How Austin Became America's CPG Capital, One Coffee Meetup at a Time

This week's Founder Friday is about the quiet rooms that helped turn Austin into a CPG powerhouse.

For the last decade, Marc Nathan has been helping build the places where Austin founders actually meet — from Open Coffee Austin to Wakeup CPG, the monthly gathering he's hosted at Cosmic Pickle since 2016.

His argument is simple: Austin did not accidentally become a CPG powerhouse. It happened because founders, retailers, investors, mentors, and operators kept showing up long enough for the scene to compound.

That matters because Austin's CPG story is bigger than a few breakout brands. Sweet Leaf Tea, Deep Eddy, Siete Foods, SKU, Naturally Austin, and a growing group of CPG-focused investors have turned the city into one of the most important markets in the country for consumer brands.

But the founder lesson underneath is not just about CPG. It's about how communities actually get built: not through spectacle, but through consistency.

What founders can steal from this:

Why "same place, same time" is still one of the most underrated community-building strategies
Why CPG founders obsess over shelf velocity and doors, not just growth charts
How farmers' markets can become leverage into retail, not the finish line
Why Austin's most valuable ecosystems are often hiding in plain sight

Free resources from Marc:

Here's what Marc shared...

I'd love to understand how Austin has developed from an entrepreneurial perspective, and dive deep into the CPG space.

We always have to talk about Austin from today going backwards, because Austin people only think about Austin from about five years ago, and everything that happened five years ago was the best ever. Austin was the greatest place in the entire world. It doesn't matter when you move here or when you got here. Five years ago was always the best time to be in Austin, and that's been true since the 70s. Any time anybody arrived, whether it was the 70s, 80s, 90s, or 2000s, a few years ago was always peak Austin, and I don't subscribe to that. I got here in 2014. Austin did not peak for me. Austin is still peaking. It's a great town. It's a great town for young, ambitious people. That's why I'm here.

In what areas is Austin peaking now?

Austin is a city that's maturing. It's not mature. There are a lot of mature cities out there. The big ones: LA, New York, Chicago, Houston, Dallas. They have systems in place. They know what's going on, their city leadership knows what's going on. Austin has really built itself up by its bootstraps in a lot of ways. We don't have a lot of institutions that tell people what to do. Obviously, we have the state government here. Obviously, we have the University of Texas system. But as far as companies go, they've been running their own businesses and doing their own thing for a while, and it allows other people to come in and add to that deep tapestry of different companies and different people.

How has that changed over time? Is it accelerating?

It's accelerated. For most people, Austin was a sleepy college town for many, many years. People came to UT, they either stayed or went back to wherever they were from. They did their business, and that was that. Around 1999, 2000, the height of the dot-com boom, a whole group of city people from the chamber of commerce started making junkets out to California, begging those big software companies to come to Austin. For the most part, it worked. This is what we now know as a 25-year overnight success story.

A lot of people don't know this, but Apple has its second-largest headquarters here. Oracle's headquarters are here, even though they're ostensibly moving to Nashville. They're not actually going to move the people. We have a lot of major headquarters and major software companies that have started to set up real shops here. That means we have the talent, the experience, the executives that are now trickling down to other companies, smaller, more startup-style companies. That change happened around 2015, 2016 in my opinion.

For many years, Austin people would build software and sell it on the coasts: New York, LA, San Francisco. When those companies started coming here en masse and establishing their headquarters and operations here, it was the very first time Austin software people had people to sell to locally. Instead of jumping on a plane and selling in Palo Alto or somewhere else, they could actually sell here. That really spiked our ability to do real sales and real executive-level sales locally. It used to be we were only doing small ideas, small things. Now we're talking to executives because the executives live here in Austin.

What makes Austin accelerate compared to bigger cities that are leveling out or declining?

