Untold Truth Behind JUUL’s Explosive Growth ft. Alex Cantwell

27:00Like, is that, is that still interesting to you to back like a second or third time? Oh, absolutely. A second or third time founder. Yeah. Yeah. I mean, one of our, one of our companies, two of our companies now actually are, are repeat founders. And I'd actually say, ironically, like we're even better with them because the language barrier is just like, like the communication is tight. I'm not even joking, but like I can accomplish more in five minutes with five minutes with a repeat founder, repeat operator than I can in like literally weeks with a, with a new founder operator. And it's, it's, I'm not exaggerating.

27:36Like that is the delta because the person who's done it before you spend a lot less time on the prescriptive, how you get there and the conversation much more about like, Hey, here's where we need to get to. And here's like the high level thinking on how we're going to go approach it. And then they can kind of go execute. Whereas a lot of first time founders, like they're sitting there being like, okay, I get the where I need to be and the high level, how I get there. But then how do I actually do the how? And you're like, oh, I guess it'd be like the where I need to get to the what I need to do.

28:00And then how do I, how do I do the what it's like that extra layer can take a lot. And obviously we're very happy to provide it. But with like repeat founders, repeat operators, it's like, it's, it's really, really efficient. It's super efficient. And I'm sure you have that, that a classically trained investor to say the same thing. I've heard, you know, we've gotten great feedback from our repeat operators and founders that they really like working with us because of our backgrounds, because we are often speaking the same language or on the same page about a lot of things. Yeah, that's really helpful.

28:25I'd imagine also with repeat founders, it's not only the strategy, but it's also the actual tactics itself. What it's actually going to take to actually solve. They actually understand what actually the true problem is versus maybe what fake problems are, or maybe just less important problems. What's actually the fundamental problems in terms of what could be the bottleneck in terms of growth and understand that a lot more easily as a second or third time. I think you've scaled. Yeah. I used to work with a guy who, I love this quote. He was like, really successful founders or operators, they don't think that they're running a startup.

29:02Basically, they internalize the day they launch, I'm already running a successful company. It just happens to be early on. And that's very different than And most first time founders who are approaching it from a man, I'm putting everything I got into this thing. I sure hope it works. We'll see what happens. It's just a completely different mentality of like, oh, no, no, like this is a successful business. We're just 12 months before the numbers impress anybody, but we're already there. Right. It's like the day we incorporated the day we released our brand or product, like we're already a great concern.

29:29And it's just that that mindset shift is all the difference in the world. It changes how you recruit, when you recruit, your willingness to deploy capital, your willingness to invest in growth programs, your confidence in growth programs. the speed with which you make decisions, like everything changes when you fundamentally shift your thinking. How do you think about different categories to invest in or specifically regulated categories? Because when you look at founders now, how do you evaluate if they actually have the stomach or skill set for navigating complexities like that as you did with Juul?

30:00If you're going to do business in a regulated category, expect a fast start, expect fast growth and a lot of pain on the back end. Just like it doesn't matter what category you're in. If you're in the vice world, that is going to be your path. And that's what I tell every single family. They're like, oh, my numbers look great. This looks good. Look at this. And like, you're like, great. It's amazing. The second you achieve your personal objectives and you get this business to where you want it to be, people are going to be mad. People are going to be angry with you. And like, you're going to have to deal with that.

30:32So let's say like a typical consumer company might take six to eight years to build. You go into Vice, maybe it takes like three to five years to build. But we don't touch Vice anymore for this reason. Everybody wants us to. Everybody wants Cartograph to do more Vice investments. And it's candidly been a personal decision to just walk away. Now we're seeing in the world of Naked Team, we're obviously seeing Naked Team pouches just explode. And obviously Zin explode. When you compare this cycle to Jewel's Rise, what feels similar and what feels different? It's happened a lot more quietly. A lot more quietly.

31:08Schumer out of New York was like, wouldn't stop talking about Juul for a very long time. I think I saw him make like one comment on Zen. It's just not getting nearly the same degree of emphatic coverage that Juul got. I'll also say like, I think Zen is a much more familiar product. Juul wasn't just a surprising nicotine product. People didn't know what it was. Like I remember like someone being like, is there meth in here? What is this? You're like, no, it's a nicotine vapor. It says it on the box, like 5 % that's the active ingredient. Like that's how foreign, again, it's really hard to remember the world 10 years ago.

31:44But like no one knew what these products were. They were very foreign to people. Zin, you had chewing tobacco, you had hundreds of years of chewing tobacco dip. And then you had snus, which Zin is largely like a Gen 2 of, you know, camel snus pouches. And then you had Zin. And so I think the familiarity of like, oh, yeah, it's an oral tobacco product. That familiarity, I think, does a lot. Right. Like, again, going back to this whole concept of people are more scared of change than they are of anything else. I think that Zinn has had the huge benefit of seeming like just another product. Like if Zinn had been a pack of cigarettes and suddenly like everybody's smoking cigarettes again.

