Strong Branding — A brand that resonates with consumers, especially in crowded markets with established players, is crucial for a startup that wants to succeed and achieve longevity in the industry. We’re looking for a brand that isn’t a fleeting fad and can win over the hearts of consumers for years.
Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.
Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?
In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.
I had the pleasure of interviewing Anish Bhatia.
Anish Bhatia is the founder and CEO of Room 9, a creative agency and early-stage venture capital firm. With a specialty in alcoholic beverage investments, he believes that an essential feature of an investable brand is its personal appeal to him as a consumer, whether its skincare or sustainable cleaning products. A creative at heart, Bhatia believes that the traditional venture capital space is ready for disruption, and with Room 9, he is discovering, partnering with and funding authentic and unique brands.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
My story in the consumer goods and venture capital space began with a company called Los Sundays Tequila. I started off as an investor in the brand, but I quickly fell in love with everything about them — from the founders to their company culture. What was initially a passive investing relationship evolved into an active partner one.
Working with Los Sundays has taught me about building a company that has longevity and how to navigate a crowded industry (in this case, spirits). Now, I use that experience to help other up-and-coming brands inside the Room 9 portfolio grow and thrive.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
I have two “aha moments” that are a culmination of my time in the industry.
The first is that venture capital funding isn’t the end-all be-all for consumer companies — especially consumer packaged goods. What a CPG really needs to focus on is building a product that understands its potential customers and market trends. Over the years, I learned that most venture capitalists tend to analyze a potential deal through one lens: by focusing on the numbers and rarely looking at the resonance and authenticity of a brand.
I believe it should be the other way around. When determining a company’s potential value, brand should be a top consideration. This realization is what led me to build the venture side of Room 9.
My second “aha moment” was realizing how much investment capital up-and-coming brands were spending on unnecessary design. It’s what inspired me to expand Room 9 to include a creative design sector, which could offer design services at a much more affordable rate than what other agencies were charging.
Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?
Steven Vigilante, a good friend from college and the Growth Marketing Manager at OLIPOP, has been an enormous influence on my career. I initially started down the path of a career in life sciences. When I was looking to make a move to investment banking, Steven was instrumental by introducing me to Los Sundays. He knew I’d be happier in the long-term working in the brand space and has been a big believer in me since day one. He’s one of my closest friends and still remains an active advisor to Room 9.
What do you think makes your company stand out? Can you share a story?
As a new venture capitalist firm, what sets Room 9 apart is not just our venture-design hybrid, but that we value branding as one of our highest investment criteria. We’re always looking for brand-forward companies that are able to engage with consumers and achieve longevity by nurturing those relationships. Also, our hybrid of design and venture provides us the insight into knowing exactly what a start-up needs to attract both future investors and customers.
How have you used your success to bring goodness to the world?
Whether it’s a brand like Clean Cult, a company that offers affordable, sustainable cleaning products, or Madre, a mezcal distiller that works with local communities in Oaxaca, Mexico, we care deeply that the brands we partner with leave a positive impact on the world.
You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?
- Determination/ Willingness to learn — Even though our usual investments focus on consumer products- the consumer space is so big that it allows for a huge variety of brands to be a part of our portfolio- from traditional CPG, like tequila or ice cream , to consumer tech such as online travel. Because of this variety, being willing and open to learn and grow to meet the needs of the brands in the space is critical to being not only a successful VC, but to being a worthy partner of these startups.
- A strong network — My journey over the years has taught me that in order to be successful I must constantly surround myself with positive, smart, creative and diverse individuals. I try to live by the saying, “You’re the average of the five people you spend the most time with.”
- Passion for your craft — Food, beverage and anything in the consumer sector is what really excites me. I love to discover, partner with and fund authentic brands and founders. Despite the long hours, I struggle to call what I do “work” because I truly love what I do!
Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?
Don’t befriend industry peers. This industry is highly competitive, but over the years I’ve developed great relationships with my peers or so-called “competitors”, and we’ve all found ways to work together. Room 9 looks at things differently. We encourage collaboration amongst brands across our portfolio. We’re all trying our hardest to make it, so having someone in the industry that you can reach out to for guidance and support goes a long way.
