Honest Ecommerce

222 | The Silicon Valley Model of Selling Drinkable Products | with Henry Murray

Episode Summary

On this podcast, we talk about the advantages and disadvantages of the EU and US market, why waterdrop specifically targets tennis, setting a lemonade stand style of pop-up shop to get customer feedback, and so much more!

Episode Notes

Henry Murray is the co-founder and CMO of waterdrop. With an impressive educational background, Henry is waterdrop’s resident jack of all trades. 

After working for the Boston Consulting Group (BCG), Henry joined his brother, Martin Donald Murray, and friend, Christoph Hermann, to co-found the beverage-industry disrupting company, earning him a spot on Forbes prestigious 30 under 30 list. 

Henry is currently in charge of overseeing waterdrop’s global expansion, with a focus on the U.S. Murray holds a Master of Science from The London School of Economics and Political Science (LSE), an exchange semester in Business Administration and Management, General from Seoul National University, and a Bachelor of Science in International Business Administration from WU (Vienna University of Economics and Business). 

waterdrop, the fast-growing hydration brand based in Vienna, has been shaking up the beverage industry since 2016 with its innovative waterdrop® Microdrink and global hydration platform. 

The company's mission is to encourage people to drink more water in a more sustainable way. Its sugar-free, flavored cubes, which dissolve in water and enrich it with natural fruit & plant extracts and valuable vitamins, have been praised by consumers for supporting them to Drink More Water. 

waterdrop significantly reduces plastic use and CO2 emissions. The 98% saving in plastic compared to traditional bottled drinks is achieved through the individual recyclable packaging of each cube: the plastic contained in a single cap of a traditional bottle is equivalent to 10 Microdrinks. 

In partnership with Plastic Bank, waterdrop pledges to collect one plastic bottle for every 12-pack sold, meaning consumers can not only drink more sustainably, but they can also support waterdrop's cause for a better environmental future. 

Now established for six years, the company has grown to having more than 2 million online customers and over 300 employees, as well as product listings in over 20,000 retail outlets and more than 40 waterdrop stores in Europe, America and Singapore.

In This Conversation We Discuss: 


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Episode Transcription

Henry Murray  

Being present in tournaments in this sport is one thing. But at the end of the day, you want to be associated with the people and the stories behind it.

Chase Clymer  

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. 

On this podcast, we interview founders and experts who are putting in the work and creating  real results. 

I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.

Let's get on with the show.

Hey everybody, welcome back to another episode of honest ecommerce. Today I'm welcomed by an amazing guest, Henry Murray. He's the co-founder and CMO of waterdrop. They're one of Europe's fastest growing hydration brands. 

They're making a name for themselves in the US now.

Looking forward to chatting with you, Henry. How are you doing today?

Henry Murray  

I'm doing great. Nice to be on the show.

Chase Clymer  

Absolutely. Thanks for being here. 

So let's quickly let people know what are the products that waterdrop is actually bringing to market so they can kind of understand what it is that you guys are producing.

Henry Murray  

So the core of our portfolio is really a simple hydration cube that gives you water flavor, functionality, and taste without all the bad stuff: Preservatives, no sugar, no artificial flavorings... That's how we started the product brand and the universe. 

But what it evolved into is a hydration ecosystem. 

So over time, we introduced drinkware and [a] hydration tracking app across different categories

But at the core of it and the replenishable product --and that's the product we launched initially-- is our hydration cube, especially our Microdrinks, as we call them

Chase Clymer  

Awesome. Alright, so take me back in time to where the idea for these micro cubes come from.

Henry Murray  

So the idea came up, funnily enough, in a plane. There was my brother Martin and our mother flying from Singapore to Hong Kong. 

And sitting in front, you know you always get asked the question: "What do you want to drink on a plane?" And people come with these little cans of carbonated soft drinks.

And then you say, "Well, I just want water because I'm not really into sugar and packaged stuff." 

So you get water and you say, "Okay, that's not a really sustainable way of carrying all that water up there in a little plastic cup." 

But is there something we can put into this cup of water now that turns it into a beverage that is well-tasting, and doesn't do harm, and actually does something good for me? And that was the initial idea of waterdrop. 

And that's how we then started researching what solutions are and we saw on the market, there wasn't a lot. There's a lot in liquid water enhancers, there was a lot in vitamin supplements, but these products were all about transporting something, not drinking experience itself. 

And then there's a few old instant powders out there with all kinds of stuff in there. So nothing really tackling the new consumer sentiment around customization, sustainability, and great taste, and functionality. 

And that's how we developed the first product, and launched it in 2017, and grew it from there.

Chase Clymer  

Awesome. Awesome. 

