Sam Parr interviews Kara Goldin, founder and CEO of Hint Water, about building the company from a kitchen experiment in 2005 to the largest independent non-alcoholic beverage brand not partnered with Coke, Pepsi, or Dr Pepper. They cover the origin story (quitting Diet Coke and losing 55 pounds), manufacturing challenges, how Google became their #1 retailer, the $1M Super Bowl ad that reached 80% of the country, brand partnerships with Verizon and NetSuite worth $50M in free advertising, direct-to-consumer strategy, and lessons from marketing failures.
Speakers: Sam Parr (host, Exit Strategy), Kara Goldin (founder & CEO, Hint Water)
Introduction and Hint Water Origin Story [00:00:00]
Sam: Welcome back to the third episode of Exit Strategy. I’m here with one of my favorite founders — her name’s Kara, and she’s the founder and CEO of Hint Water. Kara, thanks so much for doing this. Super excited.
Kara: Thanks for having me. I feel like you and I have met plenty of times in the past, but rarely have we had an opportunity to do an in-depth one-on-one discussion, so I’m really excited.
Sam: Just a quick background on the history of Hint Water — you guys started in 2005. Much like what you’re drinking right now, you guys make a flavored water that’s generally flavored with fruit. The water is generally non-carbonated, although you have a carbonated version. There’s no sugar, stevia, calories, or artificial anything in the water. Does that sound right? Am I messing that up?
Kara: That’s absolutely right. We have over 20 flavors of our water, and then a few years ago we came out with a carbonated version and then a caffeinated version of the product too.
Sam: And so you started the business back in 2005 when you were making the switch from Diet Coke because you just didn’t feel healthy drinking the 8 to 12 cans that you were drinking. Is that right?
Kara: Yeah. I never really realized this about myself, but I just wasn’t happy with where I was at from a health perspective. I had gained a few pounds, but I had also developed really bad adult acne — which I had never even had as a kid — and my energy levels were really low. I couldn’t figure out what was going on.
We were — I was at a time when I had three kids at that point, so I was taking a little break from work. I had left AOL where I was running their e-commerce platform, and I was interviewing for jobs, we were redoing a house in San Francisco, and I just took the time to try to get in shape. It’s funny — I always tell people when I’m out speaking about my background story, I really thought my pathway to getting healthy was just shopping at Whole Foods. Like if I went into Whole Foods and shopped there, I was good to go. And then I was like, okay, I’m not really getting any healthier, things aren’t really changing for me. I had been an athlete growing up — I was a gymnast — so I knew how to train. I thought, okay, I’m really going to start working out and training, and continuing to buy better-for-you products. But nothing was still working.
So I ended up going to a few different doctors who basically said, you know, you’re probably having too many cupcakes, that’s why you’re gaining all this weight and having this problem with your skin, or it’s hormones, or you’ve had babies too close to one another. None of it really made sense to me.
Sam: Your response wasn’t like, “The cupcakes are from Whole Foods, though”?
Kara: No. I said, that’s not really what’s going on. So at that point I really started to take a closer look, and one of the doctors said, hey, keep a diary of everything you’re eating and everything you’re doing. I don’t even think I counted my diet soda consumption, because I didn’t really think of it as food — I viewed it as just something else that I was doing, and there’s nothing wrong with it, so why count it?
But then one day I was looking at the label on my Diet Coke — that was my favorite, but the Pepsi people always loved me because I’d always talk about my problem with Diet Coke and not my problem with diet sodas in general — and I realized how many ingredients it had, and so many of the ingredients I just didn’t understand. So I thought, maybe I’ll just put it to the side and see what happens, not really thinking it would be any dramatic change.
I swapped out my diet sodas for plain water, and things started getting better. My energy levels were coming back, my skin was better, I was losing weight. And it was a pretty dismal two and a half weeks — I felt like I had a really bad case of the flu. I now look back on it as detox. I was really getting off of Splenda and NutraSweet and some of the other sweeteners that were going into these diet drinks. I had lost 24 pounds in two and a half weeks. My skin had cleared up, my energy levels were back. And that’s when I was like, God, I’ve actually been marketed to. I’ve been told that something is better for me because it has the word “diet” in it. And for me, that was this epiphany.
I had grown up in the publishing industry and in the tech industry — I had never really paid attention to labels on food being tricky. So at that point, another six months passed, and I kept losing weight. I sort of went through a period wondering if I was actually really sick, because I was losing weight so much faster. My skin continued to stay great, my energy levels were great, and by the time six months rolled around, I had lost 55 pounds — which was kind of my college weight, my goal weight. It was dramatic. People would see me and be like, “Wow, you look like you lost a lot of weight.” And I’m like, “Yeah, I did.” And everyone’s like, “You okay?” And I’m like, “Yeah, I feel really good.”
And they’d say, “What diet were you on?” And I’d say, “I wasn’t really on a diet — I stopped drinking diet soda.” That’s when I realized I was educating so many people about my experience, including the guy who was stocking shelves at Whole Foods.
I decided I really wanted to drink water. But then I realized I wasn’t really a water drinker. I thought, I don’t know how long I can do this, I’m so bored by it. So I started slicing up fruit and throwing it in water. And then I went looking at my favorite Whole Foods in San Francisco for that product, and everything that had fruit in it had sweeteners. And often the fruit wasn’t even real fruit — it was lots of other stuff. So I really saw this need in the market, but I never really thought, “I should go become a beverage entrepreneur.” I really saw it as, this is criminal what I’ve experienced, and so many people really do want health but have a really hard time finding it.
