The Next Brand, Episode #3

Fixing sleep, rebranding, and The Gamechangers

Hi there, and welcome to The Next Brand - my take on health, wellness and building the next generation of brands. 

(Cool - but who are you)?

In the last 4 years I’ve founded 2 health brands (Kettle & Fire and Perfect Keto), which will do nearly $100mm in revenue in 2019. I’ve raised ~$20mm to build Kette & Fire, gotten into 9k+ retail stores, bootstrapped Perfect Keto, launched 80+ SKUs… and have a small portfolio of Shopify apps I’ve bought + operate with another business partner. Previously, I worked in tech and had no experience in CPG, DTC or any other 3 letter acronym industries.

If you missed past episodes, you can catch up here (Episode 01, 02). Otherwise, let’s dive in.

What’s new

For the last 6 months I’ve had a terrible time sleeping 🛌. More nights than not, I’ve woken up after 5-6 hours completely unable to get back to sleep. 

Pretty typical night of sleep this past July. Though after comparing the Oura to the Dreem, I do believe that sometimes Oura codes REM sleep as “awake” - at least for me. 

After 6 months of trying what feels like literally everything, I think I’ve figured this sleep thing out. 

What I did not want to do was immediately start with Ambien or other sleeping pills. Not only because they aren’t as restorative as real sleep, but because I don’t want to fix this recent sleep issue by becoming dependent on a pill for something as basic as sleeping. 

Instead, I approached things in a step-function way: starting with lifestyle interventions, then adding supplements, and saving medication as a method of last resort. 

Interventions I tried

  1. Meditation - I tried meditating for 10-20 more minutes before bed. Though I certainly felt calmer (and more meditation never hurt anyone), it didn’t seem to solve the core issue. Some nights I slept better and some nights I’d wake up the same - it seemed completely independent of whether or not I’d spent extra time meditating that night. 

  2. Noise - I got serious about drowning out noise in my apartment. I had the windows in my unit double-paned (to reduce sound), bought a white noise machine (this one), listened to music at 432 hertz (which some Bad Science says is optimal), wore earplugs… all of it. It probably helped some, but the sleep issues persisted. On to the next item. 

  3. Light - my room has blackout shades so it is already pretty dark, but I added an eye mask. Sleep issues persisted. 

  4. Cut out caffeine - for about a month I cut out caffeine. I wasn’t even a heavy caffeine user, and usually only had a single cup in the morning around 10am. However, I cut it out and discovered it didn’t seem to impact my sleep one way or another. 

  5. CBD - this magical supplement solves everything! It must have solved my sleep! Nope - not even close. I took a few different kinds of CBD, at the strongest potencies + highest doses possible. I even got some direct from a grower - still nothing. Same with Kava (a plant similar to CBD), edibles or THC before bed. None solved the sleep issue. 

  6. Stopped drinking - I’m not a huge drinker, so I didn’t expect this would solve things. But when I stopped drinking, my sleep issues persisted. Mind you - they got worse on nights that I did drink. But cutting it out completely didn’t fix anything. 

  7. Acupressure mat - I got an acupressure mat (to simulate the effects of getting acupuncture) in an effort to reduce stress before bed. Also a flop, though feels good. 

  8. Eating before bed - I stopped eating within 3 hours of going to bed. This made falling asleep easier, but didn’t solve the recurring issue. Next. 

  9. Supplements - I tried a lot of things here. Magnesium, melatonin, ZMAs, 2 specially formulated sleeping supplements… and none of them seemed to work consistently. 

  10. Chili pad - I bought and tried the infamous chili pad that everyone seems to love. According to my Oura data, sleeping with the Chili pad vs without made no difference. I don’t know if that’s because I normally keep my apartment cold (around 67 degrees at night) or what, but it seemingly had no effect. 

  11. CVAC - I tried a few treatments in a CVAC machine: basically a hyperbaric chamber that pro athletes use to improve athletic performance. I’d seen some evidence that it could help with sleep, but it didn’t solve my issues. 

  12. Sauna + Cold showers before bed - same deal here. Though I fully believe that sauna and cold exposure are great for you, they didn't seem to solve the recurring sleep issue I was having. 

