[00:00:03] Ray Latif: Hello, everyone. Thanks for listening to the BebNet podcast. I'm Ray Latif. I'm here with John Craven, Jon Landis, and we're joined by a very special guest. I think I always say very special guest, but in this case, it's a very, very special guest.
[00:00:13] John Craven: Oh, that's what you tell all the guests.
[00:00:14] Jon Landis: Well, they wouldn't be on the podcast if they weren't special, right?
[00:00:17] Ray Latif: This is very true. It's Mark Rampolla, who is known to many as the founder of Zico, a leading coconut water brand. Mark is also the co-founder and managing partner of Powerplant Ventures, a Incubation and Private Equity Group. And he's currently the interim CEO of Hail Merry. Is there another word? Just Hail Merry. It's just Hail Merry? Yeah. OK, great. So thanks for being with us, Mark. My pleasure. We're sitting here in the wonderful sun, some in the shade, at the Skirball Center in Los Angeles amid Project Nosh LA. And you are here, and you've seen some of the speakers. You've been around some of the entrepreneurs. What are your thoughts?
[00:00:55] John Craven: well i'll tell you what i have a completely renewed sense of this industry now i'm a c e o again and all of a sudden i have a little more empathy for the uh... for the companies that are here trying to present and pitch in and it brings me back to not always the best memories of the early days of Zico yet I think it's fascinating. It never ceases to amaze me the level of innovation, the ideas people have, and how many of them keep coming back with new ideas despite the failure rate, despite the struggles. It's really, I think, an amazing sign about our industry and, frankly, country that we just have this innovative spirit. America.
[00:01:32] Mark Rampolla: America. Do you think it's the success in stories like Zico that drives people to do it or is it just because I mean I think right now what's really amazing is we're seeing people who genuinely want to what they say is fix the food system. They want to bring better products to people. But have you seen that shift as well or.
[00:01:52] John Craven: Yeah I have. You know one of my sort of self-criticism in this whole process is Zico was definitely an anomaly you guys know the stats in this industry so to a certain extent i was worried about perpetuating a you know this myth that you can break through and get it all but the reality is some do and what i love today is seen these passionate, committed entrepreneurs that are smart as hell, very capable, enabled by technology, that really are committed to making a difference in the world. And I think doing some big, big thinking about systems and technology and delivery and just whole new business models that wasn't the case 10 years ago and maybe even five years ago.
[00:02:32] Jon Landis: I guess I'll chime in as someone who's been around this industry a while. I feel like when I started out, there were people in this industry who ended up here either because their family owned a, you know, bottler, distributor. S.O.B.s. Or they just really knew how to, you know, hustle, right? And I think this was not an industry where this sort of, you know, brain talent of like, you got your MBA, you're going to go in at the beverage business, right?
[00:02:59] John Craven: Yeah, exactly.
[00:03:00] Jon Landis: And now I think it's something that is a lot sexier, right? Yeah, definitely. So you see more sophisticated, more established people. And I think, you know, that was something to plug your recently released book, High Hanging Fruit, right? Yep. You know, I think there was a lot of stuff in there that just talks about, you know, you talked about the SOBs, of course, but... What also struck me is just the story of trying to figure out how to play somewhere that other people weren't, which is kind of a lot of what people at at least our Nosh conference here are doing, right? And is that kind of the stuff that you look for? Does it have to be really different?
[00:03:33] John Craven: Absolutely. I mean, you know, I think I now have a completely different lens as an investor, right? Because I look at about, my partners and I look at at least 500 deals a year. I think from that perspective, it becomes very clear people that are doing something different and something unique. And to me, it's no longer just about unique of a product. And it's no longer about, oh, you know, I'm going to make a better granola or I'm going to make a better beverage. the entrepreneurs today yet some of them have nba's but some of them have run technology at some of the best companies in our in our world and are applying that sort of system thinking to our industry and they're starting to say why do you distribute through all these channels from where i was like just go direct the consumer we know how to do that why are you processing here in packing there why don't you breaking these foods down to their key components in recombining them you know stuff that is which are way beyond my uh... my level of intelligence and and so i do think that there's some really innovative approaches so what we're really looking for is that blend somebody that has a passion and commitment willing to roll up their sleeves and do the hard work but really thinks differently almost systemically about these problems in these opportunities to build businesses that can scale fast and and make an impact and have a chance to kind of breakthrough the arts
[00:04:54] Ray Latif: But no matter how innovative they are or how technologically sound and advanced some of these brands and some of these ideas might be, at the end of the day, it's really about filling or creating a consumer need, right? I mean, you do that with Zico, sort of presenting Zico coconut water as an isotonic, as a sports drink. You know, are you seeing that these entrepreneurs are effective in the way they're creating this consumer need, or is it more they're sort of replacing the old guard of food brands?
