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- [00:00]
Kofi
And in CPG physical products companies, you need a lot of margin play because marketing is what's going to drive people to buy it, and you need room to be able to market. So if you don't have that margin play, it becomes really difficult. So one of the things that I think it's made me a better CPG investor because I know all the pain points, because a lot of times I talk to founders who don't have great margins, and they say the classic business school line, which is, we're going to hit economies of scale. And that's never really true.
- [00:37]
Joel Palo Thinkle
Welcome to the Investor, a podcast where I, Joel Palo Thinkle, your host, dives deep into the minds of the world's most influential institutional investors. In each episode, we sit down with an investor to hear about their journeys and, and how global markets are driving capital allocation. So join us on this journey as we explore these insights. So we should be live in a second here. All right, so I think we're live. So welcome again to the show, Kofi. So excited to have you on. So, everyone on the show, excited to have a really awesome guest. Kofi is a new friend of mine. We spoke a couple weeks ago. Really love his background and his ecosystem, and I'm excited to learn a little more about you, Kofi, your journey and your career and how you pivoted into venture capital just for your background. The people in this call, some of them are potential emerging managers. A lot of them are looking to break into vc. So I think we can, you know, just myself and everybody else can just learn a lot from, from you and your background. And I know you've worked closely with a lot of startups, you know, so that is really, really important to be aware of too. Kind of just the, the mental models and just ways that we can support founders and then just both sides of the table. I think you have a lot of perspective. So why don't we kick this off? You know, maybe we can start with you sharing a little bit about your background and how you broke into. Into vc. What did you study and, you know, what were your thought processes as you made those pivots? So why don't we start with that and then we'll kind of take it as we go?
- [02:17]
Kofi
Yeah, for sure. I'm sure you've heard this before, but I had an unconventional path into vc, right. I think every VC says that. So for me, my journey took took some turns. Originally, I, I went to school for industrial engineering and packaging science. So after undergrad, I actually was working within industry I was an OPS and engineer and at Kraft Foods. I was there for about four years. Kind of figured out that it's not the path for me long term because I realized that the path that I was on, I wasn't really a decision maker, I was an implementer.
- [02:55]
Unnamed Speaker
Right.
- [02:55]
Kofi
Where if you know anything about the consumer products, good space marketers make a lot of decisions and like everyone else just kind of implements. So I decided I'm going to leave and go back to school. So I went to Carnegie Mellon, got my mba, and after I got my mba, I actually went into strategy consultant. So I was a consultant at Accenture, working with big CPG and big retail clients. I loved that role. It was fun being around folks who I always felt like they were smarter than me.
- [03:28]
Unnamed Speaker
Right.
- [03:30]
Kofi
It's always good to have smart people in a room with you, right. Because you're constantly learning. But after a couple of years I realized that, okay, now I'm a decision maker, but I don't really own anything. Cause as a consultant you usually implement things and you leave or you make strategy decisions and you leave, but you don't really own anything.
- [03:50]
Unnamed Speaker
Right.
- [03:52]
Kofi
The parallel I like to make there is there's some Smart consultant from BCGO, McKenzie that told Apple you guys should get into the phone game.
- [04:00]
Unnamed Speaker
Right?
- [04:00]
Kofi
But they're not saying I came up with the iPhone. Cause they don't own that.
- [04:04]
Unnamed Speaker
Right.
- [04:04]
Kofi
Like they just made the recommendation. So I left strategy consultant behind and just jumped 10 toes down into entrepreneurship. So I actually launched while I was at Accenture. My, my third year at Accenture actually launched a startup. It was a beverage company.
- [04:21]
Unnamed Speaker
Right.
- [04:21]
Kofi
So this is what I, yeah, so I, I worked in, I worked in cpg, consulted for cpg, so wanted to compound like the knowledge that I already knew and so launched a beverage company. Ran our beverage company for a couple of years. We, we had decent traction, raised some angel capital, bought. But I quickly realized that it was a lifestyle business and I couldn't really scale it up. But so I decided to kind of ramp that business down. And I had a friend who had an idea for a more traditional tech startup. It was a marketplace for airline miles. And he knew I was itching not to go back to consulting. He said, hey, do you want to join me as a co founder for this thing? And I was like, yeah, it sounds good. It sounds like I don't have to actually go back to being a consultant. Right. So joined him. We worked on the idea, we had early traction. We ran into a wall of trying to raise. We Raised angel capital, but we were trying to raise venture capital. We raised a little bit of pre seed capital, but it wasn't enough money. And when we went to. So I spoke to a ton of VCs in New York and everything they said actually came true, which was, this is a tough industry to kind of work in. And what if the airlines come after you?
- [05:38]
Unnamed Speaker
Right?
- [05:38]
Kofi
Like VCs always say, what if Google builds it? What if the airlines come after you?
- [05:42]
Unnamed Speaker
Right?
- [05:43]
Kofi
And for me, it actually came true.
- [05:44]
Unnamed Speaker
Right?
- [05:45]
Joel Palo Thinkle
So.
- [05:47]
Kofi
We got a couple of cease and desists from.
- [05:50]
Joel Palo Thinkle
Oh, wow, okay. From the big airlines.
- [05:52]
Kofi
From the big airlines, right? So worked with, talked to my lawyers and they said, you know what, you may have to kind of ramp things down.
- [06:01]
Unnamed Speaker
Right?
- [06:01]
Kofi
So after, after, after we decided to ramp things down, I did some soul searching, which was, what do I want to do? I knew I wanted to stay within a startup ecosystem. And I think everyone, like this was about five years ago, right? Like Ventures, Venture is sexy. I knew I've tried, I've tried my hand at being a founder. I don't have an idea that I'm super, super passionate about. I said, you know what? I want to be a vc. I didn't know how hard it was.
- [06:29]
Unnamed Speaker
To become a vc.
- [06:32]
Kofi
I did the whole. I went through the circuit of like interviewing for a bunch of different firms. I would, I would make it, I would make it through the process until a certain point, and then I would lose out to someone who worked at Goldman Sachs or came from Stanford. And while going through that process, I kind of took a step back and told myself to myself, you're an entrepreneur, you're a founder. You have grit. You can, you can build something out of nothing. Why are you waiting for someone to give you a shot? Why don't you just do it?
- [07:00]
Unnamed Speaker
Right?
- [07:01]
Kofi
And part of me just doing it was I was able to kind of. I got married, so that got me to be. I became an accredited investor based on the fact that my, at that time, my combined income with my, my spouse made me an accredited investor. Nice. I asked my, Ask my spouse, can, can I actually start angel investing?
- [07:23]
Unnamed Speaker
Right?
- [07:23]
Kofi
And she's like, yeah, if that's what you want to do. So I started actually doing small checks, right? So my first, I remember my first angel investment check was a check for $5,000. And then gradually scaled up the check, started building muscle memory around the things that I was really interested in. And for me, again, going back to the fact that I like to compound my experiences, I said, I know cpg. I'VE done deep research in the space. I don't think a lot of investors really play within that land, that landscape and it's something I can take advantage of.
- [08:02]
Unnamed Speaker
Right.
- [08:02]
Kofi
So started angel investing and then last year raised, raised a small fund, Skewed Ventures, with the sole purpose of investing in pre seed CPG companies. So as of this week, I've done 14 deals. 12 of them are public, two of them are in stealth. But I'm just super blessed and happy that kind of took that roundabout journey right where I think those bumps and bruises are going to make me a better investor. So really, really excited to be here to kind of share my story and impart any words of wisdom on anyone listening.
