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Okay, I want to start with the fact you sold your previous company for 600 million.
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You and your co-founder own 90% of it.
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You find yourself as a very young man with about a quart billion dollars in cash. What happens next?
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>> The natural thing is to get into investing.
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Outside looking at investing is like very appealing.
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It's like one you think it's an intellectual exercise.
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The second real thing is like it gives you a great lifestyle cuz you're not operating.
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So you can kind of you no organizational responsibility.
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I started studying investing and getting into it.
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>> How did you study investing?
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>> Figuring out asset classes, how to build a portfolio, grow capital, >> underwriting deals.
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>> Are you having conversations?
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You reading like >> reading conversations, best books on it.
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And then where my time was spent was on where I had the the best advantage, which is in consumer package good investing or or or just privates.
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So early startups and stage agnostic seed to growth didn't matter and started doing that and quickly realized that the most important skill sets like is charisma or like with whale hunting it's like finding the deal that is quite obvious and then trying to get an allocation.
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That's really like the game and that's quite quite gay.
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[laughter] Chasing men for allocations is something I didn't want to do.
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My previous experience was like, I'm gonna sit back, I'm gonna spend my time building a product, and my product's going to do the talking.
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Like, my product's going to do the work.
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Where investing, you're you're you're taking capital, and then you're trying to allocate it into the into the thing that's going to grow, behind the leader that's going to you're going to bet behind.
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And that's just too hands-off for me.
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Like I'm I'm used to like fighting being in knife fights and it's just too passive.
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So investing is very tempting because you can like make a decision not and not have to do anything and it works like it grows.
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The big problem I had with it is the feedback loop's super long.
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Like in in building and operating a business you make a decision whether it's a hire, whether it's a product decision, marketing and you get the feedback right away.
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Like the feedback loops it's like immediate.
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where in investing it's like are you can >> develop a thesis, develop this underwrite this founder as really great and then you like >> make the decision and like all right 5 years go by did it work or not.
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>> So you're living where when you sell RX Bar >> Chicago okay you have this huge acquisition you have a bunch of cash this is when you moved to Miami you moved to Miami before >> no after. >> Okay after.
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So now you have the money and now you're like, "Okay, I'm going to I have a bunch of money."
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You start You had this ridiculous idea.
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This is your own words cuz when we were hanging out a few weeks ago, you said, "I had the ridiculous idea of starting a family office." >> Yes.
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>> So you moved to Miami like I'm going to start a family office. >> Yes. >> Okay. Explain that part.
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>> So I was in Chicago and I just needed a change.
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I needed to like change environment. RX was my identity. I just got divorced.
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So I looked at the United States and I was like, where's the best place to go? >> Wait, wait. The divorce part.
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>> The divorce happened after the acquisition. Yeah.
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Was it anything related there where like you're under a lot of stress like >> No, just hubus. >> Say more about that.
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>> I had success bias where everything I done has been successful and so there's blurred lines between your personal and professional and I just moved too fast.
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Thought it was going to be easy. Yeah.
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Cuz my goal is to have a family so career success accomplished.
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Next thing is family and you try to speedrun. >> Yeah.
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Go went too way too fast and thinking I'm really good.
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So, [laughter] so this is if I if I remember correctly, me, marry, divorce, all in like nine months. Yeah. >> Okay. I beat Kim Kardashian. [laughter] >> Okay. So, you moved to Miami. I'm going to invest.
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And then what I really want to get into is the fact that you are uniquely unsuited to invest.
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Like I all the other founders I know that I ask about you is like this guy is just like a relentless animal operator.
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like the idea that he could think that he could sit and be like the guy behind the guy.
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Why do you think you made that mistake?
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This is very interesting to me because you did what you did to start scale sell, right?
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Which is very uh like uh celebrated, but I talked to a bunch of founders that did that and then they're [ __ ] miserable. You're one of them.
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So like I really want to hone in on like what you were feeling and why you were so miserable in this situation.
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My plan was to get out of Chicago, change environments, and then I just looked at a map like, "All right, where's the best place to go to reset a bit and invest, build my family office, get get that right, and then ultim ultimate goal was to relocate where is in the best interest to start my next thing."
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So, chose Miami as a place to like reset and invest.
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And this is before co got there, started like formalizing a family office.
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And then I I think like what I underestimated with investing in in different entrepreneurs particularly in food and beverage is that like I just assumed they all had the same tenacity as me.
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Like I I just thought like that's what you did.
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And I didn't really know anyone else who were founders at the time.
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And then I quickly realized like I'm probably actually a miserable investor because I'm I'm like I'm handcuffed sitting in the back seat while someone else is driving and they don't know where they're going.
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And that's like a torturous position to someone who knows where to go.
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>> So you didn't know how rare you were. >> Yes. >> Okay.
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>> As as not humble that as that is, but yeah.
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>> I was just sitting upstairs right before this and I was with my friend Patrick who does the invest like the best um podcast.
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podcast. He's one of my closest friends and we just happen to run into Adam Fugui from Apploven >> which again there's a lot of like overlap between you and uh uh you and Adam and we were talking about essentially you know Adam's running this very this this cash printing machine with like very few employees like he
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actually he hates entrepreneurs optimized for vanity metrics where he said you should just focus on cash generation it's like very straightforward to him it's like obvious to him >> and we were talking about the different like different hires he had and different other founders he knows and then through a story that he was telling Patrick had a great line. He goes, "Man,
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He goes, "Man, it's crazy.
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Like in any domain, there's only like two or three guys that are actually good." >> Yeah.
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Just pick any categories.
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Like there's like a sea of [ __ ] and like two or three maybe four people that are actually excellent. >> Yeah.
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And like what I I just like assume that anyone who's getting into entrepreneurship, they're like willing to die before their company fails.
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They are willing to sacrifice comfort to win. They want to win.
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And I realized like no some people like that's not that's actually not what people a lot of people do or prioritize.
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>> When you run into other entrepreneurs like this that you made the mistake of investing in because they weren't like you.
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When you have conversations with them like what is their response to your extreme approach?
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>> If I'm the one giving criticisms to the company like that's a problem.
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Like the CEO should be the most critical.
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I shouldn't be like hey man the car is on fire.
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that relationship if I'm the one spotting out problems or saying go faster or saying like that's usually not a good sign.
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Um, and I kept falling into that pattern and I don't want to be in a position to be like it's like your company at the end of the day.
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I don't want to be I'm not an adviser.
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I'm just here to try to facilitate stuff.
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But what I'm really trying to get at is like what is going on inside of you?
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Like what is your inner monologue?
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You're like, "Oh, I [ __ ] up."
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Like what is actually happening? >> This is frustrating.
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Uh, I need to get back in the game. like this sucks.
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>> How long did it take for you to figure this out? >> Probably a year. Yeah. 20 on the age of 21. >> Okay.
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So then what's the next step after that?
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You're like, "Okay, this sucks.
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I don't want to be an investor.
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I need to be an operator.
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I want to own my own company.
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>> I'm way too young to be retired, by the way." >> Yeah, for sure.
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So I I started One of the good things about investing is you're talking you're getting through the deal for process. You're you're ideating.
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you're talking to other movers and shakers and that that's a helpful process of like, all right, is that something interesting?
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Is that a problem I want to solve, but basically I I had several false starts.
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I looked at recycling garbage.
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I looked at synthetic biology.
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I looked at other consumer package stuff.
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And I like started and then I basically pulled out um committing to stuff.
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And the the reason is like if I go in I'm like [ __ ] all in and that's like a really scary thing actually cuz then I like my friends go away like my health goes all this stuff happens to me.
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So >> we can't we can't go on from that. Okay.
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Then you need to describe what allin means. See what you just said. It's scary.
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My friends go away my health goes away.
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>> So this is just the only way you can operate. Explain this to me. >> Yeah.
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my like my leadership style is like it's just like all in um burn the bridges, burn so I can't go into something like halfass ever.
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So what I commit to is like very serious.
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And so all my false starts were like uh I'm not like moving in the direction of starting it and then just pull back moving in this direction of starting pull back.
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The other thing that there was like I needed to start a family.
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So, my order of like during my hiatus of investing, I was like, I need to find a wife to go start a family.
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I don't know if Miami is the place, Miami Beach in particular is the place you should be searching for a wife. >> I agree.
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And then I bought a place in New York and moved to New York.
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But in general, it's like, all right, so if I find something and and fall for it, there's a really high chance that I'm going to go all in.
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I won't see my friends lose my health and I'll be 50 and single.
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And that's a version of my the future I didn't I didn't really want.
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So I ultimately found my wife and then all roads led back to like protein bars.
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It required some humility of being like, you know, that's like my stick.
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Like if I die on my gravestone, it might say like protein bar guy.
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Like I'm and I'm comfortable with that.
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Uh cuz first I had some like influence of Elon like, oh, I need to go into like I'm not the food guy. I'm going over there. I'm not this.
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I need to like prove something.
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But then I realized like I've been I've been in the food business since I was like 12.
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I like have an in deep intrinsic knowledge of it and and basically once once my non-compete was like a year away, it just like naturally happened of like oh started connecting the dots like this is what I should do.
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>> So wait, you're in the food business since you were 12.
