah it was it was crazy

Moiz Ali

Talk a little bit about that. Like, you know, yeah, that is insane! I would love to understand how that sort of came about. You know, I've certainly seen the commercial where somebody's talking about how they really enjoyed Blackberry, and they've got Blackberry on their face. Then, somebody else licks it off their face, and they're like, "The Hint Water, the Hint Water flavor, the Blackberry-flavored Hint Water tastes more like blackberries than real blackberries." Can you tell me about how that came about? Can you tell me a little bit about costs and stuff as well? I think everybody's always curious about Super Bowl commercials and how extravagant they are or not. We'd love to hear the background about that.

Kara Goldin

yeah so I mean it was a pretty crazy story we had started to do some tv and just running remnants you know ads so we shot 3 commercials actually in the fall and 2 of them we had running and you know it's we were running just for about 8 weeks on you know just various like some news channels so some people had seen it and then some sort of overnight stuff we were just sort of testing it and and then we were also not only testing the brand commercial but we were also there's a tweaked version that is direct to consumer so you could actually you know you get an offer and and doing all of that and so so we had this one ad that was sitting there and I don't know it was it it's a crazy story 1 sunday so I you know was at cnn for a couple of years way way way back and I had just run into a woman that worked with me at cnn and who's now you know pretty high level at nbc and just happened to see her at a at a conference and her name's laura and I was chatting with her and I don't know one sunday I just was like I should just text her and just ask her you know I knew it was on fox and I I should just ask her who's like if she knows anybody at fox and if there's any inventory and I had sort of heard that they were sold out but I never really trust what I hear and so she's like oh yeah you should like you should you know just text this guy he like runs fox sports and he's a good friend of mine and just tell him that laura sent you and he laughed he said oh no we're totally sold out but he said you know it's funny that you mentioned this that there's I just spoke to somebody who was doing regional stuff and I was like what do you what do you mean I mean obviously I know what a region is but he said so in the major areas like san francisco and new york and chicago there's they have to leave a little bit of inventory in those markets and I said so you're saying that there's like multiple people and and this was literally two and a half weeks before super bowl was running

Moiz Ali

wow

Kara Goldin

And so, he said, "Do you have an ad?" I sort of lied. I wasn't sure if that was going to be the ad, but I was like, "Oh yeah, we have an ad."

Moiz Ali

you blocked you blocked he

Kara Goldin

He said, "You know, there's this guy. You should talk to this one guy, and he can get them for all the markets." I still didn't really think that it was going to happen, but I was just... I don't know, I was bored and amused by it. I had never really... you know, I had started to joke, like, "We've got to make these commercials something we could run on the Super Bowl one day." It was kind of something that I just was energizing the team about more than actually thinking seriously about it. So the guy reached out to me, and I was like, "Okay, so the Super Bowl is in less than two weeks, and you have inventory in all of these markets."

Moiz Ali

yeah

Kara Goldin

He said, "Yeah, in every market I have inventory left." So I was like, "You know, what do we have to do?" He said, "Well, your ad has to be like traffic through not only the NFL or Fox, but also the NFL." So, you know, a couple of days here, a couple of days there. The response back from my team was like, "There's no way! I mean, you're just dreaming. This is gonna be like $5,000,000." I'm like, "We already have the ads; it'll be fine." You know, the founder is just saying, "It's gonna be great."

Moiz Ali

everything's gonna

Kara Goldin

It was fine, but you know, I was getting shot down by everybody in the company. They were like, "There's just no way that this is happening." Then, 10 days before, I guess 11 days before the Super Bowl, I resurfaced it. I said, "You know, we should really go back and do this." I told my CMO, "Go back and just say to the guy, give him a lowball offer." He replied, "Yeah, they're sold out for national. There's no way that they're going to go for it." I was like, "No, what does it hurt? We're running out of time." So, one week before, the Friday before, I said, "This whole thing has to be trafficked by the NFL, or else they're going to be giving these spots away to their own advertisers." By Tuesday morning, it has to be done. So, at 5 o'clock Friday, we turned in our bid on this and let's see what happens. I mean, I have to tell you, we ended up getting... you know, the overall plan was less than 50%. I mean, we got 80% of the country for less than $1,000,000.

