He Built a $725 Million Company in 255 Days. Here's What You're Doing Wrong

just sitting there in the open. We're like, "Holy [ __ ] the product's so good, we got sued over it. It's so good, people don't believe it. It's so good. It tastes like it's 280 calories, but it only is $150."

That's Peter Rahal. He built RX Bar to a $600 million exit and is now aggressively scaling David, a brand valued at over a billion in under 2 years.

Every [ __ ] brand does some stupid thing. It doesn't move the needle. It's a waste of time. You got to find ideas that are not obvious, but true. It wasn't obvious to sell Cobb. It wasn't obvious to do a campaign in a big photo shoot. That wasn't obvious, but it was a really good idea.

We get into how he engineers breakout products, the viral marketing moves that makes David impossible to ignore and what no one tells you about getting sued multiple times.

Younger entrepreneurs just want to be really aggressive. That's a big mistake. What mountain are you climbing? It's your life's work, so you got to pick the right mountain. Guys, by the end of the episode, you guys are going to know exactly how Peter scaled and sold his company for $600 million and now is on another run with David Protein. 255 days in, he raises at a $725 million valuation. Stay at the end, you're going to hear about it all. I want to start with the lawsuits, though. Let's start with the first one, the calorie. Is David actually 150 calories?

Yeah, David's 150 calories.

Walk through it. Tell us how and why because the calories and the protein are out of control.

Yeah, so the plaintiffs that filed the case used an instrument called the balm calorimeter, which is simply a device that burns material and measures the energy out of it. And so that's how the unit of energy, a calorie, is measured. That is not how you measure certain foods for nutritional facts because the nutritional facts are a measurement of metabolic energy, not just energy broadly. Good examples like fiber, alulose, those have 0, 4, and 2 calories per gram instead of four. If you burn those in a balm calorimeter, you get four calories per gram. And so yeah, so they use the wrong device. And then we have an ingredient called EPG, which is this revolutionary fat replacer. It's a it's a triglyceride, so it has a lot of energy in it. And if you burn that with a balm calorimeter, it will show up as 9 calories per gram of fat. However, metabolically, the body does not pick it up as nine. That's why it's so special. It's why the David product is so special because it tastes like it's 280 calories, but but it's only 150. So, so they use the wrong device. And this is pretty common. Like the whole food industry uses more, it's based on a metabolic, not what you burn physically or literally. And a good example is like wood. If you were to like take wood, use a ball calorimeter, it will show some some amount of calories. However, if you were to chew wood and eat it, your body doesn't have the enzymes or process to to break that down and use it as energy. So yeah, a simple misunderstanding and the case is the case has been dropped.

Congrats.

Thank you.

A couple days before this, it got dropped. Love it.

It's top of April now.

And then and then the thing I wonder is like, why did this go so viral, right? Like at at RX Bar, my previous company, this has happened. It happens all the time in the food business. Like this is like a whole industry around class actions and things. But for us, it was a big deal. And I think it says something about how breakthrough the product is. And

as a multi-time founder, I'd love to know just for people out there that maybe on their first ride, what goes through your head when it just comes on your desk and or the email or a letter that you got the lawsuit.

Well, I yeah, I'm experienced. So, like when I first heard about like, oh, of course, not surprised. We knew this was going to happen because of of this groundbreaking technology that that is part of the territory. And then also if you measure through a palm calorimeter, not a metabolic chamber, like you're going to show up way over. So, we knew it. And then when I first, you know, was on my desk, I'm like, "Okay, great. We'll we're obviously we'll fight it." The thing different the second time is how different media is. So, like the way it happened was like, you know, some random Tuesday I'm like in a management meeting and then all of a sudden I'm like, it's gone viral somewhere because someone just lit off a class action lawsuit and then it just went crazy.

No, it's more the class action happened in January. It's more that a really funny content creator made a great video that went viral on TikTok and that virality caused media to pick it up. Everyone like picked it up, but the news had happened in January. So, so different. Like I think in 2015 if this happened, it would never gotten picked up. So, that's that's what's different second time. So, the good thing is we have an amazing team and we went right into action and second time founder, you just have to not listen to lawyers and go go communicate. You were telling me that off camera. I completely agree. Now it's a combination of intuition, LLMs, and maybe like 20% of the lawyer bill you used to play. Just dabble in there in the lawyer bill.

Do you think all press is good press?

No, I don't think it can't be true. Think about like people getting cancelled and stuff like Yeah, I don't think all press is good press because all all press is not true. Like the misinformation thing is like wild right now. So, no, I don't think it's all all

Let's back into the epo because u you guys bought that company and then there also was this kind of antitrust violation by a couple people that were using it. What's the story on that for people out there that that haven't heard it?

Yeah. So, when we started David, Epo was this amazing ingredient, amazing technology. It was sitting there in the open. We're like, "Holy shit." and then got really close to the company because like to me, my my view is like all paths were either to like us acquiring them, merging, or them being a problem because when you have a single source of a when you have that sort of dependency, it's a huge risk.

Bottleneck for scale.

Bottleneck for scale, just if something goes wrong, it's out of our control.

Pricing power.

Just yeah, it's just like nasty. You in as an entrepreneur, you want to identify dependencies and reduce the risk of those dependencies. So I got close to the and you know, they they wanted me to invest in it and I was like, "I'm not going to invest." And then as David took off, we got product market fit. They've been around and no one's really was successful with the ingredient. And one day they came to me and was like, "Hey, Peter, we got a crazy idea." They're like, "How about you take it over?" And

They came to you.

Yeah. Because it's really, really hard. So the problem with scaling a new ingredient is you have a chicken or the egg problem. So you create the ingredient, you go to market and you want to sell to large companies because they have the volume and they'll say, "Oh, it's very interesting, but you're the only one that makes it. It's too expensive and there's not enough supply to support our potential demand." And so there's not enough supply to support the demand and then there's not enough demand to support any sort of building of supply. So you actually these businesses really need to have a vertical integration.

You can't incrementally grow. You need to be vertically integrated and or have big supply. So then you could go to the people that actually would satiate the demand.

Yeah. So so that that problem is inevitable. So the way you do that is through your own vertical integrating, getting a product to market and scale. And they they are super aware of that. And so we we acquired them and merged. And then

Why didn't anybody come after these guys? Why didn't anybody else try and acquire them?

Well, they they there were a couple, they had some clients that had success with it. And yeah, and it's also like not a lot of people knew how to apply the product. So yeah, and then in that transaction, it totally changed our aperture of our vision and where we can go. But that year, so two two factors is one, prior to that deal, I had negotiated a supply agreement with them. And part of that supply agreement was in a change of control, we would have continued supply. And then we had most favored nations on inventory. So anything they made

And pricing.

Yeah. And and pricing. Well, most favored nations is that if anyone comes into the market and gets a better price, just

Have to match it.

Yeah. You have to match it. And then same thing on inventories. Most favored nations inventory is like if there's any open supply, we have the first right to it. And so after the deal, scaling a supply chain is really hard. You have to manufacture, you have to build new equipment. We're talking like actual new equipment. It was not able to support David's business with the transaction or without the transaction. So we were in an out of stock situation after the acquisition. And so obviously we bought the company, we paid a lot of money for it, and we merged with them. So there was no supply after the deal. There was really no supply. Uh

What does that look like? You guys raised a bunch of money. You broke off some of it and now you merged and they're on their cap table now.

It was a cash equity deal. So we we bought

So you raised 75 and some of that went to them plus equity.

Yeah. Exactly. So anyway, whether the deal happened or not, we would have been out of stock. The plaintiffs would have been out of stock. And then on top of it, if the deal didn't happen, we wouldn't have the resources to actually go build a supply chain to go scale EPG manufacturing. So yeah, and then the thing is you there was no commercial efforts to like negotiate. There was just litigation. So

So it's done.

Yeah, that that got that got dismissed. So

It's a it's a good day.

Yeah. Yeah. We're it's a battle out there.

I definitely do think it's it's one if not many of the modes that you guys have. For me, when I look at it too, like the EpoG, it has other applications as well, too. Like you can put this in tons of other different snacks and foods. Correct.

Yeah. What are some like sample examples?

Yeah. The way to think about it is where are there items or categories or products that are dependent on fat? So, the most obvious one is ice cream. What makes ice cream so special is cream and sugar. One pint of ice cream, full fat, is like 1,200 calories. Crazy. It's like you a Ninja Creamy guy. Ninja Creamy. I'm not an

It gets it done. It does. It does get it done.

Those numbers are bonkers though, bro. Like if you go and look at like a Ben & Jerry's or something. It is insane.

It's an energy bomb. Yeah. And so like it's kind of a problem. You can't really You shouldn't really be eating that. But why it tastes so great is because it's fat. And so

That's a obvious category that an application is ice cream. And so so the framework is like where there are a lot of things that depend on fat. And then another one would be fried foods.

Oh,

Like fried foods are delicious. Obviously, one of the things that makes them terrible is the oil uptake and the energy density of that. So, that's a good application.

I think it's safe bet to say we're going to get into the future a little later, but you guys are going to basically dominate in all these categories.

That's the goal. Yeah.

Because you're going to really be able to arbitrage. I mean, what is that? Is it is it 2:1 as far as some of these kind of key metrics, whether it be fat or whether it be calories? You're getting like a two to 3:1 ratio. You get we can get 50% reduction in calories.

Insane.

Yeah. With with with the most important thing without a major like taste compromise.

Cuz usually better for you items usually better for you items are always like

Yeah, better tastes like [ __ ].

It's better for you, but yeah, it's like it tastes people are like, "It's okay." And it's like, "But it's good for you." It's like that you can't you can't have that argument. Everything needs to be at par or better taste and texture-wise. How are you managing like the trust like with your customers and the retailers with why this is going on? I mean, we said that all press isn't good press. Obviously, explosive stuff is going on the internet, but like are your retailers concerned? Are your investors concerned?

No, the investors understand, retailers get it because they're in the industry. And the way the way you build trust is it's like the truth prevails, right? So, like the science prevails over time and the messaging is like, yeah, the product so is so good that we got sued over it. Like it's so good people don't believe it. It's it's so good. It tastes like it's 280 calories, but it it it only is 150. And so that's a bit of like taking the negative press and turning it into like an actual the the truth of the story. And that builds positive momentum. But any yeah, like any new new thing, anything innovative that's so different is misunderstood. Part of the the education process is like these moments of articulating the benefit and and explaining it. So, um

I almost feel like they just were like top of the funnel and they just filled like this net new funnel for you guys of just new people to understand and know about you. Some people may or may not even care how many calories to be completely frank with you and then you get the ripple effect of actually educating on what it is and the calories.

Yeah. I mean, yeah, like net positive. I think it is good in the long run because it's a mass education thing and like we got 200 million impressions in

A week. Like what?

So, so 200. So, here's where like it is good press. Like, what would you pay for 200 million impressions?

Back into the CPMs. I mean, a lot.

Yeah. One thing that was inevitable for us to do is educate on calories, right? And like a lot of people just don't understand energy and calories. And so, so I do think net over time it's a positive.

Love that. Let's move on. So, definitely supply chain is one of the most that you have. We'll get into some of the others. I want to get into kind of the machine. You guys went like 0 to $100 million run rate very very fast. Let's kind of talk about like the launch cuz you guys basically took over Instagram on the launch and the marketing mix. I guess let's just first start off with like marketing mix. Like how do you guys spend your dollars?

Yeah, I'd say most of it is paid ads. We do a lot of sampling. Like one of the advantages of this product is it's very easy to trial and sample and so letting the product do the work is like super like foundational strategy and people love free stuff and so just giving away trialing product mission critical.

And that's trialing at retail. That's giving to influencers anywhere and everywhere.

Everywhere. Yeah. Be very liberal with trial.

Let's stop there for a second. I feel like not enough people do that, man. Straight up, bro. That's how I built my whole entire business is we were sending thousands and thousands of pieces of art. You get the content, you get the distribution, you get the social proofing, you get the relationship, the biz, the I mean, it's it's everything that you get.

