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EPISODE 9

How Haus Capitalized on Vertical Integration and Organic Growth to Become One of the Hottest Alcohol Sellers in eCommerce

With Helena Price Hambrecht, the founder of Haus

The alcohol industry is worth more than $250 billion in the United States, but the bulk of that money is being raked in by the biggest corporations and distributors with very little room for independents to break in. But Haus has found a way to be a disruptor. On this episode of Up Next in Commerce, Haus founder Helena Price Hambrecht hopped into her recording studio (AKA her car outside the Haus warehouse) to explain how her small aperitif company has taken advantage of deep industry knowledge, organic growth, and the complete ownership of the supply chain to build an eCommerce-based alcohol experience that the younger generation is embracing.

Key Takeaways:

  • Adding educational elements to every touchpoint is key to helping customers get the most out of products 
  • Now is the time to invest heavily in the product because it is only with a good product that you can have truly excellent organic growth
  • There are risks involved with being a fully vertical company, but the reward is the ability to be nimble, have a laser-focus on product development, and allow the ability to adjust to supply chain curveballs with ease

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

Key Quotes:

“Most people don’t realize that alcohol can be better than it is….We’re a generation that’s cared about where our food comes from, where our beauty products come from, is it organic? Is it locally processed? Is it responsibly made? For some reason, alcohol has gotten a pass and we wanted to raise the bar. So we approach things very, very differently.” 

“We thought that we’d stumbled upon a treasure and that, “Oh my gosh, when other people find out about this loophole, we’re going to have competition, which would be fine.” But when we were pitching it to folks in the alcohol industry, they thought it was a stupid idea. They could not understand why we would want to go direct and why we would sell online. People are so used to doing things the way that they’ve been done forever and they just couldn’t process that we thought that we could just go on the internet and create a brand and sell something to the drinker because it had never been done before. Over and over and over again people were just like, “Why would you do that? That’s stupid.”

“The real challenge that we had was how do we take this type of liquor, aperitifs, which has been in Europe for over a century … it’s a style of drinking that’s very common in other parts of the world but is relatively unknown in America. How do we take this type of liquor and make it mainstream? Without having to pitch people in person just through the internet, how do we very quickly educate people on what this is, the problem it’s solving, convince them to buy it, get them to get their friends together and drink it together? for us, our goal was to just approach it as education, right? And bake education into as many touchpoints as possible, not just through copy on the website, but through photography, through editorial, through different touchpoints post-purchase, in the packaging. It was really about how can we make the most of every single touchpoint that this customer has with our product so that by the time that they receive it, they deeply understand it and where it lives in their life.”

“When we thought about photography for Haus, first things first, I didn’t want to do what every other direct to consumer company at the time was doing, which was product on a plain colored backdrop, very simple, very polished, very digital looking. It didn’t feel right for us because there was no context, right? Haus isn’t supposed to live on a seamless backdrop in a photo studio, Haus is supposed to live at your dinner table. And it just felt like a missed opportunity to show the customer where Haus belongs.”

“There are a lot of parallels between media relations and fundraising for those who have fundraised where building relationships with investors is similar, where a lot of times it’s just reaching out over and over, being like, ‘Hey, hope you’re well, remember that thing that we said we were going to do, we did it. Check it out. It’s pretty cool.’ And not expecting anyone to immediately do something about it, whether it’s to write you a check or write a piece about you. If you have news to share, you can always pitch it and formally ask if they’re interested in writing about it. But I think approaching it more casually and really thinking about the long game helps forge a more authentic relationship as well. They are people and if they’re interested in your space, you probably actually have a lot in common, you could probably be friends. And if you just treat them as a person who’s interested in a space that’s similar to you, then it’s just going to be a much healthier relationship versus only reaching out last minute when you want them to write about you right now.”

“There was a risk to selling smaller form factors direct to consumer. The margin is lower, it’s just not a productive purchase from a business standpoint. But we released those smaller sizes because we saw a behavior where when people would buy even one larger bottle of Haus, they would come back and they’d buy more. Their next purchase would be two bottles or six bottles. So for us, there was that confidence because we had the data that showed that people that bought that first smaller size, they would come back and they would buy something bigger.”

“We also had a hunch that being fully vertical would give us a huge advantage from a product development standpoint. We could super nimble, we could iterate every day if we wanted to based on customer feedback. We could launch new products quickly, we can kill them quickly. We had a lot of abilities that other companies wouldn’t have. And then we would also be prepared for any sort of supply chain curveball that comes our way.” 

“I have a feeling that there’s going to be a new level of scrutiny applied to direct to consumer,” she said. “This is a real moment of reckoning for a lot of companies where if you can’t do business for a month, you have to shut down or you have to lay off a majority of your workforce. It’s probably not great that the supply chain is so fragmented right now. And I think there’s also at the same time a bit of brand fatigue that was already happening prior to the pandemic where there are so many direct to consumer companies being made right now where the founders don’t actually have much expertise in the space. They just had the idea, they were able to get venture capital because they’re connected in that world, and they were able to launch a company. And they can put all that money into it, and they can acquire a bunch of customers. But the problem with not knowing your space is that you’re not able to iterate quickly. And it seems like we’re about to enter a world where we just don’t know what curve balls we’re going to see. So I think at the very least we’re going to see more money going to founder teams that have at least one founder with deep, deep industry experience, whether that’s a generational family heritage or whether it’s a decade-plus of experience in the industry because you at the very least need the connections on that side of things to have leverage, right? You may not have to own it all yourself, but if you don’t have any real leverage in that world, then you’re toast.”

