Will Schmitt — Miroma Ventures

Posted on Wednesday, June 23, 2021
Will Schmitt is Head of Venture Strategy at Miroma Ventures.  Miroma recently announced a $100M commitment to fund the next generation of consumer brands and media platforms.  
 
Miroma has worked with companies from McDonald’s to Netflix to Masterclass and Spotify.  They invest at the seed or Series A stage and aim to bring that expertise to earlier stage companies.

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Today I will be chatting with Will Schmitt, Head of Venture Strategy at Miroma Ventures. Miroma Ventures recently announced a commitment to invest a hundred million to fund the next generation of consumer brands and media platforms.

Before Miroma Will was a partner at trail post ventures, a growth equity firm, and Beechwood capital before that. Hi Will.

Hi, Minnie. Thanks for having me on, great to be here.

Yeah, thanks for coming on. Tell me about Maruma ventures and what sort of companies you are investing into.

Yeah, of course, happy to!  o we, we invest in early stage businesses, within consumer and media platforms. So we’ll see lots of businesses within food and beverage, beauty apparel,  marketing tech or consumer tech type businesses. They’ve done a great job of getting the product in market and starting to generate revenue, but haven’t yet been able to raise growth capital to really accelerate growth, bring on new team members,  and really expand distribution.

What’s good? When you look at them, like, what are sort of good metrics that you might be looking for for someone who’s either online or, or in retail?

first beyond the team, right? In terms of pure metrics from the business. We really like to see high growth businesses that are doing well in a particular function or channel, maybe on a regional basis, but haven’t yet explored distribution with major retailers or haven’t really explored   marketing outside of pure performance-based digital marketing.

And so when we see businesses like that’s when we get really excited about, you know, leaning in as a strategic partner in bringing some of those opening some of those doors and bringing some of those capabilities to the table.

What do you think? What is high growth?

Yeah. So generally I like to see businesses, you know, kind of 20 to 30%, as, minimum,   you know, these days, because we focus on the early seed stage, we’re seeing businesses kind of do multiples of year over year revenue. Right? 

You just said, 20 to 30% is that month over month growth.

Yeah. And then, you know, on a run rate basis, we generally like to see anywhere from a few million, net sales at a starting point up to 20 to 30 million. So a lot of times I’ll see businesses start, you know, kind of do anywhere from one to 5 million the first year. And if they’re doing north of 10 to 15 million, and then in the second year going into the third year, generally that’s pretty impressive, depending on where you’re at in the category.

that’s so interesting and so different than like, you know, SAS numbers that I’m looking at. So if someone’s doing, you know, 20 million in revenue or whatever, what sort of margins are you expecting or how are you evaluating sort of a little further down the finances? So statement.

Yeah. Yeah, it’s a great question. So, um, it’s entirely dependent on the, you know, the industrial categories and the vertical of focus. Um, you know, in beauty and skincare, you can see really high gross margin profiles north of 70%, whereas in food and beverage, um, would be really be really surprising to see that sort of margin profile in the business.

Um, and generally at this stage, that seed to series a stage. They are still loss-making businesses, right? So that they’re not really managing to the bottom line on most of the businesses and teams are focused on, you know, scaling the business and really growing distribution and growing the top line. Um, and we’re comfortable with that at the same time.

We’d like to see, um, um, generally they haven’t reached anywhere near their full gross margin profile, but we’d like to see a pathway to that. Um, and we’d like to understand. You know, what, what were the opportunities for margin expansion, whether it’s on the ingredients and the material side, or, you know, working with different suppliers on the co-packer side, or were there maybe opportunities, I guess, for improvement?

Um, but I comfortable seeing margins. Um, you know, and expanding into those margins and then longer term, we do like to see a pathway to profitability. We don’t want to see a business, always be a loss-making business and continue to have to raise capital. So, um, I think that, that maybe a different story and tack, I guess, on the profitability.

Yeah. I mean, I don’t know, call me old school. I still like to see some path to profitability.

Yeah.

What have you seen as best practices going from D to C into wholesale?

Yeah, it really starts with, DTC to be honest and developing, you know, strong, strong following, really impressive product reviews and customer reviews. Um, repeat per high repeat purchase rates return on ad spend. I mean that, that along with the growth trajectory and just. Increasing brand awareness is what it’s going to get you noticed by the retail buyers.

Um, and generally if you’re doing everything well, D to C um, and building that loyal following and people, and you have consumer demands for your products. The retail buyers are going to find you sometimes before you find them. Right? And so they’ll come to you and they’ll say, Hey, you know, we want to want to invite you into our innovation summit or accelerator program or special each retailer as a different name, but the buyers will, will find you.

And you’ll start to develop that relationship. And, um, So that’s one of the pathways and it is, they can actually come, come and find you to start. Um, the other one is really developing and building a sales team, right. With relationships with other retailers, um, and, um, really, you know, developing a strategy and attacking the channel, um, which your product lends itself to, you know, natural, organic, and you want to start kind of in the natural channel and build a presence there before expanding into.

You know, traditional, uh, retail or mass, um, that could be a strategy. So, um, some of the businesses like the higher the sales teams or engaged brokers to really, um, think about nutrient retail.

I didn’t actually know they had. Do you call them like innovation programs?

