0104 Nik Sharma - How To Build and Invest in Great DTC Brands

Before we start, I want to thank our sponsor, Quiet Light Brokerage. Quiet Light's team of advisors helps entrepreneurs like you buy and sell online businesses for 6, 7, or 8 figures. They closed over $75 million of deals last year alone, and they've closed hundreds of millions of dollars since they started in 2007. Want to know how much your business is worth? Visit quietlightbrokerage.com/exitstrategy to find out. The site will teach you how to determine what impacts your valuation and how to optimize your valuation through add-backs and accounting methods. Whether you're aiming for an exit or want to run your business for years to come, Quiet Light can help you. Ready to learn more? Visit quietlightbrokerage.com/exitstrategy to get started. All right, on to today's episode. Okay, we're here on the 5th episode of the podcast with Nick Sharma. Nick and I have been friends for about a year. Nick, I'm gonna tell everyone a little bit your background. You ran acquisition at Hintwater. You've been an investor in a bunch of direct-to-consumer businesses, including Judy, including Howes, which is an alcohol company, and some other ones that I was looking at on your LinkedIn profile yesterday. Will you tell people a little bit about like the companies that you've invested in?

Yeah, let's see, Judy, Howes, Black Wolf Nation, Brightland. They're honestly mostly just DTC companies that I'm like a fan of first, and then fan enough to want to be involved in a deeper level.

Yeah. Are you involved in all of them on a deeper level or are you involved in all of them in like—

Yeah, I would say I definitely work on stuff like every week for each portfolio company. Like I help them out in some way every week for sure.

Okay, great.

Yeah.

What's something that you did for like Judy this week?

For Judy? Well, today actually pretty happy. I just finished the domain migration, so I ended up getting judy.co as a domain. And I just set it like literally 10 minutes ago as like our new primary domain. So that was exciting.

Oh, that's awesome. How much did you buy Judy.co? Like you had to buy it off somebody or?

Yeah, it was available. It was a 5-figure domain. So I'm just all about like, especially if it's a 4-letter brand.

Sure.

I mean, you did the same thing with Native and then with Judy, I'm trying to do it as much as I can. You know, Judy's a little harder because it's a person's name.

Yeah. The hard part is that you have to like sometimes steal the like Instagram handle from a squatter.

Yeah.

Like we— I remember like—

You stole it from Andy.

Yeah. I didn't even know that was happening. I just reached out to our Facebook folks and I was like, hey, could we get the native, like, you know, Instagram handle? And they're like, yeah, here you go. And I'm like, okay, great. That was a lot easier than I expected.

Yeah.

Uh, we actually never tried. Do you think domain names are important? Like, I think Instagram handle is really important. I think Twitter handle is really important. And we never did that well with Twitter. But do you think domain name is? Because like so much of the traffic that is driving to your site now. Is like being searched for on Google or being found on social and not necessarily like people putting in google.com.

Yeah, I think it's definitely important to some extent. Like, you want a good domain. I think where some brands get carried away is when they try and put a verb in front of their brand and then it gets too long.

Yeah.

It's usually like food and bev or like fitness-related things. But yeah, I mean, I like things that are just nice, short, and clean.

Yeah.

So I was really proud to get judy.co, but then like other things, like for Brightland, I'm working on a landing page and for Houzz, like things like connecting them with Postscript and Alex, getting them set up there. But yeah, it's like usually anywhere I try to be proactive about like, oh, if I see them trying to do something or do something, then I just try to think like, what's something easy I can do to help them out?

Yeah. It makes a ton of sense. When it comes to like brand names, before Native launched, I was like, okay, I want to start this deodorant business. What's a good brand name for it? and sort of went through a bunch of ideas and I was like, okay, I want something like that has a nod towards natural, but it isn't like called natural and isn't called something like Deodorant Club or Deodorant Company. 'Cause like I wanna be able to sell other products. And when we came up with the term Native, I remember a bunch of people were like, this is a bad name, doesn't mean anything. And a lot of Native Americans are gonna get upset.

Yeah.

Native Americans getting upset happened. A ton of people got upset about it.

That's a good thing.

But we never tried to buy like native.com.

Yeah.

But we did have a huge issue with a trademark. I think I've mentioned this to you before where we tried to use the Native trademark and somebody else owned it. And it became really difficult to like, sort of, we had to acquire that trademark and we bought the trademark like 5 days before we ended up selling the business to Procter Gamble.

That was the one issue we had before we sold the business. Wow. Wow. That's insane.

And when we were chatting with other people, other people would be like, we're not going to give you an offer for your business until you own your trademark. And so I really think one of like P&G's advantages was they were like, look, we're ready to move forward in the acquisition process with the contingency that you buy the mark before we close. But other people were like, we're not even ready to move forward.

Did they charge you like an arm and a leg for that?

Yeah, they did. It was high 6-figure price.

Well, so what's crazy is like comparing that to a domain, like you had to get that because that's the only way that your deal would have gone through. Whereas a domain, you don't necessarily need it. But Just as you were saying that, this thing popped in my head that Soylent was— I think it was like drink Soylent. And they bought soylent.com off this dude who used it to like— he was into some weird shit and he would promote some stuff on that site. But they bought the domain off of him for like $100K.

Wow.

Insane.

I mean, I think they've like raised $80 million. So I feel like if you've raised $80 million, you don't know what $100,000 is anymore. Yeah, that is crazy. We never tried to buy native.com and our domain name was nativecos.com.

Yeah.

And people would be like, what is the COS? Is it cosmetics? Is it companies? What is it? And I was like, I have no idea. It was the only thing available. And so like, people would be like, what is the name of this company? And I'm like, I don't know.

Yeah. For the longest time on Twitter, I never found Native because it's native_cos.

That's so bad. Yeah. We tried to get Twitter to do what we had Instagram do or Facebook do, which is give us the—

Well, I told you the guy who had the Instagram also has the Twitter. He's down to sell it.

Oh, does he really? Okay. Well, I'm glad that he like got to keep one of them then. All right, we'd love to talk about like what's going on in like the, like not just the businesses that you're invested in. I know you've said like Judy is sort of crushing it, great time to launch, beautiful branding. Actually, can we talk a little bit more about Judy?

Yeah.

Judy sells like a disaster kit for your house.

Correct.

Which is like, I mean, it's good timing because people are now staying at home and realize that disasters may happen. Who are like other people that are involved in the Judy business? Because you've told me about this, I sort of understand it, but I don't really understand all the relationships.

Yeah. So Judy is interesting because of 2 things. One, it's like a really sound business. The product is basically a very functional product and it's something that like provides immediate value to the consumer. So it's a very functional and necessary product, which we love as immigrants.

Yeah, yeah, no, it makes a ton of sense. Like, I want a disaster kit for my parents, probably one for myself as well. So you don't need to sell me on the business any longer. I'm 100%.

So the other reason it's really interesting is because of the team that's involved. So the core team was probably 5 people. It was myself, it was our ops person who's just a G with ops, a head of customer service, and then the 2 founders, Josh Udashkin, who's a former founder of Raiden, and then Simon Huck, who is the founder of Command PR or Command Entertainment Group. But he also happens to be a celebrity of his own, being so closely friends with Kim Kardashian. And he also knows like the A-list world like the back of his hand. So it made it really interesting for launch because on launch day I was learning all about A-list celebrities through Judy. There was like, yeah, every celebrity has posted a Judy, from Chrissy Teigen to Martha Stewart to Kim Kardashian to literally everybody.

