Investor Spotlight: Ryan Springer of Midnight Venture Partners

In this episode of the Startup CPG Podcast, Hannah Dittman welcomes Ryan Springer, Managing Partner and Co-Founder of Midnight Venture Partners, for an in-depth conversation on the evolving world of CPG investing. Ryan shares his path into venture capital, insights gained from his early experiences in retail strategy, and the vision behind building Midnight Venture Partners.

The discussion covers strategies and viewpoints from Midnight Venture Partners, exploring how investment theses evolve to adapt to category dynamics, market factors, and shifting opportunities. Ryan also offers valuable perspective on founder-investor alignment, holding periods, and the critical traits—such as tenacity and grit—that set successful entrepreneurs apart.

From navigating differentiation and defensibility to understanding consumer behavior shifts and new growth frontiers, this episode provides practical guidance for founders and industry professionals alike.

Listen now to gain actionable insights on scaling a CPG brand and building lasting investor partnerships.

Don’t miss the chance to connect with investors and brands—secure your spot at fandf.startupcpg.com

Listen in as they share about:

• Midnight Venture Partners Overview
• How Venture Capital Works
• Investment Fundamentals
• Founder–Investor Alignment
• Lessons from Fund I → Fund II
• Differentiation & Defensibility in CPG
• Consumer Trends & Growth Channels
• Founder & Investor Perspectives
• Advice for Founders & Aspiring Investors
  
  

Episode Links:

Website:  https://midnightvp.com/
LinkedIn: https://www.linkedin.com/in/ryan-springer-466a02aa/ 

Don't forget to leave a five-star review on Apple Podcasts or Spotify if you enjoyed this episode. For potential sponsorship opportunities or to join the Startup CPG community, visit http://www.startupcpg.com.

Show Links:

• Transcripts of each episode are available on the Transistor platform that hosts our podcast here (click on the episode and toggle to “Transcript” at the top)
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• Follow @startupcpg
• Visit host Hannah's Linkedin 
• Questions or comments about the episode? Email Daniel at [e-mail]
• Episode music by Super Fantastics
  
  

Creators and Guests

Host

Hannah Dittman

Operations and Finance Correspondent at Startup CPG

What is The Startup CPG Podcast?

The top CPG podcast in the world, highlighting stories from founders, buyer spotlights, highly practical industry insights - all to give you a better chance at success.

Ryan Springer
That misalignment of timeline and speed and all that kind of thing is where VC starts to get a bad reputation that I believe it kind of earns. Because a lot of VCs, including myself, when I get lazy, aren't clear to these founders about, hey, I need you to do this in this period of time or I'm going to start getting antsy and whatever levers I've got to kind of push you further along or for instance, I'll get a lot of brands that'll say, hey, MVC on my board is telling me to launch an RTD version. And I'm like, well, there's a reason they need you to go for the fences and they're totally okay if you're a zero, that's not true for you. This is your one thing. If it's a zero, it's a giant bum room.

00:54
Hannah Dittman
Hey everybody, I'm Hannah Dittman, Operations and Finance correspondent at startup CPG and the founder of Ready Basics. As a former CPG investor, I'm especially excited to host this Investor Spotlight with Ryan Springer from Midnight Venture Partners. If you've ever wondered how investors really think about fund returns, defensibility, or what separates a good founder from an unforgettable one, this episode is for you. We're sitting down with Ryan Springer of Midnight Venture Partners. A founder himself, a second generation CPGer and the co founder of High Desert Vodka. Ryan shares how investors think about the math behind venture returns, the factors that truly matter in defensibility, plenty of hot takes on industry topics and how to position yourself so investors recognize your edge.

01:35
Hannah Dittman
We also dive into what makes a strong investor founder relationship work and the role a great capital partner should play beyond just writing a check. Whether you're figuring out when to start fundraising, how to stand out in a crowded market, or what investors think like, you'll get invaluable perspective from someone who's built both brands and a venture firm. Enjoy. Hey everybody. Welcome back to the Startup CPG podcast. This is Hannah and today I am here with Ryan Springer, a founding partner for Midnight Venture Partners. Ryan, welcome to the show.

02:07
Ryan Springer
I'm pumped to be on. Thank you for having me.

02:09
Hannah Dittman
We are so excited to have you. I'd love to kick off with you introducing yourself. Can you share your title, a brief background of your experience prior to MVP and what led you to investing in the first place?

02:20
Ryan Springer
Definitely. My title is Managing Partner. I co founded Midnight with my two partners, Chris, Adam and Alex Bodney. What led me to this? I feel Like I make a lot of nepotism jokes because I was kind of born to do this. My dad does retail strategy at cpg. His name's Al Springer and he forced me to work for him in the summers in my teens and then voluntarily not getting paid very well in my 20s. I learned retail strategy from him. So you know what retailers should you choose, how do you get there, how to use data to tell a story, how do you get in front of a buyer once you're on the shelf, what promos do you run, how do you maximize velocity? Basically how you grow a brand in retail. And that's what I did prior to starting this fund.

03:02
Ryan Springer
I started it with Alex and Chris. We're starting our fund two now starting to deploy our fund two. Another kind of fun fact about me. I have another business. We're all in the same office here in Austin, Texas but I co founded a Cactus Vodka for High Desert with my co founder Logan Sligger. He came up with the idea. I just kind of helped try to get it to where it needs to go. And those are the two things I.

03:25
Hannah Dittman
Do that's so interesting. I love the name, the branding. I totally see where you're going with that and how exciting to be to learn from your father. I feel like investing and CPG kind of is such a apprenticeship model since it's so experiential and anecdotally based a lot of the learning. So what a better person to learn from. That's a really unique opportunity and experience.

