The Backstory Behind Dream Water’s $34.5M Exit

 

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David Lekach started Dream Water; a natural sleep aid bottled in a 5 oz shot similar to the famous 5-Hour Energy Drink.

Lekach built Dream Water up to almost $10 million in annual revenue before selling it to Harvest One, a cannabis company, for $34.5 million in cash and Harvest One stock.

One of the biggest takeaways for aspiring value builders is staying focused on what you’re good at and outsourcing the rest. In Dream Water’s case, Lekach saw his role as “selling Dream Water, not making it.” That meant he outsourced the manufacturing, packaging, and distribution of Dream Water to a co-packer while Lekach and his team focused on selling it. They launched Dream Water in New York, with a catchy public relations hook of helping “the city that never sleeps get some rest.” Instead of focusing on gas stations where 5-Hour Energy had a stronghold, Lekach reasoned that sleep aids are sold at a pharmacy, so they partnered with giant retailer Duane Reade for their launch in Manhattan.

There’s lots more to learn from Lekach including:

  • How to calculate Internal Rate of Return (IRR).
  • The most significant mistake founders make when raising money.
  • How to make sure an acquirer follows through on an LOI.
  • The dirty little secret of selling to the likes of Walgreens and Wal-Mart.

Warning: this episode includes some coarse language.

Lekach experienced a devastating blow when Wal-Mart changed the way they were displaying Dream Water, leading to a 30% drop in Dream Water’s total sales. It was a near-death experience for Lekach and prompted him to want to sell as soon as he was able to steady sales. One of the unexpected by-products of the coronavirus pandemic is a growing army of founders who have decided to sell as soon as they can stabilize their business. If you find yourself feeling like you want to get out, consider getting your PREScore™ by answering 12 simple questions. It’s free and will have you thinking differently about the road ahead.

Our guest

Prior to the sale of his company in May of 2018, David Lekach was the Chief Executive Officer of Dream Products LLC. As the architect of the company’s growth strategy, David was responsible for managing all aspects of the business, including, sales, marketing, manufacturing and finance. Dream Products manufactures and markets Dream Water, a natural, zero calorie, 2.5oz liquid sleep enhancer, that is also available in a powder format that you can take with or without water. Before launching Dream Products, David worked briefly as an investment banker and prior to that, David served as the managing partner in a small Miami-based law firm, handling a variety of legal and business development focused consulting projects. Those projects included the structuring and general oversight of international real estate ventures worth more than $50 million and numerous consumer goods opportunities, ranging from licensing to product development engagements.

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Transcript

John Warrillow:

Ever been to a gas station and seeing those little bottles of 5-Hour Energy drinks? Well, think of the exact opposite of that, a downer that helps you sleep, but packaged in the same size bottle. What you’re imagining is a product called Dream Water, which was the invention of a guy named David Lekach, who is my next guest. One of the things I love about David’s story is he focused on what he’s good at and outsourced the rest. So the actual creation, the packaging, the manufacturing, the distribution of Dream Water was outsourced to a third party co-packer. What David’s good at, as you will learn from hearing his story, is selling, which he did to the tune of almost $10 million of revenue before he sold for $34.5 million. Here to tell you the entire story is David Lekach.

John Warrillow:

David Lekach, welcome to Built To Sell Radio.

David Lekach:

Thank you. Thank you for having me.

John Warrillow:

Yeah. So tell us where you are right now, for people who may be kind of surprised to see you working in what looks like an office.

David Lekach:

I am not in my office. I am actually in Miami, Florida. Actually to be more specific, in Aventura, North Miami, Florida in my kid’s private school contributing. I’m a part of an organization called EO, Entrepreneurs Organization, and one of our core values is making a mark. And so instead of sitting here and complaining and bitching, quite frankly, to the administration and the staff of what’s going on in virtual learning, whatever, I sillily, in a bout of altruism wrote an email to the head of school, and that meant that I just volunteered myself to doing a lot of, I would argue, the most intellectually challenging planning and scenario planning and practical planning that I’ve ever had to experience in my entire life.

John Warrillow:

And this is around getting the school back open. For those of you who are listening, I’m interviewing David in early June when Miami is certainly still very much in the throes of this COVID situation. And so you’re working on how to deal with getting kids back to learning.

David Lekach:

And that’s what I do in retirement, I guess, right?

John Warrillow:

This is what you get for selling your company.

David Lekach:

I don’t have hobbies. Yeah, this is what I get. I don’t have hobbies.

John Warrillow:

So talk about Dream Water. I think people would be fascinated by this story. First of all, what is Dream Water? And how did you cook up this idea for this business?

David Lekach:

Sure. So the little blurb about Dream Water is it’s, at least in its original form, it’s a two and a half ounce shot that helps you relax and fall asleep, 74 mL for those listening outside of the US. So it’s a little shot, just like 5-Hour Energy, but the exact opposite. It’s natural. It’s a combination of gaba, melatonin, 5 HTP, and it’s just a lightly-flavored water that you take before wanting to go to bed or whenever that moment is. You can take it on the airplane. You can take it when you show up in a hotel, whatever the case might be.

John Warrillow:

Such a cool idea. Is it addictive at all? Because people take pills, and if they take them too much, they get dependent on them.

David Lekach:

I wish. I mean, we could do this whole podcast just about my own issues with sleep aids and pharmaceutical-grade sleep aids and how scary and how dangerous they are. On a commercial level, had it been addictive I would have made a lot more money. I’m saying that partly in jest, but it’s true. The idea is not that it’s addictive. My perspective always with a sleep aid is that it’s an aid and ideally you don’t have to take it for forever. The idea is to help you. And there’s over 70 diagnosed sleep disorders. What that sleep issue is varies by human, and so you’re not trying to do a one size fits all. It’s just a natural liquid. So you’re not taking a pill. It’s not anything like that. It’s just a natural liquid, lightly-flavored water that helps you relax and fall asleep. And we were cognizant of all of the potential risks because sleep aids are scary, to your point, right?

John Warrillow:

Sure, yeah.

David Lekach:

There’s a lot of side effects. It creates dependencies. You can never wean yourself off. And if you want to hide it from even your spouse, you can because it’s not like cigarettes that you smell it on somebody and you know that they’re doing it or alcohol that you smell it on them. You don’t know about sleep aids, right?

John Warrillow:

Did you come up with the formula? What was the genesis of the business? How’d you actually come up with it?

David Lekach:

Yeah, I partnered with my cofounder, Vincent. He had created the baseline of what I call Dream Water 1.0. That’s not what we commercialized. So basically, when I found him, it was like a working prototype, let’s call it, with a good name called Dream Water. And we partnered in the summer of 2009, and then we launched with Duane Reade in New York City in mid-December 2009. So really our first-

John Warrillow:

For those of you who are not in the US, Duane Reade is not a person. It’s a pharmacy or a shop that sells stuff.

David Lekach:

If you’ve ever been to New York, they’re your pharmacy. They’re your convenience store. They’re your everything store on every corner, especially in Manhattan, but it’s in the greater New York area. It’s now owned by Walgreens, but at the time it was independent. And we launched in New York for a variety of reasons with the idea of putting the city that never sleeps to sleep.

John Warrillow:

I love that.

David Lekach:

Yes, yes. So we-

John Warrillow:

Is that why you chose to launch in New York?

David Lekach:

No. So first of all, I ended up roping in two other people, my younger brother being one of them. I roped them into… We were like a little pod of four, and three out of the four of us were either born there or have lived in New York at multiple times. When we were thinking about how do you launch a product in such a big geography with so many variables like the United States, we said we could go the ancillary market route. And I call Miami ancillary because it’s in my home and all those things, although I was living in New York when I started Dream Water, living.

David Lekach:

I was there more than in Miami, and we said instead of messing around with an ancillary market, let’s go straight to New York where we’ll see because this wasn’t like I think I have the best idea ever, and I’m just going to go do it at all costs since a water, normal liquid that helps you relax and fall asleep has never existed before at this point. While we thought it was a good idea, while I thought it was a good idea, the entirety of it, including raising money at the beginning, it was very much a thesis. I need to put it out there in the market and have the market tell me if there is a need for this or not. So the entire thing, I would argue all the way through, I was constantly trying to learn, to learn to iterate, to learn to develop across a variety of things. But all of it, from especially the beginning, was I didn’t even know if there was going to be demand for something like this. I just assumed there would be.

John Warrillow:

What was the startup? I mean, are you raising a ton of money and doing industrial grade manufacturing? Or are you and Vincent putting a pot together in your basement? How did you guys… The first sort of iteration?

David Lekach:

The latter is how Vincent created that initial prototype. I’m kidding to some degree. But at the outset, this was, we worked with major labs and things. And I think as a backdrop, I should say, that me, I personally always said we’re in the business of selling Dream Water, not making it, but I have to worry about making it too. So it wasn’t that I had to go build my whole factory and lines. You use these other companies where you can outsource your production that are generally called or referred to as co-packers. So you send over all your ingredients, all of your components, or they could buy it for you. It depends on your relationship with the co-packer. You send it all over to the co-packer, and the co-packer puts it together for you and sends you back a finished product. And so I say it in that tone because I was always very clear that for me, it was about selling it. If I ever got big enough where it would warrant me having my own facilities, I never even came close to that because I was very clear on the fact that I was not in the business of making it. I had to worry about making it, but I was in the business of selling it. And those are two totally different functions.

John Warrillow:

How’d you get into Duane Reade? Because I’d imagine a huge retailer like that is a labyrinth of decision-makers.

