You're listening to Tsipi. Hello, everybody, welcome to the Investors podcast. I'm your host, Trey Lockerby, and I am so excited to have with me on the show today Jason Carr. Jason has had an incredible career so far, starting as a quant at major hedge funds like SAC Capital under billionaire Steve Cohen, as well as Carleson Capital, where he became co CIO or chief investment officer. He then moved on to start his own fund, Tourbillon Capital, which at its peak managed over four billion dollars in assets under management.

Along the way, he helped his family start a successful company called WHU, most known for its chocolate bars, which recently sold to Mondelēz for his next act. He is now founded Human Co., which focuses on providing permanent capital to health and wellness brands, as well as the launch of a recent SPAC or Special Purpose Acquisition Company. On today's episode, I guarantee you will glean some incredible wisdom from Jason's experience, both as a hedge fund manager and as an entrepreneur.

We discuss the view from the mountaintop opportunities and health and wellness. What is a SPAC and why are they so popular at the moment and much, much more? I thoroughly enjoyed this conversation and I hope you do as well. So without further ado, please enjoy my conversation with Jason Karp.

You are listening to the Investor's Podcast. When we study the financial markets and read the books that influenced self-made billionaires the most, we keep you informed and prepared for the unexpected. All right, everybody, I'm here with Jason Karp. Jason, I cannot tell you how excited I am to have you on the show today, we're going to be talking about a lot of things that I'm curious about that are near and dear to my heart, like health and wellness and just going over this amazing career you've had so far.

So welcome to the show. Thank you for having me.

All right, so I do want to touch on some of your early success starting out at SAC Capital under the leadership of billionaire Steve Cohen. What did you learn from that experience and how did it shape your investment approach? It's been an interesting journey, my period at S.A.C. was actually a great one, and I spent my first six and a half, seven years at another hedge fund where I started as a client and a friend called George Weiss Associates. And I met many people at s.E.C.

At the time, it was sort of viewed as the best of the best in terms of places to learn. And they didn't disappoint. I was brought into a unique position of a new entity within sight of me where the goal was to really focus on much bigger positions, much longer term oriented investing versus what was known for prior to that, which was much more short term and even day trading in some instances. And Steve is just a phenomenal manager, trader and investor.

He started to see where the puck was going towards the need for bigger, more concentrated positions where you could actually withstand the volatility and hold it for quarters instead of holding it for weeks. And so I was brought in to basically be one of the lieutenants of this new entity where I functioned as a director of research. And I combined a lot of my quantitative training where I started doing things like statistical arbitrage. I used a lot of my quantitative training to basically build a hybridize fundamental research model which incorporated a lot of data that we were able to capture and combined it with subjective human judgment in terms of what positions we choose, how we size them, we hold them, how we do our fundamental due diligence.

And I think what was amazing about that environment was it was created. This was twenty two thousand four early twenty five when I got there. And it was before some of the scandal stuff happened in 09 and later. And it was really an entrepreneurial culture that took an incredible open minded approach to figuring out the best ways to invest. And they were also able to attract I mean, I still think to this day some of the best people and smartest people and most thought provoking people who brought really the best out of me.

Many of those people I met at. So for those in our audience who are curious or interested in going into the hedge fund industry or even starting their own fund, maybe talk to us about your decision to start Turpie on capital and what that entrepreneurial experience was like for you. I was at three funds over the course of 14 years. I went straight to a hedge fund when I was twenty one years old, right out of college in nineteen ninety eight, and each chapter was very different.

My George Weiss chapter was very much about understanding quantitative methods, really hard core analysis. That's where I began as an analyst. Understanding how to marry fundamental research with quantitative research, the sexy chapter was very much about large concentrated positions, activities in very deep fundamental research that required that was required to hold positions through thick and thin, know, take big, big draw downs, hold them for multiple quarters. And then after that I went to become the CIO of Dallas based hedge fund called Kalsi Capital.

And there were a lot of ads I was helping manage some of the fundamental portfolios. Carlson was really known for their market neutral approach. By the way, almost everything I do over those 40 years was what some people call kind of pure alpha strategies, where you're generally market neutral as many shorts as you do and you're trying to capture true alpha as opposed to just sort of riding the direction of the market. And each of my bosses and mentors in each of those three places really had this sort of pride in the reason hedge funds should get paid for outcome, not for beta.

And all three of them really ingrained that into me. So my three bosses and mentors over those three chapters all took a lot of pride in. The reason we get paid a fee is to create Alpha. And that was kind of deeply ingrained in my own philosophy of investing because of how they approached the world. And the cost of Chapter four was amazing because prior to that I'd just been basically a portfolio manager and an analyst. But I had learned how to run a firm.

