 This is Startup Storefront. In business school, it's common for college professors to assign semester-long projects for students to start a business. And to be honest, most students never take this project beyond the final grade. However, Max Berg and his classmate, Dave Goldbin, took this assignment and ran with it. In a world where you can literally customize everything, they couldn't help but ask, why can't you create customized beer cans? After all, that's what everyone's drinking in college. After creating custom cans for their families' Thanksgiving dinner, their families, especially the grandparents, just couldn't get enough. Heck, one grandparent was even stashing them away to hold on to the memory. That's when they realized the concept of custom can labels had staying power beyond the classroom. Today, we're talking with Max, co-founder of Elix, a company that creates customizable beverages made for the moment. We discuss why custom drinks pair so well with weddings, how they started by soaking Trader Joe's beer bottles in bathtubs, and their partnerships with everyone from individuals to businesses, including mischief. All right, welcome to the podcast on today's show. We're talking to Max from Barrel Labs. Thanks for joining. People don't know, complicated thing, but what is Barrel Labs? Yeah, Barrel Labs. It's our umbrella company, actually. So we've got a handful of brands underneath Barrel Labs. The probably most notable one is Elix. It's basically where we're enabling the customization of craft beverages. We've got beer, wine, water, hard seltzer that we're enabling our customers to personalize, customize for their events, gifting occasions, that sort of thing. And so... We'll talk about Elix, pass me that can right there. And so this can that we gave you guys, this is an NFT I own, it's a Cardano NFT. And so it's called Claymates. And so this is basically the board ape of the Cardano coin. Gotcha. And I tweeted this after I got it. And if you're listening, it's a can that has the NFT on it and under it says startup to storefront and Elix, the company. And so it's like a collab. And I tweeted this. This is my most liked, shared and retweeted tweet of all time. Love that. And I tagged you guys in it. And so I'm sure you guys were like, what is this thing happening on Twitter? And it's a rose wine. And it's a rose wine. And so let's just unpack this. So when you guys started to go down the road of Elix was your first step to partner with beer makers, wide makers, and then just see if you can get quantities out at scale? Yeah, the way we, I mean, the way we first started, we literally went to Trader Joe's bought the most generic looking beer that had like no branding on the cap, left those in the bathtub overnight, scrubbed off the labels, and then we were designing custom branded stickers for people's events and applying them ourselves and then reselling those. So that's how we like first started. And what made you guys want to do that? So at some point maybe you had the idea of like it'd be really cool to throw a party with a custom label on something. Yeah, well, it's funny, Elix started as a master's thesis during business school actually. So we were trying to come up with an idea for a school project. And we were all wearing branded shirts for, we went to UCLA. So we're wearing branded UCLA Anderson shirts. Like you can brand everything, but I can't brand a beer, which we were all drinking as well. And that kind of led us down the path of learning about the beverage industry, supply change, regulatory kind of compliance issues and hurdles. And that was the genesis of, you know, let's figure out how to make this happen. And so in your head you're like, people definitely pay for t-shirts, which we know. And so in your head you go, it seems likely people will pay for this. 100%, 100%. OK, and then so you're at Trader Joe's, you do this thing. What was the first model you guys made? What was like the logo? It was one of my co-founders, buddy's Thanksgiving dinner with his family. Like a photo that he had taken? It was a photo of his grandparents on the label that we printed out, a sticker, applied it. And the entire family freaked out. Of course. Literally like the grandma was hiding beers, so no one would drink them. And we're like, OK, cool proof point, let's unpack this a little bit further. And basically we realized we're enabling the long tail of customization for any event. It's not just Thanksgiving or a birthday or a wedding, but it's like we've done divorce parties and one-year-old dog birthdays, like people are creating whatever reasons to buy beverages. We have one for the podcast. We have a champagne right there and the photo on it. So in that case, it's a wine label. And people listening, it's just like maybe a four by five sticker doesn't look good. Like it's boring. Whereas like this can, people listening again, it's a complete replacement cover for the entire can. So it doesn't feel like a cheesy sticker that we just slapped on it. Yeah. And that's by design, right? Like when we first started, we thought of ourselves as honestly like a design company where we're selling beverages, yes, but really we're selling high quality design so that every order we're delivering feels like your true own brand that you have developed and you own