Mike Fata – Founder & Former Chairman & CEO of Manitoba Harvest

Episode 155

Mike Fata is the Founder and Former Chairman & CEO of Manitoba Harvest, known for their high quality hemp food products and for being one of the originals to take on this category. In this episode, honored to hear Mike’s journey as he shares how an overweight high school dropout transformed his health and discovered the wonders of hemp. We also talk about what fueled him to start a company, overcoming the challenges in starting a new category prior to the legalization of hemp, and the concept of “coopetition” as a way to grow as an entrepreneur. Check out this amazing conversation on #TheKaraGoldinShow!

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Transcript

Kara Goldin 0:00
Hi, everyone, its Kara golden, and I am here with my next guest that I’m so excited about Mike fata, who is the founder and previous Chairman and CEO of Manitoba harvest. We’re going to talk about what Mike is doing. I actually just joined him on a clubhouse event that he is leading. We’ll talk about that and how he’s really leading and helping so many entrepreneurs and aspiring entrepreneurs as well. Super fun. But Mike is the founder, as I mentioned, have an incredible brand Manitoba harvest, which is the global manufacturer of high quality hemp food products. And he started the company after being sick and tired of being sick and tired due to an unhealthy diet. And he went on to grow the company to annual sales of well over 100 million in sales before going on to sell the business not once, but twice. We’ll get into that as well, great story. And today, we’ll talk about Mike’s journey. And like I said, He’s doing a lot of other things. But he really created this demand for hemp products at a pretty young age. And and if I remember correctly, you’re living in Canada, right?

Mike Fata 1:22
Yeah. Thanks for having me, Kara. Yeah, I live in Winnipeg, Manitoba, Canada.

Kara Goldin 1:26
That’s awesome. And yeah, so we’re really, really excited to have you here. So welcome. Thank you. So how did this all get started? Let’s talk about Mike Jr. A little Mike. And well, how did what was Mike gonna do with his life?

Mike Fata 1:43
Yeah, that’s, well, I grew up with a single mom, my brother and I, and didn’t have a didn’t have a lot of money. And my mom moved us we lived in a smaller town in Ontario, and we moved to Winnipeg, which not a big city, but bigger. And, and so, you know, life was challenging when I was young, both from you know, just being poor, or, and, and so I didn’t know what I wanted to be when I when I grew up. But by the time I got to, like 12, or 13, I was there was two things happening. I was frustrated with school, because I was not educated about health. And so I was a little chunky, I was the fat kid in school, and, you know, going into going into high school, the big what I you know, the big social club, I didn’t fit in. And at the same time, I thought, hey, if I wasn’t going to school, and I could actually work and start making money, maybe I could get myself out of the situation of, you know, being able to buy things that I wanted, like clothes and stuff. So I didn’t know what I wanted to be but definitely no, I didn’t want to be in school. And so that was the first maybe part of my journey was asking my mom telling my mom, hey, I don’t want to be in school. And she she supported me by saying, hey, you could drop out of school if if you start working. And and I did that. And my true, I call it my adult journey started from there at about 13 or 14.

Kara Goldin 3:14
And so you drop out of school and what were you doing at that point?

Mike Fata 3:18
Working construction. So you know, picking pick and shovel or hammer and nails. I was a carpenter’s apprentice at first and learn the hard way about making making good money because I think minimum wage at that time was like $4.50 an hour and I was working for $10 or $12 an hour working construction. So the money was good. And and so I started to almost instantly have more money than I ever had up until that point. But I didn’t see the bigger picture from there. But it was various construction jobs and carpentry and then and then led into asphalt and concrete and kind of more heavy heavy construction.

