Behind the Buyouts: VMG’s Tsai on Building Consumer Brands

Speaker 1 Hello, and welcome to Behind the Buyouts, the Deals podcast, where we speak to private equity and venture capital practitioners about their deals and deal making. I'm your host, Nikita Satiraju, chief reporter at the Deal We have with us today, Robin Tsai, managing partner at growth equity firm BMG. He's here to talk to us about the firm's investment strategy, its portfolio companies, and the state of consumer M&A in 2026. Robin, thanks so much for joining us. Speaker 2 Thanks for having me. Speaker 1 You had a very interesting path to private equity and investing, and I would love to start there talking a little bit about how you found your way to private equity and to VMG. Speaker 2 It was a bit of a circuitous route. I don't know if it'd be recommended, but I grew up in the Bay Area and went to College in the Bay Area as well, and throughout college I'd always thought that I was going to work with kids. So every summer I worked in some capacity and education, so either teaching or some degree of administration, something along those lines. And so right after college, I actually, I started out my career as a school teacher. So I taught 7th, 8th, and 9th grade in Washington, DC at a school as a charter school called the C Public Charter School. It was the first public boarding school in the nation and it was an incredible experience. I coached basketball as well and I just always assumed that, you know, that was the path that I was going to be on. And candidly, it's an incredibly fulfilling job. Being in classroom is amazing and you'd be shocked about the number of things that you take away from that type of role. You are basically always on stage the entire time. It is definitely a tiring job, but at that time I was actually teaching and I was living with a couple of other of my friends. Two of them were actually in management consulting. I had no idea what that was. They told me that they gave you a computer, you flew around and you told people what to do. And I was like, you guys are wholly unqualified to do that, but it sounds interesting. And so I just logged in a resume. I ended up going into a an interview at BCG. I showed up at my interview with the black Eye because I had been playing basketball with the students and I think they just looked at me and they're like, we got to save this guy. Ended up getting a gig there, ended up working in the consumer retail space at BCG for a number of years and kind of fell in love with the category. And that was really a sort of my entree into business and also the consumer segment. After that, I guess he Fast forward a little bit, I came back, I went to Business School and ended up joining VMG back in 2009. So super early on, we'd made about 3 investments, 3/4 or something like that at that time, obviously, no exits yet. It was the first fund. We got our start in sort of that 2007 time period. So it hadn't been that long and joined on as an associate. I think I was like the second or third associate again, myself, wholly unqualified to be there, I'm sure, but really excited to learn. And I Fast forward almost 20 years, I know I'm still at VMG and we're doing a lot of the same types of things that we've been doing 20 years ago. So it's not necessarily a recommended path, but it's one that I'm very grateful. Speaker 1 For that sounds fantastic. I'd also love to know a little bit of VM GS history. Obviously you said it hadn't been long before that they'd already been going that you joined the firm. Tell us a little bit more about how the firm was founded. Speaker 2 Yeah. So I think the idea was to actually take two incredibly, I think interesting and compelling disciplines and combine them. So the first was there were a handful of people who had been professional sort of consumer deal makers at that point in time. They were at the Shansby Group, there was Mike Mosaic, there was Caravel, there were a handful of folks who were basically bringing best practices in that space. And they've done some really interesting deals, one of which was actually Vitamin Water when if you kind of remember that deal, amazing brand, really exceptional management team. But I think one of the calling cards for that business was their ability to actually bring in cultural relevance, you know, through, I don't think if I don't know if they're influencers at that time, but really it was more celebrities at that time. And, you know, I think in doing that deal, they actually that crew got to get to know the other half of what came to become the MG. But Dave Barum was someone who was actually in more of that talent management space down in LA and they saw the potency of best in class practitioner of consumer investing married together with an incredible roster and access of celebrity. And that created it like that was sort of the perfect marriage. And the two groups combined to actually form DMG back in the day. So that was that was the original genesis. It was, you know, even then I think the insight really was, you know, these brands are all storytellers and they had an exceptional way to bring great operations, investing and storytelling into one entity. Speaker 1 I do want to dig into the firm's strategy more, but first the the really interesting thing about your story is how you went from an associate to a managing partner and really evolved over time to come up to such a leadership position in the firm. Tell us a little bit about how that culture still exists within BMG and how you try to hire and promote talent within the firm. Speaker 2 I think this is one of the most special things about our shop. I think a lot of folks with everyone loves the idea of promoting from within. I think that we've been able to do it partially because we have more of a burn the boat strategy. We have no backup plan. Our plan is our team and that's historically the way that we've carried ourselves. I think it carries a good amount of responsibility though, because if you're really