Introduction
Digestive issues are a common problem. Symptoms can be painful and interfere with daily activities, especially when they occur frequently. Fortunately, science has revealed simple ways to alleviate and even potentially improve digestive health.
Waku is a natural herbal tea brand designed to refresh the palate and revitalize the digestive system. Using Ecuadorian recipes and ethically sourced Ecuadorian ingredients, these beverages are low in both calories and sugar. We reached out to co-founder and CEO Juan Giraldo to hear the story behind the company and the challenges he has faced as a founder.
Note: This interview was conducted over phone and email. It has been lightly edited for clarity and length.
In your own words, how would you describe your company?
Waku is a healthy beverage brand where we make prebiotic herbal teas that support a healthy gut. We put a modern twist on an ancient tea, using a centuries-old Ecuadorian recipe, the finest natural ingredients, zero sugar, and prebiotics to maximize the gut-healthy benefits.
What inspired you to take the leap and start this company?
While we were at Babson College in Boston, we decided to jump into a new business venture together. We wanted to build a company that would allow us to have a positive socio-economic impact in Ecuador, was in an industry where Ecuador has a comparative advantage against other countries around the world, and was from Ecuador to the world (and not from the world to Ecuador). With these three guardrails in mind, we explored multiple business ideas. We settled on food, beverages, and agriculture because Ecuador is distinguished in growing the highest-quality natural ingredients. If done right, we knew that we could have a tremendous impact on one of the most vulnerable populations in Ecuador: indigenous farmers, 42% of whom live under the poverty line.
While learning about the food and beverage industry in the US, we discovered a massive market trend around gut health. More than half of Americans experience digestive issues, and increasingly, science is uncovering the link between gut health and overall health and wellbeing. But many so-called “gut health” drinks are bland or off-putting, while the tasty ones come loaded with added sugar, fake flavors, and empty calories.
It clicked! We decided to put a modern twist on an ancient tea – using a centuries-old Ecuadorian recipe, the finest natural ingredients, no sugar, and prebiotics to maximize the gut-healthy benefits.
Who is on your team and how did you come together?
Nico and I are college friends. While in college, entrepreneurship brought us together. We were both passionate about entrepreneurship, business, and social impact. Our real friendship and partnership started in 2015, when Nico joined my team at a previous company. We understand that together we can achieve more than each of us individually. It’s truly a pleasure to work with Nico, and we complement each other very well. Nico is a marketer at heart – detail-oriented with a strong eye for design – whereas I am more of a numbers guy with a big-picture mindset. In our day-to-day, Nico is our CMO and direct-to-consumer GM, while I run sales, finances, and operations.
Sofi Estrella – Nico’s younger sister – joined us from day one. She has pretty much worn all the hats, running our content strategy, field marketing, operations, and customer support. For the last year, she has settled down as our creative director. She makes sure that the look and feel of our brand is cohesive across multiple communication channels, and she is responsible for the brand’s personality and tone of voice.
Finally, Juane Silva joined our team about three months ago as our content manager. Juane’s background is in advertising and entrepreneurship, and he is always producing content – mostly video – for all of our platforms.
Fun fact: We all grew up in Quito, and actually, we all went to the same university: Universidad San Francisco de Quito. Juane and I met while we were in college, so when we were looking for an advertiser to help us scale our digital creatives, we immediately thought of him.
Sofi and Juane are based in Ecuador and Nico and I are based in the USA.
What distribution channel is Waku implementing? How did you set up your pricing strategy?
Waku is currently an e-commerce-only brand (even though we are preparing to launch in retail in the Northeast soon). Our main channels are our own website (direct to consumer) and Amazon. We strategically invested on these channels first, where we could own the customer relationship and gather data. These channels make for a great feedback loop, and they allow us to test things quickly. All the data we’ve gathered from these channels has guided our product decisions and now is guiding our retail strategy.
