Are You Playing to Win or Just Not to Lose?

Foreign. Welcome everyone, to another edition of CPG Insiders. I'm your host, Mark Young. I'm going to do a little bit of a monologue today. I want to talk about a concept. And the concept is, are you playing to win or are you playing not to lose? And let me expand on this. So as some of you know who listen to the show, I race cars. And I had a big crash last year. Hit a wall at 100 miles an hour. And then I noticed after that that my lap times were starting to. Starting to drop on me. And I was trying to figure out why. And I started talking to a professional sports coach. And I tell you what happened. What happened was I started driving the car not to crash instead of driving the car to win. And the funny thing is, this became apparent to me when I was talking to a client. We're having a zoom meeting, and the client was telling me about what they're doing and so on and so forth. And I said to the client, you're trying to play this game not to lose instead of winning. And it hit me, geez, I'm doing the same thing now. I'm happy to report that I resolved that issue. I was back on track last weekend and my times were better than ever, right back to where they were. And I felt happy. And I was just in a much better place and loved being on track again. How does this relate to your business? Here's the problem. In the world of cpg, in the world of consumer packaged goods, once we make the jump from Amazon and we make that jump to brick and mortar, the idea of playing not to lose is pretty much the guaranteed route to lose. And here's the reason. Let me give you an example. When you're first getting into retail, you might just get your first account. It might be 250 stores at Walmart. It might be 500 stores at Walgreens. It might be, you know, a regional player like Meijer. But what happens is once you get into one of these chains, even on a limited basis, your sales numbers are now reporting to Nielsen and iri, which means the rest of the world can see how you're doing. So you have a risk. You're in 250 stores, clearly not enough stores to make advertising profitable. It is not profitable to advertise several hundred stores. It's not even profitable to advertise a few thousand stores. You need a lot of distribution to make advertising really pay. But the problem you have is that everyone else can now see your numbers. And if your numbers don't reach at least minimum turn rates for each of those stores. They're not bringing you in. And you have the second risk. And that is, let's say you have that 250 store test at CVS. If those 250 stores fail, they're not going to put you chain wide. They're going to cut you out, they're going to drop you. So what happens with younger brands is they get their 250 stores or their 500 stores and they assume that getting on the shelf will resolve the problem. I'm on the shelf in 250 Meijer stores. People will start buying the product. No, they're not a Walmart superstore. A meijer Superstore has 148,000 SKUs. I'm not walking around a store with 148,000 items reading all the packages. And even if I go to the category that you're in, there is a concept which is called the final three. It's the final three feet. I'm standing at the shelf. I'm three feet away. I'm looking at the sea of choices. Let's say I'm in the hair care and I'm looking at shampoo. I'm looking over probably 12ft of shelf space with probably 200 choices. I'm not reading the labels on the products I don't recognize. My brain defaults to the familiar. What is sitting on the shelf? That for some reason I know doesn't mean that I consciously think about, doesn't mean I've used it before. It means someone has hit me with an ad, a digital ad, a TV commercial, a billboard, something where it's like, oh, my mind, my unconscious mind goes, I've seen that one. Now I'll read the label. But if you as the brand don't do something to first build that familiarity, it isn't going to happen. And this is why over and over we get calls from brands and yep, we just got 250 stores in, in chain X, and we're selling a quarter piece per week per store or half a piece per week per store when that particular store is looking for three pieces per week or four pieces per week. Now, when I get back to playing not to lose, playing not to lose in our business means. And I'm going to tell you how many times we've heard this, well, if I can get into Walmart and start selling, then we'll start advertising. Okay, doesn't work that way. Because if you get into Walmart and you're not Already advertising, you're not selling anything. So you can't say, well we'll fund it out of future sales. No, you need to play to win. And play to win means you're going to the CPG casino and you're putting your money, you're at the roulette table and you're putting your money on red or black or whatever the case is. And you're going to spin the big wheel and see what happens. Now in reality, of the 45,000 new products that are introduced to the market every day, or not every day, but every year, only 15% of them survive in 24 months. So it is a casino. It's better than a casino. We look at a roulette table, we've got odds of what three? 