Bio:

“Helena Price Hambrecht is the co-founder and Co-CEO of Haus, the brand creating products for how we gather today. Prior to Haus, Helena was a Silicon Valley creative who helped shape brands like Facebook, Fitbit, Google, Instagram, Microsoft, Nike, Pinterest, Slack, Square, Twitter, and Uber. Her work has been featured on ABC, CNN, The New York Times, Fast Company, Fortune, Glamour, The Guardian, and Inc. For more on Helena and Haus, be sure to follow @helenapricehambrechat and @drinkahus on Instagram and check out drink.haus!”

Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce

Transcript:

Stephanie:

Welcome everyone to another episode of Up Next in Commerce. This is Stephanie [Postals 00:00:06]. And today we’re joined by Helena Price Hambrecht founder at Haus. Helena, should we call this a happy hour episode even though it’s only 11:00 AM.

Helena:

Every hour it can be a happy hour.

Stephanie:

I think so too. So tell us a little bit about Haus. I was looking into it and it looks like a really fun brand and it already was getting me excited with some of the new products you were launching. I think one of them was called Lemon Lavender that, like I said, I was ready to order at 11:00 AM. So I’d love for you to detail a bit about your company, and your background, and how you started it.

Helena:

Yeah, so Haus is an alcohol company. We launched with me and my husband. We co-founded it together. His name’s Woody. We live on a farm in Sonoma County and we joke that it’s very much the product of a techie marrying a wine maker. And our goal is to create the next portfolio of alcohol products that reflect how our generation drinks and what they care about in food and beverage.

Stephanie:

Very cool. And how is Haus different from other spirits brands or liquor brands or wine?

Helena:

Oh God, where do I begin? I think it’s interesting because most people don’t realize that alcohol can be better than it is. Right? I think alcohol has gotten a pass for a long time because it’s a vice. And I think people can just assume, “Well, it’s bad for me. So doesn’t ultimately matter what’s in it because it’s just bad.” And corporate alcohol has kind of run with that for a long time. So a lot of the products that you’re drinking are worse than you think. You’re feeling bad, you’re feeling hung over when you drink and you think it’s just because it’s alcohol, but alcohol is only a tiny piece of that puzzle.

Helena:

In reality, corporate alcohol is made with things that you just wouldn’t believe, take wine for instance. You can intervene in your wine production with milk, and eggs, and clay, and fish bladders, and artificial flavors, and tubs of processed sugar. You can engineer it to taste good, but it’s going to make you feel horrible. It can be made with grapes that are full of pesticides. Your favorite whiskey might be full of petroleum-based, caramel coloring. It’s kind of a racket. And we’re a generation that’s cared about where our food comes from, where our beauty products come from, is it organic? Is it locally processed? Is it responsibly made? For some reason, alcohol has gotten a pass and we wanted to raise the bar. So we approach things very, very differently.

Stephanie:

Very cool. So it seems it’d be very difficult getting into the alcohol industry. I was reading a little bit about the three tier system where distributors and bartenders are the gatekeepers and they tell you what to drink. How did you have the courage to get into that industry? And then how were you actually able to become the only direct consumer spirits brand?

Helena:

Yeah, so I mean, it’s really Woody, right? I used to work in alcohol industry, but as a bartender. I wasn’t really deep in the production side of it until I met Woody. And Woody is a great farmer. He’s been running the family’s grape farm for the last decade and he also makes wine, and was making aperitifs when I met him before Haus. And he was doing everything right as a independent wine and spirits guy. His products were in the best bars and restaurants in America. They were in the best cocktails in America.

Helena:

But because of the three tier system, which is pretty much controlled by corporations, you don’t have a lot of leverage as an independent brand. So you don’t really have control over how your product is used and Woody would just find that he was a little sprinkle in a fancy 10 ingredient cocktail. So while he could name drop his full accounts, he wasn’t moving any product, the drinker had no idea who he was. I was observing this and thinking, “Man, this is not a great way to build an independent brand.” And the more and more I got to know the industry, the more I got to know the three tier system, which it’s a hundred year old prohibition era laws.

Helena:

For those who don’t know the tiers, which I would assume you don’t, it’s just distributors, producers, and retailers. So if you’re a producer, you have to go through a distributor to get your product into bars and restaurants. And then bars, and restaurants, and retailers then sell to the drinker. Unfortunately, the way the laws have been designed, it’s actually allowed corporations to just be in cahoots with distributors. So corporations ultimately decide what you’re drinking and it’s why you’re still drinking Jack Daniels, and Gregger’s, and Absolut and you’ve not really heard of any other brands that are playing in the liquor space.

