dan fishman -- regeneration vc

Dan Fishman — Regeneration VC

Wednesday, August 10, 2022
Do you feel good about the purchases you make and the trash you generate as a consumer?
 
Dan Fishman believes in empowering consumers and he shares perspective for startups and brands that are being built to serve our new regenerative future.

Dan has had a fascinating career from making brand deals for Prince and Shaq to launching fashion brands like ALC with Andrea Lieberman. To scaling LA-based ice cream brand Coolhaus to over 6,000 stores. Dan is now focused on climate innovation and the circular economy with his amazing partners at Regeneration VC.

Dan, you have had such a unique career. I would love to start there and hear some about your background and kind of how you got from there to here.

Yeah. I got put in a great position. I had a partner down in Atlanta. I got introduced to a music manager, Scooter Braun, and started to put together some real unique deals. Uh, we put together a deal with Ludicrous for General Motors for Pontiac, uh, started understanding the fashion space, working with people like Jermaine Dupri, Nelly, Shaq  on a watch project.

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From there, You know, started coming out to Los Angeles, and you know, we started putting together brand deals in that world. Nicole Richie, and I grew a brand called house of Harlem 1960 together. uh, had a partner named Margaret Maldonado who was representing, stylists and makeup artists were doing Evelyn from beyond say’s hair to styling, you know, Jennifer Lopez and the top people in those areas. That’s how I met Andrew Lieberman before she was a fashion designer.

She was a top stylist. So we, myself and my partner put together and put in the capital and put all the pieces together for ALC to be launched. and from thereMargaret and I launched a brand called , which scaled into department stores all over the world.

 did you know how to launch and scale fashion brands?

I guess that’s probably what I’m really good at is just learning understandings, sponging, and, just not taking no for an answer. calling in favors and making decisions. I guess it’s the same thing. When I, got involved with house, it was very cool food truck brand and, uh, Natasha, the founder.

And I made the decision to convert to a grocery. neither of us knew anything about the grocery space and through just going into every whole foods and every Bristol farms and every Rouse going into factories and all hours and understanding that the landscape and the business.

 it’s a lot of hard work. And when you look at, and you say I’m just going to outwork everyone and, find all the answers to all the questions that I would want to answer. You’re basically half the way there. And then have a great brand and a great product work some good marketing.

Well, but I know lots of people are outworking everyone and asking hard questions, but they don’t all skills successfully where there’s certain big inflection points where you made the right decision,

Uh, I mean? Obviously yes, that goes without saying, I also will say that when we made a wrong decision, it was at the right time to make a wrong decision. I mean, with cool house, you know, early on, remember . We had numerous big chains coming at us saying, we want you in our stores.

We’ll put you in all 200 of these stores and 150 of these stores. And obviously you’re like, wow, that’s amazing. Let’s do that. And then you realize quite quickly, you don’t have the money to market. You barely have the money to, afford the slotting fees. all the different marketing costs that these stores put on you, you can’t.

And you figured out really quickly that you’ve made a mistake and then you, when you pull back and you say, you know what, we’re just going to focus on California, grow from there. Then there would focus on New York and then we’re going to fill in it’s sometimes , the mistakes that you make really are what turn it around and help you scale a positive way.

So I think that I’ve learned very well from any errors that I’ve made. and then just. Being good with people understanding, that everything should be a win-win. And when you’re, talking to people being honest and open with them , and saying, here’s what I’d like to do, what do I need to do to make sure that we can get there?

any good examples or lessons we can learn from. Yeah. I mean, There was a turning point in my life where I, I was going through a whole food thing on my end. I just, the idea of how food and health are not really aligned in this country and within that, , dairy as a whole.

And just saying, you know, We need to launch a non-dairy vegan. I think that Koolhouse would be the right brand to do it. And literally went to whole foods and said, here’s what we want to do. Will you guys get behind us? , we’d love to give you some equity in the brand and figured out a deal that makes sense where you’ll help us launch it and give us certain shelf space.

And, in return, you know, you become a partner of ours and, uh, you know, it just, it worked out.

