$3M/Year Making partying more fun by introducing portable party punch – Justin Fenchel of BeatBox Beverages
INTERVIEW VIDEO (Length – 45:12)
Sponsors & Partners
Justin Fenchel of BeatBox Beverages shares how he brought his ideas to life by introducing a delicious and portable party punch that is to be enjoyed by anyone who loves to have a great party experience.
The co-founder and CEO of BeatBox Beverages, Justin Fenchel, shares the story of how his company came up with the idea of portable party punch in an eco-friendly container. By noticing the growing popularity of box wine among millennials and gen Z, Fenchel wanted to create something more fun and flavorful that embodied the spirit of music festivals. The company went through The Lean Startup model and crowdsourced the logo and box designs before launching in the market. The product quickly gained popularity, and BeatBox Beverages was even featured on Shark Tank to raise funds. Throughout the video, Fenchel discusses the challenges of distribution and selling, the impact of Shark Tank, the growth of the company, and the mistakes they have learned from.
- 00:00:00 In this section, Justin Fenchel, the co-founder and CEO of BeatBox Beverages, talks about how his company came up with the idea of portable party punch in an eco-friendly container. Fenchel explains that they noticed the growing popularity of box wine among millennials and gen Z but wanted to offer something more fun and flavorful. They also wanted to create a brand that embodied the spirit of music festivals, where people come together to have fun irrespective of their backgrounds. The company went through The Lean Startup model and crowdsourced the logo and box designs before launching in the market with their wine-based nostalgic flavors. The product quickly gained popularity, and BeatBox Beverages was even featured on Shark Tank to raise funds.
- 00:05:00 In this section, Justin Fenchel shares how he and his team went about testing the market for their product, BeatBox Beverages. They picked certain types of parties where the product could do well and offered five different boxes with unique flavors, alcohol content, and designs. They got feedback from people to figure out which flavor to produce. Justin also talks about working with his five co-founders and how their rare and amazing relationship helped them scale the business successfully. They knew when to pivot quickly, which led to the development of single-serve packaging as their product for consumers.
- 00:10:00 In this section, Justin Fenchel, co-founder of BeatBox Beverages, discusses the challenges of distributing and selling their portable party punch product. They couldn’t sell online, on the street, or direct to the stores due to the restriction of the industry. As a result, they needed to figure out the right product and the right distribution channels, which led them to switch from wine and spirits Distributors to beer Distributors in 2018. Despite not being able to outspend any of the bigger competitors, they still have a unique advantage of community, authenticity, and brand. BeatBox has been creating moments where customers connect through events and online, which supports the brand message of a taste that is portable, eco-friendly, and has an excellent alcohol percentage.
- 00:15:00 In this section, Justin Fenchel, the co-founder of BeatBox Beverages, shares the story of how they were able to legally self-distribute their product as a winery in Texas, which allowed them to sell their product directly to accountants by driving it around town in their cars. Their big break came when they presented their startup’s idea to a network they were a part of at the University of Texas, which led them to meet Alan Driven, the owner of the Republic National Distribution Company, the biggest Hawaiian spirits distributor in Texas. Their first funding was raised from the founding members, their friends and family, and an Indiegogo campaign. They also spent the first two years standing in stores giving out samples and selling boxes to build the community and get their product known.
- 00:20:00 In this section, Justin Fenchel of BeatBox Beverages talks about his experience pitching on Shark Tank and securing Mark Cuban’s investment. Fenchel explains that they went through a rigorous process to make it onto the show, from applying and pitching to two producers each week to being one of the 800 companies selected from an initial 80,000. Fenchel also shares that getting on the show validated their idea and brand, giving them the confidence to raise more money and expand their business. Despite going too far too fast, the publicity and investment from Cuban allowed them to pivot and ultimately succeed. Plus, Fenchel adds, it was an unforgettable, surreal experience.
- 00:25:00 In this section, the speaker discusses the impact of Shark Tank and gaining exposure through television and celebrity reach, stating that it was a super powerful opportunity for the company. They go on to talk about their working relationship with Mark Cuban, mentioning that he provides valuable feedback and focuses on teaching the message of being super focused in business. Additionally, they discuss the company’s two types of marketing: trade marketing, which involves in-store marketing, and field marketing, which involves events like music festivals. The speaker also mentions the success they’ve had with a shipper that takes up very little space in stores, allowing for more visibility.
- 00:30:00 In this section, Justin Fenchel, co-founder of BeatBox Beverages, discusses the impact of the COVID-19 pandemic on their business. Although it was a challenging time, they were fortunate that alcohol was deemed an essential product and their sales in off-premise areas such as gas stations and grocery stores increased as people shifted their spending to their homes. They also shifted their budget from live music events to online digital house parties and contests. While BeatBox Beverages is currently only in the United States, they are launching in Canada and have plans for expansion in Europe in the future. Their packaging is more popular in Europe and there are many opportunities for growth. However, they plan to focus on their current markets before expanding too widely.
- 00:35:00 In this section, Justin Fenchel, co-founder of BeatBox Beverages, talks about the growth of his company from its early days of only 15 employees to now having over 80 employees within three years. The company has hired 40 people in the last seven to eight months alone. BeatBox has teams for sales, marketing, operations, finance, and HR, with a focus on building a great culture. Fenchel emphasizes the importance of people management, a critical shift as the company grew. He ensures that his team is getting the things they wanted out of their role and that they have the resources they need. Fenchel also shares his view on failures and mistakes as a continuous learning process that entrepreneurs have to go through.
