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The first two years, I was focused on cracking the code around the fermentation.
So we want to try these three chemicals and we want to try this food source and we want to try these microorganisms. So let's put that in a bag. Let's do 10 different versions of it. And let's literally staple them to the wall of the shed. Okay. It looked like a scene out of, you know, the hive in Aliens. I was thinking Breaking Bad. A little, well, yeah, until you see like 400 microorganisms
bioreactor bags filled with God knows what hanging from the walls. I mean, it was absolute madness. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Ben Goodwin set out to make a healthier soda and built Olipop into one of the fastest growing sodas on the market.
There is an inherent risk in committing your life to a single pursuit. The most obvious, of course, is that it fails. No one likes the idea of looking back on years and years of effort only to conclude that it was time wasted. Except I'm starting to think that rarely happens. In other words, I've met and even interviewed lots and lots of people who toiled away on projects and ideas...
only to see them fail. And in every case, that person was supposed to fail. It's like there's a cosmic force that derails you in order to put you on the right path. Case in point, James Dyson. He was on the show many years ago talking about his famous vacuum cleaner. But for years before that, he devoted his life to creating a revolutionary wheelbarrow
It was called the ball barrel, and instead of a wheel in the front, it had a large plastic sphere, like a hardened yoga ball, that made it easier to balance. Unfortunately, Dyson's investors kicked him out of the company, and the product eventually died. Adding insult to injury, the investors owned Dyson's patent, so he was out of luck, and they forced him to sign a non-compete so he couldn't try a similar design.
But all of that set him off on a new course, a course that would lead to the Dyson vacuum cleaner. It's an amazing story. And that failed wheelbarrow led directly to the idea of building the vacuum. And if you haven't heard it, I'll post a link to it in my newsletter this week. Anyway, we've had dozens and dozens of stories just like this on the show, including today's.
Because Ben Goodwin, the co-founder of Olipop, spent more than a decade developing another drink called Obie. And Obie, as you will hear, was a probiotic soda that was going to be Ben's legacy. Except it didn't work out that way. Ben had to sell the company and he was restricted from working on a new probiotic beverage. So instead, he was forced to think long and hard about what to do next.
And he came up with a different idea. Not a probiotic soda, but a prebiotic soda. Now, we'll get into what the differences are a little later. What you need to know for now is that Olipop, which officially launched in 2018, is on track to sell more than half a billion dollars worth of drinks this year alone. As for Ben, he grew up in the late 80s and early 90s in Monterey, California.
He had a pretty rough childhood. His dad passed away when he was a toddler. And his mom got into a new relationship with a man who Ben says was pretty abusive.
I would say third grade, fourth grade, fifth grade in my life is when the abuse really started to ratchet up. And I was hit quite a bit. I was locked in my room. I was, I mean, I called every name you could ever imagine. It was very, it was very bad. So as that ratcheted up, then I started to become more isolated. I started to become, you know, it's like the other kids can kind of tell that something's wrong, right?
And I think the other aspect of that as well is, you know, my mom did work really hard, but we were constantly out of cash. So I moved something like,
13 times, I think I counted once, which is almost unfathomable. We were moving houses almost every year. Living mainly around in the Monterey area. Well, that's what's funny because it's technically kind of a high-end area, but we didn't really have the money to live there. And so we kept getting evicted from houses and moving to new houses. So yeah, there was a real financial... We grew up very poor as well.
I guess that around age 15 or so, you were around that time, decided to change your diet and get into exercise. You decide to become a vegetarian. Tell me about what was going on. Were you conscious of your weight? What prompted you to make that decision? Yeah. I mean, look, I think that, uh,
You know, there were obviously a lot of really intense negative emotions that I was experiencing. And simultaneously, obviously, I was also overweight. You know, the...
Drugs of choice shifted for, you know, the stepfather figure. So he went from being very angry and explosive to very subdued. And it was really during that time where there's that shift in tone in the house where a lot of kind of fighting for my survival shifted to,
more like self-destructive tendencies right and and and a lot of anxiety you know at 12 i had severe insomnia would wouldn't sleep well for like five days in a row right so and then i was eating my feelings i think my mom didn't have the tools to help at all and so she would just buy me bags of cookies so that was like that was like 12 year old me was just like going to safeway and
Eating a bag of cookies in a day. And the whole thing was just terrible. Now, in terms of the pivot point, it was really interesting because it's like a lifelong memory. I was home. I'm on the couch. I'm eating peanut butter with sugar in it. My sister walks in the front door. And she's like, are you just eating a bowl of peanut butter? And I'm like, yeah, with sugar in it. She's like, that is terrible.
What are you... Like, it was just... She was just like... It was just one of those, like, okay, Ben moments. But that moment will always stick in my mind where I was just like, why the hell am I sitting here eating a bowl of peanut butter? This is just stupid. It was almost like this...
awareness entered my mind in this like kind of split second epiphany of I actually have a choice about what I'm doing. And I was also having all sorts of existential crises about what happens after you die and what's the meaning of life. And that was all floating around in my head. And so I just kind of got down to the point where it was like, look, I don't know what we're here for. I don't know what happens when we die.
But I want to have a good life. And what I'm doing right now is not going to create a good life. And I just woke up the next morning. It was like, that's it. I'm changing everything. I'm going. So I started with a diet. It started with going on long walks. Then I learned about factory farms and went vegetarian and kind of from there. But that was this, you know, interesting event that really started to shift things for me. So you have this kind of lifestyle change at a pretty early age.
And then I guess sort of sometime after high school, you start exploring all sorts of opportunities. Like you sell coconut water at a farmer's market and you're doing some DJing at raves in Monterey. And you also attended college for a while. But you wind up dropping out pretty soon after, right? Yeah. So I dropped out almost immediately. You know, I know enough about myself to know that
I'm never going to do something and stick with it because it's quote what I'm supposed to do. My personality is such that if I'm really engaged in what I'm doing and why I'm doing it and I'm fascinated by it, I'll take it to the ends of the earth. But if I'm just doing something because that's what's next up on your dance card, I'm really going to struggle to see it through.
