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A different type of funding and a different type of “no”

Jason Yeh
December 8, 2020
55
 MIN
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Listen on Apple Podcasts
New
December 8, 2020
55
 MIN

A different type of funding and a different type of “no”

Lindsay McCormick, founder of Bite Toothpaste Bits, wants you to know there are alternatives to taking venture capital. She created a multimillion dollar business and funded its growth almost entirely through customer purchases. This show is an honest discussion about the alternatives to venture capital. You’ll learn why even though Lindsay’s email inbox is full of investment offers, she turns them away.

Episode Summary

Lindsay McCormick, founder of Bite Toothpaste Bits, wants you to know there are alternatives to taking venture capital. She created a multimillion dollar business and funded its growth almost entirely through customer purchases. This show is an honest discussion about the alternatives to venture capital. You’ll learn why even though Lindsay’s email inbox is full of investment offers, she turns them away.

Topics Discussed

  • Lindsay’s ah-ha moment behind Bite [6:43]
  • The drive to produce Bite [9:33]
  • How she initially got the cash to buy equipment, like a tableting machine [13:48]
  • What she already knew about venture capital and how it influenced her decisions [17:55]
  • The point that Bite started to take off and [21:17]
  • Problems that come with success [ 22:37]
  • Saying “no” on Shark Tank [34:39]
  • Advice Lindsay would give to founders based on her experience starting a company and thinking about funding her business [38:46]
  • Charities she supports through Bite like Beauty 2 the Streetz  [40:17]
  • Debrief with my producer, Olivia, where go into detail about the different funding decisions Lindsay made [43:06]

Resources Mentioned

Calls-to-Action

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Lindsay McCormick
Bite
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Jason Yeh (host)
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If you’re fundraising, make sure you send your materials via a document sharing tool. Even if they weren’t our presenting sponsor, we’d still recommend you use DocSend - www.docsend.com

Episode Transcript

Lindsay: [00:00:00] [coin spinning] Everybody takes money and that's for a very good reason. It's helpful and it works. Right. I just try to also be that one person in the room being like, but maybe you should think about it if you really need it. Yeah.

Jason (host): [00:00:19] This is Funded. A Show where founders who raised millions in venture capital share the gritty side of what it actually took to get that money in the bank. I'm Jason Yeh, your host, not too long ago, I was trying to get my ideas funded. And back in the day, I was a VC listening to founders, pitch me for money.

This is a show called Funded. So as you can imagine, we're pretty pro fundraising around here. But today's guest is going to show you that not all investment needs to come from VCs, Lindsay McCormick, the founder and CEO of Bite has managed to build a successful toothpaste brand focused on sustainability without a dime of venture capital.

So if you're sitting on a big idea that needs funding to get started, this is your chance to think about different approaches. Because there might be other ways. Lindsay is proof of that in past episodes. We've talked about what it feels like to get a million dollar term sheet, but Lindsay says the freedom she feels without one is worth more.

In fact, it's the only way she's been able to build a thriving business while following strongly held principles. She developed long before she ever launched her. Okay.

Lindsay: [00:01:36] I think, uh, if there's a trait that kind of sums up like who I was then and who I am today, it would be the fact that I went like strict vegetarian at age eight. And my parents are not vegetarian. No, my family was vegetarian, but I saw a Bambi and a little mermaid. And I was like, Oh, absolutely not. And I basically had just decided that that's, that's how I'm going to live my life.

And my parents were incredibly supportive. Um, and I think like back then, You know, little kids would, they would be like, well, how does that make a difference? You're not making a difference, but I always like, from the very beginning, felt like every single person can make a difference. And like, that was my way of making a difference.

And then just kind of all throughout, um, you know, My life growing up up until now was kind of just looking at things and trying to decide how I felt if they were right or wrong and then living my life according to that. And, um, I like it was, I was really competitive growing up. I was on the soccer team and I then was a competitive snowboarder and then actually a snowboard instructor and a surfer instructor.

So like sports have always been a huge part of my life. Um, And I think especially, uh, more like action sports, adventure, sports, where soccer was kind of the only team sport, the goalkeeper. And if you know anything about soccer, that's like the least team part of the team, you know? Um, but I think, you know, just having it, the drive to especially like be out in nature and to kind of compete against yourself in snowboarding and surfing and rock climbing and things like that.

Uh, I definitely think had a big impact on the path that I've gone. Yeah. Basically, you know, I grew up right outside DC and my dad worked for the Washington post and my mom was like, funny enough. She was actually a marketing teacher, a high school marketing teacher, and she taught entrepreneurship. And it's so funny because when I was in high school, like I partied a lot.

I like gotten a lot of trouble and, but I always, you know, I also went to like the, the peace protests after 9/11 in DC. And like, I like listened to a lot of Phish and Grateful Dead. And like, to me, entrepreneurship was just. Nothing on my radar at, at all. Like it was not anything I wanted to do or be part of.

Um, I very much wanted to, I mean, my first job actually was teaching goalkeeping to little kids and then like, and then my first job out of college was a surf instructor and a snowboard instructor. And so I very much loved kind of working in. Sports and outside. And, uh, and so it was definitely a, uh, a different, a different path that I ended up going.

Jason (host): [00:04:17] Totally. And it sounds like, um, post-college a lot of the things that you focused on were very like free flowing and, you know, controlled by you. Um, is that something that I'm. Uh, erroneously picking up on 

It's very true, very true. And like being a surf instructor. And I always caveat that with being like, I was also a bartender and this and that cause like, you can't live off of, you know, the $40 a day you make doing that.

