Lee: [00:00:03] Welcome to Episode 64 of The Stairway to CEO podcast. I'm your host, Lee Greene. And today I spoke with David Crooch, the Co-Founder and CEO of Ritual Zero Proof. Ritual Zero Proof is the first American made spirit alternative featuring all natural botanicals that echo the flavor and burn of liquor without the alcohol or calories. In this episode, David talks with us about his entrepreneurial journey from growing up in Oklahoma, where he sold pages out of his coloring book to other kids at just four years old, to moving to Chicago, where he started a physical therapy business and later a bone broth company called Osteobroth, to launching Ritual Zero Proof with his two friends, Marcus and GG, in 2019. While sipping on a Smooth Sailor cocktail I made with a shot of Ritual rum alternative, David and I talked about the hundreds of iterations it took during the R&D process to land on the perfect recipe for each flavor, why the company has only one investor, and why he believes business isn't just business, it's personal. Tune in to hear all this and more. If you like what you hear, please don't forget to subscribe to the show, and leave us an awesome review. We hope you enjoy this episode.

Lee: [00:02:06] Hi, David, thank you so much for joining the show today. I'm super excited to hear your story in building Ritual Zero Proof. Thanks so much for joining us.

David: [00:02:14] Thank you for having me. I'm excited to be here.

Lee: [00:02:17] Awesome. So, you know, like I was saying, I typically will start in a different format. But again, I have this insane product that you sent, and I just have to take the first few minutes to experience this. So you've sent your whiskey alternative. We've got the new rum alternative, which I'm going to be trying right now. We have the tequila alternative and the gin. I mean, these are beautifully branded. The bottles are huge. They're huge, and they're beautiful. So talk to me about the branding of this and the name. How did you come up with the name?

David: [00:02:54] Aren't they beautiful? So name first. That's a big part of why this whole thing exists. So often, you want to sit down, mark a moment. You want to cozy up and read a book or enhance a meal. You want to make a cocktail. And the ritual of creating that cocktail is a big part of what you're looking for. At the end of the day, do you actually care if it's alcoholic? Maybe, maybe not. But if you don't, this is a wonderful opportunity. For me, I happen to like both. I really enjoy cocktails. I also am very busy and don't necessarily need five tonight. Maybe I could have a couple and then I shift over to Ritual and can still have that same ritual of creating the cocktail nonalcoholic.

Lee: [00:03:43] Amazing. Well, I went on the website and you guys have all of these great recipes. Because I was first thinking I'm like, what am I going to make? What do I have at home to kind of put into this drink? So I am making the Smooth Sailor here. I luckily had some lime juice and ginger beer, and I've got a little lime in there with a big ice cube. So I'm going to pour some of this rum alternative in here and then see what we've got.

David: [00:04:10] It's really good. The recipes, we have some really fun ones on the website. But what we want to do, the whole purpose of the product was be a one to one replacement for the real spirit. If you're using our rum alternative, you use it the same way.

Lee: [00:04:25] So one shot, basically.

David: [00:04:29] Exactly.

Lee: [00:04:30] Oh, right. We are going to try this. And you have a drink in your hand. Which one are you having?

David: [00:04:37] Cheers. I have the Ritual Gin here with a little bit of tonic.

Lee: [00:04:41] Well, cheers, David. Thanks for being on the show.

David: [00:04:45] Mm hmm.

Lee: [00:04:47] Wow, that really tastes like rum.

David: [00:04:49] Isn't that great?

Lee: [00:04:50] That's insane. That's insane. I'm shocked. Like, how many iterations did you have to do to get so accurate?

David: [00:04:59] Oh my gosh. So the first two products were whiskey and gin alternatives and both of those each took over 500 iterations to get right.

Lee: [00:05:11] Wow.

David: [00:05:12] We learned a lot in that. And the tequila that came next and the rum that came next were a little bit easier and even better because of everything we learned with the first two products. It took a lot, and it took a lot of hunting to find the right people to help us to be able to create this. We had the idea. Making it a reality is very, very different.

Lee: [00:05:31] Oh, yes, it is. There's lots of ideas out there. Ideas are kind of cheap. It's all execution. So tell me about the aha moment. Like when did you decide to do this and why?

David: [00:05:43] Yeah. So my very best friend in the whole world, Marcus Sakey, also one of my two Co-Founders, the other being his wife, GG. I was over at their house one night for just a night of fun. Marcus and I hanging out, going to go to a bar. But when I get over there he's got all this stuff laid out on his countertop. And he's a pretty darn good novice amateur chef. We all like to cook and drink. And I kind of say, "What are you making?" Because he had enough weird ingredients that I thought he's doing something interesting. And he said, "You know, I've been trying to cut back a little bit on the cocktails I'm drinking. And I tried to make something that would still be something I needed to sip on that would scratch that itch, would still make me want to enjoy the moment and take my time with it and enjoy making it. But not just dive into cocktail number two or three or four." So he made me one, and I tried it, and I said, "Wow, Marcus, that is disgusting. What are you doing to me? That's horrible." {laughter} "However, I see what you're working with here. That's a really good idea. And all the respect in the world that you took the time to create this. Can I please have a real drink now?" And then we were having our night and doing our thing. And [00:07:02] the idea never left. And kind of what came to me was, what you're missing is that it was just a the thing. It wasn't directional. If we could actually make these taste like known spirits, if we could approximate the flavor profile of whiskey, of gin, tequila, rum, that'd be amazing. Now we're talking Impossible Burger. Now we're talking almond milk. Now we're taking something that is different than the normal thing, but let's you have that same experience. Let's do that. [00:07:32] And it became an entire night of brainstorming how this company could become, how these products could be, all the use case scenarios. And then it became week of it and it became a month of it. And then it became our lives for the last few years. It's a really fun journey from conception in which, you know, on a night we had a lot of non Ritual drinks to the leading nonalcoholic spirit alternative company in the US.

