Selling Rally Beer for $2M on $920K raised

Krystyn

My guest today is Alan Wood, founder and CEO of Rally Beer Company, who built Canada's first electrolyte-rich functional beer and sold to Muskoka Brewery in October of 2022. The idea came to him during a 760 km solo gravel bike ride in 2019.

Alan

You know, all of these sort of things were colliding on that ride. And it's honestly where I just sort of thought like I wonder if anyone's put these things together like the outdoor adventure occasion, the electrolytes, the functional ingredients, and the delicious, you know, celebratory beer at the end of the day.

Krystyn

He launched in July 2020 right in the middle of COVID and went from zero to over a million in run in just 27 months. While he was executing brilliantly, his competitors were raising 20 million hund million and he raised $920,000 total. When it came time to exit, he sold for approximately $2 million. Everyone at his cap table got their money back and that was the win.

Alan

I was like, "Boom, sign me up. That'll be my first ride on the gravel bike. Let's go." All of these sort of things were colliding on that ride. And it's honestly where I just sort of thought like, I wonder if anyone's put these things together like the outdoor adventure occasion, the electrolytes, the functional ingredients, and the delicious, you know, celebratory beer at the end of the day. So, that gave me a little bit of like, ooh, something's happening here. And I was like, you know what? I'm going to jump in, go all in. I love it.

Krystyn

His biggest lesson. Alan, welcome to the show.

Alan

Awesome. Thanks for having me, Krystyn. Yeah, really excited to be here and share a bit of the story.

Krystyn

Well, it is an honor to share it. And let's start from the very beginning. You're on the Butter Tart 700, which is this wild 760 km solo gravel bike ride through Ontario. And somewhere in the middle of that journey, an idea hits you for Rally Beer. Take me to that moment. What were you thinking about? What was on your mind?

Alan

Yeah, it's funny. I think the ride was I was definitely at a bit of a crossroads in life. Personal stuff happening. I had recently switched jobs. I was working in tech. I was the first one of the first employees at a fast growing telemedicine startup. And I was just looking to out of that Felix. Exactly. And I was just like, you know what? I just want to get out there and see if I can get the juices flowing again. I was just feeling sort of a little bit stuck, I think. Um, so I went out. This was my first real adventure on a gravel bike. So, I think one thing about me that's relevant is I like to like go deep when I get into something. So, I think I bought a gravel bike and I was immediately like, "Okay, what's like the biggest, dumbest ride that I can find to sign up for and commit to?"

Krystyn

Most extreme.

Alan

Yeah. I just stumbled across the Butter Tart, which, you know, how can you not love it? You know, a 7 760 km off-road ride fueled by butter tarts. I was like, boom, sign me up. That'll be my first ride on the gravel bike. Let's go. Prior to that, I've mostly only been into action sports, so I knew nothing about nutrition and endurance. And so right before this ride, I was like, I got like a heart rate monitor, my first Garmin, and I'm fueling up with like all these different bars and learning about functional ingredients and uh electrolytes and all that stuff in the water bottle. And uh yeah, we'd ride all day. I'd have the gears turning. I was actually originally thinking like, oh, I love the bars, you know, it's such a cool format to uh build a brand around, tell a story, and I love the occasion of like boom, you're out in the wild, you're out, you're outside, you're doing something you love.

Krystyn

Oh, it's so interesting. And so you had this idea and everybody has ideas, but in terms of actually taking that next step, what was your first step to see if this is something you wanted to invest in? Time, money, etc.

Alan

Yeah, I don't think that I don't know that this is the right approach. Um, but I got really really excited about the idea and really invested in it uh early on. Honestly, all the validation I looked for prior to like basically putting all my chips in was, you know, googling around, not really finding anybody pursuing it in a authentic way, you know, and there have been past failed brands or failed product line extensions from uh like Sleeman had did done like a coconut something or other that got a lot of bad press years back. Uh, but I did see one brand in the US uh, called Sufferfest Brewing and it had just been acquired by Sierra Nevada Brewing, which is like one of the, you know, most epic craft beer brands uh, in the USA.

Krystyn

And we were talking about this earlier just around this like first time sort of in the build, this sort of beautiful naive, if you will. And I had this with my first build where you're just like, I'm going to just I'm just going to go for it because I see a problem. It needs to be solved. Let's put the weight of the muscle and the time and the effort and the hours in to make it a reality. And you do that and we'll get to sort of, you know, on your second build what that looks like now. But how many like what time period was it? Set the stage from the moment you're eating butter tarts on this crazy gravel bot ride to the first product is in your hands. What was that journey like?

