#050: How to Find the Next $1 Billion Brand – Insider Tips from Alex Malamatinas

where the data is telling you that this company has issues, those are pretty telltale signs that it's either not going to work out or something drastic needs to change. There have been situations where my team has said to me, look, you know, we've got to listen to the fact that the unit economics aren't strong enough and, you know, have to make the hard decision of saying no. If we are recognized as, you know, one of the, or the most sort of credible like early-stage consumer investor partner, I think that's success, being that sort of consumer fund of choice.

Alex Malamatinas, founder of Melitas Ventures, has made a notable impact in venture capital by investing in early-stage consumer brands. With a finance and hedge fund background, Alex combines analytical skills with a passion for guiding founders through the challenges of building successful companies. In this episode, he shares his journey from finance to becoming a leading investor in the consumer packaged goods space. He discusses his investment philosophy, highlighting the importance of resilience and vision in founders and the role of early traction in assessing potential. Alex also reflects on the CPG market's evolution, the balance between collaboration and competition among investors, and the trends he finds most exciting. Welcome back to Season 2, Episode 13 of the Turning Pro Podcast. Today we have Alex Malamatinas, the founder of Melitas Ventures. Thanks for joining us today.

Thanks for having me.

Did I get that right?

You did. I'm impressed.

Wow. One go. That's it.

Yeah.

Appreciate you being here today. Would love to maybe start by you just giving us a little bit of background on what you're working on.

Sure. Yeah. So maybe I'll briefly introduce myself. So I grew up in Europe. I'm so half Greek, half Dutch. Grew up in London primarily. Came to the US for my undergrad many years ago. Went to Stanford, began my career at Morgan Stanley, went to business school, and then I guess a less conventional path to VC. So I was trained in the hedge fund industry, uh, as a fundamental bottom-up investor. I invested across the board, different sectors and geographies, and then ultimately it came full circle where I was spending the vast majority, if not all of my time, on global consumer companies. It's a space that I'm very passionate about. I grew up in a CPG household, so my father was the CEO of Burger King and Smirnoff in, in the '90s. His first CEO role was actually Pepsi Italy in the '80s.

Wow, I didn't know that.

Yeah, so it's— so I kind of just grew up with, you know, brands, food and beverage brands around me. So yeah, love the space, and I've always been passionate about working with founders. And so, you know, as I was looking at or analyzing, you know, the large companies in the space, the Nestlés, the Mondelez, the Pepsis. I realized that they were all looking to the early stage for innovation. Um, I've always loved, you know, just trying to help out founders, give advice where I, where I can, and then saw an opportunity to build a venture fund that focuses on emerging consumer brands. So yeah, launched Mallet House Ventures in 2018.

The two interests in bottom-up hedge fund and helping consumer founders at the early stages, there's not many people that share that overlap, right? You'd usually think they're on opposite sides of the table. If you think about like private equity guys or hedge funds, they're trying to acquire those companies and carve them out and focus on the profit centers. Where at the same time, like you have these weird competing things that you're really good at, this hedge fund, like quant analysis. But you also love working with founders. And so like, are those at odds or should they be at odds?

I mean, I recognize that there may be different skills or, but I actually see them as complementary. And I think it— I'd like to think it's helped us at Mellitas differentiate ourselves. So I think on the analysis side, and I'm surrounded by, you know, partners and operators and advisors that also have, you know, very strong both skill sets in financial analysis as well as on the operational side. I think that's helped us be more targeted as investors. We've been fortunate to identify companies like Allapop, Magic Spoon, Mudwater, Lemon Perfect early on. And candidly, I don't think people give enough credit to early-stage venture investors. I think you can do the work. A lot of people will say you can't, but I think that's helped us. And then, and then, yeah, the other side to it being that, you know, I love working with founders and working through challenges. And where I can't help, you know, my partners or advisors can.

So I want to push on that a little bit because I think you bring up an interesting point of like, you can do the work. In your eyes, what do you see as the most important work that you're doing when you're investing at the earlier stages, especially as someone who comes from a pretty analytical background? Because I think there's a lot of people out there who will say that early stage is really just like gambling and betting, but obviously there's ways that you can try to reduce your risk by doing that work. What is that to you?

Yeah, so there's a few things. And firstly, I would, you know, specify that we invest once there's initial product market fit and there's initial traction. So if you're investing pre-revenue, sure, there's very little, if any, analysis that you can do beyond assessing the founder and and the team and things like that. So I guess to answer your question more directly, you can already have a viewpoint on the founder and his or her abilities. You can assess the product. You can taste it or try it. And it doesn't matter what I think, but there's maybe enough consumer feedback that you can see, do people like this? And is it addressing— you know, a problem or something that consumers are missing. And then the third point in terms of, you know, the analysis, even if there's limited data, there's still data. So if a company's been around, you know, for call it a year or two, I'll give you a specific example. So when we first invested in Olipop, this was like late 2019, early 2020, they were doing just under a million in annualized revenue.