- [08:43]
Joel Palo Thinkle
You probably don't know this because I don't, I probably didn't lead with this, but I worked at General Mills for a short amount of time. Where were you at Kraft?
- [08:54]
Kofi
I was actually in New York. So they had, they had a facility in Tarrytown, New York. And funny enough, when I was at Accenture, I did a project at General Mills. The coldest it was.
- [09:05]
Joel Palo Thinkle
Which office?
- [09:06]
Kofi
I was in Minneapolis.
- [09:07]
Joel Palo Thinkle
Okay, got it.
- [09:08]
Unnamed Speaker
Yeah, yeah, yeah.
- [09:09]
Kofi
It was brutally cold.
- [09:12]
Joel Palo Thinkle
So check this out. So I was in Hannibal, Missouri. I don't know if you know where that is, but it's outside of St. Louis. It's the middle of nowhere, but believe it or not, that's the birthplace of Mark Twain. So they had a big plant there. And I did a summer internship there. A lot of people might not know this, but at the end of my intern I did an internship there and it was same thing. It was like a process engineering role. So I was working, I think I was working on like milk and cereal bars. Yeah, I did milk and Sarah bars. There was people that would work I think in the taco shell areas and you know, they would make salsa and people would come home smelling like onions and salsa.
- [09:50]
Unnamed Speaker
Yeah.
- [09:52]
Joel Palo Thinkle
But you know, it was, it was really good because I really learned how to think through the like, I learned a lot about the supply chain. Like just seeing how like a product get, you know, how a product turns into, you know, the commercialized object that gets on the shelf. You know, just kind of understanding the whole lifecycle. And then I got to present my, my findings from the internship in Minneapolis. And the biggest reward was they gave me a Wheaties box with my face on it. Yeah, it's still, still at my parents house.
- [10:25]
Kofi
So that's pretty dope.
- [10:27]
Joel Palo Thinkle
Yeah. Yeah, so it's still at home. So that's, that was a Lot of fun. But you know, I think it's a good career. I just think kind of like what you're saying. I think I felt like, you know, I wanted to do something a little more technical and I think that was more like process based. So it is kind of like consulting, I guess, because if you work in consulting, you're looking at trying to streamline processes, trying to, you know, provide cost savings. And that was kind of the project that I did, which, which I was, you know, really proud of. I learned a lot, I'll say, in that experience too. I learned Excel pretty well. Like I built some of my early Excel, Microsoft Excel skills like with, from that job because we were, you know, putting together all these spreadsheets, you know, forecasting our results. So that was, that was really helpful. But I, but I see kind of the, the touch points of how that kind of fed into your, your later career. I mean, you know, you did that, you got some experience working at craft, then you did consulting and now you've got a fund with that whole thesis. So I feel like had you not gone to craft, you might have had a different fund probably by now. Right?
- [11:30]
Kofi
Yeah, for sure, for sure. And I think what's, what's also good is NETworking with different VCs is getting me interested in other segments.
- [11:38]
Unnamed Speaker
Right.
- [11:38]
Kofi
Where I don't think I'm going to stay narrowly focused. I think eventually I'm going to kind of expand out the thesis. But it's been, it's been, it's been a great like learning experience for me.
- [11:48]
Unnamed Speaker
Right.
- [11:48]
Kofi
And one of the things that I tell founders whenever I talk to a new founder is I feel blessed and lucky to have this role because at the end of the day, even if I don't invest in someone's company, I'm learning about something new.
- [12:00]
Unnamed Speaker
Right.
- [12:01]
Kofi
Like we have a front row seat to like what's going to be happening in the future because we're working with smart people. We get to converse with like intelligent individuals who are, who are constantly trying to imagine what the future looks like.
- [12:13]
Joel Palo Thinkle
Yeah. And you've been full circle because you've been a founder as well. So you really empathize with founders now as they're building companies. I mean, so I think. So the. What was the biggest learnings that you took away from launching the beverage company? What were the pain points? Was it the cause? Typically, you know, when you watch Shark Tank and you know, that's probably the best example that I see of like the physical goods businesses because in Shark Tank they have a Lot of physical product companies and the biggest issue they have is really being able to buy enough inventory. So it's a good problem because you got a lot of demand, but then you just don't have enough money to buy the inventory to actually build those products and ship them. So was that a problem? And then you know, what were the other problems? Like did the beverage go bad or expire at a certain time? I guess. Would love to learn a little more about that.
- [13:01]
Kofi
Yeah. So we came out. So expiration was definitely a big issue for us. It was.
- [13:07]
Joel Palo Thinkle
What kind of beverage was it?
- [13:09]
Kofi
It was a cold press beverage. So if you think about the name of the company was H2 Melon. So it was different melons. And it's essentially our tagline was it was like the fruit in a drinkable format.
- [13:23]
Unnamed Speaker
Right.
- [13:23]
Kofi
We didn't add anything to it. We essentially kind of juiced their entire melon and we went through a process called high pressure processing. And at the time, this is how crazy it was when I launched a brand with my co founder. At the time there was only one facility in the tri state area that did this processing and it was in Connecticut. So what we had to do was. And imagine when we initially first kind of soft launched a brand, I was still a consultant, right. And luckily as a consultant I'm traveling Monday to Thursday and then Friday I'm at home, right. So while, while I was supposed to be at the office working, I would actually be at a commercial kitchen in Columbia at Columbia University. Juicing fruit with juicing fruit with my co founder who at the time was working at kkr. But he will take, he'll take certain Fridays off, right. So we can kind of juice together. And then right after we finish juicing, we have to make sure we get it to the facility right away.
- [14:26]
Unnamed Speaker
Right.
- [14:26]
Kofi
So we will rent a refrigerator truck from Chelsea, New York, drive down to Connecticut and then drop it off at the facility. And we eventually moved into a co manufacturer who handled all of that. But for the soft launch we, we had to do everything ourselves. And one of the issues we had was we had 45 day shelf life.
- [14:47]
Unnamed Speaker
Right.
- [14:48]
Kofi
So it was essentially a ticking time bomb when you gave it to grocers, right. Because it had to move, right? It had to. You need high velocity, so even if.
- [14:56]
Joel Palo Thinkle
It'S cold, it could still go bad.
- [14:58]
Kofi
Yeah. So it's the, the thing is the recommended shelf life is 45 days. Right. I've done experiments where I drank it after three months and it was still fine.
- [15:06]
Unnamed Speaker
Right. But.
- [15:09]
Joel Palo Thinkle
Yeah, I mean it's exactly that. Definitely wouldn't pass the fda.
- [15:12]
Kofi
Yeah, I didn't want to, like, put it out and then someone drinks it and they get sick. I think one of the things that we so one, the shelf life was a big issue. And so to be able to increase our velocities in store, we would have to do in store demos. And that's not. That's not cheap, Right. So you always see an uptick in sales when you're actually doing in store demos. Because the hard thing about being a consumer brand is or new food item is no one leaves their home to go grocery shopping with your item listed on their list.
- [15:49]
Unnamed Speaker
Right.
- [15:49]
Kofi
Like it has to. They don't know about you. They have to try you to then decide that this is something that's worth ending up on my shopping list. And to be able to get people to do that, you have to demo and it gets super expensive. Our shelf life was crappy. Our unit economics was not the best at the time. Our unit economics, I think our net margins were around like 20%. Right. So it was just such a tough business to be in. And I think a lot of people made money off of us, but we didn't make any money.
