Building One of the Fastest Growing CPG Companies in History | Peter Rahal of David Protein, Medici Brands & RXBAR

Peter Rahal's second protein bar company run-rates $400m

Peter Rahal sold RXBAR for $600m, took roughly a quarter of a billion dollars in cash, and spent two years finding out he is not an investor. His second protein bar company, David, is two years old and run-rating over $400m, and his ambition is to compete with Nestle and Pepsi across everything you can buy in a store. The bet rests on a brand identity held for decades, scarce ingredient supply and a small-company operating structure.

Takeaways

• Investing made Rahal miserable and handcuffed. He sold RXBAR for $600m while he and his co-founder owned 90%, then spent 2020 and 2021 investing in CPG and early-stage private companies. The feedback loop ran five years, and being hands-off while someone else drove left him frustrated.
• David is among the fastest growing CPG companies. Two years old, it is run-rating over $400m and expects $300m this year. It has launched frozen and ready-to-drink products, and Rahal says scaling is mostly an inventory problem of buying raw materials and converting them.
• A brand is one identity repeated for decades. Rahal spent six months planning David's identity, taking its values from Michelangelo's sculpture of David, and says a clear identity makes marketing easy because you hammer the same points. He calls time the most important factor in building a brand.
• David bought Epogee to lock up an ingredient. Epogee makes EPG, a modified triglyceride the body cannot digest, giving fat's taste without the calories. David was 90% of Epogee's sales and 150% of its supply. Rahal negotiated a supply agreement first, then bought it half in equity and half in cash.
• He skipped an auction and left $100m behind. Rahal raised $85m from Greenoaks and Valor instead of running a process. Greenoaks diligenced his leadership by paying former RXBAR employees $1,000 a call, and he brought in Valor because Antonio Gracias had supported him.
• Rahal treats pain and anger as fuel. Dyslexic and labelled disabled as a child, he says he carries resentment and channels it into physical exertion and company building. He agrees with Travis Kalanick on pain tolerance, and with Issy Sharp that excellence is the capacity to take pain.

How Rahal runs Medici

• Medici holds semi-autonomous business units, including David and HallPass, and is named after the Medicis. Rahal cites Henry Singleton, who ran 130 businesses.
• He has 25 direct reports and four people processes, and prefers hiring former founders with a chip on their shoulder.
• Convincing a founder to join a bigger company instead of doing their own thing signals how strong the opportunity is.