Moiz Ali

80% of the country saw the ad for less than $1,000,000 on a Super Bowl commercial. Yes, it was a 30-second spot or a 15-second spot.

Kara Goldin

It was a 30-second spot. What was crazy is that they told us it would run sometime during the Super Bowl. It could be anywhere from 30 to 60 minutes before or after the halftime show. We literally were right before the halftime show, so everybody who was coming in to see the halftime show was showing up, getting ready, and saw the spot. It did amazing! We were so excited about it, not only from a consumer perspective. Definitely, it was... you know, where you've got people licking each other's faces, which, you know, we probably wouldn't run that ad in today's climate by any means.

Moiz Ali

that's right

Kara Goldin

Direct, but yeah, it got people to remember it and they were talking about it. It was, you know... like a very small percentage of the population thought it was offensive that two guys were licking each other's faces. Gen X's and Gen Z's thought it was hilarious.

Moiz Ali

And they remembered it. Twelve percent of the population will think everything is offensive, no matter what you run. They'll think it's offensive. If you're going to walk on eggshells and please everybody, you're not going to do anything.

Kara Goldin

yeah but I I think

Moiz Ali

That's a bunch of friends texting you, being like, "Hey, I just saw your company on the Super Bowl!"

Kara Goldin

I have never said this about my cell phone. I think I had over 400 texts within...

Moiz Ali

wow

Kara Goldin

Like from all over the country, just like, "Oh my God, oh my God." I think that was the thing too. What I was going to say is it wasn't just consumers, but it was also, you know, people in the industry noticing. It was investors, it was, you know, lots of people. Oh, and most important were our employees. The excitement that they were getting from all these texts saying, "Oh my gosh, like, you know, there's this big soda. You know, Pepsi's doing it, and Coca-Cola's doing it, and everybody's doing it." But then all of a sudden, sure, the little underdog shows up.

Moiz Ali

yeah yeah yeah

Kara Goldin

with the ad

Moiz Ali

that's that's an amazing story

Kara Goldin

And so, people were so excited. But again, I think it's just, you know, never lose your scrappiness, right? No matter how big you get. I think my curiosity and also just my previous life of sort of understanding what trafficking is, and just stuff like that, it just takes time. We knew it was going to clear, but we were playing against the clock. The guy that we were dealing with knew it, and I just said, "Is your manager just freaking out right now that you have these open at this open house?" He was like, "Kinda. Can we get this done?" And I was like, "What?"

Moiz Ali

do you mean of the leverage that you had that's fantastic

Kara Goldin

so so so

Moiz Ali

We've talked about some of your incredible marketing successes. It sounds like the Super Bowl ad was fantastic, and you've had a bunch of successes at the trade shows you've attended in terms of getting in front of buyers. Can you talk about any tough marketing failures that you've had? You know, at Native, we had a bunch of marketing failures where we tried to buy really large podcasts or we tried to buy our way into places, and it just failed spectacularly. We would spend tens of thousands of dollars, and it just didn't work out. We also experienced that when we tried, like, you know, the first couple of months after I launched the business. We lost thousands of dollars trying to buy Google ads because we felt that was what we were supposed to do. I'm sure there are going to be a lot of people listening to this podcast who aren't nearly at the level of scale that you're at but want to realize that you're also a human being and that there are failures along the way. Were there any failures from a marketing perspective that you had in the last 15 years that you can talk about?

Kara Goldin

Yeah, I mean I would say a couple of things to that: First, you know, I was in advertising before, so I sort of always had this theory that unless we could really get the frequency, it wasn't worth it. So, we never really went out and bought one billboard because I just thought like one billboard... it just... it's...

