Investor Spotlight: Ben Zises, SuperAngel.Fund

25:43And I mean, the amount of, you know, the graveyard of celebrity back brands, you know, growing every day. There's always the wave. It's like, he just sees the hot thing. Celebrity brands are the hot thing. Influencer collabs are the hot thing. It's like, it's always something. Yeah, I never got really, everyone knows, you know, someone with a million followers on Instagram today. Like, that's just nowhere near enough. Yeah, if that celebrity is sort of built in from the beginning, really part of the founding story, and they're putting their own money, and they're a true co-founder, that's one thing.

26:12But oftentimes, they come in later and kind of, you know, maybe get bored after a few posts. And even Mr. Beast, I think he tweeted one time how he was just blown away how hard how hard CPG is and how the nuances around retail merchandising and all the different areas of, you know, just kind of the things you need to know are, you know, take time and it can't be outsourced and figured out in, you know. No. And just reading a few books or scrolling Instagram like these. There's experts who've been working in the industry for a long time. and they still have new things to learn. So you just, operational excellence is really crucial for any brand today.

26:53The other thing, just to kind of a little advice and what I've seen go wrong for brands who are commercially successful, but maybe not financially successful. And that's a big thing to focus on, which is the goal, unless you're kind of doing this for fun and not looking to make a return on your time or your money, The goal is to have a profitable, a good investment at the end of the day. It's as hard as ever to start a business. And the way we get rewarded is financially oftentimes. Obviously, there's fulfillment and all this incredible about getting your brand seen and used and tasted by, enjoyed by so many people.

27:31But you really want a financial success in addition to the commercial success. And I think there's a lot of brands out there, CPG companies that I'm convinced will have commercial success. The product they'll create will be better tasting, better to use, more enjoyable, better for the world. But question then becomes, can it be done in a way that makes it a successful investment and a viable business? And that comes down to capital efficiency, financial discipline, cash flow management. What I like to see on the founding team, someone who is extremely financially sophisticated. You can't really just get away with hiring a fractional CFO to kind of manage your books and give you the information you need on the financials.

28:15You really need a founder or someone on the C-suite to kind of be living in the financial model 24-7, 365, because there's just too many variable costs and too many moving pieces that you can't wait a week for your fractional CFO to kind of run some numbers and get back to you. Like the world's changed on a day-to-day basis. Like that needs to be a skill set that's really inherent from founding at the top. And so it's really a tough situation when you see a brand reach what I call is like magic, kind of like hitting an inflection point where it's, you know, it's going viral and everywhere. It's seeing so much success, which is on its own, like you've achieved the impossible by breaking through the noise.

28:52But again, it needs to be coupled with that financial discipline. You know, when what I look for is, you know, the founders with that background, you know, CPG founders who come from, you know, the finance department of other merchants and brands, because it's sort of, it's just native to kind of like how they operate and kind of almost, what's the word I'm using? Almost just like orchestrate the business, you know, reverse, engineer it in a way of like, well, because we need to see these sort of metrics, then we need a product that will be X, Y, and Z. And I've seen that a few times and, you know, we're sort of, yeah, creating this unit economic structure based on what's going on in the world and customer acquisition costs and all the consumer behavior and all that.

29:36Yeah, that's all great advice, wealth of knowledge. I feel like an all very sound, you know, I've said it a million times, but I think because everyone is a consumer, everyone thinks they can do consumer professionally or invest in consumer. and understanding business fundamentals and what makes any industry tick is critical to being successful in it. And consumer is no different just because it's a little bit easier for people to wrap their heads around the final product. It doesn't mean the back end of any of that is any less sophisticated than any other industry. So I'm glad you touched on that.

30:11You know, you've talked a lot about the things, kind of hinting at the things that founders should focus on and what you might be looking for. But, you know, especially on the early side, when you're like first making a check-in and maybe that there isn't a ton of traction there yet. And obviously we've mentioned the pitch deck and we'll get back into that at the end of this conversation. But what are you really looking for in a diligence process? You know, like what are kind of the unlocks? If you look back at investments you've already made, what were the kind of diligence unlocks for you that you felt like got you so excited that you were like, I definitely have to be into this?

30:44Yeah, I talk about this all the time. People, you know, LPs in my fund, People want to know, especially since I've been fortunate to invest day zero in companies that have gone from nothing to hundreds of millions and billions of revenue. And I've sort of written the first check in more than a few of these now. Companies like Quip, companies like Carraway, the Cookware brand, first investor before they had a name, and many others that people could see on my website at superangel.vc. But as to my selection criteria, there's a few things, and I can dig in more details. But high level, I'd say I'm going to give you three bullets here.

