How Bhakti Chai Conquered Your Coffee Shop

Can you change the world with a cup of tea? How about 35,000 gallons of it per month? That’s how much Colorado-based Bhakti Chai currently produces and ships to coffee shops and retailers nationwide, including mainstream grocers like Target and Costco. Yet even as the business launches new products (most recently, a sparkling tea) and touches new markets, it is staying true to its core mission of giving back to the global community. We sat down with founder and CEO Brook Eddy to talk about how Bhakti got started and what she has learned along the way.

What was the inspiration behind starting Bhakti Chai?

Brook Eddy: I spent three months in India studying a movement based on “Bhakti,” or devotion through social action. I didn’t think about starting a chai company; I was just drinking a lot of homemade chai in people’s homes.

Then, probably two years later [in 2006], I started making my own chai on the stove, just to drink. I went into a cafe and realized the chai they had was gross — it was a powder. I asked a cafe in Boulder if they’d be willing to try my homemade chai and consider carrying it. The owner told me to bring in a sample.

I remember walking out the door and thinking, “If I bring in a sample, I know I’m going to start a company. Because it’s really good. Would I want to start a company? I could call it Bhakti Chai, and it could be based on all this stuff I learned in India. And I could kick ass, because all these other chai companies suck.” I’ve always had this kind of competitive spirit in me.

My background is studying social policy and nonprofit management. I took classes in graduate school about how to make nonprofits work more like businesses, and at the time, I was thinking about how we can make businesses act more like nonprofits. So it kind of just came together in one of these “aha!” moments.

Then the courage to do it came when I brought in the sample. It was in a mason jar, no label, no nothing. The owner was like, “Oh my God, this is amazing. Can we get three gallons a week?” She didn’t even ask the price.

I went back and figured out how much my ingredients were and did my whole COGS [cost of goods sold] analysis. And then I decided, “I need a massage. I’m building that into my price model.”

At this point, my twins were a year and a half, I was working a full-time job, I was going through a divorce, and I was just exhausted. I knew I couldn’t quit my job. I figured, “If I’m going to do this as a hobby, the hobby has to be able to pay for itself, get me some massages, and get me some food money.”

I was working as a development director for an amazing organization, but I knew there was a cap on what a development director can make. While supporting two kids, that’s not going to be able to buy a house here, ever. The courage came from seeing that this was my path. I said, “I can take this risk or I can have safety, and I know what safety’s going to look like. I don’t know what this is going to look like.” It hasn’t looked like anything that I thought it was going to — in many positive ways and also many obstacle-crazy ways.

Now that you know what you know, is there anything that you would have done differently from the start, or has the journey just been exactly what it’s supposed to be?

BE: If I had a magic wand, I would have been capitalized earlier. I tried as much as I could, but I couldn’t get a loan. I didn’t own a home. I had no family that had money. I didn’t even have a business credit card.

It was also 2008 and 2009 when I was raising capital, so it was not really a time to be walking around town and asking angel investors if they wanted to put in even $20,000. I think we would have been here a  lot quicker had it not been so slowly capitalized and so “boot-strappy.” It’s still my dream of, “What if we had all that money? We could do whatever we wanted.” But that might have made for bad business, and I might have spent a lot more than I should have.

Bhakti Chai

Speaking of capital-raising, have you been able to find mission-aligned investors? If so, how?

BE: If you don’t like ginger, we’re not a fit for you, and if you don’t like our mission, we’re not a fit for you. It’s just finding that right partner. If prospective investors saw a Charitable Contributions line-item on our P&L [profit and loss statement] and were like, “Um, do you really need to spend that much?” I’d know they were probably not the investor for us.

Early on, it was local angel investors who always were on the same page with my mission. They were like, “We buy your product every day anyway — we might as well invest in your company.” It felt like we were in it together.

