Jeff Cantalupo: 0:00

I'm very clear with all of our LPs that we have made some investments that have stroke of the pen risk. And whenever you're dealing with stroke of the pen risk, that's unclear, and and you know that it's likely going to be a bumpy ride.

Ben Larson: 0:19

Hey everybody, welcome to episode 111, 111 of High Spirits. I'm Ben Larson, and with me as always is my co-host Anna Ray Grabstein. Recording Tuesday, October 28th, 2025, and we have a very interesting show for you today. We have our friend Jeff Kenalupo, the founder of Listen Ventures, famous for the so curious concert or concert conference that that launched this past year. It was like a concert, it was a lot of fun. Uh, we're gonna dive into everything regarding the consumer, hemp beverages, and vice wellness. Curious about that one. Anna Ray, let's get some vice wellness on the map.

AnnaRae Grabstein: 1:04

I know. I I was thinking a lot about integration recently, and people talk a lot about integration when it comes to psychedelics and the wellness movement.

Ben Larson: 1:15

But I've been really, especially with how popular it's become.

AnnaRae Grabstein: 1:22

Great, let's talk about it because I'm on a kick of integration of the lessons that I'm learning in my life outside of my work into my work. And just seeing all these incredible connections about the way that um just everything is so interrelated. And the lessons that we learn as parents can sometimes be incredible lessons that I can help the CEOs and like boards that I'm working with sometimes. So I'm just I'm just all about the integration move right now.

Ben Larson: 1:55

I love it. I love it. Yeah, I listen to a lot of motivational like things on Spotify, things that get me going while I'm at the gym in the morning. And I occasionally fire them off back to my wife. And I always preface it with like, yeah, I'm I know this is so me. I know I'm in like one of my moods, but just listen to it. It's it's like really interesting. And if you feel so inclined, maybe have Alistair listen to it on the way to school. And it works sometimes, but yeah, I love that we've often referred to it at Vertosa as cross-pollination, like encouraging our team to stay active out in the world beyond what we do and bring that information back, bring those insights back. And that's actually what I've loved about working in the beverage space is like it's a whole new world for us to explore and infer on like how that might influence the trajectory of cannabis and hemp.

AnnaRae Grabstein: 2:44

Yeah. Well, so here's my two lessons, my integration lessons for the week.

Ben Larson: 2:49

Yes.

AnnaRae Grabstein: 2:50

First one coming from Coach Rich, the jujitsu coach, that my eight-year-old goes to jujitsu, and I was uh sitting in and watching a practice, and at the end of the session, the coach said to everybody, Are you trying to be perfect? Don't because perfect is not real. He said, Be a little bit better today than you were yesterday. And it was just so clear and obvious and was just to the reminder that I needed.

Ben Larson: 3:20

Man, I love that. I yeah, right. You need that coach.

AnnaRae Grabstein: 3:24

Yeah, don't try to be perfect because it's just not real, but we want to be better every day. And then the next day, through my son's school, we get all of these updates from his third grade teacher through an app, the playground app. It's like the social media of the classroom. They often share the things that they were teaching the kids in the class so that then we can have conversations with them at home. And the lesson was Did you know that people communicate their feelings and attitudes? 7% with words, 38% with tone, and 55% with body language. And it was all about teaching the kids that they're communicating with a lot more than words. And again, such an incredible lesson. I think that in particular, when I'm working with executive teams, there's often so much that gets lost in communication, uh, be it through tone, through written communication, and uh just a really great reminder. So I'm all about integrating these lessons that I'm learning through my eight-year-old this work, uh, this week back into my work with executives.

Ben Larson: 4:34

Yeah. No, I love that. It's uh especially in this virtual world, that the last lesson, like it's really hard to build that connection when you're not actually having those in-person conversations. And in the world of Slack, like so much gets lost. And you really have to be intentional about re-grounding in that in that relationship and having that that face-to-face opportunity because otherwise you can just diverge and like you're not even recognizing it, right? You're not even actually communicating.

AnnaRae Grabstein: 5:06

Absolutely. Should we jump into some news? I know you've got stuff on your mind.

Ben Larson: 5:10

Yeah, some juicy news out there uh recently. Sorry, I can't help myself. The MSO thought it'd be wise to to sue in Virginia toll wine, DoorDash, uh, to the tune of $80 million, uh, essentially for unfair competition and and lost revenue. $80 million sounds like a lot, especially for a company losing about $17 or $18 million a quarter.

AnnaRae Grabstein: 5:41

Yeah, juicy.

Ben Larson: 5:42

Sounds like a nice recovery effort.

AnnaRae Grabstein: 5:43

Yeah, they haven't had a profitable, uh, they haven't had a profitable quarter. They have been a public company for quite some time and have never really entered the sphere of the tier one MSO group and really looked at Virginia as a huge opportunity. And as a result of the Virginia market not coming to fruition, I think the way that really anyone has wanted, they have chosen to sue some behemoths in the space. It's it's a really big surprise. It feels like they are a little bit of a of a David up against some Goliaths.

Ben Larson: 6:18

Aren't they mid-lawsuit in Pennsylvania against some hemp operators as well? Like, I I did that ever get settled. It just seems like a total waste of money for them, especially going up against these other organizations. You're just gonna piss away, you know, money. And to what end? Like they're putting a target on their back? Are they trying to be the hero? I just don't understand the end game for Jushi here.

