[00:00:05] Melissa Traverse: Hello, and thank you for joining. I am Melissa Traverse, Director of Community here at BevNET & Nosh, and I'm excited to welcome you to the Nombase podcast, a podcast built to help CPG owners and operators navigate growth challenges and run more profitable businesses. Be sure to check out Nombase.com, BevNET's platform built for the CPG community. It's where you can find episodes of this podcast and so much more. Raising capital in food and beverage is never easy, but it's especially tough at the earliest stages when you might not have revenue, traction, or even a finished product. And yet, that's exactly where some of the most important decisions get made. The partners you choose, the amount you raise, and how you spend it can shape the entire future of your business. So how do you raise capital before you've proven anything? And how do you make sure you're using it in a way that actually sets you up to win? Today I am joined by Chris Robb, founder of Supernatural Ventures, a fund focused specifically on pre-seed and often pre-revenue food and beverage brands. Chris has backed companies like Ayo, Painterland Sisters, Stone & Skillet, and he's spent years helping founders navigate the earliest and most uncertain stages of building a business. Chris, it is so great to have you not only on the Non-Based Podcast, but here in the Newton headquarters. Thank you so much for coming on over.
[00:01:30] Chris Robb: Yeah, thanks so much for having me, Melissa. It's great to be here, and I'm glad it worked out to be in person together.
[00:01:34] Melissa Traverse: Yeah, likewise. Yeah, there's no substitute for being in person. I know that you're a man who probably needs no introduction for so many of the folks in our audience, but I would like to spend a little bit of time on your background because I think it really does help explain the opportunities that you're able to offer brands and a lot of the support that you're able to offer. So you grew up in consumer packaged goods and grocery retail. How long have you been in this industry?
[00:02:04] Chris Robb: Well, I've been in the industry, I guess, my whole life. My parents started a natural grocery store in 1978, and they were more or less hippies that went back to the land and were part of the early movement of natural products. You know, so we spent a lot of time in that store as kids and, you know, I get nostalgic about, you know, products like Orangina or, you know, Nancy's Kiefer, you know, things like that. But it was just the very beginning of the industry. It was very small. Things like UNFI, for example, were started by people like Michael Funk, you know, who at the time was called Mountain Peoples. it was just a kind of a roots California thing, which is where I grew up. And being a kid in the 80s and 90s and watching this unfold was really formative for me. And then even just bagging groceries in high school and being in and around distribution centers and stopping off with my dad to go to the bakery and things like that, right? Just food and just the whole kind of ecosystem of time frame. It just really shaped a lot of my passions now around food and beverage. And so for me, I'm really grateful that I got to have that experience.
[00:03:20] Melissa Traverse: And I'd like to point out for folks in the audience who may not know, when you talk about your dad, you're talking about Walter Robb, who was co-CEO with John McKenna for Whole Foods Market, that you really did grow up in grocery retail.
[00:03:35] Chris Robb: Yeah, and it's funny because he did, right? He actually sold his store in Mill Valley, California in 1991 to Whole Foods, which I think became around the ninth store in the company at that time. Whole Foods went public in 93. He started out as the store manager and kind of worked his way all the way up to co-CEO. So there was a whole time frame of watching him kind of grow professionally and build his career. At the same time that the natural products industry was rising, right? But when I think about how long I've been in the industry, I think this year was my first, my 21st year going to Expo West professionally. And when I first started going to Expo, it was, you know, maybe 10,000 people and, you know, it was like a small little organic section in the corner. Now it's 80,000 people and wild. But yeah, it's been really fun to watch this industry grow up. And one of the most important things that I always think about, even as an investor, is trying to put myself in the customer's shoes. And I think when you are on the retail floor, that's the best possible place to learn about what the customer perspective is. You know, the way that they always decided where to put grocery stores was it wasn't on household income or typical demographics. It was based on education, right? The idea is that if you're more educated about better food, or if you're more educated in general, you might be more educated about better food and what that means for you. and your own health. And that's how they would kind of determine, you know, where to buy real estate and, you know, a lot of college towns, a lot of places that, you know, had that kind of influence. And so we think about skipping forward to where we are today and how fast information moves and you know, how easy it is to educate yourself on all different types of topics. You can see why natural products in general are, are still on the rise and, you know, um, growing really quickly, but it's always been, you know, up into the right in terms of how this industry has grown. And, uh, it's an exciting, you know, to be part of an industry that, you know, is, has always been growing.
[00:05:37] Melissa Traverse: It really is such an exciting industry. And not only did you start off in grocery retail, but you've also been a founder a number of times yourself. Can you explain what that part of your career was like?
