730 Steve Magami: Co-Founder & CEO of Fruitist

0:00Kara Goldin:I am unwilling to give up, but I will start over from scratch as many times as it takes to get where I want to be. You just want to make sure you will get knocked down, but just make sure you don't get knocked out. So your only choice should be, go focus on what you can control. Hi everyone and welcome to the Kara Goldin show. Join me each week for inspiring conversations with some of the world's greatest leaders. We'll talk with founders, entrepreneurs, CEOs, and really some of the most interesting people of our time. Can't wait to get started. Let's go. Hi, everyone, and welcome back to The Kara Golden Show.

0:44Kara Goldin:Today's guest is leading one of the boldest transformations in the food world. I'm joined by Steve Magami, who is the co-founder and CEO of a company called Fruitist, And it is the global super fruit brand redefining how we snack. And so, so amazing and delicious. If you have not tried their blueberries, maybe you've seen them out on store shelves, but maybe didn't know the name. You will now after hearing all about how these all came to be. But so, so delicious. Steve didn't just build another fruit company. took an overlooked aisle in the grocery store and turned it into a branded billion-dollar experience.

1:31Kara Goldin:And Fruit has started with a simple insight. If we brand chips, soda, and candy, why not Fruit? So from that idea came a vertically integrated powerhouse now doing hundreds of millions of dollars in annual revenue operating in 28 countries and showing up in more than 12 ,500 stores across the U.S. So what makes the story even more remarkable is some of the background that Steve's got in private equity and some of the cast of characters that he has had joined him. I'll leave it there and we can talk a little bit more about that. But really, really honored and excited to hear all about your story, Steve.

2:16Kara Goldin:So welcome. Pleasure, Kara. Thank you so much for that intro and thanks for having me today. This episode of the Kara Golden Show is brought to you by Range Rover Sport. You know that old saying, it's not what you say, it's how you say it. Well, I believe it's also how you show up. Because in business and in life, you have to lead with presence, power, and adaptability. That's exactly what the Range Rover Sport brings to the table. It's a force, inside and out, with a dynamic sporting personality, an assertive stance, and refined performance. This SUV doesn't just handle challenges, it owns them.

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3:48Kara Goldin:Again, that's RangeRover.com slash US slash sport. Trust me, you'll be glad you did. Super excited to have you. So let's start with the basics. So what is Fruitist and what problem were you looking to solve when you launched? We saw that there was an inconsistent experience for consumers in the produce aisle, particularly in the berry aisle. And we call that berry roulette. And we saw an opportunity to truly transform the produce aisle by taking a new approach. And we've been on a mission to inspire healthy and enjoyable snacking, the two together. And we saw a tremendous opportunity to do this starting with blueberry.

4:33And that's where we started. And we've since started to expand into blackberries and raspberries and our future products that we've already made moves in to install production are cherries and next up will be strawberries.

4:49Kara Goldin:Wow, that's amazing. So what year did you start? 2012. Oh, wow. Okay. So you started and you did not come from, you weren't a farmer, you weren't in agriculture. So can you talk a little bit about your background and how you decided to do this? Very unusual background for this industry. I came out of private equity. I was making growth investments, venture capital investments, and doing buyouts in the financial services industry. I was towards the end of the first decade of my career, private equity, deploying large scale biofuel deployments around the world and in kind of advantage locations and microclimate.

5:35So as I was traveling around, looking at the most unique microclimate to deploy these biofuel developments, where we'd have advantages in production, climate stability, etc. I realized the greater opportunity was in transforming high-value stackable berries. And we started with blueberries. We saw a very large market opportunity. And we knew it was all about the product and solving for the berry roulette experience that I had going back to me as a young kid.

6:07Kara Goldin:So were you always a big blueberry fan? What was the reason why you started with blueberries? You know, the reason was that the locations that we were looking at, locations where we were in, blueberries had just been proven. And the expression of the elite kind of varietals and these kind of wonders of the world were exceptional. The eating experience was exceptional. And we thought, okay, if we take the approach that we're thinking of taking, which is using technology, data, and controlling the entire value chain, we can really deliver that product quality all the way to the consumer on the shelf.

6:48And that's where we went.

