Speaker 1all right everybody before we dive into today's episode we're brought to you by a few fantastic brands that sponsor this show the first one is routine now this one has been a sponsor for a long time if you haven't tried it yet i don't know what you're doing because i've been talking about them for years but ultimately what was routine designed to do well when we sleep we lose between a pound and a pound and a half of water mostly just from sweating something i learned when i first met these guys each packet of routine comes with half an organic lemon one tablespoon of apple cider vinegar himalayan sea salt all six essential electrolytes and no sugar i always like to say it's really just three ingredients it's lemons it's apple cider vinegar it's himalayan sea salt i dump that into a glass of water first thing in the morning rehydrate myself the days i have it versus the days i don't phenomenal on the days i do i genuinely it's one of those products where you feel it immediately you know when you don't have it trust ingredients made convenient these guys they're the bomb i love working with them i've loved supporting them over the years give them a shot if you haven't already go to your routine.com you can use code shane white 30 at checkout for 30 off your first order they're also available on amazon you can go there get on subscription that's what i would do get a 30 pack throw it on subscribe and save get it once a month if you like to have more than one a day or if you share it with folks in your house you're probably going to need it more than once a month or get two bags a month both of those are great options and you can save up to 15 every month on amazon with subscribe and save and all right we actually have a new sponsor on the show couldn't be more excited love these guys they are also out of chicago i have worked with them supported them actually invested in them so if you if you can't tell i love these guys you do now it's called haywell and for any of you who know me you know me i'm into energy drinks i'm into caffeine sometimes to my detriment and haywell has honestly been a great alternative not just caffeine or caffeinated product but it's been a product i'm able to use at nighttime too because they have a calming line as well but really haywell i'll read this to you guys modern life can be hard but your wellness shouldn't have to be being well doesn't mean being perfect getting fit doesn't mean you have to fit into a mold we need a reminder that little more and joyful steps can add up to something truly meaningful we can do hard things but that doesn't mean we always need to be so hardcore wellness is meant to be enjoyed not endured they created haywell to be a simple invitation to a new movement for modern wellness where all are welcome where small steps can add up to something big where you get more high fives and less side eyes where you have more fun and less frustration where flavor and function are equally famous wellness doesn't come in a can but we can help they have created a line of low calorie functional beverages that taste delicious and help you be a little more well in every mood and moment of your life they're equally proud of creating a more welcoming realistic and joyful flavor of wellness culture where more people feel seen supported and inspired to embrace a wellness journey that truly feels better for you from the beginning haywell is here for you from rise and shine to relax and unwind ashley and brit like i said the co-founders of haywell i've i've worked them for a while now and just they're just unbelievable people if you guys want to try their products go to the link in the bio as i'm recording this i don't have a discount code but i'm sure we can get one for you guys so take a look at the link in the bio you can go to haywell.com you can also go to amazon they're on amazon and it's a great place to get it they're also available in target you can find them in foxtrot you can find them in a lot of different places now they're doing a great job of getting distribution but i would say the two easiest places living haywell.com if you just google haywell you'll you'll find that pretty quickly and then also amazon all right everybody thank you for listening here's today's show all right everybody welcome to another episode of the shane white show i'm pumped today to have wayne woo from vmg partners today wayne thanks for taking the time man welcome to the show hey
Speaker 2thanks shane i'm not often do i get to get interviewed by someone whose name rhymes with mine so we got shane wayne on which uh which was nice alliteration so thanks yeah that's the first
Speaker 1time i've heard that one that's great i love you don't meet many waynes no no i don't you're right you might be the first wayne i've ever met you're the first wayne i've ever met you're the first wayne i've ever met actually now that i say that um i'm pumped to have you i always funny i
Speaker 2got to see little lowly and i'm like oh wow isn't he having like a resurgence there's two waynes hanging out here with the at the music festival let's go
Speaker 1that's amazing how was it and he's i've actually not long ago just had a convo
Speaker 2you know what i didn't have any appreciation it was like literally at the end of each song he says thank you you really it's kind of like his signature move which others might say hey you didn't know that wayne as a fellow wayne but hey i didn't know
Speaker 1that i didn't know he did that at the end of every song he says
Speaker 2thank you but like in a very distinct little little wayne way of like thank you it was super that's wild yeah i mean
Speaker 1that's i honestly he's one of those people where i recently was having a conversation with somebody i was like where is he like i feel like he just fell off the face of the earth but he's out there touring i didn't
Speaker 2even know he he was there and it was an incredible
Speaker 1performance that's awesome man um and i think that's kind of what i'm trying to do is i'm trying to do is i'm trying to do a little bit more of that um so for everyone listening who doesn't know you wayne um would you mind just giving a quick background on you and then i have a funny thing i'll add because i there's anyone that's in our industry there's one reason they might recognize you not in the video today but i'll i'll explain what i'm talking about you know what