31:20I like to say kind of one unwavering. I look for a founder who's got unwavering ambition to build what I say is like a multibillion dollar company. And of course, if they only get to a few hundred million, I'm not going to be upset about that. But I think the key there is just really someone who has enormous ambition, relentless, willing to sacrifice all the things that you need to in order to kind of be successful, which is a lot. I mean, it's really not for everyone. Like one of my founders, just to give an anecdote, I mean, her company is her baby. I was on the phone with this founder within an hour before she gave birth, her first baby.

32:00And it was just, we were on the phone strategizing and I was helping her with a fundraise that she was working on. And we were just talking through dynamics. But I just remember thinking at the time, like, the reason I invested in you is because the level of commitment you have to this business that even in a moment like that, such a life milestone moment, like, you're literally prioritizing your company. And of course, it's not an expectation at that moment for her to be on the phone with me, but it's just like gave me, you know, reinforced kind of like what I just said, which is like that, the sacrifice and that unwavering ambition and obsession.

32:37And so that's sort of the first bullet when it comes to like a founder, what I'm looking for. And I ask a lot of personal questions in the diligence period to kind of try to understand the root of that, where it comes from and making sure that it's authentic. And so the next thing is sort of like a relentless pursuit of perfection and product obsessed. So what I've had to see from great consumer founders is, and I know, you know, perfect is the enemy of good and all that. But consumer, like you kind of need to be a 10x better solution to get consumers to pay attention. And so kind of being obsessed with the product and never being happy with like one of my founders texted me a photo of a packaging, a retail packaging of the product.

33:18And he was just collecting feedback from me and asking me if like some, the most tiniest minuscule kind of shape of this packaging he was just questioning and obsessing over. And it just, I love that just seeing this founder's kind of, yeah, attention to detail in a way that's just unparalleled. And so that was, that was one example of like being able to sort of appreciate someone's product obsessiveness. And then this third bullet is what I say is like the ability. I'm really looking for a founder because you can't know everything, especially when you get started, but someone who has the ability to learn new things quickly and absorb information fast.

33:57And the example I give there is I remember talking to one of my founders who was about to hire their first employee and they needed to understand how to compensate them properly with stock options. And for anyone out there who's experienced anything with employee stock options, it happens to be extremely complicated. I mean, I wish there was a better way, but like there's so many tax implications and market standards and different ways that you can kind of get give shares to early employees. And this this founder had never kind of gone through this before. And I think we were on the phone with the founder on a Friday by he didn't know anything about how this worked.

34:36But by Monday, he had read everything and was smarter than like a lawyer who who's been studying this and working with companies for a long time. And just sort of watching this person in two days over the weekend kind of become an expert so deep on something so nuanced. Like that's an example of being able to evaluate someone's ability to learn new things fast. Right. And so for me, it's the diligence process is so founder heavy. Yeah. So those are some of the things I look for. The other secret sauce. So when it comes to due diligence, there's, you know, for me, there's lots of data points I'm sort of collecting and trying to get as smart as I can as quickly as possible on the companies that I look at.

35:13So I'm doing reference calls. That's a big thing. And if there is a product, I'm ordering it, I'm tasting it. You know, I'm talking to customers, I'm following them social media, I'm doing competitor research, you know, making sure the numbers, their corporate documents are straight. But one more piece of diligence that I do often that most people I think miss or just for whatever reason, don't put enough weight on, is if a company has taken money before I've met them and been around for maybe even six months or a year, what I like to say is I like to ask them if they've been sending out investor updates to their existing investors.

35:47And if they have, I ask them to send that to me. If I could only have one piece of diligence, that's what I would ask for, which is their prior investor updates. Because to me, that is going to be the single, if looking back now 10 years in, the single common attribute of successful companies is ones that have sent consistent written, call it quarterly, monthly, roughly. I always recommend quarterly, but consistent quarterly updates. I don't know exactly why, but I do think it's just representative of respecting your investors, your ability to communicate, discipline, your level of commitment.

36:22And so it's a big thing for me that I expect from the founders that I invest in and like to see as part of my due diligence process. And going back to an earlier piece of advice I gave, which is even if you don't even have investors, you should start writing investor updates, people who will be potential investors. And it's just a great habit to get into. And it becomes your best marketing materials for whenever you need money again. Because the worst thing which every investor has experienced is not hearing from a founder for a year or more, and then getting an email saying, hey, we'd love to catch up.

