The Startup CPG Podcast

Paul Voge
The things I felt I learned about myself. I think there's a lot of questions you can ask in your life. How, what, where, when, and I think always why questions end up being the most meaningful and honestly, might be the only things you remember. Like, the only thing I will remember in an Alzheimer's ward someday is like, why did I do this? And why was it impactful and why did I care? And I think at the beginning, you're trying to prove something to people. You're trying to prove something to your family. You're trying to prove something to your investors. I prove something to an industry. And the truth is, like, at the end of the day, as painful as it sounds like, unless you're born a twin, you come into this world alone. And you go out of this world alone.

00:49
Daniel Scharff
Startup CPG ers, you are about to hear something truly special. This podcast is a retrospective on the rise and eventual sale of Ourobora sparkling water. And as you usual, Paul Vogue just deals it straight. He talks about what went well, his lessons for founders, what the process of a sale is actually like. And more than anything, I just really loved his reflections about the life of an entrepreneur in CPG and what it means to him looking back on this journey. I think this should be played for everyone far and wide. It's an instant classic. I hope you love it as much as I do. Enjoy. Welcome, everybody, back to the Startup CPG podcast. I am really honored to have Paul Vogue back with us today.

01:30
Daniel Scharff
And one of the reasons that I'm super excited to have you here, Paul, is because I think you would probably be one of the top five guests that we've ever had on the show in terms of. Yeah, people just walking up to me, like, at trade shows, being like, hey, you know, what episode really changed how I think about my business or just my life or my brand? And they'll talk about one of the ones that we've done with you. So I'm really excited to have you back for. For another episode full of incredible learning. So just thank you for always being so thoughtful and open and, you know, just candid and having just. I think for me, it's just like, the vision that you have about, like. Like, you learn things that I would never know how to learn.

02:06
Daniel Scharff
I think because you've been through so many stages of business, like, you just see it very clearly. So thank you. I hope that's not overdoing it.

02:12
Paul Voge
That's very kind. Yeah, I'm. I'm thrilled to hear that you've had a lot of guests. And I'm glad that it's been helpful even to just a handful of people. Makes it worth it for sure.

02:20
Daniel Scharff
Definitely more than a handful. So, like, we got big audience here and you helped us grow that. So thank you. First of all, you know, congratulations on the sale for Ouroboro. We just are really excited anytime we see an outcome from a brand that we root for so hard in the community. Do you mind first just kind of telling people as much of the details of the sale as you can. Whatever you can reveal.

02:42
Paul Voge
Sure. Maybe I'll just do quickly by way of background. It's a little more than six years ago, I started a sparkling water company. The idea was most sparkling waters, Lacroix, Waterloo, Perrier, San Pellegrino have very similar products. And if I blindfolded you probably couldn't tell the difference. It's funny, this is now feels like ancient history. It felt like no one was doing interesting flavors at the time. Lemon, grapefruit was kind of the standard issue for everybody. So that was the initial premise. Hey, can we make a sparkling water that can be elevated in terms of flavor, in terms of ingredient profile, in terms of brand, but also something that could be a daily driver where unusual relative to other beverages, where the average use is, you know, zero to one can per day.

03:25
Paul Voge
The average sparkling water drinker is drinking more than one can a day, which is not that many things you drink more than one of per day in general, let alone as an average of a large group of people. Speaking for myself at the far upper quartile of this extreme is a bad day for me is six cans of sparkling water. I'm usually closer to 10 or 12, which maybe you could argue blinded my judgment in a lot of ways. But anyway, that was the initial premise was, hey, can someone. I used to say what Sierra Nevada did to beer, the east coast, what Sam Adams did to beer, we'd love to do to sparkling water. Anyway, that was six years ago, in 2019 is when that started.

03:56
Paul Voge
And I think we did like $6,000 of sales in 2019 and $500,000 of sales in 2020 and $3 million of sales in 2021 and $6 million of sales in 2022. We had like a bit of a Correction Year in 2023, we're into $8 million of sales because we essentially stopped advertising all of our D2C business and just focused on retail. So the retail side grew 2x. And then in 2024, that we ended the year around 12 and a half million dollars of sales. I think that's the number anyway. That is the last X number of days, months, years of my life. By way of background. So the business sold to a group called Next in Natural at the end of January of this year of 2025. They own a number of CPG businesses, some in beverage like Rowdy Mermaid, some in Snack.

04:44
Paul Voge
They have a fiber cracker company and a dairy in the northeast and just a number of interesting CPG assets. So that is the very quick background.

04:53
Daniel Scharff
All right, thank you for all that background. That's super helpful to know what happened in the years prior. A nice summary. And can you just talk about your thinking around selling the business? Also, how did that start coming about? How did you get in touch with them or they got in touch with you? How did that all happen?

05:09
Paul Voge
Sure. Worth noting. Obviously it's the podcast called Startup cpg. So this varies a little bit. But for those listening to this that are in the beverage industry or maybe aspiring to be in the beverage industry specifically ready to drink, I'd say famously a very cash intensive business. And the reasons for that is just math of gross margin you can possibly hit. Manufacturing this product is quite low. If you want to look up large publicly traded beverage companies, you'll find that's generally the case. And low in CPG is, hey, at scale, if you are selling hundreds of millions of cans or bottles of your beverage company and you get to 40 points of gross margin after freight and after trade. So this is in the gross margin line of the income statement, not net income or ebitda.

05:53
Paul Voge
I mean, you are running one of the best beverage companies, period. That said, yesterday I was speaking to someone that's in skincare and their very first production run was mid-80s gross margin. So if the first production run on the first bottle of Sunscreen can be mid-80s and the 200 millionth can of BE is at 40, you can see naturally why it takes so many dollars to scale this up. Not to mention there's just a natural distribution advantage to The Coke, Pepsi, Dr. Pepper, Keurig. Just they dominate the shelves, the fridges, et cetera. So as a result, we had raised a lot of money. The question was, hey, we got to think about his sale. You know, it's worth noting it was us. Even though, yes, I started this business with my wife Maddie very quickly. I'm not the only person running this business.

