Ben Zises: A Journey From Startup Founder to Angel Investor at SuperAngel.Fund

The Profit Forecast: The eComm CEO's Podcast

Episode #21: Ben Zises of SuperAngel.Fund

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About the episode:

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On this episode of The Profit Forecast, Ben Zeiss shares the story of his success and his approach to angel investing. He emphasizes the operational complexity of the businesses and the importance of unwavering ambition, laser focus, and product obsession. He also shares advice for founders on unboxing experiences and fundraising tactics, emphasizing the importance of reading updates, resharing posts, and being a champion for founders. Lastly, he discusses what is considered acceptable growth and profitability in the investor world.

About Ben Zises:

Ben Zises is an entrepreneur from New York City. After graduating from Boston University, he started a business in real estate and his first client was Verizon Wireless. He quickly became frustrated with the inefficient model of searching for retail space and conceived the idea for RetailMLS, the first multiple listing service to search and advertise for vacant retail space. After four years of wins, losses, and hard work, he was unable to secure a series A check and had to close the business. Despite this setback, Ben continued to pursue his entrepreneurial ambitions and invested $10,000 in a startup that would become Quip. Now, Ben works in angel investing and supports other aspiring entrepreneurs. Ben now runs SuperAngel.fund with over 40 portfolio companies.

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Transcript

Ben Tregoe: [00:00:00] All right. Ben, welcome to the Bainbridge podcast. 

Ben Zises: Thanks so much, Ben. Great name. Happy to be here. Appreciate you having me on. 

Ben Tregoe: All right. Today it's Ben Zises from Super Angel who literally is the super angel of e-com investors. It's incredible. Your portfolio is fantastic. Your network is fantastic.

We're lucky enough to be a part of. But I thought instead of me trying to butcher your background, if it would be super helpful to just give a little bit about how you got to where you are why you are interested in angel investing, and then we'll take it from there. 

Ben Zises: Awesome.

Thanks so much. Yeah, I guess just to, to step back I definitely fell into this a little sort of organically. I grew up in New York City. I've always been an entrepreneur. I had a DJ business in elementary school and started a college business. And after [00:01:00] graduating from Boston University came back to New York City and my first sort of job was in the real estate area.

I was doing store leasing and hired by owners to rent out their vacant retail spaces, hired by tenants to go and find space to open up storefronts. My first client was Verizon Wireless. They said, Hey, go find us 10 stores. We wanna, expand our footprint in Manhattan. And I used to play roller hockey, so I got on my roller blades at night when.

So full of traffic. And I started just quickly skating around the city looking for vacant retail spaces. And it was just such an inefficient model. And just being an entrepreneur, I couldn't understand for the life of me why it wasn't as easy to look for storefront space and retail like it was to search for an apartment or a home on Zillow or Street Easy.

And so this idea just couldn't get outta my head. And I think other entrepreneurs oftentimes, You know that you experience the problem yourself and it's like a seed and it just grows and grows. And was doing this like traditional retail leasing brokerage business during the day and at home and nights and weekends, just thinking about, [00:02:00] Hey, I, I really wanna, Digitized this industry that's just old fashioned.

And I conceived the idea for what became retail mls dot com, the first multiple listing service to search and advertise for vacant retail space. And I went out and I spoke to some of the investors and, teams behind Zillow and Streetz, and was fortunate to get Spencer Rascoff the CEO of Zillow, one of the co-founders as an advisor.

So from 2010 basically to 2014 I pursued this startup and it was really my founder journey. And I went out and I raised money from Angels and Seed funds and I, hi, as a non-technical founder, I went out and found a CTO and. At the time a lot of custom software development. I and I spent four years and I launched the product, tremendous sort of traction in users and had mall owners and landlords and brokers all around the country using the platform for its intended purpose to advertise and search for vacant retail space.

And I'm giving whole story here, Ben. That's awesome. Our listeners wanna really go back and understand, my [00:03:00] full sort of background. And I went through this four year journey of tons of, wins and losses, ups and downs constantly on the flywheel as a founder and as much success as I had from the product stand.

I made it, it was a, I didn't want to create friction to obtain users, so I made the service free for both the advertisers and the searchers, the supply and the demand of the marketplace. And I went out and I was very excited to pitch every VC across Silicon Valley, and I was fortunate to be put in front of all the tier one, tier two, all the big name firms.

You leave these meetings, you feel so hopeful. Y but the truth is I really didn't know what I was doing and I think I was pitching all wrong. Long story short, I couldn't get a series a check for a handful of reasons. It maybe the list a little bit too long to go into the details, but, single founder, non-technical went through the first 2 million, didn't yet really have material revenue.

People felt like it was a little binary and just didn't get to revenue or profitability soon enough. And certainly the lot of lessons learned. But long story [00:04:00] short, in 2014, eventually I closed the business and it was really tough. I was, young professional in Manhattan. I took, my founder shot really early, well before a lot of my friends.

And I was really down and out. But at the time mid late twenties. I was I was an early customer of Dollar Shave Club and just a, an early adopter, a super fan, and clearly their marketing video was unique and different than anything I'd ever seen. And I was just enamored by what they were doing and.

