Liquor, Quicker

It all started with a text message.

Nick Rellas, BC ’12, was sitting in his dorm room in Ignacio Hall when the thought occurred to him. Upon reaching for a beer only to find an empty fridge, the then-senior sent his friend and former classmate Justin Robinson, BC ’11, a text.

“It was late one night, sitting in my dorm in Ignacio,” Rellas said. “I sent Justin a text message and it was, ‘Hey, man. Why doesn’t alcohol delivery from your smartphone exist?'”

Rellas had transferred to Boston College from Rochester Institute of Technology, double-majored in finance and corporate reporting and analysis in the Carroll School of Management, and graduated in the Class of 2012.

While studying at BC, Rellas also worked part-time at New England Coffee-one of the top five roasters by volume in the country.

“That was really where I got the framework for what I call an obsession with the fact that technology has been unable to implement itself into these regulated industries,” he said.

Rellas recognized the space for technology within an industry comprised largely of unchanged and outdated methods of providing customers what they want-in the case of New England Coffee, beverages.

“You see these incredibly antiquated, fragmented industry structures that make an awful lot of money-up to tens or hundreds of billions of dollars a year-but seemingly haven’t moved, haven’t changed as we’ve seen the advent, frankly, of the phone or mobile phone, cellular, Internet, and now smart phone,” he said.

As they mulled over the fact that there was no convenient system to provide alcohol to consumers, Rellas, Robinson, and third Drizly co-founder Spencer Frazier, BC ’11, dug deeper into the potential of creating one themselves.

“Alcohol just had a really interesting appeal to me-not so much personally, just in terms of the fact that it was so open in terms of technology,” Rellas said. “The liquor store experience is something that fascinated me, thinking about the fact that it just hasn’t changed in 80 years-since Prohibition ended.”

It was then that the BC senior, alongside Robinson and Frazier, thought of developing a mobile application that would enable small businesses to grow revenue through increased deliveries.

Still considered one of the company’s co-founders, Frazier developed the prototype app in conjunction with a friend of his at USC, but left Drizly to pursue other interests.

The Boston and New York City-based Drizly has since pursued the dual goals of maximizing convenience for consumers while simultaneously increasing sales for local liquor stores. With Drizly, customers can order alcohol to their doorstep within 30 to 60 minutes without paying any more than they would if they had gone to the liquor store themselves.

Drizly is neither a sale nor delivery service, and instead acts as a modern middleman between local liquor stores and individual patrons throughout Boston and New York via its iPhone-based app. The app allows users to order any combination of beer, wine, or liquor they choose and have it delivered to their household or business, all without Drizly ever touching a bottle or driving a car.

Knowing that delivery options from liquor stores have existed for years, Rellas and Robinson were not looking to alter the alcohol distribution industry, only to enhance it for both providers and consumers.

The company makes its profits by charging local distributors a fee for joining its network of listed alcohol providers-the more providers, the broader the range of deliverable alcohol. The increased delivery requests liquor stores receive through partnering with Drizly exceed the fee, therefore benefiting both the purchaser and the local business.

Given the potential legal issues surrounding the process of delivering alcohol on a mass level, Rellas and Robinson made it a point to become fluent in all state regulations regarding alcohol policies to ensure that local stores would be willing to partner with them and that the company could operate in compliance with the Massachusetts and New York State Liquor Authorities.

“The first thing that stores appreciate and the most important thing in this state, and New York, and anywhere else, frankly, is being responsible and fully understanding all of the regulation that goes into it,” Robinson said.

“The way Drizly is set up was intentional-we don’t take any money from a sale, we don’t do deliveries,” Rellas said. “So as far as the State Liquor Authorities are concerned both in Massachusetts and New York, we don’t have any part of the process, we’re just the software middle man-a 21st century fax machine, as far as they’re concerned, in large part because of the tools we’re giving the stores.”

Those tools, Rellas and Robinson said, are based solely on helping businesses witness incremental revenue through ushering the outdated liquor store experience into the modern era of technology.

Regarding its hand in the process, Drizly is not seeking to uproot or overhaul the existing structure of the alcohol industry, but is only trying to utilize its current system to help all aspects of the industry grow.

“You’ve probably seen me say it a lot: we don’t try to disrupt this industry,” Rellas said. “We’re not coming at this like Uber, trying to go at regulators, trying to go at lawmakers, saying, ‘We want change the way we’re doing this.’ It’s just not how we want to run the business-not that it’s better or worse, it’s just different.”

