The Nathan Barry Show

John Durant: [00:00:00] Everybody wants to be an entrepreneur, but you've really got to be irrationally confident. The way you really build equity value is to start something yourself.

Nathan Barry: John Durant, he has invested in Primal Kitchen, Thrive Market, Element, companies that creators take an audience based business and build it into something with real equity value.

John Durant: Huge advantage that creators have. Understanding product market fit better than other founders. You know if I want this I know enough of my other followers want this. When you shift from selling digital products to selling physical products It's a whole different ballgame. People love subscription business models But I also see a lot of people force subscription just make the product so good that they're still gonna consume it on a regular basis

Nathan Barry: What are some of the biggest mistakes that you see people making?

John Durant: Yeah. So

Nathan Barry: John, welcome to the show. Thanks. Good to be here. So we had a great time last night out wake surfing. You got to enjoy some Boise summer

John Durant: and nobody was out there. It was [00:01:00] amazing. Loved it.

Nathan Barry: We had a great time. We've been hanging out and talking about. All of these, like the behind the scenes of these creator businesses as they go into, you know, consumer products.

Before we dive into some of the specifics that you and I have been chatting about the last, you know, 24 hours or so, uh, let's just talk about what wild ventures is and kind of give that, that context. Cause you've been, you know, It's like, everything I talk about of the billion dollar creator and how to drive the most equity value, you know, from attention, you've been living that for how, how long have you been deeply in that world?

John Durant: I advised my first startup in 2013. Okay. It was XO, the cricket protein bar company and the founders. That didn't work out, but the founders went on to start Magic Spoon Cereal. Um, I stuck my toe in the water into the venture space in 2013, and then full time, uh, built Wild Ventures, uh, starting in 2015.

And it is a [00:02:00] consumer health early stage venture fund. And I pulled together syndicates of, uh, Other influencers, creators from the health and wellness space, authentic figures, um, whether it's Mark Sisson, who started Primal Kitchen or Robb Wolf, a co founder of Element, Wellness Mama, Food Babe, a lot of friends of mine from, you know, I helped popularize paleo about 15 years ago, wrote a book about it, and was in New York City, uh, had a, had a big community of people there, and we would just help other people in the health and wellness space when they had a book launch or when they had a clinic or an event and became, you know, Friends with a lot of these figures and started to put together a group that would invest in startups and help people incubate Companies, you know for their own for their own brand for their own platform.

Nathan Barry: Yes, as you're incubating all of these brands Well, I, so I went to a wild ventures event, [00:03:00] 2019, is that right? Yeah, up in Malibu. It was one of those things where I was like, oh, this is literally everyone from like the health and wellness space who were thinking about building much bigger companies. And it was really cool to, to watch like some of these absolutely at the ground floor as they're, as they're coming together.

When you're bringing people together, what are you looking for in it? the creators and the, the types of companies that they're launching.

John Durant: Yeah. So there are two sides to this. There's the investor side, the LP side, the creator, influencer side. So we'll invest and then promote. Um, and then there's the founders of these companies and sometimes they're creators from within our community and sometimes they're just other founders out there in the world that we love and want to back.

Um, on the investor side, uh, there are a few things that I look for. Do they have a platform [00:04:00] of any type? It could be email, podcast, social, whatever. Do I like them? Do I like to work with them?

Nathan Barry: Do you want to spend years? It

John Durant: could be, we're in on some of these things for 10 plus years and for every, um, for every investor in my group, I have a ratio that I maintain and it is drama to helpfulness.

And if that ratio gets too high, um, They stopped getting invited to new deals and fortunately haven't had to do that much. Um, but basically, like, is this person easy to work with, fun, that I want to be on an adventure on for a decade. We have people with different nutritional philosophies in our group.

Some people do dairy, some people don't, some people are low carb, some people aren't. You know, there are things like that, but we're broadly, Real food people, um, who also [00:05:00] are pro animal foods. Um, we don't, while, while we've built some coalitions like with Thrive Market, there's some vegan, vegetarian, plant based people who are involved there and we're looking for opportunities to partner with them.

Um, generally the things we're investing in, um, are, it tends to be with people who eat paleo or keto or Whole30 or real food, something like

Nathan Barry: that. Yeah, that makes sense. So diving into one of these investments, like, uh, element is a huge one, right? So talk through sort of the, I think what people listening will care the most about is the like audience product fit.

