Eric Ryan has launched two very successful ventures. These are Method Products and Olly. Together they’ve already raised more than $34 million in funding. Method Products sold to SC Johnson. Olly has attracted some very high profile investors, and effectively went from zero to $100 million a year in sales within 24 months of launching.
In this episode you will learn:
- How to work effectively with family and childhood friends
- Deciding when to scale up the operation
- Raising capital as a non-tech company
- How to prepare for market corrections
- Fostering employee ownership and great culture
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Eric Ryan:
Eric makes soap. Really nice smelling soap that’s non-toxic and good for the planet. It’s really beautiful, too.
He and his high school buddy Adam started Method in 2001 and have since built it into a global industry leader for both design and sustainability.
Today, Method has over 200 planet-friendly cleaning products in stores across North America, Europe, Australia and Asia.
Eric has been named an eco-leader by Vanity Fair, an eco-revolutionary by Time Magazine, PETA’s Person of the Year, a recipient of the Clinton Global Citizen Award and was named to Fortune’s 40 under 40. He lives in the San Francisco Bay Area with his three children who all think he is the cleanest Dad in the world.
Currently Eric leads the vision for Olly. Olly is a maker of premium nutrition and wellness products. Their mission is to inspire lifelong healthy habits by bringing simplicity, inspiration and delight to the world of vitamins and supplements.
Connect with Eric Ryan:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the Dealmakers Show. Today, we’re going to be interviewing someone very special, and I think we’re going to be learning a lot. Eric Ryan from Method Products and OLLY, welcome today.
Eric Ryan: Thanks for having me.
Alejandro: I have to say, Eric, that you’re probably the guy that has made me love soap again. At least like the beautiful-looking design of soap. It’s something that I clearly saw when my wife would bring these products home, and I was like “Wow!” with that. I would love to really learn about your story, but why don’t we go early on to your story, and how did you get the entrepreneurial bug?
Eric Ryan: Sure. I grew up in an entrepreneurial family. My great grandfather dropped out of pharmacy school in Iowa, moved to Detroit to work for Henry when he was still running Ford for $5 a day. Ultimately, he and my grandfather started a machine and stamping company that made the parts that would go on automobiles. They continued to build that business up to the ’80s. As a child, I loved nothing more than going to see the plants and being around that and the family story. As early as I remember, I was like maybe third grade playing with Legos, and I would always be building little office buildings. It came very early that I knew I someday wanted to start a company.
Alejandro: Got it. And I know that the Method is obviously the result of you and Adam Lowry getting together and figuring that there will be a really interesting concept to go after, but how did you meet Adam because I know it was early on.
Eric Ryan: Yes. Adam and I are childhood friends. We actually grew up racing sailboats together in our youth. He’s somebody that was always a great friend. We kind of lost touch during the college years. He went to the west coast; I went to the east coast. Then we were reunited when we realized we were living on the same block in San Francisco. He was in this big flat with six other guys which arguably is not the way you’d expect as a birthplace for a cleaning revolution. One of his roommates moved out, and I moved in, and we had a lot of fun in our 20s at 1731 Pine Street.
Alejandro: Got it. Talk to us about the incubation of the idea that really gave birth to Method.
Eric Ryan: Yeah, so, I came from an advertising background. Really, my expertise is understanding consumer insight and building brand experiences around that. I really loved consumer products because they’re very tangible, they transcend society, and I love this idea—kind of inspired from Mr. Branson of finding a really big tired category that you could go in and change. I like the idea that it’s big, it is predictable, people know how to already make money in it, [3:03] business model. I started looking, and I spent a lot of time at the grocery store on some other projects, and I started spending just a lot of time looking at the cleaning aisle because it was so big, but it was like the sea of sameness. My idea was, okay, try to figure out what’s the cultural shift the categories missing, and in-between would be the business opportunity. So, I first realized—well, this is back in 2000, and domestic design was really taking off. Home and Garden television launched. Pottery Barn was going nationwide, and people were really starting to think of their homes more as an extension to themselves. So, the first cultural shift was life styling of the home, and what if we design these products to be more of an extension of your home? I mean, you look at a dish soap more than you actually use it. If they’re beautifully designed, you would more likely leave it on the counter versus hidden underneath the sink, out of sight, out of mind. So, you’re more likely to use it. So, that was kind of first insight. So, Adam, and I, and my roommates started working on that. And we realized like, “Wow! Cleaning is actually a very dirty industry.” You [4:08] when you clean, you use poison to make your home healthier, and when we looked at the number of childhood poisonings that occur every year from common household products, that didn’t sit very well with us or the idea of leaving little, you know, pretty bottles of toxic cleaners sitting on everybody’s countertops. So, we started as a second cultural shift which was sustainability. But there was a problem which is at that time, green products really didn’t work that well, and the majority of America believed green doesn’t clean. So, we had to figure out how do we get the mainstream into a green product to make it successful. And really, the big idea behind Method, we call it our elevator pitch was a beta for the home, and taking a lot of personal care and applying it in home care. We took these two macro trends of high design and deep sustainability and brought it together in a single product offering.
