David Bunch of Growve talks about Having A Mission and Purpose When Selling on Amazon. In this Prime Talk Podcast Sponsored by GETIDA – David Bunch - President of Growve talks about Having A Mission and Purpose When Selling on Amazon and shares his personal journey into e-commerce.
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Yoni Mazor 0:06
Hi, everybody, welcome to another episode of Prime talk. Today I have a special guest. Today I'm having Dave Bunch. Dave is the president of Growve, which is a brand aggregator of wellness and beauty brands with an e-commerce focus. So Dave, welcome to the show.
David Bunch 0:20
Yeah, thanks. appreciate you having me.
Yoni Mazor 0:23
My pleasure, really. So alright, so today's episode is going to be the story of David Bunch, you're going to share with us? Where are you? Where are you from? Where were you born? Where'd you grow up? How'd you begin your professional career all the way to where you are in e-commerce today. So without further ado, let's jump right into it.
David Bunch 0:40
Yeah, perfect. Yeah. So hopefully, this is interesting to all of you. But yeah, I grew up in Utah, in a little town, close to the Idaho border, and Logan spent all my youth there. Before I really began college in university studies, I went on a church mission for the Church of Jesus Christ of Latter-Day Saints, the Mormon Church, as many know, spent two years in...
Yoni Mazor 1:07
So let's backtrack a little so you grew up in Logan, Utah, and you grew up in a Mormon family?
David Bunch 1:14
I did. Yep.
Yoni Mazor 1:15
So let's talk for a minute. I want to touch on your childhood if I may. Your parents were they professionals? They're in the spiritual industry, or?
David Bunch 1:23
Oh, no, not at all. So my father's a college professor in animal science, and my mom was in elementary education. She mostly spent her working career at home with us. But she, you know, she was educated and had that elementary education background,
Yoni Mazor 1:41
A large family, a small family?
David Bunch 1:44
So yeah, there were four of us, which is about the average family size in Utah. But a lot of my friends had, you know, seven, eight, you know, I had some that had over 1010 kids. They're very family-oriented, the community I lived in, and Utah, in particular,
Yoni Mazor 2:04
And growing up. Were you involved in anything that was entrepreneurial? And in spirit or nature?
David Bunch 2:10
Yeah, I mean, just from an early age, you know, my parents always encouraged us to have jobs. And so whether it was a paper route, or, or selling things, you know, we were always kind of thinking, you know, how can we make money?
Yoni Mazor 2:27
That'd because of financial reasons, or more like educational, like, you got to own yourself reasons or
David Bunch 2:33
Yeah, combination. I mean, my parents did well and supported me as well. But, you know, they encouraged us to work hard. I mean, my father, he grew up in a family where he was the first high school graduate, and, you know, came from a family that didn't have a lot of financial means. And so for my father, it was all about, you know, working hard, and, and taking care of yourself. And so, you know, from a young age, you know, I remember I was six years old when I started my first paper out.
Yoni Mazor 3:05
Really six years old? Wow, doing doors, pretty solid.
David Bunch 3:09
Yoni Mazor 3:11
And so from there, you...read the papers back when you were six years old?
David Bunch 3:14
Maybe a little, it was more about, yeah, making some money. And so that's, it's hard to when you're six, you know that that was one of the only options you know, I had at the time. But yeah, all of my siblings were very much that way. We all, you know, worked hard at a young age to really, and they encouraged us to do so. You know, to explore different things. And so I think that's really where it started.
Yoni Mazor 3:43
That's great. I love that Okay, so let's talk so you finished high school and after high school, you went on a mission or trajectory.
David Bunch 3:49
I went on a church mission so how it works is you turn in your papers to the church, and then they assign you to an area to go to and generally for two years.
Yoni Mazor 4:01
Alone when you say attorney, your papers, what kind of papers are we talking about? I'm just not familiar.
David Bunch 4:05
It's almost like an application saying yes, I want to serve a mission and...
Yoni Mazor 4:09
Almost like a soldier style. Oh, it sounds like the army because you know, when I was a civilian back in Israel, and adjusted to the army, there was a whole kind of chain of events that happened to an all son of my soldier. I'm a property of his big organization called the Israeli idea for Israeli Defense Force. Was that kind of the dynamic or are just you applying application to intermission
David Bunch 4:29
Yeah, it's more voluntary so it's not required by the church I would say encouraged. But you know, you go when you're 18 or 19 years old, and you turn in your paper so like an application saying yes, I want to go it's something that you actually pay your own way. So it's something if you're going to go and do that you have to really believe in what you're doing. And so I turned in my papers when I was 18. I got called to Uruguay Paraguay and South America, ah and I spent a little over two years there and living with the people you know serving them Montevideo yeah so I spent about a year in Montevideo but I also spend time in what they call the interior of the country and a lot of the smaller cities still have a lot of good friends there I think for me going there really gave me a perspective on you know what I have in the US you know versus you know, see you know, other people and their circumstances.
Yoni Mazor 5:37
And if I may, can you take us a little bit to the world of org Why Why did you experience what you learn about it take us there for a moment because I've been there by just for a short few days two years is a much more you know, I guess advanced I would say or more in-depth so take us there for one because I'm curious.