Moiz Ali

not gonna do so anything

Kara Goldin

Right, it's just wasting money if we're just doing one thing. I think that we've always believed, like, you know, buy a chunk in an area and do it right, or just don't do it at all. That's sort of been our theory too. Not only from a marketing and brand standpoint, but also from a distribution standpoint, we've believed that if we can't actually do well in a store or in a market, we shouldn't be there. I think it's the same sort of philosophy: don't be afraid to take your time. This is sort of like, you know, not what everybody would say. I mean, we've had so many brands that have said, "No, you've gotta get across the U.S. You've gotta get into Kroger, you've gotta get into Publix, like Costco, fast, fast, fast." So many of those companies aren't here anymore because they just spent too fast. If you don't have the money to go into those markets and really do it right, my best advice would be to just do the markets that you can be really good at.

Kara Goldin

Right, and like slow that growth. But I would say, you know, there... Even I'm just thinking about Facebook. I mean, Facebook is sort of the conversation for all D2C [direct-to-consumer] brands, right? And figuring that out, I think it's just... It's really, you know, again: **don't put all your eggs in one basket**, right?

Moiz Ali

yeah

Kara Goldin

And I think you have to figure out constantly how to continue to grow. You know, go back to your list and get the existing buyers to keep buying until you find the right time to ultimately get Facebook to be at a point where your cost of customer acquisition isn't crazy. So I think that’s the key thing. A lot of people say to us, "Why are you on Amazon but you're also on your direct-to-consumer site?" There's a value to us in being able to have a name that we can go back and market to and have a subscription service. You know, all of those things, so it's not one or the other.

Moiz Ali

Surveys to understand what Average Order Value (AOV) looks like and what the repeat purchase rate looks like. That's crazy that people would ask you that. There's clearly value in you having your own direct channel with consumers.

Kara Goldin

Yeah, totally. I think it's just... it’s again, you know, I never... I mean, I look at even... I think about and I talk about in my book the whole Starbucks situation. I mean, it was clearly distribution. They were selling millions of dollars of product every year. But for us, it really was a marketing play where they were getting us into all kinds of places. You know, there’s a Starbucks on every corner, right? Yeah, there are every couple of blocks. So we were getting visible in so many places. Then, you know, when they turned us off, I really viewed that as a failure for a lot of different reasons. I blamed myself for not having... you know, too much in that relationship. I mean, they were clearly buying; we weren't writing them large slotting fee checks or anything like that. But I still had a lot of inventory. There was a lot of risk with that. What I've learned to do, though, is not be so hard on yourself and create all this anxiety around the fact that, you know, in some ways you failed and in some ways you tried. I think instead, figure out like, you know, what was the good? I'm a huge believer that, in fact, when we went into Amazon, the guy who was the buyer reached out and said, "Oh, I get your product all the time at Starbucks." So if we were not in Starbucks...

Moiz Ali

like be in amazon

Kara Goldin

we wouldn't be in amazon

Moiz Ali

we wouldn't wanna start our

Kara Goldin

own direct business

Moiz Ali

great story yeah

Kara Goldin

Yeah, right. Sometimes it just takes a minute to actually reflect. I'm sure you know the Google story, feeling like, "Oh, I made a mistake there," or whatever. If you sit back for a minute and actually say, "What did I learn?" you realize you got that much smarter about how you do your buys for the next one where you save money. Again, sometimes you have to connect a bunch of different dots to figure that stuff out, and it takes time. But I just don't really view life in general as failing as much as I see it as teaching me that I can do better on the next front. Maybe that also means telling an audience, "Here's what I learned along the way." These are the lessons, and perhaps I'm giving back to other people to learn from my mistakes and failures.