- [16:24]
Unnamed Speaker
Right.
- [16:25]
Kofi
Like the grocers made money because our distributors made money, but us as the founders, it was just such a tough business to be in. And we realized. We realized we were going to have a hard time scaling it when we actually went try to go the venture route to raise capital.
- [16:42]
Unnamed Speaker
Right.
- [16:42]
Kofi
Like investors. The same thing I tell founders now, right? Investors were saying, your margins are not there. You're going to need a lot more. And in CPG physical products companies, you need a lot of margin play because marketing is what's going to drive people to buy it. And you need room to be able to market. So if you don't have that margin play, it becomes like really difficult. So one of the things that I think it's made me a better CPG investor because I know all the pain points.
- [17:14]
Unnamed Speaker
Right.
- [17:14]
Kofi
Because a lot of times I talk to founders who don't have great margins, and they say the classic business school line, which is we're going to hit economies of scale. And that's never really true.
- [17:25]
Unnamed Speaker
Right.
- [17:26]
Joel Palo Thinkle
How did you come up with the. How would you think. How did you think about melons as the first product? And was it watermelon or did you have a couple different.
- [17:38]
Kofi
It was watermelon. And then we were moving into cantaloupe as well.
- [17:42]
Joel Palo Thinkle
Okay.
- [17:43]
Kofi
So the original idea actually was my co Founder's idea, right? It was, he, he was a former football player in college and he was in pretty good shape in college and as I mentioned, he was working in finance now he was at kkr. So he let himself go a bit and when he decided he wanted to kind of trim down, he started juicing. Yeah, he did. He did research around just the watermelon itself and realized, okay, it's a super fruit, it's a superfood. You can really juice an entire watermelon.
- [18:17]
Unnamed Speaker
Right.
- [18:17]
Kofi
Including the seeds. And it still tastes amazing.
- [18:21]
Unnamed Speaker
Right.
- [18:21]
Kofi
Like you can't juice a whole, you can't juice a whole orange because it's going to taste a little bitter because of. But you can juice an entire watermelon. And it was one of reasons. We also went with watermelon, it's 98% water. So we knew we were going to get the entire juice. Right. We didn't have to add water into was one of those things where it became a no brainer. We had what we thought was like an amazing name, amazing brand around. We built a decent team. So at the, at our heights we had a team of about eight people.
- [18:54]
Unnamed Speaker
Right.
- [18:54]
Kofi
We had four full time and then we had four brand ambassadors who would help out with demos and manage other people who were doing demos. Sure.
- [19:06]
Joel Palo Thinkle
And how did you, how did you, you know, test out the product? Did you get some feedback, I guess in the beginning or did you just kind of use your instincts and just kind of launch it and see what they said? Did you do surveys or taste tests to see? I mean one thing is there's no, you know, even to this day there isn't really watermelon juice or any melons. Coconut, I feel like is super crowded. But I don't think there's, there actually is watermelon juice. Unless you go to, to your, to a point, unless you go to one of those juice smoothie spots where they have like the fresh mangoes and watermelon. But you know what, you know, so I think from, from a logistical standpoint and just kind of all the points that you mentioned, I think all of that makes sense. But like what were the, what were the customers saying?
- [19:54]
Kofi
I guess the way, yeah, the way we actually tested it out. So there, there was actually there. We had a competitor.
- [20:02]
Joel Palo Thinkle
Oh really?
- [20:02]
Kofi
Yeah, we had a competitor. It's called Watermelon Water. So it's the spelling is Watermelon water with no vowels in it.
- [20:10]
Joel Palo Thinkle
Oh, got it.
- [20:11]
Kofi
The funny thing about that is we actually, we got the trademark for the name Watermelon water and a bunch of like Sandy and a bunch of different trademarks. But they, they essentially got around that because.
- [20:24]
Joel Palo Thinkle
Just remove the.
- [20:26]
Kofi
Yeah, they took out the vows.
- [20:28]
Joel Palo Thinkle
I was hoping you would have been able to do a cease and desist.
- [20:33]
Kofi
It takes money. It takes money to go after someone, right?
- [20:35]
Joel Palo Thinkle
I know.
- [20:36]
Kofi
But the way we tested it was we actually started out as far at farmer markets, market. So what we did was we, we. We started when we started doing it at Columbia and Juice, and we made sure that we had like the right labels, regulatory information. And then we just showed up the farmers markets and we were selling. And this was at the time where you can sell a 12 ounce bottle of cold pressed juice for $8 and no one bats an eye.
- [21:10]
Joel Palo Thinkle
Yeah.
- [21:10]
Kofi
So we were selling this stuff for like $8 a pop and no one, like, no one complained about it. I remember the first. The first location we got into, I literally showed up to. For those. For those of you in New York, I literally showed up to west side Market. West side Market location with two cases. And I told the store manager, I said, hey, we just, we just created a new product. I think it's going to do well here. Can you just stock two cases and see how it does?
- [21:44]
Joel Palo Thinkle
Yeah.
- [21:44]
Kofi
So gave them two cases free. Obviously did some guerrilla marketing kind of hustle. Got some friends to go in there to also buy some of it to make sure high velocity. And then the following week the manager said, hey, can you bring back some more cases? This time I'm actually going to pay for it. And then I used. We used that location to then go to other west side market locations, to go to other local grocers and say, hey, we're in west side Markets. Because it gives you that legitimacy.
- [22:13]
Unnamed Speaker
Right.
- [22:14]
Kofi
If you go to a mom and pop kind of natural food store and you tell them I'm in this brand name location, it gives you legitimacy and they want to carry your product.
- [22:24]
Unnamed Speaker
Right.
- [22:24]
Kofi
So we did a lot of groundwork and then eventually we got a distributor that was able to get us into over 300 locations in just New York and then nationwide. We had an e Commerce platform where we were shipping product as well.
- [22:37]
Joel Palo Thinkle
So you have some remedy, you know, I mean, and also with watermelon, I remember I would, you know, I never juiced it, but I would just blend it and just throw some vodka in it, you know, like over the, over the summer, like the summertime, it's like a fun summer drink, you know, I mean, but I like kind of the pulp. But you know, the, when you, when you guys have the juicing, you know, that's. That's great because it's super lightweight. Right. It's kind of a refreshing drink. So can you educate us on just how to work with distributors? So do you have to kind of pitch them them and have them be convinced that you're going to, like, your products are going to sell? Is that how it works? Because you're competing for shelf space, I'm assuming. Right. So the distributors have to kind of give you a chance and assume that your products are going to sell. But if you don't sell enough, could the distributor just stop working with you?
- [23:25]
Kofi
Yep. So distributors are like pitching a distributor is like pitching a vc.
- [23:30]
Joel Palo Thinkle
Okay.
- [23:31]
Kofi
Some of them can literally tell you you're too early.
- [23:33]
Unnamed Speaker
Right.
- [23:34]
Kofi
Meaning they want to see some tracks and they want to see some excitement. And you can. You can approach distributors in two ways, right? So let's say you want to get into a Whole Foods. You can't get into a Whole Foods through a self distribution model. Meaning Whole Foods has their own dedicated distributors that they work with. So when Whole Foods decides they want you in Whole Foods, they can then go to a distributor and say, we want this brand here. So the distributor is going to work with you.
- [24:01]
Unnamed Speaker
Right.
