November 18, 2020
In this session of The Personal Mastery Podcast, we speak with Jai Jung Kim who talks about what Hydrant is and what they have done to become well known in the industry. Hydrant is an electrolyte mix that works to provide rapid hydration in a convenient to-go packet. Oriented around health, Hydrant is an alternative to reducing your caffeine intake as well as starting your day with more electrolytes and less sugar. Jai works progressively to make drinking plenty of water an enjoyable experience. Some advice he could give to an entrepreneur would be: have a plan, surround yourself with people who are proactive and be willing to do things against the standard playbook.
Jai Kim is the Co-Founder of Hydrant. Jai and Co-Founder John started Hydrant with a couple hundred dollars in the bank and grew it into an eight figure brand. They impressively raised $5.7M million dollars without a pitch deck this year and are continuing to grow at a rapid rate.
You can learn more about Jai below:
Podcast Discount on your first purchase: MASTERY20
Arri Bagah: You're listening to the Personal Mastery podcast with Arri Bagah, interviewing CEOs and executives who are performing at the highest level in their industry, working purposefully towards vision, in alignment with the values and the state of constant learning about the self. In this episode of the Personal Mastery podcast, we have Jake Kim, who is the co-founder of Hydrant Jay, and his co-founder Matt Stone and Hydrant with just a couple of hundred dollars in the bank and grew into an eight-figure brand. They recently raised five point seven million dollars without a paycheck. And he's going to tell us how they did it, as well as his entire journey from starting the brand from scratch to now a fast growing brand. There's a lot of content in this podcast. I'm super excited for you to check it out. So without further ado, here's Jay. Jay, welcome to the podcast.
Jai Kim: Thank you for having me.
Arri Bagah: Awesome, and you've been living in New York for quite some time now, correct?
Jai Kim: Yeah, I haven't left the city even when even during the peak of the pandemic.
Arri Bagah: Well, yeah, I've noticed a lot of people kind of left. But you're still in New York strong.
Jai Kim: So holding the fourth. Oh, yeah.
Arri Bagah: So you started out you went to business school, correct?
Jai Kim: That's right. That's right. I was at Penn.
Arri Bagah: Oh, OK. And what did you study there? Exactly.
Jai Kim: Was business Glanbia? Oh, we haven't decided concentration. I was only because,
Arri Bagah: Yeah, concentration as well.
Jai Kim: Yeah, I was only in three weeks before I left, so. So I can't even really say I went there, but I was I was really their moment momentarily, OK.
Arri Bagah: Ok. And what you learn there, like after like running your business now, do you think it's like on par with what business actually is?
Jai Kim: You mean like like if I think about what I learned there during the first three weeks. Yeah. I don't think I can claim that I went to the Wharton curriculum to make a fair statement about what they offer. So I'll definitely avoid making that statement. But what I can say is, I think for me while I was there, you know, I realized it wasn't the best fit for me because I went there thinking that I was going to run a business while I'm in business school, start a business. And and most of the people that I met were interested in making a career transition to consulting or banking. So a lot of them were talking about getting an internship there and the interest was just not kind of a line. And I wanted to be in an environment where people kind of share the vision of starting their business and kind of going through the the founder journey.
Arri Bagah: From there, you started consulting.
Jai Kim: No, no. So let me give you an overview background on myself, so. I started my career as a consultant at McKinsey, Penn was two years ago, and so, yeah, so I serve a career as a consultant McKinsey and then spend rest of my time in private equity before I went to business school. And then I was in business school trying to start a hydration business. And and I was sort of like stuck with the product development process because like I explained, my background is all kind of focus on the quote unquote business related experiences and nothing to do with science or wellness. Right. And a friend of mine connected me to my current partner, John, who went to Oxford study science, and he already had a identical product that had been trying to make. But he didn't have the skill set that I did. He didn't. He was trying to still trying to figure out how to raise money and think about the the strategy to grow the business. So we chatted and we instantly clicked and realized we had a complementary skill set and we decided to kind of become a co-founder. And that was basically three weeks into the business.
Arri Bagah: Ok.