- 00:40:00 In this section, Justin Fenchel, co-founder of BeatBox Beverages, discusses some of the mistakes the company made early on, including not hiring a VP of sales after appearing on Shark Tank and not switching to beer distributors sooner. He also shares that having a smaller trial size and a team earlier on would have been beneficial. However, despite these mistakes, the company did not fail and learned from their experiences. Fenchel advises entrepreneurs to receive feedback from customers, be passionate about their business, and not give up if they believe in their product and get positive responses from customers.
People & Resources Mentioned in the Episode
Book: Hard Thing About Hard Things; Shoe Dog
What You’ll Learn
Interview with Justin Fenchel of BeatBox Beverages
|00:56||The business idea|
|06:58||Founders and Investors|
|20:17||Shark tank experience|
|36:26||The entrepreneurial journey|
|39:10||Mistakes made, lessons learned|
|41:33||Rapid fire round|
In this segment, the guest will answer a few questions quickly in one or two sentences.
Justin Fenchel of BeatBox Beverages
- Book recommendation that you would make to entrepreneurs or business professionals (Response: Hard Thing About Hard Things; Shoe Dog)
- An innovative product or idea and the current eCommerce, retail, or tech landscape that you feel excited about (Response: Celsius Energy)
- A business or productivity tip that you would recommend (Response: Slack)
- A startup or business and eCommerce retailer tech that you think is currently doing great things (Response: Loverboy)
- A peer entrepreneur or business person whom you look up to or someone who inspires you (Response: My dad i.e. the founder of Quetico)
- Best business advice you ever received (Response: Do something that you are passionate about because it’s going to be your life. You’re gonna be doing it every day. Don’t do it just cuz you see dollar signs.)
Sushant Misra of TrepTalks: Hey, there are entrepreneurs. My name is Sushant and welcome to Trep Talks. This is the show where I interview successful e-commerce entrepreneurs, business executives, and thought leaders, and ask them questions about their business story, and also dive deep into some of their strategies and.
They have used to start and grow their businesses, and today I’m real excited to welcome Justin F to the show. Justin is the co-founder and CEO of Box Beverages. Box is an 11.1% wine based party punch in eco-friendly portable containers. And today I’m going to ask just, just in a few questions about his entrepreneur journey and some of the strategies and tactic that he has used to start and grow his.
So thank you so much for joining me today at , Justin.
Justin Fenchel of BeatBox Beverages: Really appreciate it. Uh, thanks so much. Uh, thanks so much for having me. Love, always love telling our story.
Sushant Misra of TrepTalks: So a beautiful background and it also says 11.1% Abu. So , I definitely want to know, I mean, very unique idea to have kind like this punch with this wine mixture.
Um, how did you come up with the idea, what’s the backstory? And was, was there a product already, something to this in the market, or this would be like a completely
Justin Fenchel of BeatBox Beverages: new. Uh, yeah. You know, it’s, it, it, we had no experience in, in the alcohol industry when we started this, other than being consumers. What we saw was, in my background, I was an econ major and I was an equity analyst, um, training stocks for about five years in my early twenties.
And then I went to business school at the University of Texas and McCombs. And while I was transitioning, Um, had the idea with one of my best friends, um, and now the co-founder Brad, um, basically seeing what was going on in the box wine space. So box wine was becoming very popular in the millennial, you know, and now Gen Z demographic.
People were bringing the boxes to tailgates, to the beach, to kickball games. You were seeing it every. And it was typically FR or some boring box wine. And at the same time, we were also drinking less beer and moving towards alternatives. Like, you know, there was Bud Light, lime Maritas, and smear off ice, and Mike’s Hard Lemonade and Twisted Tea, and people were moving away from beer towards more flavors.
But, No one had taken the fun flavors and done it in the box packaging, and the box packaging was eco-friendly. It was portable, it was fun. It was like all these things. So we said, okay, well, why not do that? And then the third piece of it was, what is the brand going to be? And I am obsessed with music festivals.
Our whole founding team loves music. And to me, if the world was more like if you, I don’t know if you’ve ever been to a music festival, but when you’re out there and there’s a hundred thousand people and no one’s asking who you voted it for, no one cares what race, religion, sexual identity are. It’s just people there having an amazing time with old friends, meeting new friends.
And if the world could be more like that, , we wouldn’t have all of these issues we’re having. And so that was like the essence of the brand we wanted to create. So now we have this idea and this brand ethos and then we had to figure out how to do it. And so we just went Lean startup. Um, there was five of us originally, five original co-founders and four of us were at the business school and then Brad who was helping.
And um, we um, we just went the Lean Startup model. We emptied out fr via. Fill them up with vodka, crystalite and food coloring and went to different parties with, we crowdsourced a logo and box designs. I mean for like less than $2,000. We had like a logo and box designs and we were able to, to, to bring different mixes to parties and see what people thought and get validation beyond just our own thoughts.
And people went nuts for it. I mean, trying to give us $20 bills, uh, to buy these things off of us. And so that gave us the confidence to put in our own money we. $55,000, the five of us, um, to go out and, and make it. And we learned we couldn’t, we wanted to be a vodka based originally. Um, we learned we couldn’t do that, um, with the size we wanted to be.
And so we found this wine that tasted like a vodka. So we became this wine based punch. But always there was about creating nostalgic, fun flavors. We weren’t trying to be like a margarita or a, you know, a sangrita. You know, a mam or something. We wanted to be like blue raspberry and fruit punch and pink lemonade.
These really nostalgic classic flavors that are instantly recognizable and we were able to do that with this wine base and then, um, figured out how to make it ourselves in Austin. Um, we had a 800 square foot facility in Austin. It looked like it was seen outta breaking bad, but we were able to get product out into the.
And then, you know, things started to take the life of their own. We got picked up by a distributor, um, and then we went on Shark Tank to raise Mo to raise money. So that’s, that’s kind of the, the background on the, the brand and how we got going.
