Jonathan is the Founder and CEO of VYBES, a functional wellness beverage that uses CBD to help the mind and body reduce stress.
Briefly introduce us to VYBES and your journey to founding the company?
VYBES is a premium CBD beverage made with 25mg of CBD isolate that I started in late 2017. We currently have six flavors that are low in calories, sugar and are vegan. We are LA based but sell in thirty states, primarily with small retailers such as coffee shops, hotels, gyms and food stores.
I have enjoyed VYBES at a number of places, from a coffee shop in Nantucket to a food store in LA. What seems to tie them together is this local, specialty curated retail location — almost as if VYBES was founded in that very neighborhood. How do you think about this in terms of your distribution strategy?
We have always been very obsessed with where people discover VYBES. People don’t go to big box retailers to discover new brands. They look for something specific, buy something they know, and leave. But, at local coffee shops and natural food stores, people are more open to discovering new items.
What has worked to our advantage is the fact that CBD today can’t be sold at the bigger chains. So, only smaller accounts and retailers are willing to take on products. This gives us the ability to focus on who these retailers are. Many competitors overlook mom-and-pop stores and want to get right into Whole Foods and Krogers where they think they can move a lot of products and be in a ton of doors. With mom-and-pops, you have to fight for each one at a time since the owner is the decision maker. But, what this also means is that they become endorsers of your brand. They have a personal relationship to it, because the person selling the product is also the person who made the decision to shelve it, rather than someone in a corporate office.
We look for smaller distributors who live in the communities they serve and know the accounts that they bring the beverages to. This helps give this impression that you talk about, where VYBES feels local and unique to each store, making the discovery process all the more impactful.
Piggy backing off of that, you recently pivoted to a more DTC presence because of COVID-19. What was this experience like for you?
It’s interesting. I came out of the tech world. I started at Myspace and then went to eharmony before ultimately starting a company called Radpad. So, I have experience working online and eCommerce was a big part of that. But, we know that the way you win in this industry is on the store shelf. People often buy beverages as an impulse buy; they don’t necessarily go online to do so. So, our first two years we focused on winning in retail and building those accounts.
With COVID, we temporarily lost 90% of our retail business. This caused us to have to pivot more to DTC, and I am really proud of what we have done quickly. Going forward, I imagine it will be a much bigger channel as consumers continue to get used to the idea of buying things and having them delivered.
For example, we launched a six pack format during COVID which was a huge change because we had to develop new boxes and hand pack them. We also ran a pretty substantial 30% off promotion from mid March to early June. This promotion accounted for a 400% increase in revenue during the same period.
But, the biggest thing we’ve done is start free same day delivery. We wanted to create an online experience that provides people with the same instantaneous satisfaction of buying a beverage in a store. We accomplished this by partnering with local courier services and expanded the same delivery service to our three biggest markets, and we hope to continue to do so.
These are three key drivers of our eCommerce strategy. Prior to COVID, online business accounted for 3% of our sales, now it accounts for 16%.
One thing we haven’t launched yet, which will launch with our new website, is a subscription service. We have a ton of recurring customers and are going to start an auto shipping service that will save them 10%. So, as you can see, we’ve had to pivot and do so quickly, and in the process we are trying to find creative ways of getting VYBES to our customers and spread our mission.
What is more difficult, being a beverage company or a cannabis company?
A cannabis company. Not that beverage is easy, but cannabis is especially challenging because of regulations. There are so many barriers and obstacles just to enter the industry, whether it is getting a license or dealing with city and state laws that conflict with federal laws. There are also extremely high taxes and difficulty opening up bank accounts. But, what makes it difficult can also make a great barrier for entry.
What do you think is the most important part of a business to get right first?
There are a couple things that have to come together to give you best odds of success. You have to be really passionate about your mission. It has to be something that you are essentially doing for yourself; you see a hole in the market for something that doesn’t exist and there are a lot of people like you who want it.
I started taking CBD everyday through a tincture, and it felt strange and almost like I was taking medicine. I wanted to take CBD without being embarrassed to do so in front of my friends, and found that a beverage would be a great way to do it, but nothing like that existed. So I created a product where I was it’s ideal user.
When it comes to beverage in particular, you have to nail packaging and flavor profile. My background in graphic design allowed me to see what I wanted the product to look like before I made it. VYBES looks very different than anything else you see on the shelf, and we did that because we knew it was going to be hard to get people to notice us if it wasn’t radically different than what else there was on the market.
If you could join the crew from Inception and implant one fact or idea into the minds of consumers about CBD, what would it be?
It would be that CBD is really medicine. Unfortunately I can’t say that as a brand, but cannabinoids are natural medicine. Whether you are using THC to help with things like anxiety or the side effects of chemotherapy, we are still learning so much about cannabinoids and what they do for the human body. It is still illegal for scientists in the US to study THC, so we are dependent on the rest of the world to pick up the research. The regulations for CBD have only changed in the last couple of years, prior to which we couldn’t study it either.
It is clear that CBD has medicinal value because the FDA approved it as a pharmaceutical drug for children with epilepsy. In terms of education, there hasn’t been guidance or information from a trusted authority; our understanding of cannabinoids mostly stems from word of mouth based on personal experiences. So, I think it is really important to get the message across that it’s not snake oil or things that get you high, these are real compounds that attach to parts of the body for beneficial health purposes.
If you could drink a VYBES with one person, who would it be and why?
Stephen Hahn, who is the Commissioner of the FDA. I would want him to see how people are innovating and how entrepreneurs in the US are trying to utilize cannabinoids to better peoples’ lives. It would be great to sit down with him and hear his thoughts on why the FDA hasn’t moved forward with CBD and what their concerns are, as well as for me to share my concerns and have an open and frank discussion.
What is a memento from your childhood that you still keep and how does it serve you?
When I was 9 years old I was chasing my brother at my grandmother’s house. He ran into a room, I ran behind him and he slammed the door on my middle finger — cutting it almost entirely off. I had to go to hospital and luckily the doctors were able to save it, but I have a funky scar in the middle of my fingernail.
The reason why this is a momento and why it’s so important to me is that one of the biggest things I have learned in the past couple years is that I need to slow down in life and not rush things. The actual scar of having part of my finger chopped off is a reminder that if you don’t slow down you can’t make better decisions.
Anything in life that is special does not happen overnight. Whether it’s cooking, art, relationships, etc. It takes time. I just updated our bottle and on the back under our manifesto we put life advice to help people to reduce anxiety and stress. One of them is to give yourself permission to slow down.
What is your creative outlet and how does it help you channel a flow state?
My creative outlet is going out to the desert. I go out there every chance that I get; it allows me to decompress and restores my faith in the world in a lot of respects.
What is one daily ritual that you cannot live without?
What is the last:
TV show you binged?
The Crown (Netflix).
Movie you watched?
Challenger: The FInal Flight.
Song you listened to?
Borealis by Alex Bandes.
Podcast you listened to?
I don’t listen to podcasts!
Book you read?
I just started reading 1984 by George Orwell.
Up Next: Shane Heath, Founder & CEO of MUD/WTR