Tyler Mayoras - 15+ Years of CPG Private Equity Investing

On this episode, we’re joined by Tyler Mayoras, Managing Director at Manna Tree Partners.

Tyler has spent over 15 years in private equity CPG, partnering with brands like Simple Mills, Health-Ade, New Primal, and Verde Farms. But he’s also been on the operator side, building Cool Beans from scratch, launching into retailers like Sprouts and Wegmans, and learning firsthand how to navigate the frozen aisle, regenerative sourcing, and repeat purchase velocity.

Tyler dives into the reality of regenerative, demo strategies, hero SKUs, what he focuses on when working with management teams, how he evaluates potential investment opps, and how the CPG PE landscape has changed over the past decade or so. 

Episode Highlights:
📦 Digital demos vs. in-store: what actually works
📊 Unit economics red flags (and how to fix them)
🔥 Why taste is the #1 investment filter
🧠 What makes a founder “coachable” and a brand a real target for Manna Tree
🛒 The problem with early national rollouts (velocity vs distribution)
💥 How one brutal Expo West conversation changed a founder’s trajectory
🐶 Two categories Tyler “missed”

Table of Contents:
00:00 – Intro & Background
02:00 – Regenerative Ag: Promise vs. Reality
06:00 – Digital Demo Strategy & Social Nature
11:00 – Velocity vs. Distribution: What Founders Miss
16:00 – COGS, Margins & Pricing Power
18:00 – Hero SKUs and Hyper-Focus
27:00 – Investment Criteria & Team Dynamics
34:00 – Why PE Targets $25M–$75M Brands
39:00 – Trends Tyler Missed & What He’s Watching Now
41:00 – Where to Follow Tyler

Links:
Manna Tree (join their newsletter!) – https://www.mannatreepartners.com
Follow Tyler on LinkedIn – linkedin.com/in/tylermayoras

Follow Adam on LinkedIn – https://www.linkedin.com/in/adam-martin-steinberg

Check out https://www.kitprint.co/ for CPG production design support.

Transcript

Adam Steinberg (00:00)

All right, welcome to Shelf Help. Today we're speaking with Tyler Mayoras, who is joining us from Chicago. Tyler is a longtime investor and operator in the food and beverage space. Currently, he's a managing director of food and beverage at Manna Tree Partners, as well as a board member at various brands like Health Ade and New Primal. Before that, Tyler was the founder and former CEO of Cool Beans, a plant-based brand that offered

globally inspired plant place wraps, among many other things. So excited to get into it. So Tyler, just put it first off, maybe just give us kind of a quick lay of the land in terms of who Manna Tree is, what your focus is at the firm and maybe just take a step back a little bit, kind of what led you to focus on the food and beverage space in general.

Tyler Mayoras (00:46)

Yeah. So, Manna Tree is an investor that's particularly focused on companies that improve health through nutrition and wellness. So we are later stage investors. We invest when companies are between 25 and 75 million of revenue usually, and try to help them grow then to 150 to 200 million. We primarily focus on food and beverage, but we are also

interested in clean beauty, fitness, vitamins, minerals, supplements, VMS, etc. So really the wellness categories. Yeah, and my background, I've got probably 30 years of experience in private equity. And I did do a small stint running cool beans, but most of my time has been investing and started as a generalist and the last 15 years or so I've been focused on.

Adam Steinberg (01:24)

Yeah.

Tyler Mayoras (01:42)

food and beverage and more and more healthy and sustainable food and beverage.

Adam Steinberg (01:47)

Yeah, cool. That's

talking about sustainable, talking about cool beans,

one question to add for you was,

from what I know, you've got a fairly strong interest and have invested in a number of companies that are,

focused on regenerative ag practices,

like Simple Mills, Verde Farms, Cool Beans as well, you know New Primal. There's a lot of excitement around the space, but, you know, there's also a lot of challenges, I think, too.

at a high level and I'll you kind of...

take this however you want. Where do you see the regenerative space as it stands today?

Tyler Mayoras (02:19)

Yeah. Well, I'm a huge fan of regenerative agriculture. And I think that many societies in the past have died.

because they've destroyed their soil. So it's critical that we not do that. And regenerative is a great path toward that.

Having said that, unfortunately, there are a lot of things stacked against regenerative right now. And insurance is one, crop insurance, lending is another. There's just not many lenders for regenerative agriculture companies. it's a lot harder. It's just a lot harder than getting on a combine and mowing down corn. So I think that it will continue to grow.

I think our goal though is probably to see it hopefully someday get to 5 % of all agriculture in the US. know, right now, % organic is just 1 % of all of our and regenerative is actually harder than organic. So it's, that's still a very sizable goal and hopefully we'll get there someday, but there, really need to get a little bit more help from Washington and get some better regulations that allow for crop insurance and lending, et cetera.

Adam Steinberg (03:35)

Yeah. Yeah.