32:20I don't know. I actually don't think there'd be equal outcries there was to when Juul took over because Juul was just so alien to so many people. And I think it's been a big tailwind for Zinn. I also think a big tailwind for Zinn was like, were we really going to do just like a picture you're a media agency. You're like, are we really going to do Juul 2.0? Like you've had two Trump presidencies to report on. That's getting you click, click rates. Like why do Juul 2.0 as a story? It's just, it's a little less interesting to do it a second time. It's like doing a rerun. So I think that for a lot of reasons, it's almost like there was so much freneticism and emotion around the Juul saga.

32:53And it created this like six year overhang where like, you know, Kavak, again, I already listed the products, but like, look at all of the gray market explosion, explosion, all these great market products in the vice category and with a nicotine and across the board. And like, you don't really see a lot of chatter about them. And even if you see it pop up, it doesn't get nearly the traction that Juul was getting in 2018, 2019. So no, I think Zinn's been much cleaner. I think it's been a much cleaner launch. Zinn was also launched by a traditional big tobacco company. Juul was an independent company that was destroying big tobacco market share.

33:26You know, there's probably something to that. Not to sound too much like a conspiracy theory podcast host, but you're like, okay, like the company run by a legacy big tobacco company didn't have any like really big hubbub about it. And the company run by an independent company or the product run by an independent company that had basically the exact same growth curve and same story was treated wildly differently by virtually everybody. I see what you're saying. All right. Is there, is, do you think that, well, first of all on nicotine pouches, and I know you've seen a lot of kind of startups that are building or creating their own nicotine pouches and selling them and it's obviously zen is are they actually like different is there actually differentiation within nicotine pouches that actually is oh absolutely or is it kind of what there is yeah yeah uh the you're so you're definitely seeing some some me too some lookalikes right of just um products are very much like zen um but uh i've actually been impressed with all of the variations people have found um higher nicotine strength moist first dry uh compostable and more natural ingredients versus the, I've heard that Xen has a lot of plastic as a base.

34:28I can't verify if that's true or not. Higher price points, lower price points, chewable versions, breaker versions that release more flavor. You're seeing like, I just listed like six or seven unique pouch approaches that are all looking to largely just release nicotine through your mucus membrane. Now compare that to like the traditional tobacco category where like a menthol crusher was like the like one innovation in five years um so i think that yeah the pace of play that you're seeing in the patch category you're seeing crazy levels of funding you're seeing an explosion in new brands and you're seeing a lot of shots on goal to see if if you can really displace it do you think the nicotine industry is in a harm reduction era or is it just reinventing itself with new products oh you had that you had that one locked and loaded ready to go um Um, I, the, uh, it's a little tricky.

35:21Like I know, I know the data on vapes. I don't know the data on pouches. Um, I sort of choose to believe that the pouches like, so I, so oral tobacco is, is a less harmful for you than cigarettes. Um, still not zero harm, but it is less harmful. Um, so in general, like basically everything's better than a cigarette. Like, so no, it's, it's, it's a tricky question, right? Cause it's like, Oh, are we in a reduced harm period? You're like, well, is a percent of nicotine users using cigarettes dropping? If so, yes, we're in a reduced harm era. You then say, oh, but aren't we just perpetuating nicotine or continue to grow the nicotine category?

35:56That's asking a pretty big question, which is why do we think the way we think about nicotine today? Why do we think the way? Yeah, just encourage everyone to think about that. Like, what is it about nicotine? And the answer is it's cigarettes. It's cigarettes killing people and being an incredibly deadly product and being associated with nicotine. Obviously, nicotine is the reason for the cigarettes in the first place. I do think that we're going through this big question mark period right now where you have a lot of people exploring this concept of do we understand nicotine is like it does each individual understand their personal relationship with nicotine is the chemical in the same way that you know, I have a personal relationship with alcohol, I have a personal relationship with THC, I have a personal relationship with nicotine, I personal relationship with caffeine, like there's certain amounts and doses that make me feel good, make me feel.

36:40I took adderall once in my life it may be crushingly depressed for three days i never took it again like that's my personal relationship with adderall everybody engages with these you know ingredients and like their own inter like own personal way and i think that right now what's happening is thanks thanks to these reduced harm alternatives a lot of people are starting to question their relationship with nicotine and whether or not they put it into a hard vice category like alcohol or thc or maybe more of the soft vice category um uh like you know other you know more common stimulants I don't have an answer, just to be clear.

