Josh Delaney has made local and national news lately by selling 80% of his company, FAB Nutrition to High Tide Inc, for $20.6M. Josh started FAB Nutrition only three years ago, and the fact that he just cashed out for over $20M at age 35 is rare. It’s the largest exit I personally know of by a young(ish) Milwaukee entrepreneur. That said, it is far from an overnight success story.
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I’ve got our office neighbor on, Josh Delaney. Big news, he is the Founder of FAB CBD, which he sold 80% of that at a $20.6 million valuation to a Canada-based company, High Tide Inc., publicly traded. He’s got a new development, The 1540 in the works in Downtown Milwaukee. It’s a 3-story office building with 4 townhomes. He’s a youngish guy but has been going at it for a while.
FAB started not too long ago but he’s got several years of online marketing, affiliate marketing and eCommerce experience so far from an overnight success. This is the largest acquisition that I know of a younger Milwaukee startup founder that I’ve ever heard of. I’m so excited to have Josh on finally and get his backstory. You finally are Big Tom enough to make it. You know you make it when you cashed out for about $20 million and get invited on the show. Welcome.
Thank you. I appreciate it.
Josh, what’s your backstory? What’s the origin of FAB CBD?
I’m sure I won’t spin it off into a dovetail of stories. I have my first business when I was eighteen and haven’t stopped since, mostly in the sales, marketing and affiliate space. That is transformed into a multitude of businesses, websites, products and things like that. The grand scheme of it has always been sales, marketing, direct sales and affiliate marketing.
Also, in fitness. You owned some gyms for a while. You’ve been a fitness nut and that’s blended into your eCommerce but when you think about FAB CBD, you are a supplement company. Touch on that a little bit.
With the progression of sales, marketing and all that, I found the fitness industry very early. I started business at 18 years old and found the gym at 19.5 or 20 years old. That was an immediate passion and love. I get it. Having a six-pack is like a superhuman. I was so addicted to that quickly, but I didn’t marry business to fitness or health and wellness for probably 5, 6 to 7 years.
One of my investments wasn’t my business, but an investment I had made in a startup led me to Los Angeles and that was where my love for fitness, health and wellness started. I started meeting people in the health and wellness space in Los Angeles. You can throw a rock and hit somebody in health and wellness. That was where I started to go, “I like the health and wellness lifestyle.”
I’m starting to meet people that are in health and wellness products and all that. I married my sales marketing and affiliate marketing and what I could do online with the passion of, “My whole life is these two things. Let’s put them together.” That happened when I lived in Los Angeles for a while. Since then, my niche within sales and marketing has been mostly health and wellness and consumable products, which has a lot to do with my lifestyle and from a business standpoint.
Consumables, reoccurring billing and products that have to be ordered every 30 to 60 days. It was a very easy point for me already being in my career in sales like, “I love this space and this is a good business to be in too. This makes a lot of sense.” It wasn’t like, “I love health. Let me figure it out.” It was very strategic like, “This is a good idea.” I happened to be obsessed with fitness. This is a great business model for health and wellness products, building them and all that. That has stuck for over a decade.
You say it’s a great business model, which makes it sound a little easier than it is because it’s a very saturated market with supplements. Many people want to get into that. It’s sexy. It’s very hard to start a sexy company with supplement products. Usually, you see the big valuations on companies in non-sexy industries with lower competition, but you pulled something off here that is difficult to do. How did you formulate these products to stand out? Was it because you have this marketing engine and all the experience with affiliates that you are able to get this on a scale on day one? You were early when it came to CBD.
FAB was only a success story because of what built up to it. It was accidental and not planned like CBD. I had a decade of doing the same model in harder markets, so when CBD came around, I was early. I didn’t do anything different than what I had been doing. The difference was I got into something early and had a tail to it. Supplements are difficult, but my way into it was I was an affiliate for a lot of big billion-dollar companies.
I was selling millions of dollars in proteins and superfoods, which are my niche. Powder supplements were my thing. As I got closer to the top of these companies in terms of befriending owners and the formulators, going into manufacturing facilities and warehouses and making friends with more of the executive level people within the companies that I was selling for, I got to see behind the curtain. Not to discredit some of these guys, but my ego was like, “This is not rocket science.”