And so maybe just tell some of the founding story of element and then you know, we'll get into like why that was a fit with the audience and on from there.

John Durant: Yeah. So Element is an incredible story and the full story one day we'll, we'll have to get Robb Wolf on here, James Murphy and those folks. But I've known Robb Wolf from [00:06:00] the paleo space going back to, I don't know, 2011 or something like that.

And, and so, um, he was an investor in wild ventures first, um, before starting element and. James Murphy was partners and, uh, with Dr. David Perlmutter, um, Grain Brain and all that, the neurologist and met James. Both of them came to my retreat in 2017 in Malibu and they met there, you know, they went off into the wilderness and started talking about, you know, this investing stuff is great, but why don't the, the way you really build equity value is to start something yourself.

Now that's hard. And can take a long time and, and it's risky. Um, and they, they tossed around a bunch of ideas and, um, James put it to Rob, like what's, you're the creator, you're the, you know, the early CrossFit guy, you're the, the paleo figure, what's needed in the market? And let's evaluate some of these ideas.[00:07:00]

Um, and Rob had done that. been doing a bunch of low keto training and realized that he wasn't getting enough salt. And the nutritional guidelines as he dug into the science on salt and sodium realized that a lot of scare tactics were being used on salt. They started the company and they came to me to lead the seed round and sort of get the gang back together again.

And Even then, it seemed like the sort of hydration stick pack, uh, space already had a bunch of winners and maybe it was already too competitive. You had Liquid IV that was way out there and Noon that was way out there and, you know, can, can you really build a moat in this space? And even though there were all these competitors out there, in a sense, there were no competitors because nobody was really leaning into SALT.

And when you lean into SALT, It's [00:08:00] there's a mental block for people, or they're not really looking at the science of this, um, first and foremost, and then while ventures led their seed round and early 2020, um, and the, the focus, they've always run the company. extremely capital efficient, uh, not raising very much money.

I mean, every time they've raised money, it's, it's been a, they haven't needed to, they could have bootstrapped this whole company, um, but wanted to build a moat with health and wellness figures and, and reach those audiences first. Um, the people who didn't have to be persuaded that, uh, the science and salt, um, was actually different than what the government recommendations said.

Um, and it has just been a remarkable ride. That team, there's a lot I could say about element. We can talk more about them, but I've, I've, I've been a part of some good ones and I've never seen a company [00:09:00] continue to pick up momentum like they have. Yeah.

Nathan Barry: Yeah. The level of they're growing year over year is just, it's just incredible.

Incredible. So as we think about. this creator and product, right? Like a bunch of people that I spent time with at the, you know, the wild benches retreat and a bunch of people in the space have made money in call it more traditional creator ways of sponsorships, advertising, you know, Uh, courses, digital products, all of that sort of thing.

But this is like the highest concentration I've ever been around of people who are like, okay, we're going to take this attention and build a business worth hundreds of millions of dollars. What are some of the common threads that you see in It's just in those creators, those founders that actually, um, you know, decide to pursue it.

And then ultimately those that pull it off, well,

John Durant: you've really got to be on a mission. So people who are incredibly driven, um, [00:10:00] because when you, when you shift from say selling digital products to selling physical products, it's a whole different ball game, right? Yeah. Yeah. If you're in food, you've got supply chain and manufacturing and food safety testing and perishability and lower margins than, than digital products.

And all that means is there's a, it's not a lifestyle business. Like you've really got to go all in and commit.

Nathan Barry: You can't say just because I have this audience, I'm going to, my contribution will be attention. And that's it. You know, like we'll drive some sales, you know, that's like the affiliate model and it doesn't work if you're founding the new company.

John Durant: Yeah, to, to, to build a business that, um, can reach the mass market of America, to build a brand that can extend beyond the name of the personal creator, um, to sell in [00:11:00] retail. These, these are hard things to pull off and they take years and sometimes they, they take capital. And so being a founder is really hard.

Yeah. Yeah. And. You know, there's all these people out there. Oh, everybody wants to be an entrepreneur. There are some business, you know, Elon describes it as chewing glass and staring into the abyss. Um, you've really got to be fully committed. Um, and you've got to be a little bit crazy, um, to. Take on these big players and to take some contrarian stances on nutritional philosophy.

