Advice Line with Peter Rahal of RXBAR

Summary

Episode Summary: "Advice Line with Peter Rahal of RXBAR"

Title: Advice Line with Peter Rahal of RXBAR
Host: Guy Raz
Guest Expert: Peter Rahal, Co-Founder of RXBAR and Founder of David Bars
Release Date: April 10, 2025

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Introduction

In this engaging episode of How I Built This with Guy Raz, host Guy Raz teams up with Peter Rahal, the entrepreneurial mind behind RXBAR and David Bars, to provide invaluable advice to budding entrepreneurs facing various business challenges. Throughout the episode, Rahal leverages his extensive experience in building successful brands to guide callers through issues ranging from scaling operations to refining marketing strategies.

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Caller 1: April Wachtel of Inner Wealth Supplements

Timestamp: [08:05 - 18:37]

Background:
April Wachtel, hailing from Calgary, Alberta, Canada, is the founder of Inner Wealth Supplements—a pioneering supplement line dedicated to alleviating PMS and perimenopause symptoms while simultaneously increasing lean muscle mass in women. Her products, launched in June 2023, come in powdered form, designed to be mixed with water for ease of use.

Challenges:
April reached a critical growth ceiling with her organic marketing efforts, noting a substantial increase in sales but facing limitations in expanding her reach without investing in online advertising. Her primary concerns revolved around determining appropriate advertising spend, setting realistic ROI expectations, and selecting the right advertising channels to scale effectively.

Advice and Insights:
Peter Rahal, alongside co-host Christy Stewart, provided strategic guidance:

• Prioritize High-Intent Channels: Focus on platforms like Meta, Google, and Amazon that have proven effective for scaling. Start with a modest budget (e.g., $200-$250 daily) to gather data and assess performance before scaling.

  "You want to keep your acquisition costs below the gross margin per order. You want to be first order profitable."
  — Christy Stewart [05:12]

• Ensure Unit Economics Work: Emphasize profitability on the first order to ensure sustainable growth.

• Leverage Product-Market Fit: Encourage focusing on building demand through relationships and word-of-mouth rather than solely relying on advertising.

April acknowledged the value of these insights, particularly the emphasis on optimizing high-intent advertising channels and maintaining profitability.

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Caller 2: Eric Orkiski of Squat Wedgies

Timestamp: [22:51 - 31:57]

Background:
Eric Orkiski from Los Angeles, California, is the founder of Squat Wedgies, a company specializing in exercise products that enhance lower body workouts. Their flagship products include squat wedges and slant boards designed to improve squatting mechanics, increase workout efficiency, and target specific muscle groups.

Challenges:
Eric grapples with balancing sales channels, particularly the tension between Amazon and his proprietary Shopify website. While Amazon offers substantial revenue and growth potential, it comes with lower margins and restrictions on customer engagement. Conversely, selling through his own website allows for better customer relationships and upselling opportunities but presents logistical and financial hurdles, especially concerning inventory management and financing.

Advice and Insights:
Peter Rahal and Christy Stewart delved into strategies to optimize multi-channel sales:

• Channel Optimization: Rather than choosing between Amazon and a proprietary website, aim to optimize both. Use Amazon for volume while differentiating the Shopify channel by offering unique bundles, promotions, or educational content to add value.

  "Amazon's everything. It's such a powerful, powerful e-commerce platform. You want to lean into it and you don't want to run away from it."
  — Christy Stewart [28:20]

• Focus on Profitable Channels: Given Eric's inventory constraints and high Amazon fees, it may be prudent to prioritize more profitable channels initially, ensuring sustainable growth without overextending resources.

• Leverage Influencer Relationships: Building relationships with influencers and trusted voices in the fitness space can drive organic growth and brand loyalty, reducing reliance on cost-heavy advertising.

Eric expressed appreciation for the balanced approach, recognizing the need to manage inventory effectively while exploring the benefits of both sales channels.

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Caller 3: April Wachtel of Cheeky Cocktails

Timestamp: [34:39 - 49:50]

Background:
April Wachtel, based in Brooklyn, New York, is the founder of Cheeky Cocktails—a line of premium cocktail mixers designed to simplify the creation of labor-intensive cocktails. Her mixers are shelf-stable, non-alcoholic products that cater to both home enthusiasts and professional bartenders, allowing for consistent and high-quality drink preparations.

Challenges:
April faces difficulties in encapsulating Cheeky Cocktails' unique selling propositions (USPs) due to the diverse target audience, including both trade professionals and consumers. The primary issue lies in crafting messaging that effectively communicates the brand's differentiation without diluting its core values, especially in a saturated market.

Advice and Insights:
Peter Rahal and Christy Stewart offered targeted strategies to refine branding and messaging:

• Clarify Positioning: Determine whether to prioritize on-premise (trade professionals) or direct-to-consumer channels. Focusing on one allows for more coherent messaging and stronger market presence.

  "Your messaging should align with your strategy."
  — Christy Stewart [43:08]

• Simplify Communication: Develop a clear, concise value proposition that resonates with the primary target audience. For Cheeky Cocktails, emphasizing the professional-grade quality and consistency can appeal to both bartenders and home users seeking premium mixers.

• Leverage Unique Ingredients: Highlighting specific aspects, such as sourcing premium coffee for espresso martinis, can differentiate Cheeky Cocktails from competitors and attract cocktail enthusiasts seeking authenticity.

  "How can you convey that people use words like artisanal, which is overused, or, you know, premium. But there's something around that idea that I think can really pop because the fact that you have sourced the coffee that you're using in your syrup mix is really interesting to me."
  — Peter Rahal [41:10]

April took these recommendations to heart, recognizing the importance of strategic focus and effective communication in scaling her brand without compromising its essence.

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Insights and Key Takeaways

1. Optimize High-Intent Advertising Channels: Prioritize platforms where potential customers are actively seeking products, ensuring efficient use of advertising budgets.

2. Balance Multi-Channel Sales Strategically: Utilize major platforms like Amazon for volume while enhancing proprietary channels with added value to foster customer loyalty and higher margins.