thinking about a the associates that you're bringing on, some may have the ability to eventually have very significant leadership positions in the fund. You've got to really cultivate them. And I think private equity is already a mentorship type of model. But shout out to our head of people, Kelly. I think we've done a pretty good job of being very deliberate about crafting well-rounded, first of all investors and then eventually managers of resource and people. I think it's super critical in this type of environment to make sure that you are promoting the right people. And the truth is we're a performance culture. You are going to have to coach out people too. And the take that we typically have is if it's someone who is ambitious and wants to be on that path, like attracts like, right, they want the fact that we can be demanding, right? And we expect high performance and people who want that will absolutely rise to that challenge. And so if you take a look at our roster of not even deal professionals, but just across the board, we've just been a very long tenured fund. As you kind of think about ages, sure, I guess we actually end up trending a little bit younger. But we've got people here who are, call it in their early 40s and they've been with us for over 10 years and they've been actually practicing and been in the deal world for a, a good amount of time. So it's the culture that we have. We absolutely walk the walk and it's candidly, I think it's a part of the job that we all really love. Like I think that if you have this idea of you're going to be here in success in the long run, the nice thing about that is you can really invest in your career, right? You're not just focused on, oh man, what do I need to do in the next 6 months, right? I got to produce something in 12 months. That's not the mentality that we have. We can talk about this later, but we do something very specific and we believe that iconic brands, it's not like they're innumerable. There's, there's, there's a finite number. And so for us, we want people to invest deeply in time and resources to actually cultivate those relationships that allow for us to go win those deals. And that usually is years in the making. It's not something that you can plan for in six months. And it's definitely not something where it's like we're just reacting to. I think as sector specialists we are focused on not taking our cues from what's going on right here and now. I think a lot of the things that we're doing are pretty deliberate. Speaker 1 Yeah. And I don't want to continue that bit and maybe talk a little bit about starting with what makes an investment of EMG investment. What characteristics do these companies need to check for you to actually pull the trigger on investing in them? Speaker 2 What it always boils down to if there are two through lines, for us the through line has always been number one is, is there a brand that we believe is going to be loved by? It doesn't have to be everyone and often times the vast majority of these aren't can't be loved by everyone, but is there going to be a really passionate base of consumers who are going to ride or die for these brands? I think that's something that we absolutely focus on and that's the hallmark of a great brand. I think the second we were growth investors, right, we're not really turn around guys. We're not real platform guys. We deeply believe that consumers are voting with their dollars. So it's not just the buzz. They absolutely are committing real dollars to things. And so if a brand is actually growing in the right way and again as a an exceptional brand, I mean, those are the two non negotiables for us. If those two things aren't true, we can't proceed to the next series of things that we actually care about. I think the thing that probably follows quickly after those two is just it's people. You know, we put so much emphasis on who we partner with, how we want to partner with, who we get around the table, whether this is at a board level or within the organization. We have I think a best in class talent team that is exceptional at identifying the best talent within our small sandbox of where we play. And the way we goal ourselves in that regard is it's not about necessarily filling a seat right in the next 6 months. It's more we want to cultivate relationships with the best people in their sub sector. They may not actually be at this moment in one of our portfolio companies. They may, in fact, actually be super happy in the job that they're in. But at some point, things happen and we believe in karma. And they may end up being on a board, They may end up being a reference call. They may actually end up being ACEO of one of our businesses. And so we spend I think an inordinate amount of time cultivating those relationships knowing full well we're not going to bat 1000. But it is something that gives us energy and what we do too. It helps us make better decisions and it makes the job much more fulfilling. So I think the people aspect is also. Speaker 1 Incredibly important. And how do you measure that going back to the first part of it, just how do you measure brand love and how much loyalty these brands have? I'd love to know maybe some of the metrics that you go by. Speaker 2 Yeah, I think it's a great, great question. I think we're not the only ones who think this. But at the end of the day, a brand is really only going to have true strength if someone's willing to pay a premium for it, right? Like or else we're just slinging commodities. And so for us, we have to be able to see that for some reason, it may be brand, it may be product, whatever it might be like the economics of the business, We're not looking at that purely just because hey, that's going to eventually give us an idea of how much to pay or how much to sell. It's actually a very strong indicator of is this brand truly a brand, right? So we spent a lot of time thinking about how things are priced, what the gross margin of the business is. We spend a lot of time thinking