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What's up, dtc Pod. Today we're joined by Ryan springer, who is the founding partner of Midnight Venture Partners, as well as a co founder of High Desert cactus Vodka. So Ryan, I'll let you kick us off. Why don't you tell us a little bit about the background, about yourself and some of the projects that you're involved in.

Yeah, van. I usually start my personal background with a bunch of nepotism jokes. My dad started I'll save you those this time. My dad started a retail consulting firm that mainly did strategy in the 90s. Before that he was in marketing at gatorade and and what he did was essentially build retail strategy trade marketing, data analytics, and later on actual retail execution for a lot of the most successful wellness brands or natural brand. He worked with hansen's, Monster, amy's, Kitchen Emergency, and a bunch of newer ones that have done really well. I always say that to say I worked for him my whole career. I kind of grew up in the industry. One of my favorite stories about my bona fides of going up the industry. I remember when my dad walked in Dallas, he was like, this is the first commercially viable gluten freed bread. Neither one of us knew what that was. It was like 2004 or whatever. And I remember my dad, we tried it and my dad's like, man, I don't know what gluten is, but it's fucking delicious because this is terrible. I didn't like natural foods. I liked the industry, but I didn't get it until much later in my life but ended up working for him out of college. The the nepotism part came more in the fact that he was putting me in these positions where I was learning so much and essentially be kind of an outsourced national sales manager where I would run West, Central and East salespeople, learning retail strategy, flying out and selling to Walmart and Whole Foods. So my personal background expertise was all on the retail strategy and natural better for you CPG side of things. And that sort of led me to where I am now in terms of my my vodka partner came to me to become his kind of 50 50 partner in the vodka because of that background, which is what a mistake he made because I had nothing to do with alcohol. Alcohol is a different animal. I've learned that the hard way. And then it definitely led me to Midnight, where we're kind of a very valueadd BC, where we take kind of best in class retail, direct to consumer and operations general partners that I had met along the way, along with my two co founders, chris Adam and Alex Lady. And so yeah, it all kind of stems from that kind of how I grew up.

No, absolutely. And one thing I'd love to get into on the vc side of things is how your background, like, operating and having that exposure to the space really set you up for success in the, in the venture capital side of things. Right. So why don't you talk to us a little bit about how those two went hand in hand?

Yeah, there's a lot of ways. Number one, I didn't understand this early on. The part I understood early was why can't more of these ultravalue add people be the ones writing the check? And there are absolutely funds in CPG that are very value add, but there aren't a lot. There's a lot that aren't. And I would kind of get annoyed when I would go into board meetings as like an outsource BP of sales or national sales manager. And we'd have this guy who was very smart, very kind, but came from a commercial real estate and didn't know anything about CPG. He was giving a bunch of advice and ended up being terrible, kind of pressuring the company to do things, just as one example. And so I realized there just wasn't enough functional capital at the seed stage in CPG. There were several great funds, BMG being one of them later onx and things like that, but there weren't enough at the seed stage. There were, there were definitely some, but there weren't enough. That's what gave me the kind of lightbulb moment of, you know, this should happen. What I didn't understand was the advantage I would have in terms of growing up in the industry, like the network side of deal flow. I didn't understand how important that it was because I didn't come from BC. And so the deal flow side has been huge. It ended up being kind of our biggest thing. At Midnight. One of our partners is Ken meyer. He ran the eastern half of Whole Foods Market under John mackey. And our dtc partners, jbody. mitchella, Dan weinberg at Red crypto, they've done multiple billion dollar, 100 million dollar dtc brand. And so if you put all those operating people together that have like these 20 and 30 year histories, it's crazy how many deals they see as soon as people find out that they're investors. And so the final piece, I think, is more what you were asking, what's the perspective of being on the operating side that helped. Certainly seeing the kind of founders that won versus the kind of founders that didn't like understanding the intensity I think required was a big deal. Certainly on the retail side, sales velocities by category, gross margins by category. I'd gotten lucky enough to develop this pattern recognition across multiple areas where I could kind of say that gross margin is terrible for a beverage, you're going to be a lot of trouble. You're going to bring a lot of cash. It's not different enough. The pricing is wrong. So just having been in the industry, my specialties were beverage and supplements. I think that helped an enormous amount. And we'll see. Man, I don't even know if I'm any good at bd. We've been doing it for two years. This is a yeah, it takes a long time to find out. My partner Alex and I went to a meeting with a guy named Wayne wu who started emg, and he was part of the team at vmg. He was a pretty early add on and ended up being one of the top partners. And one of the first things he said was, you guys won't know if you're any good at this, like, six years. So good luck.

