DTC POD: How The Best Brands Are Built

Matt Lanter is OpenStore’s Head of Product and Co-Founder. Matt served as an engineering and product leader at Opendoor, Facebook and Apple. He was the Chief of Staff at Founders Fund where he worked closely with entrepreneurs building the next set of companies. OpenStore provides life-changing liquidity to Shopify business entrepreneurs that are ready to sell their business so they can move on to what's next. Anyone can get a free, no obligation offer for their business within 24 hours by visiting open.store.00:14 - Helping entrepreneurs exitMatt explained that just like selling a house, selling a business can be a lengthy and complicated process. He wanted to change that.“We provide liquidity to Shopify entrepreneurs. We provide them with an exit and the ability to sell their business when they're ready to. A lot of these entrepreneurs don't really have other options to sell their business. They're too small for private equity. They don't necessarily have the characteristics that venture capitalists are looking for. And there are brokers and marketplaces they could go with, but similar to all other marketplaces, even selling your house, there's no guarantee you'll be able to find a buyer. You can spend a lot of time talking to potential buyers and waste time. So we wanted to make it really simple for these Shopify entrepreneurs to come to our website, connect their Shopify account, their Facebook and Google marketing data if they have it, and get an offer within a day to sell a business if they're ready to.”04:16 - The problem with private equityPrivate equity tends to go after high-value targets. It’s also very high-touch, with a process and payment terms that can move at a glacial pace.“Private equity tends to be more like $50 million+ in GMV, so it tends to be on the larger side. Whereas for us, our target size of businesses is between $500K and $10 million. Part of it is that private equity firms tend to be very human-based and use a lot of humans to value these businesses and go through that process. Whereas we've built this pricing engine that's able to within 24 hours deliver an offer for your business. So we're able to serve a much wider swath of businesses and really serve as many people as we can….With private equity also, it's usually a multi-year payout. And there’s earnouts over time and all these percentages, and it's a fairly complicated thing for sure. We want to make it very simple. You come to us, you get your offer. It's a very clear price. You actually get 80% of it on the day you close. And then there's a short 1-2 month transition period where you help us learn about your business. And then you get the remaining 20% at the end of that.”15:11 - A streamlined sale processWhen selling on OpenStore, founders immediately get 80% of the payout. After helping transition the business, they get the rest. Meanwhile, OpenStore works hard to maintain brand integrity.“Once you close you get 80% of the cash around then, and then it's a 1-2 month transition period. So the founder works with our team for us to understand how they run their business, transition everything over to us. Domains, all the various parts of the business. And then we run it from there. To that point, as we build out this operating platform we've created a set of OpenStore best practices. Various tools, internal and external, that we use to help run these businesses at scale. And analytics is a very important thing as well. So investing in that and moving those brands to our way of running and growing them. But one thing is we do really want to maintain the brands and grow the brands. We don't want to take a company and then just get rid of the brand. We really want to keep the brand and grow the brand and highlight what the entrepreneur has built.”19:57 - The power of brandOpenStore works exclusively with Shopify brands because they find branding to be important and rewarding work. Shopify provides the tools that the team needs to help brands thrive.“We really like that these Shopify e-commerce brands have a really strong brand. Whereas the ones on Amazon tend to don't need to focus as much on the brand, because they're on Amazon. And Amazon helps them with customer acquisition. And so we focused on Shopify stores because we believe in a strong brand and a strong building-out of these brands. For example, you look at Nike, which is obviously a very well-known brand. and they aren't on Amazon. They can't control their brand experience. And we really want to control the full stack of things…When you're running these businesses, there's marketing, supply chain, demand, planning, forecasting, all those complex things. Which when you run them on Shopify, there's like a lot of room for us to really grow and build out a great platform there. Whereas Amazon takes care of a lot of those things for you, so it was less exciting work for us.”22:45 - Promoting entrepreneurshipMatt and his team are big cheerleaders for entrepreneurs. They hope that the ability to make an easy exit with OpenStore will convince even more people to build something new.“Part of the reason people may be hesitant to start a brand right now, even if they have a really cool idea, is that they could pour years of their life into this and a lot of hard work. And then there's no certain exit after that. Like after five years, let's say, maybe they want to do something else. They don't want to sign up like, ‘I'm going to work on this brand for the next 80 years’ or a long time. But now that we provide an exit, hopefully more people will create brands. Generally I think entrepreneurship is just great for society and great for the individuals as well.”26:20 - Catering to startup addictsMatt recognizes that some founders enjoy the thrill of a zero-to-one startup environment. They don’t want to be handcuffed to a business long-term, even if it’s successful.“A lot of people just enjoy the zero-to-one type of work, and don't want to do the scaling work. Just like you see at startups or other companies, the types of people who enjoy working at a startup versus a larger tech company tend to be different as well. And we have found, to your point about shutting down the business, some of the early companies we acquired when we actually met the founders right when we were starting, some of them were actually in the process of already even shutting down their business. And then they found out about us at the last minute, and were very excited and happy. But it is crazy to think about you pour all your time and effort in this business, just to shut it down.”29:06 - How to prepare to sell your businessOpenStore serves entrepreneurs of all business types. That said, Matt recommends improving product margin and lowering CAC to make your business profitable and attractive.“We want to serve as many entrepreneurs as possible. So we're not particular with what they sell or even the characteristics of the business. It could be a higher margin, lower margin, different repeat purchase rates, average order sizes. But in terms of things to obviously improve your business and grow them, I’m sure it's a lot of things people have heard and standard things. Obviously improving the margin of your products helps by decreasing your fixed costs. On the customer acquisition side, lowering your cost of customer acquisition, which kind of ties to building a product that delights customers. That will lower your costs naturally.”31:11 - OpenStore’s 5 foundersA complex business requires a team with varied expertise. That’s why Matt is one of five founders who share the work of running the business.“There’s five founders of us in total. Obviously it’s a really complex business, so we wanted to start with a really great team. So myself, I'm the head of product. And then like I mentioned, Jack Abraham from Atomic came up with the idea, and has been helping us along. As well as Keith Rabois, who is a partner at Founders Fund, another venture firm, and was an executive at Square and LinkedIn. He’s currently our CEO, so helping making sure that we're building a great company and making the right decisions. And then we have Jeremy [Wood] our head of engineering, and Mike [Rubenstein] our president who's been president of other great startups, helping us build and scale the company. And as we build out the team, we focus a lot on engineering, product, design, so that we can really run these brands at scale. So both the pricing engine, being able to build a great pricing engine with data science to quickly deliver evaluation to businesses as well as building out the operations platform to help run these businesses.”33:03 - The magic of MiamiRight now, Miami is a hotbed for startup innovation. The city is in full “building mode” compared to more established startup cities that are in “preservation mode.”“I think everyone's really excited about Miami. I think in some ways there's actually similarities between startups and companies and cities. So early in a startup, obviously people are very excited about what you're building. You're focusing on 10x opportunities to grow the business and really optimistic about the future. And then once a company builds something valuable, then companies naturally switch a little more into value preservation or protection. And I think cities are the same way. So San Francisco and New York obviously have been great tech scenes and are great tech scenes, but they're a little bit more in this value preservation mode rather than being excited about building new things. And so what we all love about Miami is everyone here is super excited about building, solving really hard problems. So it's great both from a work and a lifestyle standpoint.” This episode is brought to you by OrderGroove and OpenStore:Visit  https://www.ordergroove.com/dtcpod/?utm_source=event&utm_medium=podcast&utm_campaign=2022q1_dtcpodpodcast_thirdparty_demo_us&utm_content=demo  today to receive 2-months off your first contract.Visit https://open.store to get a free, no-obligation offer for your ecommerce business from OpenStore in 24 hours. Have any questions about the show or topics you'd like us to explore further? Shoot us a DM, we'd love to hear from you. Matt Lanter - Head of Product of Open.storeRamon Berrios - CEO of Trend.ioBlaine Bolus - COO of Omnipanel

