Investing in Tomorrow’s Consumer Brands: Morrison Seger’s Rogers Healy

Fred Schonenberg
Hello everyone and welcome to the VentureFuel Visionaries. I'm your host, Fred Schoenberg. I'm so excited today to be joined by Rogers Healy. Rogers is the Founder and CEO of Morrison Seger Venture Capital Partners, which is a Dallas based investment firm, which is backing some of the fastest growing consumer brands in the country.

Rogers spent nearly two decades building Rogers Healy and Associates into one of the largest independently owned real estate brokerages in the U S, a business that grew past a hundred million in annual revenue and hundreds of employees before he merged it into compass earlier this year. But along the way, he was approached by a mentee of his on a pitch for a new dress shirt, which I'm randomly wearing today. What's that?

Rogers Healy
I’m not. What a traitor. 

Fred Schonenberg
Yeah, you gotta be on brand, man, but I've got the Mizzen+Main and I was joking with you before we hit record. My shorts are Mizzen+Main and I just… my closet, like half of the shirts are there. It's my favorite dress shirt. And I had no idea of the connection before we started doing research for this. But that first investment spark would become a decade plus habit of quietly backing some of the biggest, fastest growing consumer brands on the market. 

And one of the things that jumped for us, right, is that a lot of the companies in your portfolio have come through VentureFuel programs, Slate, Smearcase, Elite Sweets, Haywell is one of my favorite startup companies that's going out there. And now you've backed companies over 150 investments, portfolios valued over a hundred million breakout wins like Poppy, that PepsiCo acquired for 1.95 billion water, loose sparkling water and tips treats. So I'm so excited to dive into how you got into the venture space, what you're thinking about the future of CPG. 

So everyone, I know you'll enjoy this episode. Rogers, welcome to the show.

Rogers Healy
Thank you. Thanks for the intro and for calling me out for not wearing a Mizzen+Main shirt, but I’m wearing a Snaps shirt with a Stiller's logo and Snaps is one of our companies. And I wouldn't know about Snaps if it wasn't for Mizzen, so always, always grateful.

Fred Schonenberg
And Stiller's also now… you were kind enough to send me some Stiller's and it's awesome. So maybe we'll talk a little bit about that as well.

Rogers Healy
Have it on my desk.

Fred Schonenberg
All right, man. Well, listen, I want to dive in a little bit to your background for a second because you ended up building one of the largest independently owned real estate brokerages in the country, merged it into compass. Can you talk about that chapter and maybe how you decided, Hey, it's time to move on from that?

Rogers Healy
I mean, the short of it is it was a miserable chapter. I got into real estate in college, and my story of finding what I wanted to do is turbulent. I learned a lot, and God put me through it for a reason, but it took me a lot longer than I would have hoped. To be honest with you, the real estate company blessed me. It gave me a nice network. It gave me access. I made some money. But it was never fun. Managing people for a living in certain verticals is brutal.

You mentioned it was the largest independently owned company in real estate in Texas, but a lot of that is based on volume of people. And I just kind of got to the point where I knew myself so well enough to know I wanted to focus on this, on Sendero, on Snaps, on Waterloo, on Stiller's. I couldn't marry my forever family until I was done with my first family. That process was long and exhausting, and I just kind of reached a point where I was ready to be done. We got there, and we were powerful along the way, and my wife is awesome, and it was just a journey. But I got a lot out of it as far as learning. And one of those things is the ability to go and help lead these companies that we're a part of whenever they're in the journey. 

The last thing I'll say is, I think one of the things that made me a relatively successful leader in real estate is that I would lead from experience. I can now, in large part, say: don't do this, don't do that, with our portcos that are potentially pursuing an exit of their own.

Fred Schonenberg
Very interesting. Maybe take me back to that. The first Mizzen+Main conversation with Kevin. How did he approach you? What was your thinking at the time, and sort of that entry moment?

Rogers Healy
I've got the very first Mizzen+Main shirt framed on my wall right over here, of course autographed by Kevin. It was natural. I met Kevin through SMU. If you don't know Kevin Lovell, or you don't follow him, he's one of the best guys I know. He’s one of the best founders I've ever met. He's also just an awesome guy. We met through a program at SMU that matched alumni with undergrads. I don't know how I qualified to get called to do that, but I did it just to be a nice guy, and I met Kevin. 

