Episode Transcript
[00:00:00] Speaker A: We had so many customers that wanted product and we were just kind of sitting on our hands waiting.
[00:00:05] Speaker B: It's one of the biggest headaches I feel like I hear people talk about from a vendor perspective. And you've eliminated that.
[00:00:10] Speaker A: They lost and there was a crazy
[00:00:11] Speaker C: riot and you weren't part of the riot, were you?
[00:00:13] Speaker A: It's funny, the bar that I was an owner in was on Granville street and the riot spilled in onto Granville,
[00:00:19] Speaker B: and one of the biggest things that we studied was actually nicotine ads.
[00:00:22] Speaker C: Max Cunningham, the founder and CEO of Sesh Products. Hello, Max.
[00:00:27] Speaker B: Calling all CPG shippers, truckers and logistics pros.
Welcome to the truck. Yeah Podcast, your ultimate cheat code for smarter shipping, smoother logistics, and dominating the shelf where it matters most. Buckle up. It's time to learn, laugh, and get your freight on.
[00:00:46] Speaker C: Ladies and gentlemen, welcome back to another edition of the Zipline Logistics Podcast. My name is Jesse Jewett. Joined with me as always, Teddy Lee Knox. Hello, Teddy.
[00:00:56] Speaker B: Hello. How are you?
[00:00:58] Speaker C: Wonderful, wonderful, wonderful. We got a special guest today joining us remotely, Max Cunningham, the founder and CEO of Sesh Products. Hello, Max.
[00:01:09] Speaker B: Hey, guys.
[00:01:09] Speaker A: Hey, Jesse. Hey, Teddy. Thanks so much for having me.
[00:01:12] Speaker C: Yeah, thanks for joining us today. We're excited to talk to you about your CPG brand Sesh products and kind of your unique setup you've got going on with Sesh. But first off, we're going to kind of talk about you and your background. So tell us a little bit about yourself, Max.
[00:01:30] Speaker A: Yeah, so I have a bit of an unconventional path. You know, I, I was a poker player. I played a lot of cards growing up. That was just part of, part of the family dynamic.
And then when I was 15, I started throwing all age parties. I parlayed that into, you know, the, the hospitality industry and, and bought into my first bar when I was 23, bought into my second bar when I was 25. Also worked for a big liquor distributor in sales. So was really kind of going, going deep in that industry. And you know, when I turned, was turning 30, I was really looking for a career change and a friend of mine had a marketing agency and so I decided, you know what, I'm going to go forward and work with the marketing agency. And it just so happened that one of their clients was a legacy tobacco company and they were launching next generation products in.
And so my role was to help launch. At the time it was a vape device that was competing with Juul across Canada. So that's where I really started to learn the ropes and was understanding, you know, what can we do? What can't we do from a regulatory perspective? I was talking to smokers every day what they liked about it, what they didn't like.
And so that really gave me a good background to start sesh.
[00:02:46] Speaker C: And correct me if I'm wrong, you started SESH in 2021, is that right?
[00:02:51] Speaker A: That's right, yeah.
[00:02:52] Speaker C: And are you a user yourself?
[00:02:54] Speaker A: I am. I, I, I used chewing tobacco originally from Canada, so I played hockey growing up. You know, part of the locker room culture. You know, lots of, lots of guys are using snus and, and chewing tobacco, and so that's how I started. And then eventually I switched to vaping. And then when I was trying to quit vaping, I went to the local pharmacy near my, my house, and, you know, I tried the traditional NRTs, that's nicotine replacement therapy. So those are your gums, your patches, and it felt like it was meant for a patient. Like it was this big white box. And, you know, it tasted awful. It was chalky.
And I thought, oh, man, you know, there's been no innovation in this category in two decades. And this was before pouches, nicotine pouches were popular at all. Nobody'd heard of them. And so I thought, you know, where, where does it go from here?
[00:03:45] Speaker C: Interesting.
There is nothing quite like a little pouch or some nicotine after, like, a skating session. I can agree with you there that. I know from experience, Teddy, Maybe.
