Challenge Assumptions Podcast with Aaron Hinde — The Hustle Behind the LIFEAID Brand
Aaron Hinde, Co-Founder & President of LIFEAID Beverage Company
joins us for this week's Challenge Assumptions Podcast (episode 33).
LIFEAID is a nutritional beverage company that uses high-quality supplements and nutrients in its popular drinks.
The company made a name for itself in the beverage world by using a unique marketing strategy. Instead of trying to make drinks that would appeal to the most people possible, Aaron’s company took the opposite approach. By focusing on highly specific markets like Golf and Crossfit, they were able to develop a community of loyal users. This developed brand awareness which is helping launch them into markets like grocery stores, and health food chains.
We sat down with Aaron Hinde and picked his brain as he opens up about his vision, his entrepreneurial journey, and what fuels his passion in life & business.
Want to know how LIFEAID was able to break into these niche communities?
Find out how Hinde used very specific groups to leverage his product and produce devoted customers.
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Greg Davis | SOURCE: http://challengeassumptions.com/2017/07/06/challenge-assumptions-episode-33/
Read the full podcast transcription below:
Speaker 1: The Challenge Assumptions Podcast is brought to you by Dolphin Consulting, your source for the latest sales and marketing techniques and training in any industry. Visit dolphinconsulting.org today.
Aaron Hinde: You don't ask for a Monster Vodka, people ask for a Red Bull Vodka. And why is that? Because Red Bull planted their flag with that Red Bull fridge in every bar across America.
Speaker 3: Coming to you from Americana Studio in Austin, Texas, this is Challenge Assumptions.
Aaron Hinde: I always had a vision for myself to really do something great or do something a little bit big on a larger scale.
Greg Davis: What led to the idea behind the LIFEAID Beverage Company?
Aaron Hinde: We wanted to create products that were clean and healthy, something you could give a wink wink to the moms out there that this was okay for their kids to be taking. "You'll never be able to sell any drinks online. It's never been done, it will never be done because people need to get it past their lips." "Why do you have all these niche products? Why don't you just come up with SportAid and cover all sports?"
Greg Davis: Wait, so you were doing a fire dancing show to sell your drinks? Are you juggling fire sticks and cans of drink?
Aaron Hinde: For lead generation we always have some type of irresistible offer. Like, right now if you go on the website, we're giving away a $15,000 home gym in exchange for first name and email. When we made that commitment, we just became one of the dominant brands over time in that niche.
Speaker 3: Challenge Assumptions, helping you build your committed tribe and grow your company with your host, best selling author, Greg Davis.
Greg Davis: Konnichiwa. Welcome to Challenge Assumptions Radio, entertaining sales and business radio where we take your ideas and content seriously, but not ourselves. Back in the perch in Hermosa Beach today, not in Austin. John's in Austin pressing all the buttons and ready to press my buttons a bit. Are we all good to go John?
John: We are good to go, man.
Greg Davis: Nice, nice. We had a few little hiccups getting the train back on the track rolling down the bike path, as I like to say here in Hermosa, but I'm really excited about our guest that we'll be having on here in just a sec, Aaron Hinde, who is with LIFEAID Beverage Company. Really challenging assumptions of the beverage industry, but also taking on the big boys and now going after venture capital, did not go to Shark Tank. Are you a fan of that show? Or is it just me, John?
John: I think I've seen it once.
Greg Davis: That's not a fan. Yes. Well, Gene and I watch it a bit more. Gene's off on assignment, so he may miss a couple of shows as we record several back to back. And what's nice about Aaron, he's a chiropractor. And I went to the chiropractor today, and it's like the third time I got adjusted in a different way every time, even though I'm going to the same place. So, I want to hear about that. But welcome to the show, Aaron, how are you doing today?
Aaron Hinde: Greg, doing well. John, pleasure.
Greg Davis: So, I want to get into this question before I forget. Why would I get different adjustment ideas from three different people at the joint? One guy did my neck pull, the other one says I've got-
Aaron Hinde: I think it's like any profession. I mean, you go to an attorney, you might get a little different advice from attorney to attorney, no different from chiropractic, you know? We're all looking at things a little bit differently.
Greg Davis: And that kind of runs into the idea of the LIFEAID Beverage Company. There's certainly a lot of options in healthcare supplements and healthcare related drinks. You mentioned you know Bedros who's been on our show. How do you know him, by the way?
Aaron Hinde: I met Bedros through, I think our marketing group. We're both in Genius Mastermind.
Greg Davis: You may not have heard the episode of Challenge Assumptions. I'm sure you're not a fan yet, but hopefully after this you will be, but we had him on twice. And the first time he was on the show, I had gone into atrial fibrillation, but was out, kind of my heart was acting normal. And this was right around the first of March, it would have been before the first of March that we actually recorded. And he challenged me to go work out. I went out and worked out the next day, and I overdid it, I guess, knocked myself back in to atrial fibrillation. And eventually, that led to a surgery, but also a deeper commitment. And as of today, I'm 72 pounds lighter.
Aaron Hinde: Congrats. That's awesome.
Greg Davis: Yeah, thanks. About four months ago. So, it's been a pretty fast journey in that sense for me. So, let's talk about before you started your company, though. Did you grow up in The Bay area, then? And what led you into the chiropractic care initially?
Aaron Hinde: Yeah, I was always involved in health and fitness through high school and college, you know? In college, I used to have a little side supplement business where I was selling supplements out of my dorm room.