Wow.

But you could see the growth. So you could see year on year it was scaling. And under the hood, like even more importantly, sales velocities were already far in excess of what other beverage brands were in the space. The margins were good. So there's enough there that you, you can analyze. Of course, not every company with good initial traction does well, but those are signs I think you should be paying attention to. And we've made mistakes as well. I mean, candidly, You're going to make mistakes even when the indications are very strong. Where the data is telling you that this company has issues, let's say because the margin's too low, I don't know, the margin, call it less than 40% or less than 30%, it's not scaling, the cash burn's really high, those are pretty telltale signs that it's either not going to work out or something drastic needs to change.

How have you evolved your investment decision-making and your philosophy around approaching a potential investment from maybe when you started angel investing and first entering the space to, you know, 2024 July?

I think we've just built out the team more. So now we have, you know, a team of partners, we have an analyst. And so how big is the team now? We are 5 full-time and then we have 4 advisors. So you know, we, between each of us, you know, we're looking into all of these pieces, sort of qualitative and quantitative. So I don't know if anything has changed per se. It's more that we maybe go into even more depth on the analysis than we did before. Of course, you learn from your mistakes. And so, you know, it might sound really obvious, but one thing I've learned is like the founder and team is arguably the most important aspect to all of this. And, um, you know, there have been situations where, you know, you can get carried away by the brand and kind of overlook, um, you know, things on the team or margin profile, etc.

What do you look for in a founder?

I look for a few things, and every founder is different. Um, I mean, first and foremost, they need to be, you know, extremely passionate and resilient. Resilience is arguably the most important characteristic to success, I would say, in general. And for a founder, they need to have a very clear vision, and they need to believe that vision. If they don't believe it, no one else is going to believe it. And then I think they also need to have this delicate balance of conviction and humility. And so like, no one person, you know, can do it all alone. And so the earlier a founder can recognize what he or she might need to complement them, the better. I mean, some of the more successful founders I've seen, speaking our own sort of portfolio, like Ben and David from Olipop and Gabby and Greg from Magic Spoon, they started early on and very complementary skill sets.

Do you think that over time as the team has evolved as well, you've, some specific mistakes that you've reflected on, you've noticed yourself integrating that into new methodologies? And on that note, are there specific mistakes or lessons, you know, we don't have to call the specific company out, that you've made that you can talk about?

Yeah, for sure. So one of them, um, one of them I alluded to, I guess it's like making a mistake, you know, in terms of your judgment on the founder's ability. You know, people can sell you on the dream And again, as a founder, you should sell, right? I mean, you've gotta raise capital.

[Speaker:DAVID] Yeah.

[Speaker:JOSH] You've gotta build your business. Some people sell better than others, and you know, some people will sell you something which isn't reality, and then when you start working with them, you realize actually this is not what I signed up for. So I try to be a better judge of character and ability. Of course, we all make mistakes, but you know, as we go through the diligence process, you know, really spending more time getting to know the founders. And it's two-way process. Founders should do the same on their investors and understand, like, are they going to be good partners for them? So I'd say that's point one. And then point two is just like not ignoring the data, right? Like, you sometimes— I can speak for myself— I'll get very excited about a brand and you want to invest, and you'll, you'll say, ah, well, okay, the margins are a bit lower, or the sales growth's a bit lower. You'll overlook that, but I think also as a team, we're like, we hold each other accountable. And there've been situations where my team has said to me, look, we've gotta listen to the fact that the unit economics aren't strong enough and have to make the hard decision of saying no.

From a macro lens, looking at the early-stage venture asset class that is investing in e-commerce brands or consumer packaged goods brands, how has it evolved since, I mean, we first met each other like 4 or 5 years ago.

Yeah.

And that was right after COVID when all these brands were exploding, especially through digital channels. And it was flooded with a lot of celebrity investors that were backing companies. Some of them are still around. It was flooded with angel investors that, you know, CPG was incredibly hot. And since then, the folks that I know that have continued to build kind of generational funds in the space, yourself included, Kiva included, Coefficient, funds like that, has it weeded out a lot of the kind of, let's call it touristy investors in the space?

