Jaisen Freeman is the Co-Founder/CEO of Phusion Projects—the maker of Four Loko, one of the most controversial and successful beverages of the past two decades.
Starting with a big idea, passion, and some capital from a Small Business Administration loan, Phusion Projects has grown into a global business with more than 200 employees. The company has sold over $1 Billion in alcoholic products during its short history and has expanded sales to 30 countries worldwide. All of this, as an independent company without outside investment capital.
Jaisen is also an investor and partner in SWISH Beverages, makers of the wildly successful White Girl Rosé and Not Your Father's Root Beer.
He joins us to talk about the importance of having skin in the game, how to lose your ego, and the value the comes with staying true to your brand.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Art of the Hustle is a production of I Heart Radio.
You're listening to the Art of the Hustle, the show
that breaks down how some of the world's most fascinating
people have hustle and learn their way into achieving great things.
I'm your host Jeff Rosenthal, co founder of Summit, and
(00:23):
today on the show, I had the pleasure of chatting
with my friend Jason Freeman. Jason is the co founder
and co CEO of Fusion Projects, the maker for Loco,
one of the most controversial and successful beverages of the
past two decades. Starting with a big idea of passion
and some capital from a small business administration loan, Fusion
Projects has grown into a global business more than two
(00:45):
hundred employees. The company has sold over a billion dollars
in alcoholic products during its short history, and it's expanded
sales to thirty countries worldwide, all of this as an
independent company without raising any outside investment capital. Jason is
also an investor and partner and Switch Beverages, makers of
the wildly successful White Girl Rose and Not Your Father's Roop.
(01:07):
Here and he joined us to talk about the importance
of having skin in the game. How to lose your
ego and the value that comes with staying true to
your brand. So please enjoy my conversation with Jason Freeman. Jason,
welcome to the podcast. Thank you, thank you for having me.
How's it going out there? How's your pandemic sheltering in
(01:30):
place treating you? Uh, it's it's very interesting. We just
moved into a brand new office at the end of January,
so I'm self quarantined here by myself. It's just nice
to get out of the house and come to the
office every once in a while. Totally. And you know,
we met, I guess over a year ago. Now. I
couldn't believe the story that you told me about how
(01:52):
you and your buddies built and grew for Loco and
and to pull some projects. And I'm just really excited
that you joined us for the podcast. Happy to be here.
Are you from Chicago? Did you end up in Chicago? No,
I ended up in Chicago. I'm actually was born in Minneapolis,
um St. Paul Minneapolis area. Yeah, and we moved around
a little bit as a kid, Jersey, New York and
(02:12):
then I end up going to the Ohio State University
to play hockey and That's where I met my current
business partner and our other partner that was with us
in the beginning, and then moved to Chicago after finishing school.
And you were in banking, correct, Yeah, I started in banking.
You know, you look at careers that you can have
from a business degree, and everyone wants to be an
investment banker or work for a bank because you think
(02:32):
you could make a lot of money. But I quickly
learned that wearing a suit every day was definitely not
for me. And what what kind of banking were you doing?
You know, it was in the investment banking side. We
did like foreign currency stuff and different M and A transactions.
I was at the bank for about a year and
a half in their management development program, and it was
right about the time that that we started fusion projects.
(02:54):
And were you guys all still close of course? Yeah?
And would you hang like were you like kicking it
and like talking about startup ideas? Like how exactly did
this concept come to be? Yeah? So, um, we had
always been friends in college. You know, I always knew
that I would start something. I didn't know what it
would be, and it just end up being an alcohol
(03:14):
which I think is a is a great industry to
be in a lot of fun. And so when we
got out of college, this has right about the rise
of Red Bull and vodka. And our other partner, Chris,
was working as a sales up for a vodka company
and the first idea was to start a vodka and
we looked at all the vodkas out there, and if
you go to any liquor store now I can see
there's hundreds. We realized that we probably didn't have a
(03:35):
chance to do it, but all of our friends, including us,
we're drinking Red Bull vodka. We thought, hey, if we
mix these two things together and we sell it as
as a package, you know, our friends and and us,
we would love to drink this. And we're drinking every
weekend and making a lot easier. It's just seemed like
an Aha moment. You know, we knew nothing really about
the industry. Thank god for Google, and we found, you know,
how to make a formula, where to make it, how
(03:58):
to do distribution, and we thought if we could sell
a million dollars in product like we had made it.
And this is two thousand five, so this concept was
still super novel. This idea of like a caffeinated beer basically. Yeah.
So there's different words for it's like flavored malt beverage
or progressive adult beverage, but you know, mostly remote base
like whether it's a seltzer, whether it's twisted tea, or
(04:20):
whether it's four loco. These are all like beer based
malt products. And our idea was the first idea wasn't
you know, slowly read bullovaca. We had an idea to
put wormwood in or some other ingredients. We thought people
would care about wormwood, but nobody cared at all, and
the product was was a complete failure. Our first product
was a complete failure. I think we purchased more back
from the stores and we actually sold oh Man, and
(04:43):
how much was that initial investment that you guys just
kind of burnt? Well? You know, this is a time,
you know, we got I had some savings, we had
some family and friends put some money in. You know,
this is a time where you could, right before the
financial crisis, where you could get loan. We got an
SBA loan for two thousand dollars and we set off
(05:03):
and figured out how to do it. We didn't really
really great at raising money. We tried, we didn't really
know how to do it. People looked at us as kids.
So we started opening up credit cards and cash advancing money. Yeah,
I mean we would. We would open credit cards, cash
advance just to make payroll. And we did this and
did this until we couldn't until we couldn't open up
any more credit cards or refinance any more homes. You're
(05:25):
leveraging everything to make this thing work. So you had
conviction even though the first you know, Batch didn't selling,
Ford didn't sell. You must have had some positive feedback
from the marketplace. It was like encouraging you to bet
the farm on this. What was that? Yeah, So I
think I think there's a little piece of a nugget
(05:45):
here that is a little different than today because I
do talk to a lot of entrepreneurs today, especially in
my industry. I'm an investor, but um, you know, also
take a call from from pretty much any kind of
budding entrepreneur because I know how hard it is get started.
And nobody would take my calls. But the three of
us when we started, we were doing everything and we
didn't raise a lot of money. You know, I see
(06:06):
these companies now raising ten dollars in Series A and
I think we would have spend it really stupidly, but
us not having the funds and bootstrapping made us go
out there and do the work. We were totally understanding,
you know, costs a good soul and purchasing and so
being out in the market and talking to consumers and
actually being in the stores where the product is sold,
(06:26):
we started to understand the industry and really got a
crash course on what was working. And so our next
iteration was that we were in the wrong size can.
We had the wrong price. And what we saw was
the emergency of craft beer and that higher A b
V products we're starting to become more popular and people
were actually you know seeking these out and A b
V does that mean higher alcohol content? Yes, higher alcohol content. Yeah.
(06:49):
So what we saw was that crafts were coming at
eight ten percent alcohol and that you know, they were
selling very very well. And so we thought, as we
look at this as iteration prototype for kind of phase
two of the product. You know, we raised the alcohol
percentage and we made it made it in a bigger can,
which was where a majority of products like like this
(07:09):
we're selling. And so as soon as that happened, we
saw an immediate increase in sales, you know, not the
big jump, but we saw it where now there was
there was a little bit of buzz around the product,
that the product was viable and that there was something there.
And as I understand it, it's brutal, like it's it's warfare,
like shelf by shelf, venue by venue. It was at
(07:30):
the case then in two thousand six also like you
guys were literally going into like the individual bodegas and
check it and see like is it eye level? Can
you find the product? Like how how deep down the
rabbit hole did you have to go? Yeah, I mean
that was every day. And we were not in you know,
the most desirable places either, you know, we were we
were there and it was guerilla warfare. And I think
(07:52):
that's where we really developed the ethos for our sales team.