David Lekach:

Well, our biggest challenge was, again, thinking about the size and scope of the United States as a market, and how do you start or launch? Our basic thought process and proposition was fish where the fish are, and that was always our thought. It’s not about the long-term. On the long-term, I want my business to look like this. But I felt was thinking about what do I have to do today to win to get to tomorrow? And then from there, how do I get to the next day? And so on and so forth. And in that regard, we looked at it and this idea of fishing where the fish are, we said well, if I ask you for a bottle of water, if you’re a consumer here in the US or in general, wherever you’re listening from or watching from, you’ll say okay, I’ll go to my local convenience store, my local 7-Eleven or whatever for a bottle of water.

David Lekach:

But if I ask you for a headache medicine or something for my stomach pain, and what have you, you’ll default into at least more probably than not a drug store or what have you. So I thought okay, sleep aids. Nobody’s ever really been trained to go buy sleep aids in 7-Eleven. They’re trained to go by it in drug stores. And when we settled on New York as our location, that’s what it told us, Duane Reade. We didn’t say Duane Reade. We looked at it holistically. We said where? New York. Mind you in 2009, 2010, the direct-to-consumer piece of e-commerce doesn’t look like what it looks like today. So that wasn’t really an option. It wasn’t even a part of our consideration set. It was always about food, drug, mass, channels. We were in an airport in a big way in specialty retail, air travel eventually, and all that stuff or whatever.

David Lekach:

So what I’m saying is so how do you dissect it? And it was those things that told us where to go. And then we are relentlessly resourceful, every one of us. And so once we knew it was Duane Reade, now it was who do we know in Duane Reade? One of us happened to Christmas with the beverage buyer, not every year, but has done Christmas with the beverage buyer. We were like great, and that was our in. But the point is that once we holistically decided what our launch area, geography, and channel was, distribution channel, i.e., drug stores, that told us Duane Reade. And then it’s just about being incredibly resourceful to get into Duane Reade.

John Warrillow:

How does it work… And this is my ignorance playing out. I would’ve thought a big regional retailer like Duane Reade would’ve bought nationally, they would’ve said, “We’re only stocking it if we can stock it in all of our stores. There’s none of this onesy, twosy, Manhattan, but not in Arizona.” Is that the way it works? Or can you pick a store or pick a region and get it into one location?

David Lekach:

Not every retailer is the same. So again, and just to be clear, when we did our deal and launch with Duane Reade, they were independent, but about three months into launching with Duane Reade, Walgreens bought them. They didn’t close the transaction, but they bought them. And so we were chain wide with Duane Reade in their entirety of their chain. And then we had to filter our way into Walgreens on a national basis, but because it was that. If not, it would’ve been a standalone, and we would’ve been chain wide with Duane Reade and then chain wide with Walgreens and so on and so forth. With some of these big box retailers, you are able to, within reason and to some degree, do things on a regional geographic basis because you have thousands of Walmarts and thousands of Walgreens.

John Warrillow:

And did you get and exclusivity for a period of time when you launched?

David Lekach:

No, I never gave anybody exclusivity. I should also say I’ve pissed off every retailer in this country at least once.

John Warrillow:

How’d you do that?

David Lekach:

Because if not, we could make this about that instead of selling your business, but-

John Warrillow:

They all want to get to selling.

David Lekach:

Well, no, but quite frankly, it’s because the dirty little secret, and everybody gets excited, is that they got into Walgreens. They got into Walmart. It’s not about getting in. It’s about how you’re in that store. So when you’re relegated to the bottom of a shelf with one facing, the chances of that being a tangible business for you, that you can invest behind and build on or whatever, is slim to none. And that’s what I mean just as a touch point or as an example of it’s not about getting in. If you got in and you’re relegated to the bottom of the sleep aid set or what have you, your business, while it might be viable, there is never going to scale to be a certain number, whereas-

John Warrillow:

So how did you get your product front and center?

David Lekach:

Because oddly, I believe the delivery format, and I was piggybacking. I was using 5-Hour Energy as my roadmap and saying that yes, there’s more usage occasions and more of a need and more consumption happening around the energy shot as a format. They’re a premium energy shot, functional shot of energy. I’m a premium functional shot of sleep. And between the two of us, it was a lot about going to the retailer and talking to them about their impulsive areas of the store, which are higher volume, higher sell through areas of the store. I was always looking at it and saying but they’ve blazed the path for me. They have a little box of 5-Hour Energy at the front of a 7-Eleven or the front of a Walgreens or at the front of a supermarket or you name it.

David Lekach:

And so I said now, instead of having seven flavors, five flavors, three flavors of 5-Hour Energy, give me one of those spots. Or how do you include me? Keep their seven, but include one or two of mine. So it was really about that. It was about that. And then when we went in to those types of opportunities, but sometimes we did through corporate. Sometimes we did on a regional basis. Again, be relentlessly resourceful, I would say. We would sometimes do these things on a regional basis. So while I was going to Chicago to sell corporate Walgreens, their program, I was also on a regional basis building the relationships so I can execute the programs and build data with them in their formats in a program that they would do and execute at the corporate level. In other words, I wasn’t trying to do something that they would never execute across 8,000 plus stores.

John Warrillow:

What was in it for them? Because 5-Hour Energy, they’ve got a preexisting relationship. They know how much sells through. They kind of know the product. What was in it for Walgreens to add another SKU, but in adding Dream Water.

David Lekach:

First of all, you get, from a functional perspective between energy and sleep, you’re covering… Let’s say energy covers 18 hours-

John Warrillow:

It’ll degrade maybe.

David Lekach:

Or 16 hours in a day. The next 8 gets covered by Dream Water. And sleep is fundamentally sleep. Proper sleep is the most important thing. If you go to the doctor, they’re going to say lose weight. It almost seems like whenever you go to the doctor, the solution to everything. Your knee pain, your back pain, or your heart issues are all about losing weight. But if you don’t sleep right, you stress eat. You live a life with more stress if you’re not getting that recharge that sleep brings you. So from a health and wellness perspective, again, fish where the fish are, the drug store chains really understood the importance and the value of sleep. And on the basis of that, you’re able to say fine, and how do we… The wording would be how can we be incremental to your baseline? Their baseline is in zero of sales. And that varies based on where you are in the store, but how can we, our proposition of Dream Water, be incremental to your business. That’s how you have to talk to the retailers. It’s not you will sell or you won’t sell. Everything that goes into their stores will sell. It’s will it sell above a baseline? And is it incremental?

David Lekach:

So if you have a bunch of different ways to do shampoos, but they’re all shampoos, at one point it doesn’t become incremental anymore. You’re trading between this customer and this customer. The novelty of Dream Water, of water that helps you relax and fall asleep, a lightly-flavored, natural water that helps you relax and fall asleep, it’s not that you’re trading. It’s not that you’re going between Advil and Tylenol or Coke and Pepsi. You’re not trading. You’re literally creating an entire new consumer product category and segment. And that was front and center. We didn’t to have to be so overt about it with the retailers. We were resourceful and putting the product in front of the retailer or the key decision-makers, explaining to them our thoughts and our ideas, but I always said that we open the doors, and the product does the selling because it for the most part really worked. It was really beneficial, and it really worked.

John Warrillow:

And you could see why people would buy both at the same time. I’m going to grab a 5 Energy to get through the day, but man, that’s going to make me edgy, so I’ll use this on the backend. You could see people buying it as a bundle. How did you finance this?

David Lekach:

I wanted to do that so badly. It was just so hard to collaborate with 5-Hour or to get the retailers to really let us do something very smart and holistic.

John Warrillow:

Why was it so hard to bundle or work with 5-Hour Energy?

David Lekach:

Because we were so small relative to them. Why did Kodak lose the… They developed the digital camera. Sorry to use such a weird cliche because you don’t know things until you know them. You sit there and you’re comfortable until you’re not, until you’re disrupted. And I mean, I would have some conversations with them or whatever, but they had no incentive, I guess. It didn’t occur to them. It didn’t matter to them to increase. They have a very nice, very profitable, very cashflow-generating business. They didn’t necessarily care. They didn’t have the gun to the head to go. I don’t foresee them going the way of Kodak, obviously. They’re very entrenched into a lot of people’s lives and routines, and that format works because of what they’ve trailblazed into that delivery format.

John Warrillow:

Sure.

David Lekach:

But they just didn’t see it that way. They didn’t need to.

John Warrillow:

How did you finance? It sounds like you had partners. Maybe talk a little bit about the financing of the business.

David Lekach:

I never had a war chest of cash. And you asked that at the beginning. I wanted to touch on that. Thanks for bringing it back. The first hundred grand or so was out of my pocket. It was all an experiment. We raised the first million, and my dad participated in every round that we did. So that was important. But we raised the first million sort of in October, and we launched October, November of 2009. And we launched with Duane Reade in mid-December 2009. So just to give you a sense of how close we were to launch point. Why a million dollars? Because it was a nice round number to test to see do we have something or not? Remember the entire thing was sort of like let’s do it and put it out there and see what we have. And in all. We raised about 6 million bucks, and it was with no bells and whistles. It was all one class of LLC units. I never had any debt, certainly no traditional debt into the cap structure. And I never had any sort of restrictions or gun to my head relative to either the equity-raising side or the… Obviously, there was no debt, so nothing can sort of compel me to do stuff, although I do believe very much in corporate governance and transparency and all that.

David Lekach:

The one thing I would say, though, is I say that number, and I never had a war chest of cash. I think I touched $2 million in the bank account once for a brief moment. And in the realm of what we were trying to do and in the CPG space, that is almost no money. It is very expensive to work with all these retailers, and it’s very expensive to do these big, broad marketing campaigns without attributing it to sales. It’s brand building. I’m going to call it brand building, not marketing, because in today’s digital world, you have no incentive to go out and run a hundred thousand dollar or a million dollar TV spend just to see if it moved the needle. But in 2008, 2009, 2010, 2011, in those earlier year years, we did everything. We lost millions of dollars in marketing, let’s call it, because we had to go out and do a hundred thousand dollar spend to see if it moved the needle, with billboards, with magazines, with PR, with you name it. And to play that game, the branding game, doing things because it’ll elevate and build your brand, not correlating it to sales, you can lose a lot of money very, very quickly. And for that, you really do need a war chest of cash.