Moiz Ali

yeah yeah

Kara Goldin

Whatever, but I just... I'm a huge believer that that's such an important piece of this as well. You know, you make the best decision based on the best information that you have. I think that is so key. Sometimes, you know, that's challenging too because I'm sure you have things in your head that you maybe did wrong or were not exactly how you wanted them to turn out. And then people come to you and start talking to you about, you know, Google AdWords or whatever, and you're like... you know, like...

Moiz Ali

sure

Kara Goldin

And you're gun shy. So, you know exactly what you need to get over or what the price is. It's a lesson.

Moiz Ali

Yeah, and you know, initially when we were talking about marketing, you were talking about billboards and how you didn't want to buy just one billboard. There was a frequency that you thought was really important in order to get consumers to resonate with the brand or think about it. When you're setting your marketing campaign or marketing budget, do you think, "Okay, we're going to allocate this much to digital, this much to out-of-home, this much to B2B"? Or are you more like, "Look, this is a living organism, and we'll call the play when we sort of walk up to the line"?

Kara Goldin

So we currently divide our marketing out into branded marketing as well as direct-to-consumer. Some companies, especially when they're small, actually have one person who's maybe... you know, kind of... yeah.

Moiz Ali

sure

Kara Goldin

Kind of thing, or running the advice, or whatever. They're actually two very separate departments in terms of budgets. But what we found is the more money we put into direct-to-consumer, as an example, in terms of ads, like there's a lot of people who will go on Facebook or other places where we may show up. They're going to walk into a Target store, or they're going to go on to Instacart or whatever and order. For us, we've just found that there's some carryover into the branded or sort of the offline stuff that they're going to do. They may not click the button and actually order online, or if they see a TV ad, they may again go into their local grocery store or whatever they might end up doing. So I think it's just a matter of there being definitely spillover into that. From the standpoint of budgets, our direct-to-consumer is prioritized just because of its measurability and because of the spillover. We put more money into that. On the flip side of that too, we viewed the Super Bowl ad as there was no... you know, at the end it said "drinkint.com," but there was no 800 number. Nobody was going on in the middle of the Super Bowl to go buy. But you know, the next time that they saw a direct-to-consumer ad, did they click it because they remembered?

Moiz Ali

of course

Kara Goldin

ad

Moiz Ali

yeah

Kara Goldin

And you know, that's really how we view it.

Moiz Ali

And if the direct-to-consumer side is sort of larger than the branded side, is Facebook... like, native Facebook was king there, and I think you've told other people as well, Facebook is king there for Hint as well. Is that right? Is that where you sort of say, "Okay, this is our..."?

Kara Goldin

Yeah, definitely. I would say, from a third-party perspective, like companies where we're doing it, we also go out to other lists as well. We do different swaps with other companies to try and figure out if we can email people and establish some sort of partnership too. So we've done... you know, it's funny too, just from a branding standpoint. Again, I can't say that I was strategically brilliant or knew exactly what was going to happen, but a few years ago, Verizon reached out to me. They said, "Hey, we've got this ad. We're asking entrepreneurs to be a part of this ad. Would you be interested?" I've been a Verizon customer pretty much since day one. I wouldn't get good cell connection through AT&T. Sorry, AT&T, but I'm sure you've gotten a lot better since then.

Moiz Ali

was but it was just I've

Kara Goldin

Just always been Verizon, and that was from my AOL days. I was traveling around a lot, and so I still have my 917 number even though I'm living in the Bay Area. They asked me to be a part of this, and they didn't really give me a clear definition of what it would be. They told me to show up in this studio, and I really thought it was going to be print. After they did the print, they were like, "By the way, we think we're going to run this." They actually didn't run the ad until recently, and now it's running on CNN a lot. By some miracle, they were just talking to me, just like you and I are talking, and I had a quote that they picked up on, which is part of the Verizon ad. It said, "We don't have to be together to work together." So that has become a Verizon quote, and it says, "Karah Goldman, founder and CEO of Hint." Every time that Verizon ad runs, people go onto our site.