Um, and most ventures fail. And so to have that irrational level of confidence, which is what you need to have. I want the founders that I back to be sort of, on the one hand, irrationally confident, overconfident, but also clear eyed about the challenges they need to solve, which is a really hard [00:12:00] balance to strike.

Honestly, not everybody is cut out for it. It, at least in the businesses that I back, they're not lifestyle businesses, and it can put stress on the family and stress on relationships. And people talk about work life balance. And it's like, if you want to build one of these things, um, you're going to be struggling.

skewed towards work for a period of time. Um, so I, you know, those are, those are some of the differences, but a huge advantage that creators influencers have is understanding product market fit, uh, better than other founders or better than traditional investors. So when you've got a platform, when you've got fans, you, you have a feedback loop.

You have multiple feedback loops where it's like, Hmm, what are the open rates on these emails? Bone broth is really a popular, uh, subject line right now, or that's taking off or collagen or. [00:13:00] Creatine is hot these days, but also seeing sort of DIY solutions like bubble up from your community or pain points, Sisson, Mark Sisson, founder of Primal Kitchen, which is another company that we backed.

He just saw that dressings and sauces were just a huge pain point because so many of them are made with seed oils and he wasn't going to use seed oils in his, and there's invisible sugar. Right. It's really hard if you're eating at a restaurant to get clean sauces. Um, Some people don't want to make them at home.

And it was something that he wanted in his life. And he had a big enough following that he's like, you know, if I want this, I know enough of my other followers want this. And then the challenge is, how do we jump from sort of the, the people who self identify as paleo or primal to to a more mainstream market where they definitely don't identify as paleo primal.

Nathan Barry: They might just be health minded.

John Durant: Health [00:14:00] minded. Yeah. They're like, you know, I, I prefer avocado oil or olive oil or something like that, or low sugar, no sugar. Um, and they don't have to be a part of the cult. Wild Ventures, we love cults. We love cults. I don't have like a, I know it has a negative connotation, but what it basically means is it's a group of people who are.

committed to a point of view or a lifestyle, um, in a way that goes beyond sort of transactional monetary sorts of things. Um, it's a source of motivation. You have to go beyond the cult, uh, to, to spread to the mass market. So, so even the brand name Primal Kitchen, the word paleo doesn't jump to the mainstream as well, I don't think, as well as primal.

So, Primal, people who are in paleo, in that world, they hear that word, they know what it means, sort of in a more technical way, um, but in, in the main, to mainstream eyes, [00:15:00] like primal is a sexy word. It's like fit, it's healthy, um, but you also don't have to join a cult, uh, to, to buy. So it resonates

with

the cult.

It resonates with the cult,

Nathan Barry: but can expand beyond that. A lot of these. Creators that come in and start the brands, they have their own audience. Like we go wellness mama to wellness. Well you're talking about. Like, I believe it was the, like the homemade toothpaste recipe that was very, very popular. And then people are like, can I just buy this?

You know, talk about that for a second and then we'll get into the creator side.

John Durant: The original formula for Kettle and Fire, um, like her DIY recipe online ended up inspiring the, the original formula for Kettle and Fire. Um, yeah. And, and then the. On the toothpaste side, she had a DIY recipe. I mean, she has all sorts of DIY recipes.

And so we went to her and said, you know, [00:16:00] of your DIY recipes, what do people love? Um, what do we think we could make it, make a product of, you know, it might be like a little tricky to make or more. You know, too time consuming. Some people may, uh, want to make it themselves. Element has a DIY recipe on their website and a lot of people, like if they're very cost conscious, we'll do it.

Um, it'll get, be hard to get the flavoring right. Um, but as a general philosophy, we want. people to be healthy and we want there to be options for them to do it themselves. When it has

Nathan Barry: this grassroots feel to the brand where someone's like, Hey, this is, this is of the people. You can make it yourself.

We're the kinds of people who, you know, we might buy it, we might make it ourselves. And then as we You know, it just, it changes the, the brand perception and it's interesting to see that across so many of these, of these brands where it's like, you can do it yourself or, you know, if [00:17:00] you want the convenience and the taste and whatever else, right.