Jai Kim: So I started Hydrant and after that, not not consulting.
Arri Bagah: I as if you majored in hydration or something. Glad to know you were in signs or anything like that. So I was like a personal problem. But you're trying to solve it was just like a business case that you kind of.
Jai Kim: So yeah. So I've always been a a guy where if you opened up my kitchen cabinet is like filled with supplements and I would try all these different types of ingredients that are supposed to be energizing or body hacking. And and I've been an avid user of energy drinks and coffee and a friend of mine who is really into body hacking was was asking, have you tried hacking hydration? And I was like, what do you mean, that's just me, like drinking like a gallon or two of water every day or something. And he basically says similar, but you should first start your day with electrolytes. So it's like Gatorade is like, you know, like sugar. But there are more products out there with less sugar. It just happens to be that none of them taste good, but it helps you to feel better and kind of reduce the reliance on caffeine. So I tried it for about a month or two, like drinking a lot of water with electrolytes starting from first thing in the morning. And I started to feel a lot more energized in a in a natural way. I started to have less of that kind of peaks and troughs of caffeine. So I was thinking, well, I definitely feel better, feeling much healthier, but I really enjoy the experience of drinking these electrolyte products. Gatorade was way too sweet and sugary. A lot of these other hydration supplements or try it tastes like Gatorade, but failing to taste good. So I was thinking, why don't I create something that is more optimized for like a lifestyle where you can drink it every day. It kind of treat it like environment and then you can also enjoy the experience. So that was a pressure problem. And I was trying to solve and and I was kind of failing to nail the product development piece.
Arri Bagah: Yeah. I recently also became some sort of like bio hacker. I have like so many supplements of just like superfood.
Jai Kim: Nice. Yeah. That I try out. But one thing that sucks is drinking a gallon of water every day, like it's like, oh yeah. That's like a lot of water that you have to carry anyway. And if you're like working and doing all the stuff like where are you going to carry like a gallon of water. So that's why like, I'm guessing most people don't even drink a gallon water every day.
Jai Kim: Yeah. And I think a lot of people don't even enjoy to the plain water taste and some people do. But a lot of the a lot of our customers don't. So Hydrant makes kind of drink a lot of water. Very enjoyable experience. So we focus a lot on the experience aspect.
Arri Bagah: Yeah, I order the product before too. I ordered the lemon the I think we're like two twenty packs or something and actually like you only have to drink that much water and I feel like taste pretty good.
Jai Kim: Yeah. Makes you want to drink more water. Right.
Arri Bagah: Exactly. Yeah. And then there's like a some sort of like aftertaste like lemon taste. That's actually really good too.
Jai Kim: Yeah. I mean for all of our products we flavor them with real fruit juice. That's where you get that the real real flavor.
Arri Bagah: So when you make your co-founders. So he was in the science, you're more like in the business. How did you guys like and assigned to work together? Because I think he started like the brand before he went to go, go, etc..
Jai Kim: Yeah, yeah. It's honestly, it's a pretty interesting experience. And we we tried to like not disclose that in book because when we were going to fundraise and like a lot of these traditional Silicon Valley investors were like, you know, how long have you known your co-founder was your childhood friend? Have you worked with them? And in your previous job? And typically everyone will say, I've known so-and-so for ten years, but we've known each other for three weeks. So, yeah, I mean, I think I think basically what happened was we were struggling independently on our own. You know, for me, I could even get the product right. So I didn't cause he's just like wasting time trying to figure out who I want to increase or decrease that. Like, what's the ideal nutritional fact that I want to give Obama and John kind of nail that, but had basically five hundred dollars left in the bank account, wasn't really doing much in sales and was sort of like trying to still figure out how to raise money for angels versus fund, etcetera, etcetera. So, you know, I think we're both higher in terms of like working alone and facing the problem. And we were just thinking. Why don't we just outsource each of our weakness and rely on each other and become a team team? So that's how we just started to work together and ink the paper and kind of execute those really weird is a weird process in the beginning. But few weeks in we we clicked and it's pretty natural.
Arri Bagah: Yeah, even like for like a product that people have to ingest, did you guys have to, like, go through like FDA or anything like that?