and is yours. And it's a pretty different feeling than just a sticker on a bottle that everyone knows it's a sticker on a bottle. So then how important is the manufacture of the alcohol inside of it? I imagine that. Not at all. Right, it doesn't matter. You could have anything in there. It's more of a presentation. You put my face on a bottle, I'm gonna pretend it's delicious. Exactly. I think that's that simple. For sure. No, it's a great question though, right? And I kind of skipped over your initial question. How are we actually sourcing the beverages? But what's inside the can is still really important because if something tastes like shit, can I cuss? Yeah. If something tastes like shit, no one's gonna buy from us again, right? So we are going out of our way to source really high quality craft beverages across all the different categories that we're offering so that people oftentimes are trying for the first time one of our beverages are like, oh, it actually tastes good because they think something that has branding over the top of it is gonna be just really low quality whatever on the inside. And that's not the case. Was it hard to find these people? Like are these like craft brewers that on the side have? I don't know, maybe like it's just a 100 barrel system. No, so we're, I mean, we're happy to share who we're working with. So on the beer side, we work with Slow Brewing Company up in San Luis Obispo. They're one of the largest craft breweries in California award-winning beers, really, really high quality stuff. We had graduated to them when we first started out, when we were looking for our first brewery partner we literally went from brewery to brewery kind of just cozied up at the counter started asking weird probing questions that someone just having a beer at a brewery wouldn't ask about like production capacity and how long their brews typically take and what their canning process is and that's like literally what we did until we eventually were introduced to either the owner or GM and started the conversation of what we were trying to build to see if they had interest in working with us. And I can imagine them being pretty down like the least experiment at the beginning, right? It would seem without having you commit to some like crazy quantity or a whole vat or something. Yeah, there were a couple that were down to kind of I guess open their doors to us so to speak really low order quantities and for them our pitch was you guys are doing literally nothing different except for creating or producing more of one of your flagship beers and we're helping you increase your utilization capacity. That was our sell. It's like you do nothing else you just happen to fill cans without labels on them according to your same production process your same recipes will buy those from you at wholesale and then kind of take them from there. It's kind of like the Kirkland signature model, right? I mean, they partner with alcohol manufacturers all over the world and people guess as to what they are but it's not like you're reinventing the wheel here you're just doing it with local craft brewers as opposed to massive distributors. Yeah, yeah, at least at the start for sure that's about right and most of the breweries I mean like you don't see customized cans or you haven't for a reason the production process is kind of completely inverse to what our model is and that enables us to get down to really small minimum orders for our customers down to individual 12 packs when minimum orders for branded cans probably like 10,000 plus for breweries. Okay, so then at some point you have to match the customer, right? And so then you gotta be like well who wants this outside of your test case? At Thanksgiving and it works but then what are people willing to pay for it that cover your costs? And so what was the next step of like you're doing your thesis, okay, we have an idea we have a proof point how do we make this a real business and get people to pay us to do this? Yeah, I mean our beach head kind of target customer was event and wedding planners. They service large scale events there's a long lead time there's typically a preset budget alcohol is gonna be served at a very large majority of them and branding is important. So checked all the boxes and they could be in effect our outsourced sales team, right? They've got a lot of different customers that they're working on events for. So that was our beach head market. So we started on like theknot.com to get in front of people at scale in that way. And that worked? It did work. Yeah, so like weddings were the main focused kind of target event for us when we initially launched the company and it was working and then COVID hit and all events were canceled overnight. And so that threw a wrench into... I kind of like this. Yeah. I kind of like this actually. So that was a... Before we get into the pivot of this. Yeah, sure. But your business is so when you get the cans, they're just cans and then you guys have I imagine some like big sticker factory. Yeah. Is that really, is that it? Yeah, we have a... A sticker, but you know what I mean? Sure. Like a beautiful cover. We've got a full label application kind of production line storing all beverages on site. Okay. So it's like a big fridge, big walk-ins and stickers. Yeah, yeah. Okay. Like