Yeah. And I think an underrated feature of it is the generosity of of it. And so when you receive a gift, it's unexpected. It's starting a relationship off positively. And so like in your head, it's like, oh, this is free. This was given. I'm lucky. Like you're like starting the relationship off with the brand or company in a positive way. And so it's yeah, it's going to and it's going to taste better. Everything's positive about it. And so generosity is underrated probably. And so that's like that's always like a foundational thing just like trial paid ads. We we've done these truck ads you see everywhere all over New York. We have trucks running around the city on the routes with with good ads. And

I think that's underpriced as well too. The guys at Melon, I was just there and they wrapped multiple trucks and you're just you have 24/7 billboard.

Yeah.

It's insane.

Yeah. And that's that's a good one. And then that was mispriced like two years ago. It's probably pricing's gone up. Another one would be podcasts. You know, good podcast hosts.

Give him a shout. Who we got here? Who you guys with?

Herman's great. He's the main one. And you know, the thing about the podcast thing is like the audience feels like they know them personally, right? It's not like an actor or anything where you just like don't really understand them. Like you you feel like you're friends with them.

Parasocial relationship 100%.

Yeah. So it's it's an interesting thing. So that's that was that's like our main those are our main things.

On the sampling side too before we just move on. Like this is how I look at it. I'd love to know if you just look at the same way just from an LTV to CAC ratio. It's just like if you do the math, it's like if you give someone one bar, like how many bars do you need to give out

To just make it back on LTV. It's that simple. It's like

If you just do the math on LTV and you're like, hey, I can give away

10 free bars and if I get one person to buy and then they win on LTV. It's that simple.

Yeah. Yeah. And like like the anecdotes are overwhelming. Like you you don't even need to do any analysis. It's like if you if you have a good product, right? Like if the product, you know, tastes good for something that costs, you know, it's like 325, we sell it for, it's the way to go. And and the thing I always tell our team is like, we cannot take for granted that we have a product that is a individually wrapped item that is not too expensive that we can sample because if you're in beverage, if you're like we're seeing this with ice cream, it is impossible, very difficult to get samples. Like it's heavy to ship. It needs to be frozen. Like you can't achieve trial very easily. So any new brands growing, like trial is the most important thing because when you and it's like you get trial, you get awareness, you start a relationship with the customer and yeah, it's like the foundational thing.

To put a pin on that as well too for people out there listening, he gave very very hard advice. I completely agree. And I stopped doing this. I was doing this in the beginning with Iconic [ __ ]. The attribution, you don't need attribution. It could just be a fixed line item on your P&L. I'm going to give away X amount of free stuff and then just like for us, like we were only DTC then. It's just like, does the IBA look good? Straight up. And it's like an intuition type thing. It makes you have to be common sense.

Yeah. And it's like you're giving instead of giving money to ads to like go through this process, like take that money, put it in inventory and give it to customers or potential customers. But you want to be smart with like who you give it to and how you do it. But it's I think it's a way better use of resources than just giving it to Facebook.

So it's late 2024. You guys are launching as I mentioned. Like you guys literally came out of nowhere. Like literally like you hit Instagram with like a bag of bricks. Walk us through kind of some of those like strategies and you know, you did a million dollars in the first week, you guys sold out. There was there was a lot of pre-planning. So walk us through some stuff.

Yeah. So being a second time founder, planting the seed early of like like six months out that like, hey, something's coming. So introducing David, introducing the product, building anticipation and then

Through just your channels or third party channels?

Through my just my channels, which was mostly LinkedIn and X.

And then that dribbled into probably some earned media.

Yeah, exactly. Then earned media, like the industry picked it up and and then picking a date, right? It's like here's the launch date and just so building some anticipation and then had hypothesis that we would have like brand market fit on TikTok. TikTok's I think fitness products do really well there. And so one idea that would worked really well was doing a 5,000 bar giveaway on TikTok and just sign up and first 5,000 will get it. And then in g so in general, like very aggressive sampling pre-launch sampling campaign.

And again, to back into that, it's not that aggre it's how much money. It's not that much money.

Yeah, it's not crazy.

Yeah, it's not crazy. And so one, they got something for free for free. They entered a little thing, got it for free, and it was novel, had credibility because I was involved, and then it had also crazy great differentiation with

Macronutrient.

Macronutrients and then design as well, disruptive design. And so those all those factors together, everyone wanted to share it.

And early, they feel cool.

Yeah, exactly. There's like a scarcity or exclusivity thing. So all those like factors and tactics were stacked up into a big trialing thing and and then their product is good. You hear a 28 gram protein bar, you're just going to be like, ah, it's like probably, you know, not going to taste good. So So something interesting in the protein bar market is like expectation minus reality is like happiness. The expectations really low on protein bars because protein is is the most important macronutrient, but it's difficult. Doesn't really taste great all the time.

I only got a couple that taste good.

Yeah. Like it's the market's tough. So yeah, that was the that then we got the like attention wheel and virality on TikTok that was really helpful. And then another thing in that hype phase or anticipation building, we got like 40,000 person email list. So the day we launched, we just like 40,000 people got it, had been waiting for it, went viral on TikTok and yeah, that set the momentum for the week.

Did you sell out? Was that a good or a bad thing? You think

I think about it as like selling out is good if the replenishment window is like two weeks. Like if if it's over two weeks, then it's I think it causes some demand destruction.

Outside, out of mind at that point.

Yeah. Like so if if Yeah. The gap's too long, it's a problem, but if it's short enough, it's great.

Makes sense. What about like profitability and unit economics? I mean, all of these companies in your space, I don't know how people invest in some of these companies where it's just like, okay, first round we lost 19 million, second round we lost 9 million, then we lost 4 million. How do you look at profitability in unit economics?

For CPG businesses, the math should work right away, depending on the product or category. 40 to 50%.

Wow.

Yeah. So CPG, the math should work right away, I think. And

That's 40 to 50 on your website.

Yeah.

Wow.

Yeah. Yeah. That's Yeah. That's and that's the whole most most of the industry, the the mega scale people like Reese or Mars Hershey, very different margin profiles.

So for people out there that would be launching theirs, obviously you have the credibility from RX Bar. What about like these trade shows? Do you leverage like the trade show and or any other distribution channels to kind of get it? So trade shows, they're really effective, but if you look at like what's the objective of a trade show, say say it's a Natural Expo West, the the objective would be to get retailers, like I am there to get in front of buyers, category buyers, and get new distribution points. Like that's the goal. But for us, it's a really expensive, it's like a lot of the company's energy, it's it's a lot of resources to go do those. And so we we opted out simply for the reason that we we have those relationships with retailers and we don't necessarily need to be there. But if your objective is that and you can't get that, they're they're a good place to be.

So for people that are more advanced, second time founders, you actually think that those expos may or may not even be relevant anymore if you have the retail connections.

Yeah. I think I I mean, all stakeholders who go there kind of view it as like exhausting.

It is. It's like football fields over there. It's crazy, dude.

Yeah. Like I'm happy to get on a plane and just go go to the customer, you know? But it is it is a one one of those, it's a get scale. Like everyone's in the same place, same room. So there is a benefit, but I just don't ever default do things, right? Like you just got to reason from why

First principles.

Yeah. You don't just need to to go to go. Let's talk about like performance marketing versus brand marketing. I feel like you're more of a brand marketing guy and you do these like

Crazy campaigns. I got a whole list of some here. This COD billboard, vibrators and PR boxes, copyree subway ads, the Mean Girl lawsuit response is really good. Yeah, that was

Is there like an actual strategy behind these pulse campaigns or like a cadence or a process?

So, obviously I don't like I don't like performance marketing personally. I think it's it's it's important.

Guys, I asked Peter before all the topics he wanted to talk about and I say digital marketing, he just goes, "Nah."

Yeah. I just don't think it's that interesting. And and yes, it's valuable. I don't mean to diminish it, but I I don't think it's interesting. And I I don't think it's I if you're dependent on it, I think it's a problem. My thesis is a lot of people think they're brands and they're not. They're marketing companies. And I think that the threshold is like,

Dude, I think the threshold's like 200 million and it might even be more.

Yeah. And it's like I think it's like not a good use of resources or capital. And yeah, so I'm more of a brand marketer ad guy. Like I like good ads. Like I think they do a good job. Um

Traditional advertising like David Oggov like like billboards and campaigns. And so our framework or the one I like to think about and I push a team is if it's it's you got to find ideas that are not obvious but true. So if they're obvious and true, they won't work. So they have to be not obvious. For example, I I'll give you some like obvious ideas that are not good. David and Goliath, something with the name David and getting a bunch of Davids in a room. Golden ticket. Uh, those are all bad ideas because they're obvious, right? Like I whenever we're interviewing people, it's always funny like those are the those always come up if like marketing ideas. It's like, oh, you should do something with Goliath.

Those are the first ideas from the LLMs. The first idea.

Yeah. They're just And they're So, my point is like, how do you determine if they're good? If they're obvious, they're not good. So, a non-obvious idea that is good is COD. Okay. No one would if you just survey everyone, no one would come up with that idea. The reason why it's good is because there was a story around our website having it as a on a comparison chart because it has the most protein to calorie ratio of any item out in the world. So David's number two to cod. Okay, we did that on our website. So it wasn't obvious to sell cod. It wasn't obvious to do a campaign and a big photo shoot and like that wasn't obvious, but it was a really good idea.

It was confusing and it drew a lot of attention and then it was true.

Yeah, it was true. And the juxtaposition between boiled cod and David Gold is funny and powerful and it communicates a lot. Another like non-obvious good idea is like RX Bars packaging, like reducing the logo to where you almost cannot see the you don't know what the brand is and leading with the ingredients was not an obvious idea and it was a good idea.

We'll pop that up as well. It was just like,

Yeah,

Four egg whites, two cashews, and just three or four things.

And conventional marketing, conventional brand design would say like, "Oh, logo is number one." And I remember teasing that out to some more conventional marketers back before we launched and they're like, "Oh, that's terrible. Like, where's your logo? This where's your claims? Where's your differentiation?" So, with brand marketing, I think that's that's the main idea is like, what is not obvious that is that is actually true. So it's arguably it's like very a contrarian approach. Like so good ideas are not obvious.

It's a similar mental model to investing.

Yeah. Completely. Yeah.

Yeah. Yeah. Same.

Is you just want to find something that maybe even is early too.

Yeah. Like the perfect example we just had this was like April Fools. Every [ __ ] brand does some stupid thing and it's so obvious it doesn't move the needle. It's a waste of time. Like a nonobvious idea would actually just be launch a normal product.

Going to say that. Just do something that actually is real.

Yeah, exactly.

And then people be like, "Oh, is this April Fools? Too good to be true."

Yeah. So, I hate April Fools for that reason. And it's like if you look like on Instagram on April Fools, it's like, "Oh, it's just so obvious at this point." And therefore, none of it's a good idea.

And is this a repeatable system that you guys are doing with all these ideas? Because I mean, you guys have been in market, I don't know, like two years, and I I mean, I listed off four or five and you just announced some like supermodel as like your chief beauty officer. Like, you guys are keep doing these big bold things. Is this like a workback schedule where like quarterly or by year like we need to do it?

Um, there's not so much structure to it, but our goal is every quarter do something. And what I love about the creative process is like you have to tear up the script, right? Because it can't be obvious. You have to keep ripping it up.

Obviously, the Mean Girls thing like it happened like 24 hours after, but obviously you guys knew behind closed doors that stuff was happening. But like from idea to execution, what was the window like for that?

Oh, no. It was right. It was like this is an emergency. We have to go right away. And again, we have super talented people and the ability to make content and we just like went for it.

What does that look like? I know that you guys are in office like everybody's in office.

Everyone's in office and it's like war room style. Like, you know, we go

Whiteboard.

Yeah. Whiteboard. We go in a conference room and it's like I I'm like clear my calendar, like let's go. I'm in there, but we have, you know, there's like a small a small little small team. Yeah.

Army of Swiss Army.

Yeah. Yeah. Love that. How are how are you looking at kind of like this brand marketing versus paid marketing from let's just call it zero to one and one to 100? Like how important is the sequencing?

Yeah. So brand marketing is always important. However, it's riskier, right? So one out of 10 ideas work. It's there's creative risk with it. So in general, I look at it is one spectrum would be brand marketing, uh, performance marketing. In your early days, it's like 90/10, 90% performance, 10% brand marketing. In your life cycle, as you get distribution and get household penetration and have awareness, it should migrate to almost all brand marketing. So we're at a life cycle, I would call us like a teenage boy, we're still growing, going. We have a nice mix of say 60/40. But when we're in five years, 10 years maybe, it should be all brand marketing.