[00:05:22] John Craven: Yeah, that's a great point. I think, you know, both is happening, but no longer is it simply replace the old guard, right? Oh, OK, you know, Rice Krispies cereal is crap. We're going to make a better one, right? so uh... perfect example is you guys talk to doug from juicero right of course talk about a radical approach you know where their consumers jumping up and down saying i need an at-home delivery solution for juice no but what he said is look juices big it's always going to be big i think i can do it better and he created a whole new business model you know arguably industry right delivered at your home fresh press fresh products now you know juries out of he's gonna really be able to break through and raise a ton of money behind it but i think that's a level of systematic thinking from literally from farm to mouth that i hadn't seen ten years ago was incredibly rare now you're seeing it in many products you know some of them go through conventional distribution you think about like a uh... a beyond meat or something but just rethinking the whole way that we grow produce process distribute and consume food and beverage
[00:06:32] Ray Latif: So it's really more about just staying on trend than it is, you know, the need will find you.
[00:06:37] John Craven: Look, I think what I challenge entrepreneurs to do is to really think about problems. What are the problems that, it used to be, I woke up, I feel like crap because I drank too much, therefore that's a problem. That might be the case, but what I get inspired by is entrepreneurs that are saying, why do we waste so much food? What do we do about that? Why do we waste so much? I just heard about a startup that's doing something in the beer industry, not my space at all, but they're targeting waste in the beer manufacturing space. Spent grains. Yeah, exactly. And so I just think there's a way of thinking about problems in terms of societal problems, health and wellness problems, waste problems. that is just a different way of thinking than I had 10 years ago, but now I think is becoming more commonplace. Certainly part of that is a consumer need, but I think it's bigger than that, to really think systematically about these problems. Tough to do, right? We're investing in companies that have a simpler approach in some ways as well, but I just really love to see how people are thinking differently about it.
[00:07:42] Jon Landis: And as far as just, I guess, from the investor perspective, are you looking to invest in people who are looking for money to kind of figure out the solution? Or are you looking for them to come to you and say, we've already, you know, I don't know, Spent the money, time, whatever. We figured it out. We need money to implement and roll out.
[00:08:04] John Craven: Generally the second. In an ideal world, I might have the ability, bandwidth, and resources to be able to do more than that and really find really smart people that are going after problems and getting early with them. given that we have a fine we're not really structured for that so jolly we're looking for people that have come along a certain amount of the way but not necessarily solved at all you know we're looking at some food and beverage technology companies are doing some really incredible stuff that a pre-revenue and frankly pre prototype but that's where it would have to be something really exceptional but will do it if we find the right i mean that is the challenge of what we're talking about that i mean someone has to find that i think you know when you mentioned you sarah
[00:08:44] Jon Landis: Obviously, a lot of time and money has gone into just producing that first machine.
[00:08:49] Ray Latif: I'd imagine just from looking at it and using it, it costs a lot of time and money.
[00:09:00] Jon Landis: You know, I guess to use that as an example, like investors who maybe get in later, I don't know, are they better off, worse off coming in kind of after all that's been done? Yeah, that's a great question.
[00:09:09] John Craven: And look, I'm figuring this out as I go, too, as a three-year-old VC. I haven't exactly cracked the code, but I'm learning a few data points. One is that The people that really do that well, true early stage venture capitalists, generally invest across a wide range of businesses. So they'll, the old spray and pray mentality, right? And so that way you're diversifying your risk. And I think we'll do a little bit of that, but cautiously, it's not our mandate, but The reality is, yeah, that takes risk. It doesn't always take 100 million, right? I mean, I'm seeing businesses that are doing some really interesting things with technology with a couple hundred K, right? It's hard to do a zero. But the same kind of angel network you would use, the same sort of early investor network you would use still works. but i think the reason why investors interested in the sort of systematic changes is because they have a higher probability of a big outcome because if it works it works big and you have protection around it whereas you know a lot of the just normal better for you beverages or food you know it's really hard to there's no intellectual property there's not nothing really protecting it and we all know how hard that road is to build if you can build that but knowing you have some intellectual property knowing you have some technology or know you have a different business model around it is, I think, very compelling for investors.
