Brian Powers On Raising $80 Million To Kill Plastic Foam In Packaging

Brian Powers is the cofounder and CEO of TemperPack which manufactures insulated packaging solutions that meet the needs of all industries that ship perishable items. The company has raised over $80 million from investors like Revolution, SFJ Ventures, Harbert Growth Partners, Tao Capital Partners, Third Prime, Interplay Ventures, Haas Portman, and Dolik Ventures to name a few.

In this episode you will learn:

• Taking your startup international
• The importance of prioritizing in execution
• Finding your customers
• The future of shipping

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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.

About Brian Powers:

Brian Powers wants to challenge the ubiquity of Styrofoam. Brian Powers Temper Pack manufacturers insulated packing materials made from recycled burlap sacks (since 2014, it’s recycled more than 500,000 pounds) – better for the environment and just good at keeping things like food cold. After graduating from the University of Pennsylvania, Brian Powers toiled first as an investment banker before cofounding the company.

Connect with Brian Powers:

• Linkedin
• Crunchbase

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have an exciting founder. I think we’re going to be learning quite a bit from him, and I don’t want to wait any longer, so without further ado, let’s welcome our guest today, Brian Powers. Welcome to the show.

Brian Powers: Thank you. I’m really excited to be here.

Alejandro: So, born in Washington, but growing up in Maryland, so how was life for you growing up?

Brian Powers: It was great – two awesome parents. My mom’s a civil rights lawyer. My dad works in the School of Public Policy at the University of Maryland, so I grew up a big Maryland Terrapins fan, growing up in College Park, pretty much right on campus. I have an older sister Lyndsey who is brilliant and always had a high bar with grades and other things like that. It was an awesome childhood.

Alejandro: And very interesting because from one side, you learn how to fight for what’s yours, and then on the other side, you learn how to educate yourself and how knowledge is power.

Brian Powers: That’s right. My parents were super big on education. I think they have like seven degrees among themselves. They really stressed the importance of school growing up.

Alejandro: Very cool. Did you have anyone in the family that was an entrepreneur as well, or do you think it was developed later on?

Brian Powers: Yeah, I think it was developed later on. From an early age, I wanted to be an entrepreneur. I remember I had a speech impediment when I was a little kid, and I couldn’t say my r’s correctly. So, they gave me a lot of difficult words to say and practice. One was rambunctious, and one was entrepreneur, which is very difficult to say if you don’t know how to say your r’s. I remember attaching to that word. I don’t remember this, but I’ve been told this that in kindergarten, I sold some of my classmates’ tickets to go to the moon because I said I was going to build a rocket ship once they gave me money for the tickets. I don’t think I was going anywhere, but for some reason, I was always trying to scheme in some sort of way.

Alejandro: Very, very cool. One thing that is very interesting is that you met your co-founder very early on. We’re talking about middle school. Tell us about this relationship that has come a long way.

Brian Powers: Yeah. James and I, pretty much right as we met, started doing lots of different stuff together. We formed a rock band called Paper Planes with his brothers. He would play piano. He’s a world-class piano player, and I would sing. I’m far from a world-class singer, but when you don’t know how to play any instruments, and you’re hanging out with your friends, you’re willing to sound like an idiot. We took that pretty seriously and started a yardwork business and a junk removal business. We just always wanted to break out of whatever system we would end up in. James has a very rebellious spirit. Also, his dad is an entrepreneur. He prefers the term business builder, Chris McGoff is his dad. He always was inspiring us to go build a business, which when you’re 14 means to go mow a lawn. But it did instill in us a desire to ultimately start something.

Alejandro: Got it. Obviously, we’re going to be talking about that, but here, one thing that happened is that you guys actually went different directions when it comes to education. One thing took you to Philadelphia, and for your co-founder, it took him to Canada. So, tell us about how your journeys crossed paths once again.

