David protein bar founder Peter Rahal targets $140M revenue in year one after acquiring key ingredient supplier

Peter, Peter, how you doing? [Music] Nice. Nice sweatshirt. Looking good. Thank you. It's a sample, too. Oh, very. Congratulations on your second announcement of the week. This is the first real one, I guess. Sorry. Sorry that Sorry that you got leaked, but um uh very excited for you.

Excited to have you on the show to break it all down. Um yeah. What is the most recent news? I only know the the incredible revenue number, but what else is uh what else is driving the news cycle right now for you guys? Uh well um so we acquired a supplier an ingredient supplier called Epig.

Um and then yeah our valuation 7 725. Wow. Uh forecast this year is 140. Um so I think those those numbers and you know I think you know it's like in we've accomplished more in nine months than we did in RX over four years. Wow.

Um, so I think we're I think we're one of the What other What other brands have achieved that level of revenue within a year of launch? It has to be like there's two um Fastables and uh Prime Prime. Yeah. Yeah.

Because just massive distribution cannons and really like leveraging like essentially like you know $100 million worth of free marketing on day one, right? Yeah. Yeah. So what's the secret for you? Because It feels productled. Is that is that is that the right assessment?

Obviously, you have a bunch of lessons uh you know, war stories you can pull on from RX Bar, but like it feels like the product just sells itself in some way. Yeah, I would say it's definitely productled. Um we act, you know, in CPG it's pretty hard to differentiate measurably, right?

It's it's and you know we are 75% of our calories are coming from protein. the market is at like 50. Um so so it's meaningful and it's an example like the market was on the surface if you don't apply rigor it looks pretty competitive. Yep.

But if you just like spend a little time talk to some customers you realize like NPS is pretty low like no one's really happy. Um and a lot of people don't just aren't even in the category because of taste and texture and nutrition.

So, I think big opportunity for us in in the bar business is like to really expand the category and make delicious, nutritious products that that people are like, "Oh, oh, protein bars don't taste like shit. " Like the expectations that there's just they're just going to be bad. Yeah. Yeah.

When you say people aren't in the category, are you talking about the difference between protein shakes, which can typically be like extremely high protein from calorie ratio? Uh more more specifically, people are like people don't consume protein bars.

Like you you'll you'll hear people say like, "Oh, I'm just not a protein bar person. " Sure. Sure. Sure. Sure. Yeah, that makes sense. Those are the people you ask them like, "Why not? " It's fundamentally taste. Yeah. Fantastic. I I I I want to kind of push back on this idea that it's productled.

They agree that there's product differentiation, but this feels like it's only possible from you because if you call up a major distributor or supplier or retail chain, they say, "Yes, I know you. You you you have a you have a win under your belt. I'm willing to go big and we don't need to do some long extended test.

" Is this isn't to knock you. I mean, this is why you worked really hard and you're reaping the benefit of that. But is that is that critical or do you think if you were nobody and you were cold calling?

My position is more so like Peter would have the relationships to get the bars on the shelf, but he's not making you know holding every customer that walks into the store at gunpoint being like buy my product. You know, I mean it is very different than Mr.

Beast and Prime where you know you have like major influencers driving this like it is more productled in that sense. Yeah. And I would say like my credibility or track record is like a lubricant to facilitate things. Yeah. But but the repeat and it's it's all product driven. Yeah. Yeah, that makes sense.

Talk about the decision to acquire one of your major suppliers. Uh was that something that you anticipated doing a long time ago or, you know, what was the point that that that made sense? Yeah. So, when we started, you know, in our business, you don't want any single source supplier. It's just too much risk.

So, it's like it's it can become a nasty dependency. So we identified the technology, the ingredient and was like this is this is like magic like technology should feel. Um got close with them um became 90% of their volume.

So we were basically you know 90% of the yeah 90% of their revenue and um it just made sense to vertically integrate and derisk it and so we can just control the supply. Um yeah and and and you know I can't imagine a company without without us being together.