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How old are you at this point where you're like I'm going to be I'm going to start another protein gore. >> 34. >> Okay. >> Yeah. So >> 34. Yes. Yeah.
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So, my not compete was 22 October 6th, 22.
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>> How long that getting over that dialogue, that inner monologue where it's like, oh, like, you know, I need to do something more impactful or I have to do biology or create hardware or something and just like, no, I'm going to actually stick to what I actually know and maybe the best in the world at it was 3 years.
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You had to convince yourself this. >> Wow. Okay. >> Yeah.
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>> Yeah. and a little bit of like because I always think with a this is both as with as an investor when I looked at companies and then a philosophy um for myself is like the leader of the company if they have to pick up the phone to fix the product they're [ __ ]
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meaning like the the leader has to be able to really deeply understand the product and be able to fix it and then all those false starts were like I kind of depended on something else or I didn't have the time to learn the the get the deep enough understanding of the product to make that change. And so with
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And so with food, I like deeply I like know exactly what to do.
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what to do. So it just became really obvious and um got my wife and then started what is today David >> when we talked the other why why just like that was my it was a very clear process like all right check your personal life before you so you don't like ruin your personal life again
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because you're going to like go all in on something and then like once that's done and then it happens you got the family the non-compete expires and now you're back at this but your maybe your ambition when you were younger cuz you started RX bar when you were held early
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20s something like Todd >> 24 >> 24 but now the scope of your ambition is like David is not a bar company that's like the first of the products but how do you describe what you're working on now >> we don't want to tell people what not to eat I think that's like a lot of the food business like don't eat this it's
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like demonization and it's pseudocience we want to make your favorite foods smarter and so it's a really quiet approach like they're there and they're more intelligent they're more effective they're objectively better so we're going to do that across Ross multiple categories. Protein bar is the wedge. I
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Protein bar is the wedge. I know it.
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That's what we use to get to scale.
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Um, and once you get to scale, you can build the platform for there.
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You have the organization, you have the route to market, you have the R&D capabilities.
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So, the protein bar got us our platform and now we're proliferating into categories that just make sense for us and our our technology.
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>> When you started, David, you knew that you were not going to stay, that you wanted to build a food company, not a protein bar company.
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protein bar company. I'm going to just answer the qu my my question that I asked you the way you said it to me before which I think was excellent where you're like I have to be the best in the world at what I do in my category and I was like what's your category and you're like CPG I go what does that mean you go
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anything that you can buy in a store >> that's the size and scope of your ambition >> yeah like we're competing with Nestle like I want to build the most important food company in the 21st century and how big what's the scale of some of these food companies Nestle's is 100 plus billion in revenue. Um they're real real
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Um they're real real global as well.
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Um Pepsi is probably right around there. Real scale.
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>> So a couple hundred billion dollar companies.
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Uh how many different products?
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>> Well, they have these enormous portfolio of brands. Yeah.
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>> And then you know hundreds of brands and then those brands are different by cultures or geographies.
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>> They grow by acquisition or no? >> Yeah, mostly. >> Okay.
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Are you going to do that too? >> Probably. It's on the table.
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But our core competency is the ability to build brands.
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So like I know how to create an identity and build a brand.
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So for the next four years, 5 years, we'll probably just create brands, but I wouldn't rule it out later on. >> Okay.
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So tell me what you know about building brands and identities.
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This could be interesting.
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>> The analogy I think of as a brand, it's simply just a human being. So a brand has a name. It has mommy and daddy.
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It's the founders, its parents. Those parents have DNA.
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This [snorts] brand, this individual has values.
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It has a vision where it's going.
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It has um other traits, tone of voice, uh has friends.
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Who do you associate with? >> Hold on. Explain that part to me.
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Who do you associate with?
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>> So, who who are you going to do partnerships with?
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Like, so David, for example, David Protein has a partnership with Huberman.
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Like, that's an alignment.
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Like we wouldn't do a partnership with I don't know Miss Rachel doesn't make sense although she's great but like >> just like a human the social circle matters and so >> in creating a brand that identity both from tone of voice visual what clothes it wears who is its friends its values vision you define that clearly and that there's like a north star to it.
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The most important factor in building brand is it just takes time.
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So if you keep this identity, it can be dynamic in nature as it grows, but you are consistently doing that over time and with really great quality product and service.
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The time piece is critical.
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Like you just have to be doing that over time.
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David's values are around intelligence, beauty, and um discipline.
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And that's rooted in the story of Michelangelo's masterpiece, the sculpture of David.
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Those values are rooted in that the symbolism of of that masterpiece and then the tool the chisel which is like this crude nail but the meaning of a chisel is intelligence discipline and if you apply those things you get a masterpiece something beautiful.
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So so that's the logic for David's uh brand and brand identity.
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So so so if you have a crystal clear identity for a brand and and its product offering and its position the marketing actually becomes really easy.
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You just constantly hammer those points over and over over again.
15:56
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18:13
>> How much time did you put into planning this brand identity for David? >> Six months maybe. >> Okay.
18:18
So then once you have this clearly defined set of qualities for the brand and then you're saying okay then we just extend this over you know decades is the plan. >> Yes.
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You just hammer it like >> keep going.
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>> How did you learn the importance of maintaining the same brand identity over a long period of time?
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>> Uh just studying like in like just studying brands.
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Like if you look at the best brands, they're all old and so time is a factor that's really really important and the consistency of that.
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Um, and the thing is there's an asymmetry where like those brands are super fragile.
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So if you like [ __ ] around on quality or or something else like it's over really quickly.
18:53
The reason I asked that is because uh I was obsessed with this guy named David Olg and I've read every single one of his books.
19:01
He built one of the greatest advertising agencies of all time and he would hammer exactly what you did.
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you sounded exactly like him.
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If you read his autobiography, if you read Ogo on advertising and his whole thing was just like people jump around too much, like you pick one brand identity and you do it over and over and over again for decades.
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He came to the exact same conclusion.
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It's like the best brands are the best brands because they did this for decades after decades.
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>> And it's fundamentally about the values of the brand.
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Like for David, it's about intelligence, >> beauty, and discipline.
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>> Why did you pick those three traits, though? >> They're close to me. I love beauty.
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I love intelligence and I love suffering and discipline to a negative point of view almost.
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Protein bars are our start.
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So what do people come to protein bars for?
19:43
They come to it for body composition.
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Like no one really eats protein bars is like, oh, I'm just like going to enjoy this treat.
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It's like very very functional.
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Like I'm going to I need to transform my body either increase muscle or decrease fat.
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So the category in protein in general is very oriented around those values as well.
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And so with David, one of the things I wanted was like a a weight loss company or a body composition company without being one.
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So if you look at the great, they're not really great, but the '9s um brands in weight loss like Atkins, um [snorts] Weight Watchers, Jenny Craig, like they're super tacky, but they're people went to them for body composition stuff.
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So the question was like all right well how do I make that more refined really more European like higher better taste and so did that um and then the other side like I don't know but when I turned 35 and just looked around my friends I
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just realized like everyone I knew had some issue with weight like everyone had struggled with weight loss as you get older um everyone wanted more muscle like everyone I've ever talked to and it's whether it's a issue they're honest about or they're in the closet about it. Like so it's like a ubiquitous problem.
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Like so it's like a ubiquitous problem.
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So idea is like how do you create a brand that really embodies that in a refined way?
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>> I'm going to get back to the masterpiece in a minute so don't let me forget that part.
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But you said that I'm you're almost like attracted to suffering in like almost like an extreme ridiculous way.
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What the hell does that mean?
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>> I always choose the hard path.
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Like I like even when I exercise, I choose the most painful exercises.
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When I take my son out, I refuse to take a stroller. I just always carry him.
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I just like being strong and doing hard things.
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And I think there's something spiritual about like suffering that I find very gratifying once you get through it.
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And I think physical suffering is easy cuz like you just get really hot, get really cold.
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It's like but that what's nice about building a company is it's like emotional suffering.
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It's it's like a lot of tough conversations.
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Um, and so I just I I think what I've learned early on is like if you face those things, there's growth on the end of it.
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And so I found this relationship, the more you suffer, the stronger and the more growth you experience.
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And so when I see it and I feel it, I like lean into it.
22:09
Travis Kalanick, the founder of Ruber, was on this podcast and he said something that resonated with a lot of people and he's like, "The lifestyle of an entrepreneur is I can take more pain than this guy and I'll prove it to you." Yeah.
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>> Do you agree with this? Yeah, it's fun. >> Yeah, I love it. Pain tolerance.
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>> Yeah, >> I want everything that's in your head about pain tolerance and suffering.
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Let's just put it out here because I think this is very interesting.
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Look at the look in your eyes.
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I don't know if we can get this on camera or not. >> I don't know.
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I I I just feels good and I I like I don't know where I don't know where it's from necessarily.
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I think it's rooted in competitive nature, but I think it makes you a better man.
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I think there's well there's nuance like suffering for like no benefit is not good but I think this is actually it I have a lot of resentment and anger in my life and if I do not harness that in a certain way it has become I it starts to I become a bad person or I I start to not be happy and so physical exertion exercise company building stuff is a way for me to channel all this spite and anger in a way that's really productive.