AnnaRae Grabstein: 6:43

Yeah, I more think about those that are getting sued, the DoorDash and Total Wine and and that cohort is that I'm just really have been optimistic and hopeful about these players' entrance into the cannabinoid category. And and I know that they take risk really seriously and um are doing everything as compliantly as they can in these markets. And I know that from my own experience working with companies that work with them. And I just don't want them to get scared away and to think that this ends up being too much of a pain in the butt. And and the the consumers that they're targeting with these new products aren't worth it because I think that they are. And um, and I know that we're gonna be talking about that today.

Ben Larson: 7:28

Here's the hot tip you aren't scaring anyone away. Everyone has seen the opportunity, they know how big the future is for THC beverages. You aren't gonna scare these guys away. So now you've asked for the horns, and I don't speak for these companies, but I know better than to sue them when they want something. And so now you've put a target on your back, and they're gonna be more involved and more invested in making sure that they not only win this, but they get the last laugh. So good luck. I don't know. I I I just I I think it's a fool's errand. It just shows like a lack of like understanding and research as to what's actually happening in in the in the hemp beverage movement.

AnnaRae Grabstein: 8:10

And what other important news are you following in the world of hemp policy and regulation?

Ben Larson: 8:16

Oh, you know, it's just been very quiet on the federal front, nothing going on during a government shutdown. What hit the headlines that everyone is seeing is that the AGs pulled together the the state's attorneys general and penned a letter very similar to the one that they did last year and sent it to the Hill. And basically that letter was talking about actually a lot of reasonable things. We need more regulation, we need consumer safety, yada yada yada. And in the very last line, they put, and we need to shut down the intoxicating hem. They kind of snuck it in there. We know from offices that we've spoken to that they came in really hot and heavy, that this needs to be signed, that there's a 12 p.m. deadline, and so people were just signing it and sending it. And so you have AGs from like Minnesota that basically birthed this whole movement signing on to this letter. From what we've heard is that the letter isn't holding as much water as other letters that are being penned by people that actually contribute funds to the Hill. It's interesting, right? You know, it's like obviously the attorneys general have a lot of sway, and people generally do take their opinion into consideration. But what else do you expect from a bunch of lawyers and former cops? You know, it's like, of course, they're gonna be opposed to this. Of course, they're gonna want to continue the enforcement and the drug war that they've been backing for the last century.

AnnaRae Grabstein: 9:39

Yeah. Ongoing investment in prohibition definitely fuels the economy of incarceration and criminalization, which funds the Department of Justice's budget overall.

Ben Larson: 9:52

So I hear I just I just I mean, going how this relates to our last topic, like I just don't think people understand like how much people actually want specifically TAC beverages, if not hemp as a whole in the mainstream channels. It's not just about the hemp operators anymore. It is about the distributors, it is about the retailers, it's about the consumer. Like people want this product in this category on their shelves, in their hands, and they're gonna get it.

AnnaRae Grabstein: 10:23

I love it. It's a perfect segue to bring on our guest. So let's do that. I'll cue them up. Our guest today is uh Jeff Cantalupo. He's the managing partner and founder of Listen Ventures, a venture capital group that backs consumer-obsessed founders building the next generation of brands. Jeff's career began at the global ad agency, Leo Burnett, where he helped shape household names like Marlboro and Pop Tarts. And in 2010, he founded Listen Ventures, translating brand building instincts into venture strategy. And today he sits on the boards of Miss Grass, The Fresh Factory, Black Buffalo, Fable, and Modern Pediatrics. And he teaches startup branding at Kellogg School of Management at Northwestern. So he's here today to talk with us about everything that he's got going on in his head and a category in hemp beverage that's redefining how consumers think about wellness, vice, and the ritual of social drinking. So, Jeff, welcome to High Spirits.

Jeff Cantalupo: 11:22

Thank you, Anna Ray. Thanks, Ben. Good to be here.

Ben Larson: 11:25

Man, great to see you. And I love seeing the posters that you have on the wall behind you for anyone watching video. Like this is the same branding that we all got exposed to when we went to the So Curious conference in Chicago. And, you know, just kudos to you for like coming in to the market with a brand new show. You know, we we reflect on the fact that there's just so many conferences. How do you choose? Like, what is new? But this definitely felt new. It felt fresh. You walked in, it felt like you were in a little supermarket. There were shelves of all these different products. And then you had the speaking stage and the audience intermingled with the booths. It was like a big horseshoe around the stage. And it was just such an awesome experience where I felt that everyone in the room was listening to the talks. They were having opportunities to socialize and then also see what was happening at the people that were displaying around the periphery. So incredibly well done. What's on the wall behind you reminded me of what a great day that was.

Jeff Cantalupo: 12:25

Thanks, Ben. I appreciate it. Quite honestly, we didn't know what to expect. We we just felt like there was uh some missing conversation around the category that was being built as it pertains to the consumer. And so that was that was really the goal of putting on the conference. And we were overwhelmed by the the response and the number of people that we met and and the relationships we built from it. So appreciate you both being there.