Andrew Benin is the co-founder & CEO of Graza, a Brooklyn based DTC brand reimagining extra-virgin olive oil.  Andrew previously served at DTC powerhouses including Magic Spoon, Casper, & Warby Parker where he worked in key operational roles. His new brand, Graza, had one of the most successful CPG launches of 2022.3:29 - Becoming a CPG addictAndrew got his start working for hot DTC Brands like Warby Parker, Casper, and Magic Spoon. It was a thrilling environment, but he knew he wanted to build something of his own.“When you work at really hot CPG companies, you are an addict of course. Because the company you're working for is growing, and growth is the fuel that fires the whole engine. But I definitely was looking to replicate that fire for something that I cared about. And olive oil is a dream, because it's objectively healthy. It is delicious. The supply chain is beautiful. The places where olive trees are grown and harvested are beautiful. And people's general reaction is shit, I love olive oil. It's kind of everybody's best friend, you know? So it definitely had strong tailwinds. But when I actually thought, okay, it's time to start a company, super saturated market. Investors had seen decks come across their desk recently. Really fragmented supply chain. So all of the reasons not to do it started coming up at the same time as the energy to do it. But I couldn't stop. I knew that we were going to get an olive oil company off the ground.”05:09 - Focusing on middle AmericaLuxury olive oil abounds in the world...for a steep price tag. Andrew realized that what middle America needed was olive that hit the sweet spot between amazing quality and accessibility.“I got really, really close with Mike Anthony, the executive chef at Gramercy Tavern. I get back to New York. I'm still working at Magic Spoon. And I find time with Mike to do a tasting at the restaurant. And we're trying really expensive, really delicious, really crazy olive oils. And he looks me in the eye and he's like, you know, I have 10 of you in this zip code who I can call on to get me amazing Italian, Portuguese, Spanish, French, Argentinian olive oil anywhere I want in the world. Don't start another boutique luxury olive oil company. Don't do it. That's not what we need. Middle America doesn't need that. Because it's not even just middle America doesn't need that, we can't afford it. So that changed my perspective completely. And ever since then, mass and scale and mass premium have been the leading principles for this company. Of course without sacrificing quality at all. I would put up our olive oil against any gold metal, whatever award olive oil there is in the world.”8:07 - Making olive oil sexyGraza’s unique squeeze bottle makes it possible to be both playful and insanely functional.“We just wanted to add some life and some sex appeal to it, some fun. A big part of the development process and the idea was when we were like, screw it. We're going to put this in a chef-inspired squeeze bottle. That was a whole deviation from the norm. And that was a lot of energy from the culinary community, a lot of energy from the investment community. People were like, damn. This is going to really be usable on all social media verticals. You can do collabs with restaurants. And it all kind of started coming together when we flipped the form factor. You know, olive oil is always sold in the same dark green glass bottle with a random label with an olive branch on it. And when we chose a squeeze bottle, everything changed in terms of the visual appeal. And this is something that makes us not only a CPG food company, it makes us a tool in the kitchen.”14:13 - Finding a design partnerGraza tapped Gander as their design agency, and offered them an equity and cash partnership to give the relationship deep roots.“Our original design was a Dr. Bronner's bottle with a Mike's Hot Honey cap, put together with some Photoshop work. That's how it started. But we knew we were going to work with a great branding and design agency. We worked with Gander, Take a Gander is how you can find them online. They also did Magic Spoon and Banza and Gotham Greens and Mystic Market. So I knew they had the heat. We decided to explore an equity and cash partnership with them, which I think is a great way to work with long-term partners. I think it's a great way to keep people invested and honest…I think working with a great branding agency not only is like the visual aspect, they instill amazing creative project management into your company from an early point. And their first job is to extract all of the thoughts that you've had for six months alone, writing in your iPhone notes, writing a Google Doc, sending emails. Their job is to get that all out of you. And I think if we didn't work with some professionals like that, it would still just be stuck in my brain somewhere. And I'd be very frustrated.”15:56 - Vetting new partnersAndrew suggests doing reference checks, carefully reviewing offers, and paying close attention to what is in the project scope before committing to new partners.“It's the classic. You have to reference check. You have to right away ask for three companies that you worked with. I'm going to speak to all of them. And you got to put in the effort. What I will say is don't pay more than $150 grand for branding work. That is when things get crazy. You know, we got some offers in for $250k, $300k, $350k and we're going to do these data insights and consumer insights. I kind of read all that stuff is BS. Like if your job is a creative agency, I'm going to pay you for the creative. If your job is to give me consumer insights, I'm going to partner with McKinsey before I partner with the creative agency for that. So know what you're getting, and I know what you need. My last bit of advice would be the scopes of work that come through. You are going to be held to it. And if you deviate from scope, you are going to be billed for it. So don't take those lightly. Make sure exactly what you want is in there. And if you don't know how to ascertain that information, get help from a founder. Go into CPG founder Slack groups and figure out who can help you figure that out.”21:04 - Seeding to creators pre-launchGraza’s successful launch can be credited to successfully seeding to creators and influencers in a respectful way.“For us all this organic pre-launch effort was mostly around seeding. I think if you have a physical product that is affordable to seed, you have already struck gold. And then you have to have faith in yourself and your team and your story and how you package it and the notes that you write and everything that you do, that these creators are going to naturally feel inclined to participate. So we took a seeding approach that was no strings attached, no asks, nothing. No incessant communication. If you want to squeeze with us, if you want to have some dope olive oil, drop your address. And if you don't, no hard feelings at all. If you only want to do a paid campaign, we'll speak to you in a year. I think that having a deep respect for the creator economy is vital for a CPG founder. Because these are people that their skill is mocked sometimes. And oh, you have 20,000 followers on Instagram. These are people that are trying to hustle and make a career out of this. And getting behind a camera with food is really hard, really hard. I have tried to do it many times, and my videos are awful. So I just think having the utmost respect for them and treating them like they are the key for all of us. So seeding really worked.”32:12 - Kicking off a retail strategyAndrew knew that retail would turn into a big component of Graza’s business. That’s why he identified a talented co-founder to run and own Graza’s retail arm.“We divide and conquer. I have an amazing co-founder Allen… Allen had run an $80 million business just at Costco in apparel, and it's the retail mass mindset that we needed. So Alan runs our entire sales team. Allen facilitates our selection of brokers and a whole bunch of other stuff. But dividing and conquering in those channels. It was always kind of a dream to be okay, maybe we can actually have different ownership of digital and physical from day one. And obviously it's not a perfect line, but we're doing a pretty damn good job. So for us, we have to figure out how to supply 1,500 stores. It's a huge, huge challenge for a new brand. Our interactions with our customers digitally will always be so vital to our community building and brand building. And we're not going to let those strategies conflate with what works on a retail shelf. I don't think they are completely transferable. And I also think it's a pipe dream to be like, oh, we'll get our physical retail customers and convert them over to digital customers, and everyone's going to be happy. Wrong. No one's going to be happy.”36:40 - Channeling startup energyWork-life balance is simply impossible for a startup founder. Andrew said that something changes when it’s your own business that allows you to draw on a deeper well of energy.“I worked for people that I watched them suffer, because it was their company. And I got to go to the gym at 7:00 PM and go out to dinner with friends. That's not my reality right now. But I think at the same time, you tune into like a different stamina, different energy, that just keeps you going. Yesterday was Sunday, and I was answering every single customer email that we got, because I think it’s really really important, especially with these early customers. And that's in thanks to amazing training that I had at companies where customer service was everything. So I'm not going to sit here and say that my personal health is at an all-time high. It's not. But the community that we're building in the food space is insane. It is a lot of fun to work with olive oil. Every time we go to dinner here in Brooklyn, we bring a bottle and we're just squeezing it everywhere. It is fun. We're gonna build out a team to help, for sure. And that's going to be so exciting. Maybe in a year and a half, two years, I can come up for some air. But right now I want to put everything into this, because at the end of the day, we're selling something to people that actually is good for them.”Watch the full interview here: This episode is brought to you by OrderGroove and OpenStore:Visit  https://www.ordergroove.com/dtcpod/?utm_source=event&utm_medium=podcast&utm_campaign=2022q1_dtcpodpodcast_thirdparty_demo_us&utm_content=demo  today to receive 2-months off your first contract.Visit https://open.store to get a free, no-obligation offer for your ecommerce business from OpenStore in 24 hours.Have any questions about the show or topics you'd like us to explore further? Shoot us a DM, we'd love to hear from you.Andrew Benin - CEO of GrazaRamon Berrios - CEO of Trend.ioBlaine Bolus - COO of Omnipanel