[00:03:57] Speaker B: Yeah, I can't say I've had that experience, but I also don't skate, so maybe that's why.
[00:04:03] Speaker C: There you go.
[00:04:03] Speaker B: I played field hockey, not ice hockey, so a little different.
[00:04:06] Speaker C: Nice. Nice. Who's your, who's your NHL team then, Max?
[00:04:09] Speaker A: I mean, it's got to be the Vancouver Canucks.
[00:04:11] Speaker C: Oh, okay, so you're Western King. All right, that's, that's good old Pavel Bureau. In the early 90s, you weren't part of the riot, were you, there? Wasn't there a big, like, crazy celebration when they, they won. No, they lost.
[00:04:23] Speaker A: That's right, they lost. And there was a crazy riot. And it's funny, the bar that I was an owner in was on Gramble street, which is the main entertainment district, and the riot spilled in onto Granville, and at this time, you know, the bar was busy, so we didn't want to lose sales for the bar, so we had to shut the doors and basically lock. Lock the doors. And, you know, we just said, hey, let's, let's. Let's keep it going. And, yeah, that was a crazy, crazy night.
[00:04:49] Speaker C: Year was that now we're off on a tangent, but what year is that? That was 94. Was it? That was later than. No, that.
[00:04:54] Speaker A: That was in 94. It was. Yeah, I can't remember, I can't remember the exact year, but definitely not 94. Much, much later.
[00:05:01] Speaker C: Okay. All right, back on track here. So tell us about the, the relationship, you know, the manufacturing side of things. You're, you, you're, you're launching this brand and you're getting involved with co manufacturers, three PL warehouses, et cetera. We deal with a lot of that with some of our other cpgn, CPG brand customers. But tell us specifically about your partnership there.
[00:05:24] Speaker A: Yeah, so the partnership right now, the current one we have is a really kind of unique relationship, but it's, it's a great one. So we own all the equipment. So we purchased all the equipment, we partnered with an FDA registered facility in Ohio and we basically dropped in the equipment, you know, validated everything. Our partner runs labor and has the facility overhead.
And then we control the equipment and we control the process. And one of the reasons that we did that is because we had a previous co man and we'd been negotiating terms with them for, you know, six months. And at the final hour, I was in Europe on a vacation. I got a call from them and they said, we've just been acquired by, you know, a large incumbent, one of your competitors, and you guys are out. And so we said, okay, we're never going to let that happen again. How do we control our own destiny? And we kind of had two options. We said, well, we either, you know, stand up our own facility, which I know nothing about. You know, I'm a sales and marketing guy.
[00:06:25] Speaker C: Yeah.
[00:06:26] Speaker A: And. Or we try to find a partner. But the difficult part was because it's a novel product, nicotine pouches, it was very rare to find somebody domestically that was making these. I mean you could find some manufacturers in China and India and Sweden, but. But nobody really had the knowledge in the US yet. And luckily for us, we found a partner that had just got out of the non compete. And so it was kind of perfect serendipitous timing and we found them and we just said, yes, let's go. Went and purchased the equipment and you know, it still took us probably nine months. So I can't imagine what, you know, building a facility would have done.
[00:07:06] Speaker C: Yeah, I think that's a little larger scale endeavor than just throwing some equipment and renting some space.
So owning that piece of it, does that change your role in inventory demand planning? I guess. Maintenance, like are you, are you all in charge of that too?
[00:07:23] Speaker A: We're not in charge of maintenance. So we have a quality, we have quality oversight. It's shared. We have a quality director there, we have a production manager who's also out there on the sesh side. So it's really a partnership. In terms of demand planning, it's still similar.
We have minimums we have to hit. We still need share demand plans and make sure that everything is hitting and they have ample notice.
Similar, I would say. But yeah, it's, it's, it's shared as well and they help us with that.
[00:08:00] Speaker B: So you had, you had that moment when you realized that you can't fully outsource all of this due to the fact that it was taken over by a competitor. But are there, are there any other like moments or severe benefits that you found due to your unique partnership with the co manufacturer? Is there anything else that's opened up that maybe you didn't expect and it's a nice little positive?