I think the short answer is yes. I mean, the funds that you mentioned, like, there's only a few of us. It's a large space. And, you know, we generally all know each other. So yes, there's been a lot of tourist capital. You know, at some point, everybody was starting a new fund. Every branding agency was starting a fund. Angel investors were starting a fund. And, you know, it was a bit of a sign of the times. Candidly, the tech funds, like, we're investing in CPG. And I think it's, you know, we've just been going through a cycle. And so, you know, it sort of weeds people out. And sort of, you've seen kind of everybody going a bit back to their swimming lanes. So the tech funds are more focused on tech, as probably they should be. And even some family offices that were kind of doing more, maybe doing less in the space. So it kind of presents I think a great opportunity for funds like ourselves that we've been focused on this space for 7 years to, yeah, to find great founders and valuations are more reasonable. So I think it's a great time to be investing. The innovation is as strong as ever and yeah, and valuations are reasonable.

You mentioned the point around getting to know a founder, and I'm curious from your lens, as someone who has raised some money, like I think I hear a lot of investors say, yeah, we like to get to know founders. I've had investors who are like writing checks on first calls who know nothing about me. I have other investors who didn't even know what company I was building but have known me for 5 years that were like, here's a check. So I'm curious, in your mind, like, what is that process? Or like, what are the important milestones in your eyes to like, okay, I think I know this person well enough to, to believe the thesis we form like holds true?

It's hard to kind of give a simple answer to that, but I generally, with time, you kind of build conviction. So I wouldn't say I'm one of those investors to write a check on the first call. I might have a good feeling on that first call, and then I'll try to convince my team and we'll meet in person and we'll look through the data. And in some cases, we are able to move pretty quickly. It's just not on that first call. And so you, within a few interactions with the founders, you just start building conviction. In some cases it's, uh, sooner rather than later.

How do you balance the timing of— on one side, as a venture investor, your job is to say no 99% of the time, and your job is to slowly build conviction. But at the same time, when something does come around that you have a really good gut feeling about based on pattern recognition or the data that you're diving into, sometimes you do need to move incredibly quickly. And I feel like that dichotomy, as a lot of my friends that are investors do a pretty good job at that, like really slow methodical thinking. And then when they do get that gut feeling, they move incredibly quickly. Has that always been like a skill set of yours or have you really tried to hone that over time?

It's hard and it's, yeah, it's probably more of an art than a science. So I, I will have a very strong instinct or feeling about that there's something I like here. And then it's a balancing act of signaling interest to the founders while concurrently doing diligence and then presenting a term sheet soon enough. So yeah, it's kind of more of an art and kind of over time, I guess you evolve your style.

What are red flags in first couple calls that you've seen from founders, obviously, that you haven't backed? What are some immediate ones that come up?

I mean, the first one is if people are just not honest.

That's a good one.

I mean, it happens, right?

Give us an example. Anonymize it.

I mean, I'll keep it general, but like if somebody tells you that they did a certain amount of revenue or they will do a certain amount of revenue in the quarter and the quarter is just has just finished or just about to close and you're far off. Soon enough you realize, and then it's tough to kind of maintain trust and integrity, which is so important in anything, but let alone as you're trying to build a long-term relationship in venture. I think the other thing is, um, and, and it's a little bit stylistic, but you know, and it's a balance. Like sometimes, like, people can be too aggressive in that initial pitch. Um, and, and, and again, you've gotta, you gotta sell yourself, but you also gotta build that, that trust and relationship. And so that's fine. I mean, there's, there's investors like you mentioned where, you know, they'll write a check on the first call. We're just not that investor. Like, we'll need at least to meet in person a couple meetings, and maybe we can build a conviction. But yeah, you know, some— I guess it depends. You gotta find the right fit for or on both sides.

My favorite question, what's your biggest miss?

It's a good question. So time will tell.

Good answer, very diplomatic.

I mean, I'll give you a specific answer. I passed on Liquid Death at a $20 million valuation.

Wow, I didn't know that.

Yeah. So I thought it was expensive at $20 million. I think it's a lot more expensive at over a billion, but they've done very well. You know, I probably should have invested given the traction. Fortunately, I did invest at Olipop at a $22 million valuation, so you can't win them all. But, um, but yeah, that's probably one that comes to mind.

Do those keep you up at night?

No, um, the ones that keep me up at night are the ones I'm involved in, um, because you want them to, to succeed. At the end of the day, you only need a few properly sized positions to return each fund.

What are the ideas that founders have about venture investors? In this case specifically, brand founders versus brand investors or consumer investors. What are the notions that they have that just aren't true?

That's a tough one. I mean, I think I'm trying to generalize, but we, I think, play an active role with our companies and can help them everything from production to marketing to retail to DTC all the way to exit. So I think there's a lot of areas in which we can help. But even in our case, it's not us, it's the founder that's driving the company. And so I think most founders get this, but it's like, try to find first and foremost an investor you have good chemistry with or you can trust. And secondly, somebody that can help your company succeed. But it's you that's going to be driving it. And so I— maybe in some cases founders sort of think like, oh, I'm lacking in marketing or retail, so I'll get this investor and they'll solve all my problems. It just doesn't work that way.