I had learned kind of how the sausage was made, how everything from operations to marketing to dealing with the back office to dealing with things like trade breaks and all of those enormous complexity in managing a hedge fund. And I don't think I appreciated it fully until I was the Kosei or Karlson. When I was there. I quickly realized, like this was a this was a big piece of the puzzle that I was missing. And then after I felt like I really learned it from Clint Bruce, the founder, it was a fabulous mentor for me.

I felt like it was my time and it was my turn. And what I learned about myself throughout all of this was I'm actually an entrepreneur at heart. I love investing. I've always loved investing even from when I was in high school. But it's more about the business aspects of investing as opposed to just sort of the notion of pushing pieces of paper around and sort of arbitraging, which I did do a fair amount of. And it was quite lucrative for me.

But it never I always enjoyed that part of the of investing more so of the sense of playing a game and winning at a game as opposed to like deep fulfillment. The deep fulfillment I got from my experiences over those 14 years was much more about the entrepreneurial itch that I needed to scratch. It was about building teams. It was about solving real problems. It was about providing a service to people who couldn't do it on their own. And so there was a moment where I sort of felt like I hit a wall at Karlson and I went to Clint.

Actually, just for the sake of your listeners will probably appreciate this. I was in a funk where I just kind of felt like I was getting a raw as an investor and as a manager and my wife at that point I'd been married to for seven or eight years. I obviously knew me very well. And she looked at me and she's like, something's wrong. You've got to change it. You've got to step up. And I looked at her and there's a that's the PG version.

There's sort of an R version of that story where she basically saw me and she saw how frustrated I was. And it's probably not appropriate to give you the either. And I said, you know what, you're right. And I went to and had had started his own problem many years earlier. And he was a real gentleman about it. And I said, I got to do this on my own. It's sort of the last chapter. Like, I can't go higher than starting my own time in this industry.

And I think I was thirty four, thirty five at the time. And I said I just, I got to try it on my own because I can't really let go up from here. And that was the genesis behind starting Thurbon kind of all the things I had learned and express it in the way that I finally wanted to express. And that was how that got going. All right, so now Tourbillon is managing over four billion dollars and it's this incredible success, did this turn out to be everything you thought it would be?

This is the most interesting part of this interview, I think so I watched her. I really believe that I wanted to do that. And I certainly knew I wanted to invest my way, but I definitely made a bunch of mistakes in how I set it up. I think I did a great job in hiring the right people. We had an amazing culture. In fact, one of my lieutenants who was my president, Amy Amy, was fabulous in sort of being the yin to my yang and helping run the business.

And he's also with me now a Humacao. And she basically worked together now for 11 years at three different places. She was also a concern with me. But what happened in 2015 was sort of this remarkable revelation. We had three very strong years in a row of pure alpha. We were top decile for our strategy three years in a row, which is why we got four and a half billion in three years, which was a pretty rapid growth.

And then that year, we also won best new hedge fund manager in the country from Institutional Investor, which was an award that I was sort of coveting to me, felt like that would mean like we did it effectively at best, new hedge fund. And yet my help at the time was pretty bad and I was depressed. And we finished that year with another great year. And it was my biggest earnings year up until that point by a lot.

And it was one of those years that you're supposed to say, like, wow, I made it. And by all accounts, on the surface it looks like I did. And I said to my wife one day, I said, I don't think I could do better than this. And I'm sick and I'm miserable. And there was this sort of deep, deep hole inside of me that I thought would be expelled from kind of getting to that point.

And it wasn't. And then I sort of had this kind of real panic moment. This demon I've been chasing for most of my life is still there. And I sort of thought I would kind of quiet that demon by doing everything that I had done. One of my mentors who was extremely well accomplished, I mentioned by name, but it's one of the people you can imagine. He said to me one day, and I think a lot of top hedge fund managers suffer from this and they don't talk about it, because when you're that successful and you're the head of your firm, there's this shame in being able to talk about things that are wrong, because people look at you and a lot of people just presume that if you're financially successful, it means you're successful in other aspects of your life, like your family, your friends and most notably happiness.

And most often those things actually are negatively correlated, despite this belief that getting financially wealthy means all those things get solved. And what this meant to me was he said, Jason, I've been to the top of the mountain and there's nothing to see. And I kind of didn't believe it when he said it to me because I'm like, no way. And then I kind of had that moment myself in 2015. And I'm like, oh, my God, he's right.

And I think there's a number of managers who I've now spoken to over the years where we could literally have like a like in a group of people that would just talk to each other because they can't talk about it to other people, because nobody has any sympathy, obviously, for financially successful people. But many of them are miserable people and have terrible family lives, and many of them die young and get sick. And I had I still do, but I had that feeling that kind of fueled me to get to where I was.

And then unfortunately, my competitiveness continued to drive me despite my illnesses. And I kept going. My financial performance thereafter suffered. I proceeded to have my only down year after that in 16 years. I was really proud of the fact that I basically hadn't had a down year for my entire career and it wasn't bad. I mean, I still in the beginning, I still made double digits for my investor. When we return, the money I knew over the course of the next couple of years that this wasn't my ultimate calling.