Now, this whole process wasn’t totally hopeless. There were a few clues that led me to believe my sleep was an environmental issue. First, at the peak of my issues being the worst, I spent a day in nature in Northern California. I slept in a hotel, didn’t check my phone or screens all day, got a ton of sunlight and ate pretty lightly. And I had my best sleep in 2019. 

This + the fact that I seemed to sleep better outside of my apartment hinted that the issue with my sleep was environmental. Likely something to do with my lifestyle + routines at home, and possibly something to do with my apartment. This hypothesis was further supported after I had bloodwork done that showed nothing hugely abnormal, but a slightly higher than ideal amount of stress hormones. 

What finally worked

After months of testing, I hit on 5 interventions that together seem to have solved my sleep issue. They all hit around the same time so it’s hard to say what worked best, but in order...

  1. Installing a HEPA-quality air filter in my condo, and setting up an air purifier in my bedroom (this one - the Molekule didn’t work well). I suspect that part of my issue was a low-key allergic or inflammatory reaction to dust particles in my apartment, which caused a stress response and caused me to wake up in the middle of the night. After all, if your body thinks you’re getting poisoned, or are sleeping on top of a pile of toxic mold, 10,000 years ago the right move is to wake you up so you can change your environment! In today’s age, similar low-grade stressors can just build up and cause issues like insomnia or other health problems. I suspect my sleep was just part of this. 

  2. Creating a wind-down routine before bed, where I don’t look at screens, read fiction and have a cup of tea before hitting the sack. This seemed to help quite a bit. 

  3. Adding adaptogens into my diet. Adaptogens are plants, herbs and mushrooms 🍄 that help the body withstand and reduce stress. I was pretty skeptical honestly, but after incorporating adaptogens into my diet (specifically lionsmane in the morning, and this holy basil tea at night) my sleep really, really improved. Not only that, but my heart rate variability (a key measure of your body’s recovery and readiness for the day) improved nearly 25% just from drinking the tea every night before bed. Crazy. 

  4. Sunlight ☀️ - I noticed a strong correlation between the amount of sun I get in a day and how well (or not well) I sleep. I now try to go for walks and spend some time outside working during the day, just to ensure I’m getting enough sunlight to set my body’s circadian rhythms appropriately. 

  5. Floating - Floating, aka using a sensory deprivation tank (I go to The Ocean Lab here in Austin) for 30-60 minutes a few hours before bed was a game-changer. Floating had always been too close to the hippie side of the health and wellness world for me, right up there with people talking about vibrations and using crystals for healing. Well, I was wrong - for someone who spends a lot of time in his head, floating was incredible for clearing my mind, helping me relax and chill out. On evenings I floated, my sleep was almost always top notch. 

Overall, it’s been a journey to fix this. I generally think that health issues are a reflection of something going wrong in your environment. Can’t sleep? That’s your body sending you a message that something is not right in your world. 

In my case, I think the stresses of startup life were starting to get to me. I think of it like this: your body only has so much capacity to absorb and handle stress, just like a glass of water can only hold so much liquid. As you add stress to it - from work, life, or even just some extra dust in your apartment - that stress builds up and starts to overflow, leading to symptoms like being unable to sleep. 

Do I think that too much dust in your condo will mean you’ll never be able to sleep again? Hell no. However, when paired with work stress my body clearly freaked out - hence sleeping issues for the first time in my life. 

If you’ve had similar issues, I’d love to hear about them - just reply to this email and let me know what worked (or what didn’t). Otherwise, this resource was also good! 

What’s going on in health and wellness?

Maybe you’ve heard of the latest popular documentary making waves about the benefits of going vegan, The Gamechangers. It’s a pretty standard bit of vegan propaganda with high production value. Funded by a host of vegans (James Cameron among them), it follows former MMA fighter James Wilks as he transitions from omnivore to vegan. 

There’s been a lot of chatter about the film. From multipleJoe Rogan podcasts discussing the documentary, to 77 pages of notes by Chris Kresser addressing misleading claims and factual errors in the documentary. 