Ultimately I randomly came across two young guys who I heard about that were building, looking to do the similar playbook as Dollar Shave Club, but for the toothbrush and the oral care industry and just total randomness met two founders at a party and heard what they were doing and it just, everything made sense to me.

Having seen what Dollar Shave Club was doing and, being in the ecosystem, it just became clear that there was a similar opportunity to disrupt a legacy every day, consumer product category. And so Simon and Bill, these two incredible young gentlemen pitched their idea to me.

They came into my [00:05:00] office and I fell in love with them and their mission, their vision, and I said, Hey I'm gonna scrape together all the, any money I could, even though I had put my last dollars into my own startup as it was that, that ship was sinking. I just scrounged together, a $10,000 check and I said, Hey, let me introduce you to my network and I think I can help a little bit with your pitch deck and introduce you to, some of the people that can help bring this to life.

And That's what started the next five, 10 years of what led to what I do today, this small angel investment in the business that became Quip At the time they didn't even have a name. It was a prototype. And that's the origin story, if you will. And I'll take a break. Maybe you've got some questions, but that kicked off as my very first angel investment.

What's now my future and my everyday. 

Ben Tregoe: Man, that is awesome. That is a great founder's story, and I love that you started with your own startup and went through the pain and the trials and tribulations of that. I think I can definitely empathize , [00:06:00] and also I think a lot of founders can empathize with that.

Oftentimes when you're pitching VCs or money a common. It's not, it's rare that you get a founder on the other side of the table, often you get a, 

Ben Zises: I say it all the time and some people have taken offense to it. As far as, the comment that like, the best VCs or maybe former founders and I'm not gonna say such a general statement, but I do think clearly having been a founder and going through that experience, I do believe makes me a better of investor.

I know there's examples out there, the most notable of which I think Fred Wilson, where you can be, a successful, arguably the most successful Angel VC without having gone through a full founder journey. But I definitely think it provides incredible context to truly understand what founders are going through.

Ben Tregoe: Absolutely. Yeah. It's super helpful. Do you that must play to your advantage with the rapid growth of Super Angel? Because, you went from Quip. To [00:07:00] this incredible portfolio. It seems really quickly. I don't know I guess it probably took you a lot longer than it appears, but Yeah. 10 years for an overnight success.

Ben Zises: Yeah. So just to continue on my journey there. So again, I didn't have any background in e-commerce. Where I was. Working at an e-commerce brand or doing marketing or supply chain or any number of these, this specialties within obviously the consumer e-commerce. I was just a consumer like anyone else and felt like I had a right to an opinion of a product, a as much as anyone.

And I do think there's some attributes. With Quip that have carried through today, one of which just, unique design as a way to cut through the clutter. And I think if you were to look through the Super Angel Fund portfolio, you would notice that so many of my businesses, I truly over-index on design.

The founders of Quip were industrial engineers, product designers, and Payne just painstakingly obsessed over every single Whether it was a part of the physical toothbrush product or the branding, or the copywriting, or even the naming exercise, it was an exhaustive process. And I still believe design is an underappreciated piece of a, of the [00:08:00] puzzle.

And one where I really prov, give a lot of weight to, again, both if it's a, if it's a hardware product or even software, I just think you can stand out and. Separate yourself from competition with incredible design. I have a lot of respect for designers. And it's something that I certainly attribute that I look for in, in both brands and software from a user interface standpoint.

That first investment in Quip really kicked the ball rolling, and I fell in love with championing other founders and. It was incredible day when the, when Simon from Quip told me that they were raising the series A round and from an incredible fund. And cuz I had not got gotten to that point on my own.

So living through their success, he knew how important that was and how meaningful it was to me. And I just started to. I went back to work after my startup didn't work out at a traditional real estate investment in property management firm as the sort of a chief operating officer role. And, continued my day job for the next several years in this real estate business.

But all of my time, nights and weekends before work and after [00:09:00] work, I spent supporting Quip, but also starting to meet other founders who were building consumer product companies. , I wasn't shy about the role I was playing with Quip because I was obviously. Investing a little bit more as over time in them, but bringing in my network to also invest in that businesses.

So people, word of mouth starts to spread. Hey, Ben is an angel investor in consumer products. Hey, and people would just start introducing me and incredible consumer, brand founders just started to reach out and I spent time networking and started to place other pretty small investments into a lot of other brands.

And so from 2014 to 2020, I think it was a few more continued investing in quip rounds over some subsequent periods. But eventually I expanded into other brands. Lalo a baby goods company, caraway a cookware brand. A cold email from the founder of Caraway. Hey, Ben, saw you were an investor in Quip.

It's high design consumer product company. Maybe you're interested in caraway. We're looking to do a similar playbook, but reinvent, this other nice. Business and obviously a lot of luck involved. The harder you work, [00:10:00] obviously. Yeah. I believe the luckier you get and I started to write small checks even into some other people's syndicates as a way to learn, including Jason Calis, huge mentor of mine.

Someone I follow. And I think anyone who's an angel investor, it's a first place you want to go to get your bearings is read and listen to his book and podcast. But I, I basically invested in 32 companies personally over the six years, from 2014 to 2020. It's quite a lot of money.