I was doing a disservice to my investors by just keeping the money and still trying if I really felt like I wasn't going to be the best at what I was doing. And it was also I'd also had been a student of the industry from the moment I got into it in ninety eight and I watched a considerable evolution happen where there was just a massive amount of legal edge in the late 90s because only a third of probably managers even had a Bloomberg when I got started and people were still going to the public library to get ten KS and ten Qs.

And so information was a tremendous advantage when I first got started. And then with the rise of quants and the rise of the democratization of information and hedge funds also became popular and lots of people started going into it. I started to watch the reasons that got me excited about being in that space. We're being arbitraged away. And it was becoming less and less interesting because it was becoming much more. Additive and much more difficult. There was a lot more noise and a lot less signal than there used to be, and so a lot of my challenges that were happening as an investor in 16 and 17 were actually things that I didn't even think I got wrong.

But I actually got them wrong, obviously, in terms of price. And so that connection between effort and outcome, which I believe is always a key marker for people's sanity, literally in psychological experiments, if you want to make someone crazy, you disconnect effort, an outcome they've already seen the studies where people like pull on a lever and sometimes it gives them an electric shock and sometimes it gives them a reward. And if you make it random, it literally drives you crazy.

And I felt like there were aspects of at least short term investing. And by short term, I mean under a year, not like day trading, some of the shorter term forms of investing. I felt like we're having more and more and more of a disconnect between effort and outcome. And those they were just a variety of variables that sort of conspired for me that made me ultimately decide that I was I was basically done managing. I had to.

Wow, that's some amazing wisdom and insight. Thank you for that. Let's take a quick break and hear from his sponsor.

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Get back into the podcast. Now, before we go on to the next chapter, I just want to touch on one investment you made that stood out to me, which was your activist involvement into Sun Opta. Now activism pops up here and there, especially with hedge funds, but it's not as common as it was maybe in the eighties, especially when you're just running a pure alpha playbook, like you mentioned. So I'm curious, what drew you to this opportunity and what made you get involved?

Activism for your listeners, and there are a handful of hedge funds that have made their name being activists valuate, Bill Ackman is probably the most notable and an activist is basically like a hybrid between a private equity investor and a public investor, where you take a meaningful position in a company, you usually have a board seat and through your large ownership, you try to effect change in a way that you think will dramatically improve and enhance shareholder value. I did a handful of them at ASIC.

I was involved in a couple of them at Karlsen, and so I had some experience in being an activist and I really enjoyed it when we did it. It was part of what I think helped me realize that ultimately I am an entrepreneur because you do have a clear, a clear linkage between your effort and the ultimate outcome when you're an activist because you're literally trying to make yourself right, as opposed to just sort of hoping the management team in the case of a traditional passive investment gets it right.

So that was a company and we didn't really talk about my I think we can get to the human qualities, but I've had this kind of dual path in my whole career of health and wellness as well as investing, because in right when I started working in my second and third year of work straight out of college, I got very sick and I was diagnosed with several autoimmune diseases and a degenerative disease where they told me I would be blind by the age of 30.

And I was I was actually losing my vision and seeing double for almost six months when I was twenty three years old. And it was a very difficult time for me. I was deeply depressed. I was ashamed. I didn't really tell people about it and I hid it. And I was also told there was no cure for what I had. I actually solved my illnesses for the most part. I mean, I've had some relapses, but I've basically been in remission for 20 years through food and through lifestyle.

And I had to figure all this out on my own before health and wellness was like a thing. And I ultimately discovered through DNA sequencing that I just I don't detoxify like a normal human. And so I have to eat and live in a much stricter way than the average human does so that I don't get sick again. And so this has deeply shaped my worldview in a lot of areas. But one of them was health and wellness and how important it is for all of humanity.

And I was kind of like a canary in the coal mine in that whatever made me sick in months. It makes everybody else say over many, many years and sometimes decades. But it's just that I'm sort of a fast the responder to some of these common aspects of modern living. It's making everyone sick. And so I've had this sort of really acute sense for health and wellness and for what goes into kind of food and all products that you put either in your body or on your body over the last twenty two years.

So that was one of these companies that was like nobody knew about them. I'd actually discovered them through my experience with the kitchen, the snacking chocolate company that I co-founded with my family. And they were at the time the largest organic ingredient provider in the world. And we were buying more and more certain ingredients for you at the time. And we kind of outgrew our middlemen. And somebody said to me, when we're like, well, where do we buy?

At the time, it was it was one of our greatest. We're like, well, where do we buy this quantity? Like, Oh, you've got to go to Seattle. And I said, loosen up. And then I started digging on it. I realized it was a Canadian public company that was also crustless it here in the US. Nobody I talked to had ever heard of it, and I started doing a lot of digging on it.