Helena:

So for us, we didn’t know that there was a way to go around the system. And I started doing research because I was curious about just how our generation was drinking, what were we looking for out of alcohol? Because I was certainly looking for a better alcohol experience. And I saw a huge opportunity. Like I said earlier, millennials are looking for better made products. They care about their health, and their image, and authenticity, and transparency, and convenience. And when you looked at what alcohol was doing, it was almost nothing. So I was really complaining to Woody about this, saying, “Gosh, what a shame that you can’t build independent brand, like a Glossier or an Everlane of alcohol because of the three tier system and you have to go through the distributors.” And that’s when I said, “Actually, there’s a loophole that I never thought about until this moment.”

Stephanie:

Dun, dun, dnn.

Helena:

Yeah. If you’re an aperitif, you’re typically in the liquor category. You’re federally regulated like a liquor. You can’t sell direct to consumer. You can’t go online, but if you’re under 24% alcohol and you’re made mostly of grapes, which is a loophole you would only know about if you’re a great farmer who makes great base aperitifs, you can go around the loss, you can go direct to consumer, you can sell online. And it just had never occurred to anyone to use that loophole to build a direct to consumer alcohol company.

Stephanie:

So no one else in the industry found that out until you guys did and you’re the first ones to actually be able to sell to consumers directly because you leveraged that loophole?

Helena:

Yeah. And you know what? We thought that we’d stumbled upon a treasure and that, “Oh my gosh, when other people find out about this loophole, we’re going to have competition, which would be fine.” But when we were pitching it to folks in the alcohol industry, they thought it was a stupid idea. They could not understand why we would want to go direct and why we would sell online. People are so used to doing things the way that they’ve been done forever and they just couldn’t process that we thought that we could just go on the internet and create a brand and sell something to the drinker because it had never been done before. Over and over and over again people were just like, “Why would you do that? That’s stupid.”

Stephanie:

Yeah. That’s awesome. And this loophole also lets you guys have a brick and mortar store, right? Whereas you would never see a Jack Daniels store on the streets of New York. But you all could open one if you wanted it to, correct?

Helena:

Exactly. Yeah. We could open two different brick and mortars in California today. It’s state by state. Every state has different laws and it’s still kind of a nightmare to navigate. But yeah, we can do so many things that other brands and liquor space can’t do. We can be sold without a liquor license. We can sell online, we can do a wine club style subscription service. There’s just this whole world that opens up to us. And we were the only people that decided to try it.

Stephanie:

That’s amazing. So what was the first steps looking like when you started Haus and you were thinking about building the website and the experience, like the buyer experience? How do you think through designing that process for consumers who have never done that before?

Helena:

Yeah, and that was the challenge, right? It’s like as a brand, one thing we had going for us was we weren’t just two people in class who had an idea and had to create a backstory. The backstory was there, right? We were people trying to solve our own problem and a problem that everyone we knew was having and that was great. And we live on the farm and we make it ourselves, and all of that’s hopeful as a brand. But the real challenge that we had was how do we take this type of liquor aperitifs, which has been in Europe for over a century … it’s a style of drinking that’s very common in other parts of the world, but is relatively unknown in America. How do we take this type of liquor and make it mainstream? Without having to pitch people in person just through the internet, how do we very quickly educate people on what this is, the problem it’s solving, convince them to buy it, get them to get their friends together and drink it together? So that was a challenge.

Helena:

But for us, our goal was to just approach it as education, right? And bake education into as many touch points as possible, not just through copy on the website, but through photography, through editorial, through different touch points post-purchase, in the packaging. It was really about how can we make the most of every single touch point that this customer has with our product so that by the time that they receive it, they deeply understand it and where it lives in their life.

Stephanie:

Yeah. I could definitely see the difference from your photography versus a lot of other e-commerce companies. I could see that you were teaching the buyer how to enjoy Haus. I think one thing I saw was as you went from page to page, you had a couple images flash showing how it’s being enjoyed at the table, sitting on the table with a bunch of friends. It was very different than the typical product images with the white background and no one really having a good time with it. How did you know to utilize that imagery to encourage that buyer behavior to then hopefully spread the word about Haus?

Helena:

Yeah, that was a very conscious decision. So my background’s in brand. Before Haus, I had a production company that did everything from visual brand strategy to producing commercial campaigns including photography. So when we thought about photography for Haus, first things first, I didn’t want to do what every other direct to consumer company at the time was doing, which was product on a plain colored backdrop, very simple, very polished, very digital looking. It didn’t feel right for us because there was no context, right? Haus isn’t supposed to live on a seamless backdrop in a photo studio, Haus is supposed to live at your dinner table. And it just felt like a missed opportunity to show the customer where Haus belongs.

Helena:

And that type of photography of the product on a plain backdrop, that exists for a reason, right? It performs well in paid. It’s very straightforward. People can physically see what they’re buying. And, in an era prior to now where paid drove most direct to consumer growth, it makes sense that people use what performs well. But for us wanting to grow organically as much as possible, we didn’t care so much about that sort of metric and for us the priority was way more about how can we use this opportunity to just show people exactly what they should be doing with the product. And that’s really how we approached it.

