Neil Patel

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Ryan Begin recently exited his startup to a private equity firm for $200M. A venture that’s all about diverting what would be wasted food. The company, Divert, has attracted funding from top-tier investors like Ara Partners, GIC, and Ontario Power Generation. Eventually, it was acquired by Ara Partners.

In this episode, you will learn:

  • Tackling the huge wasted food problem
  • Why it can take four acquisition attempts to finally sell your business
  • Finding product market fit and scalability


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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.

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The Ultimate Guide To Pitch Decks

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 Ryan Begin:

Ryan Begin is the Co-Founder and CEO of Divert, Inc. Bringing deep interest and expertise in solutions-oriented technology, he co-founded the company in 2007 to drive social and environmental impact through advanced technology and sustainable infrastructure.

Over the last 15 years, Ryan has led the development of Divert, its technologies, and its vision. As CEO, he is helping bring to life Divert’s mission to solve the wasted food crisis by establishing the company’s data-centric impact platform.

Before Divert, Ryan was a Senior Systems Engineer and Laboratory Manager at Raytheon. Prior to Raytheon, he was a lead engineer at Proton Energy Systems (now Nel Hydrogen), where he delivered the first zero-carbon PEM Electrolyzer to fuel a fuel cell bus in Barth, Germany, and on-site hydrogen systems in Nikopol, Ukraine.

His experience exposed him to a rapidly scaling decarbonization technology, with the disciplined approach to product delivery from Raytheon. These experiences set the early technical foundation at Divert.

Ryan holds a Bachelor’s and a Masters in Electrical Engineering from Clarkson University.

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Connect with Ryan Begin:

Read the Full Transcription of the Interview:

Alejandro Cremades: All righty hello everyone and welcome to the deal maker show. So today. We have a really incredible founder. You know we’re going to be talking about building scaling you know also a very interesting transaction that you know he’s done as well with a private equity firm and how you know they actually you know they structure that. Ah, but but nevertheless I think that you’re all going to find this very inspiring so without further ado. Let’s let’s welcome our guest today Ryan begging welcome to the show.

Ryan Begin: Thank you I appreciate it. Thanks for the opportunity. Ajandra.

Alejandro Cremades: So let’s do a little of a walkthrough memory lane ryan. So originally you know out of Maine so how was life growing up. So.

Ryan Begin: Ah, slow remote somewhat isolated as you could Imagine. Um, but you know foundational I think the growing up the opportunity to explore work with you know, machinery and and tools and sort of explore different. Systems and electronics mechanical it was it was It was really Unique. So.

Alejandro Cremades: Now also very unique. You know the fact that you were very much into problems into engineering you know so to speak and and and you were also the very first person in your family to go to college. So how did you get into the whole problem solving. You know, engineering thing and and and also becoming the first family member to to go to college.

Ryan Begin: You know I think it’s funny. It’s I I look back now and I look at my family I look at my son and I can sort of see the same curiosity wanting to take things apart and rebuild them in your own way and I think a lot of people have these experiences. Ah, we had I had the unique opportunity you know had a machine shop with my uncle and very large garages and tools to do some some interesting interesting things and a lot of family support. You know my my father would bought me my first 5 boxes of used electronics and an old an oscilloscope and just playing with this equipment. It it then translate translated into electronics in high school to so going into vocational which I think is a little taboo sometimes when you think about like going into vogue is is like to that trade element. Um, but as I thought about going into university and electrical engineering. It I had a completely different foundational skill set than anybody else that I interacted with at school.

Alejandro Cremades: So then so then let’s talk about life after school so getting into you know the whole thing you know around around solid. You know way cars and and and really good stuff. You know like how did you venture into into all of that.

Ryan Begin: And why? so I think building things and playing with things when I was ah when I was you know home high school and and trying to invent and now here’s this team university supported we were raising money with general electric and gm and um. So it was ah it was a completely different experience at a much higher more professional scale actually ah the the leader of our Solarcar team has gone on to create a riddle wind company that has gone public which is really exciting to see that journey for him. But it’s only the same principles. It’s it’s understanding the design. And my hands-on experience growing up I think lended itself to the team in a really unique way that I knew how to solder you know, really fundamental things I knew how to route wires and and do other things. Made me more valuable and I got more responsibility and and more exposure so you know when we were raising money for solar car and we were going to corning. Um, you know that was a really unique opportunity. It definitely translates into entrepreneurship when we think about it’s not just building the product you have to have money to build the product. So.