What initially was me kind of mentoring him quickly became the opposite. Everyone has different philosophies in the world of investing, and I think one of the best ones is that sometimes you bet on the jockey and not the horse. Kevin was just a great jockey, even at 18 years old. So we stayed friends. One thing led to another, and he moved around the country, did the cliché post-college finance stuff bla bla bla. 

He came to me, this was 15 years ago, and said, "I've got this idea. I want to start a dry-fit dress shirt company." I said, "Cool." This was before Shark Tank, before Elevator Pitch, the show I'm on. Frankly, alternative investing wasn't really a thing yet. But he said, "I'm looking for investors." I said, "I'm in." That was literally the diligence, and it still led to a very successful story. It became the fastest-growing men's apparel company in the country. I thought, this is cool, this is easy, just go invest and make a bunch of money, and it'll work. But that's still kind of the story.

I think, to kind of derail the question and add a little experience to the question: it all starts like that. The numbers have to make sense, the leadership has to make sense. But if you like the Sendero hat, or if you like the taste of the Shirley Temple Stiller's, that's reason to pursue something. I got spoiled with Kevin being the first person I bet on, or trusted, and it set me up.

Fred Schonenberg
Can you talk about where it goes from there? I launched VentureFuel 13 years ago at this point, so a very similar timeline. My sort of moment was working with all these Fortune 500 companies who kept saying, "What's next, what's next." I had a founder who was very serendipitous. It was like my little high school friend's little brother, and he couldn't get a meeting with the big companies I was meeting with. I said, "I'll introduce you, no sweat," and it worked, and it changed his valuation, and I got introduced to this whole world. How does it start to build from "oh, I knew somebody" into you starting to make more of those bets? And as you make more, it becomes more of a serious part of your financial equation.

Rogers Healy
Look, you've got to pursue what excites you. I met my wife because she was at dinner with her mom at a restaurant, and I thought, that's a very happy, pretty woman. I want to meet her. So I introduced myself. I feel like that honestly needs to happen in this world. We're fortunate to get a really great deal flow at Morrison Seger, which I own the company with my wife, it’s me. 

A lot of the deals we find, like Stiller's, I was like, man, I love Ben Stiller, I love soda, I love beverages. I know soda, I know beverage. I didn't know Ben Stiller yet. How do I get access? It's just a pursuit. I think that's what most people in this space are afraid to do, because it's not how they were trained. Screw that. You find something you like, and you go find a way to get involved. That was kind of part of my real estate story too.

But look, I think critical mass is a hard thing to achieve in any industry, whether it's venture, real estate, whether it’s soda, or toothpicks. You can create your own destiny if you have the manic will to win, and most people aren't wired like that. And then raising money is a whole other animal that isn't easy. But I feel like people buy into the conviction, and they buy into the fact that I was fortunate to have built something people watched grow. A lot of them wanted to see me fail, because that's just human nature. But it didn't fail, and so I think people respect that. It's this constant learning that you've got to create your own flywheel, get it to actually work, and make sure it never slows down. That's kind of part of the obsession for me. 
Fred Schonenberg
I love that part of it. There's something to people being wired differently. Maybe this ties into Kevin, and some of the ways you view founders. But how are you separating these? I'm looking at your portfolio, and it's really interesting. I mentioned a bunch of companies that come through the VentureFuel side, whether it’s Slate, Smearcase, Elite Sweets, like those three. I can see the founders. They are awesome, they've got a unique idea, you can believe in them. 

How much of it is jockey versus horse for you, and how are you separating signal from the noise? Like, how are you saying, you know what, like I would say stillers, right? Ben Stiller, it's obvious there's, there's something interesting about his personality, but there's a lot of soda. So what makes you go, you know what, I'm going to bet on this one? 

Rogers Healy
There's a lot of sweets, a lot of shirts, and a lot of ice cream companies out there. Again, you've got to have a lot of crazy in you to really buy into something that has no proprietary moat. The moat for Stiller's has been Stiller. That's it, it's called Stiller's, everyone loves Ben Stiller, but the soda tastes good too. Smearcase, funky name, there's a story behind it. It's frozen cottage cheese, but the founders are Joe and Drew. They're great founders, intentional leaders, good dudes, they practice what they preach. Elite Sweets, I got in through a fund, and I was a former fat kid, so I liked the story there. Everyone's got their thing.

