I Have £500k to Scale with, What am I spending it On? - Documenting the journey - Episode 14

Right, then back with episode 14 of Documenting the Journey. It is another morning record. I'm gonna start recording these in the morning because I feel caffeinated, I feel rainbow dusted and I've just been drinking from what is going to be the first accessory. Dropping the creative pursuit of a greater self is very fucking cringe. But this is from a UK supplier and I'm like launching 500 units of them to test what is going on. As I said in the last episode, I thought I'd try to keep this a bit shorter. I also think a lot of them are going to be relatively boring because by default a lot of what fucking happens day to day when I'm documenting this every week blends into one. Feels like the same as last week, but as usual, I wrote a few notes, I guess. Yeah. So I've raised 500 grand now, so half a million quid, which I mentioned before recently. The big thing I'm thinking about, and I'm going to put in the title of this to try and clickbait a little bit and get some more views, is where do I spend it? Because I think a lot of people, and I'm going to go through a bunch of points, but I think a lot of people by default jump to the conclusion that, oh, you know, if I have more money or resources or capital worth money, then, you know, everything I wanted to do, I would nail it. I would build this 10 million pound business. And it's definitely not true because having Money show my WhatsApp, you actually have to know how to spend it properly. And in the past I haven't necessarily spent money properly when I've had a lot of money in the bank. And actually it can sometimes be a bad thing to have too much money in the bank because you overspend and you don't think as frugally or, you know, you don't hustle as much. And I think there's a lot to be said for having less resource, but obviously having a lot of resource and now having experience and knowledge and connections and mentors around me, I feel like I'm in the best position and probably like a uniquely good position in many ways. You know, with a blank slate of this brand and all the stuff I've done in the past to execute really well. But then it's like, it's interesting because it's almost like quite a cool case study. So I had this experience, I have mentors telling me what I should, I shouldn't do. I have obviously been doing this a while, so I know what I'm doing. I've got enough money to basically do everything I want to do in terms of new products, hiring, etc, etc. But then the big question, this is where I actually feel a little bit stuck, is where should I invest that money? Should I, should I be, you know, should I always be profitable? Should I be shooting to remain profitable right from the start, or should I try and grow quicker and be willing to lose a bit of money? Because I've got all this money and we've got a lot of Runway, hypothetically. So, yeah, it's kind of interesting. I think another thing with fundraising is there seems to be a bit of a culture of, I don't know if it's on Twitter or whatever. Like a lot of things I mentioned are, oh, you raise money, therefore the business is, you know, it's a dud, it's unviable, it might not be profitable, which isn't true anyway. Like, raising money is often, in my case primarily was to get people involved and position the business to be a fundraising, a fundraising business that later on can, as a result of further fundraising, you know, increase the valuation, potentially get an exit, take money off the table, all this sort of thing. But people seem to think, and I've had a few comments about this and you know, DMs or whatever and just general kind of people saying and implying things over the past few months that people seem to think that it's very easy to raise money and that someone committing verbally is the same as money in the bank and they're very, very, very different things. I am very fortunate and I've said this many, many times, fortunate, not lucky, because it's been, you know, it's the result of building relationships over many, many, many years and experience. That raising all this money was for me was pretty easy because there's no, there's no funds involved yet, no PE funds, no VC funds, etc. They probably will be at a later date at a much larger scale. But all my investors are just angels, so individuals, high net worth individuals generally, and most of them are mates or, you know, contacts that have become mates. And yeah, I think a lot of people think that you can just kind of go on LinkedIn and, I don't know, hypothetically raise a million quid. But. And I'm sure you can if you've got a great business and you're very well presented and you know how to speak to people and pitch yourself. But yeah, I would encourage anyone to maybe try it. It's an interesting Process. You know, one of the things I learned was it always takes longer to get money in the bank than you think in terms of, you know, someone might verbally agree. Two months later you still haven't got the money. And it's a very different thing between someone verbally agreeing or maybe having a handshake after a few drinks. Yeah, I'll invest in your business and actually sending the money. Some people it's been very easy, with others it's taking a lot longer. But that's life. And yeah, it's obviously a big part of speak, part of the startup journey and certainly a part that I'm new to say. It's just interesting because that's kind of something I'm thinking a lot about. I have all this Money, we've got 500k, we raised that. Where do I spend it? That's kind of the biggest thing I'm thinking about right now. So I guess to jump through things I'm spending on and things I'm doing right now, probably a bit of duplication in terms of what I speak about here. So I guess a few big things. I mentioned accessories. We've got a bunch of different accessories because I really want to build out a suite of obvious accessory products. Lower, lower price, probably like between 15 and 30 quid. A bunch of different things that I can upsell because our these not high enough to be honest. It's like spoilers. It's about 51 quid right now, which is like fine, but I'd like it to be more like 70, 80 quid. I just think that's going to help a lot more because ad costs are only gonna get more and more and you know, I can bundle stuff, increase aov, encourage subscriptions more in that way. So yeah, a bunch of that stuff coming. I've obviously mentioned two new