Alan

Yeah. So the butter tart was in September. Um, I actually incorporated Rally Beer Company Limited. Uh, I believe it was November 19th. It was in November of 2019. So, Probably a lot of people on this Podcast can remember, you know, just a few months before, you know, all of our lives changed as well, which had a, you know, Crazy and wonderful impact on the business, I think. Um, and then I got I convinced the LCBO I landed my first LCBO listing probably in right around March 2020 and we delivered the first can of beer to the first store in um July of 2020. So it was a pretty quick uh sprint to turn around and of course at that time we were you know deep in sort of the pandemic uh July 2020.

Krystyn

And so you dove all in, you went all in, you were convicted in the belief, you invested personally, you brought your partner along for the ride. In terms of the product development, you know, I imagine this is a pretty capital inensive business to set up to sort of brew something and to make sure that it's safe for consumption. Any uh any kind of early learnings, any lessons that you took forward as you as you built the first version of the product?

Alan

I think it's just that it was the conviction. Um I think the first thing I did in the fall of 2019 is I got on uh I believe at that time it wasn't Facebook Marketplace. I think I was using Kijiji and I bought like a homebrew setup that was like a pretty sweet setup with uh like it had a rack. It was using like kegs with the top cut off for, you know, mash tanks and for the boiling and bought that, set it up in my garage and we just started brewing a couple of batches of home brew in the garage. So, not massively capital intensive. I think that first setup was like 2,000 bucks and then you buy a few a little bit of ingredients, you repurpose some old grill uh bottles and you know you can start having a product to talk about, share with friends and you know start to hone in on At least the style of beer and the recipes that you want to use.

Krystyn

And on the crazy, was you looked around in Canada at least, did you see any competitors on the scene that were thinking about this functional category at the time?

Alan

No, honestly saw very little. I would say Um absolutely nothing. Like you definitely saw a little a little bit of the trend starting around uh people having lower alk and um lower calories. So like Michelob Ultra I think was like one of the fastest growing beers at the time and they were obviously from a from a marketing standpoint you know going after um the active consumer. So that was a little bit that I saw and like a little bit of a competitor that we kind of like you know they were way up here. So we kind of Um put them on our vision board a little bit.

Krystyn

But there was there was a signal there in the market that this was a turn in the market. There was a bit of a wave you could catch. And then for you to get to that first million, What would you say the hardest hurdles were for you to get to that milestone?

Alan

Oh, the I mean countless. I mean, even just to get to the first case of beer is, you know, it's 50 bucks, right? So, you know, I think we were getting paid from the LCBO about $51 per case beer we delivered. And you know what people don't tell you is sure the LCBO gets, you know, thousands of applications for listings and they'll only hand out a few. So a lot of people think like you've just won the lottery if you've got a listing in your hand. But I learned like truly that is like literally just like the starting line of uh absolutely like grueling uh course and especially in the craft category.

Krystyn

And so when sort of when did you start to see the momentum pick up and you know you built a very strong brand program with the partnerships like in the active category like Arc'teryx did those help catalyze a lot of more of the consumer demand that was needed to support the sell through once you had folks in and say yes let's carry this here.

Alan

Yeah, for sure. It was like a bit of a double-edged sword being COVID um you know, one thing I was grateful for is that, you know, the big marathons were sort of off the table. So these big scary sponsorships where you have to pay a bunch of cash and then you got to give away like thousands and thousands of cans of beer, uh they were like off the table. So didn't have to worry about my competitors going for it and winning over those consumers. So we did a ton of grassroots events. So like small running clubs, small cycling clubs, we would host our own mountain bike and gravel nights and just like bring together the grassroots community.

Krystyn

Oh, and that I mean that's a really critical uh playbook kind of element here that I'm hearing just in terms of selling the business case to them for all of the additional activation you were going to do to drive traffic into the store. Or they may not actually be able to acquire for folks who are more health consscious Um and serve them and expand that through that new category that you clearly were defining. Were you facing any competition at that point In those buyer conversations?

