Connecting With Your Customer Base with Dave Fulwider

Old Salt Coffee really knows and understands their customers. The e-commerce coffee company sells mainly to U.S. Navy veterans, active duty members and their families. They know and understand their customers because that's who they are too.

On this week's episode, I talked to the Co-Founder, Dave Fulwider about growing the e-commerce business. The strategies they use and the challenges they've faced.

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The Backstory of Old Salt Coffee

The Navy to coffee. That’s a big career change. How did that come about?

It was a big jump, but it was sort of a natural progression in that the jump didn't occur, sort of as implied immediately. It was kind of a long stretch over a period of time, and it started, with a fellow I met probably 10 or 12 years ago. I was a member of the Naval Academy alumni mentoring program.

And this fellow was coming out of the Navy and the mentoring program had provided an opportunity for young officers leaving the Navy to talk with old officers or guys who made that transition. So anyway we met, we got past the mentoring piece and became good friends. And one of the things we found out was that we had a passion for coffee.

I was an International Marketer for Exxon Mobil.  Many, many years. And I traveled the world over. And one of the things that I always made a point of collecting or tasting was the local country's coffee. So I sort of developed a taste for different types of coffee, even as an amateur. And this, this fell out pretty much the same.

And we talked about the different ways to sell coffee. We had some ideas. It was a passion, and I think that's probably the key. We even made an attempt to buy a small Kona Coffee Farm in Kona, Hawaii, but we couldn't talk our wives into the commute or living out there. That kind of—but it helped sort of center our thought.

And then I had a conversation with a gentleman on a—pure serendipity, that sat next to me on a long flight from Miami to Vancouver, Canada. We were just chatting and I found out that he was an operations officer for a company that bought coffee in Guatemala and had been buying from a family for over 35 years.

So I had his undivided attention and he had my interest and we just talked coffee. When I got off the plane, I called my buddy and I said, “Hey, look, I think we can do this, and I've got some ideas.” And it kind of started from there. So it is, it was a passion, sort of common interest, a passion that just, over time we worked, and then we had this serendipitous sort of meeting and well, this fell booms, it just kind of, kind of crystallized.

So that's sort of the backstory.

How long was that between finding that common passion for coffee and starting Old Salt Coffee?

Recall, as I said, we weren't really focused on, we were focused on other things when we got together. So that was probably—I’ve known my partner for about 12 years, all told, so about 10 years. We've been in business for, right at two years, in October 2020. So it percolated over about 10 years.

We both had our day jobs. We were doing different things. You know, we weren't, we weren't really in the entrepreneurial mood. I guess over those 10 years I transitioned from corporate to manager of a small private business to an entrepreneurial for a year. I worked for a hedge fund manager and actually was CEO of another startup.

So I kind of went through a little bit of an if you will, maturation process from a big corporation to running a very small startup. I was kind of in the learning process maybe it's interesting, you should ask. Maybe in the back of my mind, I kind of saw how things were done.

Marketing was different. I was introduced to e-commerce marketing as the CEO of this other startup. When you say that, it kind of—maybe I was going through a little bit of an education process so that with a passion and what turned out to be a good idea, at least we, so far so good.

What were the next steps you had to take to get to the starting point in October 2020?

We both had our day jobs. We were doing different things. You know, we weren't, we weren't really in the entrepreneurial mood. I guess over those 10 years I transitioned from corporate to manager of a small private business to an entrepreneurial for a year. I worked for a hedge fund manager and actually was CEO of another startup.

So I kind of went through a little bit of an if you will, maturation process from a big corporation to running a very small startup. I was kind of in the learning process maybe it's interesting, you should ask. Maybe in the back of my mind, I kind of saw how things were done.

Marketing was different. I was introduced to e-commerce marketing as the CEO of this other startup. When you say that, it kind of—maybe I was going through a little bit of an education process so that with a passion and what turned out to be a good idea, at least we, so far so good.