3. Clarify and Simplify Brand Messaging: Ensure that the brand's unique value propositions are communicated clearly and effectively to the intended audience, avoiding overcomplication or dilution.

4. Leverage Influencer and Organic Growth: Building relationships with industry influencers and fostering word-of-mouth can significantly enhance brand reach and credibility without heavy reliance on advertising.

5. Focus on Product-Market Fit and Customer Relationships: Understanding and aligning with the target market's needs ensures sustainable growth and brand loyalty.

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Notable Quotes with Timestamps

• "You want to keep your acquisition costs below the gross margin per order. You want to be first order profitable."
  — Christy Stewart [05:12]

• "Amazon's everything. It's such a powerful, powerful e-commerce platform. You want to lean into it and you don't want to run away from it."
  — Christy Stewart [28:20]

• "Your messaging should align with your strategy."
  — Christy Stewart [43:08]

• "How can you convey that people use words like artisanal, which is overused, or, you know, premium. But there's something around that idea that I think can really pop because the fact that you have sourced the coffee that you're using in your syrup mix is really interesting to me."
  — Peter Rahal [41:10]

• "Removing yourself of pride is super important. And instead of like being defensive on criticism, you should act, actually seek criticism. It's about finding what's wrong and fixing it."
  — Christy Stewart [47:37]

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Conclusion

This episode of How I Built This with Guy Raz shines a light on the nuanced challenges entrepreneurs face as they scale their businesses. Through the insightful guidance of Peter Rahal and Christy Stewart, callers April Wachtel and Eric Orkiski received actionable strategies to navigate their respective growth hurdles. The discussions underscore the importance of strategic channel optimization, clear brand messaging, and fostering authentic customer relationships in building enduring and successful brands.

Transcript

[Guy Raz]

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[Peter Rahal]

Hello and welcome to the advice line.

[Guy Raz]

On How I Built this Lab.

[Peter Rahal]

I'm Guy Raz.

[Guy Raz]

This is the place where we help.

[Peter Rahal]

Try to solve your business challenges. Each week I'm joined by a legendary.

[Guy Raz]

Founder, a former guest on the show.

[Peter Rahal]

Who will help me try to help you.

[Guy Raz]

And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Send us a 1 minute message that.

[Peter Rahal]

Tells us about your business and the.

[Guy Raz]

Issues or questions that you'd like help with.

[Peter Rahal]

You can also send us a voice [e-mail] and make sure to tell us.

[Guy Raz]

How to reach you.

[Peter Rahal]

And also, don't forget to sign up for my newsletter. It's full of insights and ideas from.

[Guy Raz]

The world's greatest entreprene.

[Peter Rahal]

You can sign up for [e-mail] and we'll put all this info in the podcast description. All right, let's get to it. Joining me this week is Peter Rahal.

[Guy Raz]

He's the co founder of the energy.

[Peter Rahal]

Bar brand RXBar and a new protein bar called David. Peter, it's great to have you back on the show.

[Christy Stewart]

Great to be here, guy. Thanks for having me.

[Peter Rahal]

So of course you were a guest on the show back in 2018.

[Guy Raz]

We did a live taping in Chicago.

[Peter Rahal]

Super fun. And if any of you missed that episode, the story of our expo, you've got to go back and check it out. Great story. And we'll put a link in the episode description. Basically, Peter, you started rxbar back in 2013 with your friend Jared Smith, and the bars had really simple ingredients such as dates and nuts and like egg whites. And as the story goes, you sold the brand to Kellogg's in 2017 for over $600 million. An amazing story.

[Christy Stewart]

Thank you.

[Peter Rahal]

But before, Peter, before we get to some of the collar sales, I was hoping to ask you just a couple questions about this story is okay?

[Christy Stewart]

Yeah, of course.

[Peter Rahal]

So, all right, so in 2015, and we talked about this a little bit on the episode, you completely, like, overhauled the packaging. Right. Which was a. I think it was a game changer. I mean, and a lot of brands kind of have gone on to copy it. And basically you focused on just like four things. It was like four dates, two eggs, six pecans, or whatever it was. And no bs. Tell me about the decision to do that and how that actually transformed the product.

[Christy Stewart]

Yeah, so we had a. We had a marketing problem. We were really successful in our niche. CrossFit gyms, those were our early adopters. So they totally understood the product. When we began to expand outside of that market into say, conventional grocery or convenience store, it didn't sell, it didn't work. And, you know, it's a lesson in simplicity. So when you designed a product like ours, you could claim gluten free, dairy free, soy free. And so sometimes you kind of think more is the merrier and like, you just want to like, lay out all your differentiations and communicate it. And actually it's confusing.

[Peter Rahal]

Right, because on the package you could have been like Paleo friendly. But that doesn't.

[Guy Raz]

People who are Paleo knew that.

[Peter Rahal]

They would know that it was paleo friendly.

[Christy Stewart]

Yeah, exactly. And a couple insights were like in the bar market in general, if you just study and observe the shopper, you'll see they reach out, grab the product and immediately flip it over. And so that was the real differentiation. It wasn't how much protein we had, it was that we were clean, minimal ingredient product. And so that's what we led with.

[Eric Orkiski]

Right.

[Christy Stewart]

But we fundamentally knew that we had a communication problem and we need to really do something more bold to stand out in the competitive market.

[Peter Rahal]

Yeah. And it was risky. Right. It's not like you and your co founder sat there and like we have all these, this data and we know this is going to work like it really was risky. It could have failed.

[Christy Stewart]

Yeah. I mean people thought we were a new company.

[Peter Rahal]

When you put them out. Wow.

[Christy Stewart]

Yeah, yeah. They're like, wait, what happened?

[Peter Rahal]

Yeah, it's an amazing story and really just people who are interested in branding, marketing and packaging design. This is like a great case study. Peter. Your non compete eventually ended with Kellogg's and then you became free to reenter the protein bar space. And you're doing it. I've tried them. They're called David protein bars. You launched it I think last year. And these are bars high in protein, 28 grams of protein, a bunch of different flavors. Tell me about the decision to re enter the market. Why? I mean, obviously you've got expertise, but tell me about, you know, starting a brand new bar brand, especially in such a super saturated category.