And what happened was so I have to also it's kind of a hodgepodge of a business back then. This is back in twenty sixteen when I first started looking at it. But they also had one of the at had and it's actually quite topical today. They had and now have the largest grant based milk manufacturing capacity for other companies with what they call private label manufacturing in the country. So if you go to Whole Foods and you see organic three sixty five, which is the Whole Foods brand, or you go into Costco and you see the Kirkland brand and you want to buy organic almond milk.

So that makes it for them. And now they're the largest private label, oat milk manufacturer in the country, which is relevant because today we announced that they were IPO and that a ten billion dollar valuation and it's going to come out at ten times, ten times the valuation of personalities. So for your listeners who want to figure out a sneaky way to play, so that is the way. And my belief is that health and wellness was exponentially growing and that more and more people like me, I was sick.

And so I approached health and wellness from a curative perspective. But everyone around me was approaching it from just a people just want to live healthier. They want to look better. They want to perform. We want to age well, this is a universal trait of humans, and so I had this governing belief that health and wellness was going to be a segment of a business that's going to rise and grow much, much faster than other segment. I viewed that Schnapper was effectively an arms dealer in a war.

And there's an expression which is in a war, you don't want to pick a country, you want to own the arms deal. And I didn't know necessarily who all the winners and losers were going to be. But I knew that if this company was supplying all of the innovation that was happening, that they were going to benefit. And what happened right when I first started investing in it and admittedly, I was 18 months early, which does tend to happen.

They made a terrible, terrible acquisition. And so all the trends and aspects of the business that I wanted to be long for were basically overshadowed by this bad acquisition. They dated a frozen fruit business where they overpaid for something that also kind of had some real operational challenges. The theme was right, but the execution was bad. And so I got really big and I bought 10 percent of the company. We wrote a letter. This is when the stock was about three dollars and 50 cents.

Today it's around fifteen dollars. And we wrote a letter to the company as the largest shareholder and basically said, we want to help you fix this because your theme is dead on. And literally, if you just do a, B plus job, your company is going to go up many fold, but you've got to get out of your own way. And it took a few kind of trials and errors over a couple of years. Oaktree ended up becoming the largest investor.

We helped bring in a few different people involved on the board. Then another activist got involved, the firm called Engaged Capital on the West Coast. And it was basically OK to me and engage with the top three shareholders. And a very ambitious yet logical plan was established that would take a couple of years to basically clean up the operational challenges and just allow the company to thrive in a way that they were already on to do. And last year, which was the first year basically that all the things were firing, so was the top performing food stock in North America.

It was up three hundred and sixty percent last year. And as all of your listeners should know, it was my single worst contributed to my fund performance in Two Thousand and eighteen, which was the year that I return the money. And we were down small single digits that year. But Cynthia was seventy five percent of my last night. Well, and then of course I couldn't allow that. So I created a special purpose vehicle for my investors to basically say, look, I'm going to return all the money, but I'm not selling this position because we're just a little early.

And so we created an SUV and thankfully I had a few investors who stuck around. I put a considerable amount of money into it myself, and now we're up considerably. And I think it's got a long way to go because in the last 12 months, oatmeal in particular has become very, very popular and interesting to a lot of people. Only is obviously capitalizing on it. But Synoptic makes the milk for all of us, at least competitors, and they're all being well funded.

And so I think Senator has a considerable amount of runway to go and we will only highlight the valuation disparity between them and everybody else. So that ties in really nicely with your new kitchen experience, which you noted you down to this with your family and it's become very well known as of late, especially for its chocolate. So if you've seen huge chocolate on the shelf, which is my favorite chocolate, I've got to say it's been a huge success and just recently sold to Mondelēz.

So talk to us a little bit about how you became more involved in that company with your family and help ultimately bring it to an exit. So the background to you was my brother in law, Jordan Brown is my wife's brother, so he was aware of the journey that I had just gone through. I, incidentally, met my wife right after I kind of cured myself. And I was just a prolific reader of all of these books around health and wellness, biohacking, functional medicine, which is a growing field that wasn't accepted as real science back then, but now is which is basically treating the root causes of diseases as opposed to the symptoms.

And Jordan started reading a lot of the same books that I was reading, and he didn't have my autoimmune issues, but he just noticed that when he started eating cleaner, he performs better and looked better and felt better. And he really got into this style of living and where Jordan and I gravitated the most when we were doing a lot of our our kind of research and sort of studies was around kind of this evolutionary approach or what some people call ancestral, which was the basis behind paleo and the paleo diet.

Jordan came to me in 2010 and said we're trying to eat this way, which was basically paleo inspired before really. It was an accepted term. But it's this idea that we don't eat like humans anymore and that we've evolved. And there's a lot of indisputable science behind kind of the evolutionary influences on how we become who we are. And it also works, obviously, with animals. And that really resonated with us. But we felt like there weren't many offerings out there.

