Announcer 0:01
You’re listening to biz ninja entrepreneur radio. This show was created for entrepreneurs, business owners, marketers, and dreamers who want to learn from the experts of today and drastically shortcut their success to build a business that supports their dream lifestyle. Since 2011, Tyler Jorgensen has been interviewing business thought leaders from around the world, a serial entrepreneur himself. Tyler also shares his personal insights into what’s working in business today. Welcome to biz Ninja, entrepreneur radio.
Tyler Jorgenson 0:33
Welcome out to biz ninja entrepreneur radio. I am your host, Tyler Jorgensen. And today we have Josh Jacobs with us. And Josh is the founder of one of the most fascinating companies that I’ve seen in quite a while Speakeasy Co. and Speakeasy is a company that is streamlining the chaotic world of alcohol, ecommerce, and I don’t even understand it, but I know that it’s crazy. But Welcome to the show, Josh.
Joshua Jacobs 0:42
Thanks for the kind words and appreciate you having me on the show, Tyler.
Tyler Jorgenson 1:10
Absolutely. So I always start at the very beginning. When was the very first moment in your life that you realized, Josh, you’re an entrepreneur?
Joshua Jacobs 1:19
That’s an interesting question, Tyler. I can’t recall the exact day that it dawned on me. But I can recall the first startup back in college, where it was kind of pre that big internship between junior and senior year where one of my roommates and I was just racking our head saying there aren’t a lot of great internships in the market. A lot of them are fluff resume builders. And we said that there’s an incredible talent pool of college kids that are underutilized. And so we started creating our own mini staffing agency. And so that was my first taste of entrepreneurism and I was hooked right out of the gate.
Tyler Jorgenson 1:59
Now you’re running Speakeasy. And so tell us what today Speakeasy is, and then we’ll work backward from there.
Joshua Jacobs 2:05
Speakeasy is an ecommerce and fulfillment platform purpose-built for the alcohol industry. And that’s a mouthful, and we’ll definitely unpack it. But in a nutshell, we help alcohol brands sell online, where that’s not compliant to the existing regulatory structure.
Tyler Jorgenson 2:22
So and there’s a lot of barriers and a lot of regulatory structure. And I mean, you guys, there’s a lot of industry lingo for people that are in the industry, we’re like, the basics of it is an alcohol brand cannot sell directly to a consumer online, is that the shortest or period right?
Joshua Jacobs 2:40
There are some exceptions. Tyler, if you go to a brewery or distillery you can purchase in person in certain states. But generally speaking, you’re absolutely correct brands cannot sell direct to consumer, there are these three tiers, the brands have to sell it to a distributor, the middleman that transports from the brand to the third tier bars, restaurants, and liquor stores where we as consumers purchase product generally.
Tyler Jorgenson 3:05
So a lot of this like, not only is it super complex, it’s different by state. And a lot of this stems all the way back to like prohibition, right. And the rules that started at that time, as the law started loosening up and opening back up, which I love that you then created the term your company called Speakeasy. How did you guys get your start?
Joshua Jacobs 3:26
We got our start back in 2015. And it was during the rise of the subscription boxes and Tyler, are you familiar with Blue Apron? And Birchbox?
Tyler Jorgenson 3:35
Yep, absolutely.
Joshua Jacobs 3:36
And so what we loved about Blue Apron was they were taking something as intimidating as whipping up a gourmet meal at home, and democratizing that experience. What we loved about Birchbox was the whole sample to full-size component and ecommerce store that they had, we thought this was an opportunity with Blue Apron that you were really only engaging with them through this subscription box. So we were looking at the intersection of Blue Apron and Birchbox. And back in 2015, was also the rise of craft cocktails. They’re becoming integral facets of restaurant menus, and even dedicated bars popping up all over the place. So we thought, okay, this is it. This is an amazing opportunity. None of our friends, family, even ourselves, my wife, and I were the original founders at the beginning. We were like no one knows how to make a craft cocktail. There’s got to be an opportunity here and then even going online. There’s not a centralized location for information or to purchase.
Tyler Jorgenson 4:41
Yeah, so you saw a lot of different opportunities. How did you first dip your toe into the market?
