The Startup CPG Podcast

Ryan Williams
They see companies that are searching for capital and they're a little bit unwilling to listen to what the market is telling them. And I've seen a lot of companies sometimes in this very competitive environment where for every $1 that an investor gives out, there's a a hundred brands seeking that same dollar can be really dangerous. If you're a brand looking for capital and you're a either like anchoring to some publicly disclosed investment of a 1 in 10,000 company and the terms of that deal, I think you just need to focus on your brand and what your brand is attracting, not somebody else.

00:51
Hannah Dittman
Hey everyone, I'm Hannah Dittman, operations and finance host of the Startup CPG podcast and today I'm excited to be joined by Ryan Williams, founder of Northhall. Ryan is a true CPG finance operator and partner to brands. Through Northhall, he works hands on with consumer companies to build strong accounting and finance foundations from day to day bookkeeping and reporting to strategic finance, forecasting and fundraising readiness. His background spans operating finance roles inside CPG companies, investment banking and a long term career working closely with hundreds of brands across stages, giving him a rare objective view of how CPG finance actually works in practice. In this episode we break down CPG Finance and Accounting 101, covering critical terms and concepts founders often hear but don't always fully understand. Ryan shares hard earned lessons from years.

01:40
Hannah Dittman
In the trenches, common mistakes he sees.

01:42
Hannah Dittman
Brands make as they scale, and practical advice for building finance and accounting strength over time. We also dig into key metrics founders should be tracking, frameworks for evolving your finance function as the business grows, and how to think about fundraising without falling into the most common traps. If you're a founder who wants to feel more confident in your numbers, build a finance stack that supports growth instead of slowing it down. Or understand how investors actually interpret your financials. This conversation is packed with clear, grounded insights from someone who's seen the full picture time and time again.

02:13
Hannah Dittman
Enjoy. Hey everybody, welcome back to the Startup CPG podcast. This is Hannah and today I am here with Ryan Williams, founder of Northhall. Ryan, welcome to the show.

02:26
Ryan Williams
Thank you for having me. Great to be here.

02:28
Hannah Dittman
Yeah. We're so excited to have you here today. I think it's going to be a unique and interesting chat. We're excited to get your perspectives. I'd love to kick off with a brief background from your career and path and what led you to Northhall today.

02:42
Ryan Williams
Yeah, it goes all the way back to, you know, right after college I ended up investment banking and at Houlihan Lok in York. And I remember when I was in an intern there, were advising on the sell side of Snack Factory, which people probably more know as Pretzel Crisps, those thin pretzels. And I was this intern and I saw people diving over, you know, to get pretzels from the boardroom after our like pitch meeting with them. And were chatting about this before the call. At the time I feel like entrepreneurship was very focused on starting an app or something in tech. And I was thinking like I really like walking around Whole Foods more and seeing startups in Whole Foods more than an app. So where's the intersection of startups and CPG as opposed to startups and tech?

03:30
Ryan Williams
And so I just got more and more drawn into the CPG startup world and went from Houlihan to being the CFO of a coffee brand that was a venture backed coffee company and then just keeping tabs on just investment trends in consumer more generally as like this passion project. And all of that kind of eventually coalesced to what we do today at Northhall which is kind of to end full cycle bookkeeping, controller, financial statements prep through like financial modeling, FP&A advising on really anything that has a dollar sign in front of or attached to it. So we work with a great mix of brands as they're kind of like one stop shop for all things accounting and finance.

04:14
Hannah Dittman
I love that and so useful and helpful. I feel like there is a huge slice of the pie that consumer brands that in the early days are a little bit allergic to finance and really need the support and help. So I love that you're providing that and I'm sure it's a really fun gig for you to see a lot of different interesting startups and companies along their journey and watching them grow and helping them grow. I'd love to dive in a little bit more to Northhall if you could maybe give a little bit more context on the scale and the type of companies you focus on and a little bit of the pitch of how you fit into the CPG ecosystem and any sectors you're focusing on or any additional color I think would be really helpful for the conversation today.