I read something yesterday on LinkedIn. There's literally like 30,000 companies waiting to get acquired or IPO, which I don't think you can read that stuff when you're doing it. Because you've got to just stay in your lane and bet on it. But yeah, they're all difficult. Part of my diligence is asking founders questions that revolve around them not knowing how to quit, and a lot of people do. In real estate, I had the largest real estate company, but it would have been the largest in the world if no one had ever quit. You've got to do your own gut checks. It isn't easy. 

But last thing, the fun thing about consumer, especially food and beverage, is that you get to try it. When you take a sip of Waterloo, I like this taste. When you put on a Snaps shirt, I like this shirt. When you wear a Sendero hat, this hat fits me really well, that's a cool logo. That's part of it. You've got to have the smart people behind the scenes with the diligence, but really, diligence starts with this, because you've got to build a foundation of people who support the brand and come back to purchase it again. That's what turns it into an actual business versus just a brand.

Fred Schonenberg
Man, I love it. I think one thing that's interesting is we sit at this intersection between large companies and startups. We'll dig into the top 10 out of 500 companies, get it down, and then sit in a room with a large group of people who work at the big company. And they can all find a reason why each of those companies will fail. 

Someone in R&D says, technically this doesn't work. Someone in marketing says, this isn't going to work, they don't have a good enough brand. I always have to pause them all and be like, why might it work? Like, just stop with all the reasons it's going to fail. Because of course, like that is, that is the power law. Nobody would ever start anything new if they were looking for a sure thing. And so it's a very interesting dynamic.

Rogers Healy
Yeah. That's why you have to back first-time founders. I don't mind that, but they have to be a little crazy. Everyone at some point in the world of business was a first-time founder, and somebody believed in them. I didn't raise money with my real estate companies, and if I had, nobody would have invested, because I didn't know the answers to the questions. 

But there are people too who are humble going into it that actually want help along the way. Those are investable founders. I think it's honestly harder to find an investable founder than a great idea. Like again, frozen cottage cheese is relatively disruptive, but it's not going to save the world, and on top of it, they don't even have a company called Frozen Cottage Cheese. It's called Smearcase, and people ask, what is that? That's part of the journey, and I can get behind it. It's also, like you said, you do these podcasts, you're getting a master's in business every single day. So am I. I can speak intelligently about apparel, toothpicks, and beverage now. That keeps me young, and I think that's a big part of this journey. That is a massive benefit.

Fred Schonenberg
I couldn't agree more. Let me ask you this. You mentioned it's you and your wife, and one of the first things I asked when we met was, why don't you raise a fund? You laughed and that's what everyone asks you. And you've built this model around a deal by deal model, kind of pooling the capital, including your own on a company by company basis. I'm curious what attracted you to that versus a traditional path. And by the way, I think it's fantastic and super interesting, and I'm not a big fan of traditional paths. So I'm curious if you could walk through that and maybe some of the trade offs of the model or the advantages, disadvantages?

Rogers Healy
Trade offs first. Speed, size, a little bit of humiliation, chasing the one-offs. I think that's kind of it. The benefit of it is, if I send Fred a Stiller's soda, you might really love Stiller’s soda, and you’re going to do your own diligence, which should literally just be tasting it, and he's in. But I might send you a rubber band company, and you say, I don't really like rubber bands, so I'm not going to invest. So it gets you pot-committed a little differently. It also gives me the ability to keep going  like there's no end goal with this. 

You and I meet a month and a half ago, maybe you invest in one of my deals, maybe I invest in one of yours, but you're in my database now, forever, and I like that. I like the fact that I'm kind of the guy in Times Square who opens his jacket. If you don't want a yo-yo, maybe I'll sell you a cell phone case. You don't want the cell phone case, I'll sell you a piece of gum. I'm always going to have something that interests people, and that's just my personality. 