In short, I think the film makes a few key errors:

Ignoring food quality - the film categorically ignores the importance of food quality. In the food world where I work, things like DIAAS (Digestible Indispensable Amino Acid Score) is used to compare the quality of proteins in food products, with higher scores being better. In fact, if you claim 10 grams of protein in your product but only 4 grams of that is “digestible” (according to the DIAAS measure), you can get sued. 

DIAAS for beef - 1.10. Wheat? A measly 0.20. 

In the film, they talk a lot about protein amounts but completely ignore digestibility and sourcing. Sourcing and food quality is possibly the most important quality in food, a fact that the documentary (and many vegans and meat eaters!) miss. At one point, the documentary claims you can get as much protein in a peanut butter sandwich as you can in a pound of beef. Maybe: but even if so, you’re getting a ton of processed food and vegetable oils in that protein. Not so in beef - the quality of the two foods are just completely different. 

Comparing a standard American diet to a vegan one - there’s practically no argument among nutritionists that the standard American diet (lots of processed foods, lots of sugars, processed dairy and high carb) is one of the worst humanity has yet invented. It’s driven skyrocketing healthcare costs, record rates of obesity and shows no signs of stopping. 

So, what do you get when you switch someone from a heavy fast-food diet to a vegan diet? In many cases, a healthier human (though not for the reasons you might think). You see people getting much healthier and reversing health issues when they go carnivore as well: likely because they’re cutting out fried, processed foods and many sugars. 

I know vegans who spend tons of time sourcing organic and local, and a guy doing keto who eats McDonald’s cheeseburgers without the bun. If I had to, I’d trade places with the vegan any day, for sure. But that doesn’t tell us much about how healthy (or unhealthy) a diet containing high-quality meat is relative to a vegan diet. 

Pretending that a vegan diet is clearly superior - Look, I’m sympathetic to the position of the vegan crowd. However, the research from what I’ve seen is just not as cut and dry as the film makes it out to be. 

Much of the film is spent covering many of the athletes that went vegan. However, if you read Kresser’s notes (starting on page 29) you can see what happened to all of them: they went through the “vegan honeymoon”. A well-known phenomenon where people go vegan, feel better for a bit, and fall off after a few years as vitamin and mineral deficiencies pile up. Many of the athletes the documentary highlights are now out of their sports, injured or not performing at their peak. 

For more, I highly recommend reading (or at least skimming) Kresser’s notes, and listening to the Joe Rogan podcasts if you have time. 

What’s my takeaway? If you eat vegan, do I think you’ll die? No, not at all. There are likely many people who feel good on a vegan diet, and address some of the nutrient deficiencies by occasionally eating eggs or taking supplements. However, I don’t believe going vegan is optimal for human health - nor do I think it’s even good for the environment (as I covered in Episode 2). 

Thoughts on brand building

There’s a lot of talk in DTC land about building brands. Specifically, how important it is to create a memorable brand with a catchy name and a clean look + feel that appeals to millenials. 

I’d like to share how I did this all wrong in the early days of Kettle & Fire

When we started K&F, we thought it’d be a lifestyle business. As such, we didn’t put much thought into our early branding or name, and called the company Bone Broths Co. (because I landed the domain bonebroths.com). 

Sweet, right? Kind of like starting a new tissue company and calling it Tissues & Co. I’m shocked we ever sold any product. 

Our first packaging 

The first month we launched, we did about $20k in revenue. $40k the following month. Nearly $60k the next month (before going out of stock). And we realized “holy shit, we have a real business on our hands!”

At that point, we’d heard from many customers that one of their top complaints was they couldn’t find us online. They’d google bone broth, or try to tell a friend about our brand and would find nothing. Turns out, searching “Bone Broths Co” turned up a litany of confusing and hard to sift through search results. For an online-only brand, that was a disaster. 

So we began to brainstorm: what do we want a new brand to look like? What should our new name to convey? What attributes do we want the new brand to stand for? 