Is that because Steve Huck, I guess, sort of got all these people to post about it? How did that sort of happen?

Yeah, honestly, Simon, I think, just has like— he's a very loved guy in the industry and in his network. And I think when people saw that he was launching something that, you know, he developed this brand because he saw that so many of his own family members were affected by disasters. And so I think when they saw that he was basically launching this brand and it was a real thing, they all just wanted to support. It's weird because none of the influencer posts have ever felt like ads. None of them are like, go buy this now. It's like, it's all congratulating Simon or just talking about how handy their Judy kits are.

Yeah, well, that's great. Trying to get that organic, like, influencer reach is really, really difficult to get down.

Yeah. Yeah, they did a really good job. And like Josh, who's the other founder, is the president of Rimowa. So he's just a beast of an operator.

Yeah.

And so making sure, like, especially on things like logistics and supply chain sourcing, marketing, like he's a genius.

Is he related to like the founder of LVMH? I thought the president of Rimowa was like the guy's son or something like Bernard. Oh, whatever his son.

No, I don't think he's related to them. I have heard that name come up, but maybe Josh replaced them or he like took a different role in the company.

Yeah, sure. Let's move on to like what's going on in the direct-to-consumer industry now, because I feel like you're in touch with a ton of different brands and there is certainly like a perfect storm brewing right now. I think there was all of a sudden people were worried about profitability and not just like top-line growth. And so like when Brandless sort of shut down its operations, when Outdoor Voices had whatever issues that it recently had, people realized that bottom line really mattered. And then all of a sudden, the stock market is collapsing. And so investors are going to be a lot more cautious when it comes to writing checks. And then finally, no one's going outside because, you know, COVID is causing the stock market to collapse. And all of a sudden, the pair of Nike shoes that you would ordinarily wear when you were running outside don't really seem necessary anymore.

Right.

Do you think that the bottom line mattering or COVID is sort of having a larger impact, or is it just impossible to tell right now?

It is kind of impossible to tell because we're kind of in this like sheltered or hibernation stage right now, where we haven't like fully accepted that, okay, this is the reality and figured out the adjustments around that. We're all kind of in this like, I'm sure you saw that New York Times article around how people are just like turning to junk food. I know just from portfolio companies and chatting around that like cookware is doing really well. Beauty type of stuff isn't doing as well, like anything really related to going out, but anything that promotes Happiness or calmness or wellness while you're staying in has just been crushing. Everything from like fitness, fitness gear and jump ropes and bands all the way to adaptogen drinks are crushing. Cookware, I said, is doing well. It's kind of weird though, but it will be interesting to see when all this stuff does settle down, how will people adjust and what will people start to realize as their priorities? You know, I don't think people are going to be rushing to spend $100 to get, you know, face wash customized to their zip code anymore. Yeah, the perspective of money will definitely change.

Yeah, it's crazy how fast that happens. You know, it took like 10 years for people to feel really bullish and their wallets to feel fat and them to feel like, hey, I want to spend money making myself happy.

Yeah.

To all of a sudden being like, this seems like a crazy luxury to have a customized face wash.

Yeah, right. That's literally Away, right? It's like you used to have like a $25 Target suitcase or you have like a $5,000 Saks Fifth Avenue set. And then Away kind of came in and found that like high earners but not rich type of playground.

Henry.

The Henry playground. Yeah. But they just had to let go of like 60% of their staff. The worst part is all the people who get affected who just don't know how they're gonna pay rent in 2 months.

Yeah. Let's take a step back. I mean, COVID is obviously a complete catastrophe for the country and like just heartbreaking. I think a couple days ago I saw that there were nearly 2,000 deaths in the United States. Yeah, on a single day. And I was like, this is 2/3 of a 9/11 on a single day, and it's gonna happen again tomorrow. It's really heartbreaking. You were talking about some businesses that are doing well just by virtue of the fact that people have to stay in. Cookware companies, fitness bands. And you're right, like I've tried to order fitness products and the wait is like a month now.

Yeah, I waited 3 weeks to get a jump rope.

Yeah, it's crazy. Do you think that that acceleration is permanent? For instance, if you haven't ordered from Instacart before and now you do, do you get off of Instacart? Are people gonna be like, yeah, I want a tonal or a mirror and I wanna keep this? Like tonals and mirrors are thousands of dollars. They have $50 a month like subscription fees or something to that effect. They're incredibly expensive. But is this now the new reality? Is Equinox sort of like in trouble? Or 6 months from now, are these direct-to-consumer businesses back to where they were? And Equinox is back to what it was?

Well, I think there's 2 parts to that. One is, will people trust going out and going into a public gym again? Like, that to me is mind-boggling. But the second part is like, how much do they value getting that like Peloton bike or SoulCycle bike for their house and whether or not they will. I mean, they've definitely seen sales just jump. And for them, their whole game is they get a product in your house, then they kind of have you with the subscription for quite some time. Yeah.

Away Travel had to lay off a bunch of their staff. Everlane has as well. You know, a lot of companies have just as a result of the fact that sales are down.

You can't—

it's a terrible thing to have to do, but at the same time, If the entire business goes bankrupt, there's nobody that can work there, right? And so it's a hard decision, but probably the right decision.

Sure.

What happens to these businesses in the future? Do they have down rounds? Do they go out of business ultimately? Do they like— what happens to Away, I guess, in 6 months or a year? It was probably like the darling of the DTC community, right? Like a huge valuation, 2 female entrepreneurs who were, I thought, doing a fantastic job, like really admired both of them. Them. And I know, like, you know, I'd love to talk a little bit more about the press related to Steph Korey and stuff later on. What happens to this, a company that was doing everything right for so long, investing in a brand, you go to the airport, and a ton of people are carrying their Away bags? What happens to that brand a year from now?

Yeah, it's tough to say. Like the two— yeah, it's so scary. Things that come to mind is one is private equity. And then the other is it just gets acquired by You know, one of the bigger luggage companies, and they either like acquihire it and roll in capabilities, or they basically just keep the brand going, but support the P&L much better.

Yeah, it's certainly tough to say. I imagine there's going to be like down rounds for a bunch of these businesses. Aside from the founders who I, you know, have a lot of empathy for because they built an amazing business and like something terrible happened that was completely outside their control and hurt their business. Also a lot of empathy for those employees that work there. And I bought into that stock or exercised their options. And now all of a sudden, they're in a lot of trouble.

Yeah.

And it's not just Away, right? It's Airbnb, a ton of other companies that sort of were headed in the right trajectory, and then all of a sudden are no longer going to do that.

Yeah.

Do you think there's opportunities to buy distressed direct-to-consumer businesses? So like Away Travel is obviously gonna be a super expensive business. But like, how do people buy and sell these distressed businesses?

To be honest, I'm not 100% sure. I've definitely been doing a little more research just 'cause I've gotten curious recently about it.

Yeah, but I figured you had.