03:45
Ryan Springer
Yeah, I tell everyone that was kind of my advantage. My unfair advantage was sort of I shouldn't have had that network. I definitely should add that knowledge base. But I was lucky enough to get it and not smart enough to do something else. I needed to take advantage of it. I was smart enough to know I needed to take advantage of it.

04:00
Hannah Dittman
Yeah, or you were smart enough to know, not too proud.

04:04
Ryan Springer
Somewhere between those two things.

04:06
Hannah Dittman
Love it. Can you also provide an overview of Midnight Venture Partners and give us the kind of formal intro to your fund? I'd love touch on things like key investment criteria, your thesis stage focus, any key themes you focus on, how you differentiate yourself, average check size, things like that.

04:24
Ryan Springer
Sure. We're in a period of kind of transition from fund one, which we've almost finished deploying into fund two, which we just started deploying and we've written one check out of fund two. I won't, I can't share yet who that is. I think that'll get announced down the line. But we basically we started as a wellness fund. I think we are very much still that. But going into Fund 2, we've discovered that we love beverage, we love kind of power law, higher potential outcome investments, we're comfortable with risk. And so we are pushing further into, you know, billion dollar potential deals rather than more traditional CVG investing of like, hey, you know, let's own a bunch and hope it sells for 300. So I think I can go deeper into it later.

05:12
Ryan Springer
But it's dictating what categories we'll invest in and the other categories, maybe the ownership percentage we'd need to have to make it work. Fund 1 was 23 million and then we've invested 27 million in five SDVs into Fund 1 Brands. So a total of like 50 million AUM in the Fund 1 universe. And that's a strategy of ours. We invest out of a fund and then when businesses begin to scale and get to a certain point, we allow our LPs to get into SPVs. Largest one we've ever written is 14 million. Smallest one we've ever written is a million. Average check size out of fund level is about 500k. Fund two, that's going to change. Average check size I think is going to between 2 and 3 million.

05:53
Ryan Springer
But that strategy of like 1 to 1 plus ratio of fund dollars to SPV dollars is going to stay the same. And I think what's exciting for founders about that is if we get involved, we can follow the business, continue to build into our position and be a source of capital beyond just like a seed check.

06:10
Hannah Dittman
I'm so excited that you came out the gate with some of this information because you're touching on a lot of concepts that I think tee up conversations that I wanted to have today really nicely. Can you maybe break it down in a little bit more simplified terminology of what exactly you mean by with some of those concepts?

06:27
Ryan Springer
So keep me honest, I'll start with spv. So special purpose vehicle. It's like a fund but it's just for typically one investment. And so a lot of funds increasingly these days they'll invest out of a fund and then they will have inability to do all that people call like a sidecar. For us it's a lower carry to RLP chance to double down into a deal. So in fund one our max check size was a million dollars. But when Olipop came across our desk, like a lot of funds in our industry, we jumped on it and were really excited. We showed it to our LPs and so we had 1 million out of the fund and then it ended up being a total of 6 million through an SPV from our LPs to invest into it.

07:06
Ryan Springer
So it's like an investment vehicle that goes into one business. That's not always true. That's how we treat it. That's usually the case. And so I hope that clarifies things on the SPV side. It's a critical part of our strategy, both to the founders and to our investors to be able to say, hey, as these businesses grow and get to a point where we're confident enough to bring in more direct capital and venture outside of the portfolio, effect safety of the fund. That's where a lot of our LPs, I think they're going to make most of their money. And that's where our founders can rely on us to be able to be much larger check writers later on, which has been helpful. For example, one of our portfolio companies, they had a lead that they were aiming for and wanted.

07:46
Ryan Springer
We agreed we wanted them in, but we really like this deal too. And so what we told them was like, hey, tell that lead. We'll do the whole thing if they don't. And fund model alone. We never could have done that. We had already reached our max check size and it was nowhere near what these guys were looking for. But it helped them in negotiations and it helped land the person we wanted to land. And were serious too. And so I think that flexibility that SPVs allows you to makes it more exciting, in my opinion, on the fun side. And then I think founders like that.

08:15
Hannah Dittman
Ability to, yeah, definitely keeps you able to be flexible and dynamic. I think for founders that allows them to have you as a more leading partner, I guess I should say, where they know that you can be with them in a little bit, you know, to swing for the fences a little bit more to make a bigger bet. If things are going really well and they are getting the traction and they need more support from you. And then, you know, we're touching on LPs, so just again, break it down a little bit simpler. So LPs are the limited partners that are giving you the capital to then go invest. And an SPV is a way for them to co invest alongside you so you get some dynamic opportunities to get more capital quickly into a company.

08:55
Hannah Dittman
As you're describing, that's really awesome and advantageous of you guys that you're, you know, hustling and have enough conviction that you want to be able to play, you know, the longer game with some of your companies. I think this is a perfect launchpad point, I think, to kind of dive into a conversation I wanted to have, which I feel like a lot of founders out there would really benefit from understanding how investors make their money and kind of wrap their head a little bit more around, you know, what holding periods are like for you guys, how you think about how long a brand needs to perform or what the end cycle of your investment needs to look like for it to be a success for you.

09:33
Hannah Dittman
I think as you kind of touched on earlier, this changes based on category and kind of strategically, when you need to get out and in can dictate a lot of what you're looking for at the beginning, which I think helps take some of the ambiguity or confusion out of that initial evaluation process. So, yeah, I would love to kind of get an understanding of. And obviously this is going to be different for every company. But in general, what point do you like to get involved at the beginning? And at what point do you think that you're ready to exit with a company and what is happening that ends an investment for you guys?

