Investor Spotlight: Nick Giannuzzi, Humble Growth

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0:59I work backwards from the legal perspective and what the company has to look like. How many co-packers we have? Do we have redundancy? Do we have in those contracts, do we have the ability to extend them if we want to sell it to a buyer who needs the manufacturing? But what if you sell your company to a buyer who doesn't need the manufacturing? Then you need the right to terminate those contracts and those suppliers. Hey everyone, I'm Hannah Dittman, operations and finance host of the Startup CPG podcast. And today I'm joined by Nick Giannuzzi, founder and managing partner of Humble Growth. Nick has spent his entire career at the center of the consumer space, first as one of the most sought-after attorneys representing founders in transaction deals, and now as a founding partner of Humble Growth, an investment firm built to rewrite the traditional investor-founder dynamic.

1:46After working with thousands of entrepreneurs, Nick saw the need for a more balanced, founder-first model in investing, one that brings real transparency, aligned incentives, and humanity. In this episode, we get into the fundamentals every founder should be thinking about long before they raise a dollar or build a business. How important it is to work backwards from a clear north star of where you want your business to eventually be, studying exit case studies to understand what makes a brand truly exitable, and building the kind of operational organization and back office hygiene that sets you up for a clean, efficient, confident fundraise.

2:19Nick also shares why the people around the table on both sides often determine whether a deal thrives or falls apart, and how to make sure you're choosing the right partners. This episode is candid, passionate, and grounded in decades of firsthand experience across thousands of consumer transactions. If you want to build a business and a cap table that lasts, you won't want to miss this one. Enjoy.

2:45Hey, everybody. Welcome back to the Startup CPG podcast. This is Hannah, and today I am here with Nick Giannuzzi, an investor from Humble Growth. Nick, welcome to the show. Hi, Hannah. How are you? I'm good. Thanks so much for joining us today. I'm thrilled to be here. Appreciate you spending time with me. Yeah, likewise. I'd love to kick off our conversation getting a brief background of your journey through CPG, your path to Humble, and your current title and focus as an investor. Okay. I'll try to not make it too long, but my background is a long background in CPG. In 1999, as a young lawyer on my own, I got a call from a guy who needed an attorney out in Queens.

3:26And I met a young man at the time named Darius Bykoff, who had a product called Fruit Water. And I became their lawyer. Unfortunately, Fruit Water was a terrible idea because it didn't taste good. But Darius, who was very creative and full of energy and complete inability to ever quit, decided that he was going to pivot and put vitamins in the water and call it vitamin water. And lo and behold, vitamin water and smart water were born. So I had the absolute pleasure of being the lawyer for the company from 1999 to 2007. The company went from a few hundred thousand dollars in sales in 1999 to 670 million in sales in 2007.

4:08So that was my first CPG company. And I said to myself, boy, this is so easy. I'm just going to keep on doing this. So basically since 1999, I've only done that. I started a law firm called Giannuzzi Group originally, later to be changed to Giannuzzi Lewenden for my partner, Ryan Lewenden. And happy to say that today the law firm is about 25 lawyers. We're located in the Meatpacking District in New York City. we only do CPG. We don't do anything else. If you're starting a brand, if you want to raise money, if you want to do a celebrity deal, if you need a co-packing agreement, whatever it is you need to do, we do it.

4:48We then partner with those brands. We help them grow. We help them do their financing across the table from private equity, which is something we're going to talk about today. And then eventually we help them sell. And so over the years, we've sold hundreds of companies to either strategics or other large sponsor private equity farms. Did that my entire career. The law firm is thriving today. Seven partners. They're absolutely amazing. They all started their career with me. I hired them all out of law school and still the biggest joy of my entire career. The law firm also led me to something. We made our money and we served the CPG community by serving founders at the law firm.

5:29In 2007 and 2010 and 2012, when founders wanted to start a company, there was really nobody there for them. And we built this boutique based on getting the backs, being the wingman, however you want to put it, of these founders. And it became an absolute passion for me. Most of my closest friends are the founders who I served during those years. Some of them, we had giant successes sold for hundreds of millions or even billions of dollars, and some of them failed. But they were all journeys, and they were all battles, and they were all wonderful experiences. Along the way, I represented my clients at least a thousand times across the table from private equity.

6:11And I watched the founder's journey and what they went through. And they went to raise money because the business needed money or because they wanted to take some money off the table. And that was the primary goal would be to raise money so the company could grow. But then they also, of course, hoped for good people as partners. And then what they really hoped for was real help, real, meaningful, operational help. And what I saw time after time was the chance of getting all three of those things, the money you need, a really good charactered partner that had your back and somebody who actually could move the needle on operations, it virtually didn't exist.