Hero SKUs in the works. Maybe I mentioned one. One of them is the Dream Dust, which is the sleep product, which is fucking amazing by the way. I've been trying it a lot. I'm gonna try and get that into production in about the next month. I think we need a few more tweaks to it. The packaging looks sick. There's a very unique set of like aesthetics obviously like the whole gradient pouches which I'm sure a million brands are gonna try and rip off. But like. And yeah, I'm just doing different color schemes per main product, which looks sick. I think it's gonna build out a really cool suite of products which potentially would look really good on a shelf as well. As on E Comm, of course, the other Hero Skew. I don't know if I mentioned that, but yeah, it's kind of. Maybe I'll tease you a little bit. It's kind of. It's like a play on the first Rainbow Dust product, but it's kind of aimed at like gamers. So slightly different, stronger, other ingredients in it is actually chaos. It like sparkles and shit. So that was actually a product I had and I was sampling prior to launching Rainbow Dust. I then parked for a while, then I thought, actually, I think it's time to slot this in. So two new Hero skus come in. I mean, I guess to give you like some real transparent context on that, like the minimums for me on like a product like that, about 3,000 units. So, you know, try and work out my margins. But you're looking at like 35 grand to launch a SKU, which obviously isn't cheap. So launching two SKUs, about 70k in terms of like stock investment. There's a bit of R and D cost, but it's not massive. So call it like 70 grand to launch two new SKUs just in terms of like getting the product physically available, obviously then you do a bit of marketing on top of that. Probably only budget like five grand for that between the two in terms of like, you know, doing another 80s film or whatever it is. But yeah, that's probably interesting context for people because that's kind of why I like this market. You know, the barrier to entry is way higher because it needs a lot more money to start. And obviously that's partly where I can spend investment money and obviously move quicker on other SKUs. I could have done that just from the business's money, I guess, without raising more money, et cetera. But obviously with more money you can do that quicker. One thing that I guess is a bit of a failure in the past. Not failure, but a problem, and I want to speak about problems as well, is my creative testing system and my system for having creatives for ads. Because I believe I know for a fact that creatives are the biggest variable with ad spend these days. Obviously right now we're purely Ecom, so we're spending on TikTok, Instagram, Google, Google and TikTok still banned and working on that. So primarily Instagram. But I thought I had a shitload of creative, you know, a bunch of different UGC creators agencies. Brad, who does my main stuff is the fucking best. To be fair, I thought I had enough that my agency's suddenly telling me that loads of shit's like fatigued. And I hadn't really, I hadn't built a system that meant we had stuff ahead of time. So now it's like the past week ads have kind of gone a bit to shit, to be fair, because I haven't had enough. The system hasn't been nailed. So now I'm like, fuck, all right, we can learn from that. And now I'm building out a much more bulletproof system to basically always have enough, always be sort of a month ahead in terms of requirements and. Yeah, because it feels like the biggest bottleneck right now is creative and the ability to run profitably on ads, of course, and then scale. And the catalyst for that is more creative, better creative. Creative that's, that's built contextually around what's working, you know, in the ad account. So just trying to really build that system. I'm not the best at building systems because I just fucking get confused, to be honest. There's a billion things going into it. So I'm trying to simplify that. Work with a few, work with less content creators and agencies, but more of them basically. So, yeah, that's kind of a big problem I'm trying to fix. I mentioned the conversion rate agency. We did like three months with them. It's like a retainer per month. It's pretty fucking expensive. But I genuinely think is one of those things that's worth investing in because, you know, if we can even increase conversion rate by 30%, then obviously ads overnight are way, way more efficient. Hypothetically. Yeah, I was going to mention like making brand movies. I have this idea of like building this almost like Netflix Stranger Things esque type like movie world around the brand, which I've never seen done for like never seen it done for many brands. I've certainly never seen it done for supplement business. As in like every Hero Skew. So like main supplement products will have its own movie, like probably like an 80s theme, just because I fucking love that. And it will somehow link to like the previous film, like certain nuances around the product. Maybe I'll get some customers involved and I want to almost build out like this brand movie franchise on a very small scale. Of course, like relatively it's never gonna probably drive conversions and sales that much, but I just think it's very fun to do. It's very unique and ultimately I think it has a long term evergreen brand effect. So that's something I'm working on. I got some pretty fucking sick ideas. I might be making a cameo appearance in my own 80s film, which is what I wanted to do in the first one. But I wanted to see how it went first, see how it came out. So now we've got more reference points. Another thing, and probably the single biggest thing I'm thinking about, especially as I mentioned, how to invest this money rather than just have it sat in the bank because we are like break even pretty much right now. So it's not like we're burning cash and need more cash just to exist. Is hiring, like I've mentioned trying to hire like a performance content manager, I guess basically someone to manage a lot of the stuff that I'm spending a lot of time on. I don't feel like I'm very good at, which is, you know, social, mainly sourcing content for ads at scale and a few other things. But and then within that, you know, I speak to different people and there's kind of like three different options there. You can go fully like the cheapest, leanest version, which is just hire the A in the Philippines, which is what Arsalan