I put almost over, over $500,000 into 32 companies. Wow. Any money I was making from my real estate business and my day job where I had some success of buying and selling some buildings in Manhattan with others I decided to put into early stage companies and. No question a financial advisor would've said, this is not your best approach here.

But I think everyone knows, if you're looking to achieve tremendous upside, risk and reward go hand in hand. And I'm certainly willing to, with the ambitions I have financially, . I knew I needed to take more risk than others, and so I really tripled and quadrupled down on these early stage companies.

[00:11:00] And so 32 investments truly al almost a million dollars of my own money. That was my track record and just was extremely selective, but very fortunate. Great brands. Another one, bright Land. Just incredible founders cadence. The list goes on and 2020 hits and I'm working full-time in my real estate business and really full-time as well, supporting my founders and I decided, Really like a lot of people the, pandemic was the great reassessment and I really looked at myself in the mirror and I said, I want to do what I love full-time professionally.

And I just, my wife and I just had our first daughter. And it was clearly another tremendous risk. And I had to go through the pros and the cons with her and sell her on this. But looking around, looking in the mirror, I said, I really want to do what I love. And spoke to my real estate partner at the time and said I'm gonna step back from this business and I'm gonna go full-time and raise a fund.

And really, wish there was another way to do it. But you need to raise a fund generally, unless you've got unlimited capital, which no one has, is a way to earn management fee [00:12:00] until you can. I don't know if there's, there is no end game, but really to, until you achieve those exits, which come many years down the road.

So in January 1st, 2021 my fund launched super angel.fund and started to get going and, be able to leverage both my own money. I invest in the fund, of course. And the network that I established people started investing with me and was off to the. . That's awesome.

Ben Tregoe: That's awesome. Did you consider going to work for another fund or was it always gonna be your own? 

Ben Zises: Yeah, it's a great question. , I would say I had some conversations with several funds, and again, most of the, my first sort of 32 personal angel investments were primarily e-commerce brands.

And I had co-invested with tremendous funds and other great people, and so was exploring conversations with the several of them. And it, not for any reason. , I just decided, let me try doing this myself. Yeah. As what's called a solo gp, and there a platform like [00:13:00] AngelList, which I'm sure.

Maybe some of our listeners are aware of, they enable people like me as an individual to create a fund while they handle all of the back office administrative services, the tax and legal and banking stuff. And so I would say if not for Angelist, maybe I would've worked at another fund. But in this case, because they serve.

Such an incredible purpose and handle all those functions and enables me and other great investors to not partner necessarily with other people to perform those services. I'd also just like to say I do believe early stage investings precede seed . And this is not to say that, funds with multiple partners, I'm, there's a lot of ways to be successful, but I believe it's a single woman or man's sport and best served as such because it's so qualitative and we're underwriting the founder that if I need a founder, and I'm, it's all my own experiences. That are driving my conviction. If I have to go, if I get conviction in an investment and then need to go sell it into another [00:14:00] one or two or three other people.

A, you lose momentum, deals move quick at the earliest stage, especially if you want to get in at that very lowest, cap or price. That would really in my mind not serve to be the best approach. And I think. , being able to just move really quickly and founders know I'm the sole decision maker.

I think there's a lot of value there. And I'm a solo gp, but I would say I work so closely with some of these other funds that invest in the areas that I invest. And, it's as if we're, working together almost. . That's awesome. 

Ben Tregoe: That, thanks for sharing that. That is a terrific backstory.

And to how many brands are you in today? Now you're in like, what, 40 or 50? 

Ben Zises: That, that's probably right. And Brands were the core focus of my portfolio in the earlier sort of years. Yeah. And eventually I think like a lot of investors who did consumer product companies, the market became so saturated and it just became harder to stand out.

And so I expanded into the e-commerce [00:15:00] SaaS and the companies that are supporting the brands and the services and the software and the tools that these brands were using to run their business. And , it was a natural evolution and an expansion. Because catching up with all my brand founders when two or three or four saying, Hey Ben, like we're using settle for cash flow management, accounts payable.

This is an amazing tool. You should take a look at it. It made sense to spend time there and start to learn about, hey maybe I could invest in. Everyone says the picks and shovels, if you will, great people selling, shovels to the brand digging for gold. So it became a huge focus of my criteria where to invest in these e-com SaaS tools which has made a larger and larger portion of my investing portfolio over the years.

But I'd say I have about a hundred total portfolio companies and I think. . Yeah. You're, maybe there's 40 or 50 brands in there, maybe 30 tools. And then I also invest in PropTech given my experience investing, both founding a real estate tech company and then working in the real estate business.

So [00:16:00] every investor I think likes to invest where you have a competitive advantage and either, yeah, information network experience. And for me, I'm no different. Those are the areas, but I would say, I've got those core sort of pillars and categories, but you always have to be open-minded to fou, if there's an amazing founder in a space that maybe isn't the strict core folks to my fund, it's always possible.

I'll invest. Yeah. Nice. Founder led. Yeah. Yeah. 

Ben Tregoe: It, what I, you have an incredible view of the market. If we focus on the brands, right? Cuz I think a lot of our listeners are brand leaders, founders. So you have like roughly 50 either you're, you know intimately and then you've got this awesome deal flow.