Kara Goldin 3:59
So I read that you started Manitoba harvest because you were tired of being sick and tired. And you mentioned a little bit about being you know, that unhealthy kid. What What was it? Like? What was that moment when you finally First of all, how did you how did you finally kind of come to terms with the fact that you don’t want to be this way anymore? And then how did you find hemp

Mike Fata 4:27
so you know it it started with with McDonald’s days at my school in the last couple of years of being in school and and I really fell prey to fast food. The convenience of fast food the cheapness of fast food and so I ate way too much hamburgers and fries and, and and drinking lots of pop and I found myself weighing 300 pounds at 18 years old and that just sucks I feel for anyone that’s overweight or or you know, that was you know, majorly obese and I just felt crappy all the time. Every day, I’d wake up My whole body was sore and I didn’t have any energy and I was depressed and, and and so you know, there was one day I was like enough of this I’m going to do something about it and change and I didn’t even really know what that meant, but I thought it meant working out and my brother a couple years older than me was already into weightlifting and exercising he was a little chubby, but didn’t wasn’t super overweight, like I was and said, Hey, I’ll help you out and take it to the gym. And, and so that really started my, my healthy lifestyle journey is is you know, it was like an episode of The Biggest Loser for anyone that’s watched the show of like, you know, going to the gym and crying in the gym drunk trying to do the exercises, which I was just so weak that I couldn’t do but I also at the same time realized that I needed to change what I was putting in my mouth and I watched the other people at the gym that were you know, making shakes and you know, even though it was a little bit more bodybuilding at that time, so eating chicken and rice and so I started adopting some of those changes and gave up my pop and went to water and gave up chocolate bars and started eating bananas instead and and I instantly started feeling better and lost weight and lost more weight and then kept on making dietary changes and and all was good except that I was I was on a no fat diet which was the kind of the bodybuilding dr Nathan predictions materials that eat no fat and you’ll lose weight and and so I went from 300 pounds down to healthy weight for me is about 180 pounds but I went past that because I cut all the fat out of my diet and I found myself weighing like 160 pounds it you know, just not enough fat healthy fats in my diet. And so that’s how I discovered hemp I read a book fats that heal fats that kill which is Dr. Udo Erasmus. It talks about the different types of fat and and learn that you have to eat fat or you’ll die and and I learned that the hard way because I’m stubborn. And so I started eating flaxseed and and and read about him and met the other two co founders of Manitoba harvest that were hemp activists that were lobbying the government to legalize hemp and I just I saw things changing from the no fat diet to the right fat diet. And and that was going to be a big part of that. So I got super excited about it. And and we started a little company and went from there.

Kara Goldin 7:18
So it’s one thing to like, find hat and read a book, but then you start a company out of it. What was it? What was kind of? I mean, how did you know that you could do it?

Mike Fata 7:30
Uh, well, I didn’t know that I could do it. One of the things I say is, you know, since I dropped out of high school, I wasn’t educated about how business works. I never took any business classes because you know, it’s done at 13. And so I didn’t know the odds of success of starting a business, especially in food and being successful. So I didn’t have any of that I was just pure passion that we pressed our first batch of hemp seed oil and we had bottles of hemp seed oil, and I was so coming off of a no fat diet that a couple years ago, I would go around telling people that they needed to eat no fat, you know, I was I read all the materials, I believe the science and I thought that was the way and so it was a light bulb moment and the switch for me. And so I literally told people Hey, I know I used to say that you shouldn’t eat fat, but you need fat, you need essential fatty acids and omega three and omega six central fats weren’t the mainstream household products that they are nowadays. And so a lot of people were still confused. There was as many people out there that like me thought I thought fat was bad. We weren’t supposed to eat fat. And so it wasn’t really about a big business idea that that I thought was going to be this massive company. I just I was passionate about fats. I was passionate about hemp and I wanted to share that with people and it was like it was literally one consumer at a time and for the first couple of years anyway.

Kara Goldin 8:49
So for those of you who are those of our listeners who are not familiar with the entire line, so sort of talk a little bit about the products that that you have.

Mike Fata 9:02
Well the the flagship product for Manitoba harvest is hemp hearts, so hemp hearts has the widest, widest use widest distribution. So if someone if people are familiar with hemp, then it’s probably hemp parts but which is the hemp part is the soft inner kernel of the hemp seed or the heart of the hemp seed. The hemp seed has a hard outer shell and so when you remove the shell it’s kind of like a hold sunflower seed but a little bit even softer and creamier and in texture. That is the far majority of mental harvest sales and is because it has a nice nutty flavor tastes similar to a sunflower seed. Really easy to use it most people would sprinkle the hemp parts on their salad on cereal, mix it in with yogurt, you can put it into smoothies, and it’s very rich in protein and essential fatty acids because you’re basically getting the whole whole seed without the without the shell on it. But the company has innovated and made a number of other products a range of hemp protein powders using hemp parts in more ready to eat. products like bars and granola cereals. But you know if I if I was to encourage anyone that hasn’t tried him foods yet it would be get a bag of hemp parts, sprinkle it on some of your favorite things and I think you’ll you’ll fall in love with it.

