This is our 27th episode of the Brain Brew Whisk(e)y Academy. We will discuss how to get investors for your whiskey business and the craft cocktail recipe - Orlando Rush. This podcast episode features Whiskey Maker - Doug Hall and Whiskey Drinker - Tripp Babbitt.

Show Notes

[00:00:04] Brain Brew Whisk(e)y Academy

[00:00:26] How to Get Investors of a Whiskey Business

[00:00:37] 3 Things Needed to Get Investors

[00:02:57] Math is Difficult in Spirits Industry

[00:07:46] Investment to Start $5,000 - 10,000

[00:10:31] Craft Cocktail Recipe - The Orlando Rush

[00:11:14] Step 1

[00:11:24] Step 2

[00:11:30] Step 3

[00:11:45] Step 4

 

 

Transcript

Tripp: [00:00:04] This is the Brain Brew Whisk(e)y Academy podcasts where we're going to take you behind the scenes on what it takes to build a whisk(e)y distillery business. The Eureka ranch team led by Doug Hall are creating a craft whisk(e)y company like has never been done before.

 

Tripp: [00:00:26] So in this Brain Brew Whisk(e)y Academy let's talk about how we get investors for a whisk(e)y or spirits business.

 

Doug: [00:00:37] Ok so the three things make it real. Get the numbers protect your innovation. The first one making it real. This is where whisk(e)y guys and gals have a real disadvantage because homebrew for beer guys you can do homebrew and get yourself ready and get kind of a product and you can kind of show people and then scale up but with spirits most areas of the world it's illegal to do that. Now there is what you can do is find a local craft distiller. And there's almost 2000 of them now so there's plenty of them around. Who has the spirit distilled spirits production licence a DSP it's called and do that. And that's what I did with brain brew in the beginning. I worked with a local distillery who they can register.

 

Doug: [00:01:28] They registered my company as as as doing products and I made products using their license and paid them a fee to do this. And you can do it that way you know. In effect it was quote their product but it was you know that's how I can make prototypes and make products and do stuff and do research and and actually get some product to market. So until I got the funding to build my own place and get my own DSP.

 

Tripp: [00:01:58] So let me ask you a question Doug. At that point did you have to already apply for some type of a license in Ohio. Since you're located in Ohio. Because I I don't know.

 

Doug: [00:02:08] No I did. I did in Kentucky. I did and I just this really happened to in Kentucky so I did it in Kentucky but I could have done it in Ohio just as well. But it was under his license. He paid the taxes and I mean I paid him for everything. But you know the idea was I was using him to do my research.

 

Tripp: [00:02:27] Ok. So does that mean that since you were have having it done in Kentucky that you couldn't sell in Ohio.

 

Doug: [00:02:36] Well I just. That's that's a whole separate issue. OK the distributor that does that. They're not connected to each other. Not that they're a whole separate thing. OK. All right.

 

Tripp: [00:02:46] Ok. Anything else to say about making a real you say it's more difficult for whisk(e)y and getting a distiller is kind of the way to go. Anything else on that.

 

Doug: [00:02:57] No. No. That's the key. So the second thing is to get the numbers and you got to do the math. And I got to tell you the math in this industry we'll talk more about this next week but math is really difficult really difficult in this in this industry. And so you're going to need help. You can't do it yourself. You can't do yourself. I got two people that you can contact. One is Scott Schiller who owns a company called thoroughbred spirits group and they are really the craft spirits experts. They've helped dozens of distilleries go and they can they can help you do your math. And it's worth every penny you pay because of the wisdom that you're gonna get there. And second if if you don't want to do that then the Ranch team we we have a very cost efficient system that we can help you with your math as well. So but you're gonna have to go get help. You're going to have to go get help on your math. Don't just show me pretty labels of what this brand is gonna be. Show me the math and how it's gonna work. I mean you know that's all you've got to have. I mean just no math no project.

 

Tripp: [00:04:03] And then protect your innovation.

 

Doug: [00:04:08] Yes and this is a bit tricky. You really I mean in our case we went the patent route because that's just what I believe because I'm worth more if I have patents. It's really simple. Valuation goes much higher like a 10x. So I do that now. Short of that protection is relative to the size of the market. You're thinking about. And so you can have something that's meaningfully unique. And that you can protect in your town region or state. With local protection it could be your product. It could be the location the brand you know where you're tasting room is it has something that connects to the community. You can make that work on a regional basis but if your goal is to go big. If you're really going to go big then you're gonna have to have a pattern or a truly secret recipe that can't be copied. Really secret recipe because I read this raw materials or method that you've got. Don't try to say that your protection is your brand. That's only the case after you created it spent millions of dollars to try to claim it at the start. It's just plain foolishness.