Yeah. Yeah. And some of them, these days even have investment arms or CBC type arms, but, um, but yeah, there’s, um, that’s one of the ways is just developing relationships with the retailers, through their buyers and understanding, you know, maybe doing a small pass in a certain segment of their, of their market.

And, um, and then getting feedback and kind of adjusting from there before, before launching.

got it. And developing that brand awareness. Um, I believe is some of where Maruma leans in.

Yeah, exactly. Yeah. Um, we really, um, we pride ourselves in our ability to, um, to really lean in and build a brand early on. Um, you know, we work with. Very large, you know, fortune 500 companies and, um, you know, consumer CPG companies, um, like Netflix and Starbucks and McDonald’s, um, and we work with some of the high growth, uh, tech companies like masterclass and Spotify, and, um, but really at the, at the emerging real estate or venture stage.

What we really wanna do is, um, you know, if you’re a digitally native brand you’re doing well, digital marketing performance based marketing, you’re scaling nicely and bringing in board customers. Um, we want to help help you think outside of that from a marketing perspective on, you know, what do you want to be when you grow into the next stage?

What do you want to come into consumer’s minds when they think about, uh, the business, um, and, um, what are ways that we can support, whether it’s through creative content production. You know, social influencer strategy, uh, thinking through a billboard or out of home type marketing. Um, those are the sorts of the things that I think are going to build the brand and, and really, um, you know, really amplify your digital strategy the end of the day, lower acquisition costs.

So, So,

Hmm. What’s um, um, let’s dig in on all of those. Um, what’s going on with content production today? What sort of activities? What sort of state-of-the-art right now?

Yeah. So with, with content production, I mean, what, what we think about is, um, lot of times we’ll see businesses acquiring customers and spending, um, spending dollars on Facebook and Instagram and Google to acquire customers. Um, but they haven’t really done much in terms of thinking through their brand values, thinking through their mission statement.

Um, making sure that there’s one cohesive story across all the channels and across all of their marketing functions. And so that’s where the content production can really come in. 

so, okay. So talk to me more about that. So everyone says you have to be authentic. So what, what works on. What sort of authentic are people looking for? And I’ll just give you my end of one is like, you know, I’ll watch like the dollar shave club video and I’ll be like, oh, that guy seems so cool. Like, is it people that you sort of aspire to be, or, or what makes it something that resonates.

Yeah. You know, it’s, it’s, it’s funny sometimes, um, you know, a viral video, uh, like that or something that just resonates with a lot of people that a lot of people can identify with, um, can really catapult the brand, which was, which is what happened in that occasion. Um, but typically, and this is something we look for when we’re assessing partners is, um, what was the, what was the founding, the founders story, right?

Why did they. Found the business. What was the Genesis for the business? Is that coming from a place of authenticity and passion, or is this an entrepreneur that’s um, you know, maybe, maybe, um, um, you kind of a venture number five or six and is looking to kind of exploit the market in some, some dynamic.

And so we want to find businesses that resonate with a consumer and resonate with a consumer base outside of just a. A niche consumer that may be on the west coast or on east coast that really plays across the nation. Right. Um, to really build, uh, build a business of size and scale. And so, um, I think having that auth authentic thunder story and having that authenticity is important, um, because when you stray from that and you try and be something that you’re not, um, I think consumers can very quickly pick up on that and you can lose consumers quickly and lose your, lose your consumer base.

So.

Do you have any like exercises or something for companies to go through when you’re trying to sort of help them develop what their brand values are or articulate those better?

Yeah, definitely. I mean, marketing growth partners, you know, creative, uh, agency partners, um, go through those sorts of exercises, thinking through, you know, what, what are the values that you stand for? What are the keywords that you identify with? What’s your positioning within the category? Um, you know, who’s, who’s your target consumer?

Where does he, or she shop? Where are they from? What other brands do they associate with? Um, so all of that goes into the exercise, right? And you need develop personas and profiles and, you know, you really get to know your, your company and, and, um, the brand and what you stand for at a much deeper level.

Um, I think that’s important nobody’s should, should know the business better than the entrepreneur and the team. Um, so 

do you always like name the person and say like, Maria is a 23 year old nurse, do you always do 

that? 

Yeah. I mean, it tends to tends to happen. Um, I think that’s, that’s one of the exercises within marketing is really trying to personalize and identify with that consumer. Um, so yeah.

Okay. Noted. Um, and how do you counsel startups? Um, nowadays maybe, you know, you’re unbiased, Maremma hat, or how do you counsel startups to work with agencies and how do they know how should they navigate that?

Yeah. Yeah. I want to see businesses that one, they like working with agency, they’re identified, you know, they identify with agency on a personal level. Um, and two it’s an agency that shares their vision for the company long-term and then three, you know, that they’re able to grow with, uh, grow with that company, you know, as they expand internationally or there are other.

Marketing capabilities outside of, you know, a performance-based bar marketing or influence from marketing, um, that, that agency has something more that they can bring to the table. I think that’s important. And I think it’s, um, it’s unique to find an agency like that that has, you know, not just the breadth of our offering, but is flexible and able to grow with the company.

How should I be spending? Do you have any rules of thumbs around? How much should I be spending on marketing and then how, whatever my budget on marketing does it sort of correspond to what size agency I should be working with?

