If You Brew It They Will Come

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00:02 - 01:00

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 careers. I'm your host, Brian Haloossim. Bill Shufelt was out one night and ordered a beer, a non-alcoholic beer. For Bill the flavorless, watery and metallic taste was not a pleasant experience. And like any great entrepreneur, frustration led to opportunity. Today, Bill is the CEO of Athletic Brewing, a company that specializes in nonalcoholic craft beer and has raised over $70 million in a Series C and is one of only two brewers in the United States that focuses on non-alcoholic beer. Athletic brewing has been named the 26th fastest growing company in the U.S. by Ink magazine and achieved $30 million in sales last year.

01:00 - 01:22

First off, Bill, I just want to congratulate you on all your success. Thanks so much for joining us. I really appreciate it. I want business owners to typically explain their elevator pitch to kick us off. You know, maybe if you could just tell me quickly how you describe athletic brewing company. I would really appreciate that.

01:22 - 02:18

Yeah, I think the one sentence theme is reframing drinking for the modern adult. So what we all think about drinking is changing constantly in flux. But our mission as athletic is to positively impact the health, happiness, and fitness of our customers and then the communities and environment beyond. And we live up to every part of that proposition for sure. I guess what I was saying with like reframing drinking for the modern lifestyle, that's like exactly where it came out of my life. And humans have been drinking for thousands of years, but with like alcohol and drinking and socializing. And how we do that hadn't been upgraded for the modern lifestyle. And I think with the data and information available at our fingertips, the high-performance lifestyles we all lead, like people want to feel good, perform well, but they still want the social, the relaxation, those meal pairing occasions we've always gotten from alcohol. It just needs to be reimagined for this modern, high-performance lifestyle. And that's where our product comes in.

02:19 - 02:41

Yeah, and the genesis of this is a very personal story. And if you don't mind, I'd like you to tell it, because at the end of the day, you came up with this idea. Although if I'm correct, your wife is the one who pointed out that it was a real idea, but it was something that you were missing in your life. But you recognize that there was more to it. Expand on that for me a little bit further.

02:41 - 03:10

And yeah, every key moment in athletics history, for the most part, as my wife's fingerprints all over it for sure, I had a career I anticipated doing for the rest of my life. I worked at one of the world's biggest hedge funds. It was a great intellectually challenged environment. It was very merit based. It was really all I could have asked for in my financial career. And as a result, I thought I was going to be doing it for the next quarter century and never contemplated anything else. Like I do not have a single interpreted area or aspiration ever.

03:10 - 03:43

And even as simple as like creating my own hedge fund work, not something I was interested in, but I had this one idea that generated truly from my lifestyle, and it wasn't from a focus group. It wasn't seeing a trend in me like, oh, I could probably do that. It was something that spoke so deep to me in my bones that I had to do it and I just couldn't turn it off. And I was waking up at 4 a.m. before going to work and working out for 2 hours. I was working on that 10 hour a day on weekends. Like I just couldn't stop thinking about it. And that's when I knew it was for me.

03:43 - 04:39

But really that Genesis was out of like a very high-performance lifestyle. I started to wake up early, work out, and then I'd be on the bus from 6 a.m. to 6 p.m. and be responsible for my thoughts, my intellectual output. I was essentially in finance or essentially graded by the market on a daily, weekly, monthly annual basis, and its very merit based. I didn't want to have any down days, and then I was going out to work dinners three or four nights a week from analyst dinners by side dinners with 300 sell side coverages. So, like just in the business five days a week, like all hours of the day. And then on weekends it was dinner with my wife, friends, family, socializing bars, weddings, bachelor parties, everything in like six or seven nights of drinking occasions was a real artificial ceiling on the high-performance lifestyle I wanted to be living. So, it was like it was just this artificial ceiling.

04:39 - 05:10

And I stopped drinking for 30 days as I was training for my first ultramarathon. And really drinking was just getting in the way of work and getting in the way of several things in my life. And if I looked at it objectively, it was such a ceiling for when I stopped for those 30 days, it was the biggest life hack I'd ever discovered. I was sleeping through the night for the first time ever. I felt like I had to accelerate every way. Work out the whole workout. I have no down days at work. I was more mindful outside of work also. And it just it enhanced every part of my life. And so, I never went back.