8:21 - Pivoting from SaaS to ecommerceRaphael was surrounded by Saas founders, but followed his instincts when he found himself far more interested in the ecommerce space.“I started SplitBase when most of my friends were SaaS founders, because that's what I was familiar with. I always like, well, SplitBase is going to be a conversion optimization agency for SaaS companies. Now a couple of things. One, I think it would have been better positioned as a churn reduction agency maybe, or something a bit more focused than conversion optimization. Because I realized after maybe a year of doing that, that it's like, SaaS companies, it's not conversionary. It's not the term that really comes to mind. But also I just wasn't really passionate about the SaaS space. And I caught myself one day thinking and actually saying to a friend you know, when I'm done with this SaaS thing I'm going to focus on helping out ecommerce brands with optimization. And then my friend was just like, well, why don't you just do it now?”9:54 - Pioneering conversion optimizationBrands used to not invest much in the user experience, only in ads. As the DTC brand era grew, Raphael saw that start to shift.“For so many years, it's felt like you had to convince brands, and still a bit today, that optimization is something that you do. And it just felt like, I don't know how to say it, but we were stuck in a very old way of thinking. Most ecommerce brands we're just not really thinking ahead, and it was a very old-school way of thinking about user experience in general. And eventually this DTC era started surfacing. And what's been interesting is that, still then, CRO, like conversion optimization and landing pages, wasn't a big thing. Even today it's only really starting to become the thing to do. And more notably since the iOS changes. It changed everything. Because you realize people were just so focused on testing their ads, testing their ads. And they were like, oh, the website just needs to look sexy and good and beautiful, and design will sell. But the truth is no. Design is one thing and it helps build trust and it provides an identity. But design alone is not going to answer your customer's questions, their fears, their doubts, their objections. Design is made to support that content, not be that content.”16:10 - Focus on the customer, not the competitorA mistake many brands make is to see what marketing gurus are saying about best practices, or copying others. But the first place you should be looking is to your customer.“We're not going to focus on the optimization part of the traffic acquisition. We're not going to touch ads, for sure. That's not what we do. But post-click, okay. Customers clicked on your ad. Now they're on your website. It's go time. What do we do? Do we need a landing page? Is the landing page even working? First, before trying to apply tactics or techniques, because I think this is also one of the biggest traps for brands getting into optimization. They were like, Hey, what is Neil Patel or whatever marketer on their blog is saying about optimization? And most of the information is bullshit for most brands. The thing is, sure. There are some best practices when it comes to usability. But it's not about what's working for other brands or your competitors or whatever. It's what does your customer need for them to convert on your site and buy your product? The only way to really get to the bottom of this is by really doing what we call conversion research. Which is, and not to get too deep into this, but it's talk with your customers.”20:10 - Evolve your tactics with your marketProducts and customers are not static. That means your website and landing pages can’t be, either.“If we are talking about a DTC brand, they're releasing more SKUs, probably targeting different types of customers. So any business is going to be growing. The market is going to change, their customers are going to change. So first, the process is infinite. Because you're always going to have to adopt. And when you do this research work well, sure. It enables you to create landing pages, make changes on your site, and run tests that hopefully will drive some impact. But it also feeds you information in terms of how your customer and your product is evolving over time. And I think that's kind of key, because if you assume that, oh, I have one website and this is a fixed entity and my customer is also the same thing, I mean, at one point you're going to hit a wall.”22:38 - Use data to drive actionMany brands get obsessed with tracking data. But Raphael’s found that data is actually useless unless you’re using it to make business decisions.“Data can be a savior as much as it can be a killer. And the reason I believe this is because look. We have clients, for example, that sure. They have a lot of data tools. And they're actually using it. It's integrated within Klaviyo and everything. It's integrated within their tools. They have staff to handle it. That's amazing, yes. Data that you can actually use and that leads to insights, and that leads to an actual action, not just like, oh, this is interesting data. And then it sits there. But data that actually leads to progress or changes. That is great data, and it's good to have. But I think people get caught in this, it's like data porn. It's like, Hey, we need data. We need data. We need data. But it's like, Hey, before you actually get more data, ask yourself: do you actually need to know this? And if so, it’s not do you actually need to know this. It's are you actually going to be using it, and how?”25:27 - Embrace qualitative over quantitativePercentages can show you what’s happening on your website. But qualitative research can show you why.“At the end of the day, if you're looking at Google Analytics or any dataset to try to make decisions, it's great. I'm sure it's helpful if you have a problem that you're trying to solve in mind. The thing is that sure, it'll give you percentages, ratios, numbers. It'll tell you which pages are performing well, which pages aren't. But what it doesn't tell you is the qualitative stuff. Because look, numbers are numbers. But your customers are human beings. And you're not trying to optimize for numbers. Those are signals that are going to help you optimize for the human being. But who we are truly optimizing for, those numbers you see on the screen, they're real human beings. If you see that your cart abandonment, your conversion rate is low or not performing as expected, well, sure. Google will tell you that. But there has to be something that caused people to abandon, to stop themselves from actually finalizing their purchase.”28:52 - Use your customers’ languageIt’s easy to assume you know exactly who your customers are and what they want. But it’s worth talking to them to make sure, and stealing their language for your landing pages.“When you do surveys and you ask people: how would you describe X brand to your friend? Well, people explain the brand in their own words. Analyze that. Find the words they're using. Reuse that on your landing pages. It's relevant. It talks to the customer. And I've been victim of that myself so many times. We always think that we know what our customer wants. We’re the founders of a company. We think we know what our customer wants and how they think. But it's not true. Very often you start doing that research and you’re like, damn. I was describing my company that way, but customers are describing it in an entirely different way. And that can be so revealing sometimes to just stop looking at the quantitative data all the time, and trying to just get some qualitative balance.”41:49 - Create your own categoryWhile SplitBase didn’t necessarily create a brand new category within optimization, they certainly go about things differently from most agencies.“For some brands or some products, it's necessary for people to understand what it is. It's the science of familiarity. So we'll latch on to conversion optimization. We’re probably different than a lot of optimization and landing page agencies, because we focus a whole lot more on that qualitative side of things that we talked about than 99% of optimization and landing page agencies out there. Most landing page agencies out there are just going to build something from a template, and it's going to be like, oh, we should talk about that. We should talk about this. But our unique mechanism is—and that's literally what I do when I sell brands our services. I talk about our services being, Hey, well, we talk to the customer and we do this. Which generally a lot of other agencies don't do. So I think there's always a way to be a bit different. I don't know if it really falls into creating an entirely different category, but maybe it's the beginning of it.”52:16 - Look beyond the AB testAt its core, optimization is about improving experiences. That means it’s much more than AB testing.“So SplitBase is with that DTC wave, and everybody's starting to realize that hey, I think we need a landing page. Hey, I think we need to improve our website, run tests, and do optimization. I mean, I think it's funny. SplitBase is 6, 7, 8 years old. I lose track of time. But I still think we're only at the very beginning of it. Right now, the industry still thinks of optimization as an AB test. An AB test is optimization. It is not. Optimization is improving experiences, validating/invalidating hypotheses. AB testing is a tool as part of that. The industry I don't think is 100% there yet. I don't think brands think of it that way automatically. Now brands that work with us, after a couple of months we try to make them understand that. And most of them realize, oh, this is what it means to do optimization. But I think over time, as brands become more, they, I don't want to say accept that. But as they realize that optimization is more than AB testing, our task is going to be more than doing AB testing as well. And it's really going to be to guide those brands with: how do we create a culture of experimentation?”54:00 - Raphael’s barometer for successThe true sign of success for Raphael is when their clients fully and autonomously embrace the concept of making hypotheses and conducting tests.“So Dr. Squatch, which I've mentioned, we've been working with them for about three years. And when we started with them, the brand was pretty small. I don't think they were even running any AB tests. Now, fast forward three years later, we've been meeting with them on a weekly basis and more frequently, and running tests and helping them with this. They now have, three years later, pretty much an entire optimization team. And their team and everyone that really in their brand that you interact with think in terms of hypotheses. In terms of oh, we're not just going to release this feature because we know it needs to go out. They think of what is the likelihood that this is either going to fail and cost us a lot of sales, or what is the likelihood that it's actually gonna work? Like, are we wrong? Are we right? We don't know until we test it. And they think of it that way. And it's a mindset shift. It's more than just running great tests. And to me, that's when your mission is fully accomplished.”Full video episode: Raphael Paulin-Daigle - CEO of SplitBaseRamon Berrios - CEO of Trend.ioBlaine Bolus - COO of Omnipanel  