Alejandro: Got it. And at what point, I guess, in this exploratory phase with Adam were you guys like, “Okay, I think we’re going to build a business around this thing.”
Eric Ryan: You know, I think the hardest part of starting a company is just your own sense of confidence in the had games. You know, the mechanics of starting a business, when you break it down, they’re pretty easy. But it’s really taking your own kind of personal risk on your credibility, and the insecurity around that is the hardest part. So, we just de-risked it in little steps. The first step was we had this idea. We wrote up what we called the concept that brought it to life, and we gave it to the 20 smartest people we knew from different industries. We did tell them like, “Come back and tell us like do you think this is a good idea?” because most people, they don’t want to crush your dreams, so they’ll tell you it’s a better idea than what they probably believe. We gave them the homework assignment, “Come back and shoot holes in this. Tell us the top three reasons why you believe this is going to fail.” Nobody could come back with a really valid reason other than it seems so obvious why have all these other big companies never done it before? That gave us a little bit more confidence. Then we created our first couple of products. Very much DIY, developing ourselves, gave it to friends. And again, everybody seemed to like the product. That gave us a little bit more confidence. Then from there, we created our first little production. Again, kind of filling everything; labeling it at home. We went to all of the local independent grocery stores in the San Francisco Bay area where you can find the manager at 6:00 in the morning, and you can pitch them there on the spot, and they can actually make the buying decision. We got into about 30 stores. Each week, Adam and I would take turns driving door-to-door, seeing, counting how many sold, restocking it. That started giving us more confidence to see there was sell-through. From there, we did an angel round. We started going to grocery stores, Warehouse Direct. We would go to like a regional chain. From there we went to Target. So, just like step-by-step, we just kept de-risking it along the way.
Alejandro: Right. We were talking about this. So, Adam was your childhood friend. I see many instances that when you’re working with like childhood friends, or let’s say with family members, understanding the way in which you divide and conquer the different aspects of the business, it could be a challenge. So, in this case for you guys, how did you decide how you were going to divide the roles at Method?
Eric Ryan: You know, in the beginning—there’s that clique of never start a business with friends. And you can see why. Like what a friendship is based on is often not what a successful business partnership requires. But Adam and I were really fortunate. We had two radically different skill sets. Adam came out of Stanford working for the Carnegie Institute. I climbed the chain. He has a degree in Chemical Engineering. I came much more from the creative design marketing world. We had two very, very different skill sets in kind of areas of passion that came together really nicely. So, in the beginning, we just started dividing up kind of where that naturally laid. The way, for short, I always thought about it is Adam was inside the bottle. He had to figure out the formulas. I was outside the bottle. I had to figure out how to make it really sexy and beautiful. We were just very lucky that our friendship also brought two very different skill sets to the table.
Alejandro: Got it. And since you’re talking about you being accountable for outside of the bottle, you actually were even putting yourself on outside of the bottle, so how did that shape up your customer service approach, and what did you learn from that?
Eric Ryan: Yeah. As far as the design of it or the actual—
Alejandro: Your actual cellphone being on the bottle. I mean, the design was beautiful, but I’m just wondering like how being awake like at 2:00 a.m. receiving calls. I mean, I don’t know. Like, you tell us. What was that experience?