All right. So this is around 2005, 2006. And I also read that you read a book that had a big impact on you, which is a book by Gary Erickson, the founder of Cliff Bar, who's been on the show several times and is a friend of mine. He wrote a book that I think came out in 05 or 06 called Raising the Bar, which is the story of Cliff Bar. And tell me about what that book did for you when you read it.
Yeah, the timing was really good because I'm sitting here struggling with this. I feel like there's a bunch of stuff I could be doing, but I'm not 100% sure what it is. And then there's – I pick this book up for whatever reason and I'm reading it. And the essence of the philosophy is you can do the thing that everybody else does or you can carve your own path. And by the way, that's where a lot of the most interesting things can happen and it's unique to you and your footprint. Yeah.
And, and obviously in the end, Cliff Bart did that through creating a health and wellness product company. And it really opened this pathway to me like, oh, I guess I'm going to go, I can, I can just go be an entrepreneur and I can create a product. It's perfect. I mean, it's, it's the, I think that that was the whole goal of the book to inspire people to do that. And of course, you know, Gary and Kit would go on to build an empire really with that brand. And, and at the time, what else were you doing?
I was working at a local health food store's produce department, which was my hack at that time for getting all the fruits and vegetables I wanted without, you know, because I wasn't making a lot of cash, but I wanted to eat really, really well. And so I work in a produce department and then that problem solved. And then I had started, you know, basically developed an interest. And look, this I think is
part of the siren song of the beverage industry because obviously so many people go into the beverage industry and so few are successful but i felt drawn towards beverage but i realized that i had no idea where to start um and i had a friend who had at that time a boyfriend um his name was adam goodman uh and um she was like hey my boyfriend's starting a kombucha company and i
So you start working for this startup, this kombucha brand, and I think it's called Kombucha Botanica, which is a great name, by the way. Yeah.
And tell me what, I mean, kombucha, anyone who's made it. I've made it. I used to make it all the time. It's not that hard. You know, you get the sort of the SCOBY starter from somebody, the mushroom thing, and you do the sugar tea, and then you watch the mushroom eat all the sugar, and then eventually you get this nice fermented drink. And if you're really skilled, you can figure out how to naturally carbonate it in the way you bottle it in a second fermentation. I'm assuming you were learning all this stuff.
A hundred percent. So my main area of focus was managing the production side, especially the fermentation side. And to your point, you know, kombucha is really interesting because there's the entry level. There's an entry level ease to getting into it. But really the...
The most salient thing that came out of that experience was when I started looking into what is kombucha supposed to be doing anyway? You know, why is it in theory good for people? Right. Most people think probiotics. 100%. But why are the probiotics important, right? And so that – what was the most important, I'd say –
kind of conceptual aha that came out of the experience of kombucha botanica was learning about the microbiome. It's in the gut, obviously, yes. Yeah, the digestive microbiome is in the gut, and that's the most important microbiome, arguably, for human beings.
And then the other thing about the microbiome is there's something called the brain-gut axis. So we produce the majority of our hormones and our neurotransmitters in our microbiome. Those have a marked impact on how we feel, on how we think, and that's powerful. And the whole probiotics revolution really, at least in sort of the consumer consciousness, is beginning around this time. Kombucha, people are drinking it and making it.
And around this time, it was around 2008, you leave Kombucha Botanica, which would eventually, that brand would sunset anyway. And you decide to try your hand at creating your own probiotic beverage. So tell me what you started to think about. Were you going to make a Kombucha? Yeah.
Yeah, so, you know, I left Kombucha Botanica and there's, you know, a couple kind of interesting years in the middle where I started up a series of co-ops. I did a bunch of freelance product development for people because I...
I wanted to sharpen my skills. So I would practice supplements. I practiced skin creams. I practiced all sorts of different things and was getting paid for it. I also developed rudimentary web design skills, SEO skills. So I had this kind of rotating set of skills that I was using to fund my existence. And I started to really reflect more on what is my mission. And I felt like I had...
out of a difficult childhood to be more than good enough at taking care of myself and being healthy. And a lot of this for me comes down to, you know, how do you create a higher quality world? I think it's really difficult to feel truly free and alive as a human being.
if you are struggling with your health. So I wanted to create products that at scale could start to offer that higher quality of health to more people in the country.
Okay, but you but I mean, making a probiotic soda, we're not necessarily talking about like, you know, Joe six pack, you know, product. So how are you going to take that concept of probiotics and make it appealing to, you know, to a larger group of people?
So it started with this concept of I really enjoy fermentation. I still think there's something really, really important about fermentation for human health. And I had started to observe some of the weaknesses in kombucha as well. I was like, okay, here's this concept.
It's got five to eight different organisms in it. It's got the strong vinegar taste. It's actually pretty high in sugar. So my first question was, can I make a more interesting and just delicious fermented beverage? And I ended up focusing on something called water kefir. So a lot of people are familiar with dairy kefir. Yeah. But there's these kefir beverages that you can get like...
It sort of tastes like sparkling yogurt drink, even though it's clear. Well, yeah. Well, OK, so great, great point. That yogurt taste is lactic acid. And so my goal was, how can I create a scalable kind of water kefir style beverage that doesn't have that funk to it? And kefir is just it's like a fermented milk. It's a little bit like buttermilk, but it's more common in Europe.
That's the dairy version. Right. And then there's a non-dairy version that actually was originally harvested from cacti. So that's where it started. I'm like, I'm fascinated by the idea of a water kefir style beverage. And I really need to figure out how to actually make it sustainable because I had had enough experience with fermentation at that point that I knew some of the pitfalls of trying to scale up fermentation. Because it
It doesn't, like, what, you've got to refrigerate it or you've got to, it doesn't last long or what? Its shelf life is limited. Like, what are some of the limitations? Well, one of the, so I ended up working with a genius microbiologist and organic chemist in this process. And one of the ways that he described fermentation, especially fermentation that's this complex, is it's more like animal husbandry than anything else.
you basically have these different microorganisms and they've got to eat correctly and they've got to rest correctly and they've got to stay in the right balance. And if they get sick, it could be devastating. So for a lot of brands that have scaled fermentation, even in yogurt and stuff like that, they'll inoculate their culture banks against viruses, for example, that could come in and just wipe out the culture bank. It's scaling complex fermentation is,
is a very labor-intensive and complex endeavor. So you're working with this microbiologist?