05:10 - 05:42

But then I was still doing all those things and there were no options for me out there. It was like there was instead a million questions, like alcohol is so ingrained in society because people had been drinking for thousands of years and when you don't have a drink in your hand or place, doesn't serve up like a great alcohol, that's not alcoholic. I was just such an outsider for positive reasons, and it felt so unjust, and I was a huge foodie and beer guy. It was like very disappointing also to not have that relaxation beverage that I could enjoy without like really sacrificing on performance and everything.

05:42 - 06:34

So, I started to wonder about that, and I wondered about it more loudly and more often. And me and my wife were walking to dinner one time, probably 18 months after I stopped drinking, and I was just complaining about how the drink menu was going to torpedo the rest of this awesome meal. We were about to her, and she grabbed my shoulder, and she was like, why don't you do something about that? She had seen this huge positive impact stopping drinking. And I had my wife and she's like, you could take this to tens of millions of people out there and like really improve the health and happiness of this country and beyond. And it was kind of connecting those dots. And I was like, oh, this isn't only me looking for my solution. This is the way to like really impact tens of millions of people. And it was her connecting those dots and like she has her MBA and is extremely smart. And we started researching together and like, I just couldn't turn it off after that.

06:34 - 07:10

First, I absolutely love that story and I can relate very much to having a partner who's influential. A lot of times it is the support of two people together to push you, because moving from the industry that you ran, I'm sure, was not easy. But here's what I really want to know. Yes, you found a solution for you, but how did you know? When did you know that this could be a solution for a broader audience? Because I've tried non-alcoholic beverages and I know the problem that exists out there. So maybe maybe you could talk a little bit about how you knew that it was going to be a bigger thing for others, not just you.

07:11 - 08:08

Yeah, that's something I always advise founders on for sure, when like people are like sharing an idea and should I do this type questions? And it's that that question itself, it's like you're not so passionate that you can't turn it off if you're not so confident that like you felt this need is a need for millions of people, or at least a community that could be super excited about it. If you have those questions, it's probably not the right idea because it does like it's not only one person, but also an inflection point. It's like, really, is that going to hit and influence tens of millions of people and how a society thinks about something in general? And so, is it something that when you're doing the accounting at midnight on Friday night or when the alarm goes off at 3 a.m. on Sunday, are you going to be excited on the floor and is that something you want to be thinking about and just can't turn off? And if there's a wavering, like I always advise founders not to do it or maybe do more research as a part time or something like that.

08:08 - 08:28

But when do you start to realize that there was a broader market and an appetite for your product? At what point was it like, okay, you know what? This was worth the risk of me leaving the secure, lucrative job that you had, because sometimes it's not just clear until, you know, it's already past years.

08:29 - 08:51

I mean, I had such confidence. I was like my life was a representative sample of so many other people out there who were just like modern, healthy adults are looking to eat organic food, work out bishop at their job and be mindful. And I just had such confidence that like I was somewhat on the leading spear of that, like much bigger megatrend that would be around for decades.

08:51 - 09:30

I was very open about sharing my idea and I really expected people to be super cautious in my friend circle, in my professional circles and everything. And I found even the biggest drinkers in those circles were like really excited about the idea and open to it. And I did a lot of survey like we're talking about a category that was point 3% of the beer market before Atlantic entered the picture. But I was running surveys that showed 55% of the U.S. adult population would be excited to drink non-alcoholic beer with regularity if the options were better, if the stigmas didn't exist. And so, I knew what the challenges were going into it, and I just had this delusional, unwavering confidence that we could deliver on that proposition.

09:30 - 10:05

And then I would say the actual hypothesis started to get validated when one of our first retail placements was Whole Foods in Connecticut and then very quickly in New York and Massachusetts and New England. And that first summer on the market, Whole Foods couldn't keep our beer in stock, and we couldn't make enough to keep up with it. And there was from day one, customers were meeting our distributors trucks in the parking lot, and it wasn't even like getting to the shelf. And that was like, okay, about this, this is valid. It is here. And that was a great first data point that we could start to take to other states and beyond.

10:05 - 10:06

That's fantastic.

10:07 - 10:22

And Bill, and many of our entrepreneurs who listen to the podcast always tell me you dig into how they marketed. How did people find out about athletic brewing company and the product itself? Do you mind expanding a little bit on that, too?