[00:05:53] Chris Robb: I hated school. I never really wanted to go to school. I went to college reluctantly, and I'm glad I did. I made it through. I made a lot of good friends, and it was a great experience, but I think I parked my U-Haul in the Civic Center parking lot on the way home from college to go and start my own business because I didn't have a job lined up. I didn't want to go work for anybody else. To me, entrepreneurialism, that was the household I grew up in. It never occurred to me to go get a nine-to-five job. And so I started doing whatever I could do to earn money. And ultimately that led to starting my own brands because I had been exposed to this industry and I didn't really want to go into the grocery business, but I loved the brand building side. I was just drawn to it. Yeah, I've been I'm not gonna try to rattle off all the things I've tried But I've you know done some things successfully and I've failed quite a few times as well One of the failures I think about a lot is in 2013. I started a ready-to-drink beverage brand It was called summer made beverages and it was a sparkling Shrub if anybody knows what that is not a lot of people did It was an awesome product. We made you know organic syrups Ourselves we it was all raw. It was sparkling. It was you know organic raw apple cider vinegar It was delicious, but you know I learned very quickly that apple cider vinegar was polarizing to a lot of customers. We had, you know, 19 grams of sugar to balance the ACV and it wasn't really the right time or place for sugar, you know, in 2013. So it's funny to see what, you know, Poppy did years later and, you know, it was very much the same thing. Mother Beverage was doing ACV. So we might've been a little early and we also were a little bit too kind of hardcore with our proposition. But, you know, I remember getting that on the shelves, getting it eye level, you know, 24 facings and some of the best stores and moving like six units a week and just being so demoralized that like, why aren't people trying this product? You know, it was a beautiful package, beautiful product. I think you learn those lessons. And, you know, the, the cool part for me is the experience of bringing product to the stores, you know, shaking hands with the buyers, uh, dropping cases, um, and paper invoices and doing demos and talking to customers and. I did a lot of things like that. I tried different brands, different products. I always thought I could see around the corner. Sometimes I could, and sometimes I was just a little too far out in front. I also started, and this was a year later, 2014, my brother and I started a brand called New Barn Organics, which was a clean label organic almond milk business that was refrigerated. And this is actually something that I would recommend to founders, but if you can talk to the retailers and see what they're looking for, what the buyers are excited about, it's a great way to start a business. That was why we started that business was a buyer in Southern California named Diane Snyder, who's one of the best buyers that I respect, you know, all time. She came up to us at Expo and she said, you know, Califia is dominating this new almond milk thing. It's flying off the shelf because we're putting it in the cooler, you know, people are are excited about this kind of premium proposition and an alternative milk at the time. It was this big wall of kind of shelf stable stuff that just didn't, it just kind of checked a box, right? So we designed a really amazing bottle, built a great product with four ingredients, you know, organic almonds, spring water, sea salt, maple syrup, right? It was, it was awesome. But we grew really fast, you know, because there was a lot of demand and And Diane was true to her word. She brought us in. You know, she really championed the brand and helped us get placements. And that kind of kicked off this whole, this whole venture. But we grew to about 10,000 points of distribution in about 15 months.
[00:09:42] Melissa Traverse: And when you say Diane, you're talking Whole Foods?
[00:09:44] Chris Robb: Yeah, she was a buyer at Whole Foods. Yeah, we knew her a long time. And so she gave us that opportunity. She said, I think you guys can build a product like this. If you build it, I'll bring it in because I really want this. And so that's what I mean to founders that are, you know, hey, should I start this? Should I not start this? It can be really good to network with the retailers, even if it's, you know, small local buyers, just to get a feel. Are you thinking about the category the right way? Buyers know what sells, you know, what will sell. So that's like the ultimate market research is to go talk to people who do it every day and bring these products in.
[00:10:15] Melissa Traverse: Not only are you getting great information about what the market is looking for, but you're also making alliances with the people who are going to be taking it into their stores and putting it on their shelves. So that makes perfect sense, certainly. And you know, just as you're talking about your experiences building these brands, It really does, I think, help our audience understand the kind of empathy that you're able to have for the founders that you're working with at Supernatural Ventures. Now, you actually have, you're part of three different organizations right now, right? So, Dirty Hands, The Angel Group, and Supernatural Ventures. Are you part of all of those three entities all at the same time?