06:34
Paul Voge
In terms of the board of directors, we had in six years, six rounds of capital, we had 100 people on our cap table which is not by design. That's just a matter of. I didn't know anybody who invested in a beverage company before starting this one. So I just took as many conversations as possible and thankfully met some great investors. And a couple of our investors in particular are larger investors that sat on our board, felt like, hey, we need to raise a Series B. This is traditionally when a beverage company would raise a Series B just to get specific. Again, this is a little bit industry specific in beverage world from call it 2015 to 2021. And I'll get into some of those earlier years in a second here. What you might consider like a traditional Series B. I'm putting this in quotes.

07:17
Paul Voge
Beverage company was one that was selling both single serves and multi packs, doing at least $10 million of sales, at least across natural, conventional, and usually one other channel. They probably had, you know, one core product line had introduced new SKUs as well. They had very close relationships with big national retailers. And to my point earlier, hopefully fully loaded gross margin was at least 35, if not closer to 40. So we had all of these metrics that, you know, had taken, I guess at that point, five years to get to, which was well on our roadmap, hey, by year five, we want to be able to do all these things. The difference was what was historically, those series B metrics I just named, a lot of those were still true, but had just gotten larger.

08:01
Paul Voge
So, you know, what used to be, hey, we want to see 10 million in sales the year prior. I thought, oh man, I might become 15. It's kind of become more like 25 or 30. What became, hey, we want to see you know, growing at this scale. Even if you're burning a few million dollars a year, which most beverage companies do became, hey, we're only interested if you are burning far less than that amount relative to your sales. So a lot of brands, us included, are in this tough spot where they got built and started under, I'd say, kind of an old playbook and everything fundamentally changed in the consumer packaged goods world, beverage included. But CPG in general, in the spring of what year is that?

08:39
Paul Voge
The spring of 2022 ended a, I would say from 2009 to 2022 reign where CPG was a compelling asset class for venture capital investors. We can get into that a million different ways. The reason I'm bringing it up right now is if you are a board of directors, myself included, it'd make a really tough call of, hey, if we are not big enough to raise a Series B. And we also are not big enough to make this a profitable company tomorrow. We need to find someone who has assets such that they can spread out a lot of the costs. And to them this can be a compelling asset, which makes it pretty clear, hey, it needs to be effectively someone that's already running food or beverage businesses so they have a staff that's doing that or manufacturing capability.

09:19
Paul Voge
Which meant we talked to larger beverage companies. We talked to private equity firms that own beverage companies or other similar assets. We talked to roll ups of specific beverage companies. Some of those are tied to specific manufacturers. And then we talked to this fourth group, which I'll call CPG holding companies, which some of them operate more like investment firms or private equity firms, some of them operate more like holding companies. Kind of depends what their day to day is structured like. But anyway, we spoke to like 54 groups that fit one of those four descriptions that was during kind of November and December of 2024 and then closed the sale at the end of January of 2025.

09:52
Daniel Scharff
That is very interesting to hear. This is why you are Professor Paul Obvious. There's just a lot of stuff in there that I would never know that's so interesting. Well, it sounds like a. Just really good planning probably on your guys's part to just think ahead that much and know when was the time to start. Because you can't just decide to sell and sell. Right? There's just a lot that'll go into that process. You just mentioned how many people you had to source and talk to. Right. That's a lot of work too. And I know on a previous podcast you told me the whole time you were running this business, you were spending 50% of your time fundraising. So I. I guess, yeah, at least.

10:23
Paul Voge
At least. And by the way, if you're listening to this thinking about beverage, that's like a normal number, not normal in other categories. I don't know anyone that runs a beverage company that has not spent 50% of their time fundraising.

10:33
Daniel Scharff
All right, so not to scare everyone off too much, it's also very fun and we love it. Like, yeah, it does take a lot of money, especially when it's going well. Okay, so then I guess you were just doing what, some kind of cold outreach to people? Some warm leads probably like people referring you to other people who could help you think about selling it. And just by having a lot of those conversations, and they were just one of those companies that someone recommended or you found online or.

10:59
Paul Voge
Gosh. Of those groups we spoke to, I'd say all of the ones that were larger beverage companies that either sold water or sold things in aluminum can or it might have made sense for them to have a sparkling water. Those thankfully it's a very small industry is no doubt you know that like most of those folks I had at least some connection to. We'd had a conversation at a trade show or on a phone call or at the very worst, were one degree away. Sheridan Investor X Y Z Most of the private equity firms that owned beverage assets, their job is to get to know beverage companies. So same thing we had like some sort of connection to I'd say both the holding companies and some of the publicly traded beverage oriented companies that were on this list. I didn't know all that well.

11:38
Paul Voge
Same thing, you know, publicly traded beverage companies, it's not their job to get to know small potatoes like me. So those yes, totally relied on introductions. And then some of the holding companies, same thing. Some of these things are like whispers you hear. And some of these things are a lot of holding companies and publicly traded companies are also looking to do investments. So in the world were pushing our Series B, which was last end of last summer. It's like 10 months ago. A lot of those conversations became hey, this was like a very common refrain we heard two years ago, three years ago, 100% we would have done this deal. We're still tempted by it. Even though you're a lot lower than our new threshold we'd like to see. And the threshold is not just random.

