Follow the Fundamentals: Interview with Brooks Powell, Founder and CEO of Cheers
I recently went one on one with Brooks Powell, founder and CEO of Cheers.
Adam: Thanks again for taking the time to share your advice. First things first, though, I am sure readers would love to learn more about you. How did you get here? What experiences, failures, setbacks or challenges have been most instrumental to your growth?
Brooks: Great to chat with you, Adam! I’m a Houston native and, even though I had the wonderful opportunity to attend an Ivy League school, I always knew I’d return home—there’s something special about laying your roots somewhere. Early on, I wasn’t sure what career would await me but after starting my entrepreneurial journey as a sophomore at Princeton, it became clear that I’d be taking my new company back to Texas.
I officially launched the company in June of 2017. After graduation, my wife and I moved back to Houston and got a small apartment. I even enlisted my parents out of their own convenience store business and they were literally helping me fulfill orders from their living room. I obviously would have loved to have a big facility to fulfill orders right out of the gate but starting small and growing your business from the ground up is a powerful experience. I firmly believe that you “can’t ever let the cart get ahead of the horse”—and this is just one of those examples in practice.
The next year, I was invited to pitch Cheers on ABC’s popular “Shark Tank” series. I was so excited and confident that the $400,000 investment we wanted would be accepted by one of the Sharks. We were ready to scale the business in a big way but we needed some additional capital to get there. After having a difference of opinion with Mark Cuban, I got turned down by all of the Sharks.
At the time, I was disappointed. But we stayed focused on our goals and I’m proud to say that as of today we’ve sold 13M+ doses and have done $25M+ in total sales.
The year we went on Shark Tank, which was filmed in 2017, we did about $400k in revenue and lost about $30k (net income). In 2020, we did about $10.4m in revenue and had around $1.7m in profit (net income). That’s about a 26x increase in revenue and a huge swing in profitability and operating efficiency. That $400,000 investment that we offered to the sharks would be worth quite a bit now.
As history has shown time and time again, even the best investors miss out on great opportunities.
Adam: How did you come up with your business idea? What advice do you have for others on how to come up with great ideas?
Brooks: You can segment entrepreneurs up into two groups. The first group includes people who are dying to start a business. They get an MBA, search for an idea and then start a business. It’s not so much the idea that impassions them, it’s business itself. The idea is merely a vehicle for the business. The second group of entrepreneurs are those people who are so excited by an idea that they say, “I have to do this.” The business is merely the vehicle for the idea. They need to make this idea a reality and the best way to do so is to create a business around it. I believe the companies that do really well are letting the business serve the ideas, like Apple. This approach certainly comes with risks because, by pursuing an idea, you have to learn and understand business. Business is the machine by which the idea moves forward and money is the gasoline that fuels the machine. If your idea doesn’t initially follow the fundamentals of business, make a roadmap for how it could, and then create a business that exists to serve your idea over time. Then you can build something that’s really powerful over time.
For example, Elon Musk wants a for-profit company to put humans on Mars. How would that ever work? Well obviously, initially it wouldn’t. Instead, SpaceX has built a business around transporting things and people to space—and now is expanding those services to stuff such as their Starlink, which could provide satellite wifi to people where standard wifi isn’t easily accessible. The idea is still the same… but they have had to figure out how to follow the fundamentals of business to let the business ultimately serve the idea. Eventually, the business will get to a point where they can pursue the original idea, but “Rome wasn’t built in a day.”
I think one of the great ironies is that idea-first businesses often become more successful than business-first type companies. By keeping the idea as the north star, you start to see the business as a beautiful machine that helps you achieve your idea, rather than the other way around. I’m very passionate about the fundamentals of business primarily because I’m so passionate about bringing the alcohol-related health category to the world. I’m great at business because I know it’s the machine that gets us to the original goal.
As far as advice, I’d say only find something worth doing. And anything worth doing is worth overdoing. If you build a business around some idea just because it seems like it could be profitable—well a few years in, you may have a few speed bumps, and then want to throw in the towel because you just wanted to get rich and didn’t really care about the idea. You only have one life—don’t waste it on simply pursuing money for its own sake. Find a compelling vision, build a team passionate about that, and then tap dance to work each day whether the road is currently smooth or bumpy. That’s a far more rewarding way to build a company.
Adam: How did you know your business idea was worth pursuing? What advice do you have on how to best test a business idea?
Brooks: The decisions on whether it makes sense to pursue any investment (e.g, starting a new company, new initiative, launching a new product, starting a new department, etc.), I believe can always be likened to a game of Texas Hold ‘Em. Texas Hold ‘Em has four distinct points at which you can make decisions: pocket cards (internal validation), flop (external validation—if there’s no chance, drop out), turn (almost all info to see if pursuable—if it’s not good, there’s no sense in staying in when you see it’s not going to work), river (know all there is to know about how your business fits into market, except what other players, your competition, have). After considering all these factors, you make your final bet, asking if we are going to heavily pursue this new initiative or not. If it doesn’t look good, consider getting out. If it does, invest more. There is no sort of distinct point where you decide to go in fully. You just continue to uncover in layers of information and decide to bet more. It serves no one to bluff long-term in business.