Alan

Uh well, we were we were facing a tremendous amount of skepticism. You know, I think We were we were well past like the main craft beer boom. So there was a there's a lot there's hundreds of craft beers on the shelf. Managers were skeptical cuz there's a lot of beers that don't sell through if it they don't have a following. It's made in one small community and now they're trying to sell it in Northern Ontario and it just it doesn't connect. It doesn't sell. So a ton of skepticism. Um also being a co-acker came with uh challenges because they just it you're sort of like a second tier.

Krystyn

And let's talk more about some of the headwinds and then kind of how you caught a bit of a tailwind to get to the exit itself. But you raised just under a million total. Uh your competitors, Athletic Brewing, Partake, were announcing 20 million, $100 million raises. When did that really hit you in terms of the capital game that you were in?

Alan

Yeah. So, I started at I when I started the business, I was just in my own little bubble, right? Like up in Thornbury, Collingwood, paying 600 bucks a month, just like everything laer anything about the beer category. So, just learning from scratch, just wanting to get it in people's hands. That's all I cared about. That's why we did so many events. Like, every night we're packing beers for some random run club and getting sweaty with people and, you know, it was quite fun. The hustle, the grind, love it. Um, but I would say that that has a toll on you.

Krystyn

Um And so let's walk me through that moment when you kind of came to that real reality and you were looking at your options. What was going through your mind at that point? What options did you explore?

Alan

Yeah. So, at that time we had uh three beer listings in the LCBO. So, alcoholic beers. Um it was going well, but you know, it is really hard to duplicate, you know, me and the energy that like the founding team, Dave, Spencer, Mike that we all brought to the table. Oh, and Maddie, Like really hard to duplicate that. Really hard to service a region as large as Ontario. Um you know without hiring a lot of people. How do you get sales reps that are really invested? We did use agents and some of them yeah to great results but it was really hard to get traction everywhere. Um where we gave attention and where we spent time we got great traction.

Krystyn

Yeah. And so you talk so yeah the working capital that goes into that and the payment terms and you sort of talked a little bit about Loblaws and yeah you know we do have a bit of a monopolistic igopolistic grocery chain across Canada chains there's only two or three players really that dominate and so how did that kind of dynamic show up for you as a small business as you were thinking about um matching the scale and being able to fully match the distribution need.

Alan

Honestly, I think it was the naivee. Um, and At that time, you know, we were going to CH uh CHFA conferences. I was meeting lots of founders, hearing everybody's war stories. Um, and being like, oh man, like this is this is a tough game, you know, like it's really tough to break through. Um, but my naive I think you know again it's a double-edged sword but Loblaws actually phoned us and to this day I don't know who it was or how it happened but I assumed I chatted with someone at an event, gave them a beer, told the story and you know someone liked what we were doing. So Loblaws end up calling us and they waved the listing fee. Um, and that was a I think at the time that was a $75,000 listing fee.

Krystyn

What an opportunity. Literally an opportunity that knocks. And so what happened what happened from that distribution? Did that change the game that you were playing?

Alan

Um, absolutely. Um, but it also put us in a really tricky position. So, you know, they give you this enormous forecast, you produce the largest batch of beer that you've ever produced, and you start shipping it out to stores. Um, we had a few like really scary moments. I was, you know, on a bike ride. My phone's ringing like crazy. Answer it. And the Loblaws DC was denying our shipment because our the way we wrote the uh expiry date code was non-compliant for them. And so like that was the whole thing. I was like this is that's that's it. Like it's over. Like we're going to we're done. Like there's no money left. Um ended up calling my category manager. She ended up kind of smoothing it over, giving us a one-time exception on it.

Krystyn

If you're speaking to a retail founder CPG founder today and you look back on what you would have told younger Allen in that moment to shortcut some of that pain. What would you say? What two or three moves would be really critical for them to take?

Alan

I think that you really would I think we would have been better off if we started smaller, started with smaller chains and like really learned how to sell through in a grocery environment rather than just sort of scaling up to you know the largest retailer in the country right away. Uh so we didn't have a tremendous amount of experience selling through small chains in independence. Um, I had no idea what Promotions were or flyer campaigns or I didn't know what any of that stuff was. Um, and I didn't really understand all the deductions and all the, you know, logistics fees and restocking fees and I was getting bills for store renovation and I was like, why am I paying for store renovation in Sault Ste. Marie? Um so just like Not knowing about really how all the economics play out and like okay what is it the margin you really actually need um once you account for all these sort of hidden charges and hidden fees

Krystyn

Given that what you learned there from a price point perspect like what are the levers you can control once you really have a good handle on the economics is it just about volume in this category do you have any control over pricing really or is it really just about ensuring that sell through is really high to make sure that you're hitting the mark?

