Find Your Flow: Nicholas Reichenbach

00:00 - 00:16

When we got it to a certain level, we started to see that the customer's voice was much larger than the brand's voice. I picked up my Instagram and all of a sudden, Drew Barrymore is drinking Flow. Coldplay's Drinking Flow, Shawn Mendes is drinking Flow.

00:17 - 00:38

Nicolas Reichenbach is a serial, mission-driven entrepreneur and an investor. He started his entrepreneurial journey at the age of six, selling pretty much anything he could out of his wagon wheel. His first serious business was a clothing store he started at the age of 17 on a beach in Ontario with about $1500 in small business loans and $800 on his credit card.

00:38 - 01:17

Over the years, he's built an impressive track record founding, building and investing in multiple businesses, including his most recent venture Flow Alkaline Spring Water, a sustainably packaged spring water company that's revolutionizing the water industry. Hi, everyone, and welcome to the Inflection Point, where we talk to entrepreneurs, business leaders and innovators about their journey and the make or break moments of their career. I'm your host, Brian Haloossim, senior managing director at Bernstein. And today we're on the line with Nicholas Reichenbach, founder and CEO of Flow Alkaline Spring Water.

01:20 - 01:44

So, Nicholas, thanks again for joining us. I'm really excited about this conversation, largely in part because you are the epitome of a serial entrepreneur. And before we get into the flow, I wanted you to maybe tell us a little bit more about your inaugural business ventures. I'd like to know how a 17-year-old gets the confidence to go after a small business loan and get things going. Talk to me a little bit about that.

01:44 - 02:11

Yeah. Well, thanks a lot for having me on the show and super excited to share some experiences. Seventeen years old and I started my first business, was a clothing store on a beach, and I, recently in Grade 12, won the Entrepreneur Award at my high school. So that was really when I started to first kind of come into like, what was an entrepreneur. I had no idea what it was, but I knew I liked selling things and I liked

02:11 - 02:42

And, you know, ever since I had my first paper route when I was 12, but when I was 17, I won the Entrepreneur Award for designing the lumbar box support, portable lumbar box support. It was actually pretty revolutionary, the design of it. You know, that summer, the High School informed us that there was small business loans for first time business owners up to 1500 Canadian dollars available for us, if we wanted to do some entrepreneurial venture and I had recently got my first credit card at $800 limit on the card.

02:42 - 03:19

So I thought it was a great idea to max my credit out and start a clothing store and running bus tours up to concerts in our large city, Toronto, which is about two hours away from my beach town, which is called Southampton, Ontario, and I started my first business and at the end of the summer, I paid off the loan, paid off my credit card and went to school for business marketing. So I was a really exciting time and that's...that really gave me the confidence to start my next business, which was concert promotion, where I owned lots of venues and threw lots, hundreds and hundreds of concerts over the course of 10 years. But that kind of kicked it off.

03:19 - 03:39

Nicholas, you mentioned multiple businesses, and one of the things that I remember was you trying to find the white space. And I'd like for you to maybe talk about what that means to you and how that's applied to all these different industries. You've been in entertainment, mobile technology, the internet, consumer goods. Do you mind commenting a little bit?

03:40 - 04:06

I'm not too sure if it's in every entrepreneur's DNA, but for whatever reason, my playbook is very specific. I see a trend, a macro trend like a big trend coming in because I see early consumers adopting these products and services. But you don't really see the infrastructure of big companies servicing that. So you're seeing, you know, the first generation early adopters coming in with these ideas.

04:06 - 04:46

And you know, as an entrepreneur, I feel like it's easy to create these products and services because you can see that there's consumer intent to purchase, but there's no one servicing the consumer. And so you just focus in on that consumer and deliver them the products and services that they need. And then eventually the market grows large because these trends are macro trends coming in from Europe or New York City or other important trend hubs in the world. And eventually early adopters grow into large scale growth in this particular product or service. And then it hits maturity way up, you know, years later.