[00:08:22] Speaker A: Yeah, I think the positive is just like the confidence and we fully control the lines. So in traditional contract manufacturers it's like at any time there could be a bigger customer that comes and there's just always that threat in the back of your mind. Whereas with this we have so much confidence because it's, there are lines. So it's kind of the best of both worlds in my opinion. And I think it really protects us as well in a pretty competitive category, especially when there's not that many good domestic contract manufacturers. So really making sure that we were able to tie that up was important.
[00:09:02] Speaker B: That's awesome. Say, I feel like there's so many times where I have those, those experiences where things are down because the line, someone else, a delay cleaning, whatever it might be that so many brands have to deal with. And it's one of the biggest headaches I feel like I hear people talk about from a vendor perspective. And you've eliminated that.
[00:09:22] Speaker A: Yeah, yeah. And we over invested in equipment because there was so much scar tissue. Like when that other partner pulled out. We had so many customers and you know, yes, it's a good problem, but it's also a problem. We had so many customers that wanted product and we were just kind of sitting on our hands waiting and it was so frustrating for, you know, six months we were pulling out our hair and you know, we had a big counter in our office on cans made and there was even still issues with permitting that we were trying to work through. So yeah, it was, it was a really kind of hard time to get through. And we actually had to shut down our E comm site because our, our main, our biggest customer at the time, Buc EE's was ordering everything we could make and we were air shipping product from Sweden, which was our previous manufacturer. Yeah, you know, air freighting all of our product that we could straight, straight to BUC EE's.
[00:10:18] Speaker C: Got to keep those Buc ee stores filled, that is for sure.
Well, at the very least you started it Covid. Well, at the tail end of COVID I guess we experienced that a lot in early 2020. Right. It was the shutdown in March, about a month of like, what the heck is going on? And then probably six months after that of like, all right, no one's going anywhere. Let's order everything into our house. And so how do we take these 20 truckloads scheduled for Costco in July and move them all up into May and yeah, you get, you deal with them manufacturing lines that are taken over and are prioritized based on who's paying the most. So it all makes sense. But now you're scaling. We were talking earlier, this is a fast growing category.
Anything that you're dealing with in particular on scaling right now that maybe some outsiders wouldn't expect?
[00:11:15] Speaker A: I think the challenge is there's a lot of challenges operationally scaling especially.
We started the company, it was me, my co founder and my now wife. For a long time it was just us three kind of building this from, from the ground up and figuring out things as we went.
And then in 2024, that's when we got Buc Ees, which was, you know, our big kind of first U.S. major retailer and that spawned our Series A. And that's really what we used to purchase the equipment. And then we started to build up the team and now our team is 40.
And so it's just weird shift from, you know, a founder perspective where it's like you're doing everything to now if you're doing everything, it's actually like it's not the right way to run the company.
And you bring in experts. You know, we've brought in supply chain manufacturing experts that, you know, worked at Lego and other very reputable companies. Yeah. And so it's just kind of that shift from okay, now we're, we're turning into a real company. And so how do we set this up when we're scaling so that it's not going to break at, you know, 50 million in revenue, 100 million in revenue. And so that's I think really a challenge that I probably either not so much underestimated, but just didn't really think about it. Like, I was just going. And then all of a sudden, you know, you have a team that's getting bigger and you really have to start to understand, okay, how do I actually run this as a CEO, not as a founder.
[00:12:48] Speaker B: Which one would you say is. Has been more difficult for you as of now, creating this fabulous product or building the. The oper team? And what goes behind that? Like, as you mentioned, that operational success?
[00:13:03] Speaker A: I think probably building the operational just because it. It doesn't come as naturally to me. Like the, the early days, at least looking back was fun because I also didn't know what was ahead of me. Like, everything was new and unknown. And so I was learning as I went and, and.
And now it's really kind of like operationalizing and scaling the business.