Lee: [00:08:00] And so did you have any hesitations around, you know, sometimes the taste of alcohol itself? The connotation with that is that it's not so great. Right? And so honestly, when I first saw this, I was like, I wonder how you're going to taste? Because if they're really accurate, you know, part of drinking, if it's not very tasteful, is you're like, "Oh, well, at least I'll be buzzed, and I won't even notice anyways." Right? But this is not going to really give you a buzz. So have you had that kind of concern, you know, going into creating this?

David: [00:08:28] Yeah.

Lee: [00:08:28] What's on your mind in that field?

David: [00:08:30] For sure. I'm one of the oddballs. I actually really like the taste of liquor. A lot of my cocktails are one ingredient cocktails. {laughter} No need to mess it up. It's already good. But that's why we haven't made a vodka alternative. As as a perfect example.

Lee: [00:08:45] Interesting.

David: [00:08:45] So many vodka recipes are made to hide the fact that it's liquor and we're doing the opposite. We're enhancing the flavor profiles of those spirits. So we bring out the juniper in a gin. You're going to taste oak and smoke in our whiskey. Molasses is going to come right to the front in the rum and all of that spice. And that's what we do. You're going to taste that agave. You're going to taste all of that green bell pepper in that tequila. So we're doing it differently. We're letting you really enhance what you should be tasting in those spirits. And kind of with everything, the more you know about something, the more you appreciate it. You know, if you've ever taken a wine class, it's enlightening. And if you've taken many oh, my gosh, what you can pull out of a sip of wine is unbelievable if you've been coached and taught how to do it. And we have. We've done that with spirits and we apply that to this, and when you are looking for those flavor notes, and you are trying to find those tasting components that are in there, it's wonderful.

Lee: [00:09:43] Yeah. Did you have to hire, like, professional tasters to really make sure to get it to this level? I mean...

David: [00:09:51] We did. {laughter} Yeah. So Marcus and I are really lucky in that we're both naturally super tasters and that is a bit of a rare quality we share. Kind of fun.

Lee: [00:09:58] Yeah.

David: [00:09:59] But we went to the best in the business. We went right down to Louisville and we were working with flavorist and we were working with distillers and we really pulled the best in the business together, and they were all saying, "This can't be done. This is ridiculous."

Lee: [00:10:12] Really?

David: [00:10:13] And we just didn't let up. We just kept at it saying, I don't care. The Impossible Burger is called the Impossible Burger because it was impossible. We're making a liquor replacement. Let's go.

Lee: [00:10:24] Yeah.

David: [00:10:25] And everyone involved is now very proud. They did stick with it, but it took a lot, took a lot of convincing, a little bit of arm twisting, you know, a couple of bruises. But we made them do it.

Lee: [00:10:35] {laughter} Arm twisting. Were there any moments where you were going through like the four hundred and fifty iteration, you know, of this flavor or of a flavor and you're like, are we ever going to get there? Did you, like, have those second guess moments? And if so, how did you handle it?

David: [00:10:53] Yeah, you know,  [00:10:55]it was much earlier on in which I think the concept was proven, this is probably good enough. You know, this is iteration number 30 and like, OK, we've really done something great here. Now let's take another four hundred and seventy iterations and really perfect it. Let's get really picky. The devil's in the details and the details matter. Let's get it right. So we kind of knew we were on to something really early on in the process and it became a matter of perfecting. [00:11:23]

Lee: [00:11:23] Interesting. Awesome. So you have these four flavors. Which one's your favorite?

David: [00:11:32] You know, because the rum is so new, it just launched, it's my favorite right now.

Lee: [00:11:36] It's really good.

David: [00:11:38] It's so good. It kind of bridges two major things I love. I love Christmas. Just I'm ready for Christmas now. Let's go with the lights...

Lee: [00:11:49] Taste like Christmas.

David: [00:11:50] It's Christmas in a glass. It's so good. But it's also perfect in the summer and it is very much a beach drink. Make that kind of a Dark and Stormy type drink and you're you're ready for a holiday. And I love summertime. I love Christmas. It's all right there for me.

Lee: [00:12:07] Yeah. Totally opposite seasons. Is that your favorite drink? The Dark and Stormy?

David: [00:12:13] It's really good. Yeah. It probably is. In cocktail life, if it's a liquor, I'm more of a bourbon guy. I drink a lot of bourbon and I do, I do drink our bourbon quite a bit. Our gin is exceptionally versatile. It's so easy to work with. But I probably use the tequila more than anything else from making cocktails. When I'm asking guests over at my house people what they want, very often they kind of blend towards that tequila profile.

Lee: [00:12:43] Margarita? They just want a margarita?

David: [00:12:45] Margarita. Paloma. Yeah, exactly.

Lee: [00:12:46] Amazing. Yeah. I can't wait to try that one. These are all really amazing and awesome.

David: [00:12:54] Thank you.

Lee: [00:12:54] What was one of the things, you know, beyond the taste of like, OK, this product I think we're getting somewhere with the product. It's tasting great. We've got something here. What were some measurements for success that said we're not the only ones that think this is really awesome, this is going to work. The market wants this...

David: [00:13:11] Yeah.

Lee: [00:13:11] How'd you test that?

David: [00:13:13] So a lot of the people working with us are chemists, flavorist, distillers that have been doing this their entire lives and they had opinions, and strong opinions, on whether or not this is going to be something, and it was almost like we were working with the pros right out of the gate. And if they gave us nod of approval, we had a good chance that the general public would do so as well. But we sent this out to a lot of people. A lot of people got the taste test this in advance. People we trusted. People we didn't. You know, we wanted to get this right. And the taste is king. You have to have a good tasting product. You're just going to fall flat on your face if you don't. It's got to perform well. It's got to taste well. It's got to act right. It's got to smell right. It's got to look right. And we spent a lot of time doing that.

Lee: [00:14:05] How many is a lot of people? Is that like one hundred people? Is that five hundred people?

