Investor Spotlight: Consumer Psychology, Channel Strategy, and What Actually Makes Brands Win — David Bell, Idea Farm Ventures

In this episode of the Startup CPG Podcast, host Hannah Dittman sits down with David Bell, co-founder of Idea Farm Ventures and one of the most academically grounded voices in consumer. David has spent decades studying what actually drives success in consumer brands and retail — from analyzing Nielsen and IRI barcode scanner data as a PhD student at Stanford GSB, to building Wharton's first digital marketing and e-commerce courses, to advising and backing standout brands like Warby Parker, Bonobos, Harry's, Cotopaxi, Jet, and Diapers.com in their earliest days.

Through Idea Farm Ventures, David and co-founder Jem have built a consumer-only fund anchored around three formats: the digital native vertical brand, the location-centric experiential brand, and the authentic wholesale-led brand. Their thesis is that wherever a brand starts, it can ultimately encompass all three. In this conversation, David brings that same analytical rigor to some of the most important questions founders face — why certain brands win, how channels shape outcomes, and what the best consumer companies consistently get right.

Hannah and David dig into consumer psychology, the evolving retail and distribution landscape, and the common threads behind standout brands. David shares case-by-case insights from decades spent analyzing the companies and founders that shaped modern consumer — from the Touchland Sephora channel strategy to Graza's compliance-driving packaging to the binary choice framework that can unlock real lift for emerging brands.

Listen in as they discuss:

• David's path from Stanford PhD to Wharton professor to early investor in Warby Parker, Bonobos, and beyond
• The three investment formats behind Idea Farm Ventures and how the best brands ultimately span all of them
• What David anchors on at the early stage: founder tenacity, genuine white space, and economic discipline
• Why the most successful brands win on distribution — and how finding a channel with binary choice can be a massive advantage
• The functional, emotional, and symbolic framework for evaluating whether a product can truly break through
• Attention to detail as a competitive moat — and what Graza, Touchland, and Brightland all have in common
• Why narrative creation and cultural relevance matter more than ad spend for building lasting brands
• The D2C to Amazon to offline retail playbook and how to think about inflection points between fundraises
• A Slack community question answered: how long is the typical timeline between a first and second fundraise?
• Why founders should reverse-engineer their fundraise — starting with strategy and people before asking how much
  
  

Episode Links: 

David Bell — Co-Founder, Idea Farm Ventures 

LinkedIn: https://www.linkedin.com/in/david-bell-086820/ 

Idea Farm Ventures LinkedIn: https://www.linkedin.com/company/idea-farm-ventures/ 

Website: http://www.ideafarmventures.com

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• 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?

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David Bell
As a founder and investor yourself, it's kind of hard, like early stage stuff. It can be very fragile. You go up or go down. That's just the nature of the business. So I think there's at least two or three things and these are probably not unique to us, but you do anchor to so one has to be the human behind it. There's some really amazing founders out there, people who try to get a sense of they'll just sort of run to the end of the earth to do whatever has to be done. I think the second thing you always like to see is either a novel twist on something old or something that's a genuine sort of white space and that has some tailwinds behind it, some existential trends, whether it's around health and wellness, convenience, the importance of aesthetic, whatever those pieces are.

00:50
David Bell
And then I think the third piece is really important, particularly in consumer and this is where some other kind of really star brands like sadly went off the rails is having a very disciplined mindset around the economics.

01:03
Hannah Dittman
Hey everybody, I'm Hannah Dittman, operations and Finance host of the Startup CPG podcast and today it's a real treat that I'm joined by David Bell from Idea Farm Ventures. David brings one of the deepest and most academically grounded perspectives in consumer that I've come across. For decades. He studied what actually drives success in consumer brands and retail. From his early work digging through Nielsen and IRI data as a PhD student at Stanford, to building Wharton's first digital marketing and e commerce courses, to advising and backing standout brands like Warby Parker, Bonobos, Harry's, Cotopaxi Jet and Diapers.com, just to name a few, in their earliest days. Through Idea Farm Ventures and across his broader career, he's spent years unpacking the underlying principles behind why certain brands win, how channels and distribution shape outcomes, and what the best consumer companies consistently get right.

01:59
Hannah Dittman
In this episode we dive into consumer psychology, market shifts, and the evolving retail and distribution landscape. We also unpack lessons learned from decades of studying high growth consumer businesses, explore the common threads behind standout brands, and get into how great investors and operators develop conviction. David shares tons of thoughtful reflections and case by case insights from years spent analyzing the companies and founders that shaped modern consumer today. If you're building a brand thinking deeply about consumer behavior, or just want to sharpen your perspective on what actually drives enduring success in cpg, this one is packed with insight. Enjoy. Hey everybody, welcome back to the Startup CPG podcast. This is Hannah and today I am super excited to Be here with David Bell from Idea Farm Ventures. David, welcome to the show.

02:54
David Bell
Hey, thanks, Hannah. Good to be here.

02:56
Hannah Dittman
It's such a treat to have you here. I know you've got an incredible background that I would love to dive straight into. You're not only an investor and a competent investor in the space and also a true academic in it as well. So I would love to understand a little bit more about your journey through consumer and the path that led you to Idea Farm Ventures.

03:14
David Bell
Oh, so thanks. Great question. Try and give it a shortened version. So as you may tell from the accent, originally from New Zealand. Even though my American friends, sorry, my Kiwi friends, think I sound very American, I'm not sure that's the case. So, like many people from down under, you know, you want to get out of a small country as great as it is, see what's out there. So I went to grad school at Stanford. And back then, Hannah, there was a whole cottage industry of people analyzing Nielsen data, at least on the quantitative side of marketing. So I was one of those guys analyzing barcode scanner data. So Coke drops the price. Do people switch from Pepsi? Did they buy more Coke, drink more? Did they go to Safeway instead of some other store?