Alejandro Cremades: And and obviously you know here you you had it in you right? but you know based on the problem solving approach that you’ve had and you know how you went to school and everything. Why do you think it. It took you you know a few jobs to really you know venture out on your own and. And start a company.

Ryan Begin: I think it is a I think it’s opening up the aperture of what is the world. How does the world actually function. Um, you know, growing up holding a job for 3045 years was was applauded that was what you do. You go to general electric and you’re there for life. You get your pension and um the idea of venturing off on your own to do something it. You know, frankly it freaked my parents out when I said I was quitting my job at Raytheon. And we’re going to venture and do our own thing and play with food waste and you know the idea of working with food waste and making money from from food waste was was very different so when I go back to leaving university going into proton energy systems which is now nell hydrogen we I was. I hired it around employee number 26 had hundreds of million dollars of dollars in the bank and I was hired into a team to to build an explore product and I think this idea of exploring product brought me back to that solar car experience I was I was pretty good at it at Nell and. That curiosity just kind of continuing and and drive to wanting to build things I think is very unique and that’s important to me.

Alejandro Cremades: And and talking about you know they say this first stint you know that you did I mean at that point is when you started to think that it will make sense to apply to business schools. But you know it doesn’t sound like they were very welcoming. So. So how do you take that on and and and and why did you think at this point that a master’s degree was you know the next day you know a critical point in your in your journey.

Ryan Begin: So I Saw when I was at Proton the pushing into a new frontier and trying to create an industry that didn’t exist I don’t think that I didn’t have the requisite skill set to. To really recognize? how do you make this product work in and create Cash Flow. It’s a really different experience growing up and learning how to you know, lay out off amps. But now you’re trying to create you know balance sheets so going into business trying to get into business school I Thought that was my path. Ah, clearly it wasn’t after being rejected by every school and I knew that I wanted an opportunity to maybe take a step back and add to my toolbox so controls and you know really going deeper into electrical engineering. Um, at that point in time. The idea of neural nets. This is Circa 2001 2002 you know we were programming fuzzy logic controllers at that point this was sort of like Brand new cutting edge type things. So I think you know opening up going back and sort of resetting within University created that opportunity to go then. Back into the the working world.

Alejandro Cremades: So then at raeum I mean it sounds like that’s just like the sick way for you know, getting into entrepreneurship. So what do you think happened there for you to say hey I think I want to I want to take this one on I think I want to go on my own.

Ryan Begin: Ah.

Ryan Begin: So I got in trouble a lot at Raytheon. Um I brought my proton energy ingenuity entrepreneurial hat with me into Raytheon and it really wasn’t welcomed. I had a boss I remember I I took an initiative to to do a project I found you know, ah a rather important issue but I but I sort of broke chain of command and he was screaming at me in his office I think that was the point I realized this is not the right environment for me I want to solve problems. Want to make an impact and so I started you know talking with folks and trying to understand what other opportunities I knew I wanted to get back to renewable energy between solar car and green hydrogen and seeing what was happening if if you look at like the clean tech revolution. It was clean tech 1.0 in the 2000 2010 there was a reawakening so around 2007 getting in early into that to that timeframe. Um, that’s where I decided to take the leap of faith and hook up with with other entrepreneurs to to create something from scratch is hard.

Alejandro Cremades: So then what happened next.

Ryan Begin: Ah mistakes Um, movement I mean we we We really try to create very similar to my experience as a proton trying to create an industry that doesn’t exist and how do you make money doing that. How do you protect your intellectual property. How do you fundraise when Investors don’t quite understand what it is. You’re doing and and why you’re doing it. Do They really understand the problem. Do you have the right solution as a scalable so it was a journey after that. So.

Alejandro Cremades: And for the people that are that are listening to to get it. What ended up being the business model of diver. How do you guys make money.

Ryan Begin: So we started with this concept of behind the grocery store taking their wasted food and turning it into renewable energy. So this is a a biological process called anaerobic digestion. And what happens is you’re effectively taking the carbon that’s locked up in food. You have bacteria methanogens that are consuming that food and turning it into biogass biogass is about 60% methane. So it’s very similar and molecular structure to natural gas. So it’s ah it’s a renewable fuel. It comes from waste. it’s it’s stable it’s somewhat mature technology happens naturally and we were doing this behind the grocery store and like what a stupid idea because when you think about the problem we were solving and you think about wasted food across the United States 63 xty three million tons and here we are with a a really focused product that our customer was excited so we did have validation on the customer side. We built our first system it kind of worked and we realized that it just wasn’t a scalable solution. We we then sort of went back we and we pulled ourselves to understand what is working really well. What’s novel about what we’re doing and and what’s not working these same principles of pulling back and really self-evaluating is this the right solution for the market. We’re still doing is today.