David: [00:14:09] It's probably more like 12 to 15 hundred people.

Lee: [00:14:12] Wow.

David: [00:14:13] Which is a lot.

Lee: [00:14:14] Yes. That is a lot of people.

David: [00:14:16] And it was because of who we were working with. We had access to an enormous amount of people. So it's a little bit unfair. If I were saying, is that necessary for the average startup? No. That extreme. But, you know, but we're a little extreme sometimes.

Lee: [00:14:33] Yeah. So how long did it take between kind of the R&D process and launch? What was that timeline? And what was that like?

David: [00:14:41] It was over a year, not quite a year and a half, but a year and three to four months getting everything lined up, getting ready to go, getting it all figured out, getting the people together to make it happen. Took about a year and a half. Yeah.

Lee: [00:14:59] And what was your go to market strategy? How did you kind of think about that and how did it work out?

David: [00:15:05] It did not work out how I thought it would. {laughter}

Lee: [00:15:09] Great. Let's hear it.

David: [00:15:10] I do have a background in CPG and in natural food. And the goal was to launch kind of right out of the gate in that industry. So often in food, the natural food segment is the early adopter, followed by conventional grocery, so you end up kind of go Whole Foods, Sprouts, that route, and then you end up in the bigger Kroger, Albertsons, et cetera?

Lee: [00:15:36] Right.

David: [00:15:37] And then this weird little pandemic happened and that kind of set us back a little bit from that plan entirely. No one was bringing on new brands, but we did have one retailer, national retailer, bring us on right before the pandemic. And he said had this happened 24 hours later, it would not have happened. It was that down to the wire.

Lee: [00:15:59] Wow.

David: [00:15:59] And that's been a major proof point for us. We've excelled throughout that retailer, but it allowed us to pull back and really focus on branding, focus on our message, focus on finding our audience, finding our own voice, and then taking that everywhere, talking to our audience, finding what people are looking for and becoming an eCommerce brand first. And we did very, very well with that.

Lee: [00:16:23] And when you say, like, try to find your own voice and refine the branding, what was that process like?

David: [00:16:29] It's so interesting. You know, we built this for us, right? We're busy. We're in our 40s. We love cocktails, and we know we should drink a few less. It's a healthy thing for us. Sell it for us. Right? Who else out there, just like me, wants the same thing? But there's so many other audiences. There's people that are twenty years younger, twenty years older, people that are sober for life. People who are sober for a reason. People who are pregnant. There's so many reasons to drink this and finding those people, talking to them, learning how to approach them... It's such an aha moment when you see this product and people go, "Why would I... Oh, I could make my wife a nonalcoholic margarita. Aha. It makes so much sense." Right? And [00:17:14] it's kind of like the Impossible Burger almond milk. Now that the cat's out of the bag, you can't put it back in. There's never going to be a world where the coffee joints don't sell alternative milks to go with your latte. And in no world, the grocery store is not going to have alternative meats. Now that it's there, people are buying it. And most people that buy the Impossible Burger and Beyond Burger and everything, they're not vegans. They just want balance. They've also got some ground beef in their cart. They just want to feel good about a choice they're making. And what we've learned is you can't change consumer behavior. They're going to do the thing that they want to do. But you can decide and help them decide what's in their hand when they're doing that behavior that they repeat. Maybe it's not real meat, maybe it's not real milk. Maybe it's a Ritual Margarita instead of the real thing. [00:18:07]

Lee: [00:18:08] Yeah, I'm still so shocked when I'm on an airplane and they still don't have a milk alternative. You're like, what is going on? Like, what the hell is happening? You have a lot of travelers from different places, like you'd think they'd be a little bit more on top of that. Same thing with gas stations. Same old cow milk right there,

David: [00:18:30] It is insane.

Lee: [00:18:31] Yeah.

David: [00:18:32] Yeah. Thankfully, I don't have to buy much food from gas stations anymore. I plan a little in advance. {laughter}

Lee: [00:18:40] Exactly. Make it from home. So let's hear about your background. I'd love to learn more about you starting from the early days. Where are you from originally? And what was childhood like growing up?

David: [00:18:53] It was great. I'm from Oklahoma originally, so a suburb just north of Oklahoma City. Oklahoma City has suburbs. We can learn a lot on this podcast. {laughter}

Lee: [00:19:06] What? They do?

David: [00:19:06] But it was a great childhood. I have an older sister, two loving parents that really wanted the best for me and still do. Incredible. Very supportive. I kind of had that entrepreneurial itch as a very young kid. As a four year old I was running around the neighborhood trying to sell the pages I tore out of my coloring book. Which one little old couple was a wonderful, and they'd give me a penny every now and then and then some people weren't so nice about it. They were awful drawings. You should never buy that. But it was adorable and fun and cute. Played a lot of sports, very active and always worked to some degree. When I was 13, my dad helped me start Broken Bow Lawn Care, my first actual business.

Lee: [00:19:54] All right.

David: [00:19:55] He made me do it right. We had to become an actual company. People wrote their checks, their ten dollar checks, to the Broken Bow Lawn Service. It was great. You learned a lot that way, you know. You also learn that it's hard, the business-y part of business is frustrating sometimes. I just wanted to mow lawns, and my dad was smart enough to try to make it a lesson at the same time.

Lee: [00:20:20] Right.

David: [00:20:22] Yeah, yeah. I went to college in Oklahoma as well at a small private liberal arts university chosen due to a nice scholarship and ended up in Chicago shortly after that.

Lee: [00:20:35] What brought you to Chicago?

David: [00:20:37] You know, a big part of it was wanting to live in a big city. And I knew a lot of people here. When it came to big cities LA seemed like a lot, and New York certainly was, even though now, God, I love those places. I love LA. I love New York. But at the time, Chicago just seemed very tangible and seemed easy to access. It seemed very me. And twenty years later, I'm still here. So I guess there's something to that.