David Bunch 5:53
Oh for sure. Yeah, so it's just south of Brazil so I remember getting there and I first day and you get off the plane and I thought I knew Spanish because you go to when you do missions, they send you a training center for two months and you learn you learn more about you know, church topics, but also the language and so I thought I knew a little bit when I got off the plane and I heard some people speaking I couldn't really even I couldn't really understand anything and so I knew that this is going to be a little bit harder than I thought and it took a few months to really pick up the Spanish language but it did come eventually and by the end I spoke very fluently but I my first area I served it was right up on the border with Brazil on the Atlantic Ocean and my first my first house you know the toilet was just a whole shower was it heat the water through this electrical device so if you if you reach your hand up close to the showerhead it would shock you and so
Yoni Mazor 6:53
I remember those in South America they're very ubiquitous.
David Bunch 6:57
Yeah so.It was very different you know there weren't central layers you know there was an air-conditioned there wasn't central heating but it was interesting the people there you know very kind and friendly you know, they welcomed us into their homes we would eat most meals with people whether they were members of the church or were just you know, people that became friends of ours.
Yoni Mazor 7:24
Let me understand this so wherever you stayed in around Uruguay there were churches, community churches, more than the ones that you go there and you interact with the community to what do you do day today. What's your purpose? What's your mission?
David Bunch 7:35
Yeah, yep so there was a wherever we were at there was a mormon church so we would spend our days working with with members that were already members of the church we also taught people that were interested in the church so they may be you know what we call this investigators they wanted to learn more we also spent a lot of time doing service so we would teach English classes you know, we would we would help in the community whether we're volunteering at you know, food kitchens or just people in the neighborhood that needed our help, we'd spent a lot of time serving so really it was you know, a chance for two years to really focus on on others kind of outside of myself you know, just the first 18 years you're very much focused on yourself in high school and you know, sports and you know, dating and all of that it's really kind of self focus this was a chance to really you know, spend time thinking about others and you know, so it's a good It gave me a lot of perspective about live I think it helped me you know, prioritize you know, things you know better than then before I left.
Yoni Mazor 8:44
So you would definitely say that after two years it was very impactful to shape you up, your abilities, your mindset, your priorities, your values. Before I was on a mission for two years, it's not like two minutes or two days or two weeks or two months. It's three years that's very purposeful, very purposeful, so I salute you for that.
David Bunch 9:03
Yeah, no, absolutely yeah so it's something you know, I think about almost every day just you know, bits and pieces and unfortunately through social media you know, there are several people that I still interact with and become kind of long you know, lifelong friends.
Yoni Mazor 9:18
And while yours were there if I may so let's put that let's put some dates into the top progression so what what what was, you started there and what was your finished?
David Bunch 9:26
Yeah, so I started in January of 1995. And I came back in March of 1997.
Yoni Mazor 9:32
Got a mid 90s Very good. Okay, so let's move on to the next station after two years in a row. Why served the mission really well. What was the next session for you?
David Bunch 9:42
Yeah, so you get back from being a missionary and it takes a few weeks to adjust because you're on this full-time schedule of being a missionary and then you're back into the real world. So back at home with the parents. It's when I really started the College studies I went to Utah State University where I did my undergraduate degree. I initially was going to do medicine with my brother's cardiologist. I wanted to kind of pursue that path with my grandpa's doctor and some of my uncles.
Yoni Mazor 10:19
But quickly this probably goes like your grandfather's a doctor from your mother's side because you mentioned your father was the first to graduate high school right?
David Bunch 10:23
Yep. From my mother's side. Yep. That's a good point. Yeah. So from my mother's side, so very, you know, you know, lots on the medical profession. But I got in, I did well in the classes for pre med, but I think kind of going back to the paper out just some of my, you know, starting small entrepreneurial businesses, just that business mindset. So I decided to make the switch. And I went into finance in accounting, I felt like, whatever business I got into, I needed to have a clear understanding of, you know, financials. You know, I felt like it didn't matter what I did, that was the most important thing. So I decided in terms of business, that I wanted to focus my effort there. And so I got a degree in finance from Utah State, minor in economics. And so you just said it is based on what Salt Lake City, Utah states based in Logan, so it's about the home? Yeah, for you. That was that home. That's where I grew up. And so I did my undergrad there. I, I live with my parents for the first year. And then I got married a year into my studies. So I got married pretty early at 22.
Yoni Mazor 11:38
Nice. Did you meet your wife at the university or from the community?
David Bunch 11:41
Yeah, so she actually was from the community too. We went to the same high school. I knew who she was, but I didn't know her until I was in college. And we met through some mutual friends. We dated for about a year. And then we got married in 1998. And you know, this year we'll be married 23 years, and so very good.
Yoni Mazor 12:02
So in University will you marry in your graduate year?
David Bunch 12:06
I graduated in 99. So I went through pretty quickly, it took me about two and a half years when summers and kind of accelerated I think being married to, you know, is more focused on life. You know, my wife and I made sure you know, I got through quickly, and so I didn't spend a ton of time in school. So I finished in 99 and had a lot of job opportunities. I ended up going to a company called nutraceuticals, where I started my career and nutraceutical is an aggregator at the time, you know, nutraceuticals was focused on the health food and specialty channel. And that was primarily these mom-and-pop health food stores. And back in 1999, there were 1000s of these stores. And there's been some consolidation, you know, now Whole Foods and sprouts and some larger retailers, you know, dominate more that channel. But at the time, there were lots of independent healthy stores, and there still are some today. But if you look at the market share in that channel, there are lots and lots of brands, and none of those brands really represent a lot of market share. And so nutriceutical felt like there was an opportunity in that channel to do some consolidation. And so I joined the accounting and finance side and quickly, you know, got involved in their m&a. And, you know, towards the end well towards the last 10 plus years in my career that I was actually there for 21 years.