Alan

Yeah, I mean you want to make sure the unit economics either makes sense or that you have a pathway to improve your own costs. So like one of the big levers we were always Working on was moving from um a labeled can to a printed can. Again, it's just all dependent on scale and The volume that you can do. Also, you have to pre-commit to these. So, it is a cash flow issue whereas labels you can kind of buy one by one and stick them on. Um, but making sure that it works right from the get- go because you have a little bit of pricing power like we did we were a premium. We were like 10% more than our competitor but if you start going much more than that it's you know consumers are going to opt for the a different price point.

Krystyn

I mean it's really Is a lever there like how do we expand the margin through cost as much as we can.

Alan

Yeah. Cost control

Krystyn

Cash flow.

Alan

Yeah. The logistics the freight and then sort of like being really smart on the trade marketing side. Um And again we I didn't know what even know what that word was.

Krystyn

And I imagine freight is across Canada when you're shipping water effectively is extremely expensive and costly.

Alan

Totally. And things happen and cans break and explode and yeah there's all kinds of uh issues for sure

Krystyn

The operation of this and so back to this idea of like capital and being feeling like you were under capitalized did you look to raise additional capital along the journey

Alan

Yeah we um we were out looking for uh capital tough environment for fundraising this would have been um at least it was tough for me the environment it was 2021 one and we were like we got to raise some money. We went out to the market, went looking, talked to lots of people and that's actually when I first got introduced to uh the people at Muskoka Brewery and you know they were very interested at that time and I had like uh I had like letter of intent for them to do a fairly sizable investment.

Krystyn

And on that note, I mean that's also sort of the height of DTC kind of like different categories coming online. So did you feel like there was a lack of capital flow coming through to this category? Was that part of it? Um was it also that I mean in my experience fundraising is a full-time job while you're also handling a full-time job and a lean operation. I mean that's that's a lot to handle at once and do really well in both respects. Did you feel constrained just in your own capacity to handle All of that at once?

Alan

Oh yeah. I think I was navigating burnout during that time for sure. Um and like it's a bit of a perfect storm like and it does come back to conviction too. You know I felt strong conviction that with a someone to make an investment like a Muskoka brewery who has a lot of expertise in the in the beer category and beverage in manufacturing has their truck. So I was like this could be really good. There's a lot to learn there. Um, but I don't know that I was necessarily keen to go raise another million bucks from my personal network um to just let me keep figuring it out.

Krystyn

Well, and on that point, and this is what a lot of founders, especially when they're starting out, don't necessarily recognize that the more equity you give away, yes, it can support scaling the business, but the more of your options you sort of give away. And also exit stories, you know, you may hear of this crazy hundred million whatever exit, but at that point, how much of the company does the founder actually control and own? And from there, what was the deal structured? Was most of that structured in an earnout? So, there's so much nuance to these stories and I think there's always so much heart and emotion that is not really talked about and the fact that you're literally wearing all of these hats trying to keep this thing going.

Alan

Yeah, I mean part of it is this and I think why this will hopefully resonate with founders is like you just have to be in the arena to sort of uh Try to figure something out. Um but yeah, that that investment did fall through. It just it took too long. I responded I remember to an email thinking it was my team and it was their team and it was like oh I was just like it was a disaster. And then both of us got really busy like in the beverage business summers are really busy. So then it was like it was pause and it was over. That's when we had to double down and like personally put in um me, my co-founder Dave, and then um my main investor, he was like, I'll match whatever you put in. So we all put in 50 grand.

Krystyn

You're feeling

Alan

A lot of people yeah a lot of people losing money on every can of beer and it's just like I don't have the cap table or the investors that are you know going to sign up for that so um it was either go out and try to raise a tremendous amount of money and then play that game. I didn't necessarily have the contacts or I didn't necessarily have the knowledge to figure out how to go execute a raise like that. Um, so I started to really focus in on I got to find a real strategic partner who can help me, you know, get a good handle on my costs and look for efficiencies and synergies that way.

