The Reum brothers are vultures.
🦅
They scavenge.
They raise money. They spend money to make money. And they do it well.
The year is 2007.
And Dad is proud.
So, so proud.
🥹
His sons - Carter and Courtney - work on Wall Street after all! They’re investment bankers at Goldman Sachs. And Courtney is hands on with the CEOs of Vitamin Water, Under Armor, etc…
Which gets him thinking.
These CEOs are smart. But they’re not any smarter… HOWEVER.
It’s 2007.
And starting a brand isn’t everything.
We don’t have Instagram. Or Shopify. Or a financial crisis. But Courtney has a brain? And some ignorance. And a disappointed father.*
Disappointed because -
You can read all the 10Ks in the world. But starting a business is different from understanding a trend.
Courtney gets Carter to renege on a really great job offer in private equity. To start VEEV (vitamin enhanced energy vodka). It’s a mixture of acai and prickly pear and vodka and gin. And it really just sounds like the flavored vodka sh*t you buy in high school.
But hey.
Veev is concepted during Courtney’s party time on New York rooftops. Which gets him thinking. Wall Street only orders Vodka Sodas. (Which is literally Vodka Water). So prickly pear sounds prettty good. 🙄
The year is 2016.
And the brothers sell their flavored vodka sh*t (my words, it’s a joke) for an estimated $70M. (They learn a lot about best practices and repeatable processes along the way).
The first being - DON’T start an alcohol company. It’s hard to know where your bottle lands after leaving its distribution center. And distribution centers only care about the big guys.
The team that takes a company from 0 to $5 million revenue is different from the team that takes it from $5 million plus. VEEV sells to Luxco (a big guy) for leverage and scalability. (Luxco owns the majority of their distribution center’s skus).
Don’t forget.
The Reum brothers are vultures. You have to spend money to make money. They write a book called Shortcut Your Startup. And they angel invest/advise 12 CPG companies. (Warby Parker, Lyft, Birchbox, Benevo, etc…).
Cap tables, BABY. ;)
They’re pretty good at this stuff.
So they start M13.
(A venture capital firm).
And they learn.
That it’s really f*cking hard to raise a fund.
You have a responsibility to your LPs and portfolio companies and employees. (And you have to convince a bunch of LPs to take your money over established funds).
You have to ask yourself.
How big can this thing get if it works???
VEEV faced roadblocks which made the brothers sell early. At M13, Fund 1 is used to invest in scalable CPG brands. (Like Daily Harvest, FabFitFun, etc…). These brands still face roadblocks. They’re just less permanent.
Fund 2 is used to invest in software. AKA the marketplaces that will power consumers to do what they do in ten years. (Like Ring, Thrive Market, etc…).
In a perfect world - capital flows to the people or systems who can best accelerate growth. In today’s world - money isn’t hard to come by. Everyone and their mother has a VC firm.
The Reum brothers differentiate M13 by hiring operators. People like Christine Choi. Who’s on the ground with things like operations, distribution, talent, etc…
Okay.
M13 is two-thronged.
Aside from the whole portfolio thing, they also run a launchpad.
AKA. M13 partners with large corporations (like Procter & Gamble) to launch brands internally (like Kindra). They institutionalize repeatable behaviors that result in the greatest likelihood of success.
Which is why… I like to call them PROCESS FREAKS. ;)
So take one from the Reum brothers. You gotta be a little crazy. And a little ignorant. And a vulture?
And that’s the skinny.
* Their dad is upset because how cool is it to say, “My sons work on Wall Street.” The whole “let’s start a business” trend hasn’t happened yet.
Always an excellent read! Thanks for The Skinny, IB.