Wow.

And the reason is, you have good brand marketing raises the tide for everything. And you have the distribution points to absorb all the benefits of it.

Because you don't need the quote unquote attribution. It's just going to seep to one of the a zillion points of distribution.

Especially an omnichannel business. You have like so many. It's like I don't actually don't care where customers buy the product. I just want them to buy it where it's the best place for them. And so the most efficient way to do that is good brand marketing.

Um, what about celebrity and influential? I guess we should just back into starting with Norton Huberman and Aia. How do you guys look at having celebrities on your quote unquote cap table?

I think people that have the same approach to nutrition was important. People that I personally learn from and are rooted in facts and are really pragmatic. And for David, all it mattered I thought was nutrition thought leadership, not athletic or anything like that or lifestyle. So that's how we thought about it. And I think I think there's a lot of fatigue in the market for celebrity and influencer stuff. It's been so played out. So I think the best days are behind it. But in the nutrition world, I think I think it's important to have certain credibility with really thoughtful people on on the topic because society's generally confused around nutrition, right? I've been in nutrition since I was 12. Every five years, it's like five years ago is starve yourself. It was fasting. It was like that's the next thing. And then carnivore, and then now eat five small meals a day. Like it's so dynamic that it just leaves everyone confused. So there's a need for sort of like an arbiter of truth and uh

Chief science officer of some type, something like that.

Yeah, it's helpful. But but I do think like the athletes, like when I started as an entrepreneur in like 2012, like professional athletes sold product.

I just don't think that's a thing anymore.

Yeah, I don't think athletes sell product anymore because they're just genetically like they're not relatable. Like LeBron James is a specimen. I can't relate to him. But yeah, I mean, there's some crazy crazy studies done with people with millions and millions of followers and then like, you know, an influencer with a micro following of like 10,000 followers and they can push more product.

Yeah.

That is like a that is factual now. That is no longer subjective. And

Like that wasn't the way three four years ago.

Completely agree.

Yeah. What's up guys? Hope you guys are enjoying the episode. There are a lot of gems in this conversation. So, we put together a free PDF going inside the brain of Peter from RXBar's packaging to David's explosive launch to how to actually build brands that cut through. If you want it, link is down below in the description. Enjoy the rest of the episode. What about like timing on this? Cuz I do think obviously you had RX Bar and you had leverage in the marketplace, but I think the fact that you stacked the deck early when you guys came out and it was just like the macronutrients, Peter Rahal, second time founder, and then you had all of these scientists. What advice would you give to to founders out there from that? I mean, for me personally, it's like I think you create the tornado early and if you need to give up something to start, I think you do it because it just amplifies and gets the ball rolling fast. What's your thoughts on that?

Yeah, it's so situational. So, it's hard to give general advice. You know, at our expert, I I had no credibility to even attract anyone to trust me. So, I could I didn't have the means to bring anyone into the company. I mean, I couldn't even get we couldn't get investors. But, as a second time founder, like, you know, it's like, oh, Peter's going to make a protein bar again. Like, it's just a much easier thing to back. So, yeah. So it's I'm for first time founders, I would be more patient and you need to get product market fit first, I think, before you bring in try to like bring in outside support for these

Guys were just assuming that right out the gate you were going to have product market fit.

Given given and we brought them along. Like I was developing the product, sending it to them, they're like, "Oh my god, this is this is a breakthrough thing." But, you know, if I, you know, if I was my first time founder, I don't think they pick up the phone. And they get so much solicitation. Everyone wants to work with them. So

I just think if you're at 10, 15, 20 million, you just get that asymmetric benefit with one of these guys. And what's really really good about the marketplace now is I do think it's top-heavy. Huberman, like dude, I've heard of some of the numbers with this guy from like an affiliate perspective.

It is out of control. It is out of control. But I do think there is this new kind of cohort of these random doctors that have a a very very specialized

Yeah.

That have 100,000 followers on Instagram. They're probably going to go on the upswing that you can get for a really

Yeah. That that's the arbitrage is like an up-and-comer. If you can find, if you can go more venture and find an up-and-comer or like king-make someone that would probably be the best. That's the arbitrage right now.

Which you can king-make someone if they're good at content and they have actual real credible.

Yeah. Like Yeah. Actually like and I I just generally think we're in the market. I think there's just fatigue on influencer celebrity endorsement.

No celebrity doctors.

Doctors.

Doctors and specialists.

Yeah.

The crazy crazy.

They're like celebrities though. Like that's burn celebrity. The craziest thing about him, man, is I know that he has done like ad reads on podcasts from four years ago

That are

And they are still ripping

On the post-purchase survey on how did you find out about us? No longer with the company, four years later. Still [ __ ] ripping.

Yeah. I mean,

He's a very special talent. I mean, he's loved. He's he's like the voice he'll be and he'll have a voice in America for a long time.

I completely agree. Let's just go right to it. The in the Epstein documents. It gets on your desk, you hear about it. What goes through your mind?

Yeah. Like, so it got released Friday night and so I wake up Saturday morning to like, you know, look at my phone on X and it's like, "Oh, Peter's in the files." I'm like, "Oh, that's so surprising, but like a lot of people are." So, and then yeah, just realized like, oh, it's really getting he's getting picked up a lot. Like he's being he's a big target. And then it was clear that like the public was just going after him. And you know, it puts you as a brand, it puts us in a a tough spot. And so what Peter came to was like, hey, listen, I'm I I just need to focus on my family. I need to focus on my practice and like take a step back. Then, you know, obviously it was a company, we stand with the victims and the injustice. Like the DOJ is totally failing in providing justice. It's like it's it's pretty gross. And so I do think like if the DOJ did do its job and do justice, I think it'd be a very different situation, but you know, the doctor is going to get targeted, not the businessman or sleazy politician. It's like it's expected almost.

Yeah. I mean, he definitely I mean, of anybody and everybody, I don't even want to call out other names. I mean, for me, yeah, I feel like he was the name most him him and Trump were the two names that I feel like were the most circulating through the internet.

Yeah. Yeah.

And one other name, but I don't want to I don't want to drop other names for people in in this podcast right now. You guys could go on the internet and see yourselves.

Yeah. But I mean, it's a I've seen file. It's it's just is gross what's going on. I mean, no, there's a war and no one's like it's all swept on the rug. So the public should be outraged and I totally understand.

Yeah, it's upsetting. I mean, that is that's the risk that comes. It's not like key man risk, but like with signing deals with these people, they're going to be faces of your company, knowing that the company could rise or fall based on how they're perceiving the marketplace.

Yeah. Yeah. It's totally.

You got to do crazy due diligence on this and obviously this is something that you never could have expected.

No. Absolutely crazy. So right now from an influencer perspective, obviously you're leveraging the social proofing and the science-backed from now Lane and Huberman. You're doing Huberman's podcasting. On the influencer side, are you guys still just spraying the market with tons of free product?

Yeah. Yeah. And affiliate affiliates on TikTok is big, but I I view this as like David's friends. Like we just want to align and and be friends with a lot of people in the market and do it with product and and build a relationship. For everybody out there listening that has a brand, I challenge you to give more free [ __ ]. Give more free shits. Give 10% of your marketing budget a free [ __ ] and it'll just come it'll come around.

It's so crazy, man. Yesterday a guy got like a damaged piece of art. It happens like 2% of the time and then like I was like, "Pick another one on me." And just like that guy just again, it's it's not necessarily free. That guy's going to do so much for me just because he's getting something for free. The word of mouth marketing, people forget word of mouth marketing is the number one thing. Yeah, 100%. You went viral, word of mouth. But like what you just described is called the paradox of service failure.

What the the

When bad happens, it's good.

Yeah. So

If someone has a bad experience, you can actually turn those into really positive like customers for life if you over deliver. So they got the art, it was broken. If you like make that right wholly, proactively, then you have a customer for life. I look at it as like let's just say like equilibrium is at zero, they're at negative 10. You bring them from a negative 10 to a 10. So you get this like 20 point markup as opposed to a 10.

Yeah. And they're and guess what? They're going to go talk about it. So you have that word of mouth.

Yeah. You got to be nice, but not too nice. There. Sometimes they take advantage. Some of those people. It gets crazy.

You can see that. You can always tell those.

It gets I'm going back and forth with my customer service guy like this guy is trying to scam us right now. Asking for QuickBook links and wire back this.

Yeah. I guess your product's expensive.

Yeah. For us, it's like the scam rate's fine if

If it's it is there.

AOB's AOB is 400. I'm in a different world than you.

Yeah. Yeah.

Your LTV is nice, though.

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Let's get into the brand. So, you guys definitely have been called polarizing in the marketplace. Why the name? Why the packaging? Like, how did this all come into fruition?

Yes. So branding is important and coming off RXAR, I wanted a really good name because RXAR had a name problem.

Um,

it's a doctor prescription.

Yeah. Yeah. Exactly. So it's like confusing and then actually start So the actual story is when my non-compete came up. I had fantasized about buying the trademarks of Power Bar. So for anyone who's grew up in the 90s,

we're we're going to bring that up.

Yeah. Show Power Bar. So Power Bar was the brand. It was the Kleenex. In the late 90s, if you were to go walk a grocery store, the category would be called Power Bars. That was the vernacular. And even when I first started RX Bar, if if I talked to like an older customer in their 50s or something at the time, it's like 2012, 13, they'd be like, "Oh, is you you're making power bars?" Like that was it was Zbrand.

So

tasted like rubber.

That's how that's how you know it works.

There you go. It's like Chinese medicine. So, so anyway, I had a little bit of this like PTSD from a naming and I was like, "Oh, the Power Bar brand had more or less died. I I had gotten close with the Post Holdings CEO from selling RX Bar." And so, my first phone call after the non-compete was to him. It's October 6. I was like, "Hey, would you be willing to sell those trademarks?" He's like, "Absolutely."

I would imagine they had probably started the fall from grace was already there. What are they doing like a couple hundred million at this point?

No, they're they're in North America. They were dead basically. Yeah. And so you could just tell they're, you know, nothing to do with it. They had a European business which is where the complexity was. So tried, you know, for 6 months was negotiating that and it was clear it just wasn't going to work. So my power bar fantasy was over and then just went to the drawing board. However, one you can see the design is quite influenced by power bar. It's all gold.

I was gonna say that, but I wasn't going to say that. It's kind of similar with the big block of from a color scheme. It has the big block.

They didn't do that, but they the main communication that we borrowed was gold. And gold has a ton of meaning. It's premium. It's expensive. It's beautiful. It's feminine. So, in our brief, that was like, all right, I want it to look like Power Bar. Actually, our DNA was a third Power Bar, a third Huberman, and like a third me DNA.

Um,

interesting. That's in the brief.

Yeah, the brief's really good.

We need to see that brief. You give us the brief.

I want to frame it.

Uh,

give us a little piece of the brief.

I I'll I'll give it to you.

Link below, guys. A little brief. The brief is actually a really great tool or example to show entrepreneurs on how to do a brief because a lot of times they'll like look for an agency and be like go make and they don't give any direction or have no vision and then it's like a shitty process and they blame the agency.

It's literally you they're like the they're like the little handholders.

Yeah. I say this all the time. If you have a bad experience with the creative, the responsibility is on you, not them.

I agree.

So that's a bit of the context on that. And then I wanted a really good name. I was like I don't want a name that's confusing. you have the power bar thing. And then the second thing is positioning wise, RX Bar was writing an ideology. It was writing paleo and it was a really vulnerable position. I and I did not want to ride a diet trend. I wanted to ride something that was based around facts and evidence.

So

i.e. protein, calories,

protein, cal like those are facts. Not agnostic around ingredients in the sense that like that's not your differentiation. So that was the positioning. And then when you look at protein bars, the purpose of them, they're high performance tools in a way. And the DNA of the brand is like it's all around high performance. Like it's about excellence. And the fourth factor would be if you look at nutrition, if you study nutrition bars, they are driven by one thing, weight loss. That's really what people want. They want it to taste good, but they they're coming to the category for weight loss.

BLP is a baby.