Ryan Begin: As we introduce new products and new solutions to solve the wasted food crisis.

Alejandro Cremades: So It sounds like the um so obviously on the business Model. You guys had to tweak it you know quite a bit and when it comes to um to also combining that with with a canass and and and and and really having you know like entrepreneurs. Do they have their own. You know canvas in their own head and it’s all about being able to translate what you’re thinking and what you’re dreaming into a picture that you can really translate to others that can help you in the right direction in the same direction that you’re hoping with the same you know, kind of like move and you know all of that I mean how did you go about combining those 2 Ah, in order to really you know hit that product Market fit.

Ryan Begin: I think you have to have conviction and humility and they have to coexist and they really do not want to coexist those are competing for your attention I think for your for your own. Value as you as you sort of see yourself and how am I spending my time am I solving the right problem. It’s a really hard thing to do to take a look at something that you spent years working on and saying maybe this isn’t the right solution even with a little bit of validation. So when we did that what we ended up with is. Putting ourselves on a path to really solving the right problem doing it at scale. So now we still work with grocery stores. They’re they’re our biggest customer base we’re still using aerobic digestion. We’re producing renewable energy. But we found some really creative ways to solve problems but we can’t solve those problems if we don’t identify what those problems are or our shortcomings are and doing that earlier into the process something else. That’s incredibly unique about us as a business we raised five point four million dollars over the first. 15 years of our existence and we did that building infrastructure. So we’re now we’re really having to commit capital to to buying pumps and screw presses and other things. So how do you do that? you you have to be creative in the approach.

Ryan Begin: A lot of businesses that were kind of doing similar things never made it because they took on too much too fast and we never we Never We never went down that path because we were always pushing ourselves. Do We have the right business model. But at the same time you’re out in the Market. You’re pushing and testing. Concepts and thoughts so you have to be able to pull back and and self-evaluate.

Alejandro Cremades: So watch that perhaps what they drove avoiding capital.

Ryan Begin: Um I think avoiding capital came down to not wanting to lose control. We just had you know a phenomenal exit this about a year ago with an incredible parker. We would have never gotten there if we had given up control eight years prior and the reason is when you move into accepting other cash they need to put that cash to work and I think we we looked around. There was a a competitor of ours harvest power they raised $400000000 from kleiner perkins. When they did that we said oh no, we are we are dead. They’re just going to eat our lunch and put us out of business and take all of our customers but they didn’t because what happened they had a business model that wasn’t really fully defined in our opinion. My opinion wasn’t fully defined. And they then took all that rocket fuel and they just launched that thing into the wrong direction. Meanwhile we were sort of the tortoise we were moving through and thinking and working and trying to solve problems to put together the right business model that just recently we felt that the market was ready. Our customers were ready. We were ready. The model was ready. We knew how to make money now. It’s time to push and I think we’re being rewarded for that patience now. So.

Alejandro Cremades: And and at what point do you realize hey I think that we are now ready to scale this thing like we’re now I think we have it right? I think that we have this thing ready to go.

Ryan Begin: That’s a great question I I think there is a certain amount of customer adoption that’s required to validate how we’re thinking about this, you can look at the growth prospects and on unit economic basis to say this is this is working. Um. And it’s not just working in 1 specific market under 1 set specific set of conditions. This is something that scales into you know from from Los Angeles into the southeast and that really is taking an effective look at how well can you capture your tam. Easy to say that there’s 63 million tons of wasted food in the us that’s a four hundred and eight billion dollars problem is your model ready to tackle that problem. So I think that’s part of it I think really understanding the problem that we’re trying to solve. Food waste is wasted. Food is ah is an incredibly complex issue for a whole variety of issues and do we have the right solution so you’re also looking at the the changes in regulations consumer behaviors our customers behavior and what we see and within the wasted food space. We have always been. We had started off as reducing wasted food stopping that from getting into landfills and the model was awesome create renewable energy save the fertilizer. This is incredibly important. It’s going to stop methane emissions. But when you start to realize and this was part of our journey when you’re getting wasted food.