I mean still today were known as a company that
battles on the ground. You know, we support our distributors
and retailers and we have people there that you know,
build on what you know, we started many years ago,
but it really is going into independent. We owned store,
working with them, moving cams around, being in the back
(08:14):
shelf to make sure you have the best shelf position
the best pricing, and so you learn a lot on
the fly, but it's still like that. And you know,
when we started, an average distributor, let's say in Los Angeles,
maybe had you know, one to two thousand products. Today
the average like ten to fifteen thousand different SKUs. So
it's a lot harder today than it was then, but
it's still you know, it's even more ultra competitive because
(08:36):
there's a limit amount of space and a lot of
products that want that space. I want to continue down
the timeline of the story, but like I think it's
important for the listeners to know, like today this is
a nine figure business. This is a very, very sizeable enterprise.
And you know, it's funny, is like when you know,
you were called the media that we consumed on four Loco.
(08:56):
It was like the rise and fall of four Loco.
But what didn't get covered is the fact that it's
now like a category killer. And you guys are a
huge business, a huge global business. You're in over forty countries.
So why did it pop? Obviously, you guys have a
good sensibility of the marketplace. You worked your ass off,
you went and did all the unsexy hard work and
(09:18):
you know, we're in every independent store and be like,
tell us about what happened, because clearly it became like
an absolute phenomenon. Well, I think there's there's a lot
of different things that happened, and timing is also super
important for any brand, in any product. It was different
and what you had for years and years and years
was just not very good innovation from the big companies.
(09:39):
And they used the same playbooks, the same products, the
same brands. They did big billboards outside, they did big
television commercials at the Super Bowl, and we obviously couldn't
afford these things right and timing as if that was perfect.
We're one of the first brands on Facebook. Social media
is just emerging at this time and allowed you to
get to consumers. And again this is before, this is
(10:00):
before the timeline and the algorithms and all that crap. Right, Like,
you know, if you posted something, usually most people saw
it that was either following you. So we built a
pretty big following on social media. Um, and then you
know what happened was the brand is to become more popular,
more people were starting to drink it. We started increasing
distribution everywhere. I remember one day I started getting you know,
(10:22):
a whole bunch of text messages, and these rappers in
Cleveland made this song about for Locois. It was the
goog Wop Gang. I think it was called, of course,
but this became it was a YouTube sensation hit. Millions
and millions of people watching this, right, and so now
every rapper wants for local in their song. And it
(10:43):
just became this like viral hit sensation, which was great
at the time, but also brought a lot of attention,
probably unwanted attention as well as wanted attention, sure, because
it had like a mythical quality to the way people
would talk about it. I imagine that first when you
were seeing that sort of you know, myth getting created,
you guys are like, wow, like we've hit you know,
(11:04):
a cultural vein. And then uh, it sounds like that
quickly shifted to understanding that there would be some liability
attached to that as well. Yeah. I think I think
what we thought was and what everyone thinks is, you know,
we had we had achieved the American dream. We had
no outside investors, we created a brand, We worked hard.
We were middle class kids from the Midwest. We weren't rich.
(11:28):
No one gave us so much of money, and we
assume people would be happy for us. But when you
disrupt a category with big players and they're spending a
lot of money and you start taking their consumers, there's
always going to be a reaction. It can be a
good reaction or bad reaction, but there's gonna be a reaction.
And you know, we had a lot of copycat products
(11:48):
from from our competitors emulating looking like our products. Nothing
was taking the share away because the consumer, you know,
once they're fixed on it, and we hit that viral sensation,
you know, our consumers are friends us became this this
urban myth of what the brand really was or what
you know was in the product or what the product was,
and that just continued to exacerbate. Saturday Night Live three
(12:12):
and a half minute skit on four Local unsolicited Right,
never have they done it for a brand ever. So
when those started, things started happening. It's just a snowball
effect from consumers. The pr comes with that, but then
you you attract a different type of attention of people like, well, wait,
what is this? Why? Why there has to be something
different or bad going on about this? And listen, we
(12:34):
had no lobbyists, no really no lawyers, no pr firm.
You know, we have a young company of thirty people
and the brand is the fastest growing alcohol brand basically
in the the biggest market in the world. So you
guys are exploding, the orders are growing and growing. Saturday
Night Lives doing like three minutes skits about the product.
But you guys have like whatever twenty million cases or
(12:58):
cases of the stuff, and you were then told the
press pause. Correct, there is some weaponization of some government entities.
It wasn't the press pause. Um, you know, a lot
of questions started to get answered, and we saw articles
and questions popped up about the safety of mixing caffeine
and alcohol. And so in our view, we had caffeine
(13:21):
alcohol had been around for since Irish coffee, right, that
was that was the original caffeine and outpoint right, And
so for us, it's something that's widely consumed. People know it,
You understand it. You have a cappuccino after you have dinner.
You know, there's their similarities there, and so Jack and
Coke has caffeine in it. And also you have to remember,
(13:42):
like were we were in one of the most highly
regulated industries in the world. You can't just you know,
pop up and make alcohol in your bathroom, right Like,
there's a lot of different levels of approval that needed
to happen, and the government had a limit on the
amount of caffeine that you can have, you know, per ounce,
and so in our head we assume that if there's
if there's limits, then it's legal. So don't ever make assumptions.
(14:05):
Is is key number one. And so what happened was
the FDA, which doesn't regulate alcohol, it's a different agency,
or FDA regulates food. They said caffeine is technically of food,
and we believe that for locals adulterated which it may
or may not be safe. And so that out of
cloud put a lot of fear into our distributors, into us,
(14:28):
into our retailers, you know, into everybody, and so you know,
we voluntarily decided to take take it off the market.
We realized that we had a big brand, we had
a big company, and their brand was bigger than caffeine.
It was a very very hard decision. We had about
twenty eight million dollars of inventory that we had to destroy.
No way you had to destroy twenty eight million dollars
(14:50):
of inventory. We had just started making money. We had
just become profitable and we had to destroy twenty eight
million dollars in inventory. We had to then reproduce douct
that was same formula without caffeine, and then redistribute out
in the market. Now, when we decided to to reformulate
the product, I mean consumers went crazy. People were selling
(15:11):
the caffeine and product product on eBay. People are buying
hundreds of products. This is all over the news. Remember
this is like a dead news cycle too. So everybody
from Bill Maher to Fox News too. I mean we're like,
can something happen in the country to get us off
the front page? Because this is just it's It was
every day something new. I would have reporters show up
(15:32):
to my contability in Chicago and tell my front door
guy that their delivery person and come to my open
my door and there'd be a It was. It was
pure chaos. But we learned a lot about ourselves in
that time because it was just everyday wake up. How
do we we knew we had the consumer, We just
had to get back to them, and the demand was
(15:52):
was insane. We got back into market as quick as
we could, which I think we got back to full
distribution in about three months. You know, we couldn't really
obviously say back twenty eight million dollars, so we had to,
you know, we had to be creative. And we thought
we had finally made it through the darkness that our
bank kicked us out of the bank because they said
they were a family bank, and we had our insurance
(16:17):
companies sue us saying that they didn't need to cover
us because we had about eighty five lawsuits filed against us,
from personal injury to class action lawsuit. So you name it.
I've flipped and fell and it was because I drank
before local and you guys need to pay me a
million dollars. I mean it was the Gamut, right. Look,
we we had a crash course in in business one
oh one and this you know, in this timeframe. So
(16:39):
we had no insurance company, we had no bank, and
we had to pay out one million dollars in lawsuits.
So as someone that had just finally made it, and
you we got to smile for maybe about thirty seconds.
Everything we made for the next four years went out
the door, paying back inventory or paying down lawsuits. Oh
my god. Yes, it's not as romantic as what you know,
(17:04):
I think people imagine the life of a high flying entrepreneur.
Oh yeah, trust me. I have a lot of a
lot of a lot of grace from that time. But
but listen, I wouldn't change it for anything. And the
learnings that I have, that we have, that my partner
in Jeff and I have, and how we run the business.
We still own the business. We have no outside investors.
(17:24):
We get to do what we want. We love what
we do every day. Um, and we were more thankful
and appreciative of our business and our employees that stayed
with us than we would have been had we just
been you know, super successful. From the gentleman. We'll be
back with more out of the hustle after the break.