I would argue that you have a better view of the market than really anybody that I could think of. . So given that perspective what have you seen over the past couple years? Because obviously D two C and e-com has gone through some [00:17:00] incredible shifts since you've started investing, and so I'd love to hear your perspective on that evolution.

Ben Zises: Yeah, I think clearly you can't just Put up, grab a product off the shelf from a manufacturer in China and throw up a Shopify website and, place some Facebook or Instagram or Google ads that, that That model is over. It worked great for a while and for good reason.

 You're just, taking advantage of cost effective eyeballs. That's what it's about in this game, right? Your acquisition costs making sure you can earn enough to cover, with your lifetime value of these customers, making sure you're not overspending to, spend.

basically $2 to get $1 of revenue. And I think there's some poster childs that have gotten public that have just, it's crazy that they were even able to get funding for so long and overfunded, I think that was the big, that was the, no, there's no reason to name any specifics.

But Overfunding, I think if you were to pinpoint. What the primary sort of cause was [00:18:00] for the businesses that quote D two C darling's early ones they got overfunded and you simply lose discipline no matter who you are. If someone hands you, several hundred million dollars or more, Your business just simply like you need to invest it.

Like you're not just gonna put it in the savings account and you're gonna hire people and create new products, open more stores, and obviously you run outta things to do, if you will, and you just lose discipline. And what I've found clearly pattern recognition is a huge part of what an investor, builds up in their mind.

As far as what works and what doesn't is, in my experience, this is the best companies. And again, best being defined as reaching profitability and creating shareholder value that's sustainable. Have, really struggled to raise money and didn't get money thrown at them fr from a lot of the name brand VCs.

So many of the companies in my portfolio, a little bit of, it's almost a little bit of luck is that [00:19:00] like the big VCs like turned them down. We could go down the list. And they simply have to figure out a way to do more with less. There's just no shortcuts and there's just no other way around it.

If you're forced to figure out a way to survive with less, you'll figure it out. And so Overfunding I think is, was a big problem. But today to stand out as a brand, I think there. , there's table stakes today. Like you've gotta have an amazing product and it has to have an incredible, depth to it with the story and the mission and the vision and sustainability and, maybe influencers or celebrities to help, that are on the cap table, not just paid, right?

But they've got vested interest. A great example is this beer company and I do very little food and beverage, but I'm an investor in eight Beer. Troy Aikman's new beer. I think one of the biggest differences, there's so many brands. Pay, a celebrity, a ton of cash, a ton of equity to promote the brand, but it's not authentic.

And, [00:20:00] they'll do a few posts, they'll show up for a few media events, that's sort of it. They're getting paid cash up front. It doesn't even matter what the the value of the equity is cuz they've already made their their money. But this beer company ate, Troy Aikman is equal co-founder with the others.

He's so committed to this. It was just a unique circumstance where it was so authentic. He was just part of the team from the earliest days. And. He and three other co-founders. It's just, it's a really diverse team with four co-founders with distinct skill sets in different core areas where you need to have.

Your eyes fully open. Great operations, great product person who came from the alcohol industry, a great financial mind in the C-suite, in the co-founder levels. So I think some of the brands that have gotten to trouble again, besides from Overfunding, just lacked financial discipline and.

it brings us into what excited me about investing in Bainbridge is there's so many moving parts [00:21:00] and, different I say every expense is a variable expense, right? We talk about fixed expenses and variable expenses. Everyone wants to, when they're doing their model.

Okay this'll be the cost for this, across the next five years. So let's just worry about the variable expenses. But everything's always changing, right? Yeah. And so you need to be living in your financial model constantly evaluating. every single line item. And, figuring out the profitability every cha, every product, every distribution channel, right?

There's just so many variables. You can't. and if you're a single founder, it's even harder. Cuz you're managing so many other aspects. I've, multiple founders has always been, smart to divide and conquer. But there's also, I, there are, I happen to have a handful of solo founders that run successful brands.

And to be honest with you, I have no idea how they do it. The, when I tell you they don't sleep, I'm, I mean it Yeah. They rely on advisors and great other team members clearly, but, . [00:22:00] Yeah. So I think it's e every business is hard, right? But running a consumer brand today, it's gotta be up there.

I, 

Ben Tregoe: I love where you've taken this because I think that is so true. I think that, I think a lot of founders don't realize the operational complexity of the businesses that they've embarked on. And there's, they are getting to realize it. But you, it's. . It's so much harder than like any other business I can think of.

You have these cash conversion. I'm buying stuff and then I'm selling it. I've got these massive cash needs, right? I've gotta manage that. I've got my unit economics and my margin structures you're talking about, I've got my repeat, purchase cycle that I've got figure out, and then I've got customer acquisition.

All of these move at different cadences. They all have different metrics, different data sources. and it's being able to combine all those to understand how the machine really works is hard enough. And then I don't think people appreciate the importance of like little improvements [00:23:00] in those fly wheels.

Ben Zises: Oh yeah. One little adjustment here, there you decrease you just gotta fine. everywhere you look, that's renegotiating all your contracts with, the the shipping providers and it's just you just, you always need to be improving. Yeah. And finding ways to, increase top line, decrease expenses to be successful and even still, you gotta get lucky and you gotta find good places of arbitrage to, to find cheap eyeballs.