What balance do you typically look for in, say, first-time founders, or maybe they started a software company and they're coming to CBG for the first time, they don't really know the ecosystem, but they're smart, ambitious, they clearly can get up to speed quickly. Versus second-time founder, maybe you don't like the idea as much, but they started a CBG brand, maybe, maybe got acquihired or something. How do you balance those two, like experience versus naivety?

Yeah, I mean, I've had mixed experiences with both. I mean, candidly, I used to ascribe higher value to like a second-time CBG founder. Um, of course there are some people in the business that have like had 2, 3, 4 successful exits, and I'd say they're more the exception to the rule. But then there's other people that, you know, the second time they build a business, they set, you know, sort of the company rules just based on what succeeded last time. And the environment might be different, the business dynamics might be different, the category dynamics, and often they're pretty kind of stuck in their ways. So it's good and bad. Whereas if they're coming from software, different industry, maybe they're more open-minded. And more flexible with their thinking, but also have the experience of having built a company. So it really depends. I mean, we have founders that were like lawyers, that were in finance, that were in CPG, that were in tech, you know, big corporate. So it really varies.

What categories or trends are you most excited about right now?

Fragrance is one that I think is really compelling.

Who just mentioned that?

Who?

It was Jay.

It was Jay. Yes.

That's so interesting.

Yeah.

Our first podcast today was talking about fragrance.

I think some of it is like, it's just consumer behavior is evolving, right? And so like the large companies like the Givaudan of the world and like all the big brands, Tom Ford, these are all like premium, expensive products that command loyalty and like people will just keep paying a high price and they benefit from very high margins. Gen Z doesn't like— is maybe not as loyal, and I'm generalizing, to like one brand and is maybe less keen to spend as much money. And so there are some brands that, you know, are now offering similar fragrance and/or quality at a much lower price point. And they are offering, you know, more different types of scents, which is also appealing to people. So I think it's driven by consumer behavior.

Any others?

Yeah, I think, like, global or multicultural foods is an interesting space. So kind of what Siete did. Now there's, you know, some Asian brands, some Indian food brands and condiments. I think, you know, sort of the country is ready for that. Um, and so, and there's some great tasting sort of better-for-you brands. Um, supplements is always very interesting. Femcare is interesting. Pet continues to be interesting.

I love pet. Yeah, I mean, I think the— I don't obvi— I don't have much context on pet like 5 years ago from an investor perspective, but once, uh, COVID happened, it just completely accelerated the Gen Z population of buying dogs, which was the first thing. And then it was like, you take the fact that all these younger kids have dogs and you pair that with the fact that there weren't many like Gen Z-focused brands in the space. I mean, some of the numbers that I see with some of these pet brands that we work with and like others that I'm— people I'm friends with are absolutely crazy to me.

It's a great customer, right? Because your pet doesn't change their mind as frequently as we do. Right? So if you can find like a pet food brand that, that, that your dog or cat likes, you're likely going to keep reordering it. And that makes for a great business, right? Retention is generally higher. Um, yeah, we were fortunate because we were early investors in Nom Nom, which is a fresh human-grade pet food company, sort of digitally native. And then in COVID, to your point, like, you know, saw the tailwinds And so, you know, grew even faster. And there was this increased sort of movement towards fresh human grade. And so, you know, people buying more dogs and then wanting to offer their pets healthier food. So yeah, fortunately that was our biggest investment in the first fund and we exited at the end of 2021.

I think what my like mini beta test for whether something is entering mainstream is I will order something to my parents' house down in Miami and I'll just stock their fridge for like a month. And the first one was the Lemon Ginger Olipop that has been on subscription because my mom drinks it every day for the past year. And then the second one—

those are my favorite olipop.

I like that.

The Lemon Lime is my favorite.

I don't think I've tried them.

Yeah, try that. And Orange Crush.

I think I started drinking this more when I stopped drinking alcohol because I really only drink water. And when I wanted, like, a little bit of flavor aside from water, it was usually this.

I feel like there's a big discrepancy because there's some better for you that the original tastes better. And then there are some that genuinely do taste better. Like, I don't know if you've tried, um— I know you invested. Uh, the Masa chips. Those, like, beef tallow chips. I'll send you some. Delicious.

No, I'll grab 'em some. They're—

I think they're better than—

Griff, will you check above the fridge? There's gotta be a bag up there.

I think if you did blind— Tostitos next to that. I prefer that.

They're basically building, uh, Lay's with no seed oil in like one sentence. Yeah, yeah, there you go.