Uh, but it never, like money was never important to me. Success was never important to me. It was always very much just, um, You know, being happy and being active. And, uh, and then eventually as I got older, there was more of kind of like a search for purpose. Um, I ended up when I was 27. I, um, like working as a surf and snowboard instructor I had the Falls

and Spring's off. And so a lot of times I would travel. And so then when I was 27, I think I was just like, you know what? I don't quite know what I want to do with my life. This is very fun. Um, but I don't want to do this forever. I don't, you know, it's not for me forever. And like what, what's the next step here?

And so I didn't own much, so it wasn't hard to do this, but I basically gave everything away that I owned, like literally everything, including selling my car. And then I went and just traveled the world for a year and lived out of a backpack. And so I went to, I like started in Alaska and then flew over to Europe and then kind of went all over Europe and then, uh, India, Nepal, like kind of all over the place and, uh, came back and was like, I want to, um, my

college degree was in communications, which I hadn't used at that point. And I was like, I want to work in TV. I want to make like, with the eventual goal of making like nature, documentaries and travel documentaries, and I'm like, this is what I'm going to come back and what I want to do. And that's actually what I was doing before I started Bite.

Sounds like nothing you did, uh, Was like, I want to get rich. I want, I want to have the biggest title, you know, I want to be on that rat race. Um, I guess that starting Bite was no different. Um, can we talk a little bit about starting Bite? Um, and you know, I'm sure you've shared the founding story a little bit, um, but we'll quickly transition from there to just thinking about.

Um, after you started Bite, how you thought about getting it off the ground? 

Lindsay: [00:06:42] Yeah, absolutely. So I was working, um, as a TV producer on the show house hunters, which is a show about couples buying new houses on HDTV. And I, I loved it. It was so fun. I liked the company I was working with. Like, it was great.

Um, and I was traveling all the time, which was kind of my dream and just assembling my tool belt. Uh, in production. So I could one day basically try to make my own documentaries. And, um, you know, when you travel for shoots, you fly somewhere for just three or four days. So it's always carry on only. And like, you're you like land you're on the ground, you're you're working and then like you leave, you know?

So, um, I was going through those little toothpaste tubes, which is like such a random thing to get super like agro about, but I was like, I feel like I'm throwing out one of these toothpaste tubes every single week. Like every shoot I'm going through one of these things and everything else I had gotten down to.

I mean, obviously I've always been obsessed with sustainability and, and, you know, making sustainable choices. And I was like, you know, I can refill my, my shampoo. I can refill my conditioner, like little travel things. And I was like, but this shampoo thing is killing me or the toothpaste thing is killing me.

And so I started looking into alternatives and. Everything like tooth powder existed. Uh, it's actually like that's the first form of, uh, toothpaste there ever was or care there ever was. And, um, toothpaste tablets had also existed, but they also came in plastic. So I was like, well, that doesn't really help that what I'm trying to do.

And so I decided to start making my own and it was okay. Absolutely a hobby. Um, I, I figured, you know, um, it would be me and like my parents and some of my hippie friends who would use it, like I did not in any way think that it would end up being. You know what it is today and, uh, because it was like literally for me while I was traveling for work.

Um, and then I also knew that my parents would want to use it to support me. And, you know, I wanted to make sure that I use like the cleanest, most effective ingredients that I could possibly find. And so through that, I ended up taking, you know, online chemistry courses to understand what toothpaste actually does and like what's happening and why we need it.

And talking to dentists and dental hygienists and like spending way too much time researching ingredients. Um, and then finally coming up with, uh, what we, what we basically used today. 

Jason (host): [00:09:03] Amazing. So, um, before we get too far along, um, and we start talking about, you know, hockey stick success as you started doing this.

And then this is like you said, this is a hobby, but certainly a passion based hobby. Um, you know, you've been obsessed with sustainability. Um, can you talk a little bit about what that felt like being able to work on a serious passion of yours before it was anything, um, You know, just toiling away. Um, what sort of drove you to keep going?

Lindsay: [00:09:35] I love that question. And I actually think about this so much. Like there was, it, it felt like I was making art and I didn't feel rushed at all. I didn't feel any pressure, uh, because I didn't set out to make this a business. It was just this like thing that I loved working on, you know? Uh, so I. Like very much, uh, like it's, I think it's the best way to start a company.

I think I'm like stuttering right now. He just, cause it was my favorite moment in time, but it's just like, it was it's awesome. And so that's one of the things that I really tell people, um, is like to find something that feels like you're creating art and to do that, because then it's like, and I'm not saying it wasn't hard.

It was incredibly hard. And I was doing this on top of my full-time job, so I was exhausted. Um, but it's just like, if, if I came up to a problem that was too hard to solve that I was like hitting my head against the wall. I would just like walk away. And I would like watch like a documentary, like plastic ocean or something.

And it would like, remind me like why I was doing this. And then I would go back and it was just, it was like, I would have the music on, I'd be in my lab, which was really just our dining room. But I took over with a bunch of lab equipment and I would just be like barefoot listening to music and playing with powders.

And it was like such a beautiful time. And you know, now obviously, And then, you know, when you have a company, things change and it's, it's a different type of awesome now. Like I wouldn't, you know, I love where I am now, but I look back and I'm like, Oh my God, that was great. And so I think, you know, it's so hard to start a company, so, and there's so much that you're going to be up against.

So like, if you can find the thing that feels like magic, it's just going to help you so much more. 

Jason (host): [00:11:30] That's ,that's amazing. And, um, you know, uh, I'm going to go a little bit off script and jump around and maybe come to a punchline before people thought we were. But, um, you know, we're going to talk about how you've never taken venture capital and you know, we're on a podcast called funded.

Um, but I want, wanna bring that up because. What you just talked about is really important. And the content of building a successful business and even raising venture capital, you know, we are, we are on zoom right now. We're not in the same room. And in fact, listeners should know that at the beginning, I asked you to turn on your camera and you said that, uh, you couldn't because you're in a closet, which is an amazing way to record a podcast.