Um and and enables us it just like totally widens the aperture of like where we can go um and truly have a platform for AC across different different products different different brands different different consumer needs. How h how did you dig into like the defensibility around that intellectual property?

because I feel like the gold standard for defensible IP in you know anything FDA regulated is probably um pharmaceuticals like drugs but as we've seen with like the ompic wagui transition like even GLP1s they were able to kind of eat at the edges and now Eli Liy is taking share from Novo and it feels like if it can't work in GLP1s like how can this possibly hold in a protein supply chain right?

Like you're going to get someone who spins something up that's like one molecule different or something like that. Is that is that a risk or did you dig into that at that level of depth? Yeah, I mean it's there's one there's really one process to make to make the molecule.

Um and you know it's like sure someone can go try it but like we'll we'll just litigate and then so they calculate that. Um, and I guess the I guess the the the bull case is that like yeah, you could go and fight on the IP stuff, but at the end of the road, you don't get a pharmaceutical product, you get a CPG brand.

So, and so far there you're going to have to fight real real hard and at the end you then you also have to build a brand also do the distribution and also whereas you know Eli Liy like if they spend a bunch of money to figure out how to you know alter the GLP1 to get a drug that works like well then it's just a matter of doctors prescribing it right and it's like and it gets paid and like in in CPG you kind of have like two years runway before someone copies you.

Y now we have like structurally nine years. Yep. And I think by that time it's kind of too late. Yep. Yep. Yeah. I mean you already see that with the 140 revenue like like as that gets bigger it's just going to be you know ubiquitous and you own all the shelf space.

So even if there is knockoff copycat it's like yeah you're already big. You're less than a year in post launch. Uh what is a good outcome look like? You've already had a multiund million dollar exit. I imagine you're aiming a lot a lot higher here but but what is that in your mind?

Yeah, I try not to think about the outcome too much, but I do. That's the most honest answer ever. The best. Yeah. Any any entrepreneur is like, "Oh, yeah. I've never thought about the outcomes just purely mission, you know. " Yeah. It's amazing. Yeah. Um like I would be pissed if we don't get to a billion in revenue.

Yeah. Yeah. You know, I that that would be disappointing. What was RX bar roughly? Like what's your personal high water mark? 240. Yeah. Okay. And I think maybe maybe a little bit more. Yeah. Yeah. Yeah. 4x that. Yeah. So I But I I do think I I do think we can build a really diversified portfolio of brands. Yeah.

Um that really address a broad population and and create a ton of consumer surplus. So, um, you know, I think like, yeah, we just have so much work to do. And, um, yeah, I I I I do fantasize about being a public company. Uh, let's go. I love it. And I think I have this is what my dreams are.

We'll have you back after your public company and you're just going to be like, it's it's such a headache. It's so annoying. I can't say anything. I'm in a quiet period. I can't come on TVPN. It's the worst. Yeah, I might be the irreverent. Yeah.

These calls, but but um Yeah, I just think like there hasn't been a truly uh from scratch brand platform in the space. It's all been done through M&A. Yeah. Chani is doing it actually now. Yeah. Sure.

Um, and I think that and you're a believer in in these brands living under the existing, you know, CC Corp and or or like it doesn't sound like you want to do like a studio. No, I only studio analogy like we we we're not going to do M&A.

We're gonna we're going to build them like I I me and my team we've demonstrated we can like go from scratch like um Yeah. So so we would just build them. It would be a decentralized model. So like different orgs, you know, like M so David's the master, David's Mars and then David Protein is the operating business.

Epig will be its own subsidiary and then we'll create other brands. Um and then they just have to be decentralized organiz like orgs because you you know like David in his life cycle is very different than a newborn baby. Yeah.

And so like you need to design the or for agility and speed and so so that's what we're designing for. Um, and how much do you view yourself as a technology company? I I heard you bring that up earlier.

As in you're wanting to pursue opportunities where you can have a unique sort of durable edge through some type of effectively chemistry. I don't know if that's the right. Yeah, chemistry. Um, I, you know, we're in the chemistry business now. I I want to keep learning in investing.