Eric Ryan: First of all, when you create something from scratch, you want all the feedback you can. And we did that out of necessity. We just didn’t have a different phone number, so I just put mine on. It’s like customer research calling you directly. And, you know, the majority of the calls, which at first, we thought they were friends playing a joke on us, were people literally calling to say how much they loved our cucumber bathroom cleaner. And they were really passionate about it. Again, this is a very low-interest category. Our goal is to create some emotional engagement there, but we never expected people to get that excited about a bathroom cleaner the way they did. And once we realized it wasn’t friends playing jokes on us, you know, that was just really great validation that—you know, you’re in the grind of a startup. You’re insecure about it, and it just gives you confidence to keep going. But the more interesting calls were on very few occasions where a child had drunk it, or it accidentally sprayed in their eyes, and it’s a frantic parent who just wants to make sure that it’s going to be okay. My joke was I always hand Adam the phone at that point. “Adam, it’s for you.” Let him take it. We were once in a bar on a Friday night and got one of those calls. I was like, “Adam, it’s for you.” But it was also so reassuring to be able to tell them that the product is biodegradable, non-toxic, and there is nothing to worry about. For that, it was really validating that we did the right thing in going down a path that ensured the safety of both people and the environment.
Alejandro: Got it. So, what was the process? I mean, you were talking about doing this with all these other people as well. You guys were all quite young. What was that shift, or what was that process in shifting gears from making stuff in the kitchen to with—and I’ve heard you say that you were putting on like your lab coat, and really to building that supply chain in order to really scale up the operation? What was that process?
Eric Ryan: It’s a lot of just detective work and figuring it out. And I think that’s the real joy of building a business is you go into a category you know nothing about. Adam and I knew nothing about how do you manufacture a product? How do you sell to a grocery store? The logistics in shipping it. But that was the real joy of figuring out piece by piece. And a lot of it was just trying to get to one person who then leads you to another person and then starting to assemble a team. In the beginning, of course, we couldn’t afford to hire, so we had to outsource a lot of it, just trying to find a consultant that could help. I mean, just doing a lot of begging, borrowing, and stealing of trying to figure out how to piece it together. But it was nothing but kind of good old-fashioned detective work to find one resource after another and learn your way forward. And it’s the steepest of the learning curve I think is the real joy of entrepreneurship.
Alejandro: Absolutely. And you did a fair amount of financing rounds to support the operation and the growth. So, can you walk us a little bit through how you financed the operation?
Eric Ryan: Yeah. Again, really kind of classic entrepreneur story, and whenever I coach other entrepreneurs, I always recommend “break it down to basic kind of steps.” There’ are three big steps. There’s concept development. There is prototyping, which is kind of like your launch-and-learn phase, and then scaling. And then within that, there’s different phases. And so, I guess, align the capital with each need of that phase and what we wanted to prove. So, I’d be very focused to say, “Okay. Step one, Adam and I pulled together what few dollars we had.” We were able to put together $50,000. $50,000. What are we going to do? We’re going to create the first line of products, and we’re going to prove regionally proof of consumer acceptance. And that’s all we focused on. As soon as we got to that phase, we had that like, “All right. We’re now going to raise an angel round of $300,000. It’s going to be friends and family because no one’s going to believe in our business, but hopefully, these people believe in us. That $300,000 we are going to prove that we can go into these grocery chains and be successful.” Then the next round, we raised a million dollars. That was our Series A. The million dollars was to be able to get national distribution at Target and start scaling from there. And then rounds came further as we needed growth capital for the business. So, it’s just kind of those like three phases. And often, about the angel round and the Series A round, they’re really tricky. The angel round, I see why they’re called angels because they save you from death, and these are people who don’t necessarily believe in your business, but they believe in you, and they know you’re going to figure it out. In our Series A, we closed that in the fall of 2001, shortly after 9/11. And that was a really, really challenging, obviously, time to be doing any sort of capital raising, let alone doing it for a premium product, you know, going into a recession environment. Today, it’s much more in vogue of early-stage consumer products, getting distribution and major retailers. At the time, that was kind of unheard of. We got really lucky, and Steve and Herb Simon believed in us and probably wrote a check when nobody else should have. And that gave us our original Series A. Then we had some other amazing individuals like Tim Koogle who at the time was CEO of Yahoo, that wrote some big checks and really believed in us, and got us through those awkward first couple of years.