AnnaRae Grabstein: 12:47

Awesome. Yeah, I will be back at the next one uh if you guys have it. So uh let's let's jump in. I I loved learning that your background was rooted in storytelling, not spreadsheets, which is what I think of as the traditional path into venture capital. And um, it's just a reminder that great investing is is about emotional intelligence as much as financial analysis sometimes. And um, I'd love for you to just shed some light on your story about making the leap from working in branding to launching less inventures.

Jeff Cantalupo: 13:20

Yeah, it's it's a it's a great question. My my untraditional path, Anna Ray, into the venture capital world. Happy to share a little bit of it. But um quite honestly, it was it was paved through some really unique experiences in the advertising space. So I spent a decade of my career at Leo Burnett out of school. Um, and I got very fortunate to work on some of the biggest brands in the world. Um, you know, Marlboro, Pop Tarts, uh, others. I worked with Procter Gamble, I worked with um DiAgio a little bit. And I fell in love with using creativity to build business. That's really what the business of an ad agency is. Um, but then I got really lucky and I was asked to help the agency build out a little bit of a practice around innovation rather than just advertising. And so found myself sitting in you know, strategy rooms with the the big CPG companies, helping them think about for Kellogg, for instance, like what does breakfast look like in the future and what brands might we need to build? And um, or Ultra, which is hey, we're in a declining industry with cigarettes and tobacco. Um, what else can we do based on what we're good at as a company? And so um that experience, one, I fell in love with innovation. It also opened my eyes to what was happening outside the walls of big companies because if you're trying to help big companies be innovative, you got to understand what the entrepreneurs are doing outside their walls. Um, and that was kind of the bridge to the early stage VC ecosystem. Um, I loved um thinking and doing innovation work. Um, but I also saw why big companies end up having to buy innovation more often than not. Um, and and that was kind of the the the underpinnings for why I started listening.

Ben Larson: 15:02

Well, let's let's dive into that. Let's dive right in and just see like, what is it that holds big companies back from innovation? What do these innovative companies that we get to work with like have to look forward to? And in working with those big companies, like how has that guided the advice that you give to these founders once you're engaged with them? Like, how do you get them to the point where there is a liquidity event or an opportunity for them to get snapped up?

Jeff Cantalupo: 15:27

There's a lot to unpack there, Ben. I I think I think um, you know, it listen, let's be honest, big companies have all the resources that that you would want to be super innovative. I think some of the challenges you see are just more of an organizational behavior um issue, right? So they have all the money. Yeah, I mean, they have they have all the money, they have all the talent, they have all the resources to do innovation. Um, but things get in the ray, and whether that is, you know, incentive design structure as it relates to who should be leading innovation and what what their goals are in their career, or um whether it's the true innovators, Helena, like you just mentioned, which is, you know, hey, to be truly innovative, we're gonna have to disrupt our own cash cow, and I can't get up in front of the public markets and tell people that we're gonna we're gonna deposition our current cash cow. So a lot of those things play into it. I think some companies have done innovation incredibly well. Like, you know, Apple's the biggest company in the world for a reason because they have innovation built into their culture. Um, but a lot of others end up having to buy innovation. Um, and so that's kind of what sparked the idea for me, wanting to go work with the entrepreneurs outside of these big companies.

AnnaRae Grabstein: 16:36

I love that we are now talking about the innovators' dilemma, uh, because I think that within the hemp beverage space, there's a lot to unpack with that concept because we are now seeing BeVALC companies um come into the space. And that certainly has to be something that's on their mind of both like cannibalizing their existing business, but also the opposite of just accepting the reality that potentially their existing business is declining, whether or not they choose to prioritize hemp beverages or not, so that maybe it can be kind of an off an off-road. Um, I'm curious of your thoughts there of how the innovators' dilemma is playing into the ecosystem of alcohol coming into hemp beverage today.

Jeff Cantalupo: 17:24

It's a great question. Um, to be quite honest, one of the reasons we got so excited about this market um as early as we did was because it's it's very unique in the sense that whenever you have a category creation moment, you often don't have the big guys sitting on the sidelines. They're often jumping in as quickly as possible. But that's not what's taken place over the last three or four years of the development of the hemp beverage side of business. Um, and that's largely just due to them being a little bit more um maybe conservative and patient as it relates to the regulatory uncertainty. And so it's kind of onch in a generation, right? You have as an entrepreneur, you have this window of opportunity where the big guys aren't jumping in yet for you to build real value prior to them getting in. I think some of them starting to make more larger moves into the space, I think makes a ton of sense. But I also think it paves the way for what I like to call phase one of what we'll see in this category, which is there it gave enough time to enough entrepreneurs to get large enough where they can't just be dismissed. So when the big guys do decide that they want to get into the category, I do think you'll see some movement towards buying innovation in this space versus just jumping headfirst and trying to build it themselves.

Ben Larson: 18:45

Yeah, I mean, in that time period, it's allowed hundreds of brands, you know, some people estimate 500 or more that have entered the space. And I was talking to a founder recently, and they were remarking it's like, if it was any other category, we shouldn't have gotten to like two or three million dollars in revenue yet. Like that's it would have just been such a hard slog, especially with this much competition. And so being a venture fund manager with so many investment opportunities, how do you focus on where to place your money? Like, what are you really looking for? And and I know you have this consumer focus, but is that something that you look for on the front end, or is that something you train into your portfolio as after you've made the bet?