Marla Tabaka summed it up perfectly in her Inc. article when she said, “Don’t be threatened by the competition. Get to know them instead.”
Can you tell us a story about the hard times that you faced when you first started your journey?
In the early days working alongside Los Sundays, we experienced a lot of push-back going door-to-door trying to convince bars and liquor stores to sell our tequila. As difficult as it felt at the moment, that experience made me a better investor. Now, I know what it feels like to hustle and never give up — even when you want to. I look for those same qualities in the founders of companies we invest in at Room 9.
Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?
My drive comes from emulating my parents’ perseverance and drive as immigrants to the United States. After arriving, they each worked two jobs so they could support our family while my dad pursued his dental school studies. They are still grinding today. I feel like it is my duty to mirror their ambitious work ethic in my career.
The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?
One time, I was really stressed over a potential deal and Mitchell Hayes, CEO of Los Sundays, looked at me and said, “Dude, relax. We’re just selling tequila at the end of the day.” I think about his words all the time and remind myself to always have fun with what I’m working on — even in the most challenging moments.
Like the companies we invest in, the growth of Room 9 has experienced its share of highs and lows; but, the culmination of all we’ve accomplished over the past four years is our impressive portfolio that pushes the status quo.
Let’s imagine that a young founder comes to you and asks your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?
If the founder has the means to bootstrap, I say go for it. Whatever is best for the company should be the priority.
I think the question is less “Should a company bootstrap or go with venture capital?” and more “Who is the right partner for your company?” Signing up with a VC is a partnership, one that can be beneficial or stressful, or both. Just as a VC is going to evaluate a company before making an investment, the company should evaluate the VC to ensure it’s a relationship they’re comfortable getting into.
Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each.
- Reliable, Resilient and Inspirational Founder(s) — A lot of the trust we, as a VC, are putting into the brand is influenced by the founder and if we believe that person has what it takes to make a successful brand.
- Strong Branding — A brand that resonates with consumers, especially in crowded markets with established players, is crucial for a startup that wants to succeed and achieve longevity in the industry. We’re looking for a brand that isn’t a fleeting fad and can win over the hearts of consumers for years.
- Ability to Penetrate the Market — Tequila, for example, is rising in popularity; and agave-based brands like Los Sundays and Madre Mezcal are poised to ride that surge in popularity and stand out as category winners.
- Solid Core Team — Being a solopreneur can be lonely…and exhausting. No singular person can do everything alone — which is why it’s important to tap into your network and bring people into your company that have complimentary, but different, skills.
- Scalability- To achieve longevity, you need a brand that’s scalable to meet consumer demand and achieve financial goals. By having a strong foundation (which includes having all of your legal and formation needs in order), you’ll be able to focus on growing your startup smartly without sacrificing the quality of your product and brand.
What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?
The barriers to entry have never been lower to start a consumer brand. Despite this, smart founders need more than just a strong brand, they need to pay attention to the unit economics of their company. To build a sustainable brand that lasts beyond the initial hype, you need proper management of margins so you can scale your business efficiently and effectively.
Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?
We know how important founders are to a strong brand, which is why we always ensure those that partner with Room 9 are in a good mental and physical space. Long hours are inevitable; but to help them achieve longevity in the company, founders need to make sure they’re giving themselves enough time to rest and recharge.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
One of our investment strategies is if something costs the same and has the same efficacy — but is better for the plane — go with that option. Our generation is leaning into more sustainable alternatives and realizing that the world we’re living in may not be the same in 40 years if we don’t act to protect it. At Room 9, we feel strongly that the way to continually bring more people into this movement is by making “sacrifices” seem minimal. Just as industry leaders such as Impossible Foods, Nuggs and Clean Cult have shown, consumers can choose better, more sustainable options without giving up the tastes they love or the cleaning power they need.
We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.
I would love to have lunch with Naval Ravikant. His approach to not only investing but life is something I admire greatly.
How can our readers further follow your work online?
You can learn more about Room 9 by visiting our website at www.room9.com.
This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!