04:54
Ryan Williams
So we've worked with everyone from pre revenue, which I would say is kind of the exception because it's rare that pre revenue companies are venture backed today. So for the ones that are, we've done a little bit of that, but I'd say our sweet spot is usually 3 to 30 million dollars in terms of sales. We have a couple that are approaching a hundred which is crazy and speaks to just like the efficiency of that you can bring even if you're quote unquote outsourced to manage that entire function for a brand that's approaching nine figures of revenue. But you know, we're typically involved on right as the founders and like some external party needs a little bit more financial clarity. So often post a fundraiser, I get asked by people I'm friends with like, hey, do you want to start working with us?

05:40
Ryan Williams
And I do think in the rank order of things, when you're a startup, I wouldn't say that finance comes maybe first. Most of the companies we work with, I'm like just survive with your family friend, bookkeeper for a while. We'll clean everything up. So I would say like there's usually some inflection point that it's time to get this in order. And I think often that's post arrays or like hey, we've actually found some degree of product market fit. However, you know, you want to define that and it makes sense to like a little bit professionalize accounting, finance, stack and then we're all 100% CPG across food, beverage, beauty. Probably have a little bit of extra background in beverage because I was an operator at a beverage brand.

06:27
Ryan Williams
But if it's a physical thing with an inventory line item on your balance sheet, that's our sweet spot.

06:34
Hannah Dittman
Yeah, that's so helpful. It honestly makes a huge difference. I don't know if everyone realizes that like not all accountants, not all financiers are cut from the same cloth. You know the business fundamentals of cpg, the widgets like the inventory line items like you're talking about make a really big difference. I mean in tech, for instance, you're not really grappling with sell in, verse, sell through or the kind of like real nitty gritty gross to net spread that you can get. The accruals that you need to focus on. There's a lot of nuance in consumer businesses that make a big difference. To work with somebody that really knows CBG and like where the different freights go in your margin structure to make sure you're reporting that accurately and a lot of little details.

07:19
Hannah Dittman
We, I'm sure we'll geek out on accounting throughout the rest of the this conversation.

07:23
Ryan Williams
I would say consumer brands are like 90 or 85% the same in their P and L structure. But then we try to make sure we accommodate this, the 15% that makes your business unique. Otherwise you wouldn't have started it and needs something like unique process or Attention or tracking or accounting or accrual or whatever. I think we really try to make sure that we dedicate and have plenty of time on that 15%. That's some might call it complicated. And then like have the experience on the other 85% where we're like, we know you're going to go to a trade show, we're going to have an expense bucket for all the trade shows and so forth. Let's not make that. We're figuring it out for the first time. So that's been a good bounce for everyone we've worked with.

08:10
Hannah Dittman
Yeah, great points. And it makes so much sense to especially like you're alluding to being able to forecast a business properly and get ahead of some of these things when you have a deep knowledge of like, yeah, well that's going to be a lot of sampling, that's going to be a lot of expense on certain things, knowing the scale of certain things and things like that. So obviously you've mentioned that you're working with brands that maybe got through a fundraise process, maybe they went through a Q of E quality of earnings where they're reporting out maybe some margin discrepancies or something. Once an accountant really gets in there and understands the business in a very detailed way, sometimes, you know, back of the envelope or homegrown accounting or unspecialized accounting might not be sufficient any longer.

08:53
Hannah Dittman
And really honing in on the smallest level, decimal points of margin profile starts to really matter. What are the evolutions of the businesses you see when they start working with you? Like what are the big changes over time or inflection points that are happening for brands and what's really driving those changes. From the finance side?

09:13
Ryan Williams
Yeah, I'd say it's two things. Like on the finance side, I'd say like the first order things make sure we have a good grip of. Everyone's very excited to build a beautiful operating model, which I think we do with great charts and you know, all sorts of dashboards. But I think even before you get into that, just making sure you have a super solid understanding of your unit economics, which is pricing architecture side and making sure that's viable as you plan to be not just in Whole Foods and on Amazon, but, you know, maybe more broadly. So just making sure the revenue line of your pricing strategy and then also the cost of goods part of that is detailed and accurate. I think you can operate for a decent amount of time if those numbers are right and you really understand them.