38 to 1 or 38 to 1? Yeah, 38 to 1. Depends on what table you're on. 38 or 39 to 1, it's better than that. Our odds are 15%. But also keep in mind, out of that 15%, 90% of that 15%, those new SKUs belong to brands that are already in the market. So they already have name awareness, they already have shelf space, they've expanded their offerings. So it becomes a lot tougher when it's your first sku. So you have to go into it with the mindset of I'm here to win at all costs, not I'm going to incrementally climb the ladder as I'm making money. When you look at these test markets in these stores like this, you have to go into them knowing I've got an online business, I have an Amazon business now, I just got 250 stores test or maybe even I got an entire Walgreens chain. Even if I have the whole Walgreens chain, I'm still not going to get a return on investment on my advertising. I have to be willing to take the risk to go all out, put the money out, believe in my product, believe in my marketing, believe in my ad people that they know what they're doing in my brand and put the money on the table and be willing to accept it might fail. But let me give you the flip side. Fortunes are built in the consumer packaged goods industry. When we look at our business, nearly all the innovation in consumer products comes from individual entrepreneurs. When P and G has a new breakthrough and P and G issues a new sku, a new SKU for them is now concentrated or now in a new package or now in a drip free bottle, that's innovation there. The way they get innovation the way they really make innovation is by buying entrepreneurial companies. And as a rule, they don't look at these companies till they're at least doing 20. And that's kind of the private equity and the strategic buyers and then the big, big guys, they don't look at these brands until they're on their way to 50. Because as an example, a company size of P and G realizes they can't afford to operate a unit that does less than 50 million. Their cost to manage is too expensive to mess with anything that doesn't do 50 million. So fortunes are built. And we've had clients who have literally started with one little SKU and sold out five or six years later for $300 million. So it's completely possible. So with everything, we're talking about playing, you know, playing not to lose, playing to win. Everything in business is risk and reward. The bigger the risk, the bigger the possible reward. And let's go back to that roulette table for a minute. If I put my money on black and it comes up, I double my money. If I put my money on 17 and 17 comes up, I get 35 times my money on that roulette table. Why? Because red and black's a little less than a 50. 50 odd number. 17 is the odds of 1 over 38. The bigger the risk, the bigger the reward. So what you have to ask yourself is, are you an entrepreneur? Are you a risk taker? Keep in mind, this industry attracts two types of people, and I'm going to say three. Nowadays we see three types of people that come into the business, people that are entrepreneurs and risk takers. We see people who are inventors and engineers and chemists and scientists and doctors who know how to create something. And then we're seeing a third group coming into this industry, and they tend to be more in the millennial group, where they think entrepreneurship is a career choice. Now, it's interesting that people are thinking of entrepreneurship as a career choice. And you've got colleges that are now teaching entrepreneurs entrepreneurship. And you hear presidential candidates now talking about how they're going to give tax credits so that we increase entrepreneurship. Here's a reality. Entrepreneurship is not a career choice. Entrepreneurship is something that you have no choice on. You are born an entrepreneur. It makes up about 4% of the population. It has always made up 4% of the population. It always will be 4% of the population. These are the people who are unemployable. I'm one of those people. I openly tell people I'm unemployable people like me or people who are entrepreneurs. We create our own world because we don't fit in with the corporate world. So the risk taking, the inventiveness, it's part of the personality. If you're an entrepreneur, you probably understand what I'm saying. If you're a producer, if you're a creator, a chemist, an engineer, a scientist who knows how to make things, this may sound foreign to you and oftentimes it's a good idea to even collaborate with someone who is an entrepreneur. So I'm going to recommend a book for people. This book is by Peter Thiel and Thiel is actually spelled T H E I L. And Peter Thiel is the, he's a billionaire, very smart guy. And Peter is the guy who co founded PayPal and he co founded PayPal with this guy named Elon Musk who I'm sure most of you heard of. Peter has a book out called 0 to 1. I want to recommend it for any of our entrepreneurial wannabe. Entrepreneurs are people that are new in their business. And what the book spells out, the book spells, spells out. In zero to one there are people who do zero to one. Steve Jobs is a zero to one or was. Elon Musk is a zero to one. And a zero to one is somebody who creates something where nothing existed. Then you have people who are what we call one to tens. These are people who know how to take something that's now existing and grow it into a business. Well, these are the people we need. We need the 0 to 1 people and we need the 1 to 10 people. Dan Sullivan has a really good way of putting this and it's amazing because Dan Sullivan from Strategic Coach has a way of boiling complex concepts into super, super simple one sentence solutions. And for any of you that know Dan, you'll realize that Dan says if anything takes more than five minutes, he's not interested in it because that's he doesn't have attention span past that. So here's a concept which is called multiplier or simplifier. A multiplier is someone who knows how to grow a business and market. A simplifier is someone who knows how to make things and streamline a business. Now we all have both of those skill sets, but we lean into one or the other. And I'll give you an example. Here's an easy way to know if you're a multiplier or a simplifier. Would you rather sit in a room writing a book or maybe sit in a laboratory Making something. Or would you rather be in a crowd of 500 people, a stage, telling everybody about what you have? If you find your personality is, I'd rather be in the middle