03:52
David Bell
So all your classic CPG decisions, consumption, brand switching, purchase acceleration, store switching. And then I got a teaching job. As you do, typically you're not required to, but if you're in a PhD program, there's kind of an expectation that you go into academia. So I was teaching at Wharton and the Internet was just sort of kicking off. It was like 20 odd years ago. And I was like, wow, this is really interesting because you and I have a physical store, right? We know two things immediately. The good news is we know where all the customers are. They'll be close to the store, and the further away you get, they kind of dissipate, right? No one's driving from Delaware to Philly to shop. So that's kind of good, where the customers are. The bad news is you have a fairly constrained pool of customers.

04:35
David Bell
And I was like, oh, the Internet's like, It's the opposite. Diapers.com has this huge country it can sell into. But, like, where do you start? Like, do you put a billboard, the Jersey Turnpike? Do you buy AdWords in Miami Lane? So it's like the opposite problem. And it was just really fortunate. There were some great entrepreneurs who were students, one of whom was Mark Law, who's doing all kinds of cool stuff. And they let me get their hands on the data and then I Started analyzing e commerce businesses. That was kind of the starting point.

05:03
Hannah Dittman
That's so interesting and such a fun lens to be coming into the space with. I think everyone has different areas of focus that kind of are their entry point. For a lot of people it's being a consumer themselves or the branding and the marketing or something like that. But I think the decision making process in consumer is just such a fascinating one. And with e commerce ever evolving, I'm sure whatever was working back in the early days when you started to look at it's like the playbook, if you will, changes as the technology progresses more and more. And I think strategies that worked five, 10, maybe even three years ago are now so different. So tons of insights and things to learn there all the time.

05:45
Hannah Dittman
And for someone who's intellectually curious like yourself, I'm sure just a buffet of information out there to be sorting through.

05:53
David Bell
No, it was a fun ride. And as you say, like the playbook does evolve. I think what's interesting is some of the consumer behavior principles might be more robust, like things that people like, how you appeal to people that may have a fairly long duration, but the way that you actually do it kind of changes over time. And what was interesting, going back to the Diapers.com stuff, it's like showing some of this in class to the MBA students and showing these cool maps of how Diapers.com is like growing like a weed or like a disease or all these dots appearing over the map over time from small customer base like to thousands. And I had these four guys came into my office hours after class. I said, oh, you know that e commerce stuff's really interesting.

06:31
David Bell
This is like 2010 and we want to start an e commerce business. Oh, really fascinating. What is that? Well, we're going to sell eyewear on the Internet. I was thinking, oh my God, you know, what sort of a nutty idea is this? You know, because like hna if you want to buy some sunglasses, right, you might want touch and feel them before you commit. And so I said to the guys, you know this academic jargon is they have non digital attributes, meaning product attributes that are hard to communicate through the medium of the Internet. Oh yeah, we've thought of that. We're going to put them in boxes and like ship them to people. This is, you know, ho try on program. And that was kind of the evolution of me getting involved in Warby Parker.

07:05
David Bell
Not as an investor at that point because there were still students that came later after they graduated. But I met Andy Dunn from Bonobos, like really revolutionary kind of guy. So before I knew it was kind of deep in the so called D2C. And I think your point's a very good one that I think back then a lot of people thought that was kind of a business model in itself. And obviously now we know it's like a channel that you need to do certain things right in that channel. But it's not the end point.

07:31
Hannah Dittman
You've been a part of so many amazing stories and clearly the professor mentorship in you is quite evident. And the way that you've cultivated so many of these early huge success stories and walk alongside them is truly a testament, I think, to your knowledge, but also probably your demeanor working alongside founders. I'd love to dive into a little bit more about your firm, IdeaFarm Ventures, and get the firm overview and the understanding of how you guys are participating in the market today and what you're really focused on in it.

08:03
David Bell
Yeah, okay, great question. So IdeaFarm really came out of a shared passion between myself and my co founder Jem. And I'm a bit older than him. He's sort of the younger guy, you know, that you want. It just works all day in life, you know. He's really an amazing engine of a human being. And like Jem's skill set is really what's training was in banking. He's a very high level banker at Lazard, which is probably the best job you can get banking. And so I was like a little bit older as a marketing professor, but were both kind of very interested and we'd become friends way before he also went to Wharton. And were kind of doing things as angel investors and we thought we should sort of formalize this and set up a real entity.

08:41
David Bell
And that was kind of the genesis over a few years. And he got out of Lazard and I moved to New York. I was still teaching a little bit, but then decided to take the plunge and go around the world and raise money for idea farms. That's what we did. And the vision was always to only invest in consumer and retail brands. And we had these sort of acronyms which I guess I could share that kind of funny. So Andy Dunn, right in a medium post, the founder of Bonobos, he coined this term, the dnvb, the digital native vertical brand. So we said, okay, we're probably going to invest in some of these kind of things. But there's two other formats that we cooked up, two other goofy acronyms. One was I think the lcbb. It's the location Centric, experiential brand.