4:47 - When goals make senseGoals can be a waste of time at a young company. But once you grow, you need to figure out what to prioritize.I think to start off a company where you're at zero and come up with this master plan and all these OKRs and goals, I think it's just a huge waste of time. You should just spend more of that time talking to customers and figuring out building something that they need enough. Because if you don't have product-market fit, what's the point of goals? The point of goals for us was just, you have a lot of people. There's a lot of demand. How do we prioritize our time on the things that are most important? And how do you coordinate? Last year we had maybe seven director-above people, and now we have like 22. So if you have all those types of people leading different initiatives, how do you make sure that they know what's important at any given time? How are we measuring the success of that? How are the things that they're doing gonna impact other teams? What are the dependencies? If they say, Hey, we want to build X, Y, and Z. But if the engineering team doesn't have the people they need to do that, there's just so much more coordination as you get bigger. And without having clear goals, it's just really tough.9:57 - The forecasting breakthroughAs a bootstrapped business, SwagUp felt like it was starting each month as a blank slate. Michael took on the job of building a model that could accurately predict business.Every month, I would build out the model for that next month and the next quarter and stuff. And then I’d track like, what was the variance? What was the actual revenue? What did we end up doing? What is it looking like for the next few months? And it started to be very accurate. In the beginning it was like, plus or minus 20%, which was still really helpful. And then it started to get into like the plus or minus like 5%, 6%, 7%. So in the past we went from not knowing anything to now like, oh, we'll do $2.2 million next month. And then that was super helpful with the pandemic because when the world was kind of melting down, we weren't sure are people going to buy swag, or this or that? By like April and May, we saw enough early signals that would say, Hey, actually we're going to have our best month ever in this next month. So we just started to think much more from a machine standpoint, like, okay. What are all these inputs, and what's the output going to be? And that kind of changed my thinking around this stuff in general and try to find other areas of the business that have the same dynamic.13:32 - Pursuing a SaaS look & feelThere’s no doubt that SaaS tools are very intuitive to use. Michael wanted that same look and feel for SwagUp, so that tough tasks and decisions could become simple.I wanted it to feel like a SaaS tool. Because if you were like Twilio or Plaid or Stripe or any of these interesting software or platform-type companies, the people at those companies who are buying swag, they're going to these websites that feel very 2000s, very 1990s. And I was like, I want them to feel the same buying experience that they would feel buying some piece of software that they're using, and have a brand and positioning and design that resonates. So design was super, super important to me from the very beginning. Because one, it gives you credibility, and it tells you right away like, Hey, they take pride in what they're doing. It looks really legit. They've probably been around for a while. And we had to appear bigger than we were, but also wanted it to feel natural to them. Like, oh, if we're going to buy swag, this would be the type of company we would buy it from. So we've always been thinking about how do you productize the experiences as well, and make it really, really simple and eliminate decision fatigue…and it became like this mouse trap for us, where we were able to acquire so many customers because we just do this one thing very specifically.17:18 - The benefit of swagSwag is a big business for a reason. Many companies want swag to build a relationship with employees. When you don’t have a good resource, this can take a lot of time and energy.The whole idea of like a swag pack is first off, whether it's your new hires or you have community members or your new customers or partners, building a bond and a connection between you and them is super important for companies now. There's so many more companies that you can work at or buy from. And the people that choose to work at your company or buy from you, they have a deeper sense of connection. And that's what I kind of saw happening. I saw that if you do swag well, it does a great job of kind of solidifying that connection and kind of physically embodying it. But how do you easily get something into those people's hands? And if you're hiring people remote all around the world, how do you easily get a consistent experience as well? That was one of the issues I saw in the beginning is you have people that start at a company, in the office, and they have one experience. And they have people that start remote, and they have one experience. So it's like, if you can make the process of creating one of these kits and distributing it really simple, then everybody will have a really consistent, scalable experience.24:55 - Learn what you will & won’t doSaying “no'' seems like a foregin concept at a startup. But as you solidify demand, you have to start articulating what you will and won’t do for customers.In the beginning, it's just like, do whatever the customer wants. Just say yes to every single opportunity, make money. And then eventually if you're lucky enough to be successful, then you have the option to be like, oh, I'll be picky. But when you're just starting, I don't think you can really be super picky. Because you don't even know what the business is going to be, or what parts are going to be successful or where are you going to really scale it. But then over time, it starts to get to a point where that “just say yes” attitude comes back around to haunt you, because that becomes the mentality that people are used to, and they're just like, oh, we just want to do whatever's in the best interest of the customer at all times. Which is noble in a way. But at the same time, it means you're inherently not providing a good experience to other customers, because you're spending too much time on this other stuff. Or we have to hire too many people to maintain those levels. So we started to do some things the SwagUp way, and really articulating to people and documenting what are the things that we do or the things that we don't do.27:59 - The right time for capitalSo far, SwagUp has never raised money. But Michael thinks bringing on capital soon will help them grow much quicker, faster.We've never raised money. We still own 100% of the business. We have very minimal debt, just some little lines of credit that we have access to. But I'm definitely at a point where I think we're ready to start bringing on capital. Because it's just too clear, the opportunity and how big it is and the different areas that we want to build out, and get the team that we need and stuff. We’re just wasting time by sitting, because there's too many tradeoff decisions on a daily basis. It's like, well, Anthony wants this person on his team. Well, this person wants that. So we have to say, oh no, you're not going to get that person right now. We're going to get this person. Or this is revenue-generating, so that gets priority.40:02 - Focusing on customers over marketingSwagUp only spends about 1% of their budget on marketing. That low number is due to the fact that repeat business is huge.70% of our traffic is direct and organic. And the majority of that is people just going to SwagUp.com right in their browser. So that's the most valuable thing you could ever have, is just people that know the brand itself and go straight to it. So that's why we don't need to spend too much on marketing…The bigger we get, the more vitality there is, because more of our products are in people's hands around the world. Our growth is really a function of how many customers we have. Because 70% of our revenue comes from our repeat customers. So we think of it as like, okay, we want to get as much of our traffic and leads to turn into new customers, because new customers turn into our customer base. And then a certain percentage of our customer base is going to order on a given month. So that's like a whole kind of growth flow. How do we optimize that? How do we get as many people going from lead to conversion? How do we get as much percentage of our customers ordering on a regular basis? How do we get them reordering, the time between reorders lower? So we spend a lot of time on our existing customer base.42:52 - Seeking out good dataData can be your friend, but Michael says that it can also be your enemy when used improperly. That’s why he learned how to crunch the numbers on his own before trusting others with the job.The worst thing you can do is start making decisions off of bad data. Because I'm all for being data-driven, but I'm also very annoying to people about making sure that the data that they have is actually correct at its root, and like that they dive into the raw data and check manually, like, is this right? Check some assumptions. Because ideally if you set up the infrastructure right, then you just go with it. Then you start making decisions and you adapt and stuff and you trust it and you can move quick. But I've also seen horror stories where people think they know what they're talking about or they have data and then it's really saying something totally opposite, and they don't understand the business or why. And that's why it was really valuable for me to do all of the data modeling myself in spreadsheets before, because I could manually go in there and really understand the data. So now when somebody comes to me with a report, I can usually gut feel and say hey, there's something wrong with that. You gotta dig into the data and really look at it before starting to build strategies and plans from this information.51:02 - Building in automationThe process of ordering SwagUp items is already easy, and Michael’s team is making it even easier to preview item designs thanks to AI mock-ups.You upload your logos. You say, okay, I'm going to want 100. Here's what I need it by, and submit it. And then on the backend that goes into our system. It alerts our design teams that they have a new project they need to work on. And then the customer then gets invited to the dashboard. So they make their account. And then once the design team, probably within plus or minus like six hours, you'll get your fully branded mock-ups done for your brand, with those products that you picked. We even have a little bit of lightweight AI that we built. If you go to grab one of our sample packs, that's like another lead channel that we have. At the end of it, we'll use your email to then showcase your custom mock-ups of what it's going to look like. So we'll pull your domain, and then we have some APIs that run to look at what branding you have, what color. And then we'll show you what that could actually look like in real-time. But when you're picking all these custom items, for now we have a design team that does all that. Eventually, we'll probably use AI to automate all the mockup processes.57:18 - Selecting the right swag productsThe best way to decide what to sell? Ask yourself if you and your team members would buy it. Michael goes for a mix of brand name items and high quality generic goods.The first thing was like, one of the philosophies was pick products that people would actually use themselves. Like if I was going to get a hat, which hat would I want? I always use myself as the barometer of like, is this a good product? And then we'll buy them and hang out and use them and see if people like them and stuff. But there's like a 70-30 kind of rule of like 30% of our products are brand retail names. And we try to find interesting companies that people at startups are using anyway. Like there's a drinkware company called Fellow that makes really cool stuff. And a lot of times our customers will suggest brands. They'll be like, Hey, I love these mugs that my wife just bought me, would you guys ever offer them or something? And we'll reach out. So I try to strike the balance between having cool brands that people know that they would want themselves, but then layering in these generic items that are of higher quality.This episode is brought to you by OrderGroove and OpenStore:Visit  https://www.ordergroove.com/dtcpod/?utm_source=event&utm_medium=podcast&utm_campaign=2022q1_dtcpodpodcast_thirdparty_demo_us&utm_content=demo today to receive 2-months off your first contractVisit https://open.store to get get a free, no-obligation offer for your ecommerce business from OpenStore in 24 hours.Full video interview: Michael Martocci - CEO of SwagupRamon Berrios -CEO of Trend.ioBlaine Bolus - COO of Omnipanel

