The Next Brand, Episode #8

Selling my 3 day old business, watching your media diet, and types of brands likely to do well today

Jul 01, 2020

Hi there, and welcome to The Next Brand - my take on health, wellness and brand building.

In the last 4 years I’ve founded 2 health brands (Kettle & Fire and Perfect Keto), which did nearly $100mm in revenue in 2019. I’ve raised ~$20mm to build Kettle & Fire, gotten into 10k+ retail stores, bootstrapped Perfect Keto, launched 80+ SKUs… and have a small portfolio of Shopify apps I run on the side. Previously, I worked in tech and had no experience in CPG, DTC or any other 3-letter industries.

If you missed past episodes, you can catch up here (Episode 01, 02, 03, 04, 05, 06, 07). Otherwise, let’s dive in.

🆕 What’s new

At the start of the COVID-19 pandemic, I was talking to friends about what we could do to help. Lockdowns had begun, businesses were getting hammered and uncertainty was in the air. Definite Red Wedding vibes.

I wanted to do something about it. Something to help local businesses, figuring that non-biologist Justin should leave the CRISPR stuff to the professionals. So I teamed up with my friend Brent Summers (and my girlfriend + Myles) to do something about it.

We came up with the idea to build a site that would make it easy for restaurants to sell gift cards to fund their operations. With the lockdowns, many restaurants saw 80-90% sales declines, but still had bills to pay. The more gift cards they could sell the longer they could stay in business. They’d get cash now, patrons would get food later, and fans could ensure their favorite spots stayed in business. Win-win-win.

We decided to build the site in a single-day hackathon. We popped on a few Lane 8 mixes, started an 8 hour Zoom call and built the site using no-code tools Bubble and Airtable.

We started working on it Sunday at noon, and launched GiveLocal on Monday morning to our Twitter audiences, LinkedIn and Product Hunt.

The reaction to GiveLocal blew us away. Site visitors submitted their favorite restaurants, and within 2 days we had more than 500 restaurants on the platform.

What happened next was the craziest part: 3 days after launch, we were acquired by Gannett, the publicly traded parent company of USA Today. We launched the site on Monday, and signed the deal to get acquired on Thursday. Wild.

Why? We wanted to fulfill the mission. GiveLocal now lives on as Support Local and is part of USA Today. They can leverage their massive distribution list and restaurant partners to continue the mission, and we’ll have helped thousands more restaurants than we could on our own. It’s a fun outcome for a 1-day side project.

Now, I fully admit we got lucky. But we were also prepared: Brent has been building no-code projects for years, and I have some experience spinning up and validating ideas.

I also think there’s something to the constraint of “launch something within 24 hours”. It forces you to simplify, and only focus on the highest-leverage things that need to be done.

If there’s a project that’s been on your back burner for a while, I’d highly recommend finding a friend and having each of you commit to shipping that project within 24 hours. If you do, let me know what you build and I’ll feature it in the next newsletter 👍

💪 Health stuff

I’m slowly becoming more of a hippie.

More and more I’m becoming convinced that many of 1st world society’s oft-touted “benefits” (24/7 news! always-on communication! endless calories!) are a devil’s bargain. They’re enticing, delicious, seductive… and over the long term, boy will they fuck you up.

Like communism, many of the world’s worst ideas sound appealing at first glance. Take the news: who could argue that a better informed electorate is a bad thing? Yet decades into a 24/7, rage-fueled news cycle we have one of the angriest, partisan, filter-bubbliest citizenry in history. And a media beast that’s evolved to generate rage and profit from it.

I talk a lot about physical health here, largely because our food system is so messed up. But health is an all-encompassing thing: what’s the point in looking like Arnold but having no close relationships?

Your mental and emotional health is just as important as your physical health. And let me say, for the vast majority of people today, the modern information diet will make you just as stressed and sick as anything from the American food system.

Here’s how today’s media works:

They try their hardest to make you angry
So you rage-share articles with emotionally-charged headlines
Thus driving clicks to ad-supported media models
Repeat (more here)

In a landscape designed to get you to consume emotionally-charged content until your little eyes bleed, I think you have a responsibility to examine your “information diet”. To take a hard look at the media you’re consuming and evaluate it: is this article making me happier? Sadder? Angrier? Does reading it bring me closer to achieving my goals, to becoming the person I want to be?

Does flipping through my Instagram feed make me happy? Jealous? Insecure?

I’ve started to think about information “macros”, like carbs, sugar, protein and fat. What stuff am I consuming that’s nourishing vs empty information calories? If I spend 20 minutes getting sucked into someone’s Instagram, is that nourishing? Good for me? No - of course not.

My little addiction is Twitter. As someone who’s interested in new ideas and gets high on others' thoughts, it’s perfectly engineered to suck someone like me into my Twitter feed on the daily. At my worst, I found myself checking Twitter 6-8x a day, often on phone calls. Calls with direct reports, friends… people I have real relationships with. Bad Justin.

I’ve since taken the last 2 weeks off Twitter and can feel the difference. Only do I have my time back but I’ve been able to read substantive articles, better stay on top of my work, and have felt a LOT less like the world is collapsing than I did before this experiment.

On the whole, the emotional improvement has been more than worth the small price to pay.

I’m sure I’ve not heard a few cool ideas, or missed out on some stuff that I’d prefer to know. But I’ve also felt far calmer, less stressed, and far less “America is falling apart” than before. Would highly recommend.

🤑 Brand stuff

Recently, Nestle reached an agreement to acquire collagen brand Vital Proteins for a price rumored in the hundreds of millions. If true, this would be one of the larger food + bev exits of the last few years. Nice work by the Vital Proteins team, some who I’ve had the pleasure of getting to know over the last few years.