Moiz Ali

yeah yeah of course

Kara Goldin

On our site, it doesn't say "drinkhint.com." Sure, it's very subtle. Then the exact same thing happened with a company called NetSuite. I was speaking at their conference, and I tell the story that I truly didn't know how to call Oracle. We were moving out of QuickBooks, and I just thought, "Where would I start?" I'd heard about NetSuite, and I just thought they were like, "Maybe eventually we'll get to Oracle, but for now, let's start with these guys at NetSuite." So we've grown with them. We told them all the problems that they had, and we continue to grow. The CMO said to me, "I loved watching you on stage. You're just telling the story. Would you do this ad for us?" I was like, "Sure." So that ad has now been running for a year, and every single time that ad runs, it's like, you know, Hint.

Moiz Ali

people go to hemp water dot yeah sure yeah

Kara Goldin

And so we have not spent a dime on that advertising. You know, we have... I would say it's... I would say conservatively between Verizon and NetSuite, which is now an Oracle company, easily $50,000,000 in ads that they run.

Moiz Ali

that's crazy

Kara Goldin

in our brand

Moiz Ali

I've certainly seen a lot more businesses doing that. Like, I've seen your ad first on NetSuite - it's fantastic. I've seen ShipStation doing ads with a beer brand. I've seen Amazon doing ads with companies like Nutpods. It's really amazing to see these large businesses sort of lean into that. I feel like it all started with American Express a long time ago, sort of leaning [into this advertising strategy].

Kara Goldin

And I've done some work for American Express too. I mean, I think like that's the other thing that I've learned. I've done some of their direct mail pieces. I haven't done a television commercial for them, but I think like that's, you know, the other thing that I say to entrepreneurs. It's like, you know, none of those were intentional partnerships, but they're authentic and they're real. I think that, you know, when you're out... that's why I always tell entrepreneurs, like the sooner you can get out and actually tell your story too. And that doesn't mean like necessarily talking to press outlets about it. I mean, maybe it does, but also actually speaking. Whether that's, you know, at whatever the hustle or startup grind or whatever, you go and speak at some of these conferences and you start telling your story about how we initially funded the company with our American Express card. Thank God we had good credit! We needed it to buy the bottles and the caps and all that. Then, you know, American Express reached out. It took them six months to reach out, and they were like, "We want to talk to you about the story and thank you for being a customer." Suddenly, it was clear that they wanted to get you involved. So those things are, you know, so valuable. If you can figure out two or three partnerships that you have where you really believe in them... I mean, again, like I had another phone company reach out to me interestingly after the Verizon one. I was like, you know, I just wouldn't do another food company. I wouldn't do, you know, but I just thought like these are companies that I truly believe in.

Moiz Ali

yeah

Kara Goldin

And I think if you can borrow equity from those brands... because they're clearly borrowing equity from our brand, right? We're a startup, we're a female-founded startup. There are lots of reasons why [we should consider this approach].

Moiz Ali

better for your products yeah yeah 21st century completely agree that they do that

Kara Goldin

But less obvious marketing... and I'm just saying that that is one where I think nobody's really thought about. I mean, we've valued those relationships, you know? Like, that is so big, and it doesn't cost you any money. [It] costs... yeah.

Moiz Ali

it's fantastic

Kara Goldin

company money

Moiz Ali

yeah

Kara Goldin

and so that's that's amazing

Moiz Ali

Yeah, I'd love to talk a little bit about the other categories that you've launched into. Early on, we talked about Hint Water. That was... I'm not sure if you call it flat water or like non-carbonated water? "Non-carbonated still water," okay, that's right. Yeah, so still water, carbonated... you know, Hint Fizz. We talked about caffeinated. Since then, you've also launched a couple other categories. I know you've launched Hint sunscreen, which smells absolutely amazing. It's a spray sunscreen. I think you've launched Hint deodorant as well. Are there other categories that are sort of coming up, and how did you think about those categories?

