Exit Strategy S1:E4 // Nik Sharma: How To Build and Invest in Great DTC Brands

Okay, we're here on the 5th episode of the podcast with Nick Sharma. Um, Nick and I have been friends for about a year. Uh, Nick, I'm gonna tell everyone a little bit about your background. You ran Acquisition Water. Um, you've been an investor in a bunch of direct-to-consumer businesses, including Judy, um, including Howze, 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 the companies that you've invested in?

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

And which one, like, are you involved in all of them on a deeper level or are you involved in all of them in like—

I would say like pretty much, 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. Can you give me an example? Like 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. Oh, that's awesome. So that was exciting.

Yeah. How much did you buy judy.co? Like you had to buy it off somebody or it was available?

Yeah, it was a 5-figure domain.

It was a 5-figure domain.

But I felt like I did the same thing at Hazy.

Give me some details. Give me, look, 5 figures is too wide. Like $10,000 or $99,000? Which one is it closer to?

It's closer to 10. There was a lot of nego— I'm pretty good at negotiating these domains. So I did the same thing at Hint where our first offer for hint.co was like 50 and it ended up at 6.

You guys bought hint.co for 6K?

Yeah.

Wow, that's great.

Yeah, so I'm just all about like, especially if it's a 4-letter brand, like at Hint, the first thing I did was get hint.co @Hint on Instagram, Hint on Snapchat, Hint on Twitter, Hint on Facebook. And it was just great for brand. And I mean, you did the same thing with Native. And then with Judy, I'm trying to do it as much as I can. Judy's a little harder 'cause it's a person's name.

Yeah, the hard part is that you have to sometimes steal the Instagram handle from a squatter. I remember like— And that's not fun. I didn't even know that was happening. 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 Instagram handle?

Instagram handle?

And they're like, yeah, here you go. And I'm like, okay, great. That was a lot easier than I expected. Uh, we actually never tried— do you think domain names are important? Like, I think Instagram handle is really important. I think Twitter handles— yeah, 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, um, being searched for on Google or being found on social and not necessarily like people putting in google.com.

Yeah, I don't think it's like as important, but from a Sorry, is that really noisy in the background?

No, go for it.

Okay, good. Um, so I don't— I— yeah, I think it's, 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. Like, um, like Hint is drinkhint.com.

Yeah, yeah.

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

Yeah.

And, um, so I was really proud to get judy.co. But then like other things, like for Brightland, I'm working on a landing page. Um, and for House, like, you know, things like connecting them with Postscript and Alex, getting them set up there. Um, but yeah, it's like, it's 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.

Yeah.

You know, like when it comes to like brand names, when we were trying to like, you know, before Native launched, you know, 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 doesn't say like, it isn't like called natural and it's been called something like deodorant club or deodorant company. Yeah. '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. Ton of people got upset about it.

Is that the first thing?

But we never tried to buy like native.com. Yeah. But we did have a huge issue with trademark. I think I've mentioned this to you. You before where we tried to use the native trademark and somebody else owned it and it became difficult to 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 thing.

That's insane. Wow. Wow.

Wow. 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.

Yeah.

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, uh, with the contingency that you buy the mark before we close. But other people were like, we're not even ready.

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

Yeah, they did. It was a high six-figure price.

Well, so what's crazy is like, you know, comparing that to a domain, like, 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 I remember 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. I mean, I think they've 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 nativcos.com 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, what's 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.

It's so bad. Yeah, we tried to get Twitter to do what we had Instagram do or Facebook do, which is That's the native.

Well, I told you the guy who had the Instagram also has the Twitter. He's down in the south.

Oh, does he really? Okay.

Yeah.

I'm glad that he got to keep one of them then.

Yeah.

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? Like, Judy sells like a disaster kit for your house. Which is like, I mean, it's good timing because, you know, 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 two 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, uh, look, you don't need to sell me on the business any longer. I am 100%.