Stephanie:

That’s awesome. And are there certain metrics or data and analytics that you look at to see what’s performing well and what’s not or how do you think about success when it comes to utilizing a different kind of buyer experience?

Helena:

Yeah, I mean, in the beginning up until December we were 100% growth. And that’s hard to measure, right? There’s no real way to examine where those customers are coming from. There’s not a whole lot you can do with that data, which makes it very daunting for most companies to pursue. Right?

Stephanie:

And you said a 100% organic growth, right? You cut out there for a second.

Helena:

Yes.

Stephanie:

Okay. Got it.

Helena:

And now we’re experimenting with paid and now about 20% of our customers come from paid. But for us, we’re still a primarily organic company. So I think for us it was more of a philosophy and some hypothesis around our product and how it could spread, right? Our product is something that is inherently shared, right? If you’re having a drink, you’re very likely having it with another person, you may be having it with a group of people and that’s certainly the customer that we were going before. So for us, we wanted to make sure that the product and the customer experience was so stellar, which sounds common sense, but it’s not necessarily, especially when you have limited resources that you have to put into certain buckets. We put everything into product and everything in the customer experience so that when people received that product, they gathered their friends together, they shared it with their friends, they all had an amazing experience together, and then all of those friends went to buy a Haus. So that was this organic flywheel that started taking off. And our growth was through word of mouth.

Helena:

We also prioritized press quite a bit. My first career was in PR, running comms for startups. So I’m a big fan of working with press to tell your story because, you can tell people what to do all day, but people are going to really listen when someone else tells them to go buy your product and that it’s great. And press is also hard to quantify, right? A lot of press doesn’t actually tie to purchases. It’s more of a long game of having this validation and the customer being able to come to your website and see that the New York Times, or GQ, or Vogue said that you were good. So it’s one of those things where a lot of what we pursued in the beginning birthwise was really hard to quantify and it was also kind of long game. So I think it rests outside of the comfort zone of a lot of founders and a lot of growth managers because of that. But it worked so well for us and it continues to work well for us.

Stephanie:

Yeah, it definitely sounds like it. How do you think about leveraging press? Because when I think about that, it seems like there’s a lot of agencies and companies who are ready to do a PR release and tell you that they’re going to get you press. But then afterwards you’re like, “Oh, what did it really get me?” And a lot of people maybe can’t get on the Vogues and the bigger name brand sites like that. How did you pick out strategic places to be seen and found? And how did you even get those relationships to get that press?

Helena:

Yeah, I mean, it takes time, right? There’s plenty of people that I wish were writing about us and they still haven’t. But for us, my philosophy since my early ’20s when I was doing comms is like you can’t expect anything from anybody immediately, right? Because even if the person writes about your beat, even if it’s obvious that they would find your product interesting. You just don’t know what they’re going to be writing about for the next year. And maybe they’re not going to be writing about anything where you’re particularly relevant and maybe they don’t break news, maybe they’re writing trend pieces. A lot of the media relationship building that I’ve done over the last decade and that we continue to do with Haus is about just getting on people’s radar and not wanting anything upfront, not being so transactional about it, and just saying hello, sending them some information about Haus or your company, sending them samples of it, any new products as you release them.

Helena:

There’s a lot of parallels I think between media relations, and fundraising for those who have fundraised where building relationships with investors is similar, where a lot of times it’s just reaching out over and over, being like, “Hey, hope you’re well, remember that thing that we said we were going to do, we did it. Check it out. It’s pretty cool.” And not expecting anyone to immediately do something about it, whether it’s write you a check or write a piece about you. If you have news to share, you can always pitch it and formally ask if they’re interested in writing about it.

Helena:

But I think approaching it more casually and again, really thinking about the long game, helps forge a more authentic relationship as well, where they are people and if they’re interested in your space, you probably actually have a lot in common, you could probably be friends. And if you just treat them as a person who’s interested in a space that’s similar to you, then it’s just going to be a much healthier relationship versus only reaching out last minute when you want them to write about you right now. It’s just not going to happen.

Stephanie:

Yeah, that’s such great advice. Be persistent, but don’t be annoying. So how do you think about selling something on a website that a lot of people want to experience? I know you just mentioned samples. Do you see samples working well to get people to come back and buy? Because I’ve heard mixed experiences with that from a few of the guests we’ve had on the show. Some people completely took samples away because it wasn’t working. Other people said it worked well. What’s your experience with having the buyer be able to try before they go too deep into the buying experience?

Helena:

Yeah, well, we don’t actually do samples for our customers. We have a starter kit that are two smaller bottles of two of our flavors that people can buy. And that’s definitely a popular first purchase. I think for us there was a risk to selling smaller form factors direct to consumer, right? Like the margin is lower, it’s just not a productive purchase from a business standpoint. But we released those smaller sizes because we saw a behavior where when people would buy even one larger bottle of Haus, they would come back and they’d buy more. Their next purchase would be two bottles or six bottles. So for us, there was that confidence because we had the data that showed that people that bought that first smaller size, they would come back and they would buy something bigger. So that’s worked for us. I think if we were losing money on it, we wouldn’t do it. But we still make a decent margin on our small sizes. So for us, really the challenge was how can we give people the best idea of what they’re going to experience?