Yeah, it’s a great question. I wish I had a hard and fast answer for you, but it’s, um, it’s very much dependent on the stage of the company and the vertical. Um, if we’re, you know, we’re looking at companies sub 20 million net sales, um, we can see, and if it’s a digitally native brand, you know, really focused on, um, you know, digital acquisition, we can see them spending aggressively on digital marketing to acquire customers.

Right. Um, if it’s, um, you know, more of a growth stage business where they’ve grown into the business and they’re doing 30 to 50 million top line sales, you should start to see that level out as they expand into wholesale and maybe approach it, you know, 20 to 25%, you know, as a percent of sales in terms of marketing spend.

But again, even that’s highly contingent upon the business and the category. Um, there can be, you know, a fitness tech business that, you know, really needs to acquire a customer. It really needs to, you know, uh, bill, uh, spend aggressively on marketing to get the brand awareness out there for, uh, for the product, you know, and, um, you know, it can be, can have outsize marketing spend, right?

So it’s really dependent on, on the vertical and, uh, on the stage of business. 

are there any types of marketing activity that are, um, sort of overlooked or underappreciated right now?

Yeah, I think it’s interesting what, you’re, what you’re seeing happen within marketing and just more broadly within the ecosystem right now. Um, and I think the pandemic to a certain extent has opened open people’s eyes on, you know, digital acquisition, how to acquire customers, how to do that. Um, you know, cost-effectively effectively or with a strong return on ad spend.

And so I think you’re seeing more brands that prior to the pandemic Mia been focused on BDC and thought that they were going to scale the business over three to five years solely focused on Facebook. You know, Instagram, Google, um, and you’re seeing, you know, the, the apple iOS, she just come up out in terms of, you know, um, uh, you know, the tracking and transparency around tracking.

And that’s really, really a game changer, opening a lot entrepreneur’s eyes on. Um, well maybe we should direct some of our span to brand building activities and raising brand awareness, as opposed to, you know, just acquiring customers and scaling the business. And so, 

Can you just tell me about the iOS change because I’m sort of aware of it, but sort of  it’s the consumers have to opt in to tracking and that’s a very, tell me how big a deal that 

Yeah, exactly. It’s a huge deal because it’s, um, you know, it’s what, what some of the larger, um, uh, companies, tech companies and, and, uh, uh, platforms have been using to, to really track customers and really, you know, direct. Targeted ads to customers, right? Whereas if you were on Instagram or Facebook and you may have saw or seen an ad that they liked, or a product and liked, and you go to Google and then you ended up purchasing the product, um, prior you’d be able to track all of that.

And, you know, if your tracking was turned on, we should almost, in most cases it was, um, you know, they could, they could then market to you and use that data and analyze it. Um, now with, with most of, and I think last time I saw was only about 10% are opting in to tracking now. Um, it’s, it’s really a game changer because if they can’t track the data and market to you or advertise to you, then, um, entrepreneurs are gonna be diverting dollars away from those platforms and thinking about other activities or other.

You know, ways to, uh, to market, to consumers. And so, um, I think it’s really interesting. We’re obviously at the very early stages and, um, I think there’s going to be more regulation, more changes to follow, but, um, I think it’s really exciting because, um, you think back decades ago on, on how. Um, you know, P and G and, you know, even these brand, these major conglomerates were built and it wasn’t on digital acquisition and digital standard was on, you know, brand building activities and, you know, TV, radio, et cetera, these things that just increase brand awareness and to market.

And so I think that’s really interesting. I haven’t, I’m not going to say we’re going to come full circle, but you’re definitely going to see companies like Airbnb came out and announced they slashed their digital budget in path. And so you’re going to start to see more companies. Divert resources away from pure digital acquisition and think about, you know, creative and content production.

So,

Uh, I would thought that you would not find it exciting. Like I would have thought that you are all about finding, you know, ways of really re you know, directly reaching the exact user with intent, that sort of thing. But no, you’re excited about it.

Yeah, no, I’m, I’m excited about it. I think, um, that’s that, you know, we’re a partner that’s well-positioned with, you know, the support companies, not just with digital acquisition and influencer strategy. And all the performance based marketing. We do all of that. Um, but I think we have, you know, we have a full suite of capabilities and we’ve got a global presence.

And so I really like to see brands and businesses develop, you know, a well-rounded strategy and really evolve and explore more of an Omni channel presence. Um, and I think. You know, too many businesses focus on just DDC and digital acquisition, which is a great place to start. But, um, you know, I think right around that seed series eight stages probably when they start exploring other marketing activities and brand building.

okay. So I’m going to ask you about your capabilities, but first wait, so will, did you opt in or opt out of the. IOS upgrade.

uh, yeah, so I, I kind of track it. Um, I look at like the apps and which ones are tracking. And so, you know, I turn it on, turn it off based on, based on the apps.

Interesting. I don’t, I just, I don’t even know what I do. I just click some buttons to make things go away. Yeah.

I do that too sometimes.

Okay. Just checking. Um, okay. So tell me then more about. Neuroma ventures, but also Maruma group. And what your capabilities are that you’re bringing when you’re making these investments?

Yeah, of course. Yeah. So Roma ventures where we’re the venture arm of the overall group. So I. I mean the venture strategy for the group. And, um, as I said, we work with early stage businesses within consumer on media platforms. So typically as a business approaches that seed or series a stage, we look to engage and we’re coming in as more of a strategic co-investor bringing that marketing expertise to the table.