Brian Powers: Two things: 1) He wanted to do engineering. His dad was an engineer, and he was super-drawn to that. 2) He met a girl in high school that was from Montreal and was going to go back there for college. He ended up following her there. They both went to McGill. He ended up marrying her, and they’re expecting a kid any day now. So, she’s been through the journey since then. I went to Penn to study finance. We wanted to use those different skill sets, so he would learn about things in class or in his internships, like a new technology, and we would think about how to apply it and try to figure out a cost model for it. It was really fun once he started going to engineering school, and once I started learning more about finance because when we were growing up, we were always coming up with ideas, but it was hard to come up with anything that was exciting or not taken, or something we could actually do. I remember James came up with an idea in high school that was Gatorade-flavored mouth guards because mouth guards always taste bad after a while, and this would be a cool way to do it. We learned that was one of the few ideas that wasn’t taken, but probably for a good reason because it can lead to a number of cavities and not offer great protection. But once he got the engineering background, and we linked up with Charles, our third co-founder, we had a lot more tools to go explore different business ideas.

Alejandro: Nice. Tell us about how you went about exploring those business ideas, and then how you went about the actual execution of them.

Brian Powers: James would hear about these different things and come to me, and we’d talk about it. I remember my junior year of college, probably 2012, James worked at Boeing outside of Philadelphia, and I was going to school in Philly, so he came over to my apartment with a big tub of this material. It was a lightweight white powder, and he was like, “This is the future. This is it.” It’s called aerogel, and it’s the lightest weight insulating material ever. It looks kind of like laundry detergent in powder form. It’s super lightweight. It got us really excited. It was used in NASA spacesuits to keep it cold, and we were going to apply it to something new. We thought of a north-based type jacket. We thought of making an energy-efficient refrigerator, and then ultimately, that’s what led to the idea for a cooler. But it’s funny because we did not end up using any aerogel in any products that we ended up selling, but that original thought – we were so excited that we couldn’t sleep over it even though we never ended up using it. It just got us on the right path.

Alejandro: Then, what happened next?

Brian Powers: We entered the Wharton Business Plan Competition with an idea for a very high end, lightweight cooler for the consumer market for camping, tailgating, and that sort of thing. We were going to charge several hundred dollars because aerogel is not a cheap material. We got kicked out of the first round, and they said, “Nobody is going to buy that expensive of a cooler.” Which is funny because Yeti has proven that – they’ve done really well in that category and created that category. What the feedback did say is to go into pharmaceutical cold chain packaging, which we didn’t know much about, but that’s the transport of temperature-sensitive medical materials, things like biologic drugs, vaccines, blood, and all sorts of things. It was a world that was growing from very niche to very big. The biggest source of growth in pharmaceuticals is temperature-sensitive drugs. That meant that all these companies that had been used for transporting pills you could fit a million of them on a truck. All the sudden, they were transporting these big, bulky Styrofoam boxes often literally 100 times larger than the vials they would transport. It was an incredibly inefficient system that everybody knew was inefficient, but Styrofoam was really the only thing around. It was seven years old. It was everywhere. It was affordable, but it was bulky. It was very capital intensive to get a size bespoke to what they were shipping, and they were doing it in the midst of so much growth that it’s always hard to optimize when you’re growing so quickly. We looked at it like, “There’s a lot of optimization here to do.” I remember them saying, “Oh, by the way, we hear it’s not great for the environment.” Sustainability became a big part of our pitch. It was something that was important to us growing up. My dad would work for the EPA back in the ‘70s. It was always something that we thought about, but back then, I would say it was a top-three pain point. It is now, fast-forward, seven or eight years from then. It is by far the biggest reason why folks talk to our company, and we’re seeing it even in the midst of a pandemic. Sustainability is still very important, and it’s only gaining steam.

Alejandro: I’m sure that now with all this climate change stuff, as well, there are people that are even more conscious about it.

Brian Powers: Yeah. People are looking like, “What can I do?” And it’s hard. It’s really hard to know what to do and what actually matters. But when they get a box filled with plastic packaging, and it all goes to the landfill. They hear about the toxic emissions that were used to make those, they see the documentaries where the ocean is filled with plastic, and the fishes’ bellies are filled with plastic, and then we eat the fish. I think there was just a study that came out at the University of Arizona that said virtually every human has microplastics in their organs and tissues from what we eat. It’s not just the fish that we feel bad for; it’s ourselves. They say, “What can I do?” We got started in the eCommerce food space, and consumers were demanding less plastic packaging. They wanted alternatives. We had developed a material that was made from silica, a natural non-plastic material. Ultimately, we decided to go even deeper into sustainability and started using recycled plant fiber, jute plants. Then, as we started to scale our own manufacturing operation, we started to use plant starch and paper and make it herb-side recyclable, but also scalable and lightweight. We’re on our sixth year now, so that takes a lot of time, but because there was such a demand for non-plastic alternatives, our customers were really willing to grow up with us, take the incremental change when they could get it, and allow us to ultimately build enough business to make the investments necessary to get a wholesale change, which is what we have today. Instead of petroleum-based Styrofoam getting shipped and then lasting a thousand years in a landfill, we’re shipping plant starch that dissipates in a matter of seconds when it’s in water, and what’s left is paper that gets recycled. It’s a change that was really hard. We still have a long way to go. We want to continue to make the product lighter and better and less energy-intensive, but it’s exciting to see people get so driven by reducing their footprint in even these sorts of small ways.