Speaker 2i mean i was born and raised in houston so my my parents immigrated to the states in the late 70s my dad was the first to graduate college from either side the family and he my parents moved from the uk uh where he went to college and he was the first to graduate college from either side to school and then had his first engineering job my my parents had known each other since they were kids in hong kong and so he found a job in a newspaper and ended up in in houston where i was born and raised um i grew up in hot humid houston um was a great great upbringing i i went to catholic schools my whole life grew up playing basketball and soccer and i moved to the bay area in the late 90s i went to santa clara university i thought i was gonna be part of the dot com boom turns out i was not here just in time for the dot-com bust um and it's sadly september 11th occurred um you know i think the you know i think the the you know i think the real blessing was i don't know if i would be in consumer today if there weren't a dot-com bust and so every i truly believe everything happens for a reason i i met my wife in college so we've known each other since we're 18 and you know i i didn't end up going into the tech industry at all i started my career at deloitte doing public accounting cpa type work i had a short stint in investment banking at rbc capital markets as a uh as an analyst doing the m&a like capital and capital raising type work and then i had a unique opportunity to become cfo of a automotive retail platform where i learned to operate a business um and saw the power of brands for the 2008 shortly after the first fund had its final close in the summer of 2007 so i'm heading into my 19th year here at bmg helping support entrepreneurs who are whose dream is to build an iconic brand and in the in the cpg and in uh services space love that
Speaker 1that's so cool man i i when i went through and did some research on you um i had no idea how like long you've been doing like you you have such a you must have some incredible stories which i'm excited to dive into today but like you've seen some like really prolific brands you've sat on boards of some of these brands over the years so i'm excited to dive in man um the the first question i always like to jump into is someone like you that has such an awesome background that there's so much we could dig into over the next hour is you know when you started off at deloitte and then you went into investment banking at the time did you know what you wanted to do long like you said the dot com boom and that was kind of but did you like think
Speaker 2this is what your career path was going to on and twin girls who are 14 and kids today you know they i mean it sounds like an old guy um kids today but the access to information like the like they have like an entrepreneurship program at their school just like the access to thinking about career paths it's just so different than i think it was when i was growing up and i don't know that's probably a good and bad thing you know it's almost like a specialization of youth sports where kids just don't have the same chance to just explore you know like you know like you know like you know like you know like you know and and do a lot of different things like we did when we were kids and so i i you know i i had the benefit and the curse of just trying to find my way and like i said i thought i was i thought i moved out here to be part of the dot com boom and yeah right and then i ended up you know in a safe place where i wanted to start my career and learn learn businesses with at deloitte through the cpa and so i did that and i did that and i did that and i did that and i did that and i did that and i and paul was a fellow intern who was going to cal and he ended up starting as an analyst at rbc and so he would always we stayed in touch and you tell me about what he's doing i didn't know what an investment banking analyst did at the time and so he would you know he was kind enough to tell me about the types of things he was doing in his job and i'm like wow that's super cool and it feels like you can leverage a lot of the financial type experience and you know you can leverage a lot of that I was getting at Deloitte and he helped me get an interview there and that's where I learned learned about what investment banking was. And then when I started investment banking, I had no idea what private equity was. And so, you know, and then I had a chance to learn what that was. So I felt like I was learning, learning on the job, learning every step of the way. I didn't have the benefit of parents who were in like the financial industry. So by no means, you know, have I, you know, was I born and groomed to do this job? I learned at each step. Similar to, I think, how founders think about how they're growing their businesses. You know, they're kind of learning each step of the way themselves as well. And I have tremendous empathy for that journey.
Speaker 1Yeah, that makes a ton of sense. It almost feels like you, you kind of had like a, I don't want to call it natural, but sort of like you're in, you get your CPA and you go to one of the big four, right? Yeah. And then what, for everyone listening who maybe doesn't know, like, could you give someone like the 10 second spiel on like what's investment banking and what's private equity? Like the simplest term?
Speaker 2Sure. I think the easiest analogy that when I'm asked this question is think about investment banking, like as the realtor. So they are the, they are the, they are the middle person helping market either the sale or the capital raise for a company. But in a realtor example, they're the ones selling, helping buy and sell the home, or they're helping raise the capital to, for, to purchase a property. For development. And then private equities, like the developer, someone who buying, you know, buying a home to build it up and then maybe sell it again. Maybe it's a, it's a good location, but it needs some work. They're fixing it up and they're helping sell it. And they make their profit by buying the home, fixing it up, selling it, hopefully for a higher price than they bought it for. Whereas that's a great analogy. They're making their, they're, they're putting food on the table through a transaction fee of $1,000. And then they're, they're, they're, they're putting food on the table through a transaction fee of $1,000. And then they're, they're putting buying and selling the home.
Speaker 1Got it. Oh, that's a, I mean, that's a fantastic analogy. I've never heard someone say that before, Wayne. That makes a ton of sense. Yeah. Yeah. Okay. That totally makes sense. Um, was, was investment banking what you thought it would be? It's funny. Cause I've worked for like, for example, my, my first boss at RX bar, Chris, he came from investment banking and it always seems like folks that I've worked under funny enough in my career path. They always, it seems like they came from investment banking to do other things. And I always wonder, it's like, it must just be high intensity cutthroat crazy hours. Or is that not necessarily true?