Yeah, so his name was Jim Ledeer, and he would get hired to go down to Central and South America and test different plants for interesting bioreactive compounds that could end up having like pharmaceutical or other utility. You know, if you're out in the literal jungle trying to
create these extractions and do these projects, you don't exactly have access to the best equipment. That's perfect for me because I didn't have two or $300,000 to build out like an appropriate microbiology lab. So this is where, you know, stuff started to get serious. I was working three different income streams. You know, I would have the SEO going, the web design going, the product development going. And I spent every extra dime I had to pay for the,
This gentleman to fly out, put him up in a hotel for a couple months, and then to create this low-budget microbiology lab. In your house, in your backyard, or in your garage? So the first iteration of the lab, insanely, was a spacious shed...
in a friend's backyard. So that's where we started. - And how did you make the lab? You start building it with what? - Yeah, I mean, it's plastic fold up tables. I mean, here's how insane it was.
So you need bioreactors if you're going to drive fermentation, right? Bioreactors are quite expensive and they're quite technical. We would go to like Ace Hardware and the aquarium store. You buy a bunch of Ziploc bags because they're pre-sterilized. And you get an electrostatic gun.
And you run the electrostatic gun over the Ziploc bags to create micropunctures. Okay. So all of a sudden you create this sterilized, breathable membrane. And then you run...
it as a miniature, as like a next to free miniature bioreactor. You pour like kefir juice in there? Yeah, totally. So you take whatever you're using as your culture base and then you pour whatever you're experimenting with into the vessel. So we want to try these three chemicals and we want to try the...
this food source and we want to try these microorganisms. So let's put that in a bag. Let's do 10 different versions of it that have minor differences and let's literally staple them to the wall of the shed.
So you would have them hanging to the wall of the shed, and did you have to control the temperature of the room? Yeah. I mean, it wasn't perfect, but we had a little heater. Yeah. It looked like a scene out of, you know, the hive in Aliens. I was thinking Breaking Bad, but okay. A little... Well, yeah, until you see, like, 400 bioreactor bags filled with God knows what hanging from the walls. I mean, it was...
Absolute madness. It was also very fun. Wow. So how much did this all cost you? I mean, it was a four-year R&D time period front to back. The first two years, I was focused on cracking the code around the fermentation. The second two years, I was focused on, I have this thing, now I want to make it taste like a soda. Yeah.
And I would say I probably spent about $3,000 to $350,000 almost entirely out of my own pocket over those four years. So if you were making $100,000, $150,000 a year, basically after taxes, everything is going into this thing. 100%. But how did you want to make this? I mean, kefir is still a little bit...
It's out there, right? I mean, it's not like Coca-Cola, right? The idea you had was to make something that was going to have mass appeal. Was it going to be like soda or is it going to be like kefir?
Yeah, so I didn't totally have that part nailed down at the beginning. So at a minimum, it's like I could make this kind of a delicious, sparkling, fruity beverage that's fermented. And you would just pour fruit juices into it or you'd mix fruit juices into it. Yeah, that's right. That's right. And then we got to the end of this two-year period and it was just hundreds and hundreds of experiments. We actually thought that we had failed. We thought that we had tried so many different things and
And it got to the point where we were actually breaking down the lab because I was like, all right, Jim, we got to pack it up. We've done so many iterations. I'm so over my skis on money. And I was breaking down the lab and there was this, literally this experiment in the corner of the lab that I hadn't tried. And I said, hey, what's this? I haven't tried this one. He's like, oh yeah, it's this new one that blah, blah. And I drank and I was like, are you kidding me?
Is this stable? This is delicious. When we come back in just a moment, Ben launches his first beverage with mixed results. Stay with us. I'm Guy Raz, and you're listening to How I Built This.
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Hey, welcome back to How I Built This. I'm Kai Raz. So it's 2012, and after five years of trial and error, Ben has finally developed a probiotic beverage that tastes good enough to sell. But now he needs to raise some money to get it out there. And for that, he needs something else. I knew I needed a business partner. You know, I think...
most folks, most institutional investors would probably say, hey, this guy's brilliant, but I'm not sure that I trust him to manage my money. You knew that alone, you would not be taken seriously enough. You thought you needed a partner. Yeah, and I also just, you know, I also feel like in my early 20s, I had been probably, probably was just naturally a bit more arrogant. You know, it's the insecurity of being smart enough to be smart, but being young enough to just, you know, not know enough about the world. And I felt it was important to,
I find somebody to counterbalance any weak spots that I had. I mean, three of the four years I was in the R&D process, I was looking for a business partner. I actually went through three or four rounds of looking for a business partner. I had one for a while. We didn't work out. We divorced. That was messy. How long would you stay together? Like two, three months or –
Uh, no, she and I worked together for probably about nine, 10 months. Wow. So that's a long time to kind of come to the conclusion that it's not going to work out. Yeah, that's right. And it was, it was, it was challenging. And I was back out of, I was back out of cash. I mean, they were a high net worth individual, but it wasn't, it wasn't the right fit. Ben, I'm curious, because I think this is particularly interesting and useful for people listening, which is how did you know that person was not the right partner?
I think that the cleanest way to analyze it was you really do need someone just mercilessly obsessed as you are on what's important about what you're doing, right? They can't have a problem –
Rolling their sleeves up. You're co-pilots together in a plane that barely flies that's going a thousand miles an hour. So you have got to be tight and focused. And look, good entrepreneurs don't let anything go to waste. And so even when something absolutely implodes in their face and it's really, really painful sometimes,
You've got to take a really useful lesson out of that. And I realized that a lot of my stress was actually coming from my own ego.
