At 7 years old, police shut down Jeffrey Nadel’s lemonade stand because he didn’t have a permit. Now the owner of an innovative new alcohol delivery business, Klink, Nadel is still battling the government busybodies who would like to shut him down.
Klink is a service that allows you to order alcohol from your phone to your doorstep. For those who like to entertain, it’s a game-changer—no more mid-party liquor runs, and no more drunk guests risking their lives to drive out for another six-pack. Klink will run out and buy it all for you, for a small delivery fee.
But, with alcohol remaining one of the most tightly-regulated and controlled markets in America, Klink has faced challenges at every step. At a Cato event Thursday, Nadel described the enormous hurdles he and his partners faced when first opening for business.
Before launching, Nadel had to spend 10 months huddling with lawyers just to ensure that the business would pass regulatory muster. “We struggled and struggled to figure it out,” he recalled.
Once they opened in Florida, it took just 17 days for regulators to track them down and begin probing their business. The regulators eventually let them be—but only after carrying out undercover sting investigations. “They had never seen anything like what we were doing.”
A whole host of alcohol regulations affect Klink’s day-to-day operations. Many states require alcohol retailers to close early, for example, limiting the hours that Klink can pick up booze for their customers. And Klink is not legally allowed to work with distributors, so retailers are their only option. They can’t carry the alcohol across state lines, meaning they can’t shop for cheaper deals in VA to serve to their DC customers.
Their biggest problem comes from what Nadel called the “huge imbalance of power” between each state’s powerful regulatory agency and the small mom and pop shops Klink seeks to do business with. “You have these huge powerful regulatory agencies pitted up in many respects against these mom and pop shops,” he said. “And when you come to these retailers with an innovative opportunity—let’s increase your sales, get you new customers, leverage technology, all this exciting stuff—the finger is kind of pressed on the scale in favor of not innovating. Because the risk is heightened to innovate.”
Even just getting on the bad side of a particular person at a regulatory agency can endanger a business. “That’s really the core challenge that we deal with.”
Klink currently operates in Florida, DC, and Michigan. “We’ve had different experiences, state to state,” said Nadel, calling DC “incredibly hospitable,” but Michigan “incredibly hostile.”
In Michigan, Klink drew the wrath of regulators trying to protect existing liquor businesses that they had disrupted. All Michigan stores are required to charge a minimum fee for alcohol, and Klink had sought out the stores that sold at the state minimum. This quickly wooed the business of University of Michigan students, who discovered using Klink was much cheaper than patronizing any of the liquor stores near the school, which had marked their prices up 30 or 40 percent higher than the state minimum.
These price-gouging retailers “were not so happy,” said Nadel. “They no longer had a captive interest.”
But, despite all the politics of the liquor industry, Klink has numerous reasons to appeal to regulators, particularly from a safety stand-point. Nadel frequently touted Klink’s use in eliminating drunk driving, and also claimed their in-house ID-checking technology is more rigorous than most other establishments.
And if all this talk of alcohol has made you thirsty—you can download the Klink app here.