Yoni Mazor 13:37
I oversaw 91 years from 1999 until 2020 That's right, yeah, we're gonna have to unpack this a little bit long time, just give me one but I just want to bring some context into the mix so late 90s 1999, it wasn't as advanced or the awareness of consumers wasn't as strong as it is today, you know, we're near 2021. Today, you know, supplements, well, wellness and beauty is really on high awareness, at least in the United States. And then in the Western world, people are really attentive to that. You know, preserve your body, enhance it, make sure you reach longevity, much more than the 90s it was, I want to say early beginnings, but it was just gonna get momentum in the late 90s. And that's when you kind of went into the mix. And you're saying because it was kind of scattered all over. You know, you were with a company that kind of saw the landscape and said, let's start consolidating it and create more traction, more bodies, more movement, something that's more cohesive, and it's a powerhouse or a juggernaut and the industry so take us from 1999 to I guess your your progression in the company, what was your first position was an expert position inside the company to give us understanding of your your evolution within the industry?
David Bunch 14:44
Yeah, sure. Yeah, that's a great explanation of the landscape at the time and you know, people were going to these health food stores to get their supplements because they weren't commonly found elsewhere. Or at least a wide variety and you know, that's Obviously changed but I started out in actual cost accounting and so not necessarily something I wanted to do long term but I liked the company, nutraceutical at the time was publicly traded.
Yoni Mazor 15:12
You said there was already a public company right?
David Bunch 15:15
We were a publically company traded on the NASDAQ yeah and just had gone public in 1998. So so...
Yoni Mazor 15:22
It is even though it's wealth and beauty, I want to once again bring some more context, early, late 90s or up to 2000 2001 was the.com the NASDAQ was booming. That was like a bubble that was going on. Many startups' first companies were going to the NASDAQ and getting amazing valuations until I kind of collapsed. I think there was an 80% drop or meltdown throughout the market. Were you guys weren't technology per se were more of the wealth and wellness and beauty. But you mentioned you already have a public company freshly minted in the NASDAQ for the most part and then you come in and you cost accounting. What's that?
David Bunch 15:55
Yeah, so really kind of managing product costs. You know, we were a manufacturer so all accounting to you all the factories, we did Yep, we did almost 90% of all of our manufacturing we did in house. And so as a really a very entry level role. But I like the company, I like the industry, you know, the types of products and I knew that, you know, people were starting to think more about what they put in their body and about their health. And so I liked directionally where that was going What was interesting you know, I started in and quickly on our CEO and you know, I credit a lot to him the founder CEO CEO bill gay and that he you know, people that worked hard, he gave opportunity to and probably ahead of, you know, your experience and so he got me involved early on in a lot of the m&a transactions that the first one I was involved on was you know, less than six months in in 2000.
Yoni Mazor 16:57
And at that time pulled out of cost accounting and said `` I want you to hit this deal, this merger, m&a, merger and acquisition deal and that was your first dive into the water.
David Bunch 17:04
Yeah, so yep, yep. So he got me involved there and I remember I was in Fort Lauderdale and we were going to a company and I couldn't even rent a car because it wasn't 25 but he gave me the opportunity to go there and surrounded me with some good people. And that's where I really started to learn you know more about the industry about the m&a process and you know from there.
Yoni Mazor 17:27
But take us take us to the first deal if you can make the numbers if it's a public company shouldn't be smarter maybe there was pressure leases involved also
David Bunch 17:36
Yeah, and this was a small deal so it was a you know less than a million dollars we bought it from a company called wraxall and they actually had put a pause on the brand and so we went in and acquired it we liked the brand name and so it was a small deal and my initial roles were things like you know you're counting the inventory with and you know your so all the things that they didn't want to do which we're good to do you know a lot of the you're going out to the warehouse and participating in the physical of the inventory make sure it's done right.
Yoni Mazor 18:07
You know the doing the due diligence or after the purchase.
David Bunch 18:11
Yeah so up before so a lot of the due diligence so counting inventory, you know going through bank statements and what we call proof of cash and making sure that you know the financials are accurate really tracing it to the cash the ins and the outs.
Yoni Mazor 18:29
You know that it's a successful deal eventually then emerges nicely.
David Bunch 18:33
Pretty good and we were the brand they had. They had stopped the brand and so we had to restart the brand. And so in terms of what we paid for it, you know, for what we got out of it was a good deal. Yeah, and then the thing that we did at nutriceutical so one of the things that made it nice is we have the infrastructure in place. So when we bought this brand we didn't actually take any people with it, but we already had people in place and all the functional areas we had manufacturing we had a retail sales team you know, at the time there was very little e-commerce you know, going on so it's mostly you know, brick and mortar stores, but we had regulatory so we had all these things in place and so you can automatically as you bring it in, you know, you realize significant savings just by being part of the nutraceutical platform.
Yoni Mazor 19:21
Nice. Okay, take it to the next station, there is a progression. So he did the seminar, take us forward, let's see a progression.