Constantly evaluating and testing and iterating. Like anything in life, right? You're always doing that. But that, that's, 

Ben Tregoe: is that one of the things that you look for in founders that, they have that. Ethos. 

Ben Zises: Yeah, no, no question. So my criteria, it's, there's no financial model or, as far as people ask me, what how do you decide if you're gonna make an investment?

And, you're not just plugging in some variables or data points into model and spitting out a yes or no. There's so many you're collecting all [00:24:00] these dots, all these signals, running 'em through an imperfect algorithm. In my head and then ultimately making a decision.

But for me, my sort of investing criteria falls. There's three core sort of pillars. The first clearly the founders and the team. And that weighs. So the most heavy of everything. I mean I'm talking, maybe 90% or more of the criteria of the selection criteria. And within that it's really figuring out is this a person who has unwavering ambition to build.

When I say a multi-billion dollar company, of course I'm thrilled if I invest in a 5 million valuation and you sell at a hundred or 200. But let's be honest, we're angel investing here, right? Risk reward. We're looking for founders to build unicorn valuations and val, value creation. And so founders who are thinking really big and who have just, again, unwavering ambition and drive to get.

The second thing I stand, I call [00:25:00] out within, when I'm looking at a founder, is a relentless pursuit of perfection, laser focus, and product obsessed. Wow. And it's really, these are very thought out buzzwords that I'm using here, but just think about that, right? These are patterns I've seen is by the.

I totally understand that. What is it good is the enemy of great. Like you need to ship it. Yeah. You can't wait till something's perfect until you ship it. However, You can't put a product in front of, dozens, hundreds, thousands, millions of consumers that isn't gonna live up to standards.

 That you're done if you sell a toothbrush that's not properly gonna, effectively work or brush teeth or you're done, your business is done. And it's one of those things where, you know, the first impression really does matter. You, yeah. I've just heard of a founder who's he, his first product run, there were some defects.

And he's so early, I think, he's quickly shifting and getting that fixed, but, [00:26:00] you make too many of those mistakes and you're totally done. Just continuously pursuing perfection. Yeah. And saying laser focused and being obsessed with their product, I've found repeatedly is just a trait that.

lends itself to a successful company at the end of the day. But the third thing, right? So the first being the un unwavering ambition, the pursuit of perfection, product obsessed. The third thing is really important because as a oftentimes there's young founders, although not always you can, you're not an expert.

 You've had so much experience in your career. So the key is ability to learn new things. and absorb information fast, right? Yeah. Again, that's just what I've seen. I tell a story, I'll give you an example of that, but, you gotta quickly get smart in to what we were talking about earlier, so many areas of your business, right?

The finance department, the legal department, the HR department, the marketing department, the supply chain department, the research and development part department. , you just, you're not gonna know these things going in. So you need the ability to learn those things and absorb the information really quickly.

And [00:27:00] of course, delegate and know enough to assess and evaluate talent to help you run those departments. Yeah. One of my founders he was a first time founder. He was trying to figure out how does he compensate new team members and, he was quickly trying to figure. , how options work and restricted stock and things like that.

And I just remember, speaking to this founder on a Friday, and he had no clue of any of how any of these things worked. But it's critical when you're hiring team members Yeah. To incentivize them with, again, either options or restricted stock. And there's for people that you know, Part of, we're able to, have these ownership stakes, and I'm sure people listening are like, yes.

You know how complicated this is. And if you don't, you will. If you have any of these things, it is confusing. It is complicated, and it is important that you understand at least a general sense. And this founder on a Friday, ed never in his life experienced any of this, and I swear to God, by Monday, , he could, he was educating the lawyer on how this works because he spent all weekend [00:28:00] literally just reading everything you possibly can on, NSOs, ISSOs, you name it, and all the different implications in order to, he needed to hire someone and they had asked him about these things.

I was blown away and that was just one data point in my evaluation process. It was holy. I don't know if I can say shit. Yeah, this guy, Became an expert in 48 hours that he went toe to toe with a top lawyer on schooling, this person on, how this has all worked. Those are really the key criteria for founders.

Yeah. And then I obviously wanna make sure it's a market I have a unique ability to evaluate and assess. Yeah, because I'm not investing in crypto or biotech or life sciences, I just simply can't assess it. So I'll miss. Surely there'll be a unicorn investment that gets sent to me. Cuz I get hundreds of deals a week, then I'll just won't even be able, I'll simply pass without even exploring it.

Cuz I, I wouldn't even know where to begin. Tho you know, I'm investing in markets that I understand and can evaluate. And then if there is product or traction [00:29:00] to be had at that point, because again, I invest often off of just a founder and an idea. So there might not even be a product or any traction to speak of.

Yeah. But if there is, , it's gotta have to, to my early point, cutting edge design and across all touchpoints, like the, I need to, I wanna see what the founder's vision is for their unboxing experience. The photography. Yes. Yeah. Positive unit economics, creative distribution tactics.

Because we can't rely on paid media, so we gotta figure out are we using affiliate, are we doing a partnership strategy? Are we gonna put ads in mobile video games? Where, whatever it is. , I've never given you my whole playbook. And by the way, my deck is@superangeldeck.com and it lays all of this stuff out for those.