an assembly line almost. Exactly. Basically the way our model works is we're finalizing all designs upfront getting those produced in bulk according to beverage type. So like all logger designs on one roll all Blondales, all IPAs on their own separate rules. And then as we're going through production all the loggers go through all the custom designs for the loggers go on at one time directly off the line into a box out the door. And technology-wise it's all there. It's not like you guys are creating anything. That's it's all like the canning process already exists. You're just doing it with different designs. Yeah. Our production model is I kind of mentioned it earlier is inverse to what is standard in the beverage space. What is typical and like this can they have the design on the can fill the can with the beverages after the fact close it up with the topper. Ours is completely inverse where we get fully filled cans without labels apply the label after the fact. All right, let's talk about the pivot. So COVID hits events are over. Yeah. What do you do? We try to survive. So we have this unique model we can do small batch customization on cans. So we tried to figure out how to continue selling at scale but when people weren't coming together. So we shifted to pretty much a full e-commerce model. So we built out an e-commerce website over the course of two, three weeks. And instead of doing custom designs for events we created limited edition designs that were kind of culturally relevant that we thought people might respond to. So we did a whole drink for good campaign where we had designers from across the country and really the world that were furloughed because that was when everyone's jobs got cut and everyone was looking for work and we were a design focused company. So we literally had designers all over the world submitting designs that we were choosing between to apply to our cans and make available for sale on our website. They would get a portion of the proceeds. We would then donate a portion of the proceeds to the World Health Organization. And that's like how we maintain. That's really smart. Have you heard of Tilt? The company Tilt or Teespring? Have you heard of that? Teespring, yeah, yeah, yeah, yeah. So same thing. Yeah, y'all are like Tilt beats Teespring. So Tilt. Bucket feet on the shoe side. James Beshara who now does Magic Mind. His first company was Tilt. And basically it was this thing where same exact the designer thing but it was like as soon as enough people said they would buy it, it tilted. And then boom, they would make the thing. Yeah, I mean there's Gustin is another. There's so many. They do that on the clothing side. But the hard part is getting the one enough people to come to your site, the designers to actually submit. For sure. And so Kudos to you guys for building like a brand that people were aware of. And when you guys were selecting, were you opening that up to like a public forum, like a poll or was that all in-house? That was all in-house. Really for like timings to just like, all right, that one looks good, let's move forward. But that's kind of what we did. So we started doing these limited edition campaigns where you could buy a 12 pack of, like a variety pack of these cool designs that were relevant at the time. And that was kind of how we maintained at least for the first whatever six, seven months when COVID hit and events were over. That's amazing. And so if I were you in my head, based on let's call it Teespring, I'm going nuts around like, I need to go get a bunch of money to become the brand that is one and there's no two, three, four. I gotta win immediately, right? Because it's like people can copy me. Is this going through your head? What are you guys doing? How do you guys think about that? Yeah, for sure. I mean, we raised some money to just, we had our physical infrastructure. We have a physical product. We have to buy inventory and bulk. So capital was necessary to even get the business off the ground. A lot of licensing stuff, so legal fees. So we raised some family and friends money throughout, I guess, 2020 to prove out the model. And then as we were starting to scale up across other segments as well as the world started opening and events and more direct to consumer for events, we did go out to raise a formal round of capital from institutional investors. That's smart. As you guys are moving forward, so obviously like brand partnerships work, right? And so now that you're past events, what are the things that really cranked the needle for your business today? Yeah, so I'd say there's like two unlocks. One is corporate events and selling in the promotional product industry. I'm not sure how familiar you are, but it's basically any branded swag item, backpacks, keychains, that sort of thing. It's like a $26 billion a year industry hiding in plain sight. It's insane. It's absolutely insane. So we've really leaned into selling through that channel to large corporate customers who are buying with thousands of cans at a time. A lot of scale there to get to kind of take advantage of lower distribution costs at scale as well. So there's a lot of reasons why that's a good fit for us and in that space as well. We're the only ones doing it. And then the other unlock is kind of brand incubation as