10:08
Ryan Springer
Lot going on there. I would say our average hold period we underwrite on the early side is seven to eight years. Seven to eight, to be clear. Not 78. We're not that patient.

10:20
Hannah Dittman
I think I'd be long gone by then.

10:21
Ryan Springer
Yeah, right. It's like, yeah, my grandchild will realize these returns. But I think you're touching on something super important that I talk to a lot of brands about, and that is understanding their investors. You gotta think beyond just, can I get the check? Or even can I get the value add? Which a lot of smarter founders think, okay, you know, it's not just about money, it's about value add. But then, okay, is that person aligned with you? I talk to founders often who are like, I need to take venture capital at the first round and I want to build this to an ipo. And like, okay, well, are those people willing to hold for that long, or are they going to get antsy, try to get sketchy with a board?

10:57
Ryan Springer
That's where I think that misalignment of timeline and speed and all that kind of thing is where VC starts to get a bad reputation that I believe it kind of earns, because a lot of VCs, including myself, when I get lazy, aren't clear to these founders about, hey, I need you to do this in this period of time or I'm going to start getting antsy and whatever levers I've got to kind of push you Further along or for instance, I'll get a lot of brands that'll say hey, MVC on my board is telling me to launch an RTD version. And I'm like, well there's a reason they need you to go for the fences and they're totally okay if you're a zero. That's not true for you. This is your one thing. If it's a zero, it's a giant bummer for a VC.

11:39
Ryan Springer
If one of their 27 investments is a zero. That sucks. It's a bad day. It might not even be a bad week for a lot of VC investors, especially ones that kind of focus on the fact that at a lot of great venture funds it's about a couple of big winners. So that's the mindset they're in. They're going to be way more risk heavy than most founders. There are definitely some exception founders out there who are cowboys and cowgirls and they just are willing to gamble everything all the time. Those aren't necessarily bad founders, depending on category. But I think what you're really touching on there is that alignment of timeline, alignment of incentives and that's super important. And it's why I tell a lot of pre revenue businesses that you probably don't want venture capital.

12:20
Ryan Springer
We're a little bit hypocritical because we will do some pre revenue deals but the pre revenue deals we've done are with oftentimes not always second time founders know exactly what they're going for. Other investors of the similar mindset. So everyone's kind of on the same page. We're going for this, we're capitalizing well and we're hitting hard from the jump. And so yeah, I told a lot of founders if you need some time to experiment, which is how I have been with my other business, I purposely didn't take venture capital and I'm not open to it in the near term either because we haven't, we've only just maybe begun. I'm not used to changing my answer. We've just maybe begun to figure out product, market fit and a playbook to scale before that.

13:01
Ryan Springer
It makes no sense to get some antsy folks on my cap table who have a five year clock because at high desert it took a year and a half to even figure out which end was up. Honestly before we started really building momentum. I don't need somebody going like what is going on? You're burning money and the growth isn't there. You're still experimenting. So you Want to match up the people you're inviting onto your Taft table with the phase or stage or position you're in? I think as a business, I.

13:28
Hannah Dittman
Think that's such sage advice. I love that you have such a strong founder lens to be experiencing some of these things firsthand yourself as well. Yeah. Having had an investor background, I felt like I had a lot of empathy for founders coming in first institutional capital as well. But even being on the founder side, like anything in life, you don't know it until you do it. And you interact with so many little decision point moments where you're like having the little aha. Moments of oh yeah, that makes sense. Oh yeah. I guess I'm seeing it from that perspective and I think, you know, going back to your whole period, talking about seven, eight years, that's kind of a longer hold period.

14:04
Hannah Dittman
I think on the venture side, I'd love to kind of break down your guys's ideal expectation because I think different firms, as you kind of touched on, have a little bit of different approaches. Like there might be some investors that get in early and as long as they get marked up by another investment firm and get kind of a quicker in and out or you know, some investment firms might be waiting for your big first retail PO and then they're ready to move on. Or some people might be riding with you all the way to hoping you're getting a strategic exit and they're kind of with it for the long haul. So how do you guys kind of see yourself as partners? And how do you think that you like to work with companies and scale alongside them?

14:45
Ryan Springer
Well, I want touch upon two things there. I'll do the second piece first, which is we invest in multiple stages. So we invested at Olipop much later stage, you were already doing almost 100 million revenue run rate. We invested in Jolie or California Naturals, pre revenue and everything in between. And fund two, we're still. We don't like the term stage agnostic necessarily, but it really is okay. How much cash can we write in this business from the fund that we're comfortable with in a portfolio that could, theoretically we can underwrite a return that would return a really significant amount of the fundamental on the early stage side items return the entire fund. We do some later stage deals. We even have kind of a bucket for that.

15:29
Ryan Springer
Our first deal out of fund two that I can't talk about yet is in that bucket where we're putting three plus million in and we're underwriting that to a shorter period. Of time. You know, if that's five or six years, hopefully it's because they came out with an RTD version and now they're worth 1.5 billion. And we're all gravity if it's towards what we really underwrote for like three years, they don't do the RTD and they transact or some kind of liquidity event happens within three years because they're already not mature, but certainly not as early stage anymore. This business is doing above 50 million in revenue run rate. To get back to your founder lens perspective, it's funny, I don't think there's a right answer there.