[00:11:01] Chris Robb: Yes, is the short answer. On the heels of growing New Barn, which was quite a ride, you know, low margin, high volume business. We raised a lot of money. In fact, that's where I really learned how to invest, was going through the fundraising process myself on the brand side. But I think we raised, you know, maybe 17 or $18 million, all non-venture. It was all from individuals. And that taught me a lot, you know, and we actually spent more time fundraising than running the business, like way more time. And so it was a good learning experience, but the biggest learning experience that I had helping grow that brand was getting on the shelf actually was pretty easy. Like I said, we went pretty wide, pretty fast, and we needed to drive that volume, so I think it felt like a good choice, but I think there's upsides and downsides to that strategy. What I learned was buyers can bring you in, and that feels really good, because you do your job. But getting product executed at the stores and off the shelf was a whole thing I had never even really considered, to be honest. And so we'd go into stores and you'd see your product on the bottom shelf or the top shelf or, you know, missing SKUs and things like that. And it just frustrated me and I was like, you know, how do we fix this? And at the time I started hanging out with regional DSDs, like Dove Distribution and ZAR at Hightouch. And some of these guys who were doing the work, you know, in that kind of final mile execution, you know, these guys have the trucks and they bring the product, you know, to the store, but they also have reps that go into the store and merchandise the shelf. And I just thought that was the coolest thing in probably just the grocery nerd roots. But I thought it was such an unfair advantage if you could, you know, go in and actually, you know, execute. And at that time, I met Will Ahern, who is the president of Dirty Hands. And he was expanding Dirty Hands out to the West Coast. So he was living in Northern California where I was. And we just hit it off as people, you know, as friends. And we, you know, I never really wanted to go work for anybody, but I met with him and his dad, Roy Ahern, who has become a mentor to me. And he came out of, you know, Red Bull system, which was all about that execution side as well. They both saw the opportunity like I did to say, hey, if we can go into these stores and we can execute, you know, we're going to help, we're going to help brands increase their sales and maximize their opportunity with, with each door that they're in. And so they built, you know, and fortunately I never wanted to have a job, but I, I felt like at the time it was the right thing for me to go and join this business and help grow it. given my background and skill set. So that's what I did. I was there for six years, full-time, and we grew that business pretty significantly. I think we were around 50 or so people when I joined, and when I left, we were a little over 200 full-time people. It was I learned a lot around just culture and community and having multiple teams across the country and really just doing my part, you know very well so that it would work with the rest of the team and and that we could accomplish the goals as a company and what we're trying to do so really a formative thing and You know, fortunately we got to work with at any given time, over 200 brands in our portfolio, and these are some of the best brands in the business. Think about Olipop and RX Bar and Once Upon a Farm and go down the list. We're really blessed to have great partners and I had the best job in the world because I got to build my network for six years and meet all these cool people who are running the most successful playbooks for the most successful brands. and I got to learn about how to do it. And so when I think about the training, you know, to become an investor, learning distribution and learning strategy from some of the best minds in the industry, just really blessed to have had that opportunity. And more importantly, you know, it's a family owned business, Dirty Hands, the Ahern family is incredible, incredible people, just really fortunate, you know, to get involved with that.
[00:15:13] Melissa Traverse: So you brought up the issue that you really understood with New Barn, which is that it's not so much about getting on the shelves, but it's about getting the product off the shelf once you're in the stores. What did you learn at Dirty Hands that, you know, what wisdom did you accumulate there that helps you guide other brands now to help solve that problem of making sure that you're on the right shelves and you're able to move the product once you're there?
[00:15:43] Chris Robb: I'm going to say this today and I'm probably be outdated in 10 years, but you know, grocery and food is still analog, right? And somebody has got to still move the case from the back room to the shelf. They got to pack it out. There's still people doing those, those jobs. And especially when, you know, when I first joined, um, you know, planograms are a guide, right? But then there's the reality of, you know, how stores operate and, and the best grocers, I mean, it's an art form, it's much more art than science. And I hope any grocers that are listening to that go back to the art form, you know, go back to that feeling of abundance, go back to zero holes on the shelf and think about the customer when you're building these, you know, kind of programs for your stores, but the reality is people at the stores have decision-making ability and if you show up to those stores three, five days a week and you help pack out, you know, you're there, you show up, you've got relationships, you can go anywhere three, five days a week and talk to people. They're going to know who you are. They're going to appreciate what you do. And if you approach it that way, then, you know, you think that that person's going to say, oh, this is one of your brands, you know, take this extra secondary or, you know, yeah, just go ahead and optimize it up to eye level. Like that can be the difference of six units a week and 12 units a week, right? If you do that work. And so when you're looking for an edge, which everybody, every emerging brand is, You know, there's lots of different tactics, but for me I was drawn to where the rubber meets the road because I had experienced so many times walking into stores and realizing Our product is you know stuck in the bottom like nobody's gonna even see it you know, so the unit velocity wasn't even a fair metric because it we weren't even giving it a shot. That's what I coach founders a lot on now is saying no is way more important in this business than saying yes. And it's because if you're gonna say yes to a partnership, you better be ready to support it, right? Whether that's you going to the stores to do demos, whether it's hiring somebody to go and build those relationships for you, it matters. It really, really matters to put your best foot forward in every door that you're in. especially in the early stages before you have any brand equity. So that's what I loved about that business, was our ability to make an impact that was pretty unique to what we were doing, actually. And it was very relationship forward, which is something that I really enjoy.