about the marketing dollars that are spent, both the quantum of dollars as well as how they're spent as well. Because there are definitely things where it's great for long term brand equity and those are things we love. And there are other things where you're riding a crazy wave and those get us a little bit more nervous. So we can think through our own portfolio. And also just talking to thousands of other businesses, we've seen multiple playbooks here and not all of them are made equally, but I think that's one aspect of it. If you look at across our portfolio, we invest in both products and services, but in both, what we like about the categories we play in is that they are built for repeat purchase, right? So if you take a look in our products, the vast majority of what we do is in consumables. So you're going to eat more pretzels or protein bars or you're going to go and take another solid core class. And that repeat purchase is incredibly important because it indicates to us that we're actually meeting the desires of a consumer. They're getting what they're looking for and they're again, voting with their checkbook. So repeat purchase is really important. We will do the typical things with NPS and things of that nature, but I think those are indicators. I don't think that anyone metric is going to be the clear defining thing. We care a lot about what's going on in social media. We have to, sadly, I know a lot more about TikTok trends than I would have originally. Speaker 1 Thought it'll help you relate to your kids more once they become teenagers so. Speaker 2 And that it might scare them at some point that I know some of that stuff. But for us, not all of those were created equally too, right? You kind of need to understand why something has become buzzy and where you are in the cycle. You want to make sure that you are still an up and Comer. You've got white space to go, and whether that's actually as part of Mindshare or even retail space, like you really have to understand where you are. And we'll spend a lot of time thinking about social media. What is the sentiment out there? Who's actually doing the talking? How much of it is actually promoted and how much of it is organic versus not? So there's a lot of, I would say, science behind what actually kind of looks a little fuzzy out there. We like to nerd out on stuff like this, and you absolutely can. Speaker 1 One of the really interesting ones that caught my attention when we last spoke was about how once you start retailer kind of making brand space or increasing self space for a brand like that's an indicator that you look at as well. And I found that really interesting. What I do want to talk about kind of circling back to what you said earlier on, how much time you spend around this and how much time it takes to kind of build that relationship and then identify the brands. Just walk us a little bit through that investment process from like identifying a brand to like how long does it take for you to get to a point where you built a strategy and actually invested in the company? Speaker 2 It can take years is just the truth. Again, I think we're a little different because we are sector specialists. This is why I think people invest in US, right, is that it's not just about pattern recognition. We are sowing seeds that we're not going to be able to go and cultivate and, you know, reap the benefits of for years. And we have been in many situations where we've actually partnered with founders who their first thing didn't work and we told them hard truths about what we thought was going on. And I think we handled ourselves in the right way. And with all of this, there's always going to be some degree of luck involved as well. And when something does work, they can come around and we can partner and this ends up being like this incredible partnership, but it takes years is the truth. And I wish there was another way to talk about this, but it's just a boatload of elbow grease. It is just getting to know people early, early, early, understanding what it is they're trying to build and then just killing him with kindness and just just doing favors left, right and center, like trying to do our best to connect the dots. Hey, you need an FPNA person. All right, Like let's we got a team. Let's think about that. Oh, I'm looking for a board member who could do XY or Z. Like again, we we can talk a little bit more. Our team isn't very large. We're highly connected and I think we've got good systems so that we're able to actually go and meet, you know, meet the moment when things like this come across. And again, I think the thing that might be a little bit different with us is we are so focused on rewarding the process, not necessarily just the result. Results obviously matter as well, but you don't get results unless you have great habits. And that only happens if you reward that and if you talk a lot about that. And so this idea of doing favors for businesses that are not quite ready for investment, like that's not something that we'll look at and be like, wait, like what's the point of that? That's exactly how you get deals. That's how this all works. And again, maybe this is a little bit of our DNA from being grown from within. We've all done every aspect of this job before, so we know what it takes. And so doing those little favors, whether it's for founders, operators, retailers, strategics, it really doesn't matter. Those really do help us gain an edge. And that can be a relationship edge. That can be a information edge, but like there is no doubt that we will have more information than pretty much anybody else by the time we're making an investment and also when we're actually helping to partner in the business. Speaker 1 And that time you spend it, does that also part of it help you kind of understand how sustainable a business is from when you identified them to if the product they have keeps it going? Speaker 2 Absolutely. I mean, I think again, because we start so early, the first conversation