16:10
Ryan Springer
I've gotten multiple screaming matches in a healthy way, I believe, with my two co founders, because one of them, Alex and I have this reputation of like, we just love arguing all the time and neither one of us ever gets offended. But people on the outside are like, you guys are psychos. But we just have a kind of brother relationship. Chris is more mature, doesn't need to do that with us. But Alice is important because he brings the venture mentality of like, we are representing our LPs and we need to make sure we're getting deals that make sense for them and protecting their interests. And I fundamentally come from. I grew up only integrating with founders. That's the weird upside down world I grew up in. Working for my dad was our clients were always the CEO or the founder most of the time.

16:55
Ryan Springer
And so that's the person I know. And then we founded Midnight, which was hard. I consider ourselves founders there in terms of starting a veteran from scratch, which is not even a good idea. It's gone really well, but it was crazy. We even thought we could do that. And then high desert as just a classic genuine consumer founder. You know, it's insane how stressful and anxiety inducing and difficult and trying to juggle all these things. And when a venture fund's like, hey, this one term that we put here says this, you're like, dude, I got 99 problems and this is not one of the more important ones. And so I tried to view a lot of things from that lens. I think the founder is the thing that makes it go on the CPG side. Alex would not disagree with me there.

17:34
Ryan Springer
But you know, I talked to VC success, very successful ones, and there's not like a uniform viewpoint on how you should, what lens you really should be viewing it from. Are you purely an investor or are you kind of a founder adjacent party that's an investor, but tries to be in the Foxhole with them. There's points to both sides, I think.

17:56
Hannah Dittman
What do you think that you wish, you know, having a seat at both tables. What do you think investors would benefit from knowing about the founder experience? And what do you think founders would benefit from knowing about the investor experience?

18:09
Ryan Springer
Great question. I think investors seem to always forget, in my opinion, they don't see the whole picture the way the founder does. And I mean that in two ways. Number one, they don't see the whole map, so they might not see all the moves, but number two, their brain isn't stuck with all this unbelievable amount of information. And founders, you're like, why haven't you in Whole Foods yet? And the founder is not telling you, but like, my franchise tax didn't get paid, and technically my bank account shouldn't even be working. But it is right now. But I'm nervous. I gotta get that set back up. And my girlfriend says, I've not spent enough time at home and I don't have very much money. And the Whole Foods guy didn't email me back, is the answer. But I've got, you know, there's like, not.

18:51
Ryan Springer
I'm stressed out about this. My distributor's stealing from me. And so I think a great investor. To me, one of many things that makes a great investor is reminding yourself that this person's in the middle of the jungle. And you're like, hey, buddy, I'm not telling you're doing a bunch of stuff wrong. I'm just telling you I get this kind of outside view. And maybe focusing on the things that move the needle the most would get you a little bit further down the line and allow me to be an outlet to listen to this stuff and to also tell you, hey, bank account's still working. Worry about the franchise tax thing. Tell their accountant to fix that. You focus on getting into Whole Foods. That's the update that's going to get you more money and raise more money and all that stuff.

19:30
Ryan Springer
And on the flip side, I think this one's less emotional. Founders, exactly what you just asked. I actually think, number one, founders don't understand how investors make money or even how they make decisions. And I've had a lot of founders be like, man, if I have 5x your money, your guys are happy, right? And we're like, no, If I'm a $20 million fund and I put a million dollars in your brand and you 5x it, I've returned 25% of the fund. Cool. I want to 3x the fund. That means I need 12 wins. That ain't going to happen. And unless my portfolio is a hundred and so I think a lot of founders, that's what they forget or don't understand. I try to do a good job of when we pass on a brand, telling them like, hey man, your business is good.

20:11
Ryan Springer
It's better than what I've been building for two years. I'm not telling your business isn't good. I'm telling you this math doesn't add up to make sense for our fund based on the checks we write and the return we would need. That doesn't mean you haven't built something really cool. So I think that part gets lost in translation. That's why I thought that was a great question before this one.

20:29
Hannah Dittman
Yeah, I think the math and to the founder defense, and I'm sure you are saying the same thing too, it's hard to know what the math if you've never been an investor and if investors aren't candid with you either, how would you know the math? I mean, it's hard to know it. And I think that's one of the reasons we're doing these podcasts. But also I think a great empowerment moment for founders to ask, like, don't be scared to ask those kind of questions to investors of what outcome would you need to see for this to be a successful endeavor? And then to your point on founders having the full picture and investors not, I think then the founder can do the mental load of thinking, what does that entail from me as a founder for me to be able to get there?

21:11
Hannah Dittman
Like, if you need a billion dollar exit from me, what do I have to believe about my company and myself for me to be able to get that for you? And do I think that's achievable and what timeframe and all those hard questions, then you need to go back and ask yourself. And I think that's how you really understand a good investment match. A lot of the times, aside from the burning pressure of I need money in the bank right now, so whoever's willing to give it to me.

21:35
Ryan Springer
I agree. And I think it's important to realize on the investor side, it's, it, there's, it's an art in the science. Like if you had asked me that, if we needed a billion dollar exit in fund one, we specifically were like, we don't need that. That's how we're building the fund. And that's true. Fund one, we don't need that. That's fine. Coming into Fund two, we thought, okay, were inspired by some other groups. My partners make fun of me. I'm always studying Thrive Capital and what they've been able to do and their concentration of bets. I think that it's incredibly cool. And also the more I've learned about venture in this moment in time, I think that's a really smart position to take. And Alex and Chris, we all kind of arrived at it together.