Yeah. And and that's the main driver in general. Like there was Atkins in the '9s, weight loss that was anti-carb. And then paleo was fundamentally about weight loss. Whole 30 was about weight. We call it weight body recomposition is a better way. And then fasting, what was that about? Keto, what was that about? So if the pattern was that's the common through line, weight loss. So I was like, all right, I want to build a weight loss company or body recmp company without being one. Because if if you look at the ones that are like weight loss, historically they're like Slim Fast, Jenny Craig, Weight Watchers, they're [ __ ] terrible brands. So the question was like, how can we be a weight loss company without being a weight loss company? And that was briefed to a really great creative group, Day Job. Shout out or plug.

Shout out Day Job.

They're great.

That's big.

And

Chicago,

no, Los Angeles. And so what came out of that is the masterpiece, the sculpture of David.

Yeah. So no name. They you didn't have the name. You're giving them is this packaging and name or just

I the brief was like we need a name and we need packaging. But here's all the variables. Weight loss company without being a weight loss company. Gold had to be gold.

Day job. I'm coming back to you guys should have done that Facebook artist deal and they should have swapped that bag of cash that you get.

We've took care of that. We taken care of. Don't worry. Don't worry.

Yeah. Yeah. So those those those are the briefs and then out of it came a symbol of that all those things which is Michelangelo's masterpiece the sculpture of David which is a 15 ft masterpiece that is like the perfect human body. It signals all these things. So great name Mur was available.

How was it available? You have it like obviously specifically

for the category.

I don't know. Yeah. I don't know what class this is. It was available.

Yeah.

Damn.

I had some risk but it was available. um not available in Italy but everywhere else. And then another really important thing in branding is and our brand is gender. So David's very masculine. It's a very strong name, David. It's biblical. It's a the biblical hero. It's really strong. But then the gold's very feminine. And so we wanted gender tension in the name. And even mixing gold with color is very feminine. So that that and like when you look at what art is, art is usually these these these tension points. There's these paradoxes.

And so when there's good art, there's like it it sticks in your head. It lives around free. It has it strikes an emotion. And so

what were you thinking there? Were you just thinking TAM? Like you just want to hit a bigger TAM, guys and girls. You don't want to

No, I wasn't even thinking about Tam. One thing I would was thinking about is so there's a thing with gender. Men will not consume something that is feminine. we're just insecure. We just we're not buying feminine things. Women will consume masculine things if they're aesthetic or beautiful. I understood that. And so I I I wanted to be masculine but also have this tension with feminine. And then another tension point is like David is antiquity. There's history. It's a very powerful thing. Michelangelo, the Renaissance, but then also really innovative ingredients. So bringing in that tension as well into the brand. And so that's my analysis of like why we had brand market fit. And then the other thing with the gold is so in the 2010s beginning of the natural movement the design architecture was leading with flavor as your primary communication color and then brand as your secondary communication factor. And so what that meant is if you look at the categories, all the communication is flavor, brand is second. So for us, I wanted to inverse that how it used to be in the early '9s. Think like a brand like Reese, it's primary is orange and then they communicate flavor secondary. And so our and that was just a contrarian bet that you were going to go back to what used to work.

Yeah. And so that was that's like a really important design thing that we are brand communication first and then flavor communication second. And you see it on shelf like craft beer. If you ever go like shopped craft beer, it's just like a kaleidoscope of like it's vis Yeah. And visually to me it's like yelling at me.

It's like it's visually very noisy and so I can't identify. I can't it's hard to shop.

And nutrition bar category is not too dissimilar where you look at it. just flavor colors. It's like a kaleidoscope. And so the opportunity was like, can you bring some calmness with one large color gold that has a ton of meaning in it? So that was another thing we did with the brand.

You might go down as one of the most like one of the goats from a packaging perspective. I think that's I think I think you could be the goat of the packaging.

Thank you.

I mean, let's back into the RX Bar thing just real quick just to to jump into that. I mean, you guys were sub $10 million and then you do this one big rebrand. And we talked about it briefly. Yeah. Why don't you just just give us a quick background on that?

Yeah. So, RXAR started when I was young. 25. Didn't

first ugly. It's ugly. The first one. We're going to pop that one up.

Yeah. It's ugly. And I designed that on PowerPoint because I that was a tool I knew how to use. We had no resources.

Makes no sense.

Yeah. It was just easier for me. And like whatever. What's the Adobe? Like forgot the tool. Like it was just harder back in like 2012. Like I

I was like use PowerPoint.

It's like clip art on PowerPoint. you can make it happen on there. You can piece it together.

And that but that was just to get in the game. I was like, I just need packaging. I'm not I don't have the money to hire a designer. And if I did, I would have [ __ ] it up. Like so I just did it and got product market fit with CrossFitters, Paleo people, but like it didn't work outside of that culture. So called early adopters of just normal healthy yepies. The brand didn't resonate.

That's the danger of trend versus fad there. You went too deep in that one. So, we had to cross the chasm to just normal consumers who weren't paleo. And our differentiation, like the only thing that was differentiated was the when I would pitch the product and be like, you know, like here's an RX bar. Someone would be like, well, what is it? And I'm like, well, it's like eating three egg whites, two dates, six almonds, four cashews. That was like my pitch when we were giving away product. They're like, oh, that lit up. But like saying, oh, we're 12 grams of protein. Oh, we're this like we had we're in protein no man's land. Brand name was confusing. So we had all these problems and so the way to solve the problems was through design and so in a competitive category you got to do bold things and our name was confusing. The only thing people cared about was the quantifiable food ingredients. And so as you can imagine in that brief it was like hey make the name small like use negative space and then we're in protein no man's land. So we got to communicate protein differently. So that's why three egg whites were at the top. Three egg whites sounds more valuable than 12 grams of protein.

Three egg whites sounds more valuable than 25 grams of protein in my brand.

And then the other thing is

Damn. And this is in the brief.

Yeah. And then and and if you look at so if you go to a cafe and order eggs, all right, you are actually upcharged if you want egg whites. And so there was this value communication around egg whites as like a premium expensive thing. So that was important. So we communicated our protein. We did have a claim at the bottom, but the primary was using the quantifiable like three egg whites

because of the ideology of it's more money and it has more protein. Yeah.

And you guys don't even call out the pro. It's obviously an attrition facts, but

Yeah.

And it's it's a good example in branding is like branding is not just your logo and name. It's it's the whole thing. It's how you communicate. I mean, I can't tell you how many times people I meet people and they're like, "Oh, what do you do?" I'm like, "Oh, started RX Bar." They're like, "I don't know what that is." I'm like, "Yeah, you do. It's the bar with the the ingredients on the front, you know." So that I don't think it's like I don't recommend it. It's like not a good brand system, but it solved what we had. Like the other choice was to like completely rebrand the name and rebrand the product and that would have been just too expensive and too hard. And so we

you alienate probably the cohort of CrossFit, which is your early adopters, and they were the

Yeah. And it was just like we had momentum and and so we had we had to do the best with what we had and that's where it landed.

And all of this too of the answer. I never hear this answer. So that's absolute gems for people out there listening. I don't even think people are like giving briefs and using a a third party agency. I I don't think a lot of people do that. A bunch of my buddies that have big companies did not do that. So that's interesting. And also it's just contrast thinking at retail you just want to have contrast. Like you kind of touched on that like it just it needs to stick out as different. That's like the big thing.

Different. Yeah. It's differentiation's mission critical. It has to be valuable differentiation which a lot of people don't like that's a misunderstanding is it has to be valuable and the old school differentiation that I wish we all we had is is actually price you know like price is the best differentiator but in CBG it's very hard

I think the world is most definitely moving more and more and more towards price yeah most creators are just duct taping together a bunch of different tools to run their podcast and their newsletter audience the analytics the attention it's all split Everything is fragmented. This is where Beehive changed everything for us. It's where Open Residency runs our newsletter and they just dropped a new native podcast tool. Upload your audio and immediately get distributed to Apple Podcast and Spotify. If you're hosting somewhere else, just paste your RSS feed and your entire back catalog, the metadata and the episodes all carry over. One platform, one login, everything talks to each other. Head to beehive.com/open residency for 30% off your first 3 months. Just enter code mark30 at checkout. That's be eh iivi.com/open residency and code mark30 at checkout. Stop renting your audience, start owning it.

Let's get into retail. We just briefly touched on it cuz that's what the main answer I see is they go into retail, they go into arowan. It's usually their first where's their holes in the space from a a product and ingredients perspective and then where's their holes from an aesthetic perspective to get the contrast. Tell us about retail. So you guys went zero to 100 very fast and just holistically with David. What was the strategy on retail?

One thing is in a new business or new new brand, I think you want small bites. You want to build like build building blocks of distribution, you want a distribution where you have a high confidence of success. And then if you get a distributor set up like UniFi or Ke, you want to make sure that you're moving enough volume through that DC to make sure that they're successful. So there's like a critical mass component with the distributor that's getting onboarded. There's like a volume component with how many stores there are. So you can think of it as like there's a appropriate way to build building blocks of distribution before you layer on a large player like the mass target or Walmart. the specialty

special

specialty stores like any any one individual lane that you could just get the

Yeah. or regional grocery like Wegman's Publix those are great retail partners to start because it's geographically confined so you can really target them. You just don't want to bite out more than you chew. So, so when you think about retail distribution the main objective is like how do how do I ensure we're successful there and like can we support it? Can we service it? That's that's number one. And so younger entrepreneurs full of lead will probably just want to be really aggressive and that's okay.

See it all the time, man.

That's a big mistake I think.

Oh, you're early and you're in Walmart. You're not going to sell through and they'll never take you ever again.

Yeah. Like it's attractive like, "Oh my god, if we do that, you know, it's it's attractive because you're like, oh, if we get this and it works, we've made it." And it's it just so you don't want to take risk, unnecessary risk. And so you want to be patient with that. You said something that really interesting and I'm just thinking as like a marketer in the back of my head. The the geographical concentration makes it interesting because then you can do supporting marketing via billboards, targeted digital marketing or even seat influencers in that

in that range to just kind of hedge your bet. Why geography matters is you can then stack marketing tactics to an area to get a market moving and drive all that awareness. And so that all the tactics compound

like little big horn from Facebook. They just started with one and they just [ __ ] just go out and out and out.

Yeah. If you if you create too much surface area you and you don't have the resources, you just won't do anything. Well,

what about like specific ICPs? Like it's so weird because you talked about the tension between males and females. Like an example is like my wife loves the bars. I love the bars. People of all kind of different, let's just call them like hobbies like your stuff.

Are you guys like zoning in on specific ICPs? Like do you guys know the exact person that you want?

Yeah.

Yeah.

So at our bar is like very very defined. It was people who did CrossFit and people did the paleo diet.

Sub 12% body fat. Four times a week CrossFit.

Yeah. And there was about two million of those people in like it was very clear to target. with David. It's a little broader, but some of these profiles would be they used to be called biohackers. I would call them now like high performers, like people who really want to optimize their life. They are efficient, they are smart, they love optimizing. So the optimizer, the high performer, they're taking life seriously. The Aura rang or the box, they're tracking that. Yeah, exactly. You can find correlations with other products. Yeah. If you have an asleep, you're a high performer, right? And then another one would be anyone who's interested in body recomposition. So, and with body recomposition that is either wanting to increase muscle or wanting to decrease fat. So, that would be bodybuilders. Uh

that's a big TAM because then you got like the GLPS, you got the bodybuilders, you got

older older people who realize resistance training is really important in later light later in life. And then yeah, anyone who's interested in weight loss or losing body fat, which is a huge huge huge part of the population. And then like a niche one is like I like to define it as like who are customers who need to be fit or thin for their job.

Oo, I like that.

So models, anyone in front of a camera and

big David protein guy right here.

Yeah. Like if you're on camera all day, you're looking at yourself a lot and so you become self-conscious and you realize you got to be in shape. So those those were the early groups that we or like cohorts or however you want to call it. But the reality is that most Americans are really struggling with maintaining the ideal body weight and and that's why GOP ones are just just taking off. It's is like in in our society it's really hard to not overeat calories.

You have such a sicko hedge on that, man. And it's just like that's the GLP 101 is like you just the one thing is you need to get your protein.

