Oscar: I’d like to welcome to the studio today David Lekach, CEO of Dream Water. Welcome, David.
David: Thanks for having me.
Oscar: Tell us a little bit about Dream Water.
David: Dream Water is a two-and-a-half ounce, zero-calorie, natural sleep and relaxation shot. It’s basically the opposite of 5-Hour Energy, except no chemicals, preservatives, or anything. It’s just a nice, calm, lightly flavored shot of water.
Oscar: Interesting. David, I’ve been an entrepreneur for twenty-five years, and I’m not ashamed to tell you, I wake up many times, three o’clock in the morning, thinking about a problem, worrying about something. What is Dream Water going to do for me?
David: The idea or the issue that you’re posing is something that is very common unfortunately, not just to us entrepreneurs, but to at least one in three Americans, over 70 million of us, that have some sort of sleep issue. There is no perfect sleep aid, or sleep remedy. What we’re trying to introduce in Dream Water is a mainstream alternative. It’s not a pill, it’s not a drug. It’s a combination of GABA, melatonin, and 5-HTP. It’s three natural supplements that should help you relax and fall asleep.
Within that, you take it thirty minutes or so before you want to go to sleep, and it should help you get through the night, the idea being that if you get good quality rest, you can wake up and actually accomplish everything that you’re setting out for yourself to do, which, as a twenty-five-year entrepreneur, I’m sure has encompassed a whole lot of things that are much more than what the rest of us have to do on a day-to-day basis.
Oscar: Do you happen to have one with you?
David: I do. It’s a nice little shot here. You can find that on the sleep aid sections of Walgreens, CVS, Walmart, Target, Kroger, Safeway. We’re actually in basically every airport in the country, so when you go to your Hudson News or [parody 00:02:06] shops or whatever, and you’re about to get on a plane and go a three, four, five hour flight, or maybe across an ocean, you just take it with you, and it should help take a five hour flight down to one or two hours, and help you catch up on some sleep in a best-case scenario.
Oscar: May I try this tonight?
David: Yes, that’s all yours.
Oscar: Great, thank you so much. What motivated you to launch that business?
David: Like yourself, it’s very hard for me to shut my brain down at night. Even if I’m exhausted at twelve o’clock at night, it doesn’t mean that I’m going to sleep before two o’clock in the morning. As I’ve gotten a little older, I’m in my thirties now, you have responsibilities, and I’m waking up at seven o’clock or earlier, regardless. The truth is is that a lot of us maybe think that we can get away with less sleep, “I’m really tough, I could sleep five hours or six hours,” but science tells us that eight hours for most of our adult life is the recommended amount for a reason.
You have to be able to recharge. If you’re an athlete, and your body needs that recovery time, if you’re accomplishing whatever you’re accomplishing on a day-to-day basis, a lot of us have very busy schedules, you need that energy level to sustain you through the day. You could supplement that with caffeine, coffee, 5-Hour, Red Bull, what have you, but the truth is that at the end of the day, nothing is a replacement for a full and quality night of sleep.
Oscar: How long ago did you launch this company?
David: We launched in mid-December, 2009, with Duane Reade in New York City. It was very interesting, when we set out to bring this product to market, the United States is gigantic, and so we had the issue of what channel, where do you start, both geographically and then what type of store do you start in? With a lot of New York roots that we have even though we’re based down here in South Florida, we thought it was a very ambitious thing but what we should do is try to do is put the city that never sleeps to sleep. Within that mission and mandate, anybody who’s ever been in or around New York, you know that Duane Reade dominates that landscape, both as a drugstore and as a convenience store, so if you’ve lived in New York, you know you’ll run down to your local Duane Reade for the water, the cereal, the eggs, whatever it might be. That was sort of the perfect channel for us, and the perfect retail partner for us to launch, with that mandate of a real focus on New York City.
Oscar: You’re still in Duane Reade today?
David: Yeah, we’ve grown from that as an outset and a real focus on New York, to over 30,000 points of sale nationwide in basically every major food/drug mass retailer.
Oscar: Amazing. That’s a very difficult segment to break in to.
