#172 - Sean Frank: Scaling DTC. How Ridge went from $1M to $100M+

Sean Frank was working at a local Los Angeles ad shop in his early 20’s when he and his friend Connor decided to start an agency of their own. The plan was to focus on a small team and high-touch client relationships. It worked so well that one of their clients, The Ridge Wallet, ended up absorbing their talented team entirely. At the time, Ridge was making a couple million dollars a year off Shopify and had accomplished a successful Kickstarter campaign. Sales were good, but they didn't have digital expertise in-house, and didn't want to manage a team. Instead of continuing to outsource to Sean, they ultimately merged. Sean has been CEO ever since.

4:24 - Diversify your ad strategy

The Facebook golden years didn’t last forever, and Ridge succeeded because they saw it coming and put resources into multiple ad channels early in the game.

“Those first couple of years were the golden years, where we would just run Facebook ads driving to a Shopify page. The most complex thing was, we need better static photography. This is like 2014, 2015, 2016, 2017, where if you were bad at Facebook ads, you got 10x ROAS. The thing that benefited us was we always thought it was going to get worse. I'm just a naturally paranoid person. So we were on the cutting edge of diversification away from paid media channels. So things were going great on Facebook. We were getting 10x ROAS. But it's like, we need to be on Snapchat. So we were the first Snapchat advertiser. If you read the Snapchat earnings report, when they launched ads we are named, because we were the first people doing it. We've been a TV spender for a year. So pre the iOS14 fuck-ups, we've been spending money on TV. We just always thought it was going to get harder. So one of our biggest tips was just diversify quickly.”

5:49 - Prepare to pay taxes

What makes surpassing the $10 million mark challenging for most brands is scaling quickly while also keeping up with your skyrocketing tax responsibility.

“I think most businesses can get to that $10 million mark. If you're running right now and you have an ecomm product people seem to like, and you're running Facebook ads, you're doing the basic blocking and tackling, right? You're sending email campaigns. Maybe you're touching SMS right now. The $10 million mark is easy. We had the hardest time at $15-20 million, in that range, the post 10. SO we did $8 million one year, then we did $15 million. So awesome growth, near 100% growth. The next year we did $20 million. So growth slowed. That was the hardest year of the business. What happens is if you're a profitable e-comm brand, you have this problem where taxes are due every year. Specifically if you're doing accrual accounting, which you're supposed to now, I think. So you have this problem where you had a big tax bill, but you just grew really fast. So you need to buy inventory to keep up with that growth. And that's what kills those businesses. That's what really ends up fucking up growth past $10 million.”

10:34 - Scoop up agency talent

One tactic to consider if you can’t find talent to support your brand? Buy an agency. That’s what worked for Ridge.

“When we did the merger with Ridge, they were getting a full-fledged team, because we had email, search, whatever. But that was built up and subsidized by a functioning agency business at the time. So any advice for any really big brands listening right now is, if you've had a problem finding talent, just buy an agency. I think that's pretty good advice. Now, probably half the company has some sort of marketing role. We have six people, more now, probably have seven people who just do influencer marketing. So if you bought Ridge Wallets and you go on YouTube, or go on TikTok, you might see us sponsor a lot of content. We sponsor like 5,000 creators a year or something crazy. And all of that is done in-house through like seven people at The Ridge signing people all day long. Just to give you an example, we have two people who just do email, we’re probably going to hire a third person who just does email. We have a designer who just designs emails. So it ends up being very, very specialized, the bigger you get.”

13:09 - Keeps things personal

The bigger your brand gets, the harder it is to personalize the customer experience. But it’s critical to remember that people buy from people.

“Where I think big brands mess up is that people still buy things from people. So even if they're on their website or whatever, this whole idea of brand is like, does this product make me feel a certain way? And people are like the most centric part of feelings. I think one reason we’ve had so much success is our influencer program. And it's because people you trust are showing you this product. They say they love the product. And it mimics personal recommendations, to the highest degree. So I think it's a way we’ve captured a lot of success. And it's like, how do we continue to do that? How do we continue to personalize everything we're doing? And how do we act with intention so that customers understand who we are, and then they understand why they're buying from us? That's really, really hard to do at scale. I know it's a very fluffy, nuanced, almost bullshit answer, but that's what we're trying to capture this year.”

17:18 - Involve execs in content creation

If you want your brand to excel on YouTube, you need to get a recognizable fact involved who you can rely on to continue to represent the brand indefinitely.