09:25
David Bell
It's those four words. And the idea was you could have a business that was anchored by a physical space, something like a globar where you come in and you get services and maybe eventually that brand might also sell product. And then the third one was the awlb, the authentic wholesale LED brand. So a brand that kind of starts its life in the supermarket and then kind of blows up. And the idea was that wherever you started, you could ultimately encompass all three of those formats. And so like Warby Parker started online, but they also have stores, I guess they don't participate really yet in somebody else's store. Whereas you say Harry's right. They had barbershops, so locations just kind of fun. They had E Commerce and then they sort of Target Walmart.

10:04
David Bell
So that was part of the way we thought about commerce at the time.

10:08
Hannah Dittman
Really interesting way to look at the ecosystem and focus on the customer journey of where they're finding brands. Which I think is a really nice approach. And I think it's easy in consumer to kind of get caught up in the gamification of sales or widgets and things like that. But I like that remembering the anchor point of the human experience and the consumer experience, which is the most important. I had no idea Andy Dunn had coined that term. But coming up in my own path through consumer, that was definitely a hot keyword for quite a long time.

10:46
David Bell
Yeah. If I remember correctly, I think it was a 2016 Medium post. And that's where he kind of got it out there, this digital native vertical brand selling direct. And again, I think this is sort of credit to him being sort of a visionary guy. But if you go back and you hear him in early days, maybe old YouTube videos from 2010, he was quite adamant that physical stores would be totally same. Like who wants to store with inventory and staff and turns and all that kind of nonsense. That the way of the future, at least for men buying clothes. The bonobos, the man is like a monkey and is going grabbing a few things was going to be the Internet. And then to his credit, he realized pretty quickly, oh, some guys actually want to try the pants on. Right.

11:28
David Bell
They want touch and feel the shirt before they commit. And he had a really cool, kind of like a lot of these brands did back then, Hannah, they had kind of like an office, sorry, sort of a store inside the office. So you could go down to 25th street, go into the bonobo sort of head office and those like little shirt would be trying a pair of pants. Right. And Then that's what led to the guide shop. Very innovative concept. And it was around the same time, I think the Economist, they referred to that as the zero inventory store and said this is really cool because you separated the two core retail functions of kind of the experience piece and the fulfillment piece. And with E commerce you could separate it.

12:03
David Bell
Like Hana could come in, have a great experience, try all this kind of stuff on. Let's just ship it to your home or to your office.

12:10
Hannah Dittman
Yeah. He had such an interesting journey. I read his book actually and I believe touched on the journey through setting that up and the winds and the pain points alongside with that. Fascinating. I'm sure being part of that ride you learned so much.

12:24
David Bell
It was just funny there too. There were a lot of really early good entrepreneurs who I've remained pretty good friends with through that journey. So Craig, who founded care of Craig Albert, he was one of the early guys at Bonobos like John Hutchinson who's building a new fashion brand. He was Bonobos. So there was a lot of good people came out of that company as well.

12:44
Hannah Dittman
Yeah, I feel like everyone was just really critically thinking innovative and very problem solving, solution oriented mindsets which when you're doing something so new like that especially, God, what an important trait that must be as you're just encountering new thing after new thing and kind of constantly tackling new obstacles. Before we move on. Too far from the conversation about Idea Farm, I'd love to also just double click on. Obviously we have an understanding of the big picture. Thinking of how you're structuring the original concept and sector focus. But would love to understand where you guys are investing in terms of stage focus or any key criteria that you're thinking about now as you've constructed your mandate and where you gravitate towards.

13:33
David Bell
Well, I think the first thing is, you know, as a founder and investor yourself. Right. Is that it's kind of hard, like early stage stuff. It can be very fragile. You go up or go down. That's just the nature of the business. So I think there's at least two or three things and these are probably not unique to us, but you do anchor to so one has to be the human behind it. There's some really amazing founders out there, people who try to get a sense of they'll just sort of run to the end of the earth to do whatever has to be done. I think that's just a really important trait and characteristic and they can come from all walks of life. It doesn't have to be somebody with a fancy educational background or whatever.

14:08
David Bell
So just the personal tenacity, the willingness to do whatever it takes, and also I think the way that spills over into your ability to hire other people as well. So that component's really key. I think the second thing you always like to see is either a novel twist on something old or something that's a genuine sort of white space and that has some tailwinds behind it, some existential trends, whether it's around health and wellness, convenience, the importance of aesthetic, whatever those pieces are. And then I think the third piece is really important, particularly in consumer. And this is where some of the kind of really star brands like sadly went off the rails, is having a very disciplined mindset around the economics.

14:47
David Bell
Like how do you actually get to a positive economic situation from a margin point of view, not raising too much money, thinking of a business, because the idea of venture capital in some sense applied to consumer businesses, there's a little bit of, I say anomaly. But if you and I are building a business, we'd sort of like to make money from it and then from that money, then kind of grow the business organically. And obviously with consumer, once that engine's running, you might want to pour in additional capital to really spur the growth. But I think discipline around the economic piece I think is really important. And with that comes a lot of scrappiness. Well, how do I create content? How do Interesting things? How do I remain relevant in the culture? Gets tied to that.

15:26
Hannah Dittman
All great points and very well said and agree. I think so much of early stage consumer is dancing with your hands tied behind your back. You've got to really figure out ways to backbend and work magic. Turning water into wine in a lot of ways. When you don't have those big incumbent CPG budgets to just lubricate anything you're trying to do, it's a very different animal. I think you've got to like roller coasters a little bit to gravitate towards it. You've clearly been not only a student, but a professor in a lot of senses in this space and have seen trends and wins and losses and companies and behavior changes and so many different things. Looking back at all of the brands or companies that you've spent time with, do you notice any patterns or similarities in the successful ones?