04:47 - 05:28

But during the first five to seven years of these new services, that's where all the growth is, and that's where I focused my entire career. Every single company I've ever done has been focused on building this white space where you see clear consumer intent to purchase, and the products are a little more disruptive than...I hate that word, but still use it, disruptive in the sense that the big companies are just not servicing them, which leaves small companies and entrepreneurs to really build those services as it gains momentum. And then big companies usually come along and either compete or acquire. Every single business I've ever done falls within that definition.

05:28 - 05:37

And Nicholas, finding the white space, is that something that's intuitive to you? Are you doing research? Is it a combination? How do you find it? How do you know you found it?

05:38 - 06:06

I follow my passion. I usually am passionate about what I do, or I don't do it because I just don't have the focus and energy to do things that I don't love. I want to focus on things that I love, and I just happen to fall within things that I love, which happened to be very trend-focused or at the cutting edge of what we do. And then, you know, I start to see, over the years, you start to see a very clear pattern where consumers are purchasing and it's just the beginning.

06:06 - 06:53

And then you're like, OK, you know what? This is a very big market. What kind of product or service can we bring into this market that will have consumers meet their demand and meet their expectations from what they want? You know, like Flow is a great example of that, coming into a market with a sustainable, naturally occurring alkaline spring water and a sustainable tetra pak years in advance of... even, I even I didn't even know what ESG stood for in 2014, and the world wasn't really attuned to that stuff, but it was pretty obvious that consumers purchasing natural grocery, or the organic and natural grocery movement, they also wanted better for you products, but better for the planet. And so when you combine those two megatrends together, that's where you have a company like Flow.

06:53 - 06:54

Yeah, and let's stay on that.

06:54 - 07:12

I want you to talk a little bit about the AHA moment when you realized that there was an opportunity there with Flow. And you talk about passion a lot. What came first? Was that the idea, was that the passion? Maybe you could tell us a little bit more about the story of Flow and how you got here.

07:12 - 07:53

Yeah, I've always had a very serendipitous relationship with water. Having grown up on a very large artesian mineral water spring in Canada that releases about a million liters a day of the highest quality, still mineral water sold domestically in North America, unbeknownst to my family and myself. Of course, we didn't realize that it was super high-quality mineral water. Our family had it for generations as a recreational property with this very large lake called the Blue Lake Springs on it and all we knew, it came out very cold and it was amazing to drink because it had a very silky smooth taste to

07:53 - 08:14

And my father in the 1980s built one of the first bottled water companies in Canada called the Formosa Springs Water Company, about five miles away, and they acquired the spring and built the first glass bottling line and later sold the company to a beer company that produced beer from it. I think they still produce it today, and so water was in my family. It was in our DNA.

08:14 - 08:44

So I always had it in the back of my mind that I had this very large artesian mineral water spring. But we never really wanted to do anything with that because the bottled water industry went into plastic and we are from a very small rural area. And we never wanted to build a plastic factory anywhere in our township where my parents and my grandparents and their grandparents before lived. And so it was completely out of the question for us. And that's when, after kind of building and selling over 10 companies and my career, I found myself in San

08:44 - 09:32

As you do when you live in Silicon Valley and you want your next epiphany, you go to Burning Man. So that's my, that's my aha moment, right? I went to Burning Man. I thought, what do I want to do with the rest of my life I saw two very clear things at Burning Man that sparked the passion in this project because I kind of put the three things together which is, I saw that plastic single-use plastic bottles were a problem that we have to get rid of, as one problem to make the world a better place and get us back on, you know, carbon neutrality if not having a positive impact on the world and climate change and all of the things that face us in this generation. But on top of that, I saw that the water didn't taste very good in plastics either. And so that we know that that's called microplastics and no one wants to drink plastic.