Alejandro: For the folks that are listening, what ended up being the business model? How do you guys make money?

Brian Powers: We sell coolers that go inside cardboard boxes. So, if any folks out there have gotten a meal kit, there’s a decent chance it came with our insulation if it was recyclable, it’s a very good chance. We discharge on a by-cooler basis. We make now about 3 million of those a month, and we’re growing very quickly, and we’re just a manufacturing company. We virtually make all of our products inhouse. We also have a design shop. We have over 30 engineers. We have an ICA Certified lab where we design packaging. We test it, but we don’t charge for those services. We just make money on selling each cooler.

Must Read: Alan Hahn On Selling His Companies For Over $1 Billion And Now Transforming The Food Industry With Mushrooms

Alejandro: Got it. When you say, “We’re making 3 million,” that is that you’ve made 3 million of those coolers. Are you making those a year or a month?

Brian Powers: Every month.

Alejandro: Every month. Wow! That’s really amazing. Talking about timing, when you started this business, we’re talking about some time ago. We’re talking about 2015. I think that back in 2015, people were not as conscious when it came to the use of plastic to the movement of climate change to Greta Thunberg being on the cover of Time Magazine. How would you say that being at the right time in history has helped you with this?

Brian Powers: Yeah. We couldn’t have predicted the way that was coming, and we certainly weren’t expecting it. The big thing everybody said when we were getting started is, “Everybody wants green, but nobody will pay for it. The only green technologies that will work are ones that somehow save people money. Even today, we can’t charge the same as Styrofoam. We have to charge more. Our products are more expensive, but there are two things that make it a lot easier for our customers to pay for our product than maybe some other green things. One of those is that consumers are demanding it. They will cancel their boxes if they perceive there’s too much plastic packaging. It’s the single biggest reason a lot of our customers report why people leave their subscriptions. They are economically incentivized to reduce the amount of plastic that they use. The second thing is, the coal chain world is still very new. That means, like I was saying in the beginning, it’s unoptimized, so we often find ways to design the box in ways that ultimately save our customers money. They might pay more than our cooler than Styrofoam, but we might design a smaller box for them or a box that doesn’t need as much coolant, so it’s lighter and their FedEx or UPS bill will be lower. We found ways to make it a lot less painful. But as you said, it’s a totally different pitch right now. People really care about the planet. They’re very worried about climate change. They’re worried about the plastic filling the oceans. That makes it that much easier. I think we’re now in an environment where every company out there that’s buying Styrofoam is looking for an alternative. I think when we were getting started, it was a very small niche of them. That doesn’t mean every company is ready to switch right now, but they’re starting to look. They know they can’t be using this forever. It’s a good environment to sell into. It makes the void we’re trying to fill that much larger, and that means we need to scale really fast, so it’s fun, but it’s definitely a challenge.

Alejandro: Talking about scaling really fast, in the last two years, you’ve raised more money than any money than you had ever raised since 2015. How much capital have you guys raised to date?

Brian Powers: About 80 million dollars. A lot of it for equipment and just expanding our team and our product lines. We’re in a capital-intensive business. We have a lot of machinery and space. We also came at a time when venture capital was more open to non-software applications. Seven or eight years ago, it was pretty rare. We’re still one of the only packaging manufacturing companies that have raised money. I love to see that. I think there’s so much innovation to do outside of software, so it’s great to see venture capital start to embrace those opportunities. Because there really are growth opportunities that mimic software. It might come with a little bit more capital, but it also comes with a potentially bigger opportunity in some cases. There are 10 billion dollars in Styrofoam being bought globally every year that has to go somewhere. People won’t want to spend money on Styrofoam in five years or even two to three years. There is a big opportunity.