37:01We're actually raising another round. And it's like, you're only coming to me when you need more money. Like you're not telling me what's going on in between that. And so that's terrible hygiene to do that as a founder. And I think it doesn't serve them well at the end of the day, kind of just going, giving updates or going to investors when you're fundraising. I think you really need to be doing that consistently. And you'll end up being in a much better position to raise money in the future if you've been updating people along the way. Even if things haven't been going up into the right, it's just because you've shown respect and a level of kind of like appreciation and commitment.

37:37And so that's some other advice for everyone out there. Yeah, no, I think that's a great perspective and interesting and often overlooked portion of the diligence process. I have empathy for founders because I feel like, you know, if you're wearing a million hats and you're moving so quickly, it might not be something that's on your radar. But it's a great call out to have front of mind for people that some investors really focus on that. And it's a way to keep yourself organized and honest as well. Almost like you're building up to a little board meeting. Tremendous empathy for founders, especially solo founders as to like how stretched thin they are.

38:14But it's no excuse because at the end of the day, you're the CEO for a reason. And you just need to figure out a way to better manage your time, hire people to take things off your plate. And those are all parts of building a successful company. And if you're unable to show that you have the time to step back, send a few bullets. And a lot of founders think they need to have had world-changing news to share with investors. And that's not the case. Like incremental updates are still valuable. And so it shouldn't take that long to do these. Yeah, that's great advice. And I think most founders probably do have it for themselves.

38:55And like you're saying, are maybe a little bit nervous to share. Sometimes founders think, oh, no one responded to my last update. So no one's reading it. And I would just tell you that that's A, everyone's reading your updates. Keep sending them. Yeah, no update anxiety. Kind of pivoting to a little bit more of your market perspectives, You know, CPG and consumer investing, I've spent my whole career in consumer now for over 10 years, scary to say. And even within my small chapter, I feel like I've seen so many waves in the pendulum swing. I've seen, you know, things come and go. And when things get hot, especially on the investing side, you can really tell when kind of there's a trend happening.

39:35Is that how you're thinking about what types of CPG companies you're looking at? or are trends and waves a little bit less relevant to your sector focus? You know, is there anything out there that's really getting you excited or from a market perspective, how are you thinking about things these days? Yeah, obviously, markets always changing, keeps it exciting. Yeah, I think trends are important, but I think it's sort of making sure you're maybe investing in trends that are here to stay, obviously, versus fleeting. And one example I'll give in my portfolio is creatine happens to be the fastest growing supplement on the market.

40:12There's the founder that I'll speak about in a moment, this founder, Dan McCormick, who started Create, which is becoming sort of the leading emerging brand in the creatine space. He innovated with the form factor being a gummy, and this is consistently kind of performed in how he's operating the business across every discipline. But his vision is that the market's going to basically 100x in the next maybe 10 years. And so a million people are supplementing with creatine perhaps today. And his vision is that that could grow to 100 million people in the not too distant future. And so that was one that I was fortunate to invest in from the very beginning and then kind of repeatedly more than a few times as they've kind of scaled up.

41:00But, you know, that's one where it doesn't feel like it's fleeting. It feels like every day the data, the research continues to be so positive as to the benefits that one gets from supplementing with creatine. You know, that's an exciting kind of space. And actually, I've made a second investment in a CPG brand, which I can talk about even though they haven't officially launched yet. It's called Man Cereal, which will be a creatine protein infused kind of cereal for targeted towards guys. But this is an example of, you know, sort of emerging category that I feel has real kind of roots and legs and kind of something that isn't just, you know, like the next kind of fitness equipment or fitness workout program that might be won't be here in 10 years.

41:47And I think just on a bigger level, just supplements in general, I think there's been for various reasons, you know, going to the health and wellness and consumers just, you know, especially Gen Z and younger people just being more mindful and thoughtful around their health. And kind of like that is like a flex today is like your health routine and what maybe your skincare routine. And these are sort of consumable products that are taken on a recurring basis as opposed to maybe a one off. And so there's that sort of repeat purchase behavior built in. And yeah, I think companies like that have a little bit very similar kind of software like recurring revenue metrics, if you will.

42:26And so, yeah, I think that's just a space that I'm kind of keeping my eye on and have made some other investments. Another supplement brand called Feel Goods, all natural, kind of made in the US, supplement for hydration and gut health and immunity and kind of like a modern, like emergency, which is that, you know, chemical type orange droplet that you put in your water before you fly, or at least I used to. And, you know, the amount of kind of ingredients in that that are not natural are scary. And so feel goods is kind of speaking to, you know, creating a product that will resonate and support for those things.