Speaker 2Well, the question I, I, I didn't go into it with a whole lot of knowledge or expectation, as I mentioned. So like, I've always looked at every step of my life as I'm going to go in there and work harder than anybody else there. And that's, that's how I looked at it. I went in there to learn and work hard. And certainly in that environment, you work very hard and, but I learned so much in a short period of time. And there's so many things that I learned through the combination of being at Deloitte. And RBC that still, I still think about today and then having the chance to help operate a business, the combination of, of public accounting, investment banking, and operating a business, you know, as the first three jobs I had out of college all before roughly 20, 26 years old was just tremendously helpful in building a foundation for what I do today.
Speaker 1Yeah, I bet. I mean, and also that's some pretty incredible experience early on in your career too.
Speaker 2Did you, Not by design, just, it's just happenstance, really.
Speaker 1He doesn't say it sounds like networking though. Like I feel like an underlying theme I'm hearing here already is that you've just been a good networker and you reach out to people and you ask questions at a time when that was everything too. I mean, I've never
Speaker 2thought about it as networking. I love people, you know, I, I, in my own life, I helped set up a dad's club at my kid's elementary school. We're helping build a father's club at my son's high school. I love building. I love building community. And I think there's real power. I mean, I, I, I, I'm probably misquoting this, but you know, there's, I believe there's a lot of good data that shows that not, you know, it's a combination of exercise, sleep, eating healthy, but it's as important is to feel part of a community that leads to good health outcomes and a long life. And so I've, I can't say that I've, I've done that in my life because I'm trying to seek a long life. I've always felt, I've always found fulfillment about being part of a community and feeling like I'm helping contribute to it, whether that's a parent on my kid's sports team or my kid's school or my first job or how I believe my calling and mission in what I do today is to help build community within the consumer ecosystem.
Speaker 1That's really cool, man. I was funny that you say that. I, uh, I was just having a conversation with my wife because we, we just had our third baby in three years, nine months ago. Let's go. Congrats. Yeah. Thanks. Three and three. Yeah. It's been crazy in the best way possible. No twins, no twins. No, we have a three-year-old, a two-year-old, but two first year boys. And then we have a nine month, almost nine month old daughter. So it's been a wild ride. Yeah. Yeah. Yeah.
Speaker 2Congrats. We had three, 20 months, but we,
Speaker 1I was going to say yours, yours is great. I, when I heard your, your lineup, I was like, Oh boy, what happened when you found out you're having twins? Did you hit your heart?
Speaker 2That's a great question. So I, I started laughing. My wife started crying.
Speaker 1That sounds about right.
Speaker 2Yeah. I'll tell you this, Shane. It has been the most incredible blessing of my life. And my, I'm all three of our kids are tremendously close. Oh, that's cool. We've never had to think about what's appropriate for one kid's age versus the other. So we've just kind of gone through every stage of life, like a, in like a blaze of glory. Yeah. It's been, you know, what, what saddens me is, you know, I'm, I'm four years away from knock on wood from being an empty nester with my kids. kids off at college and hopefully, you know, driving forward their own lives. So I know that's my happiness and my fulfillment is is being an active father. I love that.
Speaker 1You hear that, man. That's so cool. And it's cool to see the like, I soak it in every single day, because I think I hear too, I just hear too many times from from folks who are, you know, at that end, where it's like the kids are leaving in the next couple years. And now it's like, man, I feel like I, I wish I would have soaked it in more. I've had so many friends and neighbors from my area that have told me that. So I think it's been drilled in my head. So I just soak it in every single day. And I try to make time every single morning and night. And yeah, man, it's like the biggest blessing. And I think I also think this time of life and where I think, you know, remote work, to be honest with you, has been the biggest blessing in my eyes. I know there's lots of downsides of us all not being in the same location. But man, I think back even to when I was at our X bar, and I was like, I was on a train for 45 minutes to an hour and then walking a mile to the office. Like, I don't know when I would have seen them. Because like, at this point, I was like, I don't know when I would have seen them. I don't know when I would they go to bed so early. And they're up not that early. Like, I'm like, if I was in an office five days a week, I'd never see these. I'd have no time with them. And it's been wild being at home because you know, I work a ton, but I can always pop up and give them both a hug and all three of them a hug at some point and get back to work or jump into the next call. And it's something like my dad didn't have the opportunity, you know, like my dad had to travel a lot for his job when I was growing up. So it's, it's crazy. That's cool. But that's cool, man. I that's the one thing I'm I feel like I gotta, I gotta meet more dads that are like a little bit ahead of me with three kids. Because yeah, it's the coolest thing ever. I have so many questions that we could probably spend the whole podcast leading enjoy being a hero.
Speaker 2You're pure hero stage where you walk in a room and it's like, rock star Shane White. And it really is.
Speaker 1It really is. It's so funny. I know I keep thinking like, what is this day gonna end? It's gonna be so sad. My oldest, that's not the thing anymore. It's
Speaker 2like the dog's the one running over like, it's so excited to see me. And I'm just like, Oh, that's so funny. Look up from your screens.
Speaker 1Yeah, yeah. Are the screen that's a lot. This is one question I got to ask. How is the screen thing with high school kids? Is it tough?