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>> What's the source of the resentment and anger in your life that you feel you have to channel?
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have to channel? So like trauma is relative but for me um when I I grew up very beautiful parents like I so I don't want to sound like I suffered that much but um when I was a child I was just labeled disabled because of my dyslexia um and that I remember hearing
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conversations of teachers saying like oh is Peter stupid like I couldn't read well and I remember that like I overheard those conversations with my parents and that just I think broke me in a way that it's like my in deep intrinsic motivation to prove that wrong. And it's actually why I am so
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And it's actually why I am so disagreeable with any sort of authority or disagree like or contrarian by nature cuz like my survival strategy as a child was to say to have self-esteem really is like all you teachers are wrong.
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This whole system is broken. [ __ ] off.
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So I think deep in my personality is that like proving that all wrong.
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Um and then even to survive in school I had it was like took me it's like 10x the effort to get like a C D.
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So I think a lot of my pain tolerance came from some of that.
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Um but my resentment and anger is certainly rooted in that.
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>> You still feel this when you wake up today? >> Yeah. Yeah.
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No I think it's like tattooed.
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I've I I psychedelics therapy.
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It's like tattooed in me at this point.
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I I >> You've tried to get rid of it and you can't. >> Yeah.
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>> And so you feel the outlet is crushing your competitors like >> Yeah. Yeah. It's like it's Yeah. It's winning.
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It's like it's And it's like I'm not really proud.
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It's like it's I I'm just like it is what it is.
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I didn't really choose it, but it's like to prove that I'm not that fundamentally.
25:18
But I thought when I was in when I was uh fake working as an investor, I um I was deeply unhappy because I wasn't able to channel I was like I'm the sideline.
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I'm not I'm not a [ __ ] cheerleader.
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Like I'm on the sideline and I need to like channel all this anger and like thing towards a result and I like >> you know reporting on a portfolio is not doing that.
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I have a younger friend that um feel like I can kind of share like the some of the experience I get to have with this person.
25:48
And I was just like as a general rule, the further you get away from the person that actually has talent, the more cautious you have to be.
25:57
So it's like the founder obviously has talent.
25:59
You obviously have talent.
26:00
You you created something from nothing and you've done it over and over again and now building this.
26:03
But like you have to be careful of these agents.
26:05
You have to be careful these bankers.
26:07
You have to be careful with these investors.
26:08
the further you get away from the person with talent, the it's it they they they just are incentivized to kind of like persuade, cajol, you know, act in many cases like against your interests.
26:22
And I was like, just stay close to the people that actually have talent.
26:25
And if you're you don't need many friends in life, you can have five.
26:29
>> And like those are the kind of friend group that you should have where like you have all these other fakers out here that are playing politics.
26:34
You can get ahead that way, which is like completely different than like how the entrepreneur thinks. Yeah, I agree with that.
26:41
>> Yeah, >> there's another thing that you were saying um because I I'm not going to leave this alone.
26:46
Like I want to hear more about like your resentment and this this like attraction that you have to pain.
26:50
So the founder of the Four Seasons, this guy named Izzy Sharp, he has this great line where you know he started he he's like kind of like embarrassingly uh ambitious and I mean that in a great way where he's like I'm going to build the world's greatest high-end uh luxury hotel chain.
27:02
He didn't know anything about he never built a single hotel before he had that goal.
27:07
goal. And so his autobiography is excellent and in there he says one of my favorite maxis entrepreneurship he says that excellence is the capacity to take pain >> and this same thing he had this very complex relationship with his father he had a lot of people doubting him this idea like what you just said to me makes perfect sense because it's just in these
27:22
biographies over and over again a lot of people that have come on the show I just mentioned Adam Fugi like one thing that he drove drove himself is like I try to give raise money I was giving willing to sell 25% of my company for a million dollars right this is the company that's going to wind up being worth1200 billion dollars. They turned me down. The these They turned me down.
27:38
The these VCs turned me down and and then they uh funded some of the of my competitors.
27:44
So, we made it a company principle to put those competitors out of business.
27:47
So, when I hear you, I hear this guy Josh Wolf has this great line where he says chips on shoulders puts chips in pockets.
27:54
>> It's like using that pain that you had when you were younger as channeling to drive an achievement. >> Yeah.
28:00
Yeah, I think that's the key is like you if you have that if you don't channel it and focus it I think it's destructive.
28:08
So like for me it all gets channeled through the art through the company building process and then it's productive because it can be destructive if you don't channel it. >> Okay.
28:17
So how are you channeling it into what you're building now then?
28:21
>> The company's output is really impressive.
28:23
Just a lot of hours butts and chairs in the office just dedication. Yeah.
28:28
What do you think is impressive about the output that you're doing right now? >> What does that mean?
28:32
>> We're only 2 years old and it feels like 5 years.
28:35
So, our relationship with time is really bizarre.
28:37
But in 2 years, I mean, we're runing over 400 million this year.
28:42
We'll do 300 million this year.
28:44
We're in the frozen category.
28:44
We're obviously in protein bars. We have an RTD.
28:48
We've launched a confection with three different formats.
28:51
Um, we're launching another brand in November.
28:57
Um I you just don't in my field you don't see that sort of output and it keeps getting better like all our products keep getting better but I mean we're the fastest growing food company I think no I know in history so it's really hard to scale it and um the pace in which we're doing it like I think
29:14
this would take normally 10 years and we've done it in two explain to me why it's so hard to scale >> why it's hard to scale is because it's inventory so like you need to go buy the raw materials convert it into finished product and some the raw materials take a long time and like for example the dairy market was super tight. So if you
29:28
So if you don't like growing 300% 400% a year is really really uh or even closer every 6 months is really demanding on the supply chain to take Travis like this is all Adams like it's no we're not a digital business at all.
29:44
So um yeah the inventory part is really really challenging so matching supply and demand has just been a very difficult and >> so you've had times in the company where you ran out of supply correct? >> Oh constantly. Yeah.
29:58
Is this when you started I saw like you know Rob and everybody's been telling me about David Bar and then I saw like an ad and you were like selling like cod or something. >> Yeah.
30:07
>> Is that as a result of the fact that you ran out of supply? What happened there?
30:11
>> The story of COD was we're creating our website and we're doing a comparison table and the one metric we think is really important is how many of your calories are coming from protein.
30:26
And on this chart, we were number one.
30:28
And we were number one on everything.
30:29
And and like for me, my investor influence, anything where I see a chart where it's all number one, I'm like, it's [ __ ] So we were like, all right, well, we need to find something that's number one.
30:38
What has a better protein to calorie ratio than our gold product?
30:42
And the only thing we found was boiled cod.
30:44
And so in our comparison chart, we put boiled cod number one and David number two and just left it there as like a dorky sort of comparison.
30:52
Um, and why it worked is like the justosition between a our bar and a cod is like signals convenience.
30:58
It signals value and like cod's pretty unappetizing.
31:03
And then we're halfway through the our first year and I was like, you know, it's like it's like deja dja vu for me.
31:08
I'm like, this is super boring.
31:11
Like another another flavor, another I'm like, we need to do something bold.
31:15
And so we're like, let's actually sell cod and not like a stunt, like actually seriously sell fish.
31:19
And so we did this foiled cod campaign and everyone's like and it was funny because it was like pain let me yeah [laughter] it was like got in the frozen business and it's like back to our brand values like it was actually a very intelligent thing because it had centered the conversation around protein to calorie ratio.
31:39
So but did it in a way that wasn't sort of like pro like like right on the nose.
31:44
It was like a little bit of a riddle and it's like $55 frozen cod online like no one really wants that.
31:48
So we didn't have product market fit, but it functioned as a really great communication tool.
31:55
>> So creating a product for marketing benefits.
31:57
>> Yeah, we call it product as market. I'm not giving up on it.
32:00
Like we're going to keep we're going to keep going.
32:03
We're going to keep going on COD until we get product market fit.
32:07
>> I don't think [laughter] I don't think you will, man.
32:10
>> I It's funny cuz if you look at our website, it's like protein bars, bronze and gold, pints, frozen ice cream, and then there's like RTDs and there's like [ __ ] fish [laughter] and it's like it's weird.
32:21
It's it's weird, but like the whole food space is so [ __ ] boring to be honest.
32:27
It's like they all say the same [ __ ] They all do the same things.
32:30
And so being a second time, I just like we got to have some fun with it. Okay.
32:36
So, that was not in response to to supply issues because there was no demand for this frozen cod so far. >> Yeah. Yeah.
32:44
No, it was it happened to work at the same time we were out of stock on some things, but no, it was independent. >> Okay.
32:51
So, let's go back to when I interrupted you because you started talking about pain.
32:54
You said talk about building a masterpiece.
32:56
What were you going to say there?
33:00
Oh, it requires tons of discipline and intelligence and it's done over time and that's really what the brand Dave is about is like finish your masterpiece and everyone tap into everyone's inner inner excellence.
33:11
>> But how do you apply it to building your company though?
33:14
>> Well, I think I start with like the [ __ ] where what is a company?
33:15
So our strategy there's like two fundamental things in a company.
33:21
People it's all about people as cliche as it is.
33:25
And and I think about the organization as a product.
