How Olipop’s founders turned a $100,000 investment into a ‘healthier’ soda brand bringing in $20 million a month

Most folks solely get up in the nighttime to a noise outdoors or a dangerous dream — however at 3 a.m., Ben Goodwin thinks about soda.

Goodwin is the CEO and formulator of Olipop, a “more healthy” prebiotic soda on monitor to surpass $200 million in gross sales by the tip of the 12 months. 

He and his co-founder, David Lester, 42, launched Olipop in 2018 with the purpose of making a product that will “assist push folks’s diets in a more healthy path … however does not require a large conduct shift from them,” Goodwin, 38, tells CNBC Make It

In its first 12 months of enterprise, Olipop made $852,000 in gross income promoting to 40 grocery shops in Northern California. Goodwin and Lester packed and delivered the cans of Olipop themselves, a method Goodwin perfected in a makeshift lab at his home in Santa Cruz.

Since then, Olipop has grown into a nationwide brand and a favourite amongst Gen Z and millennial shoppers, who gravitate to the brand’s eye-catching packaging and nostalgia-inducing flavors like root beer and classic cola — a lot of which Goodwin comes up with in the early hours of the morning.

For instance: Olipop’s banana cream taste occurred “as I used to be laying in mattress one evening and requested myself, ‘What’s the weirdest, hardest taste I might pull off?'” Goodwin says.

Olipop’s flavors may mimic the style of different beloved soda, however the place it stands out is its substances: Many standard soda manufacturers can pack about 39 grams of sugar in a single can, however Olipop slashes that quantity all the way down to 2-5 grams, whereas additionally offering 9 grams of fiber. Each can price about $2.49. 

It’s no coincidence that Olipop’s rise has coincided with the general public’s rising curiosity in intestine well being. Between December 2022 and January 2023, because the hashtag #guttok surpassed 700 million views on TikTookay, Google searches for “Olipop” spiked. Within the primary six months of 2023, Olipop hit $100 million in gross income.

Here’s how Goodwin and Lester turned a $100,000 investment into a multimillion-dollar enterprise able to promoting $20 million price of soda a month.

A school dropout meets a company quitter

Goodwin demonstrates the formulation course of for Olipop at a makeshift lab in San Francisco.

Photo: Jes Gallegos for CNBC Make It

“I grew up consuming soda, it is one of the ubiquitous American drinks of all time,” says Goodwin. “I believed, If you actually wish to create a wholesome product that is accessible and may break by means of at mass scale, soda is the right automobile.”

Goodwin spent the following 4 years in a makeshift lab he arrange in a good friend’s yard alongside Jim Ilehder, a microbiologist he employed to assist with formulation. At the identical time, Goodwin balanced a number of freelance jobs, together with product growth, internet design and digital advertising and marketing for different companies, placing no matter cash he made towards the experiments.

“I believe I spent about $300,000 of my financial savings on that challenge,” says Goodwin. “We made our personal tools from elements at Ace Hardware and an aquarium retailer downtown to save cash.”

By 2012, Goodwin had created the fizzy, fermented soda of his desires. At the identical time, 6,000 miles away, Lester stop his company job at Diageo, a giant alcohol distributor, and determined to maneuver from São Paulo to San Francisco to grow to be a full-time entrepreneur.

Goodwin and Lester have lunch on the espresso store they first met at in Palo Alto.

Photo: Jes Gallegos for CNBC Make It

It was really Lester’s outdated boss at Diageo who launched the pair. 

“She knew Ben was searching for a enterprise associate and thought the 2 of us would work effectively collectively,” says Lester.

They agreed to fulfill at a espresso store in Palo Alto in early 2013 to debate a potential partnership in Ben’s probiotic soda firm – Obi. 

“I keep in mind Ben turned up with this bag of sodas that he decanted into these stunning glass champagne bottles,” says Lester. “And he simply blew my thoughts along with his data of the intestine microbiome, probiotics, and his ardour for what he was doing … it was a very completely different sort of dialog than I’d be having in my company profession.”

Adds Goodwin: “It was clear to me as soon as we met that David was this very clever, earnest, well-intentioned particular person, and we developed a lot of belief for one another actually shortly.”