1:26 - Rebuilding the vitamin categorySara realized that traditional vitamins weren’t built in a way to truly optimize health.“I was starting to struggle out of nowhere really with chronic inflammation, digestion, sleep issues, you name it. And I've always considered myself a relatively healthy person. I had a healthy diet. I didn't really know what was going on. Went through a lot of allergy tests and blood tests and found out that I had a lot of gaps in my diet. Because even if you eat a well-rounded diet, even if you eat perfectly, actually 90% of Americans are micronutrient deficient. We're not actually getting the nutrients that we need. And so like many of us, I turned to the supplement aisle to try to fill the gaps. Started looking at all these vitamins and pills and complicated and expensive sort of supplement routines, and cobbling together swallowing handfuls of capsules. And the more that I looked into it and questioned it, the more that I found that a lot of these things are built wrong. They're made with a lot of artificial fillers, synthetic binders, just a lot of dirty things. You don't actually question where your vitamins are coming from or how it's made. And so I set out to create an entirely new solution. One that's actually real food. And that's how it was inspired and Gem was born.”9:27 - Organizing a beta groupSara’s first step was to organize a Facebook group of diverse women to help understand if there was interest in replacing multivitamins with something better.“At first I didn't even think about it as the anti-vitamin, as an entirely new idea of a vitamin. I just thought of it as this daily health essential that really worked for me. And I wanted to share it with more people. And so I started a beta group actually, and I joke, on a complicated platform called Facebook Groups. And I had people kind of refer in, so it wasn't just a bunch of my friends, over 300 women across the US. And at first I just formed this community really to see if it was something of interest, to get people's feedback. And I kept iterating on it to address other people's needs, to see what would work. And I got an overwhelmingly positive response of, wow, this is something that could really replace my multivitamin. This is something that really works for me. And that's when really I had the aha moment of, wow, this could be a business and really be a product that is impactful on people's lives. And that's what led me to ultimately raising my first round of capital and then going to market in late 2018.”12:07 - Forming a panel of advisorsNext, Sara surrounded herself with experts who could serve as the scientific backbone for GEM’s products.“I have a team of scientific advisors that I brought together. And our approach and my approach in building this has always been to have a kaleidoscopic array of knowledge and expertise. And so we have an herbalist, a functional medicine doctor, a neurologist, a biochemist, registered dieticians. And bringing these different perspectives together in how can we look at our health in different ways? How can we actually look at it holistically, and not just through this band-aid lens of a pill for this and a pill for that? And so it took kind of bringing them together, getting their input, and then really co-developing it with this community.”15:25 - Embracing a minimalist brandToo often, design eats up a startup’s time and money when it should really be focused on getting the product right. That’s why Sara packaged GEM in black & white until its recent rebrand.“I started out really almost with a brandless platform. So they actually came packaged in a recyclable PET container, a small plastic container. And so it was really nicely designed and had a simple white label on it. It was like white and black. And the idea was I didn't want brand to distract from the core product. I think there's a lot of, and I've had these mistakes too in my own past of building companies, where a lot of people will spend a lot of money on these beautiful brand books and invest a ton in brand before they even know their target customer. And that's not what I want to do. I want the product right. I wanted to understand who my audience was. I wanted to understand how to build the right thing for them. And so I started out with a very simple and scalable brand packaging system that was really super minimalist.”17:06 - Prioritizing scalabilityTo stay lean and agile, Sara set up manufacturing and production systems that she knew would be scalable as GEM evolved.“As a food company, it's difficult to kind of have that quote-unquote ‘lean’ startup method. Because it's harder to iterate on obviously a physical product than it is maybe if you were a software company, or something where you can make more methodical smaller tweaks. So I set up a supply chain and I set up a manufacturing and a production system with this packaging and brand that allowed me to do that in the most minimal way possible. And I always thought about scalability in my mind, too, when building out unit economics. So from day one, I made sure that we sourced things that I could scale with, that I could iterate on pretty quickly, so that we could get to that product market fit faster.”20:23 - Bringing investors onboardGEM didn’t have fancy pitch decks. Instead, Sara invited potential investors into her beta group so that they could see all of the feedback and interest firsthand.“It was about a month into that beta group that I realized the potential. And I actually invited investors to this group. So I actually used the group as my beta. As my product market fit potential. So that was really my prototype version, if you will. So I had the product for people to taste, it continued to evolve obviously from there the next six months. But I had the initial product. I had the initial community. And I had the initial feedback as well. I did a lot of surveys within this group, asking questions. We had different dialogue conversations happening. And so I just invited these investors. They could see transparently what people were saying. Good, bad, ugly. And that was my approach. I don't even know if I had a pitch deck in the early days. I mean, that was really it. It was about the product. It was about our mission and vision of building this future of nutrition. And that's really how we actually raised that initial capital.”25:15 - Competing in the superfood spaceToday, GEM doesn’t just compete with vitamins. They also go toe-to-toe with superfoods, powders, and other players in the health space.“We're really indirectly competing with so much more than just traditional supplements in gummy or pill form. We do get a lot of switching behavior from consumers who don't want to eat a candy, who don't want to swallow pills and capsules, and who want to have a whole food solution that's more natural to get their vitamins. But also we were getting a lot of vitamin-skeptics, people who've never taken vitamins before because they don't believe in it, because it’s scary. You don't really know what's inside of it. Now, the landscape has changed so much where we're this convenient all-in-one daily nutrition. And so even like powder companies now, there's all these superfood powders and things like that where people are trying to get all of their essential nutrients. Gem also helps satisfy that need. And so now, I think the landscape has evolved where when you actually look at the supplement space, it's so much more than just supplements. You're looking at functional food, you're looking at functional powders. You're looking at a lot more players in there. And we're an entirely different form factor, but we're kind of evolving that even more with that form factor, and really disrupting and displacing a lot of those players.”43:35 - Keeping a simple tech stackThere’s no need to reinvent the wheel in DTC. The only unique tech that GEM uses is an SMS program that allows them to regularly check in with subscribers.“Our tech stack is super simple. We're built on Shopify and we use a subscription plugin within Shopify called Recharge. We use Klaviyo for our email system, and SMS as well. And we also co-built our own SMS for helping manage your subscription. So we text our customers three days before your monthly subscription, asking you how everything's going, if you want to swap flavors, if you want to pause or anything. And so we have a super communicative strategy there through SMS. And of course we have the data side as well. We use Looker. I know there's a lot of different data platforms out there. But what's amazing about the direct to consumer world obviously is that you can really get to market quickly with a pretty simple tech stack. And there's a lot of tools where you don't need to reinvent the wheel necessarily from the ground up.”46:13 - Optimizing health 30 days at a timeThe next step for GEM is to grow their community of users and enlighten more people on the value of using the product every single day.“Consistency is so important. And that's why we're a subscription model. It's about one bite a day. In order to optimize your health, you really do need to be consistent. And so that's why we offer a subscription. And we hope through the structured experience that we provide you that that becomes something of a habit. It’s shipped to your door conveniently every month so you don't have to think about it or worry about it, in 30 bite packs. So it comes in 30-bite compostable bags. And then we offer you a big tin, an eco-friendly tin that you can refill and have on your counter. And then we also offer you a travel tin for on the go. And so we give you three different packaging systems in your starter kit, so that you can always have it with you wherever you need it in the house. And you can take it with you as well. So hoping to provide different levels of convenience.”Episode Contributors: Sara Cullen - CEO of GEMBlaine Bolus - COO of Omipanel