How Hint Water Was Made: Manufacturing from Scratch [00:07:30]
Sam: So you have this epiphany — water is boring, it’s hard to drink plain week after week, but adding fruit changes that dramatically. It’s good for you, it’s still water, it’s got a flavor. You start this business. How do you make it that first year? Do you go to third-party manufacturers and say, “I’m interested in making Hint Water”? Or are you making it at home? Are you cutting up fruit? How does that work?
Kara: So initially I was making it at home, and literally cutting up fruit and throwing it in water. What I realized pretty quickly — I don’t know if anyone’s ever sliced fruit and thrown it into a pitcher — even if you put it in the refrigerator, from a bacterial standpoint you can’t leave it on the counter for too long, and it would get kind of ugly looking. The fruit would get soft and the water would just taste funky after a while.
So I started to try to figure out, why was that? And what I realized is that if we took the skins and oils of the fruit and created our own extracts, then dropped a few of those into the water, we could still be using fruit but oftentimes using the rind. We just recently came out with a lime and lemon flavor, and people had been asking us for years, “Why don’t you have a lemon flavor?” Because a lot of times we’re using the skins, and naturally the lemon can taste almost like turpentine — like a furniture polish smell. And the same thing with cherry — cherry so often reminds people of bad cherry medicine they used to take as a kid. We just wanted to make sure that didn’t happen.
And again, we’re not using sugars or stevia or any type of diet sweeteners, so there’s not a whole lot to hide behind. It’s really about the type of lemon, the type of cherry, the process. A lot of times we’ll use grape skins to round out the flavor — it’s all vegan, and I say that, but a lot of people say, “Of course it’s vegan, it’s fruit.” Well, actually that’s not always the case. A lot of so-called fruit drinks use things like bone marrow, or cockroach wings for food coloring — the red color in particular. I always tell people that even if you’re okay with eating bone marrow at a French restaurant, a lot of people think that they’re actually drinking bone marrow in some of their drinks without knowing it.
Sam: I’d be okay eating a chocolate-covered cockroach wing once in my life, but I’d want to know what I was eating. That type of transparency seems like it should be table stakes in the food and beverage industry.
Kara: Exactly. So that was really something we were focused on. I probably spent close to a year trying to figure out flavor. We looked at a lot of flavor houses — we kept getting pointed to them by co-packers — and the challenge was that we just couldn’t figure out what was in all of these flavors, and a lot of them just weren’t as real as we wanted. That was when we started creating our own.
Sam: Can you talk a little bit about what it looks like today at your bottling facility? Do they have the rinds of lemons, pineapples, grape skins and oils? How does that work? Because I’m always amazed at businesses like yours. I was reading this book about McDonald’s and they’re talking about how they perfected the French fry — for a while they were like, okay, we got the oil right, and the time right, and then it turns out that’s not the only thing that matters, because if you throw cold potatoes in hot oil it’s very different than warm potatoes. They ultimately had to go back to the manufacturer of the potato in Idaho to make a consistent french fry. For a product like yours — talking about rinds and oils of lemons and grapefruits and grapes — is your co-packer doing that? Are they getting the rinds and mixing them with water? What does that operational complexity look like?
Kara: We actually have a third party that just works for us and creates extracts for us. So they do have that, but we have multiple co-packers. We’re only distributing in the US today, and we send our extracts into our co-packers.
Sam: Are there any crazy stats? Like, “We’re one of the largest consumers of grapefruit skins in the country”?
Kara: You know, I don’t think so. In every bottle there’s only about two to three drops of the oil, so we’re not a major producer of it. What’s really interesting is people always ask us, “Do you use organic fruit?” We try to use organic whenever we can, but the key thing for us is no pesticides. And I always tell people about organic fruit — when you go into co-packing plants, our original co-packing plant was on an apple orchard and they do other people’s products too. I’m just amazed at how much fruit that goes into juices that actually has mold on it. So we really want to produce our own flavors because we have a lot more control over making sure we’re getting what we’re getting without mold.
In terms of complexity — it looks pretty simple on the outside, but the truth is it’s not simple because of temperature and everything else about it. That’s probably the biggest reason why companies have had a hard time replicating it over the years. It takes time. It’s an artisan product that is priced as a mainstream product.
Sam: The heat treatment — is that like a form of pasteurization you’re doing to provide shelf life?
Kara: Yes, exactly. And that was one of our earliest challenges. We basically couldn’t put this on any shelf anywhere because our shelf life was several weeks as opposed to a year or two, which is what you really need to get into Target.
This is a segment of my book — it’s funny now, it wasn’t funny then. We used to go into Whole Foods and stock the shelves, and we actually had inventory in our warehouse and in our garage. We would tell them, “Oh, we’re out of stock, this is all we have.” And they would yell at us because they’d say, “You don’t have enough stock to maintain this relationship.” The truth was we were really nervous about shelf stability.
My husband Theo is our chief operating officer. He was an attorney prior to helping me start Hint, and he had worked on the case around Odwalla when they had the E. coli — a few kids died, it was horrible, they weren’t pasteurizing the product. So he learned a lot about shelf stability and the dangers of it. Every single day in the early days of Hint, we were literally taking our product to a lab to make sure it was actually safe. When I hear people say, “Oh, we haven’t really figured that out yet because our volumes aren’t that big” — for an ingestible, that’s nuts. You can’t possibly think that’s okay.
Sam: There was a startup deodorant brand that launched a couple years ago that had stability issues — their deodorant would melt basically three months into shelf life. They got called out, Target ended up giving their shelf space to Native, and it was a complete disaster from a brand perspective, from a customer perspective, and because Target doesn’t really trust your brand anymore.
Kara: Yeah, it’s crazy. And it’s unforgivable.