22:14
Ryan Springer
This wasn't my idea to change the strategy at all. All three of us, a lot of time spent on couches looking at each other, talking out what we thought Fund 2 strategies should be and we're really confident in where we've landed. And it's super different than Fund one, which is funny. It's like you learn things. But Fund three, we're going to look back, I think on Fund two and go, man, look how much we've learned, look how much has changed. The same is true for founders too. I just want to make sure I don't come across as somebody telling me this is the way venture is or should because the more different you are, I think more excited I am to hear about it. So it's certainly not like a one track industry at all.

22:50
Hannah Dittman
No, not at all. I try to highlight in every podcast episode too, every investor is different even within a fund, and every firm is very different. I think there's akin to running businesses. There are some business fundamentals that are objectively, this was what makes something good or bad. And I think investing, principles that make something good or bad. But other than that, I think it is so dependent on, you know, from my own perspective, I think a great investor is kind of like a great sports coach. They should be able to see everything that's going on the field, but they know they're not playing and they should be able to kind of be the North Star and cut through some of the noise to keep the roadmap where it needs to go or the plays that need to happen.

23:35
Hannah Dittman
But every sport is different, every sports team different, every athlete's different. Like, I mean, there's no way to have a one size fits all for any of this. It's so situational. I'd love to jump back to you touching on some of the learnings you had. You know, what was the post mortem, you know, if you had to boil it up to two or three things coming out of Fund one, that's kind of changing your perspective a little bit for Fund two and a little bit more concrete terms real quick before we.

23:57
Ryan Springer
Get to that question. I want to echo something you said. One of my dad's favorite lines. One of my favorite lines my dad's told me or I've seen him tell other people. Actually, he didn't tell me because I didn't ask, but helped with some of his strategy one of the largest energy drinks in the world. And people have come to him in the years since and said, like, hey, how do you build an energy drink company? And my dad's favorite goofy old guy line is like, hey, first step you need is a time machine to the year 2003. And then I have an unbelievable playbook for you that, you know, I've saw a lot of what they did, and here's a little bit that I contributed. He's like, but if you don't have that, I don't have a whole lot of advice.

24:32
Ryan Springer
Because social media didn't exist. Retailers were different, distributors were different, consumers were different. And if you'd follow that exact playbook, now I feel like you would lose. And so I wanted to echo that.

24:43
Hannah Dittman
I'm glad you brought that up. I'd love to meet your dad. He sounds sharp and. And, yeah, like a great. Like a great person with a great understanding of the CBG space. What were some of the postmortem learnings you had coming out of fund one that has dictated some of the thoughts on fund two? You know, if you had to boil it up to two or three concrete things, where's your perspective shifting?

25:03
Ryan Springer
One thing I don't know. I've got some theories. Some, like, fun one is just ending. I'll give you some problems. How about that? I need to figure out.

25:12
Hannah Dittman
Those are the best findings.

25:13
Ryan Springer
Yeah, I need to figure out how to judge a founder's tenacity when we're investing. We had some founders in fund one that blew me away. Even in a struggling business with their ability to make us proud of how hard they were grinding and trying to make things happen and being creative even when their backs are against the wall. And, okay, how do I make sure all my founders have that level of tenacity? And the only thing I'll brag about on High Desert, Logan and I's company is we proven that to each other. We've had a very low bank account. When anybody else with a brain would go like, hey, man, you were out of money, we kept going. We kept trying to figure stuff out, and now we're in a much better position, but we should have died twice.

25:58
Ryan Springer
Basically, what I'm trying to say Is, I don't know. And I've asked other venture fund people or private equity folks. I haven't heard a great answer. But how do you know that this person's going to have that don't quit psycho attitude? I'll give you one example of how you know is. And it's tough because you can't invest early stage. This does not work with early stage. Ben Whitty at recess. Recess is doing unbelievably well. People don't even believe me how well it's doing. You have to have access to the numbers. Some really big players in the space have been circling it at every level, whether it's strategics, investors you've heard of that have backed huge, successful beverages. But Ben Witte, his business should have been dead. I think the whole industry thought it was. Took their eye off of him.

26:44
Ryan Springer
And then we woke up a year later and it's like, well, how the hell is he doing what he's doing? And instead of throwing in the towel now he's like, absolutely crushing it. It's because he's a little bit. And I've never told him this, he's a little bit of a lunatic. Like a justice human would have quit, and he probably got a lot of good advice to quit, and he didn't. And now he's where he is. I don't know how you bottle that. And I don't know how you predicted that the person's gonna be like Ben. But he's my favorite example of that. Like, this is gonna work no matter what. And I will do anything to make it work. I don't mean immoral, but everything up to that.

27:18
Hannah Dittman
Yeah.

27:18
Ryan Springer
Is sort of. How do you underwrite that? I don't know.

27:20
Hannah Dittman
There's a. Yeah. There's a great book I think calls this concept Grit. And the book is called Grit. And I feel like, yeah, if you could bottle that up and sell it, we'd all make a lot of money.

27:30
Ryan Springer
Yeah. Yeah, exactly. I think another issue we're looking at is like basically early stages, just all about the founder. It's kind of crazy. Margin's super important. There's a lot of great things burn. But, you know, for us, it's. It's kind of on the early stage. The two holy grails are founder and retention. If it's early enough to have data, product market fit just is retention. If your consumers buy it again and again, then you have a product market fit. If they don't, you dump. I don't care what anecdotal you have, and that's not rocket science. But we're starting to realize, you know, we knew margins would improve a lot. We used to think founders would sort of develop and improve, and I guess maybe they do, but not as much as you think. What you get. I think this is a theory.