[00:18:16] Melissa Traverse: Early stage business is so crucial. It's so important getting into the stores, making sure that the product is where it needs to be in order to sell, building relationships. Something that's incredibly hard for early stage brands is raising capital, especially now, you know, after the pandemic. I think that we've all heard that the investments that are going out from most VC firms are going to brands who are at least at a million in sales, oftentimes a higher number than that. But Supernatural Ventures, which is your fund, you guys specialize in much earlier stage funding. Can you talk a little bit about what Supernatural Ventures thesis is? and where you invest, like what time you invest and how much you invest?
[00:19:05] Chris Robb: We like to come in as early as we possibly can. Pre-revenue is actually my preference, which most venture firms would probably not say. But I think the reality is when you've done this for as many years as I have, and I've experienced it and I've seen it, you know, just watched a lot, those first steps that you take are very important, right? And it's very easy to make missteps in those early innings and making missteps or mistakes in this business is very expensive. There's no cookie cutter framework here that says this stage makes more sense because, or this stage is less risky because, like I know most venture firms' mentality is that the more revenue you have, the more de-risked it is. But I think if you can get in early and have that co-founder mentality, that partner mentality where it's like, We've got this crazy bank of resources and this formalized network that's really powerful. Let's put it to work and let's help design the foundation and build the foundation together so that we can build a taller building, right? So that's why I like coming in as early as we possibly can. The other practical is just venture math. Most venture is tech, not necessarily food and beverage. I think CPG, I heard somewhere, is 6% of venture. It's pretty small. And the reason is you don't have these major outcomes. You don't have $100 billion outcome in this industry. You're lucky if you have a billion. Right, so the venture math just says, you know, if you're playing in the series a series B game, that's a very a it's much more competitive because more venture is playing in that space looking for stuff that's already been validated where people have already taken the risk and proven something right and But you're also paying much higher valuations at that stage. And so the potential for, you know, a 10x plus return is just much, much less, right? So the way that we look at it, and what we've experienced in our careers, thankfully, is return profiles that look more like 50x or 100x or 400x. And those are not on multi-billion dollar outcomes necessarily, but hundreds of millions. So if we come in at a sub five million valuation or a sub 10 million valuation, depending on how big the category can be, that venture math works. And so the way that I look at it, and most people probably don't think about this, right? So we raise a pool of $30 million, which is what Supernatural, we're in the final stages of closing that fundraise. But we get to make, call it maybe 30, we get to bet on 30 companies, right? And some of that will be follow on. But, you know, when we're making a bet, we kind of need any one of those companies to ideally return the fund or at least return quite a bit of it. Because they're not all gonna work. You know, that's the premise of venture capital and power law dynamics, but One of the things I'm most bullish on with our thesis is that I believe we can bat above average, you know I don't want any company to go out of business. I never want to think that way and I know that's ludicrous, but I At the same time, there's a lot of things we can do in this asset class to mitigate risk, right? And we know how to leverage things like retail, right? In a world where you can go D to C, you can pay to acquire customers, it's very formulaic. One of the things that we look for, especially when we come in very early, is just indicators that customers really want this product. And that's hard to do pre-revenue, right? That's a lot of instinct. But you can there's things you can do you can bring it in your own kitchen You can bring it in your own household and see how people you know engage you can Walk to the grocery store and talk to the people that have work in the stores that see things every day There's lots of things that you can do to kind of build confidence And then a lot of it's just drawing on experience as well, but we We believe that we have a major edge in what we do because it's kind of a white space. There's not a lot of people that are taking that early risk the way that we are. And when we hit on something that we come in that early on, the outcome is much bigger. So that's the thesis of the fund. And why the fund matters is it allows people to diversify the risk across 30 companies, which is a pretty good idea when you're playing in the most risky space.
[00:23:45] Melissa Traverse: Supernatural Ventures certainly offers an opportunity to a lot of brands who really may not have had an option like this otherwise. But to your point, it must be challenging to figure out what the possibilities are and what the opportunity is if you are investing in a brand pre-revenue with all of the experience that you've had. That certainly gives you a leg up and you're probably able to make assessments that especially folks who haven't lived in CPG, they aren't able to make. What do you need to believe about the product, the founder, the go-to-market plan in order to believe that it would be a good partnership?
[00:24:34] Chris Robb: Well, people and product are the hardest thing to change. Product is a little easier than people, in my experience. So people are the most important. And I can give you an example of a pre-revenue investment that we made, which is a brand called Jesse & Ben's. and they make incredible frozen french fries was where they started. It's three ingredients, you know, beef tallow, sea salt, potatoes. For us, Jesse and Ben, you know, in the name, but the two guys, the guys behind the fries, if you will, which is something that we helped, you know, come up with, which I love. But, you know, tried the product first. That was usually always our first step, is try the product. Product was exceptional. I mean, it's not hard to imagine, right? It's French fries, you know, fried in tallow with sea salt. Like, it was a very, very good product. But they executed it. Um, but when you hopped on with those guys, you could see there was a really good compliment between them. Um, Ben was the operator. He was making, making the fries. He was making that work, the supply chain, you know, you could tell they had thought through every aspect of what they were doing and they were very capable people. Um, and then Jesse just instilled a confidence that, you know, is undeniable. And sometimes you just see it, right?