Tyler Mayoras (03:36)

Hmm

Adam Steinberg (03:37)

that's a good dose of reality.

then there's the consumer side of things and where it comes into play.

There's a concept that Fred Hart designer in the space that you may have come across. I think he's done some work on some pretty prominent brands and he's talking about, talks about this concept called Trojan Horse positioning, where it's basically the theory is that brand should just really focus their messaging on.

Tyler Mayoras (03:48)

Yeah, sure.

Adam Steinberg (03:57)

Ultimately, just what matters to consumers most, even if it's not really what makes the brand unique.

might've been a messaging that brands should think they should focus on, but do consumers necessarily care about the most? Maybe not.

Cheddie's was an example that he was talking about where,

they shifted away from talking about regenerative cheese to just focusing on an appetite driven approach. They have protein in the product.

it's better for you than buying Cheez its So I'm curious,

How does this resonate with you in terms of regenerative and how it actually should be positioned and where it comes into play in terms of messaging to consumers?

Tyler Mayoras (04:30)

Well, what I've seen work best is leading with health. So I believe that if brands, Simple Mills did a really good job of this, they're nutrient dense foods. And that's the first and foremost attribute. And it just so happens that they also were relying on regenerative agriculture and they started to push regenerative agriculture with videos back to the farm, et cetera.

But they always led with health. that, think, what matters to you as a consumer is what is going to drive the day. And health is usually the number one attribute. And so rather than leading with climate, climate can be an also. But it's not usually the primary driver to actually get velocities moving.

Adam Steinberg (05:06)

Yeah.

Yeah,

It's going to be a nice to have, but it's not going to be the make or break decision

Tyler Mayoras (05:18)

Even Averde

Farms, while it's regenerative, and I think they're the only grass-fed beef company that is organic, regenerative, and fully grass-fed finished. And that's partly because it comes from Uruguay, and they never went to conventional agriculture in Uruguay. But they lead with organic. That's what matters to consumers. That's the most important thing from a health perspective, no chemicals, et cetera.

Adam Steinberg (05:33)

Right.

Right. Right. Yeah.

Yeah.

shifting away from regenerative a bit, this is a bit more kind of in the weeds, but in talking about driving velocity, which I think,

we all know in CPG kind of the Holy Grail, think demos are, are often generally considered to be a pretty vital part of a brand's toolkit. And I bring this up because I you mentioned to me that new Primal was using platforms like social nature, aisle, and some other tools versus.

In-person demos, which I think is the thing that people typically think about as kind of the default and talking about demos. I'm kind of curious. What was the thought process here focusing on these kinds of digital options? Is it better metrics, easier to track and achieve your results? I imagine cheaper, but yeah, I'm curious what kind of thought process was there and what's been the result so far?

Tyler Mayoras (06:22)

Well, demos, I would say that if you look back in history, almost every brand that really became large did demos at one point. And demos are a really critical point when you're very early, especially when you have a localized approach. Maybe you're just growing in Southern California, demos and those kinds of events, event-driven marketing can be very, very valuable.

Adam Steinberg (06:30)

Yeah.

Tyler Mayoras (06:45)

As you get bigger, though, it's just much harder. One, you've just got a lot more distribution points. But two, it's really, really expensive to try to demo across the country. And so some of these platforms that have grown up, like Social Nature, several of our brands, not just the new Primal, are using. And it's a great way to get product into people's mouths through a digital coupon.

Adam Steinberg (07:06)

Yeah.

Tyler Mayoras (07:09)

And then they usually tie it in with survey data and or asking people to post. So you're getting user-generated content about the experience. So that adds a little bit of a better element, and it's a little more trackable. Because that is the one big negative with demos is there's just really no way to track how much long-lasting value there was in that.

Adam Steinberg (07:22)

Yeah.

Yeah.

Tyler Mayoras (07:39)

that you have to get product in people's mouths. It's just what's the most efficient way to do it. So as you get bigger, it's much more efficient to use these other tools. Now, we still, when you introduce a new product, oftentimes that would come with demoing, even if you're a big company. But it's just much more limited demoing.

Adam Steinberg (07:55)

Yeah.

Yeah. I, to your point, I know tracking results in terms of in-person demos is, it's certainly not a clear science. It's hard to have that direct attribution, but from what you feel like you can track, what, what have you found or seen in terms of comparing results and I guess ROI to a certain extent on the, of these digital, more digital options versus the traditional in-person format?

Tyler Mayoras (08:23)

Yeah, well, it's almost impossible to actually track ROI on demoing. So it's a guessing game. You can see how much you moved product while you were there, but that doesn't tell you anything about what happened next week, the week after, or other areas. So really, these are much more trackable because you actually get to see the purchases, the content that goes up on social media.

Adam Steinberg (08:26)

Sure. Yeah.