So the other reason it's really interesting is because of the team that's involved. So, um, you know, 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 two founders, Josh Budashkin, 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 so, and he also knows like the A-list world, like the back of his hand. So it makes it, it made it really interesting to launch because on launch day I was learning all about A-list celebrities through Judy. You know, there was like every celebrity has posted to Judy from Chrissy Teigen to Martha Stewart to Kim Kardashian to like literally everybody.

And is that just because like, is that 'cause 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. Like, none of them— 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. Like, I'm trying to get that organic— trying to get that organic, like, influencer reach is really, really difficult to get down right.

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. 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 Whatever his son.

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

Yeah, sure. Okay, let's move on to like what's going on in the direct-to-consumer industry now, 'cause I feel like, you know, you're in touch with a ton of different brands and there's 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, like, you know, the stock market is collapsing, and so investors are gonna be a lot more cautious when it comes to writing checks. And then finally, no one's going outside because, you know, COVID has caused causing the stock market to collapse. And, you know, all of a sudden the pair of Nike shoes that you would ordinarily wear when you were running outside don't really seem necessary any longer. Right. What, like, which, you know, 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, you know, 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, 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 gear and jump ropes and bands all the way to like 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? I don't think people are going to be rushing to spend $100 to get face wash customized to their zip code anymore. The perspective of money will definitely change.

Yeah, it's crazy how fast that happens. 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 to all of a sudden being like, this seems like a crazy luxury to have a customized face wash. Yeah, right.

I mean, if you think about like, that's literally Away, right? It's like you used to have like a $25 Target suitcase or you have like a $5,000, you know, Saks Fifth Avenue set.

Yeah.

And then Away kind of came in and found that like high earners but not rich playground, the Henry Playground. Yeah. And then, but I mean, they just, they just had to let go of like 60% of their staff. The worst part is all the people who get affected, who, you know, just don't know how they're going to pay rent in 2 months.

Yeah. I guess like, let's take a step back. I mean, COVID is obviously a complete catastrophe for the country and like, just heartbreaking. Like, you know, I think about it like, I think a couple days ago I saw that there were nearly 2,000 deaths in the United States on a single day, and I was like, this is two-thirds 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 sort of makes, or that are doing well, just by virtue of the fact that people have to stay in, cookware companies, fitness bands, and you're right, I've tried to order fitness products, and the wait is like a month from now.

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

Yeah, it's crazy. Do you think that that acceleration is permanent? So 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? Tonals and mirrors are thousands of dollars and then they have $50 a month 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, do people, like, will people trust going out and going into a public gym again? I think that, like, that to me is mind-boggling. But the second part is like, you know, how much do they value getting that like Peloton bike or SoulCycle bike for their house and whether or not they will. I think, I mean, they've definitely seen sales just jump. And for them, their whole game is, you know, if they get a product in your house, then they kind of get heavy with the subscription for quite some time.

Yeah. And what happens to the other companies? So like, Away Travel had to lay off a bunch of their staff. Everlane has as well. A lot of companies have just as a result of the fact that sales were down and you can't— Yeah. 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? 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 admire both of them. And I know, I'd love to talk a little bit more about the press related to Steph Korey and stuff later on, but what happens to this 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.

Yeah, it's so scary.

Two immediate things that come to mind is one is private equity and then the other is it just gets acquired by like, you know, one of the big, bigger luggage companies and they either like acquirer 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 gonna be like down rounds for a bunch of these businesses. And like, you know, 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 happened that was completely outside their control and hurt their business. Also a lot of empathy for those employees that work there and, um, you know, had bought into that stock or exercised their options. Um, and now all of a sudden they're in a lot of trouble and it's not just Away, right? It's Airbnb and a ton of other companies that sort of were, um, headed in the right trajectory and then all of a sudden are no longer going to do that.

Yeah.

Um, would love to touch base a little bit about Well, actually, before we get there, do you think that there's opportunities to buy distressed direct-to-consumer businesses? So like Away Travels obviously can be a super expensive business, but 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 because I've gotten curious recently about it. Yeah, but, 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 I, you know, 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 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 articles sort of saying, "Are there hit jobs going on against female entrepreneurs?" I have no idea what the answer is to that. 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.

