Episode 120 – A Conversation with Samyr Lainé of Freedom Trail Capital – Part Two

June 15, 2024

Dr. James Richardson:

Welcome to Episode 120. This is part two of my interview with Samir Lainé of Freedom Trail Capital. So let’s segue into the meat, I think, which is, and this may take a while to unpack, and I’m honestly a little confused, so maybe you can help clarify my brain on behalf of the audience, and this is just what I’ve seen out in the ecosystem, and I don’t know where the boundaries are, but there are brands where this, I call them the Once Upon A Farms where Jen Garner comes in, writes a check, gets her chunk of the company, and is actually an operating founder on the leadership team. And selectively and quite generously starts to activate her PR machine when called upon by the team, not randomly when called on the team. And then there’s people who just take equity versus cash, but they’re kind of acting just like a regular endorser. They’re like, okay, when do we do the spa? They treat it like an ad endorsement, and then there’s folks who are like, nah, I just want to invest and I don’t want to be involved. I don’t actually know a lot of celebrities who are like that. They’ve got to be there.

Samyr Laine:
There more there than you think.

Dr. James Richardson:
They’re not on the cover of Inc. Magazine.

Samyr Laine:
Yeah, they’re more there. Because nowadays I think you get a Serena ventures and you get Andre Iguodala and Steph Curry. You get a lot of people who are, they understand the value of investing and they’re like, I’m writing this check through my fund or family office or whatever it is.

Dr. James Richardson:
Yeah, it’s like a family office.

Samyr Laine:
That’s it. Yeah. I’m writing a check and I’m a silent partner. So there’s a lot of people, Aaron Rogers is a general,

Dr. James Richardson:
Except they made all the money in 15 years.

Samyr Laine:
Yeah, exactly.

Dr. James Richardson:
Not 75 years and three generations.

Samyr Laine:
So you do have that third bucket. There’s a lot of people, but they are, to your point, hidden to some extent.

Dr. James Richardson:
Okay, Is there one of those three you’re not interested in? You don’t want to,

Samyr Laine:
Yeah. For us as a fund, that third bucket doesn’t interest us.

Dr. James Richardson:
You don’t want to broker their investment.

Samyr Laine:
No, we’re not there to broker their investment. We invest in companies that can benefit from that Jennifer Garner model, and even the equity for endorsement model is somewhat appealing to us. Most importantly, what matters to us is buy-in from the talent partner, real authentic interest in the company, and a way to authentically tell the story of why this person is associated with the company. When Jennifer talks about motherhood and her kids and the Once Upon, a Farm story, it fits and it makes sense as opposed to, I don’t know, I just seemed like a great business. I just got some equity and I did it. And that’s why.

Dr. James Richardson:
Well, she’s got the whole West Virginia thing going, too.

Samyr Laine:
Yep, exactly.

Dr. James Richardson:
She grew up in Park Avenue makes it harder,

Samyr Laine:
But the story feels that much more authentic as a result. Right? So our favorite is that first model, it is invest operating partner at the outset. Founder, you help craft the story.

Dr. James Richardson:
Now I have a follow-up question. Is it just me or is that actually a bit of a hunt to find A list and B list celebrities who have business sense Samyr.,

Samyr Laine:
It is a little bit.

Dr. James Richardson:
Or am I the one who’s prejudiced?

Samyr Laine:
Yeah, no, it’s a little bit of a hunt. Every day becomes less and less of a hunt. And I give people the example all the time. Mark Andreessen of Andreessen Horowitz on his podcast in December mentioned that he doesn’t believe that talent led brands or celebrity led brands are a fad. He says they’re the future of consumer and they are, right? A part of that is Gatorade is a talent led, celebrity led brand. It’s just that the talent was paid through endorsement deals and royalties. And nowadays you get, it’s a Beyonce line from one of her songs. Nowadays, talent says, pay me an equity. Now you’re starting every day you get more people that are getting more business sense, they’re getting more savvy, they’re getting more entrepreneurial. It’s still a chore to find that person who says, I’m going to put my money where my mouth is. I’m going to sacrifice X, Y, and Z for the benefit of the brand of the company, and I’m going to be in it for the long haul. Whatever you need, I’m here. That is tough to find. But you’re still getting people who are in that second column where they’re like, alright, I don’t need that much cash. I got plenty of cash. Pay me an equity. And then there’s some people who are like, pay me an equity, but it’s like pulling teeth to get something from them.