Alejandro: Yeah. And this was actually something that I wanted to ask you. I mean, getting the term sheet after September 11th, like massive success because when markets turn around, obviously cash is a little bit more expensive, and a lot of people are talking about potential market correction now, and that it is going to be a little bit tougher perhaps to raise money. So, what kind of lessons did you learn during this process that perhaps could provide some guidance for folks that are in the process and that may experience some form of correction?
Eric Ryan: Yeah. I mean, it’s really how to time markets, and I think there’s pros and cons to wherever you launch during an economic cycle. And obviously, based on the value proposition, the economics of it, there’s going to be easier and harder times to do it. You know, the real upside to launching in a downturn—I kind of joke. It’s a little like vacationing off-season. Everything’s on sale. So, it makes access to resources much easier talent. You know, right now, especially living here in San Francisco, the economy is just roaring locally. Getting office space is a nightmare, let alone finding great talent and being able to afford it. So, there’s real upsides to it, to a downturn for a startup. The other one, too, is it really forces you to focus and know that you’ve got a winning proposition. If you can launch successfully in a downturn, you’re so well positioned for that upturn. As the economy starts to take off, you’re ready to scale and go a lot faster. The first couple of years of a business are pretty difficult. There’s a lot of, kind of beta moments. You’re constantly fine-tuning, figuring out what’s working, what’s not working. To do that during a slower economic time is not bad because then you’re really poised to take advantage of the economy as things really improve.
Alejandro: Got it. Yeah, I know, it makes sense. And we’re talking here about you being in San Francisco. The first thing that comes to mind is when you’re raising capital, I mean there in San Francisco, those traditional sources of capital like VCs, and let’s say private equity may be used or may be more oriented, or they’re used to dealing more with hyper-growth companies that have that type of like tech or engineering component. So, given the fact that you did not have that, did you receive or experience any type of pushback when you were going out to raise money?
Eric Ryan: Yeah, we had huge pushback. Again, this is back in 2000, and we brought in a CEO really early by the name of Alistair Dorward. We found that we didn’t think we were going to be able to close the Series A without having an M.B.A. as part of the team and somebody who had deeper business experience. I think Adam and I had—you know, we were in our late 20s, still very early in our career but we had established credibility in our areas of expertise: branding, design for me, chemical engineering, sustainability for Adam. So, we were seen as typically founders are of individuals who had expertise in an area that was relevant, but not necessarily having enough holistic business experience or a track record to be able to give us that level of capital. I think a lot has changed in today’s environment now where there are so many more resources available to a founder. So, if you are somebody that comes from an area of more expertise versus business experience, VCs and private actually know how to them surround you with the right team to be successful.
Alejandro: And the CEO, that idea of bringing that CEO aboard, was it something that you just thought it was a good idea based on the reactions from investors, or was that someone internally that suggested doing that, or a conversation with Adam, or how did that come about?
Eric Ryan: You know, I think it was a little of all of it. Adam and I, I think have pretty good self-awareness of knowing where our weaknesses are, and wanting to surround ourselves with people who offset that. And again, you look at the majority of successful entrepreneurs. Their ability to assemble and power and inspire a team is core to that. Adam and I really liked the idea of being surrounded by people who we considered smarter than us and better than us in a lot of areas. So, it felt very natural.
Alejandro: Got it. And talking of the team, how many employees were there when the exit happened? When you guys got acquired?
Eric Ryan: We were just north of probably 100 employees. At the time, we had outsourced our manufacturing. And then since then, we’ve built a plant in the south side of Chicago and really scaled up. So, we’re now well north of a couple hundred employees at Method.
Alejandro: Got it. How did you foster employee-ownership and wealth creation amongst the employees at Method?
Eric Ryan: You know, Adam and I were firm believers that everybody had to be an owner, and knowing that we were digging outside capital, the goal was to provide liquidity at some point. Now, liquidity can come in a lot of forms from IPO to strategic acquisition to continually giving employees the opportunities to sell their shares and bring in other investors. But we knew that was something that would occur. We always envisioned the day—if the day came that we were acquired, we wanted everybody to be excited, and everybody to share in the win. And I’m so thankful that we did that.
Alejandro: Got it. So, talking about this, so Method was acquired and ended up being owned by S. C. Johnson. How did the transaction come into place?