Jai Kim: I mean, there like there are things that we have to be compliant for every day in terms of manufacturing processes, claims and packaging, labeling, so there are components where we have to go through, but it's not like as rigorous as a drug policy.
Arri Bagah: And when you launch a brand, you only launch direct to consumer or did you?
Jai Kim: We did. We did. We we first started to sell our product on our website, drink hydrogen dotcom. A couple of months in, we started to sell on Amazon and within a year we start to sell in retail. We basically did a lot of things that were sort of against the playbook, like the playbook, like DeCastro. Working part of a playbook is don't go to retail nor Amazon for, you know, as long as you can. Like there is so many investors. They were asking, are you planning to go to Amazon or not? Look at Warby Parker. You should start your own store before you go to Amazon. Yeah, we didn't want to, like, follow certain playbook. We wanted to solve problems. In the best way we can, and we wanted to approach a problem with independent thinking, and we're fortunate to say that we got rejected by the investors. We're looking for playbooks and was able to source capital from investors who are welcoming independent thinking.
Arri Bagah: And we're going to talk more about that. But talk to me about like the launch of Hydrant. If your co-founder like, where you guys like like tens of thousands of dollars after a couple weeks where you guys, like, surprise.
Jai Kim: Well, we we were definitely surprised by the difficulty of the launch because we're doing like a thousand dollars per month, not tens of thousand, like a thousand, maybe two or three thousand. And and this was basically Q4 of twenty eighteen because we launched a business from September of two thousand eighteen. So for September to December, it was very slow. We were doing guerrilla marketing by blasting and different NBA scrutineers telling me about the startups, telling them this is great for general hydration, needs your workout and also for hangover, etc., etc. We're trying everything and it wasn't really working out. And we also said, one, there was also an issue we only had like nothing else. So starting from 12 19, it starts to grow much more quickly. We introduce a second flavor of grapefruit and a lot of customers who are sick of lime start to come back to try grapefruit. And as we started to add more flavors and test different marketing channels such as Facebook and Google things, Heidi, start to catch fire. It start to grow really quickly. And then we we had some PR news coverage and that that's kind of where everything kind of jumped.
Arri Bagah: And talk to me about your ideal customer, because, like, it can be kind of hard to figure out who your ideal customer would be because like everybody can drink water, right? How do you, like, nail down, like, your ideal customer?
Jai Kim: So, honestly, our customer profile is. The whole area, although I would say the core customers are the typical customer you would think of who are active and who is looking for something healthier than traditional sports drinks to consume less sugar, and that's better for me with better for you ingredients. That's like a core customer group. And then after that, beyond that, there is a group of customers who are kind of struggling from the morning grogginess and they're treating the symptom with hydrogen is a lot of time. That morning grogginess comes from dehydration. So that's a big group of customers. And then the last kind of like big chunk of customers would be the customer who are struggling to drink enough water in a day because they don't like the experience and they want to kind of spice up the experience with drinking water, with hydrate.
Arri Bagah: Mm hmm. Now, going from a couple of thousand to seven figures, can you talk about some of the things that it took to get there, like maybe like top three main things?
Jai Kim: Yeah, I think I think probably innovation was baked because we started to see real compound growth as we started to see our customers repeat as we acquire customers. And a lot and a lot of our customers start to repeat our growth started to kind of feel about 50 percent of our transactions volume comes from subscription. So, yeah, so that definitely helps. And I think the second piece is kind of through a lot of iteration, like finding the product market fit by trying all different kinds of talking points through Facebook influencers and all these different channels. We're able to find a way to kind of scale the business very quickly. And it's kind of that flywheel that we find. We across a lot of customers through various channels that that's that's optimal for us. And we see a lot of customers. You're repeating whether it's through subscription or not subscription but but repeating off of one time purchase, that has been the biggest impact.
Arri Bagah: Now, I remember seeing some of your Facebook ads, too, and I know you and your co-founder are very involved in the ads. Can you talk about, like, why you get yourselves and your stories involved with the brand and how that has worked out?