Tyler Mayoras (08:48)

from the people that tried the product and then their survey data, would they try it again? In some cases, I know with social nature, they'll go back and check, track six months later if they actually did purchase again with the survey. So some of that is very valuable.

Adam Steinberg (08:53)

Yeah.

Yeah.

Yeah. Yeah. That makes a lot of sense. Do you also come across this just, just came to me, I wrote a small check into this company back in 2021. Um, just cause they were solving a problem that I was experiencing in my day to day at the past company I was helping run. And, uh, they have a platform

it's similar where. Long story short, we were doing a lot of

retailer incentives. like incentivizing.

bud tenders at dispensaries

And they're super important

if someone walks into a dispensary and ask them, what should you buy? And they recommend your brand. That's kind of how you win. But I'm curious. This platform that I invested in, they also work outside of cannabis too, and a bunch of other

traditional CPG categories. And they

have a platform where they can basically incentivize the retail employees

but they actually can be tracked more efficiently, similar to how this demo digital platform seems to be much more trackable than in-person demos. And just curious, do you.

Do you recommend or see any of your brands in your  portfolio doing any type of

incentives related to retail employees at all too?

Tyler Mayoras (10:00)

I haven't seen it with retail employees. We've definitely seen incentive programs, affiliate programs, basically affiliate marketing for the DTC side of the business. ⁓ And that's fairly common. Somebody like New Primal, where a third of their revenue comes from e-commerce, ⁓ they'll have affiliates for sure.

Adam Steinberg (10:08)

Sure. Yeah.

Yeah.

Yeah.

Speaking of

new primal, just a side note, I don't, you probably know better than I do, I don't know what makes

the texture of their meat sticks better, but it's basically the only brand I buy now. I don't know what it is, but it's something about the texture. It's just way better than anything else I can find in the market.

Tyler Mayoras (10:35)

I've heard that from numerous people. I don't know exactly what it is that they do, but it's obviously a proprietary formula. But I've heard people that prefer their texture over a chomp, et cetera. Yeah. Yeah.

Adam Steinberg (10:42)

Right.

Yeah, much more. Yeah.

Anyways,

Staying on the topic of velocity,

this is a question I like to talk with people lot about, but it seems like, most CPG operators or investors that have had some success or experience along the lines, they often will say,

focus on velocity versus expanding distribution points as fast as possible. And I'm just curious from your perspective, just for that up and coming,

or first time CPG operator who may not have that

much clarity around that.

can you maybe just help understand why they should really just focus on velocity versus expanding those distribution points as fast as possible?

Tyler Mayoras (11:15)

Hmm.

Yeah, well, the first thing I would say, if you're a relatively new founder getting into the business, I would read the book, Ramping Your Brand by James Richardson. He's great. It's a great book. And it will help you to really focus on what's important as you grow. The reason people say that and I would say, pardon, yeah, what'd you say? Yeah, it's really very, very good. But.

Adam Steinberg (11:43)

Obviously, I've heard that many people recommended that book.

Tyler Mayoras (11:51)

The reason investors want you to do that and the reason people suggest that is because it's very expensive to try to do marketing nationwide. And when you're a small brand, you have limited budget.

And you've raised a certain amount of capital. If you don't want to raise tons of capital, then you want to focus in a region and really work on getting very high velocities in that region, which then other investors will look at and say, okay, I could apply that strategy to other parts of the country then. And so that's why people would then want to invest with you because you've proven it, even though you're not very big.

But you've proven it in this market, and you have increasing velocities in this market. So now we can go and take that across the country. So that's why they say to do that. if you go out and you just launch with a large national retailer, you really need to then support every market with marketing. And that's promotion, but that's also some kind of digital and

Adam Steinberg (12:40)

Yeah.

Yeah.

Tyler Mayoras (12:59)

you know, even outdoor, just, however you can build brand awareness, and you're have to do that across the nation rather than just in a region. So it's very expensive.

Adam Steinberg (13:05)

Yeah.

Yeah. Yeah, that makes a lot of sense. If you have

a repeatable, provable process that you can just then scale, like, certainly understand why investors would be more interested in that

What would you say are some of the key things that operators and brand owners should actually focus on if they want to maximize velocity in those regions that they're really focused on?

Tyler Mayoras (13:30)

So for focusing on just specifically on velocity.

Adam Steinberg (13:33)

Yeah, exactly.

Tyler Mayoras (13:35)

Yeah, so I would say that the number one thing is promotions. That's the easiest way to get people to try your product. And so you have to have a promotion strategy. like a lot of demos, certainly in a region, it makes a lot of sense. But

Adam Steinberg (13:49)

Yeah.

Tyler Mayoras (13:51)

The key and one of the keys that comes out of that book, Ramp in Your Brand, that I think is so critical is when you think of velocity, oftentimes you say, okay, well, we sell five units a week. And most people would look at that and say, okay, that means five people bought the product. That's not what it means. It means probably two people bought those five units, maybe one person. And so what you have is power users and you need to get more power users.