Sushant Misra of TrepTalks: I mean, it’s, it’s a great validation when people are willing to pay you, right?
When you put the product in front people and their, you know, they’re actually willing to, to, to put money. Take money out of their pockets. Um, when you went to these parties, like did you go just, uh, like did you pitch the idea that this is a new product that we, we have come up with, you know, try it out and, and you know, give us feedback that you like it or not?
Or was it really just, you know, you put it out there and people were like, yes, this seems
Justin Fenchel of BeatBox Beverages: like a great thing. Yeah, so we, we picked a few different like types of parties we knew that this product could probably do well in. So, you know, in my apartment complex there was a pool and so we had five different boxes and they were different flavors, they were different alcohol contents.
And we went and just kind of said, oh, we’re doing this, we have this idea. We’re looking at this and come by. And then they’d say, you know, why don’t you go to the one that you think looks the cool. And they’d go and they’d pick whichever design they thought looked the coolest. And then it was like, you know, okay, why did you pick that one?
And you’re getting feedback. And then, alright, go back to the one you think tastes the best. And Okay, why did you choose that one? And then people would say, oh, like, I like that it was higher alcohol or, I like that. I love blue raspberry drinks. Like, and blue raspberry kept coming up as people were like, oh, I love blue RAs.
So then it was like, okay, that’s gonna be our first flavor. Um, and you learn so much and it costs us a few hundred dollars. Right. I think a lot of times, and I learned this from my past experience, where we. , um, we put in money before we knew that anybody even wanted it. So the idea is to figure out quickly for as cheaply as possible if people actually want this, that aren’t your friends and your family
Um, yeah. So that was the goal, right? And I think that was the way for us to do it. And then we did a, we did a kickball game and same thing. And then we curated the house party where we said, Hey, come on over. We want to try out these new drinks that we’re thinking about making. So all of those gave us, you know, you find the consistencies and the feed.
Um, and that helps you develop the product.
Sushant Misra of TrepTalks: I wanna talk a little bit about the fact that you have five co-founders. Uh, I mean, a lot of the times when you talk to founders and investors, you know, um, working with co-founders that consider, you know, you know, either, either you have great relationship that your co-founder or, you know, sometimes those relationships, uh, don’t work.
Right? Um, and it’s hard enough to work with just one co-founder. I’m interested how. How, how is it that you came with like five people? What did everybody make the same kinda investment and like how, how do you make sure that everybody’s vision is the same and you know, one person is not saying, you know that I, because I’m noted what you’re doing, or, you know,
Justin Fenchel of BeatBox Beverages: things like that.
Yeah, so our situation was we had five original, two of them. Um, we knew were going to be taking full-time jobs after the business school, so we kind of structured it in a certain way knowing that they were going to be moving on to full-time jobs. And then Amy and I and Brad have stayed on since we, you know, we graduated in 2013.
Now, you’re right, like there’s lots of horror stories about founders and all that. I. With me, Brad and Amy. It’s amazing. Like, well, Brad, I’ve been best friends since we were 13 years old, and Amy been best friends since, you know, for 10 years. Um, I think it, it, it’s, it’s not easy to do. It’s a rare thing for us, but we are very collaborative.
Like it’s, we always are syncing up. No one is a, no, one is like, you know, nothing. None of us will do anything of any significant importance until the three of us are totally. On what we want to do in terms of the vision and how we wanna start Now, we’ll disagree and we’ll have good discussions, but like ultimately, like we have each other’s backs and we’ve just been, um, it’s been an amazing relationship for the three of us.
That is definitely not normal in a lot of companies that I, um, that I know about.
Sushant Misra of TrepTalks: So what is it about your business, uh, that you think now, um, has made you successful? Cause I’m, I’m assuming that, you know, creating a a a similar product is, is not as difficult, you know, somebody can your idea and, you know, create a, uh, a similar product or a similar kinda an idea.
What do you think that you and your team have been able to do? That have allowed you to be successful and scale the business.
Justin Fenchel of BeatBox Beverages: So I think there’s a few things. Um, one was knowing when you needed to pivot quickly, right? So like we launched the big box. It was five liters, it was 20 to $25. We went on Shark Tank with that, which is a rare, unique thing.
But with that, we expand. and we quickly realized that we couldn’t scale the big box because it was too expensive. It was confusing and it was gonna take a lot of money to, with consumer education, right? And so we knew we needed to develop a single serve product. So developing the single serve was totally game changing for us because that was 3 99, you know, less than $5 to get to, to try it.
When we launch that, and then also learning the alcohol industry where we can’t, I can’t sell online to you. I can’t even, I can’t be on the street and sell you it. I can’t even sell direct to a store. It all has to go through a distributor. And there’s different kinds of distributors. There’s wine and spirits distributors, and then there’s distributors that sell mostly beer.
The wine and spirits distributors are selling very expensive cases of whiskeys and fine wines, and they’re selling to restaurants and liquor. But they are not selling very much to seven 11 Circle K cause that’s very much beer and low end wine. So when we launched the single serve, our distributor wasn’t the best fit for that product.
We were with wine and spirits distributors. So we actually switched throughout 2018 to the beer distributors. And that was, you know, so that was step one. You have to figure out the right product. And the right distribution, right? Like no matter what you are in, if you’re selling online, you better figure out the right product and the right channels you’re selling online, whether that’s Amazon, your own website, so, or what affiliate programs.
So like, but once we got that and we’re like, okay, this is the right product and this is the right distribution, we were seeing it, we were getting more stores. Then I think the other advantage that we have really the, we’re never gonna outspend any of the big companies, anybody, to your point, can. Any kind of liquid in a box, like that’s not a competitive advantage, right?