Kara Goldin 10:13
So I can only imagine I talk frequently about when I launched my product and the unsweetened flavored water that I would go into buyers and they’d say, Oh, this tastes great. What’s a sweetened with? And I’m like, are you listening? It’s an unsweetened flavored water. And how many times do people ask you or am I eating marijuana? I mean, especially in days, right? I mean, had that the education that you had to get over with the buyers, especially as you got out of maybe natural food stores? And those buyers? Maybe they were a little more talk to me a little bit about that?

Mike Fata 10:50
Yeah, no, it was frustrating at first, you know, because I was so passionate about it, and then people would laugh it off. No, no, I don’t, I don’t do that thing. You know, because people just thought hemp and marijuana were both the same thing. And they’re both relatives in the cannabis family. But hemp, by definition, doesn’t have any psychoactive drugs. So it’s eaten as a food, the fibers used for clothing and for construction materials, and so on. And so they’re related, but it’s, there’s no drug aspect to it, but people were confused. So I was frustrated at first, but I could tell you, it didn’t take too long, maybe the maybe after the first couple of years that I that I saw that it was a marketing mystique that hemp had that drew people in and so is so instead of getting frustrated, saying what you know, that you don’t understand, I would use it as an opportunity to bring people in and really educate them too. And that really worked for the for the business and including up to the time where we change it around people say, Hey, is that is that marijuana? Can I get high on it, knowing that people, by that point knew they were just they’re just trying to hit play and have fun, we’d say things like, no, but meet me out in the parking lot in the back. And I’ll really set you up or something like that, you know, and just making friends with it and being friendly. But in the early years, just from the misinformation campaigns about hemp in the in the past, it was it was really challenging, and it was a lot of information and knowledge sharing to, to break through that.

Kara Goldin 12:10
So and then it to actually ship the product, right, at least into the US wasn’t that challenging?

Mike Fata 12:17
Yeah, we had challenges there. Yeah, both at the so we launched in the US in, in late in 2001.

Kara Goldin 12:25
How many years you’ve been in

Mike Fata 12:28
business for just a couple of years. So we were a very small company, we’re still like, under a million dollars on a million dollars in sales. And we we knew we need to go to the US market. Because there’s lots you know, Whole Foods and lots of natural food stores and, and more people that were interested in hemp, and so we saved up the money that we had from a capital raise, and we put it all to, to, to the US launch. And, and unfortunately, right after we launched September 1 2001, September 11 happened and we were launching on the east coast of the US and so it just, it was it was a really challenging time, it’s kind of took the wind out of the out of the launch. And but then a couple weeks after that the DEA declared war on hemp foods and and went out in this national media campaign saying that hemp foods were illegal, that they were the same as marijuana and they couldn’t be sold in the US which was, which was not the case. That’s not the law. But just more misinformation. So our retailers are confused. And we had you know, distributors like united natural foods and and some of our main main health food stores that that said, No, I can’t sell this product I’m going to get I’m going to get arrested. And and so that that took you know, a couple of years in itself that we got together with the hemp Industry Association, a group of hemp, small hemp food companies that were all trying to launch that and took the DEA to court and and ultimately defeated the DEA in court, which is, which is a nice part of our company history and nice part of the industry kind of journey. But there was there were so many times that our products got held up at the border, or that we had retailers or that would return the product. We even had some of our brokers that were that got pulled over and they had hemp foods in the back of their car and they were questioned by police. Like that’s that. That’s how that’s how challenging it was in those in those times. So, which you know, now in 2021, you kind of look back and say that’s ridiculous. That was like 20 years ago, but you know, it seems like it could be like 100 years ago with with with how ignorant some people were to, to what actually hemp is, but those were the days

Kara Goldin 14:26
crazy. So you started the company and I’ll backup you at age 21. So, I mean, that is absolutely nuts. And you know, as you mentioned, you had gotten out of high school and then just kind of learned and and what do you think was kind of the Did you feel like you had mentors along the way? Or what do you think was sort of your superpower there? How did you do it?