Lee: [00:21:07] Nice.

David: [00:21:08] Yeah. And I was in the fitness and physical therapy industry. I did a kind of a biomechanics based PT technique and taught biomechanics to other personal trainers and physical therapists and had my own company working for myself doing that. So when I moved here and just built that business, which really was me. It was building the brand of me, trying to get a bigger and larger clientele and expand upon that.

Lee: [00:21:38] And how did you get into CPG from there?

David: [00:21:41] Yeah, a few years ago, seven, eight, nine years ago, I had a handful of clients come to me in a very short period of time and say, "Hey, have you ever heard of using chicken soup like medicine?" I was like, "No. Yeah, sure. I guess. Maybe. Like grandma's chicken soup? What do you mean?" And they didn't know and I didn't know, but I kind of went online and I got asked the question enough times to figure out they were talking about bone broth. And if you're familiar with bone broth, it's the very high collagen protein that you get from leaching out the protein from the bones and the connective tissue from a chicken or a cow or whatever you might use. And I found all of these online forums talking about bone broth and the benefits bone broth could give you even if they weren't using the right word. There was no commercialized bone broth, couldn't buy it anywhere. So I said, you know what, this is ridiculous. I need to be making this for my clients. And I started making it for a few that had some intense autoimmune diseases and they got incredible results. And I thought, this is I'm out of something here. So no mean nothing, I created a company and sold a bone broth called Osteobroth. I sold it to other PTs and chiropractors and doctors offices. Sold online. And I learned there's a lot I don't know. There's so much I don't know. I'm winging this thing and I have no idea what I'm doing. And I met with... I started studying for the GMAT at the same time. And I met with a career counselor from Northwestern for Kellogg University. And I was taking the GMAT and made a great score. I thought I could, you know, all right, if I can go to a top five grad program that kind of changes the game. I could do something entirely different and really make this company work. I met with him and he said, "We'd love to have you. You don't want to be here. You have no desire to be here. You've been working for yourself this entire time. You're not going to leave here and go work for a consulting company or go to IBM. You're going to keep doing your own thing. I would take your current experience and keep expanding upon it."

Lee: [00:23:44] Smart guy. Good advice.

David: [00:23:46] Right. So that was my entrance in to CPG. I just I kept plugging away at that, sold off part of that company, started another soup company called Parks & Nash. And that's what I was doing full time when Marcus and I had this aha moment for Ritual. And I've been kind of deep into Ritual ever since.

Lee: [00:24:12]

David: [00:24:16]

Lee: [00:24:23]

David: [00:24:27]

Lee: [00:24:27]  And so what were some of the road bumps you hit along the way in trying to get this off the ground?

David: [00:24:35] First, it was getting people to believe that we could get this thing formulated in a way that was going to work. Once we did, we put our backs into it. Not big on doing things part way. Big roadblocks... This is kind of a bad answer. We've had a lot of success. We haven't bumped up against a lot of the traditional headaches. If I could have done things differently, I would have prepared for more success. And I've had a lot of failure in my life. The other companies that I've tried to make this thing work, a whole different conversation, but focused on Ritual [00:25:13], if I could do things differently, it's prepare for more success because this category is on fire. This company is leading the charge in the United States for a category that's really needed. And nobody understood just how big this was going to get when we first started the company. [00:25:30]

Lee: [00:25:30] Yeah, yeah. This category is extremely like just in the very beginning phases. It's a pretty exciting one. Well, I mean, I'm sure... So why didn't you have those roadblocks? Because there's normally like a lot of things that go wrong and starting a company.

David: [00:25:48] Yeah, that's a very easy answer because I've made all those mistakes before in other companies, and I was like still bleeding in the forehead from bashing my head against walls. {laughter} And I knew some places to avoid. Right?

Lee: [00:26:01] What were some of the things that you've learned from before?

David: [00:26:06] Sure. Sure. One is you you cannot do it alone. So much of entrepreneurship just sounds like something you're doing by yourself because you think of business being a thousand person company and a startup being you in a garage. And don't let it be that. There are so many resources and people that want to help, entrepreneurs that want to help startups. It is the fuel that makes things better. There's this whole industry of people going out there and putting themselves on the line to to create something better for the world.

Lee: [00:26:37] What are some of those resources? Are there any that stick out that were really pivotal for you?

David: [00:26:44] So, yeah, so with other companies, it's been a smaller investment groups that come together but offer more than just money, they're offering advice, they're offering the friendship, and sounding boards. There are enormous networks in the natural foods industry, things like Naturally Chicago, Naturally Boulder... Groups of entrepreneurs getting together to share the resources to mind meld and to try to navigate this crazy world. And it's very helpful. For Ritual, it was taking a lot of that and applying it. But it was also doing it with Co-Founders, with Marcus and GG side by side. People I absolutely trust with my life to go and run chunks of the business because you can't do it all yourself. [00:27:34] You just can't do it yourself. You certainly can't scale. And if you started off with the mindset of this is mine, mine, mine, it's really hard to give those pieces away and grow. And you have to be able to give things away to be able to grow. [00:27:48]

Lee: [00:27:48] There's a lot of different ways to form a partnership with a Co-Founder.

David: [00:27:54]

Lee: [00:27:55]  so when you're thinking about dividing equity or any advice you have for friends that want to start a company together, how do you view how to divide that equity?

David: [00:28:06] Sure. The first thing I would say is respect the binary nature of startups. So much of it is one or zero, success or failure. And any success is just better than failure and there's just no way around it.

Lee: [00:28:23] Right. Yeah.

David: [00:28:23] So if you're with people that are genuinely going to help you move that ball forward, do it. You're going to need it, regardless. How to divide it up is hard. People will always feel some level of ownership more than somebody... It gets awkward. It gets complicated. My biggest advice is don't let it. If you're genuinely, truly an entrepreneur, whatever you're working on now is not the last thing you're going to be working on. You're going to do this again and again and again. You can't stop. It's way too much fun. Don't stop. View it that way. This is not your life's work. Entrepreneurship is your life's work. But this may be a step in this process,

Lee: [00:29:06] Do you think equal splits are the best route to start things off on a clean slate, or do you think that someone should always have more equity than the other?