We arrived at a few things:

  1. The name should be timeless, and evoke a feeling of “oh that brand has been around forever” 

  2. The name should sound simple, primal and real 

  3. And should incorporate elements of what makes bone broth unique. 

Ultimately, we narrowed it down to a few names:

  • Granger 

  • Stocksmith

  • Kettle & Fire 

  • Soyer’s Stove

  • Green Ember

  • A bunch of others so terrible I can’t name here

We then ran surveys to our current customer list and others on SurveyMonkey, asking them to choose between Stocksmith and Kettle & Fire, the 2 names we liked the best. 

Obviously, we decided to move forward with Kettle & Fire, and received some design direction options. 

After mulling it over for months, we decided to go with the direction on the far right for our rebrand: namely because I just liked it, and there was nothing that was black and bold in the broth/stock set (in grocery stores) at the time. It allowed us to immediately stand out on shelves (relative to a sea of whites and pastels from competitors) and get attention for our new brand and product. 

The whole thing took about 9 months from start to finish, and cost $40k to pull off. 

Since this big rebrand exercise in early 2016, we’ve stuck with roughly the same packaging as above, give or take a few tweaks. Well, now we’re rebranding again. And it’s a big departure from where we are today

I think building a memorable brand that’s differentiated from others in your category is just about one of the highest-leverage things you can do as an entrepreneur. It allows you to stand out and get more attention without investing more in marketing, and with edgy design you can move into areas that larger brands can’t with authenticity. For example, our Kettle & Fire rebrand: there’s no way many larger CPG companies in our category could pull off a similarly modern, clean aesthetic today. Consumers wouldn’t trust it and it’s not what their products stand for. 

Building a brand that’s appealing, remarkable and differentiated is hard, but worth it. If there are areas you have questions around how and why we did this, just reply and let me know 😀

Dope stuff on the internet

Some of my favorite things since the last newsletter (note: I don’t get paid to recommend anything here):

  • 📰 article - The always brilliant Paul Graham wrote a must-read post on genius and how to develop it. Developing genius looks a lot like getting good at anything: become obsessively interested in a topic and go as deep as you can on it. As my career has progressed, I’ve been thinking more and more about this - how can I spend more and more of my time focused on an area I’m interested and excited to dive into? 

  • 📚book rec - Hoooo man do I have a good book rec. I recently picked up Nexus, a sci-fi book about brain-computer interface software, and wow is it good. I’ve torn through the first 2 books in 6 days, and am halfway through the 3rd. 

  • cool product - Instead of recommending just one product for this section, my friend Nick and I pulled together a quick holiday gift guide with some of our favorite products. My personal favorite are the joggers from Italic, but everything on there is good 🎁

  • 🎵music - Great set by Gioli & Assia in Italy that features headpan: an instrument I wasn’t aware of until literally watching this set. This set has everything: ✅Italian girls, ✅great scenery, ✅killer music. Fire set 🔥

  • 🔗link - This Sam Harris interview on The Portal was fantastic. Eric Weinstein (the host of The Portal) is quickly becoming my favorite podcast host, and his conversation with Sam was both thought-provoking, funny and fascinating. Highly recommend. 

***

That’s all for this episode! If you enjoyed this, I’d love if you would forward this email to a friend, or have them sign up free here. Reply back with questions, thoughts or other interesting stuff - otherwise, enjoy the week 🙏

Justin

Kudos to readers of The Next Brand to go:

  • Kevin Lee for launching Immi ramen

  • Ben Smith for launching Disco

  • Want a shoutout? Let me know something cool you’re working on, a random fact or an article. I’ll include ya 👍

The Next Brand, Episode #2

Psychedelics, eating meat to save the environment and building a brand without tons of spend

Hi there, and welcome to The Next Brand - my take on health, wellness and building the next generation of brands. 

(Who are you again?)

In the last 4 years I’ve founded 2 health brands (Kettle & Fire and Perfect Keto), which will do nearly $100mm in revenue in 2019. I’ve raised nearly $20mm to build Kettle & Fire, gotten into 9k+ retail stores, bootstrapped Perfect Keto, launched 80+ SKUs… and have a small portfolio of Shopify apps I’ve bought + operate with my partner Ryan. Before this? I worked in tech and had no experience in CPG, DTC or any other 3 letter acronym industries.