Adam: What are the key steps you have taken to grow your business? What advice do you have for others on how to take their businesses to the next level?
Brooks: Hiring the right people is an important step for growth. It’s probably the most important thing. When has something big ever been accomplished by a single person?
I also encourage other entrepreneurs to focus on fundamentals and ask themselves if, long-term, their business can actually produce more value than it takes in. When there’s a surplus, that’s what actually makes your business able to grow long-term. Where can a business be more efficient than its individual parts? That’s where you will find opportunities for profit.
In the word’s of Jeff Bezos’ last shareholder letter as CEO of Amazon: “If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with. Any business that doesn’t create value for those it touches, even if it appears successful on the surface, isn’t long for this world. It’s on the way out.”
A business also has to be personally gratifying. If you are in business just to make money or copy someone else, then it ends up being dissatisfying long-term. Focus on something you love doing or love doing with a team. Everyone should get personal gratification out of it when it grows and is successful. Your growth needs to be worth the blood, sweat and tears, so to speak. You need to love the journey—not just the result. The great paradox here is that people who end up loving the journey end up getting better results anyways. Just look at Warren Buffett and his partner Charlie Munger. Buffett is 90 years old and Munger is 97. Together they still joyfully run the $500 billion dollar business that they have for decades.
Adam: What are your best sales and marketing tips?
Brooks: I love Henry Ford’s famous quote, “If I had asked people what they wanted, they would have said faster horses.”
For Cheers, what has been successful is to build products that we are personally excited about because that excitement makes it worth it to us. Once we’re able to present this beautiful product we built, then we’ll get insights from customers that we can start to consider. Our best marketing strategy is to start with what matters to your team, build it and then figure out how it’s going to matter to customers.
It sounds wrong, but I believe many companies spend too much time asking customers what they want. Then they end up building products that merely meet the lowest common denominator. They build products that the company isn’t even excited about internally. The point of doing things like that is to just make money. Which often then paradoxically doesn’t make money. This has been part of the problem of the whole “MVP” or “minimum viable product” movement.
Now, in many circumstances, I say build something awesome that you and your team love, and then present it to the world. In most cases, you can always tweak things later based on customer feedback. But I believe that being internally passionate about your product and service can oftentimes cure for some lack of initial market testing.
Adam: In your experience, what are the defining qualities of an effective leader? How can leaders and aspiring leaders take their leadership skills to the next level?
Brooks: There’s no one true “right way”.
Leadership looks different for every person and every organization. I don’t believe there is a right or wrong approach. Some are vocal and do things themselves, some are quiet and rely on the help of others. The most important thing a leader can do is build a well-functioning team that fits within the culture. The organization has to be cohesive. So if you’re not a very outspoken leader, then you may need to hire someone that is. If you are an organized leader, you might need to hire a more creative person to balance you. An effective leader should ask themselves what their company needs to do and how they are going to meet those needs as a team.
So in other words, self-awareness and organizational awareness are key.
Adam: What is your best advice on building, leading and managing teams?
Brooks: When hiring for our team at Cheers, we’re not hiring their resume or who they are today. We’re hiring their potential. Look at the trajectory of a candidate rather than their current skills or experience. Consider each interview as a snapshot in time. We are investing in someone’s future when we hire them. All we should care about is what this candidate can accomplish 6 months from now, 2 years from now, and 6 years from now.
As for leading, I encourage my management team to identify the times they feel the most productive and work during those hours, rather than the typical 9 to 5. I have one director who comes in very early but I feel more productive after 5 p.m. As long as a deliverable is done on time, who cares when it was worked on?
We all work long hours, but those are all different hours of the day.
Adam: What are your three best tips applicable to entrepreneurs, executives and civic leaders?
Brooks:
Only do things worth doing.
Things worth doing are worth overdoing.
Things not worth doing should not be done.
Adam: What is the single best piece of advice you have ever received?
Brooks: "Do not take yearly results too seriously. Instead, focus on four or five-year averages." - Warren Buffett. This advice, while for investors, is equally applicable to management teams. Your goal is not just to increase value this year, but in the many years to come. Everything has to be done with the long-term in mind.
Adam Mendler is the CEO of The Veloz Group, where he co-founded and oversees ventures across a wide variety of industries. Adam is also the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one on one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal winning athletes, political and military leaders - for intimate half-hour conversations each week. Adam has written extensively on leadership, management, entrepreneurship, marketing and sales, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities and non-profit organizations.
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