David: Yeah, I think it’s easy to say that it’s very exhausting putting everybody else to sleep. It’s not just a sound bite, it’s the truth. We wake up everyday thinking about sleep, and most people don’t do that, and what we’re trying to do ultimately is, with, again, a non-scary sleep aid, which I think to date everything has been scary, whether it’s an over-the-counter pill, a pharmaceutical-grade pill, and I won’t even get started on how scary those really are in real life, that’s what we’re trying to do, we’re just trying to introduce a mainstream alternative and create awareness around the fact that sleep issues are very real.
Out of the seventy-plus million Americans that I discussed earlier, a lot of those people either A, don’t know that they have a sleep issue, or know that they have a sleep issue, they just don’t do anything about it. Again, that concept of, “Oh, I can get by with less sleep,” or, “I’ll catch up on the weekend.” You never catch up. You can’t make up the sleep that you didn’t get, and over time it will degrade your performance, both physically, mentally, and otherwise, and it will have real health and wellness issues, lack of sleep, and real health and wellness issues and productivity issues and what have you. At the end of the day, it’s a very real problem, it’s a growing problem in this country, and we’re just trying to introduce one potential solution. Again, there is no perfect solution to sleep issues.
Oscar: I have a question. There’s two products out in the retail world. One is WD-40 and the other one is Heinz 57. Do you know what’s unique about those names?
David: They have numbers in it?
Oscar: WD-40 was the fortieth formula until it worked, and Heinz 57 failed fifty-six times before they found a winning formula.
David: I did not know that.
Oscar: How many iterations of that formula did you go through until you found the winning, most perfect product?
David: I like to think that it’s perfect for what it is in terms of the natural component of being able to deliver an efficacious result, something that can actually have a chance at helping you. I was lucky enough, and the reason why I got into this was my co-founder had created what I call Dream Water 1.0, and it was this basic formula. It was with this whole natural concept in mind, and the fact that on a macro level a lot of people are preferring to try to go the natural route, both in their foods, medication if possible, and what have you.
I was lucky enough that sleep aids don’t really work on me, so I could take diphenhydramine, which is basically the active ingredient in every over-the-counter sleep aid, and it doesn’t really do anything to me. I kind of dismissed Dream Water when I first was introduced to that 1.0 concept, it doesn’t look anything like this, but I took it home with me that night, and it worked. I took it at nine, I was asleep by nine-thirty, and I woke up at six a.m. the next day, without an alarm clock, physically feeling better than I’d felt in a long time. That’s what good sleep does for you. I woke up with two thoughts, which was one, “I can’t believe that this worked,” and two, “This has to exist, there’s no way I just found the anti-Red Bull, and there has to be a lot of people out there that could get a benefit from a product like this.”
We didn’t have to go through too many iterations. Where we’ve gone through a lot of iterations is in our labeling and packaging, we’re always trying to get better at what we’re communicating and how we’re communicating on our label, our boxes, our displays, and then obviously in our marketing materials, the website and other marketing initiatives that we’ve taken. Because, again, our opportunity and challenge is one and the same. We’re trying to build a category here that’s never existed before, right?
The concept of liquid caffeine or liquid energy has existed for a very long time. Coffee, then Coke and Pepsi when they first came out, more recently in the nineties Jolt Cola or those highly-caffeinated type sodas, Mountain Dew, or what have you, and then Red Bull came out and really sort of cemented it as a category in the nineties, let’s say, here in the US, mid-nineties and up. There’s never been this sort of mainstream liquid sleep aid before. We’re trying to build that category, which is why we talk about sleep a lot on our packaging, and within it define it as Dream Water, and have us be sort of that de facto brand in the liquid sleep space. It’s a challenge just to build a brand, much less build a category, but therein lies an opportunity as well, which is why I couch it that it’s one and the same.
Oscar: Amazing. I can’t, in fact, I’d like to this end this interview soon so I can go home and try this product, I’m excited. When you launched, you and your partner launched the business, did you have a detailed business plan?
David: We did, but if, if I look back at it it was totally wrong, probably. I think the concepts were right, both in terms of how to launch and all that stuff whatever, but once you get out into the marketplace, one of the things that we’ve always sort of been very focused on and prided ourselves on is trying to understand and learn, from whatever it is that we’re doing, from whatever that task was, whatever that opportunity was, what worked and what didn’t. Get rid of the stuff that didn’t work and try to execute more of the stuff that did work.