Kara Goldin

You know, for us, I think it was really about looking at how we can help the consumer get healthy. We felt like there were a lot of consumers who were coming to us, drinking our product, and they would reach out and say, "Hey, what kind of makeup should I wear?" We were like, "Wait, what? We're water, you know? That's what we're doing." So, we felt like we could start to touch on these categories that, in our opinion, were not doing what we needed or what our consumer needed. Also, I'm allergic to coconut, and a lot of the natural deodorants that are out there...

Moiz Ali

sure

Kara Goldin

I have coconut in them. For me, I was totally on board with the concept of a natural deodorant, but I wanted something that did...

Moiz Ali

for your coconut oil

Kara Goldin

Right, and so that was something that, you know, I just started to play around with at home. Then I thought, "This is really interesting." For us, it's primarily sold online. I mean, we're on Amazon as well as Andre and Kint.com. But, you know, for us, it's really helped us to kind of understand this consumer of sunscreen. I mean, sunscreen was way harder than I actually thought when we embarked on it. I mean, you need FDA approval. We're using the same essences that we're using in the water for the sunscreen, which, you know, they actually needed to do shelf life testing before we actually got the approval. Most companies use fragrances; they don't actually... which is a whole other topic.

Moiz Ali

so if you're and you're using natural essence

Kara Goldin

Well, yeah, I mean, it was crazy. I saw that the beauty and personal care industry was so much further behind than what the food industry was talking about. We were one of the first companies to produce non-mineral based sunscreens that really called out oxybenzone. I really believed I had some precancerous stuff on my nose that wouldn't go away, so I started looking deeper into the sunscreen industry. I had grown up in Arizona, had red hair, and spent way too much time in the sun early on. I had read about oxybenzone and thought, "You know, this stuff is really bad." The Centers for Disease Control back in the late seventies actually told the FDA that oxybenzone may enhance precancer cell growth. They recommended that the FDA not approve it, but somehow it got approved. There are many places in the world where oxybenzone is not approved, but in the U.S., it is approved. We started calling it out, and I think for me, this goes back to the big company strategy. After we launched, the number of people from large companies who reached out to me was significant. They said, "Hey, you know, we've always known that the oxybenzone stuff is not so great, but it's hard because we have multiple brands housed under our umbrella. For us to actually call it out means we have to reformulate everything."

Moiz Ali

we do

Kara Goldin

And so, like, that's really tough. I was like, "Okay, well, you know, we'll just keep doing that, right? We'll keep calling it out." Eventually, you know, you'll have time to go and reformulate or not, and we'll just have more runway to build this company. That's the thing that I also realized I had done with Hint Water. We really focused on ingredients, and the ingredient was sweetener back then. But then you start to look at the rest of the product and all the great stuff around it. I think it's no different for products too. More and more, I think people are looking at their products. It's not just about being organic or not organic; it's really about people getting smart about ingredients, definitely. I was speaking in an interview earlier this morning, and I was talking about the world today and what is the biggest thing that I've noticed. For the last few weeks, since we've been in shelter in place, the number of conversations I've had with people—not only friends of mine but also business colleagues—around health has increased. People are realizing that health is such a key thing.

Moiz Ali

everything

Kara Goldin

Right, it's everything. And I think that, you know, people are trying to make sure that they're getting their exercise every day, but then also eating right and eating well. I have not heard this conversation... like, everywhere I go, I'm hearing it now.

Moiz Ali

yeah

Kara Goldin

I mean people are just so focused on it which

Moiz Ali

Is great. Have there been... have there been... first, I think that's absolutely true. I think you're right, and I think we'll have that conversation a lot more when the COVID crisis sort of dies down. Because right now, I think it's a struggle to make sure your fridge is stocked in a way that you know where you can get food in an easy, healthy, safe way. Yeah, and I think once it becomes easy again, it'll be a lot more important to people. Are there other beverage companies that have sort of crossed this Rubicon and gotten into personal care? Yeah, look, I'm trying to think of other beverage companies that have launched personal care products. Do you know of any?