Helena:

And part of that was us being really thorough on the site, just explaining the kind of flavor components, what they can expect, showing the ingredient list, showing the nutrition facts. And then reviews have also been really useful for us where we work with Yoko. And for that it’s been great for someone who’s on the fence to go and read from 50 people who tried the product and liked it and talk a little bit about their experience. But ultimately, it’s still a challenge for us. We’re exclusively an online company. This is kind of a great problem to have. It’s a problem that most companies want. But when we last looked at our newsletter, 70% of our newsletter subscribers who open our emails, and read our emails, and love the brand, they haven’t bought yet a Haus yet. So it’s an interesting phenomenon where people like the brand, and they’re interested in it, and they’re thinking about trying it one day, but they just haven’t pulled the trigger. Though what we’ve seen with COVID, a lot of those people are starting to pull the trigger.

Stephanie:

Got it. And what are you including in your newsletter because that’s unheard of to have a newsletter for a brand where people love the newsletter, but maybe haven’t tried it yet. What kind of content are you putting out there that’s pulling people in so much and how are you thinking about converting them in the future?

Helena:

Yeah, I mean, it’s nothing crazy, right? It’s not like we’ve built some robust editorial platform. But we share recipes, we share behind the scenes, we share occasionally elaborations that we do with other brands or people in the food and beverage space. It’s nothing that’s too robust. We haven’t put a ton of resources into the editorial side of our business yet, but we are very careful to not be too promotional or too self serving and really make it something that people are going to enjoy looking at and enjoy reading even if they aren’t actually drinking Haus right now.

Stephanie:

Got it. That’s awesome. Are there other brands in the e-commerce space that you look to, to either learn from? I know I read that you’ve described Haus like the Warby Parker of booze, so are there people that you are inspired by, that you test out maybe different website models or AB tests or what are your content that you’re releasing that helps iterate that?

Helena:

Yeah. Oh my gosh, it’s so many, right? Like the Warby Parker analogy came from Luxottica outright who Warby ultimately disrupted and Luxottica feels very similar structurally to what you see in the alcohol industry. I mean, Away is one of the kind of OG brand branded did such an incredible job of building a movement and building a community around something that wasn’t considered very sexy prior to Away. And they did such a great job with curating content and working with their community on photography and they did such an incredible job. Glossier does an incredible job. I love that they started editorial first and they really focused on building a community that was very, very different than what you saw in the beauty community. And they utilize channels in a very different way than other beauty brands did. And that really came to help them. I think the bottom line is really focusing on creating content that serves the customer and makes them really excited to participate with your brand. And for every brand, that’s different. But it’s finding that thing that gets your customers really, really energized and engaged.

Stephanie:

Yeah, I completely agree. Are you focused on a certain demographic or are you trying to pull maybe a demographic who’s always been used to going after the name brands, are you trying to also pull them away and try something new?

Helena:

Yeah, I mean, our initial demographic was a hunch based on us, on our own personal use case and how we came up with Haus. We made it for people who drink quite a bit, and they’re out and about, and they’re building their careers, and they’re networking, and they’re at events, and they’re catching up with friends, and they’re going on dates, and they’re around alcohol a lot. Right? Like we’re not going for the kiddo person. We’re not going for the super, super health nut, we’re not going for sugar-free people, we’re not going for people who are trying to get sober. We’re going for people who love to drink, but they have certain values that they apply to other industries like food, and beauty, and their clothes and they just didn’t know that they could have those same standards for alcohol. Right?

Helena:

And those people, our hunch was that they lived in urban areas, large and midsize cities, they were career focused, they were probably millennial though the age range extends beyond that. Gen Z also exhibits the same kind of behavioral demographics and they’re starting to turn 21, definitely early adopter types have some sort of aesthetic sensibility. And we had a hunch that there would be overlaps between us and other direct to consumer brands. And so far that seems to be correct.

Stephanie:

Yeah, completely agree. So something else that’s really interesting about your company is that you guys are a fully vertical company, so you own everything from the production to the distribution. Can you speak a little bit towards how that gives you an advantage when it comes to launching new products and how you even came about thinking like, “I’m going to do everything.” Instead of going with a more traditional model of sourcing things. And I mean, you said stuff came from your farm, like the ingredients and whatnot. That’s insane from thinking about how other alcohol companies do things. So I’d love to hear a little bit about that.

Helena:

Yeah. It’s not normal for alcohol and it’s not normal for direct to consumer, right? Take Warby Parker for instance, who’s like the OG in the direct to consumer space. I mean, take most direct to consumer companies. The advantage to being direct to consumer in the beginning was not owning your supply chain and being able to go and work with vendors that you own the brand experience and the purchasing experience and you’re able to take a brand and make it a thing. And, and so for us, we wanted to take a very different approach for the most part because we knew how to do it, right? Like we’re good at it. We make aperitifs already, we have the warehouse, we have the farm, we have the infrastructure. So we didn’t want to outsource that to anybody else.