Jai Kim: So I'm also involved with the ads, the John used to be a very much involved with the ad, I think it's because of two different reasons. So we always talk boxercise science scientists who wanted to put a face into that to make sure that it's real. So that was the one. And second was Jon is great at explaining science in a way that is simple and it's fun to listen to. So we were leveraging that. And in the beginning days now we we spend most of our investments in terms of creative on the UGC or just product product photos with like reviews and basic call outs on the benefits of the product. Yeah, so not any more in terms of relying on myself or my co-founder to be in the ads.
Arri Bagah: Nice. Now, you guys recently raised five million dollars, right?
Jai Kim: So we we raise our series A we announce our Raise a series A recently and it was five point seventy five million.
Arri Bagah: Ok, now, at which point, like, did you guys feel that you needed to raise money? Was that to, like, just keep scaling the growth or what? What was the idea behind that.
Jai Kim: Yeah. So here is how I think about the evolution of the business. So on the product innovation side, there, there are there is a lever of expansion, expanding the product lines and continuing to produce more flavor options within each line. So that costs money. So we're going already going through that and wanted to increase the pace of that. So that was one piece. Second piece is we wanted to expand our channel in terms of distribution channels. I know like the traditional playbook would be to rely on direct consumer for as long as you can. But I think for us, we love retail, so we love retail as well. So we wanted to expand our retail channel very quickly. And for a business that is completely relying on single channel versus multichannel, have a different team profile. So we wanted to make sure that we had resources to support that go to market strategy, but also had the right team members to fully execute that. So for those reasons, we decided to raise money when we when we thought it was the right time to do so.
Arri Bagah: Ok, now, when it comes to raising money, a lot of founders want to know, like, what does it take to raise money, especially like series a five point seven dollars million? That's a lot of money, actually. So can you give it like a couple of tips that really helped you? Was it the product? Was it you and your co-founder?
Jai Kim: So I think. First thing is for you to realize or do the research to be be aware whether your category is a category that investors care about or not. I think even if you have an impressive background and even if your product is outstanding, if your category is extremely competitive, and if investors don't really see that as a category with the potential in the Ålesund, in your future, you're probably going to struggle to raise money. Very fortunately, I think even though now our category has gotten fairly crowded, but when we were starting out, our category wasn't that crowded. From our perspective, there are only a handful of existing players that they kind of had the big name in the market and investors were looking for a few horses to bet on within the categories. So we had a lot of inbound interest. So we already knew that this was a category that was interesting to see. So that's that's the one piece like knowing how attractive your market is. And second piece is figuring out who are those investors who are interested in this category, because you could go to thousands of VCs. Right. Or family offices, but only a handful of them will be very excited about your category and about your background and your product. So it's doing the research on who will be the investors. They would understand this category so that you can have a seamless conversation about the vision of the business. So so we did that. We had an inbound interest. And then from talking to these investors, we were able to figure out who are the appropriate types, investors. We should be continuing to network with an afro kind of fighting that group of investors. We started to kind of share our plan for the year and and kept updating them on our progress to hitting those milestones and. And when we told them that, hey, we're we're planning to raise money on month X, Y, Z and demonstrating that we were beating our targets and hitting our milestones on time, a lot of investors actually reached out to us several months before our original plan to raise money, kind of wanting to do a deep dive in the business and kind of kick up the race. There's a lot of investors who want to be competitive with their deals. Right. So we were very fortunate to have raised our series without a single slide, a PowerPoint. So so it's crazy that that's how I think about the raise. Yeah, yeah.
Arri Bagah: That's amazing, man. Like, people always are working on a pitch decks and like having so many meetings, like, it's really great. So we're able to do that without delay.
Jai Kim: We're very lucky.
Arri Bagah: That's awesome. Now I want to get more into like the website and marketing side of things, since that's like the area that you're focused on now. Talk to me about the design of the brand and how it's really helped in terms of performance, because you guys have, like, really amazing packaging, a really nice website, emails, et cetera. Can you talk about the role of design in the brand of hybrid?