“We’re not only doing [business] correctly, but we’re empowering each tier of this process,” Robinson said.

The alcohol industry is divided into a three-tier system of three main actors: suppliers, distributors, and retailers. State laws prevent any participant within the alcohol industry to engage in more than one tier at the same time. Drizly, however, does not directly fall under any of those tiers and still allows each one to expand.

“We think that there’s plenty of opportunities to work within the three-tier system, and we’re committed to doing that,” Rellas said.

“We’re not only complying with those regulations, but also empowering all tiers, all steps of the process with technology, data, et cetera, that no one has ever seen before,” Robinson said.

After making deliveries themselves as employees of liquor stores in the early stages of developing the company, Drizly began establishing a network of local stores and cultivated a following of early app users that attracted a wide circle of fundraisers.

From there, investors began pouring in.

“It takes a village, and we’ve got a pretty great village around us helping us grow the business,” Rellas said on the process of fundraising.
Although the two did not have much of a background in raising capital prior to Drizly, they depended on their extensive knowledge of the business and their ability to navigate the structure of the alcohol industry to convince investors of the app’s potential.

“It was the first time, for both of us, ever fundraising, and I will say nothing really prepares for this type of a process,” Rellas said. “You’re talking to very seasoned, professional investors. So, for these guys, it’s about capital preservation and about capital appreciation. You have to really have a framework for what your company is, who you are, how you expand, how you grow.”

“In terms of preparation, I think it was a year of not only crafting the right strategy, but also having traction with the correct people in the industry and making it happen,” Robinson said. “Again, that BC sort of well-rounded overall mentality certainly helped craft that a bit.”

To minimize risk associated with delivering to anyone with an iPhone, Drizly uses a unique electronic identification system to verify purchaser age and identity upon delivery, which local stores are encouraged to use. Only once the ID is scanned and facial recognition is complete is the sale final. Drivers also have the right to withhold alcohol if they feel uncomfortable with the circumstance of the delivery-an added security measure Drizly introduced to ensure investor confidence in the delivery process.

With Drizly’s recently announced $2.25 million in seed funding from top venture capital firms like Atlas Capital, Continental Advisors, and Fairhaven Capital, and veteran entrepreneurs such as Lars Albright, Ty Danco, and T.J. Mahony among an lengthy list of others, the company has no plans of slowing.

“The answer is yes,” Rellas said when asked about plans to expand beyond Boston and New York. “I won’t say more than that-you’ll hear it from us about that pretty soon.

“I think also our users are using Hotel Tonight, they’re using Uber, they’re using Amazon Prime-so they have a desire for a really incredible, delightful experience, and we’re going to spend a lot of time putting in some features that really change the way you interact with your local liquor store in a way that’s just never happened before.”

Drizly is now one of numerous startups created by BC graduates that have received sizable funding, including California-based WePay, founded by Bill Clerico and Rich Aberman, both BC ’07, and Jebbit, founded by Tom Coburn and Jeb Thomas, BC ’12.

Rellas and Robinson attribute much of their success to their time and formation at BC, and they acknowledged that some of Drizly’s earliest supporters were professors within the BC community.

“Professor [John] Gallagher was one of the very, very first people, and instrumental in helping us kick this off … he’s a huge asset to the [BC] community,” Rellas said. “Entrepreneurship at BC is definitely something new and growing … This is something that’s happened, I think, in spite of whatever support you want to say, that people are focusing on this in as big of way, it sounds like, as the Big Four, accounting, consulting-it’s something that’s great and we try to shine more light on it.”

Robinson also noted that the array of student interests and the holistic approach of the University’s teachings helped shape the careful and analytical approach both he and Rellas have taken to build Drizly.

“I love BC first and foremost because of the people,” Robinson said. “You have a bunch of people who are well-rounded, some are athletes, maybe not, you have smart people that do well in school and still like to have fun-it’s a type of person that is entrepreneurial to begin with. It’s an awesome community.”

With an Android platform in the works and intentions to move beyond Massachusetts and New York, the lean, 15-employee operation continues to devise strategies for expansion and for enhancing its services to all involved in the industry.

“We think that we sit at a pretty interesting crossroads for an industry,” Rellas said. “So we’re going to continue to work on growing our network of stores and growing our audience.”

February 3, 2014
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Established in 1919 as Boston College’s student newspaper, The Heights has been both editorially and financially independent from the University since 1971. The Heights serves the students, faculty, and staff of the Boston College community, as well as our neighbors in Chestnut Hill, Newton, and the Allston-Brighton area.  

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