Putting all of this together, the logistics and supply chain, it’s not overly difficult for a competent person. It didn’t mean like, “This is going to be easy to startup overnight,” but I got it. If I probably had gone through that exercise in any industry, I would have thought the same thing, but that happened to be the one that I got from having a product in my hand and using it to going to see how it was made and where it started. I said, “With my health and wellness background, I get why you’re putting that ingredient in that bottle, why you’re using that bottle instead of this bottle, why you did that from a cost standpoint, you put these ingredients together and the truck is taking it here to ship it.” That made sense to me.
Having a background in health and wellness, I was able to understand ingredients, formulations and stuff. That was natural gravitation, but all of my sales and marketing skillsets online enabled me to build a team of great people, so I was ready for something to be early in. When CBD came along very accidentally, I was working on another protein and superfood company of my own, which is called Plant Goods.
I was building that when I got a call about CBD and made the decision to say, “I’ll bet on that. This seems good and makes sense.” I don’t know what’s going to happen. It was a zero-sum game. We have no products and knowledge of the industry at scale. We don’t know if this is going to work or not. It was just me. I said, “Let me put a couple of bucks into it.”
I got online for $20,000. That’s how much it costs to get online with products. The minimum order quantities of CBD products at the time when I was making them was 50. I only had to order 50 of each SKU I had at that time. That’s how small the market was. Now, nobody will touch you unless you’re ordering thousands. Our orders were in the tens of thousands. That was how easy it was in terms of coming to market. I was online for $20,000, recycling money and in the profit after 70, but that 50 in between, I got from sales. I recycled 50 more to give it about 70 and then we were off to the races. 70 turned into 30 million. It was crazy.
What are some of the main tactics that you use to sell this product and to sell millions of dollars in products before FAB CBD?
The biggest market I’m in, in terms of marketing, is affiliate marketing and search engine optimization. Those are my two skillsets and having great people within those skillsets as well. I’m not the only one that’s punching the keyboard. Affiliate marketing is such a great way in the product business and in service businesses, too, depending on what you have like SaaS products or software and stuff.
There are big affiliate markets there, but in terms of a physical product business, there are tens of thousands of other people and marketers out there that are talking about those products on their websites and blogs. They’re investing in getting their websites to rank for keywords. You can hedge your bet on their investments by finding those people.
I am a big fan of affiliate marketing in that sense. You’re working with other owners almost. I have someone who has the mentality to sell my product. That’s a next to impossible thing to find even in your staff. That’s next to an impossible skillset to find. With FAB, we have over 1,000 affiliates. I have over 1,000 people that treat their business, which is marketing my product, as seriously as I do my own. To me, that’s nuts. Why would you do anything else? That’s a big thing we do.
We do a lot of search engine optimization, which plays into that same thing. We’re building real estate online rather than renting. We do a lot of paid media as well, but nowhere near the investment that we do. The way to look at it is, “If the internet is a real estate portfolio, are you renting space or are you trying to own and buy space?” I take the approach of, “I want to own websites, assets and my own traffic.” We’ll rent some from Facebook and run some traffic from Instagram, Pinterest and things like that, but I want to own as much traffic as possible.
What main takeaways from your story would you pass on to entrepreneurs and aspiring entrepreneurs?
Everyone’s story is so different. I spent a lot of years in the motivational space in terms of always needing motivation. I’m in the space of, “If you need motivation, entrepreneurialism is not for you.” It’s only getting harder to start a business. As the years go on, we’re running out of ideas. There are new problems to be solved, but the rates of new problems to solve are not growing as fast as we are creating new products or services. We are creating products and services faster than there are problems to solve, which makes it harder. Markets are getting saturated faster. You have more people wanting to enter, which causes distraction.
It’s an execution game. It is no longer like, “Let’s think about it forever.” Do it as affordable as possible. My big message, which has been for several years, has landed on, “Put up or shut up because you’re going to ruin it for the rest of us. You are either going to play the game and play it hard and right with us because there’s plenty to go around if you do it right or a distraction. Come work with us.”
I’ve had a lot of those conversations with a lot of people that work with me to say, “Do you want to play this game of entrepreneurialism on your own or do you want to come with us and play it with us at a bigger level? You’ll get more out of it. Execute what you want to do. Let’s go.” That is more of the tone and messaging I carry with me. “Let’s figure out how you’re going to do something, go execute on it and figure out later whether you like it or don’t but let’s get moving.”