Helena:

But we also had a hunch that being fully vertical would give us a huge advantage from a product development standpoint. We could super nimble, we could iterate every day if we wanted to based on customer feedback. We could launch new products quickly, we can kill them quickly. We had a lot of abilities that other companies wouldn’t have. And then we would also be prepared for any sort of supply chain curveball that comes our way. Right? The only thing that we don’t personally own is making physical bottles. So we always have to make sure that we’re prepared and have inventory for an inflection point. But everything else we do ourselves, right? We make it, we bottle it, we ship it.

Helena:

And so for us, we of course never expected a pandemic sized curve ball, but it was the ultimate test, right? And we’re one of the few companies that haven’t been impacted at all by the pandemic and we were even able to release a ton of new products during the pandemic. So it’s one of these moments where we made some philosophical bets early and we didn’t know how exactly it would benefit us, but we had a feeling that it would longterm and it’s benefited us in a massive way now.

Stephanie:

Yeah, that’s great. It seems like it’s very opposite from what a lot of brands and companies and e-commerce companies are doing right now where everything’s about outsource that and only take care of the front end part of it. So it’s really nice hearing about someone jumping in and doing the whole process. Are there any learnings, or best practices, or failures you’ve experienced when setting that up?

Helena:

Yeah, for sure. I mean we’ve definitely made some mistakes on the production side, but the beauty of it is if you accidentally leave a hose open and the product pours out all over the floor, you just start over and you make it again. I think for us, the biggest learning curve was the one part of our supply chain that we didn’t own, which was bottles. And again, this industry has its own politics. It’s pay-to-play, it helps to be owned by a corporation. And so it took us some effort to be taken seriously by a bottle vendor because we were a new brand. We didn’t have the backing of Diageo or Pernod. What were they to expect us to do? Right? Even if we were like, “We’re going to be big.” How are they supposed to believe us?

Helena:

So we were sold out for most of the first two months of our existence because we just couldn’t get bottles. They just wouldn’t take us that seriously. And it got to a point where we had to say, “How big of a check do we have to write for you to believe us?” So the downside of that is you have to buy more bottles upfront than you may have wanted to. But again, in a time like this, during a pandemic, we’re really happy to have made that.

Stephanie:

That’s great. So when it comes to the pandemic, I saw that you were able to quickly shift where I think your profits were going. Do you want to speak a bit about the initiative that you have going on and how you were able to quickly pivot because you own the entire process and supply chain?

Helena:

Yeah, the pandemic has been a roller coaster for everybody, us included. In February, we saw that it was calming and potentially already here, which it was. So we had to do worst case scenario planning, right? Like, “Okay, what if the economy bottoms out? What if nobody’s buying anything? What if like every direct to consumer company burns to the ground?” So we did a deep dive in our P&L and we cut a lot of costs that kind of felt more like nice to have versus must haves. We luckily didn’t have to fire anybody, but we wanted to just make our business very core, very nimble and that ended up being a good decision regardless.

Helena:

But pretty soon after, our business started growing and that’s due in a large part to e-commerce growing, it’s due in a large part to alcohol growing. We happened to be the one alcohol company that directly delivers to your door and the press started writing about us because of that. So there were a lot of domino effects from being in this space. And we were also starting to see a lot of efficiencies around paid, so we were putting more money into that. There are a lot of things factoring in, but long story short, we were growing, like our business right now it’s up more than 500% than it was in January.

Stephanie:

Congratulations. It’s amazing.

Helena:

It’s crazy. And so for us, obviously that was a huge relief knowing that we didn’t have to let anybody go. We could continue building the business. But there was definitely a question of this pandemic is way bigger than us, right? It’s something that we’re all going through as a society and it feels a little strange to be wholly focused on yourself, especially if you’re doing well. And so for us it was really thinking about the rest of our industry, right? We’re in food and beverage and not everybody is faring as well. Restaurants in particular, they are in huge trouble. They’re a very low margin business. They’re a labor of love. They are a beautiful industry, but largely they’re traditional, right? And they don’t have alternative revenue streams. They’re serving only local walk-in patrons, so they’re in huge trouble.

Helena:

And we took a step back to really think about like, “Okay, we could just launch a campaign or something like that.” But that didn’t feel right. There was too many of those already out in the world and it just felt overwhelming. So we thought like, “We have infrastructure, we have a warehouse, we have a production facility, we have resources, physical resources. How could we use the tools that we have to help others in our industry?” And pretty quickly we realized if we … obviously we had to test it with them and see if they were into it, but if we made a product for restaurants, like if we made booze with these restaurants, use the chef’s vision, the chef could direct it because that’s very important to a restaurant. They don’t want to promote someone else’s group product.

Helena:

We could make and ship booze for them that’s their recipe and we could donate the profits to the restaurant, which is a healthy margin. We could make a significant impact on their business. So we tried it and we got signed on from a bunch of the best chefs in the country, partially because of our connections and connections of our investors and our friends. And now we’re making 13 new products this month. And we’re sending a lot of money to restaurants. I think at this point, we’ve probably sent like $80,000 to restaurants and we’re still in the preorder phase. So it feels good.