Jeff Cantalupo: 19:27

Yeah, it's it's a great question, man. I mean, if I give you a little bit of maybe um kind of the backdrop of why we got excited, that might be helpful. So yeah, yeah, let's do it. I'd say four, maybe four and a half, five years ago, we started spending a lot of time trying to get our arms wrapped around the changing behavior with consumers and alcohol. And what we were looking to understand was like what what was driving these shifts, how and what were they replacing these moments with, what types of products were they looking to um and moving towards? And we spent a lot of time meeting with non-alcohol, not NA brands, so NA wine, NA uh, NA liquor, etc., and a you know, RTDs, um, and NA beer. And um that led to us getting deeper into okay, well, what else is out there? What else could be serving some of these occasions? And so we were very early to understanding what was happening in Minnesota and some of the creativity we're seeing from entrepreneurs. Um, and we just became pretty big believers that in some occasions where NA might fit the bill, other occasions people still might want something feellable. And you know, this is kind of the first time we've had an ingredient other than alcohol be usable in formulations um for beverage. And it became super exciting as it related to the modality. And so um we got we got pretty excited about the movement and spent a lot of time internally and with some of the entrepreneurs building in the space, trying to get our arms wrapped around how we might approach making investments in the space, what we thought um, you know, portfolio construction would look like um when this is all said and done and working backwards almost, right? Which is if you look at the DiAgios and the Anheuser Bushes of the world and even the Ultras and some of the tobacco companies, right? All of them build portfolios of brands, and that's how they manage a category. And I don't think that this is gonna be any different. I think that this is on the verge of becoming a very large category, and it's gonna be determined based on, hey, what positionings do you want in your portfolio construction? How do you think about um where you might be able to win? And what positionings do you think that the strategics are gonna want to have in their portfolio? And that's that's a little bit about how we've constructed our strategy.

AnnaRae Grabstein: 21:59

What I've heard you talk about is this concept of a vice wellness thesis that Listen has. And so maybe within the context of this portfolio construction that you're talking about, you could explain to us what the vice wellness thesis is and potentially even how it is supported by the um investments in your portfolio that that you can share about.

Jeff Cantalupo: 22:22

Yeah, I'm happy to. And just to I'll start with saying that the vice wellness concept is is broader than this category in particular. What we're excited by, and you know, it just it's kind of a fun term. Um, but it's we're we're excited by businesses that are exhibiting kind of the ritualistic and habitual behaviors that are traditionally often associated with vice companies or vice products and the economic structure of vice. But they're now being um leveraged through wellness permission. And that's kind of the vice-wellness articulation we have internally at Listen. And the reason we're excited by that right now, and this is across multiple different categories, is um it's very rare, but it's driven kind of by the super cycle that we're seeing around consumer behavior. And health and wellness super cycle, I think, is is real. But what makes it super exciting is that the motivation for it is driven by the types of things you ever want you always want to see in consumer brands that are sticky, which is kind of this motivation for status and and vanity, quite frankly. And those motivation structures often create incredible backdrops for you to create massive businesses. There's a reason that alcohol, tobacco, gambling have historically been some of the best quote unquote fundamental economic business structures. Um, you know, super high loyalty, super good margin, um, habitual in nature, ritualistic in nature, in some cases, even addictive in nature. Um, and those led to um, you know, business models that withstood good times, bad times, et cetera, um, and built some of the biggest brands that we know. I think status shifting from, hey, how many beers did you drink or how messed up did you get last night to, oh my gosh, did I, you know, what was my sleep score? Ben, we were even joking about this earlier, but like, did I get my eight hours, right? I think, you know, people being emboldened with tracking their physiological responses to their environment, I think is a massive indicator of where the future of status goes. And if wellness becomes status driving, um, I think vice wellness will become massive categories uh to invest against. And so that's that's kind of the underpinning. Within that, we think social beverage and kind of the future of what we're seeing in hemp um uh lends itself to it. Um a lot of people are making these choices for quote unquote wellness decisions. Um, but the modality of beverage and the ritualistic nature of it, I think lends itself to that structure.

AnnaRae Grabstein: 25:03

As a quick follow-up here, so you're really like kind of opening up this can of worms on a whole lot of different categories. And and I think uh it's it sometimes has been, I've seen it be historically complicated for VC funds to raise into cannabinoid brands and companies as well as other companies. And it sounds like you are building a bit of a diversified uh portfolio strategy where you are investing in hemp, but but likely other companies as well that fit this thesis. And um, I'd love for you to talk about how you are navigating the complexity of investing in cannabinoids while also investing in other things and how your LPs and and banks or whoever it is that you're working with are kind of supporting that that thesis as well.