The advantage is the community and the authenticity and the brand, right? Why does someone buy beatbox? And then why do they go back to it? And so what a large company couldn’t recreate is now coming up on seven or eight years of authentic consumer. And that’s everything from Shark Tank to the music festivals we sponsored, to all the tastings we’ve done to telling our story, like to people engaging with the brand.
You cannot just recreate that by putting something on shelves. And so that’s, you know, I, I, I, I kind of equate it to, I remember in 2005 I was doing a study abroad in the Prague, Czech Republic. I went to an event that Red Bull had put on. Now Red Bull was still very new to the US in 2005, but they were big in Europe and they had an event called Red Bull Crash the Ice, and it was downhill speed ice skating, and they were falling over and it was like crazy and everyone was lined up, people were going nuts.
It was packed all around and. You know, there was nothing about Red Bull other than it was the Red Bull crashed the ice, and then you drink a Red Bull and you’re like, I don’t even own ice skates, and I feel like I could skate down this thing right now because I’m so energized. And it was like this.
Aspirational lifestyle experience that solidified wanting to be a Red Bull drinker. And I think with beatbox, like we are creating those moments where people are having meetups at music festivals cuz they’re connected through our discord and they’re sharing stories about how beatbox was like so cool.
And it created this amazing moment. And then the product, you know, it’s, it’s got a good alcohol percentage. It’s Taste Delicious, it’s portable. You can reseal it and dance with it. It’s eco-friendly. So the product backs up all of the things that the brand message says, and that’s when you really have created something special, um, where people are supporting you so much more than just because of their, of the product that they’re carrying.
Sushant Misra of TrepTalks: So when you started out, because as you said, you know, you couldn’t sell it through regular channels, you had to go through the distributor route. Um, what, what was the first success where you were able to persuade a distributor to take the risk on this, uh, product? And did you, in the manufacturing, like mass, mass manufacturing of.
Can you share a little bit about, you know, how did you initially fund, like did every founder put a certain amount of money that was enough to create, like the initial batch of products and to
Justin Fenchel of BeatBox Beverages: go to market? So we wanted to, originally the plan was to out find a co-manufacturer, a co-packer to make it. and then we were gonna take it into the state of Texas and we were gonna sell.
This is how naive we were. We were like, we’re gonna ask someone make it, they’re gonna send it to us personally, and we’ll go send it to stores. And we went to the, the Texas Alcohol Beverage Commission, me and Amy, when we were interning for beatbox in the summer, and we said, here’s our plan. and they said, are you outta your mind?
You, you can’t do that. That’s illegal. You need a distributor. And we were like, well, what’s a distributor? ? You know, we had no idea. And so you we’re learning and we’re figuring out, okay, who’s distributors? All this? What we were able to fig and no distributor would talk to us because we didn’t even have a product.
Right? So there was one solution we found, which was if we became a winery in the state of Texas, that allowed us to self distribute as a. That’s why we made our little 800 square foot facility to actually be able to make it just so we could drive it around town in our cars and sell it directly to accounts.
And we were legally allowed to do that as a winery. We did that for a period of time and then we were actually, this is the benefits of like an institution like University of Texas and the network you are a part of. We presented on behalf of the entrepreneurship program. For the University of Texas cuz we were like having a real startup to a bunch of big alumni and donors to the school.
And when we were done, someone came up to us and said, Hey, I think I can help you out. And that person was Alan Drebin, who at it was the owner of Republic National Distribution Company, the biggest Hawaiian spirits distributor in the state of Texas. They were the second biggest in the country. And that was our first break where we had enough traction from doing it ourselves.
When we met with him and his team, they, they gave us a shot. Now, um, as far as the money put in, we, we did not all put in equally. We all put in different amounts. Again, there was two guys that we knew were gonna be taking full-time jobs, so they, you know, they were put in less than, you know, the people that were gonna be full-time on it.
And then that was enough to get our facility and make it make the first round of beatbox, the 55,000. We put in $55,000, all five of us, um, in different. And then we went to, um, our friends and family. So we actually raised like $15,000 on an Indiegogo campaign, and we were able to get another a hundred thousand dollars through, um, you know, a couple family members and some friends.
And so that was the first funding. And then when we got with the distributor and we started launch, then we started to try and raise money, uh, around town. So we started talking to angels and, and, and seed investors. Venture capital firms. And during all of that, we got approved for Shark Tank. And so that ended up being our big seed round.
But you know, we were, we’re fortunate. I know not everybody has the access to a hundred grand from friends and family, but um, that was what got us the first start. And you know, for us it was how far can we get before we have to take a, an outside check? If we just went to an angel investor and said, we are trying to raise money and we have this idea, they’re gonna say, you’re outta your mind, or they’re gonna want half the company.
Yeah. But if you have a product, you have a distributor, you have a manufacturer, you have a store that’s selling it and selling well, like now, you’ve de-risked a lot of it. And when you get a check, you can ask for a bigger valuation to dilute you less for your first.
Sushant Misra of TrepTalks: And once you had your product distributed, um, did you, did you.
I, I’m sure you, you’d have to do some marketing to, to get your product, um, you know, known and, and, uh, adopted in the market. But at what point did you know, was it, was it a, a complete success, you know, it, people started buying it right, right away, or, you know, what, what was that, that process like of, uh,
Justin Fenchel of BeatBox Beverages: For in the alcohol industry, they call it, well, in any consumer packaged goods, sips to lips is the most important thing you can do.
Meaning people trying it, right? Because especially with the first box, it was $20, and if you didn’t know what it was, you’re not gonna spend 20 bucks on something that you’ve never tried. But , what if you don’t like it? You know? So we stood in store. Every weekend for pretty much the first two years that we had problems, Thursday night, Thursday, Friday, Saturday, Sunday, they’d let us for three to six hours every single weekend, posting up in like a grocery store or a convenience store and giving out samples and selling boxes.