And I actually appreciate you for that, but I bring that up because as you. We're talking about or answering that question as you were answering that question, I could kind of sense the ear to ear smile, you know, before you even started talking. Um, and it's just, it's just so great to hear and see. Um, sometimes when I'm coaching founders, um, I really talk to them about when you're describing your company and essentially pitching your business, like, it should feel like you're talking about your favorite thing.

Like, just like, you know, the thing that you love. And when you talk about one of those things that you love, you just. You really hang on every word and it's, it's hard for you to tell it's hard for you to decide where to start. Cause it's all just so exciting to you. Um, and anyway, so I just wanted to point that out that I, you know, I love hearing that from you and it's, um, it's honestly, no surprise that given that's the way you feel about Bite, that you've had, um, many opportunities as, as we'll learn, I think many opportunities to say no to venture capital. So, um, anyways, back to the timeline, um, after I totally messed up my interview script, um, I want to ask you a little bit about as you're messing around with different formulas and learning about this on your own,

how are you paying for this? I get it probably wasn't free to buy some of the ingredients in this, some of that early machinery. So how did you think about paying for the business? 

Lindsay: [00:13:49] Actually, this brings us to, I guess like my first quote unquote investor. And this is what I tell people too was my full-time job.

So, like I saw my full-time job as like a way to make money to fund Bite at, you know, once it started, once I started getting obsessed and it was definitely, um, it was almost like falling into it because at first I was like, okay, I want to make this toothpaste. Then I started taking like all my chemistry courses, but then,

I didn't want to spend a lot of money. Like, I, I remember there's this it's a tableting press. It was a thousand dollars. And I was just like, that's absurd. Like this is a hobby, you know, it's like, I'm not spending a thousand dollars in a fricking tablet press. So I was like, okay, I'm going to like figure out a way to make this without a tablet.

So I'm going to try to, I bought like pastry equipment from a pastry store and I was trying to pipe out, uh, toothpaste balls basically, and bake them in the oven and see if I could get them to harden. And like, I tried all these different ways to do this without having to spend my money on a thousand dollar tableting machine.

Right. Cause I was like, this is supposed to be a hobby. And so it was actually, when I realized I was like this. Yeah, I can't make this in a toaster oven. I'm going to need to make this to be a tablet that I bought the machine. And I was like, well, I want to just make my money back on this. Like I used my savings.

Like I, uh, all in all starting Bite, uh, cost me $6,000. So, and I was buying all of these like different, like, uh, Ingredients, which are very like there. And I was using natural ingredients. So these were things that you could find at the grocery store. Like I was using xylitol and urethra or like a Whole Foods, like, so I will tell you with real tall, like these things that were very, um, inexpensive to buy and to, to play with.

And, uh, I just kept trying different things. Like if by the end of it, I think I had an entire table full of Mason jars of all these different powders that I had. But it was, you know, by the time I bought the thousand dollar machine, I was like, okay. My goal will be to make my money back. So I can start like an Etsy store.

Um, and then after doing a little bit more research that's when I learned about Shopify and I was like, I'll start like an Etsy store and a Shopify store. And I'll just sell like this weird toothpaste stuff online until I make the money back from this. And so that's, that's like how it all started and, um, yeah, it was, uh, definitely random.

So I teased the fact that Lindsay doesn't end up taking venture capital to grow bite into a monster business. But how, exactly? More after the break.

Most of my days, one-on-one with founders, helping them understand strategies that make a difference in fundraising. When super important tip, I always stress with founders is to make sure they send their decks and materials using a document sharing tool. And for that, I always recommend DocSend. DocSend, lets you know, what's happening with your deck after you send it along with real-time analytics and notifications.

Did the VCs actually open it? What slides did they spend the most time on? And if you think it got shared with the wrong people, or maybe you made a mistake and sent it to quickly, DocSend lets you control access and make updates to content even after sending. Sign up for a free two week trial at DocSend.com/funded.

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Some listeners might guess that Lindsay didn't raise venture capital because she didn't know it was an option, but she says it's actually the reverse. It was more like she knew a little too much about it.

Well, so my boyfriend who's also my co-founder. He, uh, is an entrepreneur and he's had businesses before with, um, with, in tech with, uh, venture capital. And so I was familiar with it in that way. Um, and I really think that venture capital makes a lot of sense in that area. Um, but for a physical product, uh, you know, commonly referred to as CPG, I feel like it just didn't really make sense.

Like A,  I'm an outsider. I didn't even know to think that I could raise money for this. Right. And then B. I wouldn't have wanted to anyway, and I can get into that. Uh, why, but also I think, you know, for physical products, it, it's just a totally different. Uh, business model. Then when you look at something like, um, you know, a tech startup, where with tech, it's kind of like, you don't have a product until it's basically like built.

And these, you know, these people are highly skilled. They make a lot of money to code and like to do these things and you need to be able to pay and like, get that done. Um, and when you have a physical product, especially if you're making it yourself in your living room, which is literally what I was doing.

Um, you don't need that money, you know, I, and so for me, it wasn't, it was more like when I sold something on Shopify or on Etsy, it was in my account two days later. So, you know, I made something, I sold it, the money was in the account. I made something, I sold it, the money was in the account. And so, and because I was also very much treating this like a hobby, um, and I didn't think that there was a market I really liked when, and we can get into when the video went viral, but like, I would have never, I didn't do any market research.

Um, I have been heavily involved in like the vegan, uh, sustainable zero waste space for so long, but like, it didn't, it didn't seem to me at the time that it was going to like all of a sudden take off and grow, you know, it kind of was all business as usual over there has always been very niche. Uh, and so for me, I just kind of felt like I would have this small little online business and maybe one day I'd be able to get it into, you know, local health food stores. And maybe one day I could, you know, the big deal would be getting it into like Whole Foods or something, you know? So it definitely, um, the idea of raising a bunch of money making this product way faster or something, and then bringing it out to people faster and bigger and better just wasn't something that was like, even that I thought was even remotely on the radar at that time.