Jeff Cantalupo: 25:55

Yeah, it's a great question. We have never been category investors. We our our thesis at Listen and and what we do across all of the funds we've ever raised and invested um is articulated as the following, which is we we back consumer obsessed entrepreneurs building brands at the tipping point of behavior shifts. And our job as a firm, and the reason I named it Listen, is to understand where consumer behavior is going and what shifts we actually believe will enable new big brands to be built. And I think historically we've seen this happen um within our within our portfolio strategy. We were very early to a thesis around, you know, people starting to prioritize mental health. And we invested in a brand called Calm back in 2012 that kind of you know has has become one of the brands that helped leave lead and accelerate that shift. And whenever you see behavior shifts that large in culture, there's always brands that are in and around helping to lead them. And so I'd say this is never categorical as it relates to our LPs. They they kind of believe in our approach to that. We spend a lot of time at Listen Anna talking to consumers directly. So we design our own research studies, we try to get into the the you know the mindsets of what is driving some of these behavior shifts that we're reading about or hearing about um from a high-level perspective, but we really try to get into the minds of the consumers to understand is this sustained, right? Is it a trend? Or is this a true behavior shift? And if it is a shift, what are the brands that we think might help lead that shift? Um, and that's a little bit more about our thesis. I think as it relates to this category, um as I mentioned, it's evolutionary, right? I think changing behaviors uh that people are having with substances like alcohol or even food, right? Like we've seen this movement in food where it's kind of cleaner label, better for you ingredients. Um, and I think all of this is actually kind of against that super cycle I was mentioning earlier.

Ben Larson: 28:02

I really love this. The impact of both the THC beverage movement happening at the same time as the decline of alcohol. And I I say it like that because I don't think it's causal, I think it's just happening at the same time. I found myself pitching a vision of the future to a prominent retailer where I was explaining that alcohol becomes one of many different adult beverage kind of ingredients. THC is a new one, and THC is an opportunity as a gateway, so to speak, to really open our minds about what the adult beverage landscape looks like in the future. And I'm curious as to how you think this movement is it long lasting? And do we imagine like liquor stores changing to adult beverage stores and like having all these different ingredients to play with? Like, what's that look like in the future? And does the branding change? You you you talked about like premium is premiumization, like a lot of products today are are feeling familiar, but they're putting a different ingredient side of it. But what you're saying, I'm thinking is like maybe the branding has to change too if we're truly listening to consumer and what they want. It's not the old brands, it's it's like something new, something fresh. And so there was a lot there. I just kind of like went a lot of different directions. I acknowledge that, but like I don't know. I'm just inspired to really think that we are at the at the very beginning of of this shift, monumental shift in in adult beverage.

Jeff Cantalupo: 29:28

Yeah, I couldn't agree more. And I I think a lot of it is, you know, still getting played, you know, is still gonna play out. I think what is um it was a little bit of what we were trying to uh provoke, even at So Curious, with the the merchandising you said you walked in and you felt like you were going through almost like a little kind of bodega. And the idea is like, what it what does merchandising of the future look like for these choices that adult consumers are demanding? I think one of the things that gets me most excited about this category is that I Throughout history, consumer demand ends up winning usually, right? So, like, yes, it's a regulatory uh gray area. There's a lot of ups and downs that the category is going to go through, but like you know, it was illegal to ask someone to pick you up in their car too, right? Um, now Uber's a hundred billion dollar company. So, like, I think that consumer demand has its way of kind of um ultimately winning in culture, and I think that's kind of where we're at, right? The demand outstrips supply in in this category today, which is why you've seen so many people enter it. Um, I think as you get to maturity and as you get to distribution density, um, you'll start to see it, you know, go through the the ebbs and flows like any category does, and there's going to be some um reckoning that that comes. There's not going to be thousands of brands. I think there will be, you know, maybe hundreds. But the innovation cycle is fascinating because if you think about the analog we're we're playing against, and I I personally don't think this is just alcohol occasions. I think there's net new occasions being used for these beverages that are very unique. Um, and I think that but the innovation cycle we're seeing is hyper accelerated. So for instance, right, it took 150 years in alcohol to go from like moonshine to you know multiple flavor RTDs that we're seeing the innovation live today. And like overnight, we're seeing oh, new ingredient. Let's make everything, right? Let's make let's make bottles, let's make RTDs, let's make let's make wine with THC, let's make everything. And it'll be really interesting to see how the consumer um determines which of those work, which of them don't, what are they looking for? What are they looking for that's slightly different? Um, and I think we're still in the early days of that.

Ben Larson: 31:59

You hit the nail on the head. It's not it's not all about alcohol replacement, but that is the opportunity for a lot of the alcohol industry. I don't know if the spirits companies feel this way, but the distributors and the retailers certainly do. If we can expand what we consider an adult beverage, and and I think there's there's a line that needs to be drawn somewhere above functional that divides functional with the adult experience, right? And then all of a sudden you've expanded the experiences that you sell in in in a supermarket or or on a liquor store shelf. And I think that's really exciting, like to to give more breadth to to these different companies playing currently in alcohol.

Jeff Cantalupo: 32:42

Yeah, I I couldn't agree more. I mean, that that's net new occasion uh capability for all of these companies. And I think the way it gets merchandised will be fascinating. I had a great discussion with John Helper, um, the owner of Tom 10 liquors up in Minnesota, who I think is you know ahead of the game as it relates to like at least being innovative with how they may be merchandising this in some of those stores. But you know, there's a world in which I think you see um people shopping um for outcome, right? There's a world in which you see them maybe shopping or merchandising this stuff for occasion. I I think there's so much that's yet to be determined. Um, and I think a lot of it's gonna have to be rooted in listening and following the way that consumers are integrating these into their lives.