Speaker 2Oh, yeah, very. I mean, it's like, it's, it's a, it's a never ending game of whack-a-mole of trying to get them off their screens. But luckily, we live in a place with really great weather. So yeah, they like to be outside. They're active kids who play sports and want to be outside. And you can do that year round here. So yeah, that helps get them off the screen.
Speaker 1That's one thing that I'm buying for is to get to go somewhere a little more in your climate. Because I do think it's crazy here. Like in Chicago, you have, I mean, it's almost six months of the year that it's really, it's pretty cold, nasty. Like really, when you like, take a step back, it's almost half the year. So anyway, wild, man, I love that. I love that a little bit, though. That's really cool. So let's pivot then. So you, you know, you're in investment banking, why did you want to leave investment banking? And how did price change change? Do you remember that whole part of your story? Like, how did that come up?
Speaker 2I went to the automotive space.
Speaker 1Oh, that's right. Sorry. Yes. Yeah.
Speaker 2It was essentially like a car dealership platform.
Speaker 1And Okay. So still tech, though. So it was like a tech?
Speaker 2No, no, not like your local Toyota store, or your local, you know, Nissan dealership, like this group owned a bunch of those stores. And I was a CFO and learned, learned that learned automotive. Retail business. And that's where I first saw the power of brands, like the actual difference between, you know, a Kia, or a Hyundai, or a Toyota, or a Nissan, or a Mercedes, the technology is pretty, pretty comparable at this juncture. It's all about brand. And like one of the large, the most significant badges that consumers spend money on is what what car they decide to either step up and purchase or sell. So, you know, I think that's, that's, that's a really important thing. And I think that's, I think, you know, But what I wanted to do was then try to combine this experience that I learned in public accounting, investment banking, and operating, and it became very clear that, oh, like a hands-on private equity firm is almost like the happy median and balance of all of these things put together. And I had the blessing of meeting the founders of VMG in late 2007, and they were kind enough to give me a chance. And I started on the ground floor at VMG as a new associate at the beginning of 2008 when we were just really, really getting started.
Speaker 1Wild, man. And for everyone listening who maybe doesn't know or hasn't heard of VMG, can you kind of explain the thesis or the goal of the firm?
Speaker 2I mean, we've been one of the most longstanding investors. Our core focus areas are consumer-branded food and beverage, personal care and beauty, the pet space, and wellness. Some of the brands that we've invested in over the years include Kind, Quest, Pirate's Booty, Ghost, Spindrift, Drunk Elephant, Perfect Bar, Justin's, and our most recent investment, Brahmi, which is a better for you, Posse. And I think that's something that we've proven over nearly a 20-year history of being more than capital, whether they're looking for support in a retailer connection, helping build out their management teams. And often their goals are to build, to be acquired by one of the large strategics. Like, you know, I don't know. Your history of our XBAR getting acquired by Kellogg. You know, we've had the blessing of having 31 of our businesses acquired by strategic buyers over, you know, our roughly 20-year history. And we've learned a lot during that time period that we hope to pay forward to companies that are in our portfolio, but hopefully the broader consumer ecosystem as a whole.
Speaker 1That's pretty incredible. 31 exits in 20, almost 20 years. That's nice. Nice track record there.
Speaker 2Yeah. I mean, again, it's like, again, it's a real blessing. I mean, at the end of the day, we're like the people behind the scenes. Our goal is to help champion founders and their goals and dreams of what they believe and want their brands to become.
Speaker 1So on a spectrum of, because this is honestly an area that I think I told you I was excited to have you on because I don't know enough about it. But like on a spectrum of to the far right, you know, Wayne's on calls with the team at BrandX. And you're very involved and know things going on every day or week to the other end of the spectrum, which would be you guys write a check. And then, you know, you get quarterly updates or something. Where would you say you guys normally fall on the spectrum or where do you guys like prefer to be in that spectrum?
Speaker 2You know, we're not and don't seek to be the day-to-day operators. You know, that's the magic of founders and the teams that we help support them in building. You know, think about. So back to analysis. Analogies again, you know, think about us as like a trusted friend or trusted friend is someone you call on your best days and your worst days. And your trusted friend genuinely wants to help you in any way they can. And it's not a forced conversation. It's a conversation that you want to have. And that's think about that is, you know, I think about that as the analogy of like the ideal partnership.
Speaker 1That's really. And I'll be honest, Wayne, I never would have thought that's how you describe it. That's really cool, too, because I've always thought that if you're taking on capital, like I could see how there could be a. I don't want to say what's the right word I want to use here. Pressure, maybe like if Wayne invests in Shane, I'm thinking every time I talk to Wayne, I'm like, we're up into the right. We got, you know, this going, that going. It's like it's beautiful over here. But that's way better to know that that's not like that's never reality.
Speaker 2You know, that's actually I don't think. What you described doesn't lead to actually a healthy partnership. Imagine. OK, yeah. OK, imagine this analogy. Imagine if you you and your trusted friend, every time you got on the phone, you felt like you're just giving your highlights of the day. Like, right. That's not a real friendship. That's that's a that's almost like coming from a place of insecurity. Right. Where you felt right now, your friend, all the great things happening in your life and not some of the things that maybe make you feel a little more vulnerable. That are on your mind like that's not a that's you know, there's there's a bit of a hindrance in your relationship in that scenario.