[00:25:52] Melissa Traverse: Is it just something the person has or they don't have?
[00:25:56] Chris Robb: Yeah, I think so. A lot of times, if every founder could be like Jesse, my job would be easy. But I think that, you know, you just recognize it and it walks that line of confidence. But the biggest thing I look for that complements the confidence is openness, right? And what I love about Jesse is that he is very capable and very confident and very decisive. but he also wants to be better. He wants to figure out the right answer. It doesn't matter if it's what he thinks he knows. He wants the best answer wherever it comes from. And so I love that humility in a founder, especially when it's coupled with that confidence. But there's all different types of founders. I was having this conversation with some venture friends the other day, and they were like, we like founders that are older, that have been punched in the face at least a couple times. And I get that. I'm one of those guys. So I definitely can see the value of that experience, but sometimes the youth, you know, we just invested a big, our biggest check ever into a brand called frozen one, which is a new ice cream brand. That's up and coming. I love the product. I love the founders. And part of what I love about the founders is their, their mid twenties and they're young and they're hungry and they, they have a level of hustle that I used to have that I no longer have, right? Obviously, I'm down to work hard, but when you're in your 20s, it's just different. So I think that sometimes the profile of the founders match the need for the business. Sometimes businesses need to grow a little slower in the beginning. Sometimes they need to go a little faster in the beginning, depending on the dynamic. Right. So the ice cream category right now is very competitive. They need to go fast. Right. So we're coaching them on a strategy that makes sense for where they are in their category. And I believe that that these two guys match the profile of what they need to accomplish very well. Right. So does that make sense?
[00:28:01] Melissa Traverse: Yeah. And with a product like frozen ones, is it a functional ice cream and then it has protein in it?
[00:28:08] Chris Robb: Yeah, so they have 40 grams of protein, a little over 300 calories per pint, two grams of sugar per serving, so the macros are pretty insane. And the product, it delivers, right? The texture is awesome, the flavor is awesome, and this is a category that we see moving very quickly, and I think they're gonna be a leader in it.
[00:28:33] Melissa Traverse: You know something that Supernatural Ventures probably has a really strong hand in is an area where so many founders and brands get tripped up at very early stages and that's how much to raise and at what valuation. These are two things that are critical. to get right and they can affect the entire course of your business. But it's so hard to understand where to fall when you're just getting started. What's the advice that you give the founders that you're working with? And also I understand that you're constantly texting founders that aren't part of Supernatural Ventures or that you aren't necessarily working with. So this is probably something that a question that you're fielding all the time. What's some advice you can give our audience around those two aspects of fundraising?
[00:29:20] Chris Robb: We invest in less than 1% of what we look at, which is a very low number. I wish we could invest in everything. It would be way more fun to say, hey, we do this early stage space. It's very unique, and not a lot of people do this. And I think a lot of people are like, oh my god, these are my people. Invest in me. I'm in this space. And I think it's frustrating when When obviously you feel like I'm right where you right in your zone, but I think the reality is we're looking for very specific things and we we kind of know it when we see it in terms of the potential of it and you have to look at a lot of stuff to to kind of find out the things that you that you have conviction on and really want to get behind and That said just like I've done in my career where I've launched stuff and it hasn't quite worked. And so even if you're pre-revenue or you're at that earliest stage and you don't know how much to raise, what I would always recommend is, is being very reasonable about your approach, right? And so if it's hyper early and you haven't proven that much and you haven't brought in that many dollars, take a little bite-sized thing, you know, typically in that range the easiest place to to go and and get some dollars is going to be from friends and family or just other angels and If it's not going to be someone like us that's going to be where you most likely have access to capital and So, what I always tell people is don't try to go and raise $10 million or $5 million before you really have proven anything. Go say, I'm going to do this. In the next six months, I'm going to go make this happen. I need this to do it. Maybe it's a couple hundred grand or something like that. I'm going to put a really fair price on it, and if we accomplish X, I'd like to come back and structure this next round. are exciting and fun and they make the headlines. But there's a lot of this kind of ground level nuts and bolts that just, it just requires a lot of effort and a lot of discipline. And you got to kind of show people what you can do. I'm a big believer that if you show people what you can do, they're they're going to want to put up more, right. So I like taking something that's really bite-sized, especially if fundraising is challenging for you, and say, I'm going to go do this. Then go do it. And then talk to those same people. Again, I guarantee you that they will probably put up more, and they'll probably introduce you to their friends. So that's the best advice I have. you are a brand that you've gotten a lot of attention, you've gotten some notoriety, or you've gotten some early indicators that this is gonna be successful, and now it's your first time to go raise a round that is bigger than your friends and family round, my best advice there is don't overvalue it, because you can shoot yourself in the foot in that way. Right? So if you're, if you're doing, you know, a hundred thousand in sales and you've got some really good early indicators and you're going to go raise at a $15 million valuation, it's going to automatically price people out of the conversation, you know, potentially. And, uh, the other thing is in CPG, like very rarely does everything go well, you know, or perfectly as planned. Everyone knows that if you if you price on the higher end in terms of valuation, you know, yes, you're gonna maybe be diluting less but You're doing a couple things one is you're not rewarding The investors who are backing you at the earliest phase which to me I think it's like you want those people to win as well and they're on Most likely a seven-year journey with you where they're not going to be liquid if it works at all so you got if I just think it's important to factor that in but the other thing is If it doesn't go perfectly and you don't hit the plan exactly and you need to go raise more money, you're now putting those early stage investors who bet on you early at risk because the possibility of doing a down round, right? You raised up here, now you got to raise down here just to get more money and to keep going. Now you're you're really squeezing yourself and your early investors and just not setting, you know an appropriate trajectory So I think that the hardest thing to do is kind of figure out where do I price this business? you know based on a what people are willing to pay but be maybe what's kind of a reasonable pathway and I think if you are more reasonable on that and on that valuation, then you're just making it more possible to kind of spend less time fundraising potentially and allowing for a little bit of variability, which I think is, you know, just happens in this business.