Right. 

Jason (host): [00:20:22] So, um, No. I love the fact that you, it's not that you didn't know venture capital existed, but, um, you know, you just didn't feel like you wanted to, or you needed to it's, um, and I, and I think you're right, right. Like, uh, With CPG, consumer packaged goods and physical products, you can take a small amount of investment to bring that product to life and see if anyone will buy it.

Um, it's different than call it software development where a lot of, uh, high paying engineers need to be put to work, to create the first product before you can even generate revenue. Um, but you know, I'd love to kind of talk. A little bit about what the tipping point was for bite and then maybe about.

Some of the other sort of draws for bringing in more capital because companies at different stages need different, um, have different needs in terms of funding. 

Lindsay: [00:21:17] Yeah, absolutely. So for us, so basically I had bite, it was this little baby bird of a company that I was, you know, giving all of this like tender love and care.

And all of a sudden we, like I had made some videos, I had made some, I put some photos up. I been featured by since vegan and zero waste bloggers. And one video in particular got picked up by Women's Health. And it got shared on Facebook and just went insanely viral. And so this was back when I was still making it in my living room.

Like I was hand like labeling every single bottle and the video just went, it went so crazy. And I knew so little about Shopify. I literally didn't know how to turn off to show that I was out of stock. I was just like, I have no idea. So we sold, like we just, we sold insane amount. We had 2, 2 million views within like a day and a half.

Um, we had done $200,000 in sales. Then we, it was me, uh, about $200,000 in sales and I had no product. And so at this point, my boyfriend, who is my co-founder, uh, you know, he's an entrepreneur, his background's in design. He had redone the site for my birthday. So what was at first this like really crappy Shopify site with iPhone photos became like something that was, it was awesome.

It was professionally designed. So people were going to a professionally designed site, but I was still making it in my living room. So I was sold out for two months. Um, and I had to find a manufacturer, uh, very fast. So I would say, you know, at that point that would've been probably when people would have taken capital possibly.

Um, but for me, I had a ton of money in the bank, but I still had all of these problems. And so I wasn't thinking like, let's get more money. I was thinking like, I need to figure out how to get my product made. Um, and kind of looking back, you know, I am a first-time founder and I, I, you know, raising is, is we can get more kind of into that, but I'm not sure if I'd want to do it, but I would say if you're someone who does want to raise it's, as soon as you kind of feel that, okay, there's a, you know, whatever it's product market fit.

It's like, that would be a good time to raise it at the same point. You're not at, that's also the time that you don't really need it. Right? Because now I have all this. My a bank account, and I'm trying to figure out what to do.

Jason (host): [00:23:37] Let's spend more time on that. I'm curious, you know, what did that feel like? So it sounds like you had money to spend, um, But a lot of different problems. Um, you know, some people would say talk to venture capitalists because they can tell you how to buy your way out of problems. What was some of the advice you were giving?

What was going through your head? 

Lindsay: [00:23:56] Yeah, so we ended up doing a small, uh, friends and family round of just like literally our roommates that were living with us. Like, living at the time with, at the time, um, who are just really smart people who we wanted along for the ride. Um, it was a few hundred thousand dollars and it's, it's funny.

We actually haven't even touched it, but we love them and they've helped us out a lot. Um, just with general day-to-day advice. Um, but that was when I say friends and family, I mean like actual, friends, um, that we have known for years. And I think, I didn't really know that the term friends and family is sometimes just used for like a smaller investment.

And you're like, wait, no, but it really should be friends and family. Um, and so, you know, at that point, we, we now have, uh, you know, plenty of money in the bank. Um, but and the idea of  venture capital is being floated around, um, not by our friends, but like between my boyfriend and I trying to figure out, like, is this something that we want to do?

Do we want to just like blow this thing up? Or what do we want to do? And so I had to get really familiar, like quickly with like, what, what is this landscape? And like, what would this mean? You know? Um, and for me it was. Um, not something that I, I loved the idea, cause I very quickly kind of realized, you know, you could really like, um, the venture capitalists that you're talking to, but it's, it's kind of like all these different incentives because they're beholden to their LPs who are ballooned to their bottom line.

So it's like, you know, where, where is, where do you really stand? Um, and for us it was like, I, I like how we're doing these things. I like building a sustainable business, not just sustainable eco-friendly but like a sustainable, as in you don't turn our balance sheet upside down where we just start shoving money out and like buying our way out of problems, like what you said.

And I was like, that doesn't feel right to me. I just don't for me, this isn't something it's, it's something that I love to do. And it's not something that I just want to like, give it a shot and see how it, you know, be like, Oh, let's just like, Take a bunch of money and try to make this work. And if not, then we'll all just like, shut it down in a few years and, you know, write it off, like, you know, venture capital, you know, write it off as a tax thing or whatever.

And then like move on. It's like, no, this is like my dream. It's my baby. It's my passion. Um, I, I want to be able to do it the way that I want to do it. 

Jason (host): [00:26:24] I think it's worth saying that, um, you know, at that inflection point, when you have a real, you have real brand recognition, you have momentum and you do have things like, um, you know, working capital problems and suppliers that you need to pay.

And then the allure, which is where some CBG companies. And, and why they take venture capital is the, I think the allure is to spend on marketing, right? And, um, you had incredible organic reach with that viral video and, and, and beautiful product and a beautiful website. Um, but some people would take venture capital to just own the space and, and own own media around Bite and sustainability, et cetera.

So it's. It's not like there wasn't logical reasons to go after it. I mean, um, did you ever have conversations with venture capitalist or was it more just internal strategic conversations? 