(17:49):
And how did you make the transition to being a
global company? Yes, so, you know, as we talked about
the social media build was very positive on the brand
and people loved it. And then the press, you know,
as the caffeine issue developed, turned super negative. We were
the punching bag. But what this did was, you know,
America is looked at across the world all this press.
(18:09):
If I'm correct, our PR company at the time said
we got about four hundred million dollars in pr value
of press and now you've gotta manage that goes globally.
And so after all this happened, we started getting inquiries
from all over the world of importers were like, we
want for local in our country. People are asking for it,
and we're like, yeah, right, you gotta understand where we
(18:30):
started from, like Ohio State students like you never thought
that you'd be selling product in Europe, or in China
or in South America. And so we started shipping product
to Africa China containers. They were airlifting product because the
demand was so high to China. And we started a
business in Mexico with a young entrepreneur you know that
(18:51):
as our partner down there, and it was the fastest
growing product in Mexico and Central America. And still we
have still a big business there. And so you just
you know, you go back to your or what your
core values are and you try to expand on those
in other countries. And the thing about us and for
local what it is, it's unapologetically American. And so what
we found everyone when they go to other countries are like, well,
(19:15):
you're in China, maybe you should tweak and do like
plumb flavored, you know, and change this and we're like, no,
funk that, Like, this is American and that's what they want, right,
Like they're dying for unapologetic American brands. And that's the
gap we feel, uh and never would have thought it.
And when we go, when I get to travel these
(19:35):
other countries, it's it's wild, man. It's wild to see
people drinking a product that has so much of you
in it and enjoying it and loving it. You know,
even in places like Peru in Central and South America
where the price is really high, you see even see
some of the consumers sharing it. And I can't tell
you when it feels. I mean, you know obviously as
you see people enjoy your brand as well, but it's
(19:56):
it's just an amazing feeling. Well especially now, like it's
like us in my company twelve years ago, and you know,
when I think about me now, I'm like, how did
we do that? But I'm sure you had you know,
plenty of other you know moments where you know the
the universe was conspiring to get you to retire and
put down the store. Yeah yeah, And I mean one
(20:16):
stands out. So when four Local first started working we
had run out of money. Randomly, I got contacted by
this guy via email that was an investment banker and
he's like, hey, love what you guys are doing. I'm
gonna raise you guys five million dollars. And it was
like my prayers have been answered. We're gonna get out
of this. I mean we were literally, like I said,
opening credit cards, cash advancing to make payroll. So we
(20:37):
go through this whole process with him. He creates his
business plan. He's like, I got all these these rich
family offices. You know that they might check for ten
million or five million. So we're excited because we have
no money left we have I think we had dollars
left the bank. That was it, and we had payroll
coming up in some accounts payable that we had to
make and he said, listen, I'm gonna go pitch this.
(20:58):
The money should be to you within thirty day days,
he said, but it's customary for an upfront fee to
get paid to me too, offsets on my costs. And
we were like, we can't. We don't have the money
to pay him, Like what should we do? But he's
gonna he's gonna raise us money. So we had a long,
bitter conversation between internally and we weren't aligned, but we
decided to wire him the money, and we wired him
(21:19):
thirteen thousand dollars and we never heard from again, and
we're sitting here with three thousand dollars in the bank,
credit cards on our name. Levered up every penny that
we had in this thing, and we just didn't have
a choice, you know. We had to make this happen,
and you will it. It truly is. I mean, look,
a lot of other things happened, but if the owners
don't have skin in the game, and we had all
(21:40):
of our skin in the game, no matter how good
the brand of the company is, it's not gonna work totally.
Nothing like necessity to force you to innovate. Yes, but
you mentioned it earlier in the podcast, But this idea
that there's like a direct correlation to be between creativity
and a lack of capital. You know, like often our
most creative solutions and idea idea and branding campaigns come
(22:01):
earlier on. And so I'm curious what do you guys
do to stay fresh and to stay sharp. I think first,
one of the things that you learned early on, you
shift from managing the business to managing people, and we
didn't value the HR function very much in the beginning years,
you know, we thought it was the soft skills. But
(22:23):
I would say it's our most important thing today and
it's having the right people, but not only having the
right people, but allowing these people to do their job
and also challenge you. You know, I know a lot
of CEO is that if they're in a room, they
don't want to be challenged. And we most of our
great ideas haven't come from us. They've come from our
frontline sales people, are marketing interns, are social media coordinators,
(22:45):
and if an idea is better than what we have,
we run with it. Like we're I can't say zero ego,
but we try to be zero ego and we try
to take those ideas and expand on it. Now, from
a creativity perspective, I think I still ill and and
just the same as we try to be out and
do these go to these stores that we used to
be in to build the displays and see what's going
(23:08):
on out there, because you have to actually have your
eyes out there and talk to the consumer and really
be there. We have, you know, big spring break events,
I go to them. Everyone's like, oh, you gotta go
to a spring break events sounds terrible, Like, I'm not
going for fun. I'm going to see how the consumer
is interacting with products and what they're doing, what they're drinking,
what they're wearing, So I can have eyes on those things.
So when these ideas come, you know to our desks
(23:30):
that we're ready to execute on them. So I think
as you become successful, you really have to Um, it's hard,
you know, to sit up, to not sit up on
your your throne, but you have to throw the throne
out the door. You've got to stay relevant and you
have to see if your eyes. You can't just get
the creative information or research from a from a report
or you know, a research study, Like you gotta be
(23:52):
out there seeing what your consumer is doing and how
they're reacting to stuff. And it's it's not easy and
it's not always fun, but it's it's the most important
thing for me. Yeah, that's so thoughtful, you know both
that like transition from being a player to a coach,
And it sounds like it was something that you guys,
you know, did you know do really well? Just based
(24:12):
on how I hear you talking about it, that idea
that like, you know, you're going to be able to
infer what a market wants because you knew it once,
and we're really right once. It's called confirmation bias, you know,
like a lot of our peers and I'm sure we
do too. We all suffer from it, right, We're like, well,
this worked, and I'm clearly very good at this because
it happened to be the case once, and so why
(24:33):
wouldn't it still be the case? How has you know
your market changed? How has the consumer changed in the
last fifteen years. It's it's changed a lot. I mean technology,
social media, more quicker access information. People understand what's in
the products now, right, they want to know what ingredients are.
They want to know, like consumers are way more woke,
(24:54):
they're more informed, you know, most importantly, so I think,
you know, staying on top of that is very important,
but also just understanding from a consumed behavior perspective of
trends used to last for years and they last for
for for weeks or months now. I mean, if you
think about social media, trying it could be two days,
and so being able to pivot and turn quickly is
(25:16):
very very important and Listen, we've you talk about the bias.
I mean, when we had successful Local, we thought, oh,
anything we touched now was gonna be gold. You know,
we tried to get a non alcoholic business completely failed.
We wasted a lot of money in time and effort,
and you know, it grounded us that we have to
get back to what we know. And it's almost important
as what you're not going to do as what you
(25:37):
are going to do right, And we had to set
that stage really clearly, like we're not going to do
these things no matter how like sexy or great they
look like, it's just not us. And we got to
stay in a certain lane that makes sense for us.
And the brands that we're gonna support, create partner with
are really be brands where We're never going to sell
a ninety five point wine, right, it's not it's not
(25:59):
in us, not in our d and A. But we're
gonna sell a cand wine right that is disruptive and
brand focus and brand forward, right, Like that's more us
and we have to stay true to that and be
very very specific. We tried to extend for Local into
an actual light beer, you know, just because we thought
the name would extend anything, and we learned real quickly
that there's you know what for local is and what
(26:20):
it means what it stands for is very specific and
we have to stay with them that DNA. But it's
like hard to really articulate how much this product was
at the center of the zeitgeist. And it's just amazing
that you guys then like redefined it as this like
global category like dominant product, and like I love that
(26:41):
you guys were like, you know, buddies from Ohio state
that you're like Midwest dudes and like didn't have venture
capital and didn't have big investors, are like you know,
rich huncle that like helped you do it. I think
that part of the reason why people root for those
stories is because they're so rare, and you know, I
know that when it comes to opportunities for you know,
(27:01):
marginalized communities and people of color, it's really important to
you and something that you think about in your investments
and how you build. What are your thoughts on that now,
in like how do we pick ourselves up by our
own bootstraps? Man, Like when you know it seems like
there's so many barriers for us to to build these things. Yeah,
I mean, there's always been barriers. I think it's really
just about you know, giving opportunity and just being open.