Um, and so what we really want to do is understand what they’re doing well from a marketing standpoint and where we could potentially compliment or amplify their current marketing strategy. And then also open up the door, um, and explore other opportunities within marketing, um, and bring other capabilities to the table.

Maybe they haven’t explored or they don’t have the resources or team members, um, yet to, uh, to really initiate. And so that’s what we looked at do. And, um, generally we’re coming in, you know, as I said, as a co-investor alongside a lead investor or alongside other co-investors in the round and, um, we’re, we’re bringing that marketing expertise to the table to really accelerate growth.

um, and you said you’ll evaluate what they’re doing well or not doing well when you, when you’re, when you’re doing this. Uh co-investment. What do you see? That’s often, what do you see as mistakes where you’re like, ah, we gotta clean that up.

Yeah. It’s um, so, uh, we’ll bring in our agency partners to do kind of a deep dive, a full scope of work draft, you know, draft an agency agreement. So we really try and go deep and into what they’re doing. Well, assess the KPIs, do an audit of sorts on that on there. Um, uh, digital acquisition plan and really understand what’s performing well.

Um, and then we, we kind of compliment that depending on where they could use support, um, uh, many times they’re, they’re all diverting resources to one channel, right? Let’s see a company doing really, really well, um, spending 90% of marketing, um, paid marketing on Facebook. Right. Um, so there are other channels outside of that, that they should probably be exploring.

Not that they’re. Consumer as Paul Facebook. It’s just that, that’s where, that’s what they think has been working well. And, you know, they haven’t explored other opportunities outside of that. And so, um, that’s what we try to do is, is, um, compliment the existing strategy and really amplify with, with new strategies or new ways to approach their existing channel and their existing marketing plan.

got it. And as I understand it, Merona group is a collective of marketing agencies.

Yeah. So over the years, um, we’ve, uh, we’ve acquired, um, you know, smaller, independent marketing agencies. And as the business has really evolved into a marketing media holding company. Um, and so yeah, the overall group, um, you know, is it is a holding company and, and know each of the agencies that we have majority control over, they leverage.

The infrastructure, the shared services, you know, are, you know, the shared knowledge base and experiences and expertise. Um, so that for the partner, our partner company, um, that get the full breadth of offering, you know, on, on a global basis. And we really tailor, um, our marketing growth solutions and bring our marketing partners to the table based on the size and stage of the competent.

Um, so. You know, from an entrepreneur’s perspective, they’re really interacting with Rama group, but there could be, you know, 10 different agencies engaged that are, that are working to support the company. So.

So you said when I’m choosing an agency, I should. See if it’s like, if I’m aligned or if the agency is aligned with my vision, something like that. So how do I do that? Just like tell you what I’m, what my authentic story is. And then like, have you spit it back out at me and see if I like your phrasing.

Yeah, I think part of it comes from, um, getting to know your, your partner, right. Um, and you know, during diligence and during assessment of the current marketing growth plan and the mark term marketing strategy. You get to know each other and you understand what works well. Um, but I think fundamentally, I think you have to like who you work with and they have to see your vision for the company and what you want it to grow up to be.

Um, and so I think that’s, that’s really inherent in, in kind of a partnership, um, in relationship. Um, but yeah, there is that, um, you know, a conversation about, um, you know, what, what what’s working well and getting to know each other on a person. Hello.

Uh, you, you talked about, we’ve talked some about, um, consumer products, but you also keep saying it’s consumer products and media platforms. What are the sorts of media platforms that you’re looking at?

Yeah, so media platforms, we will look at social, uh, digital creative, some on that agency side. Some are, are really, um, marketing tech or e-commerce enabled enablement type of companies, um, that, you know, still have some sort of branded or consumer brand, uh, presence. Um, but at the end of the day, really have innovation in tack and how they’re, what they’re offering to other brands and other companies on a B2B, um, uh, from a B2B perspective.

And so, um, those are the types of companies that we’ll look at. It has some overlap. With consumer in terms of the consumer tech and e-commerce companies that we look at, um, but given our portfolio and, and just activity, um, within marketing and media, those sort of, uh, businesses are really complimentary to our overall organization and ways we can add value in different ways.

Hmm. Um, and, uh, and you’ve made a bunch of investments already. There’s a lot of companies, I think, 50 plus companies in the portfolio. So maybe you could give a couple examples of the media platforms. I find that one. Maybe you just, let me say that again. Maybe you could just give me some examples.

Yeah, no, of course. Yeah. Happy to. Um, yeah, so we we’ve, you know, the strategies evolved over the years. We’ve invested in over 50 companies. Um, within consumer and media platforms, you know, um, well-known companies that you’ve heard of probably like Pinterest and class pass and who, what, where meaning media McNabb, um, 

 and did you enter those at the early stage or did you come in some of those later?

yeah, most of them at the earlier stage, to be honest. 

and some of them have been, um, you know, uh, personal investments, um, or angel investments, others we’ve invested in marketing services in exchange for equity. Um, and as I said that the strategy has really evolved while we’ve made over 50 investments.

It’s evolved over the last few years to really understand that the way we add the most value is not with a cash investment or an angel investment. Um, while we may be aligned from, you know, with a company and, and be able to add value from an industry and network standpoint, the way we add the most value is with our marketing growth partners and with our knowledge base and expertise there.