will have, I don't think we're that prescriptive. We're not just trying to get information out of a business because I just don't think that's how good relationships are built. We're just trying to figure out like, what can we actually do to show you that we could be good partners? And by the way, we might not be good partners together, but it might be bad chemistry and like that's OK. I'd rather know that early, right? And so I think we want to put ourselves out there. We have more resources than the vast majority, I think, of our ecosystem, just given the fact that we've done this for quite some time and also our scale and we want to use that to our advantage. So, yeah, so that's the way that we've kind of got about it is it's less to do about being so tactical with, OK, I'm just trying to pump you for information like I think that's probably the worst way to do this. I think it's much more all right, let's really build a relationship. Over time, we'll have a better understanding of what you're struggling with. We probably do get a better idea of what you are building and what your goals are, and we can track that over time too. So three years from now, it's like, wow, this person, just the brand always outperforms. And like, that does say something. Or I guess the flip side can also be true, where this group's a little bit overly ambitious and it's a little harder for them to deliver. That doesn't mean it's not the kiss of death, but it's just something good for us to know. Speaker 1 You kind of mentioned your team is is not that big and I feel like you did tell me how many members you have on the consumer investing side. Can you talk a little bit about that as well and then how the team works? Speaker 2 Yeah. Something that we like to talk about is we want to be small and mighty. Like I love that. Everyone loves that. We have at any given point in time somewhere between 15 to 17 investment professionals. So it's not a big crew. But that being said, the partners principles of all work together for 10 plus years, some closer to 20 years actually and it's not. And because it is grow from within, we've worked together in different capacities as well. We've all kind of grown up together. I think it's helpful that we have had great success together. I think it's candidly more helpful that we've also had things not work out together too, because people say this, it's absolutely true. You learn a lot more when things don't necessarily go to plan and you know a lot more, You learn a lot more about each other. One thing I will say is that this crew of call it 15 people, like we deeply care about the job. And I think for many of us, I think if you kind of go and talk to everybody, there are lots of different types of investing that you can do. I think many of us kind of see this as a bit more of a calling in terms of working with founders to actually help sort of fulfill a dream. And that part of it is the reason why I think a lot of people will want to work here, right? It's a bit self selecting, which is good. And that's what I think keeps people here as well. So it's not a big crew. I think if it gets too big at some point it gets a little bit tough because then you don't get to collaborate as much. Then it gets a little bit tough. It's harder to actually cultivate and grow professionals if you're not in the room where decisions are made, or at least very close to it. And so that's the opportunity that we afford people who actually join VNG. Speaker 1 And what does the value add look like once you've made the investment? I think this is something that you alluded to is that you already have a plan going in and nothing really surprises the founders who have partnered with you. So can you talk a little bit about that as well? Speaker 2 So all of the plans are wildly different is the truth. So we don't have like this one blueprint for every business because all the businesses struggle with different things. There are different sort of a phase of growth that we participate in. Food and beverage and beauty and personal care, Wellness, fitness, pet, they're all different, right? Their ecosystems are different. So there's no playbook for any one of them. The thing that is consistent though is I think that it's really important to actually be transparent with founders upfront on what good looks like. We don't know how this is going to be in our great success stories. If you zoom in, you'll find there's ups and downs along the way because these businesses are not huge, right? But what we want to do is we build backwards. We think about, OK, this is a business, this is what we'd like to see by the time we exit. And here's the shape of the PNL, here's what distribution could look like. Or if it's a multi unit, you know, concept, here's the number of doors or units we need to have. And then we build backwards and we kind of script that out. And we're hyper focused on year one because year one matters a ton. And then we have very real conversations about the team that's necessary to do this thing for us. It's unique. A lot of people talk about being founder friendly and I think that is important. It's candidly more important to actually be transparent and to allow for founders to make decisions right? So I'd rather, and I think our team very much shares this. We'd rather actually pull together. Here's our best plan. And there may be some tough news in that. There might be something that you love in your business that we just don't see eye to eye on. It could be a product, it could be a channel, an account, it could be people related. I think we'd rather have those tough conversations upfront and even if that means that we're going to lose the deal or even if that means that the conversations end up being a little bit more difficult. I think, I mean, this is not an easy thing that people are trying to accomplish. All these founders, like one of the most important attributes that I've seen in founders is their ability to actually just withstand tremendous amounts of