That’s the level it takes to get like, you know, and eventually you can’t be everywhere. I can’t do it sampling at a thousand accounts, but when you’re getting going and you’re trying to build that community, That’s how you gotta do it. And so we did that time and time again. Um, and it was a good way, like we had our, like, I don’t know if you’re familiar with HEB, is the grocery chain here in Texas, but like that was our first grocery store we got into.
And so by doing all these tastings right away, they were seeing really good sales data. So then they would give us more. Opportunities. Um, but yeah, that was the first we did. And then once we got the money from Mark on Shark, we gotta deal with Mark Cuban on Shark Tank. Then we started to think about where we wanted to do a little bit more marketing, you know, whether it’s music, events, digital, you know, we were always digital for, we always did Instagram before people were on Instagram.
We did Snapchat before they’re on that, we were on TikTok before, so we’re always forward that way. Um, but it was a lot of just in the.
Sushant Misra of TrepTalks: And, and yeah, I definitely want to learn, know a bit more about your Shark Tank experience. And so to me it seems like the, the fundraising that you did at Shark Tank and, and of course the celebrity power of, uh, mark Cuban is, was really around marketing and, and, uh, getting people to know about your brand and, and getting the eyeball.
Can you share a little bit about your Shark end experience? How did you get the opportunity? What’s the experience like and what is it like working with Mark Cuban?
Justin Fenchel of BeatBox Beverages: Yeah. So, you know, it was, it, when we were doing tastings in stores and doing all these samplings, people would say, you know, you should go on Shark Tank as if you just like, go down to Sony Picture Studios and get on the show.
Right? But we ended up applying, um, we tweet, you know, we, we hit it from every angle. We tweeted at all the Sharks. We, we went on LinkedIn to find anybody that was connected to the producers and asked for intros. Um, we submitted the application and eventually they got back to us and, We’re going to be coming to Austin to look at tech companies, uh, to look at companies in Austin.
So you should do the tryout. And so we went to the tryout and waited two hours and did our 32nd elevator pitch. And they liked it a lot and we were feeling good, but you never know. And then three weeks later they said you made it to the next round. And what that that means is they’ve taken it from 80,000 companies to 800 companies.
And so, you know, that’s a big. But then you get assigned with two producers, and each week you meet with the producer and you are telling them about the business. You’re working on your pitch. And each week they say, this could be the last week. We’ll let you know if we’re gonna continue the conversations.
And this goes from like this one, from like basically end of February all the way to May. And then in May they said, we’re gonna fly you. Los Angeles and, and you’re gonna film for the Sharks in June. Um, and it’s, it’s challenging, right? Cause at this point now we’re in like early 2014, we had just got the distributor.
We had just outsourced manufacturing. We’re trying to like manage the business and we’re watching every episode preparing for this crazy opportunity. And we’re trying to figure out our money situation because we needed to raise money. That’s like we were past the point of using up everything we could from us and friends and.
But you can’t raise money when you might be going on Shark Tank. So like, you know, it’s, it’s, it was a whole balance. But anyway, we ended up going on the show and it was very surreal. You feel like you’re in an alternate universe in there because you’ve watched all these episodes and you’ve researched and studied all of everything and now you’re like in there and it’s like crazy.
But we knew our stuff. We were very well prepared and all of the sharks were interested. They all made offers. I mean, all they know is your name and your company name. They don’t know anything else about your business when you go in there. Mm-hmm. . And we were in there for about 45 minutes, maybe an hour. I don.
We have no idea. Um, but it felt like an hour and, um, walked outta there with a deal with Mark. And then there’s tons of due diligence. So like all of the paperwork that we had filled out before Shark Tank, which was like a hundred pages worth of documents, gets released to the Sharks in their team. And so then it was like three months of diligence.
We closed in September and then we aired in October. Um, and yeah, I mean when, when it, it really validated us because there was a lot of doubt. Every step of the way. People have said, you’re absolutely nuts for starting this company because, you know, it’s like, it’s not normal. It’s like a very unique product and, and didn’t have any experience.
And people are like, this will never work. And so when Mark Cuban on national TV gives you a million dollar investment, values you at $3 million when you’re, when you’ve done 200,000 in sales, that was like all the validation that we needed that this is the real deal. Um, and so that was great. It was like a real stamp of approval.
And then, yeah, like every dis our distributor was like, we want to sell this everywhere, and Walmart wanted us. And, and, but then you think like, okay, we’ve made it, and then you do all of that. And we, we launched in 25 states and we got into like 500 Walmarts and we failed. You know, we went way too far, way too fast, and we wouldn’t have done that if it wasn’t for the power of that show.
But at the same time, that show allowed us to raise money the next round because people wanted to invest in us cuz Mark Cuban was invested in us and so it allowed us to kind of pivot. Um, so it was a crazy experience all around ups and downs and, um, but it’s all worked out.
Sushant Misra of TrepTalks: So I guess, you know, the value of charting is.
It’s very much above and beyond just, uh, just the investment because the kind of preparation that you did, I mean, you could have that preparation gone to, you know, angel investors or other sources of funding and probably, you know, successful in raising those funds. But the kind of other opportunities, the eyeballs and you know, the new opportunities that, that just.
Uh, exposure, television exposure and, and, you know, the, the, the celebrity power of, uh, uh, mark, you know, was able to do, you wouldn’t have been, uh, received the same kind of things if you were going on your own, like with an angel investor or something.
Justin Fenchel of BeatBox Beverages: Yeah, no, no. There’s no, there’s no way. Um, so yeah, that was, it was super powerful for that.