John Warrillow:

How did you guys value the company for the first round? You mentioned you raised a million. What was the implied valuation?

David Lekach:

I don’t remember. It was probably like 5 million post-money, but I can tell you this. I can tell you this, and I think it’s a mistake that I see and hear entrepreneurs making all the time. Who do we raise… And this is myself included… we raise from, at least in those initial rounds, is from friends and family, legitimate friends and family, typically. I’m not saying this as a full-blown statement. And what happens is we have all these inflated valuation metrics relative to these people that are closest to you. These are the people that you spend your personal time with. You go to their houses for meals and all of that. And the way I was looking at it was I never wanted to come off as greedy, that I overstepped or I did too much or I asked for a $10 million valuation because I had the best idea in the world. Keep in mind, to give them a five X return, forget your IRR at 10 million, or the higher the valuation, the bigger the return potential has to be so that they can get their returns, including on an IRR basis, not on a total return. So you could say yeah, I five X’d it, but if you five X’d it over nine years is different than five X’ting it over one year from an IRR perspective.

David Lekach:

And so I was always attuned to that. And anybody who gives me money and bets on me and my idea and my team, I always took with the utmost seriousness. So I cringe when I hear other people’s money you’re going out and raising. I took that more personally than my own, because my own with me, I took a chance and I gambled and it is what it is. And especially in that first raise and in that first round, I’m always amazed that that entrepreneurs put such a high valuation. What they don’t realize is that they are putting a gun to their own head because now your ability to mess up, your ability to iterate, your ability to do all those things is minimized. So I always find that to be interesting.

John Warrillow:

What is IRR? Can you explain that?

David Lekach:

Internal rate of return. So for simple math, if I make a 100% return over a two-year time period, I made 50% a year. I’m totally simplifying that because that’s not actually 100% true, but your IRR is 50%. You annualize rate of return, right?

John Warrillow:

Mm-hmm (affirmative).

David Lekach:

I is internal, but it’s your annualized rate of return. So just because I’ve doubled your money, there’s a difference if I doubled your money in a day, a week, a year or 10 years. The faster I do it, the better the actual return was.

John Warrillow:

And so when you raised that first million dollars, were you talking to investors about a potential IRR?

David Lekach:

No, because there’s no way, when I get pitched investments and things and whatever, when I hear somebody really talk about their exit plans, I’m not saying that there doesn’t have to be, I get very nervous. Because life doesn’t work how you want it to work. And it doesn’t work, I don’t think ever one of my budgets was right. I used to do things because it’s the right way to do it, like plan out five years, show them five years financials. I said, “I’m not even right five months out. How the hell am I going to be right five years out?” So then I started doing three year planning, and even then I was like, “I’m going to show you the next year, year and a half, two years, because I’m wrong. I already know I’m wrong.” And I wasn’t so focused on the output, that’s certainly not a way to raise money.

David Lekach:

Even after I had commitments from people to raise money, and my philosophy, my real filter that I would verbally communicate with people is, “If this is something that you lose, I want you to still be able to invite me over to your house for dinner.” Even with new friends and family. So to speak, even along the way, I had the same filter and I would literally work that into it. It’s like I had the sale done, so to speak, and I would still make sure that you understood how important it was for me that you still invite me over to your house for dinner. So if a hundred thousand dollars is not a lot of money for you, cool. If it’s a lot of money for you, please don’t invest a hundred grand, please invest less or don’t invest at all. And I would have that conversation. It was weird, I think to some degree that actually got me people more committed to the investment, but it was me just being me, and it was me being authentically me.

John Warrillow:

And so how did you pitch them on, and I’m driving at, and there are a lot of people listening to this saying, “I’d love to raise money for my company. I’m trying to figure out how to do that. And all I’m hearing David say is how to convince people not to invest or cover yourself so you’re not getting people to overextend themselves.” But what was the pitch? How did you convince them to invest a million dollars? Did you say one day we’re going to be worth ten? Or what was the pitch that you used?

David Lekach:

First of all, I don’t think I called it a pitch.

John Warrillow:

Or what was business case, or whatever?

David Lekach:

No, but words matter, and I didn’t go into it thinking that it was a pitch, it was always a conversation. And I always did it in the context of, I think I have a really good idea. The same philosophy that worked with retailers worked with investors too. I was resourceful, I was connected, and if it wasn’t me, I was connected to somebody who was connected to X amount of people. Right? And it was the same thing. I have to open the door, right> and they are investing in me, they have to be credible, but the most important thing and this is relative to my product. If you have your app, your tech platform, you make this mean whatever it means to you. But for me, I was at the beginning, right away, I already knew that what I needed to do was put it in your hands and get you to try it.

David Lekach:

Once I got you to try it and experience it, it was logical that there was other people that needed the benefits of a mainstream liquid sleep aid. If it wasn’t just you, let’s say you had no sleep issues, whatever, and I would actually encourage it, and I would send you as much as I could. So if you said, “I don’t have a sleep issue.” I would say to you, “Great, who does? And let me give you, just hand it out, hand it out to your employees, hand it out to your coworkers, hand it out to your spouse, your sister, your brother, whoever.” Because that’s the validation.

David Lekach:

And I wasn’t pitching on necessarily, obviously, look guys, there should be a big need for this. We should have a nice exit one day, whatever, but we have to work this thing. We’re not just building a brand, we’re building an entire category and hoping to define that category with our brand. Right? And when I position it like that, the biggest thing that I could do was get you to get you to be a believer in Dream Water, and me. But I think it was in that order. One A, Dream Water the product, one B was me. And it was so new, so novel, so unique, and it was fairly self evident that if this thing really does work and it really does help that there’s going to be a need for it that I didn’t have to trot out a 50 page let me tell you about the industry.

David Lekach:

I hate that too, by the way, if you’re doing business plans, whatever, just scrap all of that. Nobody looks at it. Nobody ever, ever, ever looks at your whole market dynamic. And I love, my most absolute favorite is it’s a one billion dollar market but if I can only and get one percent of that, that equals X. Guys, come on, stop it. If you’re listening to this, I’m telling you, your industry section should go away substantially to some degree. And obviously it’s not like that in every sector or segment, but if you get something out of this, it’s keep it simple stupid, keep it real tight, understand what you’re pitching, so to speak, understand what you’re trying to accomplish. And just get to that.

John Warrillow:

So David, what I’m hearing you say is the first million was based on sort of a back of the envelope valuation. And it was really more about, do you believe in the product, the efficacy of the product, et cetera? How did that evolve, that story evolve as you went for more and more money because ultimately you raised six million. So did the conversation sort of evolve in any way, did it become more based on metrics? Or there’s some underlying valuation technique that was being used as you raised more and more money? Or was it just always this more pitch about the story of what the product could be?

David Lekach:

No, obviously there was always real decks with real data with all of that. Always, always. I just didn’t try out the fluff. I wanted to just hear here’s what were really doing, and making sure that they understood that we’re sitting here trying to learn. So in that first million dollar traunch let’s say, part of my pitch was this is a gamble. I don’t know if there’s [crosstalk 00:28:11] or not. And to some degree it is easier to raise money with white space, with no data, because you can manipulate or put forth data that you think is going to happen and explain why it’s reasonable and what have you. You can do that. When you start to have some data, you don’t have the ability to just white space it, you don’t have the ability to just say, “I’m worth this because I think I’m going to be able to sell a tremendous amount.”

David Lekach:

Some amount of data is going to come into play, and then that’s going to dictate what your business looks like. And fortunately for us, we had sort of a pretty good trajectory at the beginning. It was a series of wins, I never had a bad meeting. I used to always say I never had a bad meeting ever. Again, I think it speaks to the product. That’s why I knew I was onto something, I never had a bad meeting, it was unique, novel, really incremental for these, I never had a bad meeting. But also keep in mind, we launched the New York, people with money, certainly a lot of money, the financial people, all this stuff, they’re living in New York, a lot of them. And if not, you’re a tourist or you go for your business meeting, I’m living in Kansas city or Miami or wherever, I tend to go to New York.

David Lekach:

And as we started to scale up the investment rounds, right? I might not be in your local supermarket and I might not have been in your local airport or what have you. But I was really well done in Manhattan, not in the boroughs, but I was really tight in Manhattan. So you’d kind of walk in and out of any store because we blitzed Manhattan and we were very tight, that I think had a big effect. So that when we came into pitch Dream Water, while somebody in San Francisco might not have ever heard it or in Montana, the people in New York did. And for whatever reason, most of what we raised was in New York, most of our investor base.

John Warrillow:

And what was the valuation metric you were using in those more formal rounds? Was it a multiple of forward looking sales or historical profit? Like what was the kind of key determinant of the value?

David Lekach:

Well, remember the ramp is slow because even if retailers have their planigram windows, so you have to get to them. If they review their entire category in March and you get to them in April, you can’t even go to them until the next March. And then they’ll say yes, and you’re in, and they’re reset will happen three to four months after that review period. So until the summer, so just keep in mind, you can’t just ramp up because, or if they didn’t say yes to you in that moment and they reset, you still have to come back the next year. Right?

David Lekach:

So it wasn’t exactly like that. The truth, if I recall correctly, it was how much dilution was I willing to take, where I was also factoring into my dad was always investing in these rounds. So what did it take for him to, to allow other people in or what did it take for some of my investors? And I was always looking at it from a cap structure perspective and how much dilution can I really handle? It wasn’t it wasn’t the three times, five times revenue or any of those metrics, I never did it. I didn’t sell the company that way either, by the way. It was what sort of made sense relative to my existing cap structure that I can handle and stomach.