37:11I don't have an answer. I think this is very much up to each person to do their own research on and decide where they fall in that spectrum. But we're definitely going through a period of time right now where that question is being asked sort of en masse, like open up TikTok, open up social media, and tons of discussion around like, do we understand nicotine? I'm intentionally saying it in a very safe way. So open up your own social media platform and see how people are talking about it. I'm not gonna talk about it that way. No, that's very fair. But I appreciate kind of like the conclusion or even just had to think about it in terms of nicotine and also cigarettes and cigarettes being like the most deadly out of off script right um i actually believe that nicotine and caffeine are effectively the same like they're very similar they're very very similar both are incredibly addictive both are stimulants both stimulate you in different ways caffeine gives you um uh more of like a body energy with a little bit of freneticism nicotine gives you more mental clarity in addition to like you know the mental stimulation um i think that like that's what people are going through right now.

38:07Like I talked to guys who are taking Zen pouches at six in the morning to go to the gym as a, as like a workout. Wow. Interesting. I don't. But like, like that's what I'm seeing right now with nicotine. I'm seeing people start to explore, Hey, maybe this is more close to like, we've been treating it like alcohol, but maybe it's more like caffeine. Wow. And it's interesting because you're the CEO of a caffeine business. You've noticed I have not actually set to the number of times, if you notice, I keep not drawing a direct comparison to caffeine intentionally because I don't want to plant that seed in people's minds.

38:40I will not. Make sure, John, the caffeine and nicotine, we are taking that entire part out. Yeah. Entire part out. Because I actually do believe that caffeine and nicotine are basically the same. Me selling this caffeine product, I am mentally selling nicotine all over again with the difference of the delivery platforms are like demonstrably safer like this come on like this isn't giving you yeah yeah exactly exactly so so yeah like if we ever got to and we've talked internally about developing a nicotine spray for that reason like if you can develop like truly like you're just getting the nicotine nothing else i mean caffeine's addictive um i uh i use both um and i go through periods usually two to four weeks where i go cold turkey to kind of go through it and um it's interesting my my Cold turkey withdrawal for nicotine is craving.

39:31I crave it. I'm like, I get like annoyed. It's hard to explain, but it's like, man, I want that in the same way. I really want like a big slice of cheese pizza right now and I can't have it and that's annoying. Caffeine is like crushing headaches, irritability and like feeling like, but the nicotine one lasts longer. The nicotine one lasts like two to four weeks, whereas the caffeine one, I'm through it about like five to seven days. That's interesting. That's interesting. That's wow. Wow. So that's why it's so hard to stop. Yeah. But anyways, I know we're going way off topic. I'm eating up. No, no, no, not at all.

40:02Not at all. I guess backing up, I know we talked about, obviously, nicotine. We talked about gray areas. The overall consumer venture market. Do you think consumer venture is becoming more hits driven overall? Absolutely. You're seeing rip-roaring successes from great businesses, by the way, right? You're seeing the recent funding on Groons, David, which is going great. lucky energy. You're seeing really, really, really strong performance for the few winners who are just clearly ahead of the pack. And I think everyone else is kind of languishing. And I think it's the sort of natural, if you think about the venture market evolving over the last eight years, 2019, 2020 was superheated.

40:48If you had a render of a cool looking product, you were getting 2 million bucks to go launch it. Then there was the 2022, 2023 clapdown where you were like, hey, we're doing$5 million in sales. We're profitable. We're growing like crazy. And VC investors were like, sorry. Like, yeah, wrong time. And now it's opening back up, but you're definitely seeing, I mean, picture you're in the investor's shoes. Like you want to jump on to the deal that everyone else wants to do. It's a little, it's like things are finally opening back up. So you don't want to be the person who ever extends themselves, makes the same mistake you made in 2019.

41:20So I think you're seeing a lot more piling on happening to the few key winners. But those winners are winning. I think there's real performance there. I think it's still tough to be kind of in the middle to the bottom of the pack. This episode is brought to you by Glimpse. Glimpse is an AI-powered end-to-end deductions management service that's focused on recovering revenue from KEHI, UNFI, Amazon, and Target for consumer brands. They centralize deductions with backups. They fully handle disputing on your behalf, the brand's behalf, and streamline the accounting process for more information check out try glimpse.com and let them know that mike sent you yeah it's it was interesting i i agree with you it seems like in terms of how funds are deploying it seems a bit more concentrated than than before yeah um when it comes to the winners um or just just a lot more concentrated rather than rather than uh uh rather being a bit more spread out.

42:23So yeah, totally, totally agree with you there. How, if you were to draw a map of the most exciting frontiers in consumer right now, where are you most eager to place your bets or, or what are some of like the most interesting areas right now as you invest in are? It's funny. I actually made some notes on this one because I was happy with my cleverness on one of them. The first is the consumers are becoming cowboys, right? The cowboy diet, red meat, cigarettes, and coffee, protein, nicotine, caffeine, right? Like where we're going through, like the American consumer is going through a cowboy renaissance right now.

43:05Everything is protein, nicotine, caffeine. You're starting to see caffeine pop up in everything. You're starting to see protein definitely pop up in everything. And then of course, you're starting to see this massive explosion in nicotine products. That's like my like just CPG hat of like that's big. Outside of that, it's there's two more esoteric worlds that people would argue whether or not it's true consumer or not. I think people refer to this in application of software. I think about like the Steve Jobs mantra of I'm going to butcher it, but it was something like, you know, you should never be three clicks away from whatever you want to do.