Um, and we’re actually getting our first. We’re getting an update tomorrow night, um, which would be September 30th. I don’t know when this will be posted, but, um, we have an update tomorrow night, uh, in the main episode. So you’ll have to
Sushant Misra of TrepTalks: check. Cool. So have you, um, how long have you been working with Mark and, and what is it like, uh, you know, do you still speak with him?
Is he still, um, you know, uh, giving you advice and, and things like this? Or how do you, like what is the, the working relationship and what have you, like what have you learned from Mark, or what have you really gained outta
Justin Fenchel of BeatBox Beverages: the relationship? So, you know, right after. We’re on Shark Tank a couple months later.
We, we met with Mark for like two hours even before the deal was closed and started to build out some strategies. Um, he went and did events with us in Austin and Indiana, like over the course of 2015 and 16. He would like, you know, we’d ask him in a couple, like he would do it, um, which was pretty amazing.
And we would update him every week and get feedback. Um, in 2017, his brother joined our board of directors, Jeff Cub. Um, Jeff runs all of Mark’s entertainment properties and Jeff, uh, we built a wonderful relationship with Jeff and we talk all the time. Um, and so, you know, with Mark, I think he’s seen so many companies and seen so many things go right and so many go wrong that he kind of knows quickly.
Like he can synthesize your seven paragraph email into like two bullet points that he’ll write back. And I think the most important thing that he. Other, you know, outside of the funding and some inventory financing and other things. But, um, the, the message of focus, right? Because especially coming outta Shark Tank, everybody in the world is hitting you up and the amount of shiny objects there are.
And even if you’re not on Shark Tank, when you’re an entrepreneur, everything’s a shiny object and, and you wanna do. But you can’t, you cannot do everything. You have to be super focused. You have limited time, limited resources. And even if you, you know, you’d say to Mark like, oh, well this won’t be that expensive or won’t take, he’s like, it takes time and you don’t have, that’s, you don’t have enough time.
So that was the biggest lesson that we got drilled into us, um, for Mark. Awesome.
Sushant Misra of TrepTalks: Uh, in terms of marketing, can you share a little bit about how has your marketing evolved, uh, since you started focusing more on the marketing side of things? What, you know, what, what are the kind of things that really help you to drive, um, uh, these, uh, products, um, uh, off the show?
Justin Fenchel of BeatBox Beverages: So there’s two different types of marketing that we do, right? There’s trade marketing, which is the marketing we do in the store. So you walk into a gas station, you walk into a liquor store, you see signage, you see this, right? You’re used to that. That’s the trade marketing. Then there’s the field marketing we do, which is, we’re out at the music festivals and we’re out at the, the music venues and, and all the stuff you’re doing in the field.
So with trade marketing, you wanted, for us, what’s really worked is we developed this. A shipper that holds five cases and it takes up the size of a sheet of paper in the store. So when you go into these stores, they’re always really cramped and they’re really crowded. So store managers and owners, they, they’re like, I don’t have enough space.
So we created something. That allowed us to get something on the floor that took up almost no space, and that was very easy for our distributor to execute upon. And that was like fundamentally game changing for us when we found the right piece of trade marketing. Um, so that was, that, that was a big one there.
And then of course we do like suction cup racks, where you’ll see in the cooler doors and we do state like, you know, posters and stickers, so we do all that. Field marketing, we’re at music festivals. That’s like our bread and butter, that’s where the product was born, like our love of music festivals. And so we’re gonna do over a hundred music festivals this year alone.
Um, and it’s, you know, when someone drinks a beat box in the middle of a field with all of their friends and they, and they’re having the time of their life, then they go home and they wanna recreate those. . And so they’re trying to find beatbox and they’re sharing it with their friends and they’re re-watching the festival on YouTube and, and reliving those experiences.
Like, that’s ama, that’s amazing. Um, and so that’s really where we do it. And then, and then on digital, we’re big on digital. Um, we do a lot with, uh, cause people, people don’t want to hear from brands how cool the brand is. No one wants to hear us say that beatbox is the best thing ever. What they wanna hear is the people that they look up to and they.
To tell to, to say it’s cool, right? Like whether that’s their friend or an influencer in their community, or someone that you know is doing something cool on a YouTube channel. Like all of those things, we try to empower those people to tell their communities that beatbox is awesome.
Sushant Misra of TrepTalks: How did Covid impact your business?
Cause it seems like you. Uh, either, either your business boomed. Cause most people were home and they, they wanted more alcohol or it’s kinda like, uh, it really, uh, put a damper on the, you know,
Justin Fenchel of BeatBox Beverages: so, so, you know, for us, for us, it was, it, we were very fortunate, you know, alcohol was deemed essential. And it, you know, it’s funny when you look at the numbers out, there wasn’t necessarily more alcohol consumed in that period of time, but, All of the money that would normally be spent at bars and restaurants and those places was shifted to your home, which made it feel like people were buying way more alcohol.
Right. Because you can’t go to the concert, so you’re having a concert at home. So if you would’ve bought all that alcohol at the concert, now you’re just buying it for your house. And all of our sales at the time were mostly focused. The off premise, meaning gas stations, grocery stores, liquor stores. So there was a lot of people that were discovering our brand because they were going to their local convenience store and getting back home.
Right. And so that was like, and then we did a lot of things. We had, obviously we couldn’t do music festivals, so that was tough because we had all these plans for music festivals. We took all that budget and we funneled it into online to throw digital house parties and, you know, run contests for how do you beat boring at home, right?
Cause it’s like everyone’s bored. Like, what? Let’s do like, just trying to keep the fun in it all. And so, We ended up, you know, it was very, very tough for March and April and parts of May, but as things started to slowly open up in May of 2020, um, you know, we saw things really go well for us cuz we were great for going to the park.