Don’t miss: How Van Leeuwen turned a $60,000 investment into a $300,000-a-day ice cream empire

Before Olipop, there was Obi

Two weeks after their preliminary assembly, they turned companions. However, Obi did not see the success and traction they’d hoped for, and in 2016, Goodwin and Lester offered Obi. Goodwin and Lester declined to share how a lot Obi offered for, and to whom. 

Neither might level to a particular purpose as to why Obi failed — however each Lester and Goodwin agreed that they weren’t able to stop working collectively.

Ben Goodwin and David Lester turned companions in Goodwin’s probiotic soda firm, Obi, in 2013.

Courtesy of Ben Goodwin and David Lester

“We obtained to the opposite facet of Obi and realized that we hadn’t labored that effectively collectively, however equally essential, we hadn’t killed one another. We nonetheless felt very motivated to try to determine it out,” says Lester. “To me, it might’ve been a wasted expertise if we did not then go on and put into apply what we discovered.”

Goodwin went again to work in the lab — one he arrange in his Santa Cruz dwelling — this time specializing in prebiotics versus probiotics, a choice that was buoyed by new analysis on the advantages of prebiotics for the intestine and the mind. Prebiotics are non-digestible fibers that stimulate the expansion of fine micro organism in the intestine, whereas probiotics are dwell micro organism discovered in some meals and dietary supplements.

Getting Olipop off the bottom

In 2018, Goodwin completed the brand new method for Olipop, a mix of botanicals, plant fibers and prebiotics together with marshmallow root, nopal cactus and Jerusalem artichoke. 

Olipop’s identify was impressed by a group of prebiotic fibers, oligosaccharides, that Goodwin found throughout this experimental section — Lester recommended they mix its shortened identify, “oli” with “pop,” a frequent nickname for soda in the U.S. Midwest. 

The pair pooled $100,000 they obtained from promoting Obi to get Olipop’s first cans on cabinets.

Goodwin and Lester packed and delivered the primary cans of Olipop themselves to 40 grocery shops in Northern California.

Photo: Olipop

At the beginning of 2019, Olipop launched in three flavors — ginger lemon, strawberry vanilla and cinnamon cola — throughout 40 completely different well being meals shops in Northern California. That similar 12 months, they surpassed $850,000 in income and expanded to nationwide retailers like Target and Walmart.

Lester and Goodwin raised $2.5 million in a seed funding spherical in 2019 as effectively, which went to constructing stock, scaling up their retail presence, testing new advertising and marketing views and hiring new workers. 

Olipop’s workforce is all distant, they usually now have over 100 workers. Goodwin begins the formulation course of at his home in Washington, then the soda is shipped and completed at a lab in Palo Alto.

Striking soda gold

The extra standard Olipop turned, the extra time Goodwin needed to spend in his lab, creating new flavors to launch. Between 2022 and 2023, he concocted flavors like tropical punch, impressed by the tangy style of Hawaiian Punch, and watermelon lime, which he describes as “a watermelon Jolly Rancher sweet smushed into a watermelon agua fresca drink.” 

2022 was a large 12 months for Olipop: It kicked off with a series B funding round that raised $39.7 million {dollars}, with large names like Gwyneth Paltrow, Mindy Kaling, and the Jonas Brothers (Joe, Nick and Kevin) on the checklist of traders. It ended the 12 months with $73.4 million in gross income.

Lester and Goodwin will not publicly disclose their pay however say they’ve paid themselves “low to average” salaries because the firm has grown, and principally lived off their financial savings in its early years.

Olipop has gone from promoting in solely 40 shops to over 23,000 tales in the U.S., and it’s on monitor to promote in 30,000 shops by the tip of the 12 months, a firm spokesperson tells CNBC Make It. At this time, the corporate doesn’t ship internationally. Most impressively, in 2023, Olipop has seen at the least $20 million in gross sales every month.

Looking forward

For Goodwin, probably the most surreal profession second got here earlier this 12 months when Olipop dethroned A&W because the best-selling root beer in the U.S.

“To get to that time of belief along with your buyer the place they’re keen to swap out a brand that is been with them since childhood to your product … that is enormous to me,” he says.

Olipop’s workforce is all distant, they usually now have over 100 workers.

Photo: Olipop

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