Yeah, and I've been talking to like Mike, for example, who's our friend at Greylock. But yeah, I mean, I'm just trying to learn about it as well. It's like a completely new world for me. I never thought that all this would happen. And so I've never had to learn it before.

Yeah. Okay, let's talk a little bit about like, not just COVID, but like, let's talk a little bit about what happened at Outdoor Voices and the press that was related to away travel. I've seen a lot of like, articles sort of saying, are there hit jobs going on against female entrepreneurs?

Yeah.

I have no idea what the answer is to that. Like at Native, we barely got any press when we were independent. I've never been a woman, so I have no idea as to whether people are doing that. Certainly seems like something is happening. Like there are a lot of terrible male-run businesses that don't seem to be getting as much press.

Yeah, totally.

I'm not sure why that's the case. I think Outdoor Voices and Steph Korey are very different businesses. Like the Away Travel, Certainly there were things that, like Steph said, that weren't great. If you look at the Slack history I had at Native, you know, people would put me in prison. I was like saying terrible things. Like if people fucked up, I was like, how could you possibly fuck up like this, you motherfucker? You know, like it's a very intense process. All of your energy is being put on something so tough.

Yeah.

What did you think of the Away Travel one? I thought it was really unfair. I was like, oh, she called like some third-party logistics company brain dead. And I was like, they probably are. Yeah, yeah, yeah. I mean, that is the nicest term I could think of for a third-party. 100%.

I have empathy on both sides. I think as an employee, if you're not used to that kind of environment of like the hypergrowth startup, a lot of the really successful brands or even companies that sell products, they have a very intense marketing or customer success organization. And like, that's why they're so good is because they're so critical about their marketing, their sales, and their onboarding. So I think some people are definitely like not made for that. I also think you probably don't want to be yelling at employees on public channels or private channels. But again, I mean, that's up to you as like a founder. If you want to do that, like that's up to you. I've definitely done it before.

Yeah.

So like you said, if you're a founder and Like, I always try and have empathy for the other person. So if I was your employee and you were like, how the fuck could you fuck this up? I'm not going to get mad thinking, oh, Moiz is mad at me. I'm thinking he's right. He has to deal with like this company that's trying to acquire him and he's probably dealing with 15 other things. Me not doing my job puts something else on his plate. So like, that's how I would view it. And that's how I have viewed it when I was at the last couple of companies I was at.

That's amazing.

So all that said, I mean, those messages were like nothing that I've never gotten before.

Yeah, there was nothing I've never sent before.

Yeah.

In fact, they were like tame.

Yeah.

I was like Joe Exotic when I was running Native and like everyone else was Carolyn— or Carole Baskin.

Yeah. I think like, you know, if you're gonna do it, you own it. You know, you also obviously make sure that your employees are not pissed off that they're working for you. Like, sure, there's good times and bad times, and I think that's natural, but I mean, yeah. I think the thing on the press too is like female-founded companies are just numbers-wise could be considered anomalies. And so I think because of that, the ones that like, it started way earlier when it was the ones that go through the Red Antlers or the Gin Lanes and they come out, there's like a press tour. It's a very normal thing where like brands launch and there's a whole press tour between everybody's goal is to get into the New York Times with a quote so they can throw that on their site. That said, I think the press, good or bad, will follow you throughout because people are just intrigued by the story and the hook is so much different than what people are normally used to, I guess. That would be my like really zoomed out, non-politically correct, just like off-the-cuff thinking.

Yeah, I guess 2 things about that. One is the other thing I thought about from like the Away conversations that got leaked was, you know, they have a real commitment to customer service. that's really incredible.

Yeah.

You know, when they were late sending packages, Steph's like, okay, how about we send this person 10 suitcases or 100 suitcases to make up for it? That's what we want from customer service with direct-to-consumer businesses.

Totally.

Companies that have a ton of empathy and that do the right thing when something wrong happens.

Yeah.

And so I really admired that. The other thing from a press perspective, like at Native, I was trying to court the press early on and all like all product press. Like I wanted to talk about Native deodorant and not the success of the business. And what happened was that we couldn't get anybody to like write about us. One day, like randomly, we had created a rosé deodorant and we like accidentally launched it June 21st. It wasn't even our goal. We didn't realize that it was the first day of summer, although it was the first day of summer. And so we launched it and all of a sudden all of these press institutions picked up the product, which we never thought would happen. We were on Good Morning America, the Today Show, and like in Vogue, in Refinery29, probably like 30 or 50 publications. In the course of 24 hours, incredible! And I was like, great. We've like this is it. Yeah. You know we're gonna get all. And in reality, like I tracked our revenue from that day. All of those publications got us an extra $25,000 in revenue. And on that day, Facebook got us like $50,000 in revenue. We were like in a mini viral sensation. Certainly, like nobody remembers it.

Right.

You know other viral sensations. But it was in a lot of publications, and we got $25,000 in sales from that. And I was like, what is the— why are people courting press like this?

Yeah, well, I think it's like, it serves both parties because like you get pickup and it's good exposure. And then for a lot of these outlets, they just plug into your affiliate platform. And if they can be contextually relevant for what consumers are thinking, which is, you know, jumping in these first day of summer articles and listicles, then they're gonna try and make revenue off of it. It's actually a good strategy for when you try and launch stuff. If you can be super contextually relevant to as many people as possible, which everybody can enjoy the first day of summer, then you just increase your chances of getting picked up and things like that.

Did it happen with Judy? Look, give me another example because I have a tough time. Yeah, completely understanding.

With Judy, like, not speaking as a member of Judy, but more as like an outsider, when Judy launched like every Kardashian was posting about their Judy kit. And then Chrissy Teigen had posted it as well. And all of a sudden, there was an angle of like, the Kardashians are promoting this emergency kit, what is it? And so that became a press angle. There was another People magazine article, which did really well. That was something around like what this new emergency kit the Kardashians and Chrissy Teigen are promoting. And so it's almost just like, Making sparks on one end and the fire happens on the other, if that makes sense.

Yeah. Yeah.

That one's a little bit different than like the rosé, but similar in the sense that there are ways to plan things like press. A lot of people tend to think that you just cold email reporters asking to talk about your product and then they'll magically like pick it up one day. But the real work comes in like figuring out the reason for them to write about it or creating that angle.

Yeah.

As a publication, like they're incentivized by ad revenue. You make ad revenue by more page views. You get more page views by having a good angle. It's like a weird loop.

You can't just be like, here's this product, please write about it. You have to say, here's why I think it's interesting to the readers that you have.

Right.

I remember when at my first e-commerce business, I'd constantly like look for people who had written about something else in the space and then sort of be like, hey, here's something that you should talk about. So we, it was a business that sold alcohol online. This TechCrunch reporter wrote about a distillery in New York City for some reason. And I was like, well, that's not very TechCrunchy, but if you're willing to write about that, maybe you're willing to write about us because we know that distillery and we're the number one seller of their products. And so he's like, okay, great. Let me write about you guys. So he wrote about us and then like Bloomberg picked us up and so did like CNBC or something. Like it was just random, the kind of like flywheel effect that one single publication can have.

Yeah.

And so you have to be persistent, but you're right. Those angles are really important.

Yeah. If you can nail one of those anchors as like, whether it's an exclusive or they pick it up first, then the others will definitely make a move to try and cover it. Just because if it's coming from like a TechCrunch or a Bloomberg, then they probably assume people are going to be searching for it.