12:16
Paul Voge
Some of these things are the nature of if you're raising larger funds, as a lot of successful investment firms do, it no longer makes sense to write anything less than an X dollar check. It's a little like if you are at a flea market or maybe you're at a flea market in a different country where prices are quite low just due to currency differences. There might be a world where you think it's kind of fun to barter down the cost of a necklace. And then only after you realize I just spent 10 minutes bartering with someone over like a a quarter. This just is not literally not worth my time.

12:48
Paul Voge
And that's maybe a crass analogy, but that's kind of what these investment firms would say to a small business like Ourobora of hey, if I have to decide between writing you a $5 million check or $10 million check for it to make sense for my fund, we don't have enough people to worry about $10 million checks. We need to start deploying 2530 $50 million checks. And this has happened throughout this year in the last six months, kind of, as predicted, even more so of the small game of cpg, at least in the beverage world, just extremely different. So long as saying, hey, we're having these conversations. Some of them along the way said, hey, I know a year ago or two years ago, we said, this is the sort of check we'd like to write, a $10 million check. It no longer is.

13:27
Paul Voge
That said, if you choose to do something else, I. E. Rather than selling 20% of the brand for X millions of dollars, if instead you want to do something more interesting or we own a majority stake in the brand, let us know. Which was like, not obviously of, you know, full disclosure, not exactly what we thought. Obviously, when you go out to raise an investment round, that's not what you're thinking. So anyway, some of them got introduced to us along that path of, hey, if this way you're putting together the puzzle doesn't work, there's some other way, let us know.

13:56
Daniel Scharff
Super interesting. But you also had to talk to a lot of people and it's a long process. If there's a brand out there that was kind of in your situation, would you recommend they go about it that same way that you did of, you know, reaching out to kind of concentric circles of people that they had met? Or is there a quicker way for them to turn over all those rocks and, you know, get to people faster or just get through the sale process faster?

14:18
Paul Voge
I think my advice there is one. It's just like, it's amazing that we live in a world where you are 1 well written, respectful email away from literally everyone in the world. Everyone you'd ever want to talk to is checking their email at least 10 times a day. A day. So it's just, it's impossible for me to imagine that you could not get an email in front of almost anyone. Like, I think King Charles is checking his email as you and I do this podcast. So I. That said, yes. I mean, my quick advice is like, if.

14:47
Paul Voge
If there's someone you're looking to talk to because you're looking for them to invest in your company or give you advice or tell you about X or, you know, buy your business if that's the thing you're looking for, 100%, write a sub four sentence email that is like, to the point, not trying to pull any, you know, tricks. And you will mostly get a response. Most of the responses will be no, but a couple of them sneak through. So I think that's just true in general. You know, I have this silly document on my desktop that referenced maybe on this podcast, before we had 137 investors, I told more than 3,000 individual people about Ouroboro. So it's not like I have, like, an amazing batting average.

15:23
Paul Voge
Like, 4% of the people I spoke to wrote a check into this business, meaning 2000, whatever that is. Did not. I think that, unfortunately, is just kind of like the name of the game of you need to talk to a lot of people regardless of what you're looking for. So, yes, definitely, cold outreach is super helpful. Those who feel they are above cold outreach, I would say will always be above cold outreach. And as a result, they will never have any of these, like, synchronicity moments happening in their life because they're not willing to do it. Whereas I think the vast majority of people. If I got an email this morning that was sub five sentences, that was super respectful, I'm immediately like, oh, I'm interested in this person's success. I want them to succeed. And it's amazing.

16:03
Paul Voge
The, like, mental trick of if you ask for help, people are interested in helping, at least in this industry. That's been my expectation, my experience of it. And I think my favorite adage from maybe the six years of running Oroboro was, if you're looking for money, ask for advice. If you're looking for advice, ask for money. And as I just mentioned to you, 96% of people did not invest in Ouroboro. So I got amazing advice. Each One of those 2,000 conversations was, like, super helpful in terms of running the business. And so many people asked for advice actually ended up becoming friends of the brand and investors in the brand. So, anyway, long way of saying yes, certainly reach out.

16:35
Daniel Scharff
Okay, that is amazing. That is quotable. Paul Vogue. That's getting framed and put on my wall that whole two minutes. I love it. So let me ask you, just out of curiosity, what was the reaction you were getting from some of the big CPG companies, for example, that you were trying to talk to? Because obviously you found an amazing buyer. But what were the. Some of the reasons you were hearing no. From people that you would have loved to be able to find as a destination for the brand?

16:57
Paul Voge
Kind of what I was saying earlier of. I apologize. I'm just going to give a quick background on what I think fundamentally changed, because I think it changes the whole ecosystem. And just to give an example of this, that makes, you know, a lot of sense. You go to the gas pump. It's 10% higher today than it was yesterday. That might just feel like one business owner rubbing his hands together because he wants to get more money from you, from gas. The truth is there's like 11 reasons why that gas pump got higher. And we as consumers are often not familiar with all of the impacts that are on the supply chain before us. So same premise here, except the supply chain in quotes is the capital supply chain. So just backing up, we'll go to the largest entities for us.

17:35
Paul Voge
Coke, Pepsi, Nestle, Dr. Pepper, Keurig. Those are the four largest beverage companies. They're all publicly traded. All of them operate with 20 to 25 points of EBITDA margins. And generally they're vertically integrated. They own manufacturing facilities, they distribute their own product. They have employees in stores for everyone. I just named, you know, 100 countries around the world, I think, for Coke, literally every country. Two months ago, something came out that Coca Cola is the most well known English word besides high, which is just an insane feat. But anyway, I'll say those companies have to continue to sell innovation. Just the way the New York Stock Exchange works is we need to continue to grow. We can only grow so much with the products we sell, such that we need to sell new products.