Greg Davis: Marijuana? Or no?
Aaron Hinde: Actually, mainly legal supplements.
Greg Davis: Oh, okay.
Aaron Hinde: Not to say we didn't dabble in other things, but it was legal supplements there.
Greg Davis: A few years later, they were all legal in California.
Aaron Hinde: Yeah, now everything's legal. Thank god prohibition has ended. But I was selling supplements. I was a personal trainer, successful personal trainer throughout college. And even when I graduated college, I went to work for Westinghouse, which is a Government contractor. And I was still doing training on the side after hours on weekends. And I realized working for the Government in a little cubicle in front of a computer screen and that whole environment was just not my forte. And I loved working with people. I loved training. And I decided, you know what? I've always been a fan of chiropractic and thought, "What the heck? I should go for that."
Greg Davis: You also had the worst possible degree that exists, which I have one too, is in economics, which I'm only kidding.
Aaron Hinde: You know, it's funny. It's like, we always thought being econ, I was econ business, that we had the best degree in school. And I used to rip on all my friends that were psychology majors calling them pre-unemployment. Now I spend most of my time studying psychology, so ...
Greg Davis: Exactly. It's probably more important for business than some of the concepts in the economics degree as well. So, were you in sports in high school? Or what led you to be a personal trainer?
Aaron Hinde: Yeah, I was always doing sports. But I think the biggest thing for me and my personal drive was I was a little kind of really underdeveloped kind of kid, you know? I was probably ... it's funny, I still have my license from when I turned 16, on my 16th birthday when I took my driving test. I stepped out and sit on a little booster seat to see over the steering wheel. I was only ... I think my license says 5'3 101 pounds. And when I graduated high school, I think I was a buck 30 soaking wet. So, when I started finally growing and in college I was hitting the gym heavy and just motivated to put a little size on. And just kind of continued that throughout college.
Greg Davis: So, you went and studied chiropractic care and moved up fairly quickly. And, I guess, over the course of 10 years became the clinic director?
Aaron Hinde: Yeah, I had a great practice. I mean, I was doing 10 years. Even in year one, I don't think I had a year, looking back on it how cushy that was. I was working like probably 24 hours a week and pulling in probably 350 a year gross, and had a great practice. All referral based, 30 new patients a month for 10 years straight. So, it was a good run. It was a real good run.
Greg Davis: So how did you go about getting referrals? So that was your own business, I guess, by the way?
Aaron Hinde: Yeah.
Greg Davis: Okay. I guess your last name was on it. That makes sense. All right, sorry about that. So, how did you get these referrals then?
Aaron Hinde: It was really around creating an elegant experience for my patients, being very patient-centric, doing really good work. I mean, I was one of probably the most skilled chiropractor from just a treatment perspective in the county. I had a great network of physical therapists and medical doctors and surgeons that I worked with when necessary.
Greg Davis: But this required, it sounds like, some networking, right? So, you had a network of doctors. Did you go to ... I mean, this is probably before meet up groups, but did you go to the right happy hours, or to the right events, or country club?
Aaron Hinde: Yeah, I mean, I was hustling. You know, one of the misconceptions I had was, I'll open the doors and people will just start flooding in. I remember my first day in practice, even with doing some hustling, I think I only saw six patients or something. And I was like, "Oh gosh. I better do something different here." And immediately I started engaging with the community, getting out. I was on the Chamber of Commerce and Exchange Club. I actually was elected twice to the Santa Cruz County Board of Education. And here in Santa Cruz, I think I'm the only Libertarian ever to be elected to Countywide office here.
Greg Davis: That sounds about right. Wow. Yeah.
Aaron Hinde: Yeah, so just out engaging and hustling and meeting people, shaking hands, doing what you've got to do. And yeah.
Greg Davis: Wow, so that's ... I mean, that's quite a story. And then over the course of 10 years, was it a matter of getting bored with that? Or was it that you built up enough of a practice and had enough money to try something bigger? Like, how did you see it at that point? What drove you to start the new business?
Aaron Hinde: Unfortunately, I was making a good chunk of money, but gosh, it was just going out the door quick too. When I had really lean years when we first started LIFEAID and had to really cut back on my spending, I was just astonished by how much waste was in there with six grand a month in various insurances that I didn't need going on, and so on and so forth. But after doing something for 10 years and having a good run and being successful, I always had a vision for myself to really do something great or do something a little bit big on a larger scale. You know, on a good day, maybe I saw 40, 45 people type of thing. And now what we're able to do is affect millions of people every month by getting them off their bad habits on the "sports drinks" and energy drinks and sodas and that kind of thing, and onto much cleaner products. So, we're just playing at a much bigger scale now.
Greg Davis: So, talking about scale in your chiropractic business, it was pretty dependent. It sounds like your differentiator was you. You were very good at the chiropractic care, but it was also pretty dependent upon you to be the one actually delivering that service. Did you feel like it was harder to scale then?
Aaron Hinde: It's much harder to scale. I mean, I never took a vacation longer than three days in 10 years. And my vision was always like, "Oh, I'll be successful when I can lay on the beach and suck down Coronas," and I remember I took the family to Thailand at the end of last year. I was on that beach for about five minutes before I got restless and jumped up and was ready to do something.
Greg Davis: It's hard to jump out of the habit, I guess.
Aaron Hinde: Yeah. Yeah, but it was good to have the option, where in a fee for service model, unfortunately a lot of professionals in fee for service models do really well as far as income and everything, but they're kind of a slave to the practice.