Shout out Masa Chips.

He's got to give a live— he's got to give a live taste. I'll send it to Seth.

I've seen— I've seen the brand.

You got to open it. The founder, Seth Goldstein, and then he has a partner, Steven.

Okay.

Uh, Seth was a finance guy, left a 7-figure PE job to start this.

He was a guest. What?

He was early on.

Yeah.

I can't wait to send this to him. You got to be brutally honest.

It's really good.

Aren't those— I don't know if I've had that.

It's indistinguishable.

Wow. Can you introduce us?

Yeah, yeah, 100%.

So they love this. You know, our next investment. So good. Yeah.

One of the— yeah, I'm going to send them. I'm going to send them two deals. I have optimism here. What's really amazing about it is that one of the founders, like, won't even walk into a restaurant that uses seed oil, like, very much lives, eats, breathes, sleeps like the what they stand for. And then the other founder is like, you know, he's a capitalist. Like, this is an amazing opportunity. Private equity.

Yeah.

But Steven, the other founder, like, won't touch anything with seed oils, which I appreciate in a founder when you actually embody the thing that you're, you're building.

Yeah, totally. I think those— there, there are the handful of brands that like, this actually does taste better. Like Lemon Perfect. Similarly, I ordered it to my parents' place.

Yeah.

And they love the peach raspberry or whatever it is, and they like that better than the thing— like, whenever they have homemade lemonade with sugar, like, they actually like it better.

Well, that for me was like a key sort of awakening moment when, like, a few years ago, you know, you— I had the realization, which many have, that you don't need to sacrifice on taste. There was this perception, I don't know, 10+ years ago, where oh, if it's healthier, that it doesn't taste as good, you know, like the initial vegan restaurants, right? And so whereas these days there is no reason why you shouldn't be able to get like a product that tastes equally good or better that's also better for you.

Have you tried those like Barbell protein bars that are everywhere?

No.

Yes, they're delicious, dude. I was eating them like candy bars. I stopped ordering them. Well, like, I was, I was literally just eating way too many of them. Oh, like, they're so good.

They're—

no, but they're, they're not bad for you, but I I don't know, for me, I think I went through this phase where I realized that like a protein bar is really just like a chocolate bar. There are healthier ones, but when you just eat 'em too frequently, I was like, I can't have these in the house.

Yeah.

Cause I can't do things in mod— I can't do things in moderation when it comes to food. So I'm not a big snacker. This is like one of the only snacks that we had. The Monster Chips are one of the only snacks in this apartment.

I remember mid-COVID I would order just bunches of Magic Spoon.

Yeah.

To the place that I was staying. And I'd eat like 2 of the boxes within a day or something. I was like, okay, this isn't working for me because I have no control over like something.

It's for the brand.

Yeah, it's like keep ordering them. To your point though, around like, I agree with you around this misconception of like if it's healthy, it probably doesn't taste good. My perception of it is that it's twofold. It's convenience and it's price, right? Like I think a lot of people, why do they eat at McDonald's and Burger King? I think part of it is the price of it, but I also think there's a part of it that's convenience. It's just like easy, it's accessible, it's there. Not every better-for-you brand has the same visibility that they do. And so like there's like the lower middle class who doesn't really even know about a lot of what's going on in like the better-for-you ecosystem. And so I think breaking into those, breaking those barriers down with a product that's affordable is like very challenging, I think.

Yeah. And I think, you know, that's why for, for many of these brands, again, like a Magic Spoon and Olipop, once you break into like a Target and a Costco, then suddenly, you know, the whole population has access to these brands and they can order it online or they can find it in most stores. So they, you know, these brands really have a shot of competing against the big established ones. Price point's an interesting one because generally these better-for-you products are more expensive than your mainstream products.

Totally.

And people will generally pay up for a healthier product. The question is how much. And in a, you know, quote unquote recession, will people keep buying? And that was a fear of many people. You know, many people were concerned about a, you know, sort of pending recession that hasn't yet come. Um, and will people keep paying a premium for Olipop and Magic Spoon? So far they are.

Yeah. What's your perspective on that at large? Like, do you think premium Better For You products are recession-proof, or do you think it's category dependent?

I mean, it's tough to kind of give you a blanket statement on that. Yeah, some are, some are not.

What do you think are the differentiators from like a fat, like, variable perspective that make some like recession-proof versus others that aren't?

I think like going back to pet, pet and baby food are a little bit more recession-proof because if you've decided you're going to feed your dog and or your baby healthier food, it's going to be the last thing that you're going to cut to say, I'm going to go back to a lower price point. It would also be, I guess, a big decision to kind of say, okay, you know, you're buying all this Magic Spoon, now you want to cut down on your spending, go back to Kellogg's. But maybe, right? It just hasn't happened yet. And generally speaking, when consumers have made that leap, they're less likely to go back. And if people do, it's generally a portion of the population, but not all. So As long as these brands are reasonably priced and, you know, serving or offering you their value proposition, I think they'll continue to succeed.