Vm interesting as well. They do a bunch of stuff. They start like, skincare brands. But don't they operate their own companies or something?

Right, they can. They're very big. They have multiple billion dollars under primarily. I think of them as a growth capital group, writing really large checks and taking people to the next level from like, two to four if we're zero to one. You know what I mean? But, yes, they operate their own companies. They have multiple divisions that knock out the park. They've really grown. So I would consider that there'd be a lot of different things.

Yeah. So for the beverage side specifically, I mean, you have this ecosystem of your experts in ddc, your upbringing in retail and everything. Are you guys all based in Austin? And how has Austin contributed to this network that you've built? Because you have the whole food ecosystem alone in Austin is ginormous. And me having lived there, the CPG community is unlike anywhere else. It's very heavy, especially beverage, et cetera. So how has Austin contributed to this network that you've been able to build now in the space for deal flow?

I got like two thirds of that. blaine, did you get on?

You're muted.

You're muted.

My internet is very bad.

Ramon, do you want to just hit it again?

Yeah, my internet is horrible, so I don't know if I'll be able to continue. What? Yeah. Ryan, how has the Austin ecosystem contributed to this network that you've been able to build over time and the deal flow that you now are able to tap into? Because me having lived in Austin, the CPG community, there wasn't like anywhere else I've been, so how has Austin contributed to that?

And absolutely. I moved to Austin. I was, like, 13 because of whole foods. Right. Given my family history. And so I remember when it was like seven brand and now it's an absurd amount. Austin, I'm a big homer. I think Austin, pound for pound, the best Dpg city. I think there's ones with bigger companies, there's ones with more companies, but in terms of a culture of helping each other and really impressive, sort of you'll see competitors sitting down to coffee together, you'll see really interesting connections. Everyone's very supportive here. I guess pound for Pound, boulder would be number one, but Austin is my favorite and it's helped an enormous amount. Are we all in Austin? No, one of the retail guys. My dad's in Austin. His partner Aaron is in Portland. Our dsc guys are mostly up near New York in Miami, and so we're trying to national that way. But I think a little over a third of our portfolio is in Austin. There's actually one gym where three of our portfolio companies go, and that feels a little dumb at this point. But if I meet another company and they're in that gym, I don't think we're going to do the deal. No matter what the gypsy are going to be. I'll be like, we can't have this kind of there's just something wrong there. But Austin is a phenomenal dpg community. I can't say enough about it. And being a fund here is a really giant, no offense, like if you're tulsa, Oklahoma, this is not going to be the same. And even if you were, I don't want to offend anyone, but another major city, Seattle, is a great one. It's not going to be the same. There's only a couple of cities in America you could put a vc fund for CPG and do deals just from that town and do really well in austin's. Definitely one.

And I'd love to go a little bit deeper there, Ryan. In terms of what you're talking about density and the fact that you've got all these same companies all in the same space that you're investing, I'd love for you to give our listeners a little bit of context in terms of the portfolio companies that you have worked with. Some of the brands I know, they're really popular, so I'd love for you to just shout out some of the brands that you guys have had the pleasure working with.

Yeah, drinking a barcode currently. These are delicious. Buy as many of them as you can. If you're watching this podcast, a lot of our portfolio is doing really well. We've recently kind of been on a kick on fundraiser. It's been a good couple of months, and our portfolio is the reason behind that. I'm not going to give you exact numbers, but one of our portfolio companies just had a 15 x markup, which was fantastic within 18 months, really, of starting to deploy capital in an earnest way. There's another company that is one of the top non l retailer, both online and brick and mortar that's called wastan. Just had our update with him. Nick bobkins, the founder. The guy's phenomenal. They're crushing it. It's really fun to watch him start a company that is a wholesaler, a brick and mortar retailer and in a marketplace online all at once. And they're doing it really well. I mean, they're gonna they're growing 300%, 200% every year. They just announced Per No ricard, a major alcohol strategic, just put in a very large check. I think they're going to get a really healthy valuation here in about a year. So that one's going fantastic. A jolie skin here. Jolie skincare. That's another one of our best performing companies. We invested right about a week or two into them getting any revenue at all. They had just launched and now, again, I'm not going to give exact numbers. They're doing unbelievable on a monthly basis, revenue wise. Within a year they're a d to see super success story. Retention rates are like 98% and they're extremely profitable. And so that one has been a blast. jinx dog food is doing really well out of Los Angeles. They've probably grown, I don't know, eight or nine X if we put in a check about less than 18 months ago. And there's a bunch more we just did. We just announced the old they. It's a it's a caffeine spray that essentially they're they're big point of difference because there are other caffeine sprays on the market. It's super small and super mobile, but they've been able to get an enormous amount of caffeine into one spray, like 25 milligrams, which essentially means that three sprays is a cup of coffee. We've almost never seen something that has all the value props in one thing. It's way more convenient than our caffeine solutions. It's super efficacious, it's way healthier. It's just caffeine and Lcanine, like macho kind of caffeine and Lthanine. There's no sugar, there's no carbs, there's no chemicals, there's no bullshit. And then finally, per milligram of caffeine is the cheapest thing. It's $10 and it's like a dozen plus cups of coffee with the caffeine. So that one's a lot of fun. We did that with some incredible kind of co investors. I could go on, man. I'm really excited about a lot more portfolio companies. We've got 13 now and I just don't want to bore everyone on the pod just going through them. But it's been good, man. We're getting a little lucky for sure so far. I think two years into a vc fund, you're always going to look smart because these companies are well funded and if you pick smart people, they're going to look like they're good. We'll see in five or six years, but it's looking good.