Greg Davis: And so, one approach could have been that you're going to try to scale this existing practice versus the approach you took to say, "No, let's try something else." And so, when we come back from the break, we're going to hear about what led to that decision and to the LIFEAID Beverage Company, which is now one of Inc. 500's top fastest growing companies in the country, and moving along quite quickly.
Greg Davis: And we're back with Aaron Hinde. Aaron, enjoying having you on the show so far, want to hear more about your company today and what led to the idea behind the LIFEAID Beverage Company.
Aaron Hinde: Yeah. I mean, I met my business partner, Orion, he was actually a certified financial planner here in Santa Cruz. We met in a CrossFit gym in, I think, 2009. And we started training together. We quickly found out that our daughters not only were the same age, but in the same school and the same class and had become best friends, unbeknown to us. Our wives immediately hit it off, so we started hanging out a lot. We were training together. When we had free time, we used to golf once a week together. We'd go to Burning Man together.
Greg Davis: Burning Man, wow. That's a bonder, right? I guess. I haven't been to Burning Man.
Aaron Hinde: It is.
Greg Davis: What was that like?
Aaron Hinde: It's incredible. It'll change your life. It'll blow your mind. Whatever people think it is, multiply it by 1,000. It's-
Greg Davis: I don't know. I don't think I could take the drugs, man. I don't know. That's-
Aaron Hinde: You can go totally ... you can be high on life there.
Greg Davis: I guess so. I guess so. I haven't heard of anyone that did. But I'm sure if I did, I would be challenging some assumptions for sure about Burning Man.
Aaron Hinde: I'd say out of the 80,000, there's at least 100 that are completely sober.
Greg Davis: Yeah, they're like the first aid workers, probably. Yeah, I don't know what my heart could take of the medicines, but I mean, the heart's doing good. So, anyway. Sorry, go ahead Aaron.
Aaron Hinde: Don't mess with a good thing, that's right. So, part of it was working with a lot of athletes, especially young athletes. I had a lot of collegiate athletes and professional, but quite a few high school. And part of that mission to really get them to change their habits, they're coming in with these big cans of energy drinks and these "sports drinks," and all this garbage. And I'm like, "Look at the label here. This is just overstimulating your body on sugar and caffeine and taurine. There's artificial colors and flavors and sweeteners and dyes and all this garbage," knowing there had to be a better way. And here we are in Santa Cruz, for those that aren't familiar, this is like the hippy capital of the world. So, we all grew up on goats milk and kombucha, but for a lot of people, that's not mainstream. And there was no alternative to turn these kids to. I mean, the kombuchas and the chias, especially at the time, were so hippy dippy. They weren't appealing, especially to the younger generation. You look at the energy drinks did such a great job at lifestyle branding and they worked. Let's face it, they jack you up pretty effectively, but if you call 100 energy drinkers, not one of them is going to tell you they're drinking it for health reasons.
Aaron Hinde: So, we knew there had to be a better way. We wanted to create products that were clean and healthy, something we could give a wink, wink to the moms out there that this was okay for our kids to be taking that still had the cool, sexy, hip appeal and lifestyle branding of the energy drinks and had the functionality that we saw with energy drinks and other types of drinks. Like, kombucha, they had gut health and so on and so forth. We wanted to combine all three. And that's where LIFEAID was born.
Greg Davis: It looks like first-aid, the branding, to me. I don't know. Maybe I'm wrong. That is cool looking, though.
Aaron Hinde: Yeah. Yeah.
Greg Davis: But I guess that lets you know that the intent is sincerely medical in some way.
Aaron Hinde: Correct.
Greg Davis: So, what led you to this idea that you could take on big beverage companies and do this on your own?
Aaron Hinde: Ignorance.
Greg Davis: Really?
Aaron Hinde: Ignorance. Ignorance with passion and a little bit of skill and quite a bit of luck.
Greg Davis: Yeah. I have to admit that I've had that sort of luck when I had my first company that had ... we were earning 5000 about five times in the early days. What we were ignorant about how quickly we could go to the next scale because we'd been in companies where it had been done. And I don't know, in terms of what you did. Tell us about kind of the first steps from going from ... did you have to just shut down your chiropractic practice totally? Or did you sort of start on the side.
Aaron Hinde: Yeah, we started on the side, which I would recommend any entrepreneur do. I mean, especially having a wife and kids, you ... I still put everything at risk probably way too prematurely in hindsight. Thank god it's worked, but-
Greg Davis: That's an interesting challenge to assumptions, I think, in and of itself is that people tell you you've got to be all in, and you're saying, "No, test a little bit. Test something."
Aaron Hinde: You know, test and make sure you're being accurate about your assumptions, which most people are not accurate whatsoever, whether it comes to product development, marketing, demand, so on and so forth. Most people have multiple inaccurate assumptions about a lot of different things that could sink the boat quickly. So, I'd recommend testing small, getting some proof of concept, getting a little traction before you cut off your primary source of income. And like I said, we probably cut that off a little too prematurely, you know? That first year out of practice, I was only making ... you know, after I sold my practice, I was only pulling in $1,000 a month off of LIFEAID and then it went to 3,000 a month. And so, we learned to live very lean for quite a while once the primary income source was cut off.
Greg Davis: Right, right. So, initially, what is involved in a consumer product sale? Or what approach did you take? Because certainly, you could try to build as a scientist a product and then license it completely out to someone else, but building your own brand and going into the marketplace, you've either got to choose a geography or a sort of very specific niche, I would assume anyway, to start off with. Where did you start?