Ryan Begin: Out of the landfill you look at it differently and you say well wait a second. Why are we throwing all of this away so we would spend time in Europe because you can kind of look at a 10 year look ahead if you go to Europe and see what they’re doing within their food system and you come back and you say that’s what we’re going to look like there are models that worked and failed so we came back and we said. Why aren’t we reducing wasted food. The value proposition is so much better. That is our actual customer’s problem. They don’t have an anaerobic digestion problem. Our customers. Don’t want to throw good food away. So that’s the evolution of the business model when you see these things start to click and you have these big aha moments and you start to. Unlock real value that’s competitive and protectable. That’s when you know in my opinion and art my experience when you’re ready.

Alejandro Cremades: So then let’s talk about that. You know let’s double click on the on the transactional side I know that you guys very recently you know did um, a transaction with a private equity firm So walk us through how that came about and then you know like the ins and outs of that I mean.

Ryan Begin: 6

Alejandro Cremades: What was what what was the outcome of that and and yeah, so I think that for the people that are listening. You know, probably they’re more used to the venture. You know capital thing and then you know perhaps getting ah an acquisition from like a big corporation. Obviously in this case, you know it was a private equity Firm. You know it was. It was a combination of. Different things that came to light but they nevertheless you know, super interesting Stuff. You know and very super unique for the people that are listening to so tell us about that.

Ryan Begin: So it was not it was it was probably our third or fourth foray into exploring an acquisition and you know I think the first time you go down that path you get excited. Think this is going to happen. You start calculating? What’s my equity worth and all of these things and and you’re so naive. We were so naive you can’t read the situation. You can’t really read. You don’t understand exactly how the deal is going to be negotiated and how it’s going to be structured. What do you really want to be successful in the back end. You know four letter word earnout. Are you going down that path. Why um, we engage, you know after our first you know our second and you kind of go through these conversations you get smarter every time. We started to engage bankers. We really wanted to understand what is the value. What’s the market think of our business and what we’ve created and and where we can go that I think that experience brings out more um more self-t truth understanding what’s working what’s not and and. And maybe you said it before you have something in your head you have to be able to communicate that out. But what’s coming back when you go through that process you see what the market’s putting back at you here’s how you’re being perceived here’s what we believe about what you’re saying we don’t think you can do x we think you can do y and that’s where we see value.

Ryan Begin: So that process for us was probably over a period of maybe like 4 years and so what happens it’s sort of maybe like finding the love of your life when you find the right one you know, um, our partners we knew we were looking for somebody that was. Working to solve impact we we really wanted to be aligned on mission. We we needed somebody who appreciated the value of infrastructure wasted food is is incredibly complex. You have to touch it. You have to build things typically vcs are not. You know it’s the asset light noke. Nothing in the ground we want software certainly over the prior 10 years so finding somebody who valued that part of us as well knew where we were in our journey and where we were in our growth stage knowing that we needed more capital that we had only raised this a very small amount I only think would qualify as a a seed round now. Willing to put more capital to work so the deal structure becomes more complex. But for all the right reasons and we understand those reasons things that we wouldn’t have understood 4 years prior and so when you go back into this deal structure and you think about what are the next five ten years going to look like. Um, you know you really have that pre-ordained and ah scripted now I don’t know everything works out exactly as we expect. But at least we’re we’re we’re heading in the right direction and that’s what we found in our in our private equity partner.

Alejandro Cremades: So what? what? what were the? um, the terms. You know there’s deal if you can share anything.

Ryan Begin: So in total that was a $200,000,000 transaction. Um, it was it was 100000000 going onto our balance sheet that was that was required as part of the deal and that’s why we did the deal. We knew that we needed to. Um, we needed to reapproach the the governance of the of the business. How do we think about the business where are we going in this new frontier. It’s it’s sort of that next evolution of the business so we needed to we needed to bring in some new some new thoughts ideas board if you will. Ownership structure and that’s what we were able to do with with oura.

Alejandro Cremades: And and and and obviously you know talking about where you’re heading I Want to ask you something here I mean if you were to go to sleep tonight and you wake up in a world where the vision of the company is fully realized what does that look like.

Ryan Begin: So for us that would mean that instead of 63 million tons of wasted food being generated across the us we’ve cut that in half we have done that with with Ros responsible infrastructure. So responsible infrastructure for us is technology enabled we understand where wasted food is being generated. We’re using that infrastructure to drive that data that intelligence back into the food supply chain and we’ve connected the systems in a way that we are we are reducing food from coming into our facilities but we’re we’re really being paid for that and we’re incentivized on that with nationwide scale. So.

Alejandro Cremades: And it sounds like obviously food waste I mean you you were quite ahead of the curve here because I I find that now there’s like much more consciousness around this so you guys is is nothing like being at the right time in history right? When you’re an entrepreneur. And it sounds like you guys have been able to ride the wave. What do you think is driving that shift that consciousness now around foot waste.