6:53And so it was in the back of my head for many years. After COVID, as the firm got to a certain size and I had been running it for a long time, I finally decided that it was time to think about coming up with a solution to what I saw was a bit of a problem in private equity. And so the first person I turned to was Andrew Abraham, who is the founder of Orgain. Orgain is now over a billion in sales. Andrew built that business effectively single-handedly to where it is today. He built an amazing team. He has hundreds, maybe 300 employees. The business has now been sold substantially to Nestle. But in 2021, Andrew and I met and we talked about this vision of building a fund that was designed to improve the life and results for founders.

7:42And Andrew came up with the name of Humble, which became Humble Growth, because what we decided was the only people we wanted around us were people who had put in their dues, who understood how life really works, knows that nobody deserves anything. You work hard for it, and sometimes you get it, and sometimes you don't. And you have to be truly grateful and humble for what you have. And so that was the silly idea that we had. We also had a silly idea that we could go out and raise$200 million. Andrew effectively, Andrew was a doctor before he started Oregon. I was a lawyer. So a doctor and a lawyer got together and tried to build a private equity fund.

8:18That's a bar joke. Yeah, it's a bar joke. And there's a nun and there's some other people. So we said, okay, now we need to raise money. We have a compelling idea, but who in the world is going to listen to us? It's very hard to go to institutional investors and saying, hi, we have no background. We have no history. We can't show you the deals that we invested in together, but we have this great idea. So instead, what we did, which was very true to what we were trying to do in the first place, is we didn't go to raise our money from institutional investors. We went and raised our money from the industry.

8:54And so through lots of phone calls and lots of meetings and spending time with lots of wonderful people, a year and a half later, we ended up raising 312 million, well over the 200 from the industry. So we have 150 LPs in our fund. The vast, vast majority are industry people. And the nice thing about that is that the people who put the money in, for the most part, virtually all were founders and they had been through the ringer. They had been through the ups. They had been through the downs. We tried to take money only from people who truly were humble, you know, who knew what it was to win and to lose.

9:31and we told all of them that we're going to run the fund a little bit differently. Our goal is not going to be to maximize every single deal with every single founder. What we're going to do, which we think will be more valuable to our LPs in the long run, is we're actually going to honor the handshake. We are going to put the founder first. We're not going to look for fancy structures. We're not going to look for situations where maybe we could win and maybe the founder doesn't win quite as much. What we would do is we would tip the cap to the founder. All those years I did those private equity deals for the law firm, every private equity fund would send me an eight or a 10-page term sheet.

10:12Humble uses a two-page term sheet. And I've done more private equity deals as a lawyer than probably anybody in CPG in the world. And what I realized in that time is you don't need that many rights. What you need is a founder who will listen to you and consider your thoughts and will do their best to process what you're proposing. You do not need massive blocking rights. You do not need all these restrictions. I'm more of a carrot person than a stick person because I've always been on the founder side. And what's so wonderful is all of our LPs see it the same way because they made their money by being founders.

10:48And so we took this approach into the market. We built an amazing team. We hired a bunch of really amazing investors from lots of really good funds that we do admire because there are lots of good funds out there. And we started doing deals and we're about to be 10 deals into our fund. We've deployed about two thirds of our fund over the last two and a half years. And we have doubled down on relationships and honoring the needs and desires of the founders. And so far, so good. What a beautiful story, full of passion and a really interesting path to get into investing. You know, I think the pull that you have is a very authentic and honorable mission versus I was just looking to make a lot of money.

11:31And I think that's such a testament and a real strength as an investor and a differentiator. I'd love to dive into a little bit more of an overview of your fund itself, criteria, mandate, average check sizes, stage focus, and how you're approaching kind of the nuts and bolts of the investments that you're making. Yeah, no, great questions. I probably should have gotten there by myself, but thanks for the call. No, not at all. You had a lot you had to cover, and that was a big question. I have a lot of passion in doing this, and your comment about making money. Everybody wants to make money. We're all pursuing commercial business affairs.

12:08That's what we do. But this, for me, and certainly for Andrew, who's been incredibly successful with Orgain, money has always been a secondary thing for us. We felt we could build a better mousetrap, and maybe that was a little bit egotistical. But we wanted to prove that. And I think in fund one for Humble, I think we have proven that. So first of all, we're not venture. We're growth capital. We're generally writing checks between 20 and maybe$40 million. The brands that we invest in usually are doing 20, 30, 40 million at the time. They've achieved product market fit. They don't necessarily have to be profitable, but they're certainly en route to that.

12:48Our objective is we see a brand, maybe they're in a certain amount of retail, maybe they're primarily Amazon and online, and we say, are there seven to ten things that we can do for them that will really move the meter? Like, is there really a way for us to make a difference? And I'll give you an example. Let's say the brand's not in Costco. Andrew's business sells over 500, or Orgain, sells over$500 million a year. in Costco. Andrew knows a thing or two about Costco. In our LP base, we have brands that are selling three or 400 million a year in Target or Walmart, or not quite that much, but are sort of the masters of a category in Whole Foods, or have built a hundred million, multi-hundred million dollar business on Amazon.