And that the best way to navigate this situation was staying your size. So I think a lot of times when we feel insecure, we either shrink ourselves or we blow ourselves up to try to deal with the perceived threat or the trigger. And there's a real strength in...
in staying your size and saying, you know, I'm not going to be reactive to what ultimately is probably another person's ego. I'm not going to shrink myself, but I'm also not going to expand myself and go into this, this like spiral that consumes me. And so that was actually a super valuable lesson that I learned out of that. All right. So you, you go through a breakup with this one partner, but I guess you eventually, you know,
Yeah. Yeah.
And, you know, that tends to be a fairly emotionally monotone group of folks like Liverpool area. And so the first I remember the first time I talked to him on the phone, I was like, this guy is not interested in working with me. But then I met with him two weeks later in a cafe in Palo Alto. And we really actually hit it off. And, you know, what's also very funny is that he had a job lined up. He had like a safe job.
Job lined up that was down the street from where his wife was working. And they had this, this like picturesque fantasy of we're going to be in San Francisco. We're going to work these great safe jobs. We're going to see each other on our lunch breaks.
And then he came home from the lunch meeting with me and his wife took one look at his face and she was like, ah, you're going to go do this thing with this guy, aren't you? And I think, and he looked at her and he was just like, yeah, I think I probably am. I totally, you know, and I actually did.
ultimately make him the CEO of that venture. And one of the reasons why we landed there was again, going back to now we're starting to reach out to investors and raise capital. And look, I just, I kind of wanted permissibility to be myself. And I thought that the kind of more straight man approach
that David tends to be. And again, we've both changed a lot over the last decade. But at that point in time, that's kind of how the dynamic, you know, it's, I think that people really love to create categorizations for other folks. So it allowed people to put me in the, oh yeah, he's the kind of brilliant mad scientist-y guy. And here's the kind of corporate guy. And it allowed them to categorize us in a way that made them feel comfortable at the time.
I mean, he knew beverage, right, because he had been at Diageo, but he probably didn't know. I'm assuming he didn't know much about gut microbiome or probiotics or stuff like that. Yeah, he knew next to nothing about it. So when he tried my products, he was like, we've had teams working on Stevia sweetened products at Diageo for years.
So many years. I've tried more Stevia sweetened products than I can count. And challenging because Stevia has like a bitter aftertaste. I developed my own Stevia blend to sweeten the drink with because I didn't like any of the technology that was on the market. So like this is one of the most skillful formulations I've ever tasted involving Stevia. And then I just lambasted him with three hours of, you know,
my obsession with the microbiome and health and how this all rolled up into the greater good for society. And he walked away, you know, very impacted by this dude is very serious about this and he wants to change the world. All right. So you joined forces and, and he becomes, you decide that he's going to become the CEO and you start to
I'm assuming, I think, start to pound the pavement to raise some cash so you can package and market this product, OB probiotic soda. And you guys, indeed, you raised about $2 million. Had the groundwork already been laid or was it hard to raise that money? Oh, it was very hard. It was very hard. It's just like you have the meeting.
And it's unclear whether they're going to move. And then you get strung along often. And eventually the first chunk of funding, I think we raised about 900K on our first go. And it was just this assorted network that we had built up enough rapport with. But...
But yeah, we just... We built up enough groundswell. And actually, it was really lucky because I think we'd been working for a little over a year with no salary at that point. And for David, that was like a very unusual experience. For me, it was somewhat normal. But for him, it was really unusual. And...
I think he was about at the level where he's like, I only have a couple more months of this and then I'm going to have to go find a real job. So we were pretty much at the end of the pier for David in terms of how much longer he could go without some cash capital inflow.
But we kind of jerry-rigged enough partnerships together that gave folks faith and got enough people around the table writing checks at the same time that we pulled it in. All right. So you have the cash and you've been working on this formulation and you've had some experience in this business. You probably had some connections to like a bottling plant or a can. These were going to be cans? So Obi was actually in a tall neck glass bottle with a crown cap. Oh.
Oh, so like a, like one of those Mexican colas, Coca-Cola. Similar. Yeah. Yeah. The generic glass shape. And tell me where you first started to sell it. Like, I mean, did you start to sell it in small, like natural food stores in Santa Cruz? Santa Cruz. Yeah. That's the nice thing. You've got all these, you've got all these health food stores. It's a great place to go start pounding the pavement. Um, you
Had the kombucha market not existed, I don't think there would have been a space for OB. But I think there was enough of an argument around, you know that your shoppers in this natural channel are interested in fermented drinks. What if they could have something that was more powerful but didn't taste like vinegar? And that was enough of a hook that folks started to give us a try. Got it. Okay.
So does it get traction quickly? I can't imagine it got traction that fast. It was, I would say it was like, it definitely didn't perform poorly because in fact there, there was a, there was a need state for consumers who wanted to drink a fermented probiotic beverage that didn't really like the taste of kombucha. Right. Um, and, uh,
Obi was lower sugar than most of the kombuchas that were on the shelf as well. And you, with Obi, you were doing like...
cherry vanilla flavor. You made a root beer flavor. That's right. So this looked like, I mean, it was like soda. That was the whole goal. So what's the biggest non-water beverage that exists? It's soda, right? It's a $42 billion industry with 97% household penetration. It's an absolute legacy product in the United States. And
I have this theory that a healthy soda is going to gain some traction. And so, you know, we have the root beer, cherry vanilla. We had an orange grapefruit and we had a lemon lime. So those were our... And it's this kind of broad enough blend that...
You can test it out. But guess what our top seller was? Root beer. Yeah. And that's when I was like, oh, here we go. So that was an insight because it wasn't the fruit drinks, fruit flavored ones. It was a root beer flavored one that people wanted. I think at one point it was 30, 40% of our sales for the line. Wow. Okay. You guys launched this product, I think in late 2013 or maybe early 2014 in stores, right? No, that sounds about right. Yeah. Okay. Okay.