Um, and so the value of services and what we provide in terms of the value is. Is multiples of the actual dollar value of services. And so that’s, what’s unique to us and that’s how our position well, uh, to add value. Um, but yeah, it’s, um, it’s certainly a mix across the investment track record. We’re fortunate to have great partners, um, and fortunate to have been able to support those partners in different ways.

Um, is it hard to, are some agencies booked and they just won’t take startup clients? Like, do they just,

Yeah. I mean that, you know, part of the inherent flaw with some of the larger, um, marketing and advertising agencies is they’re just, they’re too large to really, for it to really move the needle. And so you don’t get that sort of attention. Um, it’s really more of an afterthought. And then the other drawback is it’s, it can be inherently expensive.

And so. What we try and do is because we’re invested in marketing services in exchange for equity, or it could be a combination of cash, investment marketing services in exchange for equities. You know, we’re aligned with the entrepreneur, we’ve got skin in the game, right. Whereas the driver’s seat with them.

So, you know, we need to make sure that we craft a marketing growth plan that’s successful and that we do our jobs well.  Um, because we’re, we’re equity owners at the end of the day. So we want to be a long-term partner and, um, we want to be fully invested with you. And so. Um, that’s, that’s kind of our creative solution or strategic solution to, uh, the inheritance laws, uh, historically.

I do think that’s fairly creative. I, I actually just don’t know. And maybe, you know, whether most agencies. Often a mix of if I’m hiring an agency, am I paying cash and equity a mix oftentimes, and you’re just, you’re just leaning heavily on the equity side.

Yeah, I think historically, you know, the venture, um, companies, startups, um, you know, they, they’ve done a mix of, uh, recruiting team, um, to really manage, uh, strategy, manage marketing. Um, but you know, sub 20 million net sales, um, with, you know, you have to really raised growth capital previously. You can’t really afford a team, a full-fledged team.

And so often it’s one VP of growth, uh, wearing many, many hats, doing everything from a to C. Um, and so they’re, they’re either missing on opportunities or are just resource constraint. Time constraints and canvas lore, um, other marketing growth opportunities that could really move the needle in terms of the growth or building brand awareness.

And so. I think that’s what it’s about UC, um, companies recruiting talent, and then potentially using, uh, an agency to do, um, this particular, um, subset of marketing and other agency to do, you know, social influencer strategy and really trying to piece it together. Um, I think what we offer, which is, um, you know, I think fairly unique is ability to offer multiple different capabilities and be kind of a one-stop shop of sorts.

Yeah. I mean, one more question on marketing. Um, why is it that a lot of times, when you say, like, what pops into your head, when you think of a brand, why do I think of like the little, like gecko from Geico or like, like the Quaker Oak person, you know, like, I think he’s like a Quaker, I guess, like, why are there so many of these like personified animals.

Yeah. Yeah. That’s a great question. Um, I’ve often thought of that as well. I mean, I think, uh, maybe it’s the brilliance of the marketing that, that sticks in your head. Um, but, uh, at the end of the day, I mean, I find those Geico commercials. Absolutely hilarious. You who would have thought, right. And insurance car insurance insurance company would be the one to use that animal.

Um, and it goes back to nav as well, but wiser in the frogs. So, um, clearly there’s something there on a psychological level.

Hm. Um, do you ever help people come up with little animals for their, for their brand?

I don’t personally, but I’m sure agency partners have, uh, you know, have that capability in a deck somewhere that, that matches the animal to the, uh, to the brand.

that’s funny. That’s good. I wonder what I, what, what the ten one, ten one would be. Um, great. Uh, anything else on marimba that you think we should cover? And I love to jump into your background.

Um, yeah, no, I, I think, um, for us, you know, we’re positioned to really partner at early stage and then we want to be a long-term partner to grow with the company and really. As like as the company scales and expands their, their marketing and growth plan, we want to be a partner that’s strategically positioned to be able to add value.

And so, um, I think that’s what we bring to the table. That’s a little bit differentiated and unique, and I think it is, it is a different model than traditional venture capital, private equity. Um, and I think, um, you know, the, the, the model’s evolving right, more investors are trying to add value in different ways, but inherently in terms of the structure.

You know, private equity, venture, capital funds, um, you know, they’re not set up the same way, right. So it’s just a different, different model, different Rita to play capital and to invest. Um, so, um, yeah, we’re excited with what we’re seeing and, um, we’re, we’re, we’ve been inundated with opportunities and entrepreneurs.

There’s a lot of exciting companies and innovation happening.

Yeah, I think you said something like, um, yeah, all VCs are saying they add value, but we’re really set up entirely around adding value.

Yeah. Yeah, no. And you look at the traditional VC fund model and it’s really like capital over a set time period and earn a return on your capital, right. Return that capital to investors. And, uh, obviously we want to pick great investments that that returned capital, but more than that, we want to be able to add value and.

Um, the, you know, the way we do that is with our marketing growth partners and our agency partners. And, uh, that last piece really ensures that, you know, the business is successful and then that in return we are as investors

great. Um, just making sure I can’t think of anything else I want to ask you before I jump into your, um, background. I kind of, I actually was interested in asking you some about exits that you see. Um, he, I don’t know what the question is exactly and where it ties back in, but, um, you, when you’re helping these companies think about who they want to be, are you also thinking about potential exit scenarios and how does that look in consumer.