09:58
Ryan Williams
And then as kind of the Stakes get higher and you need to plan your cash needs and working capital needs and increase the quality of your monthly reporting, then we really make sure that we can layer up into the more exciting pretty models and stuff. And I think surrounding all of that, we only will work with companies where we control the bookkeeping accounting side as well. Because in my experience, like it's much easier to plan and have a really good ability to present the finance piece when you're also in control and have a one to one relationship of accounting to finance.

10:38
Ryan Williams
So for example, you know, I think it's really useful to do budget tracking and when you have GL that's exactly matched to your model and you can zoom into like a very granular level of okay, we missed our gross margin, but which thing was it? Was it our product cost or was it our freight or whatever? The thing is, I think just having that process super connected, it increases detail, but it also increases speed. And I think one thing that is super helpful to founders is I think the nearness of reviewing what's going on to when it happened makes it much more engaging. Because I mean even my own business, I'm trying to do my 2025 review. Like, you know, I feel like it's already February. Like I focused on all our clients and like it's sitting in the rear view.

11:26
Ryan Williams
So for our clients, maybe even more than us, I think just that immediacy and detail is very valuable and I think for any brand, I think putting those accounting and like foundational unit economics pieces in place comes even before finance in a more strategic long term operating model kind of, you know, output.

11:49
Hannah Dittman
Yeah, great point. And just to double click and go back to what you said there and pull out some insights. You said gl, which is general ledger, talking about like the kind of building block of the accounting knowledge base of your company. And as you were speaking, talking about the connection between GL and your end financial analysis, I was just sitting there like, oh man, I have been there. I have had to build like I've had to go into a company and parse through a very messy GL and essentially build it up from scratch to try to understand what's going on. Because your outputs are only as good as your inputs in accounting and finance.

12:25
Hannah Dittman
You're starting with a really detailed understanding of essentially like what's every single credit card transaction that happened here, what is every single thing that was paid for or money coming in, what exactly was it used for specifically and when. And then you're taking all of that really Detailed granular general ledger information. You're rolling it up into the financial statements and then you're kind of making decisions off of that. And like you're saying. So if you're looking at a lot of times a directive, especially post investment, is to expand margins. Margin expansion is like a huge area of opportunity for most investors or at the very minimum something that you want to watch intensely closely. And if there's a change or a swing in margin or you need to get ahead of understanding what's going to impact margin.

13:09
Hannah Dittman
If you're only looking at your highest level operating budget or your financial plan, your model and the line item is like cogs. You're like cool. I know it wasn't cogs. There's like a million little things that were going on there. So knowing end to end detail, like you're saying and really having a handle on your business and the knowledge of that is the power. So it makes a lot of sense why you all want to focus across the spectrum. Speaking of, I'd love to kind of like break down for maybe earlier founders that are building up their financial portion of their business for the first time. What's the bare minimum? Homegrown things that need to be in place in an early stage company. Like if I'm a founder and maybe I'm even doing it for myself, what would you advise me on?

13:56
Hannah Dittman
These are the few things that you really need to start doing now and how to do them so that you're set up for success down the road and you're not going to miss something big.

14:05
Ryan Williams
Yeah, I would say like main buckets. One is just at least getting the gross to net revenue split. A lot of companies that we work with have just like for example booked all the money that's ever come in as their revenue. So you know, they get a deposit out of Shopify and their revenue. But it's very different than that. There's a lot of different fees that are assessed in the intern. That's not really. In fact if you do that you're understating your revenue. So it has implications of like if you present your business on that basis, people think it's smaller than it is. So I think just minimally in the revenue section like understanding what is your sales and then what are things that are taken off them.