16:20
Hannah Dittman
Any fundamentals that they had in common or approaches to the market, relationships with their consumers or anything else that you think others can learn from?

16:29
David Bell
Yeah, it's a great question. I mean, it sort of follows on A little bit from those three things that I mentioned about sort of the founding team, the tenacity and all of that, and understanding a white space and then being capital efficient. But I think there's one thing, like a real attention to detail I think is really important. And I should say, like, I'm not an investor in the brand grunds. It was, like, great to see they have a big win. It's great for the whole space. And this could be totally off base, but one thing that I love about that product and why I use it is I love the fact that it's many little bags inside a big bag that just makes me comply. Like, I don't want to pack my suitcase with a big jar of gummies.

17:04
David Bell
I don't want that stupid thing Monday to Sunday where I flip it up and I put all my whatever, vitamins and God knows what I'm taking, but I'm going away for five days, I take five little bags. And he did many other things too. But that to me is like a nuance of understanding the customer that creates compliance. Because the worst thing with vitamins, and you don't comply, you don't use them. You're like, what the hell? I've got these. I shouldn't say this because he's a kiwi, but I literally have like three bags of AG1 powder sitting in my pantry over there. They keep coming. Thank God I finally canceled it. Again, no disrespect to that brand because it's a great brand, but the form factor wasn't one that I could really get on board with.

17:39
David Bell
And I would give it to my trainer, give it to the doorman, whatever. And then I think just attention to detail. You think about a brand like Touchland, right? It's not something where you have to take off a cap. You can take it out, you can use it with one hand. It turns out that kind of thing is really important. Another thing that I've seen, it's just really a success is being able to create great stories. Narratives that continue is always kind of news. So I have this sort of framework that I use when I think about brands. And one piece of it is thinking of a customer as an orator, right? If you're a customer, that's transactional. I sell you this mug, and then you give me some money.

18:15
David Bell
Okay, but what if in the selling of the mug, you like the mug so much, you told other people about it? Right? So what are the triggers that I can use that you propagate my story for? You and some of the really successful brands that do that, they do it through collaborations, through physical activations, through really interesting content, through drops, through different colors, different flavors, sort of keeping the thing fresh and having its own momentum. So yeah, I might have gone on to one, but those are threads. The attention to detail and the ability to create narrative in the culture, ideally without spending too much money. That can really take you a long way.

18:50
Hannah Dittman
Well said and great words of wisdom. I love your point on reducing friction in the customer experience. I think the more friction, the more drop off you have in your consumer base. So anything you can do to alleviate those points of drop off obviously help you retain and keep a loyal customer base. So very well said and articulated and I think kind of ties back to your bonobos example as well. A big reason why some of that was working for them was focusing on removing friction in a shopping experience or a journey. Same with Warby Parker. I think there's so many different ways to think about that concept. Some may seem so disruptive and world changing and creating an entirely new customer journey.

19:38
Hannah Dittman
But to your point on Gruyn, some of them are just a lot more simple with understanding the in home use of a certain product and being like, okay, how can we make this an even easier experience if we really understand what our customer is doing?

19:53
David Bell
Yeah, I'll give a shout out to an old buddy of mine who was a few years ahead of me at graduate school. And to this point of understanding. So this is very true and quite typical in academia, Hannah. So you might be just some dude or some woman in an office, like running regressions on customer data. Right. You never have to interact with anybody. And there was this guy, Brian Wansink, who was a professor at Cornell for many years. He wrote this book called Mindless Eating. And it was a pretty interesting book. And what he did was he actually went into people's homes and he looked at their pantries and stuff like that. And he found all these goofy things like the size of the bottle that you sell. Something changes the psychophysics of how they perceive the quantity.

20:30
David Bell
So if I give you a cocktail in a martini glass versus a champagne flute, you just think there's much more volume because it's tall and thin. But actually there's more on this one, right? Or if you and I have a startup CPG conference and Daniel gives us a budget to buy snacks and outside the room we leave a big bowl of M&Ms. And if they're all multicolored, people just come and they just eat them out of the wazoo, right? If we all read ones, you're like, oh my God, I just ate 10 red MM's. But if you eat two blue, two green, two yellow, two orange and two brown, you feel like you've eaten less. So this guy went like right down the rabbit hole and actually looking at what people were doing with the product.

21:07
David Bell
And I think sometimes people sort of forget to do that or just go into a store, wander around and see what people pick off the shelf. And like, that's almost being a bit of a, like anthropologist in the consumer space can be really useful.

21:19
Hannah Dittman
So true. And consumer psychology, I just think is so fascinating to your point. Perceived value, even if you talk to any packaging engineer out there or brand manager, they're going to know the size impression of a product makes a big difference. The colorways grab your eye in a certain way or give you kind of perceived emotion. There's so many little tiny details that we pick up as humans and aren't even really fully conscious of what we're thinking about them.

21:50
Hannah Dittman
And I think tapping into all of those mental pathways and thinking them through and being just really intentional, I think to your point about why you're doing everything you're doing, you may not always have the right answer and probably rarely will to be able to accurately study all of these behaviors and come to the right conclusions and get enough data to actually be able to do that or actually impossible. I'm sure Pepsi has been working on that for decades and decades. But I think at a minimum, when you're making decisions in a brand, really trying to think through why you're making every little tiny decision that you're making and what the potential impact of it could be is a great way to be thoughtful and to constantly remember your consumer as part of your decision making process.

