How Olipop’s founders turned $100K funding into ‘more healthy’ soda model
Most individuals solely get up in the course of the evening to a noise outdoors or a foul dream — however at 3 a.m., Ben Goodwin thinks about soda.
Goodwin is the CEO and formulator of Olipop, a “more healthy” prebiotic soda on monitor to surpass $200 million in gross sales by the tip of the 12 months.
He and his co-founder, David Lester, 42, launched Olipop in 2018 with the purpose of making a product that will “assist push folks’s diets in a more healthy path … however does not require a large habits shift from them,” Goodwin, 38, tells CNBC Make It.
In its first 12 months of enterprise, Olipop made $852,000 in gross income promoting to 40 grocery shops in Northern California. Goodwin and Lester packed and delivered the cans of Olipop themselves, a method Goodwin perfected in a makeshift lab at his home in Santa Cruz.
Since then, Olipop has grown right into a nationwide model and a favourite amongst Gen Z and millennial shoppers, who gravitate to the model’s eye-catching packaging and nostalgia-inducing flavors like root beer and classic cola — a lot of which Goodwin comes up with within the early hours of the morning.
For instance: Olipop’s banana cream taste occurred “as I used to be laying in mattress one evening and requested myself, ‘What is the weirdest, hardest taste I might pull off?'” Goodwin says.
Olipop’s flavors would possibly mimic the style of different beloved soda, however the place it stands out is its elements: Many fashionable soda manufacturers can pack about 39 grams of sugar in a single can, however Olipop slashes that quantity all the way down to 2-5 grams, whereas additionally offering 9 grams of fiber. Every can price about $2.49.
It is no coincidence that Olipop’s rise has coincided with the general public’s rising curiosity in intestine well being. Between December 2022 and January 2023, because the hashtag #guttok surpassed 700 million views on TikTok, Google searches for “Olipop” spiked. Throughout the first six months of 2023, Olipop hit $100 million in gross income.
Here is how Goodwin and Lester turned a $100,000 funding right into a multimillion-dollar enterprise able to promoting $20 million price of soda a month.
A school dropout meets a company quitter
Goodwin and Lester met at a crossroads of their lives, when every felt misplaced of their careers.
In 2005, Goodwin dropped out of the College of California Santa Cruz, the place he studied environmental science, to assist one in every of his mates begin a kombucha firm.
“I knew that if I did end my stint in school, I would be saddled with fairly a little bit of debt,” says Goodwin. “And I truly learn the e-book by the Clif Bar founder [Gary Erickson] on the founding of Clif Bar, and it simply dawned on me that I might go be a meals or beverage entrepreneur.”
Studying the way to brew kombucha sparked Goodwin’s curiosity about intestine well being and all the fruits, herbs and different elements that may assist enhance it.
“I discovered that we truly produce plenty of neurotransmitters and hormones in our intestine microbiome, and so they have an outsized impression on how we predict and really feel,” Goodwin recollects. “The sunshine bulb went off for me.”
A number of research have proven that your intestine performs a pivotal function in your total well-being, combating pathogens, producing vitamin Ok and different essential chemical compounds, and will affect your immune system and coronary heart well being.
He left the kombucha firm in 2008 with hopes of making his personal drink, one that will be scrumptious and gut-healthy — however this time, it could be a soda.
Goodwin demonstrates the formulation course of for Olipop at a makeshift lab in San Francisco.
Photograph: Jes Gallegos for CNBC Make It
“I grew up ingesting soda, it is one of the ubiquitous American drinks of all time,” says Goodwin. “I believed, If you happen to actually need to create a wholesome product that is accessible and may break by means of at mass scale, soda is the right automobile.”
Goodwin spent the subsequent 4 years in a makeshift lab he arrange in a buddy’s yard alongside Jim Ilehder, a microbiologist he employed to assist with formulation. On the similar time, Goodwin balanced a number of freelance jobs, together with product growth, net design and digital advertising and marketing for different companies, placing no matter cash he made towards the experiments.
“I feel I spent about $300,000 of my financial savings on that undertaking,” says Goodwin. “We made our personal tools from elements at Ace {Hardware} and an aquarium retailer downtown to economize.”
By 2012, Goodwin had created the fizzy, fermented soda of his goals. On the similar time, 6,000 miles away, Lester give up his company job at Diageo, a big alcohol distributor, and determined to maneuver from São Paulo to San Francisco to develop into a full-time entrepreneur.
Goodwin and Lester have lunch on the espresso store they first met at in Palo Alto.
Photograph: Jes Gallegos for CNBC Make It
It was truly Lester’s outdated boss at Diageo who launched the pair.
“She knew Ben was on the lookout for a enterprise companion and thought the 2 of us would work properly collectively,” says Lester.
They agreed to fulfill at a espresso store in Palo Alto in early 2013 to debate a possible partnership in Ben’s probiotic soda firm – Obi.
“I bear in mind Ben turned up with this bag of sodas that he decanted into these stunning glass champagne bottles,” says Lester. “And he simply blew my thoughts together with his data of the intestine microbiome, probiotics, and his ardour for what he was doing … it was a really totally different kind of dialog than I would be having in my company profession.”