You can either go do and start this on your own or work with us with much less risk, stress and probably more money and bigger reward. In most cases, someone who’s your employee is not going to get a $20 million cash out.
Everyone that’s on my team has heard the pitch, “FAB is going to sell. I’m ready for it. You’re all going to get paid.” I’m happy to say that I gave away over $1 million. Everyone got bonuses and was paid. We got a ton of stock and stuff. That was a big moment of like, “I told you we would do this and it was going to be bigger for you rather than doing it on your own.” I take pride in, “I’ve meant what I said. I delivered on that and we’re just getting started.” It was cool.
That’s an interesting lesson because I don’t think people realize how difficult it is to get something off the ground on their own. They could be a lot better off if it’s a certain personality type going and working for someone like you or that next hot startup, being an employee for 3 or 4 years over there and getting something out of it. I know how hard you work and how you don’t. You turn it off and you’re wired a different way. Do you want to touch on that at all?
It’s the same point. You get it because you’ve been doing this for a long time too. I remember meeting you the first time. You’ve been doing this for many years.
I started this as a daily deal site out of college in 2011 or 2012.
I forgot about that, but that’s the first time I’ve ever met you. We didn’t form a relationship yet, but when I met you, it was on a deal site. The second time I met you was in your office in Bay View. That’s when our actual relationship started where we knew each other. You stuck to it. A lot of people don’t want to stick to stuff. It’s hard to see the vision. There’s no rhyme or reason.
I didn’t have a bad childhood, so I don’t know where the wiring comes from when I see it. I don’t exactly know what I see. I just see something. I don’t know what reason, but it is worth it for me to be all in. That is also a part of my messaging. CBD was an accident, but I was ready for it. It’s the product of me being all-in on all crazy stuff. I had franchises and so many businesses. Not all of them are wins. I had a lot of fails and total bombs. I had a lot of breakevens and a lot of wins. I exited the franchises.
It’s been all over the place, but the biggest thing was being all in because I knew I was going to do something. I knew we had the people, I had the mindset and knew something was going to happen. I always stayed ready. The motivation was, “I’m going to be ready because it’s going to happen, but I have no idea what’s going to happen. I don’t know what it’s going to be.” The irony of it is, “Is that exactly what happened?” Something random happened, like CBD, which I had no knowledge of. It came out of nowhere but I was ready because I just had it. You want it or you don’t and I wanted it. I was ready when something big happened to be able to make the decision, “We’re going to do that and we’re ready to be all in.”
There’s a lot of luck and timing that happens with entrepreneurship, but you built up a skillset over many years to be prepared behind the scenes. You had a lot of those fails and breakevens, which is more likely than what just happened, but you had all of those before you hit it big on this thing.
You have to be ready to be lucky. Luck is a real thing. It’s not cliché. Me getting the call from a friend about CBD was total luck. That’s what it was but the skillsets to be ready is another thing. Everybody gets lucky and has lucky opportunities. They just aren’t in a place to recognize them sometimes. The messaging is, “Be ready and all in. Believe in yourself so that you are ready when luck strikes.”
With my story too, which I won’t go too in-depth, the coupon business was a failure, but we learned a lot and built up a network. Pivoting to a marketing agency was a shit show in the first several years. We then stumbled across podcasting and that worked in 2016 for us. We launched it as a service in 2018 and didn’t have a single customer for 6, 7 months when I thought that was going to blow up right away.
We now have global brands reaching out to us that we get to work with. We’re doing good, but it took a long time to get there, having that vision or knowing that something is going to pop off or keep pivoting and trying. There are lessons to that for sure, no matter what field you’re in entrepreneurship. I do want to shift to Milwaukee. You spent time living all over the country, like in LA, San Diego, Charlotte and Alabama for a little bit. Why did you come back to Milwaukee? What do you see in the city?
First off, the Bucks. I’m still sweating from Game 7 in 2022.
Be thankful that Durant’s foot was not an inch back. It would have been different, but in business and sports, we got to take advantage of these good breaks.