Oh, that's awesome. Lot more. Yes. I po I make every, all this stuff's public. Super angel deck.com and so yeah, I invite anyone to check that out. 

Ben Tregoe: So if somebody sends in a deck that is basically your format, are you just oh, this is awesome, ? 

Ben Zises: What do you mean by format? Like at the top of the pile that way, , what's.

Ben Tregoe: If they send in their deck Yeah. In your format. Oh. Where they like put right at the top of the 

Ben Zises: consideration set. [00:30:00] Yeah. But again, there's not one thing, I've had founders that I've passed on investing in their business for a year. A year, a brand founder, I just kept passing, but this guy was relentless.

He kept updating me every month, every few weeks. Yes. Boom. Hey, we just made progress here there, boom. And eventually I invested, a meaningful amount and actually brought in probably the largest new other new investor. And that's the thing. Nice. A lot of investors think That the decision making is either yes, I'm an investor.

No, but there's also this middle ground of not yet. It's never black and white, right? Sure. If you need to make a decision because there's a priced round happening and you need to, like today, you need to commit. , listen, those happen. And of course you need to put up a shut up, but there's a lot of companies where it's, Hey, not ready today.

But if you prove out X, Y, and Z over time, you never know. So I try and yeah. Be really quick to tell founders with who pitch me [00:31:00] exactly where they stand, what I need to see. And I think. , resonates. And part of why, yeah I'd like to think that founders keep, coming to me with deal flow and that's what it's about, is, just being a great investor.

And we could always talk more a about that. Actually, I've got a funny I don't wanna take up all the airspace here, but I got . I was recently tweeting. Just, I realize makes me different than a lot of investors and even just in the top 10%, not to pat myself in the back, but I basically tweeted that just reading.

puts me in the, a lot of investors, they just don't re you make the investment and you forget about it, but that's not what this business is about. It's, that's when you're, that's when it starts. Just reading the updates and responding to the asks. , I know I have life.

Everyone's distracted and whatnot, but I just think you, you make a commitment to a founder to be part of. Baby their company. Again, unless you set expectations otherwise, but I just think the least you can do is read the. , re-share LinkedIn posts and, you just like their Instagram posts.

Just be a [00:32:00] champion for founders because again, it's so hard to be a founder. My, my job, and I take it so seriously is just try and move the needle in any way, shape or form, even if I'm just yeah. Putting a smile on the founder's face. By helping the algorithms show their content more by liking and sharing to me that, that's the least I.

Yeah. And 

Ben Tregoe: it, it's noticed and appreciated. That's awesome. Hey, Ben wanna dive into something. You're talking about your focus on the founders focus on product perfection, and it sounds to me like you're describing a premium. You're you're looking for founders that are trying to make a premium product.

Is that a 

Ben Zises: fair characterization for brands? For sure. Yes I did. But again I, one of my examples of a company I missed was this business manscaped and had a chance to invest in the very first round. And, at the time I felt like the proctor was a little gimmicky.

But I maybe should have, I'm not sure where the value of the business today. But I know that they, I think it's public. Hundreds of millions of revenue and got to an incredible scale. And that was one where, maybe I should [00:33:00] have just relied more on just the founder, than the product.

Just because if it was just an incredibly impressive founder who had some, insights into creative distribution, like he, they knew how to, produce amazing engagement content that, I think there are videos on YouTube and. Tens of millions and whoa that's a, that's a superpower, right?

Yeah. And maybe is more weight than the incredible premiumness of the actual products, although I'm sure they've right, improved from when I first saw it. that's why two quotes I have in my deck one from Jason Calis, which was, I don't need to know if your idea is going to succeed.

I need to know if you. and I put that in my deck. And then the second one, which I just love, and again, these are like the best investors in the world. Keith Ray Boy tweeted a few months ago, the number one lesson of venture has always been if you find an outstanding founder confronting a massive [00:34:00] opportunity, don't ask any other questions.

Why. And it's like we can debate all day. Like you can do all the diligence in the world that you want. Yeah. But I just love I'm sorry, go be a private equity investor if you want to be looking through cash flow models, right? Yeah. Like you're doing, we're, I don't know. I don't know. We're, the podcast is not about one thing, but at least my, again, what I do is angel investing and it's just people.

Yeah. And you can, I just think You're making, you're over complicating things if you start talking about too many other things. So I hopefully over time will, again, I aspire to be a super angel. I don't really I'm not gonna give myself that title yet. I think there's so much more work to be done.

But anyway, that's a little of my thoughts. 

Ben Tregoe: Just. . I wanna tie two things together though, that you, your, the focus on the product and the quality of the product. And then you'd said at the very beginning the importance of getting to a sustainable profitability. And do you think, [00:35:00] in your, having seen so many deals like that, founders are pricing their products appropriately to get to the margins they need to.

Successful and, not totally relying on outside capital to, hit the 

big 

Ben Zises: exits. Yeah, it's a great question. Founders ask me brand founders all the time to help with figuring out pricing. It's a critical, decision point. And I'm not a pricing expert. I can always give them my opinion, but I always caveat with you.