Yeah. Did you guys hire a PR agent already at Judy? How are you guys doing that? Do you guys not need one? Cause you guys have all these influencers.

No, they use an agency.

Gotcha.

Yeah.

Yeah. When we were like running Native, I tried to get an agency and we ultimately settled on one. But like before that, I called up like the, the guys that are sort of doing a lot of direct-to-consumer, like direct-to-consumer PR work in New York. And they were like, yeah, we charge $25,000 plus 1% equity. And I was like, are you fucking crazy?

That's crazy. I've never seen the equity ask.

I don't understand where this number came from.

Yeah.

It was a 1% equity ask. And I was like, You don't know anything about my business and you want 1% of it?

Yeah.

I might be Allbirds and you could be asking for 1% of it, or I could be a brand that does, you know, $10,000 a year and you want one. Like, those are 2 completely different asks, right? Like, one is worth more than $10 million and the other is probably worth a dollar.

Right.

So how could you just ask for 1% equity without knowing anything else about my business? Have you seen people like do that kind of stuff?

Oh, totally. Some branding agencies, Do it and still do it. I haven't seen it from PR. I know there's a couple firms in New York that'll do like growth marketing and they'll also take some equity. But yeah, I don't know. I think that concept's kind of weird to like— it's almost like exchanging currency. And I think your currencies just have to be same.

Yeah, that's why we use cash.

Yeah, you shouldn't fuck with changing equity for services and it just gets really messy. Also, I was talking with somebody and he was saying that when you get to like, let's say, you know, you're early and you're like a Native, for example. Yeah, you go off, if you didn't get acquired and you started raising like round C and D, like those investors start looking at your cap table thinking, why the fuck does this branding agency have 2% of the company? Like, just knock them off. And so they'll just end up getting screwed later.

Oh, that's interesting.

Yeah.

I didn't realize that people would do that. I mean, from like a branding agency perspective, I'm a little bit more amenable to it because presumably your business is just Starting when you work with that branding agency, and so you're both like you know it's worth nothing, and you might not have a ton of cash.

Sure.

I was just surprised. I was like that point native was probably doing you know two million three million dollars a month, and this person's like we want one percent of your company. And I was like this company could be doing three million a month, or it could be doing thirty thousand a month.

Yeah.

You don't know, and you're still asking for the same amount. Just made no sense to me. Right.

That's insane.

Like you know I wish that somebody had put together like a Yelp of vendors that e-commerce companies use.

Yeah, I know. That's one of the things I get asked the most is like what's a great paid media agency? And really where people go wrong is one, they just read stuff on the internet. Agencies are all marketing themselves, so they'll all call themselves the best.

Sure.

So one mistake is going by that. The second mistake is thinking, oh, this agency looks sick. I wanna work with them. And I made that mistake at Hint where I thought an agency, which is a sick brand agency, they did good work. But the problem was you realize that like certain agencies are built for businesses at different stages. And so we were too small for that agency to really care.

Yeah.

But now I've kind of narrowed it down to like, if you're under $200K, there's a different person. If you're between like $300K to, I don't know, $1 million, $2 million, it's a different stage. And like $2 million plus is a different stage. But, and same goes for like PR and everything. Yeah. Email, PR, like all your services, affiliate too. They're all different at different stages.

Yeah. You don't want to be like the smallest fish in a ginormous pond. You don't want to work with an email agency that is also working with like Nike.

Exactly. Because you're never their priority.

Yeah, exactly. At Native, what happened is our first like 6 months of the business, we lost our contract manager, like the person who was making our product was like, I'm going to stop making this. And so we had to find another company. And like the other company that we were working with was like this I think you know them at this point. It's 800— they were working out of an 800-square-foot facility at the time or something tiny. It was perfect for us because when we called them up, we're like, hey, we want to order 1,000 units a week. And they're like, that's fine. That's like a very reasonable request for us.

Yeah.

Other people we spoke to, they're like, you need to order 100,000 units out of the gate. And I was like, we can't even afford that. So this is a nonstarter.

Can you share what your COGS were?

When we launched the business, at first it was $5.50 to make a stick of Native deodorant.

And you were selling it for $10?

Like in July of 2015. And we were selling it for $12.

$12. And you were profitable with Facebook?

We were profitable with Facebook. Nice.

It's crazy.

That's insane. Like in 2015, our CAC was like $2. In 2016, it was $4.

Yeah.

At the end of 2016, we were doing $1 million a month. So there was a ton of EBITDA that the business was generating. The COGS went down a ton. So it went from like $5.50 to that original manufacturer. We switched and it became like $3.20. And every time we sort of grew, they brought the cost down. We went from like making 1,000 units of deodorant a week At the end of 2015 or at the beginning of 2016, by the you know middle of 2017, we were making 21,000 units a day, and so we had just increased sales by like you know I don't know 20 times five like you know 100x basically, and so our cost came down to below two dollars, like substantially below two dollars. Yeah. What was amazing is we found a manufacturer that was really able to grow with us. They moved from like this 800 square foot facility to a 20,000 square foot facility to now 40,000 square foot. facility. Rarely do you find service providers that grow with you. Usually you go to a service provider and you outgrow them, and they don't make the infrastructure changes that they need. And then you got to go find somebody new.

Totally, totally. Did you ever consider, especially when you were doing, let's say, 5,000 deodorants a day, did you ever consider like, why don't I just buy the facility to do it and buy the raw ingredients?

Yeah, certainly did. Not too seriously, though. You know, we were like, the business was growing exponentially. You could work 80 hours a week just on the business without touching a single piece of the backend. And so that became really difficult.

So for you, it was just like, it was also peace of mind that it was like being taken care of.

Yeah. And the simplicity.

Right.

When we sold the business, there were 8 employees at the manufacturing facility. I think there were 140. And at the shipment facility, there were like another 100 people.

Damn.

There were 8 employees and we had created something like 250 jobs.

Right.

But like, I only had to manage 8 employees and I think One of the things I realized working at Native was one of my weaknesses is, uh, like, uh, managing employees. It's something that I'm trying to work on and like giving them structure and goals and communicating with them well.

Yeah.

It's like, I can barely do that with 8 people sitting here. If there were 250, I'd put a bullet in my head. They'd put a bullet in me, actually.

Yeah, that's fair.

And the person who was making it was just fantastic at it. Like, had very few problems. She worked really hard to make them, uh, well. And so that was really, it gave me a lot of peace of mind.

That's awesome.

You talked about Postscript, which I think is fantastic when it comes to text messaging. It's like the Klaviyo for text messaging. I'm not sure if you've ever dealt with ShipMonk. They're based in Miami.

Yeah, you introduced me to them.

They're like the only 3PL I've ever met that is run by a young person that's in the 21st century. They have really good tech. What are some of the other agencies that you recommend to people or some of the other companies that you recommend to people?

So like most media buying, I recommend Metric Digital. They're just like, their bread and butter is DTC brands, especially if you have like a retail presence. They're really good at that. Let's see, texting, SMS, email, probably Klaviyo. If you're an influencer for texting, use Community.

Is that what you use?