Lindsay: [00:27:25] We did because at first, like we've, um, we get emails still all the time. Um, and so at first, when I didn't know how I felt about it, I was like, let's take some meetings.

And then I sat in there and I was like, yeah, I will never, I, you know, maybe I'll eat my words in a few years. I don't freaking know probably like 99% no, but like I just went in there and I was like, Oh no, this is not going to be this. I'm not doing this. Um, and so that was like the end of even discussing that situation.

Jason (host): [00:27:55] Well, I'm going to interrupt you and say, Lindsay, and I think the problem is, and you may not know this, but the problem is when venture capitalists here, no, they get more excited. So all you're doing is setting yourself up for more emails in your inbox. Like Lindsay, we just heard you on Funded. I know you said no, but we love to talk to you. 

Lindsay: [00:28:17] And I don't think venture capitalists are bad.

I really don't. And I don't, and I totally understand why they are, why they are so incredibly necessary and they fund really important businesses. But for, for us, it's like kind of like, here are some principles that I offer. But that I work off of. Right? And like, I always, when I give this advice, I'm like, time will tell, right?

Like, we're figuring this out. We're all figuring this out. And like, yeah, we have hockey stick growth. It doesn't no one knows how it's all going to pan out in the end. Right. Like that's just the way this all goes, but it's like, I can only do what I think is right. And here's like, what? I think, I think that if I raised, if I raised money, I would have to be showing this,

you know, insane growth to impress these investors. Who've given us a bunch of money that I'm just not interested in doing. I'm interested in growing a healthy company with a healthy company, with a, with a healthy customer base. And I not too interested in owning the entire space or brand recognition.

What I really want to do is make exceptional products that, that like the exact need for our customer. And by doing that, I know they'll talk about us. And like, I think that that gets so lost. Like there's so many products right now that are getting venture backed and like, I try them, I try all of the products and I'm like, this is a terrible product.

It's like, you have a leaky bucket. You now have a leaky bucket. You're spending so much money and, you know, and Bite wasn't good. When I first started, cause I was making in my living room. I thought it was great, but it didn't taste very, like as good as like commercial toothpaste and just kind of figuring out how to fix things quickly.

But like for me, it's, you know, I kind of break down. Like first principles and then something that's really important to me since forever is that I just don't want to ever make stuff just to make stuff. We have way too much stuff in this world. Um, and I think that there could be pressure to, you know, create these new products, not because of, um, you know, uh, a need for it, but just like the bottom line.

And it's like, That just goes against everything. And so kind of with all of those things, and then just understanding, like we have the money in the bank. I don't know if it's going to work, but I do know the best shot is by doing it the way that I think is right. And so that's what I've just been trying to do the whole time.

Jason (host): [00:30:29] No, that, that sounds amazing. Um, and I will say this, it may sound like I don't, it may sound confusing that I would bring somebody on that, you know, has been avoiding venture capital and that it like is a little bit inconsistent with the rest of these episodes and some of the things that we have as takeaways on funded.

But, um, what I would say is that for myself as a venture capitalist, and even as an advisor to companies, and if you look at the broader ecosystem of top venture capitalists, I think. With a hundred percent consistency, you will hear them at some point, talk about how they try to convince founders, not to venture capital.

I don't believe by and large venture capital is a bloodsucking industry. I wouldn't spend so much time in it if I did. Um, and part of the vetting process really is trying to. Make sure that the company needs venture capital or should take venture capital. So that's why I thought, you know, when we had our initial conversation, that it was such an important one to have, because this is the side of one of the sides of funding that people need to know about.

And, um, a success, a success story like bite, um, which has been largely, um, customer funded. The, the term that I wanted to drop, uh, Is just exciting to hear and, you know, our tagline of hearing, how founders raised millions. Um, I think people that were working on this, uh, this prepping for this episode before were like, Oh, it doesn't really fit.

But, uh, without even sharing numbers, I would say, I would bet that you do fit that, that profile, um, just from a different source of capital. 

Lindsay: [00:32:15] I know. And it's so funny too. Cause I was like, this is, um, first of all, thanks for having me on and I'm like going against the entire podcast, but I do think it's,

everybody takes money and that's for a very good reason it's helpful and it works right. And I think that what I just try to do, especially, um, you know, because that is just such a well-known fact. I just try to also be that one person in the room being like but maybe you should think about it if you really need it, you know?

And so that's why, that's why it's so vocal about it.

Jason (host): [00:32:54] After this quick message, we talk about a normally scary topic for entrepreneurs.

Sometimes when I'm a huge fan of a product, I go crazy person and network my brains out to try to chat with the founder. I did that with Mike Adams, the founder of this amazing zoom enhancement tool called Grain to find out who his other users are. And I was a little surprised that one of the really relevant use cases. 

Mike: [00:33:22] We pulled all of our users.

We had, um, three segments that popped to the top where they were like 80% PMS score, meaning like 80% of the people in these buckets were like, I'd be very disappointed if you took Grain away. So one of those was researchers. One of those was marketers. And then one of those was founders. Founders were like, I need this.

Cause they ended up kind of being everything. Founders are like, they're the researcher, they're the marketer, they're the fundraiser. And so in the context of fundraising, I use grain to like improve my performance. It's like game film. 

Jason (host): [00:34:01] If you ever take notes on calls or wish you could save magical zoom moments.

You got to try out grain to get started for free. Go to grain.co/funded that's grain as in whole grain oats. Okay. Back to the show.

"No's" are hard to receive as an entrepreneur, but it turns out they're also hard to give, especially when your business could use the extra cash. Lindsay tells us about the hardest no she's ever had to give. And it might be to someone you've heard of. 

Lindsay: [00:34:39] I would say the hardest one was saying no to Mark Cuban on Shark Tank.

