America's New Consumer: CPG, Sports, Four-Wall | Jason Fiedler, Left Lane Capital

Molly O'Shea interviews Jason Fiedler, Managing Partner at Left Lane Capital, a $2B+ venture fund focused on consumer and internet businesses. They discuss his unique investment strategies focused on consumer goods, sports, and the evolving retail landscape, diving into specific subcategories and his portfolio companies. Jason shares insights on the importance of NPS Delta, the application of software frameworks to consumer investing, his Sims City vision, pearls & strings system, and the rapid growth of his firm. He emphasizes the significance of sourcing deals through a rigorous process, keeping track of 'crazy' ideas, and the big opportunity for innovative beverage brands in a changing market. The discussion also touches on the risks of fast growth and the future trends in consumer behavior. -- Follow on Twitter ⁠https://x.com/MollySOShea⁠ https://x.com/MollySOShea https://x.com/jfeedler -- Check out Left Lane Capital: ⁠https://www.leftlane.com/⁠ https://www.leftlane.com/ -- Subscribe to Sourcery: ⁠https://www.sourcery.vc/ ⁠ https://www.sourcery.vc/ -- Sponsor: Archer Archer's Midnight is a piloted four passenger aircraft designed to perform rapid back-to-back flights with minimal charge time between flights. Learn more about how Archer is set to open up a new world of opportunity for passengers by providing safe and efficient access to people, places, and events across the communities they live, visit https://www.archer.com/ -- COMPANIES MENTIONED: Investment Companies: Left Lane Capital: ⁠https://www.leftlanecap.com/⁠ https://www.leftlanecap.com/ Insight Partners: ⁠https://www.insightpartners.com/⁠ https://www.insightpartners.com/ Left Lane Capital Portfolio Companies: Blank Street: ⁠https://www.blankstreet.com/⁠ https://www.blankstreet.com/ Kings League: ⁠https://kingsleague.pro/⁠ https://kingsleague.pro/ Olipop: ⁠https://drinkolipop.com/⁠ https://drinkolipop.com/ Holy (German beverage): ⁠https://drinkholyfood.com/⁠ https://drinkholyfood.com/ League One Volleyball: ⁠https://www.l1volleyball.com/⁠ https://www.l1volleyball.com/ Jason's Personal Investments: Farmer's Dog: ⁠https://www.thefarmersdog.com/⁠ https://www.thefarmersdog.com/ Figs: ⁠https://www.wearfigs.com/⁠ https://www.wearfigs.com/ Major Companies Referenced: Coca-Cola: ⁠https://www.coca-cola.com/⁠ https://www.coca-cola.com/ Pepsi: ⁠https://www.pepsi.com/⁠ https://www.pepsi.com/ Monster Energy: ⁠https://www.monsterenergy.com/⁠ https://www.monsterenergy.com/ Starbucks: ⁠https://www.starbucks.com/⁠ https://www.starbucks.com/ McDonald's: ⁠https://www.mcdonalds.com/⁠ https://www.mcdonalds.com/ Driscoll's: ⁠https://www.driscolls.com/⁠ https://www.driscolls.com/ TCBY: ⁠https://www.tcby.com/⁠ https://www.tcby.com/ All Birds: ⁠https://www.allbirds.com/⁠ https://www.allbirds.com/ Liquid Death: ⁠https://liquiddeath.com/⁠ https://liquiddeath.com/ Rao's: ⁠https://www.raos.com/⁠ https://www.raos.com/ -- TIMESTAMPS: (00:00) Preview and Intro (01:50) Inspiration from Starbucks and Investment Strategy (04:07) Subcategories of Interest (05:14) Applying Frameworks from Software to Consumer (06:56) LTV to CAC and LTV to CapEx (08:43) The Sims Framework (10:35) NPS Delta(11:51) Growth and Current Stats (14:50) Sponsor: Archer (15:33) Number of Investments and Board Seats (16:15) Sourcing Deals and Thematic Approach (19:18) Identifying Breakout Companies (20:41) The App Store Influence (21:29) Risks of Rapid Growth (23:08) Olipop Investment (25:24) The Holy Investment and Powder-Based Beverages (29:25) Conviction on Sports Investments (31:51) Crazy Ideas and Future Investment Areas (34:10) The Next Big Trends (37:08) Outro and Next Steps RECOMMENDED PODCAST: 🎙️ This Won't Last Eavesdrop on Keith Rabois, Kevin Ryan, Logan Bartlett, and Zach Weinberg's monthly backchannel. They unpack their hottest takes on the future of tech, business, venture, investing, and politics. Apple Podcasts:⁠ https://podcasts.apple.com/id1765665937⁠ https://podcasts.apple.com/id1765665937 Spotify:⁠ https://open.spotify.com/show/2HwSNeVLL1MXy0RjFPyOSz⁠ https://open.spotify.com/show/2HwSNeVLL1MXy0RjFPyOSz YouTube:⁠ https://www.youtube.com/@ThisWontLastpodcast⁠ https://www.youtube.com/@ThisWontLastpodcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Molly O'Shea?

