The Exchanges

Q So, but like, what do you do in that five year period?

A Because we, because we launched in 2016, we were able to continue selling our products. So we were doing a ton of sales and I mean, it was still slow. It took a long time to, to introduce this product to people. We started with a nicotine gum product. Uh, and, and I mean, I think we did a great job with formulation and branding. Like it, it, it, it is a better product. Um, but we would constantly get compared to Nicorette. Nicorette's very cheap. There's also generic Nicorette there. Amazon has a Nicorette product or a Nicorette competitor. Um, so we would get compared to that all the time. And it wasn't really like a, a growing category, like the overall NRT spaces is called nicotine replacement therapy. Um, that whole space, Is, you know, under a billion dollars revenue.

AI assessment note: “we were able to continue selling our products. So we were doing a ton of sales”

Q the way, you are a remarkably good storyteller, and it sounds like your co-founders are as well with, like, very pointed articles and headlines and that kind of thing. How do you think about the storytelling of the business, um, and, like, the marketing component of that in, like, consumer world? You ride with trends, you kind of, like, try to drive your own narrative. What is the mechanism there?

A Yeah. It's, it's very tricky for this company for in the nicotine space. So we did one like tech crunch article earlier and they were just like, this is the next jewel, like very negative. Uh, and so we've mostly just tried to let the product speak for itself and just work with, you know, people who are in our demographic and have like podcasts and can talk about the product and are just like genuinely excited about it. Like some of the biggest like press we've gotten has just been, you know, People who use the product talking about how much they love it. And that's been, uh, been the best. We haven't really done a lot of like business storytelling. I think we should do more. Um, I think it would probably help with like the, like the FDA advocacy and, and, you know, like, like really helping it, helping us frame the company is like, Hey, look, we're like the one company in the space. That's not big tobacco. Like people, a lot of people don't know anything about Zen, but like, You know, started by a big tobacco company from day one, sold to an even bigger tobacco company, like just a couple of years ago, like every, every, like literally all of our, all of the competitors that are directly above us are owned by big tobacco. And I mean, like, it's good that they're moving people to new products. Like I'm, I'm happy for them, but there is something, uh, that makes for a good story…

AI assessment note: “we've mostly just tried to let the product speak for itself”

Q It's very funny. Have you guys bootstrapped today? Have you received any outside funding?

A Yeah. We, we raised, we raised a seed round and I mean, we also went through YC with this company, which was really cool because, uh, I mean, it was the second time through, but also it was a cool signal to be like, it looked like YC is like taking a bet on something that's like quote unquote controversial. Um, But, uh, and then, and then we raised a, like a series A before the pandemic with RE and yeah, it's been great. It was enough. Like this is definitely a capital intensive industry to like get set up because you have to do all that, all the regulatory stuff. There are like hard costs to get started. Um, but once you get set up, then it's more of like a working capital problem. Like, uh, what's your cash conversion cycle? As long as we can place a bigger order with, With our co-packers and manufacturers get the product made and then send it to the retailers and then get the money from them as fast as possible. You know, you're looking at a conversion ratio of like monthly revenue roughly equals inventory. And so if you're doing, you know, five million in monthly revenue, like you really only need five million in inventory, maybe, maybe like, you know, some sort of slight cushion on top of that, but it's not huge. It's not, it's not something that just grows and grows and grows. And it's not like there's some massive R and D expense. It's not like, oh, we're going to be cha…

AI assessment note: “We, we raised, we raised a seed round and I mean, we also went through YC”

Q a founder and entrepreneur, so you also kind of ride the, if not create these cultural waves within Silicon Valley, uh, you founded Soylent. I would love to dig into that further. How did you Come up with this idea with your team. I know that there were a couple co-founders of yours. Um, how did you guys band together and what was kind of like the journey with Soylent?