Krystyn

Yeah. And so much of this is the operating part of this, not a lack of demand for the business and the capitalization for getting there. And a lack of capital can be a position that puts you in a very tough spot, which it sounds like this is kind of the decision point on like how can I get to, you know, and again, it's always interesting like reflecting back. So, thank you for giving me the honor of sort of replaying what I'm hearing. Um, Walk me through the moment where this deal started to come together with Muskoka Brewery. How did that come back? What sort of what did you do to did you do anything or did that come inbound? What was the spark?

Alan

Oh, well, one of my one of my partners and the main sales agency that we used, uh, Craft Brand Company and Mike Lava, uh, somehow I arranged for us to go, uh, crosscountry skiing in the back country in, uh, Color, uh, with the CEO of Muskoka, uh, Todd Luen, and we went for this big ski, stopped at like a really scenic, uh, wooden bridge, had a had a rally beer, and just sort of like let him know like, hey, we got pretty close on the deal last summer. Um, I'm trying to figure out what I'm going to do next and, you know, love to chat with you guys again if it's of interest.

Krystyn

No kidding.

Alan

Through all that. But yeah, it started out like super authentically that way. It was like really relationship first and um yeah, getting him excited on, you know, what was special about rally, you know, being that that occasion, that active occasion, that, you know, celebratory beer.

Krystyn

And he's already seeing the traction and the success considering, you know, you were in the top in his one of his core markets. Um, and this is typically, this is an atypical story for how a deal, this is not a deal room. This is a cross country Hike which is so you and so the brand as I'm getting to know it Um when did that start to become more of a real conversation um less of a strategic partnership but more of a hey let's look at a full acquisition

Alan

Yeah the other thing I'll say too on Muskoka that not everyone knows or has asked me like I even sent them my seed deck like before I even launched the brand so you know I've been trying to cultivate that relationship for a long time and I from day one I was like oh I better make friends a little bit of friends with these people rather than just be like bitter competitors. So like I was getting to know uh the team at Ace Beverage at Muskoka like I was trying to be friends because I knew like that I may need help one day one day. Um

Krystyn

Smart move but smart intuitive move to build because it is people buy from people and that's true of companies just as much as anything right so was that critical for you if you kind of look back to the throughine of your story having those early connections to draw upon when you needed it

Alan

I think it got me a lot of credibility that I had been going to them since seed stage like and showing them the story and being open and building super transparently and I really tried to build in the public uh for most of the journey so I think that played a big role and like you said it on this podcast like the optionality like that was something always in the back of my mind that yeah the more options I can always have you know the better especially and now looking back you know in such a hard category options are uh are nice to have

Krystyn

Um Completely and knowing where you are with the information you have and I also just love this idea that you had this abundance mindset of you know this category is big enough for all of us to win this doesn't need to be something I hold close to my chest. I can be I can be open. And I think a lot of founders get this feeling, you know, we're building in stealth mode. You see that on LinkedIn a lot. Sure, maybe if you're the next Nvidia, maybe, right? But I think in most businesses, the pie I really believe founders need to believe that the pie is big enough For us to win and we should we should support each other.

Alan

Yeah. Right. Craft beer's fairly collegial that way, trying to steal share from the macro guys. But, um, I also felt that we were even more different because like I don't think we were actually stealing a lot of IPA drinkers, you know, we were really trying to we were really going after people that were buying, you know, Michelob Ultras or not drinking beer at all and going after this kind of this like net new occasion in a sense. Um, so I never really I never really felt that competitive with um any of them really.

Krystyn

You were part of creating a new category that is now booming, especially if you look at Gen Z and their consump consumption habits, right? And the choice of non-alcoholic for wellness, well-being, etc. It sounded like you were kind of in the right area. Maybe a little early too in terms of that trend.

Alan

Yeah, I think so. A little early, but um yeah, it was fun to be a part of.

Krystyn

And so when you talk getting to the actual deal itself and this focus says, "Okay, let's structure this deal." What was that like? What did that sort of look like to get to the deal? You told me you'd sold for approximately 2 million. Um walk someone through who hasn't really been through that type of process. What was that like?

Alan

Um yeah, it was it was super fun. I mean, I loved it first of all. Um, but it was tough because we were talking about numbers that, you know, my main investor wasn't really going to make any money. So, it sort of became a bit of a preservation game for them. Um, but they had also learned about the category and seeing what the competitors were doing and seeing that this was going to be a tough sled. Um, and you know, I'd expressed that and I wasn't sure if I was that interested if I'm going to have nothing left. And I don't think they wanted to operate the business. So, uh, they started to get more and more excited at the opportunity that we could, uh, sell and maybe make a little bit of, you know, they could maybe make something.