Yeah, no, absolutely. It’s a great question. Um, we’re always thinking of that. Um, you know, as, as investors and as strategic partners, we want to make sure that they’re well positioned for an active down the road. If that’s what they want to do. Um, some entrepreneurs want to grow the business. You know, uh, you know, forever and really, um, you know, take, take the lion’s share of the category.

Um, but that’s what we’re thinking about at the outset. Um, look, our, our network and our capabilities is really, um, our rocket fuel at the end of the day. You know, we, we know, um, and work with the larger brands and fortune 500 companies. So we’re already. Plugged into the strategic acquires on many, many cases, um, for, uh, the startups in their categories and I’m, but well, we want to see them do, at least at the outset, um, through the growth round is need to really focus on building the business.

Building the brain and demonstrating proof of concept, you know, acquiring customers and building a loyal following, and having a great product that’s differentiated that can, you know, can, can really, um, take over a category. And so that’s, what’s really going to get a strategic acquire, interested in excited and is an emerging company that’s really.

Um, has a loyal following that, um, can really be amplified via distribution or supply chain or some of these things that larger strategic spin on lots of the company.

well, do you have any favorite categories right now where you’re like, I love nuts or something like tea? I don’t know.

Yeah. Yeah, no, I mean, I still spend a lot of time food, beverage, beauty, personal care. And then I see a lot of trends, health and wellness trends of consumers wanting to eat healthier, eat cleaner, natural, organic, that real, real transparency in terms of ingredients. Um, and some of that’s going back to, um, you know, plant base, uh, eating and plant-based ingredients.

I think it’s really interesting what you’re seeing happen from a sustainability aspect with cell-based protein and all protein. Um, and, um, you know, sustainability is something I look for on a personal level and we do, um, as well as a group, uh, with many of our investments, we want to see, uh, entrepreneurs that are doing more than just building a business and building, you know, managing to the bottom line or to profitability.

We want to see them, um, embracing trends and embracing things that. You know, consumers care about these days, right? Global warming is real and, um, eminent and, um, you know, we want to see, um, entrepreneurs build businesses that really get back to the environment or have, um, you know, uh, close loop type systems or have sustainable materials and, or support, um, underrepresented talent or, um, so that that’s, that’s something that social impact theme, um, and, uh, DNI type investment strategy is.

Is really near and dear to our hearts. And so I always like to find that in those categories, but yeah, there’s, there’s, there’s certainly a lot of really innovative businesses and a lot of categories that are getting a lot of attention for good reason. Yeah.

let me also just go backwards, I guess a little bit in time and say, before this, you were a partner at trail post ventures, and it says, you say that it’s a growth equity firms specializing early stage consumer. How is growth, equity and early stage? How is that different than venture?

Yeah, no, it’s a, it’s a good question. I always like to think of. other investment style, more akin to growth equity, um, venture for whatever reason can have a misnomer, um, with. Either entrepreneurs or other investors, um, you know, sometimes it connotates a very high risk, um, uh, dichotomous return profiles.

Um, maybe a venture capitalist as an investor that doesn’t bring much in terms of value beyond just a cash, uh, cash investment. And so. Um, that’s not, that’s not our investment style. And so I would say we, we look for certain KPIs, the way that we go about diligence, our process, and just how we think about partnership and add value, um, is caution to private equity or growth, equity, and style.

So while we invest at the venture stage, I think our investment style is a little bit different.

right. It’s interesting. I mean, positive and negative connotations, right? Like they are different. They feel stylistically different.

yeah. Yeah, they are. And, and, um, you know, even, even down to the industry on where you focus, whether it’s biotech and pharma versus tech versus consumer, there’s different, different styles, different investment strategies and different, uh, inherent risks within the category or regulatory. Uh, risks. And so, um, I think part of that is, uh, part of that different investment style is just due to those inherent risks and like how you assess opportunities and think about, uh, investments. 

Well, I want to point out that your title is head of venture strategy.

That’s right. That’s right. Maybe we should change that to head of head of growth strategy. a, we do, I think a lot of times entrepreneurs naturally think of venture, right? That stage and connotation of seed series a series B and that’s, that’s where we invest in. That’s where we’re active for the most part. 

great. Um, and so when you, what you were doing before at trail posts, um, you know, do you have any great stories of brands who invested 

Yeah. Yeah, no, definitely. I mean, um, we, uh, we were fortunate to, to find great partners so that at trail posts, um, you know, our first investment was in a company called, uh, Nutpods, which is a. Uh, they developed a product as a blend of whole milk and, um, uh, coconut cream. And they, um, they did really well, a female founder, amazing story that, you know, looked for a better alternative non-dairy alternative on the shelf.

And really couldn’t find one, uh, For her family. And so, um, really developed this product that, you know, had the consistency of it half, half, and half, but completely clean in terms of the formulation on that at the time was a shelf shelf, stable products. Now they’ve got refrigerated product as well, and I’m a business and again, did really well directing consumer and on Amazon to start.