And it lasted for about two and a half years. And then you guys were acquired.
Help me understand what happened. What was going on? I mean, at its height, I mean, imagine in two years you never, never, ever got close to profitability, right? Yeah. So the version that I can legally communicate is that we got acquired. You know, the reality is we actually weren't having a drop-off of product traction, right?
The product was continuing to grow. I think we were, I mean, slower in comparison. But after that kind of, you know, two-ish years, we were up at about a million bucks in revenue. Really? Yeah. A million dollars? Yeah. That's not bad. It's pretty great. So...
It wasn't like I was looking at our performance and was dissatisfied. It was going along, but it just got to the point where, hey, it's untenable with the kind of current corporate structure that we have and the partnerships that we have. We simply just can't continue this. And in late 2016, we finally kind of washed our hands of the business. So safe to say that you and David did not walk away from that.
experience flush with cash yourselves? I had just about recouped my R&D budget, but yeah. Wow. I mean, you'd put four years into developing it and then another three years trying to... So this is seven years of your life, right? Yeah. Was it... I mean, you're talking about it like, you know, and then we did this and then this, but I have to imagine this was emotionally painful. I mean...
A hundred percent. There were moments when exasperatedly, I would say I just set seven years of my life on fire. That's how in certain moments it felt. Yeah. On the flip side of the coin, I had gotten a lot of really useful market data. I had proved out the hypothesis that
Yeah. Yeah.
Learning to trust myself has really been a lifelong journey for me. Coming out of a high trauma childhood, trust in general is not a strong suit of mine. Learning how to filter out the noise and figure out how to act on my instincts and my intuitions and my survival instinct has been key. But I think the other thing is to have a certain amount of self-respect and
for the fact that I had been in the trenches for years and years and years learning how to survive. So when this thing unwound, right, and you were basically back to square one, I'm assuming there were some restrictions on what you were allowed to do, probably not allowed to directly compete for a while with the company you were leaving. Yeah, so...
I, yeah, I basically signed a document saying I wouldn't go back into probiotics. So you were, but that had been your life. So probiotics done. So you've got to figure out the next thing. So first of all, what did you do in the, in the weeks and months after that ended? Did you start to think right away? Okay, what am I going to do next? Or did you kind of wallow or did you, did you and David go your separate ways for a while?
So, I mean, look, David, I think, you know, my impression is
That was the most challenging life experience that David had had full stop. Yeah, he gave up a great steady job to go do this thing with you. And he walked away after a few years, probably with very little or no cash out of it. Yeah, I mean, again, we made enough that we were able to live off of that and use it to start to start Olipop. But yeah, it certainly wasn't the outcome that we were looking for. But it's also, you know, I don't know, you may know this about
and maybe it's changing, but the entrepreneur culture is quite different in Europe as well. So if you fail as an entrepreneur, at least it's the way that David described it to me, he's like, if you fail as an entrepreneur in the UK, it's very shameful. - Yeah, it's not like, yeah, woo, you failed, you're awesome. It's not like the Bay Area where they're like, how many times have you failed? Yeah, cool. - Exactly. So it's a little less plucky to that effect.
And it's just been very, very, very, very stressful. I mean, we got properly slapped in the face. Now, again, as somebody who'd been getting slapped in the face for years, I was like, it was a particularly brutal experience. And I also had a certain amount of that experience. I think David... So David and I did... It's not like we lost contact, but we did take a little breathing space. I...
was like, okay, I'm like in my late-ish 20s and I suddenly just got a small pile of cash. And so I'm thinking, awesome, I don't have to immediately go find another job or something. And my whole life I'd wanted to go to Japan. And so I'm like, I'm going to Japan.
So I spent about two weeks. I walked like I went to five or six cities. I walked 170 miles. And one of the things I was wanted to do while I was over there was study their beverage market because I have always been very fond of Japanese formulation. It's really it's like nuanced. It's balanced. It's subtle. It's intriguing. The flavor profiles are intriguing. Yeah.
And I started seeing some drinks that were over there that had fiber in them. And I was like, oh, that's really interesting that they've got all these drinks with fiber. So you basically start to kind of, I mean, you're essentially banned from working in probiotics from this contract. But in a sense, and maybe you've only recently come to this realization, that was a gift that they gave you because it forced you to look at a different,
part of this, I mean, you were an expert in drinks and beverages at this point, but you couldn't do probiotics, but you could do prebiotics. And there was this new research around prebiotics, which is basically the food that bacteria essentially in our gut eats, right? I mean, to sort of oversimplify it. And a lot of it comes from these like certain fibers, non-digestible fibers that encourages bacteria to grow. Good bacteria. Yeah.
And tell me when you start to think, OK, maybe that's the thing. Maybe if I go back into beverage, I should focus on this thing called this prebiotic function.
Yeah, it's absolutely. And just to be clear, I totally understand why the categories often refer to as the prebiotic soda category, right? Because that's kind of the salient ingredient that it's easy to understand. But the bigger nutritional platform that the product offers is
Is also important. Which is fiber? It's fiber, prebiotics, plus nutritional diversity, right? So we've got an ingredient mix called OliSmart, which has eight different ingredients in it. And again, the reason why that's important is because, like, so we've got three different sources of fiber right now.
And so you're getting a large bolus of fiber, but you're not getting it from just the same prebiotic ingredient. And the reason why that's important is because if you are trying to benefit the microbiome, you want to bring up multiple strains of beneficial bacteria simultaneously. Right.
If you overfeed one strain, you actually can just create a new imbalance. So the complex kind of functional formula is designed to be beneficial to digestive health, and it's been pretty meticulously arranged so that it's a bit more comprehensive in its nature. All right. So this is around 2017. Yeah.
And I think somewhere during that year, you reach out to David, your partner at OB, and you ask him if he wants to go in with you on this new idea.