But we are super excited about the next six months as we transition to an omnichannel brand. Now that we have learned what resonates with consumers and our products and brand are optimized, we are ready to scale. The goal is to launch in retail chains (Wegmans, Whole Foods, etc.) in the Northeast by May 2022 and start penetrating the natural channel nationwide from there.
Regarding the pricing strategy, we started with the retail price in mind and moved backwards from there – understanding that the retailers and distributors are in the middle and they need to make money too. We set our retail price at $2.99 per unit and $35.99 per case on our website and Amazon, so we keep a consistent pressing strategy across every channel.
What does the competitive landscape look like, and how do you differentiate?
The ready-to-drink tea category is a $7 billion category in the US. However, all of the legacy brands come loaded with added sugar, fake flavors, and empty calories.
Waku is the better-for-you option within this massive category. All of our products taste as good or better than all these sugary drinks but have no added sugar, low calories (derived from real fruit juice), only natural ingredients, and prebiotic fiber that supports a healthy gut.
How do you intend to use the money you raise this round to scale the business?
This money will go directly to support our most important business goals:
- Launch our new brand, packaging an improved formulation. This iteration has our three years of knowledge and learnings from the beverage industry and what the market is looking for.
- Get an authorization and launch in retailers in the Northeast (Wegmans, Whole Foods, etc.) and hire the team required to support our retail partners. The roles we will be looking to hire are field marketing manager as well as area sales managers.
- Continue to scale our digital marketing and customer acquisition strategies (paid social, influencer marketing, content production).
What do you want potential investors to know about you and/or your company?
After a little more than three years in the market, we have acquired the knowledge necessary to scale a better-for-you beverage company. The product is highly differentiated and right on trend, and we compete in a massive category that has 92% or more of household penetration.
Our relentless focus on our product makes us different. We never compromise on quality, and we always deliver on the promises we made to our customers. We stand for flavors that shine, the purest ingredients, maximized for gut health, and a product made with integrity in Ecuador.
Our purpose keeps us going day in and day out. We exist to replenish the world with time-tested knowledge and home-grown flavors of Ecuador, driving economic growth in our home country by sourcing our ingredients ethically from smallholder farmers.
As you think about the business 5-10 years down the road, what do you see exit opportunities looking like? Have you set any future goals for the company?
There has never been a better time to be a consumer packaged goods (CPG) entrepreneur, as every single category in the market is being disrupted. Big CPG conglomerates (Coca-Cola, PepsiCo, Unilever, P&G) don’t have the capabilities necessary to cater to the new age consumers who are actively looking for better-for-you, better-for-the-environment options. These big conglomerates are acquiring innovation instead, which makes the industry a hot space for mergers and multimillion-dollar and multibillion-dollar acquisitions.
We have a plan to scale this company to $200 million in sales in the next seven years, and looking at the revenue multiples, the market is paying for similar beverage brands now. That would mean a billion dollars and an exit. There is a long road to get there, but our superior product as well as the early traction in the market gives us confidence that we are on track to achieve our goals.
As a minority and underrepresented founder, what difficulties have you encountered working on your company? What advice would you give to minority founders?
View your immigration status as a department of the company. It has its own challenges and problems that need to be solved. So when the time comes, just sit down and solve the problems as you do with all the other areas of your venture.
Never allow your race or immigration status to stop you from moving forward. The USA is the land of opportunities. It is on you to take control of your destiny and push for your dreams. Opportunities are endless.
That said, there are additional complexities that you will have to deal with specifically relating to access to credit if you are an immigrant founder. One way we have felt this disadvantage firsthand is through the government funding that was offered to small businesses during 2020, specifically the EIDL loan. Flat out, we could not apply for it. Whereas for many of our founder friends, this loan literally saved their business.
We like to think about these disadvantages as an extra motivator to push for our business and our dreams. Quite frankly, we did not leave our country, our friends, and our family to only come this far. Use this to your advantage!
We look forward to seeing where Juan and his team take the company. Waku is currently raising on Republic.