Dr. James Richardson:
To me, the real hunt, wouldn’t the real challenge be finding the person in the first bucket, the one who wants to be the investor operator, celebrity like Jen Garner? I mean, to me, that’s a pretty rare person. It’s rare. She’s spending a lot of her time.

Samyr Laine:
Usually those folks are more seasoned than others. It is very rare. But as I mentioned, becoming less rare because you’ve got success stories. Not everybody’s successful. You only hear about the success stories. All of that’s true. Even in the venture capital world, usually people say there is some 80 to 90% of your portfolio isn’t going to do well. The power law dictates that you only need a few big, big, big winners. So in celebrity now you get the a-list, folks who are more seasoned, they see George Clooney and they see Jessica Alba and Jennifer Garner and The Rock, and they’re like, cool, I can do that. So every day it is becoming a little easier to find that person, but it’s still very, very difficult to find someone who says, this is going to be a 5, 7, 8 year journey. We might get lucky and cash out in three, but look at it as a five to 10 year journey.

Dr. James Richardson:
What is the difference between the celebrity founder who essentially wants to be the CEO versus what Jen Garner is doing? I see more of those. Yeah, it’s more of a head scratcher for me because it’s part of me is like, why wouldn’t you just hire someone?

Samyr Laine:
So two things that you mentioned which are really poignant. The first is now you are getting more A list celebrities who say, I’m here for X, Y, and Z and X, Y and Z doesn’t include running the company. I’m going to find someone who’s very capable and very smart to run the company, make strategic decisions, and to hire a team. And so even with Jay’s brands, we had a similar thing, JUSTwater from the Smith family has its own super talented CEO. So you’re getting a lot of talent who say they also don’t have the time for that, right? They’re like, I got to make movies and music, and I got to tour and do X, Y, and Z. Usually insert Megastar A. They’re like, I’m going to insert some money, but I don’t need to have all the money in here because I want to share the risk.

And also, on top of that, a lot of times through investing, you can get very, very experienced, very talented people around the table with you. So when we invest in a company, we are bringing our experience to a table. My experience and my brands that I’ve worked with, other investors have similar experiences. And collectively, you now have this mastermind of folks who say, let’s work together to get this brand to the top. A lot of times when celebrities, I’ll just fund it all myself, it’s tough. They’re taking all the risk. They get all the reward, but at the same time, they’re losing out on having that room of individuals that they can tap into for.

Dr. James Richardson:
What is your opinion on this definition that’s floating out there that I’ve seen this a definition of the authentic celebrity partner is the celebrity who they themselves are consuming the brand. Then they get contact. This is the Vitamin Water story. I was drinking Vitamin Water on stage, and the VP of marketing contacts 50 cents says, Hey, since you like our business,

Samyr Laine:
Yeah.

Dr. James Richardson:
Is this just random dumb luck? Or is this something you can actually plan?

Samyr Laine:
No, you can plan it. You can plan it. It takes time and effort. And as I mentioned, for us as a fund, sometimes we’ll invest in a company where there is no celebrity and we’ll go try to bring someone aboard after the fact. The way we do that is through authentic partnership. I think it’s a necessity in order for a talent partnership to be successful. Because you want someone when they’re telling the story to actually understand and believe it. It was two things. You got, Dave Chappelle has a joke, right? When he says he can’t tell the difference between Coke and Pepsi, all he knows is Pepsi paid him last, so Pepsi tastes better. So if you’ve got a situation like that, nowadays consumers are way more discerning and they’re going to out. And then you also get a Charles Barkley with a hot mic denigrating Weight Watchers, right? He is kind of like, oh, I don’t use that stuff, but they pay me to use it and it’s nonsense.

Dr. James Richardson:
I don’t look like I use it.

Samyr Laine:
Right? And people are going to call bs, especially when you’re talking about Gen Z, Gen Alpha, they want their talent partners. They want, you’re telling me that you founded this cosmetics company, but you don’t use it. They’re going to laugh you out of the room. Well,

Dr. James Richardson:
Well, you’ll get doxed really fast by someone.

Samyr Laine:
I think that authentic partnership is a necessity. Sometimes it does happen in reverse where they’re like, Hey, this person uses the company, come aboard as an investor and help us kind of lift this company into the stratosphere. That does happen fairly often. You’d be surprised. You’d be surprised.

Dr. James Richardson:
That would be my preference, but I’m a little purist because I think if you discover them in the wild using your thing, it just feels like they’re going to be a lot more likely as fans of your product to put in extra effort, whatever that means.