This is an incredible outcome, even more so given that they only raised something like $17mm total. Given the exit, I figured it’d be a worthwhile topic to discuss - how can you start (or invest in) the next Vital Proteins?

It’s been 4.5 years since my brother and I launched Kettle & Fire, and 3.5 years since Anthony and I launched Perfect Keto, and boy has the landscape changed. That said, I still think we are in inning 1 of the consumer brand revolution.

Today, Big CPG is threatened by 1000+ upstart brands. It’s hard for Campbell’s to make a soup to serve customers who are into keto: what difference does a $20-50mm line of business make to a company doing $8b in revenue? (In case it’s not obvious… none).

However, that business is very attractive to a brand like Kettle & Fire (and why we launched keto soups). And just like that, we’ve taken a few million dollars of consumer spend away from Campbell’s.

Multiply this by 1000 other brands and you can see what’s happening. Upstart brands are better able to serve the needs of their customer with a highly tailored product offering than Big CPG can with a more broadly appealing product made for the average consumer.

All that said, what attributes make for a good consumer brand?

When thinking about consumer brands worth starting, it helps to zoom out. Unlike tech (and most other startups), consumer startups literally are zero-sum games. Every time someone buys Kettle & Fire, that’s $7 less they’re spending on Pacific bone broth (which is owned by Campbells). People consume roughly the same number of daily calories year in and year out, and generally aren’t buying 2 razors, etc. Starting a food brand, you acknowledge this: you’re looking to steal dollars and caloric share from Big Food.

This means you’re in direct competition with the big guys. And the way to carve out a niche is to play in areas they’re weak or strategically can’t compete. In my mind, that means a few areas:

Highly specific niches where the total market size isn’t large enough for it to be of strategic importance to big CPG, but that’s growing fast. Think keto or plant-based meats 5 years ago, alternative milks 3 years ago, etc.
Niches where the shopping experience is painful. Think what Warby Parker did for glasses (who likes going to an eye doctor and buying glasses?), Dollar Shave Club did for razors (which seem to always run out just when you need them), etc.
Areas where community is of critical importance, and you can build that community online. Vital Proteins did an exceptional job here, as have brands like Bulletproof. Building a community around a product is hard, and harder on retail shelves where consumers don’t have as much of your brand’s backstory. If you can build that momentum, education and community online, you’re more likely to be able to win on retail shelves.
HEALTH. As you can probably imagine, this is the area I get most excited about. Big CPG has spent the last few decades optimizing the heck out of their supply chains to drive down cost… often at the expense of human health. That means if you have a healthier take on a consumer staple, there’s likely to be a market for it.

As I said in a previous newsletter:

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 sicker than ever before.

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.

Consumer brands that I get most excited about are those that reinvent categories, make them healthier, and compete on one of the dimensions that Big CPG can’t.

😌 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 - This article by Michael Solana outlines the dangers of social media driven amplification of tensions and incomplete information. We saw this with COVID-19, where social-media-driven misinformation (“ just the flu” + rumors of 5G causing Corona) almost certainly has led to tens of thousands of deaths and exacerbated an international panic. Today, information can spread and mobs can gather faster than we can process. As the article says, “The greatest possible danger of social media is the catalyzation of mass, relatively instant global action on incomplete or incorrect information”. This was easily my favorite read of the month.
📚Book rec - Let me fully admit: I am a Patagonia fanboy after reading the founder’s 1st book, Let My People Go Surfing. His second book - The Responsible Company - similarly does not disappoint. If you’re interested in learning how your company (no matter the industry) can impact our planet for the better, it’s well worth the read.
It’s also flat-out inspiring. The level of care, time and attention that Patagonia puts into ensuring their products, byproducts and family of suppliers are good stewards of the earth is mind-blowing. It makes me realize and appreciate just how much good you can accomplish with a long-term mindset and a willingness to never stop pushing on important issues.
⌚Cool product - One of the interesting side effects of COVID-19 is that nearly everything I want to buy online (dumbbells, a french press, a pull up bar) has been sold out for weeks - yay! With the internet sold out of many of the basics, I’ve been experimenting with some new products: in this case, the Fellow Duo coffee steeper. It’s a small thing but it makes a great cup of coffee during quarantine and keeps french press grounds out of the bottom of your cup. I’m a fan.
🎵Music - The musical find of the month is this album by Modd. I’ve been getting into Modd for some easy listening while working or driving, and absolutely love their stuff. That said, I don’t even pretend to understand what they’re going for with the titles and names of their songs. But they sure sound good!
✍️Other Writing - For the first time in quite a while, I wrote a blog post. In short, the post covers an idea I had around creating a fund to better enable individuals to move to labor markets where they have higher earning potential. I continue to believe that one of the greatest tragedies of our time is the income inequality between states and counties, and I suggest one potential way to fix it.
🤔Thought-provoking - I really appreciated Sam Harris’s take on the political tensions of today, asking if America can step back from the brink. Like Sam, I’m concerned that as a society we are losing the ability to have important conversations about race, class and social issues without getting cancelled or becoming enraged. As Sam mentioned in the episode, as people in society we have two ways to work things out: conversation, or violence. I’m concerned that as cancel culture grows and spreads, we’ll slowly lose our ability to have the debates and discussions we need to improve things in this world.

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The Next Brand subscribers are starting to pick up now, 8 months into this experiment - and I’d love it to continue. If you found something compelling, mind forwarding to a friend (or having them subscribe here)?

Otherwise, thanks for reading and feel free to reply and let me know what you’d like me to cover next!

Enjoy the month,

Justin

The Next