18:19
Paul Voge
Because they are such large companies, they're not very good, as has been mentioned in this podcast probably a hundred times, they're not very good at coming out, commercializing and scaling new products. They're better at integrating existing products. Or so they thought. And from 2009, 2022, the spring, April, specifically, these companies all believed this almost ruse of if we buy a beverage company, we can integrate it into our distribution chain, we can integrate it into our supply chain. And I'm making some numbers up. What was a $30 million revenue beverage business losing $5 million will instantly become a $100 million beverage business. Making $25 million. That was the goal. And there are a couple of examples where one of those four big conglomerates pulled that off.

19:04
Paul Voge
But there are far more counterexamples than examples of successful integrations with distribution, successful integrations with supply chains, successful integrations with team, successful integrations with marketing. If you watch the super bowl, you know, Coke does a Super bowl commercial every single quarter. When do they start mentioning Smart Water? When should we mention Vitamin Water? How should we talk about Honest Tea, if at all? Like, all of these decisions end up being big corporate decisions. And keep in mind, this is usually a brand that started in some guy's kitchen and then sold it in My case out of his 2019 Subaru Outback. So anyway, I, I, I say all that to say when those conglomerates realized, hey, we've been overpaying, we overpaid for vitamin water, we overpaid for buy, we overpaid for almost everything we've ever bought.

19:50
Paul Voge
And they were buying these things off of sometimes 7, 8, 9 times revenue. Because the idea was, yeah, but they're growing so much faster than the rest of our portfolio. Let's give them a very high multiple on revenue, knowing that next year when we triple sales and reduce costs by 50%, it'll be like we bought it for one times revenue. Except that just never worked out. And somehow that ruse continued 2009, 10, 11, 12, 13, until somewhere in 2020, you know, post Covid, they realized, hey, these things are not worth nine times revenue. Which by the way, we should have known because our own publicly traded company is not worth nine times revenue. It's very complex. And all of a sudden you're seeing these deals come way back to reality, just to name a couple. Spindrift got bought for about two times sales.

20:36
Paul Voge
Poppy got bought for about three times sales. They had a stronger gross margin and Pepsi is like notoriously the biggest overpayer of those four. So if very large beverage companies, speaking about Poppy and Spindrift, they're doing not little 10 million of sales. I think Poppy was doing 3,400 million of sales. Spindrift was doing 3, I think 350 million of sales. These are large companies. They are sold National Conventional drug, Mass Club International, and they are worth two or three times revenue. You can imagine how that scales its way down. If you're running a beverage company right now, hey, if the best of the best, and it's spitting off cash flow every month is worth two times sales, what is your company worth? The way that triggers down the cash supply chain.

21:20
Paul Voge
If the big conglomerates say that, next thing you know, the investors back these brands at series A and series B realize we're only going to get an outsized outcome if we hold on to not to $30 million of sales. Keep in mind Honest Tea and Zico Coconut Water. Those got bought by Coke at like $30 million of sales, which is insane to think about now sir. Kensington's got bought by Unilever, I think at about $20 million of sales. So there was just a time where better for you was such a fear of missing out factor that big conglomerates across CPG jumped in. They now realize we want these companies to be more mature. 100 million is now the minimum you can expect for any sort of acquisition. And 100 million means we'll read your pitch deck.

22:01
Paul Voge
It doesn't actually mean we'll buy you, we just want to know you, the name of your company. As a result, these investors realize we need to wait longer to make less money. That is like not a good equation. They need to rather than us making 10 times our money in three years, if we're lucky, we'll three times our money in 10 years. And even that might be a stretch with all of the dilution coming, particularly in a cash intensive business like beverage. So that's how it was from conglomerates down to investors. And now the next people in this chain are of course the brands. The brands have this problem where in order to scale to that a hundred plus million of sales, we need to raise a lot of money.

22:43
Paul Voge
And we can only raise a lot of money if we are above x million dollars of sales. Which surprise is the reason why you're seeing so many celebrity backed beverage companies is how many people do you know that can have access to 25 or 30 million dollars without any real traction? The only thing you could say is they don't have traction in the beverage world but they have this huge advantage in marketing and they're generally wealthier people from wealthier agencies. And as a result you see way more celebrity backed beverage brands than you do other sorts of things. So anyway, that is the way it trickles down the supply chain. The reason I give all that by way of background is I think your question was, it was basically just yeah.

23:25
Daniel Scharff
Okay, so I mean you kind of answered it I think is what were the big CPGs saying like for and.

23:30
Paul Voge
You basically, yeah, big CPGs are saying hey, this used to work, this used to make sense. There were times and there were still a few large CPG businesses, a couple of which were publicly traded that yes, like took a look, kicked the tires, we took three or four meetings and they said hey, we think we, you know, there's things about this brand we find compelling. We could have made this work in X year. But right now it just, it doesn't work for us. Like if they're public, too small for.

23:54
Daniel Scharff
Them to take a bet on at this point.

23:56
Paul Voge
And yeah, to take a flyer doesn't really make sense to have to report it doesn't make sense. Kind of the same premise as the investors where they're saying hey, because this is now a big game, we need to write huge checks, not small checks. Same thing for the large CPG companies, whether they're private or public. Hey, we need to take big bets and seven small backs is not equal to one big bet. It takes the same amount of time, same number of people. There's just less of a chance of a huge outcome.

24:19
Daniel Scharff
Okay, I got it.

24:20
Paul Voge
So now let's talk a little bit.

24:21
Daniel Scharff
About the actual acquirers. So can you tell me a little bit more about what was that dance like, you know, who made the first move and how did those initial discussions go? And you know, maybe as much as you can talk about the actual negotiation, deal terms, that kind of stuff.

24:37
Paul Voge
Stuff I can't talk much about deal terms, but I can give you generalities. I think it's true and it's been true of the, you know, as you can imagine, when I was in this process, I was talking to any connection, acquaintance or friend that had done anything similar. And I think everyone has a pretty similar experience with this.

24:53
Daniel Scharff
Of.