 

Tripp: [00:05:24] Cool. So it's so I would guess that these challenges that you have with whisk(e)y that each product would say you even outside of whisk(e)y all have their own individual challenges associated with doing all three of these things. As far as me I get real and get the numbers that that there is there. Each one has a little nuance to it when you're putting it together. Is there is there any kind of recommendations do you have other than these three things as far as somebody who says you know I really like whisk(e)y I want to do my own thing that you would suggest to him other than these three.

 

Doug: [00:06:02] Nope this is it. OK this is it. This is it. You've got to have a prototype. You've got to make it real. Concept prototype. You know what's your name. Package might be what's the product. You got to have a product. You gotta have the math to say that people think you're idea's awesome relative to some standard plus revenue costs. I mean and it'll be rough in the beginning. I get that. But it's a starting place to start the conversation. And then you've got to have some protection that you actually own something that you actually own something that others can't just copy.

 

Doug: [00:06:36] Okay. And that may seem that may seem impossible for people. And I get that. Well then I'm just telling you don't whine to me if you don't have them. You know because when you have them investment is easy. I mean we got one round of funding right now.

 

Doug: [00:06:53] I'm actually on my way to to England where it looks like we may have other investors. And I've got to decide kind of what we're gonna do if I'm gonna take the money or not take the money I think in one case I'm going to and I don't know about the other we'll see.

 

Doug: [00:07:05] But you know it goes from impossible to easy when you have these three things. And if you don't know how to do it learn by the frickin book Driving Eureka! why that's a cheap way. Just buy the book and read it or or take the online fundamentals course. But you've got to have these things. I mean it's as simple as that.

 

Tripp: [00:07:29] So to Doug as far as a as an individual and let's say a personal investment in order to kind of do these three things What what what type of equity would they need in order to kind of start this process.

 

Doug: [00:07:44] Oh it's to do this thing here.

 

Tripp: [00:07:45] Yeah

 

Doug: [00:07:46] Would help. I mean I think you're probably talking five thousand dollars OK. You know I think with five that five to ten thousand you could and we were ten you could make a really cool product. Some nice packaging you'd get a provisional patent filed easily. It's not money that's the issue here. It's time and thinking that you have to do OK. And investors can smell it. You forget the fact that you're pitching but they've seen it's like you know on these damn TV shows I've done you know I've seen three or four thousand ideas. And after a while you know you've just kind of seen them. And so they're benchmarking you versus the others to see you know what you've got together and these are the three things that I've done the shows this is the stuff I was doing I would look to see did they make it real. I would look to see if they had the numbers you know they could make sense and sometimes I could just look at it and I could reverse engineer the product and they tell me what it was going to sell for and I'm like There's no frickin way you can make money of that. You know the raw materials they're like Well it's a craft thing. We really put crafted. Yeah. It's called craft your self to bankruptcy. You know because it's just the raw materials which is not going to make the math work and what you find with whisk(e)y and Scott Schiller will teach you if you want to start at whisk(e)y distillery you need three to five million dollars if you're going to do it the traditional way. That's the math. Don't leave me. He's got a spreadsheet. He'll show you if you're going to do traditional aging whisk(e)y you need three to five million dollars. Now the good news is is if you do it using our time compression and with I stills and some other stuff you can do it for probably a half million depending upon the place that you do. So I mean you got choices. You've got choices.

 

Tripp: [00:09:31] Ok. So if they came to you and you basically need say five to ten thousand dollars and then you help them through these three steps it is kind of what I get.

 

Doug: [00:09:41] Actually that wouldn't all be to me. I mean we would just be doing you know turns out what parts they can do themselves. OK. You know I'm assuming they're doing a bunch of the work so it might be you know it might be a thousand dollars for a concept test for them and a product concept and product test that we're doing just to get them independent data that can say that this product. How does it benchmark does that mean we've tested. I don't know. Five hundred to a thousand or some like some crazy number of whisk(e)y over the years or spirits. And so we can tell you how your idea stacks up you know how good the concept and the product are. OK. So might be just that or it might be a provisional A provisionals are real cheap to do. You know might be helping you just do the math you know day. So I mean it really depends on what what things they can do and what things they can't do.