David Bunch 19:28
Yes, what happened is, you know, initially the first few deals I did, I was more, you know, learning process, you know, doing a lot of the due diligence, a lot of the, I was in, in deep in the detail. But over time, you know, they got more confidence in me where I actually got involved in the negotiation, to the structuring of the deals. I was involved a lot in sourcing, as I got to know more and more people in the industry. And then you know, a lot of times I would actually run the brands for a time Before they were integrated into the nutraceutical platform, and so I'd have them...
Yoni Mazor 20:05
Tell me about the nutraceutical during the.com bust that stock fell down or do you guys take any financial hits or what was the secret of…
David Bunch 20:12
The nutraceutical went public in 98 you know, early on we had missed initial earnings and we dropped significantly and so, you know, the market cap went way down you know, and it was just a gradual climb over time until in 2017 we were acquired by a private equity group and at that time it sold.
Yoni Mazor 20:37
Did you guys get delisted or you probably became public?
David Bunch 20:41
Yeah, we did fine, you know, the business did fine and we were actually able through acquisitions and organic growth we were able to grow top and bottom line when the company in 2017 was acquired by a private equity group. We sold for about 430 million at the time we were about 43 million of EBIT da you know so about a 10 multiple and you know it one of the things that we didn't probably do a great job you know is we didn't really get involved on the e-commerce side and take advantage of where the growth was going we stayed pretty true to that health food specialty channel which is a great channel to be in but it's really a channel that a struggling mom and pop stores you know they're going out of business a lot of the business the supplement volume is moving online into bigger retailers into other...
Yoni Mazor 21:40
Why did you start noticing that now looking back into you know, the time horizon what was you know, we just touched the early 2000s you know, 20 years into the mix maybe you want to take us out of the dynamics you see or that things are shifted in the industry
David Bunch 21:53
Yeah so even early in the early 2000s we started to see some consolidation even at the retail level so mom and pops getting acquired you know by bigger and becoming part of you know, bigger chains so there was consolidation there we started to see some brands move into you know, more traditional channels like grocery and mass type of accounts.
Yoni Mazor 22:17
And now you go to Walmart, you go to any food store, you'll find a nice robust supplements category instead of like you know, maybe 20 plus years ago is nothing to a lot of presidents.
David Bunch 22:28
That's exactly right yeah so no longer a lot of those consumers didn't have to make the special trip to the health food store because they could find it in traditional retail.
Yoni Mazor 22:37
Did that affect you or you guys expanded into selling to you know, the big box stores?
David Bunch 22:42
It did affect us we expanded that probably not to the degree that we should have and you know so in hindsight and some of that you know it you know that it was differing opinions on what to do just internally on the management side on really to go after the e-commerce in some of these other channels The other thing too that we had to be cautious at the time is healthy stores were very protective and so if they saw you take your brands into to other retail channels they don't want to carry you anymore because they didn't want to compete against a Walmart or a big box and so it was a balance on how do you kind of migrate out of the health food specialty channel without you know hurting your existing customer base and...
Yonin Mazor 23:31
You might have that dynamic did you create two lines one for you know brands a lot of brands for the really the specialty stores and a lot of brands for or even do private label if you guys are really into manufacturing, you just do private label lines for you know, a Walmart or Walgreens or all these you know, traditional brick and mortar stores.
David Bunch 23:48
Yeah, so that's really what we did. We had brands that were focused on different channels and so we kept loyalty to the healthy specialty channel with certain brands. And that kind of became our mantra, you know, with these brands, you're not going to find them elsewhere. So hopefully stores carry these because we're, you know, we're being loyal to you. And then with other brands, you know, we work those into other channels. And so that was really the pathway that we did that we probably didn't move as fast as we should have or you know, I would have liked and now really the lines between channels are really blurred with e-commerce. So it's not as big a deal these days just because you know what the ecom and everyone's selling, you know, it's everything's everywhere anyway. So it's hard to keep exclusive exclusivity into certain channels.
Yoni Mazor 24:41
The lows that you started really feeling the impact of a lot because I know you kind of discussed the two worlds or two sides of the brick and mortar. You got the specialty stores in the big box stores. And why did our e-commerce come into the mix and change the dance?
David Bunch 24:53
Yeah, so I would say you know, mid-2000s and up is where it Really, you know, we started to see that.
Yoni Mazor 25:03
What was really sprouted you saw was three ebay.com websites of individual brands, or was it Oh, Amazon altogether?
David Bunch 25:10
You know, Amazon, but a lot of individual sites that are specific to our channel, like Vitacost, which is owned by Kroger, there's a big one called I herb that, you know, does several billion in revenue at this point. So there were a lot of those that were picking up all these brands and offering them, you know, online with great delivery times, just like Amazon.
Yoni Mazor 25:33
Were you able to establish a relationship with them and sell them?
David Bunch 25:35
Well, we weren't at the time, because our CEOs thought, again, we need to be exclusive to health, especially since we don't want to go online and really damage, you know, our relationship. And so we were slower to make the move, you know, to some of these accounts versus our competition that went for it and said, Look, we may take a hit and health food specialty, but we'll make up for it in more than makeup for it and these other channels and online. So we were probably slow to make the move.
Yoni Mazor 26:03
In hindsight, they were right, because e-commerce was the wave of the future. And it really became more robust. And everybody expected.