Now, what is the perfect and ideal stage that you guys decide to get involved into one of these deals. What's the right moment for Midnight to come in and plug in?

Well, we have two kind of buckets that we like to get involved. Both of them we like. We want to add the most value possible. And every vc says that. But not every vc has an executive from Whole Foods, one of the best BBC guys on the planet. And I'm pretty biased by my dad's actually on what he does on the strategy side. So we have two buckets. One is more of a passive check that can be the Series A. And then the other bucket that's my favorite bucket is steed free revenue, early, whatever it is. We come in, we write a check, and then we get sweat equity to help you run your retail in DC. And that's working really well so far. And that's where we plug in and use the agencies, use the group and it frees up the founder to kind of focus on product and pnl and fundraising and all those things early. And what we can bring to the table there is less of a hey, do this, do that, and more of it when you've been doing something for 30 years, it's more of a man, don't screw this up the way we did at this, these nine times. And even I'm pretty young, I've run I've brought two companies to Walmart too early. That's been super painful. I'm not making that mistake again. A lot of it's lesson blurred and scars that our team has and kind of what not to do, at least what to watch out for. I don't know if that answers your question, but that's sort of it. We like seed. that'd be the answer. thumb series a and then there are two real ways we work with with.

Companies that's really helpful. And Ryan, the the next question I have, because I'm sure a lot of founders have this question, right? Like they're starting out businesses and they're looking for different capital partners and everything. So obviously let's assume that having an excellent founder and an exciting category that's kind of like table stakes for what it takes to get a vc, sort of excited about doing a funding round. What are some of the other things that you're looking for that gets you really excited about deals? Maybe on the pre revenue side, what gets you really excited about getting involved early, where you're able to bring on your like you're saying, your operational expertise and plug in and help scale. When a company's pre revenue as well as on maybe closer to the seed side where you've got a product in market, what are the early signals, whether it's revenue or product or production, that gets you excited about wanting to fund that this seed through a stage start?

The easier one the easier one is the seed stage where they have revenue. And there are some metrics to go off of dtc. We're all about retention acquisition, you can figure out they're really good people. We can parachute in, including on our team that can help you with acquisition. If you have a good product, you should be retaining customers. And you can change that number based on retention strategies. And you guys know that better than I do. But usually we can tell if your retention strategies aren't super sophisticated and your retention is X. You have a good product and people like it. You have a fit? You found at least one demo that loves your product. You found a way to get it there. So a magic number for us there's not really a magic number can change, but the magic number for us is, like, a retention rate of, like, 40% or higher. Number of customers have ordered twice or more a year. ltv to CAC ratio is great, but that kind of depends on category. So I don't like to just throw out a ratio number there. But if You're Under 20% on retention and Consumers Order twice or more in a year, it's Going To Be tough for us to get interested. You have to be like a couch that's a little outside of where we would normally invest. We want to see customers coming back. That's a gigantic measurement for us. Early. Obviously tech is important, aov is important. But the overall profitability Window, it's tough when you see brands that Are doing $10, their product like they are $10. It's almost smarter to have them on Amazon. Or if they're on dtc. Just understand, even if you have a phenomenal Cat and a great gross margin, $10, it's going to take a Lot of orders for that to make any sense. So We Like To see Founders that understand the strategy and whatever the strategy fits with the product and how people Use it at retail. Super easy. It's sale wasting units per store, per week per skew. That's the Holy grail. How are you doing? Versus competition. Usually we have the pattern Recognition on our team to be Able to break that down by Category retailer Go, hey, everyone on Earth is that Era One? It was like, man, we're doing stuff off Air One. And we're like, everyone did at one Point. That Stuff. We're Central Market ramon. There's another one. They're like, I'm doing 50 units at Central Market. And you're like, well, that's like Madison Square Yard. Of course you are. And so being able to see through the noise there. But it Sells lost at retail retention online. If I'm going to dumb it down. We look at way more. Those you Got to have those on the Pre revenue Side. It's a tough question. You said category and founder are given. Those two have to be super excellent on prerevenue. We all we also have to like the other partners that are coming in with us. We have to see that there is a way to plug in the holes. We think can happen early and the product has to be excellent and super differentiated. A late stage incremental is not going to get a pre revenue check from us unless things are like super interesting elsewhere in the business. So, you know, that's how it answers that. A lot of the pre revenues we've done have had some kind of X factor, whether that be lois. With 65 of the biggest CPG businesses in the world, one you could call this not pre revenue, they had 7 million in pre orders spending like $10,000 in marketing. And the final one that was pre revenue had a second time founder in the exact same space who had exited with incredible groups like al Qaedaton coming in next to us. And Eric Ryan, who was the founder of Ali and Method brands called California Nationals were going to launch a Target. Target had already said yes. There were ncaps involved. So there's usually something special going on if we're going to do a pre revenue business.