Jai Kim: Yeah, I think it really. Comes out a couple of things, I think. One is we wanted people to given that it's a wellness brand and it's something that you're putting in your body. We wanted to make sure that it conveyed conveys premium. Right. If you're putting something in your body, it better be something that's really good for you. So that was one thing that we wanted to nail. And then the second piece is when it comes to marketing, I'm sure you're familiar with this when you're doing paid marketing. The products that's really hot, there are certain packaging and brands that are, you know, beautifully born for Instagram and some of them are just not the stuff. So the color scheme and then the font and then the way we designed the product was really also optimized for that. So from an acquisition perspective, I think those elements played a big role into it, kind of creating the trust and making sure that people are enjoying purchasing the product and consuming the product. And I think in terms of. A retention like the design of the website and the seemless of the UIUC to the website and our estimates, email flow has played a huge role in optimizing our retention metrics.
Arri Bagah: Hmm. Now, when it comes to China, channels for growth, you guys are doing Facebook, Instagram, email, text, are you guys also doing Google?
Jai Kim: Yeah, we're also doing Google unbranded branded search, Google shopping.
Arri Bagah: Now, what looks like the most interesting thing that you found, that people are like searching for that, are you able to capitalize on?
Jai Kim: I wish I had more interesting answer for that, but it's very straightforward. Like people just like looking for hydration, hydration related drinks or heat recovery. Maybe there's something that's been interesting.
Arri Bagah: Because sometimes like brains end up uncovering like different new keywords or different things like that that they never it's all like people were searching for and really capitalizing on it.
Jai Kim: Our I would say maybe specific flavors, OK, sometimes, you know, we see, oh, they're looking for something specifically related to orange. And, you know, that search is crushing for our orange later flavors. Those are some of the things that we didn't we didn't expect them.
Arri Bagah: Now, after setting up DTC, you said you guys went to Amazon like after like a couple months. Can you talk about what role Amazon plays in your omnichannel approach?
Jai Kim: Yeah, I think. Omni Channel plays a few different roles, like one is reaching audiences that will be difficult or more expensive for us to reach when we're a single channel player. That's one. Two is creating a very convenient experience for a customer to come back. Not everyone would want to be on a subscription, right? So they could be familiar with our business through our Instagram and they make their first purchase on our website. But they could always want to they like free shipping or one day shipping, so they rely on Amazon for that. They could be having a party like three days out and they want to make sure they have the product and they could order an Amazon or they want to have a party like today or they're going to work out a lot later in the day. They'll go to their nearest Wal-Mart or Wholefoods to grab Heidrich. So from our perspective, it's really to reach the audience that it's really difficult to reach as a single channel player and to make sure that we create the most convenient experience for our customers to to be a customer for hydrogen.
Arri Bagah: Now, do you have like you're only like your key products or do you have, like, your entire product collection on Amazon?
Jai Kim: That's a great question. So in the beginning, we had all of our products. But as we are launching new products such as sugar free immunity or caffeine variety pack, we have introduced them to Amazon because you will see some impact on your acquisition metrics. And if you open up your distribution channel with some people will look at the ad and decide to make a purchase outside of your website. So we wanted to maintain a certain number of Skewes exclusive to our website so that those metrics are not to be impacted for a measurable return on investment purposes.
Arri Bagah: Yeah, I know, because sometimes when I go on Amazon and I order like one DTC product, I try to grab like other DTC brands that I might be interested in the Amazon. And it's usually like for convenience. Yeah, you get the two day shipping and it's always better than ordering on an actual brand site. But I know like a lot of brands try to also because like when you order on Amazon on your side, it's not too good because you don't have all that customer data. So you guys like have you guys tried different ways to try to, like, get those customers from Amazon to also come back to direct to consumer where it might be more profitable or anything like that?
Jai Kim: So it's a pretty dangerous line because if Amazon quickly finds out that you're trying to steal customers away from Amazon, you know, we don't we only try to do that too much. But if customers ever visit our site and realizes that certain products are not available on Amazon, they wanted to try those and they will they'll come back. What some of the other brands do that I think is interesting is to differentiate their product offerings on Amazon from their website by operating from packs so you can have a different tax, like a pack size on Amazon versus your website to decide which site you want to have a lower entry price point. I've never seen that before. Most most of the time I've seen Amazon product pricing being cheaper than their website.