If you missed the last episode, you can catch up here (Episode 01). Otherwise, let’s dive in.

What’s new

Man am I excited about everything going on in the world of psychedelic 🍄medicine. Not only are psychedelics a fun for hippies and ravers, but they’re good for you too! (see here)

30 years from now we’ll look back at the War on Drugs the same way we look back at Prohibition - with a general sense of “what the f**k were they thinking”! 

Side note - psychedelics are bad, but super addicting opioids, alcohol and cigarettes are all cool? Nice work lobbyists 👍

Anyway - why is this news? Because I just booked a (legal!) ketamine therapy experience in NYC next month at Mindbloom (disclosure - I’m an investor) that I’m stoked for. Psychedelic therapy is something I wholeheartedly believe is the next major trend in health and wellness. If you can figure out how to get involved now… well, you probably should. And if you need to convince your parents that this isn’t just your average hippie pill poppin’ movement, well Michael Pollan has a book for you.

What’s going on in health and wellness?

How about not buying fast fashion, which pollutes far more than the meat industry? Or just kill yourself (note: satire + fiction). 

There’s a battle going on right now in the world of plant-based “meats” (and vegetables 😂). Even though Beyond Meat’s stock price is down roughly 40% in the last month (✊💪), there’s a big rush into non-meat “meat”. Mostly driven by pro-environmental drivel like the above (“go vegan to save the planet!!”) that is just plain wrong.

Let’s start with a common belief - producing a single patty requires “2500 gallons of water” (according to the World Economic Forum). 

Oh, really? A single patty requires 2500 gallons of water? An average cow produces 200lbs of ground beef, which would mean to feed and harvest a cow for burgers would require… 500,000 gallons of water!! At this rate, we’ll run out of water any day now!! 

Except not. Why? Because a cow is not a closed system. You don’t give a cow access to 500,000 gallons of water, it drinks it and the water then disappears forever. That’s just stupid. 

Animals, plants and people are all part of the water cycle. Cows drink water. Cows get slightly bigger + don’t complain of parched throats. 98% of that water goes back into the earth in the form of urine. You get milk 🥛, cheese 🧀 and a burger 🍔. This cycle then repeats, as it has for millions and millions of years. 

But what about 🐄 farts?!

This paper is well worth reading as to the overhyped impact of livestock raising + grazing on the environment. The paper shows that the world cattle population rose by 100 million+ cattle  between 1990 and 2005. A time where methane concentration stabilized completely.

Another key quote:

CO2 emitted by human consumption of cereals, meat, and milk, by livestock respiration and forage digestion, does not increase atmospheric CO2 levels, as this is part of the natural carbon cycle. Not a single human- or livestock-born CO2 molecule is additionally released into the atmosphere, as it has previously been captured through photosynthesis.

Effectively, no, cows and meat eaters do not destroy the environment. In fact, I think they may be the single best way to reverse climate change by investing in regenerative agriculture: an approach to agriculture that focuses on regenerating the land, not just extracting nutrients from the soil (as current monocrop agriculture does). 

This is why I get so excited when I see companies like Force of Nature launching their line of meat raised regeneratively. Based on studies done by Quantis and others, eating regeneratively-grown meat is actually better for the environment than swearing off meat altogether.

I’m happy to talk more about regenerative agriculture, flaws in the vegan environmental argument, and how I think animals can help reverse climate change. Reply to this and let me know if this is the type of stuff you’d like to see more of! 

Thoughts on brand building

Many of you asked about building a DTC brand without raising a ton of money. 

Well, I have good and bad news for you. The good - I think this is still possible. 

The bad: I don’t think you can do this in next 2-3 years AND achieve hyper-growth without a built-in structural advantage. (By structural advantage, I mean partnering with a celebrity or having access to some other distribution channel outside of Instagram / Facebook). 

Here’s my quick history of building a DTC brand:

2010-2012 - Facebook ads are cheap (relative to their reach and other media CPMs), so the whole “DTC is cutting out the middleman!!” wave of stories began. This is also when brands like Dollar Shave Club, Harry’s and Warby Parker launched and gained traction. 