33:27
So my focus is all about that.
33:29
And then the second piece is product and mastery of the product.
33:34
And when I think of product, I think of brand and product is the same thing.
33:37
Like the product is just the raw thing and then [snorts] the brand is like what it wears like the exterior piece.
33:43
But if you try to look at the organization as a product, a company is just a group of people aligned towards the mission.
33:50
So if that's the most important thing, like what actions does a company do to like make sure that it's done?
33:55
So for for us when I think of mastery is like we have four processes in the company that ensure our organization is is is done right um and and culture is lived.
34:05
So if people are everything who you select is the most important thing who you select into the organization how do you train and onboard them three how do you select the ones to get promoted and and and and rewarded and then how do you get the terminate the ones that shouldn't be there.
34:26
So those four processes are really critical to building the organization and scaling it.
34:31
And so we spend a lot of our time refining our hiring process.
34:36
Training and onboarding is mission critical and then promotion as well, rewarding the right behaviors and then firing.
34:43
And then those are all organized around our value system which is the best way to align a group of people to make sure the right behaviors are matching what we want.
34:52
>> What are the behaviors that you want?
34:54
You want truth seekers, people who are have courage to seek truth. That's mission critical.
34:58
You don't want biases in place.
35:00
[snorts] Foundational would be humility, which is I define as the freedom of pride and arrogance.
35:08
So humility is really foundational.
35:11
And and it shows up like intellectually be like, I don't know what I'm doing. I need help.
35:14
Like I don't want to cover your ass culture where people are like, I have this data, therefore my decision's good.
35:20
like that's not really productive. Say more about that.
35:24
You'll get people from big corporate America come in and then they will generate a bunch of data surveys or whatever to prove their experiment or um cover their ass if the experiment goes wrong. It's like fake work.
35:41
>> It's performative in a way like I'm just doing this to cover my ass versus focusing on the experiment and and not worrying about covering your ass.
35:50
Entrepreneurship is a very important value of the company as well and that's like so anti- entrep like to any activity to like any performative activity and fearing of failure is like the opposite of entrepreneurship.
36:02
You just can't have that as a company scales and so you get a lot of people coming from different corporate environments that have that like just like protect their job.
36:10
Are you able to recruit from other food companies because like you're so different?
36:17
Most of these these companies haven't been founder led in I don't know a half century if not longer. >> Yeah.
36:22
Um we can and we do there's a lot of good experience they have.
36:24
You just sort of have to baptize them when they come in.
36:27
So that's where the onboarding process is really critical. >> You baptize them. Yeah. >> What does that mean?
36:33
>> You just have to teach them new beliefs, new values.
36:34
Um if you just sort of throw them in, they're just going to take what they know and apply it.
36:38
Um and so you really want to have them assimilate to the culture in a way and so a very thoughtful onboarding process where you learn the values of the company.
36:49
You learn entrepreneurship. You know we pack boxes. You learn humility.
36:52
You learn all these things. Um is really critical.
36:56
>> Are the most talented people in your company the ones with no experience though?
37:00
>> The most talented people in our company are former founders. Say more about this.
37:04
convincing a founder to like not do their thing to join um a greater company is a really strong signal of the opportunity we have ahead.
37:17
Basically, I would position it as like this is a platform for you to go do your thing.
37:21
You can do your thing with amazing technology.
37:22
You can do your thing with resources and you don't have to deal with the [ __ ] of raising money, all the bureaucracy that comes with the different stakeholders.
37:33
And I think you see this in AI where all the like a lot of founder talent goes to those platforms convincing them to join a founder companies um how without bureaucracy and and and for them to be able to fulfill their their vision is >> Did you specifically target founders? >> Yeah, for sure.
37:50
Because they have agency, they have courage, they have humility. Yeah.
37:57
And they're not ruined by corporate America or school. School ruins you too.
38:05
You have to follow procedures.
38:05
You're not thinking it's out of the box.
38:06
You're following a playbook.
38:08
Like there's no playbook in entrepreneurship.
38:09
You have to like think from first principles.
38:13
Understand the fundamentals and [ __ ] just go. >> Yeah.
38:16
We just had Luca Ferrari on this and you know he started this crazy company called Bending Spoons.
38:20
He's doing it from Milan.
38:21
Not exactly like a startup hub.
38:23
And he's talking about being isolated was super um valuable to him because he just did not he can't even copy the startup mantras because he doesn't know them.
38:30
he's like immune to them.
38:32
>> And his uh point was just like he doesn't he prefers young graduates or even people that didn't graduate to overexperience.
38:39
He's just like, I don't want your bad experience.
38:41
Like I know what we're doing.
38:42
Let's just take >> high agency young smart people that want it really badly.
38:46
And I think he said he got something like 800,000 applications last year for like 350 positions cuz he's in markets where there's there's a lot of there's smart people everywhere.
38:55
There's no great jobs for them.
38:55
Their economy is terrible. >> Yeah.
38:58
>> And he's just like, I'm just optimizing for this.
38:59
And then I'll come in and indoctrinate them into how we're running the business, which is completely different than school or a bad or a company that's like a mediocre company. >> Yeah. Yeah.
39:06
Because the thing with experience is like really valuable, but there's a consequence to it where you'll you'll naturally reason through your through analogy or reason through your experience, which can be the right call, but you're not going to ask the dumb question or naturally think through first principles because you've already done it.
39:26
So you're just going to move faster through through through through leaning on your experience.
39:30
And like for me personally, I started a company with no experience really.
39:35
You know, I funly don't think it's that important if you're have good reasoning skills and have the right ability to learn.
39:41
Um so the best is like some inexperience I find and then like some damage like some chip on shoulder.
39:52
Like there are individuals in our company that you can't compete with them. They're not giving up.
39:59
They have something to prove and like those are the most powerful people to get do you want to organize around. Tell me more about them.
40:08
They just got like it's all child [ __ ] up in their childhood.
40:12
You can't you know what I mean?
40:12
Like I there's some you know there's one kid in our team like I can't compete.
40:16
I get I he just he's going to die before he fails.
40:21
and uh he didn't have a comfortable life and it's like a really really like this is this is different for him.
40:27
So you want many of those people but like too many probably break things.
40:31
So you're like in general you want like a balance of like those crazy chip on shoulder you know some some people to balance out the team that are very rational and pragmatic and more conservative.
40:42
Like you want a good team design, but the people driving the company are usually those maniacs that have a chip on their shoulder, high agency, and more entrepreneurial.
40:53
>> Was this person happen to be a former founder? >> Yeah. Mhm.
40:57
>> How long did it take you to recruit them?
40:59
>> Well, when we bought EBG, he was a a victim of us acquiring that. Um, >> a victim?
41:06
>> Yeah, because we bought up all the supply.
41:07
So, he was a customer of the the the Apogee business.
41:10
So recruited him to join us and do it here.
41:15
>> Victim, I love that you just said that.
41:17
Okay, so let's let's get let's get into this because this is one of the um again I've been hearing stories about you for a long time and then this is the story that other founders repeat so much that's very like Rockefelleresque. Explain what that is. You what e what is it? >> Apogee. >> Okay.
41:32
>> So in um March of 20 >> Don't go to the acquisition yet.
41:36
Talk about the fact what what this thing does, why it was important to your business.
41:40
And then we're going to go to the fact that you victimized everybody else.
41:46
>> Epig makes EPG um sterified peroxilated glycerol.
41:52
Uh it basically it's a modified triglyceride.
41:55
So olive oil is a triglyceride.
41:57
So triglyceride has three fatty acids attached to a glycerol backbone.
42:03
Your body can't digest this unless lipase comes and clips these free these uh fatty acids off.
42:08
What the company did is they figured if they can lock these fatty acids in lipase can't break it down.
42:16
And um so what that means is you can have the taste and mouth feel of fat without the caloric the metabolic impact.
42:25
Why that's a huge innovation is because most of the calories in food are coming from fat.
42:32
It's they're twice as much as protein and carbohydrate.
42:33
and carbohydrate. technology was naturally misunderstood like most food technology and so it was sitting there and it's like this it's it's really amazing you can like have your your cake and and and and not have the caloric consequences so think of it as like
42:47
highintensity sweeteners like stevia monk fruit that sort of level of innovation so anyway we were using it for David and then we were buying we were like 90% of the company's um sales and then like all paths led to like litigation So [clears throat] you were >> this is a patented technology, correct? So you had one source where you could
43:08
So you had one source where you could buy it from. >> Yes.
43:11
>> You just said you were 90% of this company's overall sales, but there's a handful of other companies that saw that same opportunity when you use this into their product. >> Okay. >> Yeah.
43:20
So there we started like and the company was struggling like a bunch of >> their company not. Yeah.
43:24
Like a bunch of cats and dogs trying to like make it work and it's hard to work with.
43:28
It's not like it's it takes requires good product development skills.
43:31
But we were 90% of the of their available supply and >> and you'd be in a bad position if for whatever reason that company went under or they that cut you off. >> We'd be dead. >> Okay.
43:45
>> And then eventually we became like 150% of their supply, meaning like they couldn't supply our needs.
43:48
So anyway, as soon as I started the company and we were using the ingredient, my whole just like this is a nasty dependency.