So I think there's a little bit more of the story between coming up with this cool idea and launching a product. So tell me... 

Walk me through. The first question is going to be how'd you guys attempt to validate this idea? Or did you just go in gung ho?

Henry Murray  

Great question. So we did start with a strong belief in the sense of something can change --must change-- in the beverage industry. 

So the concept in itself was very appealing and strong. And that was actually what got us the first commitment from angel investors from also R&D partners Because we went... 

Nobody from us comes from the beverage industry, from the FMCG industry, or from any big player. So we had to bring on people that could actually develop a product like that. 

So our first partner and supplier was also one of the first investors into waterdrop. And that paid off a lot because we were able to really R&D the best product out there. 

So we had, as you would say, an MVP out there with which we launched and it wasn't good. 

It wasn't tasting nice. It wasn't packaged as nicely and we launched it regardless of a small test here in Vienna. And I think there's a saying…

 I'm not sure. It was one of the big Silicon Valley legends. "If you're not embarrassed by the first product you launched, you launched too late." 

And we definitely were embarrassed over time, but we were really proud at the time. 

And what we did and how we validated is we actually ran a pop up shop compared to a small lemonade stand and we did it on the busiest street in Vienna. 

And we went out there with the product and we tested it with consumers and said, "How do you like it? How would you drink it? And what do you need? What's missing? etc." 

And we did that to gain all of this insight, but at the same time we saw it's actually a viable business model. 

So that was the beginning. The start of a multi-channel business, meaning not only trying to sell direct-to-consumer, going past the classic retail industry, but also going direct-to-consumer with offline retail. And that's how we started and how we validated it. 

And we see our brand and the product more like a tech company where we've been launching versions all the time. And it was always the next best thing. 

And we went from iPhone 5 to iPhone 6 and iPhone 7. And not like maybe other beverage brands who launch a product and then focus on sales and marketing and distribution. 

So that really [is] what kept us the agility. And that's how we're still doing it today.

Chase Clymer  

Awesome. So I know that here in the States, there's a lot of red tape to getting anything that is food or beverage related available to be able to be sold. 

How long did it take you to kind of get through that r&d phase to get an MVP on the first product like from ideation to like, "Alright, we're gonna make this thing."

Henry Murray  

Do you mean specifically in the States or in Europe where we started? 

Chase Clymer  

I would say in Europe where you started, but I think it would also be...

Henry Murray  

Okay, okay. Because there was quite a, there was quite a bit of red tape involved in getting the product over to the US. 

But in Europe, it probably took us around one and a half to 2 years in order to get the product live and ready to launch and make it how we wanted it to be. 

So that would be probably from ideation to the really first commercial batch. 

That would be the timespan.

Chase Clymer  

Absolutely. Yeah. The reason I ask is I want to let the listeners know that these types of products take quite a bit of time to really get everything into place to launch them. 

And CPG, especially here in the States --as you already alluded to getting things approved-- it's quite a bit of a process. So you need to just understand that going into it.

Henry Murray  

I would fully agree. I think we made our lives harder sometimes then it could have been because nothing of what we've done is like a commodity. 

There's no co-packers that could do the same thing in the US, especially like in our market segment, especially like in our market segment. You would find a lot of  powder sachets, etc, that you could probably develop faster in the sense of it's a commodity product with a custom branding. 

But consumers and retailers, at least in our experience, acknowledged and appreciated a lot that we have our specific form, packaging is custom made, this cannot be replicated from one day to the next. And it's actually very hard to do that. 

And that turned out to be one of our greatest USPs. So it doesn't make sense…

And it does pay off in some cases to go the hard way and the long way and actually going through all that pain.

Chase Clymer  

Absolutely. So let's go back to... You guys have validated this idea through your "lemonade stand model", which I love that analogy. You validated this thing. How did you start to... 

What was phase 2 looking like? You're like, "We're onto something here? Let's start to grow this." How did you go out there and acquire new customers?

Henry Murray  

So first we thought we could... We're gonna launch this online shop and we launched waterdrop.com or the German version of it. 

And we thought "Now the sales are going to pour in, right? We have an online shop." So nothing happened obviously on the day of launch. 

And we thought "Shit." So we turned to social media very fast. And back in... 

That was 2016 - 2017, beginning of 2017…

 It was still, I would say, pretty much the high phase of Facebook ads and marketing. Acquisition costs were still bearable I would say compared to now and that comes down to timing. That was our platform for quite some time. 

We were able to crack the code and how to run scalable ads on Facebook. Instagram wasn't even as strong in Europe back then. Now it's kind of shifted but that was really where we scaled a lot. 

That was our first growth channel: Facebook ads. And then the second channel was influencer marketing. That worked really well for us. 