Yeah. Okay. Yeah. Let's see, landing pages, build them on Netlify. Commerce, use Shopify. You'd rather use WooCommerce.

I'm not a Shopify fan.

Yeah.

Yeah, which is crazy because like WooCommerce is— when I used to use it, I was like, I'm so embarrassed telling people that I use it. And now having used Shopify, I'm like, you idiots, you guys are the— like now I'm embarrassed with Shopify.

Yeah.

Shopify is great, but it offers, you know, our conversion rate went down by like a material amount once we switched from Woo to Shopify.

Yeah.

And it was because of Shopify's checkout page. I thought that like Shopify would be better than it is. Like I thought Shopify would like, uh, would have all of these network effects and it really doesn't have those. Its checkout page is terrible. Like it's a multi-step checkout page. The coupon code box doesn't appear on the cart page like it does for most other businesses at this point. It's only on the checkout page. You can't control the server. Like, you know, at Native, I actually bought a bunch of servers. Like we didn't use AWS for a long time. I actually bought some servers and put them up in like, you know, server farms and our site was blazing fast.

Yeah.

And at Shopify, you can't do that.

Right.

We used our subscription portal, which was, which was a lot cheaper than Recharge, which is what Shop— which is what Native uses today. Like Signet, like it was free actually.

How does Recharge charge you?

Uh, they charge a percentage of your subscription sales.

What a beautiful business.

Yeah. I mean, like, you know, when we went from paying zero to thousands of dollars a month.

Yeah.

It was crazy. Like my next business will be on WooCommerce again. And next time I will not have any shame whatsoever.

No Shopify app.

Bitches, I'm on WooCommerce. Someone asked Margaret Thatcher, like, how can you have the position that you have when there's 80 people that disagree with you? Like, how does that make you feel? She's like, I feel bad for the 80 people because I'm right and they're wrong. That's now how I feel about WooCommerce and Shopify.

Yeah.

Epic. The hardest part was just like the developer community. It still needed some work. Like there should have been more developers for WooCommerce.

That's my biggest tough thing is finding really good developers on Shopify. Like I have one who I just have on retainer for myself, like just for myself. I have a Shopify developer who's on my payroll. And anything I need done, I can hit them up. And it's so necessary because a lot of times too, like Shopify agencies that are on retainers for some of these brands, they're also sometimes not the best developers. And then, you know, you can't necessarily rely on just internal developer teams either. For me, I like having my own set of tools.

Yeah, yeah, definitely. Especially ones that you understand.

Yeah.

And I think it's like, It's really hard. Like, you know, you're working on a bunch of different businesses at the same time. It's really hard to say, okay, these guys use Unbounce. This guy uses something else. This company uses a third party for a landing page. And now you're like, I have to like learn all these systems in order to be helpful.

Yeah.

It is really difficult to do all that.

Yeah.

Okay. What are other industries like, you know, direct, you know, when we launched Native Deodorant, when I launched Native, I was thinking about doing Native or another mattress company. And I'm not entirely sure that like, I think the mattress company could have been even better. Like it seemed like, Everyone who makes a mattress company has hundreds of millions of dollars in debt. It is an insane industry. But hindsight is 20/20 and like no one was really doing deodorant at the time. And today there's like 5,000 companies.

Yeah, everyone's—

They're not annoying. I'm just like, look, this is a $3 billion a year industry. The 2 biggest players, Unilever and Procter Gamble, have made acquisitions in the space. We're digitally savvy. We have a huge first mover advantage. We have a good price point and a good brand. Where do you like, how much of a business are you looking to acquire? If you're looking to build a $10 million a year business, I get it. If you're looking to build a $200 million a year business, that's 7% of the market. That's going to be really difficult to do. What are other industries that are untapped today? When Quip came out, I was like, wow, this is great. You guys are doing a great job with brand. No one's touching electric toothbrush. Great industry to be in. What are other businesses that like need revolution? Like some are hard. So for instance, I think like diapers is a great business.

Yeah.

It's really hard because to make diapers is really expensive. You need a lot of inventory. You need a lot of different sizes. And there's very few companies that can private label diapers. You need like a very expensive paper machine in order to make a diaper.

Yeah. To be honest, I'm not 100% sure what like the most ripe would be just from observations though. I think pet is one that like hasn't really been done from a product side. There's a lot of pet food brands that are getting out there, but not necessarily product-wise. I think there's a lot on the side of convenience and accessibility. Even some of these brands that have come out with stuff, just making things even simpler. So I think that's one area. I don't know. The other day I was thinking of direct-to-consumer sauces. There's no sauce company. There's no like DTC buffalo sauce. Somebody told me I should start that.

There's no DTC buffalo sauce. That's really funny. Yeah, that would be interesting. Have you heard of Sir Kensington's?

I have. Yeah. Their stuff is good. Yeah. Yeah.

Probably the closest to that.

Yeah.

What are some direct-to-consumer brands that you really admire right now?

Dude Wipes is one of my favorite. Dude Wipes is one of my favorite because I think they have like some of just the funniest content.

Dude Wipes is like a butt wipe. It's like the One Wipe Charlie from Dollar Shave Club.

Yeah.

Okay.

They were on Shark Tank years ago and they're really good operators. And so because they're really good operators, all they've done is just build brand in like the coolest ways possible. So like their emails are just the best. Other brands I admire—

How rare is it for you to like look forward to an email from a direct-to-consumer company?

Oh, so rare. So rare.

My promotions tab, I'm just like, I don't want to look at any of this stuff.

Yeah, highlight all and hit archive.

Yeah, yeah. I say report spam.

Yeah, yeah. I'll usually look through and see if there's any like cool new templates or cool things that people are doing with their audience, but Aside from like, I signed up for Quibi. I've been checking out some of their emails, but nothing's really that great.

Yeah.

But honestly, lately it's just been full of sales. Everybody's just trying to liquidate.

Yeah. So I'm sorry, but I interrupted you because I think you had a couple other brands that you said you were going to admire that you heard. Yeah.

A couple other brands. You know, I think what Haus is doing is pretty awesome because all their manufacturing is done literally on their farm and they have all the bottles as like inventory to fill. And Helena is just a great brand marketer. And so she's really good at just pivoting and making things pop, which is insane. So that one's really exciting for me to watch and also learn from. And then I usually have like a couple faves I like on the brand side and then a couple faves on the performance side. Not necessarily they're like that good at brand, but they just crush with performance. They have great landing pages, great ads. The Native one is one of my favorites. Just the homepage or the landing page, the cart, the, all the upsells, the payment token holds, all the fancy stuff.

Yeah, yeah, the upsells, you know, the upsells were crazy. We have a post-purchase upsell where we sell like a travel-size deodorant, which we couldn't sell otherwise, right? It sells for $3 and it's free shipping. So we couldn't sell you that. And like, we would lose so much money if we sold you that individually. And, you know, we sell hundreds of thousands of those mini-sized deodorants every month. And they're very profitable as well. Like often our EBITDA was, you know, like, um, at Costco, you're like, their EBITDA is basically just their membership fees. I was like, wow, our EBITDA is almost all like mini-sized deodorants that we're selling because there's so much money.

Yeah. That's awesome. I usually have like a small tab of brands. I just keep looking at their stuff.

Yeah.

Yeah.