Yeah, oh, totally.

I'm not sure why that's the case, but, you know, I'd love to— like, you know, I think Outdoor Voices and Steph Korey are very different businesses. Like, the Away Travel, you know, certainly there were things that, like, Steph said that weren't great, but I think if you look at anyone's— like, 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, like that's, it's a very intense process and your livelihood and like, you know, all of your energy is being, you know, put on something so tough.

Yeah.

Like, like what did you think of the away travel one? I thought it was really unfair. I was like, she's called, she called like some third-party logistics company brain dead. And I was like, they probably are brain dead.

That happens all the time. Yeah.

That is the nicest term I could think of for a third-party logistics company.

100%. I mean, I have empathy on both sides. I think as an employee, you know, if, if you're not used to that kind of environment of like the hypergrowth startup, Or, you know, like that, like, I feel like a lot of, a lot of the really successful brands or even companies that sell products, like they have a very intense marketing or customer success organization. And it's because, and like, that's why they're so good is because they're so critical about their marketing, their sales, and their onboarding. And So I think some people are definitely not made for that. I also think, you know, 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 a founder. If you do that, that's up to you. I've definitely done it before. And like you said, if you're a founder and, you know, I always try and have empathy for the other person. If like, 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, Moise is mad at me. I'm thinking he's right. He has to deal with like, you know, this company that's trying to acquire him and he's probably dealing with 15 other things. Me not doing my job put 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 companies I was at. So all that said, I mean, those messages were like nothing that I've never gotten before. Before.

There were nothing I've never sent before. In fact, they were like, same.

Yeah.

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

Yeah. I think like, you know, if you're gonna do it, you own it. And you know, you also obviously make sure that your employees are not pissed off that they're working for you. Like, sure. You know, there's good times and bad times, and I think that's natural. But yeah, I mean, I think the thing on the press too is like, you know, um, female-founded companies are just numbers-wise, you know, could be considered anomalies. And so I think because of that, the ones that, that, you know, like it started way earlier when it was the ones that go through the Red Antlers or the Gin Lanes and they come out You know, there's like a press tour. It's like, it's, it's a very normal thing where like, you know, brands launch and there's a whole press tour between, you know, everybody's goal is to get into the New York Times with a quote so they can throw that on their site. Um, that said, I think the press, you know, 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 two 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. You know, when they were late sending packages, that'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. Companies that have a total empathy and that do the right thing when something wrong happens. And so I really admire that. The other thing from a press perspective, like we, you know, like at Native, I was trying to court the press early on and all like, you know, like all product press. Like I want 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. And then one day, like randomly, we created a rose deodorant and we like accidentally launched it June 21st. It wasn't even our goal. Like we didn't realize that it was the first day of summer, although it was the first day of summer.

Oh wow.

And all of a sudden, all these press institutions picked up the product, which we never thought would happen.

Yeah.

But like we were on Good Morning America, the Today Show, and like, you know, in Vogue, in Refinery29, probably like 30 or 50 publications in the course of 24 hours. And I was like, great, we've like, this is it, you know. And in reality, like, I tracked the customer, I tracked our revenue from that day, and like, all of those publications got us an extra $25,000 in revenue. And on that day, Facebook got us like $50,000 in revenue. And I was like, we were like in a mini viral sensation. Certainly like nobody remembers it like they do other viral sensations, but it was in a lot of publications and we got $25,000 in sales that day.

Totally. Well, I mean—

And I was like, why are people courting press like this then?

Yeah, well, I think it's like, you know, it serves both parties, right? 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.

Give me another example of something like that. Like, I'm sure with Judy, like, did it happen with Judy? Like, give me another example because I have a tough time completely understanding.

Yeah. So, you know, with Judy, like, not speaking as a member of Judy, but more as like an outsider, you know, when Judy launched, there were 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 and Chrissy Teigen are promoting. And so it's almost just like making sparks on one end and the fire happens on the other. Does that make sense? Yeah. But that said, that one's a little bit different than like the rosé, but similar in the sense that you can— 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.