43:38Streamlined UI, streamlined UX. I tried to pay a plumber yesterday and it took me 27, I counted 27 clicks to pay the guy like through my through my phone, which is completely insane. And I'm sure it's resonating with anybody who hears this. Like, oh, my God. Yes. It takes me so long and so many steps to do literally anything. I want to turn my TV on five button clicks. I want to change the channel for button clicks. You're like, that's wild. That's just totally bananas. Cars being the thing that everyone started bitching about with touchscreens and wanting the controls. So all this to say, like whether it's an A.I.

44:08tool or something like someone's going to figure out how to reduce those clicks. and that's going to be wildly successful. It sounds like such a small thing, but it's such a major friction point in every consumer's lives. The third one is online identity. I just think like in my lifetime, we're going to move away from anonymity on the web. It's going to happen. And the people to like really figure out how to capitalize on that and take advantage of it are going to do quite well for themselves, whether it's crypto enabled or sponsored by the government, who the hell knows, or if it's going to be meta.

44:38I know meta identity and the way that we engage with our like your average apps or consumer products today which I think are like both are completely broken and desperate for a solve that we haven't actually seen happen yet. No, I really appreciate that. I mean, I think that's really interesting the cowboy diet. I mean, it reminds me a little bit on the protein side. It reminds me a little bit of my doctor who's a traditional doctor just, you know, I just went to him and we were talking about diets and i finally just asked him like what like what's your diet what do you what do you eat and he seemed kind of surprised that i actually asked that question it seems like it seemed like other patients didn't actually ask him and he said well right now i'm doing the lion diet and i said what's that and he said i only eat red meat and salt that's the only thing i actually intake um and and water uh and i said wow that's really really just anyway it was just kind of interesting I thought for this like, you know, traditional doctor that like that actually is, is what he eats.

45:41But I think he was just doing that though for, but anyway, consumers, how do you think about also moats in consumer? You know, cause kind of part of the reason why maybe consumer isn't as sexy as a category as other categories is, Hey, there really aren't any moats in, in consumer. And what actually matters to you when it comes to consumer brands and consumer tech, Like what is the moat or is there a moat? There's absolutely a moat and it's the product. If you're the, I think the, I remember this is 10 years ago, but I was reading a case study business school to talk about like how the first mover advantage was a fallacy because it was usually the second and third movers who won.

46:21And the reason was that the first mover usually didn't have the best product because by definition, they didn't have something to react to. They didn't have something to innovate upon. Whereas the second and third movers tended to be able to see like what was resonating with the first mover and then make it better and really execute well on a great product. And then the second and third movers tended to be the ones who established, you know, market dominance and then and then survived for a very long time. I think I mentioned a couple a couple of products earlier, like the David Barr, Groon's.

46:46Like, I think that they have great products and I think it's going to be really challenging to replicate their success because you're either you either have to make a better product or a product. Making a product that's just as good isn't a viable reason for a consumer to switch. And so I think it's all about when you enter the market and how good your product is. if you enter with the best product and you enter at the right time, that's a real moat. Yeah, that's a great, that's a great, that makes a ton of sense that it's all about, that it's really all about the product. And actually, if it actually is a great product and also differentiated, that that could actually be like a real moat.

47:20And then of course you build a brand in the future with that. If all you're doing is white labeling a product with a new brand, you're, yeah, I agree. You don't really have a moat, but like that shouldn't be a catch-all to all consumer, right? Like that's lazily painting the too broad of a brush. But if you have a novel, unique product, I think like that's the moat. What goes into your decision in terms of retail expansion? Like let's say you do have a differentiated product. In your opinion, when does it make sense to actually move fast in retail versus actually go deep or kind of go brick by brick, as I say?

47:52Yeah, it's sort of an art mixed with the science, right? Like the science is you need to see growing velocities every month to know that you have a healthy product that is worth expanding. The art is what's the sample size required to have confidence in that? How broad do you go early? What level of investment do you want to put behind it? But I'm a big believer in like, don't go broad before you know you have success on your hands. Keep it as small as you possibly can, balanced with is that sample size big enough to give you the confidence you need to go bigger? So is that 100 locations? Is that 500 locations?

48:23Is it 10 ,000 locations? Hopefully it's not 10 ,000 locations. But pick the number for effectively a test. And truly test. Don't test it because someone's telling you to test it. test because you want to test it. Test it because you need to know how your product is actually going to do. Because if it can't perform in 100 well-executed locations, it's definitely not going to perform in 10 ,000 moderately executed locations. It's your crystal ball. Based on your current portfolio, what have you learned so far about underwriting consumer companies that actually survive and actually do well? It's funny.