Krystyn

How fast was that entire diligence process from the moment this made sense? Was there an LOI? Like what was sort of the formal process that you went through with them?

Alan

Yeah, it was probably like it probably dragged into like close to 90 days. Um, First we very fast. First, it took a little bit of time to align on the terms and like I was willing to take nothing and maintain some equity because I was still really excited about, you know, where we were going. Um, and it ended up becoming a bit of a like take it or leave it situation where they wanted 100%. They wanted 100% of the equity. Uh, they have a really clean cap table. Uh, I wasn't going to write any checks. So they're just like, "We're going to write all the checks and we don't need any other partners and we're not used to having anyone on the cap table." So they were just like, "We'd like to just own 100%." And, you know, offer me in return, you know, what they consider to be a dream job.

Krystyn

That's that can be intimidating too and it depends on you know you're used to being running your business. This is a whole other skill that you're learning while in it. I mean nobody goes to school for deal making for the most part. It's sort of something you learn once you're in it uh and then through it and have some reflection which we'll get to in a moment in terms of what you would go back and sort of help other founders who might be going through that for the first time. Um but how did you settle on the value of the business?

Alan

Yeah, it's um I mean what well one it's easy to settle on sort of okay we've got some trays and some cans and this is the inventory number and like all that stuff is easy but that amounts to like At our scale like a relatively small number so then you're just like looking at the trade you're looking at trademarks you know Um I laugh like what was on my balance sheet like a couple of Yeti coolers and a and a couple of flags and tents you know u that was pretty much it. You know, we had a truck, but it was there was a loan on it, so it was sort of a wash.

Krystyn

Right? And so selling them the future potential of the business and what were you doing just if you was sort of rough sizing at that point in revenue?

Alan

Oh, I think I think we had like just we had just started to have our first month or two over 100 grand a month in sales. So, we were it was growing a lot because we had just finally gotten the non-alc uh beer to shelf which became uh you know pretty like probably about 50% of the business Uh relatively quickly. So, we're seeing really good growth there. So, we were really definitely selling on uh that future. And for Muskoka, uh being, you know, one of the original craft beer folks, they had been seeing the non-alc trend. And from their description, they thought I was about two years ahead of them in terms of like already having national distribution and a blah blah blah blah listing and already having uh a formulation figured out and yeah, just like actually going.

Krystyn

And vertically integrate it which is versus the co-packer.

Alan

Yeah. They'll capture the co-packer margin and put it on their trucks and the trucks aren't always full to the brim. So there's a lot of efficiencies there um on that existing business. So, while it was for them, you know, probably small, um, they knew they could expand the margin pretty quickly.

Krystyn

Yeah. It's a clear and just the through line here that I'm hearing is that there's, you know, there's the inventory, there's like the hard assets, there's things that will show up on your balance sheet and on your P&L, but it really sounds like there was tremendous strategic value and that you were a shortcut to not only the learning, but the IP in terms of the formulation, in terms of the mo effectively a moat, um, in terms of having some of those partnerships locked in for them to just jump into Um, and expand further. Further um and then the deficiency. So all of that is not going to show up in those financial statements. And that's a really key point for a lot of founders. Understanding the value you have and what you actually have within the business and how to position it Is so powerful because you may if you don't know that walking into those buyer conversations, it's very difficult to understand how to where your leverage is, right?

Alan

Yeah, There's a lot of leverage there.

Krystyn

So I'm curious just in terms of um you know the deal closes, you go through a transition period. There's typically a transition period always for founders especially when you're running a lot of the components of the business. Was your 6 months was that roughly what it was end to end?

Alan

Yeah, it was it was I think it was quite unusual and I think Yeah probably from their perspective as well in hindsight um you know I felt a bit badly but they I think they thought it'd be the dream job but it just really isn't the same when you go from being the founder to having 0% um in it.