Speaker 1Yeah, no, for sure. And there's probably so much value that obviously you guys bring when there's problems. And if you know, you can pick up the phone and call Wayne and it's not it's kind of like kind of compare it back to parenting. Like, what kind of like you don't want to necessarily be the parent in my mind. I don't want to be the parent where my kids are in trouble. They don't want to call dad because they're worried how dad's going to respond. You want to be the I want to be the dad that they think. To call immediately when something bad happens because they know dad's going to try to help solve the problem for them.
Speaker 2And again, I don't even I wouldn't even say it's the right analogy still. Like, we're not okay. We're not the parent.
Speaker 1Yeah, sure. Okay, okay.
Speaker 2I look at it as we're the trusted friend. And that's the beauty of doing this for nearly 20 years is like, I wish I could tell you the last 20 years. Everything's just, you know, a bunch of, you know, rainbows and unicorns, you know, like, right, like, these are operating businesses. That that run into real challenges. And so hopefully we can be a good trusted friend and share what we've seen and how we've seen people get through different problems and challenges over time.
Speaker 1Do you feel like when you guys get involved with the brand, is there are there like core areas? I mean, I'm sure there's obviously like a very core set of business metrics and probably some special sauce that you look at for founders and but from a day to day in like, ongoing basis, like, what are what are some kind of common things you said, like retail relationships, that makes sense to me, do a lot of the people that you guys work with, are they coming to you guys for the two, the two that I hadn't thought of that made so much sense retail conversations and building a team. I know, personally, like building a team is when you're trying to operate a business, that's like the hardest, it seems like it's actually been way harder than I would have given credit to. And now I think back to even being at our export, how much time and energy that team had to put into hiring the team that we finally put together. Because now I'm, you know, I have a small business, and it's, it's, it's, it takes a lot of time. And it's like trying to sift through so much noise to get to a few killers is the way I always think about it. Like, like, it's, it's not easy. And it's almost like, that is a cheat code, I would imagine if, if you work with VMG, because if you guys have a network of people that you're like, you know, you need XYZ type of operator, and you guys know some people that seems like a great way to leverage the relationship. And then what are some other things you guys try to lean into and do? Like, what are what are some of the key areas outside of those two?
Speaker 2Anything else? So one thing I want to highlight is, by having done this for so long, a lot of times people try to go, well, you have a playbook. What I've learned is that there is no playbook. Each of these companies are a one of one. And our role is to help in collaboration with them, determine how we can be helpful. And so we're never helping in exactly the same way at each company. Okay. It really starts with what is the North Star? What are we trying to build? And what does that look like? At the end? And then what does the business look like today? And how do we how do we connect the dots? I mean, that's also the genesis of what VMG means. It's it's velocity made good, which is, you know, a nautical and aeronautical term of basically the most efficient way to get from point A to B is not necessarily a straight line. You got to navigate the variables. And that's the same way that you how you build a great brand and business. And so in some cases, we're helping make the right introductions to retailers. In other cases, we're helping build out the right team. In other instances, helping them think about what's the right manufacturing footprint, either the right contract manufacturer introductions or helping them with resources to build their own facilities. What are the right marketing resources? How do maybe we should be hiring noble partners to help us think scaling our our e-com business? Because, you know, maybe we're we're self-optimized on Amazon or RGTC. Otherwise, and so there's not one way. I think what we the overarching theme is that I think we have good perspective on what the implications are of those decisions towards the North Star that we've all aligned around. Does that move closer to our North Star or derail us?
Speaker 1Yeah. And you've seen success and I'm sure a lot of failure on this, like with all the businesses you guys have been involved. So that's yeah, that's like invaluable lessons to be learned. How I'm just this is more curious. I know there's a secret sauce. I'm not asking you to share any of that. But like when you guys look at potential brands that you want to invest in, how much would you say you weigh the numbers, the metrics, top line revenue, even anything on the P&L cash flow side versus the team and like call it like intangible, qualitative, like the founder. I'm always been so curious on like there's got to be a decision where Wayne and the others at VMG are sitting in a room and there's like a weight. There's got to be a weighted system to that. And you don't need to share anything, obviously, that's proprietary. But I'm just curious, you personally, like if you were to look at my business and you looked at the numbers, but then you met me and my co-founder, I'd be so curious how much you think of like what's the most important thing if you had to pick one or how do you weight those two areas?
Speaker 2It is not an AI algorithm, you know, between the two. It's almost like we spend a lot of time trying to put the story together because numbers are only a result of team. And so we're spending time trying to understand if we think the performance is really great, we're unpacking the how it got there and the who drove it there. And when you combine that with our collaboration on what is the North Star that we're all trying to get to, what additional team resources, if any, are needed to combine with the team that drove the numbers that got us excited to make this investment to get to the North Star that we've all aligned around?
Speaker 1Got it. Yeah, that makes a ton of sense because whatever got you here is probably not what's going to get you to the next space. It may or may not.
Speaker 2I mean, that's what we're collaborating to assess. Alongside the founder and team is what are we trying to get to? How are we trying to get there? And who do we need on the bus to drive it to the North Star?