Yeah, I think that's a great way to think of it. And even those benchmarks that you did throw out. It makes a ton of sense for listeners who are either in the early stages of operating a business and are looking to accelerate funding a little bit as they start. To scale up or even it's a good benchmark for founders who maybe haven't launched their business but are looking for targets to go at, especially if their product is like if it's something that is something that's really consumable and you're supposed to be having a lot of it, then you guys want to be able to see that in the data. And if it's something that's a little bit of a bigger purchase, like you're saying, like a couch, then it kind of makes sense why you would have a slightly lower rate there. So, moving on from that, I'd also love to start to get into a little bit of what you were talking about, about how having seen so many of these deals, having seen so many of these products go to market, what some of those fatal flaws are. But also on the positive side, what the things that they must get right are as they start to grow right. So, from your vantage point for the most successful brands, why don't we just chat through a couple either key lessons and key pitfalls to avoid, as well as things that you really want to think about getting airtight from the get.

Go, that's easy right now, which is any founder that's been raising money is going to not roll their eyes. I know this is true, but they're tired of hearing about it. It's burn rate. So many founders treat CPG like it's tech, but it's not. And you can't burn five hundred K a month and raise money because nobody's giving you a check right now unless things are going spectacular around that 500k. Basically you've got the gas fully down. There's a giant hole in the boat, and you're just taking on water really fast. And so you have to have your burn rate. The amount of great businesses and smart founders. Usually first time, there's a pattern with a high burn rate. It's almost always first time founders or incredibly confident second time founders. But those guys girls usually have a spot they're getting to. The burn has a purpose, but you usually see the burn coupled with founders who are overly focused on acquisition and not focus enough on potential. I've noticed the pattern that way. So understanding that a huge part of this as an investor is understanding whether or not you as the founder can manage capital responsibly. I think people see too many episodes in Silicon Valley and then think that's how you're supposed to operate a business, but be as close to break even as you can. You're not supposed to be break even in most categories when you're growing, and that's fine. But whatever your burn rate you think your burn rate is supposed to be, you need to cut that in half or a third. And then I recently saw some really interesting data that backed up the idea that the gaps between funding rounds are getting longer for brands. And so if you raise a certain amount, you think your runway is 18 months. Well, reality, it's probably going to be 24 months before you get the next infusion of capital. How do you stretch that further? So I would say, you know, managing capital is a big thing that, you know, a lot of first time founders just aren't understanding. It's not obvious, I think independent's to them, one area that burned to go another step is they will overhire. They'll like, hey, I've got a vp of growth. And you're like, dude, you're a granola bar doing less than 2 million. You do not need a vp of growth. You would need a vp of anything. Do you know what I mean? You were the vp of everything currently, as it should be. So that always makes me kind of double take over, hire too soon. It should be you as the founder for a long time. When the time is right, John, I want to hire slow and fire fast. I'm trying to think of other big pitfalls and seeing focusing on the wrong metrics, but I'm repeating myself. I do know what I mean.

You mentioned earlier getting into retail tour at least.