- [24:01]
Kofi
Because at the very least, they know, hey, this person has inroads with Whole Foods Northeast. I don't have to necessarily sell them into that location.
- [24:11]
Unnamed Speaker
Right.
- [24:11]
Kofi
And then the other side is you can go to a distributor and then pitch them on your product.
- [24:17]
Unnamed Speaker
Right.
- [24:18]
Kofi
And again, the way it's similar to VC is it has to be a product that's different than what they have in their portfolio.
- [24:25]
Unnamed Speaker
Right.
- [24:25]
Kofi
If we necessarily couldn't go to Watermelon Waters distributor and say, hey, can you distribute H2 melon? Because they already have it. They already have a similar product in their portfolio.
- [24:37]
Unnamed Speaker
Right.
- [24:38]
Kofi
And so when you go to be.
- [24:40]
Joel Palo Thinkle
Competitive, it's just very similar to vc.
- [24:41]
Unnamed Speaker
Right?
- [24:41]
Kofi
It's very, very.
- [24:42]
Joel Palo Thinkle
You can't. You can't invest in Lyft if you've already invested in Uber.
- [24:45]
Kofi
Exactly, exactly. And so once you. Once you connect with a. Once you connect with a distributor, they have. They usually have like standard terms, right? So at the time when we connect a couple, when we connected with our distributor. Yeah, standard terms, which was, we want to make 15% off every bottle.
- [25:04]
Unnamed Speaker
Right.
- [25:05]
Kofi
And so you kind of do the math backwards, which is for the category that we were in, grocers want to make. Want to double whatever you sell, sell into them, right? So if you sell them a bottle for $4. They're going to sell it for $8.
- [25:19]
Unnamed Speaker
Right.
- [25:20]
Kofi
So kind of do that math backwards and then figure out how much you're going to get from. From a margin standpoint, right. You can obviously negotiate with them.
- [25:31]
Unnamed Speaker
Right.
- [25:31]
Kofi
But the tough thing with also working with the distributor is sometimes a lot of the cost is still on you, right? Because when you go. So when you go to a grocery store and you see that there's a two for one promotion, right? Like the grocery store is not eating that cost, it's coming from the manufacturer, right?
- [25:50]
Joel Palo Thinkle
Oh, interesting.
- [25:51]
Unnamed Speaker
Yeah.
- [25:52]
Joel Palo Thinkle
So I thought that ate into the grocers because you have a, you have a cost, right? Like the, the landed cost. But then the grocer has like a retail cost.
- [26:03]
Kofi
Yeah, the grocer has a retail cost. But they, they urge you to do promos.
- [26:07]
Joel Palo Thinkle
They urge you to do promos.
- [26:09]
Kofi
Promos. Or oftentimes you want to like a volume discount. Yeah, oftentimes you want to do a promo, right. So a lot of times like people. So it's actually funny where when you get into retail, it's expensive to stay into retail and stay in retail, right? Because sometimes they'll slot in fees, right? Because you have to pay for the real estate that you're in, right. I tell CPG companies like Walmart, Target, Whole Foods, they're not building new shelves and new aisles, right? Like they have to remove someone from the aisle, they have to remove someone from the shelf. So like how can you convince them that you're going to do better turns? Right? Because all a grocer cares about, right? Like, yeah, Whole Foods has like the whole organic and kind of natural food mandate. But at the end of the day, if we really look at the bottom line, Whole Foods cares about what product is going to get the most turns, right? Because if you have a product that literally has like high velocity, they make way more money than if you have a product that like. And you have a product that cures cancer and is going to sit on shelf for three months, they make no money from it, Right. Regardless of how net positive that product is. Sure.
- [27:29]
Joel Palo Thinkle
No, that makes sense. I mean there's. Yeah. It makes me realize how many different layers that you gotta handle when it comes to the different players. Right. Because that all just eats into your margin.
- [27:39]
Kofi
Exactly.
- [27:40]
Joel Palo Thinkle
And then there's the cost to create it. So what happened to the competitor? Are they still in the market? Because I've never seen. I've never seen them.
- [27:48]
Kofi
Yeah, they're still in the market.
- [27:51]
Joel Palo Thinkle
Yeah.
- [27:52]
Kofi
I honestly, they're still in the market, I don't think they're doing as well. They were. There was a time where they were doing really, really well. They had like, they had celebrity investors, right? I'm not sure. I think a private equity firm may have bought them. I'm actually not, not sure. But yeah, they, they, they definitely ate our lunch, though, I can tell you that.
- [28:14]
Joel Palo Thinkle
Yeah. And was the biggest issue just kind of looking at the bottom line, is that kind of. Because, I mean, you had sales, you know, you were getting into the stores, you had, you know, it sounds like you had revenue. Obviously, if you, you know, you had more capital, you can really do a lot of crazy Facebook TikTok campaigns and all that. But was it, was it more just a unit economics not making sense?
- [28:36]
Kofi
I think unit economics didn't make sense. And I. And like full transparency. I think we sucked at marketing.
- [28:42]
Unnamed Speaker
Right.
- [28:42]
Kofi
Like I was not. Like I was not. And I'm not a marketer. And I often tell CPG companies this. Software engineers. What software engineers are to tech companies. Great marketers are to. Are to CPG and DTC brand.
- [28:58]
Unnamed Speaker
Right.
- [28:58]
Kofi
Which is you need someone who can think outside the box of how can we build enough around this. How can we build enough excitement around this thing that people want to buy it?
- [29:11]
Unnamed Speaker
Right.
- [29:11]
Kofi
And we, we just were not able to do that. Like, the product was good. We, like, as I mentioned, there was always an uptick when people tried it.
- [29:19]
Unnamed Speaker
Right.
- [29:21]
Kofi
It's expensive. If you're trading, if you're trading demos for sales, it's just an expensive, like, equation to be a part of.
- [29:29]
Joel Palo Thinkle
Yeah. So the DTC companies that you're looking at now, what is the, what is the marketing stack that they're using? Are the, you know, what do you think converts better? I mean, it's probably different for different products. So you know what? Because, because you're right. I mean, I think that's a really important learning that you just need enough of capital, a buffer to be able to market it. Right. Because, I mean, just getting it into the store isn't enough. So what. What are like some of the funnels that you're seeing to get people to, to raise awareness? I mean, are a lot of them DTC or is it really a combination of both? I guess it's a combination, right?
- [30:09]
Kofi
Yeah, it's a combination of both. I have, I've done some investments that are purely dtc.
- [30:15]
Unnamed Speaker
Right.
- [30:15]
Kofi
But I think a lot of. And we're seeing this. There's a sea change where a lot of companies that were DTC are realizing that it's not a, it's not really a sustainable model. You have to be omnichannel, right? Like you have to like, because DTC usually caters to people who live on the coast, right? There's a whole section of America or the country that also buys things and you have to kind of cater to them, right? So even if you look at like the DTC OGs like Warby Parker, Bonobos, they all have physical locations, right? And we have those physical locations for a reason. It's some people still want to see and touch things before they buy it. And then to your question around like what's been working really well when it comes to dgc? I think SMS has been working really well. So interesting. There's just SMS and email has been working like really, really well. And then if you're like a new brand and you're launching, TikTok has been pretty decent where you can, I think it's easier to get discovery and get engagement on TikTok, right. The tough thing now is becomes how can you translate that into a sale, right? Like it's nice to get people excited about what you're doing on a social media platform, but then, and build awareness. But then how do you actually translate that into cash? And I think SMS and email does a great job of that. Because your call to action, right, you can entice and stay top of mind with people, right, by reaching out to them to say, hey. And one of the things I see a lot of brands do really well is when there's a subscription, when they have a subscription service or when you order a product, they know how much, they know how many products you ordered and they know what the consumption cycle is. So they, they'll send you a text and say, hey, are you running low on this product? Do you want to reorder?