Aaron Hinde: Yeah, I think both of those comments are very accurate. And I think where we challenged the most assumptions was everyone in the beverage industry said two criticisms for us. Number one, "You'll never be able to sell any drinks online, it's never been done. It will never be done because people need to get it past their lips before they're willing to open up their wallets and their credit card, get out the credit card." And assumption two, or criticism two, I should say, was, "Hey, you guys are way too niche." At the time when we launched, we launched GolferAid, you know? A drink specifically for golfers in the golf channel. Shortly after that, and way too quickly, actually, we launched FitAid in the CrossFit niche and PartyAid, which was kind of our Burning Man type of drink there. So, our biggest criticism, "You're way too niche and you're never going to be able to sell these online," both of which, the niche aspect ended up being our ... what served us the most was being niche. I think another assumption people had was, "We need a product that goes so wide." So many early people we talked to from distributors to potential investors were like, "Why do you have all these niche products? Why don't you just come up with SportAid and cover all sports, or something like that?" So, we were going very deep into these niche markets that we had intimate knowledge of. I mean, again, we were golfers. We would go to Burning Man. We were CrossFitting regularly. We were very familiar with those three markets. And we were very successful in selling online. We took basically ... I was in the information marketing and studying what that was all about from the old Dan Kennedy days and stuff. And we were able to successfully take that approach and apply it to physical products.
Greg Davis: So, what steps did that include, like in year one? Was it videos online? Or Facebook ads?
Aaron Hinde: Yeah, online. We were doing some sampling. So, when we launched GolferAid, we were doing a lot of ... we tried to get proof of concept. So we'd go onto a golf course and do sampling, and then sell it into that golf course. I mean, our first run was so small that our cost of goods was $3 a can, and we were selling it wholesale for $2 a can. So, we were taking it in the shorts just to see if we had an idea that would get some traction here. And we'd do a lot of sampling at the golf course, and we were doing a lot of lead generation. So, everyone we sampled or gave a free can to, we got their contact information. We started building our list.
Greg Davis: And why were they willing to give you that contact information? Because that's one challenge everyone faces. And I think any business, by the way, that's not trying to get the contact information of every customer who comes through the door is losing out on potential revenue. Now, what approach and lead in you use and what your hit rate in doing that, I don't know. It varies, maybe, but what challenges did you face in getting that contact information? Or what was the approach or the lead in that you used to get them to offer that to you?
Aaron Hinde: Well, when you have an attractive female on a golf course handing out free product in exchange for first name, email, and zip code, it's actually not that difficult of a proposition.
Greg Davis: I see.
Aaron Hinde: If you've been out on the golf course, you'd know what I'm talking about.
Greg Davis: I've golfed a little bit, yeah. Okay.
Aaron Hinde: And so, imagine the interactions with the cart girl. It's very similar to that.
Greg Davis: So, you were on the 18th hole when they were most drunk coming in from the golfing day.
Aaron Hinde: Actually, we were giving them cans before they teed off because what we wanted for them to see how they felt during that round, our proposition with GolferAid was like, "Look, what you put in your body reflects directly in how you perform on the golf course," you know? "Go drink a couple of five hour energies and try to make a five foot pot, you're going to be jittering so bad you're going to be shanking every shot." So, that was our proposition there to get what their current habit was and replace that with something much cleaner and much more balanced with GolferAid. Now, when we were strictly doing online for lead generation, we always have some type of irresistible offer. Like, right now if you go on the website, we're giving away a $15,000 home gym in exchange for a first name and email. And we'll collect-
Greg Davis: I assume that's a sweepstakes, so not everyone gets that $15,000 home gym for their-
Aaron Hinde: Correct. Correct.
Greg Davis: My email is firstname.lastname@example.org. If you can just sign me up now for the gym.
Aaron Hinde: I can sign you up.
Greg Davis: Okay, yes. Okay. So, let's talk about the product itself. So, you had some sense that, hey, we think we can help people drink better or eat better or be more healthy or whatever. But did you have any experience with what the nutritional needs were? Or what led you to the actual sort of parts and pieces that went into GolferAid and what was it all about?
Aaron Hinde: I had some background with nutrition from my schooling. And being part of the community gave us access to high level participants from several pre-GA pros that we had access to in the early days, to CrossFit games athletes, to being entrenched in kind of that festival in the Burning Man community. So, we really reverse engineered the formula. So, I'd go to any golfer and say, "What's important to you?" Well, any golfer knows, "Look, I want to be consistent throughout my whole round. I typically get back nine fatigue. I have an old knee injury that when I'm walking 18 it swells up on me." Right? So, we kind of know what the issues are. So, how can we reverse engineer a product that takes care of joint health, that gives you consistent energy without the jitters, you know? That kind of keeps you in the zone. Same thing with working out, you know? People are taking branched-chain amino acids for muscle recovery. They're taking omega 3 fatty acids, they're taking glutamine and arginine. So, we were able to basically reverse engineer the formulas, approaching it in a way that, look, we want to have an efficacious dose of very clean nutritional components without all the garbage and fillers that every other drink company puts in there. Like, exogenous caffeine and taurine and salt and high sugar and all this crap, right? So, we said right off the bat, we're going to leave all this garbage out. We're only going to put in good ingredients. And we're going to constantly be improving on our products. And that's the approach we did. I think it's very consistent with always playing the long game and always doing what's in the best interest of our consumers, of which we were one of them. We're deeply entrenched in these communities.