 

Tripp: [00:10:30] Ok very good.

 

Tripp: [00:10:31] Well let's go to your craft cocktail recipe.

 

Tripp: [00:10:34] The Orlando rush so I know you just made it had a recent trip to Orlando is this something you ran into down there. Is this something you crafted.

 

Doug: [00:10:45] No it's just it's just a riff on the Gold Rush. And I was in Orlando and there's a there was a LinkedIn post that went up to 65000 people of all things bizarre about a wonderful story from the rich top down there and I just thought as a nod to them that it would be fun to do Orlando. And and it's it's just it's a simple riff. It's it brings together some taste. It'll just really work together.

 

Doug: [00:11:14] Three quarters of an ounce of honey water and honey water is a 50/50 mix of water and honey. I usually use a wild honey.

 

Doug: [00:11:24] Three quarters of an ounce of orange juice and let's make it a Florida orange juice. In this case.

 

Doug: [00:11:30] And then two ounces of our noble oak bourbon and and that's finished with Sherry oak staves and the sherry oak from Europe that's in there really goes nicely with orange and the honey. So this is really.

 

Doug: [00:11:45] And then we're gonna top it off with a splash of champagne or sparkling wine just to give it a little bit of sparkle. So think of it as like a mimosa gone gone funky uptown. This is what we're dealing with here.

 

Tripp: [00:11:57] Ok. All right well that sounds like something I want to try. I like orange juice honey water anything sweet like that. Still haven't had your noble look. Whens it coming to Indiana Doug.

 

Doug: [00:12:12] I don't know. Partners take care of that take care of that. Okay.

 

Tripp: [00:12:17] All right. Well at some point I want to actually try that one. So that will be a good thing and a good substitute again for the noble oak wood might be what.

 

Doug: [00:12:29] Another craft bourbon. So find a local craft bourbon. Support the local craft people because if you want to make a craft cocktail Tripp Tripp is the deal.

 

Doug: [00:12:39] If you're using stuff that's sold which 80 percent of the bourbon or some crazy number like that is actually owned by either Japanese or European companies. I mean they're not actually even American or the big multinational corporations. And and if you use their products in it you know be it. You know angels and Jim beam stuff or Bulliet or any of those. Then you're not making a craft cocktail. You're making a corporate cocktail if you want to make a craft cocktail. You need to use craft whisk(e)y. Otherwise you're making a solid corporate cocktails because that wouldn't be reasonable would it to use our multinational conglomerates whisk(e)y and call it a craft cocktail that would be ridiculous.

 

Tripp: [00:13:26] That's heresy. Ok. Any other comments. One thing we didn't talk about Doug was if somebody was you know would say you have an entrepreneur out there and they have nothing right now at this point how how best should they get in contact with. Do they call the Eureka ranch or they coin brain brew. Where do they want to contact where you want to say.

 

Doug: [00:13:50] Just call Ranch. Just call a ranch 800 events. I envy E.A. s if you're in North America or just visit the Eureka ranch dot com Web site. That's easy way and we're all there because the brain grew our distilleries right there at the ranch on the ground.

 

Tripp: [00:14:06] So OK very good. Any final comments about our .

 

Doug: [00:14:12] You can do this. Folks you can do this. OK you can get money you can get ridiculous money free of things. I mean the stuff I've seen over the years funded is just amazing. But you got it. There's some fundamentals you've got to do and if you don't know how to do it learn about it learn about it let's get the book or take a class A local class although some of them I'm a little scared on some of these business plan. You notice I didn't say business plan. I didn't say that it's because those things are you know you get these templates you do them and they just kind of worthless in the context of the business plan there's only three things I'm looking for I'm looking for the prototype. So I get it. I'm looking for the math and I'm looking for the protection. That's It.

 

Tripp: [00:14:53] Very good. OK. Good words of wisdom. And we'll continue our conversation how to build this thing.

 

Tripp: [00:15:03] Brain Brew whisk(e)y is looking for pioneers like existing distillers or entrepreneurs interested in our custom whisk(e)y and craft cocktail experiences. These experiences provide consumers bartenders corporations nonprofits and celebrities the ability to craft whisk(e)y to their taste and preferences. Our system also enables the creation of limited edition prestige whisk(e)y is for weddings birthdays or other celebratory events. If you'd like to learn more go to brain Brew whisk(e)y dot com and share with us what you are interested in. in the forum provided.