I saw Coach Bud, not personally, but he showed up at the same place. I was eating breakfast that next day. When they walked away, the buddy that I was with was like, “Coach Bud, when he was on the line, what was in your head right there from behind him?” He was like, “I died inside. I thought it was for sure a three.” When he laughed and walked away, I was like, “We all died on the inside.” It’s a great question. There’s a legitimate reason for it.
I lived everywhere. Being raised in, I don’t want to say small town, but like Menomonee Falls here, right outside of Milwaukee, home is home. That’s the first thing. There’s nothing cliché about that other than home is home. The irony is that I don’t have family here anymore. My family all thought that I would live elsewhere. My parents moved to the Southeast of the country because I was in Alabama, Florida and Charlotte. I had businesses in Massachusetts, so they tried to corner me on the East Coast.
I ended up not doing that, but I was living in LA on the beach, in Alabama, having the personalities in Los Angeles, the Southern drawl personalities in Alabama and Charlotte and meeting my wife who’s from Florida. I’m a very self-aware person. That’s a big message too. We’ve got to be self-aware. A lot of this is self-awareness in everything. Lack of self-awareness is what I see where people make the biggest mistakes. The most self-aware people are the ones that have done well.
It was being very aware of the type of people I liked and got along with. Big fish-small pond and small fish-big pond, I took all that into consideration. I like Milwaukee. Honestly, years ago, when I started moving, the first time I moved was right out of high school, it was because the business community here was not that prevalent yet. I was aware of that. I was like, “I’m trying to network and do this. I’m in sales. I’m not meeting anyone. No one gets it here.”
A struggle in my early twenties in Milwaukee was that people didn’t get it. It wasn’t accepted as much. I’m sure you went through too. Years ago, we were the weird people if we were selling something. They’re like, “What are you doing? Are you starting a business? Why would you do that? Go back to school and get a real job.” That’s at least what I heard.
I didn’t move away from Wisconsin necessarily. I never had a problem with Wisconsin or Milwaukee, but I moved away from not being accepted to being a crazy entrepreneur before I even knew what I was doing. I was like, “I don’t know. What do you mean? Why is this so crazy?” Going and traveling to all those other places, being aware of the people, how people treated you and vice versa, Milwaukee drew me and my wife back again from Tampa, Florida, a pretty cool place.
We wanted to be big fish in a small pond in a good way. We wanted to make a difference. We do a lot of charity work. We’ve given six figures back to charity. I hope to get that up to seven figures. We like knowing people. It’s not just this quick as I was in LA and San Diego. You meet people and it’s in and out. You maybe never see them again. There are no relationships built that well. There’s always an agenda. All of those things led us back here to say, “We can build real relationships here and have a real impact. Milwaukee still got a lot of problems, but we’re on the come up.”
At our age, my wife and I and where the businesses were at, we moved people here from other states. I was like, “Let’s be a part of Milwaukee’s come up,” rather than, “Let’s go to some random city and be another person there.” We have the luxury of picking where we want to go and what kind of impact we want to make.
We felt that the biggest impact that we might be able to make is back here in Milwaukee to say, “Let’s be a part of that come up. Even if it’s a tiny bit, let’s be able to build our little legacy to look back and say, ‘We moved back to my hometown and made a difference. We knew and met people. We impacted people that impacted us and vice versa.’” Milwaukee drew us from that angle. I feel like we’re trying to do that. We’re making an attempt at making a difference in the areas of the city that we are trying to touch, even in a small way.
A lot has changed for the better. There are areas to improve. You talked in a different interview about having a talent problem here in Milwaukee. Can you touch on that a little bit? What do you think the city can be doing better? This may not be an overnight fix to attract talent.
This is controversial with a lot of other people in the business community with me here. I would agree that Milwaukee has come up far in the business community and the startup community. It’s way more accepted. All that has been great. With the problems, I might get torched for this, but whatever, but Milwaukee needs to stop talking about raising money, venture capital, and all the stuff that has nothing to do with the built businesses.
Here’s a stat that’s been released by Startup MKE, which I thought was ironic because they talk about raising money all the time. Less than 3% of businesses get funding here. The businesses that are here are not businesses that are looking for funding so let’s stop talking about it at that capacity. If you’ve got a business that needs funding, you’re going to get it here because there are not many that can accept it and even at a place that could take it.