Because they're also, 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. Yeah, it's like a weird, weird loop.

Yeah, you definitely have to be like, 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. I remember when, right, 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 it was a business that sold alcohol online, and so 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. And so yeah, like 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 a, 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 Bloomberg, then they probably assume people are going to be searching for it.

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

Yeah, they use— 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 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 a month plus 1%.

Yeah.

I was like, are you fucking crazy? Uh, I don't understand where this number came from. It was a 1% equity ask and I was like, you don't know anything about my business and you want 1% of it? I might be Alberts 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 two completely different asks, right? Like one is worth more than $10 million and the other is probably worth a dollar. So how could you just ask for 1% equity without knowing anything else about my business?

That's insane.

Have you ever seen people like do that kind of stuff?

Oh, totally. Well, the branding agent, some branding agencies do it and still do it. I haven't seen it from PR. I know there's a couple of firms in New York that'll do like, that will do like growth marketing and they'll also take some equity.

Yeah.

But it's, 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, you know, 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.

And 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. Um, 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 has just started when you work with that branding agency. And so you're both like, you know, it's worth nothing and you don't— you might not have a ton of cash. Uh, I was just surprised. I was like, At that point, Native was probably doing $2 million, $3 million a month, and this person's like, "We want 1% of your company." And I was like, "Do you want 1%? This company could be doing $3 million a month or it could be doing $30,000 a month. You don't know and you're still asking for the same amount." Just made no sense to me.

Right. That's insane.

Yeah, I wish that somebody had put together a Yelp of vendors that e-commerce companies use.

Yeah, I know. There's honestly, that's one of the things I get asked the most is who's the best I always get like, what's a great paid media agency? And really where people go wrong is one, they just read stuff on the internet and they, like agencies are all marketing themselves. So they'll all call themselves the best. And so one mistake is going by that. The second mistake is thinking, oh, you know, like 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 agency, they were just, they did good work. And so, but the problem was you realize that like certain agencies are built for businesses at different stages. And so, you know, we were too small for that agency to really care. But now I've kind of narrowed it down to like, you know, if you're 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, you know, $2 million plus is a different stage.

But that's a great point.

And same goes for like PR and everything, email, PR, like all your services, affiliate too. They're all different at different stages.

Yeah. You don't want to be like, um, the smallest fish in a ginormous pond. Like, you don't wanna work with an email agency that is also working with Nike and—

Exactly, because you're never their priority.

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

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? July of 2015. And we were selling it for $12. Yeah. $12.

And you were profitable with Facebook?

We were profitable with Facebook, which is crazy.

Nice. That's insane.

In 2015, our CAC was like $2. In 2016, it was $4. And by the end of 2016, we were doing $1 million a month. There was a ton of EBITDA that the business was generating, but like the COGS went down a ton. So it went from like $5.50 at 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 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 5, 100x basically. And so our cost came down to below $2, like substantially below $2. And like, you know, 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 gotta go find somebody new.

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

Yeah, certainly did. Not too seriously though. We were like, the business was growing exponentially and like, if 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. Like it just didn't have the bandwidth.

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

Yeah, and the simplicity. Like when we were like, you know, 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. And so, you know, there were 8 employees and we had created something like 250 jobs, 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 like managing employees. It's something that I'm trying to work on and like giving them structure and goals and communicating with them well. And I was like, I can barely do that with 8 people sitting here. If there were 250, I'd put a blanket over my head.

Put a bullet in my head right now.

Like, they put a bullet in me, actually.

Yeah.

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— gave me a lot of peace of mind.

That's awesome.

What are, like, other— what are other, like, agents, you know? Um, you talked about Postscript, which I think is fantastic when it comes to text messaging. It's like the Klaviyo for text messaging. Um, I really— I'm not sure if you've ever dealt with, like, ShipMonk. They're based in, like, Miami. They do, they're fantastic.