(27:25):
I mean, for me, building a company and understanding why
you're building it and what you're building it, and being
able to give opportunities to everybody. Like we're inclusive a company,
and you'll find and it wasn't even by design. We're
one of a very diverse company across the board, left
and right, up and down across the spectrum. And Jeff
(27:47):
and I you know, both believe in this ethos and look,
you know, a mixed kid from Minneapolis starting in the
alcoholic beverage space and like, you know, growing a business
like does that you know, does my life experiences design that? Probably? Internally?
Do I want to see everybody succeed? Yes? Do I
want to see everyone have an opportunity? Yes? The things
(28:09):
that have happened this year have exacerbated that, you know,
to the fullest extent on our microscope. When we looked inside,
as every company did two months ago, we're pretty fucking
proud of the company that we had. And there was
a lot of companies that looked inside and said, oh shit,
we're not doing well in this in this area, right,
and it was it was a very proud moment when
(28:30):
we could step back and say, how are we grading
ourselves on diversity? How are we grading ourselves on really
being inclusive? You know, we were, we were very proud
of where we were part of the hustle. Will be
right back after this short break, not to transition totally
(28:53):
off that topic, but you know, just just moving forward.
I imagine that you know, there's certain brands and categories
that are ripe for spreading some of these messages. You know,
some of the sort of economic inequities that are you know,
just endemic in our society. You guys have you know
a number of other beverages. But it's not it's not
exactly the place that people are trying to learn about
(29:15):
the stuff. But that also means it's a place where
they relax, you know, like this is milieu that people
are have their guards down. So what are you learning
in this moment about like the similarities or or dissimilarities
between say left right or like I'm just curious if
you have any like learnings that you've gleaned from your experiences. Yeah, look,
(29:36):
like I said, I think a lot of companies, well
most of the good companies at least, you know, the
last couple of months, not only with COVID, but the
social unrest and injustice that we've seen over the last
come have looked internally and and how do we react?
And your employees look to you too for leadership, and
how are we going to be as a company. You know,
we're not being a Jerry's right, and we know that,
(29:56):
and for us to get on a podium and and
and make that swig quickly would be inauthentic. But I
think if you look through our social media, it's a
fine line, especially for a brand, because you're not trying
to sell, but you don't want to come off as
you're selling. You just want to show support and be like, hey,
we're here, We're with you. And our job, really, as
(30:16):
we talked about this, is to give people on that
social media feed a little bit of a break of
the craziness that's out there. Right. You know, we took
a break from Facebook, we took a break from Instagram.
We took a break for a little while as you know,
all the news stories and information was coming out and
and it was a tense time. We took a little break,
but then we had an internal conversation and we're like, listen,
(30:37):
we need to be out there, continue to do what
we do because we are kind of that like comedic
break and the brand really doesn't stand for like unapologetically
American and on a comedy piece. So as a company,
you know, we're very very serious about these issues, but
as a brand, you have to walk up fine line
of being what the brand is but also showing that
you support all these causes. Tell us, I mean you
(30:58):
you are you launching new products? Are you? Do you
have new product lines that you've rolled out this year? Yeah?
You know, obviously if you drink alcohol, you know that
seltzers are a very very big category. So we have
a product called Basic selz which um is done exceptionally well.
UM consumers love these products. And then we have a
(31:20):
tequila based seltzer which is called Mamitas, named after one
of our favorite beaches, UM near Ply del Carmen. So
you know, it's tequila and soda in a can, five
percent alcohol by volume, less than one graham of sugar,
ninety calories. They're starting to see that shift into you know,
better for healthier options, you know, for consumers. We launched
(31:40):
probably two or three brands a year, some successful, so
I'm not successful, but these two are really taste great.
I'm gonna send you some. You'll love mamitas if you
like tequila. And I didn't realize that you had that
sort of like venture studio mentality for launching brands at
somewhere and some don't. I recall, do you guys launched shots.
I just remember you guys doing your first martial a
(32:00):
couple of years ago on Viceland. Yeah, so we tried
to we try to go a little against the grain
with that one. We started on social media. We would
never do traditional advertising, but then you know, as we've
been in the business fifteen years, you saw all the
budgets and all the money start to go to digital
social So we thought, let's just go back against the
grain because the pricing, you know, for actual television ads
(32:22):
were coming down and also vices like right up our
alley from a consumer perspective, and it was just a fun,
little little kind of exercise to see how, you know,
how it would play out, and it was really cool
to actually shoot commercial and thank you. So so yeah,
the commercial was the virtual was great, but I think
from the product perspective. You know, you have to constantly
be innovating, prototyping, iterating, and some of our stuff has
(32:43):
been more partnerships. You know. We had a brand called
Not Your Father's roop Here a couple of years ago
that we started with the founder and eventually sold. And
then some some good friends um started a product called
Babe with them and kind of helped them out, and
you know, they took the brand and we're super successful
and sold to danazard Bush. Like I said, I take
probably three or four calls a week from entrepreneurs that
(33:06):
are starting up. If I can help them, I will,
And if it's interesting, you know, Jeff and I will
talk about it, you know, will either partner with them
or make an investment, like we did on a alcoholic
kombucha company called June Shine. Do you mentioned Babe that
was like with the Fat Jewish correct, Yeah, so the
Fat Jewish. Yeah, Josh and Doc and Tanner are brothers
(33:28):
that are part of that. And then Alex f Zane
there's four of them that started his brand. And and
someone told me that that was like the number one
rose in America or something like that. Yeah, the number
one caned rose. Yeah. So when they started. Um, you know,
we helped them kind of the beginning with distribution. Obviously
they're marketing you know geniuses. Uh. And having you know,
Josh the fat Jewish out in front of it really
(33:50):
helped and spoke the consumer. And then you know, they
kind of branched off and did their own company and
then they sold it to dan iszar Busch actually about
a year ago. UM. So it was the fastest growing
can wine um and the number one can rose kind
of in the country. UM. And again they built all
that on really on social media and and and like
really interesting um experiential activations. When you talk about the
(34:14):
brand values, it reminds me a bit of barstool Sports.
They have such a hugely passionate fan base. It's so
definitive of of a of a segment of the market.
And if they just completely changed their voice, they lose
the audience altogether. And now you know, within the last
month you had Dave Portnoy interviewing the president on which
is mind blowing. Right. So people want to talk shit
(34:36):
on or like you know, look over these things that
don't have like the cultural cachet. But the reality is
that like this is what the majority of people are
participating in no I agree, and I think interesting talk
about the influencer that you know, that partnership with with
with those guys and the Fat Jewish and you know,
it's definitely eye opening for us and it taught me
(34:57):
a lot, you know, about brands and influence or because
we worked with influencers before. You know, just having someone
with ten million or twenty million followers post about your
brand and and say that's it, it's great, but like
they have to be part of the lifestyle. Like those
guys started a company, right and they put everything online
again skin in the game, and you know, they stopped
(35:18):
everything and they were doing to build a wine brand, right.
But that's very different than a celebrity, you know, starting
it to keel as a side hustle. Those are two
different things. And I learned a lot from that partnership
that you know, if you're going to do these things
and you want to amplify the message, the influencer, if
if they have a big audience, they need to live
the brand and it needs to be authentic and they
have to they have to be fully in grain that
(35:40):
brand in their lifestyle. Well, Jason, dude, thank you. I
really appreciate you coming on the show to tell us
about you know, your story and your philosophy. It's an incredible,
incredible story man, and you know, like I really do
admire the hustle and the commitment and the fact that
you've been you know, at it with your best buds
and let's keep it going. Thank you, and I appreciate it,
(36:00):
and uh, I hope to see you again, uh when
we get out of of of COVID. Awesome, Thanks for
being on, Thanks for listening. Her to the Hustle. For
(36:28):
more podcasts for my Heart Radio, visit the I Heart
Radio app, Apple podcast, or wherever you listen to your
favorite shows.