48:51I've learned this as an investor. I heard this all the time when I was early on. I would always say like, oh yeah, I'm a big believer in product and markets. And I almost backboards exclusively, I've definitely learned that the people matter. I think that starting off in this job, seriously, starting off in this job, I have assumed everybody would care as much as I cared. And I've learned that's not the case, right? Like you meet a founder who has a great opportunity on their hands and you're like, oh, they have a great opportunity on their hands. Surely they're going to do everything in their power to make this a success.

49:18And then you realize that they actually don't care as much as you would care. And so that people component has really turned out to be the most important one of like which founders are willing to make it through that really, really first three to five years of just crawling through the muck in the mud of finding product market fit. That requires emotional and mental fortitude and also dedication to what they're working on. So I think that's been my biggest learning is like when I look at our front runners, it's founders who are willing to make it through that tough period. And when I look at members of our portfolio who haven't done as well, they largely closed up at the first sign of distress first out of trouble yeah it's i remember one one best i had before it's it's that do you do you actually trust a jockey or do you trust the horse what are you actually betting on um and kind of that and that's interesting that shift do you have do you have 15 more minutes or you got a hard stop go for it dude you're the man um this has been so much fun um for you when does it actually make sense to get involved in your portfolio companies and we were talking about earlier about about since you're obviously a uh with your drill experience and your operations experience you like to be pretty involved with your portfolio companies but when does it actually make sense to operate like you're doing with all day for example yeah um so one just in terms of like the investor operator relationship each company dynamic is completely unique and different and it's entirely about what the founder wants and also a little bit of what the founder needs so in terms of like how heavy do we lean in like you have the experienced operators who are doing for the second or third time, they talk to us a whole lot less than our first time founders.

50:57And that's okay, because we will give our first time founders as much time as they possibly need, as much guidance as they possibly need, maybe more than they want to help them become second time successful founders and operators. In terms of the decision to jump in as CEO of all day, I mentioned earlier that the true reason that we're all in venture, I choose to believe is we want to do big things to big things. We want to disrupt entire categories. We don't want to carve out a 1 % market share and flip a company. We want to have a real shot on gold at fundamentally changing how people do things, like how the world works.

51:27That's fun. That's exciting. When I look at all day, the caffeine category, it's something like 90 % of the global population takes caffeine every day. Everyone takes it in the same way, which is they drink it. That hasn't changed since coffee was invented a thousand years ago, probably tea before then. And this is a patent protected product on a true novel delivery platform of caffeine delivery that changes how how caffeine is experienced by the body and how people experience caffeine, period. And I just find that too exciting of an opportunity to pass up on. So that effectively was the entire decision making process.

52:00Great founders, great team. Obviously, there was more that could be done by someone who'd seen it fully before instead of just being on the armchair and more of an armchair expert. And I just couldn't look away from the opportunity. It's just so big and so interesting and so fun that I decided it just made a lot of sense to spend a lot of my time there. Yeah, and I love the yellow. I love that your background is just decked out and all this stuff. Love it. Yeah, nice little bottle. Here's the bottle. Nice little bottle. There's five Red Bulls worth of caffeine in here. 12 sprays, 32 milligrams per.

52:31You spray it. Basically, you microdose the caffeine. It kicks in about 300 % faster than all of it. So there's two techs in here. There's the caffeine salt technology that's enabling the bioavailability uptake like 300%, 500%. So think about the biofeedback cycle and loop that you're getting. Like if you take a sip of coffee, you might be waiting 30 to 45 minutes to feel the full effect of that caffeine. This product, you're gonna be waiting like 10 to 20 minutes maximum. That means that you're responding to the caffeine faster. So you're taking more of an appropriate amount. So like over jittery, over caffeinated, like you can better manage your personal relationship with caffeine.

53:04It also lets you get that energy on demand when you want it. You know, zero calories, zero sugar, vegan, all that stuff. That's my plug for all day. But again, I look at that and I'm like, huh, a truly novel delivery platform for one of the biggest consumed categories on the planet. Absolutely. Like, absolutely. Because I legitimately believe that it's better than drinking caffeine. If I didn't legitimately believe that, I wouldn't be spending my time on it. Yeah, that's wild. I'm so excited for the launch. That's so cool. Let's do a quick lightning round if that's all right for you. When founders pitch you, what's the first thing you look for?

53:40I really struggle with this one. Passion can be faked, not even faked. It can be genuine, but it can be very temporary. I kind of hinted at it earlier, like how big is the market? Is there a real problem they're looking to solve? And do they have a great solution to that problem? That's like the very, like candidly, I'm still looking, even though the people person's really important or the people part is really important. That's still the number one. That's still the first thing I react to is like, oh, wow, this person is doing a big thing to a big thing. I love that. That's our first stage gate.