Mike Fata 14:56
Yeah, well, I think my ultimate superpower As I’m a sponge, I soak up a lot of what’s around me and and I have the nowadays I have the ability to change I think going through so much of the life changes of the weight loss and becoming a you know going going from like a 300 pound person obese overweight to more athletic in shape I, I can change. And so as I was in business and I would meet people that I’d be friends with, and they would teach me something about the natural products industry or about entre entrepreneurial ism or or any aspect of our business, I was pretty quick to adopt whatever I learned and bring it back into to the benefit of the of the business. So I have had a tremendous amount of friends and mentors in the industry over the years that that helped guide guide me and guide the business. And, you know, it was just all analog, because we didn’t have social media and clubhouse in these kind of ways of sharing. And so I would get sometimes know, once a month or or be around trade shows that I get to meet up with some of my industry mentors and and pick their brain or have their support. But yeah, I couldn’t have done it without a lot of people around me, I say it, it takes a village to raise a family, but it takes a nation to raise an entrepreneur.

Kara Goldin 16:18
Yeah, absolutely. Well, and I think that it’s also your ability to network and just, you know, I mean, there were probably some people who said, You know, I don’t, I’m not dealing with, you know, the sky’s gonna waste my time he’s dealing with some marijuana company and right, like, you’re, I mean, you’re gonna always have those doubters or people that don’t want to spend the time haters along the way. But you just have to just keep going right, and keep asking and find those people that will help you think through the issues. And the other thing that you said that was really, really interesting. I believe that oftentimes when we have challenges along the way, those are the times when we come together, right? And in this case, I mean is you talked about getting together with other people in the hemp industry. And while people may feel like, well, that’s competition, I mean, that actually brought strength to the category, right? You guys became a muscle that was able to go in and say, No, this is, you know, not the right way to think about it.

Mike Fata 17:24
Yeah, and I’ve always thought about it as Co Op petition instead of competition, because it was that it was other, you know, all hemp food companies that were trying to launch at that time, we’re all challenged, and if we could get together, and there’s some aspects that that make make that challenging, but generally, you know, working together for the benefit of the industry, is, is an was beneficial. And I’d say the same thing nowadays to some of the entrepreneurs that I that I mentor is, is, you know, from a category management standpoint, you know, either your competitors, but if you could convince someone, you know, that there’s two or three or four brands of unsweetened flavored water that need to be on the shelf instead of just your own brand. That’s to the benefit of all. And so there are ways to work together, instead of fighting it out. And do that cooperatively.

Kara Goldin 18:15
I love it. That’s I totally agree. So you sell the company. First time talk to me about that. How did that come about?

Mike Fata 18:25
Yeah, we? Well, we had, we had Venture Capital Partners that invested in the company in 2010. And they were very clear that they had about a seven year life in the business because they had to wind up their their fund. And so in 2015, we felt like it was time the business was growing just super rapidly, we needed more capital to continue the growth. And we felt that it was time to bring the product and bring the business to market and give our our venture capital sponsors have some liquidity. And so we we ran a full auction process took about a year, I talked to over 100 companies that were interested in the business and we kept pairing that down in the funnel until until we had one business that that really, I felt believed in and did believe in mental barvas mission and it was private equity, and compass diversified holding some in July of 2015. We sold the majority control of the business for $132 million, which is one of the largest natural product industry deals, you know, the the deals over $100 million is only several handfuls of them over the time. And so I went from seeing all these people that I really looked up to in the industry that that had successfully grown and exited their business or transacted to, to being one of those, but at the same time because we we only sold the majority I was still running the business and we now had a billion dollar private equity sponsor that could help us continue the rapid growth. So I kind of felt like we We double one, you know, we got the best of both worlds of some liquidity for some of our shareholders and even myself at that time, but the the path to continue on and and have a have a partner that that had a very strong balance sheet. How big were you guys roughly? At that point we’re doing? We did about $50 million in annual revenue that year.