43:04But there's always trends. And for me, I really like to kind of sit back, let the best founders kind of tell me where the world's going and educate me on different categories and sectors. And what I love about kind of the places that I invest within consumer is like, you know, there's great funds that are going to back companies going, you know, sending people to space and all this frontier tech and rocket tech. And there's a lot of stuff going on in crypto and biotech and Web3 and all that. And there'll be a lot of money made in there. But for me, I like to invest in markets that already exist, that are already large, oftentimes growing.

43:38And so the world doesn't necessarily need to change for a lot of my brands to be successful. They're just creating kind of better, more modern versions of different products that people already spend billions of dollars a year, right? I mean, consumer spending drives the American economy. And for me, I like to have a bet in every multi-billion dollar CPG category. And I also like to kind of, unlike some investors who are okay backing competitive companies, and I've heard arguments as to why that's okay. But for me, I have such a personal relationship with the founders that I invest in. It's different.

44:13Going back to me being an angel and not a traditional venture fund, it's really about my relationships with these founders is first and foremost. And again, going back to the North Star, I wouldn't feel comfortable being a champion for companies that are doing the exact same thing, going after the same market. I like to kind of back, you know, one company in a space and then continue backing them over time as opposed to just continue to make more bets in the space. So, you know, we'll see how that plays out. But it makes me that's just where I'm comfortable. And I think founders really appreciate that that approach as well.

44:49Yeah. I mean, going back to kind of what we talked about earlier, if you know, founders have all this anxiety just closing and then you're like it's like a wolf in the hen house a little bit. sometimes. Yeah, I think an empathetic approach and really having a strong relationship with founders is really important to be a competent investor. I mean, that's really what you're offering outside of capital is a relationship worth having in the business and with them. So yeah, I think that's a really healthy perspective. I want to make sure we have a chance to dive into this case study question. As you know, Startup CPG has the largest Slack community in the industry with now over 30 ,000 members.

45:26I'd love to pull a question directly from our channel and have you answer it as a case study for any founders with a similar question. We've touched on this a little bit, but I'd love to just answer it directly. The recent question is, what should a pitch deck consist of? How many slides and what should they be? And any other advice? Yeah, I've been giving this response for 10 years. And even what's amazing is I even took this advice myself from my startup, which is there's lots of different resources for how to write a great pitch deck. The one that I recommend and have for 10 plus years is you Google Sequoia business plan, throw that in Google, and you'll find a beautiful kind of outline of what should be in a pitch deck.

46:08And I can kind of just quickly summarize it now. I just kind of did it myself here. But what they recommend is starting with, obviously the company purpose. And I think it's really important to nail the one-liner. Going back to conciseness, I'll sometimes get emails from founders where we don't even know what they do after reading three paragraphs. And that's so frustrating because I think a lot of founders get into like, you're just throwing so many words in and you're throwing AI in and you're throwing buzzwords in, but like over index on simplicity, conciseness, like we talked about. So really it's worth like obsessing over that one liner and just making sure that anyone can understand what you do.

46:45That's really, I think, the key, especially for CPG. Like, come on, this is consumer, right? So this isn't like some obscure, nuanced, B2B, healthcare, biotech innovation here. It's something that you're going to want mass appeal or at least somewhat of a mass appeal. And so really, company purpose, I would say the problem, just going off of the Sequoia business plan recommendation, describing the pain point of the customer, how it's addressed today, and what's the shortcomings of the current solutions on the market. And then, of course, you then perfect next slide is your solution, right? Explain your product and the value prop and where does it go?

47:25You know, maybe what you are starting with your initial wedge and then obviously how you could expand that. Right. There's a lot of CPG companies that will send a pitch deck for like a new type of peanut butter or, you know, one skew of like a of a snack. And it's just like to me, I always reference the shark tank. This is not a company. It's a product. Right. And I think investors want to invest in a company. And so even if you don't get to those things for years, create a little bit more of a vision than like a single product. So I think it's important to talk about that. And then there's a lot of why now, which is the best companies are very clear on what has lined up in the world today because investors know timing is everything.

48:07The research wasn't there for creatine 10 years ago, but new studies have come out that it's better for you than vitamin C and the mental cognition and the physical recovery and the sleep benefits. Like this is sort of new things that have emerged that makes now the perfect time for a modern creatine brand to sort of arise. And then, you know, the market potential. So like understanding, you know, how big it is, who your customers are, the competitive landscape, because investors are not experts in all of these categories. So a lot of this process is an education process. I love saying to founders, like, I'm so interested.