  Most of my pods already have been about AI, but you're anti-AI and you're investing in a completely different segment than most of the companies that every single investor is investing in. So you're going after CPG, sports and four-wall businesses. Could you explain how you gained conviction here?

• 0:17Speaker 01

  Definitely. And I don't know if I want to get labeled as anti-AI explicitly because the impact that Gen AI is having is foundational and huge and will eventually also affect categories that I am more focused on. It's been way less crowded on these massive consumer markets that have billions of dollars of spend, slow incumbents, repeat purchasing. You mentioned some of the CPG stuff, some of the four-wall, some of the tech-enabled healthcare. It's been an evolution of thinking over the last handful of years. Never thought we would be investing into direct-to-consumer pet food businesses, local coffee shops and burger chains, volleyball franchises.

• 0:58Speaker 01

  But we're seeing high-quality revenue and opportunities in those categories, and so it's been a focus.

• 1:11Molly O'Shea?

  Welcome to Sorcery. I'm your host, Molly O'Shea. Today, we have Jason Fiedler, managing partner at Left Lane Capital. Focused on consumer and internet companies, Left Lane Capital has grown its AUM to over $2 billion in around five years. Very fast. Notable Left Lane investments include Talkiatory, Blank Street, Holy, Jackpocket, Kings League and more. And Jason's personal investments include Farmer's Dog and Figs. This is a very fun conversation on wildly interesting, atypical, venture-backed businesses. And Jason gives a very good, refreshing take on it all. I hope you enjoy. When we were talking, you mentioned that you were inspired by Starbucks.

• 1:54Molly O'Shea?

  Learning the Starbucks model and understanding the full scale of that, what was that scale? What did you learn?

• 1:59Speaker 01

  It was an evolution of thinking. So in 2015, in New York City was kind of the boom of direct-to-consumer brands and every category had a multiple Layers and so invested in a handful of those and companies like, you know, personally was an investor in the farmer's dog, bigs, medical scrubs, and those got off to a quick start and some of those have continued to do really well, the ones that have repeat. But what what we realized in like 2021 is direct to consumer marketing costs went through the roof. Facebook tax were huge and everyone was struggling to acquire customers digitally. And I think it was two things that I mainly did. One was this article on Starbucks where they were breaking down how they only spend 4% of sales on marketing, right?

• 2:44Speaker 01

  They don't need to constantly reacquire customers. They have a front door, their four walls are marketing and they have defensibility locally. And they can continue to drive repeat revenue without opening doors every day. And the other thing I did was just, I think it was in the depths of COVID, I just sorted the stock market in descending order by market cap. Everything we're investing in, you're investing in, other funds are investing in. We're all looking at the end of the day towards that number being as big as possible, whether it's on public exchange or M and A or whatnot. And it was just shocking to me how many of those businesses are core consumer categories. Right? This is, these are your beverages, these are your banks, these are not necessarily your enterprise software companies. And it reconfirmed to me even more how if we can take the same framework,

• 3:27Speaker 01

  we're not sacrificing, we're not just kind of hoping that this consumer business is going to win, but in fact, doing even more, you have to apply even more rigor sometimes on the consumer side to make sure that you're not investing in a high flyer. But I think the combination of the the the lack of need on marketing spend and then the fact that these markets are so big and numbers one, two, and three leaders in them are often multi-billion dollar public companies, gave me confidence to double down on it. One question I would often ask people is how big is Monster Energy? And they would often say like 2 billion, 3 billion. I think at the time it was 70 billion. And so I think a lot of investors are magnitudes off in how big these categories can be.

• 4:07Molly O'Shea?

  So in those categories that you're going after, like what are the specific subcategories?

• 4:11Speaker 01

  So beverage is one of them. Can talk about beverage for for days. Pet has historically been one of my favorite categories. When you think about the enterprise software of consumer spend, pet is it? I mean, yes, you'll have that initial maybe forty to sixty percent drop off in the first year. But after that, you're retaining eighty to ninety percent of your customer, of your dollar spend year after year. And so it's a, you can apply very similar frameworks from software to growing a pet business. As I said, a lot of these fast casual restaurants that can scale really quickly with the limited capex is, is another area that we're spending a lot of our time on. We're continuing to look at digital healthcare and, you know, there's a bunch of categories that we're looking at that, uh, sports is another one.

• 4:55Speaker 01

  It's hard for me to just only talk at the surface level. I'm happy to pick one and I can go deep on it.

• 5:00Molly O'Shea?

  We'll go deep on them later, but I want to go back to something that you mentioned in the first question. So you're from a traditionally very software-heavy background. You were at one of the largest funds inside partners and you learned some great frameworks and models there. What have you applied from those frameworks and models to now doing consumer and what's different?