Kara Goldin 20:23
That’s incredible. And then so you’re continuing to at that point, you’re continuing to run the company. And so how did the second time you sold the company? Yeah.

Mike Fata 20:35
Yeah, well, literally right after the ink dried of selling the majority of the business to campus in July of 2015, we initiated a process to purchase our largest competitor. And so one of my good industry friends, and now a good friend, Sean crew, own hemp oil Canada, which was our largest competitor, that was just down the street from us in Manitoba. And I had Sean and I have talked and knew each other for literally the 20 years that we were in his business and talking about that Co Op petition, you know, we were pretty friendly to each other, even though we were both competing with each other in business. And we always spoke about, you know, that mental harvest would would would sell one day and then and then maybe would turn around with with a larger company and buy by a handful Canada. So it wasn’t more than a couple of weeks after the transaction happened that that we said, Hey, we can we could do this now. And and so we started a process. And then December of 2015, we bought hemco, Canada for a $42 million transaction. So which then we were already the largest hemp food company in the world. But we became a much, much larger combined hemp food company. And so 2015 was a was a very busy year, a very exciting year, I’ve learned more in business that year, then then I probably had, like 15 years before that, then our focus was to integrate those two businesses. So for 2016, and we really worked to put the businesses together, operating two facilities and aligning our team and our farmer base and, and just kept continuing to grow. And then and then I actually, I left the management of the company, we hired a CEO, and I operated as vice chairman of the board and director, and was really involved more on the strategic level of the of the business and which was very good. It gave me a different view instead of like working, you know, 7080 hour weeks that I didn’t always have a great lay of the land of strategy. And so a couple of things started to come about at the end of 2018, which led to our second business sale, Canada legalized recreational marijuana federally and so across Canada, recreational marijuana was legal which which really overnight or within a year created some very large businesses that the the large cannabis companies that were before selling medicinal marijuana now they could sell recreational marijuana. But I thought, hey, they would likely have interest in selling hemp or being part of their, their company, because it’s unregulated. And you know, so he could international distribution is easier. At the same time, after 20 years of lobbying of the US government finally legalized hemp, and then the date literally the day after Trump signed the farm bill to legalize hemp, the FDA, which had given us a lot of challenges over the years, approved our grass status, generally regarded as safe for hemp parts and oil and protein. So those three indicators, I thought, now’s the time to really extract value and create a creating a liquidity event for all of our shareholders. And so I reached out to to Brendan Kennedy, which was one of the which is the founder and CEO of tilray, and a couple others and said, Hey, are you interested in chatting with Manitoba harvest and to see if there was any strategic things to do together? And that literally started the conversation. But within like, six weeks, we had a deal to sell the business to tilray for $419 million. And so I would say it was it was all on timing. The business was really well set up and at that point was about $100 million dollars in sales, but just the timing of how right hemp was starting to be allowed that to happen really quickly. And with a with incredible value.

Kara Goldin 24:20
How did you I mean, you started this right. And then I mean, do you ever look back and just think about yourself, and I mean, it’s incredible. It truly is incredible. What you what you built? And did you I mean, that’s crazy. You must have just been sitting there just thinking, wow, like how did this all happen?

Mike Fata 24:42
I’ve probably been guilty of not not celebrating my own accomplishments as much care I can tell you that I and it was because I was I want to race to the next one. And so as I’ve gotten a little older, and you know have gone through some of those, some of those parts of the journey as an entrepreneur I realized that it is good to be more reflective. And so I spend a decent amount of time focused time with myself to reflect back of who I was and who I become. But when I was in the thick of it, I didn’t really think like that I was like, Oh, we accomplished some great things. And now we want to, we want to accomplish more to fulfill the mission. And so but yeah, for you know that now, I’m proud to share the story of like, more from anything’s possible, you know, for, you know, a 13 year old high school dropout that was found myself out of shape and weighing 300 pounds to be able to lose the wait, educate myself about business, start a business that I was passionate about, grow that business to $100 million, and, and then transact for, you know, over 500 million combined between the two deals. And I’m nothing special, you know, if I can do that, literally, anybody can do whatever they’re putting their mind to. So I, nowadays, just trying to be a good example of, of, if you haven’t, if you have an idea, you have an interest, pursue it. Because if it’s your passion, I think that anything’s possible.