Early Sales: From Whole Foods to Google [00:18:00]
Sam: I want to talk a little more about that. I did a bunch of research on Hint. You guys are a massive company. There was this guy at Native who would not drink any water — he would only drink Hint Water. Anytime we had to travel, he would have to Instacart Hint Water to the hotel before we landed. We’d go to Vegas, New Orleans, Minneapolis, and he was instacart-ing water. He was a huge fan.
From what I can tell, in 2018 you guys were somewhere in the 90 to 100 million dollar run rate. What were the numbers looking like in 2005, and where were you getting sales from? Because this is 15 years ago — direct-to-consumer isn’t nearly what it is today.
Kara: We started out literally delivering cases ourselves. I had just had my fourth child, and my husband is like — I think he thought I was out of my mind. I had four kids and I was a previous VP at AOL, and he’s like, “Wait, I get that it got you healthy, but why do you really want to do this? You could go get a job somewhere and make a lot of money.” But for me it was really about resetting health for people.
I described this company to people as: if I can just get it in the hands of people — especially people drinking flavored waters, vitamin waters, diet sodas, even full-fledged sugar sodas — and get them to drink our product, maybe they’ll eventually get to water. Maybe they’ll never get to plain water, but we could actually change health. Type 2 diabetes at that time was probably 2% of the population. It’s now upwards of 45% of the population in the US that have type 2 diabetes or prediabetes. So I thought, how do I get it in the hands of people?
So when we initially went into Whole Foods around the Bay Area, I was also having a few conversations with this guy Amit Patel who was at Google at the time — he worked with my husband at Netscape. Amit was talking to me about a job at Google, and he kept upping the salary. After a while I was just like, “You know, it’s really nice, and I consider you a friend, but for me it’s not about an offer right now. I really want to stay up in the Bay Area, and I want to go do this and see if I can actually help lots of people.”
That was a major turning point for him, because Amit — somewhat joking — said, “Oh, do you have a sample of this product?” I pulled it out of my bag, and he was like, “Of course you have a sample.”
Sam: You were actually selling him during a job interview in order to get Hint Water into Mountain View’s offices.
Kara: I never even thought of it that way! But he said, “Oh, we have this guy Charlie who is our chef. He’ll talk to Charlie about it and see.” I was like, “Okay, cool, yeah, if you guys want it in your offices, that’d be really fun.” I had no idea what I had stumbled upon.
Charlie ends up calling, saying, “Hey, I really like Amit — can you send me some samples? We’ll give it a try.” He called back a couple of days later and said, “Do you guys have more supply?” I said, “Yeah — do you have another office?” And he said, “Oh, we’re just going through this like crazy.” Within two weeks of that conversation, Google became our number one retailer.
Sam: And they quickly overtook Whole Foods?
Kara: Yeah, I say “retailer” in quotes — they weren’t really a real retailer. But Google was really trying to make sure they had healthier products, not just drinks but also food, and they were very early and very aware of it. That was the beginning of 2006, and our shelf life was maybe six months and we were trying to figure out how to get it higher. Today our shelf life is two years.
Sam: Do those B2B sales still make up a significant percentage of your revenue today, or is it sort of like — now you’re in Whole Foods and Target and Walmart and selling on Amazon, so it’s still nice but less significant?
Kara: It’s interesting — we’re obviously taping this during a crazy time in history. Our corporate food service sales have actually been cut because nobody’s going into offices. But it’s interesting — we’re actually talking to a lot of executives at some of these companies, and some of them are even sending cases home to their employees as a gift, just to say, “Hey, continue to stay healthy.” But food service has been massive for us. It started with the tech companies in Silicon Valley who just really embraced this, and then they would go into their local store and say, “Hey, look for the product.”
Sam: That’s a great flywheel.
Kara: Yeah, and I always tell entrepreneurs — it wasn’t strategic. I mean, I didn’t say, “God, if I can just go get Google, I can go get Facebook.” I remember when Sheryl Sandberg left Google and went to Facebook — her assistant called and said, “Hey, you guys delivered to this company Facebook,” and they were still in Palo Alto at the time. So I was like, “Sure, no problem.” And that’s how it went.
Fundraising: Family Office Over VC [00:27:00]
Sam: At what point did you first raise money in the lifecycle of the business?
Kara: I think it was early 2007. We sort of did this a little differently. We had made a little bit of money with Netscape and AOL, and we thought, let’s just try and see how long we can go self-funding. But then I remember looking at Theo one night and saying, “This isn’t really sustainable.” We had an amazing house in San Francisco that we’d remodeled, four kids in private preschools and private schools, and I was like, how can we actually put money into the company and not keep burning through it? So we decided to find a good school in Marin County and move. And Marin is gorgeous, so it wasn’t exactly a sacrifice.
Sam: Can you talk about how much you’ve raised over the last 15 years?
Kara: It’s all public — I think it’s a little over 60 million. But we’ve raised in a different way. We haven’t done venture or private equity. We have a family office out of Brussels — they’ve put a little more money into the company over time, but it stemmed from the Stavros family. They had actually been investors in Vitaminwater, which sold to Coca-Cola. Part of their thinking was that they really wanted to invest in healthy lifestyle and better-for-you products outside of Europe. So they came to us and said, “Why wouldn’t you take money?”
Sam: I just want to make sure listeners understand — why is a family office different or better for you than a VC?
Kara: I didn’t necessarily know back then when we took money. But what I always say is — we would pitch VCs, and it would always start off with, “Oh, we drink Hint all the time, we love your product.” But many of those people invest in what they know and what they think they can add value to. They viewed us as a company that if we were doing it right, Coca-Cola would come in and knock us off. And the truth is, Coca-Cola has knocked us off like six times. But every time, it just hasn’t worked for them because it’s not with their core competencies.