We were great for going to the beach. We were great for the picnic or the barbecue or the small, you know, social bubble. Get together. We were a great problem.
Sushant Misra of TrepTalks: Are you mostly in the US right now? Um, and do you have plans to maybe expand to the South America or Europe? Cause they’re also, I guess from a party perspective, probably great places where people, you know, there’s a party
Justin Fenchel of BeatBox Beverages: culture I guess.
Yeah, no, we, I, there’s a party everywhere in the world. I’ll tell you . Well, we, uh, we’re, we’re, we’re, we’re us right now, although we are just launching Canada. Um, so we’re gonna be in Canada here soon. And then we do have the setup for Europe. , but you know, again, it comes down to focus. We are still only in 10% of the wine license accounts in the us mm-hmm.
So we got a long way to go to ramp up in the US before we start taking on going worldwide. But we are very excited about the long term prospects of international because beatbox and music are not just a thing for the us. Music connects everybody. Globally and Tetra Pack, the packaging is actually bigger in Europe and parts of the world, uh, than it is in the us So people are more used to that packaging and it’s very flexible.
You can manufacture it in different parts of the world. And so there’s a lot of opportunities, and I like to say, you know, from the beaches of Brazil to the warehouse parties in Manchester, like beatbox can be enjoyed and people can share these amazing experiences and life moments, uh, around our product, which would be really, really cool.
Sushant Misra of TrepTalks: Was it difficult to, to come to Canada? Cause I think liquor is a lot more, I mean it’s, I believe it’s solely handled by the government and I, I assume there’s a lot more regulational stuff.
Justin Fenchel of BeatBox Beverages: So there is, you’re right in Ontario, there’s the Liquor Control Board of Ontario, and there you can only buy liquor through the L CBO stores in.
We actually started, we’re, we’re launching in British Columbia where there is still government control, but there’s also a lot of private businesses. Um, so we’re starting there and then we’re gonna move our way. I think we just are, we got approval for a flavor or two for the summer for the L cbo, so that’ll bring us from British Columbia and we’ll do Alberta, which is all private, and then we’ll make our way to the Ontario.
Sushant Misra of TrepTalks: Um, can you share a little bit about your team? What does your team look like and what is, what are the like different, uh, business areas that, that you have for your team working in?
Justin Fenchel of BeatBox Beverages: Yeah. Well, it’s, it’s, it’s changed a lot. It changes every day. Um, we, you know, three years ago we had 15 people and now we have over 80 , so Wow.
We’ve grown a lot. Um, you know, we’ve grown a ton. Um, we’ve hired 40 people in the last, I think, seven or eight months. Um, and, and so we have obviously on the sales. We’ve got about 40 people that do sales. Everything from the chain accounts to the feed on the street to data analysts. Um, and then we have the marketing team, which is about almost 20 people now.
And that’s field marketing, trade marketing, digital marketing, social media, like all that. Um, we have the operations team, so we have everyone from quality control working with our manufacturer to logistics and handling all of the inbound of the raw materials to the trucks that are going. Our warehouse to the distributor warehouses.
We manage all of the freight internally, which is a big, big endeavor. Uh, we have afin. We finally now have a finance team. We had one person for a while. Now we have, uh, four. Um, and then we have, we also just a year ago hired a full-time head of people in hr. So we have an hr now we have two people in the HR team.
Mm-hmm. . Um, and they’re, you know, developing the culture and dealing with problems from, you know, in the team and. And it’s awesome. And I think that’s the most important thing for us is building a great culture. Because if you build a great culture, the rest is gonna, you know, take care of itself.
Sushant Misra of TrepTalks: And what does it feel like, you know, from, as you mentioned initially, you, you are the one going into the stores and, you know, sharing the samples to now you know where your company has grown and you have a large team and you’re managing a team.
How have, um, What has been the evolution process for you as an entrepreneur going from, you know, having this idea to now kind of managing this team and, you know, what, how, how have you grown as an entrepreneur through, through this whole journey and what, what are you focusing
Justin Fenchel of BeatBox Beverages: on now? Yeah, that’s a great question.
Um, and it’s a process, right? Because when you start. You know, you’re the company lawyer, you’re the company salesperson, you’re the company marketer, you’re the company finance person. You’re, you’re everything, right? We’re the manufacturer. Um, you know, we made it ourselves. Then we would sell it and we would market it, right?
Um, and then as you grow, and we did that, we did that for a while, like four years. That was just us doing it until we finally started hiring people. Um, now the role has shifted. To really people management, right? Obvi like fundraising for sure. And, you know, strategy. Um, but it’s people management and, and making sure that.
The team, the re like everyone’s come from very successful careers. You know, oftentimes higher paying jobs and bigger companies to work here. And they’re doing it because they want to be a part of something and they, they love the excitement, they love the fast pace. They love the energy. It’s making sure that the reasons that they came here, that they’re still getting.
Months into the job, right? And so for me, like I do one-on-ones with everybody on the sales team at least once every three months, oftentimes once every two months or once a month, and we check in. It’s like, are you getting the things that you wanted out of this role? Um, you know, what can we work on? And getting feedback from the team and implementing that.
So it’s a lot of general overview strategy and like just, but, but I’m not flying around. You know, when needed, yes, I go where it’s where I’m gonna add value, but like the sales team is often running. Like, I just need to make sure that they have the resources they need and that they’re having a great time doing it.
Right? Like, you know, do let’s work together on building out. When we grow from, we’re gonna do almost 40 million in revenue this year. Three years ago we did 4 million. So, you know, we went from four to 40. Next year we’re looking at doing 70. But that’s gonna require new people. So it’s like constantly breaking the wheel of saying like, okay, what got you here won’t get you there?
