Kombucha CEO says company’s founders ‘were “succeed at any cost” types of people’
Daina Trout is a cofounder and chief executive of HealthAde Kombucha in Torrance, considered one of the dominant brands in the rapidly growing global market for the fermented tea. Health-Ade was founded in 2012 by Trout, her husband, Justin, and her best friend, Vanessa Dew.
Justin Trout serves as chief operating officer; Dew is chief sales officer.
Health-Ade, which has grown to more than 200 employees, produces 16 flavors of kombucha, which can be found in more than 26,000 stores. The company is on track to sell more than 4 million cases in 2019.
Daina Slekys discovered her love of science during high school in Plymouth, Mass.
She studied pre-med and health sciences at Georgetown University and dietetics at Simmons University, then obtained master’s degrees from Tufts University in nutritional biochemistry and public health.
She had been inspired by an internship with Artemis Simopoulos, one of the authors of “The Omega Diet.” “I really fell in love with nutrition sciences and how it could have an impact on health. That was my entryway.”
Trout still didn’t have any sense of how she was going to employ this knowledge, but the first hint emerged during her time at Tufts, when she got hooked on cooking and fermentation. She even self-published a book, jokingly titled “Someone’s in the kitchen with Daina.”
She had begun drinking kombucha but found the flavor lacking in store-bought versions of the probiotic drink.
“I learned how to make a really good kombucha. Mine always tasted better to me and my friends.”
Tired of the East Coast’s cold weather, Daina and Justin headed for Los Angeles in 2007 without jobs. “I started looking for work but I really had no interest in anything academic. Dietitian jobs just didn’t pay very much and I had home mortgage worth of college debt.” She wound up being recruited for a sales job with British pharmaceutical giant GlaxoSmithKline.
On her first day, she was paired up with her future best friend Vanessa Dew.
GSK put Trout in a position in which she was working with teams of employees to help them become more effective and “more engaged with the company,” she said.
“I worked with over 300 teams. It was this unbelievably robust case study on how teams work, which do well and on what types of leaders do those successful teams have. I was just a sponge soaking up all this information.”
But the job was only temporary and Trout found herself back in sales. In two months, she quit. Justin was a struggling musician who worked with a successful entrepreneur on the side and had the dubious distinction of depositing his rather large paychecks. Dew was feeling uninspired at GSK. The three brainstormed on what type of business they might start. “The biggest thing in our way was money. We had none,” Trout said.
Dew used her connection to a friend with the Brentwood Farmers Market to get the trio a tryout selling Trout’s kombucha. “It was cheap to make. We had our first 60 cases of kombucha on March 25, 2012. The labels were something we Scotch-taped onto the bottles. We couldn’t even buy labels. But we sold out in about an hour. The whole summer went like that. We saw that there was a lot of demand for our kombucha.”
From the start, the three meshed well. They patrolled the farmers market, giving samples. “We already had trust and good communication under our belts,” Trout said. “I think that was important to have for a founding team. We didn’t have to develop that. And the three of us were in turbo mode. We were ‘succeed at any cost’ types of people. We called it our trifecta. We were each equally dedicated to winning. This was our chance to build something great. We all quit our jobs, even though we had almost no savings.”
The credit cards were maxed out, Trout said. Bank accounts were drained. Relatives were tapped for loans, “everyone on the family trees,” as Trout put it.
Her apartment neighbors were complaining about the smell of fermenting kombucha in several 2.5-gallon jars. Others complained about them running a business from their apartment.
Eventually, it led to an eviction notice. “We were scared as heck, but we had an unusual drive to work hard and achieve success. That got us through. We were so dedicated to it. Then Cameron Diaz was in a photo holding one of our kombuchas. That was big for us.”
THE BIG BREAK
Health-Ade had a foothold in some small stores, but the goal was to get into one of the more prominent grocery chains.
Finally, after more than 10 tries, the trio got Erewhon Market to give them a little shelf space, in 2013. The Trouts and Dew were at the store all day, working in shifts, handing out samples.
“We were not going to let this fail,” Trout said. “We knew that Erewhon had to be our story of success.”
THE CASH CRUNCH
“We didn’t have enough money to meet our demand,” Trout said. Their $50,000-limit credit card was shut down and banks weren’t interested. That’s when they heard from First Beverage Group, also in 2013. “They had been following the kombucha market. They were our first big investor. One of their managing partners tried us, saw my mobile phone on the bottle and called.”
THE DISTRIBUTION PROBLEM
The three delivered products using their personal cars until they could rent a refrigerated truck, which sucked up gasoline in traffic jams.
“We also had a ton of parking tickets,” Trout said. They needed a distributor, but the one they wanted wouldn’t agree unless they signed with a big chain.
“‘If you get Gelson’s, we’ll take you on,’” Trout said she was told.
In 2013, “I think eventually Gelson’s took a meeting with us out of pity,” Trout joked. “They were told it wouldn’t work. Kombucha was too small a category. They already had a kombucha product that was selling well,” she said. “They gave us 16 weeks in eight stores. We did really well. That was how we unlocked our distribution problem. Once we had third-party distribution through Nature’s Best, we started getting into more stores across the West Coast. When we opened up with Whole Foods in 2014, that connected us to another distributor. Now, we have 150 distributors across the U.S.”
HEALTH-ADE, WHICH HAS GROWN TO MORE THAN 200 EMPLOYEES, PRODUCES 16 FLAVORS OF KOMBUCHA, WHICH CAN BE FOUND IN MORE THAN 26,000 STORES. THE COMPANY IS ON TRACK TO SELL MORE THAN 4 MILLION CASES IN 2019.