5 generations of food investors

I thought it would be prudent to develop at least a glimmer of an investment track record prior to blogging about my experiences. I also do not think you can “force” a blog, therefore, I have waited for something personal to coincide with my professional life in an attempt for my writing to flow from the heart. In hindsight, investment track record or not, I should have started earlier. For better or for worse, this is my first blog post:

1920’s and 30’s, Bensonhurst/Brownsville section of Brooklyn:

After emigrating from Europe, my great great grandfather, Isaac Garber, starts Garber Mizrahi foods, a producer of kosher peanut oil, olive oil and soap. His primary marketing channel — — ads on the Socialist radio program WEVD. Despite my best efforts, his CAC remains unclear.

Isaac’s 4 sons: Sam, Jack, Mike and Harry (my great grandfather) enter the business at some point during the 1930’s. The family purchases 345 Hewes St, a 6 story commercial building in Williamsburg currently occupied by an orthodox girls school. They took 2 floors for the business and leased the rest of it out. It’s rumored they paid $50k for the building.

At some point during the 1970’s, to my chagrin, the family sells the building. My great uncle explained the midnight burglary calls, water damage, and constant repairs became too much of a hassle for them to manage.

Competition in the 40’s got steep, companies like Rokeach (acquired by Manischewitz) were eating away at my great grandfather’s market share and forced him to merge with another wholesale grocer, Eagle Oil. Garber Eagle Oil was born. The company bottled vinegar, ammonia, bleach and lemon oil polish.

At this point, you had 4 Garbers and 2 new outside partners that made up the management team of the newly merged company. Supporting 6 families was troublesome to say the least.

1950's

Pride food was a wholesale grocer started by my great-grandfather, Harry Garber, who had branched out of the Garber Eagle Oil business amid the families’ financial burden.

Tanker trucks would pull up to the Pride facility and pump 15k gallons worth of vinegar, pasteurize and dilute it to table vinegar, to then be white labeled and sold to accounts such as Associated Supermarkets and White Rose Foods.

My grandfather, Laurie Garber (herein referred to as LG) and great uncle Ephraim joined Pride at some point in the 1950’s until once again, the fierce NYC wholesale grocery business would force them to look elsewhere.

1960's-70s

LG saw an opportunity in a fairly simple grocery business model known as “cash and carry.” In its most basic form, a cash and carry business is one whereby the grocery stores physically come to your shop to pickup their merchandise, like a modern day farmer’s market for chefs who are picking up fresh ingredients for their restaurants. Instead of fresh food, the grocers would mainly pickup dry goods from my grandfather. He had found a cash and carry business to buy into by the name of Rubin Brooks, owned by a gentleman named Mel Brooks (not the comedian).

Fast forward after a few years of solid business and my grandfather gets a call on the eve of passover; his partner had been held up at gunpoint and shot on his way out of work.

It was enough for Mel, he wanted out.

LG bought Mel out and eventually set up shop in the Brooklyn Terminal Market. He acquired several booths at the BTM (think of a booth as a subdivided warehouse) that cost him a small fortune. At a certain point, his Italian neighbors in the BTM were interested in acquiring his booths. My great uncle Ephraim was told to show up at the market in the wee hours of a brisk Brooklyn night. A deal was made and the Rubin Brooks days were done, no retention or vesting in the BTM :)

1984–2011

There was no kosher supermarket on Long Island at a time when Orthodox Jews were moving in from Brooklyn by the waves.

To be the first mover of a kosher retail operation would mean a great deal from both a brand and overall business perspective.

My parents, who were both dating and spending a gap year learning in Israel at the time, brainstormed with LG on what to call his new venture, they settled on SUPERSOL, after the Israeli supermarket of the same name (huge misconception that I am named after a supermarket).

The first Supersol opened in 1984 in the Long Island town of Lawrence to great fanfare.

The supermarket burned down no less than 2 weeks later.

LG was not deterred, he reopened the store and ran it for a healthy 30 years.

At its peak, the Supersol business consisted of 6 stores in the tri state area including Manhattan, Westchester, Brooklyn, West Orange New Jersey, and Lawrence.