And he said, why don't we create a restaurant that is the manifestation of all of this stuff that we've been reading and doing, because even in New York City, it's too hard to find things that meet the guardrails of how we want to eat. And I said, look, I said I'm a professional investor. Restaurants are notoriously terrible businesses. He was in real estate at the time. I was at a hedge fund at the time. This is before I started terbium.

And I said, look, we don't know really what we're doing, but we know we have a passion. I said maybe it'll be a decent business. I can't really tell. But frankly, if we can have a place where we could eat every day and we could sort of prove to New York that you can combine ultra simple ingredients that are evolutionarily inspired, where everything in the restaurant would be gluten free, grain free, everything need to be organic, would be organic.

All the animal products of wild and grass fed and sustainably raised animal products. I said if we could prove to New York that this could be done, let's give it a shot. And we hired a bunch of people because we knew what we didn't know who could help us. Jordan ultimately quit his job in real estate development to pursue this full time, and we took no outside investors. It was all us to find this very large experiment because my view was this was a very controversial topic at the time.

It was unproven and we did not want to compromise our guardrails. We didn't want any investor ever telling us, like, yeah, why don't you use the shittier ingredient which will improve your profit margins and nobody will notice that we wanted this to be truly what we were willing to eat every day ourselves. And that's how You Kitchen, which started as a restaurant in New York City when Union Square started. And then when we were kind of we did a lot of experimentation and we're leading up to the opening, which was in October 2012.

And we were doing a lot of baking with green tree flowers and making green free cookies and muffins and scones. But we wanted to have chocolate chips for these things. And our philosophy was no refined sugar and we could not find chocolate chips that made our ingredient Gabriele's, which was dairy free, refined, sugar free, no soy, no preservatives, no additives. We couldn't find it. There were a couple at least. Terrible. And so we hired a chocolatier using our ingredients to try to develop a baking chocolate that we could use in our stuff and the recipe that we ended up landing so delicious.

Jordan had this idea of turning them into bars and then we started making bars out of the same chocolate that was inspired by baking and added, just like one of our chefs at the time, his girlfriend worked at Whole Foods, Columbus Circle. He was bringing her bars. And she one day she asked and we saw these in and we said, sure, and that's how few consumer products business really got born. And it was Jordan's idea to basically take this baking chocolate and turn it into bars.

So chocolate in particular is a pretty crowded industry, so I'm curious what you brought to the table from your days as an investor as you entered into this entrepreneurial experience and what helped set you chocolate apart from the rest? You know, it's funny because when we've been asked this, and I do think that quote from Buffett that being an investor makes him a better businessman and being a businessman makes him a better investor. I wholeheartedly agree with that. And obviously, a lot of I studied hundreds and hundreds, if not thousands of businesses over twenty two years as a professional investor, both long and short.

And I learned a lot and I learned a lot the right way and I learned a lot the hard way. And this is no exception. And a lot of those learnings went into I was the controlling shareholder and the chairman up until the day we sold the boundaries and a lot of my learnings as an investor obviously influenced how we built you, how we raised money for you, how we manage the finances of you, how we hired it. You along with Jordan and my wife Jessica and my wife Jessica and Jordan, who were really the sort of day to day operators of the business for the first many years.

And I functioned as chairman because ironically and this is just sometimes I like those. I started terbium within two months of launching New Kitchen, which is a disaster of the year. But just sometimes the stars just aligned to kind of make it work that way. The chocolate was never intentional in the sense of, hey, let's go build a business in chocolate as sort of a business plan. We knew we had a winner because of how good the product was and how hard it was to me.

I think Jordan and Jessica and I did not appreciate we literally infinite variability that goes into making chocolate. If you had told me a with a competitive set look like and B, how hard it would be to make chocolate beforehand, I don't think we ever would have done it voluntarily. And I think there was sort of this really interesting insight that I learned from the process, which was counterintuitive to what I learned in business school, which was if you go into a category that's very well established, like chocolate, where, you know, there's a lot of demand, there's a lot of demand internationally, too, it's not just the US phenomenal, but it was relatively homogenous.

There wasn't much of sort of a healthy chocolate category. And the few healthy chocolates that existed back in 2012 were frankly gross. And they were ultra dark. They were bitter. They replaced me. And they didn't even compare to the taste of like a like a conventional milk chocolate. But milk chocolate isn't healthy. It's loaded with refined sugar. It's got a lot of other crap in it, the stuff that you buy like a gas station or a movie theater.

And we developed the chocolate that we didn't realize at the time. But now in retrospect, it's obvious that was kind of one of the first that actually tasted as good as anything else out there. And it also happened to be ultra clean and healthy and actually lower glycaemic than than conventional chocolate. And so if you go into a category that's very big and homogenous and you come in with with a challenger that's just really different, it's almost like that competition is irrelevant.