You've 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. Like 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. Although you're not really a— you'd rather—

I'm not a Shopify fan. Yeah, which is crazy, 'cause like WooCommerce is, you know, 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 like, now I'm embarrassed with Shopify. Shopify is great, but it offered, you know, our conversion rate went down by like a material amount once we switched from WooCommerce to Shopify. And it was because— Why Shopify's checkout page? I thought that Shopify would be better than it is. I thought Shopify would have all these network effects and it really doesn't have those. Its checkout page is terrible. It's a multi-step checkout page. The coupon code box doesn't appear on the cart page like it does for most businesses at this point. It's only on the checkout page. You can't control the server. 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. And at Shopify, you can't do that. And then we used, like, you know, we used our subscription portal, which was, like, you know, which was a lot cheaper than Recharge, which is what Native uses today. Like, it was free, actually.

And how does Recharge charge you?

They charge a percentage of your subscription sales.

What a beautiful business.

Yeah, I mean, look, you know, we went from paying zero to thousands of dollars a month. Yeah, it was crazy. Yeah, like my next business will be on WooCommerce again, and next time I will not have any shame whatsoever. No, no, I'm on WooCommerce. You're like, you know, like someone's, uh, told Margaret— someone asked Margaret Thatcher, like, uh, how do you— 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.

Yeah, yeah.

The hardest part was just like the developer community. It still needed some more, like there should have been more developers.

Well, there's— 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, um, it's just, it's so necessary because a lot of times too, you know, like Shopify agencies that are on retainers for some of these brands, they're also sometimes not the best developers. And, and then, you know, you can't necessarily rely on, um, just internal developer teams either. For me, I like having my own set of tools.

Yeah, yeah, definitely. Especially ones that you understand. 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 and it's really hard to say, okay, these guys use Unbounce, this guy uses something else, this company is 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, it is actually.

Oh, sorry, go ahead. No, no, go ahead.

No, we can finish that.

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 seems like everyone who makes a mattress company has hundreds of millions of dollars in sales. It's an insane industry. But, you know, hindsight is 20/20. And like, no one was really doing deodorant at the time, and today there's like 5,000 companies. Doing deodorants.

Yeah.

And like, you know, they're so— like, they're not annoying. I'm just like, look, this is a $3 billion a year industry. The two biggest players, Unilever and Procter Gamble, have made acquisitions in the space. You know, 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 gonna be really difficult to do. What are other industries that are untapped today? Like where should people be like, what's a good example? Like 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? Some are hard. For instance, I think diapers is a great business. 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 a very expensive paper machine in order to make a diaper.

Yeah. To be honest, I'm not 100% sure what 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 still think there's just like, 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 DC Buffalo Sauce. Somebody told me I should start that.

That's really funny. Yeah, that would be interesting.

Or like dressings, but—

Have you heard of Sir Kensington's?

I have, yeah. Their stuff is good.

Yeah, probably the closest to that. 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. And it's, they were on Shark Tank years ago and like 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.

Yeah.

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? Like all the emails that people— Oh, so rare.

So rare.

My promotions tab, I'm just like, I hate, like, I don't wanna look at any of this kind of stuff.

Yeah. Highlight all and hit archive.

Yeah. Yeah.

I'll like scan through like, 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, you know, like I signed up for Kwibi and so like I've been checking out some of their emails, but nothing's really that great. But honestly, lately it's just been full of sales. Everybody's just trying to liquidate.

Yeah. All right. So, so I'm sorry, but I interrupted you cause I think you had a couple other brands that you said you were going to admire, that you admired.

Oh, Yeah, a couple other brands. You know, I think what Haus is doing is pretty awesome because they're very like, they're super, 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, you know, on the— 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. Like really, like yours is— the Native one is one of my favorites. Just the homepage or the landing page, the cart, all the upsells, the payment token holds.

Yeah, yeah.

All the fancy stuff.

The upsells were crazy. We have a post-purchase upsell where we sell 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 we would lose so much money if we sold you that individually. And we sell hundreds of thousands of those mini-size deodorants every month and they're very profitable as well. Often our EBITDA was, at Costco, their EBITDA is basically just their membership fees. I was like, wow, our EBITDA is almost all mini-size deodorants that we're selling because there's so much money.