54:10The second stage gate that we've learned over time is really feeling out the founder dynamic and the founder relationship. What's the biggest red flag you see in founders pitches? It's effectively the converse of that. They're really excited about something, but maybe that something isn't a company. Maybe it's a one-time product. Maybe it's a great Kickstarter product or a one-time thing, but it's not a business. There's no business to be built around it. Or the market they're going after is just too small. So even if they go spend 24-7 sleepless nights, tons of anxiety, seven years of stress, the opportunity is just not there relative to what they could be doing if they spent the exact same amount of time and effort on a different category.

54:49I think those are the two biggest, most common opportunities that I see in a lot of founders. And look, it's tough because founders are passionate people. They're working on the things that they want to work on. The reality is it's not always going to fit what the investor is looking for in terms of total opportunity size and where it's going to go. And you can always sniff out a damn page. Like you always can. Right? When you're like, wait a minute, I just backed into it. And this implies that like the customer base is bigger than the global population. Like you can always feel that out. So definitely don't try to like cook the books.

55:19Like you're the one spending your life on it. Be genuine. Like figure out for yourself if you want to build a company in$100 million category or$100 billion category. Because they're both going to take the exact same amount of work. Yeah. Great point. Great point. what's the single best piece of advice you've ever received in your career i used to get tons of crap advice because my early career was professional services and 90 of the advice is oriented on like how to better fit into a large organization so i had my like a real life my first internship i had a real life um office space moment um where i had two members of hr and my direct manager all uh give me feedback during the formal feedback cycle because they didn't like that it wore headphones when i was doing modeling work in the middle of the afternoon in the office and I was like okay I had no idea that wearing headphones is a problem at no point by the way did anybody like gently nudge me and say hey we don't wear headphones here like I had to wait for the official cycle review so like for probably the first 10 years of my career I tended to get feedback like that of like hey like fit in better since getting into the venture world I'd say the feedback has gotten way better and I think the best thing I ever got is like be more patient slow down a little bit particularly with people that I surround myself with like I like to move fast, I like to move faster than the average person that can be uncomfortable for people.

56:35And like, that's okay. Just, you know, help that be more comfortable for people. And also just be more patient in general, because you can't always accomplish everything in one day. And sometimes things just take time. Uh, so just in general, I've been described as a very impatient person. And I take that like, that's probably the best feedback I've ever gotten. Uh, because I'm like, you're right. I am very impatient. Um, I think it's critical to what I do in my success, but also I need to learn to be more patient. What's one consumer trend. Everyone is hyping up, but that you think is a complete bubble.

57:02Have you heard, have you had anyone not say AI yet? You haven't, right? I mean, actually, I know. Actually, I mean, to be honest, I don't think that anyone said, I don't think anyone has said AI for this. Oh, that's crazy. Yeah. Okay, well, then I'll be the first for some reason. The OG, the OG. I really should not be the OG. The OG. But yeah, AI is sort of in the phase right now of like 3D printers and self-driving cars and crypto where you're like really promising technology. I'm not saying the technology is not there. I'm saying that like the products that they're looking to create for us and the end use cases, the problems they're looking to solve, I think are still a question mark.

57:43But we're funding them as if those problems have already been identified and those use cases and like those products are already being created. I mean, there are certain sectors where it's where like it is finding product market fit pretty quickly. But you specifically asked about consumer and like I think it's okay right now but I don't like again if it didn't have all the hyper like truly if it didn't have the hype around it and you were getting even if you were getting pitched on like picture Mike like I have no pedigree you've never met me before I or some 25 year old walks in your office and pitches you on chat GPT and you use it and you're like okay yeah it's like it's it's cool and they're like I want a hundred billion dollar valuation for that you'd be like that I don't I don't know it's not there yet right um uh so like I think that's a definition of a bubble um uh again not i'm not like the tech is that i hate for someone to uh listen to this or read this and be like oh like this guy's saying hey he just doesn't understand the ai technology but no i get really promising technology i just think from like a market and market valuation standpoint it's really gotten ahead of us and um i certainly wouldn't be like enthusiastic about putting my personal money into a lot of uh like consumer ai opportunities right now that's fair i think what you're saying i believe is on the consumer side you gotta like see what what actual problems are you solving what are the actual use cases instead of just building it seems like it seems like people are just kind of or companies just kind of building for the sake of building rather than building to actually solve actually building to actually solve problems yeah so like you know consolidating a search engine behind uh like a chat wrapper that's great um is the information better uh like it's summarized the like the veracity sucks like um like i mean come on like who who isn't reading the summary and then immediately spot checking it every single time right like it just means it's not quite there yet but it'll get there uh and that's you know obviously that's promising um but again the issue is like google already exists and google can summarize their own search engine pretty pretty damn well so what's the like from a vc standpoint like what net new company do you back that's going to do it just it's just really tricky and obviously there's much it's it's much more people in myself tackling too i think to your point and we had another investor bring this up regarding ai what's interesting about ai which is i think different into most categories is in ai you actually have incumbents building ai products yeah where and you actually really have to ask the question which is what everyone thinks is the dumbest question in a bc to ask but you know if you're if you're building a mustard you're like well why wouldn't it like or building a ketchup why wouldn't you know heinz just copy you or whatever it is, right?