Then, moving more into institutional capital, we were able to be the first investment of the Colorado Impact Fund, which invests in mission-driven companies based in Colorado. That felt really good. They’ve been amazing partners. And then we were able to do a round with [equity-based crowd-funding platform] CircleUp a couple of years ago. That was brilliant. I wish CircleUp could have been there when I first started, because that was an amazing platform. We were able to raise about $350,000, but the connections were even more amazing. I’ve been introduced to so many people.

We also now have a line of credit and some equipment loans with RSF Social Finance. I feel like we’re on this great path. Not only are our investors on our team, but our financial partners are on our team.

Brook Eddy's Top 3 Pieces of AdviceWith regard to CircleUp and equity crowdfunding in general, have you struggled at all with having a larger number of shareholders than you might in a more “traditional” financing round?

BE: It has benefited us in that they’re all consumers, and they all come with their different expertise, connections, and introductions. Sure, it’s more time-consuming because I’ll get emails from lots of them at different times of the year; “Hey, what’s going on with this?” “Tell me about this.” “Oh, I had this idea.” There’s more of that that you have to deal with. But I try to send out yearly, or sometimes twice a year updates, to all the investor members — there are over 60 — to try to answer all their questions about everything, so they’re not pinging me all the time.

The other piece is that we’ve structured it from a legal perspective so that they’re investors but they’re not managers. They’re not true operator-partners, and if that’s clear, then they can’t come in and be like, “Oh, you shouldn’t launch sparkling tea.” They don’t have that right, and I’ve made that clear up front.

What advice do you have for other mission-driven entrepreneurs who are heading into a capital raise?

BE: Make your story really strong, because investors want to invest in something that’s going to be positive for their returns and positive for the planet. They really do. You can have both, and we have more brands that are showing us — like Patagonia and Annie’s — that you can be super successful and you can do the right thing in terms of sourcing and how you deal with your employees. You have to live it, though, and not say, “Oh, that’s okay, I guess we won’t give to charities this year,” or “We won’t support organizations that really help women.” You’re the first guard of what is non-negotiable for your company.

What have been the largest challenges that you’ve faced, and how have you worked to address them?

BE: Manufacturing is a huge challenge. At the beginning, it was pretty simple with tea and eight ingredients. As we’ve grown our product lines, with multiple suppliers and packaging and co-packers and our own brewing facility, that’s been the biggest learning curve for me.

Cash flow is always also a big challenge. Even when we bring in a big investment; then we also build a big brewery. Sometimes our biggest customers don’t pay us for a month or two, and we’re like, “But we have to buy bottles!”

Also, being a single mom and trying to do everything. I’m really good at multi-tasking, but there were years I was working at my computer until 3:00 in the morn- ing and then I would be up all day, running kids to soccer and then grocery shopping. I think my health has probably suffered. I have a good yoga practice and a good hiking practice, but that’s been a challenge. I’d ask, “Oh, God, how much longer is the marathon?”

Does it still feel like a marathon?

BE: I have such a strong team now, it’s not as much. It might be like a 5k that you haven’t started to practice for, after you’ve been drinking all night [laughter]. But it’s not a marathon.

Are there practices beyond yoga and hiking that you’re using to keep some balance in your life?

BE: Well, I’m happy to live in Colorado. That definitely is a stress-reliever, the Colorado Candies. And I’m supporting local Colorado companies, too [laughter].

"The courage came from seeing that this was my path. I said, “I can take this risk or I can have safety, and I know what safety’s going to look like."

Do you have a morning routine to prepare for work?

BE: First is getting my kids off to school. Luckily, they’re on the buses now, so I don’t have to leave. I’m just like, “Bye, don’t let the door hit you in the ass!” Then I usually get back in bed with my laptop and get ahead of the day, know what I need to respond to, what’s going on. I’ll go do yoga or go for a hike, come home and shower, and then get into the office. And then it’s into meetings and lots of phone calls.

Tell us about your leadership style.

BE: I’m just me. I’m very hands-off, and I do not micromanage. I think it probably could be developed more for people wanting true mentorship, like sitting down and talking about your career and how we can build you there. I just physically cannot do that; we’re growing so fast. But I do want to bring more people into the company who have those types of roles so employees feel like they’re being heard and honored.