And we had to tweak a lot of things. We had to tweak the product, we had to actually introduce our drinkware range for people like our glass bottles and steel bottles for people to understand in the first second of the ad that this is actually a beverage and not a soap or not a... I don't know. A bath salt or something like that. That was really important. 

But we scaled through Facebook ads, and then influencer marketing, and then moved into broader marketing channels over time.

Chase Clymer  

Absolutely. With trying to crack the code... And as you already alluded to, cost per acquisition was very different a few years back when you guys were doing this versus now. 

But can you shed any light on what kind of budgets that you were spending on really trying to start to get the algorithm to work in your favor and to really bring in the sales that you needed?

Henry Murray  

I cannot say exactly, because everything is a bit fluid in my memory. But I do remember one point when we crossed $1,000 or €1000 a day in [ad] spend. 

It felt like, "Whoa, we're really scaling here. This is really big now." And that was when we felt like we were reaching scale, and the algorithm was optimizing itself, and A/B testS suddenly made sense. So that was back then we were spending significantly higher budgets. But before that, it was all very organic, very small. Data was in the dark or wasn't significant yet. So we're past that threshold. And we believe we have more insight into what was happening back then.

Chase Clymer  

Yeah, I feel like that's always a growing pain. And maybe it's limiting the belief on the founders or the brand side and less on the budgetary side. 

It's like, "Can we even spend that much money to do this thing?" It's always like that. I think that's one of the bigger hurdles that people approach when they're starting to... 

You've got validation, you know you've really got product-market fit

But it's like "Should we actually be spending this much money to get in front of these many people? Are we even there yet?" 

I think it's like a limiting belief some might have.

Henry Murray  

Absolutely. We were actually always trying to spend more. 

As soon as we had something working, we said to our performance team --and we were a small team-- like, "Just double it up tomorrow. We want to see the impact right away." 

And it was like, it doesn't work that way. And yeah, so it took time.

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Chase Clymer  

We were talking about influencers. But you guys are up to something a little more interesting these days.

You've engaged a lot with the professional tennis industry. Can you share a little bit more about that?

Henry Murray  

Yeah, I'm very happy to. So over time, we expanded our product portfolio. The first line, the Microdrink line is all about making tasty hydration simple.

 But last year, we introduced a line and it was --and it is-- all about electrolyte rehydration cubes. So we suddenly we were working towards developing a product that was fitting and perfect for athletes. And we realize that in order to reach the right target groups... 

And also not only for this product category but to also emotionalize the entire feeling of the brand, sport is a really great platform for us. Not because there's a lot of target consumers in there, but also because it has a lot of effects and everything else. 

And so we were thinking what sports may fit waterdrop. And we started off with skiing because we're from Austria and Europe and the skiing is a big thing here. So that's not really a global platform. 

And we came to tennis not because we're avid tennis players ourselves, but because of 2 things, actually: First of all, hydration is a massive element in tennis. They always have to drink. 

And second, immediate exposure of hydration is also really big. There's no other sport where you see people drinking as much as in tennis, because you have these changeovers and people sit on the bench and they're just sitting there usually drinking from a bottle. 

And the one problem that tennis has is that hydration was also not really sustainable there until now, meaning they're always drinking from single-use plastic bottles. 

And that's one of our core beliefs that we believe that single-use plastic water bottles should be something of the past.

So we said, we will go into sport where we can make an impact in the sense that we can transform that sport, get rid of plastic bottles there. 

We introduced an innovative hydration bench. You may have seen it on the ATP tour somewhere where players sit on a bench in a changeover, where they have a sustainable steel bottle in their hand and we can actually fill the water directly from the bench into their bottle. 

And they don't need to stand up. They just put over a bottle, the water comes down, and they drink it right away. 

The tour loved it. The tournaments love it. The players love it. Everybody is just happy about it for us. It's great media exposure. And that's why we ventured into tennis. 

Why the athletes? I think being present in tournaments in this sport is one thing. But at the end of the day, you want to be associated with the people and the stories behind it. 

And that's how we got in touch with Taylor Fritz and Danielle Collins, both US number one players, and also how we got the attention of Novak Djokovic: the current world number one. 

I would say [he's] one of the most successful if not the most successful tennis player of all time. And he not only was amazed by what we're doing in tennis, but in general as a brand. 

And we brought him in as a shareholder and investor and also as an ambassador. So I would say in tennis, we have full backing.

We also partnered with the ATP. So the professional male tennis organization that organizes the tour and really trying to make an impact. 

And also make sure we're leveraging these assets as a brand. And people get the value of that.

Chase Clymer  

Absolutely. That's amazing what you're doing there, working with the tennis players, and all of that angle kind of coincides with some of your more recent goals of expanding into the US market. 