As a real estate guy in journey one, I was constantly spinning plates, whether it was a listing or an opportunity or a job. You've got such a short window of time to engage somebody, you'd better have something good. I think that's a benefit of SPVs, but I say this as I'm about to launch a Stiller's syndicate, a Sendero syndicate, we just did a secondary, and whew, it's a different kind of exhausting, and there's also zero revenue. Zero, zero, zero, zero. I have made no money on these deals, and I won't until the investors get their money back first. So it's not for the faint of heart.

Fred Schonenberg
It’s very interesting. Our original model at VentureFuel was that we'd basically found five to ten startups at a time that we had a lot of faith in, and I'd go to Microsoft, and Nike, and all these people like that to get them to work together, almost like a chief revenue officer for hire. I often equated it to the guy in Times Square. Do you like this? What about this? What about this? It was super dynamic, but again, it's challenging to have all the finances on the back end. The faint-of-heart line is pretty good.

All right, I've got to ask you about the name of the company, mostly because my wife asked. This is my breakfast this morning. My seven-year-old asked, "What are you doing today, Dad?" I said, "I've got a podcast guest." He said, "Is it the guy with the beautiful mustache?" That's the best line ever. We were flipping around and saw the Entrepreneur show, Elevator Pitch, and I said, "Hey, I know that guy." So my son now thinks of you as the guy with the beautiful mustache. And my wife was like, why is it called Morrison Seger? You've got to ask that. 

Rogers Healy
Here we go.

Fred Schonenberg
Why those two?

Rogers Healy
I love this question. My response to a stodgier group is, I grew up with them. Every business I started before Morrison Seger was named after me. I thought that's what you were supposed to do as a business guy. Rogers Healy this, Rogers Healy that. Thankfully, and also not thankfully turned my name into a brand, and eventually I hated that. I hated that we couldn't go a lot of places without someone coming up and saying, "Oh, Rogers Healy helped me buy a house," and I'd be like, I am Rogers. It was like Frankenstein's monster, which is a whole other after-dark podcast. But I love music, I love Jesus, I voted X, Y, Z but the one thing I feel like everybody in the world can agree on is their love of music. 

At the heart of it, I'm a branding guy, and that's just how my brain works. It's all over the place, but it works for me. Anyway, the short story is I wanted something that sounded like a fancy New York City financial institution, very private equity, very venture capital, but that brought it back to music. We have three children named after musicians: Henley, after Don Henley; Collins, after Phil Collins; and Winwood, after Steve Winwood. I know my wife doesn't want to name our children Morrison or Seger, so here's my ode to them. Honestly, it was kind of a joke, and it stuck. It's very marketable, and it stands out, because most people in my world name their firm after a body of water, a tree, or a street. I kind of went YOLO and did it after music.

Fred Schonenberg
I love it. All right, I'm jumping back to a quote we found in our research that I thought was great. Comparing venture investing to spec building, where you buy the dirt and build from the ground up, so your upside is bigger, but so is your risk. I'd love your perspective. What's the CPG version of buying good dirt?

Rogers Healy
Hold on. Where did you just go? There you are. I'm not great with Microsoft Teams. Again, it's about getting in at your version of early. Somebody told me, in real estate, a long time ago, this guy only ever called me Roger. He said, "Roger, do you know the definition of a good deal?" And I said, "What?" He said, "It's a deal that makes you feel good." There's a lot of conviction in that saying. I think getting in with whatever your version of early is on these deals, you can build on that. In real estate, the parallel is you can spec build — buy the dirt, build something, hope somebody buys it, and make a lot of money if it works — or you can be a home flipper. 

To me, private equity is home flipping. You’re going to buy something that needs to be fixed, sell it a little quicker, make a smaller clip, but it works like clockwork. You're not going to make spec-building money, and I like spec building. I think my audience likes it too.

Fred Schonenberg
I love it. I've got one more question, and then we'll go to a rapid-fire round to conclude this. We work with a lot of really big companies, in the Pepsi-Cola world. Maybe the acquisition person for one of your startups. I'm curious how much… Here's my question: how much weight do you put on commercialization when you're evaluating a brand, obviously you're going in very early? 

By commercialization, for the audience, I mean retail traction, placement on a retailer's shelf, or maybe a distribution partnership with a Pepsi or a Dr. Pepper. And the extension of that is these big companies have corporate venture capital arms as an early investor. Do you want to see them involved, or is that a bit of a red flag because they may be there to acquire the company before it hits your full scale?

