The Startup Savants podcast series provides a platform for entrepreneurs to talk about their experiences founding and running their enterprises. Hosted by Ethan Peyton and Annaka Voss, the podcast series offers listeners the opportunity to hear the stories behind the startups, the founders who run them, and the problems they are solving.
In this episode, hosts Ethan Peyton and Annaka Voss are joined by Sol Broady of Leilo. Leilo offers a de-stressing drink based on kava, a plant native to some Polynesian cultures. The Leilo drink has been billed as “calm in a can.” Broady sees it as the “un-Red Bull” that a stressed-out society needs.
What is the history behind Leilo?
“I stumbled upon the kind of the idea for Leilo coincidentally and totally fortuitously. So, I had no intentions of getting into the beverage space, I was always interested in entrepreneurship, my father and grandfather were entrepreneurs. So I was looking for business opportunities, but I wasn’t like, ‘Hey, I’m going to create the next best soda and that’s what my life is going to be dedicated to.’
Now what changed for me is I went to Fiji on a very random trip… I was introduced to and befriended a couple of Fijians. One of my best friends in Fiji, his name is Benji, Benji Terrarokeneue. And he kept telling me about kava and about the kava ceremonies that they had and the kava celebrations that they had.
And it was at that moment that I said to myself, ‘I don’t know what this is, I don’t know why it’s not bigger, I don’t know what the obstacles are, but this is really powerful stuff, and I think it can make a huge difference in the lives of people back home that are suffering from the same anxiety and the same stress and the crazy work-life balance that I was going through.’”
Your product is based on kava — what is that?
“Kava is a root that’s found endemically across the South Pacific and the Polynesian, Micronesian Islands. So from Samoa, Hawaii, Vanuatu, Fiji, Papua New Guinea, etc. And the plant is grown, it’s part of the pepper family, so it’s a root that grows out of the ground, it takes three to five years to mature, much like agave. And then it’s processed, it’s taken out of the ground, and the traditional consumption method is to grind it up, put it in a tea bag like a strainer, and add lukewarm water in a big bowl and then to kind of muscle out the fibers from the kava into the water for like 30 to 45 minutes. And then you sit in a circle, and you say a little prayer and drink out of coconut shells on the beach, and it’s as you can imagine, incredibly relaxing, super cool, culturally immersive experience.”
So kava relaxes you — is it just a tranquilizer?
“So kava has five main properties. It’s a pain reliever, muscle relaxant, anti-depressant, anti-insomniac, and lastly, it’s a cognitive booster. And so the first four properties are familiar to us as an American or Western consumer because those qualities are found in most depressants that we’re accustomed to. Alcohol, prescription medication like Xanax, right, etc. However, the last quality, boosting mental cognition, enhancing your mental functionality, completely separates it from the aforementioned categories. Because you’re not slurring your words, you’re not acting out of character, you’re not, you know, becoming more aggressive. You’re very much within yourself. You feel very grounded, but your body is increasingly relaxed and you’re feeling increasingly euphoric.”
Where does kava fit in in the beverages market?
“In the late 70s, early 80s, Red Bull came out … and before that, the energy category was really wide open. So if you think of this like middle of the screen as the sober point, right? Where we all are presumably right now … Like we’re constantly putting stuff into our bodies that’s moving that status quo. So to the right, if we think of that as energy, that category is completely saturated. We can go from coffee, tea, soda, to 5-Hour Energy, or Red Bull, or Adderall, or this or that.
And everyone knows where to get their caffeine fix or … everyone knows where to go when they need energy, which is why we’ve created such a crazy stress culture in America where everyone’s pumping themselves up with sugar and caffeinated products all the time, increasing their heart rate and their cholesterol and their anxiety, diminishing their natural melatonin in their bodies and then wondering why can’t I go to sleep, why do I feel the need to ‘balance this out’ with alcohol and marijuana and Xanax and the things that are on the far extreme opposite end of the spectrum. So kind of what the fundamental premise of Leilo is is that going from sober to ‘relaxed’ means jumping all the way over here, and most of the time, you actually want to be here.”