And this is like the quickest way, most efficient way that you can get it.

Yeah. Because if you're on GLP1's that's anorexia, right? Like it's forced but through an intervention.

Guys, we don't endorse those on here. Just I'm just saying that I just need to throw that out there.

I Yeah, to each their own. The the but if you're on them, the downside is muscle loss. The one way to mitigate there's two ways to mitigate it is protein and resistance training

which the latter is usually not going to be the case for the person that's going on.

And then when you're on a GLP1 you you don't want to eat. So you need something that's very protein dense

and that tastes good too.

Yeah. Yeah. You So that Yeah.

Talking about ICPS there. I have been so bullish on this for so long. We we actually have not talked about it at all off camera. Like CrossFit I I I think you would agree is probably fading a bit. I mean the Michael Jordan of CrossFit is actually doing Hierrox now. Hierrox, why is no one riding that wave?

People are not riding that w like okay the RX bar formula with CrossFit. I don't think brands are pushing as hard with Hierrox. If you look at Hy Rocks quarter over quarter, they're crazy, bro. I'm trying to get him on now. He's based in Europe, the founder of Hierrocks. I'm so intrigued by that type of workout. But

what do you think? I think that there's a huge hole for people and I'm not saying it has to be like a protein bar. Just anything to attach to that movement.

Yeah. I mean, isn't cadence

not enough?

Not enough.

Which Ross we should should definitely go harder on that.

Yeah. Cuz because with with

because you thought RX bar, you thought CrossFit.

Can you say a brand is kind of in there, but someone should ride that association.

But the thing the difference between there's it's not really apples to apples. apples and oranges a bit cuz the I would say crossfit was like very special. It was it changed fitness. There's way more community than and like there's gyms, there's this whole culture. There's a different cultural thing.

Hierrox is really about running. So you I think you're seeing running really take off. Like there's a lot of these great running brands and so rather than I think you can you can address that customer through just running. I don't I don't necessarily agree with that. I see you're saying like CrossFit was like a big contrast. This is more like incremental kind of change. I see what you're saying on that.

But like run clubs. Like isn't Hierrox 50% running?

Yeah. Which everyone says that's what kills you? But the reality is as a runner like the first thing is like the lunges, bro. Like you need very very strong legs for Hierrox.

Yeah.

So I would argue that it's the lifter that's moving to Hierrox and has to train on running versus the runner that's going to train legs.

Yeah. And I think but CrossFit in 2013 was like super cool. It was like a religion.

Yeah. And and there were CrossFit gyms everywhere proliferating and they were awesome. There were these really tight cultures and they wore they all wore Reebok Nanos. They all drank Killcliffe. They all drank Progenics. Baylor is like it was a different sort of thing and it wasn't pedestrian like not not to hierox is like more

like normal human

normal human like CrossFit was really intense you had to do Olympic weightlifting gymnastics running super intense so

I mean it wasn't like the snatches and stuff it's like you need to be an athlete and know how to correctly have form to do that versus Hier rocks I think like anyone can really

Yeah probably why it has will have more scale

y

and longevity but I I'd argue that you can address that through running because everyone I talk to who does high rocks is like it's about running and even ex CrossFitters, they're like I'm like what's the difference? Like CrossFit's like different level difficult skill-wise. This is all about running. Like if you're good at high rocks, you're you have to be a really great runner. So if I'm marketing to that, I would focus on running, but I would get my I would invest in the community in a big way. But like are there Hierro Rocks gyms popping up that are just like branded

Hier Rockcks?

No, but I think it's starting to like percolate some sort of kind of licensing franchising model where you're like

because again I remember like a year or two ago like typing into Yel like Hierox gym and trying to find people that did the simulation that's just starting now.

Yeah. Because if there was that community aspects and then

I think it's going to morph. I think this is one of those things that's early in like I don't know man. I'm just so bullish on that sport.

Yeah. The things like food, fashion, fitness, we always need novelty. There's always a need for novelty. So the problem is people will get fatigued and in five years there'll be something else. So as a brand, the risk is like this is why with CrossFit, we didn't really want to anchor to it too strong. And if you think about it, we're we're us RX and Rogue were the only ones that transcend the

I was going to say all those other brands that you just said are all in the graveyard. Yeah, Kill Cliff was a Kill Cliff was the strongest brand. I I thought it was the best brand.

Had Navy Seal DNA. It was just like you drank that stuff, you felt like you were a badass.

You felt like you were working out with like Jaco Willing.

Oh yeah. And so I think I think uh

don't get too close. Get close but not too close.

Yeah. There's risk if you sort of and it's arguably arguably and this is what I felt with CrossFit and Paleo. It's actually like, it's the obvious idea to do that but it's actually lazy and then there's it creates risk and you don't need to do that. Makes sense. We just like quietly went over you scaling a company and selling it for 600 million RX Bar for people out there that don't know who you are. I don't want to go too too deep into it, but just a couple minutes. Can you just walk us through kind of that that origin story? Maybe start with like year-by-year revenue so people can understand and know the scale.

Yeah. So Jared Smith and I were childhood friends and started it and we started working on the business November of 2012. Launched April 2013. First production was in my parents' basement. We're working on the weekends.

Shout out Mama Rahal. Let's go, baby.

Yep. And then, you know, made production, drove drove delivered products, had a Shopify store, and launched. And we had product market fit with CrossFit gyms from day one. I remember I I delivered the first two cartons to River North CrossFit and sold out that day. So 24 bars in one store.

This is you cooking up in the kitchen at the crib like fresh fresh bars.

Yep.

Yep.

So right 24 for a day. That's a lot.

Were you in the cult then? The CrossFit cult?

Yeah, I was I was a big member.

Yeah. There you go.

And then so then the mission was all right, we got product market fit and crossfit. Let's go to every single CrossFit gym. And like one data point was I we sold product to a convenience store in Chicago like where I were near the gym River North CrossFit. And then we had product in River North CrossFit. We sold like one bar a week at the convenience store.

Velocity game. Let's hear this.

And then we sold like 150 at the CrossFit gym. So pretty obvious. You just sell to CrossFit gyms. It's not working at a convenience store with the set of all the competitors at a CrossFit gym. It's made for them. We're alone. There's no other bar. So, and we just had a map in our office of like all the CrossFit gyms that we just like we're just the main KPI of the company was like get CrossFit gyms. So, April 2013 to that end year we did $600,000 in sales. The following year we did 2 million. And then that's when we were like, "All right, how do we cross the chasm to natural grocery mass market?"

That's when that brief came and you guys went on the rocket ship.

Yeah. And then we did the brief and then decided to go into retail. Wegman's was the first retailer.

Wegman's is back, baby. Again, David

Wegman's special place.

Let's go.

Very special retailer.

Shout out Wegman's.

Yeah. And then third year we did 36 million.

Little 18x markup, guys.

Yeah. And then the following year we did 161 million

little 5x

and that's the year we transacted to Kellogg. It was October 6th. And then the following year we did about 220 240 million in sales.

And then Kellogg probably did what Kelloggs does which we'll we'll we'll get into that.

Kellogg's great. Nothing bad to say about Kellogg. And then and then I stayed on for a year after I left in March of 2019. I think a big thing to point out with that I mean you found a very uncompetitive market like you guys were the only ones feeding this. How long into that journey did were there fast followers to come on and try and take market share from you?

Yeah. So one of the advantages of we were DTOC Amazon DTOC and and Trader Joe's was like most of our volume in 2016. So in the syndicated data, we weren't that big because those numbers aren't showing up.

Oh wow.

So that's why like at when we sold and the number was public, everyone's like, where did this come from? So that was one advantage. We we didn't get fast followers. And then after we So after we sold, that's when they all came like Epic Bar made one or a couple others, but they never those fast followers just don't really usually work. I mean, if you study kind cliff, the quests, they all had those and those that don't really work. So,

when did you actually know it was going to work?

I knew right away it was going to work. It was just the degree in which it was going to work. I didn't know, but I knew I knew it was going to work in CrossFit because if it worked at that one gym, it would work in California, Florida.

Is this your first company?

Uh, this my first like

real company. Yeah. I had started two other things that failed. I I they didn't really start, but one was a coffee shop, a doughnut shop called Cream and Sugar.

I feel your passion for coffee. I'm very passionate about coffee, too.

Yeah, me too. And then the other one was a sleep shot like Dreamwater.

Oo. Early.

Yeah. But I'm glad both those didn't work.

Yeah, you did decent.

Yeah.

What do you think was like the biggest decision you made at RX Bar that people don't know about? Let's just assume the rebrand was the big one, the CrossFit. What's something that people don't know that happened or you did that my audience is going to be mind-blown?

You know, it's hard to say like one big decision. There's, you know, a successful company is a collection of really good decisions. I think, you know, there's a decision not to go to Walmart early, which was big. We said no.

That's always a good thing.

Yeah. Yeah. I mean, they're just the biggest retailer. I mean, they're they're the 400 lb gorilla. And the reason why we just weren't ready for it, like we couldn't it would have been too overbearing. And I don't think our product was good for Walmart because we were in protein no man's land and we were expensive like so another one was switching a date supplier was a big one. So we had one date supplier they're lower cost and then I found a better quality date that was more expensive. It was about 30% more expensive but it made the product much better and

LTV just more sticky. Everyone likes

I think. Yeah. Yeah. It's all about product. So that that was a decision that I think

that's a big decision. I mean that's one of the four core ingredients. I probably raised your cost a couple percent right.

Yeah. And so I think that was probably there was an inflection point of like a material improvement in the product that hurt our cost of goods I would say. Yeah. That that that would be the best decision that no one knows.

What about I think of that scale at some point you probably almost died or almost ran out of money. Any stories there or was it smooth sound?

Because you guys didn't raise money until the until the exit. Correct.

We never raised money. We just took some debt.

We had a dependency on a manufacturing partner.

No dependency on one single manufacturer.

Yeah. The the for entrepreneurs if you should be scanning your business. If there's a dependency, it should you should be understanding it and mitigating it. And so we had a dep this is where like this is where I learned all this. So I got we had a dependency. They're a great manufacturer and we had I had a good relationship with them. They, you know, I was a force of nature. I used to sleep at the plant. Like I just, you know, they love that. I was committed. But then a larger customer came in and bought out all their volume.

This is why you got that most favored nation.

You just need to protect yourself.

Yeah.

And we figured it out, but it was like this moment of like, oh, this is really a fragile business, right? like and we almost died there because you couldn't make product and then if you do you got to like go to a new manufacturer then there's all types of risk there ultimately figured out a way to work with them but yeah that was like you know the middle of our growth

you would say just always have backup manufacturers uniformity in product

I think another thing too is like understanding and knowing how you're positioned in the market and the leverage like maybe they have you know their whole entire production going on and they need to fill it up like there's cost to just keep it running and need to fill up their line. That's something understanding and knowing how much volume you've done over a long period of time and you're credible and you're actually paying your vendors. I didn't realize for me, it took me like six, seven years in to realize like, wow, we've done like a s like a good amount of business for six, seven years and we pay our guy net 30 like people want our business. I feel like feel like people don't understand and know how they're positioning the market and the leverage against the vendors.

Yeah. And I I don't I don't like the word leverage. I think you having strong partners and good relationships really strengthen the business and like there's a term mutualism which we use at the company and it's this idea that it's really empathy and if if you can have empathy for your partners and not use leverage when you have it and build a really really strong network, it makes the business really resilient and really strong. And so that that's my approach with our suppliers and is trying to make those really competitive advantages. And

that sounded a little anim animalistic when I said that the leverage I get it like because like I think what we when you do get power if you abuse it will come back and bite you

especially it could hurt you like tariffs or co like times like

that. Exactly. Like you don't know. And there's a story where my dad taught me this. My dad was he's a ingredient supplier and Coca-Cola used to just like 180day terms 360 like just abuse used all their leverage Coke they're just and for their orange juice business Min they would they would just beat up suppliers beat them up and like just RFP them to death

and then there was an issue with the crop and guess what they all did they they got they were like no I'm sorry there's some symmetry and so and any business where you have these sort of interdependencies and like relationships and you want to make sure those are healthy and strong.

Yeah, I agree with that. I think the easiest two levers is always just the the terms and the cogs, the net terms and the cogs. You could always toggle those away from a cash flow.