Great question. The industry of Austin has been software for many, many years, but we're starting to see a real break in that. We're starting to see new ideas come here, specifically around the military, defense tech, and dual-use technology. That all started happening when the US Army moved their Army Futures Command to downtown Austin, in 2016, I believe. That opened up an entire market of new investors, new products, new industrials. Now we have a lot of advanced technology, advanced materials, robotics, and mobility, all things Austin wasn't really known for but is known for now.

There's a lot of locally made products that feel distanced from military spending. Are they weirdly connected?

Yeah, because everybody in Austin is ambitious. Austin is a maturing town, which means it's built for young people. Young workers, young executives, people building their reputations, building their families, building their careers. Austin is well built for that. Austin was a real magnet during COVID when everybody was doing the digital nomad tour, getting in a van, going to Colorado, Nashville, Seattle. A lot of people ended up staying in Austin, and that's been a boon to us. All the people that moved from California to Austin during COVID I feel have stayed here. All the people that came from New York to Austin have generally moved back to New York. But Austin is a destination because it's young, it's ambitious, it's new. The vibe here is that we're here to build, we're here to be ambitious, and a lot of people really resonate with that message.

Why is building a community in Austin different from other big cities?

Let's start with my background. I've been gathering people for a very long time. I lived in Houston for many years and was very actively involved with the startup technology scene there. Because Austin is so tightly knit with a lot of different people, it's the opposite of Houston. Houston's very spread out. Houston is basically five major cities all wrapped up in two separate highway systems. Being in downtown Houston, you would never talk to somebody in The Woodlands, Sugar Land, or Clear Lake. The organization I worked for at the time, the Houston Technology Center, was downtown Houston, and we would draw people in from all over.

In order to see those people on a regular basis, you can't just do events all the time. You can't just do formal events where you're listening to panels and doing workshops. To really build a community, you have to have a social component.

So I started something called Open Coffee Club back in 2007. I stole the idea from some guys in Colorado, who in turn stole it from a guy in London. The backstory is simple. This guy was an engineer at Skype in London, and he got a job at one of the largest European VCs, Index Ventures. He realized he didn't know any founders, because he only knew engineers. So he put out a blog post in 2006 saying, "Everybody meet me at this Starbucks in Trafalgar Square," or wherever it was. He had about 10 or 15 people show up, and he wrote a blog post about it.

Some guys in Boulder heard about it and said, "If he can do it there, we can do it here." In February of 2007, they started running these regular morning coffees in Boulder. These guys actually became pretty popular. It was the founders of the Foundry Group, a big venture firm, who ultimately funded and started Techstars.

I said, "If they can do it in February in Boulder when it's snowing, I can certainly do it in Houston when the weather is decent." I had to skip March because South by Southwest was a destination event and I wanted to make sure everybody from Houston going to SXSW could go. The very next month, in April 2007, I put out a call for people to show up to a Starbucks not too far from our office. We had about 20 or 30 people. The next month we changed the venue because the Starbucks wasn't quite right for us. We went to a tiny coffee shop no bigger than your kitchen, and we had about 115 people there. I realized I was onto something.

The key was consistency. I made sure we did it at the same place at the same time every month. I'm proud to say that even though it's not called Open Coffee anymore, it was taken over by a friend of mine in Houston. It's now called Cup of Joey, but it still exists in some form today.

When I moved to Austin in 2014, a friend named Damon Clinkscales was already running Open Coffee Austin, which had been going since 2009. It turned out the law firm I was working for at the time was already the sponsor of the Austin one, so I very naturally became a co-host. It's still Damon's event. We've been running it together, and we expanded from one event a month to two events a month since 2014.

CPG is not something most people in the tech world really think about or operate in, unless you're talking about e-commerce. Even then, e-commerce is just selling the product, not making it. So I realized, having all those reps doing Open Coffee, that I needed to meet some CPG people. I didn't know anybody. Let's figure this out.

I started with a happy hour. It was the middle of July, hot, we were sweating, it was at a brewery, and it was outside. We had about 150 people show up. The surprise was that every major tech VC was represented there. I knew they were there because they were my friends, but they definitely weren't there for the free beer. I started asking around, and it turns out every major VC in town at the time had at least one, sometimes two, CPG investments directly. That was news to me.