Arri Bagah: Interesting, now you sorta like a single product and now you have about like, what, six plus product?
Jai Kim: Yeah, yeah, yeah.
Arri Bagah: So was the idea to just like, increase AOV or was the idea behind, like, expanding your product line?
Jai Kim: So it's a few thing. I think the one is to first focus on creating the best enjoyable experience for the customers. And really and that experience comes from one discovery of new product and to having having a variety of delicious options. Right. I think at the end of the day, in a beverage industry, you don't have great taste. You don't have a business. So like. You could have the most delicious lime flavor, but a customer who just doesn't like lying period is not going to enjoy the product. So we want it to kind of have enough types of flavor options so that we can accommodate all customer types. So we had a lot of products and flavor options for that purposes. And I think the second piece was there were definitely some group of customers that we we weren't able to hit because of some of the limitations of existing products. So, for example, the caterers or the complete anti sugar group, even though our core products will only have like three grams of sugar, you know, even three gram is too high for them. So we have no sugar added product space, desirable sugar. And for that customer group, this is a perfect product to to reach that audience.
Arri Bagah: And for me, like any any gram is too high for me to not really. I just try to avoid like just like sugars in general. But it's always it's always really hard because like everything nowadays has sugar in.
Jai Kim: Do you eat fruit? Yeah, I did, but that's like natural sugar that I'm talking about, like artificial. Sugar Gocha.
Arri Bagah: Yeah, so you mention like the product that for like a beverage product, the taste is the most important part. Now, talking about marketing. Yeah, getting someone who never like, you know, tasted like hydration products, like how do you even convince them that you can buy it in the first time? Do you make it like a is there like an old like a like a deal for like a first time purchase. So how do you get them to like behind their computer screen and decide to buy hydrant?
Jai Kim: So a lot of people ask this question and my answer is, first, you don't focus your energy convincing that questioner, you focus your energy convincing the customers who are already familiar with this type of value or who is already interested in this problem. That's what you first focus on for at least until you do a hundred million like this is what I think. And and then you hope to reach the customer through convincing storytelling, through either your advertising campaign or aggressive referral campaign so that his or her trusted friend. We'll be convincing them through their experience of drinking the product, because I think like to try to like focus on that customer group will just only increase your customer acquisition cost.
Arri Bagah: Yeah, that makes a lot of sense, because if someone that has never looked into, like hydration or even they don't know that you should be drinking this water anyway, like, how would you even convince them?
Jai Kim: Like, think think about it this way. You could have the best CVT product in the world. But if you're someone who just is not really interested, we're not open to CBD. No matter how much money you pour in, you're just not going to try it or like it will. Only it was it will take you like thousand dollars worth of Facebook ad or whatever, X, Y, Z to convince that person to change their mind. Right. So I think the right approach, from my perspective, is to focus on the customer who would be interested in this problem.
Arri Bagah: And I think earlier you mentioned that was at 40 or 50 percent of your purchase over your revenue comes from subscription.
Jai Kim: Correct. Correct, yes.
Arri Bagah: So how do you from that first purchase, is there like a specific tactic that you're using to get them to come back, or is it the product that just, like, sells a subscription for you?
Jai Kim: So I think a lot of people are trying to be tactical about that. And I I'm sure you know. Tactical initiatives will help, but I think the most important lever is product. Your product has to be good and it has to be optimized for subscription. That's one piece. And the way the products being introduced needs to speak the language that this is for subscription. Now, if you're introduced to hydrogen as a hangover drink, then you only drink it for a hangover unless you're drinking alcohol all the time. It's it wouldn't really make sense as a subscription. But if you're introduced to hydrogen as something that you would drink for a workout or or first thing in the morning, and then it could be a regular drink for you. Right. So I think that entry point on how you discard the product is is highly important. And know beyond that, there are different tactics such as SMS and cohort driven email tactics could help you with retention. But I think how the product's design and how you discover the product is the most important part of the retention.