Yeah, that's right. That's right. Eventually, I did ring David up and say, hey, I think I got another one. And he was, you know, I think he'll admit he was a little gun shy at first. We had both felt pretty challenged by our prior experience. And I think it was a real moment of reflection, too.
Are we willing to sign ourselves up for that again? And obviously, I think he got... He ended up getting excited about the kind of strategy of formulation. But I think ultimately, you know, the thing that I landed on, which I communicated to him, and I think resonated with him, was, hey, man, we didn't finish the mission. Like, we owe it to, I don't know, the world, consumers, whatever, to ourselves to get back out there and finish it. But...
I am only doing this again if I am coming back 10 times better and 10 times stronger with all the learnings from everything I've taken before. And if we're going back and we're going to do it again, we are going to punch through the board. When we come back in just a moment, have Ben and David punch through the board. Stay with us. I'm Guy Raz and you're listening to How I Built This.
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Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2017, and Ben has gotten back together with David to launch yet another beverage. This one, a prebiotic soda with fiber that encourages the growth of good gut bacteria.
So what we felt that we took away from Obi was that consumers didn't like the word soda, but they wanted to drink soda. And especially with like low calorie ingredients, you're building a structure where all of the elements have to click together just right to create a really compelling illusion.
Where did you start to experiment with the powders and the ingredients and mixing it into a beverage? I mean, literally my kitchen. I mean, by this time, this stuff is somewhat second nature to me, right? I know who to call when I need to go find a bunch of samples of ingredients. I'm assuming like you're looking at chicory root or like, I know you looked at marshmallow root and Jerusalem artichoke. And basically you have to powderize it
mix it into a beverage and hope that it still tastes good, like it's still going to be delicious. Well, that it has to stay in solution, right? And it has to it has to survive manufacturing. So our Oli Smart is cassava root, chicory root, Jerusalem artichoke. That's our that's our our fiber blend. And you're mixing it with maybe fruit juices and soda water, right? I mean, initially, probably something like that, right?
You know, I still use... I have always used a SodaStream. A SodaStream? Okay, yeah, I gotcha. It's hilarious how simple...
My lab has always been, and it's still as simple today as it was back when I started. It's two scales that are very expensive, but one goes out three decimal places, one goes out two. It's a Vitamix, it's Pipettes, and it's a SodaStream. And I still use that exact same setup. We have a more complex lab in the Bay Area that we use now, but when I'm formulating, that's still... Just to start testing out. Yeah, you can do...
So you're playing around with this stuff. And while you're thinking about this, right, you know, because there are a lot of products out there that start by focusing on their health claims or the benefits of the product. And they soon discover that actually a lot of consumers don't care. They just like that tastes good.
So when you were coming up with this, who were you thinking the consumer might be? I mean, again, and forgive me, people listening, because I know there's a lot of generalizations here, but you do have to think in categories, at least initially. Were you thinking like yoga moms? Were you thinking women rather than men? Like who did you think would this product appeal to? Yeah, that is funny because I...
Call me unsophisticated, but I don't – I certainly haven't historically thought in demographics. That is one of the nice things about going after something as large as a soda market. You just thought, I'm going to make something that people want because they want to get healthier. Well, yeah. And also, all of our data shows that you are 100% correct. I mean, in terms of the earlier comment you made, good luck trying to get a bunch of people to switch their behavior. Yeah.
if something doesn't lead with delicious flavor. And when we talk to our consumers and try to figure out, hey, what's contributed to our kind of growth and the high level of kind of advocacy that our customers have for the product, it really, a lot of it is the emotional and flavor relationship first. In fact, that's core to my approach to formulation is that
Every flavor has to have a hook in it that registers in some part of the brain in a nostalgic way. Like, oh, cream soda or orange soda or yeah. A great example, you're totally right. A great example is our tropical punch, right? So I grew up drinking red Hawaiian fruit punch. So good. I want one right now. And there's a really specific flavor
flavor note in there. Yeah. You instantly know what flavor I'm talking about when I reference it, right? So our tropical punch has a toned down version of that same note in it. Yeah. So you're hopefully creating, you know, historical referencing, but future focused, ownable formulas. And I should mention, you were not using sugar. You were using a stevia blend, like a not right.
you wouldn't register a lot of sugar in the final product. Yeah, that's right. So I tried a bunch of stuff. I tried mug fruit. I tried stevia. I tried allulose. I landed on stevia at the end of the day because the technology is farther along for stevia. But obviously I understand that for some folks, especially less kind of skillfully put together formulas can be challenging. Okay. Tell me about the name. How did you come up with the name Olipop? It's a great name, but where did it come from? Yeah, thank you.
So the Oli is short for oligosaccharides, which is a family of prebiotics that it's used in the product. Got it. Okay. Pop is soda. Right. Okay, great. So you get the name and you started out, so you were ready to launch and you're going to launch with, I think, three flavors, ginger, lemon, strawberry, vanilla, and cinnamon cola. Yes. How did you, so again, did you go back to the playbook from your previous experience?
Did you go to investors and start raising a bunch of money to get the funding to start canning this stuff or bottling it and then distributing it? Yeah. So all the kind of branding work, formulation work, I think even maybe like the initial test run, that was all self-funded by – You guys funded that with the proceeds from the sale of your previous business, which wasn't much, but it was enough to get this off the ground. Exactly. Exactly. And then obviously we knew, hey, we're going to need to raise some additional capital to
And actually, a lot of the folks that we went back and spoke to were the investors from OB that we felt like we particularly enjoyed working with. And look, I think what some of these folks saw was that we had absorbed a lot of the lessons from OB.