And in fact, it gives you even a bigger tailwind because, you know, you already have a category that people care about. And so we just started to take off almost without intention and we didn't approach the business in a true deliberate like let's scale this include we approach the chocolate part of the business that way until probably like three or four years later. And when we realized collectively that we had something because our restaurant was actually doing quite well and the focus was on the restaurant initially.

And and when we realized that we had something that was truly different and unique and was having such resonance with people that we didn't even know about, and we were helping all different types of people for people who actually needed the help. Like many diabetics consumed chocolate to people who just wanted to have a healthier treat. Then we realized we had something special and then we decided to really lean into it.

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The Investors Podcast Dotcom. Equity multiple. All right, back to the show so often when you're growing and scaling a company like chocolate as rapidly as you did, you're not so often focused on the bottom line, right? You're more focused on growing topline. So I'm curious as to how you approach that, what your strategy was, especially going into this exit with Mondelēz, where you focused on producing free cash flow or just growing the distribution. Great question now that I've been an angel investor and a private venture investor for the last decade, I've seen a lot of different approaches.

And usually in venture, particularly when you have a winning product or early stage stuff, you never try to make. Well, because the returns on your capital to reinvest in the business will always be much greater than you taking that match as it did today. And that is why it makes sense to take whatever potential profits you might have and just keep redeploying because you're getting effectively a much better return on that capital. We actually, because it was a family business, we only had one outside investor, which we took out a few years after we opened, and they were a minority.

And but they like us. We're very focused on cash flow. And our restaurant actually made money. And so we had this sort of luxury of using some of that cash flow to push it into the consumer products business and CPG business for growth. But we did it in a much more slow way than some of the other companies have been involved with. That raise venture money, meaning from venture capitalists who have a time horizon where they want you to grow as fast as you can, and they ultimately need to sell that business so that they get paid.

As I watched some of these other businesses that I invested in and had actually really good financial outcomes. I had a few early investments in health and wellness companies that were sold for big multiples to public companies. I felt like in a couple of the instances of those they sold too early, they harmed the brand because of the venture money that was behind them. They kind of grew way too quickly. They oversaturated behind the integrity of the brand because they just needed to get into as many stores as possible.

And Jordan, Jessica and I had this view that we want to do that, that we wanted to make sure that it's OK if we grew more slowly and we never wanted to compromise on the authenticity and integrity of what we were offering. And that ended up being, I think, a really good decision. We grew more much more slowly than some of our competitors, but I think we ultimately got a much higher multiple than our competitors because our brand was so much stickier before we sold.

We had metrics that you could see, like key performance indicators on how many bars and other products. Now we have crackers and we have hunk's, which are chocolate covered nuts. And our fastest growing SKU is our huge gems, which are chocolate chips, which you can both bake with and eat as a snack. And our metrics around all these products were really unprecedented in terms of how frequently they return, meaning like sell in a store and how many dollars we would generate called dollar velocity in a store.

And to an acquirer, what they care about is, OK, you're pretty small relative to us. In the case of Mondelēz, we took Mondelēz as a small minority partner in the beginning of two thousand nineteen. Margolese is the largest snacking company in the entire world, the parent company or the holding company behind Oreo's, Cadbury, Toblerone, Pixar. And more recently, they've gotten into some healthier brands that they bought. They bought Enjoy Life Foods, which is an allergy.

And Cary Grant, they bought Tate's cookies and they bought a car. And they've been actively trying to sell healthier. And I think they actually do a little good job with it. And we kind of looked at ourselves and we were thinking about, like, what do we want to look like when we grow up and scale? And really providing access to a lot more people was a big part of our mission. And we knew that we thought we could create the best chocolate on our own, but we didn't have the learnings of the know how and how to get truly national and how to get into all of that and how to deal with all of the challenges of producing in scale and how to produce in scale without compromising on quality and how to buy much more of our ingredients.

Again, at the same quality that we wanted in Mondelēz made it clear that they were very understanding and had shown in their previous acquisitions that they didn't want to compromise on the quality and they didn't want to compromise on the brand mission. And we did a lot of diligence and we got comfortable with them as a partner. And they were our partner for almost two years before we sold to them.

You recently launched a spat with Rowan O's and his crew over at CAVU. We've never really talked about specs on this show, so I want to just break it down for our listeners really quickly, give it a little bit of a back one on one breakdown so they understand what that is and what its purpose is for. Suspects have actually been around for 20, 30 years, but they've gotten very, very popular in the last two years for several reasons.

As a single purpose acquisition company and it is basically a blank check, a company that is public, where you go to a group of public investors, anyone can participate and you raise a pool of funds that is locked in a trust bank account. You then have. So it's just cash when you raise it. And there's a sponsor group which are kind of think of it like the management team of Westpac, the sponsor group is behind it. And you are betting on that sponsor group to identify a private company that you think should be public.