People ask me, “Why can’t P&G build their own version of Native?” I’m like, it’s the same reason that when you look at a bird you don’t say, “Now I know how to fly.” The people who work at Coca-Cola didn’t start Coca-Cola — they’re stewards of multi-billion dollar brands like Sprite and Diet Coke and Powerade. Their skill set is to steward those brands and grow them as fast as possible, but that’s very different from going from zero to 50 million dollars. Going from 1 billion to 1.5 billion is a very different skill set than from 1 million to 50 million.
I was talking about this on a timeline, but when they first came in and knocked us off — I’m sure you have this experience too — it was a really bad day. But what I realized is that it actually helped us get more shelf space, because they eventually gave up. There are probably internal fights especially when you look at the mothership of these soda companies — it’s sugar — which is totally counter to what we’re doing. We’re just getting people to drink water that tastes better. And every single time they’ve come out with a competing drink, we end up getting more space.
Sam: Just going back to your VC question — you were pitching some of these people and they kept ordering cases of Hint to their offices, but they wouldn’t invest?
Kara: Yeah. And first of all, the core consumer for Diet Coke is female, and it’s no surprise there weren’t a lot of female VCs — especially 12 or 13 years ago when I was pitching. So I’d be in there talking about my Diet Coke addiction and they would look at me like, “Well, that wasn’t really an addiction, was it?” And I was like, “Oh, no, it was. It was right up there with cigarette addiction.” They would just not understand it.
But crazy stories — some VCs have told me they won’t invest in tech companies unless they have Hint in the office, because they believe it helps their employees stay healthy. So go figure.
We ended up raising from a lot of individuals. We have over 100 investors in the company. And John Legend is on our cap table.
Sam: My brother actually — full transparency — is also on your cap table.
Retail Strategy: From Specialty to Mass Market [00:34:00]
Sam: I want to fast-forward to today. I’ve heard you talk about how about 40% of your business is online now versus brick-and-mortar, which is crazy. Let’s talk a little about the brick-and-mortar stores you’re in right now.
Kara: We started in specialty stores — Whole Foods, Sprouts, some local ones — and then went into conventional grocery. Where we had the toughest challenge in conventional grocery was we just didn’t have the bandwidth and the people that the big soda companies have. We would just get knocked off the shelf — we wouldn’t have the slotting fees and lots of other stuff was going on.
That’s where we really started to realize, not only from a revenue standpoint, but it just wasn’t as profitable to compete inside of these firms. Then lots of offices in New York started cropping up that were extensions of Silicon Valley or LA, and we got into more and more of them.
We finally got into Target a few years ago in a pretty decent-sized way. We started out with a few feet of space, and I remember reading a case study on Tom’s of Maine. They talked about getting to a point where they would tell buyers, “If you don’t give us this kind of space, we’re just not ready for this relationship — welcome back when you are.” We really started saying that to large retailers, because we knew we would fail unless we had a certain presence.
We ended up going into Target and got smarter about the data. Here’s a crazy statistic — in Target, we do more dollars per square foot than some of the large brands like Vitaminwater. When you can actually take that kind of data to a buyer, you’re just getting smarter about what you’re doing.
The Amazon Origin Story and the Starbucks Pivot [00:38:00]
Sam: Can you tell the Starbucks and Amazon story? I think it’s really instructive.
Kara: We had gotten into Starbucks — we were in 11,000 Starbucks, only one flavor, which was Blackberry. We were doing two to three times what their goals were for us. And one day we got a call from a buyer at Starbucks who said, “Hey, we’re going to bounce you out of here because Howard Schultz said we’re only going to have beverage brands distributed by Pepsi, because Pepsi is doing the distribution for our ready-to-drink Starbucks drink.”
My big lesson learned that day: don’t have too many eggs in one basket. I don’t cry often, but I went home and cried. I thought, how am I going to tell my investors and board about this?
A couple of weeks later I resurfaced. I said, look, it was really bad that we got bounced, but at the end of the day we just need to find these consumers. Because we were doing well in Starbucks — they had exposed us to places like Chicago and Texas, places where we didn’t even have distribution, and they were paying us for product.
Then a couple weeks after that, I got an email from Amazon. They were launching a grocery business, and I wasn’t sure if I really believed it was serious. I had dealt with Jeff Bezos in the early days when he was just a book retailer while I was running AOL’s e-commerce business. I thought, Amazon gets into little businesses and sometimes you hear about them and sometimes you don’t. But I had a lot of Blackberry Hint in the warehouse that was supposed to be going to Starbucks, so I sold it to Amazon instead.
That was the only flavor we had on Amazon. Then very quickly they told us, “You guys are one of the number one products in grocery.” They showed us data that our consumer was also buying better-for-you products. I asked Amazon for the emails of these consumers so I could reach out to them.
Sam: And they said no.
Kara: They said, “No way.” But they did continue to partner with us. And the buyer who reached out — he said, “I get your product all the time at Starbucks.” So if we were not in Starbucks, we wouldn’t be on Amazon. Every situation like that teaches you to connect the dots. Sometimes it takes time to figure that stuff out.
Data Challenges Across Channels [00:44:00]
Sam: At Native, we were entirely direct-to-consumer through our own website, so we understood AOV really well, repeat purchase rate, when customers purchased and what we should do if they didn’t in X number of days. Once we launched into Target and Walmart and CVS and Walgreens, that data became a lot more grey to us. Did you guys experience the same type of fuzziness with your data once you launched?