6:50Kara Goldin:So most people would have seen this as just a commodity and maybe logistics, maybe, you know, trying to figure out new ways to actually help farmers in some way. you decided to actually make it a brand and scale it and make it a tasty one. So when you think about the challenges that you've encountered, I guess, over the last 13 years, did you anticipate exactly what was going to happen? Did you think like this all out, it's going to be just one, two, three, and I'm going to have this company rolling? I mean, I can only imagine and I read this earlier, but you have scaled it into 28 countries I read.

7:44Kara Goldin:So, I mean, that's incredible. Yeah, we operate, we have production facilities and operations in eight countries in dozens of locations. And with the countries we sell into, we are in over 28 countries. It's never a straight line, Kara, right? This was going to be a heavy undertaking. This was going to require a lot of capital. This was going to require a very deep team to do what hadn't been done before. And yeah, it was brick by brick. And the early years were very difficult. And if I knew how difficult it would be, I probably wouldn't start the business again today. So where are you producing today?

8:31Yeah, today we're producing in these wonders of the world, these unique microclimates that include the northern coast of Peru, central Mexico, the southern coast of Morocco, the northern coast of Egypt, very unique location in China, two unique locations in India, three locations in Oregon, and then southern Chile.

8:58Kara Goldin:Wow. So what was the single hardest part of scaling from zero to over 400 million? Yeah, we knew that we were only going to be successful if we took a very long-term view. So it was always about scaling with excellence. We've developed a bit of a reputation for having scale with excellence in our industry. And so the difficulty was going to be managing global growth, and that has been not without its growing pains and its challenges. Certainly scaling up in eight countries at the same time, production facilities, not easy, right? And then at the same time, selling across dozens of countries around the world, sales teams across the entire northern hemisphere, dealing in different cultures, languages.

9:50At the same time, deploying our culture of innovation, disruption, competitiveness was going to be a fun challenge, and it certainly has been a challenge.

10:02Kara Goldin:Yeah, I can only imagine. And you own all of your farms, correct? And your supply chain. That's right. The incumbent model was to outsource and inherently there was a disjointed value chain with the incumbent model where virtually every link in the chain was controlled by a different party. And that was what created that Barry Roulette, that inconsistent experience, because that stifled quality amongst other things. and so we uh we took the opportunity to take this this different approach and and build it all ourself and um it was the most difficult way and that's why it hadn't been done before and it was going to take a lot of capital and that that that that certainly was the case but we are um today we are only really in the you know first inning of where we're where we're going we're driving a a massive amount of demand globally for healthier snacking and we see that there's a you know we're in the middle of a silent crisis that's unhealthy snacking.

11:00And so we're excited to be addressing a global health and nutrition challenge.

11:06Kara Goldin:I think that the one thing that I noticed, and as I was sharing with you, my whole family noticed, is that the blueberries are consistent, consistently good, consistently large. So how do you do that? So, it's a combination of many things. It all starts with the R &D, and we have been, from the beginning, always focused on being partnered with the best and brightest talent in the industry. And so we partnered with the right breeders who have been focused on the R, the research, and we've been focused on the development and the commercialization. I would say that's the first component. Second component is microclimates.

11:56We are not going to places where we know people that have land and water and good climates. We are very deliberate in underwriting to the most unique microclimates, even if these are difficult locations to be in. And if you go to our operations, they're not outside of big cities. These are in remote locations around the world. And in some cases, difficult even to get to. and uh but we we you know we we connected all the dots we built the largest data set in the industry we uh we harness that data we we leverage the data to predict um you know to predict uh many things including the right you know the optimal eating experience of the fruit and how to how to develop it and how to pick it right and how to manage the shelf life and the freshness so that when we're delivering that to the retailer we truly have um an opportunity to inspire the consumer to snack healthier.

12:54Kara Goldin:Definitely. Is there one country that you've opened in that you had to shut it down for a variety of reasons? Maybe it wasn't the right climate. Maybe it wasn't government-friendly or employee-employer-friendly, whatever. Well, fortunately, no. But we have been compelled and attracted to, and we've been recruited to come into various countries that are really interesting on paper. And we're disciplined about how thin we can spread ourselves. And so we are partnered with a couple of partners in countries outside of our eight countries. So we, for example, we have a partner in Romania who's great.