 Great. So educate me a little bit online. Non-dairy is so important and why this was an important part of your journey.Well, from my end, if you look at the numerous steps that, I endured to kind of find my environmental calling, so to speak, uh, it definitely started with food. I was definitely not living a healthy life in my food choices. , and the idea that food is health and food is medicine more importantly. I went vegan almost seven years ago and definitely at first it was health, but then you really dive deep into everything. And it’s always about environmental. Look at how much food is wasted.

It’s one third. greenhouse gas emissions are from food loss and waste. So if you look at food and environment, it all comes from their

 And so then it gives me the, the rest of the journey and how this, sort of led to you deciding to start a fund.

it. So cool house. The vegan line of course was around 2008. 17, 18, Um, we raised money from private equity around everything we were doing, and it was time for me to leave the day to day. I wanted to focus on more of a startup investor, pre-seed brands and, founders that had environmental impact and, and health and wellness kind of first and foremost with what they were building.

So I helped open up a zero plastic, zero waste grocery concept here in LA called re grocer re grocery. Excuse me, that uh, is about to open its second, third and fourth locations around Los Angeles. A clean plant milk company called good milk.

That’s frozen concentrate, four ingredients, a clean cosmetics brand called SA. , a regenerative organic baby formula company called Nara that, uh, obviously with what’s going on right now in, in the supply chain of baby formula you’re going to be hearing a lot about, Nara and Esther, the founder of the next, six months and so it just brands that I felt a calling towards and founders that I felt a calling towards, , my partner, Michael and I reconnected. And really just got to talking And we both saw that , the consumer powered climate innovation space within venture capital is,, was completely underfunded.

And therefore, we really got to talk about how we could make a difference here, how we can. Both crack the code financially. And on the impact side, So that was, November of 19.

 So tell me about that, need you saw in the market around consumer powered climate innovation.

. So the way we look at things is consumers have a lot more power than they think, you know, every bite of food, bar soap, t-shirt they buy, if you take sum of the. parts It really can add up to some monster change and monster impact. a lot of people look at consumer as not a place to invest.

You know, we want to invest in tech and we want to be in crypto and we want to be in all these, other arenas. But with. The consumer has a woefully underfunded segment. Something like only 2% of venture capital is being deployed into consumer. not, it doesn’t have to be straight consumer,we looked at things in three verticals, which I can go deeper into.

Great. Tell me more yeah, we, we look at things from three distinct overlapping Venn diagram verticals,

I like that.

design which is the stuff that goes into things. The, fabrics, the materials, the alternatives, and plastic and packaging, regenerative organic ingredient. the use vertical are the brands that are using those inputs,

 And then of course there’s reuse, reuse being landfill avoidance waste to value upcycling marketplaces.

So let’s talk about all three. They’re all super interesting. If I pick on the first one designed. And the material side of things. What are consumers looking for and what do they not yet understand about the materials they’re consuming?

 Good question. Uh, consumers are obviously getting a lot of. Uh, if you look at how sustainable products are marketed today, , that arena is growing seven times faster than conventional products.

So, it’s not about how cheap can someone make it anymore. consumers want producers to be responsible in what they’re making.

 So, an example would be cruise foam, one of our investors. So cruise takes shellfish waste and, creates a styrofoam replacement from it.

W what sort of shellfish waste are we talking about?

Like for example, the exoskeleton of shrimp and crabs and lobsters, chitin is the second most abundant natural palette. On the planet. There is so much waste, in those exoskeletons that go right to a landfill. and so they actually get paid a fee to take the waste and make it into a, polymer, a. uh, right now they’re actually partnering with, companies like Whirlpool and Sony innovation is one of their investors. Along with us, the idea that flat screens in washers and dryers that used to have these, big pieces of styrofoam.

Uh, the idea of the cruise foam can be that new packaging that when you’re adults there’s foam, you could put it in your car. And watered down and it’ll dissolve right into your garden and actually can serve as a, uh, a feed.

What did that look like? When you invested, did you visit, you see the phone? I’ve seen it touch it, dropped it, kicked it, and, and even today,

Because it’s that safe.

And there’s a lot of amazing news that’s coming out of, what they’re building.