Kara: We obviously have sales numbers that can go by store, and you get to a certain level in these stores and they’ll start to give you some of that data. We definitely have that with Target, and we can match that with how we’re doing on our own website. But it’s still very difficult for us to see that Lisa Smith is purchasing on drinkingcom and also going to Target.
Sam: That’s the holy grail of attribution.
Kara: Totally. I think electronics are able to do it because they get you to register your product, like our friends at Apple. But I think what online has allowed us to do is this: we can go back and show a Target or Costco — we’re going in nationwide into Costco in the next few weeks — we can say, “Here are our top ten markets on drinkhinт.com.” We can match that to a major retailer and show them they’re missing those consumers. When you get in front of a buyer who really understands data, it’s obvious.
The other thing direct-to-consumer allows us to do: if a major retailer in Florida decided to just turn you off, without having your own online site, you’re actually able to go in and market to that consumer. You’re really hedging your bets.
What I’ve realized is that retailers need to do what they need to do, and I need to do what I need to do for Hint. The more options you have out there — certainly during this whole corona situation, we’re considered essential, so we’re still in stores — but having a direct-to-consumer business that is now higher than 40% of our overall business has allowed us to really grow when restocking issues are someone else’s problem.
Sam: And do you find pricing issues among the retailers and Amazon? At Native, it was hard to hold the price consistently everywhere. One of our concerns was that someone would drop the price to nine dollars.
Kara: We give a suggested retail price and people have different margins they’re working with. But look, Walmart and Target have amazing algorithms that will change on a dime. We have consumers who write to us and ask, “Should we buy on your site or should we go to Target?” We always say to people, wherever you want — the consumer is in charge. Any place that we deal with, we’re excited they’re supporting our brand.
There’s always going to be people who will come to hintwater.com and buy, and I think there’s this perception that it’s like fresher if you get the product on our site. That’s not true. We actually spend very little money in warehousing because we’re making it and it is going out the door. We’re constantly making product and it’s constantly running. Through this whole corona situation — I saw probably a week before people were even talking about hoarding issues — I said to our sales team, “This whole auto-replenishment thing is not working in many stores I’ve been into.” The response I got back was, “Well, they keep telling us they’re on auto-replenishment.” But we have a product where if people come in and buy 10 bottles of Hint, which is common, they’ll wipe out the shelf.
The stores have never seen anything like this. So we went to all our retail partners and said, “There’s definitely an auto-replenishment problem in here somewhere, but you know what — we’re not going to try to figure it out. If you want to order from us directly, we’ve got trucks that will truck our product right into you.” Over 50% of the people we deal with said, “Yeah, let’s do that even if it’s just for a couple of truckloads to catch us up.”
I just watched it really carefully. People are like, “How did you know that?” I said, “I don’t know — I’ve been watching it.” That’s what great founders and CEOs do. You need to really understand why is this happening.
Trade Shows, Expo West, and the Fancy Food Show [00:53:00]
Sam: I’d love to shift the conversation to marketing. Have you guys had a booth at Expo West in the past? Do you find those types of events helpful for networking with buyers?
Kara: For sure. Our first show was the Fancy Food show in New York — it was just a few weeks after we actually put the first bottle on the shelf at Whole Foods. I literally got the worst space possible in New York, and I had no idea what I was doing. I had just come from tech booths. It happened so last-minute that I literally brought my own table in and set it up — it was super bare-bones. And we had every buyer from Whole Foods lining up.
I always tell entrepreneurs: sometimes when you actually look scrappy but have a great product, they’re going to come by you. They’ll recognize that you’re authentic and real. I laugh now because I had no idea what UNFI was or how any of these distributors worked. I’d seen Cisco trucks around but had never figured that whole world out.
Then a couple years later, Expo West in Anaheim — that’s been a great show. I’d say the East Coast show has been an okay show as well. We’ve been doing it for 14 years. Some brands actually write orders at the shows, but that’s never really been our purpose. We use trade shows not only to get with buyers but also to really understand what else is going on in the marketplace from a marketing standpoint, and just to talk to other people. And it’s gotten to a point where it’s just time — we have over 200 people in the company now. We actually try to staff our booth with people who don’t normally get to work trade show booths. We don’t hire the booth babes or whatever. We get our team in there — people who just love being there and are passionate about the product.
Sam: I’ve always heard that when you’re sampling at, say, Costco, you can either get the Costco employee handing out samples — in which case you’ll barely move any product — but if you put your own team member there who’s really excited about the product, they will go through samples really quickly and go through sales much faster. Because they have someone who’s authentic and believes in the brand, as opposed to someone who’s just handing out tiny samples and waving you on.
Kara: Exactly.
The Super Bowl Ad: 80% of the Country for Under $1 Million [00:56:00]
Sam: I also noticed that this year you guys had a Super Bowl commercial. Can you talk about that? I’ve seen the commercial — somebody’s talking about how they really enjoy the Blackberry flavor, and somebody else licks it off their face, and they’re like, “The Blackberry Hint Water tastes more like blackberries than real blackberries.” Can you tell me how that came about? And what it cost?
Kara: It was a pretty crazy story. We had started doing some TV — just running remnant ads. We had shot three commercials in the fall, and two of them we had running for about eight weeks on various channels, some news channels, some overnight stuff. We were testing not only the brand commercial but also a direct-to-consumer version where you could actually get an offer and order online.
So we have this one ad sitting there, and one Sunday — I had worked at CNN for a couple of years way back, and I had just run into a woman who worked with me at CNN and is now pretty high-level at NBC. I had just bumped into her at a conference, and one Sunday I was like, I should just text her and ask if she knows anybody at Fox. I had sort of heard they were sold out, but I never really trust what I hear.