[Christy Stewart]

Yeah. So I basically saw a pretty big gap in the market to make sort of the optimal protein bar, which is if you're going to design a protein bar from first principles, you want as much protein as possible with as little everything else.

[Peter Rahal]

And I guess the problem or maybe the opportunity in protein is a lot of protein bars are just stacked with sugar or carbs.

[Christy Stewart]

Yeah, exactly. And you know, like protein's pretty. It's like unequivocal. The most important macronutrients, not just for bodybuilders anymore, it's for humans. And so you just a delivery system of protein that tastes delicious.

[Peter Rahal]

One of the things that, I mean, obviously this is a different playbook now because you've been through Rxbar and you're better resource now to start. David Barr. One of the things that's interesting about it, I think it's only direct to consumer. Right. You're not selling in stores, mainly.

[Christy Stewart]

We're just starting to. But yeah, most predominantly we're direct to consumer in Amazon. Yeah, we wanted to start direct to consumer because you can service people directly. You don't have to plan your innovation around a retailer.

[Peter Rahal]

Yeah, super interesting. A lot to talk about and I think probably a lot that will be useful for some of the callers. Why don't we bring in our first caller?

[Christy Stewart]

Great.

[Peter Rahal]

Perfect. Hello and welcome to the advice line. You are on with and Peter Rahal. Please tell us your name, where you're calling from, and a little bit about your business.

[April Wachtel]

Hi, Guy. Hi, Peter. My name is Christy Stewart and I'm from Calgary, Alberta, Canada, and I'm the founder of Inner Wealth Supplements. We are the first supplement line that's dedicated to both alleviating PMS and perimenopause symptoms and increasing lean muscle mass in women.

[Peter Rahal]

Well, thank you for calling in and welcome to the show. So, Christy, tell me a little bit about, are these pills, are they. What's a form of the supplement?

[April Wachtel]

Yeah, so they're powdered supplements. You just put it in your water, shake it up and drink it.

[Peter Rahal]

And tell me a bit about what, what they are. Like what, what do they offer?

[April Wachtel]

Absolutely. So one is a morning, one is an evening, and the morning one has to do with energy and vitality. So it helps provide sustained energy, adrenal support, helps reduce hot flashes and brain fog, increases libido and helps with bone health. And then the evening formula, it's called Sleep Cycle. So it contains ingredients that help with your sleep and help bring the ratio of estrogen to progesterone back in context to reduce the symptoms that women typically get in PMS and perimenopause.

[Peter Rahal]

Yep. And so these are basically, you're using different formulations of vitamins, minerals, other sort of other ingredients that I'm assuming is a proprietary blend that you came up with.

[April Wachtel]

Absolutely. My background is in molecular biology and biochemistry. And so I came up with the formula. I submitted it to Health Canada. Canada and the US have very different supplement regulations. It's very, very stringent and strict in Canada. So submitted it to Health Canada, got the approval for the claims I wanted to make, found a manufacturer, and launched in June 2023.

[Peter Rahal]

Awesome. How is the business doing so far?

[April Wachtel]

Phenomenal. So in our first full year of sales, we hit $500,000 in sales and just came off an incredible month in January.

[Peter Rahal]

And tell me, how are you? How are you getting. I mean, where are you selling this? All direct to consumer.

[April Wachtel]

It's all direct to consumer. So I, I've got my, my Shopify site like everybody else, and I post on my Instagram. I don't have very many followers, but we've grown through just organic social media and word of mouth. And I haven't invested into advertising at all yet.

[Peter Rahal]

Wow, this is a huge and exciting and growing category. I did a. I actually led a panel at ces, a consumer electronics show in Las Vegas for aarp, the American association of Retired Persons, on this very issue and this very topic. And all this cool technology that's being developed around perimenopause because it is a massive exploding business opportunity that has basically been ignored.

[April Wachtel]

Well, if you think about it, every single woman on the world, if she lives to a certain age, is going to go through it. And we as women, you know, all the research is done in man. Everything is done in men. And finally, women have just. I don't know what, what has happened in the Zeitgeist, but it's finally come to fruition through some really great knowledgeable voices on social media. And the reason I got into it was I started. I kind of hit that age. I'm 44. When I hit 40, kind of everything went off the rail. And I used to own a bunch of fitness studios. And so I worked with a lot of clients on nutrition and fitness. And everybody started saying the same thing that was, you know, I'm eating how I've always eaten, I'm doing all the workouts I've always done, and I'm starting to gain weight and realizing that had to do with our hormones. So I dug into the research. I became a certified menopause support practitioner and just realized that by taking in certain vitamins, minerals, micronutrients can have a positive impact on the way your body metabolizes, detoxifies and excretes your hormones. And if you optimize those functions, all your symptoms go away.

[Peter Rahal]

And increasingly, we're hearing that experts around perimenopause menopause are saying women need to increase their protein intake. So, Peter, we'll get to you on that in a sec. Before we bring Peter and Christy, tell us what your question is for us.

[April Wachtel]

Absolutely. So I think I've reached my ceiling of organic growth and I'm ready to scale. And for this time period, I believe that online advertising is the best route for me to scale. But if I'm going to scale online, you know, what are the benchmarks? What's an appropriate spend? What is an expectation for roi? What do you ask agencies, like just all Kind of the general, you know, I know. Peter, you're advertising online now with your new company. So what is your blueprint?

[Christy Stewart]

Yeah, I'll answer your question very directly. How I recommend you think about it. So one, you want to prioritize like high intent channels. So meta, Google and Amazon, those have been the most effective. You can scale in them. And then I would start with those like a very low budget, maybe like $200 a day, $250 a day. And as you're, you're, you like get some data and figure it out. You can scale but start super small. You want to keep your acquisition costs below the gross margin per order. So you want to be first order profitable. So make sure your unit economics work. That, that's what I would recommend. But and in general with anything, I would just stay really close to it. And so you learn.

[Peter Rahal]

Chrissy, are you in the US Market yet or just in Canada?