John Warrillow:

And where did you land on that question at dilution? What were you comfortable with?

David Lekach:

I mean, I can fast forward, me and my family because it wasn’t just me. We have a family office in my family. And so the Lekach block if you will, finished somewhere around owning 55% of the company, something like that.

John Warrillow:

Got it.

David Lekach:

Again, my dad did invest in all these rounds, it was less than each rounds, but he was investing in all the rounds. I never did a serious of A, B, C. It was just okay, I I’m looking ahead at what is coming in the pipeline, because you have some visibility again, long lead times in terms of selling into real world retailers, you know it’s coming. And I was able to project and look at what do I need there?

David Lekach:

With all the focus in terms of fundraising, I will say that in my EO world or otherwise, we always hear about the scrappiness of it. And I want to acknowledge, I think I would be remiss if I don’t acknowledge that as much as it is painful that I didn’t have that war chest of cash to go out and spend and brand build and do all of the fluffy stuff so that everybody would know what Dream Water was, I equally know that it made me be infinitely better as an operator. Not having that war chest of cash, not having that margin of error, because if I had more money, I would’ve had nicer offices. I would’ve flown better.

John Warrillow:

Sure.

David Lekach:

You have to see, price mattered on everything that wasn’t consumer facing, even consumer facing. But certainly we didn’t stay in the nicest hotels, even though we were road warriors, all of us, and so on and so forth. So it really forced us to stay lean and mean, and that really proved to be beneficial. And I’m certainly, we’re sitting here in a time of COVID that you might be nice and fat and looking at your bank account, but if you’re negative cash flowing, that money will go away.

John Warrillow:

Yeah.

David Lekach:

And then if Covid happens or whatever happens, right? Walmart kicks you out or who knows what’s going to happen, you can’t weather that storm if you weren’t really prudent and really responsible on the fiscal side of the equation.

John Warrillow:

So how big did you get this company before you decided to sell it? Big in terms of revenue or whatever proxy you want to use for size?

David Lekach:

So we got on the hockey stick growth curve in the start of 2013. We felt that, we knew it was there, it was really awesome. We were growing all the time, but we got on that hockey stick growth curve, but I did have my highest highs and lowest lows with Walmart in about a three to four months span in 2013 that almost ended the company. So there was a retrenchment there, I never broke ten million in terms of sales. It was just sub ten, somewhere around there. But I did live off my cashflow for the last five years that I was operating in. I sold in year nine, the ninth year of operating. So the last five years or so, I did streamline the entire business to live off of my cash flow.

David Lekach:

Forget [inaudible 00:34:14] . I didn’t have any margin of error right there, right? My zero line was really zero me.

John Warrillow:

Meaning you had stopped wasting money and you were just living off of the proceeds of the business?

David Lekach:

Because I knew there was just too much complication, because again, I got on the hockey stick growth curve that if I kept going, I would have either A, been able to live off my cashflow at an elevated dollar amount, or I would have been able to raise more money at that moment. And again, that started and stopped and there’s reasons for it. But I think that that’s not the point of the conversation, but Walmart was 30% of my business. And then an interruption with them as a key customer, as a key client, had a very detrimental effect on the business. But then in the years that followed in 2014, but really more so finishing 2014. 2015, I started to find my groove again. I went from being shell-shocked and just surviving, just living to getting back into innovation, getting back into product development, getting creative from a marketing perspective again.

David Lekach:

All the things that I always liked about business. That’s how I got myself back. So my Dream Water journey is not this sort of straight line, look at me. I wouldn’t even say I’m a nine year overnight success. I would say that I’ve literally lived and experienced everything that you can, I think in a corporate journey. And I was lucky enough, cause I think luck has a huge factor of it. I was lucky enough to have a nice enough outcome at the end, financially speaking.

John Warrillow:

What happened with Walmart?

David Lekach:

We were doing all these regional things, we were selling to corporate. So I’d go to Bentonville, Arkansas in Northwest Arkansas and do my pitches to corporate. But I was building this data with regional operators inside of Walmart and doing these display programs and what have you, and our velocities were off the charts. So much so that the front end department of Walmart believe the data that we were generating in their stores and said, “We believe that you’re very impulsive. Because sleep aids are not impulsive.” Dream Water was impulsive, but sleep from a consuming perspective, but sleep aids are not. So they had never thought to put a sleep aid into an impulsive area of the store. It could be on display, it could be by the registers.

David Lekach:

And it was a different department instead of Walmart that we had to go pitch, it doesn’t matter that you’re in Walmart, we had to go pitch a different department. And with that department, they put us on their front ends, but they buried us. So it’s the only time I didn’t get to see what the program would be for me to say no to, had I seen it I would have said no to going to the front ends of Walmart, because I’ve never seen somebody sort of bend to the bottom shelf on a register area to impulsively buy something that they’ve never heard of before, a sleep aid called Dream Water. And it was buried, instead of putting me on par with, in a visible way, 5-Hour had like six, seven, eight boxes sitting up on the front end stands. We were in the bottom of that, not even adjacent to one box, so their execution of it sort of rendered us down to the bottom.

David Lekach:

And so when I saw that for the first time, I knew we were fucked. I knew it. Again, it goes back to the original, one of the first things that we talked about here, it’s not about getting into these stores, it’s about how you’re in these stores, which is also why I’ve said no to every retailer, at least once in this country. So that was the only time where I didn’t know what the program was going to look like. And then at that point, because I’m nonstop, a mile a minute or whatever, my own brokers and sales reps, whatever, were like, “You’re never happy. You’re never satisfied. Everybody in this industry would kill to be on their front ends. It doesn’t matter where you are on the front ends.” I said, “That’s the difference between me and everybody else. I know I’m fucked.” That was my response to them.

David Lekach:

And they just looked at it like this kid has never satisfied, this kid is never happy. He doesn’t understand what it means to be at the front end of the Mecca of retailing in the entire world, not just in the United States. And to be fair, I didn’t know the gravity or understand the gravity of that positively, I didn’t understand it, which is part of why to some degree I was fearless in my relentlessness. I was fearless in it because I didn’t understand or appreciate the gravity of selling to Walmart. Selling to Walmart was at the beginning of it, was just another day for me. And so, that’s why I was able to be sort of relentless, go in and do all these things and so on and so forth.

David Lekach:

So that’s what happened, and I knew that that was going to equal a lot of pain and problems for us. And in the front ends, they reset at least every six months. So I knew within three or four months, I was already out of the next reset. Does that make sense? And that started a retrenchment in that entire account, because I was running all these regional programs to get to this point where I can standardize it through corporate and so therefore I didn’t have the regional programs to fall back on. I was still in their sleep set in the pharmacy area, but I wasn’t doing the impulsive stuff that was driving a tremendous amount of volume, and I lost the front end of Walmart. So that was what happened there.

John Warrillow:

You said that when you saw their proposal, the stock at below eye level and so forth, had you gone on scene, you would have never agreed to it. How would you have had any leverage? This is the world’s largest retailer, don’t they get to decide where they’re going to put your product. When you say I would never have agreed to it, what are you agreeing to? Aren’t they just writing a check to put your product on the shelf?

David Lekach:

Because, I wouldn’t say it so bluntly. Right? But I would explain to them why I’m going to pass on that opportunity. I’m not going to change them. That’s a bad assumption that you’re ever going to do. That’s why you’re laughing when you’re asking the question. How do you dictate, you don’t need to be Walmart, CVS, Walgreens, heck your regional supermarket chain is huge. Right? And so who am I to dictate to them? They know what they’re doing, I understand that implicitly, but I have the choice whether to sell to them or not. And do I care about announcing that I’m doing that program? Do I care about the dollars and cents that come from that? Or do I care about the longevity of what I’m trying to do? And when I say that I would say no to that, I it’s because until I get a program that I am sufficiently comfortable with, I’m using them as an example but until I do, I don’t want to say yes.

David Lekach:

I might be wrong in my comfort level of why I’m comfortable, whatever, but at least on paper and in my mind, it had to have some potential output that on a longterm basis is going to work. I don’t want to sell into this review period and then be out in the next one. I never wanted to do that because then good luck getting back in, and then you don’t have a business.

John Warrillow:

Yeah, that makes sense. So what was the trigger that made you want to sell Dream Water? It sounds like you recovered from the Walmart, that piece, what made you want to sell?

David Lekach:

It wasn’t that I wanted to sell, I implicitly and sort of even on a subconscious level, I wasn’t thinking about it every day. I always wanted to position, Dream Water. Dream Water and my daughter are the same age, they’re both my babies. My daughter is my first born. And I always thought about selling, not in terms of how do I recoup every last dollar and cent for me and my shareholders, I always thought about selling or the potential of an acquisition where I needed to leave enough for the acquirer to make money too. So let’s start there, that was always my belief, and the deal needed to be something where I felt that Dream Water was going to be in the right hands or be given the right opportunity.

David Lekach:

So my perfect acquirer and I swear, I always, and I tried, I spoke to their president at different points and the different members of their team and whatever, my perfect acquirer would have been 5-Hour Energy because what 5-Hour Energy could have done relative to literally anybody else, including Coke and everybody else, 5-Hour Energy could have just said, “Hey, 7-11 or Walmart, instead of putting seven, eight, nine, 10 of my boxes here,” they could have said, “I control that real estate. So I want to put a Dream Water in there.” They were my perfect, but not because they would offer me the most dollars,, in my mind they were the most perfect because they can accelerate me from 10 to $50 million overnight because I’m going for the exact same segments. We’re both premium functional shots, and I’m going off to the exact same segments and so on and so forth. So absent 5-Hour Energy, it was about trying to understand who’s a potential acquirer for me that would make the most amount of sense?