09:32 - 10:25

And so those two things combined together with this zero trace policy that Burning Man had, which is like making you rethink everything that you do. Can I compost this? Can I recycle it? How does this get off the Earth? When I put it on, and that's when I said, look at why has someone not put high-quality water inside plant-based renewable resourced package? And that was the spark that made me go travel around the world and find the best possible partner to lead this charge of putting my family's artesian mineral water inside the most advanced eco-friendly pack made from plant-based material. And that partner was Tetra Pak, and at that point, the AHA moment turned into a business. And that AHA moment has definitely been adopted by a number of other people, including celebrities.

10:25 - 10:55

You know, you are right now known as the fastest-growing global wellness water. And what I would like for you to comment on a little bit more is, you know, how that celebrity following has sort of been acquired because it's quite unique. If I recall, it's not like you're running around paying all these people. And then secondly, you know, the ESG component, which I think is also extremely attractive to your followers and the consumer that supports your brand. Maybe we could discuss that a little bit.

10:55 - 11:37

Yeah. I'll start off with, the genesis of Flow was built on ESG, and as I said before, I didn't even know what ESG stood for. In fact, it was not a very common term in my mind anyways in 2014. Not only did I want to put my family's mineral spring water inside a plant-based renewable packaging that's fully recyclable, but I also wanted to be one of the most sustainable beverage companies on the planet, across the entire value chain, from the way that we manage our springs, like the eighth wonder of the world, fully sustainable, renewable, all the way through to the recycling programs that we encourage everyone use when you use a tetra pak to put it into the blue bin.

11:37 - 12:10

And so our ethos of the entire company became a very strong ESG platform for us to move and immobilize not only ourselves, our staff, but the world around us, like buyers from grocery stores, our distribution partners, our consumers, which we have 18 million-plus now, growing rapidly. And that ESG platform was the first thing that we kind of built up as like, this is what Flow is. This is what it means to be a part of our company. And this is what our goals are, what we want to do to make the world a better place.

12:10 - 12:37

And then on top of that, because the quality of the water was so high in its mineral count, it became a health product that natural grocery consumers were buying for the health benefits of alkalinity, the health benefits of drinking high-quality minerals like calcium and magnesium, and then an amazing smooth, silky taste. On top of that that allowed you to get premium hydration that also had your wellness being taken care of.

12:37 - 13:34

On top of that, with the consumer really not moving away from plastic, it was kind of the trifecta that kind of built our pillars around sustainability, natural organic product against our wellness consumer. And at that point, it just started growing and growing and growing when we focused all our energy on communicating with that consumer in a way that they wanted to be communicated with, which is, tell us why we need to be a part of the movement of Flow. You know, we want to change the world. Tell me about your products and how they're changing the world, better for my health and better for the planet. And when we started communicating with that, we just acquired millions of millions of customers that came on the journey with us to help us build this premium water company into a wellness beverage company where we're infusing different organic ingredients and taste enhancements, and then also even recently nutrition inside our Alkaline mineral water.

13:34 - 14:04

And when we got it to a certain level, we started to see that the customer's voice was much larger than the brand's voice. I picked up my Instagram, and all of a sudden, Drew Barrymore is drinking Flow, Coldplay's Drinking Flow, Shawn Mendes is drinking Flow, and we're starting to see these organic pop-ups, and we started to communicate with them to say, Hey, you know, you love our product, we'd love to send you some more product. And also you're welcome to become a part of the company and really help us build this

14:04 - 14:25

And so we amassed over the last four years over 35 highly influential celebrity investors in the company that injected tens of millions of dollars into the company over the course of the last four years of being a private company now. We're not a private company anymore, we're a public company, so it's a bit different to how we engage with them.

