To Reduce Ocean Plastics, Bevi Revamps the Office Water Cooler
The problem of ocean plastics can seem both daunting and abstract — we know that plastic pollution is having significant effects on marine life worldwide, but plastics are such a ubiquitous part of our environment that it’s hard to find areas where we can really make a difference. This problem was the impetus that spurred Sean Grundy and his cofounders to create Bevi, an all-in-one beverage service for commercial spaces. Bevi, which recently raised $35 million in series C funding, is expanding rapidly, installing machines in offices across the country and around the world.
SeaAhead recently caught up with Grundy to talk about the environmental origins of his company and how the investment community reacts to mission-driven companies.
Tell me a little bit about why you formed Bevi.
I started Bevi with two friends of mine about five and a half years ago, and we started the business from the beginning with the idea of eliminating disposable bottles and cans and making it possible to get practically any drink without needing a single-use disposable container. The entire motivation for starting the business was my co-founder Eliza learning about the great Pacific garbage patch and just getting depressed about it and thinking about “What is one solution?”. Obviously, it’s not a solution to the entire plastic pollution problem but what’s a way we could eliminate one major type of waste that hinders the environment.
Is there a sustainability thesis built into your business plan as well?
The whole purpose of Bevi is to take drinks that our customers previously purchased in single use bottles and cans, and make it possible for them to get all the same drinks without the bottles and cans, as well as significantly reducing the amount of fuel that goes into supplying beverages — just because it’s a lot cheaper and more fuel-efficient to source your tap water locally and only transfer non-water ingredients and then mix them on the spot, than it is to complete a finished drink at a bottling plant, bottle it and then ship the full, heavy container.
And we see the thesis in action all the time at customers’ sites. We’ll have customers order seven Bevi machines, one on every floor, and in each case, you'll have a refrigerator that previously their office manager had been restocking daily with cans of La Croix, bottles of Poland Spring, and a variety of other beverages. And just put Bevi in instead and then everyone starts using reusable bottles and normal cups that you find in the kitchen.
One of the interesting things for me when starting to research the industry was realizing, first of all how little of the cost of a bottle of water the water actually accounts for. Very little of what you’re paying for is actually the water. It’s primarily transportation — the labor associated with transportation, as well as just the fuel and trucking costs. After that, it’s really packaging, like and that’s the plastic or the aluminum, and only in like third place are you actually kind of paying for the water. So that was one thing that led us to believe we had a real business opportunity.
The minute we started exploring other beverages, we learned that basically every other beverage, whether it’s a soda or a vitamin type of water, or you know honestly, practically anything you see in bottle in a super market, is made up of primarily of just a filtered tap water. Our hypothesis was, if we could effectively ship just the 1 or 2 percent of other stuff, just the 1 or 2 percent of non-water ingredients and effectively and reliably and repeatedly, mix them with water at the point of use to give people truly the same quality drink they’ve come to expect in a bottle or can, our hypothesis was that pretty much everyone would want to do that, because it’s more environmental and it’s lower cost.
The other big early hypothesis was we were seeing more and more people carry reusable bottles. Like reusable bottles were going from for being kind of a fringe thing just for college and high school students, to very mainstream. My parents now carry reusable bottles. But what we saw is same people filling their reusable bottles for just water were also major purchases of seltzer and other beverages, and we thought if we could provide this variety of beverages to people that already have reusable bottles, they’ll use their bottles for more than just water.
Are you based on Boston just because that’s where you were when the company started or for another reason?
If I do another start up I’ll probably be more deliberate about where to put the headquarters and where to put additional offices. Honestly, I was finishing grad school at MIT in Boston, my cofounder Eliza lived there and was working there when we first started Bevi. We were just there and decided to build the business there. That said, I do think Boston is one of the best cities in the U.S., probably the best after San Francisco, to build a startup.
In terms of ability to raise capital and lots of smart people around, and that kind of thing?
The entrepreneurship community is really strong. The network is really strong and really supportive. I think the most important thing is you have other entrepreneurs willing to help you. One of the really unexpected benefits we saw early on — what I would now consider established Boston companies were very eager to help Boston businesses succeed. Our first multi-machine client, or one of our first multi machine clients, was Akamai, and another one was Constant Contact. They’re far from their startup days, but they went out of their way to help us and even to put up with our machines, which used to be a lot less reliable than they are now. They really went out of their way to support us, just because we were based in Boston
If you’re doing a hardware company, in particular, with schools like MIT, it’s a great place to hire mechanical engineers, and there is this expertise around robotics that’s been built up.
I know you had a big fundraise recently — were a lot of investors interested in the double or triple bottom-line element of Bevi, or was that beside the point?
There aren’t a lot that are interested. That environmental aspect of our business helped us in the very early stages, and now it’s helping again, but there was a phase where it actually made things harder.