pressure and pain. They all have it. It's crazy how much they can actually take. But in my mind, I don't think they're looking for someone just to tell them that everything is perfect and they're just geniuses all the time. There's a lot to love and what's already been done. I completely get that. But it's more important to be true and tough. That's what you're looking for. At least that's what we're going to provide at VMG is we're not going to shy away from the tough conversation. We want to tell you what we think is actually true. And if we don't see eye to eye, that's OK, right? Again, life's too short. We can figure out there are multiple ways to success and it's not purely just with VMG and we understand that. So the value add can be, it's a very bespoke, it's very candid. We'll have conversations about distribution, we'll have conversations about supply chain. Are you making your product? If it's a product business, they're at the right amount of cost. It could be anything like that's more on the operation side. There's a ton of time spent on team. There's a ton of time spent on eventually is your IP in the right place. At some point when you want to go and sell your business, that stuff has to be completely in great standing or else one of the nice things, and I, I think this has been a calling card of ours, is we've sold more businesses to Strategics over the past 20 years than our peers. So we've seen a lot of good and a lot of horror stories too. And we learned from them. And it would be so tragic if you didn't plan for your IP Bible to actually be just in great standing by the time you exit. Because absolutely people will poke holes in that. Whether that is you owning marks or owning actual patents, it doesn't really matter. All that has to be crystal crystal clear. Speaker 1 For sure. And I do want to talk about some of the portfolio companies that you own. I want to start with beauty and personal care, two of your investments. Maybe if we could start with vacation sunscreen brand, I'd love to start with talking about that and maybe how that investment came about and then how it's grown over the years. Speaker 2 We've known the guys for a long time and it's not going to come as a shock. Like if you know the brand, the founders behind it are amazing when it comes to marketing creative, like making sure that their brand remains culturally relevant. I mean, they are exceptional on that front. They're not coloring by numbers when it comes to this. They're going to be creative. They're going to push the envelope. And why it matters more in this category than in even others is it is a category that is highly regulated. So the level of product differentiation is a bit more limited than other categories. And because of that, like if you don't really have product to actually push and pull on as much, then really a lot of it truly is can you create connection with the consumer. And that's through brand, that's through marketing, that's through activation. And again, that's where they are exceptional. It's crazy, but we've collaborated, we've had, we've been super lucky to partner with amazing brands, but I don't think we've ever been in a situation where like people will pay them to throw parties. Like that's super random. And they do an incredible job with brand activation to the point where others will actually leverage their capabilities and their creativity to activate their brands. And it's a win win for us. So that is where I think Dakota Lock, they are exceptional at this. We've had success in sun care in the past with Sunbum. That was one of our former investments that was sold to SC Johnson a couple years back, also an exceptional brand. Sunbum was a little bit smaller when we invested, but I mean it is the number one brand at Target at this point in that category. And we thought that Vacation would be able to also make similar moves. And so it's a, it's been a really fun one. It's a more recent one for us. Good scale business, built the right way with incredible brand DNA that can't be bought. Like you just have to have it and the guys have it. And we are excited to be partnering with those guys. Speaker 1 When did you invest in it, by the way? Speaker 2 That was actually this year, so earlier this year. This was, yeah, early 2026. Speaker 1 Got it, got it. And then another really great one, especially with like the themes of fragrance becoming so much more important for consumers Sniff. I'd love to know more about that as well and how it kind of differentiates itself in a market where things can be quite expensive and then not very easily affordable. Speaker 2 But that's exactly it. I think this is 1 where one of our colleagues, Eliza Becker, did an exceptional job identifying a theme, which was fragrance was having more than a moment, right? Like everyone's been reading about fragrance, usually it's more a sort of luxury and then it's trickled into prestige as well. So things that sell more in a Sephora type environment. But historically, if you actually take a look at where fragrance has been consumed, there's been a lot of fragrance in places like a Walmart, a Target. Mass has always been a big player. Over time, that's actually been whittled down, but we absolutely see the resurgence happening in that space. It is kind of picture perfect from a category perspective for mass to do well because I think people understand it's like fragrance has exceptional gross margins. And so the ability to actually have something that is a sharper price point, like not every product can do that, but this product category absolutely can. And so the idea of bringing best in class practices and brand building what that you've seen in luxury and prestige into more of that mass space within fragrance makes a ton of sense. And so we knew where we wanted to play. And I think Eliza did an exceptional job just making sure she was on top of all of the up and coming brands in that little sub sector. And we're thrilled to be partnering with those guys right now and