Yeah. You you want to have good deals. Like I think those are separate things, but you don't you want to make sure they make money. Like everyone needs to make money

and in general like I don't want to do business with someone who's always [ __ ]

grinding me to the bone. Like it sucks. like no one that doesn't feel good. And then like my framework is like if they get an email from me, are they like, "Oh, fuck."

Yeah.

Or are they like, "Yes,

happiness."

They feel good that I'm, you know, I'm there and I'm

That's a very simple good mental model. I like that one.

Yeah. Like, so I I want people to get emails from me and be like, "Oh, he's fair. He's tough, but he's fair."

I like that. Tough, but fair. That's a good one. I'd like to think I'm in that arena there. So, they buy you for 600 million? Let's just fast forward all the way to the end. What happened in and around then from a negotiations perspective? Other offers I'm sure there's the worst is probably when you get like an LOI and then like it's closed but it's not closed yet. The money isn't in. You got to hit the numbers. What are the big things you learned from that like window of like [ __ ] yes, we're going to sell and then actually get the bag.

Um investment bankers don't sell the company. Management team sells the company. I had this misconception that like investment bankers do all of it. The investment banker runs the process and is coordinating, but they're the broker. They're really helpful, but like the management team, the CEO needs to sell the company. So, that was a misconception I had going into it. And then running a process is really important. That's what the banker does is design a very thoughtful process and the timing of it. And you see this with fundraising too because ultimately fundraising is a sales process. If you don't have deadlines and a proper like stage gate approach, it will just like drag on for too long. Like you need the constraint of time. So our our process was there's a good like design process and then it needs to be competitive. If you're just talking to one company, it's there's this there's no competitive dynamic or tension. So

as many companies as possible, do you recommend?

No, because then you're wasting time. But there's like there are two types of potential buyers. private equity or and then strategic so operating companies. And so we knew private equity would want to basically buy some piece of it and then two years later sell it

which I didn't want to do because then I I just I

I thought RX Bar like belonged in a portfolio and was at scale Tim would be better at a strategic or CBG business. So for us it was like all right we're going to prioritize strategics because that's where we want to be and then maybe a few private equity groups just in case. So like 8 to 10 you invite them in and then you you you go present and meet and give an offer initial offer and then narrow it down. So

how would you like if we can just categorize the strategics and the ports like Kelloggs Unilever etc. And then the pees, how would you and I know this is whatever 1015 years ago, but like when you look at that, what type of like similarities and differences are there between each as far as how they evaluate the business? Are you going to get a better multiple on this side or this side? Like what what are the key things to look at on each side?

Well, private equity, you have to put yourself in their shoes. They are, if they're going to buy it for 300, they're focused on IRRa, they're going to want a 2x at least in a 2-year period or something. So, you just have to make do the you have to put yourself in their shoes and underwrite with them. So you can understand what it makes sense

as if you were operating the company like we go this many doors this much revenue does this make sense.

Yeah. Just you want it's all about their under understand their underwriting and the underwriting of a strategic is different like a Kellogg they're thinking longer term. They're about they're about earnings per share. If you can grow earnings per share for them that's great and you want to make sure there's some synergy or strategic benefit. If you get into their distribution they can help you internationally they can grow topline. but their main KPI is growing earnings per share. So they're just different, right, between those two. How do you play that game over there? Like they obviously want to get the best price, but it's so it's like let's just say you're in 400 Walmart doors and there's 4,000 Walmart doors and like you know what their capabilities are. Like are they going to want to do financials showing the max that's going to kind of hurt their price? Correct. Like how does that go back and forth as far as like do they want to show how big it can be because that's just going to drive up the price versus like

Yeah. And on their underwriting they're saying all right well how much distributions left that's like easy growth. They can just really figure out with the existing portfolio not future innovation. What is the TAM of this product and business?

And is that something they're going to give to you or is that an internal thing on their side? No, that's just like I mean they're not sharing that, but it's it's it's an obvious like

yeah,

if you're in your if you're in their shoes like what do they again they want earnings growing earnings per share. So yeah, you just got to it's basically empathy.

It's like if that helps position it for both the types of buyers. And I think in general, just be like, really, there's this expression someone taught me that I think is really funny. It's like, "You don't want to perfume the pig."

Meaning, no one, they're not stupid. So you just have to be really honest. They find out everything. Yeah, of course. Like, you want it to work. You don't want to trick anybody. You're not at that scale. You're not tricking anybody. So any ciness is interpreted as a problem.

And so, for example, like what we did, like, you know, when we started having meetings, like, you know, everyone's looking at my calendar. It's like, I never leave the office. And so, like, why is Peter in Georgia? Like, he has no business there. And so it was like, quickly, it was obvious we're doing something. And so we, as a team, we decided, like, all right, we're just going to be fully transparent. And so one thing we did is we invited all the strategics to our office and just were fully transparent about everything. And it was just a powerful thing because we had nothing to hide. And so, you know, when like Pepsi came to the office, I like introduced the president to our like, you know, people in our team, and that just builds trust. And yeah, so I think there's this, I mean, selling a company, there's this sort of like, you're, I didn't this like deal, like you're making a deal and and and negotiating, but really it's like, all right, let's serve the collective best interest. And the way to do that is to be honest. And the way to do that is to be transparent and empathize with both our needs and just get a deal done that way. And that was our approach. And and it's, I think it's why we had one, our team, we had no retention issue, like no one left. We also had like four of the top food companies bidding. And yeah, it was a very successful process.

Seems like zooming out, it's like almost like it is what it is. And like up or down, it's going to be like a 10 or 20% on the price. Like the facts are the facts, it feels like.

Yeah, exact. Well, yeah. They're they're justifying any multiple based on the existing revenue, like the P&L. And then the future, like how they can justify higher price is determined by what what is left to grow that's easy that's there. They're not banking on future innovation in food. In food, at least.

And then also, you have to understand, know what's going on just like in the macro markets. The interest rates are people buying these type of companies.

In tax too, there's always these like tax benefits that are I I didn't know, but those factors really matter. But the most important thing if your if your goal is enterprise value, driving that up, it's competitive. Because if you if you're just bidding on one, it's like selling a house. Like if you're bidding on one person, it's there's no competitive tension. So creating competitive tension is really important.

And then yeah, like there's actually a good analogy of like selling a company, it's like selling a house. If you put all your money in the landscaping, but the water's not working. The faucet, there's no water pressure. It's like goes down. Yeah. Like so you need good water pressure. It needs to be hot. It needs to be cold. There needs to be no cracks in the foundation. The landscaping does have to be beautiful, but like the whole thing needs to make sense.

Needs to be a nice house.

Yeah. Holistically. And like that's thing, like accounting, you know, a lot of entrepreneurs, the last thing they worry about is accounting. But if you can close the books fast and it's accurate and you're audited, if you're doing that well, it's like a if you measure, you should measure the quality of a restaurant by the bathroom, right? If you're paying attention to those details, that means everything is [ __ ] good.

If the hardest thing is done well, or the one that's least looked at, makes a lot of sense.

Yeah.

Wow. So you stayed on as CEO for 18 months post-acquisition. What was that like? What did running a brand inside that monster look like?

You know, it's grass is always like when you're looking at a big company, or it's like, oh, they're slow, or it's like, those are easy things. I learned a lot of and have a lot of respect for the scale at which they operate. Like, I learned a lot about like, it is so hard to run a mega-scale multinational legacy business. Like, it's really hard.

Why? Well, you have so many people. You have these legacy iconic brands.

Comes down to people, right? Just so many layers of people.

Yeah. And then there's like good people that have been there for a long time. And on the innovation side, like we we had a product. This is a good example. Like we had a nut butter that was a pretty good business, $30 million for us at our $200 million business. I was like, "Oh yeah, it's good." But at something like Kellogg, 16 whatever billion market cap, it wasn't worth their time. Like it's this like innovator's dilemma. And so,

And do you agree with that? That they should just go all in on less products, get economies of scale. Is that what is that what

I think? Yeah. Like they're what they're good at is scale and what people want. And if you, it's really hard to foster something innovative that is small. And then yeah, global business is super hard to run. They they've operations in Africa, India, Asia. Those are all different cultures and different needs. So, but but what it was like is I I went into it like it was just a different scale that I'd never seen. And I just had a lot of respect for running a business at that scale with such good history. And, you know, for me as an entrepreneur, like it was a different pace, right? Like, yeah, and it's a huge ship. And so it was good for me to see like, oh, this is the pace you have to move, how to like align interests internally. Because for me, I was, you know, it's just I was the ultimate decision maker. Were there even you have a CEO who is the decision maker, you do need to like get get alignment. And how you do that is really interesting. So,

Is it possible, let's just say you guys have about 100 people versus what they have which is tens of thousands. Let's just say, is it just is this subjective or subjective? Like they can't go as fast as you? Correct. It's just too big.

Like you lose, you lose speed with scale. Yeah. Period. Is that a fact?

Yeah, I think so. The thing that I think handicaps them is that you're being a public company, your investors are buying the stock because they want earnings per share of growth. They want a dividend. And so that's what the mark, that's your the share, the shareholders are saying that. And so when you're on the quarterly cadence that matters. So if the CEO wants to really invest in new technology or something new, it's going to take what, two years to implement something at the earliest. You'd have to like really convince everyone that, hey, we're gonna take some of those earnings. They're going to dilute earnings per share to reinvest it in something that might not work. You're just going to get [ __ ] you're going to get hammered. So,

You need to just think through shorter time horizons to appease the end investors.

Yeah. And so, the way so the the they're what they are is like really good at scale and then they buy innovation and add that incrementally to their business versus creating it. And they'll also cut products that potentially alienate like that nut butter. Maybe they have another brand in the portfolio that wins.

No, they're not so worried about that. It's more, it's just the resources on that just aren't worth it.

Yeah. Makes sense. Walk me through that day in 2017. The deal closed. Big bag of money going in the account. Big bag. What goes through your head?

Well, I had been expecting it, right? So, like the process started in March. So, um,

How long did the process take? Banker to

March to October 6th was signing. Close was October 28th.

Was that the worst? That window in October where it's like in but not in?

Yeah. Well, that it's dangerous cuz like you have litigation leverage, which like someone, you know, that that's like the scary thing is like someone could just try to sue you and shake you down. It's tough out there sometimes, but it didn't happen to us, thank God. Yeah. I mean, it was an amazing day. You know, I'm a bit gonna sound sort of strange, but here's how I thought about it. And I think this is really important for founders to to approach this like this. When you're a founder and CEO, you are you sort of have three roles and it's important that you do not co-mingle those and abuse them. And so one of them is your shareholder, hopefully large one. The other one is you're the CEO, which is an employee. And the other one is like a founder, which I actually is like the least important one. It's sort of doesn't mean anything. It's just there. And so right, like as a CEO, that day was like, yeah, we we did what we said we're going to do and it was really successful. But like, I still had the company to run and I still had like the team to support. And so as a shareholder, I was like, yeah, awesome. Me and Jared sort of went to dinner and acknowledged it. But I didn't think it was appropriate to like overly celebrate something because as a CEO, we had more work to do. Like, I I didn't want to leave. It wasn't like a hand the keys over and you're gone. And, you know, and for me, the money, it's like when the money came in, it's not like I changed my lifestyle.

It's actually You don't have to tell us. How much money did you have? Like, it was like a couple million. Like, were you like running like paycheck to paycheck? As much or as low as you want to. That's kind of

My salary was 150.

Wow.

And that and that and before that it was like 75, 52.

Hurting some feelings out there with that one. That's

But when you're when you're 27 or eight or whatever, like I didn't need I didn't need anything. And yeah,

You didn't like didn't feel it. It almost seems

No. And and I didn't understand like when the money actually first got, I didn't even understand it.

Did you like understand at that point, like interest on your money? I mean, I I can't understand it, but not really, like a deeper level of understanding of of it. But but so we acknowledged it. It was a good good day. But the the arrangement we had was we're going to run the company separately. Like we were a separate operating business. And I didn't want to, I didn't want to leave my job. I liked my job. And so I stayed on. And so I so I just didn't think it was appropriate for the CEO to be like celebrating too much when the plan was to stay on and keep building. How long did it take you to actually comprehend the the wealth?