Speaker 1And when you think about who's on the bus, I would assume at this point for you, Wayne, you could probably sit in a room with founders and in 10 minutes get a pretty good sense of the type of leaders they are. Is that true? I was just listening to a podcast the other day with the founder. I'm going to butcher his name. The guy that started Human. And he was talking about like when he hires anybody, it's like six or seven interactions he needs before he feels like he really knows somebody. How do you feel in that world? Like when you're meeting founders, is it like a long dating process where you're having serious meetings with numbers, you're going to coffee, you're taking them to dinner, you're really trying to just get a good sense of who they are and how they operate? Or is it something you feel like you can kind of sniff out pretty fast?
Speaker 2I mean, the way it just typically ends up happening because of our approach, which is to support the broader consumer ecosystem. We just tend to have known people for years before we make the investment. But it's not, but it wasn't because we're trying to add up to a certain number of interactions, as you described in the example you gave. It's just a natural journey of getting to learning about their business and seeing if the stars align on they're looking for a partner and the business is a fit for us. Okay. Magic just happens when it's supposed to. Between it's getting, it's like this trusted friend, you're building this friendship along the way. And I, I purposefully use the word friendship because I believe in friendship, not relationship because relationship can be transactional. Friendships are deep and meaningful. And I think friendships are built along the way where there's this trusted friendship dynamic where partnership from a business standpoint just becomes a very natural next step in the journey.
Speaker 1So, yeah, and it's, so it's, it's very much your. You're, you're getting to know founders, you're getting to know businesses over a course of time. It's not like you have a deck come across your desk and you guys are having a one or two meetings and you're writing a check. This is like, this is a well thought out long-term process. I never, I never knew how that would work.
Speaker 2Well, it's a natural progression of a relationship that is, turns into a friendship that in some cases turn into a partnership.
Speaker 1That's really cool. I, I, I'll be honest. I had, I did not think this is how you were going to describe this. I'm, this has been such a cool conversation already. I'm not sure. I'm not sure.
Speaker 2Everybody looks at it this way, you know, as this industry is certainly evolved and became more efficient over time to certainly, I think people that may have come into this industry because they think it's a lucrative one. I looked at it more in its purity of like, Hey, I'm, I believe I am a constituency in a, in a beautiful, great consumer ecosystem. And I want to do my part to help build it and be a, a positive contributing member to that.
Speaker 1Love that. And, and given that you're. Already said, Hey, there's, there's not a playbook. Like that's not a thing. And every brand is going to be at different stages and need different things before you guys would get involved. Knowing that, knowing there's not like a perfect playbook, is there some sort of like, I don't want to call it perfect, but is there like an optimal stage for a brand? Like, I'll just give an example. Like if you met us at our X bar and you love the numbers, would there have been a time before we were in certain retailers or we were at certain revenue numbers or a certain size team? Is there like, is there kind of an optimal? Like, this is when private equity typically for like, for you guys specifically would be like that, that is a, that's a brand that gets us excited. Yeah. So I'm going to
Speaker 2boil it down to something real, you know, seemingly simple, but, um, you know, we're just trying to assess whether there's real repeat demand in a consumer brand or service, a consumer branded product or service, then, you know, in you assess whether there's repeat in different ways, depending on whether it's a product or service. What, and what channels it operates in, you know, so you look at repeat, repeat purchase data by cohort, you know, on a, on, on a DTC or e-comm driven product business, you're looking similarly at retention, you know, in a branded service business in retail, you're trying to assess that through a combination of sell through velocities by skew at a given retailer, along with maybe some panel data that's either found through numerator or consumer. Survey or otherwise, but at the end of the day, you're trying to, you're trying to assess, does this thing really have repeat retention legs to it? And does it have a gross margin where if you get repeat performance that you can turn this into a, a repeatable profitable business over time? What does that turn into the stage? I mean, generally speaking, that's, those are generally brands that have at least 10 million of revenue, but we're not against it being less than 10 million. A lot of times. It's just hard to assess true repeat performance at a stage earlier than that. Okay. We're certainly open to it. If we can, if we can assess the unit economics of the operating model of gross profit and otherwise, and really feel good about the retention and repeat of that branded product or service.
Speaker 1Love that. Yeah, that's really interesting. 10 million seems like a healthy mark to like that at that point, the brands I've looked at and worked with, like you definitely can tell there's. You know, 10 million, that makes a ton of sense,
Speaker 2but sometimes it's not enough to assess that. And sometimes you can assess it earlier. So I, I'm just trying to give just some, some rule of thumb, but the, at the end of the day, it's more of the substance of what I described than any specific revenue or EBITDA threshold.
Speaker 1And that makes a ton of sense. And then I know this has changed so much, um, across the last decade even, but I felt like when we were at our X bar, I remember, I remember a lot of the investments at the time. Like we. Stood out because of our profitability. And I remember like at the time, it seemed like so many people were taking on tons of money and burning really hot and then COVID hit. And it felt like that was like all of a sudden the rug got pulled out and everyone's like, wait, we can't, you can't just build at a million miles an hour and lose money every day. Like, so it's been interesting, even from my purview, just to see how much that's changed back and forth between what's the most important, where do you feel as an operator? Like, do you love to see businesses that are maybe growing slower, but they're more profitable or, or are you more on the spectrum of. Growing fast profitability could get better with scale. They're not making a ton of money now, but there's an opportunity to, do you have a, even a range that you, not a specific numbers, but like, is that something that you focus heavily on and have a preference to? Ready for another analogy? I love, by the way, I'm a huge analogy guy. I'm loving it. I'm eating this up.