Joshua Jacobs 4:47
So we said Tyler, what is the fastest way we could launch, and we outside of making tequila shots with lime and salt, we had no idea how to make a cocktail. So we went to a bar and We asked the bartender if we could film him whip up a cocktail. And I still remember to this day that he made a whiskey Smash. And he was walking us through all the individual parts about slapping the men to release the oils and the fragrances. And it was really incredible and helping validate this whole mission that we run. So we had the video, then we went to the liquor store, we got some of the ingredients. Then we went to the grocery store, we got the remainder, and we started doing these home visits. We went to friends, acquaintances, colleagues, anyone that would let us in their doors, which was virtually anyone because we had a box of booze. And speaking of being embarrassed, we had a brown craft standard box, where we slapped the logo on top, we literally taped a logo that we’ve made just on word, and we went to the people’s homes, and it was an incredibly fascinating experience. watching all the mistakes that we had made. People couldn’t hear certain sections, they kept for winding about the directions. We didn’t have directions printed out, I was one of the first things we learned. Then the second thing we quickly learned was most people don’t have the cocktail accouterment. So no one had a strained strainer. And kudos to our friends, they were using spatulas to strain and we were all laughing our asses off and having a fantastic time. And at the end of these home interviews, we asked every single person would you pay $40 a month for this subscription box? And to our surprise, a lot of people said yes. And to their surprise, we said, alright, give us your credit card information. And lo and behold, we had our first couple of subscribers in just a matter of days after coming up with the idea.
Tyler Jorgenson 6:45
Awesome. And so how did like to walk us through that first couple of years, like what was the highest number of subscribers you had. And I think things have changed since then. So what was when did you find the call the audible it’s time to pivot?
Joshua Jacobs 6:59
We went through a series of learnings and iterations until we eventually pivoted or made the decision to pivot at the end of 2017. So I’ll kind of walk you through those early days because it helps explain the model that exists today. So right out of the gate with these subscription boxes, it was a mission of ours to not just introduce subscribers to new cocktails, but the most important ingredient in the cocktail the spirits. So naturally, we gravitated to partnering with craft, distilleries, and craft spirit companies. And they were the ones educating us on the three-tier system that exists today that we’ve already talked a little bit about. And they blew our minds when they shared that our subscription box was virtually the best marketing vehicle that existed in the industry, they had an opportunity to curate an experience for drinkers and have this little bit of engagement. And we didn’t know what Tyler but from early on, we said, let’s challenge ourselves to think of creative ways to fuel these craft distilleries grow. So that was kind of version one, we got off the ground with our subscription boxes. And going back to Birchbox. We knew we wanted to have this sample to a full-size component. So it was very organic for us to then start reselling past partners, 750 ml bottles, and after a couple of months, not the most exciting ecommerce store. So we had just a couple of bottles. So we said all right. Why are we limiting ourselves to just past partners were more such a young startup, let’s build a craft spirits store.
Tyler Jorgenson 8:41
No, that’s I mean, that makes sense. Like, you’re new, so you don’t have a ton of boxes that you shipped and you don’t have a huge customer base. So you can start looking at maybe acquiring customers from two different angles.
Joshua Jacobs 8:52
Absolutely, yeah, we really saw the store as a separate vertical. And as we talked about, there wasn’t a centralized location to shop craft spirits accouterment. So whether it’s a shaker a jigger a strainer, whether it’s bitters or these craft spirits, we want it to be this location. And so whether you were enjoying the subscription box, or you were just coming to us for supplies, we really wanted to be that one-stop-shop.
Tyler Jorgenson 9:20
Yeah, absolutely. And so that’s going to open up, there’s an idea that each new skew you add in your business, like multiplies the complexity, your business by 12, right. So you have a beginning subscription box, but then you’re also like, let’s start adding all these other skews. Did business get more complex? Or did this actually help solve things?
Joshua Jacobs 9:37
Business certainly got more complex very quickly. And one of your questions, Tyler, how many subscribers do we get up to? How quickly do we grow? And things took off fairly quickly. We didn’t raise a whole bunch of money from VCs, we were bootstrapping. And so we went from five subscribers and we kept doubling for the first number of months and Very quickly, we outgrew our liquor store partner. However, fulfilling single-size bottles of alcohol is much simpler. So while a complicated overall business model was something that our liquor store partner was accustomed to fulfilling, and so they basically told us, we outgrew their capacity for the subscription boxes, but they were able to support the single bottle sales. And if there were some bidders to include, that’s much more up their alley. And so basically, they had put a cap on our growth. And we had to take our foot off the gas for marketing. And we had this whole other revenue stream that we were interested in, and we could actually continue to push.