43:55
And on top of it, it was run by like older gentlemen, mostly lawyers.
44:01
So, you know how that is.
44:03
Like lawyers running companies is not good.
44:05
I'm sitting there like, "All right, either they're going to kill us, this is going to end in litigation, extortion, or we're going to buy them."
44:14
But I was like, all my attention was like making sure either we buy them or something.
44:20
And then in February, basically 6 months into the company, they came to us like, "Hey, you guys are killing it.
44:27
How about you take it over?"
44:29
And of course, I'm like, "Let me think about it for a second."
44:33
[laughter] But um so negotiated and it was an obvious deal.
44:39
Like these food companies need to be vertically integrated.
44:40
Like if you're out there making a food ingredient and you're trying to sell to a big food company, it's this hell.
44:46
Like because the food company like well you don't have enough supply to meet our demand and then you're like well I don't have enough demand to generate supply and then it's too expensive and on top of it you're going to like well I need redundancy I need two suppliers.
45:01
Well I have the IP I can't do that.
45:02
So vert vertical integration like is makes the most sense.
45:08
So we >> and they could not vertically integrate.
45:10
>> They didn't have a route to market. Yeah.
45:11
>> So they essentially just bought this patent as a way to make money.
45:12
This is not actually real.
45:15
>> Well they developed it. Yeah.
45:15
They developed the process.
45:16
um and invested in it and the entrepre the founder is amazing.
45:20
It just it required so much cash that it just eventually got diluted for the lawyer's takeover.
45:24
And it just made sense for both parties to like merge and acquire.
45:28
And so we did a half a deal where we bought half the company and then uh or we bought the whole company but half equity, half cash.
45:35
Um and then we got in a situation where it's like, "All right, David's growing well above our forecast."
45:39
And then so we were 150% of their supply and at the end of the day there's all these like customers that had no supply agreement.
45:51
Honestly, their businesses weren't like going anywhere.
45:53
And so if you didn't have a supply agreement, you're just not going to get supply.
45:57
And by the way, me with David, the first thing I did when we started was negotiating a supply agreement with them.
46:05
Prior to the acquisition, we had a supply agreement that was good around change of control, that most favored nations on price, most favored nation on inventory.
46:13
So any inventory that was available was ours.
46:15
How did you know to do that?
46:17
When you have a dependency like that, you just got to make sure you're covered.
46:20
Even if the deal didn't go through, you'd have all the supply anyway.
46:23
Like we're we're the elephant in the room with the customer.
46:26
If you didn't have a supply agreement, you're out of luck.
46:29
So the way it was reported or talked about was there's this very important patentable ingredient he needed. He was using most of it.
46:38
There was these other companies that also used it that he was technically competing with.
46:44
He buys the company and shuts off their supply. >> Yeah.
46:49
>> But I didn't hear the second half of the story that then I also recruited from the people that I just copied. >> Yeah.
46:54
>> You got a lawsuit or something over this, right?
46:56
>> You got an antitrust claim and lawsuit. Yeah. Is that still ongoing?
47:00
>> Was dismissed three times cuz like for that lawsuit for that lawsuit to function or like for them to actually have any merit would mean like it would be like a landmark case in intellectual property.
47:10
The big lesson which I think you've had Lulu on which if I had Lulu in my pocket we would have managed the comms differently.
47:16
Like we didn't we just like one we let Apogee manage the comms a little bit and we just did a terrible job communicating.
47:24
Did you communicate at all?
47:26
communicate at all? there was a a notice standing out of the acquisition and that if you don't have a supply agreement you're there will be no um supply but like that comms I could have done better like I could have I could have done it with more compassion and like called the entrepreneurs or could have done it differently
47:44
>> in what way though compassion doesn't seem to be one of your personal traits >> I think it is I think compassion is important um >> do you have it >> yeah yeah yeah to be a good leader >> show it to me >> hiding where are you hiding I just like I I I just don't have sympathy for like I don't have sympathy for stupidity. I
48:00
I don't have sympathy for incompetence really.
48:04
Like it was so obvious that if you're going to get into it, if you're going to use an ingredient that has a single source, you better make sure you have a supply agreement. It's like fundamental.
48:18
This goes back to something that was like second nature to you that you don't even feel special.
48:21
Like remember at the beginning of conversation, you're like, "Okay, well yeah, I'm going to I got all this money. I'm going to chill.
48:25
I'm going to find a wife, have some babies, and then I'll invest in the side.
48:30
Obviously, you're an entrepreneur, so it's like life and death for you.
48:31
You'll take it very seriously.
48:32
You start cutting checks into this company's like, "What is this guy doing?" >> Yeah.
48:37
>> You didn't know how rare you were. >> Yeah. I know. Totally.
48:40
>> So, same situation here.
48:40
How many other companies are involved where buying the same ingredient? >> Three. Four. So, it's like Yeah.
48:44
And their response was like, "Well, I didn't know I couldn't I didn't know I that was an option."
48:50
It's like, "What the [ __ ] [laughter] What are you doing all day?"
48:52
Like honestly, I found one of my all-time favorite quotes when I was reading the book 0ero to1.
48:59
The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places."
49:05
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50:02
>> Is this why you had to raise money? Because >> Yeah. Yeah.
50:04
>> So your first company you did like a RX was like a friends and family loan.
50:08
What was the >> My dad and my partner's mom guaranteed a line of credit. >> A line of credit.
50:14
But no typical venture capital. Okay.
50:16
What did you start Dave with?
50:18
Did you raise money right away?
50:20
Did you put your own money in? What did you do?
50:21
>> Yeah, I put 2 million of my own in as like whatever preede and then that was enough to get us to launch and then launch we raise uh eight for working capital just to survive.
50:32
Why not just put up the yourself since you already got it in your pocket?
50:37
>> Yeah, because I wanted to bring in um some people have been very good to me.
50:42
So, Valor Equity Partners uh Antonio and John have just been really supportive and I I like how they operate like their name is Valor.
50:50
to take you like they're pretty intense >> outside of Valor.
50:52
It wasn't like typical investors. >> No. No. >> Okay.
50:55
So, friends and and things like that. >> Some small friends. >> Yeah.
50:58
>> And then >> and then I was like, we're done. >> All right.
51:02
Like we don't >> Why was that your initial reaction?
51:05
>> Because I don't want to spend time talking to investors or fundraising.
51:07
I think in C in consumer packaged goods, the P&L should work pretty quickly.
51:11
Unit economics should make sense.
51:13
So, you should be really capital efficient.
51:15
you should not be raising a lot of money until unless you're going to acquire a company or like do what we're doing.
51:20
So that wasn't like on the table in the beginning.
51:23
So I'm just focused on the business, not thinking about raising more money.
51:28
So I I thought that was like that's it.
51:30
That's the only capital in and then we had product market fit like crazy and it got bigger and then I need to raise money to find out how to sell fish online. >> Yeah, exactly. Well, that was funny.
51:41
Like, so so we eventually raised around to finance the acquisition and we we turned out we did need more money on the balance sheet.
51:47
>> Okay, hold on before we get there.
51:47
You raised how much money to do the acquisition? >> We raised 85.
51:54
>> And who'd you raise it from? >> Green Oaks and Valor.
51:56
>> Okay, we need to talk about So Neil made a I'm friends with Neil.
51:58
I talked to him on the phone all the time.
52:01
I talked to him about you like I don't know like two weeks ago and he's got hilarious stories about you that I'm going to bring up on the podcast too.
52:06
But you need to explain I like why did you choose him?
52:12
>> Because you said I'm not going to put any more money in.
52:13
You're a second time founder.
52:15
You made a boatload of money before.
52:16
You have all these other investors chasing you.
52:17
You don't even like talking to them.
52:19
You were kind of like and this is my own characterization kind of like not even rude.
52:23
You're just like, "Leave me the [ __ ] alone. I'm building my company. Go away." >> Yeah.
52:28
>> But Neil's been and Green Oaks was chasing you. Right.
52:29
So explain how you wind up selecting Neil and Green Oaks.
52:33
the investor class believes the very very high status and they always reach out with an entitlement to like take my time.
52:40
And so I I I've always viewed it as like I'm not giving you my time.
52:47
We're not I will be respectful but like I don't just take investor calls. I just don't do it.
52:51
I think it's a bad use of time.
52:53
And plus I have my own capital so I was like I'll finance it. [ __ ] it.
52:57
That's a great position to be in by the way and have I love it, right?
53:00
Like I don't need it anything.
53:01
So anyway, my friend Chad Buyers was like, "Hey, my buddy Neil wants to reach out to you." I'm like, "For what?"
53:08
And he's like, [laughter] he's like, "Oh, he's an investor."
53:11
And I'm like, and I'm like, "Cool.
53:13
I'm not I'm not taking investor calls right now."
53:18
With all due respect, so I passed.
53:21
And then two weeks later, Chad says, "Hey, I think you should take their time."
53:25
I'm like, "All right, for you, Chad, I'll do that."
53:28
And then I got on the phone and I was like, I'm just like really focused.
53:32
So I'm like, "Hey, listen.
53:33
Like this is not a tech company.
53:36
Like the math should work really quickly.
53:38
Like we should be like have profitable sales.