Speaker 2I'm going to answer it in, through an analogy. I, I think, you know, about a balanced approach wins championships. So we're not, I don't believe that we should just throw the ball all over the field and try to. Offscore somebody, nor are we just playing prevent defense the whole time. Like we're going to run the football, we're going to throw it and we're going to defend. And it's the combination of doing all those things well that win championships. And so it's, we're trying to not, we're not trying to just to grow for growth sake, you know, where the economic model doesn't work. We're not trying to eat out every penny where we may be hindering growth. Um, we're trying to do a little bit of everything. And I think in order to think about a brand that hasn't had an opportunity to be acquired by a strategic downstream, you got to, you got to nail all of it. You got to nail all of it. It's just like in sports to win a championship, you have to do all those things. Right. And have a little luck on it. You need, you need the ball to take the right bounce for you and that, and anyone who says that in business or building a brand or business, you don't need a ball to bounce in the right direction or that, you know, to, you know, have a, get hit a bit of a hot streak, you know, on a shooting hot streak, you need all those same things to win a championship and building a great brand.
Speaker 1That's a great, that was another great analogy. I'm fired today with the analogies. These are, these are great, Wayne. Um, um, I want to make sure I spend time on the real, cause we have 10 minutes left. So one of the things that I'm super curious on, because this in my world specifically is becoming just a really big topic. And I think it's, it's just been curious and I'm so excited to hear what your answer is. To this, you know, if you, if you think even the last 18 to 24 months, obviously everyone, and especially where you live, like AI is just, I feel like it's on the, it's on the tongue of every single conversation I have at this point. How important, or I guess more importantly, how much of an impact do you think some of the things that are happening in AI are going to have to CPG food and beverage specifically? Like, it's one question I really haven't asked anyone on the podcast because I think most people feel like it's maybe, maybe this is a too much of a generalization, but like, you know, you're still selling a physical product in a store. or online, there's so much that can't necessarily all be impacted by AI. but there's always i mean i'm in i'm in it all day every day so i'm just curious from you as as someone who's investing in the space like is that becoming an important thing that you're hoping founders are working with using thinking about is it not really come up as much as it is in other industries you're at the leading edge of this so i figured you would think about in two
Speaker 2ways i think from a consumer dynamic consumer brands and services are going to mean more than they're going to mean more than they ever have and like people will be seeking meaning people will be looking for things that bring them joy that they can either touch feel or experience but from like an operator's perspective i think it's going to bring a ton of efficiencies in often in businesses that weren't the most tech forward both on a consumer brand level but also on a almost the whole supply chain of it i think it's going to bring efficiencies to the manufacturers it's going to bring efficiencies to how how products get from point a to b how distribution happens how retailers make their decisions on what to carry and how to carry them and then the and then the the efficiencies of operating a cpg business are going to become next level we're not there yet but you can see you can see the breadcrumbs of where that's where that's going to happen where consumer brands are going to matter more than ever to to the actual consumers themselves and the efficiencies that are going to happen in the whole supply chain of how products and services come to market are going to become next level yeah that makes a ton
Speaker 1of sense and it's interesting to think about how many i guess maybe one follow-up question do you are you noticing any change in like the average size of organizations yet in cpg food and beverage like i was thinking back not yet yeah
Speaker 2if anything i was thinking if anything it's maybe it's almost like an incremental spend right now on experimentation you know like the tote almost like the token usage cost it's
Speaker 1like a new line item in the pll
Speaker 2right yeah of testing and learning you know imagine how many similar agents are being created across the industry right now of people experimenting like how how to utilize ai to bring efficiencies and eventually there'll be some normalization like everything else like you find in the world where there'll be a much more efficient market on those things where it does bring actual efficiencies versus incremental costs or spend in this experimental phase that we're all in yeah that
Speaker 1make that would make a ton of sense it's like it's like a new line item on the pnl but eventually it'll it'll kind of iron itself out probably and become more efficient yeah that's a good point um one other area of just curiosity is just you know you explain the industries that you guys invest in is there an area or even like a subcategory that you're just excited about bullish on and again if you can't share anything like that that's fine but i'm just curious like where your heads are like what's like your next big thing or area that you're getting pumped about
Speaker 2i think we're in a i think we're the most exciting wellness revolution maybe since the inverse of like the industrialization of food you know 50 years ago when everybody was just trying to figure out how to crank out efficient cheap food sure and the combination of glp ones combined with the quote-unquote maha movement in the in the inversion of the food pyramid has really brought ingredient awareness to the masses yeah where and so i think this is such an exciting time where you have an in you know an entire consumer base that is asking themselves what am i putting in what am i putting in my body and i think with that question leads to tremendous opportunity for better health outcomes for consumers but also great opportunity for entrepreneurs to help deliver better food better products better services towards consumers who are asking for better food and better food that makes yeah that makes