1:00:14Why wouldn't the incumbent just copy you of that product? That's like, you know, what adventure they always kind of say, like, don't ask those questions. You know, that's because the incumbents are not thinking about you at all. But it seems like an AI, it seems like an AI, what I think is tough for venture is the incumbents are building their own AI products and are investing billions building their own AI products. So it's just quite a different landscape from that perspective in terms of what the actual competitive set looks like. Yeah. I think that is a much better set than what I was trying to get at.

1:00:50It's very well summarized. Because for the big companies, it's existential. Why isn't the big company working on a new mustard? Because that's one of their 5 ,000 products. And if you make a better one, they'd prefer to buy you. Candidly, it's cheaper and less risky for them to wait for a winner and then just green mail them a little bit to acquire it. But in AI, like Google is like, no, no, no. Like we like our cashflow a lot. And if people want to engage in search in this new way, like we should deliver that to them and just build it. Because if we don't, then people, and if people move away from us, like that's existential.

1:01:21And so they will absolutely, they will absolutely innovate where it's absolutely, absolutely required. 100%. What's one consumer category that you think no one's paying enough attention to? You know, the big thing right now is protein. I think fiber, fiber, fiber, fiber. I agree with you. I agree with you. It's so crazy. I 100 % agree with you. And what's crazy is I keep getting this reaction from people. Your reaction just now, 10 out of 10, that's the reaction I get from people, which only continues to reinforce my thinking here. Like there's like Metamucil. I mean, it's a great, maybe this is a problem.

1:01:50It's like Metamucil is too good of a product, but the brand is still kind of like your grandparents, right? Like fiber brand. You know, I take like the little orange gummies every morning. I think they're great. But like, I know so many people that kind of quietly take fiber that there's like such an opportunity there to create, I don't know, potentially a better for you fiber product or a better fiber product or a better fiber brand that's maybe modernized. And I've actually been surprised that like I'm living in a world where proteins and everything and not like soluble fiber. Like I would have actually guessed that though, that we would have started seeing fiber pop up and everything before we started seeing protein pop up and everything.

1:02:22Yeah. I also think that fiber is certainly very underrated in terms of category since a lot of the a lot of the hype is around protein which um which is great but it is quite interesting that that that you quite haven't seen it yet when it comes to fiber um so yeah i think that's gonna be one to watch out for yeah potentially what's the most what's the most underrated skill or habit that helps you succeed but rarely gets talked gets talked about i don't know what commonly gets talked about or really gets talked about but But I'd say being paranoid has been my number one asset. Like I think to build, I think to be in this space and be successful, you have to be equal parts confident and egotistical enough to think that you can change the world, but also paranoid that you're going to screw it up every single day.

1:03:05And you can't be 100 % paranoid. You can't be 100 % ego and confidence because like not because like you can't. But I think having a nice yin and yang there has really been and often my paranoia wins out and it's something I'm always working on. But I think that like that is what has kept me sharp. and iterating and finding product market fit is you need to have that just like, how can I make sure, how can I guarantee that people are gonna like this as much as I think they're gonna like this? Because again, going to earlier, you were asking how do you know when to go big at retail? How do you know when to go big and blow it up?

1:03:36If you're not paranoid and you're just confident, you're going to 10 ,000 locations on your first production run, right? You're signing up for massive production runs, you're doing all that, and you're like, people are gonna love it. And then they don't, and then your business is over. If you're exclusively paranoid, You're never deploying enough capital to actually test and learn at the scale you need to, to really, to really like take it big. And you're never really able to go after that like aggressive growth scale. But like having that kind of healthy balance of both of like, I absolutely think we're going to be successful.

1:04:03But what if we're not? And having that pulling you apart at all times, like I think for me personally, it's been incredibly successful. And it's actually the number one thing I look for in founders now. What have you, what have you changed your mind the most on when it comes to venture or company building in the past year? This one depresses me. I have lived pretty much my entire life starting off trusting people implicitly and then letting that trust be eroded, if at all. Unfortunately, this new job has taught me that I have to start off not trusting somebody and then let the trust be built over time.

1:04:34Truly, I don't like to live my life this way, but it's almost like I have to put a hat on when I am walking into my cartograph job. I'm like, okay, remember, you're not going to trust anybody at face value. You're not going to take anybody at face value today. Remember that. remember, remember, remember, because I don't like operating that way personally. I like to believe that everyone is clear and upstanding and what they say is real, but doing this venture job long enough, unfortunately, it just comes with, I think, being in finance. I kind of make a joke to people. Everyone complains about their landlord.

