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• Randall Searls faced the dilemma of partners disagreeing on how to respond to a threat that could destroy Big Boom Beverages (BBB).
• The disagreement occurred after three years of working together and investing savings and sweat equity in the startup.

Crazy Idea

• Malik Evans, Jaf Hallett, Denny Grocki, and Randall Searls discussed business ideas after graduating college.
• They aimed to create a business of their own despite having day jobs.
• Malik recalled a popular college drink combining energy drink, vodka, and lime-flavored soft drink, inspiring the idea to create a premixed version.

Adult Beverage Industry

• The adult beverage industry includes thousands of companies worldwide, ranging from small local breweries to global corporations.
• These companies include Anheuser-Busch, Heineken, and Diageo.
• Spirits were the largest segment of the alcoholic beverage market in the 1970's, before beer and malt liquor displaced them in the 1990's.
• Between 1995 and 2009, beer consumption declined, while wine and spirits consumption increased.
• Many states relaxed liquor sales laws, broadening distribution channels to include supermarkets, discount stores, and convenience stores.
• Retailers demanded frequent deliveries of small quantities to keep shelves stocked, and convenience stores favored single-container packaging.
• Young single males were the largest convenience store market segment, with tobacco being the best-selling product.
• Small beverage companies were often innovators, experimenting with formulations in the craft beer segment.

Rise of Canned Energy

• Canned energy drinks combine caffeine with ingredients such as taurine, ginseng, vitamins, sugar, and green tea extract.
• Taisho Pharmaceuticals of Japan marketed Lipovitan D in the 1960's, while Red Bull was introduced to the U.S. in 1997.
• Red Bull packaged its product in a slim 8.4-ounce can with a distinct design.
• Red Bull's marketing plan targeted young men through brand associations with sports and web-based media.
• The Red Bull-sponsored Stratos jump on October 14, 2012, featured Felix Baumgartner jumping from a balloon 24 miles above the earth.
• It reached a speed of 844 miles per hour.
• Red Bull built an online presence with YouTube videos and launched its own channel in 2008, featuring videos on sports.
• The company bought soccer teams around the world, including the New York Red Bulls.
• Between 2000 and 2010, energy drink sales in the United States grew roughly 3,500%, while coffee sales remained flat.
• Red Bull maintained the largest share of the energy drink market.
• Researchers estimated that 34% of 18- to 24-year-olds regularly consumed energy drinks in the early 2000's.
• Many energy drink companies used promotions in social media to reach adolescents and young adults.
• Multiple studies found that moderate energy drink consumption led to improvements in focus, sustained attention, and reaction speed.

Launch of Big Boom Beverages, LLC

• The four partners decided their product would use malt liquor to be sold in convenience stores.
• Several large beverage companies had already introduced caffeinated alcoholic beverages like SABMiller (Spark), Anheuser-Busch Inbev (Tilt), and United Brands Company (Joose).
• The partners established BBB with funds from savings and contributions from family and friends.
• The partners first shared responsibility but informal roles soon evolved, resulting in Malik became the chief motivator etc.
• BBB found a consulting firm to develop beverages that could be produced commercially at a low cost.
• They settled on a product formulation of malt liquor, a caffeinated energy drink, and fruit-flavored sparkling soda.
• The product had an 8% average alcohol by volume (ABV) content, higher than the typical beer ABV and the product was named Highbrid.
• They defined their principal target market as male students attending Midwestern universities.
• They set a retail price of $2.29 per container and would sell the product in single cans.
• The packaging imitated the subdued graphics of Red Bull containers and banners connected the product to college towns.
• BBB's biggest obstacle was distribution, so Denny negotiated deals with liquor distributors that served college towns; Denny promised convenience store owners that he and his partners would ensure the stores would not run out of the product.

BBB's Near-Death Experience

• In the next six months, sales of Highbrid grew, though cash flow was not sustainable.
• Randall warned of a looming liquidity crisis.
• BBB could survive with additional capitalization, but the founders had limited resources.

Fight or Flight

• Randall and Denny did not want the company to sink further into debt, Jaf was undecided, and Malik was confident that BBB could succeed if it increased the alcohol and energy drink content.
• They also agreed to change the brand name, change the packaging design to reinforce the customer connection, launch a low-cost promotional effort centered on social media.
• BBB increased the ABV of their product to 14%, which was higher than that of any competitive product.
• The product was named Totaled, and its packaging was redesigned.
• BBB launched a website that included marketing events, photos, videos, and contact information.

Unintended Consequences

• The videos motivated avid Totaled customers to create a YouTube channel where users uploaded videos that mostly showed the effects of drinking Totaled, including inebriated behavior.
• The founders debated whether to discourage these videos.
• Over the next six months, the customer videos became more elaborate with people becoming incoherent or passing out.

Success

• Within a year, Totaled sales increased 150 percent, to 500,000 units, and in the second year, sales soared to 750,000.
• A national convenience store chain reported that Totaled had the second-highest sales growth among the alcoholic beverages it sold.
• In two years, the BBB partners grossed more than $2 million and they discussed expanding sponsorship of low-cost events.

Twist in the Road

• As Totaled became a popular drink for young people, binge drinking led to troubling incidents.
• 35 students at two colleges were reported to have been hospitalized because they were incapacitated after drinking multiple cans of an unidentified alcohol and caffeinated-energy drink.
• Widespread media coverage blamed Totaled, but later reports clarified that Totaled had not been one of the beverages the students consumed and cable news channels showed clips of videos.
• Physicians at hospital emergency rooms noted a spike in the number of patients who had consumed beverages that contained alcohol and an energy drink.
• The CDC was concerned that a significant percentage of high school students and about a third of young adults said that they had consumed a caffeinated alcoholic drink.
• Administrators said that the consumption of caffeinated alcoholic beverages had been implicated in sexual assaults on their campuses.
• BBB had no public relations (PR) specialist or outside PR firm, speaking about how doctors criticized it.
• As reporters found that drivers who had consumed them to excess had been involved in fatal accidents that killed five people.
• BBB received offers from PR firms to help it with crisis management and a special focus on Totaled, asserting that the only effective solution was educating consumers.
• The FDA could order harmful products off the market or issue a formal warning letter demanding corrective action.
• SABMiller and Anheuser-Busch Inbev quickly withdrew their caffeinated alcohol products without protest since drawing would destroy the BBB company.