• 5:22Speaker 01

  So the DNA of the firm is very similar in the sense that I think you had used the word aggressive. I wouldn't necessarily say aggressive, but it's lean forward, right? We're very outbound sourcing focused. The majority of our deals and majority of our dollars are in companies that our junior sourcing team brings to us, not friends of ours that we've known for whatever, saying, hey, I got this deal. Let's do this together. So it's a very rigorous outbound sourcing motion, high volume and supermarket informed, which I think is kind of rooted in, in the same kind of insight strategy that we grew up in. We're just pointing that in towards a different area of spend. We're still focused on a lot of the SMB stuff that, that there might be some overlap, but adding a lot of the consumer dollars.

• 6:05Speaker 01

  And so we, we take that outbound lean. We also take the data rigor. So as I said, just because we're focused on consumer and SMB doesn't mean we lax. In fact, those businesses generate a lot more data earlier on, right? So a series A business that has, that's in the enterprise space that has twenty or thirty customers, you can probably just phone all them. They may be YC friends. It's very difficult at that stage to be as predictive as a. Freelancer SMB software business that has thousands of customers already at the Series A stage. And so you can learn a lot earlier and we've taken a lot of the data rigor and the process as well. And I've realized that more than ever because a lot of it is just the process of building the firm and building processes, breaking processes.

• 6:50Speaker 01

  But I think we do carry through a lot of the DNA, the core DNA, we just point it in a slightly different direction.

• 6:56Molly O'Shea?

  So if it was LTV to CAC at Insight, what is it at Left Lane?

• 7:00Speaker 01

  LTV to CAC is still the North Star metric. I mean, all of these businesses, at the end of the day, are engines of we acquire a paying customer and we spend for that, the denominator, and then we get our gross profit of whatever service or product we're providing them over time. And we run that year after year, right? So they all, at the end of the day, whether it's a business in the banking space or the virtual education space or the psychiatry space, when you come to our ICs on Monday, there are similar slide templates and you're breaking them down to similar metrics. I would say on the newer kind of four-wall stuff, there is this concept of LTV to CapEx that we've been adopting that's kind of interesting, or LTV to CapEx plus sales and marketing, which is essentially your cost to acquire customer is building that four-wall unit

• 7:44Speaker 01

  and the sales and marketing required to get them inside of it. And the LTV, so the numerator is the gross profit you generate from them over time. And so that framework and being able to kind of apply and retrofit somewhat of a similar framework that we had in the software days has been really helpful. Because when you look at a burger shop, which traditionally has not been something that, you know, RLPs would know us for, and you see that it can, you know, costs can generate 150K of gross profit per month, you realize that that payback and life after payback is really interesting and rivals some of the more traditional software businesses. And so that, that sounds similar and it was a very uphill climb to get there internally.

• 8:26Speaker 01

  I think there was every kind of similar-esque deal got us a little bit closer, but there was a handful of IC discussions where it was like, do we really do this stuff? Does this fit the model and the bar? And I think we've been able to adopt our frameworks without sacrificing our core Values in a way that supports these businesses being incredibly investable and viable.

• 8:43Molly O'Shea?

  Can we talk about your Sims framework?

• 8:46Speaker 01

  Yes.

• 8:47Molly O'Shea?

  How you're building out your portfolio?

• 8:48Speaker 01

  Yes. So furthering a lot of that, I mean, I grew up playing, that was the generation where you played The Sims. And it was, it was always interesting to me that you could kind of just sit back. I would always sit back after I clicked the button a ton of times and just watch the people like Ant Farms just kind of run through the business units and generate activity and profit. And I think we're at this period right now where the retail landscape is entirely changing. You used to have a Gap here and other retail apparel store there. What's in these four walls is totally changing. It's a service economy and a food economy and a, you know, social entertainment economy now. And so I think we're entering this era of building the new Sim cities.

• 9:31Speaker 01

  And these entrepreneurs are repainting, you know, the streets with new brands. And they're digitally native, which provides a huge advantage over the incumbents. The newer generations are walking into places because of their phones, right? That's their navigation system. They're on TikTok. They're on whatever the hell else they are on. And that's the reason that they go left into that, you know, Seventh Street Burger or Blank Street, rather than right into the Starbucks or McDonald's. And you combine that with, and I can talk, you know, a massive mistrust of incumbent brands these days, right? Like the, the modern consumer has shifted values away from convenience at all costs to, I mean, we still love convenience, but there's a, there's a, obviously the health, the health craze is going more mainstream.

• 10:15Speaker 01

  And that's led to a mistrust of a lot of these brands where more and more times, when you see the incumbent brand on the right, you're going to go left. And I think there will be, we want to be invested in a lot of those businesses that are really scalable. If it works in New York City and Topeka, Kansas, there's a lot of other cities in the United States where that can work.