David: [00:29:14] I think that's very situationally dependent. It really depends on what you're bringing to the table, how much work you're going to put into the company, and how you plan to finance a company going forward too. So many variables. It's hard to say. But they'd be wonderful. If you can find another or a couple of entrepreneurs that think like you that you trust, maybe they're already your friends, yeah, go all in and go in together.

Lee: [00:29:44] Yeah. And so in terms of funding, you've had one investor this whole time. You guys are passed a Series A. Talk to us about how this happened, because that's a very kind of rare scenario, and I'm really interested to hear the story.

David: [00:30:00] So I've raised money for multiple companies the very traditional bootstrap way, and it sucks.

Lee: [00:30:09] It does. It's horrible.

David: [00:30:11] It's hard. It's awful.

Lee: [00:30:12] The majority of the conversations on the show are that like in the trenches, all the negative, no's, naysayers...

David: [00:30:21] That's the worst. {laughter} And it's hilarious. So, you know, I had another company. I'm very busy. Marcus is a novelist who's written nine books. He's written screenplays. Very busy. And we kind of we love gamesmanship. We love trying to figure out how to system break and do something a little bit different. And when we were doing this, doing it the traditional way sounded awful because it is, and it doesn't allow you to move at speed. You have to go through the same kind of traditional hoops and steps to prove concept and get another dollar and prove concept and get another dollar. Yeah, OK. It is fine. We kind of saw where this entire category was going and it wasn't going the traditional route. It was going to move fast. So we actually approached Diageo, the world's largest spirits company, through their kind of offshoot brand accelerator and showed enough proof of concept to get in front of their investment board. And it was great. They kind of said, "Listen, a lot of brands are trying to do this, but no one has done it as well as you guys have." And we put together a really interesting investment agreement that keeps them as our primary and sole investor as long as they want to. And they've been very generous and we have hit every metric and then some. So it's been a very equitable relationship.

Lee: [00:31:55] Amazing. That's a really fascinating... And good for you guys for getting that deal.

David: [00:32:02] So every strategic large company brings on smaller brands. I mean, they really do use us, the entrepreneurs out there as their R&D team. Whether we realize it or not. You're already working for Kraft or Unilever. You're already working with somebody who's going to buy your concept later. This works out or you failed. That's kind of the best, maybe you get to the venture capital or PE exit, but that's really unlikely. Most of us go this other way first. Why does it have to be after a Series B? Why do you have to have raised fifteen million dollars and are selling fifteen million a year to get acquired by strategic? You know, if you're smart, if you're capable, if you have a great concept and an amazing product, approach them early. Why not? It's cheaper for them. They get a better deal and you eliminate the floor, you get rid of that failure because you've got the money to then go and do the thing, go get the press, go get the excitement. Go nail the marketing, get your branding right, get it out there. Let people know I've got something amazing. And it's not the way it works most of the time now, but I'd be very surprised if it's not the way it works more often later. It's a good deal for everybody. Everybody wins. It would cut out a lot of the family office, small seed investor crowd, which would be unfortunate. But I think that you can all get worked out with some invest along rights and that kind of thing. I think everybody could still win. But  [00:33:45]don't assume that you can't get an investment from a gigantic company early. Maybe give it a shot. [00:33:53]

Lee: [00:33:54] Yeah, and making them a long term partner. That's awesome advice and definitely something for listeners to think about as they grow their business. When you were fundraising, in your previous experience and bootstrapping and in the trenches in that one, because that's where a lot of the founders kind of are, what advice do you have? What were some of the road bumps and learnings you learned in the fundraising process?

David: [00:34:17] I need a non Ritual drink to have this conversation. {laughter} You know, it's just heartbreaking, and it's just difficult. It's a different way of doing things. My sales meeting batting averages is incredibly high. And if I get in front of a buyer and I have my product, I do a very good job of getting that sold through. Investing is just very different. What you're selling is you. It's your product. It's your roadmap. It's your entire business plan. If the category. You're selling the entire macro of your category before you can even get into selling what your product is. There's so much that goes into it that's out of your control. And that's very frustrating because they may love you. They may think the world of you. You get a 99 out of 100. But they also met with somebody that day that was 100 out of 100. So they didn't pick you. You'd already flown to Dallas and you had the meeting and you wore the suit and you did the thing. And they didn't realize that your company had twelve hundred bucks at the time. They didn't know that that took up eight hundred of the twelve hundred bucks to get you down to Dallas and make that call.

Lee: [00:35:30] {laughter} Right.

David: [00:35:30] And then you leave and you're heartbroken, and you gave it a shot. And then you've got to find a way to make 600 bucks more to get down to Atlanta and do it again. It's hard. You know, I hope that it got a little bit easier with the pandemic and Zoom and people getting online and doing a lot of these meetings. Nothing's better than in person, except it hurts more.

Lee: [00:35:51] Yup. It hurts more. It's a little more expensive. Yeah. So what kind of qualities do you think make up a really great CEO?

David: [00:36:01] I think so strategy is very important to me. I play a lot of chess. I play far too much chess. I have a problem. But being able to look a few steps ahead to know what you're trying to do, to be able to create that path for your employees is really important. Most people don't have that entrepreneurial mindset that forge your own path, get a machete out and just create a road. And if you don't have that, that's absolutely fine. But if you do have that and you want to have employees, you've got to make it easier for them. You can't assume they're going to have that same mindset. So look ahead, look to where you're going and be able to articulate that path for them so they don't feel like you're just whacking away in the wilderness with a machete. There actually is a plan here, and you're going forward on that.

Lee: [00:36:55] Shooting from the hip. Yeah.