Greg Davis: So, how many calories does a ... they come in cans, I guess?
Aaron Hinde: Yeah, they're 12 ounce sleek cans. All of our products have 45 calories.
Greg Davis: Yeah, very low then, very low calorie intake, especially with some supplements and whatnot. And what about sugar?
Aaron Hinde: Nine grams total per can. So, what brings the entire line FitAid, FocusAid, PartyAid, LifeAid, TravelAid, GolferAid together is that they are all natural. There's no artificial colors, flavors, or sweeteners. Zero sodium in any of the drinks, no added caffeine, no taurine. They're all 45 calories. What differentiates each line is each of them has between two and three grams of very targeted supplements for the particular avocation. So, take our FocusAid for example, well, we've got all these millennials now getting burnt out after drinking energy drinks for 10 or 15 years and are looking for a clean alternative. So, with FocusAid, we go, okay, well we don't want to have 300 milligrams of caffeine like everybody else. So, what are we going to do? We're going to put a low dose of natural caffeine with yerba mate and green tea, but we're going to focus on what they're really looking for is focus and staying in the zone and that mental acuity. So, we put in supplements called nootropics. And nootropics are specific supplements that stimulate the brain for focus, mental acuity, and memory. I know you guys are out in Austin, it's like what Onnit's doing with some of their brain stimulating formulas and that kind of thing. So, it's a very trendy market in nootropics, and we just kind of ... we were the first ones to actually put that in a beverage format.
Greg Davis: So, how did you go about getting the first drink manufactured?
Aaron Hinde: Well, we went down, you know? I basically put together a formulation and I already stated what we didn't want to have in the drink, which was what everyone else was doing. And we went down to a flavor house. And interesting story, when we first walked in, I handed over the sheet of paper with my formulation and their job is to help us make it taste good. And the scientist we were working with looked at it and said, "Look, this looks great, but there's no way you're going to be able to have a drink with no artificial sweeteners that tastes good with three grams of supplements in it." And we said, "Okay, well we appreciate your time, but we'll go somewhere else if you're not willing to work with us because we're not willing to compromise on what we're trying to do here." And she said, "Whoa, whoa, whoa, hold on. Let's see if we can work on it." And we worked on it and worked on it. And those first renditions were not ... you know, we're not real proud of those at this point in time. We would never release some of them back then on the market today, but we had minimal viable product and we kept tweaking it and tweaking it and making it better and better. And now I think our flavor profiles hit it out of the park with all of our lines.
Greg Davis: I'm really kind of geeking out on the excitement about the possibilities of LIFEAID because of all the changes I'm making in my own life. But I do want to kind of get back to, in that initial approach and some of the things you did, you found a bottler, you applied some efforts at branding at your own. Did you outsource anything at the start? Or did you just have to do trial on your own and figure it out along the way?
Aaron Hinde: Yeah, I mean, I think the biggest mistake that most entrepreneurs make is just going way too wide way too quickly, or basically doing what everybody before them has done. And we just took a much different approach, we went very narrow, very niche, very deep in those niche markets. And then again, selling things online versus trying to go after the Safeways and Whole Foods and 7-11s of the world, you know? We stayed clear of those for years and years and years before we went to traditional retail.
Greg Davis: And then how were you bringing people in to your website? Other than the early lead capture in person, did you do something else?
Aaron Hinde: Yeah, so, we looked at the success of the energy drinks, and even today, even though the trajectory of, say, a Monster, especially in the United States is far outpacing Red Bull. If you go into a bar today and you ask for a ... you don't ask for a Monster Vodka, people ask for a Red Bull Vodka, and why is that? Because Red Bull planted their flag with that Red Bull fridge in every bar across America, right? They went very non traditional in their route to market originally. So, we thought, okay, let's look at what Red Bull did and apply it to our business. So, what we did is we started going out and putting a GolferAid fridge inside the pros shop in golf courses where there was no other competing products. We also took FitAid fridges and put them inside CrossFit gyms where they didn't have any competing products. So, we were utilizing that Red Bull model for our needs and our community. And then that got consumer trial going because people were like, "GolferAid? I'm a golfer. I'm here at the golf course. Sure, I'll give it a shot." Or, "FitAid? Well, I'm into fitness. I'm here at a CrossFit gym. Sure, I'll give it a shot after workout." And then people started loving the products and then they searched for it online and found us on the website. And that's how we got the initial traction.
Greg Davis: So, I have a couple more questions about that. I want to ask before I forget. So, does PartyAid have a thing that ecstasy takes away from your brain or whatever that supplement ... is it ... I forget. I've not done the ecstasy thing, but-
Aaron Hinde: Serotonin, I think is what you're referring to.
Greg Davis: Serotonin goes away, thank you. I'm the village idiot here, but it's another supplement people take, I think, after, because I read about it. But after-
Aaron Hinde: Yeah, 5-HTP?
Greg Davis: Yes, that's the one I'm thinking of.
Aaron Hinde: Yeah, so it does have an efficacious dose of 5-HTP.
Greg Davis: Efficacious is a nice word. Yes.