28:10
Ryan Springer
This is not law at all. For me. I think the people we've invested in have mostly stayed the same. So were they the people that could get it done or were they not, you know, when you invest it? That's been interesting. In fact, this is not conventional wisdom, but I keep joking. On the early side, I believe the only thing that improves for sure is the product, which everyone told me in the beginning was like, invest on the product. And maybe I'm leaving the pack on this one. But the product actually gets better that, you know, people. It's very rare.

28:36
Hannah Dittman
Money should help that.

28:37
Ryan Springer
Yeah, money, time, feedback that the product will get better. The margin won't improve as much as you want. The founders won't improve as much as you want. So they. Those need to be good, you know, when you invest. I don't know. I think I've gone in a circle on your question.

28:50
Hannah Dittman
But no, I think those are really helpful points. I agree with you. I think the early days should be founder boot camp. But I do believe now, having had the founder experience, you're in a vacuum. Like, it's not like working at a firm where you're interacting with a lot of new people when you're the tippity top too. You don't have a boss pushing you anymore. You don't have people questioning what you're doing as much. There's a lot less chances for you to develop as a person unless you're putting yourself in situations where you're going to get some new spaghetti on the wall, new learnings, new thinking, new anecdotes from other companies that you can learn from.

29:27
Hannah Dittman
As a founder, I think one of the best things you can do is stay a sponge and keep learning and try to learn from other peers and learn from other people and hopefully find investors that you can also learn from and have a kind of rapport that you can pick up some anecdotes from them as well. Your company can only grow as much as yourself, have your capabilities or the team you assemble have the capabilities. It's a people business. And in business, and I couldn't agree more. Yeah.

29:51
Ryan Springer
And a lot of times the advice you get is not very satisfying because people that have really done it are kind of aware of like, you know, this might apply to you, it might not. And I'm going to be a little vague because I don't want to get quoted on something exact. The only guys that I think made me laugh, guys and girls, are D.2C founders will trade actual tricks of like, do A and B and then C will happen. I've never seen another thing like that. No one else in the industry have. I seen somebody go like, have you tried this specific thing? And then it will lead to this specific outcome most of the time. And I'm like, that looks great. You know, that looks so awesome to be able to tell someone. Like, have you tried. I remember somebody. This is.

30:32
Ryan Springer
I don't know if this is going to offend anyone. A DTC expert I know was talking to a brand looking to target elderly people, and he was like, have you tried advertising on Bing? And were like, bing exists. And he was like, well, Bing's number one search thing is Google. I don't even know that. Like, the number one thing, search something, and he's Google. And then the users are all like, very elderly folks who like, power up a browser and Bing shows up and then they just search from there. It was like, it was a cheap way to get to. Now I'm not sure if that's still true. This was years ago. Yeah. But it made me laugh because in retail, nobody's going to say anything like that.

31:03
Hannah Dittman
Yeah, totally.

31:04
Ryan Springer
You know, they're going to be like, yeah, that's tough. Talk to this guy. He's probably gone. Now it's a new guy. Not sure how that guy works. This broker used to be good. Now they're not. Now it's a new one. But that one will be good in two years.

31:14
Hannah Dittman
Yeah, I feel like it's. It's a wild west. Yeah. It's a totally different mindset in general. Understanding the structure of your business and where you're trying to have momentum happen dictates your strategy just so much and so differently. And yeah, I think the dtc, little tips and tricks, it makes sense, though. I love consumer psychology and that makes total sense to me. So I see it working. I think, like, a lot of people talk about Reddit threads in a similar way too. You know, if we've got like, something polarizing, Reddit's a great place to because people duke it out so much there. You'll get so much easy traction.

31:48
Ryan Springer
Talking about, like, 60% of AI pull is from Reddit, supposedly.

31:53
Hannah Dittman
Yes, it does pull a lot from Reddit. Yeah.

31:55
Ryan Springer
And you're like, oh, God, I use Reddit and that's terrifying. Yeah. I think one thing I do have one trick for or one thing to keep track of for brands that I've watched some very intelligent people and my partners will kill me for even saying this because we think we, like have this secret, but I think everyone's waking up to it. Chan GPT is SEO now. Like, aio, whatever people. That's where a big chunk of search is moving there and people searching for what's the best liver supplement. Our trustom chat wt over Google and I'm not going to reveal the answers it gave me. I can let everyone else do it. I was looking at different brands. I was actually going to take one myself. I ended up taking Symbiotico, one of the best supplement companies ever.

32:39
Ryan Springer
And I asked it, you know, what's the best liver supplement? And it was trash and sellable. And I'm like, google didn't do this. You just didn't show up. It didn't say this doesn't work. And I didn't even think that was necessarily true. ChatGPT is pulling from a very small amount of data and brands aren't aware that they could game the system on their website and through a little bit of our media and just saying certain things and then suddenly ChatGPT reads it and puts it as number one. We were going through a lot of our brands being like, I want, you know, a shower filter, I want a prebiotic soda, I want a relaxing magnesium beverage. Weird things to Google. But on ChatGPT, I have like this all these opinions.

33:19
Ryan Springer
It's going to be a fantastic new frontier for brands to realize, like, okay, I can be the answer in certain niches that I like, prepare my website and media and whatever to do. One of our partners, the guys at Red Crypton, they're like literally building up the vision of their service agency to do this. And I think it's going to be fun to watch because it is the wild west right now. You get some crazy answers when you ask ChatGPT stuff.