Tyler Jorgenson 10:42
Awesome. And so I mean, this is going on through like 2015, 2016, 2017 you’ve got is that when you basically said, Okay, we’ve got to pull our foot off the gas, or did you eventually just say, you know what, we’re gonna make an even bigger pivot, we’re going to can subscription box, and we’re going to go bigger in other problems that we can solve.
Joshua Jacobs 11:00
Yep. And so we launched November 2015, with those first five or so subscribers, and then after about six or so months, we had tapped out the liquor store’s capacity. And so we were simultaneously exploring other fulfillment partners. And alcohol, we talked about lots of red tapes. So finding a three PL partner was not as simple as it would be in many other industries. And I’m sure even now, there are more that have popped up, just as subscription boxes continue to be more and more common. However, back in the middle of 2016, we were really starting to focus on this liquor store, as we were exploring new partnership opportunities for the subscription box. And we’re going back to that mission, let’s challenge ourselves to think of creative ways to fuel the craft brand’s growth. So we built this liquor store. And we asked them, we said, Hey, what do you think of our liquor store, and they said, well, outside of your selection, which might be somewhat unique, it’s no better than other existing online liquor stores. And so we pressed them, so Okay, tell us more. And they said, Well, on your liquor store website, and every other online liquor store, we have no control over the user experience, the look, the field, the design, the price, the shipping costs, any of the messaging, at the bottom of our product page, you’re promoting other alcohol brands. And so it’s great for you to perhaps run your own liquor store and your own brand and your own marketing, but we’re certainly not going to invest many resources on our end. And so that was the first major spark that put us down a new path. And we said, okay, how can we improve upon the general liquor store marketplace experience. So we built dedicated landing pages on our website, to each of these craft partners that we’re working with, we hit all the navigation, we skinned it to look like their website. So as a more seamless handoff, from their website to our website, instilling more confidence to start investing in digital marketing. And we started seeing much more success. And we started actually just pitching this whole dedicated shopping cart. So we had the subscription boxes, we are still trying to do find a partner for him. We had the liquor store, our own brand that we’re working on. And then we had this new complexity that we were adding, but it wasn’t necessarily going back to your question, a lot of complexity on the back end, whether the transaction came in from a marketplace. So the transaction came in from a dedicated landing page on the back end to liquor store fulfilling, it was all the same to them. So for us, it was really just a new model to pitch and a new potential revenue stream. And thank God, we didn’t take the foot off the gas. We have a lot of partners starting to reach out to us in our neighborhood in San Diego, and a potential partner reached out and said, Hey, Josh, rather than a dedicated landing page on your website, what if you built us a website from the ground up where we had complete control over the user experience we had access to all the fundamental ecommerce tools, cart abandonment, emails, Google Analytics, retargeting, Facebook pixels, everything, except we relied on your compliance and fulfillment back end. And Tyler, that was the Eureka moment that happened. Summer 2017.
I love that because you know, nobody wants to the minute somebody clicks on something all of a sudden see all their competitors. They don’t want their brand being featured against everybody else. They want that spotlight. I think that’s cool. So like, you started getting brands to jump on board, you started solving all these problems, like, Where are you guys at now? Where are you headed?
So we just got to summer 2017. We launched a pilot with this potential partner that approached us with the idea we built them in the end pandan website and right out of the gate, they started selling hundreds of bottles a month. And so the light at the end of the tunnel was that much closer with this b2b model, we didn’t have to go and fundraise a bunch of money for ourselves. Virtually every partner that we brought on was a mini fundraise because they brought their own marketing dollars. And after this pilot just completely knocked it out of the park, we decided that we wanted to sunset the subscription boxes and focus entirely on this new platform. Funny side story, we had also brought on a new business partner since we’d found a fulfillment partner for the subscription boxes. So we brought on a new business partner to redesign the subscription boxes, redesigned the website and relaunch, and really go big with these subscription boxes. Fortunately, he saw the vision with the direct-to-consumer platform that exists today. And it was all in and he’s been an integral part of the team ever since. And so we launched in February 2018, the first brand on our proprietary platform that exists today.