Customer service was our competitive advantage. Turnover was low. Smiles were in abundance. Credit on account was accepted, offering many low income families the opportunity to pay over time. From a gastronomical perspective, we had arguably one of the best butcher operations on Long Island. Our appetizing counter would sling Jewish delicacies like hering and kasha varnishkas. We were one of the first to offer home grocery delivery on Long Island.

LG would oversee it all out of his 7x3 hole of an office opposite the appetizing counter, the fragrance of rotisserie chicken encapsulating his work space. Humility was an unwritten operating principle. (not that I would mind the aroma of a rotisserie chicken for 11 hours a day)

Towards the mid 2000’s, the Orthodox Jewish population was experiencing massive growth. To quote Steven Cohen from The Jewish Week, “the surge in Orthodox adults is surpassed by the even steeper growth in the number of their children. While Orthodox children up to age 17 amounted to 85,000 in 1990, the comparable population more than quadrupled, reaching about 350,000 in 2013.”

The cycle of competition the Garber family experienced in previous generations would catch up to LG. At the time of his sale, there were no less than 6 kosher supermarkets serving the Five Towns communities of Lawrence, Cedarhurst, Woodmere, Inwood and Hewlett. Keep in mind, it takes less than 10 minutes by car to get from Inwood to Hewlett, the two border towns.

I would like to think LG sold the business at the right time. The current ownership’s vision is to take Supersol, now renamed Seasons, to tertiary kosher markets such as Baltimore and Cleveland. Not a bad strategy, as one thing is certain, New York has enough kosher supermarkets.

2012

While my family remains preoccupied by food, often times annoying people we dine with, my dad and his siblings had no interest in entering the supermarket business.

My father is an ad man who has had clients such as Coca Cola, Nabisco, Ritz and Keurig to name a few. He continues to tap into his consumer roots and stock boy experiences from Rubin Brooks when devising new campaigns.

I spent my elementary school days off bagging groceries and stocking shelves at Supersol for the occasional $2 tip. I developed people skills and it was all good, but also quickly opined that I too would not be entering the supermarket business, little did I know that food would one day catch up to me.

—

I started with an interest in entertainment and spent my college summers interning at Miramax Films, Sony Music and Tribeca Films. I quickly realized that I had more of a passion for technology than entertainment and switched gears my junior summer of college in 2011. At the time, NY tech was really hitting an inflection point. Companies like Warby Parker and Classpass were raising their 1st and 2nd institutional rounds of capital. On the deal front, SinglePlatform had sold for $100mm, Buddy Media for $689mm and OMGPOP for $210mm. It was a record exit year for NY, not to mention some of the smaller deals like Venmo and Felix. Companies like Etsy and Tumblr would follow suit.

My first tech gig was at a fintech startup called Tykoon that developed a platform for parents to deposit money into their kid’s bank accounts after chores were done. The company had partnerships with Amazon and over 80 charities for the kids to buy goods and make donations; it was a financial literacy play that was probably ahead of its time. We were backed by RRE and some other notable NY shops. At Tykoon, I learned growth hacking from Chris Rodriguez, how to keep cool under pressure from our CEO Mark Bruinooge, spoke about product management and engineering with James Linder and I got to IAC my senior year with a recommendation from our SVP of Product Sanem Erucar. It was an awesome summer.

I had the MOST amazing experience at IAC. Upon interviewing for a corporate marketing role, they thought I would be a good fit for Hatch labs, an incubator they were backing that had a batch of 8 companies. Tinder was born out of Hatch. We were Blu Trumpet, one of the first native mobile ad products that replaced the traditional banner ad. I would spend a few days a week taking the crosstown bus to arguably the most beautiful building in NYC.

As a business development associate, I learned sales and refined business etiquette from the impeccable Chantelle White. I observed and digested how to effectively manage teams and expectations from our brain of a CEO Nina Sodhi. I also learned what it’s like to take $ from a public corporate incubator i.e. you are subject to a stock price. IAC’s stock was in bad territory in the spring of 13' and thus they began focusing on more lucrative properties in the portfolio. In a bittersweet ending, BluTrumpet was acquired by Breaktime Studios in May of 2013.

At Blutrumpet, meeting founders for partnership purposes was my favorite part of the job. I loved hearing about businesses, how they were tackling industries and the trials and tribulations of how some of them reached success. It was evident to me that I wanted to be an investor.