I make sure you maybe want to talk to some other experts, but lean, I think you just maybe start higher because you generally, you can't go up right after you set a price, and so I would always. Recommend starting high and then you can always bring it down. But clearly that's one thing where your, your cashflow model, your unit economics comes into play and figuring out are you pricing it enough such that you can, spend what you need to spend.

And both on cogs and, [00:36:00] sg and a to, to get to the margins that, yeah, both gross and net margins that. You need to be to be successful in the long run. One of my companies, maybe you know about is intelligence. It's called intellis. It's an E-com SaaS tool. I think actually you share a, an investor with them.

Yep. And they help brands figure out optimal pricing. And the founders worked at as in engineers and data scientists, I think at via, which was the ride sharing company, which, was all. Similar Uber, right? Your dynamic pricing for ride sharing. What if we bring that to e-commerce and actually right in real time ab test different prices for products to different people and, let's and then clearly use the one that's resonating and achieving the best ultimate.

Margins, and outcome. So I think that's a huge white space and ripe for companies like intelligence, and I think there's some others to figure that out. Fascinating, right? Yeah. I mean it just, it [00:37:00] makes common sense. Now I don't think if you walked into a store you couldn't do that.

But given sort of online digital, I'm not shopping with my friend next to me and we're both know what price is and. Fascinating business, great founders drew and Adam also backed by, vinyl and tj. Yep. And so I'm excited to, to see how they can support brands with pricing strategies. Yeah. 

Ben Tregoe: I, that's, this is a conversation I think we were having increasingly with our customers is we're, as we're looking at the margin structure, we're like are you priced appropriately?

And I think there's a hesitation oftentimes with the founders, cause there's, you're making a premium product, price is an indication to the consumer of premium, right? You don't walk into a Ferrari dealer and expect to pay $50,000 for a car, you're expecting to pay 250,000 or whatever.

It's , so I think there's a bit like of hesitation, sometimes that gets in the way of really asking for the 

Ben Zises: right price. 

Yeah. And I think there's, it's easier if you [00:38:00] start highing go the margin. It's a critical decision point for founders and I think, the truth is you're gonna need to price differently depending on the.

The distribution channel, right? Because you, whether you're selling on Amazon or in Big Box, right? Target and Walmart and Costco and Home Depot and Lowe's you'll need to create different bundles and packages and get to different structures for maybe each of them, sometimes and price differently.

That, again, going back to everything being variable you, you'll need to look at, Cost structure and margin structure for each of the SKUs and the distribution channels independently and together holistically with that, 

Ben Tregoe: Everything is variable ethos, like our idea, but do you have any rules of thumb for opex?

Ben Zises: Not really. I know there's just like general frameworks, but I'm generally not. Too much tie to specific specifics there. I recommend founders get on the phone with Bainbridge and work with you cuz you guys, that's what your specialty is and that's [00:39:00] cr it's just critical, right?

And I think creating a bench, Benchmarking against what the other top performing brands are doing and a model where, it's multiplayer where you can be entering in and viewing information alongside your VP of finance, alongside your head of performance and where everyone can see the numbers dynamically.

To me was what's so exciting about Brain Bridge was We as a brand, this is arguably your most important priority, is making sure you don't run outta money and that you are profitable with each customer and product that you sell. So really spend time. With either an outsource cfo, cuz a lot of these brands obviously too early to Sure.

To pay for a full-time. But then working with a tool like Bainbridge clearly to, put it in a format that's digestible, that's best practices. What you guys have done and what I've heard from your customers is really game changing. Awesome. 

Ben Tregoe: Thank you for that. I appreciate that.

Ben, what are you seeing? , what are you hearing from your founders coming out of [00:40:00] Q4 and the kind of view of their view of 2023 and what's your view of 2023? 

Ben Zises: Clearly, I think the market has slowed tremendously at the later stage, more effective than the early stage. The early stage simply has time to get to positive outcomes. So I think there's less of a valuation drops cuz there's a floor for pre-seed deals in some respect. But I think there's sim there's everyone saying there's gr tons of VC money on the sidelines and eventually needs to get put out. Yes. But you just need to as quickly as possible.

Get to profitability, cash flow positive, not relying on the raising the next dollar to sustain your business. , if that means slowing growth, holding off on, scaling to a new distribution channel this year, then so be it. You need to live to fight a another day. You just simply need to survive at least in the next six to 12 months.

but grow sustainable. This is how it should have always [00:41:00] been, but when these businesses were overfunded, they got ahead of themselves and, were trading profitability for top line growth. So I think, everyone kind of knows that quickly. just, penny pinch if you will, right?

I'm not gonna say cheap, but you just need to look at every single expense for your business. Whether it's you're paying for Zoom and you get Google meet built in, maybe get rid of Zoom or just use the free version. I think everyone's doing that, but I also think, and this is something that, shouldn't be new for this year, and I think it needed to have been put in place.

The best brands were putting this into place. A year or two ago, which is you really need to be omnichannel as a consumer product company and sell everywhere to everyone in some respects. We know that 85%, 80, 85% of every dollar spent in, on, on. on products is in store, right? Brick and mortar.

And so yeah, it's sexy to put up a website and call yourself an e-commerce brand. You're a software company, but no, you're selling a product. Where are people purchasing products? Eight or [00:42:00] nine out of every 10. Or in store. So what does that mean? That means get into a boutique. Get into a regional, one of my brands Arbor, I.

