The Exchanges

Q So in those categories that you're going after, like what are the specific subcategories?

A So beverage is one of them. Uh, I can talk about beverage for, for days. A pet has historically been one of my favorite categories. Um, when you think about The enterprise software of consumer spend. Pet is it. I mean, yes, you'll have that initial maybe 40 to 60% drop off in the first year, but after that, you're retaining 80 to 90% of your customer, of your dollar spend year after year, and so it's a, you can apply very similar frameworks from software to growing a pet business. As I said, a lot of these fast casual restaurants that can scale really quickly with the limited capex is, is another area that we're spending a lot of our time on. We're continuing to look at digital healthcare and you know, there's a bunch of categories that we're looking at that as sports is another one. It's hard for me to just only talk at the surface level. I'm happy to pick one and I can go deep on it.

AI assessment note: “So beverage is one of them... A pet has historically been one of my favorite categories.”

Q So if it was LTV to CAC at Insight, what is it at left lane?

A LTV to CAC is still the North star metric. I mean, all of these businesses at the end of the day are engines of, we acquire a Paying customer, and we spend for that, the denominator, and then we get our gross profit of whatever service or product we're providing them over time. And we run that year after year, right? So they all at the end of the day, whether it's a business in the banking space or the virtual education space or the psychiatry space, when you come to RICs on Monday, they're similar slide templates and you're breaking them down to similar metrics. I would say on the newer kind of four wall stuff, there is this concept of LTV to CapEx that we've been adopting. That's kind of interesting or LTV to CapEx plus sales and marketing, which is essentially your cost to acquire customer is building that four wall unit and The sales and marketing required to get them inside of it and the LTV. So the numerator is the gross profit you generate from them over time. And so that framework and being able to kind of apply and retrofit somewhat of a similar framework that we had in the software days has been really helpful because when you look at a burger shop, which traditionally has not been something that, you know, our LPs would know us for, and you see that it can, you know, it costs, it can generate a hundred You realize that that payback and life after payback is really in…

AI assessment note: “LTV to CAC is still the North star metric.”

Q like you're just genuinely very passionate about what you do and all the different ideas you can come up with and you just have fun with it. So it's like, it's really refreshing. To close it out, since you're ahead of the curve on pretty much everything cool, you know, what's going to be cool before it's cool. What's the next big trend we should all know about or watch?

A The two main ones, which I'll, which I've said about continue to operate and invest against are The mass distrust of incumbent CPG brands, Coca-Cola and Pepsi and Doritos and Pringles having their, their cigarette moment. Um, you're going to see, you see what happens at Rayo's. You see, there's going to be many more businesses like that as people realize there's just a new consumer and new brands, same core needs, but new brands that they trust. The other is, is just, we're just in the early days of what's happening in sport. Um, And the, the, the disruption of linear TV and the kind of the, I mean, you've got backup guards in the NBA making hundreds of millions of dollar contracts over four or five years. It's, it's, it's nuts. Um, and, and the ability to better monetize the attention economy there is, is huge. And then don't sleep on D to C. Don't sleep on D to C. I think there's, you know, you see your losers before you see your winners and sure with, you know, all birds and handful of others, there's, there's been some, but There are certain, like pet food, there's certain categories that make an incredible amount of sense to go acquire shared, direct to consumer, and then build a digitally native business on the, off the backs of that, that then you maybe want to go omnichannel in the future. But I think we're, we've, we've kind of slept on, on some of those. And I think i…

AI assessment note: “The mass distrust of incumbent CPG brands, Coca-Cola and Pepsi”

Q both minds at the table, how do you say, stay clear minded and balanced when evaluating various kinds of deals? I mean, these trends come up and down. I mean, we see lots of social, lots of consumer driven businesses that reach really fast growth, super quick, and then they kind of taper out. So how do you Find those. How do you evaluate them and then help them grow?