we classify it, but basically merge drops where we're partnering with celebrities, influencers, content creators, anyone with valuable IP or NFT as an example, that would want to sell their own branded beverage through our platform to their audience. So we're powering a lot of those types of- I could do this, right? I could sell this as a product. That'd be kind of cool. Again, this is the most liked tweet I've ever had and I'm not big on Twitter. Like it's not the platform I use. Maybe more now that Elon's bought it. I don't know. And they're taking away blue check marks. You know, we talk a lot about productivity on this show and I think there comes a time of day where it's really hard to stay productive. And for me, it comes around like two, three PM in the afternoon. I know a lot of people turn to coffee. I don't like coffee. I never liked the taste. But the other thing is like when I have a lot of caffeine, I tend to crash really hard. And whatever gains I get from that in the meantime are erased once I hit that crash. You know, this product that we have today, MagicMind, I've actually found that it doesn't give me that crash. It gives me the boost of energy I need without the crash. All of these energy booster drinks, I'm kind of skeptical on it because like A, what's in it and B, does it actually work? But here's the deal. Here's the truth. James Bashar, the founder of MagicMind came on the podcast in season three. He talked all about the, what goes into the drinks. Great episode. And honestly, he was right. Like these MagicMinds do make a difference. Aside from matcha, it's got adaptogens, nutropics and honey. And really like all of it, natural clean ingredients. It's just a great little energy boost that you can take. Some people take in the morning. I prefer it, you know, around lunchtime and I find that it gets me through the rest of the day. You know, the one thing I will say is like you do have to shake it pretty well though and like that. Don't I? Doesn't that sound so good? Ha ha ha ha ha ha. But yeah, you, there he goes. Oh, and she's chugging it. Startup storefront approved. We have a discount code for you. It's storefront20 and that's for 20% off your order. But if you want to get the subscription, we have an even better deal for you and it's 40% off. But it only lasts for 10 days after this episode airs. So you got to be quick about it. You're saying 40% off? 40% off? 40% off, almost half, yeah. Wow, I can't believe it. Check it out, storefront20magicmind.co slash storefront. Wait, hold up. It stacks up 45%. So hold on, so hold on. It also stacks with the subscription discount from the website for a total of 45% off. I recommend it. This has been tried and tested many, many times over on the podcast. Storefront20, check it out, up to 45% off in the first 10 days after this episode airs. Crazy discount, 45%, check it out. How would I do that? Let's talk about how I would do that. Or not just me, but in general terms, like people listening, if they are a celebrity, if they do have a big brand, or if it's a publicist listening, what's the play? So I say, here's the IP, here's my logo, here's my thing. How do you guys help them navigate the rest of it? Yeah, so the way we think about it is we're a business in a box solution for launching your own beverage brand. We've got a couple of different routes to follow, but if you go to our website, we've got a brand incubation page and a introductory questionnaire that anyone could fill out to let us know what their brand ideas, what their goals and objectives are, who they are, so we can learn a little bit more about them. Not everyone's a perfect fit for us to kind of invest our time energy resources, which that's just how it goes. But for folks that are a fit, we then collaborate directly with them on the beverage that they want to make available, whether it's something we have off the shelf or are we sourcing and developing an entirely new recipe from scratch. We've got our in-house design team who are extremely talented, that helps with the branding, the design, the name, the aesthetic of the product, and then we handle website hosting and development as well. So we do all backend infrastructure, distribution, production, compliance, fulfillment, and then our partners are the demand generation engine. They've got the audience, they know what's gonna resonate and we kind of enable them to introduce a new product that otherwise wouldn't exist. Is it a SaaS model? Like how do you guys charge for that? Or is it like percentage of sales or is it? Percentage of sales, so we have a rev share with our partners. They get X percent of the cans that they're selling and then there's kind of a minimum threshold. After you sell this many cans, that's when your commission starts kicking in. And then from just a purely social media perspective, do these creators or people that you're working with, do they set up their own socials with that brand in particular with that product or are they just using their own existing platform? Or both maybe? Some do, yeah, yeah, some definitely do. If people are looking to build out a more enduring brand, it makes sense to kind of invest in that brand's infrastructure. Social is a big piece of that. Others are trying to do a limited edition merch drop tied to a music album release