24:53
Paul Voge
If I had to say this in like a pithy way, the offers you'll get, the terms you'll get is like people will always offer the thing that they find least valuable, which makes sense, of course, you know, like I, I get it. If I could pay with cans of sparkling water, I would because that's just like the thing that's easiest for me to procure. So same premise of some of the folks were talking to. You know, they're running privately owned brands that spit off a lot of cash flow. So to them cash is the, ironically the least valuable thing they have equity in that extremely fast growing brand is more valuable. So their offers are cash. For publicly traded companies, say, that are holding a lot of stock, hey, all of a sudden stock is the cheapest thing that they can offer.

25:38
Paul Voge
For some of these folks that are doing a roll up, it's stock in a combined entity and you'd get, you know, export combined entity. So it all of these deals ended up looking very different. I think just like the general rule of thumb is, hey, if you get to know an acquirer, this is probably true of an investor. If you're kind of doing a specific large investment deal is the side of the table they're on. This is like my favorite political science phrase of, you stand where you sit. The idea of it is, you know, if you ask the secretary of defense if he needs more troops, he's going to say yes. The reason being like you just stand where you sit. The thing that you represent is probably what you think.

26:14
Paul Voge
So if you ask someone were speaking to A woman who works at a large publicly traded beverage company. And she. I think her exact comment was, well, we could only do this if were able to offer you xyz. And the XYZ was the thing in her mind that she had in surplus, you know, just sitting in the medicine cabinet. Sure, I'll give you a six Advil for X, Y, Z. Because there's no big deal to me. Like, it's something we just can offer you. So that's me speaking in a lot of generalities. For obvious reasons, I did find that part pretty fascinating. You know, obviously never sold a beverage business before or sold any CPG business before.

26:46
Paul Voge
And like I said, this was not, you know, just full disclosure, not the deal were expecting, not the time were expecting to sell, not the size of business that were expecting to sell, et cetera. There's so many things that. Which is kind of a surprise between, you know, one year ago today and January. But I, I definitely learned a lot in that process of, wow, this is how the world works. And then maybe the biggest thing I'll say, and I referenced this a bunch of implicit ways via the timeline, is so much of this is timing almost. This is like an insane thing to say. But just running CPG brands in general, there was a time where I thought, you know, the idea was worth X percent.

27:24
Paul Voge
Let's say the idea is worth 50% and the execution of that idea is worth 40% and the timing's worth 10%. I would now say timing is like 80 to 90% and idea is probably like 0.01% and execution is whatever the delta is between those two.

27:41
Daniel Scharff
And can you just tell me more exactly what you mean about that, about the timing? What are the key parts of the timing that you think are so impactful just in terms of like the fundraising environment you find yourself in and when you meet people where your brand is at that stage or what? What do you mean?

27:54
Paul Voge
People think about timing in terms of meeting consumer needs all the time. For example, if you were a beef jerky company in the last five years, like you are feeling like a genius. Oh my gosh, we sell this high protein, low fat snack and the world only wants high protein, low fat. Obviously, anyone can start a beef trucking company today. It would better to have the price flexibility, the vertical integration, and $100 million of sales across five channels before the trend starts. You know, when it starts raining, you can run out of your apartment in New York City and start selling umbrellas. Wouldn't you rather have 10 guys selling umbrellas ready and then the rain comes down. Like some of these things, timing is just luck.

28:34
Paul Voge
And I guess in my example, you could just be a meteorologist in the same way with protein, you could have been a trendsetter or you know, just follow snack shot andrea will tell you what's coming next. But I'll say there is. That's the timing we talk about. The truth is there's so many other timing aspects of, you know, I remember when we started or more people you say all the time like, ugh, another. Another sparkling water company, we don't need more sparkling water. Which could be true. The truth is in the years since, sparkling water has grown net like 60%. So like what felt like a lot of sparkling water in 2019 in the United States. Hey, we continue to drink sports sparkling water. We continue to have more brands, we continue to just continue. People are trading soda, et cetera.

29:14
Paul Voge
So it turns out, hey, yes, this was an enduringly fast moving trend, but it was also going to continue to grow. That said, the timing we don't often talk about is what I was just referencing of a deal can get done between used a much larger, you know, real cash rich acquisition. You're drinking a poppy right now. Obviously Poppy sold for years. That company could have sold. They were of scale of gross margin, et cetera. The timing happens only when it work, makes sense for both parties. Only when the larger party is like, okay, now this is something we can deliver to our shareholders. Same thing with Celsius and Aulani New. I think celsius looked at 30 different beverages over the last 16 quarters that they might buy. They've had a extremely fast growing stock.

29:58
Paul Voge
What's funny, when you have a fast growing stock, you can look at these deals. We have to realize, the stock we're going to offer for this might be double in the next two years. Would we pay twice as much two years from now? Or not? And all of a sudden it just like becomes a crazy math equation. Anyway, I'm saying all that to say all of these timing things need to work out. You need to have the right trend at the right time, have the right thing set up. You need the category managers to be interested in your category at the time that you have a product ready. And you need investors and macroeconomic cycles to work in your favor. There's just to give one more CPG specific example.

30:30
Paul Voge
There was an awful supply chain disruption as a result of COVID I know 25, 30 entrepreneurs that had amazing traction and overnight gone unplugged. Oh, you were importing coconuts for your product. Which coconuts? The ones that are worth nine times as much. That's not really going to work as it works its way up to your supply chain. So all of these things, timing I'm mentioning because you inherently just have no control over it.

30:53
Daniel Scharff
All right, very interesting. And yeah, I can imagine a lot of that stuff that you wouldn't, could not even anticipate, like the trend toward non alk, which I think a lot of that does actually come into sparkling water. Like if I have a party at my house, a lot of people aren't drinking and they're really happy to have a flavorful sparkling water. You know, something kind of fun but hydrating. So total luck.