I think especially with Better For You, a lot of people overlook the fact that some of the changes that are being made, like my dad used to drink a lot of Coke.

Yeah.

And now he'll drink like after a workout, he would have like half of a Coke or something. It's really not good for me. He's like 65 and now he'll have coconut water. It's still kind of get something sweet.

That's a crazy shift.

I mean, it's still, it's still sugar. Yeah, refreshing, but it's better and it's better. And so I think a lot of, a lot of us in New York, it's like, okay, after a long day, am I going to have like an Olipop or Diet Coke in the bodega? Like, that's not that big a deal to our lifestyles. But for a lot of people, like, if you do get in the hands of mass population, it does have real impact for sure.

And the other reality is that you know, it's easier to reduce your price than increase your price. So generally these products start at a higher price point and then over time the price point comes down at scale, whether it's with a strategic or on their own.

Yeah. As you've— I'm curious, in your own personal life, are there any— I feel like a lot of the time as you're looking at all these consumer brands, you're learning all the time about seed oils. This is good for you. This is bad for you. Don't eat this. Don't eat this. Does that ever permeate your personal life where like you'll be hanging out with friends and they're eating things that are terrible for them and you're like, hey, you know, can you substitute it with this? This is going to be better for you.

Yeah. I mean, all the time. And like, as you, you know, the deeper you kind of look into these things, the more you discover that there's like unhealthy products out there that people are overlooking. Yeah. I mean, in the early days, it started with kind of Olipop and Magic Spoon and some of these other brands. And yeah, I pay a lot of attention in the grocery store and, you know, sometimes I get sort of inspiration just to find like a better-for-you product in a category where we haven't seen innovation yet.

What does your pantry and fridge look like?

I mean, I have a lot of our—

I've seen your office. I haven't seen you.

Yeah, yeah.

But the office is like the public-facing one where people are coming in there. So you got to follow the rules a little bit more there than at home.

I mean, in my fridge I have like olive oil, lemon—

like I have hundreds of—

yeah. In fact, in COVID, my wife was pointing out that like half of the fridge was like MelaTas products and other products because we try products all the time. But yeah, it's a fun part of the job.

Do you have a favorite product within the portfolio that you really, really are a fan of?

I'm curious through the lens of personal use.

Yeah.

Yeah, I mean, it— I, you know, it's hard to point out one, but like, yeah, Olipop and Lemon Perfect I drink on a very regular basis.

Yeah, I'm a big fan of the small immune— I think that the liver doses—

oh yeah, so Dose is another one of my— so Dose, um, functional wellness shots. I don't think so.

Oh, you got it.

There's, there's like— it's basically Dose for your liver, there's Dose for cholesterol, dose for skin, dose for immunity, and it's a shelf-stable, healthy, great-tasting shot. Um, yeah, we're the lead investor. They've done incredibly well. I take, you know, one dose cholesterol a day.

Really?

Yeah, I get that from my dad.

Yeah, I was thinking of getting it from my parents.

And liver, the liver health products.

Great. Yeah, it's like, um, he had— his family had connections where they were producing a lot of like ingredients in mass, I think, in India.

Pharmaceutical business.

The founder of those.

Yeah. There's family connections. And then, I mean, you could tell the story better. Yeah.

And then young guy, right? Vasu. And he moved to Santa Monica and we met him early on and he had this very clear vision for the brand. And we met him during COVID just, I guess, around the time we met. And he was, you know, just launching the brand and Yeah, has done an incredible job, like, straight up, you know, from the beginning. And so fortunately, we partnered with him, you know, within the first few months and then subsequently led the seed round.

How do you think about investing in, you know, there's that famous line about investing in lines, not dots. So like long-term relationships. A lot of the time founders will text me, say if one of us introduced them to an investor and they'll send a screenshot, you know, the investor passed. It's like, well, yeah, you met them last week and you're trying to close the round. That's not that big a surprise. They say, you know, what should I do? You know, I'm kind of frustrated. And it's like, look, it is their job to say no. And a lot of the time they will come back. And if you show the right traction, they might invest. And then that's happened with Malthus a number of times.

100%. And look, I mean, obviously there's emotions, right? You're trying to raise capital and, you know, you've got to do what you got to do. But, you know, it might not be the right fit for the investor, might not be the right fit for you. So I think everybody's got to respect that. Um, and I think if you sort of take a rational approach, it's a small industry, it's good to keep good relationships because they might refer you to somebody else that could be helpful one day. Or to your point, Adrian, at some point they can invest. I mean, we, we've had that experience with a couple brands. Um, where we initially didn't invest. It was too early or, you know, there was a reason why we didn't invest. And then ultimately we did.