It helped in the beginning, because there are a lot of grants available to companies that seem to better the world in some way. One of the first checks into Bevi, if not the very first, came from the Cleantech Open, which is big business competition program. Another one that came from MIT's Ideas Global Challenge, which is specifically for mission-driven companies. So there’s good support in the early stages in terms of grants. Like we built that very first capital into a company.
And there’s good support for mission-driven companies now, after a long period in between. When we were raising money from angel investors there was always added skepticism that came from caring about the environment, especially since we were very unproven in business. There was this fear that maybe we’d overly prioritize the environmental side of the business and sacrifice profits.
Now that we’ve essentially locked down our business model and there’s bottle savings and fuel savings built into the model. They’re essentially inextricably part of what our offering is, but before we locked down our business model … there was definitely concern.
There were other investors early on who would even tell us: “Don’t even bother trying to build environmentalism into your business model, there’s so few examples of it working that you’re better off just making your money with a real business, and then donating to a nonprofit focused on the environment.” I’m very against that approach.
I just think environmental change has to come from business. It can obviously come from government and nonprofits, too, but I think business is the driver of the bulk of what we use and how we use things and how we consume, and change has to come from there. What's exciting, once we proved out the business model, like once we locked in our business model and started growing, and proved it out, then investors started seeing real value and now I think it’s only a benefit.
The value that investors see in a mission-driven company, is first that they know that if the team joins, in part or largely, because of the mission — they know that that team won’t give up. A real concern is always that the founders will, if the going gets tough, take a job a Google or Facebook and get well paid, and live a great life and have a great career. There is real concern that backers will bounce in the face of adversity, and when you’re a mission-driven company the likelihood that you’ll give up decreases.
In a similar vein, it makes recruiting great talent easier. We’ve had employees leave great companies because they wanted to be part of something truly mission-driven.
Having gone through this process of raising money and building a company that’s hit critical mass, are there any lessons for younger startups that you think people don’t generally know about?
The piece of advice that I always give early stage entrepreneurs is to join a co-working space, just to be around other entrepreneurs all day. They’re definitely no longer a secret. Greentown Labs was critical to our success in our early days.
Is that just because the back and forth with the people in the office?
In the beginning, you really don’t know a lot. Especially if you haven’t been in a similar industry before, you really don’t know what a good electrical engineer, mechanical engineer, look like — and where do you find one. How do you structure a series of prototypes to show whatever you’re trying to demonstrate? Where do you source different materials in early stages?
For us, a hardware environment was particularly useful, but even when it comes time to commercialize, there are these questions about “How did you get your first sale?” — and just having people to talk to who have connections at that really, really early stage and are going through the same thing. It’s extremely valuable. It accelerated our work significantly and I remember really regretting not just joining earlier.
There’s also something special about just being around other entrepreneurs and essentially motivating each other. You get a sense of what it means to work hard. I remember we did the TechStars Accelerator in early 2014, and that’s really, when people talk about the hustle of startups, where I learned what that meant.
I think when you’re starting a business it’s very easy to stay in limbo, where you basically don’t really make progress. I saw this happen to friends and to other startups where they’re mainly working from home. They describe what they’re doing as working on a startup, but really they’re researching an industry or toying around with product concept. And a lot of people live grant to grant, they’re never really building the business, but they’re winning a series of grants that enable them to get a grant and get by, and it was really TechStars where I saw… like people were spilling out in the hallways on phone calls. People were literally selling products they didn’t have. Like selling products that had not been built or designed yet, just to see that if someone says yes, they are willing to pay for it, that’s a very good indicator of what needs to be built.
At what point did it feel like everything was for real finally? Was it raising money, or having your first prototype built or something like that? When did it feel like this was going to be a real big thing, and you need to start planning for that?
Even now — and we’re right around the 100-person mark — I still have periods of self-doubt. Obviously, not about can we be a functional business, but more about like where its headed. And I think it’s good to maintain a bit of a paranoia about what could go wrong. You address those things that can go wrong. Even the biggest companies in the world eventually disappear.
I think for me, the point I knew we were moving from the really early prototype stage to thinking this could actually work, was when we found product-market fit. For us, it was when we got 10 customers to sign up for the same thing at roughly the same price, and it was a price that we knew we could make a profit at.
Before that, it was very easy to creep into becoming a services company, where each of your customers want something very unique to their needs, and you essentially end up designing specific products that meet what they want. This isn’t very saleable because each customer wants a different version of the product. But once we got multiple customers signing up for exactly the same thing, we felt like “We’re actually on to something here. There’s demand for this. These are 10 random customers that represent a variety of industries, just in Boston, so if this is representative of a larger pool and other cities in the country are like this, then we’re in really good shape.”
David Hirschman is SeaAhead’s VP of Content. This interview has been edited for length and clarity.