A Yeah. It's one of the funniest, like Silicon Valley startup stories, just because, I mean, it started very normally. It was a bunch of guys who wanted to move to Silicon Valley, build the next technology company for writing software. It was a few software engineers, electrical engineers. The original idea was, uh, like a wireless mesh network, kind of like there was a crypto company that did something like this later helium. Um, but crypto barely existed at the time. Actually Coinbase was in our batch. At YC and was giving anyone who signed up a full Bitcoin, which is insane. It was like five dollars back then. Uh, so it was like their signup reward. Like, here you go. Here's a Bitcoin. I'll send you one. Try test, test this service out. Um, but, but, you know, building wireless, like base stations is really, really expensive. We didn't really know what we were doing. Didn't have a financial model or anything. And so we knew a lot of VCs through the YC network, but, um, no one wanted to pony up, you know, millions and millions of dollars to go build What were essentially five G towers, like pre Huawei. Um, we didn't really have any of the, you know, traction or anything to support that idea. We were just kind of tinkering. Um, so that company, we failed to fundraise for it. We were working on a bunch of other companies too, but, um, nothing was working. Like we weren't making a…

AI assessment note: “It was a bunch of guys who wanted to move to Silicon Valley”

Q Honestly, it could be a negative signal if you know the cultural significance of this ad and why people are fighting about it. Why are people fighting about it?

A I don't know. I mean, I, I, it, it does seem like it's, it, it struck a chord, you know, it's like, it's compressing down all these like big things into this iPad and, and it's like destroying all of our cultural significant things. Um, and it like, it is accurate. It's like what Apple's actually doing. It's what technology does. It's like, this is accelerationism. Um, but at the same time, it's just like, you know, Like the stock didn't move, you know, it's like, it's not, it is, isn't like a, a real thing. Like, I don't think it'll affect sales. Like, I, I think it's just like, I don't know, people in Texas want something to talk about. And so they'll just pick the, whatever the, the thing of the day is. And like, right now the algorithm seems to really, really, really reinforce, like there's a video and anyone can quote tweet it. And then, so you see just like, 20 people quote tweeting it. And there's a little bit of like, uh, Like a, oh, you got to get your quote tweet on that video. Cause if you come up with something pithy, it's going to go viral and you'll get a bunch of internet points. But, uh, but the actual like discourse around these things is just so, so surface level. And so like meaningless, like, like I, there's probably a version of discussing that Apple ad that I would want to engage with. Like, I want to know, like, what does that hydraulic press normally cru…

AI assessment note: “it's compressing down all these like big things into this iPad and, and it's”

Q like what are the biggest misconceptions for this product, for nicotine products in this market? What are you constantly battling if it's in terms of like public perception of maybe like, let's say like the jewels and all of these vapes out there and all these crazy products, like how do you differentiate yourself against that? And then what is the kind of like the, uh, strategic advantage you have?

A I mean, the jewel story is super informative and we're, we're very lucky that they kind of went first in this space because there's a ton of lessons, even from day one. I mean, when we started the company, jewel had barely launched and we knew a lot of the team and we saw some of them and it was, it was crazy. Like some of the early employees were like, I'm, this is the, this is the most insane rocket ship I've ever seen. Uh, I'm going to work here for four years and then start a family office. So like, like that was something I actually, and that's like not something you hear from a lot of like early stage, you know, startup employees, not founders, employees. And like, it happened like they're billionaires now. And it's like, this actually played out. Uh, yeah, it's like one of the most insane financial rises because at their peak, I think they were valued in like 60 ish billion dollars and Altria bought, uh, 30% of the company for like thirteen billion dollars. And so Uh, the majority of that went to pay a dividend to the investors and employees. So, I mean, there were people that started like, you know, a month before the dividend happened and got a check for a 120,000 dollars on like day one, basically. Like there were lots of people that made a ton, a ton of money. Um, but there were also a bunch of mistakes made. Um, the, the, the two main ones that people, uh, really, r…

AI assessment note: “the two main ones that people, uh, really, really worry about”