Um, that was yeah, incredibly stressful like, it was so cause A, it's Mark Cuban. He's awesome. And B, it was like a very public setting and trying to figure out how I, how like it, it was just so nerve wracking, obviously. 

Jason (host): [00:35:04] Actually now I'm like, I forgot that you were on Shark Tank. Um, can we, can we just rewind two seconds and tell us, maybe tell us a little bit about how Shark Tank came to be and why you even decided to do it.

Lindsay: [00:35:18] Totally. So when Bite first went viral in 2018, we were reached out to, um, by the shark tank, casting producers. And so that was like in the middle of that insanity where I was just like, I don't have product, like I'm freaking out. And so I was like, I absolutely cannot do this, but let's talk next year. And so they were like, cool, we'll let you know when we're casting again.

So then the following year. Asher and I auditioned and we got, we got approved. We got on. And we, then we shot like here in LA. So they filmed right here. It was super helpful. And I almost think that anybody who's raising or not raising should think, like if I have to stand up on a stage in front of America and say my business and like come out with my numbers, like what,

what is it like, what is it, you know, and make sure that, you know, that and, and everything. So that was, that was, um, A really helpful process, uh, to, to kind of form more of who I am as a CEO. Right. Cause I'm also learning how to do that. So figuring out how to be a CEO, knowing these are the things that I need to know.

And, um, and then going up there and doing that, and I mean, Shark Tank is it's. It's legit. Like you you're up there, you get one shot. And I remember I like froze for a second and I was just like, no, I was like, this is not happening. Uh, and, and then it was, um, and then you really don't know, like when your episode's going to air, like you get like a little bit of a heads up and you just hope to God, you have enough stock.

Um, and, and that's it. 

Jason (host): [00:36:51] And like, in the middle of the episode, I meant. I'm going to take a guess here, but, um, it seems like you were like there's little chance that we'll take a deal because it was just like kind of free marketing. Right. Um, how, how is like hearing from someone like as respected as Mark Cuban, you know, trying to convince you to take money.

Lindsay: [00:37:13] I know he's great. So I, I went on and, you know, after talking about how much I wouldn't take money from anybody I did, I was like, if we go on Shark Tank, there would be a shark that I was, I was interested in at the time, which was Herjavec, uh, specifically because he had, um, he had invested in eco-friendly products and that he knew subscription businesses from Pup Box.

Oh. And before I went on shark tank, I literally had whiteboards of all the sharks and I wrote all of their investments. I knew, I knew them, you know, and I was like, okay, this is who I want this who I don't want. This is how much I'll go up to. Um, and so by the time I get on stage, it was just. I knew what I was going to be doing.

And so as soon as Robert was out, I was like, well, there'll be no deal at this point. Um, and so it was actually, Kevin was also interested, so Kevin and Mark, but I was like, no way. Uh, but so to Mark, I wanted to, but the deal was just, um, way too much equity, uh, in my opinion, for the amount that he was offering. 

Jason (host): [00:38:12] But they sort of force you to almost negotiate.

In front of them, right. Live on man. Oh yeah. 

Lindsay: [00:38:18] And for someone who's like, not cool, like not okay, like that was hard, you know, so, and going back and forth and just being like, well, what about this? And would you take advisor shares and would you do this or would you add like when we got to where we were, we had still gotten him down, but I was just like, this is this isn't, this is not, we're not there, and it would have been a deal Mark.

It would have been 

Jason (host): [00:38:41] Mark Cuban. If you're listening. 

Lindsay: [00:38:44] We still love, you 

Jason (host): [00:38:46] No, that's amazing. And, um, looking back on it, um, I love asking people what is sort of the biggest lesson you've learned about fundraising and obviously you've never raised outside capital, but you've certainly thought a lot about it and built a business, um, in a space that other people take.

Money from. So if you could share a little bit about that, maybe something you would have told a younger version of yourself that would have made this feel better or other entrepreneurs. Um, I think that'd be awesome to hear. 

Lindsay: [00:39:14] Yeah. So I can say maybe like three different types of advice. Like one, some advice that I got, uh, when I was considering was when I was trying to figure out if we should take money, the advice that I consistently got was like, take as much as you can, as fast as you can.

Right? Like that was kind of like the, the general mantra that I was hearing. And I think my edit to that would be kind of just like life take as much as you need and nothing more. Right. So I think if you are going to raise tickets, take as much as you need and nothing more. And then, you know, my personal mantra is don't take it if you don't have to.

Jason (host): [00:39:52] Well, we're going to start wrapping this up a little bit, but I'd. And I'd love to hear some of the causes that you support at Bite. And I know, I mean, obviously Bite as a sustainability company, but, um, you know, not everyone will know that you. I know you volunteer for the homeless in LA, um, would just love to give you a platform or a chance to talk about some of the causes that you support, um, through your work at Bite.

Lindsay: [00:40:16] Oh, thanks. I love that. So one of the coolest things about having a company is that you can put money and put your time behind things that you believe in that maybe you didn't have time or the money to before. So, uh, when COVID first hit, I think everybody was kind of, like shook. Right. We didn't have any hand sanitizer.

There was no toilet paper, no one knew what to do. We were all kind of stunned. And even as a company, uh, like sales are fine. Everyone needs toothpaste, but we didn't know how to, to help and what we could do. Um, but we know how to manufacture specifically in-house um, and so we started making hand sanitizer and donating it to the homeless population here in LA.

And that's how we got involved with, um, this woman named Shirley from Beauty 2 the Streetz. Who goes out on skid row every Sunday or Saturday, and sometimes Sundays as well, uh, to serve the homeless there, which has just been really amazing. And I've, I've personally gotten, uh, very involved with, uh, her and her organization, uh, through COVID, which has been great.