[April Wachtel]

I have literally a handful of clients in the U.S. i just figured out how to do really cost effective shipping to the US So I'd love. Yeah, I'm very ready to enter the market there.

[Peter Rahal]

I mean it's a growing. Right. There's a lot of smart entrepreneurs getting into this space.

[April Wachtel]

Absolutely.

[Peter Rahal]

I mean, I think one of the advantages you have is that the Canadian rules are more and more stringent and that means something especially to the kind of consumer that would be interested in this product.

[April Wachtel]

Well, it's interesting that you say that guy, because. Absolutely. So before we can sell in Canada, we have to get rigorous third party testing. Even the claims that we have to say have to be approved by Health Canada and we have to show science to show that. So I think people can have a really good confidence that when you're buying a supplement from Canada that if it's making a claim that it's going to do something, it actually will, otherwise we're not able to sell in Canada.

[Peter Rahal]

Yeah, Peter, you, I mean you really leaned into a tribe with Rxbar Crossfitters, but now there's a new kind of tribe, a much bigger tribe, the protein tribe, and it's a growing tribe of people. Right. And again, I mean especially talking about women, you know, in their mid-40s and over, both women and men, but particularly talking about women now we know that there's increasing evidence that they need to be consuming a lot more protein. How would you sort of suggest Chrissy, how should she be thinking about getting this out there?

[Christy Stewart]

I would say one, you need to get to the US market at some point. It's Just so massive. And then I think if your product's really good, I would just get it into the hands of the right people and I would start small. So whether that's like mom bloggers, like, like find niche groups and get your brand and yourself in front of them and get into these communities. And if you have a good product, people will repeat and then they will, they not only will repeat, they will share about it. So you want like viral word of mouth. That's the best use of time and resources. And then I think like on your product, like the protein thing. So I look at, you know, AG1, so what they did was like an all in one. So if you have an opportunity to do like an all in one with protein.

[Peter Rahal]

Yeah.

[Christy Stewart]

And some of these other benefits, I think that would be a great way because I think with your consumer, they're like facing a problem, you have the solution and if you can make it really, really simple, that's like a very valuable thing. Because if I have to take a protein shake and then I have to take your supplement or other things, that's a lot of work. So streamlining into one thing can be a real value unlock. That could be valuable.

[April Wachtel]

Yeah. So when you said get it into the mommy bloggers, the influential women, would you recommend that we see people first, get that buzz going and then do the advertising? Because I've just. You hear stories that people are pumping money into ads with not a great return because I don't have any brand awareness. So it's like a chicken or the egg. Right. Do you get the brand awareness first through the ads or the influencers?

[Christy Stewart]

Yeah, it's a good question. My bias is use the product and do it more in an organic way and then relying on an ad because like one, you're starting a relationship off in a very generous way. You're introducing yourself. They want to see you have some influence. You know what you're doing, you have credibility. And that's what we did at our ex and that's at David. We're doing it at as well. Like we're sample. We sample like crazy. It's like trial is so important. So that's where I would go versus going straight to advertising yet. And that's the one question I had. You said we've reached our ceiling and I want to go advertising. And like my first thought was like, are you actually, how do you know you're at your ceiling? Like, if you're at your ceiling, what would ads do to change that ceiling?

[April Wachtel]

That's. I guess I meant I'm at my ceiling for, I think, my organic reach on social media. But then as I just said, we had an incredible month in January, like 30% higher than we've ever had. And so that almost defeats that. I'm at my ceiling. Right. So.

[Christy Stewart]

Yeah, yeah, yeah. And I would follow that cohort, like, because if you have product market fit, you know that they should be sharing it. You should see organic growth come from that. But at a high level, I think, like products over ads.

[April Wachtel]

Yeah, that makes sense.

[Peter Rahal]

Christy Stewart, the brand is called Inner Wealth. Thanks so much. Good luck.

[April Wachtel]

Thank you guys very much. Thanks for having me. And thanks, Peter. Thanks, Guy. Guy. I love, I love, I love how I built this. I've listened to every single episode. I've learned so much. And thank you for everything you do for entrepreneurs.

[Peter Rahal]

Thanks so much.

[April Wachtel]

Thank you both. Bye.

[Christy Stewart]

Thank you.

[Peter Rahal]

Yeah, this is such an exciting category. When I did this panel at the Consumer Electronics Show, I mean, there were like all these entrepreneurs working on technology and products for women going through perimenopause and it's such a fascinating area because there's so much opportunity.

[Christy Stewart]

Yeah. It doesn't seem like the market's being addressed.

[Peter Rahal]

It's not. No, not at all. I mean, it's just really starting to explode. It's like where energy bars were in like 2008. Yeah.

[Christy Stewart]

She's in a good place.

[Peter Rahal]

Yeah. Alright, we're going to take a quick break, but we'll be right back with.

[Guy Raz]

Another caller and another round of advice.

[Peter Rahal]

Stay with us. I'm Guy Raz and you're listening to the advice line right here on How I Built this Lab.

[Guy Raz]

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[Peter Rahal]

Welcome back to the Advice Line on How I Built this Lab. I'm Guy Raz and my guest today is Rxbar Co Founder and David Bar founder Peter Rahal. Peter, let's bring in our next caller. Welcome to the Advice Line. You're on with me and Peter Rahal. Hello welcome. Tell us your name, where you're calling from, and a little bit about your product.

[Eric Orkiski]

Hey Guy, I'm Peter. My name's Eric or Kiski. Calling in from Los Angeles, California. I'm the founder of Squat Wedgies. We build exercise products that enhance your lower body workout with our squat wedges and slant boards being our best sellers.

[Guy Raz]

Nice.

[Peter Rahal]

Welcome to the show, Eric. So the wedge is a wedge that you put under your feet for, I'm assuming for squats, right?

[Christy Stewart]

Yeah.

[Eric Orkiski]

So the most common thing you'll use with a squat wedge or a slant board is to elevate the heel or elevate the whole foot to improve your squatting mechanics. Make it easier to squat deeper. Opens up those hips and the ankles. But you can also use it to train your calf muscles from a toes elevated position so your toes go up the ramp instead. There's a lot more uses than just the squats. And that's what we're trying to show people, that they're not just for squatting because our biggest competition is weight plates right now, because people just elevate.