33:47
Hannah Dittman
Yeah. I had this thought for my own brand actually, the first time I really getting into ChatGPT and started googling recommendations and I was like, oh, I put it first on my to do list. I was like, figure out how to get our SEO on ChatGPT. And then my mind immediately went to, oh, man. As soon as they start to monetize this is going to be crap. It's like, there's going to be. I was like, I was my Next Google was is chatgpt monetizing placements at all yet? I definitely think, you know, consumer as behavior shifts, which we're seeing with that could be googling behavior, that can be preferences behavior, that could be interest in an ingredient like protein or whatever it is. My perspective both for investing and building brand is it's so important to follow just the daily life of the consumer.

34:29
Hannah Dittman
Similar to your dad's quote on, you know, the 2003 playbook just doesn't matter anymore. The way to kind of gut check anything you're doing is what are consumers doing right now and what is their day to day like? And how do I stay stepping foot with that? I think if you live and die by the consumer, hopefully that never leads you astray. Easy to say, hard to do.

34:47
Ryan Springer
I never quote these guys because I always think it's like a little over the top intellectually. But a long time ago I read a Harvard Business Review article that said that the greatest CEOs, the number one thing they had in common, which, you know, there's a bunch of articles saying a bunch of this stuff was a very unusual obsession with the customer experience. And I always thought, you know, to resonate to your point, that is a lot of the best founders are like really upset that the closure on their pouch for powder isn't closing right and they're freaking out. My co founder at the Vodka Logan, he's always like a label starting to fall off and he's like, doesn't sleep. I sleep like a baby. I don't have that part. To me we have different strengths and weaknesses. He's that like consumer obsessed founder.

35:33
Hannah Dittman
Yeah, I think definitely. I feel like there's been a lot of cold sweats at night over something, some packaging flip or something like that or. Yeah, I feel like it's great to compliment yourself on a founding team and leadership team in general, maybe even an investment partner too. It's good to have people think a little bit different than you and push your thinking so that covering all your bases, I want to make sure we have enough time to hop into a little bit of a case study question. As you know, startup CPG has the largest Slack community in the industry with over 30,000 members. Now I'd love to pull a question directly from our channel and have you answer it as a case study for any founder that might have a similar question.

36:10
Hannah Dittman
The recent question was how would you argue defensibility or differentiation as a CPG brand in your mind? What would be a strong answer?

36:19
Ryan Springer
Man, we talked about this morning as a team, I am. I'm not speaking for the whole midnight team era. At least I don't think I am. From an IP defensibility, I think it's borderline non existent in CPG and I don't want to hear about it as remote. I had a group pitching me a supplement in a certain format that was telling me that no one in the world would be able to do it like them. We passed and within four months three other companies did it just like them. It turns out they were completely full of it and had no concept or awareness with these other competitors. Which is another thing were talking about this morning. A lot of founders you a good answer. When somebody asks your competitive set, you need to know it like give the most honest version. I've either caught.

37:02
Ryan Springer
I've caught some founders where they either didn't know, which is horrible, or they were lying about who their main competitors were. They're just wrong. I don't know all three bad answers. Lying the least bad of those three, not knowing is terrible. Not being aware of your competitor. Anyway, speaking of competition, back to your question. For me, differentiation is whether it's on macronutrients or how you're branded. You have a clear stake in the ground and nobody else is. I don't know, it sounds really lame, but nobody else is like exactly like you. Otherwise you're in trouble. I think Olipop and Poppy had some level of differentiation. They had a lot of the same and they both worked. So I. So if you. I would say my first reaction would be differentiation to me is both critical and not 100% necessary.

37:57
Ryan Springer
There's a lot of examples of I'm not in this space, but I have no idea how truly is different than white cloth. Both of them have made an enormous amount of money. I don't like either one as a product, but I've had plenty and I have no clue what the differentiation could possibly be. So I wouldn't take. It's like the end of the world if you don't have it. But I wouldn't start a business that doesn't have a clear idea of who you are, who you're for and why you're for that person. And if you're honest with yourself and you're starting a business and it's for you or it's for people like you, or it's for a certain demo, if there's already a solution for them that's just like yours, then why should you even exist?

38:33
Ryan Springer
The only answer is I Have more money, I'm a celebrity, which doesn't work all the time at all, you know, whatever. Otherwise, if you're just a regular person, why on earth do you start my business? That's dumb. And you're not solving anything. So I think if you view it more from the lens of like am I solving something for a consumer that's a problem? Then you're just going to be differentiated a little bit because you're solving a problem and it's not a problem that there's already a solution just floating out there that's easy and available. So once I would tell you it's not the most, a hundred percent necessary thing, there's plenty of undifferentiated brands that did well. I do think it's important and if you solve a real problem for a consumer, you're going to find yourself differentiated.

39:13
Ryan Springer
And then the final part I would say, because I'm really going off the cuff here is you will only be differentiated for so long. If you are successful in cpg, that differentiation is going to disappear. Okay? There are going to be many copycats, some of which will have very intelligent founders who are going to come at you. And so whatever your differentiation is, you can't rest on it. You need to keep pressing and moving and, and attacking. You're the best mode is execution and the second best mode to me is continuing to just be true to your connection with the consumer and evolving and adapting the dev and what they're looking for.

39:48
Hannah Dittman
I really love that answer. I think you hit on so many things that I think or have experienced or have observed in others as well. I think a lot of venture investors I think can get really caught up on like the first number, whatever, you know, very niche specific things which I think has a time and a place, can be good investments, can be good businesses. But I don't think every single investable company needs to have that kind of a shtick because otherwise we'd be in a very fragmented, hyper niche industry and world where nothing gets big mainstream scale.