Eric Ryan: Adam and I were not involved with this part of the process. Both he and I had stepped down to part-time, so we were about 50% with the company at the time, and Adam was going on to found a new company, Ripple. I’d gone on to found OLLY. OLLY was also co-invested with the investors. We shared some same board members with Method. So, there was a lot of kind of shared economics across into OLLY. So, we were not part of the process, but for us, it was really important that the team was aligned to find a new partner who really believed in the mission, the values, as well as preserving the team and the jobs, and giving them even more opportunities than what we had created.
Alejandro: Yeah. And I think that you’re absolutely right. Like finding that good home for whatever you have created. I mean, it’s ultimately going to make you to look back and be proud of what you’ve built. I find that perhaps in that process, really understanding that there was some type of approach or friendliness towards sustainability. I’m sure that was a big thing for you guys. To that regard, like how are you seeing that shift and mindset from the what to the why in large organizations?
Eric Ryan: Yeah. Well, I would argue it’s really being driven by the millennial consumer more than anything, and a generation that has grown up in a world of surplus of choices. So, when quality, and features, and attributes, and benefits start to become commoditized, you start moving up the ladder. It’s not just what a company makes. It’s why it makes it and believing in the philosophy and the organization. As well as—social media has really created an environment of it’s hard not to be authentic. You can’t have a public face and a private face anymore because your private face will get out there. I have a very, very simple model of how to build a business, which is everything starts with culture. From culture comes products, and the products are really just a souvenir of that culture. And if you get the culture right, and you get the products right, sales and marketing get really easy. That’s very much how we operated Method and how we operate OLLY.
Alejandro: And just so that we get a little bit more visual into that, what does it look like in really getting the culture right? What does getting the culture right look like?
Eric Ryan: There’s a couple of components to it. I mean, the first is, getting the right people onboard. We recruit not only for skill set and expertise but also cultural fit. One way we do that is part of our interviewing process involves what we call the homework assignment. So, near the end of what would be a typical interview process, when you’re probably about to extend an offer, we’ll ask a candidate to come back and present their homework. That homework always consists of the same thing. There are two questions which are custom-designed for that role. And the third question is the culture question. At Method, it was: how will you help keep Method weird? At OLLY, it’s how will you make life better in the park for everyone? Because we’re based in a national park, the Presidio. Then you also get—there’s extra credit which is if you joined us, what would your title be? Because we kind of care so little about titles, we let you make your own, but also, the idea that a title is not just your jurisdiction or your level. A title is really the role you’re going to play here. It’s a really remarkable step because when you shift to that with a candidate, they kind of stop interviewing and they start collaborating with you. You get a little bit more inside look to how they think. What’s their work ethic? Then when they come present, they present to a cross-functional team. It’s not just their department. You’re joining a company, not a department. At the end of a homework presentation, you know if they’re going to get the job or not just from the feeling in the room. So, it’s really a way to prototype the chemistry. So, get the right people onboard. Make sure they’re the right culture fit. I’m also coming out of advertising a big believer in the power of design. You know, that Winston Churchill quote of “We shape our buildings, and then they shape us.”
Eric Ryan: The same lesson applies. So, at Method, and even the plant that we built, it’s an absolute reflection of the brand, and it embodies the values, the behaviors that we want people to have every day. At OLLY, we’re based in a national park, and our office is called Camp OLLY. From the second you walk in, it just sets the tone for the culture and the expectations, and really allows you to enable that much, much, much easier. Then from there, the third step is just constantly finding ways to reinforce the values. So, every Monday there’s an all-company meeting called The Huddle. It’s led by a different person each week. There’s a lot of different things we do there that reinforce back the values and awards. At OLLY, we call it Family Lunch. We also constantly do what we call Recess, creating different. You know, since we’re in a park, we should have recess. We find different ways to reinforce that back. And then we also, we take the whole company away for a retreat every six months. There’s always a costume party because we’ve found that’s also a great way to help people bond. So, there’s just a lot of little things also that go into constantly reinforcing the culture.
Alejandro: Got it. So, before we just say, close the chapter here on Method, what was the total amount raised before the actual acquisition? How much did you guys raise?
Eric Ryan: We raised 23 million over that period. I look back at it now. I kind of feel like we raised too much, but 2008 was pretty tough on the business, and we decided to put a little bit more capital on the balance sheet to get us through the Great Recession.
Alejandro: So, I guess just a follow-up on that, Eric. Are you a fan, or do you prefer raising all the money that you can get, or raising the money that you need?