Art of the Hustle is a production of I Heart Radio.
You're listening to the Art of the Hustle, the show
that breaks down how some of the world's most fascinating
people have hustle and learn their way into achieving great things.
I'm your host Jeff Rosenthal, co founder of Summit, and
(00:23):
today on the show, I had the pleasure of chatting
with my friend Jason Freeman. Jason is the co founder
and co CEO of Fusion Projects, the maker for Loco,
one of the most controversial and successful beverages of the
past two decades. Starting with a big idea of passion
and some capital from a small business administration loan, Fusion
Projects has grown into a global business more than two
(00:45):
hundred employees. The company has sold over a billion dollars
in alcoholic products during its short history, and it's expanded
sales to thirty countries worldwide, all of this as an
independent company without raising any outside investment capital. Jason is
also an investor and partner and Switch Beverages, makers of
the wildly successful White Girl Rose and Not Your Father's Roop.
(01:07):
Here and he joined us to talk about the importance
of having skin in the game. How to lose your
ego and the value that comes with staying true to
your brand. So please enjoy my conversation with Jason Freeman. Jason,
welcome to the podcast. Thank you, thank you for having me.
How's it going out there? How's your pandemic sheltering in
(01:30):
place treating you? Uh, it's it's very interesting. We just
moved into a brand new office at the end of January,
so I'm self quarantined here by myself. It's just nice
to get out of the house and come to the
office every once in a while. Totally. And you know,
we met, I guess over a year ago. Now. I
couldn't believe the story that you told me about how
(01:52):
you and your buddies built and grew for Loco and
and to pull some projects. And I'm just really excited
that you joined us for the podcast. Happy to be here.
Are you from Chicago? Did you end up in Chicago? No,
I ended up in Chicago. I'm actually was born in Minneapolis,
um St. Paul Minneapolis area. Yeah, and we moved around
a little bit as a kid, Jersey, New York and
(02:12):
then I end up going to the Ohio State University
to play hockey and That's where I met my current
business partner and our other partner that was with us
in the beginning, and then moved to Chicago after finishing school.
And you were in banking, correct, Yeah, I started in banking.
You know, you look at careers that you can have
from a business degree, and everyone wants to be an
investment banker or work for a bank because you think
(02:32):
you could make a lot of money. But I quickly
learned that wearing a suit every day was definitely not
for me. And what what kind of banking were you doing?
You know, it was in the investment banking side. We
did like foreign currency stuff and different M and A transactions.
I was at the bank for about a year and
a half in their management development program, and it was
right about the time that that we started fusion projects.
(02:54):
And were you guys all still close of course? Yeah?
And would you hang like were you like kicking it
and like talking about startup ideas? Like how exactly did
this concept come to be? Yeah? So, um, we had
always been friends in college. You know, I always knew
that I would start something. I didn't know what it
would be, and it just end up being an alcohol
(03:14):
which I think is a is a great industry to
be in a lot of fun. And so when we
got out of college, this has right about the rise
of Red Bull and vodka. And our other partner, Chris,
was working as a sales up for a vodka company
and the first idea was to start a vodka and
we looked at all the vodkas out there, and if
you go to any liquor store now I can see
there's hundreds. We realized that we probably didn't have a
(03:35):
chance to do it, but all of our friends, including us,
we're drinking Red Bull vodka. We thought, hey, if we
mix these two things together and we sell it as
as a package, you know, our friends and and us,
we would love to drink this. And we're drinking every
weekend and making a lot easier. It's just seemed like
an Aha moment. You know, we knew nothing really about
the industry. Thank god for Google, and we found, you know,
how to make a formula, where to make it, how
(03:58):
to do distribution, and we thought if we could sell
a million dollars in product like we had made it.
And this is two thousand five, so this concept was
still super novel. This idea of like a caffeinated beer basically. Yeah.
So there's different words for it's like flavored malt beverage
or progressive adult beverage, but you know, mostly remote base
like whether it's a seltzer, whether it's twisted tea, or
(04:20):
whether it's four loco. These are all like beer based
malt products. And our idea was the first idea wasn't
you know, slowly read bullovaca. We had an idea to
put wormwood in or some other ingredients. We thought people
would care about wormwood, but nobody cared at all, and
the product was was a complete failure. Our first product
was a complete failure. I think we purchased more back
from the stores and we actually sold oh Man, and
(04:43):
how much was that initial investment that you guys just
kind of burnt? Well? You know, this is a time,
you know, we got I had some savings, we had
some family and friends put some money in. You know,
this is a time where you could, right before the
financial crisis, where you could get loan. We got an
SBA loan for two thousand dollars and we set off
(05:03):
and figured out how to do it. We didn't really
really great at raising money. We tried, we didn't really
know how to do it. People looked at us as kids.
So we started opening up credit cards and cash advancing money. Yeah,
I mean we would. We would open credit cards, cash
advance just to make payroll. And we did this and
did this until we couldn't until we couldn't open up
any more credit cards or refinance any more homes. You're
(05:25):
leveraging everything to make this thing work. So you had
conviction even though the first you know, Batch didn't selling,
Ford didn't sell. You must have had some positive feedback
from the marketplace. It was like encouraging you to bet
the farm on this. What was that? Yeah, So I
think I think there's a little piece of a nugget
(05:45):
here that is a little different than today because I
do talk to a lot of entrepreneurs today, especially in
my industry. I'm an investor, but um, you know, also
take a call from from pretty much any kind of
budding entrepreneur because I know how hard it is get started.
And nobody would take my calls. But the three of
us when we started, we were doing everything and we
didn't raise a lot of money. You know, I see
(06:06):
these companies now raising ten dollars in Series A and
I think we would have spend it really stupidly, but
us not having the funds and bootstrapping made us go
out there and do the work. We were totally understanding,
you know, costs a good soul and purchasing and so
being out in the market and talking to consumers and
actually being in the stores where the product is sold,
(06:26):
we started to understand the industry and really got a
crash course on what was working. And so our next
iteration was that we were in the wrong size can.
We had the wrong price. And what we saw was
the emergency of craft beer and that higher A b
V products we're starting to become more popular and people
were actually you know seeking these out and A b
V does that mean higher alcohol content? Yes, higher alcohol content. Yeah.
(06:49):
So what we saw was that crafts were coming at
eight ten percent alcohol and that you know, they were
selling very very well. And so we thought, as we
look at this as iteration prototype for kind of phase
two of the product. You know, we raised the alcohol
percentage and we made it made it in a bigger can,
which was where a majority of products like like this
(07:09):
we're selling. And so as soon as that happened, we
saw an immediate increase in sales, you know, not the
big jump, but we saw it where now there was
there was a little bit of buzz around the product,
that the product was viable and that there was something there.
And as I understand it, it's brutal, like it's it's warfare,
like shelf by shelf, venue by venue. It was at
(07:30):
the case then in two thousand six also like you
guys were literally going into like the individual bodegas and
check it and see like is it eye level? Can
you find the product? Like how how deep down the
rabbit hole did you have to go? Yeah, I mean
that was every day. And we were not in you know,
the most desirable places either, you know, we were we
were there and it was guerilla warfare. And I think
(07:52):
that's where we really developed the ethos for our sales team.
I mean still today were known as a company that
battles on the ground. You know, we support our distributors
and retailers and we have people there that you know,
build on what you know, we started many years ago,
but it really is going into independent. We owned store,
working with them, moving cams around, being in the back
(08:14):
shelf to make sure you have the best shelf position
the best pricing, and so you learn a lot on
the fly, but it's still like that. And you know,
when we started, an average distributor, let's say in Los Angeles,
maybe had you know, one to two thousand products. Today
the average like ten to fifteen thousand different SKUs. So
it's a lot harder today than it was then, but
it's still you know, it's even more ultra competitive because
(08:36):
there's a limit amount of space and a lot of
products that want that space. I want to continue down
the timeline of the story, but like I think it's
important for the listeners to know, like today this is
a nine figure business. This is a very, very sizeable enterprise.