The professional formulation, then it's available, you know, online or in the store. Yeah. I mean, convenience matters and we'll give it to people. There's a lot of creators that I talked to who are saying, I want to create a business, you know, that's driven and launched from this attention. And they don't know how they know that their own promotion is going to cap out at some point.

And, you know, hopefully you can get into retail if it's the right fit or these other things. But how do you think about going from one creator promoting the brand, like the founder creator into like getting the next 10 to 25 communities that really rally around it. Cause I think you've done that, you know, and helped all these founders do it over and over again.

John Durant: You

Nathan Barry: know,

John Durant: there are certain types of products that don't scale beyond an individual creator's platform very well. Supplements would be a good example of [00:18:00] this. You know, if somebody launches their own collagen. Everybody and their brother has a collagen line, and yes, there are going to be some, um, collagen or, or supplement companies that are sufficiently differentiated that they can, or early in the game that they can scale beyond, um, but it's hard to get people, uh, to promote something if, uh, it undercuts their own business.

Right. Um, so you've really got to look for something that other, not a lot of. people are doing. So even within supplements, when some of the people went into organ meats, like that was a really savvy move for a few reasons. One is there weren't a lot of supplement companies offering sort of liver, heart, organ supplements.

Two, for these products, You really do want ultra high quality, like you don't want to be, even if you're just ordering liver in a restaurant, you don't want [00:19:00] it coming from a factory farmed cow. Um, third, even people who prefer eating real food and get like, who don't use a lot of supplements. I don't actually use a lot of supplements.

I use a few and sort of intermittently. But even for people who prefer, prefer eating real food, they usually don't get enough organ meats in their diet. And they are more difficult to cook and they can have a really strong taste that can be off putting. And so that was a really smart way to create differentiation, um, uh, high quality standards that could appeal to people who didn't have a great diet and who had a really good diet.

If you are a creator, asking your friends. If I made this sort of product, would, would you promote it? And not as a favor, but like, do you actually think your audience Uh, would like it. I was talking earlier about how starting a physical products business is hard, and there are a lot of [00:20:00] novel challenges compared to digital.

Digital's harder in its own way, but they're different. Challenges are opportunities. So if there is a tricky supply chain for a certain type of product, and you can figure it out, that's a huge opportunity. It's an absolutely huge opportunity because it, the harder it is, the fewer people who will, who will be able to follow you.

Um, so, We like businesses where people figure out some sort of hard challenge. Could be supply chain, it could be manufacturing with some of these baby food pouches. It could be, um, taking a contrarian stance on, uh, on a nutritional philosophy, like element.

Nathan Barry: What are some of the biggest mistakes that you see people making, right?

We've talked about like kind of a highlight reel of investments that have worked, uh, either. So it could be, you know, You know, mistakes in companies that you've passed on or maybe anything in the portfolio, you know, you can make more generic or talk to at any level you want. Well,

John Durant: there, there are [00:21:00] different categories of mistakes.

So there are. You know, companies that fail, there are all sorts of mistakes that people make. Um, but there are also mistakes that successful companies make and they're more subtle mistakes because when a company is taking off, it looks like everything is working. So Thrive Market would be a good example where, um, I got involved with Thrive pre launch And they had been rejected by like 50 VCs, everyone that they had spoken to for their seed round.

And I went to college with the CEO and co founder Nick Green and was staying with him at his place in Santa Monica. And uh, we were like, Oh, we gotta, we gotta work together. This sounds great. And Thrive, I brought in a bunch of people. Thrive then, Use the momentum with the health and wellness figures to bring in a list celebrities and celebrity chefs and professional athletes and a huge [00:22:00] alliance had a rocket ship of a launch, um, has continued to do very well.

Like they're, I think we're going to have a good outcome.

Nathan Barry: Yep. Um, well, I mean, even in 2019, when we toured the thrive market headquarters and they had, 300 employees then? Yeah, they're, they're huge. They're truly a giant operation. Yeah. And what's interesting about that is I feel like Thrive Market is one that really lends itself to a community of creators to promote.

And it was really cool. You know, I spent a lot of time in the, in the affiliate space with ConvertKit and it was just really cool to like, Get to talk to their teams who had built out the influencer programs and what worked and, and all of that. But it seems like it's a good, good fit for that type of thing.