1:05:05I don't think anyone's set out to be a landlord. Landlords are the result of many, many, many tenants. And I think that a lot of complaints about VC are ironically due to the exposure that VCs have to a lot and lot and lot of founders. And like, I'm going to get shredded for saying that, but it's brutal. Like you do something with the best of intentions and then a founder turns around and shreds you for it like publicly. And you're like, oh, that's like, for example, like you take the time out of your day to give a founder feedback. And then they're like, they criticize you for giving them feedback.

1:05:32And you're like, oh, you know, I didn't have to do that. And then that leads to a situation where you stop giving founders feedback. And then founders are like, doesn't it suck that VCs don't give feedback? And you're like, it does. It really does. Because I would love to, I would love to give every single founder I meet an hour of like no holds barred. Like here is what I actually think about your business, but I can't do it. Yeah. That, that makes, that makes a lot of sense. It's a bummer. It makes a lot of sense. Yeah. It is a bummer in terms of like the differences between, yeah. When you actually become a VC and investor and how you have to make that shift.

1:06:00Yeah. That's tough. Finally, what is looking back? What's, what's one thing that you wish you knew before starting your journey? The whole journey? on everything uh on everything the whole journey this is something i actually still am working on um so i probably will be working on this for the entire journey it's funny we're using the word journey um you have more time than you think uh you just do um like on the one hand you want everything to happen immediately uh you're you're in venture you're in a startup land like everything moves fast you're hearing about successes every day but like you know building a company quickly happens slowly and then all at once um and you know the trap that i often find myself falling into is like I orient around the exits so much.

1:06:39But if you think about life, like let's say you have like 10 exits like that you feel really good about, that's 10 days. So like, are you really only going to be happy for 10 days of your entire time on the planet? And you really, really need to learn to enjoy the actual write up and the actual like process of building the company. Because if you only want the exit, then like, don't get me wrong. Yeah, it feels amazing. It's great, but it's one day uh and uh and you have to enjoy every other day around it yeah i remember i remember hearing somebody a successful entrepreneur talk about how what it was like to actually sell his business yeah and it was like a nine-figure outcome right no vc um nine-figure outcome for this person and it was i think new year's and he was just at home yeah with his wife and a couple friends looking at the computer screen refreshing refreshing refreshing and then Pope.

1:07:29It just, you know, is in the big account. Yeah. Remember it was just like almost anti-climatic climactic. Obviously that's a, you know, incredible amount of money, but it was just like, all right, like that's done. You're like, you think it's a much bigger, you know, thing, you know, but it's just, it's like, all right, that's like, you know, give me an account now. And then, you know, you like have some champagne and celebrate a little bit, but it was not this big, you know, thing. It was just like, all right, you know, that's it. So I totally agree with you. That's yeah. I think if anything, there's more relief when it finally happens because you're like someone else's problem now.

1:08:02You're like, oh, but then like six months later, you're like, man, I miss those problems. I really miss those problems. It's it's tricky. That's like and that's why. Yeah, I think it's my biggest thing is like I need to my advice to anybody just because my own issue that I'm always working through is like, again, I have more time than I think I do. Slow down a little bit, like find ways to actually enjoy each day instead of enjoy it. Instead of like looking at each day as like, okay, this is going to be like pain to get to the outcome. Because the outcome is just a thing that happens one time.

1:08:30And that's not worth the way I do for. Totally. Totally. Final question for you on a fun one. What consumer brand do you personally can't live without? Oh, out of my fund or just in general? Just in general. Oh, I'm a big fast food guy. Like Papa John's and Domino's, if those disappeared tomorrow, I'd be extremely upset. In fact, I'd be unhappy for the rest of my life that I could like never have like a Papa John's pizza again. uh after that it would be like mcdonald's and chick-fil-a um like you wipe those four restaurants off the planet and uh i'm i'm very very uh angry i'm very frustrated yeah i think i think for me in this realm dominoes for sure chick-fil-a i love baja fresh i absolutely love baja fresh i actually well no i well i'm definitely not gonna put this on because i really want to have the chipotle founder on the show sure but um when i was growing up baja fresh was like everywhere yeah and then And Chipotle came in and just totally destroyed Baja Fresh.

1:09:23And I like Chipotle. But Baja Fresh to me was like the creme. It was just, it was like my first experience for a burrito. And, you know, it was just probably just nostalgia. But I'm very, very bummed that Baja Fresh has been just like slowly, like just rolling back. But anyway, but anyway, this has been great. Alex, thank you so much for your time. It's been so much fun. Yeah, I had a great time, Mike. I really appreciate the questions. And there you have it. Alex, thanks so much for coming on the show. Glimpse, thanks so much for being on today's episode. sponsor. Again, check out Glimpse. They're an AI-powered end-to-end deductions management service focused on recovering revenue from Kehi, Unify, Amazon, and Target for consumer brands.

1:10:00And check out the newsletter at theconsumervc.com for the latest fundraising news, for latest deal news, all about consumer. Thanks for listening. Thanks for listening. Thanks for listening. I hope you enjoyed this one.