22:38
David Bell
Yeah, totally. I think sometimes it even swings the other way. I guess this is a different space, but I think it was Steve Jobs or something like that sort of famously said, didn't believe in customer research because David and Hannah have no idea what they want. I'm just going to build them something cool and I'll buy it. So I think sometimes you might take a contrarian position, but I think mostly in consumer really helps to look really closely at the details. And I think we live in such a visual world now too, because of the phones and social and pictures. And so I think you see really simple things like the brand like Brightland, which I have sitting over there. I don't put it in the closet. Right. Or the Pantry because it just looks cool.

23:15
David Bell
So I leave it out on my table, like my caraway pot. Like I leave sitting there because it kind of looks nice. I think people really are attracted to things that have positive aesthetic these days. Could be the functional form, the color palette and so on. Because it's a way to also socially signal to other people the kind of stuff that you have in your everyday life. And for whatever reason, there's a slight sense of, maybe pride's too strong a word, like sense of enjoyment from having those things.

23:40
Hannah Dittman
Yes, a thousand percent. I always spend a lot of time in beauty, personal care, and I always think about it as decorating your bathroom. Because all of those products have to be out in your shower. They have to be out on your sink. Obviously, the perfume industry just knows it so well. The more beautiful a bottle is, the more you want to display it. Like, I think the kitchen, especially with the olive oil scene. Yeah, like you're saying Breitling, Graza, like a big lift for both of those brands was having something that was attractive to display in the kitchen when most things in the kitchen you want tucked away behind closed doors. We're reflecting on quite a lot of things that in hindsight kind of makes sense why they worked out with Grooms, with Breitland, with all these different companies.

24:20
Hannah Dittman
But as an early stage investor, you need to be able to have the foresight to think through how it might unfold. That way, when you're evaluating brands or thinking about early stage investment, what are some of the things that you're anchoring on that help you get conviction that you can see it turning out that way or that you have an understanding that the path might unfold successfully.

24:42
David Bell
Yeah, okay, maybe I'll separate the consumer stuff from the financial stuff. So the consumer stuff, we always, like, try the product ourselves, give it to a few other friends and family members, like, do very informal, kind of like non scientific work, focused groups, market research, like that's a must. And then sort of having done that and seeing what the reaction is, we might then formalize that by doing some broader surveys and so on. So getting some comfort. So I'll give you a tangible example that most people would probably relate to this brand. So when Jim found Touchland on Instagram or we bought some and saying, man, is anyone ever going to pay 10 bucks for a hand sanitizer when the same quantum of Purell was two. Right. So five times the price.

25:20
David Bell
But we thought, well, you know, with this one, you might take it out and people might see it and it's got fragrance, so it's kind of different. And it's this whole idea of Craig Tabitzky did an amazing job with the brains. He's been involved in writing the oral care and like the eos. And could you take something prosaic and turn it into something elevated? And we sort of came to the conclusion that you could. But then this is really funny. Then we sat around this, you and I might have done right, and you agonize over how the heck am I going to tell Daniel that when he's standing at the shelf there's the $10 option and the $2 option. And nanosecond that he's devoting. Right.

25:56
David Bell
I guess the jargon is it's a very low involvement decision making process that he's going to pick the one that's 10 because we're going to tell him, hey man, this is the same price per use because it's a spray, you need more goop, less spray. We've done the math so you know, don't worry. And you've got this other stuff, like it looks cool, it smells nice and yada. And then we kind of realize like it's really difficult to get that message across but he's just not going to pay attention to that. And at some point somebody figured out or forget how the decision arose. Like the way you tell that story is you just sell it in Sephora. Like that says everything that you want to say about the product without actually having to say it.

26:30
David Bell
Like you couldn't say it better than selling it in that channel, which I have a whole theory about why channel is so important. And then on top of that you're sitting there at 10. Everything else in that store is 25 and above. So one by three.

26:42
Hannah Dittman
Such a great point. And yes, my mind was just buzzing with thoughts as you were speaking while I was at Morphe. We had our own smaller, obviously not Sephora scale, but we had about 40 or so retail stores. We also had a partnership with Touchland. I remember when we partnered with them and them coming in. And I think there was also kind of the market factor to your point on channel distribution. Yes, huge. And I think so much consumer psychology with that. It's also really interesting what has happened over even the course of my career in consumer with channel lines blurring and channel signals. Like I think Walmart's a perfect case study of that. What it was at the beginning of my career was where you go to have brand equity die and just not where you want touch at all.

27:24
Hannah Dittman
And where it is today is in a completely different echelon of mental space. I think different generations view channels differently, and channels change over time. But to the point, on Touchland as well, there was the external market factors happening as well. Coming off of COVID there was so much emphasis on sanitization, and it had become such a prominent staple in people's lives in a way that it hadn't before that. Now, something that was like a whatever thing you might have in your purse, hand sanitizer, who cares? It was a functional item. It was the psychology of that had changed because now it was a very important part of your day, and it was an important item in your life.

28:06
Hannah Dittman
And the thought of cleanliness and sanitization was so prominent that I think also leaning into a more premium version when something matters a little bit more and it becomes a less functional purchase for you and more emotionally driven.

28:21
David Bell
Yep.

28:21
Hannah Dittman
Can also change the affinity or the attachment you might have to something as well. And then once something catches fire and becomes the staple or the everyday part of your life, consumers are relatively sticky and kind of keeps going. But, yeah, a very interesting case study.