40:26
Ryan Springer
And that then that ignores the whole concept. I don't actually have an opinion on this. But there are fast follower believers and there are pioneer brand believers. And yeah, I think there's more data behind pioneer but fast follower if the pioneer stumbles at all, that seems to be a great place to be. So you know, I also, I agree with you. Whenever like we're the first to whatever I'm like, oh well the second guy who had a chance to iterate a little more and optimize what's that person's business line? Because the first doesn't mean anything to me if I'm a consumer. What's the best one?

40:56
Hannah Dittman
Yes. Also maybe less marketing education costs on the second one too.

41:01
Ryan Springer
Yeah. My buddy Wes Van Dyke, who's, you know, made a lot of money in the marijuana space and is kind of venturing back in, which is crazy to me, but he knows what he's doing. He has this quote. I love that I talked to him about him this week. He's like, he's like, I hate educating social change off my balance sheet, which he's had to do in marijuana before. And he was like, that is expensive. If I can have a business, I don't have to do that. That's going to be a whole lot better. I'll raise a lot less money, I'll have a lot less risk. I won't name them because it's kind of shaming. Even though I don't think of shaming at all.

41:31
Ryan Springer
I can think of multiple pioneer brands that have had to burn a lot of money because they were the ones who showed everyone that this was a thing. And then someone came behind them and spent one third as much and did about as well. You know, it's kind of give and take on that first something or other.

41:47
Hannah Dittman
I totally agree. I feel like it's just navigate your niche and know it well. I know we're coming up on time, but before we wrap up, I wanted to just take a second to make sure our audience can have an actionable next step to apply all this amazing knowledge to. It's been a great conversation for founders that want to get in touch with you. Where can they find you? Or what's the best way for them to get in contact? And for any operators looking to transition or other people that might be interested in a role investing or what advice do you have for them?

42:13
Ryan Springer
I'm going to. I, I. This is the only question that I really thought about, like for a long time because I have a slightly. I know, sorry. Don't be offended by that. But there's one question I'm like, hey, I gotta. Because I used to say these kind of throwaway answers. But I would say the best way to get in front of me is the real answer is a warm intro. If you reach out to me cold. We've done two of our best deals ever. Have been cold to infoidnightvp.com so don't think that doesn't work.

42:40
Ryan Springer
We're about to get Liquidity from a brand reached [e-mail] so very thankful for info at but the best brands, the ones that I've paid the most attention to, the ones with the biggest chance are the ones that, you know, whoever down the hall introduced me to or somebody I trust or somebody in the industry. And the easiest way to do that is to find my LinkedIn, see who you have in common, see who you think is the best, go between and do that. And if there isn't anybody and it's cold, that sucks. Go through info app or try to Message me on LinkedIn. Not promising or responding to those. There's so many and we're not. We're kind of underwater on that. But I think the honest answer is find a way to get a warm intro to somebody.

43:21
Ryan Springer
It's an exponentially higher chance of converting in anything. And then what was your second question?

43:27
Hannah Dittman
Great advice. And I think also, you know, for operators looking to transition or other people that might be wanting to get into on the investing side, what advice do you have for them?

43:36
Ryan Springer
That's tough. Would be my first piece of advice when I got into alcohol. A guy named Sean from nine Bed Whiskey, he was like, can you not do it? He was like, is that an option still or are you sold on this? And I was like, I'm going to do it. And he was like, okay, well then let me give you advice. And I wouldn't say that dusting is a great. There's some wonderful parts about it, but it is hard. Alex, my co founder at midnight always says we're the worst people to ask. We never even thought. We knew we couldn't get in traditionally, so we started our own. That's been so hard. And so I don't know how you go get a job at a venture fund. I've never done that. That seems to be the easiest way.

44:17
Ryan Springer
If you're a successful founder, you can go start a venture fund in a day that you're qualified, you'll find some money. You're investors from the brand. But I would encourage. There's a lot of former founders I've talked to who didn't take investing seriously in the beginning because it had to be easier than running brand, which it absolutely is easier than running a brand who'd come in and been like, man, I had to learn a bunch. I had to learn a bunch. It turns out I'm bad at investing or whatever. So I'd tell people, be careful before you get into it's a whole new thing. You got to practice and learn and it's different. I guess my advice is I don't have much advice.

44:52
Ryan Springer
We did it by just Kool Aid man busting through a wall and I don't recommend that necessarily for most people, but it's how we did it, I think.

45:01
Hannah Dittman
Always helpful to learn from other people's experience and thoughts on things, and I love the analogy. But this has been such an amazing chat. Ryan. Thank you so much for your time. It was awesome to learn from you and to have you on the podcast today. I'm sure a lot of people will be really grateful for the nuggets of the thoughts that you shared.

45:18
Ryan Springer
Awesome. Thank you Hannah. I appreciate it.

45:22
Hannah Dittman
Thanks so much for tuning in everyone. If you like this episode, show us some love with a five star review at ratethispodcast.com startup cpg I'm Hannah Ditman, Podcast host and Correspondent here at Startup cpg. I hope you'll join me again as we dig into more juicy topics like ops, finance, and all the real talk founders actually need. Come say hi on LinkedIn or ping me on Slack. I'm always eager to hear your questions or brainstorm future episode ideas. If you're a potential sponsor and want to get in on the fun and appear on the podcast, shoot us an [e-mail] and last but not least, if you haven't already, don't miss out on our free Slack community. For emerging brands and CPG lovers alike, join [e-mail] we'd love to have you. See you next time.

46:09
Ryan Springer
Sam.