Yes, that's such a good one, ramon. And that's a tough one. That's not one you would almost ever be able to just intrinsically know. Which is like, there are certain places you should go and there are other places that are the middle Pacific Ocean, and you're just a lonely person and a rowboat, and you're not ready to go there unless you've got the resources and the know how and the connections and the plan and everything. And so you'll see some brands just rushed into the middle, not being ready. And other brands, it's totally fine. You can launch a Walmart. You can launch and target. You need to have the resources and the people around you and the plan and the fit, and then that makes sense. The thing that's always a mistake, in my opinion. I don't ever see this working. And you see it all the time, is, hey, I have wegman, which is a great one in the northeast, I have pcc in the Northwest, and I have von pavilions in Southern California. And you're like, what are you doing? And they're shipping like, glass that's refrigerated, and they're killing themselves. Freight is the thing that freight just is the ultimate. It just murders people's pl. You don't see it coming. You do the cogs and you're like, oh man, we're selling it for this. It costs me this. We're good to go. And they forget that getting it there is super expensive. One of my partners, Chris and I were part of a company that went under because the freight, we weren't running it or anything, but we were kind of value add pieces to it, and the freight was just murdering us. We were doing well shelf, but fulfilling to that many dcs with a glass jar was just more than the business could handle. And then the final piece is like, you know, raising money is not easy. I think it's going to take way longer than you think. Start raising way earlier than you think you need it. Too many founders come and they're like, I got three months of runway left. And you're like, we should have had this conversation a long time ago. And a lot of not bad actor, but more aggressive vcs are going to take advantage of that. They're going to sniff that out really quick. You're right, ramon. I think having a sound outlet strategy and treating your early retailers like laboratories, everyone has got this smart approach to DC. A lot of people understand the lab approach and look at the metrics and a retail it seems to be, just get as many doors as you can and see what happens later. You could do the same thing. Just pick a couple of good fit, smaller retailers, run different promotions, see what works, what doesn't. Where in the store should you be? Especially if you're super innovative. I don't know. I'm rambling on that one. But yeah, that was a great question.

Yeah, I think that's super important in terms of retail strategy, because I think what we're seeing now is dtc had its moment where everyone was all in on dtc, and then now you have all these ttc brands who are basically kind of racing each other into retail and seeing who can get the shelf space first. But I think it's a really good point in terms of being strategic about it, because if you're getting into retailers, especially there's, I'm. Sure, a bunch of brands that have good ins and connects that can help them get into a couple of these big retailers. But if you can't meet that demand and your business can't support it, especially on some of those things that you were mentioning, like the freight side of things, and all of a sudden, you're selling in all these places all over the states, and your supply chain can't really handle that, then you're just taking your own grave. So I think that's really important to consider.

You're exactly right. blaine, real quick, you'll have a 60% margin on DC. You think that's your margin? Well, the middleman distributors about to eat that, and so in retail, your margin is below where it needs to be. I was on a panel that was a lot of fun, and the guy that asked me if DC was dead, he's DC debt. I'm like, of course it's not debt. That's silly. And my buddy Chris Jane, christopher Jane, started proper good at stoops. And, oatmeal, they're on fire. He's the only guy that I let. I'll stay on his sms, even though it's very annoying, and he's like, buy nine soups or whatever, but the guy is crushing it. He's one of my favorite founders. And I was pointing out to the room, I'm like, everyone saying, DC's dead. This guy sold, like, a thousand soups since I sat in this chair. If you're sophisticated, you absolutely can still crush. And that was when it was at its worst. I feel like it's getting a little better currently. But you do see these lemming, like.

Everyone go to d to see and.

Now it was like, go to retail. But retail has always been hard, and it's not easy all of a sudden. And so I think you're exactly right. And you still have to have a plan. You still got to know what you're doing. And if I'm an investor, I'd love to not finance your learning curve if I could. I'd love for you to either get the team together to know what you're doing, listen to the people. I love when my founders are like, I don't know this, and they just tell everyone, and then people start like, oh, well, let me help you. Let me introduce to this person. Let me introduce you to this person. Good founders kind of advertise their gaps because they're just desperate to kind of fill that gap in knowledge. And you see it, man. And it gets me fired up, because, again, I've already had a portfolio company or two where they're like, we learned a lot with that $500,000.

And you're like, dude, that was an expensive lesson. The next question I had coming from your vantage point, I'd love to kind of go through baseline, just valuations, and how you think about valuing companies, maybe in the early stage and the seed stage, and then as you move further along, how you guys drive and get to your numbers. Obviously, CPG and apparel, D to see all these different categories are going to be priced differently than tech. So why don't you just walk us through how you guys think about valuations and in this climate, as well as maybe we can even talk about what valuations you were seeing before and where you expect them to go in the future.