[00:10:31] Ray Latif: Now, you launched Zico, I think it was in 2004. Right. And about five years later is when Koch's VEB unit invested. That's right. And then they acquired the company in 2013? Correct. OK. So having gone through that whole process, I could ask your level of satisfaction with it, but I'm not going to go there. And I'm sure you are satisfied with the whole process. If I complained, people would smack me. But, you know, in terms of any advice to VEB, if you were part of that division, you know, what kind of direction would you be pointing them in? What would you be recommending that they look at in terms of not only just food, but as you mentioned, sort of the technological advances or the tech that kind of goes into real change in the food and beverage industry.
[00:11:18] John Craven: Sure. So I've got a lot of friends there still, and I have a lot of respect for what they do. I really do. And I think they want to do the right thing. They're trying to do the right thing. It's really hard inside a major corporation. And I think if you look across all the food and beverage companies, nobody's figured it out perfectly. They're all learning. But what I will tell you is I think there's some models in the tech world that are interesting, which tends to be One, really well-staffed venture groups, if you look at Google Ventures, that has a mandate to function like a venture firm, right? And they're staffed with venture-type people, and they're placing a lot of early-stage bets. it's sort of that brain spray mindset where i i would encourage coke to think about hey why not seating a lot more businesses at an early stage and or do it through a vehicle right so they had that first beverage kinda relationship that was an interesting for a i'd say go all the way fun and outside vc that is gonna have the autonomy to be make a lot of bets and see what sticks you know let the entrepreneurs fight it out let them try to grow through the system don't give them access to distribution don't worry about the supply chain let them try to figure it out because i think coke needs to for their own sake really make sure they're getting in early at that next group of companies without paying a fortune and the only way to do that is to play a little bit earlier
[00:12:37] Ray Latif: Yeah, I mean, Campbell is sort of doing that with their Acre, I think, Acre Venture Partners or Acre something, I'm sorry, I'm blanking on it right now, where that VC operates sort of independently of Campbell, and it feels a little bit like that spray and pray, not as significant as, say, a Google Ventures, but it feels like they're really pushing the gas on that.
[00:12:54] John Craven: I think they're an interesting model. And my understanding is it's quite independent. It's fully funded by Campbell's, but no other outside capital. But they run their own show. They make their own calls. They make the investments they want to make. And I think they've made some smart ones. And I think there's going to be likely to be good returns from a venture standpoint, but huge learning for Campbell's if they're able to internalize that knowledge.
[00:13:17] Mark Rampolla: The only thing that is kind of standing out to me is we're seeing a lot of this tech in food now, like the tech money coming into food. And some of the problem with it is you can fund a tech startup and hope to be profitable in six, 12 months. And that's just not possible here. So with that mentality of place a lot of small bets on some Emerging Brands,
[00:13:42] John Craven: there has to be some kind of follow-up though right i mean like that absolutely something that's built like that would be here's five hundred thousand a million dollars this year and then you know we'll circle back around in twelve months and i think that's the model and you look you're right i think that the tech mindset in money coming into this industry's fast yet because you know there's certain sort of this mindset in the tech world that we can solve all the problems right you just see it just do what engineers do and some of that's true and interesting where it gets screwy is when you get this obscene amounts of money floating around at frankly idiotic valuations right and i think that's all you know last so long i'll be those guys are gonna stomach when they get these companies that burn a lot of cash to take a while to break through and i think they'll learn from that and i have a a very good friend from the tech industry said don't confuse two things somebody can especially a group of people can be very very smart and very very stupid at the same time right so you have very brilliant people make not so smart bets on companies and investments But I think that the reality is, you're right, it's a very different mindset, but there's something to learn from that. And so in an ideal world, if you could play some early bets with some smart, calculated companies, but know you have to follow on and resource in an additional way, I think that's really the win.