Likewise. You know, I talked to the guy who founded Hims and Hers for this podcast about a week ago.

Andrew?

Yeah, Andrew. And he's like, when we launched the business, we separated our marketing budget and we got our board of directors to sort of say, okay, we're going to spend X percentage of our marketing budget on performance and Y percent on brand, like right out of the gate.

Do you know what that split was?

I thought that was really interesting.

Or did he mention the split?

No, he said the majority was still performance.

Yeah.

And he's like, you know, we do brand stuff like we buy coasters at bars.

Yeah. Honestly, my favorite thing about Hims is Andrew is just a genius with I call it like finding that new quote unquote inventory, you know, like above urinals, the coasters. Bumble used to do coffee sleeves. I love seeing brands do stuff like that.

It's great.

That to me is just like so creative.

Yeah. And like how many guys are at bars on Friday night and all of a sudden like you can, you might be able to have a conversation about it because it's on your coaster and it's a product that these people like the bars are giving away for coasters or Disposable, certainly.

Yeah, and you cover their costs too, right?

Yeah, yeah, it was a great idea. And look, so one, I was really impressed by like the marketing channels that he had created that didn't exist beforehand. And then two, like I've never heard of a direct-to-consumer business at such a young stage sort of having the ability to spend so much money on brand marketing. Usually like you have one marketing budget and you know you spend some on brand and some on performance, but in reality you have like these numbers that you have to hit. Yeah, and he's like, look. This is how we do it. And like, we have to invest in brand if we want to be around 20 years later.

Yeah. I mean, it's definitely a good point.

Yeah, it's a great point. I feel like Away did that. I feel like Allbirds did that as well. I just don't know, like Native never did that. We never spent one penny on brand. Then I look back on things and I'm like, okay, what is right and what is wrong? Like, Outdoor Voices has certainly spent a ton on brand and has like struggled to find an exit and struggled to sort of maintain its valuation. Away seems like it's gonna struggle as well as a result of COVID Maybe not necessarily, but like, you know, spending a lot on brand and not necessarily enough, like as much on performance. And then I'm like, you know what? Like all these brands that I really, like Casper spent a ton on brand. Like all these beautiful at-home ads, like beautiful imagery. I see their TV commercials and I'm like, did you hire like Vincent van Gogh to like create this ad? This is fucking fantastic. Like I wanna freeze this ad, print it out and hang it on my wall as like, art.

Yeah.

And then I'm like, oh, but then you have a $100 million valuation having raised $400 million.

Yeah.

Are they right to be doing this? What, like, what is the outcome here?

Yeah, I mean, it'll be an interesting case study in 15 years to look back on it and like really look at what mattered. I mean, just from how I've seen Native, you build your brand equity on the back of your working media dollars. And yeah, you guys simplified the messaging a lot, which helped. That's why like Black Wolf Nation does well as a company. The messaging is just simplified.

Yeah.

At Hint, we did the same thing. But also, to some extent, a lot of these products provide convenience and an actual function. They're also consumable, which I think matters less than function, but they're very functional products and they have functional benefits to the consumer. Yeah. And so as a result, like, I think you have to work a little less. On the brand side.

Gotcha.

Because if you can show them the outcomes or the benefits of the outcomes, then you just have a stickier brand. But that said, yeah, I also don't think like there's one path to doing it that's applicable to everybody or a right path.

Yeah.

Yeah. Because also, quite frankly, I would also bet money that some of these companies that spend a lot on brand probably tried to do what you were doing at Native, but Just didn't have the skill set to actually execute it, and so their pivot was to whatever they ended up doing. Yeah, you know.

Yeah, it's really hard to build a performance-based company that has $500 million in revenue. I think the only way to do that is once you start investing in brand. Yeah, but I'm not sure like brand marketing can get you to a $500 million company. I'm just not sure it can get you to a $50 million company.

That's the crazy part. Yeah, yeah.

Like I think you need like some of that performance in order to like. Almost like an airplane, right? Like you need some—

you create that ripple and once you're out there.

Yeah, exactly. It's crazy to think about what'll happen in this community. You know, I think about Harry's and the Edgewell, like the Edgewell thing and the FTC sort of saying, yeah, this isn't going to happen. I don't know what Harry's does now. Like, yeah, P&G certainly can't acquire them. They're going to have another antitrust problem. And P&G knows that and Harry's knows that. I don't know how Billy feels because Billy's supposed to be acquired by P&G. You know, I don't know, in the next few months or—

yeah, that was supposed to start when we were Boxing in New York. That was a long time ago.

That deal was supposed to— yeah, that deal. Yeah, yeah, yeah, that's right. I wonder what Harry's— if I were like Jeff or Andy at Harry's, I'd be like, you know, I built this amazing brand. Somebody else agreed to pay $1.4 billion for it. And now I can't get this done. What happened? Like, what is going on in this world?

I know it must be crazy.

Like if Sprint and T-Mobile can merge and so that there's only 3 phone carriers, United can merge with Continental and Delta with Northwest. Why can't my DTC company sell to a strategic? I'm a direct-to-consumer new company that has launched in the last 5 years, and you're saying there's an antitrust concern here? That really blows my mind.

It sucks, and it's also a compliment.

Yeah, it's certainly a compliment, and I respect their business immensely. I think, like, you know, our lives, both yours and mine, were made so much easier by virtue of the fact that, like, Andy Dunn and Jeff and Andy from Harry's sort of paved this path for us.

Yeah.

Like, you know, Andy's like, like, we're gonna build a direct-to-consumer business online. And everyone's like, what the fuck is that?

Yeah.

And he's like, yeah, we're gonna spend a bunch of money marketing and didn't know how to spend it well and built, you know, pop-up shops that other people are copying. And the Harry's guys are like, yeah, we're gonna take this direct-to-consumer business and we're gonna launch into Target and it's gonna be successful there.

Yeah.

When it came to Native, I was like, great, I know exactly what to do. Build a direct-to-consumer business like that Andy did. And then I'm gonna launch into Target like that Andy did.

Yeah.

And like, you know, Target was like, yeah, we know why this is Look, we didn't have to convince Target. Target was like, yeah, we know why this is a good deal. Harry's has been taking a ton of market share and Native is now 12% of the deodorant sales at Target or 13%. Sells over $1 million a week there. And I'm just like, we're walking in the footsteps of giants. And unfortunately, Andy Dunn didn't have the best outcome at Bonobos. I think the outcome for Harry's is too early to tell now, but it's certainly made our lives a lot easier.

Oh, totally. I think one thing that always gets lost, even back to those press pieces slamming the founders. One thing that always gets lost is like a lot of these people paved the way or created these movements, which is something to be appreciative of. And like you said, it allows us to have a job.

Yeah, yeah. I really think that like 60% of this industry is like building your business and 40% is getting the timing right. Yeah, Outdoor Voices was a hot brand, brought in Mickey from like J.Crew as their chairman, brought in Somebody from like Nike that was like president or something. They just didn't get the timing right of like when to find a home for that business.

Yeah.

And same thing with Casper, right? Like a fantastic brand, absolute brand geniuses that created that, and like great operators as well. First month that they launched, they had $1 million in revenue. They were sending out air mattresses because they couldn't fulfill their orders.

Yeah.