Now when I'm typically in the seat, and I'm interviewing a brand, they're usually in the US market trying to expand internationally. 

So I'd love to hear about some of the challenges from an international brand trying to break into the US market.

Henry Murray  

So it's interesting because there's a big advantage and there's a disadvantage being from Europe or being from the US. 

The big advantage, I would say from being in the US directly as a brand --and it would have helped us a lot is that from day one-- is you're addressing this massive market with hundreds of millions of people. 

And you can do that with just one website or one retailer or with very simple things and a very small team. 

However in Europe, if you want to expand to that kind of scale, you have to figure out how to enter France, you have to figure out how to enter Denmark, you have to go into Italy... 

So you think there's your opinion. But the truth is, every country has different regulations, packaging, legal, compliance, all of that. 

So that means we're much slower than somebody just scaling in the US. The only big advantage you have over there... 

You have this massive advantage for brands that are coming over from the US to Europe, [but] they have no idea how to diversify across 20 different countries because it's really complex. We have to go through all that pain. So you have... 

I would say, if you've penetrated these markets first from the European side, and you're good at entering new markets by adapting to new regulations, etc, then going into the US will be, I would say, fairly easier versus going the other way around. 

Coming from one large market and trying to diversify into 10 different specific markets within Europe. 

So I think that's one of the reasons why US brands tend to maybe do the UK and then over time, explore other markets. 

But at the same time, you can become massive in the US alone. So I don't know what's better, I can only share what we did so far.

Chase Clymer  

I don't think that any one way is better. But it is... You're the first person to highlight that. 

Yeah, you guys understand how to break new markets and go through those steps on those checklists. And you've done it numerous times before trying to get to America. But yeah, it's usually... 

For an American brand, it's probably the first time they've ever done it. And the first time is always the hardest. 

Henry Murray  

Correct. Correct. 

Chase Clymer  

Awesome. Now, Henry, is there anything I didn't ask you about today that you think would resonate with our audience?

Henry Murray  

That's a great question. First of all, I have to say, you're asking a lot of great questions.

Chase Clymer  

I've done this more than once. So I'm finally getting better.

Henry Murray  

So I believe you know your audience best and what they want to know. 

I'm thinking if there's something that may be particularly interesting from a European brand coming to the US, if we changed something within the product or within the positioning, and there are a few things that we did differently. But I'm not sure how relevant it is to the audience. 

But I can elaborate if you want.

Chase Clymer  

Yeah. I'd love to hear it. 

Henry Murray  

So when we started two years in the US, we basically just launched the same product. We made sure the products are FDA ready. So that was a painful process but it was more on the compliance side of it. But we realized that after we sold out, a couple of things we actually have to change. Just simple things. 

Like in our drinkware range, our bottles  were just way too small. We had like these 15 ounce bottles and people were saying, "Oh, that's nice. But that's like an accessory.I want half gallon bottles. And I want bigger bottles." 

And like, "I want to hydrate. Give me a gallon. Give me that." And we were like, "Oh my god. We don't even have this in our portfolio." Same with the product itself. 

So we changed the intensity of the product, we changed messaging and functionality. We saw that the US values functionality a lot more than maybe some markets in Europe. 

Everything is louder, more direct, more to the point. And we have to translate that to basically also redo our entire packaging, because what we did was very soft and very D2C friendly. 

So if consumers are European, you have to figure it out on your own, basically, once you have the product.

And in the US everything has to... It should be straight to the point, in your face, make it clear from the second one and make sure you get the value for money right there. And that's something we had to learn, sometimes, the hard way. But we've definitely changed it. And I wouldn't say... 

I think we probably even learned a lot from taking more best practices from the US market and then also applying them back in Europe to a lot of things which makes things even better here in Europe. 

So being a global company and being active in more markets, I think the beauty of it is that you can take the best working things from other markets and then apply them to your core markets or the other way around.

Chase Clymer  

Absolutely. Henry, thank you so much for coming on the show today and sharing all these insights. If I am curious about the product, where do I go to check it out?

Henry Murray  

So ideally, you go to waterdrop.com. You can order there directly. 

We're also going to be available at Walmart and in selected Target locations [starting] from April. So that's a big step for us.

 We're going to be available in around half of all Walmart's. We're in HEB. We're in Harmons and Lassens. You can also get some products on Amazon

But it's up to you where you want to shop. We hope we can reach you there.

Chase Clymer  

Awesome. Thank you so much, Henry. 

Henry Murray  

Thank you, Chase. 

Chase Clymer  

We can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes. 

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Lastly, if you're a store owner looking for an amazing partner to help get your Shopify store to the next level, reach out to Electric Eye at electriceye.io/connect.