Typically I don't like happy hours. They're too loud. I don't really drink, so they get a little sloppy. But I really liked the coffee format, even though I don't drink coffee either. The morning format is a lot easier for executives who have children. They can drop off kids at school, come to coffee, then go to work.

It works better than happy hours because at traditional happy hours you're drinking, having fun, very social, but you don't remember anything. There's no business done. A morning coffee is different because people are locked in for business. They're there to take notes. They want to be social, of course, but at the same time they want to get stuff done. That format worked for us, and we've been hosting Wakeup CPG at Cosmic Pickle since 2016, so 10 years now.

Where do you see CPG going in Austin?

Austin has become the absolute epicenter for new CPG brands in the United States. We took that title from Boulder, Colorado. A different group in Boulder, but Boulder was really known for being an emerging CPG place. About 10 years ago, Austin started seeing a lot of exits in the CPG space. We started seeing venture firms come here and start here that were focused exclusively on CPG. The community was there. There's an organization that became one of the largest and best accelerators for CPG in the world, called SKU. SKU started about 14 years ago. It's a typical Techstars-style cohort program. They got mentors together, found the companies, helped with a little money and a lot of support. In the last 24 months, we've had some really big exits in the Austin space, and that's put Austin on the map as far as CPG goes.

Are there specific CPG stories that represent the Austin community?

I'll happily share. There was a company most people in Austin know, because we have billboards and they've been around for a long time, called Sweet Leaf Tea. Sweet Leaf Tea was a ready-to-drink bottled tea. It looked and felt a little like Snapple, but a homegrown Austin-based Snapple. Clean ingredients, better-for-you ingredients, great flavors, great logos. I actually know the guy that did the logo. It was a brand that was just coming up. Nobody really knew anything about it, nobody really had experience doing a drink brand, but we all muddled through and figured it out.

The founder, Clayton Christopher, built that company. He got some angel money from the group I was involved with in Houston called the Houston Angel Network. He got some extra money after that. It did very well, ultimately selling to Nestle a few years later. The angels in that deal got 16 times their money within about seven years, which is a really good return.

There's a great story where Clayton was at one of the very first ACL (Austin City Limits) festivals. He was one of the vendors, with his rinky-dink booth and a six-foot table, handing out his bottles. The guy at the booth next to him grabbed a bottle, uncapped it, poured half of it out, and poured his own drink in. His drink happened to be a vodka called Tito's, which you may have heard of. So Tito Beveridge himself was standing next to Clayton. He made the drink, swirled it around, took a sip, and said, "This tastes great. It's like a Sweet-o Tito." That name stuck. The guy behind him in line, this is a story I've heard several times and believe to be true, said, "That's a really good idea. I'm going to put it as a specialty drink on my menu." Turns out he was the owner of a very famous restaurant called Threadgill's.

The Sweet-o Tito basically got Clayton Christopher his start in the Austin market. He didn't just go to Austin though, he went everywhere. That company ended up selling for about $225 million. At the time, that was a lot of money. But he was smarter than most people. He took that money and invested in another company most people have heard of, Deep Eddy Vodka. Built that up, sold it to Heaven Hill, and then became the third partner of a very top-level VC firm focused on CPG called CAVU Ventures. His business partner from Sweet Leaf, Brian Goldberg, went on to start Amplify Snack Brands, which he was ultimately able to take public and then sell to Hershey's. So all of Hershey's salty snacks is now based here in Austin, Texas.

There's a lot going on here, and that was the beginning of the first round of CPG investment in Austin companies.