Probably like two years after. No, maybe less. Like a year after.

And that was during it. How long was it on compete?

Five years.

Damn. Is that standard?

Oh, yeah. Yeah. Five or six is standard. Or you get two to six. You can't really go more any more than that because then it's stopping you from working. So they don't want that. So after non-compete, the day that that's done, that non-compete expires, I don't know if it's Power Bar or not. You mentioned that earlier. First phone call, who does it go to?

It was the CEO of Post Holdings.

She or Power Bar?

Why the same category ultimately? I feel like that's

Yeah.

Not common.

So I was once I left RX, I was like, "All right, I think this is a normal thing. Like, I'm never going back to food or bars." So then I like the journey of finding your next thing. It was like, you know, investing, talking to other founders, investing. And then I like explored synthetic biology. I explored other other.

That sounds hard, bro. Synthetic biology.

There is, but it's really interesting. But so so use that as an example. Like I wanted to learn it. I thought it was fascinating. I thought I think biology is the next frontier. The ability to control disease. Like it's really would be breakthrough if we can control biology. And then I was getting close to this company and then I realized like, I can't learn this stuff actually. I can't learn this stuff fast enough and understand it deep enough to be able to affect the product. And if I have to pick up the phone to fix the product, that's a problem. Meaning, if there's a dependency on someone else for the product, I'm not getting involved. It's not for me because as especially as a CEO, like you have to be able to fix your product. Like you have to understand it deeply. And I never was going to be able to do that with with biology. It's

So that experience, like it was a bit of it's a teacher. Yeah. It's a humility thing. And I was like, all right.

But what I do know is food. I know that really, really well. And so I'm just going to double down on what I know.

And so I course-corrected to CPG and food, particularly. So, but I did venture off. And I was, but like, I mean, as an investor, I've invested in some companies where like the CEO doesn't know the pro, like that just doesn't work.

We talked about that off-camera. Just a quick jab in there. What's the biggest thing you've learned about from a seed investing perspective, for just investing period?

I mean, it's it's it's about the, it's about the CEO. It's all about people. But it's investing is not for me. I feel like always post-big exit, the use of the world, they make like 10 to 50 investments and they're like, "I don't like this game." And they start their own thing. Like, I literally see that 100% of the time.

Yeah. I think it's a pattern.

Yeah.

Yeah. I don't invest at all. And I don't invest in anything.

ETFs, S&P, let's get it, boys.

Yeah.

I want to touch on these last two things before we fire off on the Quick Strike. I want to get a little bit into leadership. What would you say your leadership style is? I'd say demanding, fair, present, honest, servant leader. I try to be a servant leader as much as I can. I think having a servant's mindset is important for a whole company. Like, if we're all there to help each other and serve each other, it's much better. So, so I I like, I want to make sure the best ideas rise, not like flat or best ideas rise. And I want to make sure the talent, and I learned this from working at a bad company. Like, I want to make sure talent can like spread their wings. There's really talented people, just get out of their way, like guide them.

What does that look like in practice? Just communication, just like you seeing it or

I like, I think fostering their ideas, enabling them, protecting them is important. Making sure age is not status, I think is important though.

So do you believe in experience?

Yeah, absolutely. Like experience should be respected massively, but it but but age should not be status. Like I've worked at a company where it's like, oh, the decision-maker was based on because how long you stayed there, not based on merit as much. So I think as leaders in general, you have to make sure the best ideas emerge regardless of where they come from. And so you want to, yeah.

Feel like you're pretty blunt. You just say how it is.

Oh, yeah. I can't, I'll do any. Yeah. So like communication style would be like, as you know, it's like a physics thing. Like the fastest between two points is a straight line. And I think communication should be that way.

Everybody have access to you as far as anybody in the company can tell you anything.

Yeah. Yeah. I don't, I don't have an office. I sit right.

You don't personally have an office within the office?

No. We're going to pop up that image right there. We got to see that, just right in the middle of the pit or like a little scared sides you want.

No, we just are all open. No. Yeah.

What's a big leadership mistake from RX Bar that you learned that's made you a better leader from David?

So, if servant leadership is your style, you'll want to help every, like solve every problem. You'll want to like, hey, there's a problem. I want like, I'm here for you. Let me, let me like figure it out with you or for you. Or and that's good in small teams. But when you get to some, or organization gets to some scale, the problem is you, you, you cause this dependency on you, or you cause, you, you cause the individual to lose agency. And so it's a bit of like teaching someone how to fish versus giving them the fish. So I think in general, that was one thing I did at RX where I was like, I was just really doing everything.

Yeah. Not I wasn't necessarily doing everything, but I was just I was really involved in it and like helping. I was it was good intention as a servant leader approach, but then I created something where everything had to float to the top. People lost agency.

So you're saying I shouldn't check the captions on the social media posts for our episode.

Yeah. Like, so exactly. Like, I think Jocko Willink has a book called The Dichotomy of Leadership. And I think it's like, you have to be stubborn, flexible. You have to be like open-minded. You have to be these like paradoxical things. And great leadership is knowing when to micromanage and when when to macromanage. And going in and out of those things is really important. Like, you got to be at 50,000 feet, but then you got to like parachute down and fight in the trenches.

Clouds on the dirt, both of them.

Yeah. That elevation, that change is important. And I think making sure the team has agency is really important. And good judgment. So one of the, I think unintended conse over overuse of servant leadership is you can kind of

Do too much, almost. I feel like.

Yeah. And you're not, you're not slowing down in teaching agency and teaching judgment and and and and I think that's really important as you as you scale because like things break down in middle management, basically.

Because you can have your like the man, the management team is good. And that that team works. But then when there's a middle management that comes in and there's analysts underneath that, that's when like culture breaks down. As a CEO, like if you would take a step back and you're on an island for a week, like what are those core numbers that you need to look at?

Inventory, both finished goods and raw material, net revenue, and then cost of goods.

Wow.

Yeah. Inventory is cash.

Seems as though he's got a supply issue here, not a demand. So, you're just you're radically confident in the business holistically, and you're your main concern is just making sure that we have inventory and it's priced efficiently. That's your big concern.

Yeah, we're in an inventory-heavy business. And you're managing your costs are everything. So basically the two numbers I, you know, to make sure your costs are okay and you have cash, and then your demand's good revenue.

Makes sense.

Last section before we get into Quick Strike. Let's just dive a little bit into the roadmap moving forward. I know you have a lot of stuff up your sleeve with David. You may or may not be able to share some of it, but what can you share today for this thing to get ultra scale? Like, what needs to happen and where are you guys going?

Um, so we're building a a platform business. So we'll ultimately have multiple brands in a decentralized way, which is I'm very excited for. And our first brand's David. Uh, and David.

Big announcement. That's a big announcement.

Yep. And David is all about high performance. We make tools that help you increase muscle, decrease fat.

Same thesis across the others?

No, no. David's, think of it as like, yeah, it's high performance, protein to calorie ratio. And that's like the that's the spear that's driving into the market that we can then build a platform from. So, all energy is on David. And we will be making ice cream soon. We'll have our bar portfolio, ice cream, and then looking at salty snacks. So, protein chips. And then yeah, that's most of it. We have some other stuff we're looking at in our arsenal, but that would be say 70% of it. And then, yeah, some fun fun other stuff coming.

So, the the see-through in this, obviously you're going to get you, your team, the operational excellence, the supply chain of everything. Is this really about EpoG too? Like, are we going to see Epigo in a lot of new products?

Yeah, we'll see. Yeah, you see it where it makes sense, which is items that are totally dependent on fat. So ice cream's a huge one. Chocolate's a big one. Cocoa butter. And then frying. Frying is really the coolest application because.

I mean, fried food is just negative connotation with it. Terrible. Lower the cows. Yeah.

Yeah.

Love that. When can we expect like, what's a a ballpark range of when we're going to start seeing some of this stuff?

June.

Wow.

It's it's April.

I'm glad that you shared that because when I asked you what are you most excited about, that's like the first thing. And I when we were on the phone, I could just tell how excited you were. And then you brought in your other guy. Yeah, he was he was excited as well too. So, I'm glad that we touched base on that.

What about directly in relation to that? Like, what about international expansion? You're gonna have all this new product expansion under this umbrella. And we didn't even touch on that. Are I don't even know, are you guys international?

No, we're not. And the reason why is the American, like the America is the best consumer market. It's competitive, too. And so we need to get to scale here before we add complexity. Like, there's just no other market with this many people.

Expire international.

Yeah, we went to Canada and the UK and Europe. But like Europe, for example, like a lot of people, but the French consumer is so different than the the British UK consumer.

Deep and narrow with just more products and just.

Yeah. Like the market. And so I basically, I think international is a distraction until a couple years. Like, I think we have to be bored till we go there. And yeah, this this is the only market that matters in food for now.

If you had to pick a single thing to say why this platform is going to work, what is the big thing that you can point to? I think that you have a lot of different modes, but I'm just curious hearing from you.

Why it's going to work.

Why it's going to work. Yeah.

Yeah. I think the the fundamental thing is a concept in economics called the consumer surplus. And I I'll use the gold bar as an example. And it's like when I'm as a product developer, that's what I'm always looking for is creating consumer surplus. And so this this product's $3.25. It's 28 grams of protein, the protein of a meal, calories of a snack. But if you go in the market or you look at it, like what do you pay to get 28 grams of protein? It's actually like $10, $15, $20. And then if if you look at our competitors, like Kind bar, for example, if you were to get what they have, like six grams. So like 28 grams on they, you have to eat like five Kind bars. So that's actually like what, $10, $12 bucks maybe? No, actually more. It's a thousand plus calories.

You're backing into the dollars per gram almost from an efficiency perspective.

Yeah. Yeah. And and so my creating consumer surplus is the most important thing, like fundamentally, meaning.

What do you mean by that? Is that from a money?

It means it's a reflection of value. So like, what, so way to calculate would be like, what are what are people actually willing to pay for 28 grams of protein? And in the market, they're willing to pay $10 to $15 for it. We can offer it for $3.3, $3.25. So that that delta is the surplus. And you know.

Is that the thesis with the portfol, with the whole entire portfolio?

It's my whole approach with how I look at products. So like, look at iPhone. Like, what would you actually pay for having a a computer in your pocket that's connected to the internet? Like, I'd actually, you know, it's probably $10,000 if you had the money.

Yeah. If you piece together all the things that I use on there. Yeah.

Yeah. So, so I, the that's the key, the key thing in product development is creating consumer surplus.

I have never heard of that thesis or mental model. It's called consumer surplus.

Yeah.

Yeah.

I didn't do well in econom, I'm not an economics guy.

I like, I like the social sciences, but yeah. So so and there's plenty of other, like for example, my mouth guard. I can't sleep without it. So what I'd actually pay for that is like enormous. Like, so there's certain products like.

You just get that hedge in what someone would pay versus what you can offer to the market.

It it's like, like how do I'm trying to think what number it would convert to, but is it just like val, it's the value people have from your product. It would reflect about how much they value your product.

What about taking the bet on on protein? Obviously, you know, we talked about fads versus trends. Like, is that are you looking at like empirical evidence? Is that is this like a subjective thing? Or are you like all in on protein as the thing?

Yeah, protein. So protein is not a fad because it's a macronutrient. It's not like a carnivore diet or something that like is some elimination diet. It's simply just a macronutrient. And it turns out it's like the most important, most difficult to consume, most expensive macronutrient. And so I, you know, like I don't, it's it's always going to be important. Maybe it's like peaking in popularity because of GLP1s or whatever, but I think the the shift over the last four years is like, it's not for just sport. It's not just for bodybuilding. It's like for general wellness and optimizing life. So, yes, we're making a big bet on it, but I I don't, it's not comparing to like paleo or these diet trends. And and and and my my my hypothesis is that because of GLP1s, you you historically had diet trends cycle popularity every two or three years. And those are driven by the need for weight loss. And those days are over because diet, an elimination diet as an intervention for weight loss is no longer.

Needed.

Effective. Like.

It's just affecting your brain to be.

To be, yeah, to be compliant on a keto diet. It's really hard. Keto works, fasting, they all work. But to be compliant is really hard. Now, you you're going to get a drug that's really easy to be compliant. I mean, it's coming in pill form that actually gets crazy results.