So, kava is meant to restore that balance between ready and relaxed?
“Yes. You don’t want to necessitate a hangover with something that’s going to ‘relax you.’ So, Leilo fills that role, and I think we fill it really well because we’re coming in, to your point, we have kava, and we have L-theanine … it’s an extract from green tea that simulates caffeine, it keeps you energized, and it promotes mental cognition, but it doesn’t make you jittery. And the reason that we put that in is if we didn’t have that, kava would likely make you sleep. You would probably want to sleep after drinking a product. You would be a little bit too drowsy; you’d be a little too relaxed.”
If kava is the next best thing to sliced bread, why isn’t it more popular?
“It’s a remarkably simple answer, actually. Well, and it’s just my opinion — what do I know? But as far as I can ascertain, it was only because kava doesn’t taste good, and because it takes a bowl and a strainer and 30 to 45 minutes, and I just … flip it back to you guys as a question, if I told you there was this incredibly relaxing super ingredient that I had found and all you guys needed to do is order a bunch of ground-up powder from a foreign country, import it, and take that, put it into a teabag, strain it out for 30 to 45 minutes by hand … Like this is intensive, it’s intensive labor to actually get the product and then you’re drinking essentially what’s tantamount to dirt water, and I don’t … I always feel a little weird saying that, but my Fijian friends also call it dirt water, so I feel a little bit … kava actually means bitter in Fijian. ‘Awa,’ which is the word for kava in Hawaii, also means bitter. So it’s not a secret that … kava is derived from the pepper plant. Kava’s Latin name is ‘Piper Methysticum,’ it means spicy pepper. So, when you’re consuming this, it is extremely earthy, extremely bitter, and you have to have a large volumetric amount, quantity, to feel the effects when it’s processed by water. So you’re drinking a lot of fluid.”
Fijians are familiar with Kava, but what response did people here in the US have?
“It was taking way too long to grind the stuff out, it tasted terrible, so they wouldn’t drink it, they were all turning up their noses, and then they weren’t feeling the effects because they weren’t drinking enough because it tasted bad. So it was just a massive rejection across the board from all of my … Everyone that I cared about in America, and you’re kind of at a crossroads where it’s like, ‘Okay, I know this is great. Do I just drink it by myself and that’s a little lonely or sad, or do I come up with a solution to this stuff?’ Because I know it can make a difference. And I opted for the latter, and so I immediately started doing all the research that I could and making random concoctions in my kitchen. So I started with smoothies, and then I eventually found that horchata was the best vehicle because dairy, spice, and sugar were the best maskers that I could find in horchata, and fermentation.”
Were you selling the beverage at this stage?
“So at this point I was at Columbia now, in my freshman year, literally lugging around like coolers full of rice and milk and cinnamon and kava extract that I had gotten, and I had negotiated wholesale pricing with this supplier … rugby practice would end at like 10:00 p.m., and that’s when I would get my stuff, and I would be up until 1:00 or 2:00 a.m., crafting this huge horchata batch, and then on Saturdays and Sundays, I would bring it to fraternity parties or to concerts or wherever people were, and I would go there and with my little cooler and my baby bottles of horchata, and I would without charging people just say, ‘Hey, try this, to fill out this feedback form … You’re essentially the focus group.’ And even that was extremely difficult because, I mean, people literally thought I was selling breast milk. That was a huge rumor that went around.”
How did you make the decision to commercialize?
“People would literally take it and just throw it over the fence or something, or they would just dump it out in front of my face… but there was enough positive stuff within all of that crap that I was dealing with to keep going, and the other thing that this allowed for is an incredibly low cost, low budget way to build a ton of research and consumer feedback. When it was all said and done, I had I think 650+ feedback forms that I compiled through this method, and I hadn’t spent a lot of money at all. At that point, I was ready … I said, ‘Okay. Time to get a professional,’ because I still don’t know how to do this. All I know is that if I can make a horchata, me with my extremely limited culinary skills can get people to try something and like it, and they didn’t even know what kava was in the first place, there’s promise here, and a professional can take me the rest of the way.”