John Warrillow:

But before we get you though, there must have been some of you’re going, you’re growing. There must have been some trigger or some thing that happened to make you decide, “Okay, now I want to sell.” And start looking around.

David Lekach:

So I had a Canadian distributor and in terms of the layout of the market, like the channels, food, drug, mass, convenience, air travel, a lot of other countries don’t look like the United States. It’s not like they have seven Eleven’s and Walgreen’s and Targets and Walmart’s and so on and so on. A lot of times they’re consolidated into one or what have you, right? And Canada always looked the most like the United States. It just does right, by way of the way the market lays out. It’s just that it’s more geographically spread out and less people.

David Lekach:

And so we were doing a lot of work for our Canadian distributorship by way of, we did all the manufacturing. We were doing all the sales pitching. We were doing all that, including that I would, me or one of my team would be at every retailer sales pitch with our distributor in Canada, whatever. That was just always how we worked. And oddly the Canadian market wasn’t doing great for us. And I was looking at that and saying, I was managing their Amazon Canada account directly. I was like, “It’s easier for me to just do it instead of explain to you what to do.” And …

David Lekach:

It’s easier for me to just do it and sort of explain to you what to do and things like that. And I’m just giving some examples.

David Lekach:

And so I was, that summer, this was in the second half of the summer of 2017. I was looking at, in my mind, I had never communicated it, we had a great relationship. We were weekly huddles and all this stuff. But I was thinking, “I’m doing most of the work. Why do I need them?” That was in my thought process. And as I’m thinking that, I get an unsolicited term sheet from the head of the distributorship that he wants to buy me.

John Warrillow:

An unsolicited term sheet from the head of the distributor. Who’s the distributor?

David Lekach:

It was the guy created an entity. He’s done different things in the consumer product space, but he created an entity called Dream Water Canada.

John Warrillow:

And he said, “I want to buy…”

David Lekach:

He had a buy sell relationship with me. So for simplicity purposes, I’m not that far off, but for simplicity purposes, a shot at Dream Water cost me 50 cents, five zero US dollar cents. Everything I say is in US dollars, right? So it would cost me 50 cents, and I was selling to him at a dollar. And then he had to sell it to retailers for $1.50, so that they could sell it for three bucks. I’m simplifying this, right?

John Warrillow:

Yeah, yeah.

David Lekach:

He didn’t have enough margin to do what he had to do to be profitable. Absolute huge scale, which he didn’t have yet. So his idea was, “I need to basically get to your cost of goods so I have a chance of making money.” Again, I’m overly simplifying a lot of this for the sake of time.

John Warrillow:

Sure.

David Lekach:

And so that was his, I think, in understanding that now, that was his goal. “How do I bring down my cost of goods so I have a chance to make money here in Canada?” The easiest thing was, “Let me just buy you.”

David Lekach:

And I knew he didn’t have the money. I knew. And he was very connected on Bay Street. So the funny thing about Canada, is like in the US, every major retailer is seemingly somewhere else. In Canada, a lot of the major retailers, they’re all in Toronto. So one trip to Toronto, you could bang out three or four major retailer meetings, right?

David Lekach:

It used to be, you could go to Chicago and maybe do like Walgreens and Kmart, when Kmart mattered, or existed for that matter. But that was very rare. You’d have to go to Bentonville, Arkansas for Walmart. You’d have to go to Minneapolis for Target. You’d have to go to Woonsocket, Rhode Island for CVS. You get my drift.

John Warrillow:

I do.

David Lekach:

And then the supermarket chains are somewhere, all of them are somewhere else.

John Warrillow:

But in Toronto, you could kill all your birds with one stone, yes.

David Lekach:

Toronto you bank it out. You got Loblaws is there, you got Shoppers Drug Mart, Rexall, and so on and so forth. They’re all there. They’re all in Toronto. And so the hub of the world is Toronto.

David Lekach:

And I had seen this guy. I always joked with him. “You need to teach me how to raise money your way, because you don’t even own anything, you don’t even have anything. Dude, you’re raising evaluations at my level, and all you have is buy seller arrangement that I can take away at any moment.” I said to him, because I wasn’t arguing it, I was really curious to learn. He still owes me a lesson, my friend, Steve. He still owes me a lesson on how he does it.

David Lekach:

But I think a lot of it has to do with that he’s constantly on Bay Street. Bay Street for those of you listening, is like the Wall Street of Canada. Wall Street is the Wall Street of United States in New York. It’s the financial hub of a country. And so in Bay Street he was very connected. And I just saw him raise all this money over time. And so I knew going into this, that he had to go raise money to buy me.

David Lekach:

And then just to fast forward a little bit. From that unsolicited term sheet, which I even called him and said, “How do you even propose something? You don’t know my numbers.” He goes, “No, but I’ll propose it. And now we’ll get into diligence and we’ll go look at it and whatever.” But I was never going to allow him to fish. It takes time. It’s a distraction for me as an operator. And I didn’t have a huge team or anything like that. It’s a distraction for me. And I was very clear on that. It wasn’t like I had to understand the debating.

David Lekach:

And we negotiated. I got on a plane. I went to Toronto a couple of times over the course-

John Warrillow:

What was your reaction to his term sheet?

David Lekach:

I was like, “What the fuck is this based on?” Probably was my initial reaction. It’s bullshit and it’s probably nothing.

John Warrillow:

How was the valuation? What was he offering?

David Lekach:

I don’t even remember. I don’t even remember. But it wasn’t about the valuation. I was like, “What is it based on? It’s not based on anything. The minute we get into diligence, he’ll start to correct it based on whatever it is he thinks he needs to correct it on.”

David Lekach:

So the point is, is that we went back and forth and we negotiated the term sheet. And we signed an actual term sheet like right after Thanksgiving of 2017. End of November, start of December of 2017. But here’s what I knew going into it. And when I give a talk from a Dream Water perspective, which this is my third webinar or podcast in the last seven days, which is cool. It’s usually my Dream Water story. And when I get to this part of the story, I have five or six key points and takeaways.

David Lekach:

And the first one is find your leverage. In other words, know who you’re working with. Who you’re doing that interaction with. This is going to apply to a retailer, understand what would be interesting to them and sell into that.

David Lekach:

The idea here was understanding his leverage. What was his incentive to do this deal with me? And also I knew him. So we had already known each other very intimately for three, four years. We knew each other. It’s not that I knew him, we knew each other at this point. So I knew things like he doesn’t have the money. I knew he had to go out and raise it. I knew things like he has raised it, so I believe that he has the capability of doing so, he’s not just willy-nilly. And all of these things. And I knew fundamentally that what he needed as a bare bone minimum response was to buy cheaper, buy closer to my cost of goods, if not at my cost of goods. So how do I do that?

David Lekach:

So going into this term sheet and understanding what I call is find your leverage, point one, was around it looked like this in execution mode. Yes, I signed the term sheet to sell. But that term sheet I gave him two months. I didn’t force it on him. But we’re sitting here at the end of November, start of December, which is a terrible time to start a deal because everybody goes away from like mid-December on. You’re basically working on closing deals. And then January starts and you’re working on finishing whatever you didn’t do in December from a acquisition, financial perspective, investment bankers and so on.

David Lekach:

Stupid time to start a deal. But it wasn’t a forced issue. I knew. And we put February 15th as the closing date. So it was a quick turnaround time. What I was saying to him was, and where we was aligning, I didn’t force him on that date. I asked him how much time he needed. We settled in on that date. But what I was trying to do was limit the distraction for me, knowing that he had to go out and get it. It’s not like he can just write the check.

John Warrillow:

But hold on. I feel like I’m missing part of the story here. Because you got an offer, but you can’t remember what it was, the specific number, but it was good enough or solid enough that you felt like you were willing to sign some sort of letter of intent. So clearly what he gave you met some sort of criteria for the value that you were looking for.

David Lekach:

Yeah. So again, and my job as a CEO is to always develop. I always looked at it as develop opportunities. Have options. Have choices. I would not be doing my duty, be it a legal fiduciary duty, or just practically in the way I viewed my role, if I didn’t see this through to really understand what the hell was being offered, right? Is that the backdrop?

David Lekach:

So it wasn’t even that I thought it was a great deal or that he was a good home for it, because that didn’t meet that criteria that I alluded to before. It was me just chasing it down, like I would, not giving too much credence at any given moment because I needed to stay dialed into what I was doing on a day to day basis.

David Lekach:

But to explain your point a little bit. And since I knew what he was getting at, and I knew he needed to raise money, I didn’t want to go through the distraction, whatever that might look like, without having him have some skin in the game. So upon signing the term sheet, when you’re doing a pretty sizable transaction, the key point here guys, whoever’s listening is, we ended up selling to a publicly traded Canadian cannabis company for 34 and a half million dollars Canadian. Canadian dollars. It was at the time at the exchange rate was about $27 million US. So, that’s the fast forward, right?

David Lekach:

But we were looking at this stuff, we were looking at this stuff, and I knew he had to go raise. So I said on that size of a transaction, I think upon signing of that term sheet, 200 grand came to me. I built that into the structure. It’s not about the valuation. How do I know he was offering the right amount or enough? Because the number that they offer you is only one part. It’s a nice part, big part, small part, whatever you want to call it. But the structure of the whole thing matters as well. It’s not just what is that number, right? And so-

John Warrillow:

The 200 grand was a breakup fee, or how did you structure that?

David Lekach:

It was a straight up, because I said, “I’m going to have to go out and hire accountants and lawyers. I’m going to be distracted. I might risk my team interruptions” and so on and so on and so forth.” And so, whatever I said, which was all real incredible, equaled that.