And so you come from the fashion world. So I assume you understand materials and fabrics. What are we supposed to be looking for or not looking for like polyesters and stuff? Like, are those the bad things? what should I be avoiding?

 there’s so much, I mean, how long do we have here, but yeah, polys and blends and, he can’t even, I mean, look, cotton is obviously. A fiber, but where was that cotton grown as a conventional cotton? That pesticides. I mean, if you think the pesticides in our food is bad, you should see the pesticides they use on things that you’re not eating.

Not only that, but you have to make sure the dyes that go into the fabrics are friendly because otherwise it can take a natural fiber than otherwise. Would compost or what degrade and make it, so it doesn’t.

And are there certain labels or things I should look for? I mean, look, people have to do their own research in some ways. And I think that you trust the brands that, you know,

We live in LA, you, you and I both live in Los Angeles. I try to go to farmer’s markets as much as possible. You know, that’s literally a lot of my education came from going to those farmer’s markets.

I would talk to farmers ad nauseum about their growing practices and regenerative and biodynamic and, just no pesticides in what they were using for pesticides. And,, and I’m sure they got sick of me after a while,

I did an episode with, Courtney ream from M 13 and he calls it the farmer markets test. like, you know, you don’t need a whole big launch process, like go to pharma market, try selling your product.

Courtney’s right.

Well, let’s talk about building brands you’ve done a whole lot, um, of working with brands.

 What are you seeing today? How are you sort of working with the brands that you’re looking at

Yeah. So, we’ve taken a long time to really develop our process as a fund and. What we’ve come up with is this idea of, uh, what we’re calling supercharging. So obviously when we invest in a, company, they can email us whenever, But what we really want to do is put the power of our advisory board, and ourselves behind what we’re doing.

So once a quarter, we set out to meet with each of our portfolio company. And say, what are the three, four items that are on your list that you’re having trouble with? The, you need help with? It could be hiring, could be sales, it could be marketing could be impact. You know, ,

give us those three or four items. Let us go back to our team and we’ll pick one of those per quarter. So four per year that we are going to tackle, and that will be on us to work through. and the companies and in our team understand that this is that one thing that we want to solve and, and be helpful.

And like I said, we’re calling that our supercharging program.

And mean, some of the headline news, when you guys launched was like Leonardo DiCaprio is one of your investors. Tell me a little bit about your advisory team.

Sure. So, um, I mean, yeah, Leo and his team have been. Extremely extremely helpful and, value add in our process. , Michael has done deals , with Leo and his team. so they had a nice working relationship. my wife has actually been Frank. With Leo for really long time. , she runs an entertainment marketing company around a celebrity and influencer and kind of that bridge for brands.

I was going to ask, like, who ends up being friends with Leo?

my wife does that too.

you should also tell me a little bit more about Michael who’s your partner, right?

. Yeah. So Michael’s Tibet is, is the other general partner, regeneration.vc. he has a deep background in, both environment and investing. he comes actually from a separate, from a media background. television stations. Um, he was a touring DJ for a while also. So he has that music background.

 And from that, he actually built a company called playlist generation, which was, , building playlists and music for. So back before Sono, ascend and Spotify, you’d walk into a, a restaurant or a retail store. And the music of playing would be a playlist generation. So, back to the advisors. So that’s how we pitched Leo’s team.bill McDonough. Who is really the godfather of the circular economy. and then we started to build our team. We have two partners, David Levine, formerly from art Artivest and colony capital and,

Um, Katie Hoffman comes from the impact side, ethos capital, and, so she heads up our, impact vertical or impact side, which we have developed a process called the, uh, regenerative, evaluation gauge or our reg program, which is how we look at each investment from everything from toxic avoidance to, water use, to energy, uh, and, and the human side as well.

We don’t want to invest in a business, has all these great environmental attributes, but is not paying people a fair wage or has child labor issues. philosophical question. If you think like where we’re going to be in 10 years, we’re going to look back on some of the stuff we’re doing today. What do you think are going to be some of those big ones? We were like, I can’t believe we used XYZ toxins and put them in our children or like, I can’t, believe we had single use water bottles.