Provides Goodwin: “It was clear to me as soon as we met that David was this very clever, earnest, well-intentioned individual, and we developed plenty of belief for one another actually rapidly.”
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Earlier than Olipop, there was Obi
Two weeks after their preliminary assembly, they grew to become companions. Nevertheless, Obi did not see the success and traction they’d hoped for, and in 2016, Goodwin and Lester bought Obi. Goodwin and Lester declined to share how a lot Obi bought for, and to whom.
Neither might level to a selected purpose as to why Obi failed — however each Lester and Goodwin agreed that they weren’t able to give up working collectively.
Ben Goodwin and David Lester grew to become companions in Goodwin’s probiotic soda firm, Obi, in 2013.
Courtesy of Ben Goodwin and David Lester
“We bought to the opposite facet of Obi and realized that we hadn’t labored that properly collectively, however equally essential, we hadn’t killed one another. We nonetheless felt very motivated to try to determine it out,” says Lester. “To me, it could’ve been a wasted expertise if we did not then go on and put into observe what we discovered.”
Goodwin went again to work within the lab — one he arrange in his Santa Cruz dwelling — this time specializing in prebiotics versus probiotics, a choice that was buoyed by new analysis on the advantages of prebiotics for the intestine and the mind. Prebiotics are non-digestible fibers that stimulate the expansion of fine micro organism within the intestine, whereas probiotics are dwell micro organism present in some meals and dietary supplements.
Getting Olipop off the bottom
In 2018, Goodwin completed the brand new method for Olipop, a mix of botanicals, plant fibers and prebiotics together with marshmallow root, nopal cactus and Jerusalem artichoke.
Olipop’s title was impressed by a bunch of prebiotic fibers, oligosaccharides, that Goodwin found throughout this experimental section — Lester steered they mix its shortened title, “oli” with “pop,” a standard nickname for soda within the U.S. Midwest.
The pair pooled $100,000 they acquired from promoting Obi to get Olipop’s first cans on cabinets.
Goodwin and Lester packed and delivered the primary cans of Olipop themselves to 40 grocery shops in Northern California.
Photograph: Olipop
Firstly of 2019, Olipop launched in three flavors — ginger lemon, strawberry vanilla and cinnamon cola — throughout 40 totally different well being meals shops in Northern California. That very same 12 months, they surpassed $850,000 in income and expanded to nationwide retailers like Goal and Walmart.
Lester and Goodwin raised $2.5 million in a seed funding spherical in 2019 as properly, which went to constructing stock, scaling up their retail presence, testing new advertising and marketing views and hiring new staff.
Olipop’s workforce is all distant, and so they now have over 100 staff. Goodwin begins the formulation course of at his home in Washington, then the soda is shipped and completed at a lab in Palo Alto.
Hanging soda gold
The extra fashionable Olipop grew to become, the extra time Goodwin wished to spend in his lab, creating new flavors to launch. Between 2022 and 2023, he concocted flavors like tropical punch, impressed by the tangy style of Hawaiian Punch, and watermelon lime, which he describes as “a watermelon Jolly Rancher sweet smushed right into a watermelon agua fresca drink.”
2022 was a giant 12 months for Olipop: It kicked off with a sequence B funding spherical that raised $39.7 million {dollars}, with huge names like Gwyneth Paltrow, Mindy Kaling, and the Jonas Brothers (Joe, Nick and Kevin) on the listing of buyers. It ended the 12 months with $73.4 million in gross income.
Lester and Goodwin will not publicly disclose their pay however say they’ve paid themselves “low to reasonable” salaries for the reason that firm has grown, and principally lived off their financial savings in its early years.
Olipop has gone from promoting in solely 40 shops to over 23,000 tales within the U.S., and it’s on monitor to promote in 30,000 shops by the tip of the 12 months, an organization spokesperson tells CNBC Make It. Presently, the corporate doesn’t ship internationally. Most impressively, in 2023, Olipop has seen not less than $20 million in gross sales every month.
Wanting forward
For Goodwin, probably the most surreal profession second got here earlier this 12 months when Olipop dethroned A&W because the best-selling root beer within the U.S.
“To get to that time of belief together with your buyer the place they’re keen to swap out a model that is been with them since childhood to your product … that is big to me,” he says.
Olipop’s workforce is all distant, and so they now have over 100 staff.
Photograph: Olipop
Lester and Goodwin say they have already got concepts for dozens of extra iterations of wholesome soda, if the demand is there.
“It is extraordinarily tempting to spend all of my time holed up in my lab experimenting with new flavors, however for higher or worse, we do have an organization to run,” Goodwin jokes.
Provides Lester: “I’ve no crystal ball that may inform us what occurs subsequent, however what we do know is that we’re filling a robust client want, and we’re in an enormous class. We need to take this product properly past $1 billion [in revenue]. I feel the potential is there, however we even have the humility to know that is actually troublesome to attain.”
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