David Lekach:

But what we did from a creative perspective was that if we couldn’t get this deal done by February 15, then we had built in equally a more detailed term sheet where I was going to license to him Dream Water for Canada, where effectively I was going to be front-loading. He was going to raise the money and pay it to me, front-loading my gross profit. I kind of did the calculation, and said “What is my gross profit going to be for the next three years out of Canada? Let me book it today.” It wasn’t a big number. But let me book it today, because I was working on all sorts of other stuff here in the US.

David Lekach:

Canada was not that important to me from a dollars and cents perspective. And if they couldn’t make it work, whatever, I had more important fish to fry here in the US, and I’m working on more things that I need to do here in the US. So that was an alternative way for me to raise money with no dilution, no debt, no nothing. It was just front-loading my gross profit so I can accelerate those dollars today. And I would sell to him on a go forward basis at a cost plus 10%, cost plus 20%.

John Warrillow:

And that’s how you dealt with the 200 grand that he was giving you?

David Lekach:

So, for argument’s sake, 100 of the 200 of not getting… Because if not, we’re going to get lost here in the details. But some part of that 200 in that case was 100, was a fronting of money against that licensing deal.

John Warrillow:

Got it. Okay. That’s helpful.

David Lekach:

So, that was also how I got to 200. Absent that I would have probably been able to raise 100. But the other 100 was as a advance against the upfront payment that they’d have to pay me in the licensing deal.

John Warrillow:

Got it. So, he’s got some skin in the game, as you guys go.

David Lekach:

Now I know he has skin in the game.

John Warrillow:

Yeah.

David Lekach:

We’re under a truncated timeframe. I know he has skin in the game. But we’ve also contemplated what he really wanted, conceptually. Conceptually what he really wanted was my job and my role. Not in a bad way. But as a fail-safe, at the very least, to give him an opportunity, there was an alternative financing way.

David Lekach:

Innovation isn’t just product development. Innovation is this, what I’m talking to you right now. And I’ve never heard anybody do this. But I built the whole thing in knowing that there was a very strong chance that he was never going to be able to raise this amount of money in this kind of time period.

David Lekach:

So with that contemplated, we already go through the process, and I still deliver to him, remember, find your leverage, what he wanted. What he wanted was to be able to ultimately buy cheaper so there was the ability to, at least on paper, that he could make money on it someday, right? So we’re clear on that?

John Warrillow:

Mm-hmm (affirmative).

David Lekach:

So now we go forward a little bit. You know when a deal’s going to happen or not, or at least conceptually, because the deal worked, the work on the deal shifts, and the agreements are flying back and forth, and your checklist of things that you need to do. You just know when this thing’s getting heated up.

David Lekach:

And we hit February 15th. And the funny thing is I really would have set February 28th, but my birthday is on February 15. And so why February 15th? And he didn’t push it. He never asked it. And if he hears this, this might be the first time that he will ever know that I did this. Why February 15th was because, in a weird way, I would have really liked to have celebrated my 38th birthday this way, right?

John Warrillow:

Got it.

David Lekach:

And so February 15th rolls around. And instead of celebrating my birthday, I, with tears and smiles… And I never let myself dream, not the money. I never let myself dream about this as a realistic possibility. I didn’t feel enough of the flow.

David Lekach:

And of course on February 15th, Steve calls me, it was the morning, I was actually driving to my EO, we have monthly meetings in EO. I was actually driving to my forum meeting when I get the call. Like, “Hey man, I need more time. We’re not going to be able to do it.”

David Lekach:

And my second bullet point is give yourself options. So a lot of times we think options is, let me go put out a bidding war. And your bankers will be like, “No, no, no. I’m going to take your deck, and I’m going to take it to all these people, and I’m going to try to get a bunch of bidders and we’re going to pit them against each other.”

David Lekach:

Remember, my philosophy is you got to let the acquirer have the chance to make money too, all things considered. Obviously I care about me and my shareholders first and foremost, and so on and so forth. It’s not about every last dollar for me. I want the right home. If I am associated with something that is a success post-me, so if Dream Water continues to grow and becomes a Coca-Cola one day or a 5-hour Energy one day, I can tie my personal reputation and my personal brand to that just because I was involved. Forget that I was a founder. If you were a sales guy for Dream Water, if you were a finance person for Dream Water, that matters too, especially because I was the elder statesman. Again, I was 38 when we sold. So I was the elder statesman. You’re trying to build a career here, also conceptually.

John Warrillow:

Okay. So let’s focus though on, so Steve says, “Hey, I need more time.” What’s your reaction?

David Lekach:

When I say give yourself options, that was important. My immediate reaction, and it has to be true and authentic and real, no matter how much I wanted to close and the transaction to happen, I immediately said, “Steve, don’t worry about it, man.” In the inside, I’m like, “Fuck, fuck.” But I knew it was coming. I was like, “Fuck, fuck, fuck.” But I just said, “Steve, but we talked about this. We contemplated this. Let’s just shift, actually take the LOI”, which was way more detailed on the licensing thing. “Let’s just go execute that.”

David Lekach:

But here’s the thing. Steve was already pot committed, not just financially, but he was pot committed in his mind to becoming the CEO of Dream Water, to taking over Dream Water. So I knew his, again, we talk all the time. You have to stay attuned to what’s really the driver there.

John Warrillow:

So you knew he wanted it.

David Lekach:

He really wanted it. And he validated it right there. “No, I want to do the licensing deal.”

John Warrillow:

So what’d he say?

David Lekach:

“No, I want to get the deal done.” And I said, “Steve, how much more time do you need to get your deal done?” “A month.” “Really a month, Steve?” “No, maybe two months.” Maybe two months to get the deal done, not to raise money, to get the deal done. And he says, “Two months.” There was credibility behind it as to why. And then I just go to him and I say, “Okay, Steve, I’ll give you your two months. But I want $100,000 today. None of it offset against the purchase price. I want $100,000 today on February 15th, or whenever we execute the extension. And if on March 15th, you still need another month, I want another $100,000 in. Free and clear. It’s not going to an escrow account. It’s not going to nothing. It’s coming into my bank account. So I’m going to use it to operate and to do all the things I want.” Again, alternative financing methods that are incredibly different and innovative.

John Warrillow:

So to be clear, it would have been applied against the sale price?

David Lekach:

Would not. There was no offset in the sale price.

John Warrillow:

I see. Okay.

David Lekach:

It was in addition to.

John Warrillow:

Wow.

David Lekach:

Just because. He could have said no to me, and I probably would have-

John Warrillow:

Getting him to pay for your deal. That’s great.

David Lekach:

So, but what was I doing? So when you fish, depends on what the fish are, but when you fish conceptually, I’m not a fisherman, you throw out your rod and then you’ve got to reel it in. You don’t just jerk it, maybe you jerk it to hook it, but then you’ve got to fight it, and you don’t want to fight too hard because then the line will break, and whatever fishing analogies you want to make. But you got to reel it in. That’s all I was doing here.

John Warrillow:

So he hooks it in his mouth at this point.

David Lekach:

The hook was in.

John Warrillow:

And he wants the deal, yeah.

David Lekach:

The hook is in. Every time that he paid me another 100,000, he was more committed to having it come through.

John Warrillow:

Sure.

David Lekach:

So what I’m doing, and I didn’t necessarily even realize that that’s what I was doing in that moment. I was just reeling him in a little bit more. Reeling him in a little bit more to the point where he’s going to do everything possible, not me. I was living my life, going about my day, and all of that stuff. He was the one that was on the hook for all of this stuff.

David Lekach:

My third bullet point, my third key takeaway was, don’t be afraid to go all-in. It’s that moment of authenticity where I said to him, at least in a way that he heard me being authentic, that I’m okay with the transaction not happening. Let’s just shift to the licensing deal. That was my all-in moment in this deal.

David Lekach:

Because 10 times out of 10, my immediate reaction would have been, “Fuck Steve. Fuck, what happened?” And I would have asked him all that. None of that happened. I just said, “Man, we’ve talked about it. We’ve thought about it. Go, you need more time, great.” And then we did that. And then we executed the extension.

David Lekach:

We get to really the deal flow. The activity and the work picked up in March. In mid-March really. That’s when it starts to pick up. So I have Deloitte in my office, I had a preset reason so that none of my employees would know why. I was telling them that I’m going to go for another round of fundraising now that we’re on the upswing again. Remember, my business cycle, I had come down and I was on the upswing. So I’m going to raise some more money, that’s why you’re going to see Deloitte, that’s why I’m asking for certain reports.

David Lekach:

So I built in an excuse so that nobody would even remotely know that I’m trying to sell this business, except for my right-hand man, who was really a woman, who was a controller, she was my finance person. So between us, we knew. I was shocked at the end that she never disclosed that this was happening, because sometimes she talks, and I knew her. I knew what I had to tell her. To say and stress the importance of real confidentiality and we’re on lockdown.

John Warrillow:

All right, so March 15th, it rolls around, documents are flying around, yeah.

David Lekach:

Work is picking up, the deal flow is picking up, the contracts are multiple iterations in, and so on and so forth. And April 15th is rolling around, and they need til the end of the month to finish. And so I’m sitting there saying, “All right, I’ll give you 15 days. 400 grand’s enough to get you another 15 days.” And so I give him another 15 days. As we’re coming-

John Warrillow:

Oh, okay. This is the same 400 grand, but we’re referring to it [inaudible 00:18:44].

David Lekach:

[inaudible 01:02:45] in that moment. But we’re coming to the end of it. The deal, just to foreshadow this, the deal was announced on May 3rd. It’s a publicly traded cannabis company on the Toronto Stock Exchange. And they need to announce before closing for stock exchange rules that they have up there. Part of it is also to validate that there’s no… You can’t have cannabis assets in non-federally legal territories if you’re going to trade on the Toronto Stock Exchange.