4:36 - Embracing clean beautyA long-time advocate of health and clean ingredients, Bobbi Brown founded Jones Road Beauty. The challenge was to make clean versions of all the best products.“Bobbi parted ways with her company that she founded and had a non-compete. And most people would be retiring at that age, but she just didn't feel done. And she felt like she had so much that she wanted to teach and so much that she wanted to continue to do. And part of it is throughout her journey she has gotten super into health and became a certified health coach. You know, clean beauty wasn't really a thing back then, but obviously now it's much more common and people care so more about what they're putting on their faces and also what they're putting in their bodies. So I think there was just a little bit of a challenge in there, and  obviously makeup and the trends are changing, but also what ingredients people care about is changing. So usually people didn't think that clean products were that good. And there was kind of a challenge of how can we make the best beauty products in the world, of all products, and let's just also make them clean.”8:50 - A soft launch that hit hardCody and the Jones Road team did zero pre-launch announcements, and the launch still surpassed all expectations.“I think because we knew that there would be some initial demand we had to invest for that and kind of prepare for that and start building the team. Versus if you're going to start things from scratch, you have to obviously do it super bootstrapped and do it super lean and maybe start fulfilling orders by yourself. But we knew that that wasn't going to be sustainable. So we had to invest ahead of time for that. And I think we knew that on day one we hit something pretty special and pretty serious. We didn't really do any pre-launch because Bobbi’s non-compete was up and she didn't want to wait at all. So she wanted to launch it on that first day that she could, which means we couldn't announce it ahead of time…So we really didn't do any teasing of, and we didn't have time to kind of build a list or anything like that. But we had some press hit that day. And once people started talking about it, I think we knew it that first month and that first day just surpassed expectations. And that's when we knew we really had something.”13:21 - Making investments in ad spendCody says that steady ad spend and good growth KPIs should result in increases in traffic and brand awareness.“I think you have to just trust it a little bit. Look at audience growth, look at like, yes, they are vanity metrics in terms of looking at your reach and your followers. But I do think that is an important thing to look at. And having growth KPIs that you're growing 5% or 10% a month, I think is super important. And obviously I don't think you can look day to day and like, ‘oh, we spent this much, this was our return on ad spend.’ But I think if you invest in it over a quarter, you obviously should see your overall traffic pick up. You should see your organic search, your direct, and your branded search pick up as well if you're getting some more brand awareness out there. And you should see your overall revenue quarter over quarter go up.”14:28 - Doubling down on social mediaThe next step for Jones Road is to focus on building community through social storytelling, such as putting resources into TikTok.“Obviously influencers and UGC are huge. Especially in beauty, on Instagram, just being able to share what our products look like on different people and obviously doing some storytelling around brand pillars as it relates to building a community. I think that's something we can do a way better job of is building a community on social, on Instagram. That's kind of our main focus and I think something that we can do a way better job of. And then we're really not doing much and a good enough job on TikTok. So that's going to be a huge focus. And that's something I know you asked, like, how do you calculate your return on investment of organic? I mean, we're going to find out. Because we're going to invest quite a bit of resources into TikTok, because I really think that's where the attention is. And we'll see how that plays out.”15:37 - Building the marketing teamThere are many new roles that will be up for grabs soon at Jones Road, most notably a growth associate who can work with creators on fresh user-generated content.“We've got one senior to manager level of marketing operations. We are about to hire a director of influencer marketing, that's something we're hiring for right now. We just hired an associate manager of retention marketing. So email and SMS. We have a social associate, and then a marketing coordinator. So that's kind of what our marketing team looks like right now. But again, we're looking to grow upon that quite a bit. We're looking to hire another person on the media buying side, maybe somebody else to help with our ad creative. So somebody like a growth marketing associate, where they work with content creators, work with these platforms, write briefs, communicate with creators to get UGC, and then work with an editor to kind of turn that around.”22:36 - Finding content creatorsA critical part of Jones Road Beauty’s growth has relied on getting products into the hands of influencers. The key is getting them to then create content that will help grow the brand.“We haven't done a lot of like pay-to-post. We've done a lot of seeding, so I think that's something that's been super successful. I think the more we do of that, the better. It’s just getting our products out there, it's kind of a little bit more of a brand awareness play. And then we've used a lot of influencers for paid social stuff. Just using it. Getting content is really the name of the game. It's how much content can you get? And it's very expensive and time-consuming to do it all in-house. I was talking to somebody the other day who is a consultant for this. But you know, UGC is not like an add-on thing anymore. It really has to be an essential part of your marketing. On Instagram, on TikTok, it's super important. And you have to have a budget for it. You have to dedicate, even if you're a really small brand, you have to figure out what your budget is. You have to figure out how you're going to find content creators.”29:07 - Growing a personal audienceIn addition to growing the audience for Jones Road, Cody is buy networking and growing his own personal audience so that he can more effectively hire.“My main motivation right now is I'm trying to build our team. So if I can get on podcasts from it, if I can maybe speak at some events, just build an audience there, hopefully whenever we need to recruit somebody I have a network, I have an audience. I really think it's just the biggest leverage that you can have, that almost everybody should be building an audience, even if it's not a big one, so people know who you are. Because if you're looking for a job, like I would much rather hire somebody that I'm familiar with, that I've engaged with, and kind of know a little bit more about them. If we were raising money, I'd much rather raise money from somebody who's in my network and my audience. So there's just nothing bad that can really come from it.”33:34 - Sticking with DTC over retailCody says that for now, retail isn’t a focus. He would much rather continue to fully own the revenue, customer data, and customer experience.“We have one of our own stores, but we're not in any retail. We're doing a pop-up right now in Creedo, but I don't think that that'll be long-term. And we're trying to hold off on that. At least I am trying to hold off on that for as long as possible, just so that we can own all of our distribution and all of our data. Part of the value of being direct to consumer is obviously you get to keep your margin, but more importantly, you get to keep your relationship to your customers. When you're in retail, you have to launch products for retailers. You have to make specific SKUs for them. Sometimes you don't get to make what you really think is going to be best for the customer. So that's why we're choosing not to be in it for now.”36:12 - Building a media companyThe key to DTC growth for Jones Road lies in growing organic traffic. They plan to achieve that by essentially building a media company that will invest in content and support the product company.“We want to double our growth. We want to do so essentially keeping our ad spend 15% or less of our total revenue. So to do that, we've got to figure out organic distribution. Most people go into retail for distribution, but you lose margin, you lose equity. You no longer own the customer data. We want to keep all of that. So essentially what I think most people do, they either go to retail for distribution, or they go to venture capital for distribution; stay direct to consumer but then it's all just spent on ads. We want to do it profitably. Keep all of our data, keep all of our equity, not dilute at all. And to do that, we've got to learn how to grow our organic traffic. So what we're going to do is we're going to build a media company. We're going to build a media business. So we're going to invest in building a team and invest in content. I don't exactly know yet what the form is going to look like for that content, where it's going to. How are we going to distribute it, that's kind of all in the works right now. But that's really going to be our overall goal is building a publication company, building a content-first company, that lives alongside our product company.”Episode Contributors: Blaine Bolus - COO OmnipanelCody Plofker - Director of Ecommerce of Jones Road