• 10:34Molly O'Shea?

  Totally. And I, I think you mentioned something about the NPS delta. So what is like, what is the NPS delta and how did you come to that?

• 10:43Speaker 01

  Thank you. You're bringing up all my, my keywords. And the NPS delta concept also reinforced my interest in these categories because I think a lot of people focus on objective NPS, like you, we have an NPS of 90 and that's not that great if the NPS in the incumbent industry is 87, right? And, and what's really important is what is that delta between your NPS and the next best or next most popular incumbent option? And when I go back to, you know, the personal investment in FIGS or, you know, or even in the farmer's dog and some of our businesses like Talkiatory, which is modernizing virtual psychiatry. It's not the brands themselves in isolation that I was like, this is the best thing ever.

• 11:26Speaker 01

  But relative to the next best incumbent, it was just such a stark contrast that it made it more unfairly easy for them to succeed and, and steal market share. And so I think that NPS delta is what's really important. And I often look for what are the large categories of spend where your incumbents that are doing really well just don't have NPS? Those are the categories where customers are way more likely to switch.

• 11:51Molly O'Shea?

  Um, okay, so I did mention beforehand that I perceive Left Lane as aggressive. I mean, I think you guys are like incredibly ambitious and you've grown tremendously large in a short amount of time. In around five years, I mean, I think that's a short amount of time to raise $2 billion. So that's a tremendous feat. You guys are also young, okay? Young for the industry standard of, you know, a 50 year old male, but you guys are probably early mid 30s. You've raised, yeah, you've raised a great amount of money. So how did you grow so fast? And what are the current stats and outputs that you guys are hitting?

• 12:28Speaker 01

  Well, first off, thank you. Um, it's, it's been humbling, but also at the same time, it feels like the, the bar is higher. We have to jump over, so I don't know, I take it still. I think I'm still in, I feel a lot of responsibility phase rather than clapping. But first thing I'll say is, I mean, we, we took a lot of time to name the firm. I remember we hired like three naming agencies. They were horrible. And then Harley and I went off into, I think we spent a weekend and I just, we were driving upstate and Left Lane just hit us because we're, we're not Right Lane, right? We, we. We like to go faster. We like to to beat the on a relative basis, the competition. We like to win. I just so aggressive. Yes, in that sense, I just think aggressive can have a reckless connotation, which we are the opposite of. We've got our seat belts on. We have the airbags, you know,

• 13:12Speaker 01

  make sure maintenance, everything like that. But uh, but it's it's been it's been fast, but it's been consistent with the strategy. You know, when we were at insight, we were managed Harley, Vinnie and Dan, when they were there managing a similar amount of of of money. And I can't say we we fully expected it in this amount of time. The market went fast and and we were able to fortunate to have a handful of winners early in our our fund one that we were able to raise fund two off the off the backs of. But it's really consistent with the strategy. I mean, we we execute a position building strategy where we look specifically for series A's early traction, build it getting minority ownership into those businesses. And then with support

• 13:54Speaker 01

  and getting them to that next phase where we can hopefully generally one out of three companies, one out of four companies, invest again and build our ownership into those those those winners. So that's the strategy and you need a fund of a certain size in order to do that. Also, as I explained with our outbound sourcing and our rigorous kind of data processing, you need a team. So we've got 37 individuals here and the majority of that is on the investment team. That's finding deals, processing deals. And you, you know, we've also got a value add team, an individual on growth, individual on talent, an individual on platform. So in order to to do it right, we feel like you need to be a, you know, a franchise firm. And I think we

• 14:35Speaker 01

  we really feel blessed and fortunate to to have gotten out and feel over the wall. But I think an incredible amount of responsibility to deliver to our LPs, to deliver to to our founders. And I think that's why we we work so hard and I slept four hours last night.

• 14:50Molly O'Shea?

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• 15:33Molly O'Shea?

  Can you mention how many investments the team has done to date and how many boards each partner is typically on?

• 15:40Speaker 01

  Yeah, we've, we've done almost 80 deals to date and 80 investments, 80 companies. And it ranges, partners are on anywhere right now from 12 to 14 boards, I would say generally.

• 15:52Speaker 01

  And then we have a really supportive team beyond that. So we have principals, VPs, leading deals. These are the partners to be, to be clear. We don't go externally and hire with recruiting firms to poach other partners. That's a similar, that's a strategy that we did take from the Insight Days where we promote from within. And so we give a ton of autonomy and responsibility to the future partners. So there's dozens of board seats as well that are occupied by that next layer.

• 16:15Molly O'Shea?

  You mentioned that most of the deals are sourced by the juniors too. So how does, how does that work and how many are you sourcing weekly?