14:44
Ryan Williams
And then I've noticed this battle for like years within CPG and I think I was on the losing team with it, which is what's included in gross margin. And I think 10 years ago, Gross margin in every single presentation. Every like public company and like most traditional finance people's, you know, viewpoint was included all your fulfillment and like freight out and all of those expenses. And I think a few companies sort of bucked the trend and started putting those quote unquote below the line as operations expenses that were. So when you exported your financials from QuickBooks or whatever system, cogs only included the cost of the product itself and maybe freight in. I think that's like where the industry settled.

15:28
Ryan Williams
So I think you shouldn't go against that, especially because it's going to make your gross margin look worse than it is of what everybody's now used to. But I think regardless of what you do, you minimally need to be able to separate what's the cost of my product and then what's the cost to move it around. And if you can go even just one level further than that for I think quite some time, it's sufficient. Which is like, okay, not just what's the cost of the product, but matching up, okay, what was the cost of my product for the product that I sold on Amazon versus that I sold to distributors versus that I sold to, I don't know, direct to Target.

16:10
Ryan Williams
And I think then as you scale, I think there's always this important balance of like people are very excited to be able to like infinitely drill, myself included. But I think you want to take stock of like what's the incremental effort to be able to go one level further, which is an order of magnitude more of complexity. And then like how often do I actually use that to make a decision? And you know, I think you need to just be careful of not just adding false precision where you can keep drilling, but you don't even know if it's so many little things touching the gl, is it even right at a certain point. So I find being able to like tell someone detailed channel level margins as the right kind of level for probably like sub 8 or 9 figures or so.

17:01
Ryan Williams
And then I think there's what I would say is the next step for a brand. Like I think you should probably only go through three. I think like a CPG brand should basically go through like three steps in its accounting finance life cycle. One is my uncle does the books and they're a total disaster. But I got paid and it like, it works for a while, which I would say is a very long window is one to like approaching a hundred million of. We use a simple ERP or QuickBooks with quality spreadsheets. We have understanding of our channels and Margins and we've gotten really far without putting in software systems that not everyone necessarily knows.

17:39
Ryan Williams
And then three, which is the final stage would be like we're a huge company and we need to really detailed reporting and we have a full time team that knows and understands how to put that together. And I think if you add more steps in that chain, you spend so much time like setting stuff up that you're never really like making decisions with what you have. So you know, we're stage two.

18:01
Hannah Dittman
Yeah, that's really helpful and a lot to unpack there too. To your last point, I totally agree. You know, you don't want to wait too long. A lack of diligence and process gives you blind spots or holds back your business. But at the same time you don't want to over index so much on process and perfection that you're losing sight of the North Star which is to build the company and drive it to a place of success. So that framework makes a lot of sense of three stepping the process. Earlier in the conversation you mentioned, you know, a couple of things that early stage companies should really make sure they have right and focus on is gross to net sales reporting being super accurate and understanding the payouts from Amazon or Shopify you might be receiving might not fully reflect true gross sales.

18:48
Hannah Dittman
Could you maybe, you know, for anyone out there that has no idea what could be in that bucket or how to go about it the right way, could you maybe give a walk how you would best approach a situation like that or the things that they need to specifically be looking out for or double checking on?

19:05
Ryan Williams
Sure. So I would split like that, you know, kind of gross to net bridge minimally of what we call online offline. I know a lot of people call it D2C or whatever. I just call it online offline. Online. You're selling the product online offline, as the name suggests, you know, offline. On the online piece you just need to look at whether it's Shopify or Amazon, your statement and reconcile. Like there will be a line on there that shows your revenue and then there will, it will show all these different things that are taken out of what actually comes into your bank account.

19:37
Ryan Williams
So for Amazon as an example, any FBA fees, the Amazon commission, all of those things need to be parsed out and put into other places in your gl the list of accounts that you have set up in order to get like an understanding of at least the economics. With Amazon Shopify there's not quite as many fees, but still like if you sell something for $100 on Shopify and then Shopify keeps 3% of that as their fee and you get 97 your revenue, still 100. But you need to look at the statement or there's some great software that kind of does it for you, which is always. This might open a second point, which is I would be really weary, if I'm a new company doing it myself, of setting up or implementing software.