business is doing well. Speaker 1 For sure. Another area that obviously the staple for VMG is food and beverage and one of your recent investments there is Fruit Riot. Very fun looking brand. You just really want to eat it when you look at it. We'll talk a little bit about that as well. Speaker 2 Well, this is 1 where again, like we talked a bit about this before, again, one of our colleagues, Wayne Wu, led the charge. This is an entrepreneur who actually had started something before and that had good success but rode a wave that ended up being a bit more difficult and then had the second coming of this idea of Fruit Riot. And for those who don't know what it is, I do a terrible job explaining this, but it's basically a frozen fruit with some degree of sour patch condusting on it. So it is more exciting than a frozen grape. It's a frozen grape. Plus, is it good for you? I mean, it's better for you than like eating, you know, a bonbon or something like that. And I think that it's done incredibly well. It's an interesting category. I think frozen novelties is not easy, right? Because if you think about the real estate that that commands within a supermarket or mass account, there's only so much space and the space is incredibly competitive. What we really loved about this was it's unique at that point in time. I think a lot of people love frozen fruit. The insight that we actually pulled on was it just turns out that people who love sour, like beans for sour. It's kind of an interesting category in that way. It's not as big as sugary. So chocolates going to be bigger, gummy, like all of that that if you just kind of think about the analog and handy, those are bigger categories. But when you do the consumer work, what you actually find is the sour people keep coming back to those products. So the loyalty is off the charts. And we were still very comfortable with the Tam for a product like this because ultimately it's still quite large, even if it's not the biggest. And we love the loyalty aspect of what was going on. We like the better for you nature of it, the people around the business. It just made a lot of sense because again, you learn a lot in success and in things that don't work as well. And this is a business where it looks and feels very much like a lot of the food and beverage businesses that we've invested in in the past. It's a super, super fun one. Speaker 1 And then I want to turn towards the four wall kind of concepts on consumer services, which have become really a lot more interesting and in recent years. And if you can find the right 1, I feel like those are great, great investments. Well, let's start with solid core. I feel like that's a very staple popular brand. Tell us a little bit about that investment. Speaker 2 Again, this is like when we think about this, it just starts from so far before is this truth. So McConnell Smith, one of our colleagues did a an amazing job identifying the importance and the growing love for Pilates, right. And the interesting thing about this is we got to know the business prior to COVID and we've been looking in boutique fitness for some time, but we hadn't made any investments at that point in four wall concepts. But we did a lot of work to really understand sort of the consumer perspective on a concept like solid core. And what it turns out to be is if you are into Wellness and fitness and Pilates is part of your repertoire, it usually ranks as your number one or two discipline. Like you just end up loving it. It's the thing that you actually look forward to out of all the workouts you do the most in that week. And so we love that because of that loyalty aspect. The second aspect, which was really important is I think I'm not an enthusiast in the sense that I'm afraid of Pilates, but if you do it well, like you have to have great form. And so the fact that you need to do this with others in the room who are correcting you, that made a lot of sense for us. Like that need to actually be there was important. And then the final piece of it is the reformer itself is bulky and expensive. So we'd gotten to know this concept early on. Then COVID hit and as you can imagine, all the boutique fitness concepts really had a hard time. I think this is one of our better moments of just meeting the moment and having a prepared mindset. We'd done the work before and we were very high conviction that this modality made more sense than anything else. This is during a period when everybody was running towards connected fitness, anything that you could do in your home. Every modality was like up for grabs. And to his credit, I think McConnell steered us to, hey, that's all fine and good and we'll look at it and we'll see if the values make sense and the concepts make sense. But in person is not going to be dead. And in Pilates in particular, like there are characteristics of this discipline where we are excited and we're going to stay excited. And so we were able to do that. That was our first four wall investment. And I think it was a brave 1. And I think that, again, it was a testament to us being sector specialists, right? We would never have had the conviction to back something like that in the midst of COVID if we weren't deeply preparing for it, and so that begat a lot of other interesting 4 wall concepts as well. Speaker 1 Yeah, absolutely. I mean, 2020 was just like everyone's like with the death of Jim's, like we're never going back and everything is like from home. And then everything opens up and like Planet Fitness is full to the brim and Pilates and yoga, everything's coming back. And so that was a crazy time, but that kind of brings me to the next concept, which is also very interesting. Rowan, tell us a little bit about the concept itself and maybe more around how that kind of investment came about. Speaker 2 Absolutely. So Alisa Carmichael leads that for us and I think she did a phenomenal job. She's worked deeply within beauty and personal care, more on the product side previously, but she'd already been