· David Senra, Peter Rahal
[00:00:00] S0: How did you know to do that? [00:00:00] S1: When you have a dependency like that, you just got to make sure you're covered. Even if the deal didn't go through, we didn't have all the supply anyway. Like, we're the elephant in the room with the customer. If you didn't have a supply agreement, you're out of luck. [00:00:00] S0: So the way it was reported or talked about was there's this very important patentable ingredient he needed. He was using most of it. There was these other companies that also used it that he was technically competing with. He buys the company and shuts off their supply. [00:00:00] S1: Yeah. [00:00:00] S0: But I didn't hear the second half of the story that then I also recruited from the people that I just copied. [00:00:00] S1: Yeah. [00:00:00] S0: You had a lawsuit or something over this, right? [00:00:00] S1: We had an antitrust claim and lawsuit, yeah. [00:00:00] S0: Is that still ongoing? [00:00:00] S1: It was dismissed three times. Because for that lawsuit to function or for them to actually have any merit would mean like, it would be like a landmark case in intellectual property. The big lesson, which I think you've had Lulu on, which if I had Lulu in my pocket, we would have managed the comms differently. Like, we just like, one, we let Epogee manage the comms a little bit, and we just did a terrible job communicating. [00:00:00] S0: Did you communicate at all?
· David Senra, Peter Rahal
[00:00:00] S0: Did you communicate at all? [00:00:00] S1: There was a notice sending out of the acquisition and that if you don't have a supply agreement, there will be no supply. But that comms, I could have done better. I could have done it with more compassion and called the entrepreneurs or could have done it differently. [00:00:00] S0: In what way, though? Compassion doesn't seem to be one of your personal traits. [00:00:00] S1: I think it is. I think compassion is important. [00:00:00] S0: Do you have it? [00:00:00] S1: Yeah. To be a good leader- [00:00:00] S0: Show it to me. Where are you hiding it? [00:00:00] S1: I just don't have sympathy for like... I don't have sympathy for stupidity. I don't have sympathy for incompetence, really. Like, it was so obvious that if you're going to get into it, if you're going to use an ingredient that has a single source, you better make sure you have a supply agreement. It's like fundamental. [00:00:00] S0: This goes back to something that was like second nature to you that you don't even feel special. Like, remember at the beginning of your conversation, you were like, "Okay, well, yeah, I got all this money. I'm going to chill. I'm going to find a wife, have some babies, and then I'll invest on the side." Obviously, you're an entrepreneur, so it's like life and death for you. You'll take it very seriously. You start cutting checks into this company. It's like, "What is this guy doing?" [00:00:00] S1: Yeah. [00:00:00] S0: You didn't know how rare you were. [00:00:00] S1: Yeah, no, totally. [00:00:00] S0: So same situation here.
· David Senra, Peter Rahal
[00:00:00] S0: So same situation here. [00:00:00] S1: Yeah, a little bit, yeah. [00:00:00] S0: How many other companies are involved where you're buying the same ingredient? [00:00:00] S1: Three, four. [00:00:00] S0: Okay. So this is like- [00:00:00] S1: Yeah. And their response was like, "Well, I didn't know I couldn't... I didn't know that was an option." It's like, "What the fuck? [speaker 1 chuckling] What are you doing all day?" Like, honestly.
· Peter Rahal, David Senra
[00:00:00] S1: Yeah. And their response was like, "Well, I didn't know I couldn't... I didn't know that was an option." It's like, "What the fuck? [speaker 1 chuckling] What are you doing all day?" Like, honestly. [00:00:00] S0: I found one of my all-time favorite quotes when I was reading the book "Zero to One." The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers in mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full-screen videos that are watched for an average of 35 seconds. That is retention that blows other ad platforms out of the water, and you can launch on AppLovin in minutes. You set the goal, and AppLovin achieves it. No complex setup, no expertise needed. And AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day, and increased their revenue by millions. So, you want to get started quickly before all of your competitors are on AppLovin, and you can do that by going to applovin.com. That's applovin.com. Is this why you had to raise money? Because- [00:00:00] S1: Yeah. [00:00:00] S0: So, your first company, you did like a... RXBAR was like a friends and family loan? What was the-
· David Senra, Peter Rahal
[00:00:00] S0: So, your first company, you did like a... RXBAR was like a friends and family loan? What was the- [00:00:00] S1: My dad and my partner's mom guaranteed a line of credit. [00:00:00] S0: A line of credit. [00:00:00] S1: Yeah. [00:00:00] S0: But no typical venture capital? [00:00:00] S1: No. [00:00:00] S0: Okay. What did you start Dave with? Did you raise money right away? Did you put your own money in? What'd you do? [00:00:00] S1: Yeah, I put 2 million of my own in as, like, whatever pre-seed, and then that was enough to get us to launch. And then launch, we raised eight for working capital just to survive. [00:00:00] S0: Why not just put up the eight yourself, since you already got it in your pocket? [00:00:00] S1: Yeah, because I wanted to bring in some people who have been very good to me. So, Valor Equity Partners, Antonio and John have just been really supportive, and I like how they operate. Like, their name's Valor. They're pretty intense. [00:00:00] S0: Outside of Valor, it wasn't like typical investors? [00:00:00] S1: No. [00:00:00] S0: Okay, so friends and things like that? [00:00:00] S1: Yeah, some small friends. [00:00:00] S0: Yeah. [00:00:00] S1: And then I was like, "We're done." Right? Like, we don't- [00:00:00] S0: Why was that your initial reaction?
· David Senra, Peter Rahal
[00:00:00] S0: Why was that your initial reaction? [00:00:00] S1: Because I don't want to spend time talking to investors or fundraising. I think in consumer packaged goods, the P&L should work pretty quickly. Unit economics should make sense. So, you should be really capital-efficient. You should not be raising a lot of money, unless you're going to acquire a company or do what we're doing. So, that wasn't on the table in the beginning, so I'm just focused on the business, not thinking about raising more money. So, I thought that was like, "That's it. That's the only capital in." And then we had product-market fit like crazy, and it got bigger, and then- [00:00:00] S0: And you're like, "I need to raise money to find out how to sell fish online." [00:00:00] S1: Yeah, exactly. Well, that was funny. So, we eventually raised a round to finance the acquisition, and it turned out we did need more money on the balance sheet. [00:00:00] S0: Okay, hold on. Before we get there, you raised how much money to do the acquisition? [00:00:00] S1: We raised 85. [00:00:00] S0: And who'd you raise it from? [00:00:00] S1: Greenoaks and Valor. [00:00:00] S0: Okay. We need to talk about, so Neil Mehta, I'm friends with Neil. I talk to him on the phone all the time. I talked to him about you, I don't know, like two weeks ago, and he's got hilarious stories about you that I'm going to bring up on the podcast, too. But you need to explain, like, why did you choose him? Because- [00:00:00] S1: Right, yeah.