John Durant: It's a great fit because people with different nutritional philosophies can promote different products in the retailer. Um, but the mistake, let me get to the mistake that they made, which was they didn't really [00:23:00] refine their sales funnel. Until about five years into the business and for the longest time, their opening offer, their initial offer was, uh, a month long free trial and then, uh, popped into an 11 month membership.

Um, and they just sort of thought, you know, Give people a chance to, you know, see the selection, see the discounts, make an initial order, uh, have a good experience and opt in. Um, and at one point they gave, gave away a free jar of coconut oil to everybody who signed up for a membership. And there's a flood of new signups caused.

Huge logistical issues, fulfillment issues at the company ran out of coconut oil, you know, expensive promotion. And it turned out a huge proportion of these people just wanted the free jar of coconut oil. They didn't actually want to use the service. So, so upfront, it looked like Like a, like a [00:24:00] successful offer.

And then over time, as they looked at the cohort, they're like, Oh, this is not a good cohort. And, but you can only find that out with time. You can only find that out with time. But what, what took more time was about five years in, they said, why don't we just test offering? We'll just offer an annual membership and you could have different payment terms, um, quarterly or whatever, but let's just offer the annual membership upfront rather than this one month trial.

and converted way better with higher quality. Once you started to look at quality of customer LTV, like the, the people who understood the value proposition of Thrive were willing to say, yes, I'll opt into that, um, and use the service. And it's counterintuitive, um, that removing the one month free trial led to better customers and better conversion overall.

Um, and, you know, the amount of money that they could [00:25:00] have saved on marketing when you look at the difference in conversion from the new funnel compared to the first five years, it's enormous. Um, but because the company was growing so quickly, It's like if it ain't broke, don't fix it. This, this is clearly working.

So that's, that's one of the challenges that successful companies make is, um, to change something even when it is working or, you know, but you can do better, but you got to keep testing. Yeah. Yeah,

Nathan Barry: that makes sense. You have to have enough traffic and enough inbound leads to be able to test that.

John Durant: And you have to be open minded that like, actually this fundamental thing that's staring us right in the face.

Let's, let's run a test and see how it performs.

Nathan Barry: When the cohort analysis on that is so important. Like that's something that I think people miss where they say, okay, You know, we launched the product, it, it did, it did well. And now we're a year later and I can't figure out why, but I feel like the business isn't working on the same level.

And really, if you break down your [00:26:00] cohorts, you know, first by like month of when they came in, because what you're going to find is like, Oh, right. Those first two, three cohorts were entirely our own list who had five to 10 years of trust with us. These later cohorts were, you know, maybe affiliate partners.

John Durant: That's what happened with

Blue

Apron. So when Blue Apron was going public, they released, you know, you have to release a bunch of data and people started to infer that cohort quality was getting worse and worse. And they were at that time, they were propping up like the entire podcast space, um, and throwing a lot of money at the market.

And. they had high churn rates. What's, what's challenging about these monthly memberships is it can seem like month to month, you have a high renewal rate of 85 percent or 90%, but you extrapolate that over the year and you have an enormous amount of churn in your customer base. And so That's actually a very tricky model to get right.

But yeah, and, and then they get public [00:27:00] and Blue Apron sort of crash, crash, burn.

Nathan Barry: Yeah. And cause, cause you have the cohorts based on time and you see that change, but then there's also like, the other axis on it of, you know, what's the, uh, what's the traffic source, right? And you slice it a different way.

And it's like our own promotion, you know, our, our Facebook or Google ads affiliates, um, you know, all the different distributions that you have. And if you trend those over time, you know, you might find like, okay, we're driving a huge amount of revenue. Uh, and we like a common mistake that I see people say is like, using our overall churn rate to then make assumptions about what you can spend in a specific traffic source.

And you're like, no, no, no, actually your meta ads are performing terribly for retention. And, but you're assuming that you can spend, you know, seven months to acquire a customer because your overall, your churn rate is 3. 5 percent or something.

John Durant: It's one of the inherent challenges of scale. [00:28:00] Like, you can find small audiences through a lot of different platforms that are ultra high quality.

Um. Great customers and, and then you scale and the conversion rates or the sales velocities drop. And, and I mean, that's kind of the fundamental challenge of building like a great mass market brand or big business is having something that can appeal to the core, the hardcore folks, but can also go mainstream and do very well with mainstream people.