31:12
Paul Voge
To your point. I didn't know the word mocktail when we started.

31:15
Daniel Scharff
Yeah. All right, so Paul, looking back at all of this stuff, where are some things you probably would have gone in a different direction if you could do it over again? Whether it was your, you know, how you did the fundraising all along or some decisions you made about investments for the business, marketing decisions, or, you know, how you kind of focused on different channels as you were growing the business. Is there anything that you could have done that would have potentially changed how much cash you needed to get to where you needed to go, or you could have just been operating much more efficiently to like even let you scaled to a much higher revenue over time with the amount that you were raising?

31:51
Paul Voge
Good question. I think, man, hindsight is 2020 for sure. So I've, you know, I've been effectively out of the beverage world for a few months. Obviously I still read things, but not actively calling distributors or transportation people. So I long way of saying I've definitely had some time to think. There's so many ways I can answer the question. I answer it from a big way of like, hey, do I think sparkling water is a compelling category? No, like I don't think it's a compelling category to build a business like this in. And that's coming from a guy that's, yeah, we sold, you know, 30 something million cans of sparkling water. And I just think it's not a great category for a lot of the reasons where he talked about, you know, that it is far too discount heavy. People are.

32:31
Paul Voge
There's very little brand loyalty which the benefit when you're a zero dollar of revenue brand of lack of brand loyalty is, whoa, there's no brand loyalty. People buy my stuff. The negative is when you're a $10 million brand. Well, there's no brand loyalty. People buy the next guy's new stuff. So I think all of those things combined takes a lot of cash. Super gross margin, heavy, super discounted. The fact that I'll name one specific thing about sparkling water that I think makes it so not compelling. I could name you 10 sparkling water companies that are each giants. I mean, I think sometimes you're just competing against one giant. If you are making a sandwich cream cookie, you are competing against Oreo. That is the one giant you're competing against.

33:12
Paul Voge
If I do that same thing for sparkling water, at the risk of getting too specific, I could name a bunch of independent brands. Spindrift, Waterloo, Lacroix. I can name a bunch of Nestle owned brands. San Pellegrino, Perrier, Pepsi owned brands. Bubbly, Coke owned brands. Topo, Chico. Aha. Like, it's just kind of crazy that it's unusual in a category that there are more than 10 brands each doing more than $200 million of scanned sales. That's very unusual. If tuna fish, there are two brands doing $100 million of sales. Chocolate chip cookies, there are three brands doing a hundred million dollars of sales. So it's just, it's very usual to have like a double digit number of giants.

33:48
Paul Voge
So long as saying if I could do anything differently, the honest truth, and I don't mean like no needs to play a violin for me, but like, yeah, certainly would not have picked this category to build in. Of course, it was a category that's very close to me. Like I said at the beginning of the podcast, I drink like a gallon of this product a day. I don't drink a gallon of anything else. But that's like not really a compelling reason to build a business. Because it's something you enjoy, if it's something that you happen to enjoy, that you feel passionate enough about to do every day for, you know, 20 years. Because that's kind of what it takes to build up one of these businesses. Maybe that's enough. But for me, probably not.

34:20
Daniel Scharff
That's super interesting and I think about that a lot because obviously there are a lot of emerging companies in the sparkling water and regular water space. And I think, yeah, I mean, challenge number one, by the price point, right? There is a price ceiling, especially if there isn't a really strong functional story about it. And that's always going to haunt you. It's just really hard to get a buyer on board with you being way more expensive than what's out there. And there are. Yeah, I mean, you're talking about like the market's very fragmented and there are also a lot of strong regional players. There are strong private label offerings that really keep that price ceiling intact in the market too.

34:56
Paul Voge
Hey, there's 10, 15 companies that do $200 million in scan sales in sparkling water. And then if you're running a grocery store chain of 15 stores and you don't have a private label sparkling water, you are missing out on, I think, Wegmans, just to name one regional example, Wegmans is not a huge grocery store chain. They are just in the mid Atlantic and northeast. And their private label sparkling water is the size of Spindra Drift, only sold in their stores.

35:21
Daniel Scharff
All right, pretty interesting. I mean, I hope even if you had known all of that at the beginning, you would have followed this dream of yours because, I mean, it did lead to a good outcome for you. And it may not have been the billion dollar brand outcome that I think a lot of us hope for, especially as we get into that early growth stage. Like, what could go wrong? This is going to be amazing. It's always going to be this amazing and it'll be everything. But. Yeah, I mean, I guess I think it's true for you. And I hope that it is true that you worked very hard for a long time and just had probably so many highs and lows and hopefully the highs were a lot higher than lows.

35:54
Daniel Scharff
And that kind of even looking at this at the very beginning, you would have been like, yes, I do want to do that. And it's going to be worth. It's like, you know, better than the opportunity cost that I have of doing something else. I hope that for you anyways, I hope that's how you look at it.

36:06
Paul Voge
I know. I don't know how I look at it. I think, one, it depends on the day and two, it's very kind for you to say yes, it, no matter what it is. Certainly the six years I ran Ourobora is certainly like the only way I know anything about how the world works. Like, I just, I was 24 years old when I started this business. I effectively knew nothing relative to how I feel of what I know now. Not just about CPG in general, about life, about the way humans work, about what is good work, what's a meaningful day, what feels like a fulfilling way to spend one's time, what actually makes it different difference, what's moral, what's immoral, what's the sort of thing you'd be proud of as an 80 year old.