Stephanie:

That’s great. Is this the first time that you’ve had someone help influence the ingredients to create a new product? Like you’re mentioning how the chefs are creating their own. Is this the first time you’re trying out this model or have you always had help from the industry when it comes to new products?

Helena:

No, Woody’s done everything himself. So what is this magical man who is such an artist and he has a vision and he’s really, really good at making wine and aperitifs. So all the products were his vision and then this is still very much a collaboration, right? It’s like these chefs don’t have experience making alcohol, so they talk to Woody, they share their vision, right? Like what they would love for it to taste like and ingredients that they would like to feature. It’s a very similar collaboration between a chef and their kitchen, right? They give the vision, the kitchen executes it, and it’s similar here where Woody can take that vision and then he can play around with the recipe and different combinations of ingredients to get somewhere that he thinks is up to par. Then he sends those samples to the chefs, the chefs give some feedback, whether that’s like, “Oh, it could use some more acid.” Or, “Maybe a little sweeter.” Or, “I’d like to taste more of this particular fruit.” And then and then it’s done.

Stephanie:

That’s great. Do you see that kind of partnership continuing even after the pandemics done? Because it seems like a really nice way to have like UGC content or alcohol created for you and then creating those partnerships could only help scale all the different products that you have with the help of other people who have a specific idea in mind. And then you have a buyer from the start.

Helena:

Oh yeah. It’s a win-win for everybody, right? It’s like these restaurants have a new form of revenue, which is great. It allows them to monetize their audience, which is for the most part national or international. They’re just collect revenue from a much, much bigger group than they could four. And we’ve made these products, they’re so good. These are incredible aperitifs. It feels like a new frontier for alcohol in America. It’s really exciting. And so for us it’s great that we can collaborate with these chefs to make these really unique recipes. So I wouldn’t be surprised if we added most of them to our permanent store after the project is over because they’re just awesome and this makes sense. It’s a win-win.

Stephanie:

That’s really fun. So to zoom out a little bit, go a little higher level, what kind of trends do you see coming to the e-commerce industry or what are you most excited about right now?

Helena:

Yeah, I mean, I have a feeling that there’s going to be a new level of scrutiny applied to direct to consumer, right? This is a real moment of reckoning for a lot of companies where if you can’t do business for a month, you have to shut down or you have to lay off a majority of your workforce. It’s probably not great that supply chain is so fragmented right now. And I think there’s also at the same time a bit of brand fatigue that was already happening prior to the pandemic where there’s so many direct to consumer companies being made right now where the founders don’t actually have much expertise in the space. Right? They just had the idea, they were able to get venture capital because they’re connected in that world, and they were able to launch a company. And they can put all that money into pay it, and they can acquire a bunch of customers.

Helena:

But the problem with not knowing your space is that you’re not able to iterate quickly. And it seems like we’re about to enter a world where we just don’t know what curve balls we’re going to see. Right? Like international trade is a bit testy right now. We may see people become a little bit more nationalistic in terms of supply chain. We don’t know. So I think at the very least we’re going to see more money going to founder teams that have at least one founder with deep, deep industry experience, whether that’s a generational family heritage or whether it’s a decade plus of experience in the industry because you at the very least need the connections on that side of things to have leverage, right? You may not have to own it all yourself, but if you don’t have any real leverage in that world, then you’re toast. So I think that’s going to impact a lot of what brands, not just survive right now, but what brands get funded in the future.

Stephanie:

Yeah, completely agree. It definitely feels like we have been in an environment where it’s like just try and create a quick MVP and see if it works and if not, go on to the next one and keep trying until you find one that maybe works. And I think that’s a really great point of you should probably have some kind of deep expertise in whatever you’re going into. Because one, you have to love it for a long time if you’re going to actually follow through with it and being good at something probably means you’re going to have a good business as well.

Helena:

Totally. Yeah. I mean, it’s like, of course it goes good when it’s good, right? But at the end of the day, it’s not just about product market fit. If you don’t have real control over your life business and how your product is made, then as soon as a curve ball hits, you realize you’re just as fragile as any other business.

Stephanie:

Got it. Yeah, completely agree. When it comes to someone either launching a new product or building a whole new business, what’s one thing that you would suggest for them to try out based on the success that you’ve had from your store?

Helena:

I mean, again, it sounds like obvious, but it’s not, I would put so much more effort into product than you may feel comfortable with. It’s riskier. It takes more resources. But in consumer, I just don’t think that MVP is going to cut it anymore. So in a time where paid right now is performing well, but ultimately we’re in a postpaid world. We’re in a post soft bank high growth venture capital world. People have to start taking organic growth more seriously. And the easiest way to do that is to have a product that’s good, and tastes good, and feels good, and looks good. It’s one of those things where it feels easy to cut corners up front, but you really only have one chance to make a first impression. And those first impressions, they carry the weight of viral growth. So I would really put more resources into that than you’re comfortable with and it’ll pay off.

Stephanie:

Yeah, completely agree. And I saw you all doing that in your unboxing experience. Do you want to talk a little bit about that buying experience and how you thought about creating something that would … you would make something that would be socially shared potentially, like a pretty box, a pretty bottle? I think you were putting different pamphlets and stuff inside that people actually wanted to share. How did you think about creating an experience that would go viral like that?