We had a decision to make. Did we want to put up a lot of working capital upfront? If we open a store, buy a roasting machine, learn how to roast, put it together, and neither one of us had any experience in that per se. 

But anyway working capital wasn't something that we wanted to do. And, I'd been introduced, as I mentioned, to this world of e-commerce. I said let's not do that. Let's do it, let's have a business model. Let's try the e-commerce stuff we'd learned about, a Shopify site and how they provided platforms.

I said, let's do a model that we can sort of wash, rinse, repeat. If this doesn't work, we'll go do something else. But that's what Shopify kind of allows you to do without going out and building something without having to learn how to roast coffee. So how long did this connection, obviously of this gentleman that I sat to and I sat next to on the plane.

I called him back and I said, “Look, this is kind of what we want to do.” And I said, “Give me some pointers.” He said, “Look, what you need is good coffee.” He said “I can set you up with a couple of roasters that we work with. You can have 'em formulate a blend, you can taste it, you know, pick out the different blends that you want, and then kind of go from there.”

So that was the model we got in touch with, what turned out to be a fabulous roaster. I say to this day, probably the biggest selling point for our coffee is just the taste. It's fantastic. We put together—I think at that time, three, maybe four blends, and I'll tell you about what the differentiation here is in a minute.

But, so we did the roaster. He bought the beans, he bought quality beans, he bought it in large capacity, large quantities. He did the roasting, We tasted it. It's fantastic. 

Got that all done. Ordered the bags, and sent 'em to the roaster. The guy has a facility to fill the bags and put 'em on a pallet. And then we got a fulfillment group. So it just kind of all came together and we never really bought much. We just did it all over the internet.

It was kind of the easiest way to say it. It all came together with the bags and then we, in the meantime, were building our website and it was all done internally. It was done. The son of my co-founder did the website on Shopify and did a great job, continues to do a great job and we just started marketing.

We designed our audiences using Facebook. That was a great learning curve as well. And we just started putting it out there and pretty soon people start buying our coffee. And our story, that's probably the overarching element of our success is our story and the depth of knowledge we have.

Connection With The Navy

Let's talk about your story. How did you come up with the name of Old Salt Coffee? Where does that come from?

Okay. Maybe the starting point is to describe the team a little bit. In the Navy, the culture, the customs, the commitment, the honor, the camaraderie, all of that stuff that goes into making an instant relationship with anybody who has ever been in the Navy, has been a Navy brat, even a military brat, or, just loves the Navy nautical things.

Anybody who has spent an extended amount of time at sea is called an old salt. And that's just the vernacular. So both my buddy and I are Academy graduates. Another reason I mention that is because it, our DNA has USN written across it.

That's just the way it is. We've been in the Navy since we were 17 years old in some fashion or another. And all of the other members of the team, are retired Navy members as well. All of 'em have had command positions in the Navy. They've seen it from A to Z from being a lowly to being the commanding officer, having tremendous responsibility for, a lot of things, a lot of people.

So there, I always like to say there's probably no management team that knows their customer base better than those associated with old salt coffee. And I think that's served us well. I was a Navy pilot. My partner was a ship, what we call a ship driver. He serviced warfare.

He drove ships and commanded several ships. We have another gentleman that works for us, a retired ship driver as well. Great guy. He does all of our historical stuff. We've got a gentleman that works for us whose background is in submarines and who does all of our submarines stuff. We've got a gentleman that's on the team who's a Navy seal, so he knows about the special ops side of the things.

So we came up with different blends, but the overarching theme is all of these guys have been spending a lot of time at Sea in service as members of the Navy. We're all, as we like to call ourselves Old Salt. So that was sort of the collective, the name that fit the best was Old Salt Coffee.

And we built our story—again, very important. We built our story around what it means to be an old salt. You know, the theme is old salts like to get together over a good cup of coffee and sea stories. So that's, that's how it's designed. Very simple model.

