The Exchanges

Q And then you went into finance after college, right? But from what I understand, you had to, you just were not happy with the path you were on, so you, Sort of quit your job, which is around the time you, you guys met. Tell me about that. Where, where were you when David and Alex met? What, like, what were you up to?

A So I, I at the time was living in the Bay Area. My wife was getting a degree, a master's degree in holistic health, and I was trying to figure out my next, what I wanted to do. I was waiting tables basically just to make ends meet, pay rent, but I had a lot of free time, and both my wife and I, we were just diving into, like, All kinds of reading and learning and, you know, a lot of Eastern thought and just really, I think, grappling with like, who are we as people and what do we want to do on this planet? And I think the more I, you know, moved away from conventional mentality, the more it allowed fertile soil for, for these other seeds to grow.

AI assessment note: “I at the time was living in the Bay Area. My wife was getting a degree”

Q So, all right. So you, you're going through this kind of personal transformation. How did you end up in San Luis Obispo, which is on the central coast of California?

A So two of my high school friends were very passionate about macrobiotics, and were going to Cal Poly San Luis Obispo, and as part of their senior project, they were opening a vegan restaurant in San Luis, and they were living in a house that they had converted the whole front yard into a living garden, and into, into really like a food forest, where you had mixed trees with different herbs and shrubs and vegetables. Wasn't just like Planting things in a line. So it was, it was really kind of a early version of permaculture. And so I lived there and, um, the way I felt eating the food changed my body. And then on top of that, we were connecting with all these local farmers. And so seeing the connection between the food we eat, how it impacts the land, how it impacts the community, how it impacts the health of the body. And it was like, wow, we really need to focus on building something here.

AI assessment note: “two of my high school friends were very passionate about macrobiotics, and were going to Cal Poly”

Q Presumably because, I mean, this is kind of the beginning, I think, of, like, the natural tea boom, right? There had been Snapple in the eighties and nineties and Arizona iced tea, but this is like, you're starting to see honest tea on the shelves at this time. You're starting to see, like, unsweetened teas, and so was the, was the thinking like, this is the only way to grow?

A Yeah, for sure. I mean, there's a combination of things. One is with the loose and bag market, we realized just in the United States, it's just a pretty small market. You know, statistically in the United States, it's like 75 or 85% of tea is consumed cold. Plus, David and Steven and Don Miguel had spent so much time making mate lattes and making mate taste so good. People loved it, but they would always say, we can't make it the way you make it. And so we felt with a ready to drink, it gave us the opportunity to make it the way we wanted to make it. And then be able to share it much more broadly.

AI assessment note: “Yeah, for sure. I mean, there's a combination of things.”

Q the time it was glass bottles and you were insistent on cause glass bottles are clearly recyclable. No matter what anybody says, plastic is not recycled. Like, 90% of plastic in the U.S. is not recycled. Glass is very recyclable, but it's heavy, and it breaks, and it's riskier. It costs more to ship, which is why so many beverages are in plastic bottles. Did you at all consider plastic?

A I think in the beginning we didn't consider plastic at all, partly for the environmental reason and partly just because we felt like from a health standpoint, you know, the plastic, you kind of get the leaching effect and whatever, and the cleanest way to drink something would be out of glass. Flash forward a couple of years when we were, you know, looking at how do we expand our reach? And we did consider plastic at that point, but ultimately decided plastic didn't make sense for us. And we opted to go with aluminum cans. Because we felt like it's the best out of those three containers because it's so energy efficient to recycle. Flash forward five, 10 years, and everything's in cans now.

AI assessment note: “in the beginning we didn't consider plastic at all”

Q in 6000 stores, which sounds like a lot. You're reporting about ten million dollars in annual sales. So you've been, you've been around since 1996. So what, 13 years later, you're still a very, at this point, a tiny company or small business. You are still losing money. Was this a kind of a, an inflection point? Was there any moment where you're thinking, maybe we won't be sustainable, Chris?

A So there were always worries. I, for years, I mean, was managing cash flow so tightly. I mean, we would certainly, David, Steven and I missed payroll, you know, more times than we would like to admit. And at the same point, you know, we saw friends' companies that were, you know, just hockey sticking and just like, wait, we're getting left behind. But there was never a long-term concern. It was always just short-term like, okay, how are we going to get through this valley? How are we going to get, you know, to the next peak? How are we going to make this work? We joked every year, this is going to be the year of the Yerba.

AI assessment note: “there were always worries... But there was never a long-term concern.”

Q Eventually, you would buy 300 of these. I think you're the biggest customer of Chevy Bolts in America. First of all, how do you fit enough product in a Chevy Bolt to get it to enough stores?

A Well, Cooley after a year, they developed one based on our feedback. And so they took the back seats out, put additional suspension in, had a cage, but our model was very modular. And because we started out going after markets where, you know, that were new markets for us, where we were in natural food stores, but we didn't have any convenience distribution. It was very small, small scale to start with. And so it was just starting from scratch, basically knocking on doors, opening accounts, making it happen. And so, you know, a small vehicle that could hold 60 cases was sufficient in those areas. You know, in Wyoming, we might only have one vehicle, for instance, one person, one vehicle. But as the model shifted, and we started taking over more distributionship, and as the sales grew, then that obviously became a huge limit. Our belief was that, you know, within two years, there'd be electric vans and trucks, and there aren't.

AI assessment note: “they took the back seats out, put additional suspension in, had a cage”