And that, you know, brand is an important part of that, but. Also having something functional that works. Um, so like, uh, take Kettle and Fire as an example. We led their seed round. Uh, bone broth has been made by cultures all over the world for thousands and thousands of years. My wife,

Nathan Barry: who, for as long as we've been together, has been making bone broth.

Like when I told her that bone broth was a very popular thing to buy on the internet, she just thought that was the funniest thing ever. Right, [00:29:00] right. And, and you

John Durant: know what? I, I love a good homemade bone broth. I made it myself. There is a very clear functional. you know, ingredients in bone broth, collagen, various amino acids, uh, that you don't get or get as much from muscle meat.

And this is, you know, why it's so good for the gut and hair, skin and nails and things like that. Um, and big soup, if you want to put it that way, uh, big, big soup removed the functional ingredient. from their products. Like Big Soup decades ago stopped making their products with actual You know, bones and collagen and all that, like it's flavored like chicken soup, but it's not made in a traditional way and it doesn't have those same nutritional benefits.

Well, soup as a whole, as an entire category has this nourishing reputation, right? Grandma's chicken soup or eat it when you're [00:30:00] sick. Well, that came from an era of When it was made in a traditional way and it had functional ingredients so that it was nourishing when you were sick and this entire mass category removed the functional ingredient from their own product.

And, and so Kettle and Fire is an example where it's like they're putting the functional ingredient back in to this entire category that gave it the nourishing reputation in the first place. And that's absolutely a huge mass market opportunity. I mean, chicken soup.

Nathan Barry: So taking kettle on fire, what does it look like?

to scale that. As I understand it, Kettle and Fire is almost entirely online versus retail, or is it? No,

John Durant: no, no. It's, it's quite strong in retail. It's, it's much more retail than online. A lot of the companies in our portfolio have a similar trajectory of online versus retail. And I'll tell you how we think about it.

Um, usually the first few years, we like to invest in companies that [00:31:00] can sell their product online, direct, ideally, um, and, like, first couple years, online will dominate. That's a great way to reach people with the right nutritional philosophy wherever they are in the country, who really care about it, before the mainstream cares about it.

And if you can get folks on subscription, and generate cash flow and maybe get to cash flow positive or being profitable. That's also a, you know, very founder friendly to like put the company in a position to raise more capital to move into retail. And then I'd say after year two, we typically see the team start to move into retail in a more serious way.

And most consumer packaged goods are still bought in retail. So it's a bigger market. The way that I think about it is a military metaphor. So I think of online as the Air Force, and retail, brick and mortar retail as the army. [00:32:00] Um, you can't win a war with an Air Force alone, or it's very hard to win a war with an Air Force alone.

But if you've got to fight a war, a land war, it sure helps to have one. Right. And so in the beginning, we can do these targeted strikes all over to reach the people who care about the product. But then retail is this like logistics intensive, slower moving, slow burn kind of build, you know, like, like an, like an army.

And, um, and at, in these later years, when it's like three years and onwards, the online shifts a little bit, um, to more, special missions. It might be a new product launch, and we want to get the word out on the new product launch. Or, um, hey, what should our next new flavor be? Let's ask our customers. Or, um, [00:33:00] educating the mass market on, Some, uh, nutrition on salt or sodium, um, and, and so over time what success looks like for food and beverage is online is a smaller and smaller percentage of sales.

And that's, that's what success looks like. And this is important because the big acquirers, if you want to sell the company eventually, the big acquirers in food and beverage are these, you know, big conglomerates. They're not very good at online. They, they don't have the teams in place to manage sophisticated, ultra sophisticated, cutting edge online operations.

Um, yeah, I mean, you know, they're not idiots. Yeah. They, they can do plenty, but they're not the center of innovation for that sort of stuff. And so what they want to see before they buy the company is, is this succeeding in retail? Okay. It sells well in Whole Foods, but does it sell well at Kroger? [00:34:00] You know?

And if it, if you start to show enough success in mass market, uh, channels, it gives them confidence that, hey, we can run our playbook on this brand. Okay. These are the gross margins. This is their growth rate. They're in this many doors. We can get them distribution into that many doors. They run some numbers.