E-Commerce: Know Your Customers

Usually, when we talk to business owners we ask how they connect to their local communities. But you're connecting to a different community, Navy servicemen and women. Why was that important to you?

Well, I think, deep down aside, we're very proud of what we have done and the contribution we've made. Not to wax a little bit, political, but if you look at the number of individuals on a percentage basis from our country who are now in active military service, it's gotten very, very small and, military types, not just the Navy they do what they have to do and they just kind of go about their business and they do it very well, very professional.

So just being a member of that club, which has gotten smaller, I guess, if you will, is a very large source of pride. I thought it was something that our story should represent, should support, and we would celebrate it in the fashion that we decided through—offering up some blends of coffee and selling it.

I'd also add very quickly that we support—I think nine different non-profit organizations that are directly related to the different services that I've mentioned. The surface navy, the submarine navy, the aviation navy, the seals, we're involved in that. We also support, monetarily a dollar from each bag goes to these different non-profit organizations.

We're also members of the USS Missouri organization. And their flagship coffee is Old Salt Coffee. Go to their store at their museum and you'll buy old salt coffee. Same thing with the New Jersey and several other battleships. I dunno if that answers your question, but that's I think that's how it all works.

How do you target those customers? With your experience in marketing with an international company, how do you create that audience?

Well, let me first correct you. I'm not the marketing brain. I'm kind of the old guy who's been around and done a whole bunch of stuff. So I maintain the high-level stuff. Interestingly, this one year I spent as a CEO working for a venture capitalist.

I learned a lot about e-marketing and I had a young lady that worked for me that we, we actually call her the 500-pound brain. So she's an expert in e-commerce and just does amazing stuff and has, since she joined the team, helped us grow significantly. But the focus has been primarily on Facebook and we learned that we could create audiences on Facebook.

As the two-pound brain, again I'm not the one who does all this stuff. It was very obvious that we could focus. Our advertising was on people in the Navy, people from San Diego, people from Navy communities, people who were demo demographically, retirees, or veterans on active duty.

Maybe men and women who were aspiring to be in the Navy. So you can do all of that in various ways and it's proven to be quite tricky. There have been some changes. And Facebook's guidelines on how you reach out and what you can say. And so it is a bit of a moving target, but we have members of the team who are very astute in doing that.

And we're always targeting our audience. The other thing about our audience, I've always described our audience as maybe a little bit narrow, but very, very deep there.  Individuals alive who are 70, or 80 years old, have Navy careers and still remember fondly their navy time.

And then there are young men and women who serve active duty today, so we've got a very broad scope. It's the Navy and Associated Navy, that's not to say that anybody would really enjoy or copy that. We're not limiting it just to the Navy, but that was kind of our original base focus.

So we've got a very good brand identity focusing as we have focused, and we were looking to spread out. So we're about to get on Amazon Direct, we're on Walmart, trying to get into Costco, some of the big boxes. But the story and the passion is kind of all there. And the base brand is I think, fairly strong.

And the way you tell that story—you have the stories printed out on every single one of your bags. How do you go about choosing the stories that you want to tell?

It's actually very easy. I mentioned it's in our DNA. We can sit around and talk about Navy stories all day long. But we also monitor other social media to see what clicks, and what doesn't click. Thematically, we highlight individuals who have served in the Navy. You know, movie stars that have served in the Navy, significant leaders in our country that have served in the Navy, significant battles.

And there's a lot of not residual sort of base knowledge out there among the audience and the larger market, in general. So every day, one of the gentlemen that we have, one of the ship drivers that we have, Brian—and the other thing I wanna say is every, everyone that's on the team was picked, sort of through a relationship that we've had with these guys in the past.

My partner knew that Brian was a sort of a closet historian about the Navy, and he was a good writer and he's very creative. So we knocked on Brian's door, and said, “Hey, we got this thing going on. What do you think?” And guys, he said, “Yeah, I'd love it.” I mean, it's a similar thing with Rich, our submariner.