Krystyn

No control. So

Alan

Yeah, and my Your employee my team essentially um didn't come over as much as I would have liked. So uh that was really challenging as well because you know you build a culture and a team around it and you have a whole Um Your community that way and support system. So uh that was quite challenging but yeah I just had a six-month I mean part of the benefit of doing the deal with them is really clean. You know, they don't have uh they've got one really strong uh financial backer and um so they're uh very well positioned that way. Um so they didn't need to do anything super complicated or complex. It was uh you know I think relatively easy from that perspective,

Krystyn

Right? So more of a cash component.

Alan

It was Yep. Just fully um pretty much. Yeah.

Krystyn

That's great. Because I want to get to the heart of what you just said there that was really important around you know the not all of your team came over a lot of your community was at work And I'm curious for you as you sort of reflect with some space what was the most challenging I guess surprise something that kind of snuck up on you about that transition and what came after

Alan

Oh yeah I mean well one I think you struggle with imposter syndrome from day one but you just sort of start you find your place and then you go to like a You know 150 person company that's in the craft very craft and we were very not craft and so there was like a bit of a you know that was tough not all the employees were you know I got the vibe not excited about it cuz they want to be just making their hazy IPAs and Imperial stouts and do the real craft thing. So, we're sort of battling that. And, you know, a bigger company like Muskoka is trying to go from a craft brewery to a beverage company.

Krystyn

Yeah. Yeah. And that cultural tension and what people don't often know is like the deal's done, the ink is dry, and yeah, cash is in the bank, But you're then going into this integration stage where it is all about people. Right. Like, and that's people are not numbers on a spreadsheet, although people try that move, but this is about culture. This is about values alignment. And I imagine there was a sales team that you had to also get pumped about selling this that new product in their portfolio. I mean that's there's a lot of challenges with change. We no one likes change except for entrepreneurs. We thrive on it.

Alan

Yeah. And like the sales reps did a great job, but they were also just like, man, we just keep getting new SKUs and it the managers, store LCO store managers are uh not always the uh easiest um people to work with and they have lots of people always asking them for this and that and the other things. So um you just have when you have a laundry list of things you're trying to do with them, they're just sort of roll their eyes a little bit. So it's a tough it's a tough environment and a tough gig for them for sure.

Krystyn

And so for you, let's jump into where you are now and kind of look backwards. So you go from that, you transition, you do a little bit of you do some consulting work through Windline with some phenomenal brands like Greenhouse for example and Sapsucker, which I Love. That's my like cocktail, so to speak, in the summer. Um I'm curious just in terms of what you're building now in a new occasion in a new kind of Um ideal profile where you're looking at like you know the pet parent, the dog parent, the adventurer. Walk me through how you're building differently having lived through this build. Is there anything you're doing and are you approaching this build a little differently?

Alan

Yeah, so that's uh that's the Fraps Institute as we're calling it. So, this is where we're really building uh building up a dog nutrition program for adventure dogs. So, honestly, taking a lot of inspiration from the Rally brand here. Um, and really bringing a lot of, You know, the marketing and the brand and the occasion from beverage and trying to apply it to a new category. Um, and probably an occasion that I've now fallen more in love with than the uh, appreay beer is out for a hike with, you know, my partner and our pup.

Krystyn

Is that typical by the way for a seed?

Alan

I think so. Yeah. I mean, our large investor had 25% as soon as they signed. And You know, we had a little bit had 50 grand of sales. Like, we had just sort of just got started.

Krystyn

You know, just buying a $2 million valuation. It's tough, right? When you have 50 grand in sales Starting from scr. So, what I'm hearing is, hey, let's self fund. Let's hold more of the optionality in the business for longer and then get more traction so you can raise it if you do raise at a higher valuation. Do you want it? Do you believe you have to be successful? Do you believe you have to raise in this sort of business?

Alan

I don't think so. We're uh again, we're going to really try to build a really strong brand and community. So, I'm also excited that I get to uh grow e-commerce in a in a bigger way. Um with all the regulatory constraints around alcohol, e-commerce was, you know, on and off again a little bit because the rules were changing through COVID there. Um so, I'm excited to own more of that. Own more of own my customer more, not be so uh reliant on the LCBO, on a Massive retailer like Loblaws. So, the ability to go build real relationships with um consumers direct, but then also independent stores. You know, there's um well over a thousand independent pet stores. There's, you know, hundreds and hundreds of, you know, outdoor shops and the independent sort of hiking stores and bike shops where uh we'd love to get our uh dog adventure bar in. So, yeah, more direct relationship with those uh customers, I think, is critical here. Um, I love that which I'm really excited about.