Adam Steinberg (14:12)

Right.

Tyler Mayoras (14:19)

And the way to get more power users is to try getting product into people's mouths. Some of those people are going to really love it and they're going to become power users. So you've got to continually find ways to get product in the mouths that can be bogos, can be discounts, that can be demos, that can be digital demos, these different programs. But basically you have to get product into people's mouths so that they can really see this is what I like. And then hopefully they'll continue to repeat. So that's how you, that's the process. And what you see is that then a stair-step approach.

or a stair-step chart. There'll be three or four months that are at one level, then you'll do promotions, it'll pop up a little bit. Hopefully you stay three or four months at that level, then you do promotions, it pops up again. And so with really good brands, like a Good Culture or a new Primal, you'll see that stair-step in each retailer. And that means that things are going well. You're increasing velocities with that.

Adam Steinberg (15:11)

Yeah.

Yeah. So velocities. And then also those repeat purchases

which one of those would you say is, is more, would be more of a red flag, like assuming the metrics aren't where you would like them to be in terms of repeat purchases, aren't, aren't there or velocities aren't there. Maybe they're too closely related to kind of just delineate between the two, but I'm curious.

does one become more of red flag to you if it's not there versus the other?

Tyler Mayoras (15:35)

Yeah, they're definitely related. think what becomes a red flag is if you look at somebody's chart, and every time they promote, their volume and velocity has just dropped back down to the level that it was before or even lower. That says that it's not moving a needle. You're not getting more power users. Something might be wrong with the product. You might need to tweak taste or something else. One of the other attributes isn't.

Adam Steinberg (15:51)

Yeah.

Tyler Mayoras (16:02)

resonating because people aren't repurchasing. So that's a red flag for sure.

Adam Steinberg (16:05)

Yeah.

Yeah, that's, that's super clear. shifting, direction a little bit, talking about COGS and margins,

when it comes to actually projecting COGS and margins, I know there's a lot of ways that

you can end up getting yourself in a difficult place where you weren't projecting accurately. What would you say are.

that you found are some of the most common ways that operators get this process wrong and

for up and coming ones that are listening, how can they plan ahead so they don't get it wrong?

Tyler Mayoras (16:32)

Yeah, well, COGS and gross margin are critically important. And the reason is, if your margins are 20 to 30%, you're going to have to raise a lot more money than if your margins are 40 to 50%. You're just going to have to keep going back to the well because you're not making enough money. I would also argue that if your margins are less than 40 % now, they're certain everything's category dependent.

Adam Steinberg (16:50)

Yeah.

Tyler Mayoras (17:00)

But if your margins are less than that, it really calls into question whether you have a product that people are willing to pay up for and that basically validates your differentiation strategy. And so that's something to really be cognizant of. know founders oftentimes want to stay really close to the competition on pricing.

Adam Steinberg (17:28)

Right.

Tyler Mayoras (17:28)

that competition might be 20 times bigger than them. But the reality is if you're doing something very different, very clean or higher protein, higher fiber, you need to try to charge for that.

Adam Steinberg (17:42)

Yeah.

Tyler Mayoras (17:43)

to create margins that make the business sustainable. And that's what we call unit economics. If your unit economics just aren't there, I really question whether you actually have a differentiator.

Adam Steinberg (17:55)

when you're working with management teams at the bit of the more mature stage, when you're working with those brands, what are,

one or two or a few key things that you really like to focus on when you're working with them?

Tyler Mayoras (18:06)

That's a very good question. number one I would say is me personally, I'm pretty tyrannical. I'm pretty hyper focused on focus. And the reason being, I've just seen brands just when they're really focused on one hero product, they just can really kill it. And so good culture is a great example of that. When we first invested in good culture,

Adam Steinberg (18:14)

Hahaha

Yeah.

Tyler Mayoras (18:33)

They're probably about 40 million in revenue. We invested with SemCap, another great CPG investor, and they were starting to branch out into sour cream.

probiotic milk that they were doing as a joint venture. And our team, I wasn't there at the time, but our team did a very good job of basically getting them hyper-focused on cottage cheese. Because they couldn't keep cottage cheese on the shelf. It was clearly resonating with people. They were transforming the industry with a probiotic cottage cheese, which was the first in a while.

All cottage cheese has probiotic benefit, but they usually go through a kill step. And unlike yogurt, they didn't have the probiotic benefit any longer. And so by turning the industry on its head, they were really changing the health benefits of cottage cheese. And so our team and SemCap really got hyper-focused on that focus. so they...

They've now grown, I think, fivefold since we invested and it's all 97 % of the revenue is cottage cheese. And that is because they have just a great hero product. So if you can figure out your hero product and then really focus on it, that's the recipe for success in my mind. And sometimes that means pivoting. know, in the case of Simple Mills, when I first invested with them, they were a baking company.