David: [00:36:56] Yeah. Even though you may be, do your best to make it work for your employees. I think that the ability to create personal relationships is really important. Every one that I work with, I consider a friend. And that's wonderful. Some of them are great friends and that's beautiful, too. My our first hire outside of the founders was a guy who's been a friend of mine since college. He was deep in the spirits industry and a wealth of information. Would never have hired him and crossed that very delicate boundary if I did have the faith that we had the right strategy, had the right product, had enough things in place that I wasn't going to ruin his life. So strategy. Planning ahead, and then keeping it personal. [00:37:43] There's nothing not personal about a startup. The whole "It's just business" thing is complete bullshit. It's just personal. You live and breathe this stuff. It's important. Keep it personal and become friends. And that doesn't work in a thousand person company, but it works in the 15 person company and it should work. [00:38:01]

Lee: [00:38:01] Yeah, I like that you said that. I've heard a lot of, like, empathy, you know, on the show to that kind of answer to that question. But keeping it personal I think is something that's really important and it's different than empathy. It's, you know, like you said, there's a lot of these companies and I've had this experience, too, where business is business. I'm going to treat you a certain way because this is just business. And that's not really how it works. Like the person still leaves feeling a certain way. It never really goes away. There's no healing that happens. So then you're left with these feelings and it's a mess. It's just not how you should treat people in general if you're in a business or not. Right? It's like treat people how they should deserve to be treated.

David: [00:38:41] Yeah, I mean, this is a business started among friends. Our first hires were friends. The next hire was the brother of a friend. Like it just kind of kept going. You can't treat them like anything else. They have to be friends. It has to be personal. We have employees all over the country. And I love them all. It's important. You have to to make it personal and then they're going to care about you and they're going to care about the company and they're going to care about the products and they're going to make it personal to them. Every single person in our company deeply cares about the company. Every single person in our company has equity in the company. It's important to us. That's part of our culture. Everybody gets a piece. Everybody is an owner. It's all personal.

Lee: [00:39:31] There's some people that say, you know, "Never go into business with your friends." And there's like the people that are like "I only go into business with my friends." What's the difference between those two things? Like why is there such a contrast?

David: [00:39:46] I think the first person got burned and went into business with the wrong friend. {laughter}

Lee: [00:39:52] So the thing is, is not every friend is the right friend to go into business with. Is that what you're saying?

David: [00:39:59]  [00:39:59]I think that the most important thing you can have among your Founders and among your employees is trust. [00:40:08] I absolutely trust everyone in this company to get their shit done and to make it amazing. And they trust me to do the same thing. And if you have that, you're going to become friends, whether you meant to or not. I trust you. We're into the same thing. Now we love each other. Oh, crap. We're friends. Like, look what happened. So I think it's fine, but work your ass off. You know, you can absolutely ruin a friendship in business, no question. The one way to ensure you don't ruin the friendship... Win. Win. Go win. If you all get out of this thing or you thought you were going to get out of this thing, it's going to work out.

Lee: [00:40:47] Right. So how big is your team now?

David: [00:40:49] We're at fourteen people now.

Lee: [00:40:51] All right. And so are you guys remote? Or do you have an office?

David: [00:40:58] Well the people that... If they're in the city and you've been vaccinated, you're welcome in the office. So we opened the office up about a month ago and it's been wonderful. My Co-Founders and I became a pod right when the pandemic kind of kicked off and said, we can't do this thing remote. This is awful. Let's all just do this thing together. So everyone came together and that was our decision. And then now everyone in the company is vaccinated. We all feel very safe. We're all back in the office and it's fantastic.

Lee: [00:41:28] There's a lot of kind of controversy, I think a little bit on that topic with, you know, going back to the office. A lot of employees, like don't want to go back. They want to go back maybe part time instead of full time. Was there any kind of conversation like that with your team or what was the strategy behind going back to the office after being remote for like a year?

David: [00:41:50] There was a lot of talk about it. You know, first and foremost, safety. We want to make sure that we have a you know, when this whole thing happened, you know, we thought zombies were coming out of the wall. It's hard to even go back there. Right? It was a terrifying time.

Lee: [00:42:03] Yes.

David: [00:42:05] Thank God that's over. It's gotten a lot better. But we had a lot of talk about it. And that's kind of part of our culture. We genuinely missed the people that we weren't in front of. We missed the people that are remote. We hired some people in different states we've never met in person. That's weird. I can't wait to fix that. So we had a lot of conversations around it. And where we landed was get vaccinated. You know, we're kind of big believers in science. Follow that. Do that. If you don't want to get vaccinated, that's absolutely fine. But you can't come back right now.

Lee: [00:42:39] So you do have some team members that are working remote still?

David: [00:42:43] Yes. Yes. We have some people out on the West Coast and East Coast that are remote because of location.

Lee: [00:42:49] Yeah. So you have like a hybrid situation going on where you've got some remote team members and then you have the office with people that can work at the office. So it sounds like it's very flexible,

David: [00:43:00] Super flexible and we're a pretty flexible company. It comes back to that trust thing. You know, you're not clocking in. You're just getting your stuff done, and we trust you to get it done. And that works regardless. Everyone this remote will come in for summits and sessions, we'll fly everybody in and do a big powwow, which is amazing. But trust. Again, it comes down to trust. There are companies whose vacation policies are, it's a tome to read through the vacation policy. Right?

Lee: [00:43:31] Right.

David: [00:43:31] Ours is, I trust you. I trust you. Get your shit done. And is fine.

Lee: [00:43:37] Right. Take off whatever time you need. It's kind of like an unlimited policy.

David: [00:43:42] Absolutely. Of course it is. Yeah. We're busy. I know that no one here has time to take off week after week after week. It's impossible. But I also trust you to get your stuff done, and everyone gets their stuff done and does it very well.