Krystyn

I'm hearing just a couple of patterns here. Just one around, you know, the grassroots movement really building that community around a brand, building the audience around the brand and then, um, you had mentioned, you know, going to Loblaws right away. Maybe you should have started with more of the independence, got your footing. Um, so I'm hearing you kind of taking that approach here. And then the third thing that I'm hearing is around know your numbers, know your unit economics, understand the game you're playing. We had talked about this in an earlier call just around and I felt this experience post one of my startups that didn't work out and I felt this almost like this fear of touching fire again.

Alan

I know. I really struggled to even share this because um I've had this idea for like right since you know a year and a half probably now. Um and I was really really cautious really saying I would never do that again. Um but always in the back of my mind knowing that yeah I really love it and now I have all these learnings and it yeah really would be a waste you know. Um, But one thing that got me excited about this category is a, you know, the way I've built it out there, the margins are going to be much more of a truly sustainable. Um, you know, where I think we can grow thoughtfully incrementally, uh, not have to commit to, you know, crazy minimum order quantities to get in the game and have all this inventory that, you know, might struggle to offload.

Krystyn

And I what I'm hearing is you've got the playbook from the last adventure. You've got a pattern. You've got a you know, you've got um you've got experience and expertise that you can parlay into something and do it even better. You're more experienced now as a founder Than you were before. And I'm curious as you think about the founder who's listening who's like deep in the build, Maybe they're in a category like you were where it was super competitive. Maybe they're feeling under capitalized. Maybe not. But what advice would you give them now that you've been on the other side and you're back in the build? Whether in the IQ side in terms of like all the things you can do to prepare or the EQ side in terms of like thinking about your community, thinking where you're spending your time to recharge, reset, find yourself, ground yourself through these moments. What would you want to say?

Alan

Yeah, I think it's just, you know, don't be shy to uh get uncomfortable. You know, make sure you've got the right people around you. And if you don't feel like you do, you know, it's as uncomfortable as it is, put yourself out there, have conversations. Um, I was surprised at the, uh, you know, the amount of people that gave me support and advice and were willing to help and kind of, uh, join the cause. Um, you know, was absolutely critical. So, just have those uncomfortable conversations, be honest, be transparent. You know, there's not a lot of secrets left out there. So, um, feel free to share what you're building. I think that that's a really strong, you know, it's accountability thing and I think people respect it and I and I don't think there are that many secrets left out there in many of these categories.

Krystyn

Oh, I love that. So, build your community, build your support, know what you don't know, and go seek advice to fill that gap. And then what I'm also hearing is go all in. If you're going to build something, Go all in. Continue to build. Continue to but go all in with a sense of thoughtfulness On what it is that you're building, how you're building it, how the unit economics play out. Make sure it's sustainable. That's what I'm hearing. That idea of sustainability,

Alan

I think. So, yeah, that's that's something I um I always dreamt of, but uh you know, never quite got never quite got there.

Krystyn

Well, you're on your way. And you are building differently from what I'm hearing and opening up the channel to go direct which sounds like the absolute sweet spot for how you built previously in terms of that touch point with the end customer. Um so I'm so excited for you and are you bringing in co-founders at this time or are you building this on your own? Is this fully Solo founder at this point?

Alan

No, I got co-founders especially the uh the CEO is actually our do our uh our puppy. So yeah, she's a real boss. Uh that's Alma.

Krystyn

Alma, that's right. Oh, so good.

Alan

Our Mexican rescue is uh she's the real boss around here. So,

Krystyn

And the inspiration. Well, so excited. Alan, thank you so much for sharing your knowledge with everyone here listening. So, appreciate you and can't wait to see Raps Institute on shelves or online.

Alan

Cool. Thanks so much for having me.

Krystyn

This podcast brings you conversations with founders who've made strategic exits, plus the advisers who guided them through the entire journey before, during, and after the deal. Real expertise from people who've actually been there. Getting to the Deal is made for the Exit Horizon community, a private, highly vetted membership for Canadian entrepreneurs planning strategic exits. We discuss what most won't, how to maximize value, build systematically, and design what comes next. Connect with us, Exit Horizon, on LinkedIn or reach me at krystyn@exithorizon.com. I'm Krystyn Harrison. Subscribe to Getting to the Deal wherever you get your podcasts. We'll see you next week.