Key Takeaways3:35 - Starting with KickstarterJarod and his partners knew they could have gone through the formal fundraising process, but wanted to get market validation first.“Having some startup cash to kind of get going, especially when you're talking about a CPG brand, it definitely helps a lot for a lot of levers. For us, sure, we could've gone out and raised money. But you know, that's like a 3-6, maybe 9-month process to go get a full round of fundraising. And we just don't want to do that. We just want to make sure the idea was worth it to other people. And so for us, Tyler, my co-founder, he started in his mom's kitchen just making samples, making things, making sure that it was a good product and so on and so forth. And for us Kickstarter was this channel where we could put up a campaign. And for those that don't know, Kickstarter, if you don't hit your goal within the 30, 60 whatever day campaign you want to do, you just don't get the money. So for us, it was like, okay, let's put it on Kickstarter. If it does really good, great. We'll get the money. And if it doesn't okay, then we'll go back to the drawing board.”9:49 - A viral launchAll of Muddy Bite’s original sales were completely organic, and they sold out of product before it was even produced. This meant manufacturing was the biggest blocker.“We launched on Shopify and really from day one, I think day one we launched, we did like 25k in sales. And that was really just kind of all organic. And really from there for the next four to six months, it was like every single bag was sold before it was ever produced. We never really did Facebook ads, because it just organically every bag was sold before it's produced. And so it really was kind of this process of manufacturing. How do we increase the manufacturing? How do we speed up the manufacturing? And so it was really kind of a different kind of journey so to say, because most brands it’s like, how do I go out and market this better? How do I get more customers? And it really for us, it was kind of flipped.”10:58 - Keeping customer transparencyIn the midst of constantly selling out of product, Jarod and his team made sure to keep customers in the loop so they knew what was happening.“There were some points where we maybe had 2,000 orders in the hole. And for us to catch up on those that take maybe two to three weeks. And so number one, we had full transparency with customers. The message was, Hey, we got all these orders. We can't keep up. You guys are amazing. We just need some time, please be patient. And we were really transparent with that for two to three years as we kind of got into better manufacturing for our process. And really because of that, we built a really strong foundation for customers that have followed us from day one.”11:33 - Making a small facility workMuddy Bites upgraded to a new facility…but it was still too small. They made it work as long as possible by creating night shifts and staffing with local college students.“Going from like 400 to 2,000 (square feet in facility space) was a fairly smooth process, because it was kind of that transition from Kickstarter to Shopify. But after we kind of gotten our 2,000 square foot facility and really kind of got going, we had boxes up to the ceiling and we had 30 plus employees in there. And it was jam-packed within a small facility to where after six months, whatever it was like, we needed a bigger space, but we were locked in this longer contract. And managing cash flow was super tight. So we just created a day shift and a night shift. And this was in Ames, Iowa. So we found college student. it was really easy for us to find college students that are willing to come in and work for that. So it was really kind of good for us just being in Ames because of that, finding know easy workers, so to say. But we quickly outgrew that space.”15:28 - Launching retail in the midwestIt turns out that midwest retail chains have great volume. Starting there quickly opened more doors in other regions.“Being here in Iowa, we've got Midwest chains like Hy-Vee, Fairway Foods, just to name a couple. And so that's where our starting points were for retail were, in a word, pretty nice. Because Hy-Vee, I think they have about 110 locations, like decent volume for a Midwest chain. And really once you start kind of expanding into retail to where you get maybe 500 to 1,000 doors, it's almost like a chain reaction. Because different category buyers go to different stores just to see the market and stuff like that. And so it just kind of opens up more doors. And so really from the Midwest, we expanded east, west, south, north. And it just made it a lot easier to expand.”16:34 - Using DTC to strategize with retailThe Muddy Bites online sales demographics helped the team know where retail product should be sent. This had a beneficial snowball effect on both the DTC and retail side.“Anybody in the US can order from us and we could ship. But after a while we really saw more demographics out in California and New York and Texas. Really, those are kind of the top three. And so what's nice is as we really kind of expanded to retail—we really, really expanded retail here in October, and really here in Q1 and Q2 of 2022—it's like we know where the customers are. So if we can get it in retail stores near them, it makes them go to the stores and buy it, versus paying online and paying for shipping. But also, if they can go to store, it helps us move more volume within stores. And obviously if you can move more volume, you get more doors. You get more sales, it’s just kind of a win-win.”23:07 - The DTC-Retail mixUntil now, DTC and Amazon have accounted for almost all Muddy Bites sales. Jarod expects that to flip going forward.“As we finished up in 2021, our mix was like 97% DTC and Amazon, and then like 3% retail. This year it’s going to be probably 75% retail, 25% DTC and Amazon. And that's without us decreasing the budgets for DTC or anything like that. It's just we're ramping up retail really, really hard. So, over one to three years or whatever, retail is kind of our end game, and we want to be everywhere that we can. And obviously that's going to mix up with the DTC side. If we could be in every single store across the country between Walmart and Target, 7-11, I would say DTC might slow down quite a bit, just because if you can go to your store and buy it for cheaper than online, then sure. But either way, it's like we get sales. Because then the stores reorder, the distributors reorder. But for us, it's really just getting in more doors and creating brand awareness.”24:27 - Growing the teamJarod and his co-founder used to wear every single hat, including running social media. Now, they’ve leaned into delegating to others and following there lead when it comes to innovative content, like memes.“In the early days of Muddy Bites, it was me running our socials, Tyler helping out with socials. I mean, we were wearing a million hats. We eventually got to the point where one, we can't do that. It's not sustainable. Burnout's real. And so we started just hiring key roles. Like we brought on Emma and Jessica under our social team and now they run everything. We don't tell them to do XYZ. We kind of give them full control and they've done an amazing job. And that's been a learning curve for us to hand that off. But really from there, one kind of key strategy that works really well for us as memes. If you were to tell me a year ago to post a meme, I’d think you were crazy. And our social team was like, let's just try it. And so we did. And now if you go look at our Instagram, every one of our meme posts probably gets anywhere from 500-2,000 likes. And every other post gets anywhere from like 100-400 likes. So we get a big engagement when we do memes, and we're kind of learning that like meme culture.”31:49 - Seeking funding to improve productionJarod knew it was time to pursue funding so that they could match production with demand, and grow the company into a business that can someday be acquired.“The biggest problem with our bootstrapping was that production’s always gonna be kind of a holdup. It's going to kind of tie us down, so to say. We got to the point where we’re like, okay. Let's get some money into the business. Let's improve our production a little bit deeper to where it's not really a production issue. It turns more into a sales and marketing issue. And so we raised some money. We did that. And really the other piece of that with raising more money was that way we can increase that production capacity, but also then expand into retail. Really for us, if we could be everywhere, that's our end game. Get acquired someday. That's kind of our goal versus just a DTC company.”39:28 - Standing out from the snack crowdDTC snack companies are all the rage, but most of them aim to be healthy. Embracing the fact that Muddy Bites is a dessert has actually served the company well.“The biggest thing with DTC right now is there's companies popping up left and right between organic, vegan, super healthy type stuff between snacks. And what's kinda nice about us, and especially when we pitch to investors or anything like that, or even retailers, it's we're not like a better for you product. We're sweet, we're not healthy. We're not trying to pitch it like we're better for you. So it actually makes retailers happy. Because we're seeing that in retail space and also DTC is like, everything's better for you, and we're not. And so that makes us a little bit different there. The other piece that's an advantage for us is we're basically creating a new category of snacks. We're not another cookie bar, we're not another Oreo. That's a big question we get from retailers is what category do you guys put us in? Are we in the crackers? Are we in the cookies? Are we in the chocolates? And so for us, it's like we're almost creating a category. So that allows us to be different.”Full video interview:  https://youtu.be/gWfyIpe_QyIJarod Steffes - CEO of Muddy BitesRamon Berrios - CEO of Trend.ioBlaine Bolus - COO of Omnipanel 

During this episode, you will learn about;[00:05] What’s in for you in today’s episode[01:36] Who’s Shane Rostad and his area of specialty[06:34] Typical mistakes that brands make[08:44] Tips to improve your site’s conversion rate[12:48] Things to focus on when brands are collecting customer’s data[16:54] The different ways to gather qualitative data from your customers[19:41] Commercial Break[20:38] Upselling and cross-selling in the business[28:30] How to do the A/B testing for your site[33:52] Do these things to improve consumer conversion [35:09] Shane’s three favorite brands [36:33] Connect with Shane today Notable Quotes Customer experience is the most significant lacking catalyst in most brands.Understand the game of numbers in a business.When complexity hurts, focus on simplicity. Contributors: Shane Rostad - shanerostad Jay Desai - @jayd3sai