If you do have something that can take it, you’re going to probably get it because it’s not a huge community here of businesses that are at that level or have that good of an idea. The businesses and the entrepreneurs that have done well have a great idea and legitimately have a business model, a proforma and all of the things that map out for them to get funding, get it. Kudos to them. They do the work to get it.
Maybe I’ll help be a part of the missing piece here or I won’t. Who knows what that will hold? The message for businesses in Milwaukee is a lot more bootstrap businesses and off the ground. You don’t need the money. You need to get to it and someone to teach you. I’m speaking from my place. Do affiliate marketing. You need people to talk about how to get your bookkeeping together. How many times I do meet people that don’t know their numbers is crazy.
I say that in an encouraging way, not like, “You’re dumb.” You just don’t know. Nobody has sat you down at these conferences that we do here and talked about, “The first step to making money is tracking money. You can’t make it if you don’t know where it exists.” Things like that are where we need to shift the entrepreneurial community here. That goes for some guys that do well.
I’ve met guys that do well. They’re like, “We do well because we’ve got a great product, but we could get better with our hiring.” That is why talent is harder to find because the talent that we have here is yet to reach its potential. They’re not visible to us yet, but they’re here. I don’t believe that we don’t have talented people in Milwaukee. I believe that those talented people have yet to sprout themselves. They have yet to be recognized because they have yet to be in an environment, a business, under an entrepreneur or under a model that allows them to showcase their talent to realize what they’re good at or not good at. That is what we’re lacking, but I say it in a good way.
I don’t think we have no talented people here. The talent is not being utilized properly because the messaging could be a little bit better to help a lot of those businesses do well so that talent can raise with those guys and shift. You’re rarely going to get a team that stays with you forever. They’re going to come from me to you, vice versa and bounce around. That’s how they grow. All good people came from somewhere, but they must have done well, so we’ll take them.
There needs to be more talent exchange in the right environments to start giving Milwaukee that next level of the proper business community. We have the ideas, energy, promotion of business and entrepreneurial and institutional funding to get the city into it. We have all those pieces. We need to move the players around, get them the right messaging and training and create good homes for them so they can sprout up and say, “There’s the leader, good marketer, good guy for this and good girl for that.” We start to notice them more. That’s where the work can go.
You’ve invested in the real estate community here. You have that new development coming up on the Eastside. Can you touch on that and its importance?
It was one of the last pieces of land in Milwaukee. We need to put some cash in some places to invest. We’re trying to diversify.
Where exactly is this?
It’s in The North End, so Water & Pleasant, right in that big Mandel development on one of the empty corners. We’re going to have a commercial building. That will be super cool. We’ll have four townhomes, all on the luxury higher-end side, which is a bigger investment for us and our team, but it’s an underserved market, so it’s not just us trying to make nice things.
I legitimately think it’s an underserved market and that’s after talking to a lot of people to say, “If I want a nice Chicago or New York-style downtown lifestyle, we don’t have things that cater to that outside of higher rise condos.” You’ve got a 2-bedroom and 2-bath with a great view of the lake. That’s the defining city living. If you want to live in downtown Milwaukee, in the coolest place, that’s what you’re going to picture.
In a good way, there’s more to Milwaukee. I don’t see the lake every day from my view, but I see the river in the North, which is where I live. I see people walking and a lot of activity, which is also a great part of Milwaukee. Milwaukee is a very livable city. The market for more of that internal city, walkable, boots-on-the-ground lifestyle and not just lake views can be a hot commodity and underserved in terms of new stuff. A lot of the stuff out there that exists was built a decade-plus ago, not updated finishes and things like that. I’m trying to serve that.
Any closing thoughts?
I would ask you all the same questions, but you are doing a lot of stuff too. You meet with a ton of big people in here. I watch your traffic come in and out of here every day. I’m always like, “Who’s this person?” My closing statements would be only to ask you all the same questions and say, “This was great. I appreciate it.”
We can do that some other time, but thanks for walking the ten steps over here. Congrats on your success. I’m excited about what you have to come.
I appreciate you. Thank you.
A reminder to everyone reading, this show is brought to you by OnMilwaukee and GoGeddit Marketing and Media, GGMM.io. If you got a bunch of value out of this, you’re in the Milwaukee business community or you’re a startup founder, make sure to share this episode. Josh dropped a lot of good nuggets in there and sold it. Thanks again for reading.