And you know, it's funny, is like when you know,
you were called the media that we consumed on four Loco.
(08:56):
It was like the rise and fall of four Loco.
But what didn't get covered is the fact that it's
now like a category killer. And you guys are a
huge business, a huge global business. You're in over forty countries.
So why did it pop? Obviously, you guys have a
good sensibility of the marketplace. You worked your ass off,
you went and did all the unsexy hard work and
(09:18):
you know, we're in every independent store and be like,
tell us about what happened, because clearly it became like
an absolute phenomenon. Well, I think there's there's a lot
of different things that happened, and timing is also super
important for any brand, in any product. It was different
and what you had for years and years and years
was just not very good innovation from the big companies.
(09:39):
And they used the same playbooks, the same products, the
same brands. They did big billboards outside, they did big
television commercials at the Super Bowl, and we obviously couldn't
afford these things right and timing as if that was perfect.
We're one of the first brands on Facebook. Social media
is just emerging at this time and allowed you to
get to consumers. And again this is before, this is
(10:00):
before the timeline and the algorithms and all that crap. Right, Like,
you know, if you posted something, usually most people saw
it that was either following you. So we built a
pretty big following on social media. Um, and then you
know what happened was the brand is to become more popular,
more people were starting to drink it. We started increasing
distribution everywhere. I remember one day I started getting you know,
(10:22):
a whole bunch of text messages, and these rappers in
Cleveland made this song about for Locois. It was the
goog Wop Gang. I think it was called, of course,
but this became it was a YouTube sensation hit. Millions
and millions of people watching this, right, and so now
every rapper wants for local in their song. And it
(10:43):
just became this like viral hit sensation, which was great
at the time, but also brought a lot of attention,
probably unwanted attention as well as wanted attention, sure, because
it had like a mythical quality to the way people
would talk about it. I imagine that first when you
were seeing that sort of you know, myth getting created,
you guys are like, wow, like we've hit you know,
(11:04):
a cultural vein. And then uh, it sounds like that
quickly shifted to understanding that there would be some liability
attached to that as well. Yeah. I think I think
what we thought was and what everyone thinks is, you know,
we had we had achieved the American dream. We had
no outside investors, we created a brand, We worked hard.
We were middle class kids from the Midwest. We weren't rich.
(11:28):
No one gave us so much of money, and we
assume people would be happy for us. But when you
disrupt a category with big players and they're spending a
lot of money and you start taking their consumers, there's
always going to be a reaction. It can be a
good reaction or bad reaction, but there's gonna be a reaction.
And you know, we had a lot of copycat products
(11:48):
from from our competitors emulating looking like our products. Nothing
was taking the share away because the consumer, you know,
once they're fixed on it, and we hit that viral sensation,
you know, our consumers are friends us became this this
urban myth of what the brand really was or what
you know was in the product or what the product was,
and that just continued to exacerbate. Saturday Night Live three
(12:12):
and a half minute skit on four Local unsolicited Right,
never have they done it for a brand ever. So
when those started, things started happening. It's just a snowball
effect from consumers. The pr comes with that, but then
you you attract a different type of attention of people like, well, wait,
what is this? Why? Why there has to be something
different or bad going on about this? And listen, we
(12:34):
had no lobbyists, no really no lawyers, no pr firm.
You know, we have a young company of thirty people
and the brand is the fastest growing alcohol brand basically
in the the biggest market in the world. So you
guys are exploding, the orders are growing and growing. Saturday
Night Lives doing like three minutes skits about the product.
But you guys have like whatever twenty million cases or
(12:58):
cases of the stuff, and you were then told the
press pause. Correct, there is some weaponization of some government entities.
It wasn't the press pause. Um, you know, a lot
of questions started to get answered, and we saw articles
and questions popped up about the safety of mixing caffeine
and alcohol. And so in our view, we had caffeine
(13:21):
alcohol had been around for since Irish coffee, right, that
was that was the original caffeine and outpoint right, And
so for us, it's something that's widely consumed. People know it,
You understand it. You have a cappuccino after you have dinner.
You know, there's their similarities there, and so Jack and
Coke has caffeine in it. And also you have to remember,
(13:42):
like were we were in one of the most highly
regulated industries in the world. You can't just you know,
pop up and make alcohol in your bathroom, right Like,
there's a lot of different levels of approval that needed
to happen, and the government had a limit on the
amount of caffeine that you can have, you know, per ounce,
and so in our head we assume that if there's
if there's limits, then it's legal. So don't ever make assumptions.
(14:05):
Is is key number one. And so what happened was
the FDA, which doesn't regulate alcohol, it's a different agency,
or FDA regulates food. They said caffeine is technically of food,
and we believe that for locals adulterated which it may
or may not be safe. And so that out of
cloud put a lot of fear into our distributors, into us,
(14:28):
into our retailers, you know, into everybody, and so you know,
we voluntarily decided to take take it off the market.
We realized that we had a big brand, we had
a big company, and their brand was bigger than caffeine.
It was a very very hard decision. We had about
twenty eight million dollars of inventory that we had to destroy.
No way you had to destroy twenty eight million dollars
(14:50):
of inventory. We had just started making money. We had
just become profitable and we had to destroy twenty eight
million dollars in inventory. We had to then reproduce douct
that was same formula without caffeine, and then redistribute out
in the market. Now, when we decided to to reformulate
the product, I mean consumers went crazy. People were selling
(15:11):
the caffeine and product product on eBay. People are buying
hundreds of products. This is all over the news. Remember
this is like a dead news cycle too. So everybody
from Bill Maher to Fox News too. I mean we're like,
can something happen in the country to get us off
the front page? Because this is just it's It was
every day something new. I would have reporters show up
(15:32):
to my contability in Chicago and tell my front door
guy that their delivery person and come to my open
my door and there'd be a It was. It was
pure chaos. But we learned a lot about ourselves in
that time because it was just everyday wake up. How
do we we knew we had the consumer, We just
had to get back to them, and the demand was
(15:52):
was insane. We got back into market as quick as
we could, which I think we got back to full
distribution in about three months. You know, we couldn't really
obviously say back twenty eight million dollars, so we had to,
you know, we had to be creative. And we thought
we had finally made it through the darkness that our
bank kicked us out of the bank because they said
they were a family bank, and we had our insurance
(16:17):
companies sue us saying that they didn't need to cover
us because we had about eighty five lawsuits filed against us,
from personal injury to class action lawsuit. So you name it.
I've flipped and fell and it was because I drank
before local and you guys need to pay me a
million dollars. I mean it was the Gamut, right. Look,
we we had a crash course in in business one
oh one and this you know, in this timeframe. So
(16:39):
we had no insurance company, we had no bank, and
we had to pay out one million dollars in lawsuits.
So as someone that had just finally made it, and
you we got to smile for maybe about thirty seconds.
Everything we made for the next four years went out
the door, paying back inventory or paying down lawsuits. Oh
my god. Yes, it's not as romantic as what you know,
(17:04):
I think people imagine the life of a high flying entrepreneur.
Oh yeah, trust me. I have a lot of a
lot of a lot of grace from that time. But
but listen, I wouldn't change it for anything. And the
learnings that I have, that we have, that my partner
in Jeff and I have, and how we run the business.
We still own the business. We have no outside investors.
(17:24):
We get to do what we want. We love what
we do every day. Um, and we were more thankful
and appreciative of our business and our employees that stayed
with us than we would have been had we just
been you know, super successful. From the gentleman. We'll be
back with more out of the hustle after the break.
(17:49):
And how did you make the transition to being a
global company? Yes, so, you know, as we talked about
the social media build was very positive on the brand
and people loved it. And then the press, you know,
as the caffeine issue developed, turned super negative. We were
the punching bag. But what this did was, you know,
America is looked at across the world all this press.