So smart. Clearly they have a beautiful e-commerce website, one of the best you'll ever see. But so much of that is education and even, candy for the buyers at the big boxes. Yeah. Where they can see the vision of, what is this brand gonna look like, in our store. And quickly, getting in front of buyers at at the big boxes is an efficient way to, and likely, a more cost effective way to generate sales.

Yeah. 

Ben Tregoe: Yeah. I think that is a really interesting. I think that brands are starting to use D2C prove out their ability to hit a customer base, but also to prove out to the buyers at a target or the mass retail that like, Hey, this works, with this cust, with this price point and these margins, so they gain confidence to, to make those buys, cuz.

Get like two cracks at it a year. , you gotta really put, cause 

Ben Zises: [00:43:00] the buyer. 

Oh, totally. Yeah. Absolutely. Yep. Retailers, 

Ben Tregoe: What are your thoughts about 2023? Everybody's oh, are we going to every recession? We're, we've watched like retail sales go down in December.

That was like, holy, I didn't realize they'd also gone down in. So where do you think 2023 is going?

Ben Zises: Listen I think right, everyone knows like the American economy is consumer driven. I'm worried about the amount of, debt that's piling up. I think there was some stat that blew me away regarding.

I need to verify this cuz it sounded so extraordinary. It's hard to believe that maybe seven out of every 10 purchases were done through like a buy now, pay later. Something like that. Maybe it was just, . Maybe it's just online. I'm not sure what it was, but it was, you can only kick the, can down the curb so much.

You gotta spend responsibly and a little concern that people will slow down on physical products. I think we know that, there's pent up demand for services and travel and hospitality given people's being, stuck at home for a few years for Covid. Businesses that are [00:44:00] selling cookware that are selling, garden plant plant home and garden stuff.

These are still gonna be, maybe it was a 20 billion a year category. If it drops 5, 10, 15, 20%, it's still enormous. And if you're in, if. Emerging brand that's has a better premium product being marketed better, better design. You'll start, you'll keep taking share away from the legacy incumbents.

And maybe it stunts your growth slightly, but you'll still be growing year over year. So I do I'm not seeing, people I'm still seeing really strong growth. , a lot of my brands. So it's a tale of two worlds when, you hear about the overall macro economy.

Yeah. The investor updates are coming in strong. Maybe they're not as strong as they would've been with the tailwinds of the, the cheap money and p and all that good stuff. But I do think you knows someone Was asking me the other day, they were a little bit down and out.

They were told, Hey, this is not a good year to start a [00:45:00] business. They were told by someone, and I got on the phone and I was like, oh my God, you're getting the wrong advice if you are a founder that has those attributes we talked about. And I know it from my own experience, real founders are the best founders like you.

I say, you can't not start your business, right? Like you've got this pull inside of you where. , it's just a gravitational pull. You are, you, there's nothing that's gonna stop you from starting your business and pushing forward and, finding a way to willing it to make it happen. If you are someone that has that, again, unwavering ambition that drive, don't wait.

Start today. Yeah. Come on, start today. Yeah. Yeah. 

Ben Tregoe: That's awesome advice. , I'm gonna put your feet to the fire for the last question. You said strong growth and I think that we have this debate sometimes with founders, like what is an acceptable level of growth now? You go back two years and people are like, oh, I'm growing like 400% a year, whatever.

And people are like, I at least need to double. And now everybody's you gotta get to profitability. But everybody's but I still want to show growth. [00:46:00] So what do you think, in the investor world is. An acceptable level? Or is it, there's, is it okay just to be profitable?

Ben Zises: Yes. Listen, even if you're not growing much, but there's some line of sight to growth, maybe you pulled back on production because you need to tweak your brand and packaging to set yourself up for, 12, 20, 24 Walmart's line reviews. And do you need to Yeah. Take, your revenue's gonna take a hit in the short term.

It's only gonna, right? Taking one step back to go two step forward two steps forward. So I think it's hard to give an exact response there. But I think you gotta, as from an investor, I'm looking at these things holistically, I will say, right? Like the bar is so much higher.

If you're just coming outta the gate today with a new brand, a new consumer product company, you're gonna have a very hard time finding venture. investors, I think you'll have more success with angels and friends and family and sure not everyone has friends and family, but other types of financing or just go slower.

[00:47:00] And advice for founders raising is, put everyone you speak to on an email distribution list and just as long as you, as long as you keep making progress slow and steady, I think that's your best fundraising tactic is. people are just skeptical and hesitant. No one wants to make a decision.

So like you, you bring people along for the journey with you and if you show continued progress you're de-risking the opportunity for everyone. Yeah. And again, I think founders often think they need to wait until they have some, monumental update before sharing news with people.

But I don't agree. I think people appreciate and know that things take. And great things, even specifically the best things take time, right? Yeah. Delaying gratification everyone says is a way to success. Yeah, just make slow and steady incremental progress day over day, week over week and keep your investors updated or potential investors updated.

And you never know. I think good things will happen. Nice. 

Ben Tregoe: That's awesome advice, Ben. And I think [00:48:00] we'll end 

there. 

Ben Zises: Thanks so much for having me on.

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