13:39And all of these LPs, when we are looking at a brand and when we're partnering with the brand, they all step up to help the brand. They'll come in and they'll spend time with them. Why? Why do the founders who, why do our LPs do that? Well, first of all, they're investors in the fund. And second of all, they're founders and founders take care of founders. And certainly the founders that we chose to be partners with are the types of people who want to help the next person up. And so that's really how we kind of look at it is what size are the margins close to where they need to be? We look forward and say, what would an acquirer need to see?

14:18So let's say the business is doing 30 or$40 million. Part of our work is to look forward three or four or five years and say, are there buyers for a brand like this? What would the brand have to look like for a buyer to want to buy it in four or five years? And then we work backwards and we say, can we get there? Do we have to launch new innovation to get there? Do we need to be different channels to get there? Are the margins going to be sufficient to get there? And if we can extrapolate forward to get to a theoretical exit, that's a business. Because of the seven or 10 things that either we can do or they can do perhaps a little bit better with us, that is a fit for us.

15:02Beautifully said. And I think sheds a lot of color on how you would approach a diligence process and what you're thinking through and what business fundamentals you really need to anchor in to be able to understand at that stage of a business where you need to go. I think that was a great summary. I'd love to dive back into that in a little bit, but before pivot and to some lessons learned. And, you know, now that you've been doing this for a while and you've seen quite a bit throughout your career, what is something you wish you knew at the beginning of your investing career that you know now?

15:34There's so many things. I knew so little and I'm still learning so much every day. That's a great trait. Yeah, I mean, I have so many holes in my game and that's why we do this. We do this regardless of what we're doing in life to get better. And we lean on our strengths where we can, but we have to be aware that there's sometimes things that we're still learning and still missing. The problem with me is I'm so passionate about it. I want to invest in every single founder because I see the plight and I built my own business. Law firm's different than a private equity fund. But there was hundreds of sleepless nights, times when I didn't know how to pay the bills and I didn't know how to get out of a hole and I didn't know what to do next.

16:14And so I have great empathy for the fate of a founder. And so one of the things that I learned through hiring an amazing investment team is discipline. and the discipline of not kind of falling in love. Even with the brand, we all have brands that we love, but some of those brands are designed in a way that they can never make money or they can never grow outside of natural, for instance, or they can't get to a large enough group of customers in order to have a significance so that there'd be a strategic that would want to buy them. And so the thing that I've learned most of all over the last few years is the discipline of making sure that every box is checked.

16:55And I think that that's also a shout out, I think, to founders. When founders start a business, and I have literally represented, I don't want to overstate it, but at least 3 ,000 founders in my life. I don't know exactly the number, but something above that, I believe. Founders think of a business and they dig in and they focus on the five SKUs or whatever they're doing. and it's so hard to make that work that they never come up to 20 ,000 feet above and look down. And sometimes I have conversations with founders even now and I say, well, what is a business or what should your business look like in five years?

17:34What is an acquirer gonna want your business to look like in five years? And they're working 80 hours a week just trying to keep the lights on and may get the product out the door and not go bankrupt. they don't necessarily have the time or ability to pull back and say, oh, because most of the time when I say that, believe it or not, people have no answer. Because effectively, they're just, they're in the mines. They're getting up at seven in the morning and they're going into the mine and they're coming out at midnight and they're going to sleep and getting up again. And so one of the things I would shout out to every single founder is build a business that can transact.

18:13Even if you tell yourself, I'm going to build the business and own it forever, which is very, very rare because most founders are building something to sell. Make sure you build a business that ultimately can transact, whatever that means. Like if you're building a business that can only get to 25 million, which is an amazing accomplishment, but in some sectors of our CPG industry, a$25 million business probably can't ever exit and certainly can't exit well. So whatever it is that you think you are doing, make sure you're building a business that ultimately can transact. If you don't ever want to sell it, God bless you.

18:46Don't sell your business. I think that's amazing. I love that. But don't set out to build something that can't be sold. I think that's great advice. And it kind of goes back to a point you made earlier when you were talking about how your fund is approaching finding the right company fits for you all. And you're talking about working from the end goal backwards and trying to understand how with a roadmap of does this business have the right pillars in place to eventually get there? You know, if I'm a founder listening to this and I'm thinking, OK, yeah, I definitely want to exit my business, but I have no idea what that would mean.

19:20Where's a good starting point for me to start wrapping my head around? OK, I get that I need to work from the end goal backwards. And OK, I get that I have this big dream and this big goal to eventually sell this business. What else do I need to know and what else do I need to be thinking about? Yeah, well, before we got on air together, we talked about how amazing this industry is. And the thing that sometimes doesn't get utilized enough is all of the wonderful resources that we have. People are generous with their time. My experience is unless you're a direct, direct competitor, any other founder is going to speak with you.