Flash forward to the last 24 months, we've seen a major exit with a company called Siete Foods. They have great chips. They have a product line with probably 100 different SKUs across different categories now. Very well-known company that came out of SKU. When they first got started, there are seven brothers and sisters, which is why it's called Siete, but three of them were involved in the company. They had a company at the time called Must Be Nutty. They named it that because instead of using traditional flour, they used almond flour. One of the sisters, Veronica, is celiac. She couldn't eat traditional flour, and you can't have a Hispanic person not eat tortillas. It doesn't work. They figured it out, but the issue was the name. They were a farmers' market brand doing well in some of the bodegas and farmers' markets.

They got into SKU early on. The SKU mentors changed their name to Siete Foods, changed the logo, changed the design, really got it out there, and they just sold for $1.3 billion. I know a lot of angels that made a lot of money on that because they stuck with it.

What advice do you have for a farmers' market brand trying to make their way in CPG?

I learned this from a mentor of mine many years ago, Dr. Tom Craft, who recently passed and is on my mind a lot. He told me once, "Don't give advice, because nobody listens to it. So I'll give you my opinion."

My opinion is, if you're a farmers' market brand, first of all, farmers' markets are not easy to get into. The Texas Farmers Market, which runs on Sundays at Mueller and on Saturdays at Lakeline, is considered the two largest farmers' markets in Texas. It also means there's about a year wait to get in. They're very focused on making sure the brands they have fit the parameters: natural, handmade, not production-line stuff. You're never going to see a Doritos at a farmers' market, because it's an established brand.

Once you can get in, sell, sell, sell. Be in the face of your customers. Don't hire somebody up front. Do it yourself for the first few weeks and months, so you can hear the feedback and understand what people are saying about your label, your brand, your taste, your pricing, expectations, all of it.

Most people's goal is not to stay in the farmers' market. It's to use the farmers' market as leverage to get into retail doors. Retail doors start with some of the independent bodega-style grocery stores. We've got some great ones here in town: Parker & Scott, Tiny Grocer, Rosie's. They celebrate local. You said earlier that Austin people really care about their local brands, and that's somewhat unique. People really do care and celebrate it. It's fun to buy stuff on store shelves of retailers where you know the people.

What's the roadmap for getting into those stores?

Generally speaking, those stores want to see velocity. The number one thing in CPG, versus tech where all we care about is growth (new users, user engagement, hours on the platform), is shelf velocity. How fast does the box you sell to them get sold out the front door? If a company is sitting on real estate, which is shelf space, and it's not moving, retailers have to kick them out and bring in a company that will move faster.

In order to get into a retailer, you need to show them your farmers' market data or your online sales, proving there's demand. What retailers do is give you shelf space to increase your visibility, which hopefully adds to more sales, and that velocity increases. Shelf velocity is the number one metric people care about, and it's an investable metric. The other metric is doors. "Doors" are the same thing as stores.

Stores can be anything from the top level big box, Costco, Sam's Club, Walmart, Target. Then you get into grocery, and grocery ranges from the Krogers and Albertsons of the world, all the way down to the regionals. In Florida, you have Publix. In California, Raley's. In the Midwest, Meijer. And here in Austin, our favorite, H-E-B.

One of the blessings of this market is that Austin is home to three major local retailers, not just the brands. We have a big office of H-E-B here, which is actually based in San Antonio. We've got a really big office of a little company you've heard of called Whole Foods, which started in Austin and still has a lot of their decision-making staff here, even though they're owned by Amazon. The third one, which a lot of people are hearing about nationwide for the first time, is Buc-ee's. We also have decision-makers from Buc-ee's here. We're very fortunate that we have not just builders, but buyers here, which is unique. We don't have that in every other city.

Which resources, communities, or people are great stewards of CPG education in the community?

Thank you for asking. The resource I already mentioned, SKU (sku.is), is what I consider, and I'm biased, the number one independent accelerator for CPG in the world. That's as opposed to dependent ones, like Pepsi has one, Chobani has one, Target had one for a few years. Whole Foods has a really good one. But for independent, mentor-driven cohorts for CPG brands, SKU is the best.

There's another organization based in Austin called Naturally Network. It started as Naturally Boulder, then moved to Austin and franchised a Naturally Austin program. It's a trade association for emerging brands in the natural space. Great resource, great club of people, really nice folks. I was on the board for a little while.