Aaron Hinde: Any type of partying you'll have serotonin depletion. So, if you think about it, you're out with your buddies at night. You're out having a good time and you're drinking. That next day, yes, with dehydration and you might be sleep deprived, but a lot of what people experience as kind of that "hangover" is mild depression, okay? Because they've had a serotonin dump, which is the euphoria drug the night before having a great time, and then the next day their serotonin levels are depleted. So, by giving your body 5-HPT, you're able to build those serotonin levels up at least to a baseline so you can have that dump and have a great time and then not crash the next day. So, that's where the PartyAid's positioned, and that's why it's so effective.
Greg Davis: So are the fridges, for example, you put fridges in golf locations or CrossFit locations or what have you. Did they pay for themselves? Or were you running at a deficit early on to try to get that name out there?
Aaron Hinde: Yeah, good question. We actually created a model where we would give them the free fridge if they would commit to a 10 case purchase. So, the economics of which we were looking at basically a breakeven proposition on our cost of goods in that initial order. Since then, fast forward many years, we're very warm and willing to go extremely negative on the front end as much as we have to because our lifetime value's so strong, our retention is so strong. We know our numbers down to the dollar and it's all dialed in. But in the early days, we didn't know and we didn't have the cashflow or bank roll, so we said, how can we create basically an irresistible offer that doesn't put us under in the short term? And that was this 10 case fridge model.
Greg Davis: That's the challenge for any business is to find the right mix based on how much money they have and the fact that they realize ... and I think that's what you're telling people, you realize you're actually testing. And your success, I love the fact that you admitted there's some luck involved there. And you are very skilled at what you do, or you wouldn't be where you're at. But market acceptance is sometimes out of our control of anything we offer. So, you had to find ... and anyone needs to find the right mix of commitment to how much they are willing to even barely make or lose to get those initial customers. And can they mathematically project out the lifetime value of a customer to test out their model, because once you've ... was there a point in time where you realized, we're not making a ton of money, but mathematically I've now proven that X amount of dollars in means Y amount of dollars out eventually, and that lifetime value's much bigger than the input?
Aaron Hinde: Yeah, that was the aha moment that I think it's been said that anyone who can ... whoever goes negative the longest always wins, right? Look at Amazon and their success. They just started making money, what? Last year, and they're still not profitable every quarter, I think. But that was really when we knew we had something when we ... because initially we were all in with GolferAid only and we were probably a little early, so that was one of those inaccurate assumptions, you know? Like, oh, everybody in golf is going to into health and wellness because their diets are so shitty and everyone's a fat ass and eating crap. It was like, well, no. At the time, Tiger Woods was in shape, but really there weren't that many other golfers that were in shape. Fast forward seven, eight years, now half the tour looks like they're CrossFitting, right? So, it's changed. The market is right now.
Aaron Hinde: So, even though we made in our first year 600 grand in revenue with GolferAid, we were looking at the FitAid line in CrossFit going, geez, our sell in is easier, our sell through is better. So, we literally were out of money. So, we took our limited money that we had left in resource and plugged it all into FitAid in that CrossFit channel, and we made the right bet because the timing was perfect for that marketplace, and it was still young and immature enough that when we made that commitment, we just became one of the dominant brands over time in that niche. And that really helped us bootstrap this whole thing up until last year.
Greg Davis: So, up until last year, you were focused on really two areas, CrossFit and golfing, is that right?
Aaron Hinde: Well, mainly CrossFit. GolferAid, we weren't giving any love to. It was dog paddling. I mean, at our peak we were at about 500 golf courses with just kind of drop and not giving it love. It probably dropped down to about 200 and 220, something like that. It wasn't until this year that we finally had the financing and budget to really start putting focus on GolferAid again. Now we're crushing it. We're actually opening in more new golf courses every month now than we are CrossFit gyms. So, GolferAid's doing great again. FitAid's really expanded to many other markets, including obstacle course racing, Globo gyms etc. We have FocusAid now selling in corporate and college campuses. TravelAid at a couple of airports. So, each of them ... the unique thing about our business is each of them is almost their own business.
Aaron Hinde: When we first launched we actually had, not only separate social accounts for all of them, which we still maintain today, separate social accounts, but we had separate websites for each skew because we didn't want to force those communities on each other. A Golfer may not really be into the whole kind of Burning Man crowd, or that crowd may not be into the fitness crowd. And so, we kept them separate on purpose. There were days where I'd be out working a golf tournament with my polo shirt on, GolferAid hat. Go to San Francisco, switch into my rave gear and do like a fire dancing show with PartyAid, and then-
Greg Davis: Wait, so you were doing a fire dancing show to sell your drinks?
Aaron Hinde: Yeah, oh yeah. We were doing everything, man. We had cans in hands. We were out hustling.
Greg Davis: So, how does that work? Sounds like something with your shirt off and war paint on and you're moving fire around. But that's what I've seen in Hawaii maybe.
Aaron Hinde: You're not too far off.
Greg Davis: Okay.
Aaron Hinde: Yeah.
Greg Davis: And are you juggling fire sticks and cans of drink? Or how did that work?
Aaron Hinde: I have in fact done some Fire Poi myself several times, but on that occasion we were actually getting cans in hands as other people were performing.
Greg Davis: You're a master of the shiny object. You've got the fire dancer at the rave, and you've got the hot chick at the golf course. What did you have at the CrossFit? Was there ever a person at the CrossFit events? Or was that just you? You were just the in-shape CrossFit dudes, basically?
Aaron Hinde: Exactly.
Greg Davis: Okay.