AnnaRae Grabstein: 33:30

It's really interesting how you pointed out how much faster innovation is occurring. And I almost heard the words coming out of your mouth as you talked about how how slow before we could get that Moscow mule in a can from when you know that that alcohol started in a bottle. Uh, and I think part of it is just how fast everything is moving around us. Uh, and also the how fast the the supply chain and the retailers are able to to pivot and shift. And we you just referenced John Helper up in Minnesota. We heard uh, you know, last week or two weeks ago about Target launching THC beverages in their Minnesota stores. Uh C stores are kind of the next frontier. And uh when you talk about consumers, really it's about well, where are these consumers? And and how fast are the places that consumers are going taking these products and giving consumers a choice? Uh, because not every consumer is going to seek them out. They need to just sort of find them accidentally, right? Have that moment. Um, and and I'm wondering if if if it makes sense for us to talk about the different retail channels for a little bit and and where consumers are and what you where you think are going to be the most kind of impactful places for for consumers to find uh cannabinoids.

Jeff Cantalupo: 35:00

Yeah, it's a it's a great question. Um and I think we're again we're still in such early days. I will say that um part of the reason that this this industry has started, or at least was started, by building a pretty large direct-to-consumer business was because you needed to build and understand the relationship with the consumer you were targeting and what was resonating. And I think different than alcohol, they don't have that channel. And that is very unique to this channel as well, or this product, as well as the non-alk beer and the non-alk um spirits category. So you can build a direct relationship with a consumer base, really understand that, and then use that data to determine what channels should I go to. Um, and so I think you'll start to see uh channel diversification as it relates to strategy rollout and go to market happen. The reason that you've seen kind of a bit of a race by some of the earlier brands that have started to build bigger businesses to be in every state that is selling this stuff is for two reasons, in my opinion. One is this is category creation, and you kind of have to be um merchandise where this is being discovered by consumers. And two, you get you have a liability in this in this case, where if you put all your eggs in one state's basket and they determine um to sign a sign a you know uh a letter that says this is no longer okay in their state, then you've kind of um not diversified enough as it relates to the risk that the category does happen. So I think you've seen a multi-state, multi-channel rollout strategies in this in this category be the the kind of strategy du jour versus more maybe micro geo specific or um yeah channel specific rollout strategies that you see in a lot of other categories. I think that changes as we get more saturation and more um clarity around the regulatory environment. And I am the reason I say that is that it's just true that I think if you know who your consumer is, you're gonna build for where they want to find you. And some brands I think are gonna thrive at grocery stores. I think other brands are gonna thrive at C store. And I think that is is by nature the way that most categories ultimately get built. And I think we'll see that here. And this is a beverage industry, right? Like D2C's great for as long as it lasts, but like this industry will be one at retail and distribution will be you know the one that crowns the winners. And so um I think you know, having the capability and and the internal expertise of beverage folks is really, really critical for the ones that that are out and getting ahead today.

Ben Larson: 37:49

So you you brought up the kind of regulatory shifts, which is an unavoidable topic, as one might be able to tell from the beginning of the show. And I'm just curious about what your perspective is on where we're at on the risk curve as a venture capitalist, as someone who's been this in this for a few years now. Like, how are you feeling today, be it micro today in the middle of a government shutdown, or just you know, coming into the end of 2025 after having a uh a stellar year with with the growth of the category? Yeah, what's uh where's your head at right now with with kind of where where risk lies?

Jeff Cantalupo: 38:25

Oh, the billion-dollar question, Ben. Um, you know, listen, by nature we're venture capitalists, so we're we're investing in risky things. I think I'm very clear with all of our LPs that we have made some investments that have stroke of the pen risk. And whenever you're dealing with stroke of the pen risk, that's unclear, and and you know that it's likely going to be a bumpy ride. And so again, I always go back to consumer demand will help clarify the risk. And every day that this category continues to get awareness and trial and acceptance, not just by consumers, but by players like uh you know, publicly traded C stores like Circle K or Target saying that they're gonna try this out, or you know, bigger and bigger distributors every day recognizing that they need to fill some of their trucks with with these new products, or Doordash, you know, who you know is is experiencing incredible growth with this category. I think all of those folks are uh I think reflecting what the consumer is demanding. And so my my hope is that we'll find uh eventually find rational ways to to um organize and regulate this category. And I do think regulation is important here, um and where it should be distributed. I mean, part of the reason I I'm very bullish on C stores is that C stores by nature check more IDs on a daily basis than anyone else in the country. And I think that um they're a unique place to to have this this category be distributed um at scale. And so I think that brands that that understand maybe that that that's who they're building for, I think are in a unique position.

Ben Larson: 40:24

Yeah, I just learned recently that they have their own software, it's true age, and it's like the most robust ID checking software ever. Uh yeah, pretty, pretty amazing. Also great for discovery. Uh, a lot of people make single unit purchases and consume them within the hour. So it's just really, really awesome data coming out of the C Store channel.

AnnaRae Grabstein: 40:44

That's right. So you touched on some risk as it relates to policy and regulatory things, but I think that there's a lot of other risks that that either get you to a yes or get you to a no. And those things are things like the team, the business model, the product itself, all of those things. And I I think it would be really interesting for our audience to pull back the curtain on your process and to for you to share some kind of behind the scenes about getting to a yes or getting to a no and how many no's you make for every yes. Um, that is a yes, just some you know, behind the scenes.