There's a third organization I'm involved with called Texas CPG, which is sewing up all the major cities, Dallas, San Antonio, Austin, and Houston, in the CPG market. We're putting together a full-blown website specifically for all their calendars, plus a directory of resources for people either starting a company in Texas or opening up a CPG company in Texas.

Is there anything I should have asked that I didn't?

Yes. You should ask me where the money is.

The money's here. Surprisingly, because of all this work being done and all the exits that have happened and all the momentum Austin's building, we now have at least eight separate CPG-focused VC firms.

We have real money here now. Mostly it's led by an organization I mentioned earlier called CAVU Ventures. They're the big dog, but they don't have a whole lot of Austin presence any longer. The mantle has been taken by another group called Asto Consumer Products, which is run by the guys I mentioned earlier, Clayton Christopher and Brian Goldberg. Brian has a separate group called Red Bud Brands where he takes controlling interest, or in some cases minority interest, in brands and helps build them. Then we have a handful of other direct CPG VCs: Midnight Venture Partners, Springdale Ventures, Cartograph Ventures. We have Brand Foundry, and they just spun off another fund run by a guy named Wes Gottesman called Moontower Capital. So we're seeing real money here focused directly on the CPG market.

It's taken me 10 years to learn all this stuff. I didn't know it either. There's a real, I don't want to call it underground, it's just under-reported, scene for brands, people, talent, everything is here, and people are coming here a lot more. There are a lot of remote workers. Austin happens to be the number one remote city in the United States, and we have a lot of workers from big brands, Coca-Cola, Nike, those kinds of companies, who live in the Austin area and work remotely. They're here and they come to some of these events.

Where can people learn more?

Naturally Austin is probably the best place to start. They do great events fairly regularly. I'm actually going to the SKU Demo Day tonight, and I'm pretty excited about that. As far as newsletters, Texas CPG will likely be launching a newsletter in the next couple of months.

The news about startups and CPG here is being really well reported by the Austin Business Journal, specifically a reporter named Sahar Chamas, who's done a very good job of understanding the CPG market, even though it was a new beat for her. I really like her writing, and I'm impressed with the map she's given us of what's going on. Resources are out there, and the general press, our TV, our newspapers, our community impact newspapers, are starting to talk about CPG because these are real companies. They hire.

What I've learned about CPG in general, and I didn't expect this coming from a tech background, is that it's a very blue-collar business. It's about manufacturing and packaging and logistics and shipping and 3PLs (third-party logistics). These are things tech and software people never have to care about. It doesn't matter how heavy your pixels are when you're selling online, but it matters a lot if you're switching from a glass bottle to a can. There are all kinds of supply chain issues. These things are unique to CPG and very different from tech, but a lot of people are starting to figure it out and realize there's a lot of money to be made.

One thing I love to say about Austin, and I've been here a few years now: everybody in Austin's side hustle is helping each other. We're very supportive of each other. We all want to see everybody succeed. People will go out of their way to help your business, even if it has no direct effect on them. It's a really nice feeling.

The difference between tech people and CPG people, generally speaking, is that tech people want to be the smartest guy in the room. That's their real goal. Yeah, they want to make money, but that's just proof that they're the smartest guy in the room. CPG is very female-dominated and female-oriented, and they just want to put a smile on your face. People in the food business realize that food is love, and they want to give love to people. It's a very different mentality. The downside is that tech people have had blogs and podcasts and newsletters and Twitter for decades. CPG people don't have that, so they're typically less sophisticated from a financial operation standpoint than other companies in the same space.

How can the Austin community help?

Marc wants to connect with Austin founders building real products, especially CPG brands trying to move from farmers' markets into retail.

If you're working on food, beverage, wellness, consumer goods, packaging, retail, logistics, or anything adjacent to CPG, Marc is one of the better people in Austin to know.

Connect with Marc on LinkedIn.