53:41
Like that's how we're going to grow. It's profitable sales."
53:43
And I'm like line of credit.
53:43
And they're like, "Great.
53:46
Well, if there's any opportunity that comes along, let us know." I'm like, "Great. We'll do."
53:50
So then time goes on, we're just heads down.
53:55
And then I start getting messages from former RXR employees where a firm was soliciting them for like offering them to pay them for reviewing or reviewing me.
54:08
And it's not just one, it's like 20 people I haven't talked to in like 5 years be like, "Hey, Peter, should I take the call?"
54:13
And I'm like, "Yeah, take the call."
54:16
>> So, basically what they're saying is, "We'll pay you $1,000 if you get on the phone and tell us about your experience." >> Yes. With Peter.
54:21
Like, what kind of leader was he?
54:22
And I'm like, "Yeah, take their money." I had no idea.
54:23
Um, and I thought I was going through like the litigation, so I was like, "Oh, they're just like trying to [ __ ] find dirt."
54:30
So, I had no idea it was an investor.
54:32
And then I'm like, "All right."
54:32
Um, and then the Apogee deal happens, meaning I the chairman of Epo comes to me and we we say, "Hey, let's figure out a deal."
54:42
So then I reach back out to Neil.
54:42
I'm like, "Hey, this is happening.
54:44
You guys want to take a look?"
54:46
And of course reach out to Valor like, "Hey, this is happening.
54:49
We're going to need probably some money for this."
54:51
Well, this is why I respect Kino so much is like even me kind of being rude to them.
54:55
They had like put resources to do diligence on me and in the best way possible which is like diligenting my leadership which is actually the I think the most fundamental thing for this investment to work.
55:07
It's like you got to make sure is Peter the right right type of leader.
55:10
They already done that when there was no deal on the table.
55:12
Not only there was no deal on the table, you already told them there won't be a deal.
55:15
>> When I found out it was them, I was like, "Oh wow, these guys are like they're good."
55:18
And I didn't do an auction.
55:20
I I I want the right people on the cap table.
55:24
Um so it was and Green Oaks won just out of my respect for their approach.
55:29
Kept it like with just friends I know.
55:31
Um and then Valor had a conflict of interest because they're in the deal so they couldn't do M&A cuz the deal was to finance the other company.
55:40
So uh Green Oaks led it and um yeah they're they're amazing.
55:43
Um very lucky that Chad connected us.
55:45
So before I tell you the story that he told me about you, you just said I didn't do an auction.
55:52
Why is it that important to not do an auction when you're fundraising?
55:55
>> The reason why I didn't want to do an auction is one, we didn't need a lot of money. So it's very important.
55:59
If we needed a lot a lot of money, I think it's different.
56:04
But we only needed like one or two players.
56:07
We were growing like crazy and I did not want to consume the company's resources in a way that would harm our our operating our business.
56:15
So, I'm very sensitive to the resources an auction would take.
56:20
>> What are the resources an auction would take?
56:22
>> Well, you got to like run tons of management meetings.
56:23
You have to constantly answer diligence questions.
56:27
Like, it's a lot of time.
56:27
So, >> your your whole thing keeps going back to like you're you're you're intolerant of wasting any time. >> Yeah.
56:32
You've said this thing in like half a dozen ways, like in subtle ways since we've had this conversation. Yeah.
56:39
You're obsessed with time. >> Yeah.
56:40
So, if you think of it as like the analogy is like aerodynamic.
56:41
I want to be super aerodynamic through things.
56:43
Um, and then like my goal is and like also as like being on the other side as an investor, like I want to maximize value, but not really.
56:53
Like if you want to if I want to maximize value, I would run an auction and I wouldn't care, but I I don't really want I want to make sure my the investors make money and they're they're good with the underwriting.
57:02
So like you want to walk to the line where it's like rich but not too rich, right?
57:09
Like you can you can actually if I'm on the other side, I can underwrite it pretty pretty easily.
57:12
I want to make sure all my stakeholders make money and that's my approach.
57:16
So the con of that is like maybe we could have gotten an extra 100 million valuation. I don't know. But I don't really care.
57:22
Like I want to make sure that everyone feels good.
57:25
And then >> why do you not really care? And I agree with this.
57:27
I'm just I want you I want to get your thinking out. >> What's like 2%? I it doesn't matter. It just doesn't matter.
57:36
>> And like I care about money, but I don't really care about that type of money.
57:37
I really I care about how the people on the team feel and are excited and and aligned.
57:42
And I've seen I I've seen on the other side of the table and founders just prioritize enterprise value that early and it's just [ __ ] gross. Why is it gross? Cuz it's not about that.
57:56
Like it's about in this stage it's it's about the right people and it's focusing on a mission.
58:04
It's not about maximizing enterprise value at this stage.
58:06
And if you're good, you're gonna wind up with the money anyways.
58:09
It's just gonna take over.
58:10
>> And like we got a good valuation.
58:10
We got fair and but I I I don't want an investor feeling like fine, we'll do it, but I disagree.
58:17
>> So you said if you're on the other side, you could underwrite it.
58:19
So essentially, you want to do a deal where like if you were Neil, you would take the like that's a good deal.
58:23
You should make that investment. >> Yeah. And that's like Exactly.
58:24
And that's how I underwrite it.
58:26
cuz I'm I'm I'm operating as a CEO and then I'm operating as an investor too >> cuz I'm participating in all this stuff as well, >> which is a conflict, but I'm generally trying to like bifrocate like all right, Peter's the CEO, but he's also an investor.
58:39
>> You mean you're putting more of your own personal money into the company?
58:40
Why would that be a conflict?
58:43
>> Well, because if >> I could like lower the valuation for me like >> Okay. Yeah.
58:48
>> You would self-s serve.
58:48
You're trying to do what's best for the company, not just Yeah.
58:51
I read Michael Bloomberg's autobiography for the first time like 5 years ago and then I knew he has one of the most profitable private companies in the world. Yeah.
58:58
And I've heard crazy rumors uh that we don't even have to get into which is like way richer than even everybody knows he's really rich but I heard he's like orders of magnitude richer than you've has been reported.
59:08
And he raised I think it was Mel Lynch if I remember correctly >> 30 million for 30% of the company.
59:12
Then he winds up buying that first like 10% slug back to them from from them like 10 years later and whatever it was like 200 million he paid for that right and then he bought the other 20% I think in 2008 for like 4.
59:26
5 billion so if you look at it like one of the best investments he ever made was buying back his shares right and essentially now being owning all of his company I think he owns all of it or like 90% something like that and Marilyn Lynch's point was like well we paid you know 30 million in like 1979 and by 2008 we made 4.
59:42
7 seven billion on it or whatever the case is.
59:44
Could you see an example a future because I do think you are kind of like uh obsessed with control.
59:51
Anybody's obsessed with like quality and control and everything else is like tends to I could see you wanting to like buy back the shares at one point.
1:00:00
The opportunity presented itself for sure.
1:00:06
The governance is set up in a way where I have that.
1:00:07
So as long as that's there but yeah like I I don't >> governance is set up that you have control. >> Yeah. Yeah.
1:00:12
And and I'm good with power, so I don't abuse it.
1:00:17
>> Are you going to continue to raise money?
1:00:18
>> I mean, if we have a need, but right now we don't.
1:00:20
>> But in every round, you put in more money of your own.
1:00:21
Is that what you >> I should. Yeah. >> Okay. >> Oh, yeah. >> SW a little. Yeah.
1:00:25
You got to >> The [ __ ] else am I going to do? [laughter] >> All right.
1:00:31
So, I get on the u I'm on the phone with Neil and uh he was like Peter's like one of my favorite kind of founders, like the founders he likes to dive, which is you you you um I kind of like hinted at earlier.
1:00:41
It's just like nothing's that you wake up and it's like you don't focus on what's good.
1:00:44
It's like everything is just not good enough and all you see are the kind of the flaws in your business.
1:00:48
You kind of attack those flaws trying to make your business stronger over time.
1:00:50
Again, very common in history entrepreneurship.
1:00:52
So, I guess he like came to visit you and it was him and somebody else and it was you and a bunch of people that work with you and you were doing like taste tests or whatever of maybe new products or existing products and like what do you guys think? Like this is awesome. And you go wrong.
1:01:06
This is [ __ ] And then he goes, he said, "Now you said it was wrong, that everything was shit."
1:01:10
And then he listed all the deficiencies and the things that he wanted to to to fix.
1:01:17
Running a business is like it's like a river.
1:01:20
As long as it's flowing, great.
1:01:23
But if there's something blocking that flow, you need to [ __ ] fix it.
1:01:25
Like if something's in the way, I ruminate on it to the point where I can't sleep that I have to fix it so I can sleep.
1:01:34
I ruminate on the problems.
1:01:40
So they just like nag at me.
1:01:40
This is a actually a problem I have.
1:01:42
A flaw flaw of my leadership tile is I don't acknowledge the wins or success.
1:01:47
I'm only preoccupied about what's wrong. So I'm working on that.
1:01:53
But I actually outsource that to people internally to like, hey, make sure we're like saying, you know, like our birthday is tomorrow. I [ __ ] hate birthdays.