Eric Ryan: I’m a big believer in raising the money you need.
Alejandro: And why would you say that’s the case?
Eric Ryan: Because I think a lot of bad habits come out of raising all the money you can get. And again, kind of going back to that model of breaking it down step-by-step, here’s the stage we’re in. Here’s how much capital we need. Here’s what we’re going to prove on that capital. I really like the discipline that comes from that. I just love the line that “The hungriest wolves hunt best.” I was always amazed in our early years at Method as we would be getting close to running out of capital, how efficient and how much we could get done on very few dollars compared to when the bank account had more money in it.
Alejandro: Yeah. I can absolutely understand. I think that when you are like really pressed, and you really feel the stress is when you really perform. I mean, when you get too comfortable, that’s when you make serious mistakes. So, I can see that. So, after the transaction of Method, Eric, you and Adam basically went separate ways, even though I’ve heard that you guys still maintain a very good relationship. He goes to a found. He’s a company, Ripple Foods, which basically plant sales and other dairy-free products from vegetable proteins. And you go and start OLLY. So, how did you come up with OLLY?
Eric Ryan: OLLY came out of a project I was working on which was Made to Matter at Target. The program was designed around the millennial mom in bringing together innovation and brands that really connected with that audience. And we couldn’t find anybody in the vitamin aisle that really had that millennial connection. So, I started looking around and a very similar method; just starting with the white space. I was like here we go again. Big category. People are literally stressing out trying to choose something healthy for them. So, that was kind of a clue of like dig here. So, I started trying to figure out what’s the culture shift the category’s missing and realized its lifestyle. If you look at how millennials—every generation has a different relation to health. The millennial relationship is very much driven by integrating health and wellness into their lifestyle. And you can see how this played out from fitness with brands like SoulCycle to cold-pressed juices. Nobody was doing it in as mass a category. I started playing with the concept. Very similar to Method, like how do we win on product experience? How do we change the brand relationship, make it more emotional in this low-interest category? I pulled together a pretty simple concept, and just showed it to Target during one of my one-on-ones with a senior executive there, and just asked for feedback. He looks at me and was like, “How fast can you do this?” So, I was like, “All right. I guess we’re doing it.” I went back to the capital group at Method and told them, “You know what? I think part of being an entrepreneur is being scared every morning to go to work, by the challenge. Like, I’m just not scared anymore.” We have such a talented team, an incredible culture, business is doing so well. It was very comfortable. It was like, I think I need to get back to a place where I’m scared again in taking on a new challenge. So, then I started stepping out of Method. And it wasn’t the right business to found with Adam. Adam’s real passion is around sustainability. That’s why he’s gone with Ripple, you know, really trying to replace the dairy industry that has a huge impact on our environment, and moving people into a plant-based diet. OLLY’s much more focused on health than it can have an impact on the environment the same way he can with Ripple. So, in 14 months, we put together the capital, the team, and we launched nationwide 20 products from a blank sheet of paper nationwide, and we’ve been off the races ever since.
Alejandro: So, how many people were in the team at the beginning of OLLY?
Eric Ryan: There were four of us. Really lean and having a lot of fun.
Alejandro: Yeah, I took a look at the numbers, and they were very impressive. So, during the first year, you broke even. Then in 2017, I understand you were on track in doing 80 million in sales, and then 2018 the reported figure was over 100 million sales. So, how are things progressing?
Eric Ryan: Yeah, I think we’re really proud to say we’ve beaten plan at the top line and bottom line our first four years in business. April will be our fourth anniversary of being on shelf. So, it’s been really quick. Obviously, it’s pretty unheard of for a company to come out and break even in year one. We did a Series A, and we have not raised, nor do we intend to raise capital after that. We’re very self-sustaining. When you’re writing a business plan for a Series A, you’re obviously very optimistic because that financial picture is going to be the basis of your evaluation. We were cautious. I didn’t want to ever put ourselves in a position for a down round or put too much pressure on us to grow at an unnatural rate. We got a great evaluation, but it was a fair evaluation for everybody. I’ve never heard of a business coming out and then beating those numbers every year on both the top and bottom line. It has a lot to do with the team we put in place. A lot of us have worked together—a lot of great veterans, and just a very, very talented team that has executed flawlessly.
Alejandro: Got it. So, how much capital did you guys raise for OLLY?