• 16:23Speaker 01

  I think, I was checking before, I think we've spoken with 780 companies this month so far. So we got another week to go and manage everything in Salesforce. And so, but that's really, it comprises of, you know, the, the investment team of 20, 20-ish. And they can use, I mean, we don't tell them explicitly, hey, you need to focus on this and, and run us down and find an investment here. They have an email address, they've got their phone, they, they're in our partner meetings, we're coaching them to some extent. But they're really using a combination of three different ways of. Going about sourcing to do what they do every day and that's networking, that's data and that's themes or thematic, which is my bread and butter and focus.

• 17:08Speaker 01

  I'll hit on those really quickly, but it's a combination of those that makes you a sourcing analyst. Networking, there's so many other upstream and downstream firms that are doing interesting stuff. And I think I've been blessed to have a cohort of awesome investors that I've stayed very close with over the past decade. But it's up to those folks to find your tribe and to find those folks that you love sharing deals with, talking about deals with. And at this point, I know you said we're kind of relatively young in terms of the, you know, the consumer internet and the opportunity. You know, we started our careers with the birth of the app store. You know, we've kind of been there for, since the beginning of it. And so the network extends really far, the relevant network extends really far. And so it's up to them to build that network of their own as well and tap it.

• 17:53Speaker 01

  Data is really important. I mean, a lot of firms talk about AI sourcing. We believe that having data, access to data, proprietary data, but also the table stakes data is very important. And we weave that into the very human based sourcing. So we, every week, people get automated based on trends of website traffic, job postings, app store downloads and other metrics. We automate highlighting companies, sends about six per week, per investment analyst. And they're responsible for going through those. There's also tons of other data sources that they can leverage on their own. And then third is thematic, which to me is the most interesting and important.

• 18:32Speaker 01

  And because it involves a lot of more outside the box thinking, which is living everyday life and observing culture and observing changes. But also observing what the core areas of spend are, what are interesting categories? What are interesting, I explained my pearls and strings framework, but what are the strings where they're really good categories? And have an opportunity for some reason, I mentioned pet, I mentioned beverage, I mentioned four wall. These are strings that I find interesting pearls to attach to each. And I think the job of a sourcing analyst is to prioritize those strings and exhaust all of the possible pearls that could be on it to find the best. There's nothing worse than being on the second best horse in the race. So a lot of the job is not just picking the right string, but picking the right pearl or horse on that string.

• 19:18Molly O'Shea?

  Yeah, I wanted to actually ask and dig deeper into the pearls and strings. So let's say you find a good string, you're acquiring different pearls, right? How do you know that you've found the breakout one? Like, what are the main characteristics of the breakout company within the pack?

• 19:34Speaker 01

  It's a good question. Depending on the stage, it can be more obvious or less obvious. And the later you go, the more data driven you are, the earlier you go, the more founder and brand driven you are. But the key is having close to perfect information. There's over 75 direct to consumer pet food businesses globally that I've spoken to. Right? And even when you go into France, there's seven there and you have to understand each one. And there are different retentions and there are different CACs and all of that. And so the key is really as close to perfect information as you can get, because that's what enables you to have perspective. And then if it's too early, then you have to inform a bit more brand and, you know, when, when, and, and some of the, you know, what you think about the founder and whatnot.

• 20:16Speaker 01

  But usually if it's not obvious, you haven't done enough work yet, but it usually is obvious. And then the beauty of some of these categories is they're not necessarily winner take all. You know, there's some platform or network or brand effects, but winner can often take most as we saw in direct to consumer pet. But if you ended up in two, three, four or five, you're still making, underwriting your base case. You're still gonna return your base case for each of those deals.

• 20:41Molly O'Shea?

  I love that you mentioned that your team was born out of the app store marketplace. Like, I think that's great. Some funds were born out of literally typewriters. It's a good difference.

• 20:53Speaker 01

  I remember playing like paper toss and I was like, this is, this is work. Like there's an ad network here and there's, and we actually ended up investing in, in companies related to a lot of that stuff. But yeah, it was, it was, it's when I knew that this job, this lifestyle was for me. If you view it as a job and you, and you think of it as cold calling, no chance. But if you have that fire of intellectual curiosity, it's just gonna keep leading you forward towards interesting things. Again, I had no idea I'd be talking to you about sports, four-wall, continued CPG three years ago. It seemed like we were going to transition completely away from that stuff. But here we are.

• 21:29Molly O'Shea?

  It's fascinating. And you guys have grown pretty fast. To double back on that, do you think there are any risks of growing the firm so fast? In what ways have you been able to stabilize the pace or at least the foundation?

• 21:44Speaker 01

  There's definitely risks. We say it's like a dog year versus just like a normal year. And maybe at more kind of mature or later institutional funds, processes just break faster. And you gotta, I think my, my kind of stint that I did in, in operations and at startups gives me a lot of respect and empathy and understanding for just how a startup works. We are a startup with the rate at which we're growing and you have to communicate and be responsive. I think that's the, the biggest risk and the biggest issue is not doing that. Because at a larger, more established place, you can, you have, you have the way of doing things. And if you don't communicate, generally, maybe deals won't get done.