They were absurd before. Whenever a year, year and a half ago, valuations were kind of unhinged. Now they feel a lot more fair. I'm in the seed stage. So valuations of the public markets are super compressed in the private markets, but at the top, near public and like near IPO, those are compressed. You can only value your mom's cookie recipe so little before. You just don't do it. So we've seen valuation compression. It's definitely real, but it's not the same. I'm sure the Growth Capital guys are just licking their lips. A bunch of $50 million revenue companies doing like half as much, or 70% or whatever. We're not in that world. So I'm a little ill informed in terms of what's going on above us in the stack, but it's definitely more down to earth. It's still a multiple off gross revenue. One thing we won't do, and I see it's rare for founders to expect this, but some would still expect you to get valued off projections. And that'll never happen. We've never done that. We never will. It's you know, they're irrelevant to us. We use projections to see whether or not you have a realistic understanding of how the business works, not not what weight to value a company. We don't do trailing twelve months either, necessarily. It's usually a revenue run rate plus, like, you know, it's like trailing quarter revenue run rate because you got to be fair to the founder at the seed stage. A lot of shit changes in the year, though. We're not going to do trailing twelve in that case. This is a bit of a cop out, but it's tough for me to answer this question because, you know, there's a company called gorgy. It's a really exciting energy drink. The founder is a badass. And I would argue that their valuation that we looked at and I want to get an idea, I think she's awesome is very, very high, but she was able to raise very quickly. She's a super dynamic founder. It's a great idea, and some things you're just willing to overpay for. And then we also got into a deal on our portfolio where we actually got below the gross revenue run rate as a post money. And the reason was they were recapping the business and they just brought in heavy hitters from the industry. It's like a who's who sort of calf table, and it's awesome. And getting into that one is a game changer. It was a 3.4 million post money or something like that. We business up for 60 million. We might as well hit an absolute danger home run. That one was really exciting. So a lot of finance people like to sit there and play hardball and the valuation has always got to be low. And it's true most of the time, but I would go out there and so if you're a founder, socialize your business and find out what the market will pay, you definitely see some where they didn't do that enough and it's undervalued. You see some where you're overvalued. And I like to tell them on the call, hey, I think the first call, I'm a deal flow guy. I usually tell the founder if I know what's going to happen in our engagement committee, I usually tell them, like, we're going to pass on this, because that multiple is silly for your category and what you have going on, we're not going to do that. And I try to be really kind and open with founders, and I'm usually kind of like, hey, if I like it, I like it. I'm going to hang around. If you can get that evaluation, you take it. And if you go come back down to earth a little bit, give us a call. And that works because people can. If you're looking for numbers a year and a half ago, if you're doing 3 million in revenue, you can get like a $15 million valuation on average. There are still businesses they can absolutely do that because of metrics and founder and stuff. Now, I wouldn't say that's more like twelve, is what I would say. You can even see nine. We looked at one just now that I like a lot that's at a revenue run rate of four. And the post money is nine. And it's a really exciting company. And those are the ones you wake up in the morning and get excited about. And I think that's everything founders forget as a buyer. If you want to overvalue and get the best deal, that's great, but we see a lot of great deal flow, so we're probably going to skip that one and do the one that's a better deal, and then you're still going to get funded, but it may not be by the same level of money, in my opinion.

What product categories are really exciting to you at the moment? I know one of the things in D to see is it's always kind of like there's always something new and there's some level of innovation going on. There's new products, and then you've got your innovation on top of old, tired products. So what are some of the whether it's product categories, product types, different brands that are emerging, what are some of the things that get you excited that you think are going to be big in the next couple of years?