- [32:12]
Unnamed Speaker
Right.
- [32:12]
Kofi
I think that's working really well. And then.
- [32:14]
Joel Palo Thinkle
Oh, that's cool.
- [32:15]
Kofi
Yeah, yeah. And then even from the DTC standpoint or from a product standpoint in cpg, like barcodes have been really big the last year, which is you buy, you buy a product or you go to the store and there's a, there's a, there's a QR code, I should say there's a QR code on a package that you can scan and it gives you useful information, right? Because oftentimes these brands are not big enough to have commercials, they're not big enough to have certain ads, but using that barcode, it can give you so much valuable information. You could even use that Barcode to redeem a coupon. You can use that barcode to reorder. So all of those things in tandem has been working really well for CPG companies.
- [33:04]
Joel Palo Thinkle
You know, what are some beverages that you think or I guess what are some of the CPG products that you think are really hot? You know, it comes to food, I, you know, there was probably maybe a summer ago there was like a young. It was like a tender coconut drink. And the, the traditional coconut flavor actually tasted pretty good. So if you ever go to like, you know, Brazil or if you go to India, they have the green coconuts are like really soft. So what they do is I think they make a smoothie out of that. And the original one was tasty, but then they had like a chocolate flavor and it just did not taste well and it just super thick. So I wasn't a fan of that. But I guess what are some beverage startups or beverage genres I would say that you think are. Because I feel like some of that stuff is a little trendy too. I felt like coconut water was like a hot thing a few years ago because it's, you know, it was known for quenching your thirst. But I don't know if that's still a big thing. It seems like there's, you know, whenever I go to the grocery store, there's like four or five different coconut water brands. So, you know, maybe I'd be interested in the beverage space. We just had somebody from ZX Ventures a couple, couple weeks ago. So, you know, definitely on like the beverage, you know, trend here. But I'd love to hear your, your take on kind of beverages and then also just general CPG brands. You know, what are you seeing that's really hot now?
- [34:29]
Kofi
Yeah. So I'm going to plug two beverages from my own portfolio. One is called a vec. It's a premium drink mixer. I think. I think it's going to be one of the biggest, like the biggest beverage beverages out there in the next, over the next like five years. And the reason is it is it's premium. It's less sugar.
- [34:52]
Unnamed Speaker
Right.
- [34:52]
Kofi
Like when you think about the alcohol or the liquor space, they're about 60 to 70% of liquors are considered premium on top shelf.
- [35:03]
Unnamed Speaker
Right.
- [35:04]
Kofi
And it's the inverse when you think about the mixer.
- [35:08]
Unnamed Speaker
Right.
- [35:08]
Kofi
So meaning if you buy a premium, if you buy a premium liquor, what you can mix it with is your options really, really narrow right there. Fever Tree, which has a ton of sugar or there's another Q drinks, which is. It's okay, Right. But it's not. And what I like about Avec is they've taken a spin on all the. All the most popular mixers and done their own version of it, right? So there is, like a ginger. There's a ginger. There's a ginger version that goes really well with whiskey right there. They have a jalapeno flavor, right? They have different flavors. And what I like about it, for me, specifically, because I actually, I'm not drinking. I don't drink. Is you can use it as a mocktail, right? And I think we have a lot of people nowadays that are trying to be more healthy, right? So they're sober, curious. And I think it feeds into two things, right? Where when you buy it, you don't necessarily need to use it. On occasion, when you're drinking a cocktail, you can just have it by itself. So that's one that I'm really excited about. And then, obviously, there was a big news, I think yesterday or two days ago, AliPop, the soda company, actually raised $30 million. I think at 200. I think it's like, at a $200 million valuation, right? So that's big for the space, right? Where it's always. I think it's always great when you're in a certain space and someone raises at a large valuation, it kind of validates what you're doing. So that's the beverage space. And then I think outside of. Outside of the beverage space, like cpg, broader. For me, CPG is a large landscape. So what I really try to focus on three things, right? So one is I try to focus on health and wellness, right? Because going back to my days at Craft Big, CPG has been chasing health and wellness, and they haven't quite been able to nail it, right? You see where there are things that we consumed eight, five years ago that we thought were healthy, that you find out it's actually not. It's actually not healthy, right? Like, think about naked. Naked juice and, like, thought, hey, I'm having. I'm having a smoothie or. And you realize it's full of sugar, right? So health and wellness is big for me. Sustainability. So anybody building. Anybody building a company that is looking to kind of slow down what's happening with our environment, our climate change, I'm really interested in. And then the third. The third space that I'm really interested in is what I call specific demographic focus or cultural nuances, right? There are a lot of. And for that. For that space, it is, okay, imagine you grew up in another culture and There is this particular thing that you consumed or you use that you love and then you're trying to then bring it to the masses.
- [38:17]
Unnamed Speaker
Right.
- [38:17]
Kofi
I get excited about that because one, there's already a built in audience, right. Like the third generation, the third culture. Folks who are from that culture are going to gravitate towards it and then anybody that uses it and benefits from it is going to evangelize that product.
- [38:34]
Unnamed Speaker
Right.
- [38:35]
Kofi
So I'm looking across sort of those focal areas and it gets me like really, really excited. I just recently, I recently invested in a sustainable, sustainable chocolate company where what they're doing is they're actually making chocolate in the lab.
- [38:52]
Unnamed Speaker
Right.
- [38:53]
Joel Palo Thinkle
Oh, nice.
- [38:54]
Kofi
So think about like beyond meat for chocolate.
- [38:56]
Unnamed Speaker
Yeah.
- [38:56]
Kofi
The reason that excited me is I'm from, I'm originally from Ghana and my wife, my wife is actually from the Ivory coast. And our two countries combined produce close to 70% of the world's cacao. And it is like a big, it's a big issue for deforestation. There are instances of child labor trying to, trying to get this kind of precious raw material and raw food out.
- [39:23]
Unnamed Speaker
Right.
- [39:24]
Kofi
So anybody who is working on how to slow down deforestation gets me excited.
- [39:30]
Unnamed Speaker
Right.
- [39:30]
Kofi
And obviously everyone loves chocolate, right? And if there's like a way to make it in a lab and for us to enjoy it, I'm all for it.
- [39:38]
Joel Palo Thinkle
Yeah. Yeah. I've been involved in a couple investments, lab growing different types of meat and you know, alternative proteins. So I think that's a really hot industry. What do you think, y'? All, what else do you think is, you know, an exciting trend for lab grown products? You know, we've seen fish, meat, I think some, some seafood, anything, any other kind of products that you're seeing, because that's really exciting to. And how did it taste? Does it taste very similar to the regular chocolate?
- [40:09]
Kofi
So it's similar. Ish.
- [40:12]
Unnamed Speaker
Right?
- [40:12]
Kofi
It's always hard. Like you like the real thing is the. And I think that's what's hard. I was just actually tasting, I was tasting the, like I had a vegan jerky company that I spoke to and got some of their product and I was tasting it and I was like, man, I don't know how it compares because like, you remember, you know, what the actual thing is supposed to taste like, right. And I, I think what it's, it's hard because especially with a lot of like these products, we don't realize how complex they are.