20:23
Ryan Williams
I think there's so much great software, but if you don't have someone that's super experienced implementing it, I think it actually often does way more harm than good. For online, those are kind of the, you know, the things that you've got to watch.

20:36
Hannah Dittman
You mentioned your accounts and I think what you mean by that is chart of accounts.

20:40
Ryan Williams
Yes.

20:40
Hannah Dittman
Versus actual sales accounts. Could you maybe explain chart of accounts and get that into a little layman's terms as well? So we're all on the same page.

20:48
Ryan Williams
A hundred percent. Yeah. Your chart of accounts, which I think is kind of a synonym for general ledger. Your gl, your chart of accounts, all kind of interchangeably used. It's just like the long list of all of the different slots essentially where you can put financial things, track financials for your company. So within your chart of accounts, you have accounts that create your income statement, and you have accounts that create your balance sheet. And then within the income statement, there's various accounts that on the revenue side are like gross. And then you've got deductions or trades spent, we call them just broadly deductions. And then all the things you put into your gross revenue accounts or your gross revenue, GLS less. All the things you put into your deductions, GLS gets you to your net revenue.

21:37
Hannah Dittman
That's such a great explanation and super helpful. So you want to go through all of the gross sales that you might be getting. Make sure that you're not just focusing on the payout coming into your bank account, the cash that's moving into your bank account. Find out the discrepancy between the payout and the gross sales that you made. More or less. Those might be deductions, although FBA fees might go into cogs or somewhere else. So make sure you're accurately accounting for which line item is which and then understanding your gross to net spread, as we would call it, so that you're not under reporting your gross sales. And you're also understanding as. I mean less so maybe online, but for sure on the offline channel, as you were alluding to breaking it between offline and online, obviously, everyone.

22:19
Hannah Dittman
Everyone in brick and mortar knows You've got your TDPs. You've got a lot of things going into deductions that you want to watch like a hawk. So that is super helpful. Color.

22:29
Ryan Williams
Yeah, well, and then just on the offline deductions thing to. Just as. As you were saying, all those different, you know, when you. When you get your first order to Unfi and. Or Kahi or whoever, and you got a check that's a little smaller than you thought, those are usually deductions that are happening in between. And again at the earliest stages. Maybe you don't need or just have, you know, every company's operating with fixed resources and time. So realistically, maybe those first orders, you don't have time to parse out exactly what it was. But at least, you know, I sold 100 and I got back 70. I can match the 32 offline deductions, and you can kind of know your offline trade rate, which is, you know, very helpful.

23:13
Ryan Williams
And then I thinking sequentially of, okay, this is an area where it's large enough and important enough that we need to, like, open the level of detail that we track this in, then you can kind of just gradually, like, break things out. So within offline deductions, maybe like a step that we see a lot of our brands go through is maybe first from just booking stuff, cash, which is totally wrong to like, okay, I had a hundred of revenue, 30 of deductions, but I don't know what they were to. I had 30 of deductions, and I have a piece of software. You know, I'm on the board of Floor It. There's a bunch of great companies in that space. What were those $30 of deductions, and were there some of them that shouldn't have happened?

23:59
Ryan Williams
So, you know, I think just taking things, as many projects as you expand, the accounting finance function, I think is also just a very digestible way of having that side of your business kind of keep up with the overall growth.

24:15
Hannah Dittman
Yeah, I love the way you're explaining it, peeling back the layers of an onion, essentially. And really, I guess in finance, as we would call it, the value creation that you're finding as you go and the first layer of that onion is just landing on the moon and understanding where you are. It's just the knowledge base of what is going on here. I kind of always think about it as, like, when you start a puzzle and you're dumping out all the pieces of the puzzle and you're kind of just like flipping them over, organizing. Okay, I've got edge pieces, I got corner pieces that I've got all the pieces, but you're not really making sense of it yet. And then you're kind of building the outside border. You're like, okay, I know the world I am living in now.

