Why He Invests in the Factories, Not Just the Brands with Jared Stein, Co-Founder of Monogram Capital

Jared Stein (0:00)

If you have one, don't be so hasty about trying to monetize it, because they're just really hard to come by to find the next. First Mover is really powerful. Second Mover and Fast Follower is actually the winner, and the difference between those two comes down to execution.

Mike Gelb (0:15)

Meet Jared Stein. He co-founded Monogram Capital in 2014 and closed their third fund last year at $350 million. Monogram backs consumer brands like Olipop, Oakley, and Country Art Show. They also buy the factory's brands run on. When they saw beverage brands growing 100 percent a year with nowhere to produce, they built their own plant. We get into why he'd rather own the engine than the brand. When a call out like Keto or BLP1 turns into a liability, and the cautionary tale he took from watching his dad's auto parts business change hands after it sold. Here's my conversation with Jared Stein.

Jared, thank you so much for taking the time. We really appreciate it. How are you doing?

Jared Stein (0:58)

I'm doing great. Really excited to chat and likewise, appreciate you taking time, Mike.

Mike Gelb (1:04)

Hardly. Hardly. I know I've had to reschedule a couple of times, so thanks for bearing with me.

I really appreciate it. So let's talk from the very beginning. I know that you're, tell me a little about your father, and I know he was a small business owner. What were some of the lessons that you learned about business through him?

Jared Stein (1:23)

Yeah. I mean, for me, so much of the path that I went on, sometimes unknowingly, was rooted in my childhood and being around my dad and mom who had started a small business together. So my dad's name is Rick Stein.

He started a business called Rick's Auto Supply.

And effectively, that was my business 101 education in terms of everything from how you have to think about talent and hiring, especially in a much different workforce, certainly than we deal with predominantly internally at Monogram. Some of our portfolio companies have similar dynamics to how do you motivate people and sort of compensate them and think about those structures to just higher level business strategy and how do you scale from a one unit location to building systems and process and people to really institutionalize. And so I had a ringside seat along all of that. And my dad did a great job of at a very young age, probably too young, exposing us to that whole life cycle. And I distinctly remember we'd pass his competitor once a week on a certain kind of routine drive that we did. And he taught me at a young age what the middle finger looked like, so that I could pay homage to that competitor. So I learned firsthand how much you, if you're passionate about what you do, you live every part of that business. And he certainly imbued that in me at a very young age.

Mike Gelb (3:10)

How early did you understand what ownership is when it comes to actually owning a business?

Jared Stein (3:19)

I think probably well before I understood what it was conceptually, I saw what it looked like in practice, meaning I saw my dad to the positive and the negative really toil over every aspect of his business and not necessarily be able to always elevate outside of living within and operating that business. And so that to me was ownership through the lens of accountability.

And then over time, it's interesting, I took obviously quite a different path in my personal career where after spending summers in this small business, going to college, I then went to investment banking, where our clientele was Fortune 100 And so that was a very different view of ownership with a public shareholder base and the like. So it kind of evolved and I got to see these different versions of what true ownership looks like at different scales.

Mike Gelb (4:22)

That makes a lot of sense.

One more thing on your dad, I'm just kind of curious from your standpoint. I know that his auto parts business was sold to CarQuest. And there was this thinking that there was going to be this big unlock after it was acquired, but it never quite happened that way. What did that teach you about M&A and capital and incentives and stewardship?

Jared Stein (4:55)

So, I'll give you a quick anecdote and then I'll come back to the core of the question.

Interestingly, and you and I did not talk about this, so this is totally fortuitous, but my mom and dad went back to Chicago this week. So, they got back two days ago and they went to go visit his old store. And I said, dad, what was it like?