[Peter Rahal]

Oh, you're on weight plates. I got you.

[Eric Orkiski]

Yeah, on a weight plate. Yeah. So we're trying to show people that one. It's way more efficient to use a wedge or a slant board. And you can also do way more other exercises than just squats on them.

[Peter Rahal]

How did you. How did you cut. Tell me about the story, because this is a.

[Guy Raz]

You know, there are competitors here and.

[Peter Rahal]

We'Re going to get into that in a sec. But how did you come up with this business idea?

[Eric Orkiski]

So I've been training for 13 years now. Became a personal trainer at 19 years old. Got my degree in exercise science from East Carolina University. Did the strength and conditioning coach thing. So I've been well versed in fitness. And if you've been in fitness for a while, you've known that there are squat wedges in the market, but no one was ever really making them affordable. A lot of the products were too expensive, too heavy to move around. So in 2021, we launched a Kickstarter to create the first ever wedgie. And, you know, I figured it was a good time to jump into the market and not just build a product, but build a brand around it and hopefully motivate people to exercise in general.

[Peter Rahal]

Awesome.

[Guy Raz]

All right.

[Peter Rahal]

And how did you finance this? Oh, you had the Kickstarter, I should say. Right, you mentioned.

[Eric Orkiski]

So the Kickstarter. We raised about 12,000, 12, 14,000 on the Kickstarter, but I just been self financing it myself. Using a little bit of debt for growth. Not the best strategy.

[Peter Rahal]

So just using your money as a personal trainer to help finance it.

[Eric Orkiski]

Yeah, I'm still working, I still train, so I was able to make good amount of money, then save up from there. And I pretty much just put all that into the business to keep our advertising efforts up and finance all those purchase orders and stuff.

[Peter Rahal]

All right, so you've been. So you've got this product and tell.

[Guy Raz]

Me a little bit about how the.

[Peter Rahal]

Business is doing right now.

[Eric Orkiski]

We've been growing a ton over the last three years, so it's been great to see that.

[Peter Rahal]

Nice.

[Eric Orkiski]

So last year we just had our best year to date. We did 700,000 in revenue. Years before that, we did around 345. And then the year before that we did about 37,000.

[Peter Rahal]

What's your margin on 700,000?

[Eric Orkiski]

So blended it ends up probably being around like probably 33%. That's my part of my question is today is the, you know, 400,000 that was from Amazon, where our margins around like 21%, 18% to 22%. And then the rest of that was on Shopify, which is after advertising efforts that goes down to around like 35 to 45%. Just, just based on returns and website costs and affiliates and all that stuff.

[Peter Rahal]

All right, so not bad. Pretty good, actually. Tell me what your. Before we bring Peter in, what's your question for us?

[Eric Orkiski]

So my question here is we've grown substantially through Amazon, but I don't love Amazon because I feel like it's limiting me in a way when it comes to talking to my customer and being able to potentially upsell them to our other good products and get them on my YouTube channel to see our free workout programs. But I love Amazon for the ability to drive a ton of revenue, drive growth for the company and obviously cheaper advertising costs compared to Instagram and Facebook. So my question is, at a certain point as a growing company, can you step away from Amazon and just focus on your own website so you don't have to compete with others on Amazon with their lower cost options?

[Peter Rahal]

Awesome. Okay, let me bring Peter Rahal in. Peter, something right up your alley. I know you like to go to the gym. So he's got, you know, he's got Amazon, he's got Shopify. He's trying to figure out, right, Amazon, obviously, great channel because it's Amazon, but the margins are lower. What are your thoughts, Peter?

[Christy Stewart]

Yeah, so this is a common issue. We have it at David, of how do these channels coexist? How do we optimize them? And Amazon's like a force of nature you can't avoid. So it's not, it should never be a question, are we on Amazon or not? I think it should be how do we optimize it. And I think you're right. You do want to have a direct website with relationship with your customers and offer different things. So one way to think about it is all right, Amazon is like for volume. It's like your hero skew is there, it's gotta be priced right. But like how do you differentiate and how do you create value on your own website to bring customers there? So that could be through bundling, it could be through promotion, it could be through education. But I would look at it as like a product strategy across the different channels. But I just don't. Amazon's everything. It's such a powerful, powerful e commerce platform. You want to lean into it and you don't want to run away from it.

[Peter Rahal]

Yeah, I guess my question for you, Eric, is why is it one or the other? I mean Amazon, yeah, I get it, they're squeezing you. And listen, it's a business but it's also a great channel. On the other hand, I mean I'm looking at your website here. You've got YouTube channel, you've got all these free exercise routines that you're offering. You know, you've got other products here that you're selling. So I, I guess my question is can't, can't you do both?

[Eric Orkiski]

Yeah, we, and we've been doing both for the last three years. It's part of, it's come down to being able to keep up with the inventory. Like, you know, on, on Prime Day we kind of just ran out of inventory and one of the things has just been like trying to keep up inventory from a financing perspective because I'm paying for everything up front before we do build in China, before it leaves China. And as of right now, we can only order around like a thousand to two thousand units at a time. And the lead time on that is about three to four months from like building it to getting it here. And the issue with Amazon is if you don't have enough inventory, you get charged fees. If you have too much inventory, you get charged fees and then the return issue as well. And I just, I don't as of right now, I don't have enough, I think inventory to potentially do both.

[Christy Stewart]

Got it? Yeah. If you have inventory constraints then, then you'd want to keep it on the more profitable channel and yeah, and just you have to accept that people are going to be searching for your product on Amazon and just going to buy, you're going to, you're not going to capture those sales. But it sounds like it's more of a cash Flow, working capital issue. I would focus on the profitable channel and building your platform. I would spend more of my resources and energy in building Eric as an influential person in fitness. And. Yeah, then you can create all the demand.