It was never, there wasn’t a road map for this. It’s not like I know that with certain products this is what I have to do. We had to sort of build that road map, and that road map was not, “Let’s look what we wrote down on a piece of paper.” I think in our first year I had six iterations of a potential business plan. I just got to the point where I was adjusting our budgets and financial models, and I was doing that multiple times a year, as well. It was about reacting to where we are in any given moment, and how do we get to whatever we think in that moment the next step is, whether that next step is right or wrong, and we’re still in that process today.
Oscar: What was the most creative or unusual tactic you’ve used to put this product on the shelves in 30,000 stores in the US?
David: To get on to the store shelves is a very, very hard thing. Especially in food/drug mass, you have such a ever consolidating and already consolidating and still continuously consolidating retail environment. There’s a lot of pros and cons with that. The convenience store channel’s very highly fragmented, so there’s a lot of pros and cons with that as well. I think that one of the things that we’ve been very good at is sort of having of certain targets, and opening up those doors, but at the end of the day, letting the product do the selling.
It’s a testament to the product, and it’s a testament to the fact that it really is something unique, and in today’s consumer world, what hasn’t been done already? I think it really speaks to the testament of the uniqueness of the product, and those retail partners seeing a value in it for their consumers, and understanding that, again, there isn’t one perfect sleep aid, and different consumers are looking for help in different ways.
In terms of maybe one of the more creative things we did with any retailer was it took us a really long time to get into Hudson News, the airport retailer. When we finally got into them, I think at the end of year two, we asked them, “Hey, can we do something, can we sample through you?” We basically created a gift-with-purchase program where we sampled almost 500,000 bottles across their airport stores as a gift-with-purchase from their part, so it was an investment into the retailer of a considerable amount of bottles we got into the hands of all these potential consumers. In that travel segment, it’s pretty close to use education, right, so if you just go to a Walgreens, you might be buying it now and taking it home for the weekend or later tonight or what have you, there there’s a reasonable expectation that you might take it in that moment. We were able to deploy a tremendous amount of samples through our retail partner, and I think that that was a great way to start that relationship.
Oscar: Amazing. Brilliant idea, absolutely brilliant. You’re creating what I think will be history. You’ve created a category, created a fantastic product for that category, and let’s pretend that I want to make an investment in your company, and I want to write you a check right now for one million dollars. How would you deploy those funds?
David: I’d ask you for more.
Oscar: Maybe five million, ten million.
David: I think that one of the challenges, we’ve never had a war chest of cash. We’ve been able to raise a good amount of money, all from primarily high net worth individuals. I think that the issue that we found is it’s such a big country, and when you start to work with these national retailers, you have to focus on the entire country. We might want to focus on New York, Miami, Atlanta, Houston, Dallas, LA, and Chicago, but you have to focus on the fact that your consumers are everywhere. You need big, big, big budgets in today’s very highly fragmented media market to have a chance at real brand awareness, a la like 5-Hour and that you see it all over the place.
We’ve never really had that opportunity, so I think that those bigger checks would really be all about how do you do it, and not for us just put up commercials, it’s what are we trying to do, how are we trying to communicate. I actually think there’s a tremendous amount of leeway or leverage that you can have in today’s digital world. There’s a lot of different platforms that you can use and that you can leverage, I think, to not just create brand awareness but allow people to learn more about sleep, understand why sleep is important, because our focus isn’t on the issue of sleep, it’s really what can you do with a good night’s sleep. I think there’s a lot of things that you could do creatively speaking that a bigger check would allow us to really go out and be aggressive in that regard.
Oscar: Great. I’m ready to write the check. What one word describes David as an entrepreneur?
David: Depends who you ask. I think that it’s maybe “resolved,” for lack of a better word. I think that one of the things that you have to do, especially if you’re in that lead role, I don’t think just the CEO’s an entrepreneur, I think that everybody who’s worked with us, both directly for us or ancillarily, like a PR firm or a digital firm or what have you, they take a chance. I think that that chance is very hard to go from talking about it to doing it. I think that in my role and in my position, not every day’s a good day, I’m sure you can relate, right, in fact there’s probably a lot more difficult or negative days than there are good days where you can pat yourself on the back and take a moment to really reflect.