• 22:27Speaker 01

  But there's an inertia towards just process and normalcy. Here, things change, you know, we used to have pipeline on, on Mondays. Then we split it with pipeline and IC Mondays, Tuesdays, then, you know, so, and you have to be super responsive. You know, in four years, we went from a WeWork where I used to have my feet up on the desk in, in Matt Miller's face to, you know, two floors here in, in Brooklyn with, you know, with many more employees. And so the processes just have to change and the, the half-lives of those are just way faster. And yeah, I think those are the main things.

• 22:57Molly O'Shea?

  Communication, integrity, adaptability, those are all pretty good frameworks for, for building a fund. Okay. So to get back into some of the fun, the fun stuff, okay? So I want to dive back into your portfolio. You guys have obviously had some big hits. For starters, I've heard through the grapevine that Left Lane invested in Ollie Pop at a $1 billion valuation. Can you share more on this?

• 23:22Speaker 01

  I, we, we are investors in Ollie Pop now. And what I can say is That we're really excited about the business. It started as a note that I had in my phone, maybe four years ago, and I was like, there has to be a Diet Coke alternative. And and kind of a thematic focus, as I told you, on beverage and just it's incredible. Coca-Cola and Pepsi, three hundred forty five billion dollar companies, they're really having their cigarette moment. And they were cool when I was a kid and now they're not healthy. And I had I was at a board meeting recently where an investor came in with a brown paper bag over his Coca-Cola. Because he didn't want anybody else to see as if he was drinking in the board meeting. And the Ollie Pop team is incredibly impressive.

• 24:03Speaker 01

  The founder is extraordinarily mission driven and they have a marketing and partnership savviness. And that is reflective of a of a truly digital digitally native team. And then, you know, I and so we've we've gotten to know the business for a handful of years. And it just got to that point where, you know, obviously the business has done incredibly well. We said, this can this this can be a several billion dollar business. We absolutely believe it can be a several billion dollar business. Playing against these slow incumbents, I mean, Coca-Cola has twenty brands that do over a billion dollars. Every single one of them is decreasing in sales year over year. And they haven't innovated at all. They they created Diet Coke in nineteen eighty two and then Coke Zero in two thousand and five, which are just derivative products. But all of their expansion comes from new acquisitions.

• 24:47Speaker 01

  And there's hundreds hundreds of billions of dollars of enterprise value that they're going to need to maintain and try to grow off of. And I think those are not going to come from because of the distrust that consumers have for them. From and and the inability they have to put new stuff out. It's not going to come from that. And as I said early on, monster seventy billion dollar business. These these beverage brands, when they have the right defensibility brand, they can escape and get really, really large. And so that's we we believe Ollie Pop is is a very, very special product, a special brand. And maybe we can trick America into being healthier and increasing their fiber intake by drinking soda.

• 25:24Molly O'Shea?

  Yeah, we we gotta do that. And by the way, on the fiber, the fiber point, can you talk about the bananas?

• 25:31Speaker 01

  Three and a half bananas. It's a lot of fiber.

• 25:33Molly O'Shea?

  That's a lot of bananas.

• 25:35Speaker 01

  It's a lot of bananas. But in all seriousness, it's it's we have another investment that we made in in Germany in a company called Holy. That is a powder-based beverage business with energy, hydration, and teas. And the business is nearing 100 million in run rate. It has scaled tremendously over the last year. And what has blown me away about that business, early on, I thought it was a risk potentially of being not ready to drink, being powder-based. But the market side, if you even just think about the addressable market of people that carried around water bottles three, four years ago, it's at least three, four times smaller, way smaller than that than it is today. And so, and it's incredibly mission-aligned. It's obviously more environmental. It's a better-for-you product.

• 26:19Speaker 01

  And people consume a ton of it over and over again. And so, we think there's a ton of opportunity in these kind of high-margin consumable categories with stale incumbents. So if you're building a disruptive beverage business, come my way.

• 26:32Molly O'Shea?

  Amazing. And yeah, I think about that a lot, actually, with powder. I use like an electrolyte powder every day. I'll have to try Holy. But ever since the microplastic studies have come out, I just look at water bottles and think they're like plastic juice. It's really gross.

• 26:47Speaker 01

  The way that we, what we consume and the way that we consume it on the beverage side in terms of packaging, volume, water, and shipping it all over the place. I mean, it sounds common sense, and we've been saying it for a while, but I think we're actually reaching the mass tipping point where consumers are going to actually start to make change.

• 27:04Molly O'Shea?