And we’re only in about. Not a thousand, maybe 1500 doors in terms of grocery retail distribution. And, you know, they’ve since expanded, brought aboard DMG partners on a growth round, and now they’re in over 25,000 doors around the country. And, um, you know, recognize, uh, as Amazon small business at a year, um, you know, back in 2019, and so really exciting, uh, gross story and exciting one to be part of.

wow. So a thousand or 1500 doors, uh, might translate to is some number of different brands. It sounds like a lot to me, but you’re saying that’s just not a lot.

no, no, that’s, that’s not a lot at all. That’s, that’s, I’m kind of out of the gates starting place and it could be just, you know, a retailer and some small, you know, one, maybe one major retailer and some smaller independence. Um, and the kind of a fairly region regional presence, so to speak. Um, but you know, as you expand and you grow out of your, your channel that we start in, you start to bring a board, um, you know, a Costco and you bring a board Kroger and you bring forward some of these larger companies and go across channels seem to, uh, you know, into mass, um, you know, in traditional grocery retail, Um, yeah, you quickly, quickly start to build the torque door counts.

Um, so, um, yep.

um, oh, what do you think of these companies? Like the three Casio model that are. All these companies and sort of rolling them up together and their venture, but they’re so to sound like roll-up private equity plays.

Yeah, yeah. I think it’s, I think it’s interesting. Um, you know, that we’ve seen some brands have success. Um, on Amazon, you know, maybe a single, even single product are very much niche focus in terms of category on Amazon. Um, yeah, I, I question on, on the investment strategy, where do you go from here? Right?

Like as you’re rolling up all of these brands, what’s, what’s the exit. And, um, you know, I think part of the beauty to that model could be leveraging shared resources and infrastructure. Right. And then just really. Offering more to those brands and they could otherwise achieve on their own. Um, but, um, but it’s, it’s really interesting.

I find it fascinating in terms of some of the groups that are looking to, uh, to acquire Amazon only type of businesses and grow those businesses.

yeah, it seems like a nice path for the Amazon only businesses that aren’t, you you know, that are kind of stable in  few million in sales. Right. Um, interesting. Um, and, uh, and before trail post, you were at Beechwood capital, which is, was it a family office?

yeah. Outside of Boston, we focused, um, you know, again, at that venture stage, I would say food beverage and beauty were really the core focus areas. I was, uh, I was a principal on a team, smaller team, so wore a lot of hats and can take on a lot of responsibility and, um, yeah, great experience there. I mean, we partnered with some really great brands, uh, within the space bonds, uh, once upon a farm or

Um, and so had a really great experience, um, and engaging and working with, you know, early stage entrepreneurs and businesses and help take those businesses to the next level.

Oh, how do you think you’ve changed as an investor?

Um, you know, it’s, it’s interesting. I think the, um, uh, I’ve really, I’ve learned that it’s important to really understand, you know, the entrepreneur’s long-term plan vision, um, what the business looks like today may not be what the business looks like in 18 to 24 months. And so you want to make sure that.

You have alignment on that longer term strategy and vision. Right. But this is to be performing quite well, um, right now and over the next 12 to 18 months. But, um, if the entrepreneur really doesn’t, um, doesn’t want to, you know, kind of branch out outside of DTC or explore wholesale and develop an omni-channel presence, I think that’s, you know, it’s important.

And then you also want to have, you know, shared alignment and vision with the entrepreneur, just in terms of. You know, the partnership, how are you going to add value in different ways? And so I think that’s, that’s what I’ve learned more than anything is, um, you know, making sure that you have a strong partnership that, that goes both ways, um, where you can, you can really add strategic value is I think really important at the outset beyond just, you know, picking up a great entrepreneur and making a good investment in a company from a pure investment standpoint.

Uh, and so is it usually an entrepreneur comes to you or, or are you aligned with a lot of VC firms who are leading around and might come and say, Hey, well, I’m leading around and you could add a lot of value here.

Yeah, it’s both. I mean, these days, just because it’s so active, um, we’ve got a, um, a fair amount of inbound interests. And, um, so I think that’s part of it is entrepreneurs reaching out or, um, could be even a former founders that we’ve worked with in the past that are reaching out with a new business that they’re launching.

Um, but to your point, a lot of it is because we’re participating as a strategic strategic co-investor. Um, you know, we’re being invited in by other need investors that we know in this space or vice versa, we’re inviting them in. If it’s a lead investor that can add value that’s, you know, positioned well within a particular category or has a particular knowledge base or skill set.

And so. I think that’s part of the, part of the beauty to, to our, you know, uh, our strategic co-investor positioning is that we can bring in other investors that can add value in different ways. And we’re, you know, we’re always giving guidance to our entrepreneurs, bring, bring the best group around the table that can add value in different ways that have, you know, diverse skillsets and different backgrounds.

I think that’s what makes the best team. We’re all team. 

Yeah. And so tell me about you. Uh, you went to USC Marshall, right?

That’s right? Yeah, I did.

Yeah. 

I feel like being in your room role is something that a lot of the current students aspire to be. And so, you know, I’m curious if you have sort of thoughts, tips for, for current, you know, MBAs wanting to follow a similar path.

Yeah. Yeah, no, of course. Um, yeah, I would say, um, you know, be, be open to new experiences. I think part of, uh, you know, building your career is about networking and taking new opportunities and taking risks. Right. I think, um, you don’t, you don’t always, you know, following kind of the linear path or the path that’s kind of recommended or that’s a.

You know, well, well designed, isn’t always going to get you to the place where you want to be. And so I think having, you know, myself, I’ve, I’ve, I’ve done kind of the corporate finance experience. I’ve done the investment banking experience. I’ve done the private equity, and now I’ve been focused on the early stage within venture.