Yeah, that's awesome. But yeah, I usually have 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 Hers for this podcast about a week ago, and he's like, when we— yeah, Andrew— when we launched the business, we separated our marketing budget and we got our board of directors to sort of say, okay, we're gonna spend X percentage of our marketing budget on performance and Y percent on brand, like right out of the gate.

And I thought that was really interesting.

Do you know what that split was? No, he said the majority was still performance, Yeah, but that was— and he's like, you know, we do brand stuff, like we buy coasters at bars. So if you're—

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

It's great. Like, um, I was like, 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 like, you know, coasters are disposable. Certainly. Like it was really, yeah.

You cover their costs too. Yeah.

It was a great idea. And, um, I would, but like, so one, I was really impressed by like the marketing channels that he had created. That didn't exist beforehand. And then two, 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, you have one marketing budget and you send some on brand and some on performance, but in reality, you have these numbers that you have to hit. And he's like, "Look, this is how we do it and 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.

Well, at Hint, all our marketing budget was performance too.

At Hint?

Yeah, most of it was performance. You know, actually pretty much, I would say most of the brands that I've touched And it could just be because I mostly work with like the hypergrowth ones or the more performance-based, but a lot of them, their marketing budget is focused on performance. And then either like what's left over or a very tiny percentage is dedicated to brand. But I do think that like brand, I mean, Andrew did a great job building Hims. Like everybody knew what Hims was.

Yeah. Everybody knew like the day it launched. Basically. That was a really good job. I wonder like, you know, like then I look back on things and I'm like, okay, what is right and what is wrong? Like Outdoor Voices certainly spent a ton on brand and has like struggled to find an exit and struggle to sort of maintain its valuation. Away seems like it's going to 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, right? Like all these beautiful out-of-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 want to freeze this ad, print it out and hang it on my wall.

Yeah.

And then I'm like, oh, but then you have $100 million valuation having raised $400 million. So like, you know, are they right to be doing this? What is the outcome here?

Yeah, I mean, it will be a really— it'll be an interesting case study in, you know, in 15 years to look back on it and like really look at what mattered. Because, because, um, I mean, just from how I've seen Native, like Native has always been— well, Native, and I think Hint did it really well too when I was there, was, um, like performance branding, which is you You build your brand equity on the back of your working media dollars.

Yeah.

And, um, like, I think, um, Native, you guys simplified the messaging a lot, which helped. Um, that's why, like, Black Wolf Nation does well as a company. The messaging is just simplified. Um, at Hint, we did the same thing. Um, 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 the work—

I think you have to work a little less on the brand side because if you can show them the outcomes or the benefits of the outcomes, then you just have a stickier brand.

Yeah.

That said, it will be interesting to see like I also don't think there's one path to doing it that's applicable to everybody or a right path. 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.

Yeah, look, you know, it's really hard to build a performance-based company that has $500 million in revenue, but I think the only way to do that is once you start investing in brand. 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. Like I think you need like some of that performance in order to like, almost like an airplane, right? Like you need some energy to take off.

You create that ripple.

Yeah, exactly. It is really great, like, it's crazy to think about what, like, 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 gonna happen. You know, I don't know what Harry's does now. Like, P&G certainly can't acquire them. They're gonna 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. I don't know, the next few months or—

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. And so like, I wonder what Harry's— If I were sitting at— If I were like Jeff or Andy at Harry's, I'd be like, I built this amazing brand. Somebody else agreed to pay $1.4 billion for it, and now I can't get this done? Like 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, if there's like, if, you know, 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 interest concern here? That really blows my mind.

I think it's it sucks and it's also a compliment.