and that the new product was at a much higher, it was just a better level. I remember one of our Bay Area investors tried an early version of strawberry vanilla and was just like, oh, this is it. This is going to become a cult classic. And it absolutely has become a cult classic of ours. Help me understand, before you even got into stores, what was the value proposition? What were you going to be able to
present to consumers for why they should drink this? Because it was low sugar or no sugar. I mean, a lot of people don't want sugar. They just want a nice soda. But were you going to say, oh, and this also has a bunch of fiber and it's good for your gut? Like, what were you prepared to say that was, you know, that wouldn't put you in trouble? Yeah. Look, one of the things that I love about the territory is
more of a understood inevitability now. But at the time, even just the concept and the communication of a healthy soda was at that time an intrinsic contradiction. Like we felt like we had insider data that showed people want this. Um,
We also knew that it was like a, that contradiction creates mental stickiness because you look at it and you go like healthy soda. I don't, is yes, no, I don't know. Like, and then, okay, cute packaging though. I'll try it. Oh my God, it tastes great. Oh, I look at the, then I look at the nutrition facts panel. Then I look at the ingredients. So I had faith that,
if it tasted right and the pack was right, that just the concept of the healthy soda would create enough kind of mental noise for people that they'd want to try it. And
I was right. So, all right. So you launched this product in 2019 in about 40 grocery stores all in the Bay Area. And I remember seeing it because I remember seeing a strawberry vanilla soda and I was like, oh, that looks interesting. I'm going to try that.
But I'm also an outlier because not everyone's like that. So how did they do? How did you get in those stores? But then what? I mean, there's like hundreds of beverage options in those stores. One million percent. We were really, really lucky that the data was incredible, basically from the word go. How? Why? What explains it? I mean, it was another beverage in the
Yeah, but I think, you know, it starts with you, the outlet, right? Starts with the, and that's also why we chose to launch in the natural channel because there are more folks with a little more expendable cash and there's folks who are willing to try novel things outside of the norm in order to pursue their health. But it's also a product and a concept whose time has come. There is a, a, a quite a deep, um,
pain point for a lot of American consumers that love soda that have migrated away from the category because of how unhealthy it is. And by offering something that really scratches that itch, but the deeper you dig into the science, the more you actually come away feeling, wow, they're not messing around. This is actually contributing a benefit.
That is the kind of equation that develops organic traction. All right, let me ask you a health-related question here, which is, as you know, we've talked about this, I'm super into fiber and having a good balance of vegetables, nuts, and seeds, and things like that. What's the argument? Would you argue that, yeah, if you just drink
So I really appreciate you asking that question.
One of the most common things I see in articles that are discussing the category, usually with a hatchety style, is experts agree that Olipop and comparable beverages are no replacement for a healthy balanced diet. I totally agree. All of that said...
90% of Americans are not getting adequate levels of fiber.
90%. And arguably, the FDA's recommended daily allowance of fiber at 28 grams is already a bit of a pittance. It's too low. Compared to what has actually historically been consumed by humans. And it's lower than the WHO recommendations around fiber consumption. So, Olipop has never been designed to replace a healthy diet. It's meant to help to complement...
The diet of a population that is chronically deficient in this absolutely essential nutrient. So essentially what you're saying is, look, hey, you got to eat the broccoli and chia seeds if you can. And instead of grabbing a Diet Coke, you might as well have this because it's just going to add to your total fiber consumption. A billion percent. And the other thing that I find really funny about it is I don't hear the same level of outcry around protein supplementation.
Right. Like, you know, and nobody kind of bats an eyelash if somebody throws a scoop of protein in their smoothie. Well, what do you think lollipops do? It's doing the same thing. It's it's it's supplementing, but it's critically it's doing it in a way that's incredibly enjoyable. And you might just use it to replace something that's not good for you. I mean, I know that in the first year you did eight hundred and fifty thousand dollars in revenue, which is.
pretty great. You did this all with a very, and I guess we should mention, you did raise some seed money from those former investors, a little over $2 million. So with that money, you had some flexibility, right? You could build up inventory and
you know, do some marketing and maybe hire a couple people. Yeah. But one of the things that you guys also did in the first, I think, year or so is you went into Erewhon. It's a very fancy natural food store, mainly in LA, and it's frequented by celebrities. They love Erewhon. And so when you're in Erewhon, there's a good chance that a celebrity is going to pick up on your beverage. Was that also... I mean...
I think that was the first store you went into in Southern California. Yeah, you're right. I think it was one of the first. But do you know who else frequents the Erewhon aisles? It's the Walmart buying team. The Walmart buying team. They go there because they're looking for cool things. They're looking for the future. So yes, it's the celebrity and the influencer crowd, but it's also senior buyers at mass grocery. And so that was also strategic because you wanted to be in Target and Walmart fairly quickly, right?
Well, we wanted to be ready to transition when the time was right. So Walmart's one of our biggest customers now, but they approached us to go into the stores about 18 months before we felt ready to do it. Yeah. So what we knew from the beginning is we are looking to create a mainstream product that can go toe-to-toe with Soda.
We want to start in the natural channel to build up our early adopters, to build up our revenue base and our rudimentary proof of concept and brand awareness. And we want to build the brand and the flavor profile such that so that it's ready to jump the fence and go mainstream. Right? Because I think a lot of times...
brands from a advertising perspective and a flavor profile perspective will over will will over leverage their product to be successful in the natural channel. And then it really struggles to gain traction in mainstream channels. When the pandemic hit in 2020, you've been out for a while, right? For about a year, less than a year, but you've been out. But still, like I imagine you didn't have a huge marketing and advertising budget at that point. I don't think you did.
How did that – I mean it turned out that year was very good for you. But how did people discover the product when they weren't going and spending a lot of – people were just popping in and out of grocery stores quickly that year? Well, and you're doing no demoing, right? Right. So that was a really fascinating experience because obviously at the beginning of the year when the shutdowns occurred –
everybody was rightfully losing their minds. The prevailing logic at that point in time would have been, this is an impulse purchase that people pick up when they're grabbing their sandwich. It turned out that for those customers that had discovered us and basically were falling in love with the brand, they were already considering it an essential shop for the week. So people weren't just going in and grabbing a can. They were going in and grabbing enough cans for the whole week because they were already making it a
But that was, for me, this real epiphany moment of like, oh my God, something is happening here that's at a whole different level than I could have expected it would be. You guys are, I think, just hit profitability, right? We have been profitable every month this year and we'll be profitable through the year. Amazing. And you've, of course, had other rounds of raising money. And I think this year...