Um, but we also do a lot of, you know, for the wildfires of like, this is like, it's so cool. Right. Because like something happens and I'm like, Oh my God, if we could just do a dollar from every sale, goes to the like wildlife relief fund in Australia, you know, and we were able to put money towards team trees and we're able to kind of throw this money around where we feel is most helpful.

Um, and a tradition that we just started here is that every birthday. So we have like different. Animals that we have like adopted and looks like it's not actual animals that you adopt. You like we pay every month for a cow at Gentle Barn. Right. And so we've been doing that for a long time, but one tradition that we're going to start at bite is that for everyone's birthday, you get to choose, uh, an animal from the world wildlife fund and adopt like symbolically adopt it, and we're going to have them up in our office of everybody, the animal. And like, I'm hoping, you know, years into this company, this company will just have like walls of animals that we've symbolically adopted. Um, yeah. So like, those are the things like it makes it so fun.

Jason (host): [00:42:15] Well, Lindsay, um, founder and CEO of Bite Toothpaste. Thanks so much for spending time with us. This has been an amazing conversation. Um, I'm going to sign up for a subscription very soon. Thank you so much. 

Thanks, Jason. And thanks for having me on

Lindsay was sitting on some really cool news when we spoke and now we can share it. Bite, just launched a new holiday flavor, champagne, and she says there's more where that came from.

Lindsay: [00:42:47] Oh, yeah. I wanted to do last year, like a gingerbread that got shot down and sometimes I'll like, get really excited about it and the team will be like, can we really like, can you really think about this? Like, Aw,

Jason (host): [00:43:06] turns out the only other person with that level of passion for toothpaste. Is my producer, Olivia.

Okay. So, uh, yeah. Let's talk about this conversation with Lindsay. What did what'd you think about the conversation with Lindsay and in a company of creating stuff that I think you really like? 

Olivia: [00:43:25] Yes. Um, yeah, just a quick note for listeners. I love toothpaste. Um, I'm. Love. One of my hobbies is to try new toothpaste out.

So of course I love this interview. Um, but it was very enlightening because I think, um, you know, listening to the other interviews we've done, I've been like, so team VC, and this was really, um, enlightening to see. She has such a strong conviction about not taking VC for her company. And it was really interesting to hear the counter argument to a lot of the enthusiasm.

Um, we had heard before. 

Jason (host): [00:44:04] Totally. And I, I do think it really rounds out the perspective, which is, um, something like I mentioned in the conversation with Lindsay that I think all investors have, you know, we, I. It may be this perception that investors are just trying to jam money wherever they can put it.

Um, but it's, it's very true. What I said, I think, um, investors should and do encourage entrepreneurs not to take capital. 

Olivia: [00:44:28] Yeah. Okay. I was wondering about that, because you said as a VC, you did that a lot that you tried to convince people not to take money. I don't understand aren't VCs like in the business of giving people money.

Tell me about that calculus. 

Jason (host): [00:44:46] Totally. I mean, I think there are a couple of things that drive that. And the first is that, um, while venture capitalists are running a business and do needs to quote unquote, "put money to work" and like actually invest the money that has been given to them. Um, They're not in the business of forcing people to get on a really, really difficult path and, um, drive them to hardships, which in some cases taking venture capital is so one, I just think venture capitalists are by and large, good people that, you know, don't try to like force these things on entrepreneurs.

And the second thing is that it's. It's almost a test. It's both a test and like just great advice. So, um, if I see a business that is humming along and doing well and can actually like continue to grow on its own, I think the founder will be very happy to continue growing that business at the pace that he or she is, is doing it at.

And I kind of think it's also a great test because, um, venture capitalists want people to almost take that bait. It's like, if you can grow a business without venture capital and you are encouraged and influenced by this, I'm suggesting that you don't take venture capital, then it's actually better for both sides if someone listens to that, because VCs, um, want to make sure that they're backing people that understand. The commitment that taking venture capital is and are in it for the long haul. So, um, that's the multitude of reasons that I think VCs, including myself, try to encourage founders, not to take VC.

Olivia: [00:46:27] Interesting. Um, meanwhile, you said that her passion would take her super far if she ever did want to pitch. 

Jason (host): [00:46:36] Totally. Um, and it was. I mean, you could, you could hear it in the conversation. She even like, kind of like lost her footing and her like breath. When she just started talking about how much she loved what she was doing outside of how big the business was.

And. It is, it is one of the strongest things that people investors look for when they're initially meeting with founders, trying to figure out why entrepreneurs are working on a business and how committed they are to it. Um, how passionate they are about it, because it's really that passion and excitement for the underlying business itself that helps founders get through really, really difficult times when things aren't working.

When things were really difficult for Lindsay, she was like, well, you know, I, I want to make a difference. I know the impact that toothpaste in particular is having on this environment. She's lived her whole life, like committed to sustainability. And so, um, It's it was that sort of, um, passion that kind of led her to break down walls, figure things out and then actually get her business on the right path.

So if she ever were to want to raise money, she would be such a natural, um, and just sharing her passion and joy for, for the business and the, the vision of the company. 

Olivia: [00:47:55] Yeah, that makes a lot of sense. And it's probably, um, also why a lot of investors reach out to her and want to invest in her. 

Jason (host): [00:48:06] Yeah. I mean, I know is a very powerful thing for an investor to hear.

Um, I think as you get into the fundraising game, people talk a little bit about this concept called FOMO, fear of missing out, but, um, I think it gets thrown around. Um, sort of casually without really understanding why it happens. Um, and if you think about it, like the, the, no, from an entrepreneur, entrepreneur can mean two different things.

Uh, the first can be like, no, I don't want your money because I don't need it. The business is going to grow on its own without capital. And in that scenario and investor is like, wow, like great fundamentals. And if they just had a little bit more outside capital, they could invest in growth and grow even faster.