Samyr Laine:
Ryan Reynolds with Aviation Gin, right? Ryan? Now he’s the poster.

Dr. James Richardson:
And he buys it, Yeah.

Samyr Laine:
He’s the poster child of this thesis and this model working because he’s rinsed and repeat and been very successful. But Aviation Gin had been around for a few years before Ryan came aboard. It just so happened that he liked the team, he liked the product. He was a gin drinker. He’s like, Hey, I can take this. And we go to the next level, and then Diageo writes him a nice nine-figure check, high nine-figures check for that. But it was because he was a gin drinker and the brand had been around. He liked the brand, he liked the messaging and all that stuff.

Dr. James Richardson:
I think you, you’re adding something here, which is they need to be category geeks. That’s what I talk about in my book, at least a category geek. Then even if they weren’t active user before you approach them, it’s still going to come off much more authentic. They can speak the language of the innovation, which is important if you don’t, I mean, if you don’t care about organic food, organic produce, it’s going to show, right?

Samyr Laine:
Yeah. Or sustainability doesn’t matter to you, but you’re partnering with this plastic free brand and you’re talking about sustainability, and you could care less about the climate and the environment. It’s going to show for sure.

Dr. James Richardson:
Somewhere in your PR verse, the contradiction will erupt.

Samyr Laine:
Yeah. Yeah. That’s exactly right. That’s exactly right.

Dr. James Richardson:
How would you detect at Freedom Trail Capital that celebrity X, Y or Z is actually way too overloaded to be doing what? Sorry, we’re out. It’s the Mark Cuban. Sorry. You don’t seem commit.

Samyr Laine:
Yeah, we’ve had

Dr. James Richardson:
To make that. How would you determine?

Samyr Laine:
Yeah, we, we’ve had to make that determination recently, actually, for a brand, I won’t name and I won’t name, but the individual was everywhere and talking about multiple things. He had multiple deals, some endorsement deals, some equity deals. And when you’re looking at press or social media, or even when you’re talking to, sometimes retailers are a great fountain of information as well, because you can say, Hey, this brand, what do you think about it? And you can look at Nielsen, you can look at all these things, and you get a sense that this one individual who’s come to you fundraising for X brand has 30 other things they’re trying to do. So when they go to retailers, the retailer’s like, yeah, but you came yesterday with your pet product and now you’re coming to us with your gin brand. And then you’ve got your cosmetics brand that’s around the corner, and so it’ll be clear as day.
And then also, when we do diligence, we’re also doing two things. We’re looking at the legal agreement with the talent, if there is talent already in, and I always also want to speak to the talent as well, right? I understand everyone’s busy. It’s super tough. And a lot of times like, oh no, they don’t speak to investors. But for us as a fund, given our background and experience working with talent, I’m like, look, I have experience working with talent. I want to speak to this person to understand why this company and this product matters to them. And if they can’t make the time of day for me to invest and have that conversation,

Dr. James Richardson:
That’s not a partnership you want.

Samyr Laine:
It’s not a partnership you want. And then B, if I’m looking at their social media or their press or anything like that, and I’m seeing 47 other things, I know they’re not as committed to it as I would like them to be for us to reach the promised land.

Dr. James Richardson:
So now I’m going to hit you with the blindside question. Is the Rock one of the overcommitted celebrities who’s screwing himself over?

Samyr Laine:
I would say no. I would say no.

Dr. James Richardson:
And why do you say that?

Samyr Laine:
He is very committed in a ton of multiple places. Each of the places he’s aligned himself. The one thing that I’m kind like, I don’t love it is Voss Water. It seems like a lot of people don’t even know that he’s associated with Voss, right?

Dr. James Richardson:
I didn’t know.

Samyr Laine:
Yeah, exactly. But everywhere else, it is core to who he is and what his image is as an entertainer and as a star, and as someone who cares about their health, when you think about energy drink, you’re like, yeah, he probably drinks that before he works out. And then you think about tequila, you’re like, yeah, he probably drinks that right after he works out. He has a great time. And then he just launched a skincare brand at Target, and he’s telling the story of people are always asking him for a skincare regimen. So these are things that he, and I don’t know him personally, and I know some folks who help with his business endeavors, but these are actually core to how he spends his day. Probably has an energy drink pretty frequently, probably drinks some tequila. He’s for sure using the skincare stuff. And so I think he’s very committed in a lot of places, but at the very least you can say each of those is authentic. When you get to a place where it feels like they’re slapping their name on it, now you start to ask the question of, are you doing too much?