My partner had worked with him in commands and other commands during his active duty time and he thought Rich to be a very creative guy and sort of a technical guy. And we, so everyone is sort of handpicked, to some extent. Graphic contribution by my son who is a little bit of a graphic designer.

The CTO is my partner's son, a Carnegie Mellon graduate. He's put together the website and he continues to work on it and reduce the friction between the website and the customer. 

I've forgotten your question. I do that sometimes. Refocus me here for a second. Oh, so you were talking about the blends, the different blends, the story.

So all of us have this sort of thing that we contribute and we get a story and we say, Okay, this is good. This looks like it'll be fun. And there's a story on each one of the bags. The blend for aviation is the brown shoes in the Navy, all aviators are called brown shoes.

Why? Because when they first started flying, they flew outta dirt fields. They were wearing black shoes, but they came back and their shoes were always—because of the dirt they got on 'em. So the Navy organization said, “Okay, and if you're an aviator, you wear brown shoes this way the dirt doesn't show in your shoes.”

So that's how Brown Shoe came about. And black shoes are the surface ship drivers, but every ship is painted, Hayes Gray. So the coffee blend for the Surface Navy is Hayed Gray. And the submariners are silent service. Nobody hears a submarine after—well, hopefully—after they submerge.

And then the Special Ops is green eyes, and that was an interesting story. We were trying to come up with a story for green eyes and our SEAL team member said “we're out in the field and we're moving across the field at night quietly. We always monitor the Taliban or Afghanistan cell phones, and we always hear 'em say, Hey, we've got the green eyes moving across the field.”

It's the night goggles that light up their eyes. So that's how we got green eyes. I thought that was pretty special actually. And fairly esoteric. Not very many people would know that unless they're fiction on those of special ops and whatever. 

Growing The Company

It's coming up on two years since you started Old Salt Coffee. What's next?

Me being a corporate kind of guy and my partner having run the Seventh Fleet as operations, we're all good planners and executors. So we have a long-range strategy and we get together once a week on Friday and go through the details.

So we're very disciplined about that. So at the two-year mark, we wanted to be scalable, so we wanted to have built a brand, wanted to have a firm base to spring from, and we've done that. And I will say along the way, we've had a lot of unanticipated organizations reach out and want to distribute our coffee, and grow with our coffee.

We're about ready to do that. And the next, we've developed another brand of—I think a fifth brand called Liberty Call, and that's our Kona brand. We felt we needed to have a Kona brand. So that was built in the same process. But to scale up, we're going to do compostable K-cups.

So K-cups are big. That's sort of on the product side. We're going to expand our advertising budget significantly. I'll tell you how we're gonna do that in a second. . And then we're gonna build a wholesale distribution piece. We have a wholesale page now on our website. And I mentioned that we're sending—I think starting next week to Amazon we've gotten into Walmart and the Army and Air Force on online stores.

We're trying to get into the Navy exchange system. We're looking to get into Costco on a trial basis, and hopefully, that'll be successful. So it is expanding the distribution base. 

Next products K-Cups are very popular and very practical. A lot of guys in the Navy, when they go on cruise on their ship they have a Keurig, a K-cup processing machine of some sort, so that will give us a little bit more probably significantly more market penetration, which is important.

The other thing that I haven't mentioned is we sell t-shirts and, hats. You got a hat. We sell hats and hoodies and all sorts of apparel and mugs. The mugs are extremely popular. We can't keep the mugs. We're looking to expand our apparel business as well.

It's actually done very well. So you'll see that all on the website. So it's about time to scale. And we're doing that strategically specifically pointedly, purposefully on building a broad, strong brand and getting it out there on a fairly sustainable basis to our customers.

So that's the next step. We've converted from an LLC to a C Corp, and we're about to go out for a little bit of funding to pull off what I just, shared with you. So we're actually at a very critical stage for a startup. We're about to expand our operations. We're gonna have to grow the organization a little bit, which means we're probably gonna have to get some guys who maybe aren't Navy DNA, which is okay. But they're probably very bright and they know what the heck they're doing in certain areas.