- [40:44]
Unnamed Speaker
Right.
- [40:45]
Kofi
Like they're made up of so many different parts and to be able to get all of those compositions right, right. Becomes, becomes like really difficult. So like still like the taste. And oftentimes with a lot of things that are happening, it's the taste that's going to win over the consumer. Because at the end of the day you can have the most altruistic product in the world, but if it doesn't taste, it doesn't feel, if there's no sensory there, the century is not there. Like you're not going to be able to move it. And then like another company that I saw that was like lab grown as I've seen like lab grown like diamonds.
- [41:24]
Joel Palo Thinkle
Oh yeah, I've heard of that too.
- [41:26]
Kofi
Yeah. So I've like, it's like there's, I think people are trying to do a lot of like interesting things on how do we, how do we slow down on like the impact on our environment and the impact on our climate by trying to replicate some of these things in the lab. Now I think the ultimate test is going to be do we actually meet the consumer taste and demand?
- [41:49]
Unnamed Speaker
Right.
- [41:49]
Kofi
Like, is this like, can you, can you floss with a lab grown. Lab grown diamond? I don't know.
- [41:55]
Unnamed Speaker
Right.
- [41:55]
Kofi
Can you stunt with that? Like that's something that you would have to try to like, figure out.
- [42:00]
Joel Palo Thinkle
The big thing with food, you know, especially lab grown meats, is the texture is an issue.
- [42:04]
Unnamed Speaker
Yeah.
- [42:05]
Kofi
So I don't know if you.
- [42:07]
Joel Palo Thinkle
It's like, yeah, it's like a mush kind of like, it's like a, it's like. So it'd be good for like animal feed or it'd be good for meatballs. You know, you could probably, you know, like you could do pasta, you know, Hamburger Helper probably, you know, But I think with, with chocolate, were you able to get the same texture? Like what, what was off with it? Was it the taste or the texture?
- [42:28]
Kofi
I got, I got the right like taste. Like the taste felt close enough. Because one thing you also have to realize, a lot of the chocolate that people consume is like full chocolate.
- [42:39]
Unnamed Speaker
Right.
- [42:39]
Kofi
Like it's like it's been bastardized where they've added so many things to it.
- [42:44]
Unnamed Speaker
Right.
- [42:44]
Kofi
Like real chocolate is supposed to be like really, really better.
- [42:47]
Unnamed Speaker
Right.
- [42:47]
Kofi
Like when you get close to a chocolate as possible, that like the taste, I think the taste was close. Now it becomes like, is the texture and is this something where people can, people can look at it and consume? I think you have to get close to. You have to get close enough that you feel comfortable doing a blind taste test. And I don't Think they're there yet, but I think they will get there.
- [43:08]
Joel Palo Thinkle
Okay. Okay, that's interesting. And you know, so how, and then what about with health and wellness? What are some other products, categories that you think are going to be going to be emerging in the next couple, couple years? I mean, you haven't really talked about, you know, are there better types of soaps or cleaning products that are using more natural, you know, products? Do you think? Are you bullish on that or is it.
- [43:35]
Kofi
So with, for me, with health and wellness, what I'm seeing that's going to like really take off is around like mental health, right? Yeah, I think we've seen a lot around like the health and wellness aspect when it comes to cleaners, when it comes to soaps. Right. When it comes to cosmetics, when it comes to like personal care. Now it becomes, is there anything around like mental. Mental health? Right. So I invested in a company, I invest in a company called pim, which stands for prepare your mind. And the whole goal of the company is how can we kind of de. Stress people? So it's a, it's a, it's a, it's a chew that you have 20 minutes before maybe you go into something that's going to be a stressful meeting.
- [44:22]
Joel Palo Thinkle
Yeah.
- [44:22]
Unnamed Speaker
Right.
- [44:22]
Kofi
And it, it's, it's, it's one of those things where I think, I personally think it's important because we live in a, we live in a really pressurized, kind of stressful environment in society.
- [44:36]
Unnamed Speaker
Right.
- [44:36]
Kofi
Where I think a lot of people to cope with that stress are self medicating.
- [44:41]
Unnamed Speaker
Right.
- [44:41]
Kofi
Either through drugs or through alcohol. Right. And if there's a good way to get someone off that regimen and to do something a little bit healthier, I'm excited and I want to learn more about it. So anytime someone pitches me something around health and wellness, I'm super, super interested and I want to, I want to know more about it.
- [45:01]
Unnamed Speaker
Right.
- [45:01]
Kofi
And then another thing that I think is like really interesting around health and wellness is how can we take like the treats that we love, right. So think about candy, think about some, some family recipe that is either really sugary, really salty and make a version of it that tastes better. Right. So actual beverage company that I invested in is a company called Agra Fresca and I'm Agua Bonita. They're making, they're making a better for you. Agua Fresca.
- [45:34]
Unnamed Speaker
Right.
- [45:35]
Kofi
And the, what got me excited was there was an authentic founder story.
- [45:40]
Unnamed Speaker
Right.
- [45:41]
Kofi
The founder, both founders have, have Mexican ancestry and their family Actually consumes this beverage regularly. But it is also very sugary.
- [45:54]
Unnamed Speaker
Right.
- [45:54]
Kofi
It is like a lot of people put a lot of sugar in it and they wanted to make a better for you version. And what, it hit on a lot of points for me.
- [46:04]
Unnamed Speaker
Right.
- [46:04]
Kofi
So I mentioned health and wellness, sustainability and specific demographic focus. Right. So the health and wellness aspect of it was let's make a drink that is like what we used to enjoy as kids or with our families that is better for you.
- [46:20]
Unnamed Speaker
Right.
- [46:20]
Kofi
So it's healthier, it's less sugar. And then from a sustainability angle, they're actually. So she was the, this founder was the first person in her family not to have to pick fruit for a living.
- [46:34]
Unnamed Speaker
Right.
- [46:34]
Kofi
And in California. And so her family has a lot of connections to farmers and so they're actually using upcycled fruit. Right. So the fruits that would otherwise be discarded because they're, they don't look good enough to have in a grocery store.
- [46:52]
Unnamed Speaker
Right.
- [46:52]
Kofi
But they still contain the proper nutrients.
- [46:54]
Joel Palo Thinkle
So there was a company that actually was really killing it with that same model. I forget the name of it, but yeah, they, you might know, but they, they did really, really well. They just took like the ugly looking fruits and sold them for a fraction.
- [47:08]
Kofi
Like is it, it's not. Yeah, I know what you're talking about. Like they deliver it, right?
- [47:12]
Joel Palo Thinkle
It's like ugly deliverance. I think that's what it is.
- [47:15]
Kofi
Yeah, something like that. So it hit this company hit on all of those things for me. And it's one of those things where at the end of the day, if you want to be really, really healthy, only drink water. But water also gets really boring. So if you decide you want to have a beverage, you're trying to reach for one that has maybe less calories, maybe has less sugar.
- [47:45]
Unnamed Speaker
Right.
- [47:46]
Kofi
And so I'm always excited about like these new brands that are coming out that provide you with that, with that alternative.
- [47:52]
Unnamed Speaker
Right.
- [47:53]
Kofi
But the healthiest option in the world is to just drink water.
- [47:56]
Unnamed Speaker
Right.