36:43
Paul Voge
What's the sort of thing that you'd kind of cringe at all of those sorts of questions? Those were not, like, yearly things. That was like a weekly normal onslaught of things to think about. And sometimes I look back at, like, the kinds of stressful things I felt at the job I had before this job, and it feels like a joke. And that's, like, maybe a nasty thing to say to someone that, of course, has, like, a totally respectable job. But the truth is, you learn a ton about the world. And, you know, maybe selfishly, you learn a ton about yourself. I used to joke, like, therapists are awesome, but if you want to learn a lot about yourself fast, like, put most of your savings on a product that you sell out of your car, and it's like, amazing what you learn about yourself.

37:23
Paul Voge
So I'm really grateful for that. I am sure if I am lucky one day enough to have children, they will be so tired of hearing about that time that, you know, dad sold sparkling water. And I think part of it's like, of course, yeah, there's a million sparkling waters. We don't have to talk about sparkling water. But it did become the way that I learned anything that I feel any sort of passion or conviction about, which I'm grateful for. And that's the sort of thing that needs to happen in your 20s one way or the other, and it'll either happen to you or you get to kind of be in the driver's seat.

37:53
Daniel Scharff
Let me ask you one, follow up on that. What did you learn about yourself that you're really proud of during that time? Because I feel the same way of the times that I've worked really hard and the things that went well, and not everything does always go well, but I mean, just, we're competitive, we're ambitious, we're doing this stuff. And there are probably a lot of things that you were able to accomplish that you didn't know you would be able to do. What. So what are some of those things that you're really proud of that you learned about yourself during that journey?

38:16
Paul Voge
Gosh, this won't be true for everyone. Most people just smarter than me and will have more experience than me, as I did when I started this business. But I'd never managed anyone one, period. I had zero employees my whole life, and then at its peak, I had 17. I never, like, managed a team or a profit and loss statement or any sort of enterprise of any scale. Like, I used to sell Christmas trees in the winter or T shirts in college. But like nothing of any sort of meaningful scale. So sometimes folks will call and ask like, hey, should I do xyz? And I'll be like, look, I did XYZ because I had literally nothing to lose. I was like, stupid with no good ideas and nothing to lose. For a lot of people, it's a different equation almost in a negative way.

38:55
Paul Voge
Like where they have a family in a high paying job, no one is paying me a lot of money in general. So that said, the things I felt I learned about myself at the beginning, I think there's a lot of questions you can ask in your life. How, what, where, when, and I think always why questions end up being the most meaningful and honestly might be the only things you remember. Like the only thing I will remember in an Alzheimer's ward someday is like, why did I do this and why was it impactful and why did I care? And I think at the beginning the why was like, man, you're trying to prove something to people, you're trying to prove something to your family, you're trying to prove something to your investors. I prove something to an industry.

39:33
Paul Voge
And the truth is like, at the end of the day, as painful as it sounds like unless you're born a twin, you come into this world alone and you go out of this world alone. So you get 100 years to live. I used to ask folks the first interview question, so many ways to spend one's time, why do this? And I think sometimes like long time CPG people will tilt their head and be like, why are you asking that question? And the truth is, I'm actually just interested. There's so many ways to spend one's time. If you have an abundance mindset about life, why specifically this? And I think my answer, I didn't know this until a few years in, is of all the ways to spend one's time, I find this like pretty delightful. Something you made with your hands.

40:09
Paul Voge
Like, I just like creating things. I didn't really know that about myself. Yes, I was a creative person for sure, but I didn't know the fulfillment I would get from creating anything. And of course a bit of like selfish satisfaction of watching people enjoy it and watching it scale and you know, getting pictures from airports and grocery stores and sports games where people were enjoying our sparkling waters was meaningful. Not because it represented a sale or because it was good in a quarterly report or a proved some teacher in high school that thought I was a miscreant, that I could do something impactful. It was more so of just very simple I created something and it exists.

40:46
Paul Voge
I think anyone that's listening to this, whether you would call yourself a creative person because you sing a cappella or you're in the play or not, all of us are creative in that were made to create. I actually think that humans were made to create. Whatever that thing is that brings you joy. Like that is kind of our core purpose between 0 and 100. I think what you look back is, what did I enjoy and why did I do it? And I think the answers will be almost always something that you created. If you are so fortunate, that gave you some perspective and some gratitude for being on the planet.

41:19
Paul Voge
So as silly as it sounds to have a big macro thought like that when, you know, at the end of the day I was selling lavender flavored sparkling water is what I think of kind of just made to create. And I don't think I necessarily knew that six years ago.

41:31
Daniel Scharff
I love it, Paul. I think that was really beautiful. And I hope everybody listening maybe did a little bit of reflecting while you were talking about that about, like, why do I do this? And maybe not all of them are in the same position that you were in of getting just having the right conditions and ambition and hustle to actually go out and start something on their own. But maybe even if you're just like, you're a salesperson at one of these companies. But I think, you know, for probably all of us, I think there's just something that we love about the industry. I mean, I always just say CPG is fun and that's why I do it. Everything about it is fun.

42:03
Daniel Scharff
But, you know, it's sort of like it's just the arena that I want to be playing in to do all of the things that I like doing. But anyways, I hope everybody takes that as an opportunity just to remind themselves why they do this and maybe it'll make them think of doing it in a different way or maybe starting their own company. Or maybe they won't because they've also just heard about a lot of the speed bumps along the way. So just one kind of more tactical then question about specifically the fundraising journey.

42:30
Paul Voge
Sure.

42:31
Daniel Scharff
How you, how you raised money and you know, you talked about having done even like a family round or friends and family around in the early stages and like you did Shark Tank and then, you know, all of the six different rounds or whatever that you did. Is there anything that you think you probably would have preferred to do a little bit differently or that you would just tell brands now, like, yeah, maybe think about doing this way, if you want to get a good outcome more profitably or, you know, more capital efficiently.