I also think I’m really straight. I talk about things head-on, instead of beating around the bush. “What’s going on with this? How did that happen? Let’s solve it.” My affect as a leader is nothing shocks me. People are coming in all day long yelling, “Fire, fire, fire!” and I’m like, “Okay, well, that’s somewhat smoking. How are we going to solve that?” I hope that it feels [to my employees] like it’s calm and we’ll figure everything out.

Is that a facet of your personality, to be calm under pressure?

BE: Yeah, pretty much. Just by being under pressure so much. There’s no reason to throw a chair or tear up the table and get angry at anyone. It’s like, “That sucks. What are we going to do to solve it?”

How would you describe the culture here with your team?

BE: We have a gong here that we ring when happy things happen, and we try to do spontaneous, fun things. “It’s a random Wednesday, I’m going to get Indian takeout and we’re just going to feast for no reason.”

I love the fact that, even in our management meetings, there’s a lot of laughter. People get to know each other; people become friends. Aside from work, they like spending time with each other. There’s teasing. It’s like a family, in a way. They tease me about my drinking: “Oh, we’ve got to get more vodka for Brook.”

How do you continue to have a level of accountability and drive your team forward, even when the culture is playful, fun, and people enjoy their work?

BE: We go back to the metrics, so that we can say, “This is what the sales team wants to hit, this is what the marketing team wants to hit, this is what, overall, as a company, we want to hit” — both in terms of revenue and profits, and in terms of a consciousness metric. These things take a while, but when we do it, we’re like, “We all kind of did that together!”

How transparent are you with your team members?

BE: Definitely really transparent with all the management team. I don’t think someone working on our bottling line needs to know certain financial things. But everyone knows where the company is going. When we were building a new plant, everyone knew we were looking for property and how we were going to do it and how we were going to raise capital. I also don’t believe in everyone being a part of the fire drill if they can’t help solve it, because then everyone is just wound up and in fear. I’ll hold all that for everybody. You guys don’t need to know that a truck broke down and half of our product is sitting in some other state. We’ll figure it out.

Do you have a board of directors, and if so, what advice do you have for others on building a congruent and effective board?

BE: We had an advisory board for about 4.5 years, and that was amazing. I would recommend to do that before a board of directors. They’re there for you, but you don’t have to report to them. Being a CEO and founder, you’re kind of alone: you can’t just talk to all of your employees about issues related to the business. So having this advisory board was really helpful.

The board of directors was just created last year when we brought in our first private equity funds from Colorado Impact Fund. I’m very lucky to have John Foraker, who is the CEO of Annie’s, on our board, and also our investor partners. It’s still getting built out, but with everything else going on, it’s not my top priority. I think that will evolve this year.

What is giving you hope for the future?

BE: More women in charge. On the presidential level, on the CEO level, and on the startup level. I look forward to when I can bring in some capital for myself that I can put aside to do a fund for women’s companies. I think we will get there. In the next 10 or 15 years, it’ll be easier for women to start companies, I hope.

And this generation. A lot of my friends — we’re in our 40s — we’re just hitting this amazing place. We’re kind of doing exactly what we said we wanted to do in our 20s. We’re making change, we’re having fun, and we’re showing our daughters: it can be like this. I call it “utopia” a lot.

Bhakti Chai Sparkling Teas

This article appeared in Issue 8 | July/August 2016

Issue 8 is all about women and leadership (with plenty of material for readers of all genders). We feature interviews and profiles of inspiring leaders like Kat Taylor of Beneficial State Bank, shareholder advocate Natasha Lamb, Energy Excelerator's Dawn Lippert, award-winning architect Sarah Wigglesworth, Brook Eddy of Bhakti Chai, Kiverdi's Lisa Dyson, and more. You'll also find even more how-to stories than ever before, including how to recruit a more diverse workforce, learn to disappoint people without hurting your career, and survive a capital raise.

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