[00:34:13] Melissa Traverse: What's one of the questions that tends to trip people up and they're really not prepared to answer that question because they just haven't thought of it?
[00:34:20] Chris Robb: The number one question I ask, if it's not pre-revenue, the number one question I ask is what's your units, you know, your unit velocity, your units per store, per SKU, per week. That's the metric. If you don't have that number, if you don't know that for every store you're in, then start there before we talk. Because I will be much more impressed if I say, hey, what's your unit velocity on, you know, your hero SKU at Bristol Farms? And I want you to have that answer. You should have that answer if I was growing a brand today I would know that answer and I would know it for the last eight weeks I'd say I'd know that number for you know, we just ran a promo I'd have that number like you got to know your numbers and and you're if you're building a retail brand which is a lot of where we focus because it's a lot of where we have expertise and and Um, ultimately I think it's where every brand kind of needs to end up anyway, for the most part. Um, but that's, um, that's all I care about. I could care less about revenue, you know, at the end of the day, like that's not what, that's not what we're going to value a business on. We're going to value it based on. How much customers want the products and that's why those numbers matter so much especially because in the early Indians you're not You can you can pay for you know shopper marketing and you can do demos and there's things you can do to kind of increase those Those things with the data. I'm most excited about is when you're not doing those things when it's you know in the wild It's a single facing per skew It's full price. How much do the customers want this product? You can't hide from that and
[00:35:50] Melissa Traverse: You mentioned marketing, and I don't know if shopper marketing was necessarily part of this, but you mentioned that marketing is one of the functions that you tend to steer early founders and early brands away from. Can you explain that?
[00:36:05] Chris Robb: You're exposing yourself. It is marketing, right? Retailers are influencers. That's what I always say. I mean, they have good stores or what, 55,000 transactions a week, right? You have eyeballs. real customers that are identifying with your brand, moving around the aisles, hopefully they're gonna find you organically. The best thing that you can do in the beginning is focus on getting into the right places where your customer already is. It's the most cost-effective, capital-efficient way to build your early stage business. Marketing, I think, tends to come into play a little bit later, but I also think there's just a lot of learning in putting yourself in the environment where you could do well. and seeing what's possible, right? And so, um, you know, marketing is one of the, if you're a brand, there's so many, uh, organizations that are coming at you, trying to get you to spend money. Right. And. You know how hard it is to raise money. You got to be really careful about how you spend those dollars You know, especially in the early goings, right? So again, this is maybe not Conventional thinking that most venture firms was a lot of venture firms will say hey, I'm gonna give you X million dollars I want you to go as fast as you can right but We don't really live in that era anymore. I don't think I think we learned our well, hopefully we learned our lessons I think you know, maybe we'll probably find ourselves back there again, but I experienced the growth era, you know where money was growing on trees and and Top-line revenue was all that mattered and I can tell you it's not how you build a real business. You know, you've got a put yourself in an environment where you can sell products organically, you have to verify yourself, more importantly than what you're gonna communicate to me, that it's working, to be able to take the next step. And I just don't see marketing as a really critical piece of that, depending on where you are on stage. But for a while, even zero to five, zero to 10 million, there's a lot of mileage you can get just putting one foot in front of the other with a disciplined strategy in retail.
[00:38:11] Melissa Traverse: So when we're talking marketing, does that include shopper marketing, retail media, all of those functions?