- [47:56]
Kofi
But not, not everyone's going to do that.
- [47:59]
Joel Palo Thinkle
What about CPG products that are hardware devices that pair with software. I mean, I'm a nerd when it comes to that kind of stuff, but I don't know if that's up your wheelhouse, if that gets you excited like, you know, the next kind of our ring that kind of gives you some analytics on yourself. Are you into, are you interested in those kind of products as well? And does that fit under CPG or is that hard?
- [48:21]
Unnamed Speaker
Right.
- [48:21]
Kofi
That's like it's always like is it hardware as a cpg? So I made a, I made an investment and, and this is like a pre. So this company hasn't, they haven't launched their product yet. But what got me excited is the founder is trying to, the founder is trying to make a home studio or salon quality hood, hair hood for you to like dry your hair if you have like curly, curly hair. And what got me excited about it was I've seen it like lived experiences with like my family members have never been able to get the right, like get the right at home product. They're the product, the products that exist, right? It's, it's. Yeah, I thought about it like there are a ton of spin bikes that existed, right. But none of them were like studio quality, like a peloton where you can have in your home.
- [49:17]
Unnamed Speaker
Right.
- [49:18]
Kofi
So it's, it's someone who's trying to build a, build a beautiful product, right. I consider it hardware. I think it's going to be really hard. But what got me really also excited is the way they're going to be going to market, right? So they're going to be going to market with not the hero product but with other products that's going to be able to help them seed, seed a community, right. So I do look at hardware, but I scrutinize it a lot more, which is are you going to fit like what I'm doing, right. And one of the ways that I also kind of think about when I'm investing in a company around like the thesis is I think about in the long term, where are you going to be distributed, right? So if you're like a hardware brand that I think eventually you're going to be at a Walmart, right. You're going to be at a Target. I'm still excited because those are where my products are sold, right. But if you're, if you're like, I don't think I would have invested in an iPhone if someone pitched me the iPhone.
- [50:23]
Unnamed Speaker
Right.
- [50:23]
Kofi
It's purely too technical.
- [50:25]
Unnamed Speaker
Right.
- [50:26]
Kofi
And I couldn't, potentially I couldn't add any value as an investor. And since I'm, since I'm investing so early, I also want to be an extension of the team, right. And add some value to what, to what folks are building.
- [50:39]
Joel Palo Thinkle
Yeah. I mean, two things that I've been thinking about recently is, and you just tell me what your thoughts on this. But you know, why don't we have the Back to the Future jackets? You know, I mean, I was thinking about it the other day, you know, I, I have a really heavy jacket when I go out, but it would be cool if I could wear kind of a thin jacket that was heated, you know, I mean, that's one thing that I've been thinking about, and I don't know what your concerns are with that. But then the other thing is, you know, we're. When we, when we take photos, we still have to hold our phone.
- [51:08]
Unnamed Speaker
Right.
- [51:09]
Joel Palo Thinkle
So we're kind of still going like this. So why don't, like, our AirPods, like, the AirPods just have a camera? It, you know, that way maybe you tap it, it takes a photo because it's already in your eye view. So I don't know what your thoughts are on that. Like, you know, I think it's going to happen like that.
- [51:23]
Kofi
Yeah. So I have this whole thesis around, like, Apple.
- [51:26]
Joel Palo Thinkle
Yeah.
- [51:27]
Kofi
I think eventually we're not going to have phones.
- [51:30]
Joel Palo Thinkle
Yeah.
- [51:30]
Unnamed Speaker
Right.
- [51:30]
Kofi
Like, they started with the watch, where the watch is kind of connected and tells you everything.
- [51:36]
Joel Palo Thinkle
Yeah.
- [51:36]
Kofi
You have your AirPods in. If you have your AirPods in, you literally don't have to look at your watch. You don't have to look at your phone.
- [51:43]
Unnamed Speaker
Right.
- [51:43]
Kofi
And I think eventually what's going to happen is we're going to get to. We're going to get to. We're going to get to a time where the phone is antiquated, where we have all of these other devices around us that are connected.
- [52:00]
Unnamed Speaker
Right.
- [52:01]
Kofi
Maybe. I don't know if you heard, Apple's going to be getting into augmented reality as well.
- [52:06]
Unnamed Speaker
Right.
- [52:06]
Kofi
So whatever headset they come out with.
- [52:10]
Unnamed Speaker
Right.
- [52:11]
Kofi
Maybe that becomes. That is as simple as, like having a pair of glasses on that can do.
- [52:17]
Unnamed Speaker
Right.
- [52:18]
Kofi
So I think, I think that's going to happen. And then to your point about the jacket, I feel you, man. I hate wearing.
- [52:22]
Joel Palo Thinkle
I mean, it's the 80s, man. Remember Star Wars? We had. They had holograms.
- [52:26]
Unnamed Speaker
Yeah.
- [52:26]
Joel Palo Thinkle
So I'm still waiting for. Taking phone calls.
- [52:28]
Kofi
Yeah.
- [52:29]
Joel Palo Thinkle
You know, and just doing a hologram photo, a hologram call instead of, you know, hold it. Because it's a. It's a weird form factor. Right. Especially. I actually don't like taking photos sometimes because I'm. I kind of lose my. I kind of lose the vibe a little bit when I have to hold the phone and go like this. I'm kind of out of the moment where, you know, it should really catch it in real time from your. Because, you know, when you look out, you know, that's really what your memory is. Right. From like your bird's Eye view when you have, you know, positive and negative memories, you know, you're gonna, you're gonna think about it from like your eye view, right? Versus kind of holding it like this, right?
- [53:03]
Unnamed Speaker
Yep.
- [53:04]
Joel Palo Thinkle
So I think obviously there's still memories, but I think it would be great to kind of mimic as much as possible, like the actual experience. And it takes away from the experience, too. You're not really enjoying time with your family because you're trying to hold the phone and everything, versus imagine just kind of hanging out with your friends and it obviously, you know, maybe, maybe when you do record, maybe, maybe it illuminates so people know it's recording, you know, but even from a safety standpoint, you know, there's been a lot of times where there could be a safety issue. And, you know, it takes like five taps to unlock the phone and turn on the camera versus if you're in a harmful situation or something needs to be recorded, you know, to let other people be aware. You know, it would be great if you could use that almost like as a dispatcher thing, you know, dispatcher system as well. But, you know, holograms are from the 80s. The, you know, the jacket is from the 80s, you know, so we're still, still. We're still not there yet, you know, but it'd be kind of cool.
- [53:58]
Kofi
Have you tried, have you tried the Facebook ray bans?
- [54:01]
Joel Palo Thinkle
I haven't, no. I saw, I saw it when it came out, but have you tried it?
- [54:05]
Kofi
I haven't tried it, but it looks, I mean, it looks good. I just don't know if I want to give Facebook any, any more information.
- [54:12]
Joel Palo Thinkle
I hear you. I hear. Well, we got a question here. You got a couple minutes for. Yes, maybe one or two questions. So we got somebody here talking about. And you probably deal with this a lot, you know, cpg, you know, and really handling production, right. That's the biggest, eater of the, of the margin, really, just getting your cost down. So, you know, getting, getting it landed and shipped and then, and then getting it out to your customers. But what are your thoughts on CPG and outsourcing it overseas? You know, pros and cons concerns.
- [54:44]
Kofi
So I think it's similar to anything you have to kind of conquer or be really, really good at one thing first before going overseas.
