Michael Duda – Investing In Brands

**Patrick O'Shaughnessy** (0:04)
Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_3** (0:24)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:47)
My guest this week is Michael Duda and the topic of our conversation is the role that brands play in business and investing.
Michael has worked on and invested in a wide range of brands including Birchbox, Casper, Harry's, Citibank, DirecTV, Google, TripAdvisor, Under Armour and Vineyard Vines. His background in advertising made this a unique and interesting conversation. Please enjoy.

**Michael Duda** (1:11)
Bullish is an early stage consumer investment firm who really focuses on the consumer and the power of the brand to create superior returns.
And probably the most telling thing I can say why I exist is we're a bunch of ad guys for the most part. I spent my many years at Deutsch and most people listening think that Deutsche, no, Donnie Deutsch and Deutsch advertising. I just remember seeing a lot of Wall Street people and reading the reports saying like, well, and he kept getting the sense that marketing is an expense. And I was like, why is that? That's wrong. It's ridiculous. And as I'm huffing and puffing about it, then I look at our business model, it's wait, they're right. Agencies like law firms get paid for the time that it takes to create ads or outputs, but no correlations to the outcomes. And I said, why isn't there a more premium marketing company that believes in its recommendations and implementations that literally put its money behind where its marketing is?
So we created this because in a publicly traded company, it just, there wasn't that kind of appetite to do it. And we decided to start helping entrepreneurs who had a chip on the shoulder in brand matter and putting in some money.

**Patrick O'Shaughnessy** (2:15)
So how does that process work? So you could pick a portfolio company or just talk about it in general terms. So you make an equity investment in a business like a standard venture capital style investment. But I think that it then comes with more. So there's sort of a creative component to what you bring to the table. Maybe just talk about the typical relationship you have with a company.

**Michael Duda** (2:32)
We invested such early stages, seed series A rounds and now pre seed, which has become a thing. But as I have to say, money is the least valuable thing we bring to the table. We bring a school of really accomplished marketers and strategists.
And to tell you about the makeup of our team, we know how to build brands. We can do marketing campaigns, we can do strategies. So it's not just the cute ads you might see on TV or on Instagram, but it's also the strategic rationale in terms of why you're targeting that person at that moment with that message. And that's what we do.

**Patrick O'Shaughnessy** (3:00)
Very cool. Let's get into it. So I'd like to spend as long as we can, almost like teaching like a masterclass here on building a brand.
So the best way to do that would be to define what the hell that word means to begin with your take on it. And then ideally, we can use as many real brands that people might know of or be aware of or can go look up as examples of the points that you'll make. But let's start at the high level. What does that even mean?

**Michael Duda** (3:20)
In the most simplest terms, the way we look at it is brand is the net result of what a brand does and what how people feel.
And so a case in point, it's like take a Coca-Cola, I'm going to guess they're 45 billion, 46 billion revenue. Their market cap is 170, 180 billion. I don't know what it is, something like that. What's the difference to that? What's the value of that Coca-Cola recipe versus like the actual Coca-Cola sales? One of the things we use in our decks is there was a quote from the chairman of Quaker Oaks in 1900 saying that, if you gave me the brand and I gave you the bricks and mortar, I will fare much better than you. It's just the power of what the Coca-Cola label says.