She said, “Oh yeah, you should just text this guy — he runs Fox Sports, he’s a good friend of mine. Just tell him Laura sent you.” So I did. He laughed and said, “Oh no, we’re totally sold out.” But he said, “It’s funny you mention this — I just spoke to somebody who was doing regional stuff.” I said, “What do you mean?” He said, “In major areas like San Francisco, New York, and Chicago, they have to leave a little bit of inventory.” I said, “So you’re saying there’s inventory in those markets?”
This is literally two and a half weeks before the Super Bowl.
Sam: Wow.
Kara: He said, “Do you have an ad?” I said yeah. He said, “You should talk to this one guy — he can get you all the markets.” I still didn’t really think it was going to happen. I was sort of bored and amused by it. When we were making the commercials I’d said, “They have to be something we could run on the Super Bowl one day” — but it was more energizing the team than actually taking it seriously.
So this guy reached out and I was like, okay, so the Super Bowl is in less than two weeks and you have inventory in all of these markets. He said, “You got it — every market I have inventory left.” And I was like, “What do we have to do?” He said the ad has to traffic through not only Fox but also the NFL.
The response from my team was, “There is no way. You’re just dreaming. This is going to be like five million dollars.” I said, “We already have the ad, it’ll be fine.” The founder just saying it’s going to be great, and I was getting shot down by everyone in the company. They were like, “There’s just no way this is happening.”
Then ten days before — I resurfaced it and said, “We should really go back and do this.” I said to my CMO, “Go back and just give him a lowball offer.” He said, “He’s sold out nationally, there’s no way.” I said, “We’re running out of time — this whole thing has to be trafficked by the NFL or they’re going to be giving these spots away to their own advertisers. By Tuesday morning it has to be done. Put in our bid at five o’clock Friday and let’s see what happens.”
We ended up getting 80% of the country for less than a million dollars. It was a 30-second spot. And they said it would run sometime during the Super Bowl, anywhere from 30 to 45 minutes before or after halftime. We were right before the halftime show. So everybody was coming in, getting ready, and saw the spot.
Sam: And it did amazing?
Kara: It did amazing. Not only from a consumer perspective, but it got people to remember it. They were talking about it. A very small percentage of the population thought it was offensive that two guys were licking each other’s faces, but Gen X and Gen Z thought it was hilarious. Twelve percent of the population will think everything is offensive. If you walk on eggshells trying to please everybody, you’re not going to do anything.
Sam: Did you get a bunch of friends texting you?
Kara: I have never said this about my cell phone — I think I had over 400 texts within like an hour, from all over the country. Just, “Oh my god!” And the thing too — it wasn’t just consumers. It was people in the industry noticing. It was investors. But most importantly it was employees. The excitement they were getting — all these texts saying, “Oh my gosh, there’s Pepsi, there’s Coca-Cola, and all the big guys, but then all of a sudden the little underdog shows up.”
Sam: That’s an amazing story.
Kara: Never lose your scrappiness, right? No matter how big you get. And my curiosity, plus my previous life understanding what trafficking an ad means — it just takes time. We knew it was going to clear, but we were playing against the clock. And the guy we were dealing with knew it. I was like, “Is your manager freaking out that you have these open spots?” He kind of was, and that was the leverage we had.
Marketing Failures and the Facebook-First Budget Philosophy [01:07:00]
Sam: That’s fantastic. So we’ve talked about some incredible marketing successes. Can you talk about any tough marketing failures? At Native, we had failures where we tried to buy really large podcasts or buy our way into places and it failed spectacularly. We also lost thousands of dollars trying to buy Google Ads in the first couple of months. Were there any marketing failures from the last 15 years you can talk about?
Kara: I was in advertising before, so I always had this theory that unless you could really get the frequency, it wasn’t worth it. We never really went out and bought one billboard, because one billboard is just like anything — it’s wasting money if you’re just doing one thing. We’ve always believed: buy a chunk in an area and do it right, or just don’t do it at all. That’s been our theory both from a marketing standpoint and from a distribution standpoint. If we can’t actually do well in a store or in a market, we shouldn’t be there.
I think that’s sort of opposite of what everybody says — a lot of brands said, “You’ve got to get across the US, you’ve got to get into Kroger, you’ve got to get into Publix, Costco, fast fast fast.” And so many of those companies aren’t here anymore because they spent too fast. If you don’t have the money to go into those markets and really do it right, my best advice would be: just do the markets you can be really good at, and slow that growth.
Facebook is sort of the conversation for DTC brands. And figuring that out — I think you have to figure out how to continue to grow, and go back to your list and get the existing buyers to keep buying. Find the right time to ultimately get Facebook to a point where your cost of customer acquisition isn’t crazy. A lot of people say to us, “Why are you on Amazon but also on your direct-to-consumer site?” There’s value in having a name we can go back and market to and have a subscription service.
The Starbucks situation — I always tell entrepreneurs it was clearly a distribution play. They were selling millions of dollars of product every year. But for us it was really a marketing play. There’s a Starbucks on every corner, every couple of blocks, so we were visible in so many places. When they turned us off, I blamed myself for having too much in one relationship.
What I’ve learned to do is not be so hard on yourself and create all this anxiety around the fact that you failed in some way. Instead, figure out what was the good. The Google story for you — if you sit back for a minute and say, “What did I learn? I got that much smarter about how I do my buys for the next one.” Sometimes you have to connect a bunch of different dots. Sometimes it takes time.
I’m a huge believer that you make the best decision based on the best information you have, and I think that is so key. And sometimes you’re gun-shy. You know exactly what you need to get over, or what the price was, and it’s a lesson.