Aaron Hinde: If you think about it, what most companies do, Greg, is they're going to go, "Okay, I just closed Safeway, so I'm going to go to the grocery store and set up a demo." And maybe one out of 20 people who come by that table are actually part of your core demographic, okay? But if I go to a CrossFit competition, 100% of the people there are part of my core demographic with FitAid. If I go to a festival, 100% are part of that core demographic for PartyAid, and at a golf tournament or a golf show, 100% are part of the core demographic of GolferAid. So, again, being laser focused where we know our products are going to resonate, versus what most people do is like, "Oh, I want to be on the shelf at 7-11 or Safeway," and get lost in the sea of beverages where people don't know you from Adam and quite frankly don't give a shit about you. And you're not even hitting your target demographic.
Greg Davis: You know, a lot you talk about ... I think Dan Kennedy you mentioned. At some of the other seminars they'll talk about finding your market. But you've taken it a step further in my mind to say, "Okay, I'm going to do this one thing for this one group in this type of event, and it's going to be appealing because of this."
Aaron Hinde: Yeah, and that's where all that criticism of being way too niche played to our advantage, you know? Because we were a product made for that community. We came from that community. It resonated with that community. And we were able to get traction in that community. And since then, I can't tell you how many brands have tried to enter the CrossFit space and completely fail, including some of the biggest brands out there, you know? And because they're just not part of that community. And people that are part of a community can smell you out instantly if you're not ... you don't come from within.
Greg Davis: So, as we enter the We generation, we're actually in it. We've been in it for a while, back in the We again, certainly something to think about from a marketing and sales standpoint, to look for a very specific community with a product that fits for them. There may be opportunities in a number of different areas besides the supplement beverages. So, what I do want to know though is, has your company gone full circle in some way to where you're cross promoting or using this wider customer base to appeal to multiple products in some way? And how did you make that transition?
Aaron Hinde: Yeah, great question. And that transition happened very organically. And when we saw it happening ... because what we noticed is, look, I'm a fitness guy, but I also ... I did 52 flights last year, so I'm a travel guy too. And guess what? I need focus, especially after lunch when I'm feeling kind of that post-lunch fatigue. And so, what we saw with the communities is there was just organic natural crossover that was occurring, especially as we increased our skew count to what it is today. And that played hugely to our advantage because now when we roll out and we're in all the Whole Foods now, and all the Sprouts and Vitamin Shops. So, you get a CrossFitter that goes into Whole Foods and they see FITAID that they know and love and have been consuming for years, and they see a FocusAid can, like, "Oh, what's this all about? FocusAid." They pick it up, they see it as a difference whole food profile. They're going to give that trial because they already have affinity for one brand. So, by going deep in these niche communities, we've created these tribes that now have an affinity for not just the golf or the fit, but they have an affinity for the AID, which we're now putting on different skews and different supplement profiles.
Greg Davis: So, at what point did that customer kind of know? Did they recognize, oh the golfer goes to the crossfit gym also and says, "Oh, is that the same company?" Did they have to figure that out themselves because you weren't online initially?
Aaron Hinde: Yeah, they had to figure it out. They had to figure it out.
Greg Davis: Maybe that mystery helped.
Aaron Hinde: Yeah, we never did a traditional show. We never did like any type of an event where we were showcasing every single skew until last year. That was the first year. We never cross pollinated. Golf show would be GolferAid only, and fitness show, FitAid only. And any type of festival, PartyAid only. It wasn't until last year, until we started doing a little bit more broad shows and showcasing multiple skews and stuff, but we resisted that for a long, long time. And I think the takeaway, the more that people can go deep and not chase the shiny object to go wide with "opportunities" because these opportunities can sink you just as quickly as they can make you.
Greg Davis: What store did you get into first where you were showing all the brands? And how did you penetrate the stores?
Aaron Hinde: Another great question. I mean, the first show that we did was called Expo West, and that's like the big natural products expo. That was the first time we exhibited all the skews together. The first stores that we got into from a traditional standpoint, our very first retailer was actually H-E-B. And I think right around the same time we got Earth Fare, which is a natural foods store, a Whole Foods competitor on the East Coast. Why did we land those accounts? Because decision makers in those accounts were CrossFitters.
Greg Davis: Yeah, because no offense to H-E-B, but as far as their niche, they're a good grocery store, but they're not designed to be a Whole Foods or a health store, per se. They're a broad range grocery store chain with low prices is what they promise and deliver, I guess. So, you definitely had some other sort of connection, it sounds like. That's great. And that's who was first. And they kind of helped you bring those skews to that store. So, what about the expansion to the other stores, then? Did you have some help after you got venture money? Or what happened next?
Aaron Hinde: Yeah. I mean, the whole sales team consisted of me for five years. We didn't have any sales people. We didn't have any feet on the street. People were amazed within the industry, like, "What? You're in these accounts? You're getting this kind of revenue? What's your sales team? Oh, sales team of one?" You know?
Greg Davis: Yep. Yep.
Aaron Hinde: It was so against the conventional model. Once our private equity partner, KarpReilly, came on board, we knew that, okay, this ecom business is great, but we want to be the next billion dollar beverage brand. We need to play in both worlds. We need to play in brick and mortar and ecom. And so, that required taking some of that capital and really beefing up the sales team with relationships and feet on the street. And now we did have a couple of retailers, like H-E-B and Earth Fare and Vitamin Shop to point to, to show that, look, we can sell online, but we also can sell on brick and mortar. And taking that sell story and getting out there and meeting with buyers and spreading the word. And we've just been on fire over the last 12 months on closing new retailers and new accounts from Safeway, to Whole Foods, to Sprouts, and so on and so forth.