- [54:53]
Unnamed Speaker
Right.
- [54:53]
Kofi
Like if you. And oftentimes when, when companies want to expand.
- [54:58]
Unnamed Speaker
Right.
- [54:59]
Kofi
Like, I've seen this a lot with like, cosmetics, like cosmetic startups, and they're like, we're going to go to China. Because a lot of the Chinese consumers Love cosmetics.
- [55:08]
Unnamed Speaker
Right.
- [55:09]
Kofi
And it's not a plug and play where you can necessarily do the same thing you do in the US and go do elsewhere. So I think expansion is good. You just have to understand the market that you're going to expand into.
- [55:21]
Unnamed Speaker
Right.
- [55:22]
Kofi
Which is. Okay, what marketing tactics do I need to use?
- [55:26]
Unnamed Speaker
Right.
- [55:26]
Kofi
Like how do, what's the best, what's the best channels to use? Right. And I think they're interesting ways to maybe potentially test if you can go international. Like airports are a great distribution channel. Right. So if you can get into like a, if you can get into like a Hudson News at the airport, if your product fits into, into that retail channel and see if you can collect data around like what type of traveler is grabbing your products and then maybe you can use that and extrapolate that data to say, okay, we're going to go to, we're going to go to Amsterdam because there are a lot of Dutch people who come through the airport and they grab our product.
- [56:06]
Unnamed Speaker
Right.
- [56:07]
Kofi
We're going to go to China because there are a lot of Chinese consumers who grab our product. But I don't think expansion is a bad thing. I think what you have to keep in mind is you're expanded into a whole different, a whole different consumer set. So you need to, you can't replicate the strategies and tactics. You need to figure out what is actually, what actually works well there. So I think studying brands that do well in those markets are like the first step and then trying to like test and learn would be the next step I would take.
- [56:35]
Joel Palo Thinkle
Yeah, no, that's really helpful. Well, anybody else have any questions? I know we're at time. Feel free to shout it out or post it in the message here.
- [56:49]
Unnamed Speaker
I have one quick question.
- [56:51]
Joel Palo Thinkle
Go ahead.
- [56:51]
Unnamed Speaker
If I may. Great to meet you. Coffee. I hope I'm pronouncing it correctly. Coffee.
- [57:00]
Kofi
Yes.
- [57:01]
Unnamed Speaker
So great information you shared with us. I really appreciate it. One of the challenges that I'm facing while I'm reviewing pitch decks and evaluating the founders on how well they position themselves financially is that in early stage I see that especially when companies are pre revenue so they don't have any revenue to showcase, they come up with all these metrics and projections which I feel they're very subjective. Right. And more some of a speculation. So how do I offset that concern? Right. So because they come up with some valuations and they say, okay, based on the comps, this is, you know, what value we're placing on our company, you know, pre money valuation, post money valuation, this is the amount that we're looking to invest to get us as an investment. So how do I offset that concern? Because everything is speculation, even the metrics that they're coming up with is really based on nothing on thin air. So if you can share with us your thoughts on this and how to prevent and you know, from a risk mitigation strategy, you know, how do you derisk those risks and figure out which is the optimal solution towards those companies?
- [58:28]
Kofi
Yeah, so I often when I invest, I'm investing in company, although I'm doing pre seed, I want the company to be at least post product, right. And when I meet with an, when I meet with a founder and they tell me an evaluation that I think is crazy, I just ask a few questions, right? Which is, okay, what's the valuation based on?
- [58:55]
Unnamed Speaker
Right.
- [58:56]
Kofi
What were your last three months? What were your last three months?
- [59:00]
Unnamed Speaker
Revenue.
- [59:03]
Kofi
What's been the best, your best month's revenue? And what I do is I take all those data points and then I do a run rate. I do a run rate based on the last three months that they've given me. I do a run rate based on the best month they've ever had that. And then depending on what industry they're in, I do a range of their multiple. Right. So some industries, the exit multiples are usually three to five times top line, right? Three to five times revenue. And I simply kind of send them that information, which is based on the data that I have. If your company were to have an awesome year and every month you made the top line that you were making on your best month, this is what you're going to be worth. I completely understand that valuations are not based on what you're worth today, they're based on what you're going to be worth in the future. But you're too far off, right. So kind of just working with them through the process, I think what's happening is a lot of founders got excited about like the frothy market that we're in and think that they can raise at lofty valuations. But some of them don't understand that once you raise at a really large valuation, you have to kind of grow into that valuation, right. So they're in the risk of, if they grow, if they invest, if they raise at this valuation, they may have a down round, the next round because they can't meet certain metrics. So I think it's as simple as kind of laying out those type of questions, right. To see why they're raising at the current valuation. It's different if you ask that question of why are you raising at this valuation? And they say I actually have a PO from whatever, some retailer or I have a letter of intent or I have a contract with this customer that is going to net us this revenue moving forward. But I think you just need to dig into why are they raising at that valuation. And it's not something they picked because, hey, we saw that a friend of ours who has a company was able to raise at this other valuation. So we're trying to raise at the, at the same valuation.
- [61:09]
Unnamed Speaker
I see. Okay, very, very good points. Thank you very much. I'm going to take stock to those points. Another question that I have, if I may. Joe, one more question.
- [61:20]
Joel Palo Thinkle
Are you okay on time for one more?
- [61:21]
Unnamed Speaker
Yes.
- [61:22]
Kofi
Yeah, one more. Great.
- [61:23]
Unnamed Speaker
Do you believe that the type of Fitbit and those type of devices are really offering the benefits that were being expected? And would you consider a product that quantifies the risk management of personal life insurance?
- [61:49]
Kofi
Is that so? What's the question?
- [61:52]
Unnamed Speaker
So one is really if you believe if the Fitbit and those devices are really offering the value that they were supposed to and was expected, A and B, whether or not you would consider a product that creates quantitative and qualitative analysis, real time analysis of personal life projections, personal life risk management. Let's say that you can assess very carefully, insurance companies can assess very carefully whether you are at risk or you're not at risk in certain areas.
- [62:30]
Kofi
Right?
- [62:31]
Unnamed Speaker
Those are the questions.
- [62:32]
Kofi
Yeah. So the first, the first part, I think it depends, right? Like with Fitbit, like Apple Watch, it's all about the customer adherence. So if you're wearing your Fitbit every day, it's going to give you some output. If you're wearing your, if, if you are your Fitbit and you sit on the couch and do nothing, it's, you're not going to lose weight, you're not going to.
- [62:53]
Unnamed Speaker
Right.
- [62:53]
Kofi
So it's customer adherence. I think all of these things play in tandem with something, right? Which is eat well, exercise and have this thing on to tell you like how much, how many steps and stuff you've taken.
- [63:05]
Unnamed Speaker
Right.
- [63:05]
Kofi
So I think they work. But it also over indexes for like customer adherence. So that's one and then the second one, I probably me personally would not consider that as an investment. And the only reason is it seems more like a B2B play where it's the type of product that you would need to collect money from the insurance company or a health provider. And I'm strictly focused on things where the consumer is at. The consumer is at the epicenter of the business model. Okay.
- [63:40]
Unnamed Speaker
Good answers. Thank you so much.
- [63:42]
Joel Palo Thinkle
All right. Well, hey, Kofi, thanks so much. Sorry for, you know, running over a little bit, but I appreciate all your support and amazing hearing your story. So thanks for being so generous with your time. And it.