of a room full of people shaking hands and making deals. You're a multiplier. If your answer is, well, if I could do whatever I wanted, I'd rather have this big massive laboratory or skunk workshop where I could just fiddle with stuff all day long and create things. You're a simplifier. That's who you are. Every business needs both of those skill sets. Figure out which one you are and figure out how to find the other one and bring that other one into your organization. In Jekyll and Hyde, I'm a multiplier. We have a coo, Michelle pike, who is a simplifier. Michelle is perfectly happy to sit in an office with the door closed and write solutions and write plans and write things to make stuff happen. I would blow my brains out if I had to do that all day long. Now can I do it? Yes. But is that me? No. Me is face to face with people, helping them and showing them how we can do things. So figure out which one you are. But I want to get back to what I said about playing to win, not playing to lose. When we. When we play not to lose, we're risk adverse. We're trying to hold on to what we have. When we play to win, we're looking to grow and expand. Anytime we play not to lose, we strangle the thing that we're trying to hold on to. I'm going to put this in the level of a relationship. Let's say you met a new person and this new person, you're excited about this new person and you think this might be the one. If you play to win that person's heart, how will you behave? You'll be flirtatious, you'll be doing cool things. You'll be coming up with new ideas to take them on a date and what little things you can do to romance them. And you'll be playing to win. What do you do if you're playing not to lose? You become obsessive. You start calling them too much, you start getting up, you start getting jealous because they're going to go out with some friends tonight. You literally strangle the thing that you're trying to hold on to until it's gone. This is what happens with companies. I am so focused on not losing what I have that I won't risk the future and I end up killing my business. I've got my 250 stores that I'm testing, but I'm not going to put the money out there to advertise it because that's, I could lose that money. I don't want to lose. But you're going to lose anyways. And when we think about that, that test, that 250, 500 store test, whatever the case is, let's say you have a product that, just for conversation's sake, you have a product that sells for $10 and you've got 500 Walmart stores and Walmart expects you to do at least $40 a week per store. And if you don't do $40 per week per store, Walmart's gonna get rid of you because Walmart's in the business of selling real estate by the square inch. Think about being a landlord that rents inches. So they're going to look and say, well, we're not getting, we're not getting this $40 per week per store production. And by the way, if your product is a physically larger product, then that $40 goes up because now you're taking up the space of what could be three smaller products that could have been doing $40 each. So you've got this $10 item. You, you need to sell four pieces per week. You're in 500 stores. Here's the reality. Because of inefficiency, because you're only in this 250, these 500 stores, all the advertising medium that's available to you is going to be grossly inefficient. You're going to have to do a lot of addressable advertising, ctv, ott, G Digital marketing meta these kind of platforms where the CPM is going to be very high because you're targeting a very exact group of people. So you might be spending 60, 70, $80 to talk to a thousand people to get them to buy that product. When you're national, when you're coast to coast, let's say we put you on Sirius XM Radio, which covers the whole country. Now we're paying a dollar to talk to a thousand people. So look at the gap. I'm paying 60 to $80 to tell a thousand people I exist digitally. Or if I was national, I could spend a dollar and tell a thousand people I exist. So the math is against you. The math is working against you. So Quite honestly, that $10 item that you need to sell four of, and let's say you're currently selling one, you got on the shelf and you are selling one, but you need to sell. Four, chances are in a best, in a best environment, you might break even. You will spend everything that you bring in, but more likely on day one, you will spend more than you are bringing in. But now we have to get back to the concept of playing to win. What we are doing here is we're doing two things. One, we need to prove, we need a proof of concept. We need to show the world that we belong in mass retail shelves. So yes, we're overspending because we have to prove we belong. Number two, you need to prove you belong because until you do this, you don't even know if America is going to buy your product again. Remember, 85% don't make it. So you need to prove the concept. The third thing is you need to think in longer terms. So take your focus off. You mean I spent $80,000 this month and we only sold $80,000? That's a bad business model. Long term it's a terrible business model. Short term, it could be a great business model because one, we're proving we belong so that that chain will take us chain wide and other chains will see the IRI numbers and say yes to us. But also, what is the lifetime customer value of your brand? Do you have a product that people will buy one of and never come back for the rest of their life? Or do you have a product that has a replenishment cycle? And if it has a replenishment cycle, how often can you get them this year to come back and buy? Because remember the first time we put that product over the curb, we bought that customer. We spent money to buy a new user. We're driving trial. We're not driving sales, we're driving