So icepack is there's a misnomer that Speck's quote by companies don't buy company Speck's are typically much, much smaller than the company that they what's called reverse merge with. What it does is just to use round numbers. Anspach acquisition raised approximately three hundred million dollars. That three hundred million dollars is sitting in a bank without our sponsor. Group is the Human Cottin and the Cavaletti and CAVU is one of the top performing venture funds within health and wellness and consumer packaged goods.

They've had nine exits in the last five years. They've had numerous. Unicorn's Roon, as you mentioned, is on Shark Tank. He's been involved in some of the best brands in the last decade, including he was the chief marketing officer, vitamin water when they sold the Coca-Cola Roon has an amazing background and his partner, Brett Thomas, have an amazing background in identifying brands that can become bigger. And so our team as their team is Kevo. And then we also assemble a group of board members who bring real interesting learnings and experience to the table that money cannot buy.

And if you look at some of our board members, three of which were very high profile public company executives, for example, one of our board members is a guy named Brian Kelly, who is the president of Coca-Cola, then was the CEO of Green Mountain and took Green Mountain and karig to 14 billion dollar valuation and sold it. And here's a guy who ran a huge public company. We also have a guy named John Walker, who is the CEO of Ani's the organic food brand that he took public and then sold it to General Mills.

And so we have this great group of board members and we all bring a lot of things to the table. But right now, it's just cash in a bank account. And what we have is we have twenty four months to go find a private company that has an enterprise value of a billion dollars, up to a billion dollars that are private and espec effectively shepherds that company public and helps bring it public. It's an alternative way to go in public.

And the reason that in the last 18 months there have been probably three hundred aspects that have been created, which is probably more than like the five years combined. Before that it's been well over one hundred billion dollars has been raised in bank accounts and everybody has twenty four months to find a private company to bring a public and are controversial because it's very much about the management team. The sponsor group backs are a way that the sponsor group can get very wealthy.

The sponsor group typically takes 20 percent like a hedge fund of the capital that's raised in many instances. The sponsor group is just interested in matchmaking, where all they're trying to do is find a private company, basically say, hey, we're a good way for you to go public and then the investors. It's actually a good vehicle for the public market investors to because prior to the announcement of a spec has to go look for a private company. And then what happens is let's say we find a private company, we will announce it that we have now come to terms with the private company to bring them public.

It's almost always a much bigger company. So the stock will end up owning twenty, fifteen, twenty five percent of the pro forma. And by the spaak I mean all the shareholders of the spot and then the existing company will still have the super majority of the equity. You as a public market shareholder, you have a vote when you announce the deal. If you announce a deal and the public market hates it, they can vote no and block the deal from hospital.

And you effectively have a put option. Now, effectively, you actually have a good option at ten dollars a share, which is where it's typically go public and you get all your money back and where you can lose money as a public is after the deal gets voted through. And essentially what's called Dispatch's once a dispatch's now you actually just have a regular public. And the shareholder base of that is going to be a mix of the participants in the space itself, the sponsor group and the company that was private that is now public in the case of Humacao Acquisition Corp.

And of course, every spec sponsor is going to be biased toward themselves. But we're taking a different approach. And we are not just matchmakers. This is our day job. This is not a side hustle. This is what we do every day. We observe that there were a lot of large private. That we think should be public and we think the public markets do not have enough offerings for mission driven ESG socially responsible type of investors. There's just not many ways to play it.

And Tesla has become sort of a de facto way for everybody to play ESG beyond me in the food space is probably the first kind of high profile play that went public and now commands an outrageously evaluation because there's not many ways for public shareholders to play. And so that's what we're doing in Humacao acquisition. We went public two months ago. We are actively seeking and talking to many private companies. We obviously can't say who and how and how far along we are because we are a public company.

We do have to obviously adhere to the regulations. That is what we're doing for big companies as our SPAC and for smaller companies call it. Three hundred million dollars and smaller. That's what core Tumaco is for, for big companies. We're using Dasbach and for smaller companies we're using our. So, yeah, I know, for example, in food and beverage or exit opportunities for investors, there's sometimes only a handful of what they call strategics. Right.

Those bigger companies you mentioned like Mondelēz who are willing to take on a smaller company and put it under their umbrella. So it sounds like the spack is going to democratize this a little bit more and allow for a lot of these companies to be able to exit or at least go public and pay off their shareholders in a new way. Well, it's an old way, but it's coming back into vogue. It is definitely a way for democratizing it to massively accelerate the number of private companies that can go public spats at some significant advantages over the regular way IPO process.

It is much faster. You do not have to roadshow for months and months and months. You get a determined price from the stock as opposed to when you go public the regular way. You don't know where the market's value, whereas when you go public with respect, the price is determined. And so that's a big advantage. And probably for the kind of companies that we're talking to at Chemical Acquisition Corp., one of the greatest benefits is that you get our entire team now as part of your team, you get our board, you get people like, well, how do you get the human team?