Greg Davis: So, how many sales people do you have now, by the way?
Aaron Hinde: Right now, let me think. We've probably got 15, 16 on the sales side. Maybe a little bit ... probably close to 20.
Greg Davis: Okay. And so, for yourself, and this has been within the course of a year. Did you have a consultant sort of involved in building up the sales team? Or what sort of challenges did you face going from the expectation of an owner who has a way of doing things to ... for everyone to be at the same level?
Aaron Hinde: Yeah, I mean, we're huge on culture. Our retention is extremely strong. So, our hiring process and our onboarding process, I think, are pretty special and unique. And just how we treat our people, from paying a living wage to healthcare and 401ks to every single person all the way down to the warehouse has ownership, a stake in this company. So, we're able to attract the right people. But I think the universe was conspiring. I was on a plane with my business partner, Orion, to the Natural Foods Show, and low and behold, an old high school buddy was sitting on the plane next to us that I hadn't seen in years, and he was working as a director for Vita Coco. And we had zero experience in the traditional realm. And so, we just started asking him questions about margins and distribution and so on and so forth. And met his buddy at the ... working the Vita Coco booth, and hopefully there's not too many Vita Coco people listening, but we've, I think, recruited probably a dozen people over from that company to work for LIFEAID and help build out our sales team.
Greg Davis: Wow, that's how it happens sometimes. So, that definitely worked. So, you found people from the industry that were committed to the industry in some way, not just sales people that weren't, I guess. That was important to you.
Aaron Hinde: Yeah, I mean, in this industry, having beverage experience does help. It's not that you couldn't be trained or taught, but you know, relationships and just knowing the intricacies of this industry sets you ahead probably at least six months to a year compared to just hiring somebody and training them up. So, we have those too. We have people that had no experience that we've integrated and trained up, and they're doing great. But we've also had people with experience. It's always a balance trying to find people that have still the fire in the belly, that aren't too jaded from working for the big companies, that don't mind working for a scrappy entrepreneurial startup that's doing more with less, and has a different way of doing things.
Greg Davis: So, you believe at some stage you might need a few of the experienced people, but you want to embed your own culture. And you get to enough critical mass, at least I think so, to where you can then impart that methodology and culture onto people that are newer to sales or newer to the industry.
Aaron Hinde: Yeah, absolutely. Absolutely. I mean, when we bring on a round of new hires ... we just hired, I think, a month ago. We brought on, I think, nine people. And we brought them all into the office for a three day intensive, met with the entire team. We all workout together in our gym here. We're going out to dinner at night. Everybody on our team from team members, employees, to all the athletes and ambassadors that we support are true brand advocates, you know? We utilize our own list for hiring. So, we'll send out an email blast to 120,000 people saying LIFEAID is hiring. And we're fortunate enough, we'll get over 1,000 applicants for one position. So, we get to that opportunity to filter through 1,000 current brand advocates to find those diamonds that may have some beverage and sales experience already or great sales experience but need a little TLC over here, and be able to nurture those type of people into our system.
Greg Davis: Something else I noticed on your profile that FitAid sponsored Dan Bailey preps for the 2014 games, which seems pretty awesome, by the way. We're talking about the 2014 Olympic games if anyone doesn't know who that is, unless I missed my Dan and Dave ... is that the Dan and Dave videos from way back when? Or no? Same group? Or no?
Aaron Hinde: No. It's a different group actually. Our athlete right now that's getting a ton of traction is Sara Sigmundsdóttir. She's an Icelandic female who is probably the favorite to win the CrossFit games this year, who is an incredible athlete, came from a very interesting background of being very heavyset as a kid and not athletic. And has just transformed her life and-
Greg Davis: Well, what's next for LIFEAID Beverage Company? What's on the horizon?
Aaron Hinde: Well, we're making the transition from ecom to brick and mortar, so you're going to see us rolling out into more and more accounts, five divisions of Safeway. I mentioned all the Whole Foods, Sprouts, Vitamin Shop, we've got line extensions going in in August. And so, look for us at a grocery store near you. Or if we're not in the local grocery store, check us out online or on Amazon, direct on the website, especially if you're looking to clean up the diet, change up your habits and move things in the right direction from a health perspective.
Greg Davis: The website is lifeaidbevco, B-E-V-co.com. Any other sort of methods that people use to get a hold of you?
Aaron Hinde: Social media. We're one of the top 10 beverage companies on social. All of our skus have their own social accounts, our largest is FitAid. So, if you're on Instagram checkout @fitaid, and a lot of great content there. We do a lot of value added content, so it's not just a pitch platform, it's a lot of cool engaging content. So, if you're into fitness, check that out. If you're into travel, check out the TRAVELAID Instagram. Focus, FocusAid, etc.
Greg Davis: Well, Aaron, thanks again for being on the show. Aaron Hinde of LIFEAID Beverage Company.
Aaron Hinde: Thank, Greg, appreciate it. It was fun.
Greg Davis: Yeah, and that was Challenge Assumptions.
Speaker 1: As always, the Challenge Assumptions Podcast has been brought to you by Dolphin Consulting. Whether you need to improve your operations efficiency or grow your revenue, visit dolphinconsulting.org today. Please don't forget to subscribe to the show via iTunes, and like us on Facebook. Until next time remember to challenge assumptions.
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