Kara Goldin

You know, I feel like vitamin water way back when... I mean, chapsticks. We always had a great lip balm or chapstick, or whatever you want to call it. But I don't really know of any others that really crossed over. I mean, I think the challenge, of course, is that the soda companies... I mean, look, we are today the largest independent non-alcoholic beverage company in the country that doesn't have a relationship with Coke, Pepsi, or Dr. Pepper.

Moiz Ali

yeah

Kara Goldin

So, I think... you know, a lot of companies and a lot of founders that I've talked to, I mean, they could not figure out how to do what we've done nationwide without, you know, the trucks - the Coke trucks or the Pepsi trucks.

Moiz Ali

absolutely no question

Kara Goldin

Beyond $10,000,000, you know, it's like... I mean, beverages are just like... sunscreens are hard. Beverages are harder. I mean, beverages are...

Moiz Ali

you

Kara Goldin

You have to, like, when you go into major markets, in addition to the Ciscos and the UNFIs and all the rest of it, you have to have a DSD (Direct Store Delivery) network that goes into these stores every day. This ensures that your shelves aren't wiped out. If you don't know that now, if you're starting a beverage, you learn it really quickly. Whether you're focused on the 7-Elevens of the world or whatever, you cannot rely on the stores, no matter what category they're in, whether it's club or whatever. You have to have teams of people that are in those stores, actually helping to build out pay stacks, merchandise, and make sure that your reorders are in place, or you'll fail. That's why the teams are bigger. It's just what ends up happening. When I look at these other categories, too, it's probably tougher to build the sunscreen. We really haven't put a whole lot of marketing into any of those either. I mean, we're really sort of in the infancy stages of it. For us, it doesn't take any more people to do it. We've got a small group internally that can focus on it because it's just not as high touch as beverages.

Moiz Ali

Do you think it's a little bit like... Do you think people haven't done it as much in the past because they're afraid of, you know, Coke doesn't want to buy a deodorant business or a chapstick business? Or do you think that they're afraid of dilution of brand? Or do you think they just haven't had the right story, they haven't been focused on ingredients? Or do you think it's just because, you know, people haven't thought of it or haven't had the bandwidth? Is there a reason that it hasn't been done in the past?

Kara Goldin

You know, I think there are definitely people who have said, "You're starting these categories," and you know the soda companies won't like that when they're looking at you to buy. But I think there are two things that I would say. Number one, my goal is not to figure out how to get my company perfect so that a Pepsi will buy us. We have built a standalone company that is now profitable and has grown every single year.

Moiz Ali

for

Kara Goldin

The last 15 years, I mean, we have built this really solid company. In addition to that, we have a direct-to-consumer business that I don't think there's any other company in our space doing what we're doing, both offline and online. I think soon, these large brands are going to figure out that Hint is a brand name that can stretch across multiple categories. I would love to do a home product—not necessarily to go super broad on it, but just to actually figure out because I'm all about consumer permission too. I think unless you test it, you just don't really know. I see products every single day where I'm like, "If it just had that," or "It could just be a little bit better." For me, it's really about understanding. When we talk about lifetime value, I mean, that just expands the lifetime value of a consumer. If you can do that in a way that doesn't jeopardize the rest of your sales, that doesn't get your team focused on stuff they shouldn't be focused on, then it makes sense. I don't think it happens like that. I wouldn't go launch a company today and go into multiple categories.

Moiz Ali

I would sure yeah

Kara Goldin

definitely say but we are

Moiz Ali

consumer permission to do that

Kara Goldin

Yeah, and the consumer... I don't think I would have even had the courage to go do it if I didn't keep hearing from the consumer, "Help me! Help me!" Just like you, I have a coconut allergy. I had read about oxybenzone. You know, "You should go do this. You should go do this." So, I not only feel like with our products we're helping consumers, but I also feel like we're helping large companies really understand that this consumer wants health. They're no longer going to be fooled by words like "diet," "natural," or "oxybenzone." These things are injuring our health, and I think that, you know, that is...