28:36
David Bell
Yeah, I love what you said there. I'll just pick up on a couple of things. So, you know, you talked about the function and the emotion. Right. And I think whenever we look at a product, sort of look through the three lenses of, does it offer functional value? Oh, yeah, it cleans my hands. Does it offer emotional value? Oh, yeah. It makes me feel good. And does it offer symbolic value? So in the act of use, do I kind of look good in front of other people? I think Touchland checks all three boxes. Right. Whereas Purell maybe certainly checks the first one. Like, it does the job at its functional value, maybe have emotional value. I don't get like a buzz taking out Purell. Notes of disrespect to Purell. And probably nobody thinks I'm cool for using it. Right. So functional, emotional and symbolic.

29:14
David Bell
And then just two other things. Going back to the piece about thinking about whether something's going to work. You study the consumer space as much as you can. You talk to people. You do a survey, informal focus groups. You look, does it map back to a white space and trends? And then you just have to be very pragmatic and say, if this thing were to succeed, would someone ever buy it? Is there a way out? Because obviously, as an investor, at some point you hope to get a return to pay back your own investors. And I think there was a great example of this. I Was at a conference a couple of years ago that Ray Kao runs this commerce beanstalk thing and he had a session about Exit and he had the founder due, I think from Hero.

29:51
David Bell
And she was kind of talking about her journey to sale and said once we got to 100 million, there was like 10 people we could speak to. And there was another guy, really funny guy, forget his name. So I apologize. But he had a mattress brand. It was a mattress brand with some like really high tech customer acquisition. And they both sold for, you know, 600 and a billion or whatever. And he was like, yeah, we literally have one person that would buy our thing and we had this run around with them three years earlier and then it fell apart and then we eventually sold it to them.

30:17
David Bell
So I think just being very pragmatic about like who's at the other end of this, like how many of them, what do you have to hit, what do you have to show them, what are they curious about? Which oftentimes is like, is it scaling at retail and so on. So you have to be pretty clear headed about that. And then one other thought about distribution is being a former marketing professor, right? Everybody I think knows the four Ps, right? Price, Promotion, product and place. And they kind of stack up in that order in terms of their ability, I think to deliver you advantage, right? So you and I compete. I cut the price. You're like, oh my God, you cut. And then we're both worse off. And then I'm scratching my head, I come up with, just do it.

30:54
David Bell
You're like, damn it, I better come up with something. It takes you a week maybe. With AI it only takes you like a minute now.

30:59
Hannah Dittman
Oh no.

31:01
David Bell
And then you get to product, right? Like I put an airbag in my car and then you figure out how to do it. So basically we catch each other on these three things. But if I get into some channel where you're not there and I lock it up, or I'm in a channel that you've never even thought about, like that could be massive advantage. And the other wrinkle on this is I always try and get our founders to think about what I call a channel with binary choice. And what I mean by that is the following. So I met this really cool guy, he's doing a footwear brand, it's called Stokes and it's just launched and it's like got frou, skinny little shoes with like technology. It's for the all American guy who wants like wide and wider.

31:38
David Bell
Those are the two sizes and so this guy, the shoe is like 85 bucks. I bought a pair. They're pretty comfortable. He's selling them in some sort of like a hardware, trucker supply, some kind of channel like this, right? With about 300 doors. So the customer that you want to serve, he walks in there. There's no other shoes in there. It's not a shoe store. And he just has to make the like, do I buy it or not? And that's also kind of what Touchland was able to accomplish too, in Sephora. There wasn't much else there. And then it's really easy, right? It's not like you're a beverage brand sitting on a shelf with 150 other SKUs trying to call yourself out, right?

32:13
David Bell
So if you could find a channel where you're a binary decision, I think you can get real lift out of that. Easy to say, harder to do.

32:20
Hannah Dittman
Really, really great point. And a very, I think, keen and sharp observation and very challenging to do. I think even in crowded categories like Benefit Cosmetics was the first to put these kind of like to go vending machines in the airport. And you would think that is so random. People buy some of these items like once a year. How successful can that really be? It was actually a very effective strategy because at the time, at least, I think there's been like followers since then. But at the time, no one else was thinking about doing that. It was like literally stuck out like a sore thumb. It was a place where you were like, why is there makeup here?

33:01
Hannah Dittman
And if you were a loyal customer or you had some extra downtime or whatever, it got a lot of attention and kept the brand top of the mind, if nothing else for marketing. Also some conversion, but I think being able to cut through the noise, like you're saying, and also tapping into what I call mental convenience.

33:16
David Bell
Oh, I love this. I'm gonna. Sorry, Hunter, I'm gonna borrow this phrase, but I'll give you attribution. I get dinner with some friends later.

33:22
Hannah Dittman
On and say, hey, that's an honor.

33:23
David Bell
Yeah, I'll say. Have you thought about your mental convenience? I got this idea from Hannah Dibbin on a podcast. Yeah, that's a great phrase.

33:29
Hannah Dittman
Yeah, thank you so much. I think a lot about that with my own brand. It's like you want something to be physically convenient to buy, but what consumers really crave, depending on the psychographic you're focusing on and the people that I focus on, is it needs to be easy to know what to buy. Doesn't need to be a Homework assignment, when you're thinking it through, that's a lot of friction. And a friction elimination again, like were talking about earlier, sometimes is just that shopping decision of like, I don't want to think about this because the shopping doesn't get me excited. I want to get it. I want it to be good, and I want to move on with my life.