With no ivy education, investment banking or management consulting background, it would be difficult for me to land a venture role. I read Techcrunch, Crunchbase, all the notable VC blogs, Dealbook, Venture Deals, and many others on the regular (for sure would have been reading CB Insights had I known about it, shout out to Anand). I was teaching myself cap table management and dilution scenarios on YouTube, DCF’s on Breaking Into Wall Street (not that this is a useful valuation tool for early stage businesses). I started cold emailing VC’s whose portfolios impressed me. One really nice guy from San Francisco emailed me back asking if I would consider relocating, I wasted his time by not thinking about a potential move prior to reaching out. My girlfriend was a junior in undergrad, we were getting engaged, I was not ready to move to the West Coast.

For whatever reason, I did not reach out to many NY VC’s. According to Shai Goldman’s list, there were about 20 new funds below $200mm in size raised since 2011 at the time of his post in 2013. (I was not interested in working for a massive growth stage fund). In hindsight, I probably should have hit all of them regardless if they were hiring or not.

I ended up carving my own path into venture and investing as a whole.

A longtime family friend, the president of a large real estate investment firm, was interested in diversifying. I told him I was interviewing but would guarantee him 3 months of work, he hired me as a paid intern and brought me on full time 3 months later. This is a brilliant successful investor with a background in private equity, company building and angel investing prior to his unprecedented real estate track record (which is as active as ever), what could i bring him?

Back to food, 2013 — present

At AFO, we have 4 areas of primary focus including wealth management, direct early stage investing, LP fund investments, and special situations. I spend a big portion of my day filtering through early stage companies raising their seed and series A rounds of capital, as well as vetting emerging venture fund managers.

I made it a point to network the NY tech community before heading out to the Bay (my first business trip to SF was 4 months ago). Many of the early stage guys have become friends and mentors to me. By being LP’s in the funds, it is giving us a more broad outlook on the ecosystem and is making us smarter direct investors. I have a millennial network of founders, and soon to be founders and fund managers that complements my boss’s rolodex.

Given that a large portion of the real estate portfolio is comprised of retail assets, many of the tenants are fortune 100 consumer companies. As a result of the exposure we have to new forms of technology, we have been able to leverage it for the benefit of the RE portfolio. Our global network of relationships has been a great source of value add to our AFO portfolio companies.

We have done many direct investments and fund investments. In an industry where it takes 7 years to determine whether you are truly a good investor, the portfolio is performing well as we approach the halfway point.

A portion of our family office portfolio is food related. We have a beverage company, a health and wellness CPG brand, restaurant delivery software, retail communication software (focused on restaurants first), and a new form of a franchise business we will hopefully be closing over the next 2 weeks. Out of these 5 food oriented companies, I sourced 4 of them and made a big investment case for the 5th. First and foremost, it’s the founders that impressed me more than anything else. With that said, I cant help but think somewhere embedded deep in my DNA is a gene from the late Isaac Garber that has turned me on to this vertical of venture. Like many people, I am extremely bullish on the health trend that is sweeping over America and beyond. On a macro level, it’s campaigns and programs like Lets Move by Michelle Obama and sustainable agriculture bills like this one passed by congress just last month. On a micro level, it’s the founders in our cities who are building companies for the health conscious consumer.

Beyond traditional CPG, the family office has been making SaaS investments in retail, consumer internet/ecommerce, real estate and fintech. The last 2 deals have been SaaS solutions for brick and mortar, both of them specifically catering to the restaurant industry, one for delivery, the other for communications and task management.

To briefly profile one, Adam Price is the CEO of Homer Logistics. He is also one of the most intelligent people I have ever met. We invested in Adam this year because no other founder in the food delivery business can tell you the average time it takes a delivery staffer to go up a New York City elevator. More importantly, he has built incredibly robust software that is aggregating demand amongst restaurants and has his delivery staff averaging pickup times of 4 minutes. Shout out to Charlie O’Donnell, another investor and fund investment of ours, with Brooklyn roots, who introduced us to Adam.

We expect to continue to invest in the future of food, while we are also studying more prevalent forms of disruptive technology such as AI and machine learning. The best part of my day remains meeting with people who are smarter than me, the 2nd best part of my day is still lunch time. If you are a founder in NYC raising your seed/series A round of capital, bring me a pastrami sandwich from 2nd avenue deli and you have yourself a deal.