So was it plain sailing after that?
“It was a lot harder than that. It ended up taking another two years and high six figures of R&D spend to get it done. But that was the point where I said, “Let’s do this,” and that’s kind of when Leilo was born. It was at the end of my freshman year at Columbia and going into … what was that, 2019.”
Looking back now, what were the major chapters of the Leilo story?
“I do think about it in fundamentally distinct phases, and I think it’s necessary and helpful for anyone thinking about a venture like this to really distinguish the phases here. That first phase was low profile. Like I’m not even, I’m not telling my parents … it’s like I don’t want to be embarrassed by this. I’m going to stay in the shadows. I’m going to do as much dirty work as I can. I’m going to inflict as much pain on myself as I possibly can without spending money. I would rather sit for five hours in the basement every couple days and make horchata than ask someone to spend $100,000 financing my ideas. It was really important to me that there were legs to stand on in the first place. I was insecure; it was my first business that I was starting, I didn’t want to screw it up. People already thought that I was really dumb and that this was never going to work.”
What would you say to someone who’s thinking about starting a business but just needs a little bit more motivation, a little bit more encouragement?
“I would say don’t start the business. Do not do it. If you need any extra or external motivation or persuasion or whatever, don’t do it. Because it’s just not worth it. You’re not doing it for these other people. You’re not doing it for someone else’s motivation; it’s for you. You’re the one who is responsible in a very significant and inextricable way. Like you can’t just say, ‘Okay, now let’s go back. I actually don’t want to have employees and have a company and have debt’ … Once you turn it on, you can’t turn it off. So just chill, and do your research, and think about it and think about all of the ways it could go wrong and keep thinking about those things. And don’t start the business, and when you are ready, put your foot in the ground and never look back. But don’t rush getting to that point.”
At some point you decided to start professional drink formulation. How did you go about that?
“My strategy for that was it’s a little bit interesting. I don’t know who these people are, so I’m going to go on Google because I literally had no idea what I was doing. Go on Google, look up all the flavor houses and formulators that I could find in the US that were at least tangentially related to botanicals and kava and whatever else…
I was able to get three of, I believe, the most significant flavor producers in the United States to hold an open competition for the right to be my flavor provider. So, I only paid the winner, and I got all three of them on long-term NDAs and non-competes in the process, and that was a very … again, low-budget way. It took time, it took some maneuvering, but I was able to do that with the $30,000 budget — get the top three to all formulate it for me. That’s what got me to the next step of the core MVP, which was a 12-ounce sleek lemon ginger version of Leilo. That was the first flavor that we launched with.”
The term imposter syndrome has been floating around. How big of an obstacle is that?
“I think besides my team, God bless my team and my partners, it’s all mindset. That’s what I’m trying to illustrate here … I’ll take this moment to just talk about kind of the accelerator mentor club thing because that’s what a lot of people think of as entrepreneurship in college. And I think that is a lot of the problem. Not that there are great people that have great intentions, but entrepreneurship is not about getting in a room and trying to get everyone to agree that an idea is good. That’s not how these things happen. It’s when you’re in a room and everyone tells you you’re stupid and you do it anyway because that’s the whole opportunity is showing people something that they don’t know could even exist in the first place.”
How do you keep your spirits up through challenging times?
“One thing, guys, maybe I’m a little bit too extreme in this regard, but I have like 25 poems. I’m really big into literature. I think like poetry is awesome because there are all these thoughts that are all going around, but a poem is something that distills it, and it holds a couple principles, and it does so in a very structured and replicable way. And I’d memorize those poems, and whenever things were going wrong, I would just repeat it back to myself. And that’s what got me through.
The hard thing is not, ‘Okay, let me drop another raspberry flavor in the solution.’ Like, you can make these changes. The real challenge is for two years waking up every day and with the same tenacity to drop in the raspberry flavoring. To do that mind-numbing activity over and over and over again until you reach a point of perfection, that’s the real challenge here … So that’s why a mindset that is sustainable… has to be the bedrock of any business I think.”