Eric Ryan: We raised 11 million. That’s all. We’ve been very capital-efficient, and that’s all I think we’ll ever need.
Alejandro: Got it, and I see that you raised that money from people like OLLY ventures or base ventures. So, how did you meet these guys?
Eric Ryan: Again, these are all relationships that go really far back. I have a rule, especially the second time around. I went to capital from anybody who either wasn’t a current operator or previous operator versus somebody who is a professional money manager, and that’s been the focus of their career. I find operators as investors really understand the realities of it and can also give you that added value of helping you particularly through the tough times. You know, James Joaquin who co-founded with Ev Williams who’s the co-founder of Twitter. James has a really great operating track record. He’s done many startups himself before shifting into this role. But also, what I loved about Obvious is their approach to world-positive capital and investing in businesses that have a social or environmental impact. So, that aligned really nicely with our values. Tim Koogle, also, again is a big part and our Chairman at OLLY as he was at Method. A fantastic operator who’s started companies as well. And Pat O’Dea, who at the time that he joined us, on the board at Method, and now at OLLY was CEO of Peet’s Coffee. Took it public. Took it back private. Really, really great operator. So, our entire board and investors, they’re all either previous or current operators.
Alejandro: Got it, and I love that. I think that having someone that really understands what you’re going through and really being able to provide some good feedback, and the tough love, I think that that’s critical because I think that the equity that you give out is the equity that is not coming back. So, having the right people seated on the right seats is without a doubt, very important. So, probably, this time around, the second time around, would you say that it was much easier to raise money, Eric?
Eric Ryan: Oh. Absolutely. The first time around, we were just desperate. It was so hard to raise every dollar. This time around, it was the opposite. I had a little bit of a food fight on my hands of too much, you know, the high-quality problem of too many people looking to invest versus not enough. But you know, with that, it scared me a little because the real—when you’re raising capital, you get beat up a lot, and everything gets scrutinized. And I think that’s really healthy because it forces you to really ensure you’re making all of the right decisions. And because of the track record coming off of Method, people are willing to get onboard right away, and that made me nervous. It’s hard starting companies and disrupting categories. You know, I had a lot of concerns about OLLY and would our thesis play out or not? So, I actually found it a little unnerving that we weren’t being scrutinized as hard as we’d hoped because I think there’s real value in that.
Alejandro: Right. Being the visionary that you are, Eric, how do you see the future for OLLY?
Eric Ryan: First of all, we’re just having a blast. We’ve really kind of cracked the code on how to connect with the millennial consumer, put a strategy in place that’s scaling really, really nicely. Our growth is pretty predictable of how that will continue in the U.S. just from our core products and our core retail partnerships. The real opportunity for us is going to be to continue to innovate into other forms of nutrition, but yet maintain the simplicity that we brought to the market. And then international is just a huge opportunity for us. We’ll be launching into our first non-U.S. country a little later this year. We see a very big opportunity for the brand both in Europe and Asia. I think that was one of the—the real thrills of Method were starting to turn it into a Global brand, and creating a brand that can travel outside of the U.S.
Alejandro: Got it. I have this question that I always ask the guests, and that is if you had the opportunity, Eric, to go back in time, and I know that’s impossible, but let’s say you had that opportunity to go back in time, and sit down with yourself and with Adam right before launching Method, what would be one piece of business advice that you would give to yourself and to Adam as well?
Eric Ryan: I always think every day what is more likely to kill us? Growing too fast or growing too slow. And I think the majority of companies you see out there that die, they die from indigestion, not starvation. That was one of the biggest mistakes we made with Method of we grew too fast going into the Great Recession, and we had too many product categories at the time that in these very competitive spaces that we are taking on, and we had to re-entrench a little and really strengthen areas of the business and have a stronger foundation before then growing again. You know, as an entrepreneur, it’s hard to say no to growth, but being disciplined of the right type of growth is just so important.
Alejandro: Absolutely. So, what is the best way for folks that are listening to reach out and say hi?
Eric Ryan: Probably LinkedIn. It’s a great tool, and feel free to reach out to me anytime on it.
Alejandro: Amazing. Well, Eric, it has been a pleasure to have you on the Dealmaker Show. Thank you so much.
Eric Ryan: I very much enjoyed our conversation, and thank you for having me.