[00:38:18] Chris Robb: In my opinion, yes. But the one thing that is most important, and this would be a marketing spend, where I would say Overspend Is packaging its brand identity positioning and packaging because that's gonna do, you know If you do the other piece that we're talking about which is get your product on the shelves in the right environments You still need people to see that package and convert right? It's gonna do 95 plus percent of the heavy lifting to reach your customer. So that's your billboard So spend money there
[00:38:54] Melissa Traverse: You know, an anecdotal example of that is Jesse and Ben's actually. My mom, who's almost 80 years old, she brought me a package of Jesse and Ben's fries that I think she got at Market Basket, which is a regional New England retailer. she's never purchased, she doesn't buy frozen anything except for maybe ice cream, certainly never frozen food. And she brought them to me and she said, I think the boys, you know, my two kids would like these. And I should have asked her why she picked them up, but I'm sure it's because of the packaging. It's not because she believes in beef tallow. You know, like I think she saw like a very small number of ingredients. The packaging really popped and it's case in point.
[00:39:37] Chris Robb: Yeah, well, we were very involved in that process. And, you know, it's because we were pre revenue, we got to come out of the gate with the package that we wanted to have. And so we put a lot of effort into it. And I think it's kind of case in point, right, where, in that particular instance, we were looking at the category, this is part of why we built a lot of confidence on this idea was, The category leader is a brand called Alexia And I remember when they launched I was at that Expo They had a tiny little booth and I was like, well, this is cool, you know, but that was like 20 plus years ago It's tired. It's corporate, you know, it doesn't stand out. It's not relevant. It's not premium It's got way more ingredients than you want to have even though it's organic And so we're just looking at this and like these guys are dominating the door I And every other package in the space feels pretty, pretty corporate, not really, you know, fun and personable. We had multiple good directions, some were safer than others. And eventually, we all kind of locked down to this direction. It was like this ridiculous, you know, two guys in this trench coat with fries as hair. And I'm like, For some reason, I'm like, I think this is going to work. You know, like, this is just fun. It's different. And if you look at this in this freezer door of corporate brands, there is no way that you don't look at this and at least pick up the bag and check it out. And sometimes that's half the battle is just getting people to see you. Of course, you got to have a product that delivers.
[00:41:07] Melissa Traverse: There are certain categories in my mind that are more difficult than others when it comes to unit economics. What's something that a lot of early stage brands get wrong about unit economics? And is there a way for them to rethink that concept to maybe do better a little bit earlier?
[00:41:27] Chris Robb: Well, that's one of the most challenging things, right? When you're early, you're going to be inefficient. That's just the way it is. You're going to have lower MOQs. You're, you're going to be buying pallets, not full truckloads, you know, like go down the list of reasons why you're inefficient. Um, but you know, your cogs are going to be higher. So. Think that's where there's a the most immediate fork in the road that you're gonna see as an early founder is okay Do we want to do want to try and scale and drive more volume and drive down cogs? you know or do we want to maybe charge a bit more and be a little bit more selective while we can and kind of You know try to gain some higher gross margin that way and But I would say it's very dependent on the strategy of the brand and the timing, you know If you're in a really competitive category and there's multiple suitors coming after it and there's other people that are well-funded You're probably gonna have to if you want to do it, you're gonna have to go compete, you know and and probably match that type of energy that you're up against but I think if you if there's nobody else doing what you're doing, you might have a little more time, you know, and you might For example, when we first launched Batchans, it was $12.99. That's expensive for a sauce. Everybody said that it wasn't going to work at that price. I'll tell you one thing, they were just wrong. It worked. We sold more units than the category leader and our margin was 60 plus percent from day one. Now today at $7.99 at Walmart, and it's still got a 60 plus percent margin So kind of that to me that's the best illustration of you know economics is you're going to be inefficient in the beginning so Design your price pack accordingly basically set your pricing strategy in a way that that can work for you right and so if it's you know hey, we're not going to launch this until we you know we get commitments for $2,000 and you know we've raised three million dollars, and we're gonna you know, commit to the 200,000 unit run instead of the 10,000 unit run out of the gate because we believe that this is just going to sell better at $499 versus $699 and we're not really willing to take that risk. We want to go to scale fast. That's fine. I'm okay with that if you feel like that's the right strategy but if you want to if you're in a position where you you don't want to take your time and maybe start smaller and build less inventory and and just kind of step up your your growth a little bit more to prove it and That means that you need to set a little higher price so that you can accomplish a margin that is more sustainable That's also fine. So it you you know, your price pack should be driven by your by your strategy. I
[00:44:06] Melissa Traverse: So you were just talking about timelines. And certainly, those can vary so much from brand to brand. Sometimes, I think I saw that Groons, of course, just got acquired. They had a very, very short timeline to acquisition. But that certainly isn't the most common path. For a food or a beverage startup who's looking to scale from, let's say, $0 to $10 million in sales, What do you think a realistic timeline looks like, understanding that it can take longer or shorter, but just for the folks out there who are building their brands and kind of trying to figure out what their runway looks like, is there a way for you to be able to quantify that in a general sense?