(18:09):
If I'm correct, our PR company at the time said
we got about four hundred million dollars in pr value
of press and now you've gotta manage that goes globally.
And so after all this happened, we started getting inquiries
from all over the world of importers were like, we
want for local in our country. People are asking for it,
and we're like, yeah, right, you gotta understand where we
(18:30):
started from, like Ohio State students like you never thought
that you'd be selling product in Europe, or in China
or in South America. And so we started shipping product
to Africa China containers. They were airlifting product because the
demand was so high to China. And we started a
business in Mexico with a young entrepreneur you know that
(18:51):
as our partner down there, and it was the fastest
growing product in Mexico and Central America. And still we
have still a big business there. And so you just
you know, you go back to your or what your
core values are and you try to expand on those
in other countries. And the thing about us and for
local what it is, it's unapologetically American. And so what
we found everyone when they go to other countries are like, well,
(19:15):
you're in China, maybe you should tweak and do like
plumb flavored, you know, and change this and we're like, no,
funk that, Like, this is American and that's what they want, right,
Like they're dying for unapologetic American brands. And that's the
gap we feel, uh and never would have thought it.
And when we go, when I get to travel these
(19:35):
other countries, it's it's wild, man. It's wild to see
people drinking a product that has so much of you
in it and enjoying it and loving it. You know,
even in places like Peru in Central and South America
where the price is really high, you see even see
some of the consumers sharing it. And I can't tell
you when it feels. I mean, you know obviously as
you see people enjoy your brand as well, but it's
(19:56):
it's just an amazing feeling. Well especially now, like it's
like us in my company twelve years ago, and you know,
when I think about me now, I'm like, how did
we do that? But I'm sure you had you know,
plenty of other you know moments where you know the
the universe was conspiring to get you to retire and
put down the store. Yeah yeah, And I mean one
(20:16):
stands out. So when four Local first started working we
had run out of money. Randomly, I got contacted by
this guy via email that was an investment banker and
he's like, hey, love what you guys are doing. I'm
gonna raise you guys five million dollars. And it was
like my prayers have been answered. We're gonna get out
of this. I mean we were literally, like I said,
opening credit cards, cash advancing to make payroll. So we
(20:37):
go through this whole process with him. He creates his
business plan. He's like, I got all these these rich
family offices. You know that they might check for ten
million or five million. So we're excited because we have
no money left we have I think we had dollars
left the bank. That was it, and we had payroll
coming up in some accounts payable that we had to
make and he said, listen, I'm gonna go pitch this.
(20:58):
The money should be to you within thirty day days,
he said, but it's customary for an upfront fee to
get paid to me too, offsets on my costs. And
we were like, we can't. We don't have the money
to pay him, Like what should we do? But he's
gonna he's gonna raise us money. So we had a long,
bitter conversation between internally and we weren't aligned, but we
decided to wire him the money, and we wired him
(21:19):
thirteen thousand dollars and we never heard from again, and
we're sitting here with three thousand dollars in the bank,
credit cards on our name. Levered up every penny that
we had in this thing, and we just didn't have
a choice, you know. We had to make this happen,
and you will it. It truly is. I mean, look,
a lot of other things happened, but if the owners
don't have skin in the game, and we had all
(21:40):
of our skin in the game, no matter how good
the brand of the company is, it's not gonna work totally.
Nothing like necessity to force you to innovate. Yes, but
you mentioned it earlier in the podcast, But this idea
that there's like a direct correlation to be between creativity
and a lack of capital. You know, like often our
most creative solutions and idea idea and branding campaigns come
(22:01):
earlier on. And so I'm curious what do you guys
do to stay fresh and to stay sharp. I think first,
one of the things that you learned early on, you
shift from managing the business to managing people, and we
didn't value the HR function very much in the beginning years,
you know, we thought it was the soft skills. But
(22:23):
I would say it's our most important thing today and
it's having the right people, but not only having the
right people, but allowing these people to do their job
and also challenge you. You know, I know a lot
of CEO is that if they're in a room, they
don't want to be challenged. And we most of our
great ideas haven't come from us. They've come from our
frontline sales people, are marketing interns, are social media coordinators,
(22:45):
and if an idea is better than what we have,
we run with it. Like we're I can't say zero ego,
but we try to be zero ego and we try
to take those ideas and expand on it. Now, from
a creativity perspective, I think I still ill and and
just the same as we try to be out and
do these go to these stores that we used to
be in to build the displays and see what's going
(23:08):
on out there, because you have to actually have your
eyes out there and talk to the consumer and really
be there. We have, you know, big spring break events,
I go to them. Everyone's like, oh, you gotta go
to a spring break events sounds terrible, Like, I'm not
going for fun. I'm going to see how the consumer
is interacting with products and what they're doing, what they're drinking,
what they're wearing, So I can have eyes on those things.
So when these ideas come, you know to our desks
(23:30):
that we're ready to execute on them. So I think
as you become successful, you really have to Um, it's hard,
you know, to sit up, to not sit up on
your your throne, but you have to throw the throne
out the door. You've got to stay relevant and you
have to see if your eyes. You can't just get
the creative information or research from a from a report
or you know, a research study, Like you gotta be
(23:52):
out there seeing what your consumer is doing and how
they're reacting to stuff. And it's it's not easy and
it's not always fun, but it's it's the most important
thing for me. Yeah, that's so thoughtful, you know both
that like transition from being a player to a coach,
And it sounds like it was something that you guys,
you know, did you know do really well? Just based
(24:12):
on how I hear you talking about it, that idea
that like, you know, you're going to be able to
infer what a market wants because you knew it once,
and we're really right once. It's called confirmation bias, you know,
like a lot of our peers and I'm sure we
do too. We all suffer from it, right, We're like, well,
this worked, and I'm clearly very good at this because
it happened to be the case once, and so why
(24:33):
wouldn't it still be the case? How has you know
your market changed? How has the consumer changed in the
last fifteen years. It's it's changed a lot. I mean technology,
social media, more quicker access information. People understand what's in
the products now, right, they want to know what ingredients are.
They want to know, like consumers are way more woke,
(24:54):
they're more informed, you know, most importantly, so I think,
you know, staying on top of that is very important,
but also just understanding from a consumed behavior perspective of
trends used to last for years and they last for
for for weeks or months now. I mean, if you
think about social media, trying it could be two days,
and so being able to pivot and turn quickly is
(25:16):
very very important and Listen, we've you talk about the bias.
I mean, when we had successful Local, we thought, oh,
anything we touched now was gonna be gold. You know,
we tried to get a non alcoholic business completely failed.
We wasted a lot of money in time and effort,
and you know, it grounded us that we have to
get back to what we know. And it's almost important
as what you're not going to do as what you
(25:37):
are going to do right, And we had to set
that stage really clearly, like we're not going to do
these things no matter how like sexy or great they
look like, it's just not us. And we got to
stay in a certain lane that makes sense for us.
And the brands that we're gonna support, create partner with
are really be brands where We're never going to sell
a ninety five point wine, right, it's not it's not
(25:59):
in us, not in our d and A. But we're
gonna sell a cand wine right that is disruptive and
brand focus and brand forward, right, Like that's more us
and we have to stay true to that and be
very very specific. We tried to extend for Local into
an actual light beer, you know, just because we thought
the name would extend anything, and we learned real quickly
that there's you know what for local is and what
(26:20):
it means what it stands for is very specific and
we have to stay with them that DNA. But it's
like hard to really articulate how much this product was
at the center of the zeitgeist. And it's just amazing
that you guys then like redefined it as this like
global category like dominant product, and like I love that
(26:41):
you guys were like, you know, buddies from Ohio state
that you're like Midwest dudes and like didn't have venture
capital and didn't have big investors, are like you know,
rich huncle that like helped you do it. I think
that part of the reason why people root for those
stories is because they're so rare, and you know, I
know that when it comes to opportunities for you know,
(27:01):
marginalized communities and people of color, it's really important to
you and something that you think about in your investments
and how you build. What are your thoughts on that now,
in like how do we pick ourselves up by our
own bootstraps? Man, Like when you know it seems like
there's so many barriers for us to to build these things. Yeah,
I mean, there's always been barriers. I think it's really
just about you know, giving opportunity and just being open.