David Bunch 26:10
Yeah, exactly. Yeah, a lot of our competitors are several of them, you know, did better than us by making that move early on. And we did make the move. And you know, nutraceutical does, is doing better and better from an e-commerce standpoint, as well as in more traditional retail, like mass food and drug. But that's, you know, more recent, and so we were slow. And so now we're, you know, nutraceuticals having to, you know, to make up, you know, and gain market share, you know, and it would have been easier if they would have made the move early on, but there was a risk to it. And so, you know, I think we took more of the conservative approach and nutraceutical if you look at the financial results, you know, over the years, it had steady EBIT, die, and revenue growth. And you know, some of that was because we would acquire companies, you know, to help make sure that we have that growth, even when there were years where we didn't have organic growth, and we were down and we were able to make up for that through acquisitions. I personally did 50 acquisitions there. So I was involved in 50. You know, I think the company total was about 60. And a lot of these were...
Yoni Mazor 27:22
It really took the grind you took the heavy load of m&a throughout the years for the company is no joke. Yeah. Yeah, that was your official title role. Don't go into those positions.
David Bunch 27:31
Yeah, yeah. VP of m&a. Yeah, it was really me and one other person, you know, for a 10 year period where we did you know, almost all the m&a together. I was adding up, I looked at over 1000 companies when I was at nutraceutical.
Yoni Mazor 27:49
So it's only 5% conversion from the 100% that came into the web for you at least?
David Bunch 27:53
Yeah, we were a very disciplined buyer. And, you know, we liked we weren't paying up and in terms of trying to get things, we were trying to find things that we felt like we could get, you know, get a decent amount of EBIT, da, and then looking at the synergies of bringing them on at nutraceuticals. So, we never really went after kind of the high growth companies that you might have to pay up for. And so we did, we did a lot of looking and you know...
Yoni Mazor 28:20
Looking for real value and intrinsic value, or, you know, a lot of years, it wasn't just hype or paying a premium for something that's really trendy. And it's high, but you can't really calibrate it properly, potentially. And that can have its own risks. Would you say that, besides being very, you know, in the financial sector mathematics is just like an art form, as far as you're concerned? m&a is or what's the art of the deal with this? Yes.
David Bunch 28:43
Yeah. So, you know, we had models and, you know, financial models, and we looked at that way, and we looked at a lot of, you know, retail data, you know, to see how the products were performing, you know, on shelf and velocity and things. So we looked at a lot of things like that, but at the same time, yeah, a lot of it is an art form. And you learn as you go, and, you know, we made a lot of mistakes. And so, I definitely feel like I'm much better at what I do now, having gone through 1000 companies, and, you know, so as I look at things, it's not just about what the financial model tells us, you know, there's more to the story. And, you know, and that's why, you know, today as we look at deals, we're looking at things even, like, you know, the founder is, is the founder, a good fit? Can we work well with that person? You know, there's things like that we feel like are just as important as it being, you know, making sense from a financial standpoint and be beyond the numbers and the money
Yoni Mazor 29:45
And the humans also take a big place in it. What's the character? What's the value? What's your mission? What's your purpose? How do they connect to your mission and values and purpose if there's synergy there, or lack of synergy and lack of ROI, seeing things So you take that into serious consideration?
David Bunch 30:03
Yep. Absolutely. Yeah, that's probably a number one, you know, for us, as is the founder. And we feel like it's a good fit from that standpoint. And then we look at the numbers. We also, you know, look at, you know, where do we think, you know, so we'd look at the categories and just looking forward, is this something that's got staying power? You know, so there's, you know, is it a trend? Or is this something that's going to be more long-term? And so we try to, you know, there's consumer data that we look at, you know, that's more forward-thinking. And we try to use a lot of that data as well as we think about, you know, categories and brands and companies.
Yoni Mazor 30:43
Gotcha. Okay. So before because you know, this was with the nutraceutical, but today, you're doing you know, you have your own vehicle Grove, we got to touch this very soon because I want to start packaging the nutraceutical story. So out of the 50 deals that you did in 20 plus years, which basically vetted 1000 offers, or these 50 deals, what was the success rate? What was you know, all of them had a great success and ROI or is it flops? Or take us a little bit into that?
David Bunch 31:08
So yeah, I would, I would say, more than not, you know, paid for themselves and more. We had debt, we definitely had some, some home runs. You know, there were a few in there that you're like, yeah, that was fantastic. And, and, you know, we felt that a lot too. But we were paying in a range where we could have failures. We weren't, you know, gambling, the business, we weren't, you know, we didn't do really do transformative deals where we were kind of betting the ranch, and, you know, on the company, you know, these are ones that if we missed on on the company would be okay,
Yoni Mazor 31:48
You can absorb the hit, right? Sort of. Yes, right? Yes. Then you land on trot over a swallow. Yep.
David Bunch 31:54
A different approach, then, you know, a lot of others taken in were a little bit different where I'm at today, but that approach there is kind of slow and steady. Just making sure we have grown from a top-line and bottom-line standpoint.
Yoni Mazor 32:07
Got it. Very good. Okay. So you know, after being 20 years, I guess plus with rich historical texts, the next station, what led you to that station? And what was the genesis of all this?
David Bunch 32:18
Yeah, so nutriceutical was acquired by private equity, 2017 and 2019, the private equity group sold 40%. And they actually got almost a three times to return in less than two years, and sold at about a $630 million valuation. And at that time, a lot of the management team was leaving, including the CEO, this was the second CEO.
Yoni Mazor 32:42
You know, that's not the founder anymore.