1:01:59
But our birthday's tomorrow.
1:02:02
So I'm like, "Please do something so we can acknowledge our birthday."
1:02:05
But like I don't do that.
1:02:08
So I outsource it a bit internally.
1:02:10
But yeah, it's cuz if you just fix that, I don't know.
1:02:12
The approach makes sense. >> Yeah.
1:02:15
It's almost like what Elon does.
1:02:18
So we just had Zack Dell on the podcast and Antonio's on his board and he says the first I think it's still to this day like the first two years every conversation that Zack Dell had with Antonio is it gracias? >> Yeah.
1:02:30
>> Yeah. uh Antonio Gracias is hey Zach how's it going good what's your bottleneck >> he wouldn't he refused to talk about anything and he's like what is the bottleneck what is the in way of a critical path and then we're just going to talk about this the entire conversation is this and then the next thing
1:02:45
>> that as result okay what's the next bottleneck and it's just over and over and over again just relentless focus on the bottleneck >> yeah yeah I think it's like all right my job is to scan the holistic picture of the business and react to the problems s and then go fix them and then get the [ __ ] out of the way. Just like constant
1:03:03
Just like constant confronting the problems.
1:03:05
I I think this is like almost all the elite entrepreneurs have this exact same mentality where it's like you can even go to like Buffett and Mer were talking about this when they were talking about people operating all the subsidiaries of Birkshshire.
1:03:16
It's just like just tell us the bad news cuz the good news >> Exactly.
1:03:19
That's like the river running. I don't good. >> Tell me the bad news. >> Exactly.
1:03:23
um Tony Shu from Door Dash who like I want to get him back on the show as soon as possible because I can't explain why but like you talk to him I think he's like 4142 and you just sit there and you know if you actually look it's not he's like he's not just a delivery business if that's not what this guy's doing.
1:03:37
this guy's doing. He's like gives you like young Jeff Bezos vibes and like he's chasing after something much larger that you can't he sees but you can't really see at the moment >> and he he has he said he has this
1:03:48
problem too where it's like you know they hit a milestone they do some kind of revenue or whatever the case is and he's like I might go out to dinner but in many cases I don't even do that and it's like okay what's I'm on to the next thing the very next day. Yeah, to say
1:03:58
Yeah, to say that like our export, I didn't do anything. That deal happened. I just the next day.
1:04:06
>> You bought a house in Miami, looked for a wife, though.
1:04:07
>> That was a year and a half later.
1:04:09
[laughter] >> Yeah, I did do that at some point.
1:04:13
>> So, what is the thing that you're trying to unlock right now that you see blocking you?
1:04:16
So we've reorganized the group to be a hybrid organization where we have David as a business unit which has its sales, marketing, supply, finance and we have hall pass another BU.
1:04:30
So we have two we're two BU and we're about to have a third business unit all operating semi-autonomously and then we have at the Medici level sort of shared services.
1:04:42
Why >> why name the company Medici? >> I love history.
1:04:45
And it reflects how we operate organizationally.
1:04:48
So the Medici they created the conditions for the renaissance to happen.
1:04:55
They weren't the necessarily the doers.
1:04:57
So they created the conditions.
1:05:00
They identified Michelangelo, Donatello, Galileo.
1:05:04
And it's a little bit of the analogy of what our the people that work at Medici at the company.
1:05:09
They create the conditions for the business units to thrive and flourish.
1:05:11
And they're the artists and scientists.
1:05:13
So at Medici is like it's like the money the law like the things that are agnostic live at there and then the artists and scientists the people actually doing the work are at the business unit level.
1:05:24
So the name suited how we operate.
1:05:25
Medici in our company creates the conditions for the business unit leaders and all the operators to go execute what they need to >> say more about the structure.
1:05:34
So you have all these business you just said they operate semi-autonomously.
1:05:36
Yeah, 75 tells me I mean there are some centralized services but they more or less are their own business unit that have agency and autonomy run their own P&L and go do versus like a large CPG are typically centralized.
1:05:48
So we're it's a decentralized approach because speed and agility is the main objective because you look at it and be like all right on the your payroll is too high like it's quite inefficient on a P&L basis because you have more you're like double you have double sales people >> duplication of efforts >> but to me that's the main design objective is speed and so if speed you're designing for speed you're going to pay extra people to do that.
1:06:14
>> Me and Rob had this exact same conversation yesterday. Yeah, speed's important.
1:06:18
Like, it's always been important and it's really important, especially in our market we're in where we're dealing with people with mega mega scale.
1:06:24
Our ability to bring product to market fast is is I don't want to lose that.
1:06:29
And honestly, if we lose that, I'm like, [snorts] I'm done.
1:06:33
>> What do you mean you're done?
1:06:34
>> Like, if we lose our entrepreneurial and I say this to the company, like if we lose our values and the way we operate, our culture, I'm [ __ ] leaving.
1:06:41
>> Why did you just grit your teeth? >> Grit my teeth?
1:06:43
You just >> cuz it makes me angry cuz [laughter] like cuz it makes me angry.
1:06:46
I hate big fat stupid [ __ ] >> I hate big fat stupid things and that I don't want to be a big fat stupid company.
1:06:53
The problem is it's actually inevitable as you get bigger like the bure like my my job is to fight bureaucracy fight the [ __ ] >> It doesn't have to be.
1:07:01
I mean you even kind of stumbled upon or maybe not stumbled upon you were uh probably very intentional about the way you operated this.
1:07:07
I just did this episode of my other podcast founders about Henry Singleton and he read he he led one of the most successful conglomerates of all time.
1:07:13
In many cases a lot of the ideas that we ascribed to Buffett and Munger were actually things they learned from him and his whole thing is I think at the time the 70s he owned like 130 businesses 129 of them were profitable and essentially like they same thing they just ran they ran their own operations.
1:07:29
The only thing he centralized was um compensation and and uh capital allocation.
1:07:32
So >> you're on your own you're making cash.
1:07:35
I'm going to leave you alone.
1:07:36
Performance equals freedom. >> Yeah, exactly.
1:07:37
And then you just send your cash and then I make the capital allocation decisions for us.
1:07:41
>> So I don't think And he didn't have a big fat stupid ugly >> uh company.
1:07:45
So like it doesn't have to be that kind. >> No, no, I know.
1:07:48
But like the nature of these organiz the more people they want like nature pulls it in together.
1:07:53
Like the more people the more like it almost wants to be that a group of people.
1:07:58
wants to be that a group of people. I mean, Luca Ferrari just said the exact same thing because and >> you know he he buys these he acquires these companies and in some cases they have like hundreds of these are software companies so he's like how do they like how are you unprofitable margin business there is >> and it's like what are these 400 people
1:08:14
doing and in one case he bought a company that had 400 people he got it down to 20 and now went from losing money to it's a cash printing machine he's almost making every year in profit what the acquisition cost was originally >> but that was his whole thing he's like it's in human nature to add layers and complex And I think he said the company value of his company can raise their hand on the person. He's like you don't you
1:08:36
He's like you don't you can just raise your hand.
1:08:39
You don't have to say anything else but the person who wants to add this has to be the one in the company to justify it. >> Yep. So you got to fight it. >> Okay.
1:08:45
So you have the Medici level.
1:08:45
You have all these semi-autonomous business units.
1:08:48
How much power does the person running the individual business unit have? >> Quite a bit.
1:08:54
These are typically former founders. >> Yeah. Okay.
1:08:57
for either former founders or they have to be product leaders.
1:09:02
That's like a credential meaning they have to back to my like they have to pick up the phone to fix the product. They're the wrong guy.
1:09:07
So they have to be product first.
1:09:10
Ideally a founder or someone who has that those that experience but not necessarily um but product leaders. >> Okay.
1:09:19
Tell me more about the organization now.
1:09:20
So at Medici's product, cash people uh law regulatory. So like that sits there.
1:09:30
Um I sit there and we serve the BUS, right?
1:09:37
And then there's a lot of collaboration in general.
1:09:38
We're all in the same office.
1:09:39
There's a cross functional team at each BU.
1:09:42
So it's a supply and demand.
1:09:43
So, so demand is sales and marketing.
1:09:46
Demand is finance and um supply and and CPG it's very crossunctional.
1:09:50
So the or the typical business units are organized around sales which is working with retailers, marketing and that's really demand right? They generate demand.
1:10:03
Marketing can be mostly e-commerce but it's also all social digital and then there's the supply side which is supply chain which is end to end.
1:10:11
So raw materials to fulfillment and warehousing and then finance which is forecasting pricing and sort of finance is the referee.
1:10:19
So that that that makes that cross functional team runs the business.
1:10:23
>> Wait, what do you mean finances the referee?
1:10:25
>> Meaning they define the framework for pricing. They define the budget.
1:10:26
They're they're sort of the ones because there's inherently tension between supply and demand, right?
1:10:32
Like there's always a a healthy tension there.
1:10:35
the the finances referee in terms of they define the rules of the game and they ultimately run the P&L in my view.
1:10:44
>> Explain the tension between supply and demand.
1:10:46
>> Supply people are really driven by accuracy and efficiency.
1:10:53
Sales and marketing people are really more charismatic and want to generate demand and maybe that requires less accuracy.