Yeah, it's certainly a compliment, uh, and I respect their business immensely. I think, like, you know, yeah, um, our, like, our lives, both yours and mine, were made so much easier by virtue of the fact that, like, Andy Dunn and Jeff and Andy, um, from Harry's sort of paved this path for us. Like, you know, Andy's like, we're gonna build a direct-to-consumer business online. Everyone's like, what the fuck is that? Uh, 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 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. And when it came to Native, I was like, great, I know exactly what to do. I'm gonna build a direct-to-consumer business like that Andy did, and then I'm gonna launch into Target like that Andy did. And 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, you know, Native is now 12% of the deodorant sales at Target or 13%.

That's awesome.

Sells over $1 million a week there. And I'm just like, I'm 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, you know, it's certainly made our lives a lot easier.

Oh, totally. I think like 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, you know, 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. Like Outdoor Voices is 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. And same thing with Casper, right? Like a fantastic brand, absolute brand geniuses that created that, you know, 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 orders. So they're like, we're gonna send you this air mattress until we can get you a Casper mattress. You know, sort of pioneered out-of-home ads, particularly in New York. Like, I don't remember seeing subway ads until I saw Casper.

No, never.

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. Yeah, I wonder what—

On that note, I know you committed to some ads this summer What happens to those buys, do you know?

Yeah, we're trying to like, so Native had sort of agreed to do some subway ads in New York and deodorant sales pick up in like, during the summer because it's warmer and all of a sudden you think more about sweating and you're outside as opposed to when in New York it's 12 degrees, you're sweating less, you're walking less. And so we wanted to buy some out-of-home ads and they were pushing for, I don't remember exactly what time they were pushing for it, At the time I was still at Native, but I pushed for the summer, which is now the worst time ever to run a subway ad because subway ridership is down probably 90%. And so we're trying to push them out a little bit so that we can still get some traffic. You agree to a price and you're like, okay, this is what the CPM backs out to based on the number of riders the subway has. But you don't agree to a CPM price. You don't say, okay, you're gonna have this many riders for this number of dollars. You said this is the price based on your historic traffic and that's like, I was like, I had terrible timing there. I certainly couldn't foresee it, but like just absolutely terrible.

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

Yeah, 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. Like, it's— 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 know? You could be like, yeah, this place is a shithole, use Native deodorant, avoid the rats, use Native deodorant. Yeah, they would not have been cool.

Exactly.

I think that what stinks, not you, use Native deodorant. Like, I think that would have been okay with them. But yeah, I mean, it is crazy how ad inventory has sort of changed. And when I talk to people who are advertising on Facebook these days, they're just like, prices are down substantially. CPMs are down because Marriotts and Uniteds and Toyotas of the world just aren't advertising on there now.

Yeah, yeah, actually, yeah, totally. And then the ones that, you know, when all the big agencies pulled out, then all the really savvy people like us went in and started creating these campaigns.

Yeah.

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 'cause Facebook just doesn't provide the return on investment that it should. And 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 savvy about running Facebook ads. So like, yeah, yeah, yeah, you're right, it is bad, it is bad. Don't worry about it, stop spending. Meanwhile, I'll go ahead and increase my set. That's what happens in auction-based platforms.

Totally.

If somebody was gonna start, I know we're running over time already, if someone's gonna start a new business today, what is the best way to learn about digital advertising? I feel like you're an expert at it, you were doing it at HitWall, water. By the way, 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. And I was like, whoa, when you said you focus mostly on performance ads, I was like, okay, it sounds like that's changed now. Super Bowl commercials are rarely performance ads. It's also interesting to hear that it just costs under $1 million. 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 expertise there. What's the first step that somebody should do if they're cold and they're working at, you know, 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?

Yeah. Yeah. You can definitely text me. The main thing, like I had always tried to find like whether it was that one site that was really good at educating you or like the, you know, 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. So, you know, whether it's like, these are people, most of them initially were just actual like acquisition people. So people like, you know, the head of marketing at like ThirdLove or Madison Reed or some of these like big D2C brands. And then I just started figuring out that I could use Twitter to network. And now, like I'll talk to people who are running, you know, tens of millions of dollars of ads all the way to people who are, doing $1,000 a month in sales and they're really proud of it. But 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 stock the really, really good brands and see exactly how they do it. Whether it's they're looking at their creative, there's things you pick up. Like if you go to, probably even Native, if you go to Native's Facebook ads library, 80% of the creative looks the same. That's the creative that's doing really good. And so you just like, 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, oh, what are all their landing pages looking like now? If I identify similarities, it's because it works. You know, I just, I learned by observation. So I like looking at what other people 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.