where they're just point in time, kind of take advantage of some momentum, eyeballs, publicity on them. And if it fits their brand, then we're happy to make that happen. And right now it's all cans or are there bottles? Is there even a desire to move into that space? Exclusively cans for right now, we are expanding to spirit-based products. And at that point, we'll introduce bottles, but less focus on kind of the full design printed design on the bottle, the more the uniqueness of the bottle tied to a specific brand or whatever it is we're introducing. But for the most part cans are where we're focused for a lot of different reasons, design as a priority being kind of core to that. Can you give us an example of like a really successful collab you did with a creator? Maybe like the album was a specific one, but something that you were like, wow, this really hit. Yeah, we did a collaboration with a brand Mischief. I don't know if you're familiar with them. Sounds familiar. MSCHF, they basically, they did the like Lil Nas X Blood Nikes. So they just do kind of viral stuff. So we launched a holy water hard seltzer with them where we literally had a priest come into our brewery to bless the water. And then we made hard seltzer with it, sold it out, branded, did like a merch shop. That one sold out extremely, extremely quickly, a limited edition run. So that was a fun one. And then we've partnered with Tana Mojo on her brand Dizzy, her wine brand. So we're kind of the backend infrastructure for that one. And in that case, are people getting like six packs? Like what are they getting? Yeah. Yeah, so for the Mischief we did six packs, I believe. And then we've done six packs, 12 packs, 24 packs. So the denominations are pretty flexible depending on price point and all that fun stuff. We should do something. This would be so fun. I just wonder what we should do. Yeah. And like anywhere that there's, as my co-founder likes to describe it, like composable IP that you can leverage on a new medium has inherent value, especially if it's a product category that everyone kind of leans into consumes purchases. So it makes a ton of sense. And the community element is really important as well. And I think we find like the most successful brands have that kind of cool community around them and being able to tie people together. For people who are afraid, and I say this seriously because you see this a lot of times, so people who are afraid to work with you. Like if they're like, oh, I don't have the art or whatever thing, what are the things that you get? And you're like, oh, we do that. Or oh, this is so straightforward. Or like what are the things that you may tell them in an effort to sort of say, we take care of that for you? Yeah, for sure. More often than not, it comes to the operations side of it. People are like, well, it's like, how do I source the beer? Like whose beer is it? Or like, how am I gonna produce this and ship to everyone? And so there's a lot of questions around just the physical product itself. If it's an artist, like the art, they've pretty much got dialed in. But that oftentimes is a huge question for all of our consumers. I'm not a designer. I don't know how to use Illustrator. I can't create anything that looks good. It's like, sweet. Like that is our bread and butter. We're cranking out incredible looking designs, brands all day long. So like don't let that be the hesitation for trying to kind of partner with us. I mean, you mentioned that when these artists partner with you, they tend to know their audiences, but I'm sure that you have also gotten some interesting data in terms of like trends over the years that you can share with them. And I'm curious, like if you can share with us any like trends you might notice, like, oh, weddings order this kind of alcohol or birthday parties do that. Yeah, for sure. Yes, we get a lot of that first party data, which is amazing that I'd say a lot of kind of traditional beverage brands might miss out on because they're selling through distributors or retailers so they don't know who their end consumers actually are. So the demographics of who are purchasing the Rose versus the white wine versus our red wine versus our craft beer on and on it goes is super helpful. Particularly when it comes to our brand partnerships, a lot of people are open to launching a variety of different beverage categories. So some people are interested in hard seltzer, but really a wine makes the most sense given the demographic of their audience. And there's some back and forth we can have there, but like being able to use our past performance to kind of as an indicator of what future success is gonna look like for any new partner is where we bring a ton of value, price points like packaging four packs versus six packs. Subscriptions are no subscription. There's a lot of levers we can pull to make an individual partnership launch custom to them based on our learnings. Before we get too deep into those, let's talk about the other things that Barrel Labs is doing. Yeah, yeah, yeah. And so there's a Web3 component. Yeah. Speak on it. Yeah, so we've got a Web3 brand Barrel Dow. This is where we are collaborating with some of the Blue Chip NFT communities, at least right now on the Solana ecosystem to enable them to introduce their own brands