2024, you're on track to hit possibly half a billion dollars in sales. Looks like just, yeah, just south. So, all right, tell me what the game plan is here. I mean, Coca-Cola, $280 billion market cap, Pepsi, $234 billion. I have seen you quoted and maybe you, you, maybe, you know, I don't know, basically saying, look, we want to kind of take those companies on. Yeah. I mean, look, I
It is a tricky territory, guy. Very tricky territory. The way I would describe it is we have had triple digit growth every year since inception. In fact, in 2020, we almost had quadruple digit growth. And there is a lot of room, headroom left to hit anything that even remotely resembles a ceiling.
So exactly what that future looks like is still unclear. But for right now, we are just 100% focused on continuing to go after the enormous market opportunity that's still in front of us. Hmm.
Because the way that I'm conceptualizing this is this is the third wave of soda, right? You had traditional soda and then there was diet soda in the 1980s. I think in three or four years, diet soda became 25% of all soda sales. Yeah. And now we're looking at similar –
similar trajectory in terms of the rate at which this category is achieving household penetration. I think the other piece of this as well is that traditional sodas pipeline of young consumers has collapsed. And over the last 10 years, there's been a 60% reduction in let's call it Gen Z, Gen Alpha traditional soda consumption.
That's exactly... I mean, we're a big tent. We still work really great with Gen X and millennials. And we over-index with these younger consumers. So I think we've got a really great opportunity to be the spearhead of...
Soda, which is a great American institution, doesn't need to die off. It just needs to evolve. Yeah. So now the question is, you talk about the mission and things like distributing it around the world. And the obvious answer to that is Coca-Cola or PepsiCo. I mean, they have the biggest distribution networks on the planet. I mean, they can take a brand doing a million dollars a year today and turn it into a hundred million dollar brand tomorrow.
At some point, you've got a bunch of investors. You guys have raised money over the last couple of years. It's like go public or sell. And it's probably too early to talk about it now, but it seems like there is a world where if the right partner comes along and says, hey, you know what?
You guys have crushed this. We're not going to compete with you. We just want to take it over. I mean, they did it with Topo Chico. They've done it with Honest Tea. I'm talking about Coca-Cola. You know, other big brands have taken on smaller brands and really continued to make them and distribute them. And they're still good products.
Yeah, I mean, look, again, I'm going to artfully dodge the specifics of... The artful dodger. Yeah, and it's so artful that I'm just going to say it out loud. But, look, I would say...
Obviously, I hear what you're getting at. If I just exit Olipop and I'm like, oh, yeah, I've got my small mountain of cash. It'll be a large mountain of cash if you exit. It will be. I mean, let's be honest. There's nothing wrong with that. It's going to be a lot of cash. I'm sitting on my cash and then 10 years goes by, Olipop has disappeared or I don't like what it's doing in the world anymore. I will not have considered that a win. Yeah.
But going public is no walk in the park either, right? There's a whole bunch of minefields associated with that choice. What's nice is with the way that we're growing, I have no plans to sell the company right now. So I'm fortunate that we don't feel a lot of pressure from our investors because they're all so up on their money already that we're doing fine. I'm sure they want you to wait, actually. Yeah.
They have a range of opinions. Yeah. Okay. I got you. Ben, when you think about where you've landed, you know, and the journey you took, right? Everything from, you know, meeting David Lester or, you know, working at Kombucha Place or, I don't know, everything that happened along the way. How much of where you are do you attribute to luck? And how much do you think has to do with the work you put in, the hard work and your skill? Yeah.
Yeah, I mean, it would be absolutely asinine to not acknowledge that it's a that it's a mix. I was born with a with a brain that has allowed me to be do things that are hard for a lot of people.
I'm sure my genetics have played into my resiliency. I grew up in a really bad situation, but I also grew up in a nice area. So one of the things that happened when I was a teenager going through my metamorphosis, I was able to go for walks and just psychoanalyze myself with my head.
head in the clouds for like three hours at a stint. If I grew up in like a dangerous neighborhood, I wouldn't have been able to do that. And there's where we are in the health and wellness industry and consumer receptivity and the kombucha coming up, paving the way for OB and then paving the way for digestive health. There's a million of those different instances where 100% I was given a good hand. There's a bunch of other spots as well where I was given a terrible hand.
And that's obviously life. And so then there's how you respond to it and how you build a framework of meaning around it. And also how you facilitate self-awareness and self-development through all those different experiences.
That's Ben Goodwin, co-founder of Olipop. By the way, the company just announced that its soda will be sold at the L.A. Clippers' new sports arena, the Intuit Dome. It's a major coup for the brand because normally Coke and Pepsi have exclusive deals that prevent any competition at sports stadiums.
Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's free. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at GuyRoz.com. This episode was produced by Sam Paulson with music composed by Ramteen Ereblui and Sam Paulson. It was edited by Neva Grant with research help from Catherine Seifer.
Our engineers were Robert Rodriguez and Kweisi Lee. Our production staff also includes J.C. Howard, Devin Schwartz, Carrie Thompson, Alex Chung, John Isabella, Chris Messini, Carla Estevez, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.
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At a time when we're debating where policing is going, we're going to tell you where the police came from. They wanted me to write about the New York City Police Department, but without using the words violence or corruption, which is effectively impossible. A story of how the largest and most influential police department in the country became one of the most violent and corrupt organizations in the world. It doesn't matter if you're a self-emancipated black person or if you're a free... They're just...
Sending people back to the South, capping them. When officers with the power to fight the danger become the danger. I was terrified. I'm not going to talk to the police because they're the ones who are perpetrating this. Who am I going to talk to? From Wondery and Crooked Media, I'm Chinjarai Kumaneka, and this is Empire City, the untold origin story of the NYPD. Follow Empire City on the Wondery app or wherever you get your podcasts. You can binge all episodes of Empire City early and ad-free right now by joining Wondery+.