Like what are some of those things

Mean, I can’t believe today that we’re using single use water bottles. But yeah, I, I think I got to imagine , 10 years from now, I would hope that. we’re not even bringing our trash to the curb. I would hope that, the food we eat is locally sourced. I mean, there’s people on different, different sets of the aisle.

There, there are people out there a little say 10 years from now, we won’t be eating animals. Everything will be well. So cultured seafood, and so cultured meat , but I think that if we can find a way to manage the. The trash, uh, composting and recycling bins in an efficient way where we don’t even have to deal with those.

I think everything would be, would that’d be a real positive.

Oh, my gosh, keep going on that theme. Like where are we today on just the massive amounts of trash or recycling or compost. We’re all creating and where it’s going.

I don’t even pretend to be an expert on the recycling law. but eventually. Uh, the idea that you can put a recycling stamp on something that is not recyclable, that’s going to be here.

 Everything has a recycling stamp and a number on it. I just read the other day, we used to be running around with this statistic that only 9% of plastic actually ends up getting recycled. So 91% of it , gets thrown away. And now that number is 5%. but all of this plastic has a recycle logo on it and has a number and, you know, everyone’s fine just doing what they do and throwing it in that blue band and, and wish cycling it away.

 Wow. So all that, that work I do to save the Mellon. Ryan’s in a different thing than my plastic water bottles and attract all the fruit flies.

they should like, you know, the hospital care package should just be a aluminum bottle for everyone.

I mean in a perfect world, everything we buy should have a use or a reuse,

should just last forever. The idea of, of circular economy is not, it’s not new. If you look at our grandparents, our great-grandparents, everything was built to last. It was passed down through generations.

 The dressers, the dishes, everything was just made in such a way that you didn’t have to think about. Well, I’m just going to throw it out or I’m gonna, waste something.

By the way, if you look at how some of these countries in Europe are doing it, they are light years ahead of us.

Five different bands. And you’re responsible for putting things in the right place. Some countries they don’t even have. There’s no trash pickup. Cause there is no trash.

Everything gets used one way or another.

Really,

Yeah.

 then what do you think really gets people to change?

, if you’re a corporate entity, I think tax incentives and credits will hopefully get people to change. Individuals as, we get better and scale up producing things in price, parody can happen. I think that will get people to change. I hate to say it, but sometimes only disasters get people to change.

that’s just, unfortunately the world we live in.

Okay. So I was going to have more mundane discussion, like some of my notes say, like ask them about creating a brand and what’s going on with social media.

I mean, everything is about Tik TOK Instagram and, and just creating content and having content creators out there. And every one. Has the ability to be a quote unquote influencer. And we live in a very unique time where There’s no secrets anymore. From the standpoint of everyone wants to be the first to innovate on a brand and be a trendsetter and show all their friends what they’re using, what they’re doing.

so it it’s interesting from that point. I think that again, It gives companies who don’t have huge marketing budgets, a level playing field, You can reach everyone in the world without having to spend millions and millions of dollars.

And that’s what.

and yet, you know, when I go shopping in the physical supermarket, How much there still tends to be the same brands and a lot of supermarkets. I’m like, they’re still Heinz is still all over the place.

So how, and when do we start seeing these new and more exciting brands in the market? such an interesting question. the idea of direct to consumer and I firmly believe you have to be an omni-channel brand to be successful in this world, but the idea of, building a little bit of a brand and a following via content via direct to consumer, you know, that does get to retail.

 Buyers excited, interested, and hopefully then you can work with them on, all these different kinds of sliding costs and marketing costs. And if they realize that you’re coming to them, look, we have X, many thousands of followers or hundreds of thousands of followers. You’ll put us on the shelf Yeah. but some people would say, I think some people would still say, maybe you don’t need to be on the channel because you’re really good at certain channels and lean in on those channels.

I mean, Hey show, if you can be profitable, then all the more power to you. I think we’re living in an age where it’s coming back again, where you have to be profitable. It’s not just let me raise capital every six months.

Are there common pitfalls to avoid or what have you seen go wrong?