24:56
Hannah Dittman
I know my gross, I know my net, I know kind of what's going on, I know my high level margin. And then you're kind of really putting all the pieces in as you go to finish things off. And that's where you're going to find the most value creation or problem solving, where like you're saying you're understanding, like hey, I know my gross to net, but should that be my gross to net or am I getting like ripped off here and, or this is my margin, what can I do about it to improve it and things like that. I think that's a really helpful way of thinking through things. Earlier you also mentioned a critical thing for early stage brands to get right, which often comes up in fundraising for sure.

25:32
Hannah Dittman
I think something that investors are always looking for is a very accurate gross margin and also a contribution margin by channel, as you were alluding to. Could you maybe break down for us from like an accounting perspective the difference between gross margin and contribution margin? And if I was just like brand new to the scene, could you help me wrap my head around how I would go about figuring that out for my own company?

25:59
Ryan Williams
Sure. So I would say in today's world, gross margin is your net revenue net. So were just talking about gross to net. So everything you sold less the deductions and then less on your cost of goods. So the cost of the product and the freight in for that product. So what you have left after you've paid for all of that. So again, I sold $100, but then I had $10 of discounts, now I have 90. That's my net revenue. And then if I had $40 of what I paid for ingredients, for packaging and for my co packer tolling fee, and now I have 50 left over, then I have $50 of gross profit against $90 of net revenue. And so, you know, my gross margin would be 55.5 repeating percent in that case.

26:52
Ryan Williams
And then after that you take your gross profit, then subtract your freight out, your warehousing, your fulfillment fees, all of the like what we broadly call operations, let's say those are another 20, so 50 minus 20, you're left with $30. And if you take your $30 divided by your net revenue of 90, you have a contribution margin of 33.3 repeating percent. And I've always found this thinking of your business, Whether it's a $1 million business or like $100 million business, what happened to my $1? Like good way to digest.

27:31
Hannah Dittman
It's a great way.

27:33
Ryan Williams
So yeah, I sometimes even make a chart and sometimes on your income statement it's called a common size thing which is forget the actual dollars, let's just look at this all indexed to net revenue. And so just thinking of your company as like most of the companies we work with and most startups are not profitable. And the sooner you can have a grip of how did $1 turn into negative $0.10? You know, my wife used to make fun of me when I was on board calls for my prior coffee company of talking about a few pennies here and a few pennies there.

28:06
Hannah Dittman
Yeah.

28:07
Ryan Williams
But I actually find that like a really good way to just kind of conceptualize how do we turn this from like for every $1 of sales we had 20 cents go out the door to thinking about like how can we have $1 of sales and have 5 cents stay in the door. So that'd be my kind of framework or just way of kind of thinking about it simply.

28:28
Hannah Dittman
I love that. I think that's such a practical, tangible piece of advice and really helps you think through even to the next chapter of once you get past the margin structures, understanding kind of the working capital implications. And it's just understanding how the math works of a business and if the math is logical and it makes sense for the effort and time that you're putting in to go and do that math, I'd love to kind of broaden our conversation back out to a little bit more high level and ask you know, you've spent a lot of time with a lot of different brands and been deep in the space for a long time.

29:04
Hannah Dittman
Reflecting throughout your career, what are some lessons learned or compelling anecdotes you think founders, brands or maybe even investors could learn from or general pieces of advice that you think are the most critical for people to understand based on your knowledge base and where you're coming from and your perspective in the space?

29:22
Ryan Williams
I think a few, in no particular order. One just on the founder side is like the awareness of where your business is at that is going to dictate the terms of especially if you're raising capital, what is market? You know, sometimes I see companies that are searching for capital and they're a little bit unwilling to listen to what the market is telling them. You know, I was an econ major in college. I just find that fair. And I've seen a lot of companies sometimes in this very competitive environment where for every dollar one that an investor gives out, there's 100 brands seeking that same dollar. I think can be really dangerous.