Speaker 1a ton of sense and i would agree it is crazy like i feel like i i talk about ingredients in things so much more with friends and family now than i ever remember i've always been a nerd and focused on that stuff but it's becoming a much more commonly talked about just thing in general which is cool too i like love it it's like people are just more focused and now what i think is cool is i personally think this is where ai is becoming kind of a wild like value add like you just have a question like you probably would have just brushed it off before if i were to start looking but now it's so easy to pull your phone out of your pocket and ask you know chat to your claude and you can get all these answers so fast which i think unlocks a lot of knowledge but um the last couple questions my favorite way and i've asked this on the podcast for years so i'm excited to hear yours um the first one is just tools so for you wayne you know whether it's annual goals bigger goals for your life all the way down to like what's the stuff that wayne's got to get done this week what's the shit you got to get done today are you a pen and paper guy do you have apps what do you use to keep track of everything stay organized and ultimately execute and get things
Speaker 2up i guess i don't have like the sexiest answer in the world uh but it's very pertinent because i i talked to my 16 year old high school son about it quite a bit was like you got to have a calendar and calendars drive drive action they drive um consistency and so i i am uh you know i am maniacal about my calendar if it's not on my calendar it's not on my calendar it's not on my calendar it doesn't happen but then my calendar is like just stacked to the gills of personal and professional life on what i need to be doing almost every minute of seven days a week whether it's making sure i go over my workout or i'm making sure that i'm a present father at as many of my kids games as i can be then it's yeah i got a 30 minute call here and then an hour podcast there and then i need to make sure i have buffer time to get to the airport because i gotta fly there and but then i you know this saturday having dinner with my wife making sure that we're investing in our relationship and so um trying to so for me it's my calendar and trying to pay it forward to hopefully get through to my son about the value of of planning
Speaker 1love that so you like do you put like tasks in the calendar it's like where it all lives like if you have to do things it's all living
Speaker 2there everything is in the
Speaker 1calendar very cool that i i'm such a nerd in this world too just so you know like uh i started playing have you do you know well this is a very quick aside do you know who rob deer deck is in this existence app that have you heard about this new thing he's working on i'll have to send it to you after he he's he's like do you know who that is by the way do you know no no no no he was like the i was joking he was like the skateboarder on mtv that had ridiculousness and robin big back in the day mtv but anyway i'll send a link to it he
Speaker 2probably dating ourselves i know
Speaker 1we are we definitely
Speaker 2know what that is that's right they
Speaker 1don't it's right that's crazy um i'll send you a link anyway but yeah it's cool because that's one thing i try to do uh if i can if it all fits my calendar i live off my calendar it is it's almost like uh i've i've explained to people like if you can do a good job of keeping it organized and everything's in there you almost like can take a your brain can take like a deep breath because it's all there you just open your calendar and you're like you know when you're doing it when it needs to be done it's all in there you just rely on
Speaker 2that it's powerful frustrating of someone who doesn't plan anything and you're like tell me about it i'm like oh my goodness how how do you how do you live this but you know what but then i step back and go hey that's why we're all human everybody has a different way of approaching things and right you know i think as i've gotten older i just i try to live a life of empathy i'm trying to understand where the other person's coming from and and what their lens of life is and appreciating difference i wrote that down today
Speaker 1i'm reading this like dad book and it was like what's one what's like the one key thing you want to teach your kids and i said empathy i wrote that today it's so true it's like i think it's the most all right last question wayne and i'll let you go because i know you got to run um source of knowledge book podcast just anything you've listened to or read recently that you think the audience today would benefit
Speaker 2from that's a good question um i love um gosh it's really it's a really good question i don't i don't know if i have one for you to be honest with you that's okay so i'll give you i'll answer your question another way when i'm not dialed into my calendar i look i i i am looking for almost like a like i i'm a sports guy through the analogies you've heard so i like i'll i try to enjoy myself and like i try to live in the sports world outside of if i'm not working or or being present for my being present for my kids so like the most the podcast i listen to most is bill simmons ringer podcast and okay yeah you know he he puts out so much content but it just helps me escape my calendar and so i sit there i like that i i i think about i'm thinking about things that really don't matter about whether the whether the knicks have and have enough to to win to win the nba championship whether you know whether my rockets whoever finds someone who can shoot the ball actually and and listen to someone debate that with you know debate that for an hour you know yeah yeah then the day doesn't really matter but it brings me a lot of joy and i think i i like that um for me it's i'm not um i'm not like a voracious like seeker of like another self-help podcast you know because i think in the limited time i have outside that wild calendar i'm just looking for something that just brings me joy and that is not another scheduled thing yeah
Speaker 1no i i can appreciate that like uh you can just get drilled into just thinking about the same thing and a million different cuts of it by books podcasts etc so that's cool i actually like that it's a good that's like a life balance answer i love it um well wayne thank you so much for taking the time man it's great to meet you great to hear your story love diving into this i was it was a true pleasure today
Speaker 2this was great thanks for uh thanks for having me on your show
Speaker 1sounds good man of course and next time up your way i'll hit you up please do awesome that. Thank you.
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