trial. No one knows who you are. We have to get people to take your product home and try it. Now. Is your product a winner? Is your product great? Is your product going to deliver what you promised? Are people going to come back and buy it again? Because when they come back and buy it again, you don't have to pay, you don't have to buy that customer. This time you already bought that customer. So now when they come back, you have an increase. So when we look at our media, let's say we needed to sell those four pieces per store and we spent whatever, 40 bucks a store to sell four pieces. Just use round math. If you have a one month replenishment cycle and people like your product, well, guess what, next month you're going to be selling four and a half pieces per store, five pieces per store, because you get the same outcome and people are coming back. And now you, now you know you have a product that's working and now you know you have a product where people will buy more than one of them. The last thing I will leave you with is when you're spending all that money to drive business to these stores. Also, keep in mind you still have your website and you still have Amazon. So all the money that you spend trying to lift that one chain or that test market will still lift your numbers on your website and lift your numbers at Amazon. So there is some additional business that you'll pick up outside of that brick and mortar. And it's interesting because when we're forced to do these tests, these small groups of stores, digital media tends to be that we have to heavily depend on digital media. Digital media tends to drive digital sales easier than it drives brick and mortar sales. Because I'm looking at your Atom on my phone, I can click it and get it from Amazon by tonight at 8 o' clock with one click. So I don't necessarily need to go to the store to get it. So we will always pick up that digital business that will help us offset the cost. Final thing I'm going to leave you with, I'm going to go back to that, that racing analogy. When I had that crash and I was back on track, I can tell you, my first couple times on track after it, my head was in the wrong place. I was looking at all the traffic around me. I was looking at the cars that were next to me. I was worried about who was going to crash into me. I was trying to avoid getting hit by other cars. My heart rate was much higher than it usually is. I wasn't having a good time. Now, when I was back on the track last week, I was having a blast. My heart rate was calmed down. I was just having a great time. And the reason is because I got my head wrapped around the idea, yeah, we crash cars. Yep, that's part of the game. And I might bump into another car, I might hit a wall, whatever. I'm just here to win the race. And I drove like I was there to win the race. Consequently, I had a much better time at it. What I'm trying to tell you is you will have a better entrepreneurial experience and a more enjoyable life when you embrace that concept. We have two ways to look at this. We can look at our business as a slot machine or a vending machine. So the vending machine we put $2 in and we press D11 and the cool Ranch Doritos come out. And notwithstanding the vending machine is broken, it's a pretty safe bet. If we press D11, and that's cool Ranch Doritos, The Doritos are going to come out and fall down in the shelf, and we're going to get a bag of Doritos. Now let's go to the slot machine, and we put a dollar in the slot machine. Well, the slot machine has a big sign on top that says, current jackpot, $324,000. And I put the dollar in, and I might get $324,000. Or I might just put a dollar in and I just gave them a dollar. Okay, here's what I want you to think of. When you put your $2 in or your dollar in the vending machine waiting for your Doritos, is there any excitement? You press the button saying, will I get the Doritos? What will the Doritos taste like? Oh, I wonder if. I wonder if the Doritos will come out. I wonder If I'll get 10 Doritos. What if I get every Dorito in the world when I put this two dollars in here? Nope. It's boring as hell. Put in two bucks, you press D11, and you wait for the little squirrely thing to go around and the chips to fall out. Now, what does it feel like when you put a dollar in the slot machine? It's anticipated. Watch the wheels turn. Is it going to come up? Am I going to see three cherries line up here and I'm going to get 100 bucks, or is it going to eat it? There's a reason. There's a reason. People go to casinos and feed money into slot machines all night, and they're not standing in front of the vending machine buying Doritos all night. Think about it. Why is there no lineup at the vending machine of the same person just putting dollar after dollar after dollar to get the next bag of Doritos? There's no fun in it. There's no excitement there. There's no fun. I'm gonna put in a dollar. I'm gonna get a freaking bag of Doritos. We need to accept that entrepreneurial businesses, new businesses especially, are the slot machine. We're going to put the money in. We're going to pull the lever. We're going to watch all the wheels spin, and we're going to see what comes up. And if nothing came up, we're going to put another dollar in, and we're going to put another dollar in and we're going to keep doing that until A, we hit the prize or B, we decide this is a bad slot machine and no one's ever going to win any money here. That means you've got a product in that 85 percentile that failed. But you have to understand, this is the life you are signing on for. If your idea of being an entrepreneur launching a product is, this is going to be safe and I'm not going to take any risks and I'm not going to be betting the farm on this, you're in the wrong business. My very first product. So