You launched around the time the pandemic struck. What was your response?
“It’s like, ‘Oh God, COVID. The business is crushed from the very beginning.’ Or, ‘People are extremely stressed out right now. This is the perfect time to show them a product that can reduce alcohol consumption while they’re in quarantine, can relax them and can get their mind off something’ … So we leaned really heavily into that identity, and then the next thing that we did is said, ‘Okay. For better or for worse, businesses are open in the South. So I guess that’s our new core market.’ And we started going to Florida and North Carolina and Tennessee and Georgia and those were our bread and butter states for a long time during the pandemic. You need to be willing to be flexible in that regard. It’s like if you try to slam your head against the wall and say, ‘No, it has to be New York because of this, this, and this reason,’ Leilo would have died.
We let the current kind of take us where it may, and we stayed true to some very basic … It’s not like, ‘Hey, we’re changing the slogan now.’ It’s not like, ‘We’re changing the can or the functionality.’ But we’re going to reorient it to take advantage of the cards that we’ve been dealt, and I think it’s that willingness to innovate, that willingness to differentiate ourselves. We’re not trying to be a beverage company. We always say that. I’m not the right CEO to run a beverage company. I’m the right CEO, I hope, to run a relaxation brand that’s going to be a global presence, but I’m not interested in the cookie-cutter way of doing things. And our investors aren’t either, and if they were, then just hire a corporate team or just sell to Anheuser-Busch from the get-go.”
How did you kind of formulate that marketing and brand presence?
“The marketing needs to be honest and authentic in what it is proposing or promising, and then what it is delivering. So, you don’t need to have super overstated marketing. You don’t need to have super flashy marketing as a general rule. Like, think of the insurance agency or whatever it might be. Oftentimes, the flashier it is, the less attractive it is … I don’t need that crap; I just need solid insurance, so give me the phone number and make sure that there’s someone picking up the line and that you’re doing the very basic things that you said you were going to do.
Where I think a lot of CPGs get into massive trouble, especially our competitors, I will just put it out there. Because either their name, or their marketing claims, or their design, or whatever it might be is so ridiculously promissory towards, ‘We’re going to give you this extreme effect.’ … And it’s like there’s no way you can deliver on this promise. So your marketing is fundamentally flawed, and even if you can trick, you may trick that naïve consumer into the first purchase, but they’re never coming back to you. We focus way more on retention, on returning customers, than new customers. The new customers come organically because the people who love Leilo are talking about it and drinking it all the time, and that’s way more important to us. And as an example, like our retailer retention rate is 76%.”
What’s the vision for the product?
“So another really fundamental objective I think for this year is to show that Leilo can, going back to the earlier kind of holistic lifestyle brand objective, can be viable and valuable in lots of different industries. So one thing that we did in 2021 is partner with New York City Football Club, which is owned by City Football Group, the owners of Manchester City … the whole deal. And that was my way of planting a flag in the ground and saying, ‘Look at this massive opportunity on the marketing partnership side.’ Does it make sense for a brand of Leilo’s size to partner with an organization like that? No, not under the tried and true business fundamentals. But it makes a lot of sense if we’re trying to portray Leilo in five years as a billion-dollar global brand, and so why NYCFC? That was the first official relaxation partnership in sports marketing history. There has never been an official relaxation partner ever, which makes sense because it’s a little bit ridiculous. But that’s what Leilo is now opening up for the world.”
Do you have any advice for someone that wants to start a business or is thinking about it? An aspiring entrepreneur — what would you tell them?
“So I think having the confidence in your ability to respond to crap coming up is really important. You should not strive for confidence in perfection and a detailed, exact plan for every single outcome. It’s just impossible, and it’s actually paralyzing in my experience.
The second thing is to recognize that entrepreneurship is the solution or is at least a start to the solution of many everyday problems.”
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