14:25 - 15:16

But our early shareholders and influencers like Shawn Mendes Post Malone, just to name a few. Halle Berry, Russell Westbrook. And we started engaging with them to really help us be the voice through them of the brand and just be themselves. And it's turned out to be incredible. We've gotten billions of impressions on the brand the right way, and from that, it just snowballed. Now we have hundreds of people drinking Flow like Kim Kardashian and very influential people, and it's exciting for us to see our brand resonate with them. We also take it very responsibly as well, where now it's very important to lay those ESG moments down and our platform becomes even more important, and we're going to become more accountable to ourselves about our programs and really progressing our agenda as we move forward as a public company.

15:16 - 15:22

Yeah, it's just a fantastic story. And you know, we are a leader in social impact investing.

15:22 - 15:57

I am not surprised to see the interest around your brand and what it stands for. One thing that I'm always interested in knowing is entrepreneurs grapple quite a bit with the decision of going public or staying private. Staying private, you have a certain level of control, a different set of circumstances, obviously, in terms of what the future looks like. Going public is a very different decision and also has its own benefits, but also some trials and tribulations. Talk a little bit about that decision, the why behind it, and what that experience has been like.

15:57 - 16:30

It's been a wild ride so far from moving from a high growth private company into a public company. It was a journey that we started paving out earlier on when we made a decision through one of our shareholders, who was the first president of Flow. His name is John Cochrane. He used to be the president, COO of Fiji Water. And he came on to run the company with me in 2017. We decided to vertically integrate our business and start building out our facilities.

16:30 - 16:58

So before we're doing something called Copacking, where we used other people's assets and we paid them a tolling fee, and you take a lot of margin out of your product, gross margin, but you don't have any asset infrastructure to be able to upkeep. So it's pretty light and nimble. A lot of people, the vast majority of beverage startups, over 90 percent, at least, I'm sure, don't vertically integrate because it's very expensive and they use other people's assets and they charge a premium price or make lower margins.

16:58 - 17:45

But with Flow, it was very unique because we were bringing a new technology over from Europe. Really, Tetra Pak is a very large, privately held Swedish company operating out of Switzerland, but they have global reach and we want it to be the most environmentally forward customer that they had, what also meant we had to reinvest in our infrastructure and their package. So, you know, changing our cap from plastic to sugarcane involved the new machine that no one had in North America. And then also we wanted the extra margin to be able to bring this product out of Canada into the United States. And we needed to really start building out capacity because nobody in Canada and very few companies in the US actually had the technology there to be able to produce our package at scale.

17:45 - 18:30

So we made the decision. You know what? Why don't we take the leadership role in Tetra Prisma? That's the format that Flow's in, which are... those that are listening that don't know Flow, it looks like the coconut water package that you'd see Vita, Coco and Zinc go in, and it's a very special package because it's RTD, ready to drink. But most of the capacity to produce this package is outside of North America, so we vertically integrated in 2017. And as a result, we immediately listed on the Toronto Stock Exchange Private Markets platform, and that's kind of like your three-year time window that you're preparing the company to go public. So it's a pre-public offering platform that allowed to raise capital in private investors and private institutional banks and investment banks.

18:30 - 19:13

So we set off to raise Series A through D, as in David, so four rounds of financing kicked off on that platform. We went from reviewed to audited statements. And so we started building our pre-public story in 2017. And that capital, which was, I think, well over $100 million Canadian throughout those rounds, that gave us the capacity to vertically integrate and build our assets and infrastructure to two different facilities, one in Toronto, GTA and one in Virginia, in the Shenandoah Valley, where we now have eight tetra line machines producing, you know, overcapacity to produce of over 350 million packs a year.