(27:25):
I mean, for me, building a company and understanding why
you're building it and what you're building it, and being
able to give opportunities to everybody. Like we're inclusive a company,
and you'll find and it wasn't even by design. We're
one of a very diverse company across the board, left
and right, up and down across the spectrum. And Jeff
(27:47):
and I you know, both believe in this ethos and look,
you know, a mixed kid from Minneapolis starting in the
alcoholic beverage space and like, you know, growing a business
like does that you know, does my life experiences design that? Probably? Internally?
Do I want to see everybody succeed? Yes? Do I
want to see everyone have an opportunity? Yes? The things
(28:09):
that have happened this year have exacerbated that, you know,
to the fullest extent on our microscope. When we looked inside,
as every company did two months ago, we're pretty fucking
proud of the company that we had. And there was
a lot of companies that looked inside and said, oh shit,
we're not doing well in this in this area, right,
and it was it was a very proud moment when
(28:30):
we could step back and say, how are we grading
ourselves on diversity? How are we grading ourselves on really
being inclusive? You know, we were, we were very proud
of where we were part of the hustle. Will be
right back after this short break, not to transition totally
(28:53):
off that topic, but you know, just just moving forward.
I imagine that you know, there's certain brands and categories
that are ripe for spreading some of these messages. You know,
some of the sort of economic inequities that are you know,
just endemic in our society. You guys have you know
a number of other beverages. But it's not it's not
exactly the place that people are trying to learn about
(29:15):
the stuff. But that also means it's a place where
they relax, you know, like this is milieu that people
are have their guards down. So what are you learning
in this moment about like the similarities or or dissimilarities
between say left right or like I'm just curious if
you have any like learnings that you've gleaned from your experiences. Yeah, look,
(29:36):
like I said, I think a lot of companies, well
most of the good companies at least, you know, the
last couple of months, not only with COVID, but the
social unrest and injustice that we've seen over the last
come have looked internally and and how do we react?
And your employees look to you too for leadership, and
how are we going to be as a company. You know,
we're not being a Jerry's right, and we know that,
(29:56):
and for us to get on a podium and and
and make that swig quickly would be inauthentic. But I
think if you look through our social media, it's a
fine line, especially for a brand, because you're not trying
to sell, but you don't want to come off as
you're selling. You just want to show support and be like, hey,
we're here, We're with you. And our job, really, as
(30:16):
we talked about this, is to give people on that
social media feed a little bit of a break of
the craziness that's out there. Right. You know, we took
a break from Facebook, we took a break from Instagram.
We took a break for a little while as you know,
all the news stories and information was coming out and
and it was a tense time. We took a little break,
but then we had an internal conversation and we're like, listen,
(30:37):
we need to be out there, continue to do what
we do because we are kind of that like comedic
break and the brand really doesn't stand for like unapologetically
American and on a comedy piece. So as a company,
you know, we're very very serious about these issues, but
as a brand, you have to walk up fine line
of being what the brand is but also showing that
you support all these causes. Tell us, I mean you
(30:58):
you are you launching new products? Are you? Do you
have new product lines that you've rolled out this year? Yeah?
You know, obviously if you drink alcohol, you know that
seltzers are a very very big category. So we have
a product called Basic selz which um is done exceptionally well.
UM consumers love these products. And then we have a
(31:20):
tequila based seltzer which is called Mamitas, named after one
of our favorite beaches, UM near Ply del Carmen. So
you know, it's tequila and soda in a can, five
percent alcohol by volume, less than one graham of sugar,
ninety calories. They're starting to see that shift into you know,
better for healthier options, you know, for consumers. We launched
(31:40):
probably two or three brands a year, some successful, so
I'm not successful, but these two are really taste great.
I'm gonna send you some. You'll love mamitas if you
like tequila. And I didn't realize that you had that
sort of like venture studio mentality for launching brands at
somewhere and some don't. I recall, do you guys launched shots.
I just remember you guys doing your first martial a
(32:00):
couple of years ago on Viceland. Yeah, so we tried
to we try to go a little against the grain
with that one. We started on social media. We would
never do traditional advertising, but then you know, as we've
been in the business fifteen years, you saw all the
budgets and all the money start to go to digital
social So we thought, let's just go back against the
grain because the pricing, you know, for actual television ads
(32:22):
were coming down and also vices like right up our
alley from a consumer perspective, and it was just a fun,
little little kind of exercise to see how, you know,
how it would play out, and it was really cool
to actually shoot commercial and thank you. So so yeah,
the commercial was the virtual was great, but I think
from the product perspective. You know, you have to constantly
be innovating, prototyping, iterating, and some of our stuff has
(32:43):
been more partnerships. You know. We had a brand called
Not Your Father's roop Here a couple of years ago
that we started with the founder and eventually sold. And
then some some good friends um started a product called
Babe with them and kind of helped them out, and
you know, they took the brand and we're super successful
and sold to danazard Bush. Like I said, I take
probably three or four calls a week from entrepreneurs that
(33:06):
are starting up. If I can help them, I will,
And if it's interesting, you know, Jeff and I will
talk about it, you know, will either partner with them
or make an investment, like we did on a alcoholic
kombucha company called June Shine. Do you mentioned Babe that
was like with the Fat Jewish correct, Yeah, so the
Fat Jewish. Yeah, Josh and Doc and Tanner are brothers
(33:28):
that are part of that. And then Alex f Zane
there's four of them that started his brand. And and
someone told me that that was like the number one
rose in America or something like that. Yeah, the number
one caned rose. Yeah. So when they started. Um, you know,
we helped them kind of the beginning with distribution. Obviously
they're marketing you know geniuses. Uh. And having you know,
Josh the fat Jewish out in front of it really
(33:50):
helped and spoke the consumer. And then you know, they
kind of branched off and did their own company and
then they sold it to dan iszar Busch actually about
a year ago. UM. So it was the fastest growing
can wine um and the number one can rose kind
of in the country. UM. And again they built all
that on really on social media and and and like
really interesting um experiential activations. When you talk about the
(34:14):
brand values, it reminds me a bit of barstool Sports.
They have such a hugely passionate fan base. It's so
definitive of of a of a segment of the market.
And if they just completely changed their voice, they lose
the audience altogether. And now you know, within the last
month you had Dave Portnoy interviewing the president on which
is mind blowing. Right. So people want to talk shit
(34:36):
on or like you know, look over these things that
don't have like the cultural cachet. But the reality is
that like this is what the majority of people are
participating in no I agree, and I think interesting talk
about the influencer that you know, that partnership with with
with those guys and the Fat Jewish and you know,
it's definitely eye opening for us and it taught me
(34:57):
a lot, you know, about brands and influence or because
we worked with influencers before. You know, just having someone
with ten million or twenty million followers post about your
brand and and say that's it, it's great, but like
they have to be part of the lifestyle. Like those
guys started a company, right and they put everything online
again skin in the game, and you know, they stopped
(35:18):
everything and they were doing to build a wine brand, right.
But that's very different than a celebrity, you know, starting
it to keel as a side hustle. Those are two
different things. And I learned a lot from that partnership
that you know, if you're going to do these things
and you want to amplify the message, the influencer, if
if they have a big audience, they need to live
the brand and it needs to be authentic and they
have to they have to be fully in grain that
(35:40):
brand in their lifestyle. Well, Jason, dude, thank you. I
really appreciate you coming on the show to tell us
about you know, your story and your philosophy. It's an incredible,
incredible story man, and you know, like I really do
admire the hustle and the commitment and the fact that
you've been you know, at it with your best buds
and let's keep it going. Thank you, and I appreciate it,
(36:00):
and uh, I hope to see you again, uh when
we get out of of of COVID. Awesome, Thanks for
being on, Thanks for listening. Her to the Hustle. For
(36:28):
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