So they're like, we're going to send you this air mattress until we can get you a Casper mattress. Sort of pioneered out-of-home ads, particularly in New York. Like, I don't remember seeing Subway ads until I saw Casper ads.

Yeah.

And then I was like, shit, all direct-to-consumer businesses are now doing this. And like, just didn't find a home at the right time for that business.

Yeah, it's crazy. On that note, I know you committed to some ads this summer. What happens to those buys? Do you know?

Yeah, so Native had sort of agreed to do some subway ads in New York. Deal room sales pick up in like You know, during the summer because it's warmer out and all of a sudden you think more about sweating and you know, you're outside as opposed to when in New York it's, you know, 12 degrees, you're sweating less, you're walking to the, like, you know, you're walking less. Uh, we wanted to buy some out-of-home ads and like they were pushing for, I don't remember exactly what time they were pushing for. And you know, at the time I was still at Native and I pushed for the summer, which is now the worst time ever to run a subway ad because the subway ridership is down probably 90%.

Yeah.

And so we're trying to like push them out a little bit so that we can still get some traffic.

Yeah.

You know, you agree to like a, a price and you're like, okay, this is what the CPM backs out to based on the number of riders that the subway has. And then, but you don't agree to a CPM price. You know, you don't say, okay, you're gonna have this many riders, so I'll pay X number of dollars.

Yep.

You say, this is the price based on your historic traffic. And that's like, I had terrible timing there. I certainly couldn't foresee it, but like just—

Well, yeah. I mean, it's nothing you could have— yeah, it's nothing you could have predicted. I was pretty excited though.

I was super excited too, 'cause I wanted to run all these like fun ads that would say like, what stinks down here? Not you if you use Native deodorant. And the subway guys were like, you have to be careful because you can't make fun of the subway while you're running these ads. You have to buy the inventory from us. You can't like be an asshole to us. Like, we're not gonna let that happen. You can't be like, this place is a shithole, use Native deodorant. Avoid the rats. Use native deodorant. Like they would not have been cool with that. But I think the what stinks, not you, use native deodorant. Like I think that would have been okay with them. But yeah, it is crazy how like ad inventory has sort of changed. And you know, when I talk to people who are advertising on Facebook these days, they're just like prices are down substantially. Like CPMs are down because the Marriotts and Uniteds and Toyotas of the world just aren't advertising on there now.

Yeah. When all the big agencies pulled out, then all the really savvy people like us went in and started creating these campaigns and the overall inventory got super cheap.

Yeah. I remember like in 2017, Mark Pritchard, who's the chief brand officer at P&G, like went on the Wall Street Journal and he's like, we're cutting our Facebook ad spend by $100 million because Facebook just doesn't provide the return on investment that it should. I was sitting there like, this is pre-acquisition. I was like, Fantastic. You have no idea what you're missing. It's fantastic out here if you're like, you know, if you're savvy about running Facebook ads. So like, you're right. It is bad.

It is bad.

Don't worry about it. Stop spending. Meanwhile, I'll go ahead and increase my spend. Like that's what happens in auction-based platforms. Totally. If somebody was going to start, you know, I know we're running over time already. If someone's going to start a new business today, what is the best way to learn about digital advertising? I spoke to Kara earlier this week and she was like, we ran a Super Bowl commercial and it cost us under $1 million. To run that Super Bowl commercial, I was like, "Whoa! When you said you focus mostly on performance ads, I was like, okay. It sounds like that's changed now.

Yeah.

Super Bowl commercials are rarely performance-based, but it's also interesting to hear that just costs under a million dollars.

Yeah.

You've run acquisition at a bunch of companies. You're advising a bunch of companies when it comes to acquisition. You've run your fair share of Facebook ads. Certainly admire your like expertise there. What's the first step that somebody should do if they're cold and they're working at?" I don't know, Johnson Johnson, or they're working, they're like a paralegal somewhere and they want to run this direct-to-consumer business. Where should they go to learn about direct-to-consumer advertising? Or should they text you?

Yeah, yeah, you can definitely text me. I had always tried to find like whether it was that one site that was really good at educating you or like that one course or whatever, but it just doesn't exist. And also this world changes so fast that there's really nothing that can constantly keep up. I found that for me, the best tool is like, I just started building a group of people that I constantly talk to, you know, whether it's like, these are people, most of them initially were just actual like acquisition people. So people like the head of marketing at like ThirdLove or Madison Reed or some of these like big D2C brands.

Yeah.

And then I just started figuring out that I could use Twitter to network. Now, like, I'll talk to people who are running tens of millions of dollars of ads all the way to people who are, you know, doing $1,000 a month in sales and they're really proud of it. But I, it's easy for me to just kind of learn through seeing what other people are doing. And then the other thing I'll do is just, you know, like stalk the really, really good brands and see exactly how they do it, whether it's they're looking at their creative, you know, there's things you pick up. Like if you go to, yeah, probably even native, if you go to natives like Facebook Ads Library, if 80% of the creative looks the same, That's the creative that's doing really good. And so you just like—

100%.

You do that. I constantly have a list where I'll go through, you know, the top like 50 or 60 brands and just see what are all their landing pages looking like now. If I identify similarities, it's because it works. You know, I just— I learn by observation. I like looking at what other people are doing and then figuring out the why and then basically taking the why And trying to make that with my own version.

Yeah, that's a great point. I think like, you know, someone made fun of us for like having a landing page that looked like Harry's, and I was like, you're using this as like an insult. And I picked up what you said and put it on myself as a badge. It was like a compliment. I'm like, thank you. We didn't spend the money to do it, but we looked at other people and we emulated their best practices.

You know, if you look at like a lot of these brands that spend Millions of dollars a month. Like, we don't have to do that testing. They've done the testing for us. We just have to see what they've come out with. Yeah, I'm a big fan of like work smarter, not harder.

So agree with like sort of looking at competitors or actually best-in-class sites to see what they're doing really well.

Yeah.

When you said you develop like a network of people on Twitter and presumably Slack and communicate with them, and some of them are spending you know, $1,000 and some of them are spending $10 million a year on Facebook ads.

Yeah.

How does that network help you?

It helps me in a few different ways. So like, if I know that, for example, I'm helping out a telemedicine brand, you know, onboard new customers and a part of their customer journey requires like going through insurance, then I have a friend who runs marketing at another telemedicine brand For women where they have that whole kind of funnel and they've gone through that whole process. So for me, it can be as easy as texting him and asking a question. In other cases, it could be like I needed a Shopify developer 2 months ago. And so I had asked a couple friends and right away they were just like, oh yeah, here, use this guy. He's the best. And yeah, I usually just learn that way. I'm a big like questions person. My theory initially, I think the reason that it kicked off was because I don't really have a formal education in anything. And so, and I also wasn't a big reader. So my thought process was basically like, instead of, instead of going to like books and instead of going to college, if I just surround myself with the people who write these books and I get the information first, then I should be in a good enough position.

Yeah, I think that's absolutely right. There's 2 things I'd say. Look, I have a formal education and I can tell you I like never use it on a single day unless someone's saying something like requiring me to do something that I don't want to do.

Yeah, you're a Harvard lawyer.