34:00
David Bell
No, this is such a great point because you had this cognitive load, right? So much stuff comes at you in the course of the day. And we could ask AI how many advertising messages we're exposed to and how many choices we have to make. And this is why once people have locked into something, the simple heuristic is do what you did last time. So when I used to analyze all this data from Nielsen, you run some sort of regression model. Like the best predictor of which orange juice you're going to buy today is like the one you bought last time. You know what I mean? I mean, of course, price and everything else, but usually the biggest regression coefficient is on your lag behavior. And yeah, people are always using sort of simplification shortcuts.

34:38
David Bell
And sometimes you can, I would say, trick them because you don't want to be too subversive. But there's also funny things. Like one of my buddies at Wharton did this study where he's in the supermarket and he had this idea about anchoring. So he put these signs up at different stores in Chicago. Campbell's Soup. Limit two cans per customer. And another story, like limit four cans per customer. People just buy more because they see a bigger number. I mean, you couldn't put 50 at some point it taps out. But the fact that people are using heuristics for mental convenience or they're latching onto simple things like, we have to understand this, I think, to be effective.

35:11
Hannah Dittman
Yeah, all great ways to kind of extrapolate that out. And so true. I think this shows up in our lives in so many ways. And I think a big reason why private label wins sometimes too. It's almost like the abstinence from a decision because you don't need. You're just like, you know, I'm going with the one that I know is private label. It's cheap, it works, whatever. Good enough. All really great thoughts. And I feel bad for using up so much of our time just pontificating on. On the market, on the case study. I would love to open the floor to a slack case study question. As you know, startup CPG has the largest slack community in the industry, with now over 35, 000 members.

35:51
Hannah Dittman
I'd love to pull a question directly from our channel and have you answer it as a case study for any founders that might have a similar question. Today's question is how long is the typical timeline between a first and second fundraise? What should I plan for?

36:05
David Bell
Wow, that's a tough question. I mean, I think it's a little bit. I don't want to be like the professor vibe and say it depends, right? It's always the cop out answer that you give your class. So if I think about some of the companies that we've invested in without naming them, right. So in the beginning there's got to be some typically little bit of seed capital. It might be you as a founder putting it in, it could be the friends and family and so on. And so what you really want to do there is sort of three things. First of all, you want to show that you can attract people who just love you, that you don't have to really pay too much to do it right.

36:35
David Bell
So I mean if you're sort of buying off the first customers, that's always a bad sign if you're having to spend on digital properties and so on. So who can I get in effectively or almost at zero cac because they just like what I'm doing so much. Number two, sort of modeling that out. Can you see a pathway to where you're going to be breaking even and going to be profitable? And then number three, what's going to be an inflection point that's really going to help you scale? Like is it going to be a big PO from a retailer? Is there going to be a certain momentum within Amazon? And if you're thinking about cpg, you know, a typical playbook might be dial down your own or dial up, dial down, dial in. Okay, your own kind of D2C website.

37:11
David Bell
Make sure that looks great, it runs, it hums, hopefully doesn't cost you any money, but it does what it should. That's probably not going to be the biggest source of revenue over the long term for you. And then you want to get into the Amazon flywheel. Typically do that really well and then there'll be a point at which you want to have offline scale because that's often what the strategic at the other end is looking for. So the time between getting the sort of seed bit up and running and the next bit that's really going to juice you, that might be sort of three or four years, but it should be done with purpose. And I think maybe to answer the question too, another way the person I've asked to think about it is to reverse the whole process.

37:46
David Bell
So you and I have seen this many times. You meet a founder and what does a founder want from you? They want Hana's money. And they might want it because if you're on the cap table, that helps them. They want your advice. But usually founders are looking for money. It's just natural, right? Money is the oxygen. But sometimes it helps to reverse the process and say, what is it I'm trying to do? Let me figure that out. Who do I need to do it? Well, I'm okay at doing this, but I better hire Hana because I need someone who's really good at operations. I need this other person. And then having figured out those two things, kind of the strategy of the people, what's the minimal amount of money that I need to actually accomplish that?

38:23
David Bell
And then there's also the question of from whom do I want to take that? Because once you take money from somebody that part of your ecosystem, they should be adding value, you ideally should get on with them. They should have a similar vision. And I think this is where sometimes in our space in consumer, there can be a tension between the investor and the source of capital. Because the source of capital might want to see at least a paper return on a horizon that's actually shorter than is really realistic for the right way to grow the business. Because the capital provider over here might want to raise another vehicle and don't get more fees and so on and so forth. But the founder, if they're really to do it properly, maybe it's a 10 year window, whereas this person wants a 5.

39:03
David Bell
So I think that's really the right way to approach it. Take as little as possible, unless you're timing with purpose for inflection, that's really giving you the growth. And I think in our space hunter, most of the Suffolk that you and I see, it's not really destined to be a public company. It's destined to be picked up by Unilever, Church and Dwight Whomever. So with that in mind, that's what's fueling that second piece of capital.

39:25
Hannah Dittman
Really insightful and well said. And I think the point you made of a founder needing to think, oscillating their thinking between the macro and the micro is so important. And often one of the biggest challenges of being a founder is to be able to keep that fluidity and hold both of those thoughts in your mind at the same time. Being able to understand from a micro level what you're working on, what you're doing, what's on fire, what you need money for, da da. But also from a macro. Constantly remembering to boil it back up and be like, what's the strategy here? Are all those micro things happening in the right direction? Do I have the right game plan? Does that need to shift? Like, am I thinking about the big picture in the right way? It's a big pivot.