Jeff Cantalupo: 41:25

Yeah. You know, unfortunately, the nature of our business is that, you know, 99% of the time we're saying no instead of yes. Um, you know, we we operate a very concentrated portfolio strategy at Listen, which is unique in the VC world. Like we only invest in about three or four deals a year, um, and we only invest in 10 to 15 companies per fund. A lot of our peers are investing in kind of 30 to 50 companies per fund and uh playing a more mathematical game. We're we're we're hyper concentrated and convicted investors. And so um, by nature, we're we're we try to be and maintain high discipline and a high bar as it relates to what we're looking for. Um, and that is across any category that we're investing in. When it comes to this category, um, it's one of the first times we've made a decision where we got comfortable with making a couple of investments in the same category versus just one. Um, we typically um when we're excited about a behavior shift, we'll we'll go try to find one investment against that behavior shift to make. Um, but in this category, we think there's going to be multiple winners and multiple positionings that um are attractive to consumers. And so we made a decision that we would earmark a certain amount of capital to make a few investments and we've done so. Um what gets to a yes, I mean, you know, at the early stage of investing, it's probably a cliche by now if you've talked to a lot of VCs, but it's really much it's really about the people. Um, you know, you're backing entrepreneurs um that you believe can have have the have the grit and the vision to to win, you know, building a business is not easy. Um but it starts first of almost with the entrepreneurs and how consumer obsessed they really are. You know, what are they doing that gave them the insights to build what they're building? What's their brand acumen as it relates to standing out and making noise and showing up and activating the brand? And then in this category specifically, like, you know, operational expertise and beverage expertise is critical. And so we spent a lot of time understanding margin structure. You know, this is unfortunately a commodity industry eventually. And uh there will be price compression and margin compression. And um, if you don't have the margin structure to withstand that eventually, um, I think it puts a lot of pressure on the business. Um, and so think about that. And then we also like to think about you know, do they have the capability to activate an omnichannel strategy? So, what I mean by that is the digital muscle, obviously, for the DC channel is great, but can you also use that digital uh muscle to drive velocity at retail? And what does that look like? What does your go-to-market look like? How does how does that um help your sales team when they're on the ground opening up new accounts and and showing the the retailer what and how you activate around the brand? So those are just some high-level things that we're super focused on when we're making investments.

Ben Larson: 44:25

Can we double click on the margin structure conversation just a little bit, especially as it pertains to early stage companies in a beverage category? And and maybe it's unique to the the hemp beverage category, but what are you looking for when when you say margin structure? Like, are you are we talking about like an eye on profitability? Anna Rey and I have been spending a lot of time talking about operating plans and all that kind of stuff. So we've been digging into numbers a lot lately. So forgive us. But we know that beverage is often like just go, go, go. It's like rapid pace, growth at all costs, et cetera, et cetera. But I keep hearing about the necessity to have like this margin structure, and I just have a hard time really understanding what that means in the early stages, and then like at what point do you have to be able to be like, yeah, we're we're actually profitable? Um yeah, what are you looking for?

Jeff Cantalupo: 45:14

I I'm I'm looking for an absolute command on every aspect of the margin. So while that might not mean that it's 65% today, is your is there a pathway to it and why and how and what's the bridge and how do you think about that and what partnerships have you made and what's your command on the supply chain? And how do you think about leverage, right? Because at the end of the day, consumer businesses come down to two things operating leverage and marketing leverage. And um, you know, so we spend a lot of time with our entrepreneurs before we've read a check, understanding how they think about both of those and how they think about getting there. I think um the other reason I think it's really important in this category, not not just because I think margin compression will happen, I think it will, but there's not a lot of capital out there for this category, unfortunately. And so while historically in Beverage, you see these companies raise you know lots and lots of dollars to get to scale and totally be comfortable burning a bunch of money and being unprofitable, right? Like liquid deaths raised like $300 million, right? I think um I I don't think those coffers exist today for this category. You know, a lot of the cannabis investors of of yesterday, you know, maybe didn't make you know a lot of money on their historical cannabis investments and they're not investing. And a lot of traditional VCs have vice clauses, so they can't invest in it. And so there's there's there's not a lot of upstream capital, at least that we're seeing deployed yet. I think it will come. Um, but I think the kind of growth at all cost strategy isn't gonna be um what the what's gonna make winners in this category. I think um capital efficiency is gonna allow them to get to the next rung and then hopefully unlock additional capital for scale.

AnnaRae Grabstein: 47:06

You're you're really uh diving into a complex question here when when you're talking about having a full grasp on your margin, because while also prioritizing consumer and brand, what what you're actually bringing up is is the complexity of the supply chain. And and we generally are seeing this division between companies that are more vertical and companies that are more asset-light and often brand focused, um, but have less control over their margin often if they are asset-light and don't own their infrastructure. Um, have you invested in cannabinoid companies that are owners of their own manufacturing and infrastructure, or have you tended to make investments into brand-only asset-light companies?

