Don’t Ring That Bell, Unless….

In the culture of the Navy SEALs ringing the bell signals the end of things. In SEAL training the instructors carry around a large bell during evolutions for any trainee who Drops On Request(DOR). Ringing the bell three times means you quit. Last week a group of veterans rang a different bell with a very different meaning. Evan Haffer, a former Green Beret and co-founder of Black Rifle Coffee Company, rang the opening bell of the New York Stock Exchange (NYSE), signaling not the end of things, but a new beginning as a publicly-traded company.

The ring reverberated across the military community. The BRCC IPO is a tale of two important economic stories. The first takeaway from Monday’s IPO seems to be a strong signal that there is a direct-to-consumer market for the Military Affinity Community- a loosely defined coalition of active duty armed forces, veterans, their families, and overall supporters of a military-centric ideological and cultural bent. Call it ‘the patriot market.’ BRCC played to this community masterfully (although not without controversy) through content, merchandising, and press. Some of their first brews were ‘silencer smooth roast’ & ‘AK-47 espresso blend.’ They describe themselves as pro-military, pro-law enforcement, and anti-hipster. The message resonated and they were able to stand out in a crowded space that included everyone from Starbucks to Blue Bottle. 

A SPAC In a Silver Box

The second novel part of BRCC’s public offering was their methodology for listing on the exchange. BRCC employed the use of a SPAC through a company called SILVERBOX ENGAGED MERGER CORP that was previously listed on the stock exchange. SilverBox is a Special Purpose Acquisition Company commonly called a SPAC. These are also called blank check companies since they are simply shell companies with some funding whose sole purpose is to buy a part or all of another business. Anyone old enough to remember the Seinfeld pitch that it was “a show about nothing” may find it ironic that these SPACs are businesses about nothing. However, like Seinfeld in the 90’s, SPACs are a big hit these days. With nothing but cash to deploy and companies to buy, SilverBox had many options for a business to purchase. Joe Recce, SilverBox’s Executive Chairman, explained why BRCC in the company’s written statement from earlier this week, “We carefully selected BRCC after identifying and evaluating roughly 200 quality merger candidates because of its strong foundation for sustainable growth, its loyal customer base, and its management team’s relentless focus on execution.”

When Recce says “loyal customer base,” he is referencing the military affinity group, those who have worn the cloth of our country, and those supporters who are loyal to them. Recce is an experienced Wall St investor, and he is making a large bet on this group. BRCC states that 84% of their customers buy from them to support the military & veterans. Combine that with the U.S. Coffee industry, worth $45 billion, and 18.5 million veterans in this country, one can easily see why a serious Wall St investor, such as Recce, wants to go all-in on this brand and military affinity group, market segment.