David Bunch 32:44
The founder left in 2017, when the private equity group took over, they brought in a new one. And then this new one was left with this 40% transaction. They wanted me to stay, the new CEO wanted me to stay, but I just felt like, you know, I've done that. It's time to do something a little bit more entrepreneurial, where it's not so structured. And then I can really implement a lot of the things that I've learned, and really want to lean heavily on the e-commerce side, knowing that that's, you know, where the direction of the categories we participated in is going. And Brian bear, who's the founder of the company that I work at now, Grove, he's been trying to get me to work for him for five or six years.
Yoni Mazor 33:31
And as you guys first meet, I want to hear about the honeymoon and romantic relationship.
David Bunch 33:35
We actually bought a brand that he worked for. And so he worked for us for a short period of time, and we became good friends and traveled together and did some customer visits.
Yoni Mazor 33:47
The one thing that you bought his company out of maybe a little earnouts period or a transition period. So you said along, and that's to establish a relationship.
David Bunch 33:54
That's right. Yes. Yeah. So we met there. Then he left and started this company in 2006. And he would call me and say his company's meaning.
Yoni Mazor 34:05
David Bunch 34:07
But at the time, Grove wasn't an aggregator was an innovation house, he would help brands with their innovation. It has really morphed into what it is today in the last couple of years. And yeah, he would, he would call me, you know, are you ready? And I finally call him and said, I am ready to go. And so jumped over, we've really kind of changed change the company in terms of transforming the end into being an aggregator, and I've spent a lot of my time this last year, building out the platform, the services, you know, people, we made over 100 hires, we now have over 400 employees, you know, thinking about our capital structure and making sure that we're, we're in a place from a capital standpoint that we can actually do you know, support The growth both organically and through acquisitions.
Yoni Mazor 35:03
Let's pause here for a second. So crew growth was established in 2016. You were still with? Yeah. 2006 Oh, that's pretty early on. Okay. So 15 years into the mix. And you keep a relationship with Brian for, well, you know, 14 years, until you make the move. And in these 14 years, Grove has essentially transformed itself from an innovation company to what to explain to us what was the What was it?
David Bunch 35:31
Yeah. So Brian, ended up buying a couple of Amazon brands, you know, we call them Amazon, because that, you know, 100, almost 100% of the revenue was on Amazon bought on Amazon, so to speak. That's right. Yep. So he wanted to get into the branded business, you know because at some point, he wanted to have something tangible that he could sell beyond, you know.
Yoni Mazor 35:52
So as far as you know, what was the year that he bought his first Amazon brand?
David Bunch 35:56
2018? Got it.
Yoni Mazor 35:59
Okay, so what was he doing for 2012 years, for the most part, just helping out with innovation still, or?
David Bunch 36:04
No, a lot of the large consumer product companies in the industry, he was helping them with innovation?
Yoni Mazor 36:10
How would you help if you know, how to, I never heard of anything like this?
David Bunch 36:16
Yeah, so he would go out, and he would lock up key, you know, raw materials, you know, from an exclusivity standpoint, and then he would go sell them to these different consumer product groups. You know, here's the latest and greatest, he's very good on things like probiotics. So, you know, he was offering a probiotic gut, you know, different probiotic gummies to, you know, some of the largest, you know, brands in the market. And we actually still have that component today as part of Grove where we do some contract manufacturing, you know, we help other brands, with products, that's not the focus, but it's something that we do have, and it cash flows well, and it helps fund you know, the rest of the business.
Yoni Mazor 36:59
So let me understand, let's see if we got this straight. And that wellness and beauty categories, let's say supplements, right? That when you have all these supplements, like probiotics, right, it's something that helps your digestive system, he was able to, on the sourcing side, you know, be able to source you know, really high end and exclusive materials and ingredients, and also pitch kind of new products, like probiotic gummies, I guess, when he was pitching that was kind of new and innovative, and that help other bigger, larger brands becoming even he was able to put all together, package it all together and basically make earnings from this. It's a unique model I'm not too familiar with, but was that kind of dynamic?
David Bunch 37:37
Yeah, essentially, he would go, let's just say to someone that has this probiotic, he would go to them and say, Look, I know all the consumer product companies, let me sell that for you to them, give me exclusivity, I will be, you know, I will sell it for you. And he would lock up really good innovation, he's good at seeing kind of where the market is going. And so he's been able to lock up some really good, you know, tech, technology, raw materials. And get exclusivity to that. And then, you know, these big companies, you know, Nestle nature's bounty farmer bike, you know, they're coming to him, because he has exclusivity for them. And just a model. Yep, yep. So that's how we got started. And you know, he's able to cash flow well enough that then he was able to start buying some brands.
Yoni Mazor 38:28
And what compelled him to buy Amazon brands, I mean, brands and specific brands that were born on Amazon were Where did he come up with that?
David Bunch 38:35
Absolutely. I think it may be due to a degree and that I started to do that at nutriceutical.
David Bunch 38:45
A little bit in terms of we had purchased a couple of Amazon-only brands sound nutrition. You know, we acquired that in 2017. And then new nutrition, which was the largest supplement brand on Amazon in Europe. We acquired that in 2019. So he was seeing some success that we were doing at nutraceutical and he's like, there's something here. And you know, these brands are competing while they're out-competing the traditional CPG companies, you know, there's something here I need to get involved in and he wanted a brand where he had something tangible to sell. And so he started looking at lots and lots of brands, and he ended up buying a couple of brands from Matt Newman, who rolled some of his own and is actually one of you know, the principal owners of Grove. So there's Brian Baron Matt Newman, and that's really how it all began and Matt Newman's really was really his Amazon expertise. So Brian buck brought this business expertise and then Matt, you know, had the business expertise but he also had Amazon as well. And you know, that's really how it got started.