And, you know, there are lots of people have done it before, so there's, you know, there's, there's ways you can do it, but it's just a different takes, a different muscle that, that maybe isn't as, you know, isn't as natural to me as. As it was kind of first starting.
[00:13:44] Speaker B: Absolutely.
[00:13:46] Speaker C: What else do we need to know about Sesh? I was going to ask. You said 40 people on the team now, are they all. And you're based in Austin, Texas, correct?
[00:13:53] Speaker A: That's correct, yeah.
[00:13:54] Speaker C: Is everyone in Austin or are you kind of kind of a hybrid model?
[00:13:58] Speaker A: Yeah, we have a hybrid model. So there's about 20 folks in Austin.
And then we have a small Canadian business unit. And then we have some folks in Ohio, and then we have some sales reps and managers sprinkled kind of around the country in their territories.
[00:14:12] Speaker C: Cool. Very cool. Where can people find Sesh products? Where can they find them?
[00:14:19] Speaker A: Yeah. So Sesh is available. We just launched in Murphy's. Obviously we're in BUC EE's. We're in pilot flying J.
We're in Quick trip with a queue. Quick trip with a K Sheets, Circle K West if you're on the west coast. So lots of distribution. And you can always go to our website and find a location near you.
[00:14:39] Speaker C: That's seshproducts.com. i'm sure that's going to be in our show notes. Max, we appreciate you joining us. Oh, Teddy's got a question. Sorry, hold on.
[00:14:47] Speaker B: If I can.
[00:14:48] Speaker C: Teddy's got a question. Ye.
[00:14:50] Speaker B: With your experience in, like, the sales and marketing background, and I was a communication major and one of the Biggest things that we studied was actually nicotine ads with the verbal and non verbal communication that went in from the packaging all the way to like, you know, the commercials and ads. And I'm interested with your like, point of view, like what's different from there, you know, also knowing that you have a lot of celebrity investors, so that means that your product is out there in social media getting, you know, the views, like what were existing nicotine products doing differently or wrong or what have you improved on from like a user experience and people being interested in your product?
[00:15:33] Speaker A: Yeah, I think the biggest thing for me, and I kind of alluded to it earlier, was I was a consumer first, right? Like I, I genuinely was a consumer of these tobacco products and then vaping and I was looking to switch to something and I noticed on the pharma felt very, you know, very prescription pharmaceutical with those nicotine replacement therapy products. And then on the consumer side it was, it was so hard to actually figure out what was in the product. I was like, just tell me what's in it and then I'll make a decision based on the risk profile. And so with sesh, what I really wanted to do was be transparent about what's in the product and give the consumer the choice.
And all of our lab results are on our site. So you can look at any, can you buy, you can go check the lab results. There's about 10 ingredients, ingredients in our, in our pouches. And so that was one thing that I really wanted to bring to the forefront and I think we're seeing is a broader trend in, in CPG is, you know, people are actually reading what they're consuming. And so that's something I thought hadn't been done yet in this particular category that I thought we could really change and, and bring. And then from an actual product perspective, you know, we were talking about it before the call, but you know, some of the current income, you know, it, it seems like a commodity, like a pouch to a non user. Seems like any pouch, it's like, oh yeah, it's just a white pouch. It's the same thing, but actually each one is a little bit different. You know, they have different release profiles so they could release nicotine fast or slow, they have more flavor or less flavor. And so every one has a little bit of a different combination. And I couldn't find one that was very subtle. Like I didn't want something that was overpowering. I wanted something that, you know, felt balanced and subtle and didn't, you know, hit you with a ton of nicotine up front. And so that was really the, the purpose of, of trying to bring that to market. And I thought there was a consumer for it because, you know, I was one of them.
[00:17:27] Speaker C: Fast growing. Check it out folks on seshproducts.com Max, thanks again for joining us. There will be show notes. Please reach out. Check out the I see there's a find us section on the seshproducts.com website. We appreciate you listening to another episode of the Zipline Logistics podcast. We will see time. Thanks, everyone.