So by saying, no, you're telling me like, it's, this is a perfect opportunity. And, uh, the second is that by saying no, another thing could be possible, which is that other people want to fund the business and you don't need my particular money. Um, And that's really powerful because it means really smart people.

Other smart people have seen something in the business and they want to invest. So it's just positive signaling around the opportunity. 

Olivia: [00:49:20] One thing I, I also thought was really cool is that she said that she wasn't interested in taking money because she kind of wanted to set her own standard of success instead of having VCs set it for her.

So I guess that made me wonder. What happens when you do take money from VCs? Like what sort of expectations could you be inviting in? 

Lindsay: [00:49:45] Sure. 

Jason (host): [00:49:46] So as you take on more institutional capital from so money from actual investment firms, you start bringing them into the decision-making structure of the company.

Um, you know, putting them on what's called a board. So like the governing body around the company and. At, you know, the very first time you take on venture capital, you'll likely still control the company. But, um, once you get on the venture capital, uh, treadmill, there's likely going to be future investments with more money from venture capitalists.

And as more money comes in from the outside, more control ends up coming in outside of the founders. And so at some point, um, you essentially have bosses, people that can tell you what to do and could actually fire you from your own company. 

Olivia: [00:50:39] You guys kept dropping. This terminology is C PG. Right? Did I get that right?

Lindsay: [00:50:43] CPG, 

Jason (host): [00:50:44] Consumer packaged goods. 

Olivia: [00:50:46] There we go. And she said that the, or there's less incentive. It makes less sense to fundraise there than it does with a software. Can you talk about that? 

Jason (host): [00:50:55] Yeah, sure. I mean, hers is, is the best example about that because she's like, I have this idea for a tablet-based toothpaste that use X, Y, and Z ingredients in order to do that, she could buy the raw ingredients, mix it herself, bake it in her oven and sell it on Shopify.

And, um, I think she told us it took her $6,000 to do that, um, which is not. Zero money, but, um, you know, it's, it's something that can be managed. Whereas if I tell you that I have a new piece of video conferencing technology, and I think it will be better because it streams, um, faster with less delay in and I'm going to sell it.

I'm actually going to sell it to businesses for $10,000 a year. And we know that they'll buy it. That's amazing, right? Like $10,000 a year from one specific customer. Whereas Bite is like, I don't know, $300 a year, whatever it is. Yeah. Yeah. Um, but in order for me to even get to that initial customer that pays me $10,000, I need to hire 10 engineers that make, you know, $200,000 a year.

Um, and we need to develop for a full year before we're even close to showing anyone anything. That's already $2 million just in engineering costs. And so a business like that does require initial investment before you can even get to the chance of making money. 

Olivia: [00:52:24] Okay, cool. 

Jason (host): [00:52:25] Yeah. One other thing. And I had this highlighted, I actually wanted to talk about it, you know, again about her, her passion and, and how important it is and why it actually drives towards really, really successful conversations.

Um, with investors is. Well, there are two things that I would point out for, for listeners, especially ones thinking about fundraising and it's that if you do have that kind of level of passion and joy that Lindsay had, you know, to the extent where she was like, thinking back on, starting it again, and just like, was getting choked up, make sure you're open about it.

Like let that shine through, um, when you discuss your business with investors. Um, and I think it's important to tell people that because I meet a lot of. Founders who do have that passion, but they kind of think that investors are all about finance. And so they bottle that up, which is actually the opposite of what I think you should do.

Um, and the second thing to draw, draw from like what you heard from the conversation with Lindsay around her passion is that if you don't have that level of passion for at least some part of your business, I mean, maybe it's not the core content or product that you're building, but like maybe it can be just the process of learning and that you're so passionate in business.

But if you, if you don't have that level of passionate passion for some layer of the business, you really should think long and hard about, um, if you're spending your time appropriately. So, um, anyways, I, you know, I, I'm glad we could touch base on this. It was just such a fun conversation. Um, as you, as you were going and listening through our conversation, did you start dreaming about, um, any flavors you hope that they develop in the future?

Olivia: [00:54:12] Okay, well, so this is a tough question because I'm no toothpaste maker here. So like I have no. Um, on Genuity or ingenuity in designing toothpaste, but I'm very adventurous. Like I will try anything. So let me just instead tell you about my current toothpaste. So my, my, my current toothpaste that I'm using is salt flavored, like 

Jason (host): [00:54:38] stop right there.

Okay. Keep going 

Olivia: [00:54:44] It, um, is like, It's kind of revolting, but also so refreshing. I got it at Whole Foods, so it's not that weird. Okay. If it's sold out. Oh my gosh. 

Jason (host): [00:54:56] I honestly, before it, before you started, I was going to be like, I just show it. Obviously it's not going to be something that's savory. It's going to be

anything that. Anything that's like food, like chicken flavor, disgusting. 

Olivia: [00:55:14] And it's salt.

Jason (host): [00:55:21] Thanks a ton for listening. If you have any questions related to today's show, or maybe you're going through your own fundraise and want to bounce an idea off of me. If, so, shoot me an email at jason@fundedpod.com. I'd love to help.

Find us on social, where we showcase other founders with their own amazing fundraising stories. The show is @fundedpod and I'm @jayyeh. That's J A Y Y E H DM us. We'd love to feature your story. This episode was produced by Olivia Rheingold. 

Olivia: [00:55:55] That's me. Hello. 

Jason (host): [00:55:56] Thanks. Also to Jordan Pascasio from Adamant Ventures for his support.

Jordan: [00:56:00] Hey guys

Jason (host): [00:56:01] and thanks to Lindsay McCormick for being anawesome guest Lindsay. To return the favor, here's a free flavor idea, black Sesame. You're welcome. And one last thanks to our sponsor. DocSend. The most trusted document sharing platform.


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