48:43I'm so impressed by you. But like, if you don't mind, like, can you educate me? That will help your cause. Like, send me materials. Like, explain to me what's going on in the market. And sometimes I can quickly assess it. Other times it might take me, you know, a year and I'll be up front with the founders of like, hey, I'm not comfortable yet with this space. I'm not educated enough. I'm not even, you know, I'm not able to even give an opinion. Therefore, I can't make this investment. Like, I need to get smarter. That's on me. So I might miss out on an opportunity. But making sure in the deck, you kind of provide some of the materials as to like how investors who aren't living and breathing in this category can get smart on the space.

49:18And of course, the competition out there, the business model, how are you making money? What's your distribution strategy? And team, financials, vision, all that sort of stuff. So yeah, Sequoia business plan. That's the reference point I recommend. It's laid out very simply. Thank you so much. I love the tangible examples and the parallels that you showed. I think that's really easy for people to wrap their heads around applying to their own situation or categories. And, you know, the other thing I will say is every investor is so different. You know, this is a human business and investors have their own biases, their own lenses, their own ways they like to learn, their own anchor points, the things that they've been burned by by the past or that have really worked out for them, too.

50:01So I think really important to understand the investor that you're speaking with and what they prioritize and how they think about things. Because I do think you also want to find someone who sees the world and communication in the same way that you do. It makes it will probably make your life a lot easier. Yeah, well said. Absolutely. Well, before we wrap up, I just want to make sure our audience can have an actionable next step to apply all of this amazing knowledge to. You've been a wealth of knowledge and your passion, above all, is unparalleled. And I think that's so important in this industry.

50:35For founders that want to get in touch with you, where can they find you or what is the best way for them to get in contact? And for operators looking to transition or other people that might be interested in starting angel investing or beginning their investing journey, what advice would you have for them? Yeah, thanks for giving me the opportunity. So for founders, yeah, my inbox is always open, ben at superangel.vc. My website, superangel.vc, has a pitch form right at the top right. So just feel free to send me an email, fill out the form. Also on x at bzises, B-Z-I-S-E-S, on LinkedIn. I think there's a lot of investors that will only take a warm intro, and I couldn't be more opposite than that.

51:17I welcome all, any and all pitch decks. Come at me. Keep coming at me. I think, yeah, persistence is one great filtering mechanism. Unfortunately, I can't respond to every inbound that I get, but I do read everything that comes my way. I love that. It's awesome that you value people's time that way. Yeah. And also, I've written hundreds of blog posts. So superangel.blog, you can read pretty much all the same similar advice, perhaps always trying to have new things to share. But superangel.blog, tell that I like domain names with superangel in it. superangel.fund will also go to my website. But yeah, those are some places to find me.

51:58And I'm grateful for every pitch that comes my way. And there's some, yeah, try to kind of give some advice, even if it's not a fit in some cases, kind of put people in the right direction, even if it's not an investment fit for me. And then on the investing side, so I've invested $25 million into over a hundred companies and a large portion of these businesses are performing active, had a number of exits, and yeah, started raising Super Angel Fund 2 in January this year, targeting a$15 million fund, already made 20 investments out of Fund 2, which you can see by going to my website and filtering the portfolio and searching by Fund 2.

52:37So anyone who joins the fund, you automatically get a basket of great companies that are already in it. And yeah, that's my story. And I'm just really grateful to Startup CPG for having me. And Hannah, you've been a pleasure to talk to this afternoon. Yeah, no, thank you so much for joining us. I feel like we could have spent hours doing this. You're a very knowledgeable person on quite a lot of different subjects. And it was a pleasure having you today. I'm sure everyone really enjoyed learning from you and will be excited to hopefully check out your blog and your newsletter updates so that they can get some learnings on the time as well.

53:12Thanks again for joining us. Honored to be here. Thank you. Thanks so much for tuning in, everyone. If you like this episode, show us some love with a five-star review at ratethispodcast.com slash startupcpg. I'm Hannah Dittman, podcast host and correspondent here at Startup CPG. I hope you'll join me again as we dig into more juicy topics like ops, finance, and all the real talk founders actually need. Come say hi on LinkedIn or ping me on Slack. I'm always eager to hear your questions or brainstorm future episode ideas. If you're a potential sponsor and want to get in on the fun and appear on the podcast, shoot us an email at partnerships at startupcpg.com and last but not least if you haven't already don't miss out on our free slack community for emerging brands and cpg lovers alike join us at startupcpg.com we'd love to have you see you next time