2013-2016 - A whole slew of brands launched on the back of relatively low ad costs. This led to crazy revenue growth (see: Casper, Hubble, Blue Apron, etc) and further fed the “DTC is future” wave of stories around building new brands. 

2016-present - Facebook ad inventory costs have gone up more than 3x in the last few years, which has made acquiring new customers MUCH more expensive for each new brand. This has essentially killed the growth trajectories of several DTC brands that can no longer acquire customers affordably (ie Blue Apron, whose customer acquisition costs (CAC) went up nearly 5x in the 18 months before going public, or Casper which has been essentially flat since August 2017). 

So, as an enterprising young brand-builder… what do you do? 

Let’s zoom out. Marketing is effectively figuring out how to get in front of people who aren’t aware of your product. Facebook/Instagram have a ton of user attention, and make it really easy to get in front of people (for a price, of course 🤑). 

Your job as a marketer is to figure out how to get in front of potential customers more cheaply than Facebook/Instagram. That’s it. 

How? By looking to leverage places where your potential consumer is spending a lot of time + attention, but where costs are low(ish). As a marketer, you’re always looking at how you can get maximum attention at minimum cost. 

Today, I’d look at places where you see a lot of attention sink (TikTok or esports, for example) but that don’t yet have super built-out advertising tools. Then, figure out how to get in front of those consumers: by hacking the platform with native ads, leveraging emerging influencers, or even building your own asset on the platforms. 

Outside of that, I think you have to go back to the basics:

  1. Is my product solving a real problem? 

  2. If yes, what communities have this problem? How can I engage them? 

  3. How can I get creative to reach more people with this problem? 

You have to go back to first principles of growth and marketing - hard, I know. It’s always first principles thinking that’s the hardest. 

To improve, I recommend engaging with other world-class marketers, taking marketing classes (like those at Reforge) and testing a LOT to figure out what works for your brand and audience. Good luck 👊

Dope stuff on the internet

Some of my favorite things since the last newsletter (note: I don’t get paid to recommend anything here):

  • 📰 Article - I’ve struggled with staying asleep for the first time in my life this year, and reading the book Why We Sleep didn’t gave me stress about my lack of sleep (ironic, I know). Well, fortunately for me Alexey Guzey has a pretty great article that uncovers a bunch of factual errors and wrong claims Walker makes in his book. It’s made me feel less stressed about not always sleeping 8 hours a night, and just reinforces that I should probably be more skeptical of all pop science books. That said, the core message still stands: sleep health is important, make sure you’re getting enough, etc etc. 

  • 📚Book rec - I just finished reading It Doesn’t Have to be Crazy At Work by the Basecamp crew. Great read with a lot of applicable ideas. Essentially, they argue (and I agree) that most companies are set up to prevent people from doing their best work (unintentionally, but still). They then share a bunch of ideas as to how to reverse this in your workplace. Highly recommend.

  • Cool product - I can’t get enough of my Suavs shoes 👟. I’ve bought something like 6 pairs for friends at this point and they all love them. In my opinion, they’re faaaar more fashionable than Allbirds, wash easily, look cool and are super comfy. Big fan.  

  • 🎵Music - Hot Since 82 with a classic boiler room ripper, and the first set that got me into deep house way back when. For bonus points, note someone doing cocaine later in the video - fun times. 

  • 🔗Link - This timelapse of houseplants moving throughout the day is just cool. I am a proud father to 6 houseplants, so to know my little guys are moving and jiving while dad’s at work just makes me happy. 

***

Just one quick favor before I sign off - can you reply to this email and let me know:

  • What you’d like to see more of 

  • What you’d like to see less of

  • What sucked, and what didn’t? 

I’m trying to make this a super valuable use of your time reading, and want to consistently put out great stuff. Feel free to reply back with questions or comments. Otherwise, enjoy the week 🙏

Justin

The Next Brand, Episode #1

Writing worth reading on health, wellness, and building the next generation of brands.

hello hello,

welcome to the first edition of The Next Brand - my take on health, wellness and building the next generation of great brands.