The experience reaches beyond what we have in-house. So it is a very exciting time. I think the models worked very well. We're a little bit of tongue in cheek. It's not really a competitor, but one of the things I told my partner when we first started talking about this, said, Let's, let's be a little bit black rifle.

We're not gonna be Second Amendment, which is a kind of their focus. But we are gonna be a little bit tongue in cheek, maybe in your face at times. So if you look at some of these stories, they're a little bit edgy, not on the edge, but a little bit edgy. They're funny, you know, that we try and keep the humor going because that's very old salt-ish.

Humour makes the long. Easier and shorter. And when you're pulling, watch at sea and you're away from your family and all those things that the Navy types do, enlisted in officers long hours that you work and the long flight missions that you fly. A little bit of humor goes a long way.

What have been the challenges that you've had to face in the past two years?

I mentioned that the model didn't include opening a store, but that doesn't mean that we haven't had to focus financially on—drill down on every cost element that we have. We've actually changed fulfillment companies. We backed up the supply chain a bit.

And our roasters not only roast and put it in the bag, but they also store it. And they do our fulfillment and we've connected Shopify and their ability to take the order and send it to our fulfill fulfillment company to send it out. And they do all of that for us now.

So we had a great efficiency bump there. I'm always looking to reduce the price of coffee. Our roasters actually got bought out in the meantime. They increased their minimum order quantity to something that was just gonna blow us away. And they said, no, we really like you guys.

You can stay here and we'll grandfather you in. So, you gotta focus on that stuff or you're not going to be successful. Make money, and be attractive to investors when that time comes. So it's just not sustainable. So, we in the economic sense, create wealth. We want to be a successful company.

We want to bring our product to the market in a sustainable fashion. And we want to continue to have fun. So not all of those things always go together. There are days that are not fun but we work as we work on focus on things that—working capital, which isn't bricks and mortars, but it is money out there, and money, cash flow, and all of those things.

And the branding side of it. We’ve worked very hard on the branding side of it. So those have been some of the challenges. More monetary because we're sort of a monetary-based model.

The coffee kind of sells itself. If I can get you a cup of our coffee in your hand you'll buy some more. So getting it to your hand and taking a little bit of money back from you and giving it to the nonprofits and the business side of it, I think we've all learned as we go through the marketing side of it is different.

When I started out with Exxon Mobil, if I wanted to go sell lubricants to the Sugar Canne factory in Guatemala, well I got on a plane, went to Guatemala, went out in the hinterlands, and took a barrel of lubricant with me, and sold it face. You don't do that anymore. So I have learned personally a completely different approach to marketing and it's been fascinating.

I think the rest of the team not having been have learned as well, and they've—boy, it's been very heartening to see everybody just kind of dig in. We're all learners. It's what we do. We learn and execute, learn, and... It's been hard.

I think it's been in transition for a lot of people, but, everybody's gone at it with a tremendous spirit.

Advice for Roasters

If you were to give one piece of advice to someone that wanted to start their own roasting company, what would that piece of advice be?

This is very wholesale coffee specific. But on the first podcast that I listened to of yours—I forget her name—her off-stage comment was it really is about the story, a story that connects with your customers.

So in this eCommerce world where something like this works, that didn't exist 20 years ago, what's the constant? Everybody loves a good story. So if you can tell that story effectively, coherently. Connectivity between your product and your customer. I think you're off to a good start. s it guaranteed success? No. 

But if you tap that in, you connect that all with a passion and I think you're off to a good start. And you know what? The roasting companies that have their own shop, when you walk into a shop, the shop tells a story, and when you walk in the front door or look at the advertisement on the outside of the shop, that it tells a story.

So I think connecting with your customers via story, maybe the means doesn't matter so much that it's kind of a financial issue at that point, but it's the story and how you connect with your customers. That's just the way it is nowadays and I think it really has been forever.