Hypothetically, they're going to have a harder time eating your delicious David protein bar than actually sticking to the diet.

Yeah. Yeah. Yeah. Exactly. And so, so.

That is that is [ __ ] crazy to think to say that out loud.

Yeah. And so, so it's really effective. So the days of diet fads, like there used to be just real volatility in them. Like, I think that's going to be gone because for people for weight loss are going to drug. That's great. So the interventions just so much better. So yeah, I think it's changing sort of food forever. What's a prediction in that in the CPG space like as a whole that you think people are really like not looking at?

I think I think like a contrarian one is just soy is actually a great protein source. But you know, for like you and me, like we're we're like North American males, so we just grew up.

Soy sounds a little soft.

Yeah. Like it's feminizing or something. And that that like the brand of soy is so bad.

I literally have no, I just think it's soft. It has a branding problem.

Yeah. And when you see it, you're going to be like, "No." Like, no matter what, it's just this default no. And it has like a full PDCAAS score, which is just a reflection of its amino acid profile. Like, if you just look at it from first principles, you're like, "Oh, this is like an affordable, pretty good tasting protein source. It has a terrible reputation, but it's like it's one, it's a contrarian thing where it's like people will disagree with you, but it's actually you're right."

So, I, the science reflects it.

Yeah. It doesn't give you what we grew up thinking it did.

M scoops and soy protein. Any last thoughts before we get into Quick Strike now with just David's roadmap. Anything else big that you want to share with our audience?

David's 150.

May or may not have some really cool names and branding which we're not going to share. Obviously, you're going to announce that. Which again, the naming and the labeling Mount Rushmore.

Thanks.

We're there. Quick strike. I'm just going to dial off a bunch of random questions and then we're good here. Let's start with that. Best deep dish pizza in Chicago. What you got?

Giordano's.

The 150 calorie lawsuit. One sentence. Honest take. What do you have?

Net positive.

One skill every CPG founder needs to master.

Humility.

What happened at 7-Eleven? Word on the street says you got kicked out at some point.

Oh, yeah. Quick story. So, I'm I I think of myself as an anthropologist, which is just the study of culture. And so, I like to observe shoppers. And I think convenience stores like 7-Elevens and convenience stores are really good interesting shopping experiences because you get every different type of consumer, right? Like.

Everything high, low, everything.

Truck drivers, construction workers, office workers, pregnant women, like everyone comes through 7-Eleven. And so I was just, there was one by my house and I would just I would just loiter there watching people cuz it's interesting, like the behavior of a shopper. Like, do they come to the category and know exactly what they want? Do they do they come and grab the bar, flip it? What do they look at? Do they flip it around? Are like how long do they shop the category? There's all this data actually and you can't get it in a survey, is my point. Like it's an you have to observe. So I I like to observe the world. And yeah, I got asked to leave.

I I love doing like Zumiez, Tilly's, PacSun, whenever in the mall. My girls always like, "Why do you want to go in Spencer's?" I was like, I just I just want to see what the vibe is in there. I just want to see what's going on in there.

What's the single biggest thing founders get wrong when they walk into a fundraise?

I mean, obvious one is like maximizing price. But that's obvious. The second thing would be not putting themselves in the shoes of the investor. So, like, how do they underwrite? Where's the money coming from? Yeah. Like, what kind of return do they need over what time frame? Yeah. Is it, where's the money from? Whose money is it?

That's a question you can just ask as far as like, what's your expectations of how long and what's your what's your expected return?

Where's the money? What fund is it coming from? What is your expectation? How do you underwrite, underwrite? Like, what kind of return do you need? And then whose money is it?

Whose money is it? That's that's kind of an interesting one.

Yeah.

Where is this coming from?

Yeah.

One word to describe Andrew Huberman.

He's a mensch. He's just like, he's what you see. He's just an awesome guy. Like, he's just kind, generous, curious. He's exactly what you see.

One word to describe Lane Norton.

He's exactly what you see, too. He's tenacious. I'm [ __ ] I mean, the guy is super gritty, tough, really intelligent. Yeah, he's he's a work of, he's a force of nature.

We're going to pop up the lifting videos with him. He is a savage. Have you seen those lifting videos? And he's like, he's like 40 what? Plus, and he's he's Yeah. Like, and he's been doing it for and he he's been doing it for like his whole life. Natural.

Key word, natural.

Like properly, like no hormone augmentation.

Got to hold off on that. Ladies and gentlemen, what's one thing you believed about business in your 20s that you completely disagree with now?

I think that it's all about money. Yeah. Like when I was younger, I was probably like, "Oh, it's about making money."

What is it about?

I think it's about having impact. It's about a team. It's about it's it's about creating an institution. It's it's about advancing society in some way. It's not just about money.

What's the most overrated piece of marketing advice you hear founders follow?

I don't know, man. It's the most overrated piece of. What's your stack? I don't know.

I mean, it's all going to be consolidated into.

Yeah.

One stack soon with this AI stuff.

Yeah. Just stacks.

Guys, mid-market SAS is in trouble. I'm I'm putting it on the record right now. Green Oaks led your Series A at $725 million valuation, less than a year old. Why them?

So, we weren't planning on raising capital. And this, so I I kept getting text messages from former colleagues at RXBar being like, "Hey, this company reached out to me. They're asking about you, like referrals, references." And I'm like, "What?" I was like, I thought I thought I don't know. I was like being invest, I was being investigated. And it wasn't just like two, it was like 20. And I'm like, I have no idea why. And then a friend was like, "Hey, this company wants to talk to you." And I'm like, "I'm too busy. I'm not talking to investors." I'm like, in my head I was like, "We're not raising money. Just focus." And so I'm like, "No, thank you." And then he followed up again like two weeks later, like, "Hey, they he really wants to talk to you. Just you should talk to them. Trust me." And I'm like, "Okay, I'll talk to him." And it was Green Oaks. Great. Just talk to him. I'm like, "Hey, you know, like these like my approach was like these companies like David, they the P&L should work. We don't really need a lot of capital. We should be capital efficient. So like, you know, but if something in the future opens up, would love to talk to you, but was basically like we're not." And then something up in the like Epo came to me was like, "Hey, you guys should we want to hand it over to you?"

Let me know timeline on this.

So time. Oh, it's like, so I basically solicitations in January from my former team. And then February I talked to Green Oaks, but saying, hey, this we're not, I think don't think we should, we should be capital efficient, basically. And then March was Epigo soliciting us for the acquisition. And then I called up, I called them and I'm like, hey, like I think we can do a deal here. Like we're going to need capital to finance it. And then I was like, hey, by the way, would you? And then it it was them who hired like a a firm to do a background check on me, which what the thing is. So I was I had a PE fund and I had been an investor. And for them to be that proactive and to invest resources in and doing that level of diligence when there wasn't a deal on the table.

There wasn't even a first conversation.

Yeah.

Yeah. I have a lot of respect for that because usually if you're an investor, you kind of you kind of react to stuff like, oh, company's raising, then you get in the process. So they they had identified like, oh, this is something special, let's go investigate. And I, I had a lot of respect for that. So that's that's one, like that means they're serious, that means they're good. And then second, this is cliche, but they believe in great leadership and great founders and are low touch. Like, I hold myself really accountable. I I have really high standards for myself. I don't need portfolio management. Like, I don't need some Ivy League kid checking in on me on revenue. Like, I we have, we measure everything. We do all, we're we close our books. We run it like a public company, the best we can at our stage. I don't want PMS, which is basically like some junior person like checking in on me and giving me advice. Like, I I as a second-time founder, I I think I've earned the like that I I don't want to be, I just don't want someone keeping tabs on me. Now, that being said, I I do have a duty to report and we do do that and I do respect that. But I I just don't want to be dragged down by shareholders that are just dragging it down. Like, I want someone to get on the get on the rocket ship and like support us in every way. A lot of the Silicon Valley type investors do that versus like private, like traditional private equity. They're they're doing portfolio management, which is I just find it not helpful. So Valor and Green Oaks were like very much that, right? They like they invest in big big ideas with really great founders. So there's a precedent of that.

I mean, they need to see, I mean, if they came in at 725, they think this thing is, yeah, billions and billions and billions of dollars.

Yeah. Yeah, they're underwriting 10x.

Nice flex. Love that.

What is the best business decision you've made in your whole life? One single decision. It's a tough question. I've never asked that.

Probably getting out of retirement and starting David. Well, no. Picking picking Jared to start RX Bar.

It's all about the people.

Yeah.

You still close with him?

Yeah.

What's he doing now?

He has a company called Horbles.

Oh, I didn't know that was him.

Yeah. Yeah. That's a good one, too.

All right, last three questions I ask everybody. Favorite book or podcast, and why?

Favorite podcast? I think the there's a new one. I think it's Sequoia's podcast called The Long and Windy Road. It's that's probably my favorite one because it's it's CEO memoirs or like it's it's Sequoia interviewing like CEOs and just about this like CEO, like being a CEO. Is that the one with the guys with Elon Musk in the bar, or is that a different one?

No, it's different.

Check one out. It's fairly new, this one.

I think so. But for me, I like to learn and it's a very niche thing about like being particularly being a CEO of a high-growth company. You know, you talk about like bringing in like it's all these niche topics of like, all right, do you when do you bring in experience versus high learning curve people, like what's the mix of that, like scaling culture, like how do you do that, like.

Who's the host?

Uh, he's the founder or CEO of HubSpot. I don't know. I forgot his name.

Oh, wow. Interesting.

That's that's new for me. Obviously love like Huberman and all the health health podcasts, but current what I'm consuming is that.

Book guy? You a book guy?

Book? No, I I mean, I like to consume information, but reading is too hard for me. So I do it audio and through podcasts.

Love it. Entrepreneur or brand that you want to give flowers to and why? Uh, so I this is so cliche, but the GOAT Elon is just the king. He's just this biggest outlier. And then Greg Cacerio from Juneshine and Willies.

Don't even know. June Shine is the.

He's a hard kombucha. And then they have a new brand called Willies that is a THC.

Is Kombucha still going, is it up to the right?

No, it's flat flattened down. And so the reason why is like he's a great entrepreneur. Hard kombucha just sort of hit its TAM, hit its ceiling. And then he pivoted and like.

Was he the winner though? Was Junshine the winner of.

It was the winner in hard kombucha, but no one really won. And then I just his ability to pivot, like there's a lot of times where like, I think with entrepreneurship, it's like, I don't care how good you are as an entrepreneur, you couldn't solve the hard kombucha market, like, you know what I mean? Like he, but he's really good, but then picked the wrong bet or was wrong in the bet. And then he was able to pivot. Like the ability to pivot is a big feat. How important is it, do you think, entrepreneur versus market? I I mean, I just don't think you could outmuscle a smaller shrinking TAM. That's the thesis for sure.

Yeah. Yeah, totally. It depends on the market, of course, like because you can argue that like, oh, Uber's market, like the taxi cab market wasn't that big, but they actually.

Create a net new market.

Yeah. So yeah, it's a combination. But like hard kombucha, like Elon couldn't fix that market. You know what I mean? So he's the most influential person.

That's great advice. What you choose to work on, I still think is the most thing.

It's like, what mountain are you climbing? Like, it's your life's work, so you got to pick the right mountain. And you have to be self-aware of your own skills and abilities to do that.

I have some thoughts on that off the record. Last question, how big can David be?

I think David, if we execute all formats and like keep doing our thing, I think revenue-wise can be about 1.5 billion. Yeah. Across bars, ice cream, chips, and other few other items.

What's that? Exit 10, 15?

I don't know. I don't, I don't know. We don't, we, I, we don't plan on exiting.

I like that. Casual 15 here, guys.

What's the best place for people to find you on the internet? We're going to link it out below as well, but.

Probably X. Yeah.

Yes.

Had a great time, man.

Thanks. Appreciate.

Congrats on the platform. It's going to be crazy. And congrats on bye-bye lawsuits.

Yeah. Yeah, part of the territory.

Man. Thank you.

Thank you.

What's up, guys? If you guys got this far in the episode, I would assume that you enjoyed it. If you got any value, it would mean the world if you hit the subscribe button, give it a like, post a comment, tell a friend. We could keep going bigger, bigger guests, bigger locations, more value. See you in the next episode.