Several of us may or may not become board members of your Coca-Cola Company. And on the human side, where we have a lot of public market experience. My partner and I, Ross, we both have over 20 years of public market experience. A lot of these private founders don't want to deal with public markets. They're worried about reporting quarterly earnings. They're worried about investor relations, are worried about watching their stock price move every day. There are a lot of downsides to being public.

And I think having a sponsor partner that knows how to navigate that part so that you as a management team of your private company, can focus on what you do best. I think that's a compelling value proposition. Well, you touched on S.G., so I just want to spell that out for our listeners, that's environmental, social and corporate governance focused company. So you've mentioned Tesla's sort of taking up all the market share of ESG opportunities in public markets, which I think is a fascinating viewpoint.

What do you think the future of ESG looks like beyond specs in the public markets? Well, I think it's accelerating massively now, I think for a very long time. He was viewed as almost like a tax where corporations and companies that had a mission of trying to help other stakeholders, not just stockholders, but other stakeholders like people and the environment and your employees and aspects like diversity. Those concepts used to be viewed as sort of like they were mutually exclusive, like you couldn't have a good return if you cared about all those other things.

And in the last decade, it's been very clear that those two actually are correlated and not negatively correlated and that many ESG oriented companies who care about these other things attract better talent. They actually compound returns faster. And in some cases, they actually grow from a revenue perspective, not just the valuation. From a revenue perspective. They actually grow faster because the people who want to buy those products actually care about who's behind us. Why are they doing this?

Does this support my own personal values? And in the last decade, what's been great about some of the younger generation is that they're starting to vote with their wallet and starting to buy products that actually are kind of manifestations of their own personal values. And I think companies like you benefited from that. I think certainly companies like Beyonce, that's almost the entire business model and a lot of big kind of sexy private companies like all birds. There's many really successful companies that are using these aspects behind them and are working.

And the more they work, meaning the returns come, the more capital will go towards them and the more capital it goes towards them, the more innovation accelerates. And it's a virtuous cycle that will continue. So I am super bullish on categories where you have this intersection of mission and business and I don't think they're mutually exclusive. I would caution your listeners, though, that there are many concept companies, what I call sort of pie in the sky hope stories that have no prospects for years and years and years of ever generating even revenue.

And there are some insane things happening in the public markets right now that are very scary. And as investors and unfortunately, I've lived through a few cycles, including ninety nine, two thousand and then two thousand eight. As an investor, there are going to be many of these companies that sound like they have a great mission and have a great home, but go to zero. And what I always like to tell investors and entrepreneurs and companies that even we're involved with the Tumaco is you can't help people if you don't have a viable business model, you're not going to help people.

If your business doesn't succeed, the best way you can help people is make sure you have a viable model that can employ more and more people, that can raise capital, that can generate real ultimate profit and ultimately be a real business. And I feel like right now we're in a very bubblish period where people are ignoring business models again. And the last time I saw that was nineteen ninety nine. And so you definitely have to be careful as an investor right now and the difference between speculation and investing, because there's going to be a lot of companies that go to zero.

And I just want everybody to be cautious about that, that they're actually doing their real work about how does this turn into a real business? So I know that you've thought about this, but at what enterprise value would you consider taking human public? Actually, in that regard, I think we're too early. We're still in like any one and we're really building it and we have we have a lot of work to do to continue building it, to continue hiring.

We're going to announce a very high profile partner in addition to our company next week. It's early days, but but it is something that I do intend to do at some point. So, Jason, thank you so much for coming on our show, maybe hand off our audience where they can learn more about your funds, your SPAC humacao, your other endeavors. We have a Web site called Dot Com, or Spaak has its own website, Spack, dot com were listed on the Nasdaq H.M.S. as a ticker.

We're also on Instagram academical brands. I'm not that active on social, but my handle is at Human Karpe on Twitter, at Human Carp on Instagram, and obviously keep a lookout for the evolution of our of our own products and brands. Coconut Bliss, Montes and Snow Days are all brands that you can follow and try if you want to sort of experience what we're doing. And then finally, if you're interested in playing plant based milks and after is a public company to take stock out and it will be highlighted as Oatley is looking to go public.

Jason, thank you so much again for coming on the show. I really hope we get to do it again some time. All right. Thanks so much. I appreciate it. All right, everybody, that's all we had for you this week. Be sure to tune in next week where Steeg is going to be sitting down with the mastermind group. And if you're loving the show, don't forget to subscribe to the feed so that you get these episodes in the app every week automatically.

And while you're at it, go ahead and follow me at Treh Lockerby. Find us on Twitter. Check out the investor's podcast dot com or go to ask the investors dot com to send in a question. And with that, we'll see you again next week. Thank you for listening to type, make sure to subscribe to Millennial Investing by the Investors Podcast Network and learn how to achieve financial independence to access our show notes, transcripts of courses, go to the investor's podcast.

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