Do most founders know that? I feel like that's not as talked about.

It's not as talked about. And I think people, you know, when you say no, they just assume that's kind of the end of the relationship.

Yeah.

I think it stems from a larger, like, philosophical understanding as a founder is that, like, you never know when someone's going to come back around in your life and, like, you don't want to burn a bridge. Like, I think there's a lot of emotion, there's a lot of ego involved, especially for first-time founders where they take it personal. I mean, I'll be the first to admit, like, when we— when I tried to raise money for the first time, it's like the first person that says no, you're like, what the fuck? Like, why not? Like, you don't understand it.

Yeah, it's really hard. I mean, and by the way, as funds, we raise capital too.

Yeah, totally. I'm sure you've had plenty of LPs who tell you no, right? Or potential LPs, right?

I mean, and there are people that I've been speaking with since I launched our first fund and they're still speaking with me and claim to be really interested, but maybe haven't invested yet.

Yeah. Like by the time you get to like your fifth fund, like, oh, you know what, I've seen what I wanted. Here's like, here's $500K and they'll be the loudest person in the room.

I mean, of course, at some point you've got to maybe draw the line.

No, of course.

Of course. But yeah, why not?

What is life like away from work for you? What do you do for fun?

Well, I try to stay active. I mean, I used to play more sports. I used to love playing soccer, tennis, basketball. Yeah, so these days I guess watching the Euro Championships.

That counts as playing soccer?

Yeah. No, it doesn't count.

Big games on Friday.

Yeah.

Spain-Germany is going to be fun.

Well, and this weekend. So I told you I was half Dutch. I grew up supporting the Dutch team and my wife's Turkish. So that's going to be a heated game.

That Turkey game was incredible.

Yeah.

It's been a big summer for soccer fans.

It's a great, I guess, month for sports. Wimbledon, as well as other sports. So yeah, I mean, these days I go to the gym, I run, I play tennis.

Are there any hobbies from childhood that you have rediscovered over the years?

Huh. I mean, tennis is one that I've recently started taking up again.

Where do you play?

Well, that's part of the issue. It's not—

I mean, West Side, there's some courts, but you sit there for 45 minutes to wait to get one.

You actually have to.

Yeah, isn't it first come, first serve?

Yeah, it's brutal. It's not easy to play in the city. I mean, this is more of like a relatively more recent hobby, but I cook and I, I love cooking and, you know, bringing in your own ingredients, and I find it very meditative. Um, so I enjoy that.

We just had someone on, uh, do you know the brand Thesis?

Yeah.

He was a chef at a 3-star Michelin restaurant. Yeah, Dan was on earlier.

He's on 4 hours ago.

Yeah, I didn't realize that. I mean, I know that he's a great—

his whole, his whole journey started in culinary.

Amazing.

And he was a sous chef, I think, at a— or he was whatever term that I'd never heard. One of the executive chefs. No, but there was a, there was a word or a term that I was familiar— no, I know, but he used— yeah, so he was a saucier at a 3-star Michelin restaurant in, uh, was it in France?

I think it was in Paris.

Yeah.

And then that was like the first step where he's like, I don't want to do this anymore. And one thing led to the next.

That's a tough job. I have so much respect for chefs and people that work in the kitchen. In fact, I've been speaking with the founder. We haven't invested in the brand, but he used to work at Blue Hill. And in the city, Dan Barber, upstate.

Wow.

And incredible, like, restaurant establishment. And their, like, level of detail and focus is just—

and work ethic.

Incredible. And work ethic. Yeah.

When you're in the day-to-day or week-to-week, what are, what are the most stressful parts of the job where you get frustrated, your head's hitting a wall? Is it when a portco isn't doing well, when you're struggling fundraising from LPs, or conversations are taking too long?

Yeah, I mean, it's, it, you know, it's a combination of things. I think it's always, I'd say, challenging when things don't go well with Porcos. And I think the unfortunate reality is no matter how good you are as an early-stage investor, there are always things going wrong, whether or not the company succeeds. So I think sort of recognizing that and getting better with managing your emotions is very important, um, because otherwise you can just drive yourself crazy.

Like when you see a founder making objectively poor capital allocation decisions and you're just like, what is going on?

Well, and it's, it's like a relate— it's like any relationship, you got to work on it, right? So you've got to really— you can't just like point fingers at each other. You've got to be there and talk through it and try to get through it. And hopefully you do. In some cases you don't, and it's really unfortunate. And then you gotta move on.