13:44And we've designed this footprint, not only to achieve the most stable, the most consistently inspirational eating experience with all of our tech and all of our kind of management excellence, but we've done this to deliver a 52-week, a year-round supply from different locations, right? And so it kind of works like an orchestra together across the year, the different locations. but there are you know certain locations that have been much more difficult and we have gone more slowly you know than others in terms of scaling up and we we love we love we love the the footprint we have but they're all it's all very interestingly different but at the same time they're complementary to one another so it's it's a lot of fun to see how we've you know see how we've kind of reached this point and we've made the right decisions.

14:46Not that we didn't make mistakes along the way. Of course we did, but we feel pretty good about the footprint today.

14:52Kara Goldin:So trust in a category that has not historically focused on branding per se, what have you learned about that? So this is great because it goes back to our kind of premium brand playbook. So we knew the first step for us was to deliver a consistent eating experience, deliver a consistent quality, shelf life, freshness, et cetera, and scale that up, earn the trust of our retailers, earn the trust of our consumers, and then really lean into the brand. And so we have ultra high standards around food safety, around worker welfare. We We're considered to be a showcase in terms of social impact. At the end of the day now, we're really leaning into the brand because the brand truly stands for that quality guarantee, and consumers are starting to understand that.

15:50They've started to become – we started to really penetrate enough consumers to start to deliver that awareness. That's what Fruita stands for. And so we've sponsored our first professional sports team. We're going to be announcing a partnership with an NFL quarterback next month that I'm very excited to finally announce. And we've sponsored a top university athletic program and we have others in the pipeline. And these are athletes and programs that are really leaning into our product and excited about where the brand is going.

16:34Kara Goldin:That's awesome. So when did you know that Fruitist was really working? It's definitely, you have not been in the brand building space. You've dealt, I guess, with consumers out there, but maybe a different type of consumers. and you've got, I guess, two audiences. You've got the retailers, the grocery buyers, but then you also have the actual consumer who is signing up and looking for your product in the stores. But when did you know that Fruitist was really working? So I'm reminded of a time when we had a consumer reach out and say to us that I have a three-year-old who hasn't been eating for days and days and days, and the first thing my three-year-old ate were your fruitless blueberries.

17:31And you can't imagine how much joy that brought to this consumer. So very touching stories from our consumers who emailed us, who reached out. I remember the initial expression on the faces of youth football teams. that we would bring our product to and to see six seventh eighth graders that had never eaten a blueberry before and i couldn't i couldn't believe it and they looked at me and said how did you do that um because it was not only the size that was you know kind of catching but the the the crispness the freshness the crunch uh the flavor and the juice and and and just how enjoyable it was.

18:17And to see, uh, to see it at certain football camps, you know, a bunch of big football players, uh, snacking through a clamshell or a snack cup of blueberries was a lot of fun. So seeing the, seeing how the combination of, um, the youth, uh, seeing combination of, of kind of, uh, heavy blueberry consumers responding, uh, they couldn't find our product in the afternoons because it was flying off the shelf and by noon it was gone.

18:48We were hearing questions like, why can't the retailers stock more of your blueberries so we can buy them in the afternoon? It got to a point where we had people lining up to sign up to a direct-to-consumer delivery. We actually have a list of consumers waiting for us to roll out a direct-to-consumer, which will never be a large business for us, but that would be fun if we launched that. And so I think those are some of the examples and stories that I'm reminded of.

19:20Kara Goldin:That's incredible. So in terms of the split of, I mean, you talked about direct to consumer and you're going to be getting into that, but you're mostly retailers that you're dealing with versus food service or is food service a pretty big business for you as well? No, retail. So we are in, you can find our product in Costco, Trader Joe's, Whole Foods, Sprouts, ShopRite, Giant, Publix. And we serve Costco, I think, in seven countries around the world, not just the U.S. And the reality is today we're short of demand that we have from our retailers around the world. We have 30 retail partners around the world that are super important to us that we want to take care of and focus on and really deliver.

20:15They're our number one priority. Food service will come. We've been in some interesting discussions with the hospitality industry, and we expect to see demand from hospitality. But for now, we're serving our retailers.