(cool - but who the f**k are you)?

in the last 4 years i’ve founded 2 health brands (Kettle & Fire and Perfect Keto), which will do nearly $100mm in revenue in 2019. i’ve raised nearly $20mm to build Kette & Fire, gotten into 9k+ retail stores, bootstrapped Perfect Keto, launched 80+ SKUs… oh and have a small portfolio of Shopify apps I’ve bought + operate with my partner Ryan. before this? i worked in tech and had no experience in CPG, DTC or any other 3 letter acronyms industries.

i also have some strong opinions on things like Beyond Meat, health, startups… all things i’m sure we’ll cover. in the meantime, let’s dive in.

what’s new

i went hunting for the first time in my life this weekend (officially earning my Texas resident card) and - it was fascinating. 3 days in nature + shooting, gutting and eating an animal made me appreciate more than ever how humans are just a small part of a massively complex ecosystem.

it’s great to virtue-signal going vegan while living in NYC, blasting the heat and eating Sweetgreen from the comfort of your office. when you’re outside in 26 degree weather, you can’t see an edible plant for miles and you’re starving - whole different story. it’s pretty clear that for most people of European ancestry, our ancestors killed and ate animals to survive the winter. there just wasn’t another way to meet a human’s caloric needs.

more and more i’m coming to appreciate that the root cause of most disease is a mismatch between human’s genes and our environment. as my biz partner Anthony Gustin says, the default of any creature (human, mammal, plant) is health. the only time we move away from our default state of health is when we take ourselves out of our natural environments. like i am by sitting and typing this right now 😃

anyway, hunting was super cool but really intimidating to get started with. i’d highly recommend giving it a shot, and happy to pass on recommendations if you want to jump in.

what’s going on in health and wellness?

the tech sector is fascinating. i used to live in Silicon Valley and still have a soft spot for all things tech. it’s inspiring to see great entrepreneurs building new things at the forefront of technology, literally inventing the future #props.

health is the opposite. in my opinion, the food + wellness trends that are here to stay are a return to a past state where humans (on average) were healthier. not a progression towards a techno-utopian world where every human has Soylent on IV drip.

the default state of an organism is health, which means we don’t need technology to make us healthy. in my opinion, the Great Health Challenge™️ of our century is reversing the damage done by the last 75 years of packaged foods and junk science. removing glyphosate, sugars, carbs, processing from our foods… all that jazz that’s made Americans both richer and sicker than ever before.

this is why shit like Soylent and Beyond Meat really piss me off. oh, you want to improve human health by introducing tons of canola + vegetable oils to people’s diets and pass that off as healthy? please, tell me how many times your ancestors would be able to take the following steps to extract the oils from a canola*:

the answer is clearly never. your ancestors would never be able to regularly consume canola oil, especially not in the quantities Beyond Meat suggests. Soylent? nah: i’ll take real foods humans have eaten for millions of years over a bunch of junk ingredients that satisfy “everything i need” in a shake.

*(sidenote - wtf is a canola? has anyone ever seen a canola plant? picked one from a tree? no, because canola oil is made from rapeseed, the seed most likely to get canceled in 2019).

what does this mean in practice? it means getting back to eating real food that grows, demanding sourcing and ingredient quality from food brands and entrepreneurs you may or may not support (👋🏼👋🏼), and being willing to call bullshit on brands that purport health but will make you sicker. looking at you Dr. Longo for selling people a “fasting bar” to eat while… fasting. (yes, a doctor is trying to tell you that you can eat ONLY HIS BAR while fasting and still be fasting. insanity).

this is a fundamental principle i think many people (especially in tech) miss. optimal health is a return to our ancestral roots and reflects our animal biology: technology shapes the future.

until we’re 3D printing sexy little bodies for us all to walk around in, i’m highly skeptical of the techno-utopian vision of “reinventing food”. tech should focus on making the transition to organic, regenerative agriculture more efficient and scalable, not trying to introduce weird processed ingredients into a complex system like the human body. keep that in mind each time you evaluate the latest hot health and wellness brand.