Sam: Yeah. And you know, initially when we were talking about marketing you were talking about billboards and how you didn’t want to buy just one — there was a frequency that you thought was really important. When you’re setting your marketing budget, do you think, “We’re going to allocate this much to digital, this much out-of-home, this much to B2B” — or is it more like a living organism where you call the play at the line?
Kara: We currently divide our marketing into two buckets: brand marketing and direct-to-consumer. Some companies, especially when you’re small, have one person kind of doing both. But those are actually two very separate departments with separate budgets. What we’ve found is the more money we put into direct-to-consumer ads — like Facebook — there are a lot of people who will see us on Facebook and then walk into a Target store, or go on Instacart and order. So there’s carryover. If they see TV, they may go into their local grocery store.
So from a budget standpoint, direct-to-consumer is larger than brand because of its measurability and because of the spillover. But on the flip side, the Super Bowl ad — at the end it said “drinkhinт.com” but there was no 800 number. Nobody’s going online after a Super Bowl ad to buy. But the next time they saw a direct-to-consumer ad, did they click it because they remembered the Super Bowl spot?
Sam: Is Facebook still king for Hint the way it was for Native?
Kara: Definitely. From a third-party standpoint, that’s where we’re putting the most into. We also go out to other email lists and do different swaps with other companies to figure out if we can email people and do some sort of partnership.
$50 Million in Free Advertising: Verizon and NetSuite [01:16:00]
Sam: Fascinating. I’ve also noticed you’ve done some brand partnerships — I’ve seen you in Verizon ads and NetSuite ads. Can you talk about those?
Kara: A few years ago, Verizon reached out and said, “Hey, we’ve got this ad — we’re asking entrepreneurs to be a part of it. Would you be interested?” I’ve been a Verizon customer since pretty much day one — I still have my 917 number even though I’m living in the Bay Area. They asked me to be a part of this, and they didn’t really give me a clear definition of what it would be. I thought it was going to be print.
After they did the print they said, “By the way, we think we’re going to run this on TV.” They actually didn’t run the ad until recently, and it’s running on CNN a lot right now. By some miracle, I had a quote that they picked up on, and it said, “You don’t have to be together to work together.” That has become a Verizon quote, and it says, “Kara Goldin, founder and CEO of Hint.” Every time that Verizon ad runs, people go to our site.
The exact same thing happened with NetSuite. I was speaking at their conference, telling the story that I truly didn’t know how to call Oracle when we were moving out of QuickBooks. I’d heard about NetSuite and thought, maybe eventually we’ll get to Oracle, but for now let’s start with these guys. So we’ve grown with them, we’ve told them all their problems, and we continue to grow. Their CMO said to me, “I loved watching you on stage — you’re just telling the story. Would you do this ad for us?” And so that ad has now been running for a year, and every single time it runs, people go to hintwater.com.
Sam: And you have not spent a dime on that advertising?
Kara: We have not spent a dime. I would say conservatively between Verizon and NetSuite — which is now an Oracle company — easily 50 million dollars in ads that they’ve run for our brand.
Sam: That’s crazy. I’ve seen more businesses doing that kind of thing. I’ve seen ShipStation doing ads with beard brands, Amazon doing ads with Allbirds. It’s really amazing to see large businesses leaning into that. I feel like it all started with American Express.
Kara: I’ve done some for American Express too — some direct mail pieces. I haven’t done a television commercial for them, but yes. And the thing I say to entrepreneurs is: none of those were intentional partnerships. But they’re authentic and they’re real. The sooner you can get out and tell your story — and that doesn’t necessarily mean just talking to press, maybe it does, but also speaking at conferences — whether that’s the Hustle events or wherever you go. Tell your story about how you initially funded the company with your American Express card, and then American Express reaches out six months later saying they want to talk to you about the story.
If you can figure out two or three partnerships where you truly believe in the brand — I had another phone company reach out to me after the Verizon one, and I was like, I just wouldn’t do that. I wouldn’t do another food company either. But these are companies I truly believe in. And if you can borrow equity from those brands — because they’re clearly borrowing equity from yours — that is so big. And it doesn’t cost you any money.
Sam: It’s company money.
Kara: Exactly.
Product Expansion: Sunscreen, Deodorant, and Beyond [01:23:00]
Sam: I’d love to talk about the other categories you’ve launched into. We talked about still water, Hint Fizz, caffeinated. Since then you’ve also launched a sunscreen and a deodorant. Are there other categories coming up, and how did you think about those?
Kara: For us it was really looking at how we can help the consumer get healthy. We felt like there were a lot of consumers coming to us who would reach out and say, “Hey, what kind of makeup should I wear?” And we were like, wait — we’re water, that’s what we do. But we felt like we could start to touch on categories that were, in our opinion, not doing what our consumer needed.
I’m allergic to coconut, so a lot of natural deodorants have coconut in them. For me, I was totally on board with the concept of natural deodorant, but I wanted something free of coconut oil. So that was something I just started to play around with at home. It’s primarily sold online — on Amazon and on drinkhinт.com — but for us it’s really helped us understand this consumer a little more.
The sunscreen was way harder. You need FDA approval. We use the same essences that we use in the water for the sunscreen, which actually needed to do the FDA’s shelf-life testing before we got approval, because most companies use fragrances and we’re using natural essences. I saw in the beauty and personal care industry it was so much further behind what people were talking about in the food industry.