Tyler Jorgenson 16:06
So I love that you brought him in, hey, come and help us do this. And then you decide to completely go a different direction, but he stayed on board. And it’s that old adage of if you got the right people on the bus ride, then you can take the bus wherever you need to. So you had a good, good team and a good partner. And you guys are going all-in in this direction now. So you know, I reached out to you guys originally, I saw one of your ads or something. And as an econ guy, I’m like, man, I know brands that either wants to add their own product, like I believe you guys worked with some really big names they like, I don’t know if you’re allowed to talk about it. But I think you guys did the Tesla tequila, which was a huge product launch, really well known and like the people in the space people that liked Tesla and Elon Musk if you can talk a little bit about that, and how people maybe that don’t have as big of a presence as Elon, but how they could do their own version.
Joshua Jacobs 16:54
Certainly Yeah. And happy to talk about it. It’s one of the things we’re most proud of, at this point, the last launch 10s of 1000s of bottles sold out in 45 minutes. Really incredible. And that type of success might be difficult to replicate, millions and millions of dollars. However, there are micro-influencers. And some entrepreneurs understand ecommerce and what’s so exciting is that according to the AWS are less than 2% of alcohol sales at this time are online, you look at other industries, it’s more like 1520 25%. And growing. There’s a really exciting runway, and AWS is projecting 400% growth in the next couple of years. And I’d expect that exponential curve to continue. And so there’s a really exciting opportunity for micro-influencers, entrepreneurs marketers to come into this space. While not everyone’s jumped in and get a really quick Head Start from what we’re seeing the acquisition costs and the clicks are extremely low compared to other saturated markets.
Tyler Jorgenson 18:04
Like that’s insane 2% again, I don’t mean to keep saying but as an econ guy, any market understanding that only 2% of its online, huge opportunity. And I’m also a huge believer of a lot of these, we’ll call them influencers but people who have an audience needing to own a little bit more of their supply chain, right like some people have huge followings and they’re all they’re doing is looking for brand deals and selling other people’s products. And I think we’re starting to see a lot more of those people realize, I could do my own thing, you know, and own a little bit more of the customer experience. And or at least be more proud of the thing, I’m moving right. And so not that there’s anything with brand wrong with brand deals. But I just think it’s neat. And so, I mean, 10s of 1000s of products and in four and a half hours is not normal. What are some other of those kinds of deals that are those kinds of things that you guys have done? You can share with us?
Joshua Jacobs 18:54
Yeah, one of the other marquee logos working with if you’re familiar with the alcohol industry is Whistlepig. And Whistlepig has a really unique approach for online sales. They are widely distributed for some of their skews, they have certain skews, they’re highly allocated impossible to get. And then they have other skews that have historically only been available in Vermont out of their tasting room. And ecommerce presents an opportunity with centralized fulfillment to get the product in the hands of consumers in a much wider demographic with that control. And we’ll keep going back to that word Tyler control is really at the heart of our offering. And so whistle pigs first launch, they took two single barrels that have never been available outside of their tasting room in Vermont. And they throw them up on our platform. And lo and behold, they sold out of both in just a couple of hours. Then they did a second launch with an 18-year-old reserve. And it was $400 I think and that they sold out in just a couple of hours as well. And so there’s an exciting opportunity for emerging craft brands that don’t have the notoriety to have more control over their growth. So going back to that word control, well is existed in this industry is reliance upon the distributors, the second tier, and the third tier bars, restaurants, and liquor stores to promote brands. But now all of a sudden, through ecommerce, they can start running Facebook and Instagram ads, and own their own growth, where before, if they ran those ads, it was either to an online liquor store where they had no visibility, no ownership of the customer data to monetize the lifetime value of the consumer. Or they said, Here are the locations where available brick and mortar, not the most modern experience. So really challenging for these small brands to get off the ground. And then on the other end of the spectrum, these larger brands, it’s an opportunity for them to control the unboxing experience, where brands have had no control over the experience in a bar-restaurant or liquor store. Now they can curate this really elevated experience in-box and in your home. And not just control the experience but also gives them an opportunity to focus on small-batch harder to find rare products.
Tyler Jorgenson 21:17
I love the model I love what you guys are doing this is we preach a lot of what you say all the time, and you guys are working with I think like over 180 craft brands now, which I think is amazing. What are some of the other like, you know, I mean, obviously, Tesla tequila is not that’s not some of the industry they plan to stay into, right? They’re not trying to move into the TV space. It’s a promotional type thing. Do you guys do promotional-type things often? Or is that really less common?
Joshua Jacobs 21:42
Tesla tequila was our first taste of promotional and we’re hooked. So we’re certainly seeking other opportunities. And I mean, we might be only going downhill after Tesla. What it was a good test.