understand, folks, not only do we run an ad agency, but I've owned products, so I've been in your spot. My very first product decades ago was first product I owned and was successful with was a product called Moto Lure. And Moto Lure was a motorized fishing lure that Chuck Woolery and I did together. I actually drained our 401k, took a loan against our entire 401k and took a mortgage against our house. And I took all of that money and I sent it to some company in China that I'd never heard of. And that was for them to make the lures for us because we could not, by the way, we could not afford to make them in the US and be competitively priced. So we had to go to China and deal with people we never met. And then we had to ship all of those lures. In this particular case, we shipped them to qvc. Now, QVC told us straight up, no one on QVC has ever been successful selling products for men. QVC is a woman's world where women shop for themselves. And there was the possibility that women might buy some Christmas presents in the fourth quarter for other people. So we convinced QVC to give us eight minutes on qvc. And we had a secret weapon. Because our secret weapon was this was Chuck Woolery's fishing lure. And Chuck Woolery would be appearing on QVC. And this is, you know, 20, 30 years ago, Chuck Woolery was a big deal and people loved him. And women really love Chuck. And QVC agreed to it. Then they gave us our airtime and the airtime they gave us was election night at 7pm so here we are, it's November, it's election night. Now, what are people watching on election night? Are they watching QVC on election night? So they gave us QVC election night, 7pm and they told us, we think you're going to fail, but because you have a nice celebrity like Chuck Woolery, we're going to let you try it. Now what was happening there? One, I believed in the product. Two, I believed in the marketing, which in this case was. Chuck Woolery is a dear friend of mine. I know, I understand what Chuck's capable of. I know that when I put Chuck on TV he can sell a product. We went on that show, we got our eight minutes, we sold out. I mean we literally went to zero where they stopped, stopped us in the sixth or seventh minute to tell the audience there was no more left. So by the way, if any of you that watch QVC when you see that countdown, when it tells you how many items are left, it's legit. And when it gets to zero, they stop taking orders because they don't want people buying products that they can't ship. So that is very legit. We sold it out. Now we were downstairs in the green room outside the studios and vice president and the buyer came running in, came running into the green room. They were high fiving each other, telling each other how smart they both were for bringing the product in. Chuck and I are kind of looking at each other like I thought they said that we were going to fail and they didn't think we could do this, but okay. So we kind of sat there and let them high five each other. Then the buyer came over to me and said, can you meet me tomorrow morning? And I'm like, well I've actually got a flight out at 8:00am she goes, well, if you meet me at 10:00am I'll give you an order for $5,000,000. And then I'm like, I could probably get a different flight. I could probably work this out. And Chuck and I proceeded to sell millions of dollars on QVC with multiple products because we kept making new products and new products and we did millions of dollars. And I will tell you this, from that day on, I never had to mortgage my house and I put the money back in the 401k and I've never had to touch that again because after having those successes, guess what happened? Banks wanted to loan me money now because all of a sudden I had a proof of concept. I was able to prove I belonged here, that my product belonged here. This is what you have to do. Doesn't have to be QVC. QVC is not what QVC was 30 years ago. QVC has much been set aside by Amazon today. But you have to prove you belong and you don't prove your. You don't prove you belong by taking small cautious steps. You prove you belong by big bold actions being an entrepreneur is doing a high wire act with no net. You fall off the wire, you're going to hit the ground, but if you pull it off, the entire audience is going to be there clapping for you. Well, that's it. That's all I wanted to tell people today. Hope you don't mind me ranting and raving to you folks. I only say all this stuff for you because I want you to succeed. I deal with entrepreneurs every day in my life and this is a conversation I've had over and over. So it's a conversation I'm having right now to maybe save you from having this conversation with me in person, to be honest with you, and maybe getting you to understand what you're up against. Big actions get big results. Playing not to lose is pretty much a guarantee to lose. So I guess the way to say it is when you play to win, if you play to win, there's no guarantee you will win. If you play not to lose, it's pretty guaranteed you will lose. That's it. If you enjoyed today's podcast, make sure you go to wherever you get your podcast. Leave us five Star Review if you don't subscribe to the podcast podcast, there's a little subscribe button there where you get it. Click the subscribe button and then you'll always get every episode. You'll get notified and then you'll have it. And I believe we're available on YouTube now too, so you can always watch the podcast on YouTube. That's it for today. We'll see you on the next episode of CPG Insiders. If you're looking to greatly increase sales on your CPG product, don't hesitate to contact us at Jekyll and Hyde Advertising and Marketing. By the way, the only advertising agency with a guaranteed result. Just go to jekyllhideagency.com or feel free to give us a call at 800-542-10SA.