Man, I love this question every time. I never give a great answer. Well, I'll make you guys roll your eyes. I still love supplements. I love supplements. They never seem it only seemed to go up. Like, I don't understand how we don't have enough supplements, but apparently we don't. And the margins are phenomenal. They never weigh a lot. Value per weight is incredible. The retention can be really good. That's a very crowded category that somehow just there always seems to be more room for more weird snake oily supplements and I like to find ones that are real, but I love that one. That's boring. It we're in wasan, which is like almost any article about nonalk, which is a huge category that is exploding. We'll mention Was on the leader, I would argue solid leader of that category we love because we're investing that we get to see their data. I consider that to be the best data set in our period. We're looking hopefully to invest in a nile company, but it's tough. And sometimes the categories you're most excited about, they're so wild west and new that it's really hard to pick a winner because the patterns aren't established. We love category traders. We love fast followers, though it's tough to say we like specific categories when we like people who are really changing the game. Point of difference wise, but not always a good example of I don't know what to say in terms of we just haven't done a deal. We like several companies. Destroy is really cool pathfinder, which is back here. It's phenomenal. Like, every bartender I've talked to is obsessed with these guys. Guy over there is a really cool dude. We looked at the deal and one of my partners hated it and he's like, I happen to know one of the best non out bartenders in Texas. And I didn't leave him at all. I go, what's your favorite non out spirit? He's like a non elk influenza pathfinder, like immediately. And so these guys are on fire. My buddy Justin and Marshall and curly Wines. They're doing really well. There's a bunch of great brands in that category. It's just tough to pick. We just haven't fallen in love with anybody yet. But one of those three might be the next check. I don't know. That's a great category. Plant based is down. Like everything was plant based. Apparently we overdid that. And while he can boucher and before that, the first one I remember in my career was coconut water, where there was, like, two coconut waters at Expo West, and then there was 56 coconut waters at Expo West, and then there was two again. And it was like turns out we just needed two. You know what I mean? And so we're always wary of these like super fuzzy categories. That's a terrible answer, but I never give a good one to that because we're always looking for something that's kind of a little bit special. Like, I don't know, you would call day the caffeine spray. I'm sure how you categorize that and that's we like that little bit energy.

A little bit supplements.

Yeah, there you go. You made it seem easy, but I'll give you one. I love Mastige prestige, but mass price. So, like, Method is a perfect example. California naturals is we hope to be the method of haircare body care. It's a couple of dollars more than tressa May and some of those airbnbs, but not much like two. And jinx dog food is a perfect mastige brand. Blue, Buffalo and whatever else is that. Walmart. Those are the existing brands. jinx is an upgrade quality wise and a very small upgrade financially. So suddenly you have this giant Middle America group. They can access clean ingredient things for their dog. You know, this giant Middle America group, they can access clean ingredients for hair and body care without breaking the bank, without feeling like they got to spend $30. We love those mastiff product. The negative part of our Mastiff is you typically got to go big stack in terms of the big retailers. You gotta go where those people shopping and ain't a Whole Foods.

Yeah, I mean, I think the Mastige part, it always gets me right, because, like, when you're in the DTC world and you're doing all these niche brands and you're talking to all these brands that are popping up in Air, one, you're thinking, this is like all that exists. And then you go into costco and you start walking around on a Sunday and it's like there's more people than you've ever seen in your life. And everyone's just, like, ripping every single product off the shelf and you're looking at the price points and the volume, and you're like, oh, this is a totally different beast and this is what America loves. So I love that terminology in terms of Mastige and just understanding that there's so many different markets and there are different games to be played.

100% mastige is fun from a venture perspective. And I'm not sure I'm supposed to say this, but I love brands that within two years, I know whether or not I didn't want one of our partners. Is this like stupid date blessed to just heat up a cologne? He's always like, one of your lennons arrived in staff adventure. I want to know if it's not going to win and I want to put my money and resources somewhere else. And so mastiffs plays are kind of like king of the hill. If jinx is doing really well at Walmart, and I don't know what I'm allowed to say by their tap table, but they have some incredible strategic, aka Walmart on there. And so they're moving, they're doing really cool stuff there. And if they continue to do that, then that real estate is so valuable that they want D to see somebody can come along. They don't have to sell a single product. They just need to push up your CAC and spend a bunch of money in your category and they can mess up your business. somebody's got to get into Walmart to mess up jinx's business. You know what I mean? There's real land there. And that's why I think a lot of brands are doing both, etc is so valuable. But Omnichannel is definitely where it's at for the current time and brands and most brands out of the timeline.

No, it's funny you mentioned that because it's always this debate, but it's like you said, it doesn't have to be a one or the other. It's just an omnichannel strategy. And it reminds me of the passenger seat I've had and seeing Nick, our mutual friend, grow kettle and fire. I mean, they've done every channel from the very early days. It's not one or the other. And I'm sure they've had their bumpy roads on Amazon, on retail, on DTC. And it's funny because I always hear people like, don't do Amazon, do Amazon, don't do retail, do DTC. But while we do all of them, if it works for you, it's just really hard to attack all of these avenues at the same time. It's not the same to figure out DTC, then go retail. It's a different beast to go after both and try to nail both at the same time. So whatever best works for your dynamic and team strategy. But you should probably just be Omnichannel rumored.