who runs my ads is telling me. And I'm like, nah, I don't want to do that because I don't think that's a long term solution. You know, other people are telling me get a freelancer off upwork, you know, they can still be in the uk you pay them hourly or whatever, pay the monthly fee, they're not an employee, there's less headache potentially. And then I speak to one of my investors, Alex, who I spoke to for an hour yesterday or an hour, 45 minutes, whatever. And he's always a great sounding board and it's funny to see how people's viewpoint differs because he says no, you should go straight to pay employee. Hire someone super experienced, put them on 70 grand a year salary. And you know, and that is how you grow because you're hiring to grow rather than hiring once you've grown. And I definitely see that because it's the difference in mindset and maybe particularly because I've got more money to play with now. It's different in mindset between, you know, focus entirely on the P L. Like we want to keep cost as low as possible. But then actually thinking, well invest, invest this money into a good person and they'll pay them, you know, they'll pay back tenfold. And I do see that. But. But maybe in my mind I'm kind of thinking, thinking somewhere in between. But yeah, I don't know. I'm terrible at hiring. Really, really, really terrible. Everyone in business right now is you know, agency or freelance and it works. But I think we need one or two people in the next three to six months, like full time property members. I actually think probably pay employees because that is structuring the business how I see it working longer term. Like I mentioned before, like having a proper team, maybe not with an office, but like we could go Soho works together, we can actually see each other in person, you know, have their full undivided attention on the business. I think you're more likely to get that when they're fully contractually like an employee of the business and you know, not a freelancer that might be working on other gigs on the side, all that sort of stuff. So that's something I'm thinking about. And ultimately everything comes down to that long term view. And because this is the last brand I ever want to build from scratch, I'm sure I'll angel invest. I'll be involved in other brands or brands in different worlds in the future. But this is the last thing I want to build from the trenches basically. So I'm just thinking with everything I'm doing, whether that's hiring, thinking about potentially getting an office at some point in the future, I mean definitely not yet. Is, would this fit like the 10 year potential vision? I like the 5 year vision and yeah, that's what I'm thinking about. So I guess, yeah, a lot going on. I think the final point, that's just an interesting one is I think everyone, and I alluded to it at the start is everyone thinks that more money would solve their business problems, all their life problems, but you know, in this context, the entrepreneurial business problems, and they think, you know, if I had 500k then I could do everything and like I said, we'd be a 10 million pound business overnight. But you definitely wouldn't. It's not as simple as that because part of the skill set in managing money and being an entrepreneur is knowing where to spend it. And trust me, I've had a lot of money in the past, more money in the past in my previous businesses at like the very peak. And I did not spend it wisely, spent on some of it wisely, but I didn't maybe invest in the foundations. It was all very much driven by ad spend revenue, you know, that's that kind of mindset. Whereas now I'm thinking, well, how can I actually invest money rather than just spend it, invest it until I build in the foundations, you know, conversion, my agency, building the right team, invest legally in, you know, the proper trademarks. Worldwide, all this sort of stuff which is more foundation building, it's less instantly, instantly gratifying. You can't see the financial effect of that straight away in the same way. But I think that is the mindset difference between maybe like a short term drop shipper sort of mindset in a bedroom brand versus building a genuinely valuable business that you know is more bulletproof to, is more recession proof, is more bulletproof to competitors, is more problem proof long term. So putting the proper foundations in place. And yeah, in many ways I think it's better to, even if you have a lot of money to play with like I do, is to try and make decisions based on the assumption that you have way less. So if I had 50k, what would I do? Do you know what I mean? Because then I'm probably less, less bullish on certain things that might be inherently risky. And I think there's a lot to be said for the hustle that you can bring to the table when you have less resource. So great, have the resource there. So like, you know, the businesses has a lot of Runway, you know, can deal with problems but try not to spend it all and think and approach things like I had 10 times less. And that's kind of the way I'm trying to go, I guess. Final point is, yeah, I was going to go Bali this month. I think that's kind of off because a lot of us just need to fucking focus right now. It gets very hard in summer, so fucking heat wave right now. Obviously I'm trying to find that balance. Just getting outside training outside keeps me sane and yeah, you know, the sun will come again but obviously enjoy while it's here as well. So yeah, I guess we'll wrap the episode there. I always try and do these shorter than the last one. This is still 16 minutes of fuck's sake. Hope that was interesting. Drop, drop a comment. Actually I might start doing like more maybe like screen share shit more specific things. I feel like at the minute I'm starting to just ramble. It's getting a bit repetitive because I've done 14 episodes pretty much in the same format. So if there's any very specific things you want me to go through in like an episode and maybe I can cover a certain area of the business, whether that's R D product I can actually visit in my factory layer and the production facility for the first time in person. I don't know if I can film there. I'll see if I can a little bit. Definitely won't give away who I'M working with, but that sort of stuff could be pretty cool for an episode in the future. So let me know what you want to see. And as always, space goods to the moon. We'll see you in the next episode. Cheers for watching. Peace.