“The reason why brands are gonna have a hard time with it, and the reason why Ridge has hard time with it is it’s something you can't outsource. Like our influencer content is influencer shot, influencer released, distributed by them. Studio photography is done by a studio photographer, their face isn’t in it. It’s not personal. But when you get to YouTube, it's like, I can't hire a guy to do it. Because then people want the relationship with that person. And they like the way that he delivers his style or whatever. And he could get a different job. He could get a Netflix show, you know what I mean? So I can't outsource it. And if it's an employee, you've seen that happen to G4 back in the day. They built up these employees, the employees leave, and it's because you're a faceless corporation. So it has to be one of us, the executives to do it. And it's just finding the time to do that.”

23:26 - Make better organic content

For true success, Sean says brands need to think like content creators, and distribute organic content across multiple platforms.

“You have to sort of think like a content creator. Like how do you actually deliver not only a product that's a good value, that somebody wants to buy it. But to get that in front of somebody, you have to be so content first, right. CPMs are going to be what they're going to be. I talk to people all the time. They're like, what do I do to make Facebook better? And I'm like, do you have a time machine? That's what you need right now. Do you know someone at Facebook who will commit a crime to get your CPMs lower? It's never going to get better. But you as a brand need to get better. And people hate having that conversation, right? You need to make content better. You need to make this stuff better…we need to get better at creating organic content across every single platform, but right now we're spending money on paid media across every single platform.”

27:26 - Bomb-proof your business with content

There’s always going to be a “next era” of content. The key is to learn how to make the content itself, not just disrupt it.

“How do you bomb-proof your business for the next change in the era? It's going to be content first...so figuring out how to make the content and not just disrupt the content is a huge piece of that…Everything's a golden secret until it stops, you know what I mean? It's like, that's what Facebook was. There's something else somebody's doing that’s driving amazing results. There's always something like that, and it gets brought to the mainstream. But by the time you hear about it, it's too late. There's a golden rule. I was reading some Vice report thing, and they were talking about that it's like, by the time you see it in the news, it doesn't matter anymore. It's like everyone that knows about it has already acted on it, already knows about it. Nothing's breaking, as long as you're in the industry. So just take that with a grain of salt. So by the time you're hearing about something, it's too late to act on it. So just keep living your life.”

33:10 - Keep improving your product

Making new products every year will keep customers engaged and coming back for more. Everything should feel fresh and current, from your products to your ads.

“The community feedback is important. But the big thing that brands don't want to talk about, and this is like if you're an agency, they're paying you. So you don't want to rock the relationship too much. But you need to make better products probably every year, right? It's like, Apple is worth $3 trillion. Every year, there's an iPhone that comes out. And every year, they need to give you a reason to buy. What if they said, yeah, there's no updates this year. It's just the same. Maybe people would still buy it. But no, you need to deliver a reason. An improvement. That’s the cost of getting better. And no one wants to hear that. They want to have a website from 2017. They want to have a product from 2016. Then want to have ads from 2018. And they still want to be successful in 2022. And if that's your playbook, it's not going to work.”

35:36 - Hire before you need to

If you stumble across a top performer, get them on your payroll. It’s worth feeling like you are jumping the gun than risk stifling growth later when you’re short on talent.

“Probably the best advice I can give if you're a $10 million brand who thinks they have a bunch of growth ahead of them is hire the best people before you think you need them. So if you find someone who's actually - everyone uses the term “A player, right. But really think about that. Is it a top 10% of all people, or is it in this specific field? Because a specific field is a lot narrower. So if you're really finding a top 10 digital marketer or a top 10 CFO, make that hire. Even if you don't think you can afford it, even though it's going to cut into whatever and you don't get to fucking buy a new car or whatever, make that investment. Because if we had more people and more guidance earlier, we would be a billion-dollar company now, you know what I mean?”

36:56 - Get your accounting rock solid

Hiring a firm, getting audited, and paying sales tax is painful but absolutely necessary if you want to be ready for big opportunities, like incoming capital.

“Figure out your accounting way before you think you need to. If you're not collecting sales tax in every single state, start doing that right now. If you ever want to exit, you will get fucked so hard if you do not. Forget about the nexus, forget about whatever you fucking hack you think you have. Just collect sales tax in every single state. Customers are going to pay it, conversion rates won't go down. You're just hurting yourself. And then figure out the rest of your accounting stuff. Get a real firm, get gap compliant, get audited. And the reason why you have to do all that type of stuff is when you actually want funding from a bank, the people who give you loans, or a VC or private equity group or a family office, it's way better to have your ducks in a row before you go to meet with them, then look like a fool and take 12 months, 18 months, 14 months, however long it takes to get your shit together. So do all that stuff when you don't think you have to. Find the time to do it.”

Here's the full interview: 

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Sean Frank  - CEO of Ridge

Ramon Berrios - CEO of Trend.io

Blaine Bolus - COO of Omnipanel