John Warrillow:

Okay. But you lost me there, because I thought this was guy Steve was the distributor for Dream Water. How did you get to a cannabis company? That part is a little bit [crosstalk 01:03:18].

David Lekach:

Because ultimately what… Thank you. Thank you for bringing me back. What he was really trying to do was him find a strategic that would buy the Canadian distribution arm and me in one fell swoop. That turned out to be this company called Harvest One up in Canada. It was a cannabis company that was building, they had raised a tremendous amount of money post-transaction with me. They were sitting with over 60 million Canadian dollars in the bank, post-transaction, with zero debt.

John Warrillow:

So, Steve was the one who brokered this deal and got Harvest One to buy Steve and you?

David Lekach:

Yes.

John Warrillow:

In effect.

David Lekach:

Yes.

John Warrillow:

Got it.

David Lekach:

So, that happened in that post-February 15th process where the ultimate acquirer became self-evident, right? We actually understood what the plan was.

John Warrillow:

When did you become aware that Steve wasn’t raising the money for his own benefit? He was planning to essentially flip it to Harvest One?

David Lekach:

In March when they had their… And even then they weren’t acknowledging exactly who the buyer was. But since I’m super resourceful and I’m really, really smart, I let them play their game. I don’t want to get distracted with that. But they didn’t even want to necessarily tell me right away who the acquirer was. They told me enough about the acquirer, and I was able to figure out who the acquirer was. They never acknowledged it.

David Lekach:

But at different points, the acquirer staff wanted to go see our production facilities. We would produce between Dallas and Phoenix, even though we’re based here. So they wanted to go see that. So, at some point they had to tell me. It was in that moment of diligence or whatever. They were just sort of revalidating and wanting to see with their own eyes, including come down and meet me in my office here in Miami and things like that. So you can’t keep that a secret for a long time. But it became self-evident when it really started to pick up, what it looked like and who was the acquirer.

David Lekach:

And so all of that is to say though, that we come to the end of this, and now they’re telling me that we need another month. And that to me was the scariest part. Because if we announced that we’re getting bought by a cannabis company, but I sell to Walmart and Walgreens and CVS, I don’t know how they’re going to react. And for all I know, they’re just going to send me an email and say, “Take your shit out of our stores.” And if you don’t close with me, I’m on the hook for that, not you, right?

David Lekach:

Because I wanted to keep it quiet. I didn’t want to tell my employees. I didn’t want to tell anybody. And I wanted it to be done and then communicate. So that was a wrinkle. And it was funny because at that point they needed another month and there’s more risk. So what did I do on May 1st or as May 1st was approaching?

John Warrillow:

You want me to tell you? More money.

David Lekach:

It’s another $100,000. And my own lawyers looked at me like, “Are you fucking kidding me, David?” They are into this for hundreds of thousands of dollars, because they had two massive Canadian law firms.

David Lekach:

A big US law firm that Deloitte doing the diligence. I can’t even imagine what they spend on this transaction. I said, “Yeah, I don’t care. It’s another $100,000 we’re done here. We’re basically done.” Again, go all in, stick to your guns. But it was within reason I had rationale. It wasn’t like I was being a dick. It was very self-evident like everything that was going on and why I was going to ask for that money. But here’s the other thing that I said to them. If you ever had a chance to clean up these couple of balance sheet items, I didn’t have traditional debt, but I had a couple balance sheet items. I said, “If you ever want to clean that up, if you ever want to do, you should let me clean it up today. Because the minute that we announce that a company with $60 million Canadian in the bank is buying us, you’re getting zero discount on these line items.” So they gave me even more money to clean that up all to the tune of about 750 grand.

John Warrillow:

So when you say balance sheet items, you’re referring to the company owed you some money, personally?

David Lekach:

The company didn’t owe money personally, that wasn’t what I was referring to. We had a couple of legal bills that were outsized for some other stuff. And they were just sitting on a balance sheet. So I said, effectively, if you want me to go and get this amount reduced, which I did by half, if you want me to do that, you have to let me do that now. And you have to give me the money now to do that.

John Warrillow:

I see.

David Lekach:

You’re going to close the transaction anyway. Right? There’s no problems. There’s no issues. I’m doing this for you. Not for me. I’m thinking about you because the minute that you close with me and you announce, why would anybody give you any discount when you have that much money in the bank?

John Warrillow:

Right. So you’re constantly pressure testing this deal along the way and getting hooked deeper and deeper in.

David Lekach:

Right. And so that if the deal didn’t happen and none of this was offset against the purchase price, this is all in addition to the purchase price that if the deal didn’t happen well, shit, that was the most profitable $750,000, let’s say I had ever made because my cost of goods against that was zero. It was found money.

John Warrillow:

And David who’s paying that, is that Steve, the distributor is paying that out of his bank account or is it the Harvest One?

David Lekach:

At the end, it was Harvest One.

John Warrillow:

Got it.

David Lekach:

And so it was different people in different points and that’s great. Right? So that’s what that all looked like. That’s what that all sounded like.

John Warrillow:

What was the reaction to from companies like Walmart and Walgreens when you told them you’d sold to a cannabis company?

David Lekach:

Very congratulatory. I didn’t overtly tell them because I didn’t want to put on the radar if they didn’t see the press release, I wasn’t in a rush. But what I was really saying to them was not that I sold to a cannabis company, congratulate me. It was the positioning of it when I was in charge, when I was in the control was I now have that war chest of cash that I can go and do all the things that I’ve been wanting to do all this time, that I didn’t have the war chest with. It was a real transparency between me and my retail partners. A lot of which I had known over time and I said, now I have this cash, this war chest of cash, forget that it’s cannabis for a second because they can’t touch cannabis assets where it’s not federally legal.

David Lekach:

So that was my hedge there on the cannabis side. That was the positioning that I now have this company with a tremendous amount of money backing me. So now you don’t have to wonder what I’m going to do or how I’m going to spend or anything like that. That was basically the idea. And-

John Warrillow:

What were the terms around staying on what you said it was 34.5 million? Was that cash at closing or did you have to agree to stay on for a period of time? What was that like?

David Lekach:

I had no contingencies, no escrowing, no nothing like that. Again, if I had done this, the traditional, the right way with professionals, whatever, none of this, this story would have been real easy, real quick. I’m sure you’ve heard enough of them like this, because none of this stuff is normal. None of this stuff is the way you do things correctly. And so it wasn’t about the dollars and cents. Regarding me personally, I negotiated this to be as clean as much of as a purchasing, as is condition. You know when you buy a house as is? They bought the company, it wasn’t an asset sale. They bought the company because I was so clean and so tight with my documentation and so good in my diligence side, they bought me as is from a corporate perspective, which is also really insane because of all the potential liabilities that exist known or unknown in those types of scenarios.

David Lekach:

And I was very, very clear with them the entire way, I will not negotiate you hard on my agreement in leveraging the things, my total comp package being four or 500 grand in year one is in no way going to jeopardize this sale going on. That was my approach. So I was very clear and transparent, of course, what they did. And they were asking me for a long-time sign for two years. And my whole approach was, let me sign for one, by the way, in the original term sheet, my employment was spelled out in that, in that original, it wasn’t a one [crosstalk 01:11:20].

John Warrillow:

They were asking you to stay on for a year [crosstalk 01:11:22].

David Lekach:

But my employment, at least at the broad parts of its salary benefits, whatever was, was delineated in that original term sheet postings giving. So there was that level of detail. They didn’t give me a contract or even talk. They were asking me to sign for two years and my perspective was, let me sign for one and let me earn the second. Right. I wanted to make sure that the fit was right, that we got along, that it all worked. And I just me, I said, “Let me earn the second.” But I’m just trying to quantify that I was very clear about the fact that my four or $500,000-year comp package was not going to jeopardize the deal. So if they really wanted to hammer me and F with me or whatever, they handed me the draft of my employment agreement say May 1st, again, this deal was announced on May 3rd. Or maybe they handed it to me on April 30th, somewhere on it, it was the very end as a tactful move on their part because they didn’t want to continue to negotiate now this and drag that thing out.

David Lekach:

They knew that the deal is ready to go. Let’s go. They didn’t want to give me a lot of time to negotiate. They didn’t really believe that I wasn’t going to kill them because this purchase agreement is the cleanest sale side agreement probably ever in the history of selling a business as it is here in the United States. I had very limited indemnity. There was no escrow. There was no way that they can claw back this stuff. And whatever little bit of indemnities that I was offering, it was in that period of May 3rd, announcing to the closing, which they had to do by the end of May. They had to, they ended up closing on May 30th in order to wiring me the money and finishing the transaction.

David Lekach:

And so, my personal part of it, I was clear and I didn’t push them on it too much. My employment agreement technically started June one and for a variety of reasons, I really wanted to stay in and see a bunch of stuff that I was doing through. And I wanted to test my thought processes. I had all these ideas in a digital ecosystem and direct to consumer and building a subscription, recurring revenue model on my side. I wanted to do all that to see if it’s true. If what I understood academically, was going to happen in real life. That was my motivation. That would have been why I would have stayed. I didn’t care about the title or whatever. I wanted to see it through, but it became very quickly evident that they were like, “No, no, no, no slow and steady. Don’t worry about it. No, no, no. We’re not doing anything right now.”