Lee: [00:43:57] So you guys have done incredibly well during the pandemic when a lot of companies weren't doing so well, and I know that a lot of people were drinking alcohol during the pandemic because it was a tough time for everybody. Everyone's sitting at home, like what the hell is happening to the world? As a non-alc brand you guys have done extraordinarily well, 40 percent above projections. So talk to me about how that happened. What was in line to allow that to happen?

David: [00:44:26] So a few things there. Right when this whole, as the world seemed to be falling apart and we're waiting for the zombies to come out of the sewer and all that, we were terrified like everybody else was. And so I called a big meeting and we put together three different budgets. We had our original budget. We had what I call a slashed budgets, where everything was less than it was supposed to be. We have less opportunity to spend. We're going to get less revenue. Every team go and slash your budget, assuming things are going to get bad. And then there was a disaster budget. What if we never make another penny? What if this is all we get? The world is falling apart for a time. How can we just hang on by our fingernails and make this thing happen? So we immediately implemented the slash budget. Every spend got cut, everything changed and said, we're going to talk about this for 30 days and we're going to let things begin to shake out. And 30 days later kind of went, yeah. So we spent less, but we still made the revenue we thought we'd make. What's going on here?

Lee: [00:45:30] Wow.

David: [00:45:30] And then let's just give it another 30 days. Sales are way up and we're still spending less. Come to find out, yeah, everybody was drinking during the pandemic and everyone was drinking non-alc during the pandemic. People wanted that celebration. They wanted that Zoom cheers. They wanted to cozy up next to the fireplace with the book and make that moment special, whether it was whiskey or whiskey alternative. They wanted the whole ritual of the thing. And it began, the pandemic began to really highlight health and people began take their health very seriously. Some people drank a whole lot early on, and went wait a minute. You know, the Tiger King part of the pandemic is over now. Let's get serious about our health a little bit. And they started drinking less. So it became obvious that this this category, this product, people need it. People want it for all the right reasons. To create your own rituals, to have those rituals in your life, to enjoy yourself and your friends and your family in a moment, whether it's with alcohol or without.

Lee: [00:46:40] And with the team being remote, it sounds like, you know, I'm assuming it's probably similar to everybody else where all of a sudden you're in an office and then you're not. And now all of a sudden you're managing a remote team, which a lot of people have never had an experience with. And so how did you kind of navigate that and how did you motivate your team?

David: [00:47:00] So we immediately put together a few different rooms, like virtual offices. One was for the entire team and one was kind of my office. You open up both screens first thing in the morning, people popping in and out all day, making it seem as normal as possible. Set up regular full team meetings to keep everybody engaged, keep everybody excited. But it's not easy. You know, we were all kind of in this thing together trying to figure out how to make it work. And kind of back to that whole how best to counter negativity? Win. We just, it kept happening. Everyone had a new idea of how to engage the audience. Here's a new idea. Here's a new idea. The team was so engaged, the team was so alive with this product. Everyone is an owner. Like I said, it just kept coming, just kept kind of happening. We kept everybody engaged and they didn't need that much, you know, "managing" because we hired right, and they took care of their stuff.

Lee: [00:48:08] You know, meetings, I feel like Zoom meetings, people were just getting so much like Zoom fatigue. You know, so many meetings so that we can all stay on the same page and stay motivated. So when you say that you had a lot of full meetings with everybody, how often were you having them and what would you suggest is like a healthy amount of meetings during the week?

David: [00:48:28] Even pre-pandemic we've always had our all hands meeting once a week, and that's where all the teams come together. And it's just a full download of everything. We still do that. We had some more topic specific ones very early on in the pandemic. We kind of had a cadence a little bit earlier and realized it was not necessary and it became more team specific. So we still had that regular touch point at least once a week, only once a week, and at the same time, very regular. And then it was the sales team, the marketing team, the creative team, all getting together to mind meld and get their stuff done. And then with big victories or any major announcement, we always kind of do a slack 911. Everyone jumps on the virtual office and we can get that done too.

Lee: [00:49:16] Interesting, and so what do you think has kind of led to the success of Ritual? What's put you on? Is there anything specific that really helped put you guys on the map? Was it like a press article that was a big winner? I know it's always a combination of everything. But when you think of, like, the number one thing that really helps you build the brand or get sales, is it paid media? Is it influencers? What is it?

David: [00:49:44] You know, I think it's... I'm going to try to give you one answer and I'll give you like four. But it starts with our entire concept to be in that one to one super simple liquor replacement. So there wasn't any learning curve. If it's a tequila alternative, you have to like tequila. It's super straight forward. And then having very strong but clean, bright on point, branding... Our branding is very simple. Simple is very hard to do. It is not mucked up. Our three Founders, our first hire was a spirits expert. Our second hire was our creative director. Was all about branding. We had to nail that. It had to be obvious from flipping through the Amazon or walking through Kroger. Oh, that makes sense. So a super simple, straightforward, understandable product and then just getting in front of people. And I think that the pandemic helped us to highlight that. And we took a spend that could have been spent in store and put it on paid media and on search, on social media advertising. And that's been huge for us.

Lee: [00:50:57] And what about influencer marketing? How do you view that for a non-alc brand?

David: [00:51:01] It's great. It's great. We've really dug into that in more over the past few months. It fits into so many different lifestyles. Whatever the influencer's key core thing may be, whether it's diet related, fitness related, even more specific, it works for them and it works for a lot of brands that, a lot of larger brands, a lot of bigger companies that would love to attach themselves to an alcohol company if they want an alcohol company. You know, they may be a little bit more kid friendly or family focused. They avoid going with the real vodka, but they jump in with us because we have all the same benefits of a liquor brand without the actual liquor.

Lee: [00:51:40] Yeah. And what do you think? You know, being a Founder really involves a lot of persistence, a positive mindset, staying motivated every day. Do you have a morning ritual or any type of routine that helps you stay on track?

David: [00:51:55] Just wake up screaming and then the next ten minutes of crying...