30:05
Ryan Williams
If you're a brand looking for capital and you're a either like anchoring to some publicly disclosed investment of a 1 in 10,000 company and the terms of that deal, I think you just need to focus on your brand and what your brand is attracting, not somebody else. And I think number two is just if you're not profitable and there's reasonable term capital available. I think I've seen more often than not the risk of trying to optimize around valuation while you're like account is going down each month being a really big business risk. And my input is always calculate what your incremental dilution is from the difference in like one valuation or another and you'll probably realize 1 or 2 or 3% of your company.

30:55
Ryan Williams
And then ask yourself okay, if this all falls apart and I have to shut my company down, that's pathway A. And if it all works out and I optimize my valuation and I get to the end of the road and sell my company to Coca Cola for a billion dollars or whatever, is there any possibility that I'll be calling my CFO and be like super upset that instead of owning 32% at exit I own 25 and a half? Like no. So you know, I think you should exclude deals that are so ridiculous that you won't have any incentive after but you shouldn't be in my opinion. I think optimizing can be dangerous.

31:39
Hannah Dittman
Pennywise and dollar poor.

31:41
Ryan Williams
Yeah, yeah.

31:43
Hannah Dittman
No, that makes a lot of sense. I think great advice and sage advice. The North Star is the big bet and belief in your brand and being rational and reasonable along the way. But the same way that sometimes it makes sense to have a little bit of a cogs give to get the product quality you really want or things like that. You know, there's always competing incentives and it's a judgment call on a lot of these things to not be too hard nosed and to understand that some concessions have to be made.

32:10
Ryan Williams
You know another thing I think I would encourage more early stage brands to think about and consider which I think the tech industry does well. I feel like most tech founders are pretty self honest of are people really using our app? Are they like downloading it and is there a real product market fit here. And I think when you're in that like early stage, if you know it, when it's truly working and I think if you've launched a business, this is just totally resonating with people. I think it's like very difficult and becomes a capital intensive grind where it's very difficult to create value if you're just like kind of forcing it with whatever your original idea was. Yeah, I think the term pivot is maybe a little bit passe or overused.

32:56
Ryan Williams
You know, I would just encourage companies, if they're like this is just not totally hitting the mark to take bigger churns than to try to like think that a new email template or a little change to the logo or one more gram of protein is going to be like their unlock. And if you look at basically every brand that's had like a really great exit, they all were not stories of little incremental improvement. They were stories of wild consumer fervor over like what they hit the mark on. And I think if you have outside funding and it's depleting, I think you just are like, you need to try to find that as opposed to like optimizing while you're unprofitable. That would be my little input that's.

33:42
Hannah Dittman
So helpful and I think a great objective third party perspective. It's a hard thing to distance yourself from your business sometime enough to see it objectively in that way, but I think you've had the benefit of seeing so many different patterns and so many different companies over such a long time. It's a little bit easier to kind of like compare and contrast against them. So really helpful.

34:04
Hannah Dittman
Color.

34:05
Hannah Dittman
I'd love to pivot into a slack question. As you know, startup CPG has the largest slack community in the industry with.

34:11
Hannah Dittman
Now over 35,000 members.

34:13
Hannah Dittman
I'd love to pull a question directly from our channel and have you answer it as a case study for any.

34:17
Hannah Dittman
Founder that might have a similar question.

34:19
Hannah Dittman
Today's question is what are the most.

34:21
Hannah Dittman
Important KPIs to track in a company for investors?

34:25
Ryan Williams
Okay, I'd say a couple. You know, I think it's always hard to reduce this to one. I think like ultimately an investor is investing in your ability to create value. And maybe there isn't one thing that creates value, but I think there's a few. And then I think there's a couple metrics that's speak to. That one I would say is how much capital has it taken to where we've gotten our business? So in a very simple way. If a company has, let's say burned $5 million to build a $20 million business, your ratio there would be 4 to 1. So I think capital efficiency and in the most simple, quick to like calculate and digest what's my trailing or run rate revenue divided by capital burned. I think that is often a good indicator of value creation or lack thereof.