[00:44:48] Chris Robb: Yeah, I'd peg it right at seven and a half years.
[00:44:51] Melissa Traverse: Amazing. That wasn't general at all.
[00:44:54] Chris Robb: Right. And I think if you understand that that's average, it could be longer and it could be less. But I think that that gives you some time horizon that's realistic. And that's a fair amount of time. So that's why I also think, you know, Take your time in the beginning. I think it's really important to learn. Learn what's possible for yourself, right? So you need to be able to communicate that to any stakeholder that you're going to enroll in your process, right? To get on board with what your vision is, without a doubt. but learn for yourself first is the best advice I can give you. Go see what that organic velocity looks like. Go see how much customers really like your product. Look in the mirror. Is this working? I had that moment in my life where I put stuff out on the shelf that didn't work, and it's like, OK, am I going to keep doing this? Am I going to waste a million more dollars, or am I going to cut it off at $150,000? That's a decision you need to make. That's real decisions that you need to make. And I joke a lot, sarcastically, that we need more decelerators in this business than accelerators, because it's so expensive to push the wrong thing. But most importantly, if you're a founder, you've got to be willing to look yourself in the mirror and say, is this working? Do I have conviction that this is going to work? Because that's the most important thing. bust your ass to make this happen. You better feel like what you've got and what you've put together is, is ready for prime time. You know, otherwise it's really, it's truly, it's not worth it, you know, or, and I'm not saying it's not worth it for you to do this. I'm saying it's maybe sometimes you gotta go back to the drawing board or maybe this isn't the one and it's maybe the next one. Right. But that's the best advice I could give is, is go and, and learn for yourself what's possible with what you have.
[00:46:47] Melissa Traverse: That certainly takes honesty and vulnerability as a founder to be able to look in the mirror and ask yourself that question and give the right answer. And that kind of goes back to some of the qualities and traits that you mentioned looking for in other founders like Jesse and Ben, folks who always want to hear what other people have to say and always want to be better. You've given us so much great advice for folks who are starting up brands and who will be embarking on a fundraising journey. While I have you sitting here, what are some closing words and some advice that we can leave our audience with around fundraising and fundraising strategy?
[00:47:27] Chris Robb: I've been through the fundraising process multiple times on the brand side, and now on the fund side. I'm fundraising right now, trying to close our Supernatural Fund One, which is, we're probably 95% of the way there, but it's been a journey. For the last year, I've been fundraising, right? So I think that's what I tell founders a lot. I'm doing the same thing you're doing right now, right? It's money needs to move into your product, and my venture thesis is my product now. I do this full time, this is all I do. I think I'm good at it, but other people need to make that determination. What I would say is, and this is the thing that I say that shocks people the most, I love fundraising.
[00:48:11] Melissa Traverse: Shocking.
[00:48:13] Chris Robb: I've never heard anybody else say that.
[00:48:15] Melissa Traverse: I've never heard anyone say that.
[00:48:16] Chris Robb: But I love it. And I think if you love it, you're going to be better at it. And so that's my best advice and my biggest challenge to everybody who's listening to this is if you're fundraising, if you're confident in your products, you're going to have more fun fundraising. So back to that kind of learning and making sure that you've got like what you've got, you're really all in and convicted on. But the other thing for me is why I love fundraising so much is I get to meet so many cool people that are from all different walks of life, right? That have been successful enough to become accredited investors. And if you don't approach that from a social capital perspective versus just a financial capital perspective, you're really missing the point. Because you're building relationships with people who can make things happen, not just with their dollar. And if you build relationships, real relationships with them first, don't approach it like you're pitching somebody. Approach it like you're just genuinely interested in what they've done in their life and share what you're doing in your life. And if there's alignment, if they see the potential of what you're building, they're going to tell you, but you don't need to ask them for anything. Just go be interested and get to know people. And you're expanding your network. Your network is your net net worth, right? Everybody says that, but it's absolutely true. Um, if you build meaningful relationships with more people and you approach life that way, I don't think there's, I don't think you need to look at fundraising as a chore. I think you look at it as an opportunity.
[00:49:48] Melissa Traverse: Well, if that isn't inviting and inspiring, I don't know What Chris. Chris Robb, thank you so much for joining us today on the Non-Based Podcast to talk about Supernatural Ventures and so many other things. It's been such a pleasure to have you here, and certainly we appreciate all of the advice and inspiration you've given us today. So thank you for joining. For everybody else out there, thank you for listening to the Non-Based Podcast, and we will see you next time. That concludes another episode of the Nombase podcast. If you enjoyed the show, please leave us a review and follow us on your listening platform of choice. You can also watch and listen to past episodes on Nombase.com and don't forget to join our Nombase Slack at slack.BevNET.com for company updates, industry networking, and community discussions. See you next time.