Lee: [00:52:00] Well if you have kids, then that'll do it.

David: [00:52:02] I do. I have a lot of young children. Well, I had to fight myself on not just grabbing the cell phone and checking email. So I force ten minutes before. That's nothing. Right? Ten minutes. But ten minutes not grabbing my phone. If I'm allowed to just lay there I really try to manifest the day. I think about the most important things. I try to bring them to life. It's very, very possible to bring your ideal life into reality and try to remember what's really important and try to think high level, bring it down to very tactical moves, and think as many moves out as possible. Working with friends, back to that whole thing, it's a real responsibility. It makes everything better. The highs are better, but the lows can be lower too, and to avoid those, you've got to think a little harder. And you can't just play the game. You got to think through every move to make it work right. And for me, if I'm allowed ten minutes of doing that, it makes a big difference.

Lee: [00:53:09] Yeah. What's something you think most people don't know about building a business?

David: [00:53:13] How hard it is and how rewarding it is. Building anything is thoroughly enjoyable. I love woodworking. I love to rebuild motorcycles. Building something is so much fun, and we've all gotten some taste of it. You built your kid's bicycle, you did something. And it's so gratifying. You can't imagine how gratifying it is to build a business. The responsibility is heavy. You're also in charge of all of these employees and their health insurance and their kids. And there's so much that you have to take seriously. But [00:53:50] it is so very gratifying to build something and see something out in the real world. But I think it's just worth it. I think it's a shame if you don't give some version of entrepreneurship a shot. Doesn't have to be leaving your job and creating a company. Can be some very small step towards that. But do it. It's a wonderful way to grow as a person. [00:54:10]

Lee: [00:54:11] What would be a small step? Because I agree with you, I don't think that everybody should be jumping to quit their job, although there are a lot of people quitting their jobs right now to try to start something which is a little scary. Being an entrepreneur, I'm like you guys, be a little careful. You know, it's pretty tough. You only hear the success stories, you know. Like you don't hear about the millions of companies that tank. Right? There's a graveyard. There's a very large graveyard of businesses that die.

David: [00:54:44] And I've been there and it's awful. I'm from a small step maybe within your company, there's a committee you can take over. There's a charitable organization you can become part of. Maybe you can build a charity on the side and scratch that itch. Build something, benefit the world, but not put your family's health care at risk. There can be some ways to mitigate that risk and still have that same feeling. Fair warning, you might get that it's going and it may not stop.

Lee: [00:55:14] And once you have it, you can't get rid of it.

David: [00:55:17] You really can't.

Lee: [00:55:20] Yes. So before we wrap up, do you have any other kind of final advice for entrepreneurs out there listening? Or those that are thinking about starting something, business operators, just the listeners in general. What final advice do you have?

David: [00:55:37] Yeah, final advice kind of goes back to what I said earlier about not thinking you have to do it completely on your own. There's someone even if you have the most unique idea in the world, there's someone that's that's right there with you. It may not be the same idea, but they could be an amazing business partner. They could be your investor. Get out there. Don't be afraid to talk about your idea.

Lee: [00:55:58] Yup.

David: [00:55:59] You know, it's very rare that someone steals your idea and goes and makes it happen. That's a great movie.

Lee: [00:56:04] Everyone is so afraid of that. Like every person.

David: [00:56:07] I get it.

Lee: [00:56:08] I was afraid of it early on.

David: [00:56:10] I used to carry around NDAs in my briefcase and my backpack all the time. That's ridiculous [00:56:15]. If you don't just get out there and begin making steps, just start digging. Start digging and see what you find. You're going to uncover an enormous amount of questions, get them answered, find people that will help you to answer those questions for you. It's a learning process. Your life is about learning. That's as important as the money you'll get from this, and you'll realize later ultimately more important than the money you'll get from this is how much you've learned, people you've met, the experiences you've had... It's worth it to just step out the door and just start going. [00:56:49]

Lee: [00:56:49] About the journey, not the destination.

David: [00:56:52] Right.

Lee: [00:56:54] So what is next? What's the grand vision for Ritual? What can we expect to see next?

David: [00:56:59] Yeah, spirit alternatives are the thing. They are as needed as gluten free bread, as a dairy free milk, as a meat alternative. Every responsible bar and grocery store and host and barbecue will have a nonalcoholic option for the adults, just like they have an alcoholic option for the adults. So you're going to see it everywhere. Ritual will become synonymous with nonalcoholic spirits. You'll be able to order a gin and tonic and you know you're going to get alcohol or a Ritual gin and tonic and you know you're going to get the nonalcoholic option.

Lee: [00:57:36] What about the kids? Do you think because it's non-alc that parents are going to be like, "Hey, you want a drink?"

David: [00:57:41] I don't think so. I think because back to your early point of a lot of people don't find the taste of alcohol exciting.

Lee: [00:57:48] True.

David: [00:57:49] Kids really don't. Kids are just not a fan.

Lee: [00:57:51] {laughter} Have you tested this on your kids?

David: [00:57:53] I have. I have. Not a fan. Not a fan. They want the margarita mix. No tequila. {laughter}

Lee: [00:57:59] It's a good thing for them to try early on so they know never to drink alcohol.

David: [00:58:04] That's a good idea. I can actually make a really awful version of this to turn kid's off from it.

Lee: [00:58:09] Hey, kids, this is what alcohol tastes like. Awesome. Well, thank you so much, David, for being on the show. I really appreciate your time today.

David: [00:58:17] Thank you so much. I had fun.

Lee: [00:58:21] Thank you so much for listening to the Stairway to CEO podcast. Once again, I'm your host, Lee Greene, and if you have any burning business questions, please feel free to reach us at StairwaytoCEO.com. We'd love to hear from you. And if you like what you hear, be sure to subscribe to the show, tell your friends, leave us a review, and follow us on Instagram @StairwaytoCEO. Until next time, guys, keep on climbing.

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