Adam Steinberg (19:48)

Yeah.

Tyler Mayoras (19:57)

baking mix company, but they were transitioning to crackers. And crackers was going to be their hero product because baking mix is really is not a hugely, people don't really want to work that hard. You know, there's some people love to bake, but not everybody wants to. So that's not a huge high velocity part of the grocery store. But crackers is a high velocity skew. And so they then focused

Adam Steinberg (20:12)

Yeah.

Yeah.

for sure.

Tyler Mayoras (20:26)

very deeply on crackers. Even today, when they sold, they were 240 million in revenue. And even then, crackers was their hero's cue. And they had multiple types of crackers. had branched into other things like cookies, et cetera. But crackers was still the predominant revenue source. ⁓ Another great example is the new Primal, which when I first joined the board,

Adam Steinberg (20:44)

Yeah.

Tyler Mayoras (20:53)

We were trying to figure out they had a meat snacks business and they had a sauce business. The sauce business was small and we were thinking, do we want to make acquisitions there and try to grow that? Because we're going to have to sell them separately. The same person's not going to buy meat, snacks and sauces.

But I remember my first board meeting, were sitting in the board meeting and meat sacks was growing faster. Protein was starting to come to its own. This was a couple of years ago. during that time, I think it was a CFO or maybe it was Jason, said, you know, yeah, and started talking about Snackmates and Snackmates was this tiny little product, it doubled each of the last two years. I said, say more about that. And so it had gone from two to four to eight.

Adam Steinberg (21:17)

Yeah.

Yeah.

Tyler Mayoras (21:37)

And we talked, dove, dived into the whole thesis behind Snackmates. And really what they had done was created products that were for kids' palates. It was maple and chicken and maple and chicken and apple and things that didn't have the spiciness of most meat snacks. And they had kids' packaging and it was very unique. Nobody else was doing it.

And we decided as a board, that's where we should focus, that this should be, this is our hero product. And if you then fast forward now, it's more than 50 % of the revenue of the company. I think over 25 million this year will be just, just snack mates alone. And so that ultimately is their hero product. They've leaned into it deeply. The whole team got focused on it. We saw, this is just on a shelf, not doing anything to try to grow.

revenue there, but really we knew that snack mates was the thing that was really going to be different and take off. So that's really what you have to do is you have to find that hero product and then just get tyrannical about it and focus on it.

Adam Steinberg (22:35)

Yeah.

I imagine from your guys's perspective

the value of getting real feedback

where does that come in?

Tyler Mayoras (22:49)

Yeah, that's

a very good point.

As a founder, I really saw this first firsthand. The feedback that you get from friends and family is almost worthless. mean, it just really is. Nobody wants to hurt your feelings. Nobody wants to give you any real feedback. And even people in the industry, for the most part, don't give, I give brutal honest feedback, but most people will not. And that doesn't help you. So you need to kind of get consumer

Adam Steinberg (22:58)

Yeah.

Tyler Mayoras (23:18)

base testing, you know, you need to get the product in front of people, the concept, get people tasting it. And people that they don't care if they hear your feeling because they don't know you. So that's who you want to hear from. I personally just always want to give brutal feedback because the hardest thing, the thing you'll never get back in life is time. And if somebody wastes three to five years of their life on something that

Adam Steinberg (23:19)

Yeah.

Yeah.

Tyler Mayoras (23:48)

probably isn't going to go anywhere. I want them to know what's ahead. And a great example of that, it was a sad story that became really happy. But I was at Expo East maybe three or four years ago. And a good friend of mine, Eric Schnell from Beyond Brands, introduced me to this young founder. And they had a new product. And this was before there were a lot of these.

Adam Steinberg (23:51)

Yeah.

you

Tyler Mayoras (24:13)

drinks with adaptogens in them. And they wanted to create this adaptogen-based drink that was a refresher in hydration, but also had these other added benefits for calm, et cetera. And I said, yeah, but that sounds like a great idea. And then they told me the name, and we tried the beverage. And the beverage just tasted terrible. And the name was weird. I wish I could remember what it was. But they had two words together that don't normally go together.

Adam Steinberg (24:24)

Mm-hmm.

Tyler Mayoras (24:41)

And they were doing it because it was something about, you know, changing your mood and whatnot. was like, you just spent five minutes explaining what the name is to me. So then nobody reading this on the shelf was going to understand that. It's just never going to happen. And so I just gave him brutal feedback. said, look, the product doesn't taste very good. The idea is great. And the name's terrible. And I, you know, I felt bad. This kid was like 25 and he was a college athlete. He and his brother were doing this.

Adam Steinberg (24:57)

No.