[Peter Rahal]

Eric, this is a little bit. I mean, going back to this idea of what you are giving your customers or your fans, your potential customers for free. And I know that you're doing these videos. I want to see more of that coming from it because I think that's when people see you as somebody who's a trusted voice, they're going to want to support your products. I just say this as a focus group one here, but I do spend money on some of these influencers who I feel are giving me really great free advice. And I have gone and purchased their courses or their products, and they've been really helpful.

[Christy Stewart]

I agree with Guy. Okay.

[Eric Orkiski]

I really appreciate that. And also, Peter, I just want to say I listened to the episode again and hearing about the dyslexia stuff and some of the speech issues myself. I went to speech therapy for about six to seven years as a kid. So it's pretty cool to see, you know, someone struggle with that as a kid to be so successful as you are now. So I appreciate the inspiration and talking about that.

[Christy Stewart]

Thank you. Of course.

[Peter Rahal]

Awesome. Eric, thanks so much for calling in. Squat Wedgies is the brand. Good luck, man.

[Christy Stewart]

Great to meet you, Eric.

[Peter Rahal]

Yeah, squats are so healthy. It's such a great compound exercise.

[Christy Stewart]

Yeah. Especially the full. The full range of motion ones. Yeah. I love to squat.

[Peter Rahal]

Yeah. And super important, Peter, you will start to discover this as you get closer to 50. That mobility, I know, is so key, man. It is like, it opens everything up if you're stuck, if you're tight.

[Christy Stewart]

I know.

[Peter Rahal]

I've spent the last, like, year and a half just focusing on stretching in addition to the other exercises. And it just completely. It just opens all these doors. It's the best.

[Christy Stewart]

I'm not there yet.

[Peter Rahal]

Not there yet. You still have some grease in your joints and stuff. Okay, we're gonna take another quick break.

[Guy Raz]

But we'll be right back with another collar.

[Peter Rahal]

Stay with us. I'm Guy Raz, and you're listening to the advice line right here on How I Built this Lab.

[Guy Raz]

This episode is sponsored by Canva. If you make decks at work, you should make the switch to Canva presentations. Canva presentations might be the most visually impressive presentations you'll ever use. Start with a stunning template. Drag and drop images, graphics charts and data visualizations from Canva's massive media library. Add animations plus interact of polls and quizzes to really set your slides apart. Built in AI also lets you generate slides and text in seconds from a prompt and you can share your Canva presentations with anyone and instantly collaborate in real time. Canva is used by 95% of Fortune 500 companies. Whether you work at a small or big company, in a team of two or two thousand, Canva empowers workplaces everywhere to create captivating presentations, save time and be more productive together. You'll love the presentations you can easily design with Canva. Your audience will too love your work with canva [e-mail] One of the hardest parts about B2B marketing is reaching the right audience. So when you want to reach the right professionals, use LinkedIn ads. LinkedIn has grown to a network of over 1 billion professionals and that's where it stands apart from the other ad buys. You can target your buyers by job title, industry, company role, seniority, skills, company revenue, all the professionals you need to reach in one place. Stop wasting budget on the wrong audience and start targeting the right professionals only on LinkedIn ads. LinkedIn will even give you a $100 credit on your next campaign so you can try it yourself. Just go to LinkedIn.com built this. That's LinkedIn.com built this. Terms and conditions apply only on LinkedIn ads. Welcome back to the advice line on how I built this lab.

[Peter Rahal]

I'm Guy Raz and today I'm taking your calls with Peter Rahal, the co.

[Guy Raz]

Founder of Rxbar and founder of David Bars. Peter, let's get back into it and.

[Peter Rahal]

Bring in another caller. Please tell us your name, where you're calling from and a little bit about your business.

Hello, I'm April Wachtel and I am calling in from Brooklyn, New York and I'm the founder of Cheeky Cocktails. It's a line of badass cocktail mixers for the Hohman Bar that make labor intensive cocktails a breeze.

Welcome. Welcome to the show. Thanks for calling in. Okay, so cheeky. These are mixers basically. Like you add this to spirits and then you've got your drink.

Exactly. These are professional grade, so they're shelf stable versions of what the pros use behind bars. And they're non alcoholic so they can be mixed with spirits, non elk spirits, seltzer, tea, water, etc.

And I'm on your website now.

[Guy Raz]

Love the branding.

[Peter Rahal]

Yeah, and so I see espresso syrup. So presumably for like an espresso martini.

[Guy Raz]

Exactly.

[Peter Rahal]

You've got some Agave syrup, simple syrup, cranberry, lemon juice. So basically, I mean, are you covering the whole gamut of mo of sort of like 50 to 70% of what people order at a bar?

Yeah, so that's part of the problem.

[Guy Raz]

Got it.

[Peter Rahal]

It's part of the opportunity, and it's part of the problem and part of the question that I have for you, actually.

Okay, we'll get to your question. Tell me a little bit about how this started. How did you start this brand?

Yeah, so. So my background, I basically grew up in bars and restaurants, and then I worked my way up over many years, came up through bartending, craft cock, and then I became a brand ambassador for Bacardi, consultant for Diageo, and a cocktail instructor. So I've taught over 12,000 students how to make cocktails.

So you come to this with, like, deep experience?

[Christy Stewart]

Yes.

[Peter Rahal]

And you decided. When did you decide to start a business?

Yeah, so I started tinkering with the first version in 2014, ran a business for about four years, which I would consider to be a worse version of what we do now. So pulled that apart in 2019, put it back together in 2020, and then launched into March of 2020 into the first wave of COVID Got it.

And now you sell cheeky cocktails entirely direct to consumer online?

No, it's about 25% direct to consumer. We're in 1300 accounts, primarily brick and mortar across the country, but we're in four and five star hotels as well.

[Guy Raz]

Nice.

[Peter Rahal]

And are you mainly in smaller stores or any larger chains?

About half are small independent boutiques, independent liquor, specialty grocers, and then we're in Anthropologie, Nordstrom home goods. Goods on the chain side.

Got it. All right, so tell us what your question is for us.