David Lekach:

I said, “That’s not me. You can relegate me or give me my… Here’s your options with me. I’m not an employee. I know I’m your employee now, but I’m not an employee. So for me, either relegate me, you put me off to the side and get rid of me or give me my lanes and let me go.” And that’s what I meant by, I’m not an employee. “Give me my lanes and let me go.” I lasted about three weeks. They paid me very, very amicable. None of this was weird or difficult. I lasted about three weeks and they paid me out the entirety of that one year. Now, in retrospect, I was like, “Man, I should have asked for two years, they I would have made double as much.” But they paid me out the contract in full. And to this day, I’m there to help and serve. And I care about it because it’s my baby. Right. So there’s that.

John Warrillow:

I love it. Did you buy yourself a trophy? What did you go buy as a reward for this journey?

David Lekach:

So the things that if I was doing this as a Dream Water centric dissertation versus an interview where… You see even you were so hooked by the story that you were so focused on the other details that you told me, this was going to be an interview about my exit. And you spent 30 to 40 minutes at the beginning asking about Dream Water. That was what my life is like. Always, I go to dinner my entire life, since I did Dream Water. “Tell me about Dream Water.” It was always a point of conversation, even in social circles and so on and so forth for whatever that’s worth.

David Lekach:

I went through a divorce toward the start of… I had two little kids. My daughter wasn’t even two. My son was 10 months old when I left the house. To me, that’s when I got the divorce. I went through a divorce. I also saw the benefits of being lean and mean in terms of certainly your fixed overhead, such that when you lose a huge customer, a substantial amount of your huge customer base that you can live for another day, I didn’t live my life in debt personally or professionally. I’m not saying that that’s good too. I think some amount of that is good and it’s beneficial and helpful, but I did, I lived my life this way. And so coming into this… I should also say, as a backdrop, I come from a very entrepreneurial family and a very successful family.

David Lekach:

And so let me be absolutely transparent and clear. I still got a tremendous amount of support financial and otherwise from my parents in my 30s. I didn’t abuse that support. In other words, I wasn’t getting that support and buying myself a Ferrari. I drove a very normal car. I still drive a very normal car, but I guess enough things happen in life. My generation coming into the… I graduated from University of Michigan business school in 2002 into one of the worst recessions in that moment, everything was rocking and rolling, rocking and rolling. Most of my classmates in the best business school in the country did not have a job. So I already had that as a mark in my early 20s, let’s say, right? Then fast forward into my late 20s, we have the greatest of depressions in a way ’08, ’09 with the financial crisis.

John Warrillow:

Sure.

David Lekach:

And this is two years before COVID, but I’ve had two marks, even on a subconscious level that say, life doesn’t always work out your way you need it to work out. Cash matters, really more than cash, cashflow matters. And so my trophies were not, I needed a car. I’ve lived a very good life. Thank God. And I will always credit my parents for that. I used to in my 20s, want to be a self-made man in spite of my parents and in my 30s, as I matured and evolved, I grew to very implicitly, openly and internally to me say, “Thank you for being my parents. Thank you for giving me this opportunity or these opportunities to go to school, to not graduate with debt. All these things over time.” I’m incredibly lucky in that regard, but I never wanted to be that that guy that just is always taking and taking and taking, I didn’t want them to be like, “Well, why am I helping you above and beyond?”

David Lekach:

In other words, they did it because they saw who I was as a person. And who I was as a person does not require, I’m not a car guy. I didn’t need a boat even though I’m in South Florida, I didn’t need a Ferrari and I didn’t need any of that. But what I did understand, and personally, what I did want was cashflow. I didn’t want to put money in the bank. I also never made money in the stock market. So I wasn’t trying to put into the stock market. But all of a sudden, I started to invest in some real estate deals. I started to invest into some lending funds. I started to do things that weren’t going to be… I did some home run, swinging type of stuff into some businesses or otherwise, but I knew that I wanted to build a cashflow basis.

David Lekach:

And then I wanted to live my life off of the cashflow, not off of the cash, but if I go buy a $300,000 sports car and I go buy a $2 million house and I go buy a $500,000 boat, well, shit that just went… What did I just say? Three, four million post tax dollars, post tax dollars. Okay. And so that’s not me. I didn’t want to do that. And mind you, I don’t live my life in debt. So I just was shooting for cashflow. And that was the real truth. I mean I didn’t have to have a trophy, but because of that reason and to some degree-

John Warrillow:

Perfect.

David Lekach:

… And to some degree, I think it’s a bigger, fuck you status symbol, if you really want to look at it that way. That I just sold my company for all this money. And I drive the same car that every mom in my kids’ school drives. But I do that because just to hammer home that point, I do that because I have little kids, I have little nieces and nephews and their friends. And if I have a nice car, I’m going to be worried about the car, in my car they have jumped to the back seat, come in with sand from the beach-

John Warrillow:

Or your Cheerios.

David Lekach:

But you eat your food, I just don’t care. Does that make any sense? That was really-

John Warrillow:

Totally.

David Lekach:

… If I had a nice car, I would have cared. So that was really the thought process behind my exit.

John Warrillow:

Awesome. Awesome. Well, that’s an incredible story. I’m very grateful for you sharing it. I think a lot of people will find it amazing. Where can people, if they want to reach out to you and say, hi, and on social, or what’s the best way to reach out?

David Lekach:

Sure. I’m on LinkedIn. David Lekach. L-E-K-A-C-H. I’m on Instagram, david.lekach. My email is david.lekach@gmail.com. Do not be shy to reach out. I believe in paying it forward. In a year, we have to make a mark. Again, when we finish this interview, I’m going back to war rooming, how do you bring an entire community back into school. But before we break and before we wrap up by way of a sort of a thing that is necessary to acknowledge. Is that if I think about my exit in terms of a bigger thought process, is if it’s about the money you’re going to burn out. Because there’s nothing that says that, I’m going to start this I’m going to do enough right things, I’m going to sell it on your five. Again, I was in my ninth year. I’m a nine-year, overnight success, nine years. It’s almost a decade. It’s almost a decade.

David Lekach:

And so I just want to take knowledge that my co-founders, my original crew, including my younger brother, they all burnt out at one point or another. They just did. I don’t know where or how I found that resolve to keep going, but it was really fundamentally because we would get so much consumer feedback directly, not esoterically about the impact that we were making on their lives. That’s what kept me going substantially time and time and time again, because I wasn’t paying myself much money. Operationally Dream Water was a dog for me. On a day to day basis, I was not… The first five years I took zero salary. Let me repeat that. The first five years I took zero comp, zero and I went through a divorce in those first five years.

David Lekach:

So whatever little that I had in my name, my ex took more than half of it. Okay. And so I want to be clear that for me the real motivator, when I can look back and diagnose, it was that, it was the impact. To me, I found that really cool that this idea that I had equaled tens of millions of bottles sold over time, under my stewardship over this little idea that I had way back when, and then seeing the impact. And when I will tell you, you said, “What toy did I get?” A lot of people do that, or-

John Warrillow:

Trophy. Yeah.

David Lekach:

… Whatever trophy that you have the most rewarding part of the entire experience, because this was really like a family for all of us. We grew up together. Again, I was the elderstatesman when I sold this at 38 years old, we all grew up together. And I will tell you that the best part was since I wasn’t doing much in the time from May 3rd, when they announced a deal to May 30th, when they closed on purpose. And that’s not for the purpose of this call right now, but, or this webinar, I wrote letters of appreciation and gratitude to my staff. And there was a pool of money that I didn’t mention, but there was a pool of money in the structure that wasn’t for my shareholders. It was literally set up to be a pool that was at my discretion that I could say, thank you to whoever or I can pocket the whole thing myself, if I wanted to.

David Lekach:

But that’s how we set this thing up, this transaction on that side. And they did try to negotiate that pool of money away from me multiple times. My answer was always absolutely no, because what I did was even the cleaning lady in my office here, we’re not all based in Miami. We have real base of operations in Dallas. And again, we produced with a co-packer in Phoenix as well, but we were not all in Miami. But even the cleaning lady in my office in Miami got 1000 bucks just as a thank you, which you can imagine is a lot of money. But what I really tried to do, especially on a longevity basis, it wasn’t merit based. It was just how you felt or whatever. I tried to get to one-year salary for the people that I wanted to say, thank you to, or that I just had some extra funds to say, thank you. You didn’t have to be a W-2 employee. You could have been just somebody that helped me along the way. It was my way to say things that little pool of money, but it wasn’t the money.

David Lekach:

It was that I wrote these letters to tell them half a page, half page max, a full page. If it was really in depth, not more than that. And the emotional connection and that thing was the most awesome part of this thing. Better than giving my shareholders their money back or return on their money, better than putting the money in my pocket or whatever. For me it was another day, my mom calls me I was out at a conference. My calls me, she says, “Have you seen on May 30th, have you seen your bank account?” And I said, “No.” She goes, “Look at it.” I looked at it, I said, “Wow, that’s cool. And I went about my day.” Right? My life didn’t change.

John Warrillow:

How come your mom is seeing your bank account, man?

David Lekach:

Oh, we have a family office.

John Warrillow:

Change your passwords.

David Lekach:

No, she’s the one that sees everybody, everybody professional and whatever. But my point is is that I just, I would be remiss if I didn’t say that that was the best part, that, and to some degree, the second best part, even before I say myself for the shareholders was my EO group, my entrepreneur group, because they lived my life with me, not just my Dream Water life, they lived this whole journey with me. And so that first monthly meeting that we had after the sale, it was very awesome and emotional for me and for all of us-

John Warrillow:

Oh, I imagine.

David Lekach:

… Because we lived it and did it together. So I would be remiss if I didn’t say that appreciation and gratitude matter. It matter for me, most of all, but also on the receiving side.

John Warrillow:

That’s incredible. Well, good for you for paying it forward and for sharing with us. I really appreciate you doing that. So listen, thank you again. And we’ll put your coordinates in this show notes as well. Thank you for doing this.

David Lekach:

Thank you, guys. Thank you for having me and thank you for listening.

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