Tyler Mayoras (25:09)

And I could see him like almost welling up right there in front of me. I'm like, this is terrible. it's not like I want to be mean to people. That felt terrible. But I knew that if he went down this road, he had maybe a 5 % chance of winning with the way it was formulated, maybe less. ⁓ And so the funny thing about that story is a year later, I'm at Expo West, and some guy comes running up to me.

Adam Steinberg (25:17)

Yeah.

Yeah.

Tyler Mayoras (25:34)

didn't recognize his face. first he goes, dude, dude, you won't believe this. We changed the name, we changed the product, we listened to your advice. And I was like, wow, what are you talking about? And so he showed me they basically had changed the name and now it was called Leisure. And the product tasted great. It was completely reformulated. And now they're launched and they're growing in the Los Angeles market. They're doing really well. think they're

Adam Steinberg (25:44)

Hahaha

Tyler Mayoras (26:04)

I think they're in the single million dollar range, but growing and they've got investors and it just, it was really rewarding to see that somebody took the advice and said, okay, we got to go back to the drawing board because otherwise you're just going to waste a lot of time. so, you know, knock on wood though, they'll get some place.

Adam Steinberg (26:21)

Right.

That's great. That's a great story. I actually, met the Leisure Project guys at Expo West

in March.

that was the first time I tried their product. It really, really good. Really good.

Tyler Mayoras (26:30)

Mickelson's. Yeah,

it is really good. Yeah, exactly. at the time, it was pretty unique. Now, there's quite a few people doing it now, but they still have a unique angle on it. And hopefully, they'll continue to grow.

Adam Steinberg (26:44)

Yeah, that feedback is really helpful.

I write a few small to angel texts here and there. And I think like a few things that I think about when I'm looking at a CPG is like, obviously the founder and the team, the product obviously has to taste amazing. And is just the overall product experience good. Obviously the unit and economics have to be there. Velocity is an indicator of

good product market fit. And then the other one.

does it have

a clear place on the shelf? Cause it seems like if it's, it doesn't have a clear place of where it's going to fit in the store, I guess, whether what aisle or what section, or it seems like what I've feedback I've heard is if brands approaching a retailer or a buyer and it's not clear where it's going to fit in the store, it's much harder for the buyer to kind of envision where this is going to fit and how it's going to work.

So I'm curious, like what, what are the top variables that, that you take into account that you feel are the most important things as you guys are looking at deals?

Tyler Mayoras (27:34)

Yeah, well, clearly, founder team is a very important one. But when you think about founder team, because we typically take an active role in helping to shape that longer term, like by adding key members and working with team coaching and things like that. But the real key for me with a founder is somebody that's receptive to

change because as you grow, if you think about a company with $10 million.

You know, that company's CEO is going to be making all the decisions and involved in every decision. But when that company gets to 200 million, they can't be involved in the decision. So you have to be willing to push down decision making. And that isn't always evident and requires a lot of one-on-one conversations and whatnot with CEOs because it's critically important whether

When you think of the really good CEOs that have grown and become the same CEO founder at 200 million, Jesse Merrill at Good Culture and Caitlin Smith, they all were willing to make that change and adapt. And so that's critically important and the most important part of this team. Unit economics is always very high on our list.

When you think of unit economics, it's really about

Because it might be that they're just afraid to charge enough. Are they charging enough for the product? If their margins only 30 % is it 30 % because they're just afraid to charge or is it 30 % because it's just structurally they can't do any better than that. And that's we try to dive into that because

Adam Steinberg (29:15)

Right. Right.

Tyler Mayoras (29:21)

Something like a good culture where you can't keep the product on shelf, we've increased price multiple times because you haven't really found the spot where there's not saturation, really. So it's important to be able to figure that out and get a feel for that. The place on the shelf is important, although I've seen a lot of

Adam Steinberg (29:31)

Yeah.

Tyler Mayoras (29:41)

really good companies create categories. know, Once Upon a Farm is a great example of that. And now you've got a legendary founder there and a celebrity involved. So that makes it a little bit easier.

Adam Steinberg (29:45)

Yeah. Yeah, good point.

Tyler Mayoras (29:55)

People are creating categories all the time. Mush is another example. They're being sold in the yogurt space, but they're really an overnight oats company that's ready to eat. it's interesting. Those things can happen. They are harder, but they also can be much more rewarding.

Adam Steinberg (30:06)

Yeah.

True, yeah, for sure. If you make

it work, can be much bigger upside, right? Yeah.

Tyler Mayoras (30:17)

Yeah,

I think the biggest thing about differentiation.

And we have this conversation a lot with the team because people will say, what's the moat? And I blanch at that a bit. the reason is because I don't believe any, with today's food scientists, we have just amazing food scientists across this country. And I believe that they can replicate any product on the shelf. Oreos, Doritos, whatever you want to say.

They can replicate the exact case. But they can't supplant that brand. The mode is the brand. And that's really vitally important in what we look at is. And when you're small, what that brand is is how does it resonate with the consumer? And usually, it's associated with a founder story. So there was almost always, there was something that happened to the founder.

or somebody in their family and they changed how they were eating as a result and that led to this product.