I can't tell you how many times in the last year I've heard people go, you got to do TikTok. Never do TikTok. TikTok Soft. TikTok is the best, right? And you're like, holy shit. Is it good? I don't know, man. First of all, content creation is amazing if you're good at it. If you're good at it, it's the single best tool I think you can use. And if you're not good at it, figure out someone who is. Or just don't do it. It takes a lot of time and effort and resources. Everyone thinks like, oh, it doesn't cost anything majorly. Yeah, it's super expensive. You're going to do it well, unless you're just one of those phenomenal people can do it with their phone and you understand how to make things viral. There's not that many of those people. But yeah, it is fun to hop on things and just have people prognosticate. I'm one of them. I'm always do this, don't do that. Changes quick and see relating, bringing this.

Conversation back to like, this ties to the burn that you were talking about, say, first time founder. And I also want to tie this to your background in agency. What is some of the advice you would give to early stage founders who hear this? They hear, do Amazon, do TikTok, do retail. If you want to keep your burn low, how do you sort of assess all of these opportunities and know what is the right channel for me and what should be my approach before I try to start tapping into new channels?

This depends on category. So my first advice always for a founder, if you don't have one, you must get an advisor. Network does not have to be official. In fact, official is probably a gigantic waste of time and kind of freak people out. Get some people in your network. I'm sure you know some people or you know some people who know some people who are willing to go get a coffee on you and tell you about retail. They're a broker that specializes in public. Who cares? Whatever they are, they can add an enormous amount of knowledge to you, and they can help you understand where your channel is for your category. If you're a refrigerated beverage, DTC is not where you should start, right? If you're a $90 no tropic brain health supplement, DTC is exactly what you should start. And so understanding. You couldn't have said it better, ramon. And I guess I'm kind of punting. But what you ask is one of the most important questions that a founder will ever ask themselves. Where do I launch and why? And am I right? And never go off. Gut if you're a first time founder to ask them CPG, you have no idea what you're doing. You don't understand it. You can get there a little bit by going as a customer. Where do I expect to see this? I'm an expensive supplement. How does that flood agree? How does audit do it? That is primarily direct concern. Okay, that's probably where it should be. If you get there a little bit still, go ask experts. And so, to me, you got to factor in where your margins are at fulfillment. That shipping thing we talked about, that's why refrigerating beverage can't do DC. It's got to be a complete nightmare. And so you kind of find, like, path of least resistance financially, unit economics wise. Where is my fish? Where the fish are? Who shops for is anybody going online trying to look for refrigerator and beverages? No. So I would fish where the fish are for sure on that end. But men, ramon, that is, like, a phenomenal question. A third of founders don't seem to have asked themselves that. They just heard d to c is where you're supposed to be or wherever, and they never corrected whether or not their product is supposed to be there. Yes, they listen to blaine and ramon, and they're like, I know what I'm doing now. I'm going online. No.

Well, Ryan, we just wanted to thank you for coming on the pod and helping us out helping out some of those founders that might be getting crazy ideas about launching their own CPG or other sort of company. So for everyone who's falling along, where can we find out about you? Where can founders connect with you guys, as well as learn more about I know we didn't really go too far into the weeds in terms of high desert, but also a little bit more about your Cactus Vodka brand.

So Midnightbp.com is a website. I've got a LinkedIn. Reach out to me on there. If you're a founder, the best way to reach out to any funders on LinkedIn, go to my thing and see who you have mutual and see if any of those warm connections will make the intro. I always think that's better info@midnightbp.com. We do look at that. I'm not sure we've ever done an investment from it. We might have. I mean, we really do look at people who are coming in through that. So I would do late dinner. That if you're a brand trying to get in touch with us in terms of what you can see here would be LinkedIn. High Desert. It's cactus vodka. That's called high desert vodka.com. We're distilled pureed fermented, all from the fruit of the prickly Perry cactus. We hand harvested in San Diego City, Mexico. Pureed this beautiful purple pureed down there. Then we fermented in San Antonio. Distilled in San Antonio. It's a very high end vodka. We launched 60, 90 days ago. We went all in on Point of Difference. It's the most different vodka I've ever seen. We'll see if that works. It's going well so far. It's a lot of fun. And if you're ever in the Austin area, we're not. We're becoming kind of in most of the high end restaurants. You can find us. You can find us there. And we'll be in Twin liquors starting next month as well, if you happen to be in the office. But to anyone else, primarily weighted games would be Midnight and Midnightb.com.

All right, thanks so much for coming on, Ryan.

Thank you, Ryan, as I really appreciate it. This was a blast. And see again remotely.

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