Alejandro: Obviously, that has been seen by investors that have been investing. You’ve got the Series B and C rounds literally in the last couple of years, and you literally even raised money during COVID. Unbelievable. Would you say that the pitch has gotten a little bit easier, not only with the progress but then also with the consciousness in the market?

Brian Powers: Yeah. I remember going to Silicon Valley, taking the three connecting flights from Richmond, Virginia, to get out there and then spending our last dollar on the flight and the hotel. Everything in Silicon Valley is probably 10x as expensive as Richmond. Then, having the meeting that I painstakingly set up to cancel an hour before. People were not interested for a while. We had to get a lot of traction, and we had well over 10 million dollars in sales when we closed our Series A. Yeah, I think times have changed. We’ve grown a lot. We found a really good set of investors that cared deeply about the social mission of what we’re doing. They’re not just looking at it as a financial return. With COVID, it definitely limited our ability to meet new investors, but we’ve been able to meet a lot of good folks over the years. Wheatsheaf Group, based in London, led our Series C. We were able to meet them last year just in the nick of time before travel became impossible. So that certainly helped us close a really good round fairly quickly, even in the midst of COVID.

Alejandro: Did you see anything changing during the fundraising process here. Did you see investors becoming a little bit more okay with having important conversations over the video conference that maybe didn’t happen before? Did you see any changes like that?

Brian Powers: Yeah, definitely. Video chat became the mode of the grilling that happens. I think they also wanted to meet more of the team and get a feel for the whole team rather than just the few folks they might meet on an in-person meeting. So, I think there were some benefits because it’s just easier to set that up now. We did have some virtual factory tours, which by the second or third one, I think, ended up working okay from an IT perspective. I think this has changed a lot. We’ll see how it works out more broadly. You hear about IPOs getting done. Roche has done completely and virtually – is that the future for IPOs, and also for venture rounds, or we’ll go back to how it was. It will be interesting to see. It’s especially interesting for us because we’re so physical-based in our factories or in the majority of our business. So it’s tough for investors or even our customers to fully grasp everything we do without seeing that. I look forward to being able to welcome customers and investors back. In the meantime, we’re pretty strict on that. People find a way to get stuff done, I think, no matter what the environment is. That’s how our investors were willing to be creative and how they could do due diligence.

Alejandro: Absolutely. If there’s a good deal, they’re going to find a way to make it happen. That’s for sure. Brian, let’s say if you were to go to sleep tonight and you wake up in a world, let’s say five years later, where the vision of TemperPack is fully realized. What does that look like? 

Brian Powers: We’re international. We’re operating in multiple continents. We’re making tens of millions of coolers a month. Anywhere you see plastic foam or plastic bubble wrap, we’ve found a really good way to replace it with a plant-starched foam, something that will break down versus lasting 1,000 years in a landfill. There are endless applications. I think a lot of my job as leaders is just to not let our imaginations get in the way of executing right now. Every year we grow; we build our team; we execute; we earn more time to work on these new product lines, and there really is a lot of opportunity there. Just growing internationally is – we’re honing our factory model that we’ll be able to export the factory model in a sense. But also, we’re already starting to export to Europe. We have several good commercial partners out there, half a dozen customers who have grown really quickly, and it turns out that it’s actually less expensive for us to ship to the UK than it is to ship to Texas right now. It takes longer. Our model has been built to export. Five years from now, I hope that we’ve been a huge part of reducing the amount of plastic foam that’s out there because I think it’s on its way out. The question is, what’s going to replace it?

Alejandro: I think that’s a very interesting point you were touching there because it typically is a really big obstacle or hurdle or challenge that startups face when they’re going from the early stage mindset to the growth stage mindset. On that growth stage, when they start to think about international, how do you think about international, and what have you learned about it?