And that then really resonates with consumers and consumers hold that and say, yes, I can see me in that. And that is vitally important to building a mode. So when I think about mode, it's usually around the brand as opposed to some kind of unique scientific formulation patented. I just don't see that as much. like I said, there's

Adam Steinberg (31:28)

Yeah.

Sure.

Tyler Mayoras (31:50)

Food scientists can replicate anything these days. So it's really about building that emotion through the brand that you create the moat.

Adam Steinberg (31:59)

talking about the union economics that you mentioned for a second at the stage that you guys come in,

will you guys only make investments if the unit economics are already there or were you guys willing to take a bet if you see

35 % gross margins, but you think you look at the business and you say,

Clearly these guys could be charging more if they just haven't yet and they've been apprehensive to do so or are you only willing to come in when the unit economics are already there?

Tyler Mayoras (32:23)

It's certainly easier if the economics are already there, but we will do either. We'll do either. just want to be able to see. Now, one of the things for us is we're investing later and we usually want to see that they're actually profitable. So at the EBITDA line. And if somebody's got 25 % gross margins, they're probably not profitable at the EBITDA line. It's just really hard to do. So it's going to be less likely that

Adam Steinberg (32:39)

Yeah. Yeah.

Tyler Mayoras (32:53)

we're going to be able to invest in something like that. Not every company is 100 % profitable when we invest, but we've got to see a clear path within the next six months or seven months to get there. We're not venture investors. ⁓ But if we think that somebody, we definitely have inklings of businesses where we think that there's more margin to be had that they're not.

Adam Steinberg (33:02)

Right? Yeah. Yeah. Yeah.

Tyler Mayoras (33:19)

charging enough, if you will. And yeah, we'd be very interested in those. It might be that they're 30 % or 35%, and they could be higher. But yeah.

Adam Steinberg (33:29)

Sure.

I imagine maybe when you're coming to those, you may be able to get a more competitive valuation from your guys's firm perspective, imagine. Theoretically, maybe. It be way off.

Tyler Mayoras (33:39)

Yeah,

it depends. sure. It's, I mean, somebody that comes to us with 50 % gross margins, it's very demonstrated that they know that they can charge and they may not be able to charge more. You know, it depends on how fast the product's moving off the shelves or online, etc. But yeah, so

Adam Steinberg (33:53)

Right.

Tyler Mayoras (34:02)

That definitely is a critical element that we look at as we're coming into companies, for sure.

Adam Steinberg (34:06)

Yeah, that

makes a lot of sense.

So I know you focus on companies that are in that $25 to $75 million range. Why, why is that the right stage for, for PE to come in and maybe more specifically, why is that feel like that's the stage that Manna Tree wants to focus on and what your team wants to focus on?

Tyler Mayoras (34:25)

Yeah, it's the right stage for us. That's where we play. It's kind of an interesting little cycle that's developed because CPG companies have moved up market, and they really won't buy companies now. They'll buy distressed companies, but they won't buy strong companies until they get kind of close to that $200 million range.

Adam Steinberg (34:49)

Yeah.

Tyler Mayoras (34:50)

And the reason is because they get orphaned if they buy too small, too soon within that big CPG network. So that's created opportunity. So you've got early stage investors that kind of help the company bootstrap up to that $40, $50 million range. Then you have people like us that come in. We typically invest $20 to $50 million into

companies and usually only maybe 10 million of that, 15 million of it goes into the company. The rest goes secondary to early investors and founders that maybe want to take some chips off the table. Because to be honest, to get to 50 million, they've probably been in this for eight years. These are not overnight successes. There's no such thing. And so it's been a long time and they need to get some money back for their investment, et cetera. They may not sell it all, but they've sold portion.

Adam Steinberg (35:43)

Yeah.

Tyler Mayoras (35:43)

Then what's interesting is what's also developed now is, so let's say we take that company up to 150, 200 million. There's now whole group of other investors that want to take it to invest again and take it to 300 or 400 million before selling. The TSTs of the world, Investar and Caterton. And so that's an interesting newer development where you see

large CPG companies, emerging companies sell to other private equity groups and maybe they buy 60 % or 70 % of it. We get a bunch of our money back and some return, but then we also ride into the next round before selling to the full CPG sale.

Adam Steinberg (36:29)

Yeah,

I think I heard you say that's a bit of a newer concept where some of these, what do you call them growth equity investors are coming into that later stage and purchasing the company from you.

if that's a newer thing, why was that not as much of a factor or part of the market whenever it used to be, whenever, how long ago it wasn't part of the market?

Tyler Mayoras (36:45)

Yeah, it's a good question. The market has evolved primarily because of CPG demand, large CPG demand. So when I first started in the industry, basically, there was a formula. When you got the 50 million, big CPG would buy you for two times your revenue. And that was the formula. It didn't matter if you made money, none of that. It was just two times the revenue.