Arri Bagah: Yeah, like marketing is just perception. Right. And then to get that and the perception might get you to get that first purchase by the product is definitely going to determine the second version, especially for the beverage. Right. Like if you drink a beverage, you don't like it. There's nothing that you can say that's going to get someone to come back.
Jai Kim: So it's a type of problem that you're solving. Right. Is your problem a recurring problem? And is this a solution for that recurring problem or are you trying to solve a one-off problem with this product right now?
Arri Bagah: You mentioned channels like text or email. So is there like a like a way that you're collecting that data? Is there like a survey that you have them fill out or how do you like segment based on. Like what? Like the entry point.
Jai Kim: I mean, we have a lot of these different types of flows, but the way we think about it is. We always tie everything back to our cohort analysis and then we would have a benchmark in terms of retention metrics for each cohort and we'll we'll see like for each cohort based on different flows, are they hitting the retention metrics that we're aspiring towards? And if not, like, what do we need to fix and change? What or what do we need to introduce in addition to this? And that's how we make adjustments on those flows.
Arri Bagah: Makes sense now, you guys are also in retail and recently, I would say over the past one to two years, retail has really become more profitable for a lot of direct consumer brands with a lot of direct consumer goods setting up retail stores. And that is because of the rise of advertising costs on Facebook, Instagram and pretty much all channels. Has that been like the same case for you guys, where retail has become a very profitable channel?
Jai Kim: Yeah, you know, I would say retail has always been. Like profitable to the level that that just has been, I think non retail channel has just became more unprofitable compared to a couple of years ago. Think about it. I don't think it's necessarily became more profitable. So the answer is yes, retail is very profitable for us because there is no CAC. But of course, the net channel will take up more gross margin compared to direct consumer business. The way we think about our direct consumer is a payback, right? How quickly do we pay back on a contribution margin basis in terms of retail is how much of our revenue can we capture with with that Zazie contribution margin? And then can we sustain that right in those channels? So it's a very attractive channel for us.
Arri Bagah: Yeah, what I think of hydrant like I can think of and like doing like some some sort of like flagship store where people are just like like a good experiential store where people come in like tastes like different, like water, like there's something like really cool like that that can help even like build, like strengthen the relationships with customers. Is that something that you guys have ever thought of, like some sort of like experiential store.
Jai Kim: Right. That that's what a lot of VCs would love for us. We would absolutely never do that because we are very ROI focused like return on investment focus. And it's a different story if someone gives us like 50 million dollars to play with. But yeah. We're more focused on thinking about every dollar we invest in, how much return is it generating, and that type of experiential store will take a very long time to realize the types of returns. And that's not our strategy.
Arri Bagah: The reason why I said that is because I've talked to some marketing directors, CMOs and they mentioned like retail is also a way to get discovered DTC and also like for the newer brand and might be like a great strategy for providing that social proof like this is real. This is like a real brand, especially like.
Jai Kim: Yeah, but by being in like Wal-Mart or Target or Costco, Whole Foods, I don't know if I don't know if I if by renting out a space in Soho and pays like thirty thousand dollars per month, I'd like to just to create some experience for maybe like a hundred people per month. And I just don't know if that's the right way from my perspective. It also comes down to what is the age of your product. Right. If you're exactly sure, if you're selling like, you know, five thousand or ten thousand dollar, like high end furniture. Sure. Maybe makes sense. But if I'm selling like thirty, thirty dollars like hydration product, I it's I don't think it makes sense.
Arri Bagah: Yeah.
Jai Kim: So now you guys have been doing all this on a team of like, like 13 people, but you guys are running pretty lean based on like compared to like Jerry Moran. Yeah. Can you talk a little more about that. Yeah, our philosophy is it may sound brutal, but before we hire anyone, additionally each team, we would like every team member to feel like, oh, man, this is overwhelming. I'm like being fully stretched. And then we figure out the timing of the hire because like we want to avoid is, like I said, we're very return on investment focus. We want to make sure that we hire the right person at the right time. And we think it's really difficult to decide that until the hiring manager goes through the like the limitations are like, oh, like I need to be able to do X, Y, Z, but I can't do it because I am doing ABC and when I'm doing the ABC, like these are the most challenging things. I wish I have someone that is great at the ABC. It does that make sense.