A It's a good question, and this is what I, why I think it's so valuable to have our partnership and our processes and our team. We say if one of my partners, Dan, is a bit more on the Enterprise side, but more fintech and a bit more complex businesses. And we often say if him and I like a business, it's going to be a damn good business. And I think you can get emotionally excited about consumer. I'll never forget when I had liquid death and I put the bottle on our, the not bottle can obviously on our, our table and IC, and I got laughed at, and it's turned out to be a great success. And there was definitely key insight there around brand. So I think like our process and our IC just holds Are consumer businesses way more accountable than the other average consumer dedicated investor? If you are entirely reliant on new customers for your revenue and you can't really go to sleep for a year and be a decent sized business that next year, It's just not going to work, and it's not going to hold up in RIC. There's no trust me. There's, there's, there's no, hey man, just on this one. Even League One Volleyball, which is one of our investments, they're launching a professional pro league, and there have been investments into dedicated pro leagues. Those are huge J-curve, higher risk investments. What was interesting to us about League One is that underneath their hold co, they also are bu…

AI assessment note: “I think it's so valuable to have our partnership and our processes and our team.”

Q Yeah. I wanted to actually ask and dig Deeper into the pearls and strings. So let's say you find a good string, you're acquiring different pearls, right? How do you know that you found the breakout one? Like what are the main characteristics of the breakout company within the pack?

A It's a good question. Depending on the stage, it can be more obvious or less obvious. And the later you go, the more data-driven you are, the earlier you go, the more founder and brand-driven you are. But the key is having Close to perfect information. There's over 75 direct to consumer pet food businesses globally that I've spoken to, right? And even when you go into France, there's seven there, and you have to understand each one, and there are different retentions, and there are different CACs, and all of that. And so, the key is really As close to perfect information as you can get, because that's what enables you to have perspective. And then if it's too early, then you have to inform a bit more brand and, you know, when, when, uh, and, and some of the, you know, what you think about the founder and whatnot. But usually if it's not obvious, you haven't done enough work yet, but it usually is obvious. And then the beauty of some of these categories is they're not necessarily winner take all. Um, you know, there's some platform or network or brand effects, but winner can often take most as we saw in indirect to consumer pet. But if you ended up in two, three, four, or five, you're still making, underwriting your base, you're still, ah, gonna return your base case for each of those deals.

AI assessment note: “the key is really As close to perfect information as you can get”

Q that's a short amount of time to raise two billion dollars. So that's a tremendous feat. You guys are also young, okay? Young for the industry standard of, you know, a fifty-year-old male, but you guys are probably early, mid-thirties. You've raised, yeah, you've raised a great amount of money. So how did you grow so fast, and what are the current stats and outputs that you guys are hitting?

A Well, first off, thank you. Um, it's, it's been humbling, but also at the same time, it feels like the, the bar is higher. We have to jump over. So I don't know. I take it still. I think I'm still in, I feel a lot of responsibility phase rather than clapping. But first thing I'll say is, I mean, we, we took a lot of time to name the firm. I remember we hired like three naming agencies. They were horrible. And then Harley and I went off into, I think we spent a weekend and I just, we were driving upstate and left lane just hit us. Cause we're, We're not right lane, right? We, we, we like to go faster. We like to, to beat the, the, on a relative basis, the competition. We like to win. Um, I just so aggressive. Yes. In that sense. I just think aggressive can have a reckless connotation, which we are the opposite of. We've got our seat belts on. We have the airbags, you know, make sure maintenance, everything like that. But, uh, but it's, it's been, it's been fast, but it's been consistent with the strategy. You know, when we were at insight, we were Man, Harley, Vinny, and Dan, when they were there managing a similar amount of, of, of, of money. And I can't say we, we fully expected it in, in this amount of time. The market went fast and, and we were able to fortunate to have a handful of winners early in our, our fund one that we were able to raise fund two off, off the backs of,…

AI assessment note: “fortunate to have a handful of winners early in our, our fund one”