Adam Steinberg (37:12)

Right.

Tyler Mayoras (37:15)

That started to transform. There was a period of time where it went up to three, four times revenue. Now it's come back down and it's really about profitability. They want to buy companies that are already profitable because they know that those companies can charge for their product. have strong demand, et cetera. But they've moved up their hurdle to that $200 million range. So the TSGs and the Vestars of the world, they might have been investors like us.

10 years ago, investing in our size range. But now they've moved up market and now they want to invest 100, 200 million into companies. And at the same time, CPGs won't buy those companies. it becomes this, it's just an opportunity has about that didn't used to exist. So when Simple Mills first did their transaction, they went to sell

Adam Steinberg (37:46)

Yeah.

Got it, that makes sense.

Tyler Mayoras (38:08)

I think it was three years ago, four years ago, and they couldn't get a large CPG to buy them at the price they wanted. But Vestar, and I think there were a couple of other private equity groups, were offering three times revenue. And they came in and they bought, at the time, 40 % of the company. And then, and I think at the time, the company was like 70 million in revenue. And then the company grew.

Well, Vestar was a 40 % owner to $240 million, and then we sold for $750 million. So it's become a very good formula for people like us to sell to because CPGs are taking a longer-term approach to when they'll come

Adam Steinberg (38:44)

Right.

Yeah.

And when you sell to those other firms, are you typically selling your entire stake or are still guys keeping a portion?

Tyler Mayoras (39:05)

No,

yeah, that's a misnomer. It's not we're not selling. We're basically it's like a recap transaction where we where they'll buy into somewhere between 40 and 60 percent of the company, probably. And then we continue to be owners. All the original investors continue to be owners. It's usually on a pro rata basis. Everybody sells. So.

Adam Steinberg (39:11)

Got it.

Yeah. Yeah.

Tyler Mayoras (39:28)

Except for management. Management sometimes doesn't want to sell any piece and they want to keep this role so they own more when it ultimately sells. Yeah. Yeah, yeah, it's a good formula. Sure.

Adam Steinberg (39:35)

Sure. Yeah. Well, that makes sense. Well, yeah, last question for you.

what's a trend or opportunity that's come across your desk that's looking back, you wish you would have jumped on or taken advantage of that, let you pass by, or if there aren't any that come to mind, any just trends in general that you're excited about right now?

Tyler Mayoras (39:53)

Yeah, well, there's a lot. I'd love to say I was a perfect investor, but I'm not, you know, I've made mistakes. So I had a lot of successes and had a lot of failures as well. And then the ones that you miss are also failures, but certainly the prebiotic soda would be one I would say, you know, and we did look at as a firm before I was here, we looked at Olipop a couple times, but

At the time the company was losing a lot of money early in its life. It's obviously making a lot now, but it was losing a lot then. And it also always carried a high valuation. And we're not real speculative investors for high valuation businesses. We'll pay up for certain things to a certain degree, but we're not the kind of guys that are going to pay five times revenue and take real...

Adam Steinberg (40:22)

Okay.

Tyler Mayoras (40:42)

kind of venturi risk like that. I would say another one is the whole human grade dog food. know, what farmers dog has been, it's amazing story. Yeah. And I think that that's a billion dollar company now and all almost all DTC and just really impressive what they've done. So I think those would be areas and we, until this third fund that we're in now, we couldn't invest in.

Adam Steinberg (40:48)

Okay, yeah.

Yeah.

Yeah, really.

Tyler Mayoras (41:10)

We were really human health focused, but now we're branching out to include, we look at pets, both the health of the pet as well as the health of the human because they have a healthy pet is it improves your health in that way. And so that's how we're looking at it. But it's definitely an area of interest. Yeah. Yeah, for sure.

Adam Steinberg (41:24)

That doesn't make sense. Yeah, that totally makes sense. Well yeah,

Tyler, it's been great. Really appreciate the time. It's been awesome. think a lot of really valuable insights. I think listeners are going to get a lot out of this. Where's the best place to follow along with you?

Tyler Mayoras (41:37)

Yeah, so I'm on LinkedIn. I'm no longer on Twitter. I kind of got rid of that. I'm yeah, I you can catch me. I do occasionally do something on TikTok, but we have a newsletter on our website at Manna Tree that you should definitely subscribe to because there's a lot of great insights into that. we've got a marketing team that creates white papers on some of the trends we see in the industry. So that's definitely worth subscribing to.

Adam Steinberg (41:42)

or not.

Okay.

Tyler Mayoras (42:04)

yeah, going by the products. Thanks very much, Adam. Appreciate it. Okay, bye-bye.

Adam Steinberg (42:03)

Awesome. Thanks, I appreciate the time. This has been great. Yes, for sure.