Oh, this can be big and profitable. Um, and. Yeah, so that is the typical trajectory, but kettle and fire is definitely skewed towards retails now. And over time it becomes, if you're dealing with out of stocks and tons of demand, which, which they are right now, um, it, it makes more sense to make sure that.

the big retailers are happy that you're not dealing with out of stocks there. And, you know, if there are some people online that need to deal with out of stocks, you know, you can give them a discount. You can, you can do something to, to make them happy. But [00:35:00] if you, If you piss off a big retailer, it's not good for the business.

Nathan Barry: Yeah, that makes sense. I think there's the, the air force army analogy makes a lot of sense because then you can take a lot of ground there. And then even as you're doing like the special missions later, trying out a new product, you can, you're not, you're not making expensive, uh, mistakes to the same level,

John Durant: right?

Right. It, yeah, it's scary how good the metaphor is. Like it, we did, you know, there are a bunch more aspects where it, where it continues to make sense and they're complimentary. They just, um, they're together, they're more, more powerful than either one alone.

Nathan Barry: That makes sense. So what about the balance of one time product sales versus like recurring or repeat purchases?

Because in my essay, the billion dollar creator, one of the tenants that I have is you, you. you have to have recurring or repeat purchases. And I'm curious how, like, you're much deeper in the space than I am. Does that, does that match?

John Durant: Yeah. [00:36:00] You, um, you absolutely want a product that becomes part of people's lives.

Now, People love subscription business models. So, you know, there's no, there's no secret in that. Like it's, it's predictable. You have an ongoing relationship. Um, but I also see a lot of people force subscription onto business models that aren't really consumed like a subscription or, or customers who aren't ready for a subscription.

Um, so subscription is great in food and beverage. Um, if the product is in fact consumed on a very regular basis, it could be coffee, it could be electrolytes, something like that. Um, if it's more, some people want to be on a subscription for bone broth. Other people are like, I'm just going to buy it when I need it, you know, and you don't want to, you know, force people to buy it.

into an artificial construct. [00:37:00] So, so that's what I would sort of tell people to keep in mind is, yeah, they're going to be a bunch of hardcore people who want to subscribe, but not everybody's going to want to subscribe and that's okay. Just make the product so good that they're still going to consume it on a regular basis.

You get the repeat purchase. Yes, repeat purchase is huge. Like you can't win in food and beverage without repeat purchase.

Nathan Barry: So what's the reason, like, I'm seeing everything that you've gone into for the most part is, you know, food and beverage, that sort of thing. If we're going, you know, health and fitness and all of that, you could be investing in, you know, the next on it or the, you know, rogue fitness, like those types of products, like there's a whole range of things.

Um, are you staying entirely in food and beverage or is it? Like, is it deliberate or more accidental? Um, both. Yeah, like everything in business.

John Durant: So obviously health and wellness influencers and creators, we have strong opinions about food and beverage and, and we have domain expertise [00:38:00] and the audiences, the followers of these figures, they actually look to them for their expertise on this topic.

So it's the right fit between the platform and the audience. And the products and fit is so important in this sort of thing. But we have made investments in other types of consumer health tech. So we invested in a telemedicine company. We invested in called SteadyMD. That's now a B2B company. And we invested in a product called the Chili Pad.

It was one of those mattress pads that cools your sleep surface. And we exited that a few years ago, um, successfully. And there's so many products in the health and wellness space where if you have discipline, It works. Oh yeah, this app on your phone that has workout videos, if you take it to the gym, it's useful.

The issue is most people don't go to the gym at all. Um, so it's sort of like working for the people that are already in [00:39:00] the gym.

Nathan Barry: Right.

John Durant: Um, this was a product where once you install it on your bed, most people use it for cooling their sleep surface and helps their circadian rhythm and they sleep better.

Um, once you install it on your bed, there's no discipline. It just turns on and cools your sleep surface. And guess what? You're not conscious while you're asleep. So any, like a lot of the best sleep solutions, um, are things that you sort of set up in advance, getting the light out of the room and, um, and, and things like that.

Um, and so that was one where we had confidence We could move the needle and drive a lot of sales, and we did that. Thrive Market was one of my earliest investments. And as a retailer, they were strategically advantageous to food and beverage companies. Right. And so suddenly, we were even stronger in that domain.