19:13 - 19:44

And so we built that out over time. And so it became very clear that in order to be able to continue our growth, which were a rapidly growing company and we have aspirations to be a leader in the premium enhanced water company against international competitors selling products here domestically in North America, as well as we want to be a leader in the tetrapod PRISMA packaging so we can really start to build this format as the format of choice not only for water but for other beverage

19:44 - 20:07

We do a lot of copacking for other beverage companies as well, and that made the decision to go public very simple. We passed the three-year mark. We'd raised a lot of capital from private investors and we needed more capital, which we raised 98.9 million on our pre-public offering to take the company public in order to give us the runway to really, truly take this leadership

20:07 - 20:33

So we're super fortunate to have the support of the TSX and the support of the financial community, not only in Canada but at large, meaning, you know, international institutions, as well as US institutions, participated. So we're really fortunate to have the support of that to give us the runway. So it's been a journey and it's only the start. We've got a long way to go, could even be decades of growth ahead of us to really, truly bring this brand and company into what we

20:33 - 20:41

we can take it all the way. A really unique path to get there. And a great accomplishment. On the note of great accomplishments,

20:41 - 20:53

the opportunity to be able to say that you're certified B Corp I think is a really big deal that not a lot of people are aware of. What did that process entail and what, you know, advice for entrepreneurs who want to pursue this?

20:54 - 21:45

Yes, B Corp by default was one of the only certifications that we could go for in ESG that allowed for like everything from the entire supply chain to be captured. But on top of that, all of our social endeavors as well. And it became super obvious to me after going to Expo West and talking to the B Corp guys at the booth that this was really something that consumers are starting to become aware of, but also it's just a way to govern your company from end to end to be able to capture not only the environmental sustainability impact, but also your social impacts, too. Like you're mentioning your social impact fund, it's not just about taking care of the plan, it's about taking care of us, our communities and our planet all at one

21:45 - 22:27

And so that's why we decided to go to B Corp. And last year we got awarded one of the highest awards in B Corp in the entire world for our score of 126.5 And. that was largely to do with like our social impact programs that we ran through COVID. We gave away about a million dollars worth of product to all of our frontline workers, both in the United States and Canada, through FEMA, and locally here through our hospitals to make sure that our frontline workers were healthy, hydrated throughout that very trying process. That really got us a really big score, and we're hoping to continue that growth as we move forward both from the environmental sustainable aspect of our value chain, including our package, but also our social programs and governance around that.

22:27 - 23:20

And so my advice to entrepreneurs is that if your business, your business should always want to make the world a better place. I think we're at a stage in life in general where we're very aware that we all have a part to do in this. So we all have our part to make sure that the world is a better place and that we can curb the lines and do our job as a society to make sure that generations ahead of us have a really good life to live and the planet's healthy. So in doing that, B Corp is a great way of just governing yourself. Whether you're small or big, it's just a way to say, you know what, let's think about everything that's important to our products and services and our customers, and let's try to just put it down in writing. And it's not a very rigorous process. You know, it doesn't take a lot of time. It takes a bit of documentation, but it also just gets your management team to understand like, what are we doing and how do we do the things that we do to make the world a better place?

23:20 - 23:22

Yeah, it makes a lot of sense.

23:22 - 23:39

So Nicholas, I know you navigated a number of challenging environments in your career. One was 9/11 and now seemed Flow through the pandemic. Can you share what those experiences were like and how you were able to, you know, get through those environments?

23:39 - 24:19

Yeah, I mean, the world can throw a lot of curveballs at you, right? And I know that everybody listening can feel and have empathy for people that are not doing very well now in the pandemic. And last year, you know, on September 11th, 2001, was the same thing. We felt that across North America, you know, I was in Canada, but were, you know, still your favorite neighbors. And when that happened to you, it happened to us and all in one swoosh, you know, the world changed for anyone in North America. And as a result, you know, no one wanted to go out to concerts anymore for the conceivable future. All the major tours postponed and we were the same way, we couldn't throw the shows anymore.