I mean, could be anything, could be everything. It It could be, they have a great space and a great product in there, be just the wrong industry could be that they just don’t know how to. Create any margin, you don’t know how to manufacture, right?

You don’t know how to sell. Right. The marketing is off. it’s so hard to build a brand and, you know, that’s why I’ve, I always will talk to any founder because I know what they’re going through. And, and I never want to be like, ah, I’m too busy to talk to that founder.

You’ve scaled a lot of brands.

Thank you.

Any other good stories or lessons learned from scaling some of those. Yeah, I mean, it was 2008 , when we really launched lasagna. and look, first, last time I’m going there was, it doesn’t matter when you’re launching a brand, sometimes the best brands and best companies get launched in the worst of times. I mean, we launched and it was, it was tough and we were really scared but at the end there was no competition launching with us.

So when we were talking to, Barneys and, and, Ron Herman and some of the European department stores, they just needed something new. So they bent over backwards to have us come in but then the same thing we learned quite quickly is you really have to manage your design room and you really have to manage your people very well because you know, you get so excited by all these orders and all these people want explosives.

And then you realize that you’re, you’re cut into all of your margin because you’re just going so wide on a number of skews and, it’s a fine line.

Just out of curiosity, like how many skews does something like lasagna have, or how many in the design and what does that look like?

 I want to say that each delivery was something like 20 pieces.

And within that you can have like three or four colors or, or a pattern. but you know, if there’s any fashion, people listening in, they’re like, oh, you’re so wrong,

then my bad.

Uh, but now by the way, nowadays, the idea of a delivery is, First of all, you should make things that can last season to season. an And staples people you need. that was the problem with department stores. They kept buying new things and returning and shipping and, and swapping.

And it was like the, the amount of waste being created was, awful. It was, it was so hard to see.

is that true? Like there was this huge thing for fast fashion and everyone was producing lots of different colors and different everything. And are we moving back to a world where people are buying like a few staples?

 Well, I mean, fast fashion, , I mean, it’s here to stay, but I think that those are the brands and the big companies that are starting to get even more, more responsible in what the. , just like some of the biggest industries are the biggest investors in alternative energy.

I mean, we know that the oil companies have huge money behind alternative energy one way or another either, even if it’s just a hedge, , the alternative meat companies. If you look at who the biggest investors is. And those companies are there all the big meat companies. So with regeneration, let me bring it back there.

 You know, are you investing exclusively at the earliest stages? tell me a little bit about the investing

So look at companies that are in seed and series a stage, not the earliest want to get involved after the, proof of concept has been met. And when these, businesses are ready to either scale commercially or series a. really scale.Will you lead rounds? Half a million dollar million dollar check.

Yeah, seed rounds, half a million to a million. Um, we will certainly lead if that opportunity presents itself, we have the team to lead. Although some of these rounds are getting to the size where our million and a half to $3 million chats are not meant to be lead checks.

A $15 million, a round or even more,

Great. Anything else about regeneration? Or do we have a couple minutes to ask you about you?

whatever you want. Yeah, go ahead. Ask me about me.

Uh, how do your friends describe you?

I think they would say that I’m, smart and funny. I mean,

That’s great.

and I’m a good friend. I think I’m a good. I don’t think I asked them, I don’t ask them how to describe me, but I get enough emails and phone calls asking me if I’m available to go to dinner and lunch. So I’m happy.

That’s great. That’s a great way. Would you describe yourself as a burner?

Oh, definitely. I

can’t wait. You have no idea. it’s what keeps my wife and I just, excited about, you know, there isn’t a day that goes by. I’m not texting a different friend.

Ah, I was just thinking, what month is it? It’s may. Um, that’s awesome. Dan, thank you for coming on the podcast.

Good luck with your flag football game.

Because I shoot very much. I’m sure my son is outside my door right now and that’s why I was barricaded.

Oh, I thought you were going to go play flag

No, no, that’s just, that’d be hilarious. I do during practice, I’ll get out there, but, um, I gotta stick to my yoga and Pilates.

Okay. Fantastic. Well, I have a great time at your son’s flag football

Thank you. Have such a great weekend. Thank you for having me.