Rogers Healy
Yeah. I mean, sure. Right. It depends on the deal, and it depends on the vertical, whether it's frozen or beverage or apparel. It just depends. We don't only do early-stage deals, but I really like early-stage, and the benefit of getting into Snaps before they'd sold a shirt is that we could sell in a year to a private equity firm that wants to grow it further. And I think it all depends, and it's really just about volume. 

One of the fun parts of what I do is that I'm not tied to one type of deal or one stage of deal. I tell people, we like simple consumers that’s not controversial, and it's easy for me to pitch. No one ever said like, tell me more about what's in this mysterious 12-ounce can. It's soda. You've had a soda, right? That's AI-proof. You're going to eat and drink for the rest of your life. So I think that part of my journey in this business is that I don't know everything, but I know a lot about a lot of things.

Fred Schonenberg
I love it. All right, we're going to rapid-fire a couple of questions to end. You mentioned AI, so I'll start there. AI is making it pretty easy to spin up a brand, get a sales sheet, and all those things, which is enabling a lot of founders to crowd the market. Do you think that AI is going to enable the next great consumer brands, or do you think the big companies with the distribution are just going to use AI to create their own versions?

Rogers Healy
Both. I use AI, but I still have relationships, and I think people don't give the consumer the credit they deserve. The consumer is literally AI-proof. People need clothes, they need food, they need beverage, they need snacks, they need stuff. But behind the scenes, people need to leverage AI to scale quicker and keep costs down. But yeah, I don't think AI can think. AI doesn't have a gut instinct. AI doesn't have the ability to say, "Oh my gosh, I like that logo versus the other logo, I like that founder." AI cannot get inside my head. It can talk like me, it can communicate like me, it might be able to find trends, but at the end of the day, AI is not going to make your decision. I think that's the beauty of what we're doing. 

Fred Schonenberg
Taste and judgment are going to become even more important, and the people who have it, and the conviction to go after it, are going to stand out even more. All right, so — entrepreneurs, Elevator Pitch, you're on there judging. What's your personality? Are you a shark, or some other animal?

Rogers Healy
Depends on how much caffeine I've had. It's a lot of fun, it's been a career highlight. Not a shark. I think people are often surprised, like, "You're so honest." But why would I not be? If it's a terrible pitch, you need to know it's a terrible pitch. If it's a dumb idea, I think that some people need to tell you it's a dumb idea. You can say it in a respectful tone, but that's just my opinion. I think I get asked to do this kind of thing because I don't really fit the mold of a venture capital guy, and I think that's kind of entertaining. Let me see. I'm maybe not a puppy dog, not a shark, but like a five-year-old dog that knows what it's doing but doesn't know everything. 

Fred Schonenberg
Hangs on the porch, friendly, still a little mischievous. What's one word or sentence to describe the future of CPG or brand consumer?

Rogers Healy
White space. I think it's the future. People are going to all of a sudden it's like Dallas, ten years ago it'd be, "let's all move to Dallas, where were you the past 150 years?" I think the consumer is going to be the version of that in the world of investing in alternative assets.

Fred Schonenberg
What's one myth you'd debunk about investing in consumer brands?

Rogers Healy
Oh, gosh. I think there's a lot of pessimists out there, which I get. You've got to have them in the world of investing. But there are ways to add value and help these investments grow, even if you don't have a background in consumer, marketing, or entrepreneurship, you can still help. Again, you've got a Mizzen+Main shirt on. I used to wear one every single day, and I know that's helped drive revenue to the company. It's not a matter of just writing a check and keeping your fingers crossed and moving on. You can get involved, even on a small scale.

Fred Schonenberg
I love it. Rogers, thank you so much for everything you're doing to spark change, and for being a part of this. I love your approach, and I appreciate you making the time today.

Rogers Healy
You too. Congrats on what you're doing, and I'm excited to watch the podcast.

Fred Schonenberg
Where do you want people to go to learn more about you — your podcast, your website?

Rogers Healy
Not the podcast. Morrisonseger.com, and I'm active on LinkedIn and social media, just Rogers Healy.

Fred Schonenberg
Awesome, man. Thank you.