thinking a little bit more about other modalities that were a bit more service oriented. And when Rowan came about, it was a different concept. I mean, at that point when it started, it was more about being a store in store concept within Target. And obviously we knew Target really well just given our product experience. And we have always been believers that that is an influential account. The thesis is pretty straightforward. And the truth is for us to fall in love with these concepts, they are quite simple premises. So Rowan is all about just moms in particular are going to go and celebrate this really important event in a kid's life. And no disrespect, but a lot of folks were going to Claire's or tattoo parlors or places where I feel like a lot of folks didn't really necessarily want to go. But it was more of like this rite of passage and where else could you go? And to the credit of that founder, she did an exceptional job identifying that, hey, if you created a service environment that was more welcoming and you actually had people who are better trained than a nervous teenager with a piercing tool, there was going to be value there. And, you know, obviously, on top of that, there's been a lot more piercing art, right? It's not just about having one at this point. You can do lots more. There's also a lot that you can do on the jewelry side of things too. And I mean that business actually, it pivoted away from being a, a shop in shop at Target into having its own units. And it has grown incredibly well. Truly, again, I think, you know, I think the execution has been very, very strong, but I think there's been incredible product market fit. You know, they do this with very limited amounts of marketing. It is just something that people seek out as opposed to a push model. Speaker 1 How many stores does it have at this point? Speaker 2 There's over 100 now. Speaker 1 That's incredible. And is that, is that geographically like is, is that in the West? Like how is it spread out? Speaker 2 It's actually pretty well spread out right now. They just actually entered California. That's been relatively recent. So there's still a ton of white space left. But if you really think about it, I mean, this is an area where I really do like this about a lot of our four wall concepts because we're also in gyms, we're in other fitness concepts. Ours are not purely coastal. If you really think about it, many of the businesses and services that we've invested in, they cut their teeth in middle America where the South and kind of built up from there. And so it creates an opportunity for us to be able to ensure that there's enough scale opportunity for eventually the next investor whoever wants to buy this. So, and again, not to get political, but there aren't that many things that people can kind of agree on these days, but there are a few of these. And for example, we have a concept where it's about building your body as a kid to actually be great at sports. And something that American parents all very much agree on generally is my kids going to be an incredible athlete. That may or may not be true, but you are willing to spend money on that. And it doesn't matter what geography that is. I mean, sports are still pretty pervasive across the US. Speaker 1 But that's a really interesting concept. What is that investment called? Speaker 2 It's ETS and it's a really interesting 1:00 and it's 1 again, where people really want to set their kids up to be a high performing athlete. And it really matters how your body actually develops, especially if you specialize in a sport, right? So if you're focused on football or whatever it might be, soccer, volleyball, you want your body in the right shape for the season. And so it's a business that really caters to that type of parent. The sell in process actually is it's partially parent, but a lot of it really is like coaches, if you think about it, like club coaches or school coaches because they want great performance out of their kids too. So again, there are these like very interesting themes that we solidify around. Speaker 1 I feel like youth sports in general has become so much bigger than it was before. I like, I keep hearing that all the time from investors trying to find ways to kind of back that industry. So that's definitely fascinating. My last few questions would be around just the general state of consumer M&A. Obviously, the MG has been active and you've been making investments. But broadly speaking, what have things been like over the past couple of years for the market? Speaker 2 The saying that we have at VMG is that we focus so much of our attention on selling businesses to strategics. That's been a big part of Our Calling card and it's a huge part of the discipline that we actually bring to our portfolio companies. And the saying is some version of strategics are going to pay top dollar for the best brand or they're going to pay nothing at all. Like getting the 2nd, 3rd or 4th best brand won't really matter to pick your strategic, right? It's a drop in the bucket given how big these businesses are. That I don't think has changed, right. I think that you are always within a sub sector looking for the absolute best brand and hopefully the best sort of business that's executing within that segment. That's what we goal ourselves on. We want it to be almost within that little pocket. We want it to be almost inevitable that this business is going to get bought. And so I don't think that's actually changed that much in over the past 20 years, at least in from our mentality. What has changed I think more from a strategic perspective is we've gone in ebbs and flows where there have been moments where strategics have been a little bit more comfortable with some, I don't know if it's hair or just may not be the absolute no brainer asset to go and tackle, but they can see their way to it because they believe they can execute on it or just make it better. And I think in some occasions that actually has proven to be really, really