10:22 - 11:04

Yeah. I mean, our goal was to do everything like, so you see so many startups launch with like a full form C-suite and like fully built out teams. And I think that's a huge mistake. I think you need to be in the mud doing everything yourself and learning everything you can about your company. And I don't want to pretend that, like, our pitch or our idea was like perfect in its first iteration. But like, I did 120 investor meetings, like to raise our first seed fund. And in that I learned a lot about what resonated with people and took a lot of great lessons from a lot of smart people who poked holes in our business plan. And I learned a ton from them and some I dismissed and had a great answer for and some I incorporated.

11:04 - 11:56

So, things like that and then like really wanted to learn every element of the business ourselves. And in that I was our one-man marketing department for a year and a half longer than that, even probably two years. But every time in our company I thought it was cool. iPhone picture on Instagram, share it with the world. And then I went to 65 athletic events that first summer in three months. So, every weekend I was on at least one finish line, handing out hundreds of beers, talking to people directly. You know, the alarm went off at 3 a.m. and I drove somewhere within 5 hours and had about 505,000 beers and come home. And that gave me the chance to talk to people face to face, learn what they thought of the product, hear their reaction, refine how I talked to customers. But it's amazing. Like in those, you know, that one first summer I probably talked to 100,000 people face to face about athletic brewing.

11:56 - 12:49

And like, that's so much more interesting than just like someone serving you a digital ad. It's literally the founder in real world with product in his hand telling you exactly what the product is. And I was just talking about this with one of our earliest teammates the other day. We're going to have like a O.G. VIP beer dinner at the brewery, and we're going to invite a bunch of our oldest customers. And the thing is, like, this is five years ago, at this point, four years ago, I can rattle off, off the top of my head dozens of people I met in those interactions in the first summer who are like still super fans and they've no doubt each told 100 people at least. And so, it's very much like I think it's Kevin Kelly runs the concept of 1000 true fans and then that replicates out from there. But I was a huge believer in that. Like we had a clear product and purpose for being and I wanted to tell people exactly that and not leave room for interpretation out there.

12:49 - 13:14

Yeah, the grassroots approach and you obviously building the brand has been an incredible part of the momentum that you guys are enjoying as we speak. You said something that caught my attention. You had a lot of people poking holes. You had a lot of people giving you feedback. Can you share like a couple of the takeaways that you got from those people that might have pushed you in a direction or maybe you affirm something?

13:15 - 13:56

Yeah. I mean, I had all sorts of rejection. I flew I flew one day on a rainy day to meet with this group of people all in one office. And it was essentially like a trip, the business trying to go a different direction type meeting of meeting in Westport, Connecticut, with ten potential investors who I thought were all a slam dunk. And I went, Oh, for ten from that group. And it was funny as I was, as we were like sitting down to that dinner, like these people are like super into the tequila they were ordering. And I was like the questions asked. Like I could tell they just didn't really get it and they weren't really listening. And I was like, you know, and total respect, like non-alcoholic beer isn't for everyone in pre-revenue companies. Investing for sure isn't for everyone.

13:56 - 14:26

And I will say a lot of questions were like synthetic. We built our production every step of the way and that was somewhat informed by no contractors wanting to work with us from step one. But we decided we were going to own every step of quality, our IP, our process and do everything from ingredient selection to class. We were going to own and do it in the utmost quality. And that was a decision that a lot of people who wanted us to hyperscale didn't like because that would be capital intensive.

14:26 - 15:15

And a lot of CPG companies are essentially like a contract brewing business with like a marketing shell around it. So, it's like a lot of CPG companies can start with like five people and it can be five people for five years as they like farmed out essentially every function of the company at a flat. Like we've done almost the exact opposite as we've built every function of the company from. We have over 100 people in our production facilities. We have production facilities on both coasts that we've invested in on every step of the quality. We have a salesperson in every state around the country that like is talking to people directly. And that's why we have an ambassador team of 1500 people across the country. So, like we've gone super deep rather than like surface level. And a lot of people disagreed with that approach to it. But that was a choice we had made, and we felt strongly about.

15:15 - 15:47

And ultimately, it is higher margin to invest in everything yourself rather than get locked into a bunch of agency structures and toll takers and farm out your business. So, I would say that's the number one thing. People question and question our ability to hyperscale in that model, which our production teams have done an amazing job keeping up with our quick growth in that. Also, we own everything in our business too. So, there's not anyone who can kind of hold up hostage in our supply chain and our sales and marketing infrastructure or anything like that as well.