Yoni Mazor 39:57
So he’s able obviously to buy a company but also by a great talent to come along as a partner as well as a core member of the whole team. So it has great value, great purpose and mission and the ability to grow and become strong, strongly held shoulders on the commerce level. Okay, so that all happened 2018 you came in two years later 2020 it was kind of a tango dance between you know, your work and your m&a position and to the Commerce that they tagged along. So I guess it made perfect, perfect sense to put you all together as your gym team, so to speak. Okay, so in 2020 you get in? Take us in the past year. What have you guys accomplished so far? Where do you guys stand? What makes you guys your Nick? So forth?
David Bunch 40:39
Yeah, certainly. Yeah. So come over in March of 2020. You know, just as the president and really is my, you know, my first you know, tasks were to build out an infrastructure to really support you know, doing significant, you know, acquisitions and, and so, we invested and it was interesting, I left you to know, COVID really hit right as I was leaving and so even people at nutraceutical You know, one of the board members had reached out and was like, I'm surprised you haven't come back to ask for your job again. But we were well-positioned because we were e-commerce primarily and, you know, our business did tremendously, you know, last year, yeah, the moment of the Big Bang. Yeah, exactly. And so, and that really helped fund, you know, building out a team. And so we build-out and in all functional areas. So we have in-house General Counsel, we've got a, you know, a chief operating officer that oversees our manufacturing supply chain, we manufacture gummies, and powders, we build out a traditional retail sales team. So we start on Amazon or on Shopify accounts. But as we do well, we leverage that and take it into traditional retail. So just building out all these functional areas, and that now is in place, also spend a lot of time thinking about, okay, how do we finance this from a capital standpoint, we did bring on one minority equity partner, Palm Beach capital, and then we just finished up a refinance of our debt. And through syndication, we had 10 banks participate. So we've got an additional 100 and 50 million, you know, to really help fund you.
Yoni Mazor 42:26
You know, so this is a credit facility that is committed, so as long as you find the deal, the financial correct?
David Bunch 42:32
That's right, as long as we stay in our covenants, and we find deals, you know, we can do these so we don't have to, there's not necessarily financial contingency. So as we find deals, we're able to execute them quickly. We've done since I've joined so what 1515 months or so we've done eight acquisitions. We have 300 term sheets. We are as we close these, these three will be at 250 million of revenue and about 45 million of EBIT, and so you know, we're sizable.
Yoni Mazor 43:07
It sounds a bit double the profitability from nutraceuticals saying back in the day there were about 400 plus and if it was about 10% sounds like you guys are doing about 20% so there's some sort of efficiency that you can identify there on a large, large, large number.
David Bunch 43:22
Yeah, so in neutral when neutral sold in 2017 they're about 40 40,000,040 3 million of EBITDA so we're actually yeah, we'll be higher than neutral was, you know, in a much shorter period of time and one of the things that we've done well we've done a few things different one is that we actually allow partners founders to roll equity, we always take a majority position but we allow founders to join us and that was one of the things that I learned at nutriceutical is we always struggle because generally we buy 100% of the founders would be off and doing something else and they're critical they're really helping the brands grow I mean they're the visionary they have a passion to grow.
Yoni Mazor 44:02
There are intuition processes, but also growth keeps those alignments I totally connect to what you're saying. But I want to also if I may, you know so if an Amazon seller is listening out there and I'm like what are you guys looking for? How do I know it's just a fit you know, if I'm gonna I did well with my brand from zero to a few million. I feel like you know, I'm close to my edge. I need something that's more resourceful. What are you guys offering? Well, what's the opportunity for Amazon sellers out there with growth? You know, if they come on with a focus on that?
David Bunch 44:34
Absolutely, yeah. So really, if the brands fit within the categories that we're looking at, we have, we have six verticals. We have dietary supplements, personal care, sports, nutrition, pet, food, and household, but again, focused on wellness and beauty, more natural. If they have brands in those categories. They're definitely a candidate. Also, if they're interested And they want to continue in the business but they know that there are points that they need help you know we can they would be a good candidate as brands grow they realize look if I'm gonna really take this to the next level I'm gonna have to build out a pretty significant internal team I mean and how do I do things like traditional retail I have no idea you know I have concerns about regulatory on the manufacturing side so we can bring all of these resources to help a brand grow and then the other thing that we offer is those that real equity is we believe that Grove will be more worth more as a whole and brands will be on their own and so those are real equity with us our partners, they get that multiple enhancement by being part of a so on the equity that they roll, they'll get they should get a much higher multiple than they would on selling the brand on their own plus...
Yoni Mazor 45:52
To clarify this so if I want to sell my brand to grow yoga, you guys will pay you to know there's gonna be a liquidity event because you know, the majority of shares that will be sold or all the shares but then you'll pay some of it in equity, right and growth so you get a part of growth right a percentage of over a piece of the action of the corporation call a call it and then you can actually stay in integrating and grow with the team with this empire that's building up and enjoy all the resources. So of course you can keep growing the brand that you founded, but if you connect to the mission and purpose of these other brands, you find yourself, you know, in a very interesting position.