  Yeah. So stepping back, consumer is a very cyclical market. It requires more intuition versus logical B2B contracts and long-term revenue. How does your team, because you have both minds at the table, how do you stay clear-minded and balanced when evaluating various kinds of deals? I mean, these trends come up and down. I mean, we see lots of social, lots of consumer-driven businesses that reach really fast growth, super quick, and then they kind of taper out. So how do you find those? How do you evaluate them and then help them grow?

• 27:39Speaker 01

  It's a good question, and this is what I, why I think it's so valuable to have our partnership and our processes and our team. We say if one of my partners, Dan, is a bit more on the enterprise side, but more fintech and a bit more complex businesses, and we all often say if him and I like a business, it's going to be a damn good business. And I think you can get emotionally excited about consumer. I'll never forget when I had Liquid Death and I put the bottle on our, the not bottle can, obviously, on our, our table in IC and I got laughed at. And it's turned out to be a great success and there was definitely key insight there around brand. So I think like our process and our IC just holds our consumer businesses way more accountable than the other average consumer dedicated investor.

• 28:20Speaker 01

  If you are entirely reliant on new customers for your revenue and you can't really go to sleep for a year and be a decent sized business that next year, it's just not going to work and it's not going to hold up in our IC. There's no trust me. There's, there's, there's no, hey, man, just on this one. Even League One Volleyball, which is one of our investments, they're launching a professional pro league. And there have been investments into dedicated pro leagues. Those are huge J curve, higher risk investments. What was interesting to us about League One is that underneath their hold co, they also are buying the top youth volleyball clubs globally, nationally. So they have 50 of those and it creates cash flow and a really stable business with which you can de-risk the pro side of the business, which is launching in January.

• 29:03Speaker 01

  And so it, I think that it's just a, there's like an extra layer of check that our, our processes and our IC holds to our consumer deals where it becomes very difficult to do anything emotional. And again, all of our consumer deals have the same memos and frameworks that our B2B, our SMB SaaS or, or vertical SaaS businesses do.

• 29:25Molly O'Shea?

  Yeah, it's really interesting. I mean, like even going back to the first question, not only are these companies not AI, but some of them are not even traditionally like a VC backable kind of company, quote unquote. In terms of sports, how did that happen? Like, how did you gain so much conviction on that and invest into a volleyball league?

• 29:45Speaker 01

  So the volleyball investment is part of a broader sports thesis. That's another string that we've been pulling on. So we're, we're also investors in Kings League, which is a seven on seven soccer league, started in Barcelona by ex Barcelona star Gerard Pique. And we've got a chess league that we invested in and another one that will be in. This was similar kind of outside of the box thinking, but at the same time, holding it up to our framework and these sports businesses, it's different types of revenue, but with media rights and sponsorships, these are highly recurring, high margin revenue opportunities. And you have a fairly reliable year over year in consumer loyalty and just eyeballs. A lot of these sports leagues were early in their J curves in the, in the 2000s and then early 20s.

• 30:28Speaker 01

  And that's why high net worth individuals were largely investing and benefiting. But right now they're, it's, it's out that they're formidable assets. And, you know, when I was younger, there's 60 channels to watch on TV or whatever. There was, I don't know, Nickelodeon was like 49 or 50 and ESPN was 36. And they determined what sports you watched. It was, and a lot of baseball. The modern consumer now has infinite channels on YouTube and Tik Tok and Twitch. They can choose where to spend their time. And I think that's resulted in a huge fragmentation of sports beyond the incumbent four leagues are obviously growing. But now you've got women's sports that are really hitting a critical mass of viewership. You've got other sports beyond the major four.

• 31:09Speaker 01

  And it all stems, in my opinion, from this like break of linear where, I mean, you go to India, for example, 96% of sport is cricket. They have a hugely homogenous sports culture. In the U S, we are entering a phase of much more heterogeneity. And I think that screams opportunity. People have tons of other interests. If you can, there, there's, we're also seeing that there's an absolute pattern matching to these businesses. They have a lot of similar, you know, the same way that enterprise sales businesses and e-commerce businesses have similar growth pain points. These sports businesses all have common growth and pain points. But there yet isn't really a growth stage investor that's addressing, how do you build the next generation leagues into formidable businesses long-term? And we think there's an opportunity to step into that.

• 31:51Molly O'Shea?

  Okay, Jason, I don't know if you're comfortable sharing this, but in our prep call, I thought this was a lot of fun. You showed me some of your crazy ideas. Are you comfortable sharing two or three of your crazy ideas? Uh, I'll point one out, you wrote nail polish with all caps. So, so what else do we got in there?