35:17
Ryan Williams
And I would say kind of similar to like LTV to CAC for like D2C focused companies. That 3 or 4 to 1 ratio is I think where you want to be with maybe an asterisk of that first year where you like had to pay the design agency and like all these different one time expenses but your revenue is really nascent. Maybe exclude that from the calculation because I would say that's like a fixed one time kind of expense. But yeah, as like almost a quick disqualifier for a lot of investors. If you've burned $90 million and you're at 40 million of revenue, something's broken. So you know, I think that's a place really to focus. I think a couple others are growth. You know, we've had just so much focus, maybe rightfully so since the falling out of investment volumes following 2021.

36:08
Ryan Williams
I'm becoming profitable and a lot of brands I think have optimized for like let me try to be as close to but still not profitable as possible. If you have two companies and one is tripling and working each year but it's not profitable and one that's like so close to profitable but they grew 30% last year, the one that's triple in is way more backable and in value creating than the one that's closer to profitable. So I think there's rightfully been a reset from this growth at all costs mentality. But if you're not, it's not even doubling. If you're not growing close to 3x in those early years or more investor kind of metrics of IRR and return on cash and so forth, it's going to be very difficult to create value there.

36:56
Ryan Williams
So I do think your first priority is crazy growth, not let's get to profitability.

37:02
Hannah Dittman
Really helpful color and perspective. And yeah, I think markets can often overcorrect as we've seen one end of chasm of funding dollars going in on you know, on another chasm of business fundamentals maybe so really helpful color and perspective. Ryan, I could sit and chat accounting and finance with you all day long. I feel like we have really just scratched like the tip of the iceberg on so many of these concepts. And you're a wealth of knowledge and clearly an expert in the space. For any founders that want to get in touch with you to learn more, maybe listening to this, like, man, I don't know. Or they just really need some help. What's the best way for them to get in contact?

37:39
Hannah Dittman
And second question, do you have any advice for anyone that wants to break in the industry or maybe join your team?

37:45
Ryan Williams
Oh, yeah. To get in touch with us, you can just Visit our website, Northall.com, you can reach out to me via email, ryan@northhall.com or you can connect with me. I'm on LinkedIn, so just shoot me a connection request, maybe with a little message of some context is helpful. And then advice for anyone trying to get in the industry. This is again from my tech days. I was in an incubator called techstars and they had this mantra of give first, which was figure out how to like, help people and then just boomerangs around. And so that's actually why I started building Fabid, which was our original name, the Food and Beverage Investor Database.

38:23
Ryan Williams
Because I was like, oh, anyone, whether they're an investor or a founder, like, I can give them this really well researched, you know, curated investor database and they'll find it useful. And that allowed me, like, really early to meet a lot of people that were super successful in CPG and kickstart my career in this direction. And I think if you can think of one singular thing that's meaningful where you can help other people in like a repeatable way, I think that was such a shortcut for meeting a ton of great people and having something to offer as opposed to something to ask. And that just makes it so much easier to ingratiate yourself and have people want to see you win. Yeah. As far as joining our team, like, our business is growing.

39:10
Ryan Williams
You know, we're always excited to meet new people who might add to it. So also ryanorthall.com just shoot me a note.

39:17
Hannah Dittman
Thanks so much, Ryan, and thanks again for your time and all the insights you shared. This was really great. And like I said, you're clearly an expert in the space, so we're lucky to be learning from you.

39:27
Ryan Williams
Well, thank you for having me. A pleasure being here and, you know, I appreciate the invite.

39:33
Hannah Dittman
Well, friends, we've now arrived together at the end of another episode of the Startup CPG podcast, the top globally ranked podcast in cpg. And if you love this podcast, you'll love our Slack community even more. Here at Startup cpg. We're a community of brands and experts and you should join. Sign up@startupcpg.com you'll then get an invite to our online Slack community of over 35,000 All Star CPG members. Hear about amazing events near you and all our special opportunities to get you in front of buyers, investors, brands and more. It's a free community. So what are you waiting for? I'll catch you on the next episode and I'll see you on the Slack.