</rant>

thoughts on brand building

over in DTC / brand building land, Web Smith made an interesting observation:

i’ll tell you why this holdings company doesn’t exist - valuations in DTC are NUTS.

now, this doesn’t make the rollup a bad play. like much in business, it’s all about timing. and for this idea, the timing just isn’t there because of large private market valuations.

public consumer trades between 3-5x revenue on average. Away luggage, Hubble contacts, Farmer’s Dog, <insert-fav-DTC-brand-here> are all raising at private market multiples between 5-10x. hell, i even saw a pitch deck where the founder was raising at a 5mm valuation while only having done 50k in revenue in the last year (and on a 300k run rate) - a 100x revenue multiple!!! i passed.

you end up with DTC companies raising at 5-10x revenue valuations, while strategic acquisitions generally occur at 3-6x. with early private market valuations that high, you have a crop of mature DTC startups (Casper, Warby, Freshly, Hubble, Hint, etc) that have raised at high multiples and need to get 2-3x more than their last valuation for investors to be happy. as long as the music hasn’t totally stopped, no brand is going to take a major valuation haircut to execute a rollup strategy in a bullish private funding market.

the more money you have to raise, the more conservative valuations get - very few growth equity PE firms are writing huge checks at inflated valuations because the strategic buyers are very rarely paying big multiples, and already have lots of regrets:

  • it’s well known in the industry that Unilever regrets paying up for Dollar Shave Club (~5x rev multiple)

  • Hershey’s hasn’t been thrilled with the Krave (~6x rev multiple) acquisition and

  • Walmart is having a terrible time digesting the Jet.com and Bonobos acquisitions (~3x rev acquisition multiple)

let’s run the numbers: let’s say you were to execute this strategy and wanted to build a big DTC conglomerate. if you had $1b to pull off this strategy, by rolling up DTC brands at about a 5x rev multiple you’d probably be able to buy about $200mm of revenue, likely close to $0 in earnings. in fact, many of these brands are likely losing money, somewhere between 5-15% of revenue. that means that - after spending $1b on this strategy - you’d have 4-6 brands doing ~$200mm in revenue, and the honor of funding these brands at an indefinite loss for about $20mm a year.

who buys this package of DTC brands? where do you get $20mm+ of synergies to cover likely losses? i’m just not sure that this strategy makes sense (yet), but it soon could. there’s a lot of capital sitting on the sidelines waiting to execute on this as soon as these DTC darlings can no longer raise at hefty valuations.

until then, stay lean and hungry my friends.

*note - i have some strong opinions on scaling a DTC brand without a ton of capital. reply to this email if there’s more you’d like me to dig into in this area.

dope stuff on the internet

some of my favorite things since the last newsletter (note: i don’t get paid to recommend anything here):

  • 📰 article - i really enjoyed matt taibbi’s reporting post 2008 financial crisis, and he’s back at it with a killer series of posts on what’s going on in American politics. here’s a favorite, please don’t email me political things now.

  • 📚book rec - i really enjoyed the Three Body Problem if you’re into sci-fi. if not, i also got a lot out of Seeing Like A State (though very dense).

  • cool product - Copilot is easily the best budgeting app i’ve come across. if you want an invite code let me know - again, i get nothing from recommending this.

  • 🎵music - if you’re into deep house, you gotta check out Cercle. it’s great DJs playing sets in epic locations - what could go wrong? i’d recommend starting with the Hot Since 82 set (though the location is less cool than others). if you want more deep house / long mixes, Lane 8’s Fall 2019 mix is 🔥🔥🔥

  • 🔗link - each Halloween, Tokyo has a “mundane Halloween costume party” which is every bit as amazing and Japanese as it sounds. check out some of the costumes here, including my favorite: “Guy at the optical store who gets mistaken for staff”

***

that’s all for this episode. let me know what more you’d like to see, what sucked and what didn’t. otherwise, if you enjoyed this i’d love if you’d forward this email to a friend, or have them sign up for free here.

feel free to reply back with questions or comments. otherwise, enjoy the week 🙏

justin

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