Ryan Begin: So I really do believe it starts with the same experience that we’ve gone through which is when you pull this wasted food out of the landfill stream and you look at it. You just say yeah.

Alejandro Cremades: Ah, ah, all on on second Ryan I think that we have um, an an issue here with the with the tech site for some reason it saying offline. So what I’m gonna do is the following I’m going to stop this recording and so that we don’t lose anything.

Ryan Begin: Good so driving the I think what’s happening right now in wasted food and that is a conscious food waste versus wasted food when you walk into one of our facilities and you see. What is going to waste. It. The question is always why why is this being thrown away. Why is the bruised Apple and if you think about everything that’s happened to that Apple from the seed going into the ground the watering the fertilizer the transportation for the harvest the cooling. Merchandising all of this accreedive value and carbon that’s put into that Apple to go all the way through that journey to get to the end and it’s got a bruise nobody wants it and then it’s going into the recycling bin. So even if it’s not going into the trash which is fantastic and really important that awareness. Is really changing things. So California had food waste recycling laws and Europe food waste recycling laws could put it into the landfill for obvious reasons. But France in 2016 California followed nine months after banning. Edible food in France from going into the trash and then California has said with sb 1383 we need to reduce all of your food that’s going to waste by 20 what a radical idea right? We just had food waste bands being passed across the country and currently happening.

Ryan Begin: But California has gone further Washington State has followed so all of that is being driven by the idea of looking into what is going to waste and I think giving a greater appreciation to our resources the time the effort that goes into food we are we I believe are ahead on this journey. Thinking about how do we use our position at the end of the supply chain to better inform solutions. How do we help drive food donation and we’re doing that today. How do you integrate technologies to drive source reductions. So don’t bring that food into the grocery store if it’s not going to get sold make sure your refrigeration systems are working appropriately. Why are we not marking food down for it with a coupon to move it out the front door really important to grocery stores as well because they need to stay in business really thin at profit margins. So it’s that entire food system coming together.

Alejandro Cremades: : Now obviously you know you’ve been at it for a while you know I mean we’re talking about over like 15 years you know it’s like in the startup world I mean dog years I mean that’s like a lifetime right of of being like in a general electric of the world that you were alluding to earlier. so so I guess imagine if you had the opportunity of.

Ryan Begin: I.

Alejandro Cremades: You know going back in time and perhaps you know you are able to sit down that younger self that younger self that is still corporate and and you know like thinking through you know what will be a world. You know where where you could bring you know a solution to a problem and they. If you were able to have a sit down with your younger self and giving that younger self that younger Ryan one piece of advice before launching a business. What would that be and why given what you know now.

Ryan Begin: That’s interesting because I will frequently go back to what younger Ryan did to make sure he does not do the same things again as we as we kind of push forward here if we were to go back in course correct certain periods of time. I think the business probably looks a lot like what it does today. Um, we had we taken on more Vc type capital early into the business I don’t think we would have made it I think we would have been pushed to scale faster. And it would have been the failure of the business because the market wasn’t ready so it’s hard to go back and say what would be the things that we would do differently because I don’t think the market was ready for our solutions. I. To your point we probably could have went and founded another business and then come into the business in two thousand and fourteen seven years right and and probably had a good position if if we knew everything that we knew today but I do think our position today within wasted food is is coveted. Is highly respected. We have some of the largest customers in the country that we are scaling with um I don’t think I don’t think we have any regrets I think that there are some things that we might do differently on the capital raising side the structure of the business how we approach solutions maybe getting technology integrated sooner.

Ryan Begin: Getting the idea of wasted food into our vocabulary instead of food waste. Um, it’s a complex. It’s complex. So.

Alejandro Cremades: I love it I love it and now 1 thing that you mentioned there market ready versus you know, not market ready. You know what’s what’s the difference between one another.

Ryan Begin: So can you get paid. We.

Alejandro Cremades: I think that’s ah, that’s a good way to put it Ryan so I for the for the folks that are listening to you know that that are listening now and and that will love to reach out and say hi. What is the best way for them to do so.

Ryan Begin: So Linkedin I am that’s the only social media I have time for and I’m on.

Alejandro Cremades: Amazing. Well hey Ryan thank you so much for being on the deal maker show today. It has been on honor to have you with us.

Ryan Begin: I really appreciate it. Likewise great opportunity. Thank you so much Ali andro.

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