20:31Kara Goldin:It'd be amazing to see you penetrate hospitals. And I had started a brand called Hint, and it was amazing seeing all of the roadblocks. I call it the healthy perception versus healthy reality that was out there. And, you know, I could imagine fruitists making such an impact in places that really are hoping to be healthier than they are. I love the hint-flavored berry-flavored water. Yeah. A great product. And you premiumized water in a way. Yeah, I mean, when we started, it's funny because there was just so many diet sweeteners that were hitting these drinks. And all I saw was that everything had something in it.

21:26Kara Goldin:And it was, you know, also not using real fruit. So we created our own extracts and did a lot to really change the industry. Didn't add preservatives to the product, figured out how to use heat. So there were a lot of things that went on in the process of actually creating the product. So I have a lot of knowledge how hard this is behind the scenes for sure, even though you make it seem so easy. So when you think about adding new categories, you touched on that cherries and blackberries and strawberries are just rolling out or coming next. So how do you ensure each product kind of delivers on the fruitist promise?

22:17Yeah, you know, what we have set up as a platform is very transferable to these products. These products, we believe, have the same opportunity. The Barry Roulette experience by consumers applies to these other products.

22:35They're wonderful kind of snacking-on-the-go products when they're good. And the issue is the consistency. And the issue is they're not always good. um and the issue is that you know again they're the the the the the way that the incumbent model has delivered these products results in that that route that that crapshoot so we have built our footprint to be leveraged across not just our first product blueberries but across these other products as well so the fun the fun thing is that we are leveraging our footprint now to scale up in the other products. By way of example, the number one location in the world for blackberries is where we are in Mexico.

23:19The number one location in the world for cherries is where we are in Chile. And I can say the same thing for raspberries. And so it's a lot of fun. We have an an approach that we take where we don't compromise on the recipe, the tech we need to deliver that. And we scale up accordingly. So we're going to scale up kind of in a measured way in these products so that we don't disappoint consumers. But the team here and our shareholders are super excited about what's coming next.

23:58Kara Goldin:So you just said the word shareholders. You have gained the love of a lot of investors. You came from the private equity world. But how do you get investors? I mean, it's one thing to come from the private equity world and know a lot of these people, but it's another thing to get them to actually invest more than angel money, which you've done. So how have you done that? Yeah. Yeah. We've done it the hard way, which is we've deployed capital really efficiently every year as we've needed it, issued new equity, always at a step up. you know and fortunately the we have a we have a kind of an understanding of how to allocate capital i'm blessed with an incredible team very deep and for both insiders and outsiders and the outsiders are as passionate about what we're doing in the industry as our insiders which is a lot of fun and it makes for a really special recipe when you think about the depth on our board and the depth in our shareholder base and what we're able to the value that we're able to get and the brain trust that comes with all that.

25:11And so, you know, it's not your typical company with a very deep base of shareholders. They look at this as a generational investment. This is not like a private equity play, right? This is not a five to seven to 10 year play. We're building this for a generational horizon. I'm turning 49, you know, next week. And I'm looking forward to doing this for many more years to come and then passing the baton down to the next generation of our management and watching this from the board be built for another 20 years or so.

25:49Kara Goldin:Do you think you'll take this company public? We don't need to. We think this could be a wonderful opportunity to stay private, but we certainly are not going to rule out any options. we certainly have interesting interesting possibilities and the markets certainly are in favor of high growth durable companies with strong fundamentals and companies that are growing fast and that that you know deploy capital for for growth so our profile could make sense for for for that for the public markets but we're just focused on product on our consumers on delivering, and on putting the pieces in place for the next chapters and phases of our growth.

26:36Kara Goldin:What's one myth about scaling a brand in general that you wish more founders understood? It's not a straight line. It's really fun how the line looks like it's plateauing and all of a sudden And you just keep doing, if you do the right thing, you keep delivering how you will hit these inflection points and what that does with respect to brand recognition and the data coming from the industry. I think when I look around at brands, Cara, I find that not enough have a sufficient level of differentiation. And we came at this from an absolute place of disrupting a sleepy industry with an outdated model that would be based on that product quality and that differentiation.