good too. But I think that we are at a moment now where the bar is high. And again, I've always felt like it's always been high. It's a minor miracle to sell anything, right? You've got to have a great brand, great people around it, and amazing execution and economics. And even then there's the politics of you have to have someone on the other side pound the table and say I'm putting my career at risk to actually go and make this investment. And a lot of things can go wrong. We feel blessed that we've been able to have the consistency of exits that we have. I don't think that that is purely by luck, but I do think a lot of things have to go right and we put ourselves in a position where the probabilities actually work in our favor for the businesses that we back. Speaker 1 From an investment perspective, consumer investments in general, M&A hasn't been that strong these past couple of years. I think that can be said for M&A in general. I'm curious what 2026 has looked like so far And then do you think the rest of the year will shape up to be better in terms of volumes? Curious to hear your thoughts on that. Speaker 2 I think it's just it's pockets, right? Like we love this area that we have coined as modern staples. And it's not an economic term, like an economist would probably not agree with us. But for a big and incredibly impactful segment of consumers with great disposable income, their perspective on what is a staple and what is discretionary has evolved. And the way we think about that is it's all about trade-offs. And as you think about what they put in their body, on their body or around their body, often Times Now they're not willing to compromise. Now, we do participate in categories where we're not really investing in, you know, handbags and things of that nature. So the ticket prices usually aren't that expensive. Yeah, spin drift is, on a percentage basis, a lot more expensive than Lacroix, but it's still less than a buck unless you go to a super fancy spot. But people are not as willing to actually make that substitute anymore because there's so much education about what it can do to your body. And I mean, obviously a core theme these days is like living well and longevity and these areas of modern staples that we play in. You think about the fitness that we're in, the food and Bev, the beauty and personal care. Everything that we do, there is an element of better for you. And that can be pretty broadly defined. But generally speaking, people want to make that trade off. They want to invest in themselves. And those are the consumers that we speak to. Those segments have generally done really well. So again, we always follow consumer. We're not even necessarily following M&A transactions because the M&A transactions always follow the consumer behavior and consumers are spending in those areas. And as long as that continues to happen and we believe that it absolutely will, things will actually all kind of work out because all the strategics, all the sponsors, they need growth. They need great businesses. That's just the model that we're in right now. And so we don't see a change in that regard. It's just I think we've been in the right place, focused on the right types of things and that's been to a certain extent by design a bit of Our Calling card. So we still love this pocket of consumer. Speaker 1 Absolutely. I mean, skin care, hair care, organic foods, like that's something I'm not willing to compromise on once I found my brand. So I completely understand what you're saying, but is there anything else that I missed out on asking that you think is an interesting thing or an important thing to note about BMG? Speaker 2 We're always evolving from 30,000 feet. It probably looks pretty similar because we've been doing this for quite some time with a lot of the same people, which I think is a good thing. But an area that we do spend time on and really think about is, you know, what is happening in the world of AI. If you think about first principles, it's pretty straightforward for us because people will still eat food and they still to a certain extent want to work out to feel better and stronger and all of this. So that's not necessarily going to get disintermediated. The area that I think is most interesting from an AI perspective is actually not as much top line driven. It's a bit more what you think about when you think about the leakage between gross profit dollars and EBITDA for consumer. So on a gross profit basis, the magnitude of dollars that are in consumer, it's one of the largest in the US economy, right, Because it's such a big space and the gross margins themselves are actually not that bad in many categories. Where it gets tougher is going from gross profit down to EBITDA and that's death by 1000 paper cuts. Like think about all the different things that are inefficiently done in that area. Our perspective is that the evolution within consumer that's going to be super exciting is there's going to be an unlock where the conversion between gross profit to EBITDA is going to that rate of conversion is going to improve and I think AI is going to have a role in that. It will be bumpy. This is all happening in real time, but it absolutely is going to change how things are and it's an area of opportunity, so it's definitely something that we're spending a lot of time thinking about too. Speaker 1 Absolutely. That's, that's a really fascinating point. And it's, it's something that I'm so like it's also as a consumer reporter and a services reporter, I deal with so many like just like food and like plumbing. It's like that's going to wrap my head around AI is like, OK, I understand what you're saying, but it's something that I'm still waiting to see how that translates into action. So it's definitely really interesting. But Robin, thank you so much for a great conversation. Speaker 2 I appreciate it. Thanks for having me. Speaker 1 Yeah, this is Nikita Satiraju, chief reporter with the deal. Thanks for tuning in to Behind the Buyouts.