Jeff Cantalupo: 47:58

It's a great question. I think um we could talk about like cannabis 1.0 and and kind of the the regulated marijuana market, where we have an investment um in a brand called Missgrass that has taken the asset-light approach. Um, and the reason we made that investment, um, well, let me step back. I think everything about the regulated market makes it very hard to build a brand. It is state by state. Um, there's all these requirements as it relates to um the typical things you would want to build a great brand, right? And so um that makes it challenging. The reason we backed Kate Miller at at Miss Grass was because her view was I'm gonna build a brand before I launch a product. And she built a community around Miss Grass through educational content um and through a point of view on the category. And then she decided to go asset light and launch products in strategic markets where she already had people that knew the brand. And so for that side of the business, I believed in that approach. And she's done a phenomenal job building a building a brand in that category. Um, for what we're seeing in hemp beverage, I think it's slightly different. Um, we do have one investment in a vertically integrated company. Um, you know, we're in we're investors in a in a non-alcoholic beer company called Go Brewing that's vertically integrated. And they've launched uh, I believe one of the first um hemp beverages that is is a beer, um, a non-alcoholic beer. And it's it's a phenomenal product. We we love the positioning because we think the beer occasion is going to be large for this category. Um, and it's not like all the others out there, it's pretty easy to dose seltzer water with THC. It's not easy to make great non-alcoholic beer and then add THC to it. So really unique positioning. But they're their their model, and part of the reason we invested there is that the way that they're brewing the beer is a competitive advantage. And the fact that they're vertically integrated gives them um advantageous unit economics. Um, when I look at some of the other investments we made, these entrepreneurs have not vertically integrated. They're not, they don't own their own canning lines and they're not manufacturing it, but they've spent a considerable amount of time being very thoughtful about formulation and supply chain. Um, and so our other investments in the space, Magic Cactus and Delta, um, you know, incredible entrepreneurs, really focused on formulation and flavor and consumer insights that led to their approach to the category. Magic cactus's case, very unique, flavor-based with cactus water, um, multicannabinoid microdose strategy, right? Delta really kind of positioned that as a mass seltzer in five, tens, and twenties, and and one of the earliest to the market to kind of build that brand. Um, but you know, really rooted in consumer feedback. Um, and in those cases, they are outsourcing a lot of the supply chain, um, but they're maniacal about margin structure. Um, and so I think that it's not about necessarily today are you profitable. It's about do you have the margin structure that we think at certain scales will allow you to be profitable and and get you to those points of inflection. And so um that's a little bit of how we think about it. Um, but yeah, you know, it's beverage, it's uh it's it's a it's typically a harder category to have uh amazing margins out of the gate.

Ben Larson: 51:40

So your portfolio, Go Brewing, Delta, Magic Cactus, Miss Grass, love those brands. Putting them aside, who do you admire in the space right now as far as what they're doing, as far as owning the occasion or really listening to consumer? Like who's who's out there nailing it?

Jeff Cantalupo: 51:59

Yeah, I'll I'll speak to two that just super continue to be impressed by. I think the nowadays folks are doing an incredible job helping to build this category. I think Justin's a great operator. Um, they know how to show up. I think I love that they have taken an active strategy against um events and building that brand on you know, on premise when when and where they can. And, you know, quite honestly, I think the bottle format is great for them. I think it's it's good for the category for them as kind of some of the early leaders to kind of establish the category. And so I think they're doing great work. Um, another one of my favorites is uh Uncle Arnie's. I'm a huge fan of Theo. I I think they've they're one of, you know, let me let me preface all this by saying there are a significant amount of products in the market. There are very few brands. I think Theo and the team in Uncle Arnie's have have built a brand, and I love that. Um, I think they know who their customer is. I think um they're fun, they're creative. Um, and I love seeing that in the category. So big, big respect for those folks as well. Um, but those are a couple great brands.

AnnaRae Grabstein: 53:15

Awesome. And shout out to us for having uh Theo from Uncle Arnie's on the pod a couple weeks ago. And actually Kate Miller, CEO of Missgrass, uh was on the pod probably about a year ago. Um, so look back in the archives and hear from Kate about her journey with Miss Grass as well. Um, I love those tips, really good ones. And uh Jeff, you know, we're at the hour, which means that it's time for our last call. So, what's your final message for our listeners? Advice, call to action, closing thought.

Jeff Cantalupo: 53:47

Listen to your customers. That's it. Could have called that one.

Ben Larson: 53:52

Amazing.

AnnaRae Grabstein: 53:54

On brand, on brand, Jeff.

Ben Larson: 53:56

Wait, wait, I got I got one last call question. Will there be another uh So Curious conference?

Jeff Cantalupo: 54:02

Great question, Ben. I have a meeting right after this actually to discuss our plans for it. So, yes, we're planning on doing it again um in 26. So I would love for y'all to come back out.

Ben Larson: 54:13

All right, Jeff Cantalupo, listenventures. Thank you so much for the time, the knowledge. Uh, it was really great chatting with you.

Jeff Cantalupo: 54:21

Thank you, Ben. Thank you, Anna Ray.

Ben Larson: 54:23

All right, we'll talk to you soon. We'll see you at SoCurious 2026. All right, folks, what do you think? It was an incredible conversation. Let us know if you have any follow-on questions or anything else. Let us know who you'd like to have on the show, what topics you would like us to cover. Thank you to our friends and family at Virtosa and Wolfmeyer, and of course our producer Eric Rosetti. If you've enjoyed this episode, please drop us a like, a subscribe, a follow, a share. Your friends, your family, your loved ones. Drop a review on Apple Podcasts, Spotify, wherever you listen to your shows. As always, folks, stay curious, stay informed, and most importantly, keep your spirits high. Until next time, that's the show.