1:11:01
So they have a conflict of interest sometimes because one just wants to grow as fast as possible.
1:11:05
The other one wants to make sure the supply is there appropriately and accurately.
1:11:12
>> I'm still not understanding though.
1:11:12
Say more about the accuracy.
1:11:13
You're using the term accuracy.
1:11:16
>> Why would someone be interested in supply chain?
1:11:17
Generally like to know what what you need.
1:11:19
Where is >> you're talking about the personality types. >> Personality types. Yes. Okay.
1:11:23
>> And their function is like to make sure what do we have? Where is it? When do we need it? How much do we have?
1:11:27
like and then sales is like I want to go win and often they will I'll kick their coverage or there will be issues and ultimately supply has to go fix those problems. >> Okay.
1:11:40
So how many business units do you currently have in DG? >> Uh 1 2 3 4.
1:11:44
You said something earlier uh that like I wanted you to expand on too.
1:11:50
You said it's very important for me to be aerodynamic as I go through things. >> Yeah.
1:11:55
I just like efficiency and simplicity like um I think the best design is the simplest design and just my my I think my nature.
1:12:05
So how does that manifest your nature manifest in the way you're building this business because it looks super complicated.
1:12:10
>> Um it is complicated but well one it's a very flat organization so there's not a lot of depth like I have like 25 direct reports.
1:12:20
have like 25 direct reports. What's interesting is I read this book on Jensen and Jensen has uh famously like 60 direct reports and a lot of people when that came out in the book and I think he's talked about this some interviews too they're like that's way too many like how could he do it like
1:12:33
well this guy's running the most valuable company in the world seems to be working for him how many direct reports is too many >> well I used to think that like seven or eight was the most you could have to really like develop and like give the right attention to like develop the best leaders possible. Now, I think the value of having
1:12:49
Now, I think the value of having somebody write reports is that it allows you to see a lot and it keeps the organization um it keeps me closer to the problems.
1:13:02
And what I tell people when my if they if they're reporting to me is like I I'm not going to manage or tell you what to do.
1:13:08
We're going to work together to set priorities, but like I'm going to expect you to like bring things to me.
1:13:12
I'm going to you need to bring the problems to me and we're going to figure out together.
1:13:17
But like I'm not going to be like managing your to-do list.
1:13:18
Like that's So it takes a certain type of leader like report to me.
1:13:22
Like I'm not going to manage them, but I'm going to lead them. Yeah.
1:13:25
So it requires like this leaders to have just better agency and autonomy if they're working with me versus a conventional organization which is like oh I only have eight direct reports.
1:13:35
Then you just get this very very stacked thing that like the hier the hierarchy gets too stacked and information doesn't flow as well.
1:13:42
Do you have a co-founder? >> Yeah.
1:13:47
Are you still working together?
1:13:48
>> No, he's no longer at the company. >> What happened?
1:13:53
>> He was really helpful in the beginning, but most founding teams never really scale to the to the promised land.
1:14:00
Like it's always pretty like the hardest thing in leadership is that the team that gets you started in the different life cycles usually is not the same group of people.
1:14:13
Um, so that's that's a true observation I've had.
1:14:16
>> The observation you had is the founding team, let's say there's two, three, four co-founders.
1:14:20
Usually there's actually one. >> Yeah.
1:14:23
>> It just takes time to reveal who the one is. >> Yeah.
1:14:27
>> It's the same exact thing. >> Yeah. Yeah.
1:14:28
>> We I talked about Adam Fugi earlier in Apple and I think he even said this on the podcast, you know, he wants to run a very strict and ruthless meritocracy. >> Yeah. Same way. >> Yeah.
1:14:38
And his whole thing was like, well, the co-founder that maybe had the skills to be the CTO at the beginning couldn't hang.
1:14:43
So, we had to literally like, and in many cases, they had a conversation.
1:14:47
Adam was the one driving it, but he was like, you see what's going on.
1:14:50
So, like, do you want what's best for the company or do you want to have like this fight?
1:14:53
And in many cases, if you just frame it like this is obviously best for the company, you see what's going on.
1:14:56
And like >> it's somewhat amicable. >> Mhm. Yeah.
1:15:00
And I don't like I don't like the co I don't like the founder co-founder titles because it implies some privilege.
1:15:06
Um it's inherently anti- u meocratic.
1:15:09
What do you mean you don't like the founder co the co-founder?
1:15:12
I just don't like what like a thought isn't a role. It's not a job. You never hire it.
1:15:19
So it doesn't have a role in the company.
1:15:21
So I think it's actually people abuse its power and I don't think it it should get special treatment. So like I don't use it.
1:15:32
I think it's an abuse of power. Everyone has a role.
1:15:35
Everyone has duties and either you do them well or you don't.
1:15:38
This is what's getting more and more interesting about me having more of these conversations is to start seeing the same similarities between the people because I mentioned Luca Ferrari earlier.
1:15:47
Uh Adam Fugi I mentioned a few times they both said the same thing like Luka Ferrari like we don't even like the the term founder in the company and there's like four founders of Benny like we all have the same job and that job is to do whatever is best for the company.
1:16:01
>> They don't use the title at all. >> Yeah.
1:16:02
I don't It's not on my It's on my signature.
1:16:05
>> So, you define your role as what? >> Chief executive.
1:16:10
>> And how do you think about that in like terms? You wake up every day. >> Yeah.
1:16:13
My kind of forever job description is the management team making sure they're performing, make [snorts] sure we get product market fit and continually get product market fit. Organizational health.
1:16:25
So, just like how is the culture? Is are people scared?
1:16:30
Are people like free and creative?
1:16:32
Are we living the values?
1:16:32
Can people recite the values? So culture.
1:16:34
And then four would be alignment of like strategy like are are we organizationally aligned?
1:16:44
Not on decisions but like does everyone understand where we're going, why we're going, and is everyone incentivized to go there?
1:16:48
Is the group of people moving in the right direction?
1:16:52
And then fifth would be cash or fundraising.
1:16:55
So those are like my forever.
1:16:55
And then I have one the what I like to call this is like founder mode but what I've always done is like I call it my main job is like reactionary leadership support.
1:17:08
So reactionary in the sense I literally react to it.
1:17:11
So fires or problems I get information it's very reactionary which is generally viewed as negative but like my job is to react to the problems.
1:17:17
So reactionary leadership support.
1:17:19
So the leadership is that I either have to drop what I'm doing or prioritize or reshuffle and then go in and assess, figure out, fix it, whether that's directly, indirectly or whatever.
1:17:34
Provide resources to shine a flashlight on it and then get the [ __ ] out of the way.
1:17:38
And I expect that on all leaders in the company like I call it reactionary leadership support.
1:17:43
I want to go back to this.
1:17:43
I think one of the most fascinating things about you is this uh like divine discontent.
1:17:50
This you wake up with this fierce competitive drive, but also I'm not going to call it unhappiness cuz I don't think that's the right word, but like this discontent of where you are and this constant desire to improve things every day.
1:18:02
When Travis from Uber came on, uh he he had like a warning because how old are you? >> 40. >> Okay.
1:18:09
So he's about 10 years older, right?
1:18:11
And he's like, "What you have to worry worry about is that you get so he's like the the act of entrepreneuring is just dealing with problems constantly."
1:18:21
>> And he's like, he says something like when a warrior fights too long, he might be too zen.
1:18:24
So he's like kind of like zen on the outside, but he's like so used to adversity and and like it doesn't bother him anymore, right?
1:18:30
And he's like worried that >> Yeah. He's numb. >> Exactly.
1:18:35
Numb is a great way to put it.
1:18:38
And the the point that he's making is like you want to wake up being bothered and not being used to adversity, not being not doesn't prevent you from acting, but you want to essentially react to it.
1:18:49
This is what your reactionary leadership what you just said there made me think of this.
1:18:52
So, how do you think about like what's actually going on inside of you >> emotionally?
1:18:57
Yeah, I do have a sensitivity um and get angry, but I harness it in the work, which is good.
1:19:06
I love the It's like a It's not a fair analogy, but I love like the I love the fight, so I seek it.
1:19:14
Um but I don't think I'm good at tapping into my emotions on the spot.
1:19:19
I think the building the pain tolerance is very good though to be able to handle it over long periods of time because if it if you are too sensitive and you react to it it in an affection in your sleep then you will break.
1:19:34
So I do think it's important to be able to like have that zen be the ability like get punched in the stomach and you're just chill with it.
1:19:43
But you yeah, you definitely can't lose the emotional response.
1:19:46
Like things don't bother me like they used to.
1:19:49
I'm getting better at it, but I still have that response if things aren't right.
1:19:55
But I imagine with Uber, he just got really really thick skinned about it to the point where everything was I don't know.
1:20:04
I don't know his experience, but I could see how that happened.
1:20:08
>> So what keeps you in it is you like to fight. >> Yeah. Yeah. I love conflict. healthy conflict.
1:20:14
But >> thanks for taking the time. This was awesome, man. Appreciate it.
1:20:19
>> I hope you enjoyed this episode.
1:20:19
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1:20:22
And make sure you listen to my other podcast, Founders, for almost a decade.
1:20:25
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1:20:33
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