Dr. James Richardson:
So we’re talking more on the order of eight plus.

Samyr Laine:
Yeah, exactly.

Dr. James Richardson:
You can definitely start scratching your head going, yeah,

Samyr Laine:
It doesn’t make any sense. Well,

Dr. James Richardson:
That’s what I’ve said to people is sort of, it’s just a law of math. How much of their PR verse could they ever dedicate to you? And have you really had a kind of conversation about their irrational prioritization of their investments? They may have a favorite, and it’s not you,

Samyr Laine:
Then you get in trouble. Then you get in trouble, right?

Dr. James Richardson:
You should know that before you sign?

Samyr Laine:
Yeah. If you can, like a parent say, I love all my children and all my investments equally, now you’ve got not

Dr. James Richardson:
If you have 10, yeah, exactly. You’re in trouble. Definitely not possible if you have 10 kids.

Samyr Laine:
Yeah, someone like The Rock, as long as it’s very authentic. Again, even Mark Wahlberg has a lot going on, has a lot going on, but he is got municipal, which he wears on a daily basis, and he’s got this, which he uses. So for each of those, and they’re in very smartly selected categories where they’re not trampling over each other. Sometimes they’re synergistic, sometimes they work together. The Rock has his project Rock deal with Under Armour, which is apparel line and his energy drink. So you drink your energy before you go to the gym, but you’re wearing Project Rock in the gym. So at some point you’re like, alright, there’s some synergy there. But once you start to get to a place where you’re like endorsing this pet thing, but you don’t have any pets, now I’ve got to ask questions about, or you’ve got a Spirits brand and we know that you’re sober. Now I’ve got to start to ask the question of why are you doing these things? And it feels so inauthentic. I have to call it BS.

Dr. James Richardson:
My emerging favorite. You’re endorsing a non-alcoholic brand, but you drink like a fish.

Samyr Laine:
No, that’s exactly right.

Dr. James Richardson:
There at least there needs to be a story.

Samyr Laine:
But people told you that low ALC or non ALC was on trend, so now you’re like, all right, I got to jump into it.

Dr. James Richardson:
You haven’t tried any, but you’ve heard.

Samyr Laine:
Yep, exactly.

Dr. James Richardson:
So wrapping up Samyr, how does your fund plan to accelerate the funding of a more diverse ecosystem in consuming?

Samyr Laine:
Yeah. It’s interesting because you have a lot of funds now that are exclusively looking for diverse entrepreneurs, which isn’t our mandate. We’re not exclusively investing in diverse entrepreneurs, but it is of particular importance to us. So when McKinsey says that diverse founders and entrepreneurs have more efficient businesses that generate more revenue, that means a lot. And a lot of it has to do with the backstory and what they’ve overcome and how they can persevere. But we are, every time we do a deal, every time we get someone reaches out who has a diverse background, we’re speaking to that, we’re having an earnest conversation with that individual, and we’re thinking through, does it fit for us? Could it fit for us? Can we advise them in some other way? We might not invest, but can we be an advisor? Can we point you in the right direction?

It’s not right for our fund, but here are three funds that it is right for. And so we’re trying to establish a real, real strong relationship with diverse entrepreneurs. And anytime, literally, anytime we get a diverse founder who reaches out, we’re saying, how quickly can we speak with them to understand is it a fit for our fund? And again, if it’s not, here are three funds that you can speak to. Here is my phone number. If you need advice, let me try to help you in other ways. We might not invest, but we’re here to help you in other ways still as well.

Dr. James Richardson:
Yeah, I think just being more available for free consult. I think that’s the beginning,

Samyr Laine:
Actually, I couldn’t have said it better. Diverse founders and entrepreneurs usually can’t get the time of day from venture funds and anything to that effect. And so being available, being present, that’s the first step. And it goes a lot further than I think people realize, to be honest.

Dr. James Richardson:
Yeah, I think that’s important distinction. I think this seems like the conversation public is only about throwing money around, and I think that there’s a lot more ways you can sort of put your finger on the scale, because access to critical information is one of them. That’s the first thing you get shut out. Yeah. You’re not on the SMS group. Yeah. Well, thanks Samyr. Thanks for your time. I hope this was useful for me.

Samyr Laine:
Yeah, no, it was a ton of fun. Ton of fun. I always say I could talk consumer brands or talent led brands all day, so it was a pleasure and thanks for having me.