24:19 - 24:46

And so we decided to go on a different production and fold the company up, and that was a tough decision to make. But that was the hand that dealt with us. You know, what was important is that we did it in a responsible way, but also took care of everyone around us in the process of doing that and pivoted really quickly to take all that experience and turn it into a new company focused on ringtone and mobile entertainment, which is really something I did for 20 years and still super passionate about

24:46 - 25:29

You know, as far as COVID and the pandemic, we reacted to it even better because we were very fortunate that water is an essential service. Having our water in the grocery stores was very important, and we went through what most food and beverage companies went through, which was pantry-loading in the first six weeks. So our sales really jumped up and we're able to maintain that growth. We grew 40 percent last year in 2020 fiscal period as a result of maintaining our great customer relationships throughout that, delivering our products direct to consumer where they couldn't go out to grocery stores through our amazing partnerships with Amazon, as well as our own website FlowHydration.com that gets delivered through Office Depot.

25:30 - 25:50

So we have really great partnerships that to be able to deliver to every household in America, in Canada, in a very quick and responsible way. But at the same time, we also supported our grocery store partnerships like Whole Foods and Sprouts and Safeway and Walmart and all of our great partners throughout that period to make sure that we had product delivered to them safe at all times.

25:50 - 26:31

And then equally more important when we saw the world in pain and going through this, we reacted with positivity and shipped over a million dollars worth of product out to through FEMA in the United States and locally in Canada through all of our frontline workers. And I think that that had a very positive effect on what was a negative or even a very trying time for society as a whole. And I think that what I learned is whenever you have these moments come to you, curveballs, you pivot fast, but pivot with a positive direction, and usually you can turn it into a positive outcome, and if you can't, then you can definitely pivot into something else. It's not everything can have a positive outcome. Failure is definitely a success in the making.

26:32 - 26:56

Appreciate you sharing that, Nicholas. You obviously have great vision. You've adopted a number of different, very successful ideas. I know you're working on a lot of other things right now, and I know the audience wants to hear what those look and sound like. Do you mind sharing what are the ventures that you're focused on? You know, I know your Flow is a big focus, but also I think you're involved with some other things. What does the future look like for Nicholas and his companies?

26:56 - 27:38

Yeah. Well, I'm definitely full-time. As the executive chairman of Flow, I focus all my time plus plus plus on that. However, I love supporting entrepreneurs and other businesses that are very similar to Flow in the sense of wanting to make the world a better place. My entire investment portfolio, whether it's indexes or individual companies, are all ESG. So I don't, I don't invest money in something I don't believe in. I think that's an important step for anybody that's listening, which is you got to walk the walk, right? You know, you want to make the world a better place. Then you've got to focus our dollars into companies that want to make the world a better place. On top level,

27:38 - 28:19

I love making investments in other companies that are like minded with an ESG focus. Whether it's, you know, I sit on the board of a company called Simply Protein, which is Canada's number one plant-based snack company and one of the fastest-growing in the U.S. And I was one of the early investors in that, and as well as I sit on the board of like one of the most innovative pizza subscription products that are really reinventing pizzas in a way in which has all-natural ingredients, direct to consumer, cutting all of the value chain out and moving towards a very innovative carbon neutral position in the pizza industry, which is exciting, too. But I have a lot of other investments as well, but they all focus on ESG.

28:19 - 28:41

So what's next for me? I think that this is an incredible time in the world to really just focus in on something that you feel that you can have an impact on to help make the world and consumers focused in on the right things, which is, you know, supporting each other, supporting the planet. And I think that's where I'll be for the conceivable future. I think it's a great place to be.

28:42 - 29:04

Nicholas, I could talk to you forever. I can't thank you enough for joining us today and going through all of this. I actually would love to continue this dialogue at some point in the future. Absolutely. Either on our podcast or even on some future panels that we're considering. You know, your background, your vision, and your generosity and sharing it is much appreciated. So thank you again for being with me.

29:04 - 29:06

It was an honor. Thank you.

29:11 - 29:26

Thanks for listening to the Inflection Point. If you've enjoyed the episode, please subscribe on Apple Podcasts, Google Play, or wherever you listen to podcasts. You can also find me on LinkedIn, and you can follow Bernstein on social media at BernsteinPWM.