Yeah, so there's a lot of ways that cheeky is distinct from the competitors, but I struggle to encapsulate all of those ways because we are speaking to trade, we're speaking to consumers, and different people use us for different things. And I don't know if I just need to nail my messaging better or if this is something that adds complexity and will prevent us from scaling as we try to hit the gas.

What's your messaging now?

Badass cocktail mixers for the home and bar.

Badass cocktail mixers for the home and bar. Yeah, I mean, it doesn't tell me anything.

[Guy Raz]

Right, right.

[Peter Rahal]

So what is it that differentiates it from competitors? I mean, there are other brands out there that are mixer brands. So how do you, when you say it Just takes so long to explain it. What is it that's different?

So there's many things for the professional bartender, there are very specific ratios and recipes that are used when they make ingredients from scratch behind the bar. And commercial options that are shelf stable, sold in retail. Don't ever say that. We make our syrups to those specs so the professionals know what is in them and how sweet they are. And then the consumer is able to replicate those cocktails with certainty because we make the exact same products as the scratch ingredients.

Got it. All right, Peter, I want to bring you in here. Messaging is her challenge. I don't know if that's the main challenge here, but what do you think? I mean, again, badass cocktail mixers doesn't tell me anything. It's fun, but it doesn't tell me anything.

[Christy Stewart]

So, like, your positioning and communication is a reaction to the competitive landscape. It can never be done in isolation. Yeah, I think badass cocktails is like a fun thing, but it's not a very telegraphic. It doesn't, like, really communicate. And one of my sort of design principles, it's a bit crude, but I think it's a very good approach to packaging design is like, the consumers are stupid and lazy. Stupid in the sense that they don't really care that much. The brand is supposed to make it easy for them, and then lazy in the sense they're not going to look at your package and read the third point and then flip it over and read the story. So question for you, if you're to boil down the value in a one statement, what is it?

[Peter Rahal]

So this is part of where I'm getting hung up. So the packaging itself is really attractive. It's minimalist, and it's premium. And so. Thank you.

It looks like New York Art deco. Ish. Really cool. Love it.

Thank you. So that I think for the consumer, that is the first thing that catches their attention. It's relative to a very crowded, cluttered marketplace and competitive set. It pops out because there's a lot of white space. Like, it's more relaxing to look at our packaging on shelf or if it's in your home bar or in a professional bar. So that's the first thing. The second thing is the ingredients quality is incredibly high. And we don't use preservatives. We don't use natural or artificial flavorings. So it's really shelf, stable versions of the ingredients that pros use.

[Christy Stewart]

Where do you have the most success, like on premise or at home?

[Peter Rahal]

So our focus this year is the on premise. So food service, for sure. Yeah.

[Christy Stewart]

Yeah. And is that. Is that because you're providing, you're making the bartender's job so much easier. Is that the value?

[Peter Rahal]

I think it's a couple of things. One of which is if it's in a cocktail. Yes, but it's. If it's in a cocktail, on a cocktail menu, and it eliminates multiple steps, it improves consistency, you know, all of that fun stuff.

[April Wachtel]

Yeah.

[Peter Rahal]

Then it's, of course, easy for them to use.

[Christy Stewart]

Yeah. I always say, like, strategy is choosing what not to do.

[Peter Rahal]

Yeah.

[Christy Stewart]

So one of the I. It sounds like your product's kind of working everywhere a little bit.

[Peter Rahal]

Yeah.

[Christy Stewart]

But it's probably one of those things where, like, if you really were to focus on where it's the highest demand is where people are like, oh, my God, finally a product like this, like, where they're not price sensitive, where they forgive you if there's like a quality issue. Because just there's like, the early adopters.

[Peter Rahal]

Are there now you've identified the issue, which is. I have been conflicted because it is working everywhere. And so choosing up until this year has been difficult.

You know, I'm looking at. I keep thinking about this, you know, badass cocktail mixers. And I mean, I'm looking at your coffee mixer for the espresso martinis. And I notice in the back, I'm looking at the label here on your site. You're using a very specific kind of premium coffee. You know, you're using really high quality ingredients. I mean, you even name the coffee. It reminds me a lot of the story we did on La Colombe a few years ago. And when they launched back in the day, you know, they were making a very, very premium coffee. And they started by working with really, the best restaurants in Philadelphia and New York, because when people tried it, it was just. It was different. It tasted better. But I feel like there's a way for you to convey that, you know, people use words like artisanal, which is overused, or, you know, premium. But there' something around that idea that I think can really pop because the fact that you have sourced the coffee that you're using in your syrup mix is really interesting to me. And I think that would be interesting to a certain set of cocktail enthusiasts.

[Christy Stewart]

Yeah. Because that's not communicated.

[Peter Rahal]

Yeah. So there's two things. The trade gets it immediately. Like, we do zero explanation with the trade, and immediately they're like, oh, my God, I cannot. Like, this is amazing with consumers. We used to call it bar Quality syrups and juices. Then we said professional grade syrups and juices. So that was why we adapted it, because the consumer reaction was like another premium product. And when we started saying badass, everyone just laughs. And that is more in the spirit of the reaction we want to get from people, because it opens people up and then it's more of a fun conversation versus just kind of groaning and saying, oh, yes, yet another of these.

[Christy Stewart]

Cheeky is like English humor, right?

[Peter Rahal]

Yes.

[Christy Stewart]

But badass is like American.

[Peter Rahal]

Yeah.

[Christy Stewart]

So I find those two things.

[Peter Rahal]

That's an interesting one.

[Christy Stewart]

Are at odds.

[Peter Rahal]

Yeah.

[Christy Stewart]

Good brands have great tension, but I don't think those tensions really work. They're more confusing.

[Peter Rahal]

It's a really, really interesting insight, I think that. I mean, again, it's not the answer, but something like mixers for cocktail nerds. Some way to kind of convey that it's like, you cannot get anything better than this. If you're into watches or you're into pens, there are people who are, and there are a lot of people like that. They want the absolute best. And the good news is a lot of people who are really into making the absolute best cocktails.

Yeah, I mean, it's a lot of food for thought, I think, because there's a lot of sort of exclusionary behavior associated with the highest quality craft cocktails. I'm trying to share a. Like, a more approachable version. And so that's the thing that we've been batting around for a number of years at this point is like, how can you be super approachable and fun and light and also know, be very serious about what you do?