42:58
Paul Voge
I'll say for those brands that are listening to this, that don't need to raise outside capital because their gross margins are good and they've found a way to grow at an acceptable speed relative to that gross margin, or maybe they're able to get a lot of debt, like as a result of that same cash supply chain I referenced earlier, from conglomerates to investment firms to brands, like, one of the things that's filled that gap is really efficient debt capital at a much lower interest rate than people are probably expecting. So if you're one of those brands that can leverage all of those things, great gross margin and great debt, and not raise money, of course, that's like my, no offense to our capital providers. That's the best.

43:32
Paul Voge
I had this silly Christmas tree farm that I used to do for three weeks every December and it was awesome that it was three weeks long. It was just in December, so I could just max out my credit cards, buy hundreds of Christmas trees and know that I can pay them off three weeks if I worked hard. Like, as silly and simplistic as that is the best version of business of like your expenses. You own 100% of it and you can find a way by hook or by crook to like sell something for more than the cost of goods in it. So if you can pull that off and have a profitable business, absolutely.

44:02
Paul Voge
For those that can't, because the industry they're in or the scale they need to grow, et cetera, et cetera, I guess I would generally say if you are so fortunate to have one particularly adept capital provider that you can closely partner with, that is like certainly the best way. And I'm saying best in quotes because I think it's best in that you guys are equally aligned. Hopefully you really enjoy working with one another. So many examples of folks that raise money from capital partners that they really regretted. And ironically, it actually is easier to get dependent divorced than it is to get rid of a capital provider. So my answer to those fundraising is, hey, it generally is better to have one well funded firm that's interested in continuing to back you over the course of several years.

44:47
Paul Voge
If the brand is working and you're working hard and you're hitting all your goals. If you can't do that, which will be the most people, because there's not that many of those firms and they don't do that many of those deals, I would generally say I Definitely spoken to a lot of brands that are have a lot of questions about fundraising. I try to just golden rule everything of if it were me on the other side of the table, like, what is the deal that feels fair to me as an investor and for so many of these things as I just referenced, like, yeah, the multiples come down at the top end of the spectrum. The revenue multiples need to come down in year round.

45:18
Paul Voge
And it might mean you own less of this business than you would have had you started it 10 years prior. And that's just true. My other fundraising advice is like, be reasonable. The odds anyone succeeds in cpg. And I'll be specific. When I say succeed. I'm using the word succeed to mean a tangible investment dollar is returned to investors. Forget the entrepreneur. If investors put a dollar in at some point and got a dollar and one cent out, that we'll call that a successful CPG business. That is like one in 100,000. So just know that, hey, you're raising money 99,999 times that dollar will become less than a dollar, whether it's zero or 99 cents in the future. And as a result, like, yeah, these things are priced accordingly. You know, it's. That's just like the painful truth of it.

46:01
Paul Voge
So I'd say keep that in mind if you're fundraising. It's so easy people to focus on their business and they need to be maniacally sure that it's going to work. And of course that's true. Everyone that jumps into the pool at the Olympics thinks they're getting the gold medal. And I can name Michael Phelps and I don't know a single other person that was in the pool with him. And that's just like the painful truth of this business.

46:21
Daniel Scharff
All right, that's hard, sober truth of it. But it is the thing that so many of us love to do. So good luck to everybody, despite the long odds. I mean, I hope everybody enjoys the journey as well, because it should be fun even when it's hard. And a lot of that is what makes it fun. Okay, cool. So Paul, just last question for you here. What's up next, Paul? What are you spending your time on now? How can people kind of still follow along with you even though you're not actively working on our Bora anymore? You know what? People will, I think, just be interested to keep tabs on Paul.

46:56
Paul Voge
Gosh, that's very kind. If they want to keep tabs on Paul. Easy guy to find on LinkedIn for sure. And other Social media sites. I'm what's next in general is I. I just wanted to take some months and clear my head. So I'm actually about to leave for the John Muir Trail here in a couple weeks and do a big hike with some friends. Yeah, I made this silly word game just for fun. To my point earlier, I really like creating things. So if you like word games, it's called Outlier. You can find it at Outlier Land. I've been consulting for some businesses just to stay busy. So what's next right now is just, hey, I love the consumer world. I'm sure that the next thing, if I'm so fortunate to make, will be something consumers can interact with.

47:37
Paul Voge
Either something they pour in a glass like my former thing, or something they click on a screen or somewhere in between. But for right now, I'm not really sure. I definitely, in retrospect, to my point earlier, felt like I rushed into sparkling water because I was so excited about it and I was 24 and I'm trying not to rush into whatever that next thing is. And like, fortunately I have the benefit of both time and perspective and can afford to do this. So that's what's next.

47:59
Daniel Scharff
I love it and I have played the game. I can tell everyone it is fun.

48:02
Paul Voge
Check it out.

48:03
Daniel Scharff
Outlier Land. It's cool. You basically go in and you're just trying to pick the thing that doesn't fit with the others. And it's fun in that way that like, you know, Angry Birds is fun and like wordle and all that stuff. So everybody check it out. Outlier Land. Paul, thank you. This is another instant classic. I'm really excited for everybody to get to hear this and I will look forward to seeing what the next adventure is.

48:28
Paul Voge
Thank you, sir. Good to see you.

48:29
Daniel Scharff
Good to see you. All right, everybody, thank you so much for listening to our podcast. If you loved it, I would so appreciate it if you could leave us a review. You could do it right now. If you're an Apple podcast, you can scroll to the bottom of our Startup CPG podcast page and click on Write a review. Leave your company name in there. I will try to read it out. If you're in Spotify, you can click on about and then the star rating icon. If you are a service provider that would like to appear on the Startup CPG podcast, you can email us@partnershipstartupcpg.com lastly, if you found yourself grooving along to the music, it is my band. You can visit our website and listen to more it is. Superfantastics.com thank you, everybody. See you next time.