15:47 - 15:52

Yeah, there's so much value in that in the long run on many fronts, and that's something I wanted to talk about.

15:53 - 16:16

But as I learned more about the product tribe, the product, what I've learned is that there is a unique process to what you're doing with the non-alcoholic component of the beverage. And and I think that was one of the challenges with the contract manufacturers and other non-alcoholic beverages if I if I'm correct in the way that it is ultimately developed and created.

16:16 - 16:49

Yeah, absolutely. It was kind of a first principles approach to the industry, and I would taste all these non-alcoholic beers that are out there and did a lot of research on how they were made and really concluded that, you know, everyone in the industry is using technology from the 1970s. And I said, I think everyone's like people when they go into the craft beer market, assume these like five things about how it's made and then they build on that where like I went back all the way to square one and like I think all these five things are why the category has such a long ceiling.

16:50 - 17:16

And we that was part of what I teamed up with John. So, John's our other co-founder and an extremely talented brew master who had won every award under the sun in the alcoholic category before coming to non-alcoholic. So, he was probably the most talented person to ever turn his sights on this category. In that, like I said, when we started up, I was like a big catcher's I don't want to use any of the technology out there. We can't talk to anyone about it because it's going to be proprietary in ours.

17:16 - 18:04

And we we had done a lot of research up to that point and credit to John. He started with the scientific method, just like tinkering on one variable per batch. And, you know, it might even be like the temperature of the mash tun over a 20-degree scale. There would be 20 different batches right there and then hold everything constant after and see how it affected things down the line as he approached it. Like we did well over 100 batches in tests like doing testing every variable and came up with a proprietary process that's truly our own. But in that like that made it something that like really differentiated us on a product level. And since then, we've won dozens, probably 60 awards over the last three years on a bunch of different continents. So, like I think that breaking of the norm of how non-alcoholic beer is made has really differentiated us for the long term.

18:04 - 18:11

Yeah, no doubt. No doubt at all. And I think it just adds to the story in so many ways and the way you differentiate.

18:11 - 18:38

I want to dive into challenges, you know, not just the obstacles of getting started, but, you know, we've had COVID, we've had supply chain issues out there. I'm sure there have been other things as well. Do you mind sharing some of the bigger roadblocks that you've run into as you've gotten to this point? Because everyone always sees the success but has no idea the journey that it took to get there.

18:39 - 19:32

Oh, for sure. And I mean, I have unbelievable respect for anyone who starts any ailment of a small business in this country or anywhere for that matter. It looks like a smooth line on like from the outside, but it's peaks and valleys every day. Often like six valleys, five peaks. And like me and John really try to just balance each other out and work through problems together. You know, nothing so big or insurmountable that we aren't going to be able to figure it out eventually. And those types of challenges are honestly where the opportunity is, you know, because if you're doing something that's super easy, super scalable, you're never hitting challenges. It means everyone coming behind is going to be on the same road. And I see a road with huge potholes, big barriers, things like that, you know, all the opportunities on the other side because clearly other people have got to those barriers and quit before them. So, it's super exciting.

19:33 - 20:02

It's funny you mentioned COVID. They ended up being much easier for our business because we had built out all the infrastructure ourselves. So, we owned like we weren't dependent on anyone. And so, it wasn't like, okay, let's make sure to check with like these 20 counterparties and make sure their business is all okay. And like we had a tight ecosystem and we just made sure our supply chains were okay in terms of like cans and malt, but all of that's mostly domestic and readily available. And we felt the. Warehouse with 12 million cans and we are off and running.

20:02 - 20:57

But it is like we also have a million mini panics any day of the week and everything seems like a huge fire drill. And I'm very thankful coming from my prior career in that where like every day was truly intense in sales and trading. Portfolio management live through any number of flash crashes, 2029 underwriting impacting in the financial sector like so it's it was all great experience for like the unpredictability of 72 hours in the biotech sector. So, like nothing was more volatile than biotech except maybe running a small business. So, I think it all prepared me very well and working at Point72 and kind of sharpening my intellectual sword every day with hundreds of just like some of the brightest people in the industry was a great opportunity in terms of like looking at challenges from a differentiated lens than like the super sleepy bear industry, really.

20:57 - 21:20

So yeah, I relate to many of the things that you've brought up. You have a component though to the business, as many do now in terms of giving back. Yours is unique, protecting local trails. I'd love to know the genesis of that and a little bit more background on on it, because I know that there's a cool story behind even how much you guys give away, for sure.

