Todd Harrison Interviews Scott Reamer: The Story of Jackson's Honest Potato Chips
Chora Capital's Scott Reamer explains how his Wall Street experience helped him discover a dietary strategy that eased his son's mysterious illness, and how that solution later sparked a family business.
So what's next? What do you foresee? Have you faced any growing pains? Have there been any lessons for the entrepreneurs out there who have a dream or are coming out of the gates with their mission? Anything on the food chain, so to speak, any lessons learned along the way that you might be able to share?
SR: As I think about it and have watched her build this, what's changed is a result of the interconnectedness of the world, and this is sort of typified by the fact that she received orders from eight different foreign countries in the first two months. The interconnectedness of the world is a fundamental shift in how you build a business now, I think. A corporation like Lays (NYSE:PEP), which has 75% margin share in potato chips, for instance -- in the US it's a $9 billion business per year. A corporation like Lays couldn't start today without engaging people at some human level, and do so through either social media or other online methods.
But the reality is, some nameless, faceless corporation, particularly in the consumer packaged goods or even the services space, is unlikely to do really, really well and get that increasing returns/positive feedback loop going of good reviews begetting better reviews. You can't really get that in a modern day if you're just this nameless, faceless corporation without a mission, really... that you're just out there for ROI.
You've spoken about this for a decade, Todd. That there has to be a mix of the financial and the human. I see, as I watch her build the business, how critical having a connection with an actual human being is. Corporations are not human beings, and neither is that the case in business where you can start a company and hope to do well without having some passion, some driving story or some driving mission. And she's got that in spades.
TH: I agree with you, a good story goes a long way. But it has to take more than that, right? To have a great story will maybe open a door, but to have a great product will keep the door open.
TH: For those unfamiliar, Scott has been one of the more astute analysts for a long time; he is a multi-linear thinker and a very shrewd market practitioner. In an age where some people think the louder you scream, the more important your message, Scott has always been a "strain your neck so you could hear what he has to say" kind of guy.
My question for you, though, because there are a lot of folks who remember you as Scott Reamer, the financial market seer. You've always been extremely talented in that regard, and I don't want it to stray from the focus here, which is Jackson's Honest Potato Chips and the story that surrounds it. But while I have you, in two minutes or less, can you give your view of the world and where we are? I know it's a very complex question, but what are you seeing that could maybe help some Minyanville readers make sense of what's going on in the world?
SR: I'm focused on building quantitative strategies to monetize volatility, and there are a bunch of ways to do that now, not the least of which is the futures and the ETFs and such, both here and in Europe. But suffice it to say that when we originally made the big picture call in 2006, 2007, even in 2005, you recall that they were saying, "Gosh, we're going to enter a period of pretty extreme volatility, both up and down. And both sides of the distribution curve are going to get a lot of work, both far sides."
Now there are a bunch of books to describe some of the qualitative mechanics of that, but at the end of the day, what we're living through is an extraordinarily volatile time, and the net message is: This is going to continue. Whether it's a specific geography or an asset class will depend on the mechanics of those particular places and those particular assets. But the overarching theme of increased volatility has not gone away at all, even if we have long periods like the last two years of a pretty highly damped volatility. What we're getting from the monetary and fiscal policy experts is an attempt to control volatility. And every attempt by one or more entities to control something that's as natural as volatility only results in more of it.
So the net message is greater volatility in all sorts of asset classes. Probably less consilient volatility, in the form that we saw in 2008 and 2009, where everything went up or everything went down. I think what you're going to see over the next several years is pockets of volatility in certain asset classes, certain geographies. So a breaking apart of the volatility wave that we saw start in 2000, come back in 2008. We're going to see more of that, but it's going to be a little bit more diffused in time and through geographies and asset classes.
So bracing for that volatility, attempting to step out of its way, or to try to monetize it if you're able to do that, that's the biggest continuing lesson from 2000, from 2008, the boom/bust cycles that we've seen, is that they're not over. And that those are going to become more challenging to deal with, because they're not as easy to see as they were in 2007, because everything was going up. And everything then subsequently went down, as it were, so you had these waves of volatility that were very broad and consilient. Now we're seeing, and we will see, in my view, different pockets of volatility express themselves in different ways. That's going to be a challenge, an almost bigger challenge than 2008 and 2009, for sure.
But nevertheless, that's the one thing I can point to as being a sort of a high confident statement, is that the volatility will continue. And dealing with that, as you've said many times, just surviving is the most important part, and monetizing it is the cherry on top if it's possible.
TH: Excellent. As we tie up here, I'll just ask you to think back for the moment on the last decade plus. When we look at everything we've witnessed in the global markets, whether it was the bubbles and busts in various asset classes, and/or your personal experiences, if you could synthesize and really drill down and say, what was the one thing that if you had the benefit of hindsight 10 years ago, that you've learned, given your experiences, personally and professionally, what would that sound like? What would that feel like? What would that look like? If you had to kind of synthesize and sum up your experience over the last 10 years, what have you learned?
SR: That actually is remarkably easy to answer, and that is, don't ever, ever give up. Whether it's your portfolio, whether it's your business, Minyanville today exists because you never gave up. You didn't give up over a lot of reasons, but you didn't give up. You didn't give up because you're passionate about it, because you're surrounded by great people, great friends. But at the end of the day, whether it's your marriage or your kids or your diet or your workout regimen or your portfolio, your methodologies that you use, just don't give up. And if anything is valuable from what I've gone through, personally and professionally, I'd say that would be the number-one thing that I would tell people.
TH: Well, I thank you, both for your time and for setting an example through your words and actions, Scott. You're a good man. I understand there's no such thing as a victory lap when you're in the midst of a race, be it metaphorical or otherwise, but you give us a lot to think about, and you provide an example of how we can make ourselves better, and for that I thank you for your time. Please give my love and the love of the Minyanville community to your beautiful family.
SR: I appreciate that. It was entirely my pleasure, Todd.
TH: Thank you, sir.
SR: Thank you.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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