And so. I think having that background where I, where I have different experiences that I can leverage and different people within the network that can add value in different ways is, is invaluable. And so, you know, I would encourage, um, students that people looking to break in to venture to, to really, you know, experience new things, be open to new experiences and, um, never, never stop learning.

Right. Always, always try and be a sponge and soaking up information and experiencing new things.

Hmm. Do you keep track of your network at all? Do you, uh, you know, write down, I don’t know. You have any system for building that.

no, no system. I should probably have a system at this point. I mean, I leverage LinkedIn and social media and, uh, You know, I, I guess to a certain extent, um, just, just kind of friends, you know, friends and family on surrounding yourself with good people that, um, you know, can, uh, that have different views and different, you know, different backgrounds.

Um, I think that’s, that’s all about, I think, who you surround yourself with kind of shapes you as a person. 

Yeah. Yeah. It’s weird in this time where you don’t see anyone, but your family

 I’m going to start acting like a five-year-old great. Uh, well, what are your hobbies?

Um, so I’m a, I’m a huge foodie. So I love trying new restaurants, trying on new recipes. Um, you know, I try and get outdoors as much as possible.

You’re fortunate to be in the south bay so I can get to the beach with a good two young girls. And so, um, like to get outdoors as much as possible. And, uh, uh, yeah, I grew up, you know, fly fishing and enjoying the outdoors as well. I’m from Ohio. So, um, yeah, I love doing that whenever I can.

Oh, that’s nice. Um, yeah, you don’t see a lot of that here. Uh, one more question will, when you go into a retail store, do you walk in and you just see how things the merchandise is laid out differently? What do you notice that I don’t notice.

um, you know, I think the first thing I noticed is what’s on shelf, right? I I’m, I’m amazed depending on the store and the retailer, what they have on shelf and like what’s in the set in terms of whether it’s the kombucha category or the functional drink category or coffee, you name it. Right. I’m always what pops in my head versus the emerging brands or brands that I’ve.

Um, then in conversation with, or that we partner with, and I’m always looking at who sits next to them on shelf, what’s the, what’s the price point. He’s got the brand blocks. I’m always going to the, you know, the end caps or the featured product walls and trying to understand like what’s up and coming what’s new.

Um, so I think that’s, I kind of geek out from that perspective on trying to understand who’s who’s new on shell.

yeah. Got it. How often are there new brands? Are they, does it change around a lot?

Yeah. I mean, I think, um, you know, airlines, one of the retailers, it’s done a really good job bringing on new brands from a very early stage. And, um, it’s amazing, uh, the number of brands they have in each of their categories and you know, how, you know how they’re constantly either identifying. Up and coming and emerging new brands within each category.

And so, um, that’s one of the things I’ll do if I’m in between meetings or need to grab a quick launch is walk through an Erewhon look at the shelves and I get, get more ideas on companies and just other potential partners. 

and they want to see that you just sell quickly, right? Or right? Or do they, and the margin or the price or

Yeah, I, yeah, I think, um, a lot of what, uh, the retailers will look at and what the entrepreneurs focus on is velocity offers shelf. Now how quickly your units are selling on a per store per week basis. Um, and they kind of extrapolate that out based on the number of stores, you know, the region, the channel, the time period.

Um, but generally it comes down to basically, how quickly are you selling through off shell? What’s kind of your average price point, um, is your velocity spiking when it’s on promotion versus off promotion. Um, but what I want to see as an investor is a, is a business and a brand it’s. Turning well off of shelf that has a pipeline of doors of distribution behind it.

That’s thinking strategically through distribution, bringing on new retail partners, not just bringing on partners or for growth sake. Um, and so that’s what I want to see, because again, that comes back to the marketing and the brand, as well as you know, where is your consumer shopping? Where are they gonna find you?

And you, you want to be, you know, make sure that you’re in the right stores and in the right region. Yes.

Yeah, that makes sense. Well, well this was super informative. Thank you.

Of course. Yeah, no, thanks for having me on. Yes. It’s been a really fun conversation and um, some really great, great questions.

yeah. Great. I look forward to crossing paths more. Thanks.

Definitely. Yeah. Appreciate it.

Cool. I’ll um, you know, this is really good in my brain. I’m thinking about who’s and remind me, it’s like seed series a is your sweet, 

Seed series a and focus generally kind of first institutional round of capital is where wherever you come in.

Hm. Um, yeah, I wonder, like I have one in the fitness category right now. It’s was like, when you were talking about fitness, I was like, oh, maybe we’ll should help the Delta trainer. They’re doing really well. It’s a great product. Um, but it’s early. I mean, we already invested, so I guess it would be the second Institute.

Yeah, well, I mean, we’d love to, we’d love to explore the conversation and, uh, yeah. Happy to have a, have a chat and see if there’s ways we can be helpful.

Okay. Awesome. Well, good to make the connection. Good to know you.

Yeah, good to know you as well. Thanks again.

Okay, 

All right. Talk soon. 

Have a good day. I’ll be in touch when we, when I get it back from the producer, it probably a couple of 

weeks 

Sounds good. All right, thanks.

things there. You’re a great guest. Thanks. Well, thanks Danny.

Thanks Danny.

Bye. 

Real quick. It would be great. If you could spare a moment to give the podcast five stars or share with a  friend Or I love getting emails. Send me a note, minnie@tenoneten.net. Thanks.