“Now that we've been so successful, and we've done $10 million direct-to-consumer, which is a hefty amount for a small business operating online and still 78% of consumers are purchasing in retail for this type of product, and we haven't touched any retail [so] now it is time to bring some money on and let's put some fuel on the fire and really try to grow this business.”
Building out the brand infrastructure for growth
The round of Series A funding was led by clients of MSA Advisors, including participation from Entrepreneur Ventures, Joyance Ventures, Lab Capital Advisors, Verso Capital and Entrepreneur Ventures. MOSH will invest the money in several key business activities to grow its brand, starting with a bigger push into retail, Schwarzenegger said.
“Number one is retail expansion. We are in nine stores today - that is nothing. Our goal is to be in 1,800 stores next year, 4,000-plus a year after that. And unfortunately, it takes capital to go and grow into the retail segment.”
To support that retail growth, MOSH will also be building out “the team to implement and execute the strategy for retail,” as the company has been “operating in a very lean capacity," Schwarzenegger said. And lastly, MOSH will use the money to “continue to market, to reinforce our strategy at retail, and to build out an R&D platform, so [it] can build out other product lines that speak towards the mission,” he added.
While “direct to consumer is a beautiful way to test” and start a brand, retail is key to unlocking growth for the brand, as it is associated with higher velocity and revenue, Schwarzenegger said.
“Now that we feel like we have a foothold on a great product, and we have really great retention, and there are a lot of consumers that are interested, it's time to grow. In two years from now, how big will our direct-to-consumer business be? Not much bigger than what it is now. We will continue to grow at a steady, slower pace, but the real growth of the business in terms of revenue and actual velocity for the bars will be coming from retail.”
From a struggling consumer to creating a brand with his mother
While Schwarzenegger's focus is on building out the brand, he has been a part of the natural, better-for-you space for twelve years and was an early investor in a number of food and beverage CPG brands, including Liquid I.V., Poppi and Super Coffee, before launching MOSH with his mother Maria Shriver.
His journey in food and beverage CPG began at age 16 when he was a "struggling consumer ... [who] was struggling to find healthier alternatives at the grocery store," Schwarzenegger said. And at the time, Schwarzenegger stumbled across the food chain Blaze Pizza and invested in the company and operated two stores, where he saw that other consumers were looking for similar things.
"What I started to see from operating my own stores ... was that there was a macro shift that consumers were starting to ask for– gluten-free crust; they wanted keto crust; they wanted different meat options; they wanted plant-based meat," Schwarzenegger said. "There's obviously a shift happening here that customers are wanting more out of their products."
After divesting his stake in Blaze Pizza, Schwarzenegger developed a simple strategy to invest in other health-focused, better-for-you brands.
“My thesis is very simple; it's just: Is it the better-for-you version of what is out there in a large addressable marketplace? So, Liquid IV was just the low-sugar, on-the-go Gatorade. Super Coffee was the low-sugar and healthier Starbucks Frappuccino or Dunkin Donuts latte.” Schwarzenegger said. “How can we get it so people are willing to make a switch over, [where] it is not sacrificing too much on price, flavor and taste, but they know the nutritionals outweigh all those.”
A focus on brain health, supporting Alzheimer's research
Just as consumers are looking for healthier, better-for-you options, they are also looking for products that can support their physical and brain health. The idea to focus on brain health was inspired by a relative of Shriver’s and Schwarzenegger’s who battled Alzheimer's for twenty years and started a journey understanding the connection between food and brain health.
“The Cleveland Clinic, the largest brain health institute in North America, they figured out that there are three main contributing factors towards your brain health. Number one is utilizing it and socializing, continuously using it. Number two was exercise, and three was diet.”
And research into the Blue Zones -- regions where people live the longest -- has also shed light into the foods that are good for a "mind diet," Schwarzenegger said. These areas, including Okinawa, Japan; Sardinia, Italy; Ikaria, Greece; and others, eat less processed food, and their diets were "low in sugar, high in healthy nutrient fats and high in ample amounts of protein," including walnuts, olive oil and fish, he said. With this research, Shriver developed the brand to "[speak] towards this kind of mind diet that incorporates ingredients that are good for the brain and for the body," he added.
“This isn't going to reverse Alzheimer's, ... but it is proven that if you do eat a specific way, it is beneficial to your brain and towards your body health. And that is just what we are speaking of and speaking towards. And our goal is to create other product lines down the road that continue to speak to that, and that could have more efficacious ingredients or things of that nature in it.”
As part of its overall business mission, MOSH is also supporting brain health by donating a portion of its sales to support Alzheimer's research, Schwarzenegger’s said.
“We are a mission driven company. We are for profit, but we also have raised money and will continue to raise money. We have raised over six figures of money for Alzheimer's research, and that's the core of this business.”