40:05
Hannah Dittman
It's like two different jobs in some ways. And I think being able to do that in the context of fundraising, to your point, is just really important because it's easy to get hung up on that micro of what needs to happen immediately and what you have going on. Yeah, but these are the decisions that impact the long term play out of your business in such a material way. And it's the way investors are thinking a little bit more. They're not in the nitty gritty weeds of your micro, but they're definitely super focused on your macro. And so I think remembering to keep that at the forefront as you're thinking through the fundraise process is also really important.

40:41
David Bell
And I think too, Hannah, just following up from what you're saying, there's a lot of decisions sometimes that you have to make as a founder. There's a little bit of maybe economic sloppiness in there. Right. So maybe the way you're buying inventory, particularly with AI now, right. You could build maybe a slightly better economic order quantity model that means that you don't stock out. And you know, most of the stuff we sell has a reasonable duration to it. So that's probably the bigger thing as opposed to having too much but like optimizing that so you're not using money to finance inventory in an appropriate way or you're dropping, I think sometimes, and I'm sort of dating myself here, but I think it's like a younger, you know, when I sort of grew up going to school, learning about marketing and stuff like that.

41:20
David Bell
So one of my professors that's still a good friend of mine's Advisor actually for IdeaFarm, is a guy called Kevin Keller. And Kevin is just like a great dude, hilariously funny, produces a rock band in Australia, but he's like a marketing professor. So Keller, he's the guy on the Copper and Keller textbook. And he's at least within academia in the 90s, he's the guy that introduced the concept of brand equity. He owned that phrase. He wrote a paper that has 60,000 citations about that. And so when I think about the way Kevin thinks about brand and connection and how you build it and architecture, that's sort of what I learned. But I think there was a generation, and this is important too, that sort of thought of brand is, oh, I spend money on this and I count the clicks. And like, that's branding.

42:02
David Bell
I mean, it's sort of a tactic that might support a brand. But I think when you forget about this bigger picture of maybe one way you can build a brand is like, go and give people coffee in, like, Battery park as opposed to spending money on Meta to get them to buy your coffee mug. You know what I mean? I know that's a bit of a trite example that I'm cooking up, but I think that generational distinction is quite interesting.

42:22
Hannah Dittman
It makes a lot of sense. When you get tunnel vision and on a rabbit hole one Way to Skin the Cat, you forget there's all these other creative, interesting solutions out there that might be more worthwhile. It's a lot of opportunity cost going on across these decisions.

42:39
David Bell
Exactly. And sometimes the decision that's sort of the measurable decision seems like a superficially better place to spend the money because you can measure the input and the output. But just because you can sort of measure that again, probably with debatable accuracy, it doesn't mean that spending $3,000 to set up a coffee booth at Battery park is a bad idea. That might actually better for your coffee brand than doing the ads on Insta. And so I think that's one thing I would say to people who are a little younger. Maybe our Gen Z about the XN is have a more sort of encompassing view of what your brand is. And I think if you look at the great brands and the culture that we've seen in our space, we talked about Groons and Touchland and stuff like that. Graza, Breitland.

43:20
David Bell
I mean, they're real brands, right, that people actually have real love for. They're more than just getting people in through sort of clicks on the page.

43:26
Hannah Dittman
Really well said and great food for thought. Like many of your other points today, David, this has been just a masterclass in ways to think through consumer psychology and the academic lens, but also the real nitty gritty stories and the case studies that have been along such a long tenured journey and career through some big wins in the consumer space. It was such a treat to speak with you today and I'm so honored that you were willing to share your time with us for founders that might want to continue the conversation with you or get in Touch. Where can they find you? Or what's the best way for them to follow along?

44:00
David Bell
So I think probably two best avenues. You know, you can always connect just on LinkedIn or you could send me an email. It's just David, first name at and then ideafarmventures.com all one word. Those are two ways. And Alice, it's been such a pleasure. I mean, it's always fun. I think the great thing in our space, right, Hannah, that we like consumers, like the things that you can really touch and feel. I mean, I'm sure there's plenty of people out there could do amazing things in technology and that's obviously important and great too. But as an investor, there's like a certain point of enjoyment when you walk into a store. It's oh yeah, I know the person who made that and I helped in some small way. It's kind of cool, for sure.

44:36
Hannah Dittman
I think the tangible aspect of consumer is so exciting for everyone who works in the industry in any capacity. I think even if you're working at a brand, just knowing you had a little piece of the puzzle that brought something to life or that you're a fan of consuming yourself and get to see behind the scenes of it, I think that's what differentiates our industry in a lot of ways, is we're really focused on bringing joy into people's lives and positively impacting it and with a tangible widget. And that's the most fun part of it. Well, thank you again, David. Your time has been so incredible. I love all the lessons that you have to share and all the fun and interesting things that you've seen.

45:15
Hannah Dittman
I think it's going to be a real eye opener for a different way of thinking for a lot of people and a real interesting lens that you have as an investor pulling from such a broad view. You're very thoughtful and deep thinking about a lot of these concepts and I'm sure if you dove into the operating side, you would be building something quite incredible as well. Well, thank you again so much for your time today. True pleasure.

45:39
David Bell
Thank you too, Helen.

45:42
Hannah Dittman
Well, friends, we've now arrived together at the end of another episode of the Startup CPG podcast, the top globally ranked podcast in cpg. And if you love this podcast, you'll love our Slack community even more. Here at Startup cpg, we're a community of brands and experts and you should join. Sign up @startupcpg.com you'll then get an invite to our online Slack community of over 35,000 All Star CPG members hear about amazing events near you and all our special opportunities to get you in front of buyers, investors, brands and more. It's a free community. So what are you waiting for? I'll catch you on the next episode and I'll see you on the slack.