And that led to some of the focus on food and beverage. And it just became a space that we knew really well. And, um, and [00:40:00] You know, we haven't done a lot of deals, but we have a high hit rate.

Nathan Barry: Yeah. So that's interesting of you. Not only we're learning over time, what works, but you're starting to secure, not your own distribution channels.

Cause you don't, you know, you don't own thrive market distribution channel, but like the founders are investors with you. You, you know, you're getting a lot of those things where you're like, Hey, This is working. We can get you in, in the door at Thrive Market.

John Durant: Yeah. And, you know, in the early days of Thrive, it was a little bit more of the Wild West with what gets stocked there.

And pretty quickly they just, you know, decisions were up to the buyers and the category managers. And so I can get something looked at, but I, I can't like. Get something stocked. Like, there's a process that has to be, has to be followed. And, and they have to make objective decisions about what are the right products to stock.

You know, but we're often investing in, in [00:41:00] companies that, um. They might already be stocked. So that decision has already been made where we can help them, you know, get some additional promotion or, you know, that's a deal they have to work out with thrive, but also just the experience of the founders, um, as entrepreneurs, that is such a hard.

I mean, you know, people talk about bootstrapping companies and that's amazing, but Thrive's the type of business that you just, you can't bootstrap it. If you're going to be an online retailer and you're going to hold a bunch of inventory and do your own fulfillment, um, it's just a hard mode across like five major categories.

Yeah. It's like SpaceX. You can't bootstrap SpaceX. Right. Right. There's just some activation energy that's required. And, and, and so venture capital is appropriate for those types of companies because they wouldn't be possible without it. But then there are other types of businesses where it's like, why did you raise money?

Like you should have just self funded this and bootstrapped [00:42:00] it. Um,

Nathan Barry: Oh, there's so many good things in there. As we wrap up, is there anything that You know, if someone's a creator watching this and they've got, say, they're making a million dollars a year off of a, uh, you know, health and wellness community, maybe a food blog, uh, any of those things.

And they're thinking about dabbling in this space that like all the revenue right now is, uh, digital products and sponsorships. And they're like, Oh man, I, I, maybe I could start the next Primal Kitchen. Maybe I could go down this direction. What are some things that you would say to them?

John Durant: The team is so critical.

The the founding team. Yeah. And you really only get one shot at that because if it goes awry, um, it's, it's hard to fix. Um, what I said earlier about physical products being difficult for so many reasons, um, I the margins, the cash flow, the supply chain, distributors, all these sorts of things. They're hard [00:43:00] businesses to operate.

And that makes the team that much more important. So either the creator needs to be prepared, To go all in on this and, you know, work, work really hard and make it their thing. Um, or they need to partner with A COO, Co-founder, A CEO, um, who's prepared to do that, um, because, you know, at the end of the day.

It's all about founders like founders are the ones stay up all night or wake up early in the morning or do whatever needs to be done to solve these thousands of problems that that come up and if you if you get a situation like with element with Robb Wolf as a creator and great product pioneering so many different times in his career and then an incredible operator in James Murphy like they're so [00:44:00] complimentary.

to each other. They're not stepping on each other's toes. They work well together. They have different domains. But, um, like that's the type of partnership you need to form because it ain't for better or for worse. And it's both for better and worse. It's not, it's not a lifestyle business, right? Especially if you want to go into retail, forget all the status games.

Is this part of your life's mission? Is it, can you bring a great product to the world? Is this something you really want to commit yourself to? Do you have a great team? And are you strapped in? Um, and if those things are true,

Nathan Barry: Then do it. I love it. It's a great place to end. Uh, is there anywhere that people should go to follow you online or all of that?

As you're, you're, you're pretty under the radar behind the scenes. Yeah,

John Durant: I've, I've been behind the scenes and I like it that way. It's other folks in the group. I'm happy to give the credit to, and, and the success of wild ventures [00:45:00] is really due to dozens and dozens of people. Um, but folks can go to wild ventures.

vc. That sounds

Nathan Barry: good. Thanks for coming on. Thank you. If you enjoyed this episode, go to the YouTube channel, just search BillionDollarCreator and go ahead and subscribe. Make sure to like the video and drop a comment. I'd love to hear what some of your favorite parts of the video were and also who else we should have on the show.