We, you know, I don't know what we don't know, but like once you get in the pool, you'll figure things out. So um you know like technology is not really welcome in food. Um so we we we restrain from the t-word. Um uh but yeah we want to keep making really valuable products like that's just our focus.

Um and and obviously technology is really the best way to get there. Have you have technology you have investors that are traditionally technology investors. I mean, I I don't think I've ever seen Green Oaks do a CPG round. Yeah. The last deal they did was like Windsurf, right? Or like the last big outcome for them.

A wildly different company.

Have you have you taken a crack at kind of reverse engineering what it takes to really go after like a Nestle or a Unilever, like one of the major major conglomerates that has been built through M&A, but if you if you think really really far into like what it takes to create a hundred a hundred billion dollar outcome in consumer packaged goods.

Yeah. No one's even come close. Like we all site like Red Bull is a great outcome. Celsius, but these are all like single things in very niche categories that are big categories like energy drinks.

So the companies get big, Red Bull's big, Monster's big, but no one's really been able to figure out the right corporate structure to to just compound and compound and compound and create this like hundred million dollarundred billion dollar behemoth. Yeah.

So the key way to address the really large TAM and consumer food is through different brands that have different DNA that address different sort of problems or consumer state like needs. So like David's I use the analogy of like D brands are just human beings. They have fathers. They have they have DNA.

They have behaviors, beliefs. They you know have friends. You got to let that brand or that asset be it be itself. like you can't jam it into places it doesn't belong. So like the David brand with our future portfolio and optimizing for calories coming from protein.

Um so when you look at David, you know, it's like the most protein, least amount of calories. Yeah. That that TAM is probably 1. 5 billion in revenue in the US. So So you really need multi you need like a house of brands to go after very different parts of the population. Yeah, that's one. And then international. Yeah.

What's the mega scale and they're global. So that that's the key thing.

What's the push back been like from kind of like the trad community that wants to do everything all natural everything like you know oh just you know farmtotable the pollen crew the RFK crew like there's all these different uh different segments of kind of uh like anti-modernity in food. What's the reaction been like?

Yeah. So um you know Peter Teal talks about like anything with science at the end is not science. Sure. So nutrition science is has really to date not been science. Yeah. Um and so so it's really been it's a really emotional conversation and and and not a intellectual conversation.

So that's the first place and it is complicated and and and our society is really confused around it. And so in under the confusion in a way to simplify something complex, people find like just simple correlations like if my ancestors didn't eat it, I shouldn't.

And that that's like a pretty good framework or like it's not bad advice, but it's clearly not sophisticated and it's way more complicated than that. Yeah. So um and it's like the interesting thing with like the ancestral movement, my friend told me this and I thought it was like really good.

It's like the ancestral food movements. Like it's like post-traumatic stress response. Like it's like a post-trauma response where like like you just stop and you like don't progress and you actually go backwards because you're scared to make it worse.

And perhaps that's because food [ __ ] up and food, you know, yeah, got run by CFOs who just cut the bottom line and just cut cut. Um, but I do believe like there's a way to advance food in a way that and it isn't that scary and um, yeah.

So I think I I goal is to have like a more intellectual conversation on food like you know not something like oh I can't pronounce it therefore it's automatically bad. Yeah. Yeah. Makes sense. Food is about like nutrition is about like it's pretty simple. It's about the 80% like don't overeat calories. Don't be fat.

Turns out that's [ __ ] terrible. Don't spike your blood sugar and get enough protein. Yeah. And hit the gym. I wish we had more I wish we had more time. There's a there's a bunch more questions I have, but congratulations on the milestone. Just getting started and uh appreciate you coming on.

Yeah, we'll talk to you later. Congrats. Cheers. Bye. Next up, we have Ashley Vance. You know that you know that Green Oaks is writing underwriting that to small chance of a hundred billion dollar for sure. I think that's why they're they're doing the deal. Neil Meta undefeated.

Uh next up we have Ashley Vance coming in the studio from Core Memory. Bring him in. How you doing, Ashley? Oh,