I'm like, I'm a lawyer and no, I don't have to do this. I'm not your slave. Yeah, I think that's the only time I use it. You were talking about networks in San Francisco. What I started doing when we were growing Native and we were really small is I started hosting like this e-commerce brunch. Oh yeah, like one Sunday a month, I would get like 10 people who are all in e-commerce into a room. And we would talk about like, you know, the problems that we were having from like an operations perspective, a personnel perspective, and really a marketing perspective. Yeah, what is working for you guys on a marketing perspective? Where are you spending money? Network really helped me understand the shift from like desktop to mobile, from mobile static images to mobile video, landing pages, colors that would work, how important creative was versus headline.

Yeah.

You know, how important the, the display image was before it started a video, like all that kind of stuff. Aside from the fact that it was really like easy to voice my concerns to other founders who came to the brunch, it was super inspirational. I remember like coming out of those brunches being like, it's Sunday at 2 PM. I have 9 hours of work to do today because all of these guys had such good ideas. I need to go and start executing some of them.

Yeah, myself, Scott Swanson, who I don't think you've met, but he actually used to work at The Hustle. Me, Scott, the head of marketing at ThirdLove, head of marketing Madison Reed, and Mike Dubois when he was at Stitch Fix.

Yeah.

We would all get lunch once a month, and sometimes we would come out of these meetings and we all have pretty much the same customer, but we were not competing, so it was great. And we would come out of these meetings and Scott and I would take like an idea that we discussed over lunch and it would make us an extra $100 grand the next weekend.

Yeah.

But it totally did help with like ThirdLove and Madison Reed did a ton in podcasts and TV. So like we learned a lot about that before we stepped into that. It helped us with figuring out things like the right agencies, you know, who are the right buyers.

Yeah.

All the way down to like we're trying to hire a head of retention. How do we go about Hiring that, or, you know, we have this issue on the team where this person thinks they're supposed to be doing email and affiliate, but like random issues, but it helps to have that group where the chances of one of them having already dealt with that issue is pretty high.

Yeah, that's a great point. It's like your personal, like Yelp where you have a bunch of people who have like had some experiences and it's just like brainstorming in a way where sometimes you need to get other people's perspective who are doing the same thing you're doing, although it's in a different industry to really open up your eyes. Yeah, for me, we had Eric who runs Nectar Mattresses, or it's called like Nectar, I guess. I saw his business go from like $0 to north of $200 million, and I was just like, what the fuck is going on over there? Yeah, like every month we'd come in, I'd be like, what the fuck? How is your growth that huge? Yeah, and it was really helpful. So when I was looking at marketing perspective, I'd go to him, and then when I, you know, need to discuss a small team issue, I talked to the guys at Vinebox or Japan Crate or somebody else who was there that was a small But like sort of growing, like struggling well, and like had a lot of insight.

Yeah.

And yeah, I think those networks are like underappreciated. They're like sort of—

It's a total advantage too.

Yeah, it really is.

Yeah.

You know, you were talking about how you guys had different businesses, but how like certain things would work. There needs to be a private equity firm that sort of buys up a bunch of these businesses and spreads— like everyone's biggest cost, or one of their biggest costs, is certainly customer acquisition. It's got to be in the top 5 or probably the top 2 costs.

Oh, definitely, yeah.

You know, someone needs to spread this around because you're right, like the customer who's a Native customer is probably a Hint customer.

Totally.

And the customer who's a Hint customer is probably an Outdoor Voices customer. And we're all paying Facebook to sort of like acquire these customers as opposed to saying, you know what, we have this one email address that would probably apply to all 3 of us. Why don't we try and share this resource?

Yeah, I've thought so much about this. There was actually a company That I think the furthest it got as like, as us operators were trying to do that, the furthest it ever got was like sharing Facebook audiences, like lookalikes among swapping lookalikes among brands. But everybody got super— well, one, people got really protective about their email lists, especially if it was a big list, everybody was really cautious. And then secondly, anything from like a bigger company that had I would say like more than 50 people, they naturally had like a chief technology or chief privacy or chief legal. And that's where it gets really tough. Yeah, it is tough. But if somebody could figure that out, or you know, it's another one. I think I'd sent you a screenshot one time, but it's if you could develop a Shopify app, The Hustle is like the perfect audience for this, a Shopify app that imagine if like I was at Hint and you were at Native and it was one landing page. You check out on the landing page and it pushes the order out to both Hint and Native. So, on the backend, it gets fulfilled like a normal order. And on the frontend, the customer pays once, puts their information in once, and it basically goes out to 2 stores rather than checking out on my site and I send you an Excel sheet or vice versa.

You're saying, so, like, there'd be one checkout, like one website that sells both of our products?

Yeah, it could be that, but it's more so like, The reason a lot of people don't do things like acquisition collabs is because it's like, well, who owns that customer technically? Is it on my store that they check out or your store? And then if it's, if it's just another site like Amazon, then Amazon owns it. So in this case, everybody wins.

Yeah, I think you're absolutely right. I think the first step to getting there is actually like the worst step, which is like a private equity company coming in and buying 5 of these businesses and start sharing, like, because Once they prove that, hey, this kind of stuff works and we can bring your marketing costs down 35%, and that's your biggest P&L, like that's the biggest line item you have in terms of expenses. Now all of a sudden everyone's going to be like, well, this company's got a competitive advantage and we have to figure that out. I think there are certain companies that are trying. I would be surprised if Atomic and like Hims and Hers don't share that kind of stuff. And I'd be surprised if like the new Gin Lane isn't trying to do that as well. It is like no one has done it well and like A lot of people are attempting it. Yeah, yeah, there are a lot of people attempting it. Like back when Facebook would share interests with you, like I'd look at Native's audience and I'd be like, what are the other things you like? And I'm like, great, all of these other, like 60% of our customers also liked Honest.

Yeah, that's how I would find a lot of like media partnerships. We saw that, I think the first time I ever did it, it was like The Skimm was in the top 5 and I was like, all right, we're running placements with The Skimm.

Yeah, yeah, it was great. And like, I was just like, we have the exact same audience and we bet like The Honest Co and Native have the same audience. And we have to, each of us have to acquire our own customers independently. Doesn't make any sense. It's just the only, like, it is what it is right now, I guess.

Yeah.

Awesome. Nick, really appreciate your time. We're way over already.

Yeah, that was fun.

So thanks so much for being on this episode. If people wanna follow you, if they wanna follow your, like, you know, the community that you've created, where should they text you? Where should they follow you on Twitter?

You can text me at 917-905-2340. Or you can follow me and tweet me on Twitter @MrSharma.

Fantastic. Niks, thanks so much for your time. Really appreciate this. I always love chatting with you. I feel like you and I have the same perspective of like performance marketing of direct-to-consumer businesses.

Yeah.

And there isn't all this like hoopla bullshit of like, you know, you don't put yourself out there like you're royalty. You're like, look, I'm a commoner fighting the good fight.

Exactly.

And it makes it a lot easier to chat with you.

Yeah. Awesome.

Awesome. Thanks so much for your time.

Of course.

Hey guys, that's a wrap for this episode of the Exit Strategy Podcast. We'll be back next Thursday with another new episode. And if you like this podcast, visit thehustle.co to subscribe to The Hustle, a daily email that will give you the business news you need to start your day.