You have to wake up an exude a certain amount of confidence, a resolve that you will find the way forward, whatever it is that that issue. It could be a small issue, a big issue, it could be a small issue that turns into a big issue. I think that your team needs to feel that from you in that leadership position, and I think it’s very hard because you have to motivate yourself. I don’t even want to say the word “motivate,” you have to psych yourself out, that you don’t have the answer but you’ll figure it out. I think that that’s maybe why I would used the word “resolved.”
Oscar: Great. Do you think entrepreneurs are born or do you think they’re made?
David: I’m not allowed to curse in … see, I call it the “f’d up entrepreneurial gene.” I’ve given some talks in colleges and in other interviews, and I think that there’s something where all of us have that sort of disturbed gene that says, “No, no, I can take this from being a good idea that we’re talking about over drinks or whatever to let’s actually go out and do it and then jump all in.” Because that’s really the only way that you can, you can’t kind of halfway do it. I think that you have to kind of be born with a … Obviously there’s a million things you’re going to learn along the way, but I think that you kind of have to be born with that weirdness would say, “I can go do that.”
Oscar: Where do you go to today if you want to brainstorm an idea or you want to problem-solve, get some advice, guidance, experience? What’s your destination for that?
David: It depends what that issue or what that brainstorming is revolving. I’ve built a lot of industry relationships, having been in this four or five years already, with larger folks, and I find that a lot of people at older companies are willing to help. I think it’s about cultivating a certain group of advisors or people around you. I also come from a highly entrepreneurial family that has a lot of exposure to retail and consumer products, mainly in the fragrance space, and so I’ve been blessed to have a good network around me, but I’ve always made it a part of my job, not something I kind of do in my spare time, to cultivate those relationships. I’ve cultivated a lot of relationships on the private equity side, whether they invest in me or not, I talk to them fairly frequently. I think it’s just about cultivating those things, and then, depending on what that issue is, going to those sources.
I’d also say we’re here in part because of our EO relationships, and wanting to [inaudible 00:17:20] an entrepreneurship, and there are organizations like EO, which for me, for example, has been hugely instrumental in being able to problem-solve a lot of things, both in my personal life and my professional life, and with people who have no idea about the consumer product space necessarily, but the ability to communicate and talk in a very open and confidential manner, which for me is part of my favorite things about EO, really works. I think there’s a lot of organizations out there, not just EO, that people can find. All they have to do is look a little bit, and they can really get a lot of benefit out of that.
Oscar: Sure. Great. Final question. Let’s imagine for a moment, tomorrow morning when you wake up, Dream Water is no longer in existence. What is the next venture you’re going to want to launch?
David: I haven’t really thought about it. I think that one of the things that I’ve been very focused on is sort of paying it forward. Especially at the outset, anybody to help you they always ask for something first and then they go to help you, and I’ve spent the last five years helping before I ask for anything, if I ever ask for anything, and most often I don’t, because I think that regardless of if it … and I never set out to be in the sleep business. It was an opportunity, and it was about reacting to that opportunity and then really getting involved in it and then having a passion for it. I’m not passionate about putting people to sleep, it’s just a passion about what this is, and when you get the e-mails or the consumer feedback about the real tangible impact you’re having on people’s lives, like how awesome is it that I get to wake up and do that everyday?
I don’t know whatever that next thing would be, because, again, I think that no matter what, I spend a lot of time doing ancillary talks or advice or whatever, but I’m pretty sure I’d find something. I’d probably find it hopefully fairly quickly, and in the meantime I’d probably take a month of just working out and eating right and getting all the sleep I actually need, and just be able to reset myself for whatever that next challenge is.
Oscar: Fantastic. David, it’s been a pleasure having you in our studio today. You’re a very inspiring, well-educated, well-spoken entrepreneur, and I wish you tremendous success, and please let me know where I could send the check.
David: Thank you, I appreciate it. Thanks for having me.
Oscar: Thank you so much.