We were one of the first non-mineral-based sunscreens that was really calling out oxybenzone. I had some pre-cancer stuff on my nose that wouldn’t go away, and I started looking deeper at the sunscreen industry. I read about oxybenzone and I was like, this stuff is really bad. The Center for Disease Control back in the late 1970s actually told the FDA that oxybenzone may actually enhance pre-cancer cell growth, and they recommended not approving it. Somehow it got approved. There are many places in the world where oxybenzone is not approved, but in the US it is.
So we started calling it out. And the number of people from large companies who reached out and said, “Hey, we’ve always known that this oxybenzone stuff isn’t so great, but it’s hard — we have all these brands in our house, and for us to call it out means we have to reformulate everything.” I was like, okay, we’ll just keep doing that.
What I’ve realized is that I did the same thing with Hint Water — we really focused on ingredients, and the ingredient was sweetener. And now you start to look at the rest of the product. More and more I think people are looking at their products. It’s not just about being organic or not organic — people are getting smart about ingredients.
Sam: Are there other beverage companies that have crossed into personal care?
Kara: Chapstick or vitamin water had a lip balm way back when. I don’t really know of any others that really crossed over. I think the challenge is the soda companies — like, we are today the largest independent non-alcoholic beverage in the country that doesn’t have a relationship with Coke, Pepsi, or Dr Pepper. A lot of companies I’ve talked to — they couldn’t figure out how to do what we’ve done nationwide without the Coke trucks or the Pepsi trucks. Beverages are hard. Beyond ten million, you have to have a DSD network going into stores every day to make sure your shelves aren’t wiped out.
That’s why the teams are bigger. When I look at these other categories, it’s probably tougher to build sunscreen, but for us it’s really not that many more people to do it. We’ve got a small group internally that can focus on it because it’s just not as high-touch as beverages.
Sam: Do you think other beverage companies haven’t done this because they’re afraid of diluting the brand?
Kara: I think there’s definitely people who have said, “You’re starting these categories, and the soda companies won’t like that when they’re looking at you to buy.” But there are two things I’d say. Number one: my goal is not to figure out how to get my company perfect so that Pepsi will buy us. We have built a standalone company that is now profitable and has grown every single year for the last 15 years. We’ve built a really solid company.
In addition to that, we have a direct-to-consumer business that — I don’t think there’s any other company in our space doing what we’re doing offline as well as online. I think soon these large brands are going to figure out that Hint is a brand name that can stretch across multiple categories.
I’d love to do a home product — not necessarily to go super broad, but just to test it, because I’m all about consumer permission. Unless you test it, you just don’t really know. And I see products every single day where I’m like, if it just had this, or was just a little bit better. If you can extend the lifetime value of a consumer in a way that doesn’t jeopardize the rest of your sales and doesn’t get your team focused on stuff they shouldn’t be focused on, then it makes sense.
I wouldn’t launch a company today and go into multiple categories. But we’ve gotten super permission to do that from the consumer. And I don’t think I would have had the courage to go do it if I didn’t keep hearing from consumers: “Help me — I have a coconut allergy just like you.” “I read about oxybenzone — you should go do this.”
So I feel like with our products we’re not only helping consumers, we’re helping large companies really understand that this consumer wants health. They’re no longer going to be fooled by words like “diet” or “natural” or oxybenzone-free, or whatever the label says. These things are engineering our health, and it’s time to stand up to that.
I don’t plan on having Hint be the next Honest Company — I just don’t think we need thousands and thousands of SKUs. I think what we need to do is a few SKUs done well, and really try to understand where the consumer wants us to go.
Quick-Fire Questions and Final Advice [01:36:00]
Sam: Kara, we’re way over time. I really appreciate you spending the time. I’m going to do a few really quick questions.
What is the best-selling flavor of Hint Water?
Kara: It’s a close tie between Blackberry and Watermelon.
Sam: What is your personal favorite flavor of Hint Water?
Kara: We just launched Clementine — that’s my current favorite.
Sam: Amazing. What’s the second favorite?
Kara: Cherry Fizz is also up there.
Sam: When you aren’t drinking Hint Water, what do you drink?
Kara: Coffee. I’m a coffee snob. I love Equator Coffee — another San Francisco female-founded brand.
Sam: And finally: if somebody wants to start a beverage brand today, what’s the first thing they should do to get into a brick-and-mortar store? Is it going into bodegas in New York? Trying to get a meeting with your local Whole Foods buyer? Getting a booth at Expo West? What’s the first step?
Kara: I think it’s finding who your audience is. If you’re launching an energy drink in a 22-ounce can, that’s probably not the Whole Foods market — maybe, maybe not, depending on the ingredients. But you need to find out who your market is, and then go try to get in there.
When I got into Whole Foods 15 years ago, they had a program where you could actually go into the local store and try to sell it, and they would test it out. I’m not sure if they’re still doing that since Amazon acquired them, but don’t focus on Target or Costco. Start small, keep doing well, and just keep building and building.
I would also say: social channels have become absolutely critical. If you can do that right, that’s the most important thing. Whether that’s figuring out who the right influencers are — there are highs and lows to that — or just figuring out if you’re doing something from a messaging standpoint that an audience would really relate to.
And don’t be afraid to show up. I know many days you’re delivering cases yourself and showing up at trade shows. I still show up to trade shows. Never be afraid to take care of your product and make sure it’s being cared for.
Sam: Fantastic. Thanks so much, Kara. If people want to hear more from you, where should they follow you?
Kara: I’m on all social channels at Kara Goldin — K-A-R-A G-O-L-D-I-N. I’m probably most active on Twitter and have a pretty robust audience there. And if you’re interested in buying Hint, we’re in stores but also on our site at drinkhint.com as well as Amazon.
Sam: Fantastic. Thanks so much for your time. I really appreciate it. This was great.
Kara: Awesome!