Kara Goldin 26:06
Well, and obviously, you had a purpose for doing it, right. And that became, you know, satisfying your curiosity and all these things that I think are, as I share with people, it doesn’t matter what industry, I mean, it really boils down to figuring out what that is what what that is that you’re really passionate about, but also really curious about, and you’re willing to just go out and get it and not allow, you know, the doubters or the you know, the walls to kind of get too high, you just go and keep working on on the business. And but that’s incredible. I mean, you should, if you haven’t already, you should stop and really think about what you’ve done, because it is absolutely incredible. So, so are you involved in the company anymore?

Mike Fata 26:51
No, I haven’t been so for the last two years, but we closed the deal in in February of 2019. And I haven’t, and then there was no board, and there’s no private shareholders. And so I haven’t been involved at all, which is the next stage, which a lot of entrepreneurs don’t talk about. But, you know, I’ve had to, I went through a fair amount of grieving, because, you know, that’s, that’s my 23 year old child that doesn’t come home to visit anymore. And so, you know, the months after we sold the business, there’s certain amount of I was happy, but there’s a certain amount of like, depression or sadness there, because I wanted to go to the office, I wanted to talk to the team, I want to work on the next project and, and that that door wasn’t, wasn’t open for me any longer. And so it took me a while to kind of reinvent myself and get into the area that I’m in now that is a lot more meaningful, a lot more impactful, but just not the same as, as it was in the, in the kind of founding journey and management journey event of a harvest.

Kara Goldin 27:58
Well, I think also being an operator, I think that that a lot of people who sort of go on to that next phase and maybe investing or that they find they miss that operational stuff, but you know, I think you’re you’re dabbling in some different things, and definitely willing to help founders too. So talk to me a little bit about your, your fund and kind of what you’re doing.

Mike Fata 28:21
Yeah, well, I’ve always liked to help and give back. I just only had a certain amount of time, but I after retiring and coming out of retirement, I was like, Well, what do I want to be now when I grow up and and really, at the end of day, I want to help others it makes me feel really good when I’m helping other people. And so I’ve realized for these other mission led founders in the natural products industry, I can be a large help to them, it whether it’s helpful with money and investment or, or it’s time and mentorship or, or being involved with their business from from a governance or board standpoint. And, and so I’ve been having a lot of fun with that with with no real agenda, just meeting people that are doing great things, creating products that I like to foods that I like to have in my house and enjoy and think that the world is going to want more of them. So over the last three years, I’ve been involved in a handful of companies that that I’ve invested in and operated at their board level and actually helped to steward the company and have made you know, several handfuls of investments in other businesses where I’m where I’m just contributing as an investor and maybe as a as a mentor. And probably the far majority of my time nowadays is really just giving back in peer mentorship chatting with either entrepreneurs one on one or in an incubator accelerator group sessions or, you know, been using the tool of clubhouse to be able to to help more people at once and so a big part of my day is actually spent just in pure mentorship and giving back.

Kara Goldin 29:57
I love it. Well, this is been super educational. Really, really terrific. Mike, thank you so much. And I know that everybody really appreciates you coming on and really excited to see what comes next for you. If you like this episode Everyone, please give it five stars on iTunes, Spotify or your favorite streaming platform. And also please subscribe to the podcast. The podcast again is called the Kara golden show and we release episodes every Monday and Wednesday. So be sure to follow me on all social channels at Kara golden that’s with an eye so that you can hear a lot more. And finally, if you haven’t had a chance to pick up a copy of my book, it would be awesome for you to do that. It’s called undaunted, overcoming doubts and doubters and it’s on Amazon or your favorite bookstore has it as well. So be sure to pick up that and of course a case of hint to and also Mike where’s the best place for people to reach you

Mike Fata 31:02
I’m active on LinkedIn so people can reach out on on LinkedIn or or or clubhouse nowadays would be the the two.

Kara Goldin 31:09
Well thank you again, Mike. And thanks everyone for listening and have a terrific rest of the week. Bye

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