21:20 - 22:14

So, we wanted to be a corporation that really wasn't just a profit extractor from society. We wanted to like do good in the communities for the long term that we're serving. And our products are inherently better fuel and healthier and attacking. One of society's biggest problems, you know, alcohol affects 14.8 million U.S. adults have documented alcohol use disorder. And alcohol is the number three all causes killer in the country. So, our products inherently are giving people healthier options in that regard. But beyond that, we want to do good in our communities for the long haul. So, we donate 1% of all sales to community impact and that's just opportunity. And so, like giving underrepresented communities better opportunity. And that's anything from diversity brewing scholarships. We have those on both coasts and they're great programs, food insecurity, fighting cancer equality and job opportunities. And so, like that program is amazing.

22:14 - 23:02

And then our two for the Trails program, so it started out as 2% for the trails of all sales. And so that goes to anything from like urban playgrounds to improving outdoor access for people anywhere. And it could be trail building trail cleanups like new bike parks, mountain biking, did a big backcountry ski program a couple of years ago. And so, it's just outdoor access in general and protecting outdoor access for generations to come. And so, it is one of the bigger environmental programs out there in the country. In 2023, 2% of the trails will likely be $2 million. So that's fun. And this year it's something like $1.2 million in our grants that just went out. But it was this year it's 106 donations across all 50 states. So, like we're making a difference in the outdoor world in every state we do business. So, we're excited about that.

23:03 - 23:04

I'm sure it's very rewarding.

23:04 - 23:17

What's next for the company? Bill So when you look at the next 2 to 3 years and where you are today, what are the key objectives and goals for for where you're going?

23:17 - 23:49

I mean, we're still very much in investment mode, like we're growing building the rails and just building both like a high growth, high profitability business. And we just finished up a big East Coast expansion. Bird It's about 50 times the production of our original Connecticut Bird. It's in Milford, Connecticut, that there's about a $50 million project. So, we're excited to be opening the doors on that and that let us say yes to a lot of big chain retailers across the country that we previously hadn't been able to commit beer to. And we just ironed out our 50-state footprint as well.

23:50 - 24:22

So going from about 30 to 50 states this year and opening a lot of new chains was just having the beer available is a is a great starting point. If we want to continue to grow awareness for this category, people must have better options. And then we have some huge marketing initiatives coming this fall that we're really excited about. We've had some things like celebrity investors and people who've like really wanted to support the brand, but we weren't quite ready for to make that breakthrough moment. So, we've got a big marketing campaign coming this fall as well that we're excited about.

24:23 - 24:33

And from a product perspective, you obviously have a great variety of flavors and products. Is that going to expand or change in any way?

24:34 - 25:02

We're always trialing things, so we want something like 45 beers last year on our e-commerce site, and we're always trialing innovation on an athletic production. But really there's such a low awareness for the category and we have such a low distribution that we want to get our awarded beers out there to better distribution. So, our run Wild IPA, upside down Golden Ale and Athletic Light are our three most popular beers. That we're trying to get out there too much bigger distribution there ahead.

25:02 - 25:04

Yeah. And what's your go to?

25:04 - 25:12

I would say run wild. Okay. Has always been my go-to. But athletic light is our new 25 calorie organic light beer. That is just like me.

25:12 - 25:13

Saw that.

25:13 - 25:21

Ad super clean. It's it's like so easy to drink and be organic and 25 calories, so you can't really beat that.

25:22 - 25:28

Yeah, knowing me, though, I would end up drinking like six of them and defeat the purpose. But that's a whole nother story.

25:28 - 25:36

Yeah, I mean, six. You're fine, that's all. MAN 150 total calories. So it's great. It's definitely a lot better than six alcoholic beers, for sure.

25:36 - 25:51

Absolutely. Well, I would like to first congratulate you on a great product, a great story. And we look forward to continuing to follow and support the brand in different ways. And definitely want to thank you for your time today as well.

25:51 - 26:04

Well, thank you so much for having me. It was a blast to be at an inflection point with you guys. So we really appreciate you allowing me to share the story. And yeah, if anyone, the entire thing, athletic drinks at Athletic Brewery, it's super easy to reach us. So thank you so much.

26:06 - 26:22

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 Bernstein GWM.