Brian Powers: I’ve learned that it’s difficult. I remember when we set up our factory in Las Vegas, that was really hard – building out the team, instilling the culture when you’re not there every day, just having standard operating procedures that work in both plants, while also allowing them freedom to develop what works for their team. It’s difficult. When you bring in a whole other country, I think it gets even harder, but it’s done. There are many international manufacturing companies that have figured out how to do it, so I view it as a matter of time. There’s so much opportunity in the US right now that that’s been our primary focus. We’re building business in Europe via export. It will be a matter of time before we go build a plant out there. It’s impossible to say when, but it could be pretty quick. It could end up being a few years. The hardest thing has been prioritization. I think back to when James and I were in high school. We wanted to start – we just wanted a good idea. That was the thing we wanted. Every time we had a good idea, it was taken, or it was something we couldn’t do. So, now, it’s like we have so many good ideas. I think everybody wants less plastic; they want packaging that works well. We feel like we have good designs for how to do it, but just channeling people to the highest priority thing is the way to execute well. I have no idea how Amazon does what they do. They seem to launch a brand new, multi-dollar business every six months and execute well, but I’m sure that’s not how they got started. I know they focused on books initially and built it up from there. I don’t think we’ll be at their scale, and not to compare us to them, but I think every startup can’t help but look at Amazon as an inspiration for how to execute while still innovating.

Alejandro: Absolutely. And you’re talking here about prioritizing, about execution, and I’m sure that for you, also a big one was learning how to say no. Tell us about this.

Brian Powers: Yeah. It’s really hard. It’s finding customers that we can add value to. But in the beginning, we would do anything to win a customer. If they ship 200 boxes all year round, we would handmake it because we needed to learn. We needed to know what they wanted, and we were just excited and a little bit naïve about what it meant to have a win-win customer relationship. But now, we try to find customers that we know we can add value for, and it can be a mutually beneficial thing. That does mean screening out the customers that don’t have a fit. Another big thing is with product initiatives. We know that there are great products out there that we can build, but we can’t go build 20 products right now. We need to focus on coolers. We need to be the best in the world at coolers, and if we do that right, we’ll have massive success. Anything else we build on top of that is extra in some way. I do think it’s a matter of time. We still have a long way to go in scaling a cooler product line both in food and life sciences. That requires saying no, and it’s gut-wrenching every time. We do say yes sometimes, and that’s why we’re scaling. That’s why we’re growing. We’ve got to remember every time we say no, we’re really just saying yes again to everything that we’re doing.

Alejandro: Absolutely. There’s one question that I typically ask the guests that come on the show and that I want to ask you too, and that is if you had the opportunity to go back in time and have a chat with that younger Brian – that younger Brian that is brainstorming ideas and thinking what’s going to be the next company that you’ll go at it and building and scaling. What would be that one piece of business advice based on what you know now that you would tell that younger self and why?

Brian Powers: I think two things. One is, enjoy it. It’s okay to get nervous about things that could go wrong. I remember feeling at times when things would go right, not really trusting that, not allowing us to celebrate them because it always felt like as soon as you celebrated, something would go wrong. It’s often how it works, but that doesn’t mean you shouldn’t celebrate because it’s just not going to be nearly as fun as it can be. It’s not the celebration that gets in the way that causes the mistake or the issue that arises. That’s going to come regardless, so celebrating more and stressing less is really important. The second thing is building a world-class team as soon as you possibly can. We had awesome early employees that helped us and are helping us build the business. They were a lot like us: young, hungry, willing to do anything. That helped us scale. I think the past couple of years, we’ve been able to build a world-class highly experienced management team, and having that team in place has allowed us to scale so much faster issues that would have been major, major issues or things that they’ve seen before to some extent, and they can help put it in perspective. I would tell myself, “Go build that team as soon as you possibly can, and they should be truly 10x smarter than you and have much more experience in these areas. I think, as an entrepreneur, you break so many rules. You’re balancing a system in some sense and say, “We can start a brand-new company and do it better than what’s being done out there, and that’s why it’s a good opportunity.” So you get in this kind of rebellious mindset, and then you want to transform everything. Anything that looks like another company, you’re like, “We don’t want to be like them, so we don’t want to do the things that they do. That’s why we’re all young and super hungry, and that will ultimately let us scale forever.” I think you’ve got to be humble enough to realize, “Yeah, we’ve got good innovation. We do packaging better than anyone, but there’s a lot we can learn from other companies and how they set up. So, I guess, be less of a rebel is what I would tell me, James, and Charles at an early age.

Alejandro: Very nice. For the folks that are listening, Brian, what is the best way for them to reach out and say hi?

Brian Powers: Just shoot me a note. [email protected]. I would love to hear from you.

Alejandro: Amazing. Well, Brian, thank you so much for being on the DealMakers show today.

Brian Powers: Thank you so much for having me. I love sharing the story. I appreciate it.

 

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