Tyler Jorgenson 21:56
Yeah, it was a good Yes. toe in the market, for sure.
Joshua Jacobs 22:00
Perfect first test. But there are lots of brands that have incredible reach. And even though going back to these micro-influencers, that we can even pair up with some of these craft brands that we’re working with, we don’t necessarily need to create a whole brand around it. But maybe we can do Casamigos at a much smaller version. And we can tie some of these micro-influencers, maybe with a brand in their local market in their local neighborhood. And maybe instead of selling Casamigos for 300 million, maybe we can help the small craft brands sell more products.
Tyler Jorgenson 22:36
Very cool. And so yeah, I love that I love the idea of collaborating, with micro-influencers and brands, especially local and regional. I think that’s really cool. What are the challenges you guys are currently trying to like battle through? And as you’re like working through those and like because you’re hitting a new level of scale, right? So what are you doing to solve today’s challenges?
Joshua Jacobs 22:56
The biggest challenge we face right now is around awareness. This is such a shift in strategy, that we haven’t really seen this leap in the 88 years since prohibition, and the decades-old sales models of someone pouring in the liquor store or going to different brewery events, and distillery events as really the only sales and marketing technique that’s existed. And so our partners first have to buy into the idea of digital that’s that’s hurdle number one, well, first, they have to know about it that it exists second, then they have to buy into it. Then the third challenge we’re facing is the fact that since this is such a paradigm shift away from the traditional model, most of the brands that we’re connecting with aren’t necessarily equipped to maximize our offering. They don’t have a digital marketer on staff and they certainly don’t have a big digital marketing budget. And so we’re trying to hold our partner’s hands and coach them through some of this. We’re also starting to offer our own digital marketing services, hey, it doesn’t make sense for you as a small brand to go all in and jump in headfirst. Why don’t you outsource and partner with us, we have incredible visibility, we have in-house expertise, we can run the marketing on your behalf. But as the conversation of direct to consumer and ecommerce is really taking off, you can’t really go a week in the alcohol industry. Now without seeing one of these crazy numbers online alcohol sales up 200% 500% whatever it might be. We’re seeing much larger brands, for example, Whistlepig gets into this. And this is where it’s going to get especially exciting since they have marketing teams and marketing budgets to really help push this forward. And what we need is not just awareness for the brands, but awareness for the consumers. We’ve been trained to go to the liquor store every Thursday or Friday to get our alcohol for the weekend. Not a ton of consumers are looking online and if we can just oh But not open up the eyes and spread the awareness. Once you go and shop from your favorite distilleries website and have it delivered directly to your door, you’re going to be hooked. And once you taste that convenience, there’s no going back.
Tyler Jorgenson 25:12
I love anytime people are like going head-on at challenges, right? And so not only do you have like the regulatory challenges but as you said, the awareness challenge of just going to a lot of these brands are they’ve been around for years. So the people that are marketing or running, it isn’t used, they’re not even thinking of this kind of thing. So you have to go and raise awareness, and then and then show it, you have to like, introduce them to the problem, and then show them how you’ve solved it. And I just think it’s really cool. What is one major item on Joshua’s personal bucket list that you’re going to accomplish in the next 12 months?
Joshua Jacobs 25:43
Tesla was certainly a bucket list item that’s going to be hard to eclipse again, in the next 12 months, I’d love to see a major household name on the Speakeasy platform, not necessarily delivering one of their main skews, since those are available in every liquor store. But if we can get well, another Whistlepig that’s offering some of these unique skews and cocktail kits and custom unboxing experiences that’s going to drive significant awareness. It’s going to bring more brands into space which is going to bring more consumers and that’s the cycle that we need.
Tyler Jorgenson 26:19
I love it. People should go and learn more about you at Speakeasy co.com, or you guys are avail you’re on Instagram, you’re on Facebook, you’re all those places. If people want to learn is that where they should go? Or is there anywhere else that people should go to learn more about what’s going on?
Joshua Jacobs 26:35
No, that’s perfect. Go to our website, check out our social media. You can also reach out to me directly Josh at Speakeasy co.com let us know if there’s a particular spirit you’re interested in and we can share a couple of brands that we’re working with.
Tyler Jorgenson 26:49
I love it. Guys. I’m so excited for any time an entrepreneur comes on the show and shares how they’re solving problems. It’s an opportunity for you to learn and grow so now wherever you are listening, it’s your turn to go out and do something.
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