to their community members. So we've done a couple of drops to date. Most notable drop has been with the Degenerate Ape Academy where we did a limited edition beer with them in order to place a purchase. You had to connect your wallet to our website, validate you owned an ape and then you had the ability to check out. So that's one of a handful of future launches that we're currently working on. But it's a lot of what we've talked about today. Composable IP NFTs are the perfect example of that. People are putting their NFTs on all sorts of products and we're now expanding that to the medium of beverage and putting forward a brand around it, Barrel Dow. So everything launched in collaboration with an NFT community or anything Web3 related is tied to the Barrel Dow brand as opposed to the Elix brand. And there's another, is there a third company? House of. So House of is the third one. This is our Web2 partnership. So kind of what we've been talking about, anything not Web3 NFT crypto related that's a collaboration partnership is just under the brand name House of. So we've got Elix, House of and Barrel Dow. And you guys are based here in LA still? Yeah. Do you guys ever think you'll have some sort of retail like a store where people can at least come in and I know it's not directly correlated because it's like you can't necessarily buy it but it's still cool to maybe see the design process or give people a window into like your office. I mean I see it almost like a t-shirt printing shop where you could walk in and like get your can printed right then and there. But the assembly thing is massive is the only issue. Whereas the t-shirt thing is like pretty strange. It's a little bit more confined. Yeah, it's a good question. We've talked about doing like limited edition pop-up type things. In the past, some of the brands that we're supporting are sold in retail. So kind of your bars, restaurants, hotels, liquor stores, grocery stores. But the kind of the elix side where it's full customization, not in the immediate future, but you never know. Maybe, yeah. When you guys partner with these brands, does the bottle still say like this one or it still says elix or is that up to the... Yeah, so there's some... Not a bad thing, just curious. Yeah, yeah, yeah. There's some regulatory information that has to be on the cans. We're the licensed brewery, winery, soon to be distillery. So our info is on the cans but that's not what we're trying to outwardly promote on any collaboration. Yeah. Any no-nos, any hard lessons you've learned. Maybe you got like a lawyer, a legal team that's racking up the bills because you guys are getting hit with some... I don't know if people like... You can't put eggplant emojis on the bottle. Yeah, we're pretty careful about copyrighted material. Nick is definitely wanting to put an eggplant. I wanted an eggplant emoji, but not, yeah. We're sure to put an eggplant on a can at some point, the emoji. That's hilarious. But yeah, we try to be pretty careful about that. Any overly explicit material, like nudity, anything derogatory, we're trying to... We nix that pretty quick. The Kyrie Irving of cans. Yeah, the Kyrie Irving of cans. You know what's funny about that? It's like you're opening a can of worms. With Kyrie literally, there's like a massive pun there. Yeah, we try to be careful about that. Yeah, I'm sure that NFTs, you have to make sure they own them. For sure. That's a big one. You just raised 5.7, congrats. Thanks, yeah. Where's that going? That was like recently announced, but happened like over a year ago at this point. So that kind of classic scenario. How big is the team now? So we are 17 or 18 full-time and then have a handful of freelance designers, folks that help out in the warehouse. The big focus for us is now just driving growth. We've built out a lot of the infrastructure, kind of the web and tech infrastructure, distribution infrastructure, production infrastructure, and now it's scaling up the revenue across all of the segments that we've been talking about. And so that's the core focus right now, getting custom cans into as many people's hands as possible. Was that a series A that was 5.7? Seed, round, yeah, that's how I guess we classified it, our seed. Yeah, that's smart. I definitely want to do something. I definitely want to do this because like the Clay Nation, which is this NFT, like I said, I mean massive community. It's basically the board of Cardano. Snoop Dogg's involved. Snoop Dogg's son, Brodus is involved. And so there's like, it's sort of taking off but based on Cardano's popularity, it's not as big. And the reason I got this one is because it's like a shark, like a shark tank and that's kind of tied to what this experience is in some way, this podcast. And so it'd be maybe good to, we'll try something, we'll figure something out. We can make it happen, man, yeah. Max, thanks for coming on the podcast, man. I really appreciate it. We're looking out for you, hopefully we'll do a collab and people who don't know, go to elix.com and then I assume, what it's the socials, not barrel labs yet. At elix. At elix, with a Q. With a Q, yeah. Thanks, Max, appreciate it. I appreciate you guys having me on. Of course. If you made it this far, I bet you loved the episode. 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