And you know, if you look at like, A lot of these brands that spend millions of dollars a month, 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. I'm a big fan of work smarter, not harder.

So agree with looking at competitors or actually best in class. Best-in-class sites to see what they're doing really well. When you said you developed 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. How does that network help you?

It helps me in a few different ways. So like, you know, if I know that, you know, if I know that, for example, I'm helping out a telemedicine brand, um, you know, onboard new, new customers, and they're, uh, 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, you know, texting him and asking a question. In other cases, it could be like, you know, 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.

Yeah.

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 my thought process was that— and I also wasn't a big reader, so my thought process was basically like, 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. You know, there's two 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 like, you know, 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 a lawyer and no, I don't have to do this. I'm not your slave.

Yeah.

And so I think that's the only time I use it. And I think, you know, 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 this e-commerce brunch. So like every Sunday, one Sunday a month, I would get like 10 people who are all in e-commerce into a room and we would talk about the problems that we were having from an operations perspective, a personnel perspective, and really a marketing perspective. I was like, what is working for you guys on a marketing perspective? Where are you spending money? That network really helped me understand the shift like desktop to mobile, from mobile static images to mobile video, landing pages, colors that would work, how important creative was versus headline, how important the display image was before it started a video, like all that kind of stuff. And aside from the fact that it was really easy to voice my concerns to other founders who came to the brunch, it was super inspirational. I remember coming out of those brunches being like, It's Sunday at 2:00 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. We would all get lunch once a month and sometimes we would come out of these meetings and we all had 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, it's crazy, but it totally did help with like, like, you know, 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, you know, oh, how do you know we're hiring? 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, you know, 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 Yelp, where you have a bunch of people who have 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 different industry, to really open up your eyes. For me, we had like the guy from— we had Eric who runs Nectar Mattresses, or it's called like Nectar, I guess. And you know, 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? Every month we'd come in and I'd be like, what the fuck? How is your growth that huge? And it was really helpful. And so when I was looking at marketing perspective, I'd go to him. And then when I need to discuss a small team issue, I talk to the guys at VineBox or Japan Crate or somebody else who was there that was a small but sort of growing, struggling well and had a lot of insight. Yeah, I think those networks are underappreciated. They're sort of below the radar.

It's a total advantage too.

It really is. You know, you were talking about how you guys had different businesses, but how like certain things would work. I don't understand, like 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.

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 a Hint customer.

Totally.

And the customer who's a Hint customer is probably an Outdoor Voices customer. Yeah. 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 three of us. Why don't we try to 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 list, especially if it was a big list. Everybody was really cautious. And then secondly, anything from like a bigger company that had, you know, 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. Um, so it is tough, but if somebody could figure that out, or, you know, it's another one. Um, I think I'd sent you a screenshot one time, but it's, 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, 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 two stores rather than checking out on my site and I send you an Excel sheet or vice versa.

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

No. Well, yeah, it could be that, but it's more so like, you know, 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 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 the private equity company coming in and buying 5 of these businesses and start sharing. Like, 'cause 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 gonna 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, you know, the new Gin Lane isn't trying to do that as well. It is like, no one has done it well and like, you know, they should.

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 these other, like 60% of our customers also liked Honest. And I was like, this doesn't make it.

That's how I would find a lot of 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, alright, we're running placements with The Skimm.

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

Yeah.

Awesome. Nick, really appreciate your time. We're way over already. So thanks so much for being on this, on this episode. If people want to follow you, if they want to follow your, like, you know, the community that you've created, where should they text you? Where should they follow you on, you know, on Twitter?

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

Fantastic. Nick, 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. And there isn't all this hoopla bullshit. You know, there's no like, you don't put yourself out there like you're royalty. You're like, look, I'm a, 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.