[Christy Stewart]

But, but I. I think the. One of the other puzzles that's making this difficult is that you're talking to the bartender. Like, on premise is a very different communication than to the consumer. And you're trying to do both.

[Eric Orkiski]

Right.

[Christy Stewart]

And so, like, one strategy would be like, we're just going to dominate on premise. They get it. We can just align our communication to prioritize them. And then, guess what? When you. If you do that really, really well, the word of mouth, they'll see it on premise. Like, oh, my God, that cocktail was great. What was it? It's cheeky. So I kind of think you're just diluting yourself across those two different channels. And it sounds like your DNA is on premise. You know it and they get it. So it's like cholula is a good example. Like, cholula just popped up in every cafe all over America. And then next thing you know, you start to see them in grocery stores. Next thing you know. And it's so there has been a history of that sort of strategy. So I think this is a strategic question. And then your positioning and messaging should align with that strategy. And then as you scale, it's a growth area.

[Peter Rahal]

I think this is so interesting how. Like that was not my question, but you got to the actual question behind the question.

April, good luck. The brand is called Cheeky Cocktails. Awesome. Congrats on what you built and we'll be cheering you on.

Thank you. And thank you so much to both of you. This is such an honor and I'm such a huge fan of the show. So thanks so much. Cheers.

Thank you.

[Christy Stewart]

See you.

[Peter Rahal]

Yeah, I mean, a product like this is particularly positioned well, because obviously still lots of people drink alcohol, but a lot of people are moving away from it, as you know, Peter, right in your space. I mean, a lot of people are just not drinking anymore, but they still want to have something. They want to have some kind of cocktail, like, drink well.

[Christy Stewart]

And the thing is, you're seeing on premise people prioritize non elk menus because it's a huge revenue grab, basically because they can like sell, you know, without the alcohol and charge $20, $15.

[Peter Rahal]

Yeah. Mocktails are super expensive. Or a lot of fancy restaurants are doing non alcoholic pairings where they're making these concoctions and they're just as. It's still 120 bucks in some of these super high end restaurants to get a non alcoholic pairing. Peter, before I let you go, I want to ask you one question that I've been asking people come on the show, which is now that you've got.

[Guy Raz]

A new brand that you're building and.

[Peter Rahal]

You'Ve got a chance to kind of do things in a different way and not make the same mistakes you made in the first go around. But if you could go back to where you were in the early days of Rxbar now and say, hey, this is a piece of advice I'm going to give you. What do you think would have been helpful for you to hear?

[Christy Stewart]

Yeah, I was full of pride when I first started, meaning I was sensitive to criticisms. I was defensive. I was very proud of my baby. This product is my life, you know, like, oh, they don't, you know, my product's not the problem. You're the problem. Like, and so I would tell myself, like, removing yourself of pride is super important. And instead of like being defensive on criticism, you should act, actually seek criticism. Like, it's about finding what's wrong and fixing it. And so you just being super objective, pragmatic and not emotional about your product and its position and is really, really prudent to be successful.

[Peter Rahal]

It's great advice. That's Rxbar co founder and David Bar founder Peter Rahal. Peter, thanks so much for coming on the show.

[Christy Stewart]

Thank you guy. That was amazing.

[Peter Rahal]

And by the way, if you haven't heard Peter's original How I Built this episode, you've got to go back and check it out. I will put a link to it in the podcast description. And here's one of my favorite moments from that interview. You got this idea, you have a plan. Did you think, yeah, let's go raise money.

[Christy Stewart]

So that was actually our initial plan. And I remember Jared and I like talking about like, all right, who are we going to raise money from? Like, I remember asking my dad like, do you know any, you know, rich people that can like, you can connect me with who'd give us, give us some money? And yeah, and my dad was like, he's old school. He's like super traditional. He's like, you need to shut the up and sell a thousand bars.

[Guy Raz]

Thanks so much for listening to the show this week. Please make sure to check out my newsletter.

[Peter Rahal]

You can sign up for it for [e-mail] each week. It's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest, greatest entrepreneurs ever. And if you're working on a business and you'd like to be on this show, send us a one minute message that tells us about your business, the issues or questions you'd like help with, and hopefully we can help you with them. And make sure to tell us how to reach you. You can send us a voice [e-mail] or call us at 1-800-443-3128 and leave a message there.

[Guy Raz]

And we'll put all this in the podcast description as well.

[Peter Rahal]

This episode was produced by Chris Masini with music composed by Ramtin Arablouei. It was edited by John Isabella and our audio engineer was Sina Lofredo.

[Guy Raz]

Our production team also includes Alex Chung, Casey Herman, Iman maani, Elaine Coates, J.C.

[Peter Rahal]

Howard, Katherine Cipher, Kerry Thompson, Sam Paulson, and Neva Grant. I'm Guy Raz and you've been listening to the advice line right here on How I Built this Lab. If you like How I Built this.

[Guy Raz]

You can listen early and ad free right now by joining Wondery plus in the Wondery App or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short [e-mail] survey.

[G]

Being an actual royal is never about finding your happy ending. But the worst part is if they step out of line or fall in love with the wrong person, it changes.

[April Wachtel]

The course of history.

[G]

I'm Arisha Skidmore Williams.

[April Wachtel]

And I'm Brooke Sifrin.

[G]

We've been telling the stories of the rich and famous on the hit Wondery show Even the Rich and talking about the latest celebrity news on Rich and Daily. We're going all over the world on our new show, Even the Royals.

[April Wachtel]

We'll be diving headfirst into the lives of the world's kings, queens and all.

[G]

The wannabes in their orbit throughout history.

[April Wachtel]

Think succession meets the crown meets real life.

[G]

We're going to pull back the gilded curtain and show how royal status might be bright and shiny, but it comes at the expense of, well, everything else, like your freedom, your privacy, and sometimes even your head. Follow even the Royals on the Wondery app or wherever you get your podcasts. You can listen to even the royals early and ad free right now by joining Wondery.