Helena:

Yeah, I mean, it’s pretty amazing to watch how much the bottle and the box is shared because we haven’t asked anyone to share it ever, and it just keeps getting shared. But again, I think for us it was about like, “Okay, all of these touch points are important to the person.” Right? Like they’re not just buying an aperitif, they’re buying an experience. They’re buying even a good website experience. They’re buying a good post purchase flow. They’re buying a good unboxing experience. They’re buying a good bottle. All of those things are just as important in direct to consumer as the actual liquid in the bottle. So for us, we put a lot of effort into the glass bottle. We wanted it to look beautiful in your home. We wanted it to feel good. We wanted it to look really tight.

Helena:

And we wanted the same with the box, right? Woody has a great relationship with a box maker from his many years in the industry. And we were able to do custom boxes really easily with him. And we just wanted to make something that was very simple that fit into as many homes as possible. And just the point where it was looking beautiful, right? The point wasn’t to sell the product because they already bought the product, [inaudible] doesn’t need to do that. It really was about looking good and making the customer feel good.

Helena:

And then with every package there’s an editorial that comes in and that’s more of that educational component that I was talking about where that’s another opportunity. Yes, it costs money to make an editorial pamphlet, but in that pamphlet, the customer can learn about me and Woody, they can learn about the farm, they can learn about what appetites are, the history of them, where they belong in the world, why they exist, they can learn a few ways to make a cocktail with Haus. It’s this kind of deep wham bam education right in their face. They didn’t have to pursue it. It’s just there for them. And by the time that they’re done reading it, they have a deep understanding of how to use the product and they feel like they know me and Woody, they feel like they deeply understand where it comes from, and we didn’t have to do anything. Right? We just did all the work upfront.

Stephanie:

Yep. Do you personalize that experience after the first time they buy they might get one type of editorial and then when they come back, do you send a different one and do you keep track of how they’re doing like how each editorial or unboxing is performing?

Helena:

Well, we’ve started only sending editorials with the first order that people make. But we’ve found that actually people like, “Oh wait, no, I was going to give this as a gift. I want the editorial.” So we’re still trying to figure that out. Because there’s so many people that gift Haus to other people that we’ve realized that the first order or the second word doesn’t necessarily mean that it’s that person’s second bottle. It might be someone else’s first bottle.

Stephanie:

Yeah. That’s a really good point not to make assumptions like that and also just really great developing that relationship. I mean, if I were to see a picture of you and Woody, and the whole background and history, I would feel like I have a personal connection with you where I would want to come back and buy from you all instead of going to a liquor store to buy something from someone that I don’t know. So yeah, that all sounds really smart.

Helena:

Yeah. I mean, it’s me and Woody like Haus is me and Woody and it’s a competitive advantage, right? There’s very few companies where the founders are physically making the product. So we want you to know us because this is our life’s work and we’re really proud of what we made. And we want you to know where it comes from because that’s important to us, so it works out.

Stephanie:

Completely agree. All right, and these last few minutes, we do something called a lightning round where you answer the question in a minute or less. Let me know if you’re ready and I will start firing them off.

Helena:

Ready. All right.

Stephanie:

What’s up next for the next product that you’re going to be enjoying from Haus?

Helena:

A summer flavor that was around last year and it’s coming back for this year.

Stephanie:

Ooh. Any hints to the ingredients or what that could be?

Helena:

It’s Rose Rosé. People know.

Stephanie:

Yeah. I didn’t know that sounds delicious.

Helena:

It’s amazing.

Stephanie:

All right. What’s up next on your Netflix queue?

Helena:

Ooh, probably more cooking documentaries. I can’t watch a lot of TV. It stresses me out, but I love cooking shows.

Stephanie:

Yeah, those are very relaxing. What’s up next on your Workday? We heard Woody outside your recording studio, AKA your car that’s outside the warehouse. So what’s he doing today? Why was he trying to get you to move your car?

Helena:

Woody is trying to move a bunch of pallets of product. They’re making a new batch of Ginger Yuzu right now and they’re finishing up some prototypes for the restaurant project. I am going to get off this podcast, answer like a hundred more emails and write a bunch of gift cards for people gifting Haus, and then I’m going to do another interview this afternoon.

Stephanie:

Very cool. All right. In a slightly harder one, what’s up next for e-commerce pros?

Helena:

Ooh. I think it’s taking a big step back and reflecting. That is the most important thing you can do right now.

Stephanie:

Completely agree. All right, Helena this has been a blast. I can’t wait to try Haus. Where can we find you and buy some of your amazing beverages?

Helena:

You can buy them online at drink.haus. And you can follow along with us on the internet @drinkhaus on Twitter and Instagram. And yeah, we hope to send you some booze soon. It’s great for breastfeeding, by the way.

Stephanie:

Yum, I will have to indulge in that. It sounds perfect for me right now.

Helena:

Yep.

Stephanie:

All right. Thanks so much for coming on the show. It’s been a blast.

Helena:

Thank you again. Talk soon.

 

 

 

 

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