David Bunch 46:27
Yeah, and it's actually equity in the brand that they have the word real equity in so if we buy a brand let's say brand a, let's say we buy 60% they would roll 40% equity in that brand. And then together we would grow the revenue and the EBIT, da we would bring all of our resources were completely aligned in wanting the brand to grow because we both benefit and then at some point when we sell the brand, we believe that the multiple will be much higher than that then they would get otherwise on selling it on their own. So there's kind of two ways that we help them you know, we have nine partnerships today and you know, people that are interested, they can talk to our existing partners, you know, we really pride ourselves in being a good partner, a lot of our partners I have companies that I bought, I bought their brands at nutraceutical and they've started other things and they've come back to me now and partner with us at grow because we try to be really good partners and that's our best deal flow is through references from our partners and you know we want them to be happy and we want them to help us you know grow their brands and so it's important that's important for us that partner relationship
Yoni Mazor 47:37
You got it you gotta like that so just to recap a little bit on that there's you know, the flagship or the corporate company which is growth when you roll up a company you can obviously buy everything or you buy let's say 60% 40% stays with the brand owner or the seller and then it can grow a base because you're gonna play all the available resources of the corporation of the parent company into the subsidiary so they can really grow and scale from there and to maybe secondary level to have an exit because all these resources are implied everything is compounded and we don't we can really blow it up in the future if needed you can always worse because you have a random list for 100 years is much private to take into that as well. We all know park to park and gamble and their brands that were there they're amazing brands and international brands and that's a dream of every inventor every entrepreneur to have a global product that you know compels all the consumers so that's never a bad thing because I forget if it's a global brand everybody's consuming it you're making money forget it it's a real business that makes money and profit. Okay, beautiful So David thank you so much for that I want to kind of package together what we have so far and return the second or last part of the episode. So one reason Logan and Utah right in 1995 until 1997 when you're 18 until you're 20 years old you actually go on a mission with the Mormon church you got you why just get from yourself and you hold yourself to something that is bigger and more important than you right it's a community and then 1997 you go by you return back home you go to university you started you know with more the I guess the medical side and then you converted into the financial side. And as you graduated you scored your first job in 1999 with a new circle right and then you started on the cost accounting side but then you went for 20 plus years as a powerhouse for Emily's with mergers and acquisition. You saw you know the whole industry reshaping format and listen to the wants and beauty categories. In 2006, he actually bought a company with, you know, the brain own, and then ran shifts off to establish growth. And then he stayed in touch for about, you know, 14 years until you joined in 2020. But for the first 12 years, Brian grew up Grove as an innovative company until he saw that you were actually just you and I guess other changes Industry buying brands that are online brands that sell on Amazon. So he kind of added that into his model, I guess you find that it early on with the success from his business model with being an innovative company for, for that for those industries and categories. And then as you matured with your own company in your own position, Ryan was dripping in you on the back end, telling you to tag along. Finally, in 2020, you made the move right into the pandemic age. And instead of that, being a boss, was a huge shift in the launching pad for e-commerce in general. And of course, for growth inside of it. And you guys already established in the past 15 months about he said seminary deals, he deals and you got about nine partnerships going along with so you guys, of course, the category is very important to you, it's very clear that land, wellness, and beauty I guess needless to say the how helpful it is to consumers around the world is to stay healthy and well preserved. And as you look for growth and purchasing other companies beyond the fact that it hasn't been the right category has to have the right values and the right kind of, you know, it has to be natural. If it's organic, probably even better things like that. The team and whoever you're dealing with has to have, you know, the same mission, purpose, and value. So you can really go together and create unique positions, further success, and growth into the future. Did I get everything correctly so far?
David Bunch 51:21
That's a good recap. Yeah, that's great.
Yoni Mazor 51:23
I'm very good. Alright, so thank you so much for that. I learned a lot. So appreciate it. Okay, now I want to close the episode with two points. The first point will be if somebody wants to connect with you and learn more about you, where can they find you? And the last thing would be what is your message of hope and inspiration for entrepreneurs listening out there?
David Bunch 51:39
Yeah, so people can reach me a D bunch at Grove calm. So emails are a great way to reach me, you know, LinkedIn as well, you can message me on our website and be calm. Yeah, I'd love to hear from people that might be interested in talking and it could be even for advice, happy to share whatever, whatever I can to help people. And your second question, you know, one of the things that we established early on at Grove, you know, as soon as I got here is we have a mantra and we call it to create value with values. And, you know, there's a lot of ways that people can make money, you know, we can make money doing a lot of things and we felt like it, you know, it's important that we do it in the right way. And, you know, so that we have things like integrity, you know, 100% integrity, you know, that and, you know, how we treat people with respect, you know, doesn't matter what position you are out in Grove, and that includes our partners, you know, we treat people well. And we don't try to take advantage of people and so we've tried to live by that is, you know, if we can take care of the value side, you know, value is going to come along with it. And so that's really the mantra we try to live by at Grove and I think that's important. You know, people think through it, you know, you can make money doing a lot of things but do it in the right way, you know, with values and that's really, you know, the advice I like to leave.
Yoni Mazor 53:05
I love that very rarely creating value is beautiful, and it comes from a man that dedicates two years of his life just to give. That's very, very, very valuable. Beautiful. Thank you so much, David, once again, I hope everybody enjoyed it. Stay safe, and healthy. Until the next time Thank you.