Arri Bagah: Yeah, yeah. Makes total sense. And I think a lot of like and I've heard this before, a lot of brand just like kind of over here, especially when they raise money to bring on a lot of people. And I think you guys are doing it right, actually, like still sticking to like what you did even before raising money.
Jai Kim: Yeah. I mean, I just think about it as like. Do you really need that extra hire to hit the metric that you need or do you really need extra hire to hit the milestone you need? And we'll stress test that until we get to a point where I feel that, you know, we don't really add anymore. However, if someone who is like, extremely qualified, a very smart person, has the right cultural fit, comes to us, and we could make an exception for hiring someone a little bit earlier. But that's that's how we think about it, because it will like being stretched thin, will give you the best idea on how you also want to design the interview process. Our interview processes are pretty rigorous for almost all hires. We have a very practically driven case studies and those case studies will be designed from that that experience when when the hiring manager was really stressed instead.
Arri Bagah: Now, getting more on the personal level, I want to ask you, like over the past couple of years since starting hydrant, are there any, like traits or personal routine that you've picked up that have helped you perform at a high level?
Jai Kim: I don't know if these are helpful to perform at high level per say, but I'll share like what are the things that I learned and that I find it to be helpful. And what are some of the recipes that I go through for the reasons that I do it? So starting with just routine, fact based routine, I wake up very early, so I wake up at four thirty in the morning because I want to work out five days a week. So I wake up before 30, do my meditations and check my emails and and work out at five thirty in the morning after I work out in the morning and come back, take a shower and I squeeze in some reading. So in this way every morning, almost every morning before I start my day, I can squeeze in medication, I can read, I can also workout. So I wanted to make those three things as my regular habit. So that's that's been super helpful. So I and I always feel like I'm not sacrificing my personal life because I'm able to squeeze those in. So from a mental health perspective, that's been tremendously helpful for me, even though I have to go through the ups and downs of startup, that's one that played a huge role. So those routines definitely help in terms of like the traits. I think the most important trade is. Having that interest to know what you don't know I think is very important. Of time, you would just assume, you know a lot or most most of the things I think. Having an interest or like proactive attitude to really ask yourself if you know certain things or if you don't know certain things, it is really helpful because it will make you become more open minded and then you start asking smarter questions more actively to either potential investors, advisers, and you will quickly figure out what kind of people you need to surround yourself with to become really smarter much quickly. I think that helped us to be more open to bring on advisors in the beginning when I looked at a lot of my. Other found her friends there are very, very sensitive about dilution, so they didn't want to bring too many investors. They want to bring too many advisers. Everyone was really stingy, and especially in the earlier, earlier stage, from our perspective, like, you know, getting your first business right is is really important. And also not failing the investors that trusted you. Right, as a first time founder was really important. So I think for us. What we cared about was how do we make sure that we minimize wrong decisions, and that's probably by making sure that we learn fast and we become smarter quickly and we surround ourselves with people who know what the fuck they were talking about. So how of being curious and then being proactive about asking yourself what you don't know? I think it's really important. But that was like a long answer.
Arri Bagah: No. That's awesome. Yeah, I remember when I lived in New York too, was always fun to, like, wake up early, go to rumble boxing classes and then meditate. And I think those are some of the things that working on yourself right now only like when your business is moving forward. Well, Jane, thanks for being on the podcast. How can people find you or hydrant?
Jai Kim: Yeah, tell them to go to drink hydrant dotcom or go to Instagram and hydrant. They can find us and or this podcast listeners, we created promo code type Master20 wanting to give you a 20 percent discount on your purchase.
Arri Bagah: It's awesome. Thanks for doing that. We'll definitely leave the links in the description as well as the discount code. Now, if you're listening on iTunes or Spotify, there is one more question. Ask Jay, and that's going to be on YouTube. Thanks for checking out this episode of the personal Masrour podcast. If you're listening on iTunes or Spotify, please follow this podcast and give us a five star review. And as always, thanks again for listening to another episode of the Personal Machree podcast.