What does the future look like for your fund? Like, how do you know— fast forward a decade, like, what does success look like to you?

So I think for us, like, just keep doing what we're doing. I mean, you know, back, you know, the next generation of better-for-you consumer brands. And, and hopefully we keep growing as a fund, and it doesn't need to be necessarily in terms of AUM or going to the next stage. If we are recognized as one of the most credible early-stage consumer investor partner, I think that's success. And that's from everyone's perspective. That's from the founder's perspective. That's from our LP's perspective, our co-investor's perspective. So really being that sort of consumer fund of choice. Of course, you named a few funds and the VMGs and El Katatans of done a very good job sort of establishing themselves in the later stage, and hopefully we can do the same for ourselves, at least in the early stage.

How do you think about relationships with co-investors? Because say there's, you know, company did a pre-seed, they're growing like crazy, you have enough traction that you guys could actually invest, and there's $3 million seed round, say you could put in $2 or $2.5, and if there's only $500K left, How do you think through, you want to work with your co-investors that you share a lot of deal flow with and that you respect, but also there's only $500K left. I can't be telling you about these deals. Maybe I'll introduce you to angels instead. How much is collaboration versus sharp elbows? Because a lot of that is pretty diplomatic.

Yeah, it's hard trying to find the right balance between collaboration and competition. Right. And I think in the space, it's It's generally a collaborative space, I would say, compared to certainly the hedge fund industry. And at the end of the day, it's a long-term game, right? Like, you've got to build your trust with your co-investors. So, um, so yeah, I think it's more important to build collaboration and trust. But there are certain situations where, you know, you're maybe competing. I mean, I've been in situations where, you know, some of the other funds, like, we're very close friends, but we're competing for the same deal. And I've been in many situations where we've both been in the same round, and that's maybe the ideal. But there are other times where there's maybe—

unit economics don't allow for that, I guess.

So yeah, exactly, that's the business model, right?

I gotta say, I think competing in a respectful way— yeah, like above the line— with friends is— I mean, it's like you're playing paddle with a good friend, right? I think it's one of the most fun things you can do.

I agree. I mean, I don't know if you— it wasn't a great documentary, but I don't know if you saw the recent documentary on Roger Federer?

No, I haven't seen it yet.

Yeah, so he's a brilliant guy, sportsman, and, you know, gave a great graduation speech worth listening to.

The Dartmouth one? Yeah, yeah, that was a good one.

But he, you know, he talks about his relationship with Nadal, and Nadal, you know, talks about— and they're getting very emotional about this. And these guys, like, at the top of their game, they're competing, but they have so much respect for each other. So it's to your point Like you can compete, but with integrity and have respect.

Yeah. I think it depends on the industry in which you're in, especially when it gets early stage.

Well, and the people, right?

And the people. I think especially early stage B2B SaaS right now, especially with Gen AI, is incredibly saturated. And there's not only 3 to 5 to 10 firms that you all mutually respect and you kind of know each other's swim lanes and maybe there's 2 or 3 that you come up against a lot. And that's the friendship, that's the mutual respect. In some kind of micro industries, there's just like dozens and dozens and dozens of funds. And sometimes you just need to move faster than others. And it's not always above the line, which is unfortunate, but just that's the volume of the competition.

I think I— yeah, I guess we'll wrap with one more question for you, which is based around the premise of the show. So looking back on your career thus far, what has been like one very big turning pro moment for you where you feel like you just kind of took things to the next level?

I think officially launching Mallet House. So in 2018, I think, you know, our first fund, I think it was officially, you know, sort of July 2018. That was sort of my moment, right? Because before that, I had made, you know, I had invested in publicly traded stocks. I had made angel investments. In fact, some of my early investments Kin Euphorics and a couple others, they were angel investments that then sort of evolved into malatoss investments. And I think being able to kind of then talk to a founder and saying, look, I'm managing a fund and we're institutional capital and we can back you and we can back your subsequent rounds was probably my first step and a very gratifying one.

Was that moment Were you excited and passionate and ambitious, or was it a little terrifying?

Or both?

You could be both.

A bit of both, but mostly I was just extremely excited to be in a position where I could, you know, do what I love and do it for work.

Beautiful. It's a great place to wrap. Can you talk to that camera on the left? Just tell them about, uh, where they can find Melitas online.

Sure. Yeah, so melitasventures.com. You, and you can also follow us on Instagram. And yeah, please reach out to us on info@melitasventures.com with, with any of your ideas. We'd love to collaborate.

If you're an early-stage, better-for-you food and beverage brand, it's really broader consumer.

So better-for-you consumer brands. Yeah.

Awesome. Thanks for coming on today.

Thank you.

This is great.

That's great to be here.