And like, how do we think through that? And, and, and just working with the team and making sure that they’re fired up. Definitely.
Sushant Misra of TrepTalks: Um, in every entrepreneur’s journey, there’s always some, you know, mistakes made, failures, lessons learn. Uh, looking back at your own journey, um, what would you say would be your, you know, Uh, lessons learned or mistake or failure, what did you learn from it and what can other entrepreneurs learn from your mistakes?
Justin Fenchel of BeatBox Beverages: Yeah, I look. We’re, you’re failing all the time as an entrepreneur because you don’t know, like anyone that says they know what they’re talking about is just straight up lying to you. like we, you know, we’re, even now, I tell our team, like, this is new for all of us. I don’t, I’ve never led a company that’s growing like this.
Like we’re learning as we go. Um, but you know, the failures that you’ve had in the past, as long as they weren’t catastrophic, you want you, if you’re gonna fail, which you will, you want to fail. And, and like so that you can learn. Cause one big failure, it’s over. Right? And you don’t want it to be over. Um, so don’t do anything that’s gonna like, totally ruin at all.
Um, I think some of the big ones were, um, and, and again, like a lot of it just not knowing, not knowing what you don’t know, right? You have this uninformed optimism. Um, you know, we, we launched after Shark Tank. We probably should have hired a VP of sales, right? Right. Um, and someone that knew the space we were in, um, you know, we didn’t know to switch to the beer distributors, so it’s like that was a mistake, but like, how do we know it?
We probably should have had a smaller trial size, like the cost of entry for us was so high because it was $25. That, like, that’s not, that’s, that’s a pretty prohibitive price point when you’re just creating a new product that no one knows what it is. So I wish we would’ve had a trial size earlier. I wish we’ve had a team earlier.
Um, you know, I probably wouldn’t have given up 33% of the business on the seed. You know that was that we gave a million for a third and like not realizing how much more money we’d have to raise, you know, I would’ve liked that to have been maybe 10 to 20% just knowing how much more dilution there was gonna be.
So those are the few examples, but there’s like every day there’s something that like, I wish, you know, but again, that none of them were big enough to put us out of business. That’s the key. Cuz you’re gonna fail. That’s no question.
Sushant Misra of TrepTalks: Definitely. Uh, now we’re gonna move on our rapid fire segment. And in this segment I’m gonna questions and you one or two.
Justin Fenchel of BeatBox Beverages: I’d say the hard thing about hard things or shoe dog. Perfect and
Sushant Misra of TrepTalks: innovative product or idea in the current e-commerce retail or tech landscape that you feel
Justin Fenchel of BeatBox Beverages: excited about? I love what, um, Celsius Energy is doing. Um, they’ve been around for a little while, but they are, they’re killing it with the branding, the messaging, and like their distribution.
Celsius energy is growing really, really fast. Love what they’re doing. A
Sushant Misra of TrepTalks: business or a productivity tool or software that you would recommend or a productivity tool?
Justin Fenchel of BeatBox Beverages: Slack. We have slack. Slack has been game changing for us. Best tool we have. There’s other ones, but that’s the biggest,
Sushant Misra of TrepTalks: uh, a startup or business, uh, in e-commerce, retailer tech that you think is currently doing great things besides the one that you already
Justin Fenchel of BeatBox Beverages: mentioned.
Yeah. Yeah. Uh, there wouldn’t be as much of a startup. They’re a big company now, but I would say, uh, in, in our space, uh, lover Boy is doing great things. Um, it’s a hard tea. They’re killing it.
Sushant Misra of TrepTalks: Uh, a peer entrepreneur or business person whom you look up to or someone who inspires you? My dad
Justin Fenchel of BeatBox Beverages: started a company out of his garage 25, 30 years ago, um, after he got let go from the bank.
And he’s grown into a pretty large logistics business, really large logistics business. And, uh, I talked to him all the time. Very lucky that I still had him as a mentor. That’s the guy. Um,
Sushant Misra of TrepTalks: do you mind naming the company or ?
Justin Fenchel of BeatBox Beverages: Oh, Quantico. Okay. Uh, and final question,
Sushant Misra of TrepTalks: best business advice you ever received or you would give to other entrepreneurs?
Justin Fenchel of BeatBox Beverages: The best business advice I received is, you know, things are gonna take, things are gonna take 10 times longer. There’s another book, 10 x, but things are gonna take 10 times longer than you think. You gotta, you gotta, nothing happens overnight. Look, it’s taken us 10 years to become an overnight sensation.
Right? Um, so adding to that, my advice to anybody is one, get quick feedback from not just your friends or your family to validate what you’re trying to do. Do something that you are so passionate about because it’s going to be your life. You’re gonna be doing it every day. Don’t do it just cuz you see dollar signs.
That is, I, I did that once and it failed because I didn’t like it. I was not passionate about it. And, and so you gotta be in it. You gotta be passionate about it. You gotta validate it. And once you do that, just don’t, don’t give up. As long as you’re, if you’re getting enough feedback from customers that they love what you’re, they love what you’re giving.
It’s going to be hard. It’s going to suck. You’re gonna have sleepless nights, you’re gonna have amazing nights. But don’t but stick with it because if you truly believe in it and people are responding to it, you gotta, you gotta fight. Perfect.
Sushant Misra of TrepTalks: Uh, thank you Justin, though. Those were all the questions that I had.
Really, really appreciate you. Enjoy your time today, your’re share, sharing your story and all the, you know, business strategies and tactics with, with, uh, yeah. You for talk and, uh, wish you the very best.
Justin Fenchel of BeatBox Beverages: Thank you so much. This was great.
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