19:55The investment bankers in the space will speak with you. Advisors, my law firm, whoever, like we are there to speak with you and to share. I always tell my clients at the law firm, if you're my client, we have probably another thousand active clients at G Newsie Lewenden. If you want to talk to any of our other clients, no matter what you do or what you're going to do next month, we have 10 or 20 clients that are already doing it. So here's the list of the people. I'll connect you with them. Talk to them. Ask. Learn. One thing I think they should do is they should look at data, right? So they're looking at data to see how their brand's doing.

20:31Okay, look at the brands that are bigger than you. See the ones that have transacted. Find out the people who did the transaction. What did they look like? If you want to be a bar and you want to sell as a bar, look what RX Bar was doing when they sold. Look at what Perfect Bar was doing when they sold. Look at what the parameters were. How many skews? What was the store count? What was the velocities? What were the margins? What were the revenues? What was the EBITDA? All that stuff is available somewhere because there's people who did those things. And again, this is the problem is it takes time and it takes awareness.

21:04And that's why the trade shows are so great, Expo West and the other good trade shows, because it brings people together. But I think it's really, really important that a founder find time, which can be brutal and can be impossible, but try to find time to pull back and to ask those questions so they actually have a plan on how to get somewhere instead of just continuing to grind. Which, by the way, is the most 99 % of it is just grinding and growing. but it'd be nice while you're doing that to have a little something in the back of your mind to know where you should be getting. Yeah, the North Star guiding you is so important because it is true.

21:40You will be grinding. Many hats, many problems, many highs, many lows. Without that constant beat of the drum of this is the metric I really need to get to or this is the dynamic I really need to get to, it's so easy to get reactive or lost in the sauce of everything that's going on. I mean, you almost have to have a little ADHD to be able to do the job, but too much of it and you can get pulled away from your goal real quick. It's always fun talking about the characteristics that you want most and hate the most in founders. So the thing that you really want in a founder is somebody who is adamant and sure of themselves and willing to run through walls and completely committed to the brand and what they see as the vision of the brand.

22:31The thing you hate most about founders are all four of those same characteristics at time. And so you need that really strong-willed person because let's face it, there's never been a brand, I don't think, that's gone in a straight line. And it's never just been easy. And so what happens for the people who don't have that level of conviction, they quit. And only the founders that have the ultimate level of conviction actually stay at it. It's just too hard of a road. It's too hard. When I need a brand and they're doing 20,$30 million and maybe Humble's not going to invest, I always tell them that what they did is like, it's not a miracle, but the fact you get a brand of 20 to$30 million, don't take a no from me to suggest that you're not valuable or you haven't accomplished something amazing because you have.

23:20It's so hard to get there. So yeah, like I want founders that are tough as nails. Hopefully they've been, I like people who've been bounced around a little bit. You don't need to, failures are fine. I prefer somebody who's failed. I failed a lot before I had some level of success. And also being vulnerable, you know, like letting people know who you are and what you've been through. That's a good thing. And I think getting to know a founder and their character and the fact that maybe they've taken some shots and they've had some battle scars along the way. It's okay. We all have. Yeah, CPG, I mean, it's such a human, investing is a very human-centric business, but CPG is as well.

23:58You know, you're understanding the psychology of your customer base. You know, you're selling things to people. This isn't like robot software that some other software is going to use to integrate. It's a very personal business and changes quite a lot. So I think understanding the person that you're in business with on both sides of the table, the founder and the investor, is just such a critical component to feeling good about your job and where your business is going. You know, when founders are interviewing the different funds and the businesses that are doing the best get the most term sheets and have the most interest in potential investment, I really recommend to every founder to really do the due diligence on the fund.

24:37Don't call the founders who the fund introduces you to and say, please call all these founders I invest in them, call all their other founders that they invested in. Because the list they give you is going to be the ones where they actually had a good result and a good relationship. You need to talk to everybody. And one of the great things about being in my position as a lawyer all these years is I got to see all of them. And I got to see who were the good actors and who were the bad actors, who were the private equity funds that really stood by their clients and really made a difference. And notwithstanding my comment, there really are some that are great, but they're few and far between.

25:16And so the founders need to do the due diligence on the character. The other thing is don't be fooled just because you meet the principles of a fund in the meetings when they're talking about investing in you. Don't be fooled that you're actually going to spend time with those principles for the next years. Make sure that whoever does invest in you, the people you're meeting in the room are going to be your people. I know for Andrew and I, we're on calls pretty much every single day with every single one of our portfolio companies. We don't sit meetings. We text, we call. We're constantly with each other.