Moiz Ali

it's how we stand up to that

Kara Goldin

We stand up to it, and I fundamentally believe it every single day that that's what we're doing. If there are products that I think we can do better, I don't plan on having this company under my leadership be the next, you know, "Honest Company"—the one Jessica Alba's involved with, not the Honest Tea. I just don't think we need to do thousands and thousands of SKUs. I think what we need to do is focus on a few SKUs and really try to understand where the consumer wants us to go.

Moiz Ali

Yeah, look Carol, we're way over time. I really appreciate you spending the time. I'm gonna ask you a bunch of just really quick... four quick questions: 1. What is the best-selling flavor of Hint water?

Kara Goldin

it's a close tie between blackberry and watermelon

Moiz Ali

okay what is your favorite flavor of hint water

Kara Goldin

we just launched clementine which

Moiz Ali

is so good that's your favorite right now

Kara Goldin

amazing yeah

Moiz Ali

okay before you launch clementine your favorite

Kara Goldin

cherry fizz is also I love cherry fizz too

Moiz Ali

okay when you aren't drinking hint water what are you drinking

Kara Goldin

**Coffee.** So, I'm a coffee snob. I love Equator Coffee, another San Francisco brand.

Moiz Ali

great

Kara Goldin

**Female-founded brand.** So, I'm very... yeah, I would say, you know, coffee would...

Moiz Ali

And finally, if somebody wants to start a beverage brand today, what do you recommend as the first thing they do to get into a brick-and-mortar store? Is it: 1. To try and go into bodegas in New York? 2. To try and get a meeting with your local Whole Foods buyer? 3. To try and get a booth at Expo West? What is the first step that they should think of when they're like, "I've got a beverage brand" or food brand? Let's focus on beverage brands. "I have a beverage brand, I want to get this into brick-and-mortar stores." What's the first step there?

Kara Goldin

I think it's about finding who your audience is. If you're launching an energy drink in a 22-ounce can, that's probably not the market for Whole Foods. I mean, maybe it is, maybe not; it depends on the ingredients. You just need to find out who your market is and then go and try to get in there. When I got into Whole Foods ten years ago, they had a program where you could actually go into the local store and try to sell it in. They would test it out. I'm not sure if they're still doing that since Amazon acquired them, but you know, don't focus on the Targets or the Costcos. Start small, keep doing well, and just keep building and building. I would also say that having social channels has become absolutely critical. If you can do that right, I think that's the most important thing. Whether that's figuring out who the influencers are... there are highs and lows, pluses and minuses to that. But I think also, are you doing something from a messaging standpoint that you think an audience would really relate to?

Moiz Ali

yeah

Kara Goldin

That, you know, they would tap into. And I think, you know, don't be afraid. I know many days you actually delivered cases and you were at the trade shows, showing up. I think it's, you know, I still see Hamdi, you know, not necessarily delivering Chobani everywhere, but every once in a while, you know, showing up and definitely at the trade shows. Daniel from Kind Bar as well. And I think it's like, never be afraid to take care of your product and make sure that it's being cared for. Yeah, that's the biggest thing.

Moiz Ali

Fantastic! Thanks so much, Cara. If people want to hear more from you, where should they reach you? Where should they follow you? Is it on Instagram? Is it on Twitter? Can you provide your thoughts?

Kara Goldin

I'm on all social channels at Kara Goldin - that's K-A-R-A G-O-L-D-I-N. I'm probably most active on Twitter and have a pretty robust audience there. It's lots of fun, so that would probably be the biggest place to find me. If you're interested in buying Hint, you can find it at stores, but also on our site at **drinkhint.com** as well as Amazon.

Moiz Ali

Fantastic! Thanks so much for your time, Kim. Really appreciate it. This was fantastic. Awesome.