9:56 - From bio major to builderDaniel’s journey into entrepreneurship started as the desire to make money for weekend college fun, despite the fact that he didn’t have time to work a traditional job.“I was a biology major. I was actually going to school to be a dentist and. I always knew that I wanted to be an entrepreneur. And that's what drove me. That was interesting. And doing new projects, stuff like that. Obviously, as a 19-year-old kid, I just had no idea what I wanted to do. And the online landscape was nothing like it was today. There's so much information you can find out there, and it's so accessible, there’s communities and all that stuff going on. When I was in sophomore year of college, I had no idea you could even make money online. I had no idea that was even a thing. So it's a lot different than it is today. But what inspired me at the time was just a conversation. My friend was telling me he was making $45 a week on his phone. And I couldn't get a job, because I was focused on my studies. At first that's just what inspired me. I was like oh, I can get some money to go to the bar on the weekends. But what allowed me to really gain motivation was really I became passionate about it. Passionate about being able to grow a following, being able to engage with other people in this community, being able to learn all this new information that was solely reliant on me building something.”15:19 - The decision to ditch dental schoolDaniel’s first ventures were doing well enough that he decided they sounded more exciting than dental school.“I started that platform May going into my senior year of college. I was going to the library every day to study for my DATs. I started the platform, it started getting traction and all this stuff. So you could say I was getting distracted very often. And I would say one month of studying and I knew that, number one, I was absolutely miserable. I hated the stuff I was studying. I never really wanted to be a dentist anyways, but it was just literally torture. I was already committed and whatnot. So I knew essentially by the time I was going to take the test, which was I think in August, that I didn't want to be a dentist for sure. And I didn't get a good enough score to get me into the right dental school anyways. So that made my decision very easy. With the platform getting so much success, I decided I'll take a year after college, see what happens. And if things keep going, I can still go to dental school. I can do whatever. But there's too much of an opportunity right now.”26:31 - Hitting the ground running with GOATcaseThe phone case company GOATcase was an immediate success. The major challenge was on the fulfillment side.“We went from literally zero to a hundred in one week. How do you fulfill that? That was the biggest thing. Within one week I remember we ordered 15,000 phone cases. Where do you put them? We should've gotten a 3PL. We thought about doing that, which was definitely the biggest mistake. And many people told me I should do it, but it seemed so expensive at the time versus what we could potentially do it for. And decided not to do it, which was an awful mistake. But like you said, in the first six months, we moved four times. Imagine how much time that takes, and stress, and all this other stuff. So logistics and fulfillment or a complete shit show.”29:30 - Getting a 3PLOnce GOATcase and Daniel’s next brand, Perfect Sculpt, gained even more momentum, they were able to get a 3PL and ditch their nightmare of a warehouse.“It took us a year and a half to outsource our fulfillment. And that was when we launched our second brand Perfect Sculpt, which was substantially bigger than GOATcase even. And ended up taking more space because we went from phone cases to bras and waist trainers and shapewear, which just take a lot more space. So now we moved into a legitimate warehouse, 8,000 square feet, and had a legitimate kind of fulfillment operation going. And we just dealt with so much bullshit. Employees stealing, weird stuff going on from the security cameras, and all the stuff from managing warehouse workers that you might imagine. Just crazy stuff. And number one we weren't doing a great job from an accuracy standpoint on fulfillment. And because we had leverage because of just the volume of the business, we were able to find a 3PL that would pay. Because I got to the point where now we had substantial costs. We had our warehouse, we had a team, we had all this, we had some equipment and stuff like that. So because we had the leverage of our volume, we were able to get the 3PL to pay for the entire move, and to pay for our lease, to buy us out of our lease.”32:24 - The early days of ShopifyAt the time Daniel started his businesses, the online ecosystem we know today was in its elementary form.“We were on Shopify day one. But all of stuff that we take for granted today with Shopify was nowhere near it is what it is today. And all up and all the partners on it that you mentioned weren't anywhere near as capable and mature as they are today. Klaviyo at that time was a startup. $10 billion company today. So it was a bunch of startups just getting started, and obviously their tools just weren't as mature as they are today. But it also provided a lot more opportunity, because there weren’t as many players in space in terms of competition yet, so costs for everything were cheaper.”34:04 - The decision to ignore AmazonAt the time, Daniel and his team didn’t have the bandwidth to explore Amazon. It worked out fine in their case, but today Amazon is much more attractive.“We always dabbled a tiny bit into Amazon. I never gave it a ton of mental bandwidth for myself to figure it out, so to speak. And I would say that looking back, that maybe I regret that. Just because we always had so much success with what we had in front of us. And there was always moving and change and all the stuff you need to do to operate a business day to day. Amazon is a completely separate beast itself. So it's like, to stop what I'm doing to learn it myself seemed like an arduous task. Versus where we were at and the scale we were at, you may as just hire someone to figure it out. So we never put a ton of focus into that. I think looking back it might've been a mistake. But it also just wasn't our business model. We were trying to build brands, not just sell forks or dishes or whatever. But the M&A activity in the Amazon space is a lot more active now.”36:49 - Founders shouldn’t do it allDaniel made the mistake of trying to hold all the cards in his business early on, when he should have been hiring and delegating sooner.“To build a great company, at least at the time, I felt like I had my fingerprints, so to speak, on everything. I had to manage everyone, I had to tell everyone to do anything, they were extensions of me. That's not right. Today I realize that's not the right way to do things. To build something that’s scaling fast and efficiently, you need to find great people and get them to do that stuff. And if that trust isn't there, then you can't build a real company. Now that's how I approach things, and trust in my leaders and managers and stuff like that, who are able to bring the company tons of value that’s not reliant on me.”39:34 - Why you need to be on marketplacesMarketplaces are where your customers are, pure and simple. With very few exceptions, such as subscription-based brands, Daniel thinks everyone should be on them.“The overwhelming majority of brands should be on Amazon. And you should be on every marketplace you can get on. Why? Traffic is so expensive today that unless you are wherever your customer is, it's now harder more than ever to generate profit. So customers simply go from Facebook ads to Amazon to buy products today. That's what happens. That's not questionable at this point. And if you're not there, then your competitors are there. And if your competitors are there, they're winning off your traffic and getting revenue and getting your customers. So for that reason alone, it's my opinion that you should be on every marketplace that you can get on.”43:27 - Subscriptions are the winning modelLong-term, Daniel thinks subscription-focused brands will win out due to the element of streamlined and sustained customer acquisition.“In my opinion today, if I'm launching a brand or I'm thinking about launching a brand, if it doesn't have a focus on subscription, I’m not even considering launching it. Because just like I touched upon before, it is now harder than ever to acquire customers profitably. And unless you have a really good metric for LTV and retention of your customers, it's just so hard to build a brand today. Pre iOS 14, it was extremely easy. You could for almost any type of stuff, if you had a good idea of what you're doing from an ad standpoint and creative and influencer, you could make it work. You could typically scale it pretty quickly. But with how tricky it has become since iOS 14, it's the brands that are able to focus on subscription that are thriving more than ever. Because typically the LTV is higher, they're compounding every month, and they don’t need to focus on day-to-day.”50:11 - Know your marginsIf you don’t have a high enough margin on a product, you can’t be successful.“I tell brands it would be ideal to have at least 75% margins on a product. If you’re under that, it just becomes really tough. Just from a marketing standpoint let's say advertising is 50% of your expenses. Which today a lot of brands are in that docket. And let's say, like I said, you only have 50% margin on the product. Now you're zero for everything else. You can't hire employees. You can’t pay for software. You can't you can't invest in anything like influencer content. So unless you have a good enough margin, it’s tough to really invest in a lot of things you need day to day. So roughly that's what I’d say, because then a lot of the numbers start backing out.”51:05 - You need a killer content strategyFrom working with influencers to ads, a good content strategy (or lack thereof) can make or break your business.“Having a good content strategy is the most important thing. And I think influencer marketing, leveraging that kind of goes hand in hand with that. Especially when it comes to building a brand, because a lot of time brands that have brand equity from the influencers you are working with, from the celebrities you are working with. Because that's how people remember a brand. It's like Nike, do you remember it was Michael Jordan. A lot of times you don't say, ‘oh, I love this brand because their ads I see on Facebook.’ It might acquire the customer, but unless you are getting the likeness from a lot of people along the way, I think it's tough to have that brand equity that a lot of people aspire to have.”Full video interview: https://www.youtube.com/watch?v=5mDY_VLkWS0Daniel Snow: CEO of Snow AgencyRamon Berrios: CEO of Trend.ioBlaine Bolus: COO of Omnipanel 

During this episode, you will learn about;[00:16] What’s in for you in today’s episode[01:43] Bailee’s career background information[03:57] What is branding and the areas of business it affects[07:28] The importance of brand guide during the branding process[09:49] Branding your brand in a way that resonates with people[12:16] Validating your branding through social channels [14:01] Promoting your brand in Tik Tok when branding [16:01] Commercial Break[17:04] The secrets to a high performing landing page [21:21] Bailee’s strategy for optimizing their landing page[22:29] The elements of building a strong brand identity [24:27] Brands that keep Bailee motivated in her course [28:30] Takeaways from the guest [29:38] What next for Sharma brands and how to connect with Bailee Contributors: Bailee Cooper - Sharma BrandsJay Desai - @jayd3sai