[00:14:57] Mark Rampolla: That's just a missing piece to me. And the other comment I wanted to make was it's very interesting seeing the food money now going to tech. With what you're doing, your background is here in food and beverage, and you're placing bets in tech. And what kind of competitive advantage do you believe that you have coming from the food world? And obviously, you're looking at food tech, but some of them are more technology. Oh, absolutely.
[00:15:20] John Craven: Yeah, so that's a great question. I think, first of all, in my view, it's all food, right? So the fact that there's a tech mindset approach to food. Hey, I'm all over that. And what we hope we bring is a couple of things. One is rational thinking, right? That we're able to look at this and understand what does it take to distribute, get a consumer engaged in it, deal with food companies, which is very different. a founder friendly approach where where we've got a been in the founder shoes my partners are founders of edgy grill we know what that life is like you can bring some of that value and we're finding that tech investors appreciate that so we're getting into some deals that are sort of tech lead because we can bring that value Founders tend to like it because we bring a pragmatic side to that, but there's some amazing stuff going on. I'll give you one example. There's a company called Appeal. You guys heard of this one?
[00:16:09] Ray Latif: Yeah.
[00:16:09] John Craven: My God, they're applying this technology to breaking down pretty much any waste product to its core organic compounds, recombining it in a way that you can basically make a second skin. around produce, the potential to revolutionize the produce industry, both for just mainstream produce and loss, but also for like Sub-Saharan Africa. It is huge. So I'm honored and thrilled to be an investor in that we are as power plant. And yeah, these are tech guys or bioscientists that are taking this incredible, brilliant thinking and applying it to some real big problems that frankly we in the food industry haven't really addressed very well.
[00:16:48] Ray Latif: Yeah, we only have a couple minutes left and I wanted to ask you a couple quick questions if I could. I saw Mike Rapoli, the co-founder of Vitaminwater, who's now the co-founder of BodyArmor, CEO of BodyArmor, I saw him a couple weeks ago and I asked him, why are you back in the game, you know, and he said it's really fun right now for me, you know, and clearly, I mean, I would assume that Mike walked away with a lot bigger check than you did. But, you know, what brought you back? What drives you to stay involved in the food and beverage industry?
[00:17:13] John Craven: Wow, that's a great question. I ask myself that most mornings. But I'm having a blast. I mean, I think what drives me is I feel like I learn every day. Every day I learn something new and think about something new. And part of that is meeting with brilliant entrepreneurs and people that have creative ideas and forces me to think differently. It forces me to think rationally about what it takes to win in this sort of industry. And I feel like I can make an impact. I feel like I have a chance to make an impact on food and social impact. So, you know, you guys are familiar with the rebel story, a chance to, You know, kind of build a successful business that makes a big social impact. So if there's one thing I'm about right now, it's sort of remaking that idea of what it means to be successful and building businesses that make a social impact from the bottom up. And imagine, you know, when guys like Rapoli start applying their money and power and capabilities and drive, not only to making incredible beverages and make an impact in our own pocketbook and in the marketplace to make it a social impact that would be freaking huge my goal isn't by the next report later to make that sort of i just be one uh... in the coming months uh... some rumors spreading about uh... certain coffee fruit infused beverage so you never know last night on yeah we always talk about uh...
[00:18:31] Ray Latif: We always talk about what we're drinking, some of our favorite beverages at the end of these shows, and couldn't let you get away without asking you what you're drinking and what you're really enjoying.
[00:18:39] John Craven: Boy, I'll tell you, it sounds like I'm biased, but rebel. I can't get that stuff out of my fridge. I mean, my wife buys it. We're paying full price for it, right? And we buy a ton of it and drink it all the time. What else has gotten me going? I do, I'm now a Juicero addict. Every freaking day, that thing, that's costly, but I enjoy that. And I'm back on beer. I'd gotten away from beer for a while, but I'm not like an IPA guy again.
[00:19:04] Ray Latif: And I'm thrilled about it. Nice, nice. Good to hear. Well, this has been tremendous. And I really appreciate the time, Mark. And hopefully, we'll hear a lot more from you and some of the great brands that you're investing in with Powerplant pretty soon. Thanks, guys. Enjoyed it. Thank you.