• 32:09Speaker 01

  Man, never share screen. That's a good, I gotta learn that. Defend how this fits in my whole framework of thinking as an investor. You've got your ideas, you got your areas of interest and those kind of pre-populate your strengths that you end up really focusing on and going and diving deep on. So like I'm always, whether it's I'm at a comedy show or at a wedding, or I'm always, and my wife makes so much fun of me, I'm always in my Apple notes and I'm always writing stuff down and prioritizing and changing things. As I said, like I wrote down Diet Coke alternative for ideas and that came out. I don't know. I think my last ones are like Driscolls for grapes, which I think could be really interesting. Driscolls is a really sneaky, interesting business. They own the seed and but there's, there's so much inconsistency in fruit.

• 32:51Molly O'Shea?

  Yeah.

• 32:51Speaker 01

  Other fruit categories beyond raspberries, which they've solved, but then some of the other berries.

• 32:57Speaker 01

  But again, like who would have, could there be an opportunity in produce? In branded produce, I don't, I don't know, but it could be interesting. I think I'm very interested right now in bringing back brands like I have TCBY, the country's best yogurt, like something like that to bring it back. I think we could actually have an entire YC for fast casual businesses with how much share there is to steal pretty quickly and how many entrepreneurs are going at it. Oh, man, a lot of ideas. Premium ice, my nice ice idea. But a lot of, a lot of these stem from like, what's a good business model? Where's their market opportunity? Is there NPS delta and disruption potential? And then who's going after that? So I think, you know, even my investment in psychiatry started from personal experience with how pathetic it is to try to find psychiatry in New York City

• 33:42Speaker 01

  if you want to pay $400 out of pocket, wait six weeks and go into an attic, right? And that leads, then that translates into the ideas or areas of interest. Then that translates into the strings and then that hopefully translates into an investment.

• 33:52Molly O'Shea?

  It's so cool and I appreciate you sharing that. And I also appreciate how passionate you are about, like it's very clear. Like you're just genuinely very passionate about what you do and all the different ideas you can come up with and you just have fun with it. So it's like, it's really refreshing. To close it out, since you're ahead of the curve on pretty much everything cool, you know what's going to be cool before it's cool. What's the next big trend we should all know about or watch?

• 34:17Speaker 01

  The, the, the two main ones, which I'll, which I've said about continue to operate and invest against are. The mass distrust of incumbent CPG brands Coca-Cola and Pepsi and Doritos and Pringles having their their cigarette moment. You're going to see you see what happens to Rayo's. You see there's going to be many more businesses like that as people realize there's just a new consumer and new brands, same core needs, but new brands that they trust. The other is is just we're just in the early days of what's happening in sport and the disruption of linear TV and the kind of the, I mean, you've got backup guards in the NBA making hundreds of

• 34:59Speaker 01

  millions of dollar contracts over four or five years. It's it's it's nuts. And and the ability to better monetize the attention economy there is is huge. And then don't sleep on D to C. Don't sleep on D to C. I think there's, you know, you see your losers before you see your winners. And sure, with, you know, Allbirds and handful of others, there's there's been some, but there are certain like pet food, there's certain categories that make an incredible amount of sense to go acquire shared direct to consumer and then build a digitally native business on the off the backs of that, that then you maybe want to go omnichannel in the future. But I think we're we've we've kind of slept on on some of those. And I think if I'm a betting man, I think multiples in general for those types of businesses would would come up. And then I I think the newest string that

• 35:43Speaker 01

  I'm I'm starting to pull on is is home services. And this is where AI may, you know, maybe I won't be so anti AI, but I think there's a lot of ways that technology can improve the operating margin of these home services businesses by five, 10, 15%, maybe not 15. And there's just a hugely long tail of fragmented service providers in all of these industries that can get rolled up under brands. And so that's another category that hasn't received a lot of VC investment, has received a lot of private equity investment. But when your paybacks can be as attractive enough, I think you can pull them from the late stage private equity middle market sphere over into the growth equity VC VC sphere. Right now, people

• 36:25Speaker 01

  are valuing cash flow profitability, but also scalability. And so I think for I'm also really bearish on urban settings and and cities. I think we're going to have

• 36:36Molly O'Shea?

  Okay, hot take. We have a hot take.

• 36:38Speaker 01

  Hundred percent. Cost of living through the roof, quality of life questionable. I mean, I'm a New York City born and bred, but can't say the city is exactly the same as it was.

• 36:49Speaker 01

  And you can get a lot more for your money and the same so many services and whatnot. Doesn't mean I'm moving anytime soon, but I do think that that there will be added, there will be a lot to do in the home services verticals and then a ton of automation in the virtual services businesses. A lot of opportunity in those last two things I mentioned.

• 37:08Molly O'Shea?

  Wonderful. Jason, it was a pleasure to have you on. This was so much fun and now I feel like I gotta go to Air One and buy some like Ollie Pop and find some holy online.

• 37:18Speaker 01

  Too late if it's at Air One already. We gotta beat it there.

• 37:21Molly O'Shea?

  Right.

• 37:21Speaker 01

  Thanks for having me.

• 37:22Molly O'Shea?

  Bye, Jason.