The Exchanges

Q that you've done and, and really started with, with method is, um, you're not an expert necessarily in any of these things and vitamins or soap or, you know, first aid, but you go into, into spaces that you, where you find opportunity. So how do you, how do you think about, about starting businesses? I mean, do you, are you literally looking for where there might be an opportunity?

A Yeah. So I definitely have like a little bit of an academic approach to it. Unlike a lot of founders will follow something they're really passionate about, or they see a problem in the world they want to solve. I, I really start with like categories. And so I will, um, look for spaces that I think are a sea of sameness. Um, and that's kind of the clue dig here. And what I do is I look for what I call like the culture shift or the macro trend that that category is missing. So in the case of method, Uh, we found two is lifestyleing of the home. Like nobody thought about these products as a, as a form of self-expression in your home. I mean, you look at a dish soap more than you use it at the same time. This is back in 2000. You couldn't buy a natural product outside of a natural store. Um, but yet you were asked to pollute when you clean or use poison to make your home healthier. So those were the two macro trends of high design and deep sustainability that we built the brand off of. And so with, within each business, that's the opportunity I look for. And I kind of then, um, you know, Build a strategy around it, and to your point of like, you just got to get in and figure it out.

AI assessment note: “I really start with like categories. And so I will, um, look for spaces”

Q So Eric, while Adam was sort of looking into the category and looking at potential ingredients and stuff, what were, what were you doing?

A So our My plan was to create our first four products, which were the surface cleaners, and get them in the local stores. So Adam was working on basically doing everything in the bottle, and I was doing everything kind of around the bottle. And this, uh, joke was style and substance. Um, and so what I started doing was we, we didn't have a lot of, you know, money to do custom tooling, and so I started looking for stock bottles, couldn't find anything I really liked. So I had this camping water bottle from Norway that I had found, just a really simple kind of bullet design with these nice, elegant shoulders. It had, it was very utilitarian, but at the same time would look almost like a vase sitting in someone's home. So we used that as the basis for the first bottle.

AI assessment note: “Adam was working on basically doing everything in the bottle, and I was doing everything”

Q Like, so is design for you the core, the sort of the center of how you build products?

A It is. And it's not just, I mean, I see design as part of a tool in creating brands that have an incredible emotional connection. And I want to create brands and products that the second you see it, you want it, and then hopefully you actually need it, which is fun going into these, these more fundamental categories. But the, the heart of it, what I'm trying to create is almost like objects of desire. Um, and I want to create this emotional connection through great design, great creativity, like working every touch point to be able to do that. And I think if you really Dig down a little deeper, kind of part of, like I say, I'm a one trick pony, but part of my trick is I try to almost bring like an inner child approach to these very serious categories. And so, I mean, you look at method, it almost looks like what a, what a kid would want to clean with. Ollie, what I did was I brought kids' gummy vitamins to the adult market. Welly, I got adults to wear, you know, bandages that were, were supposed to be for kids. And I think that's how I create that emotional connection is this almost like inner child approach to these very, very serious categories.

AI assessment note: “It is. And it's not just, I mean, I see design as part of”

Q Eric, when you launched Method, you know, 25 years ago, it was a different landscape, but how, how does it, I mean, how do you think about distributing a product, selling a product? Is it, is it, are you leaning heavily into online? Is it, do you still believe in the traditional, you know, Walmarts, Targets, and, you know, Kroger's of the world?

A Yeah, I very much do. I think today it's just much more of an omnichannel approach. I don't think it's, it's one or the other. And I don't think consumers look at that way. They don't, when they see a brand that started off as more of a traditional DTC online brand, they see it inside of a target. They don't think of like, oh, there's that DTC brand now available in wholesale. They think like, oh, that's that brand I love. And I think vice versa. And then for a whole, for someone like me, those retail partnerships are, I still think there's no more valuable real estate in America than, than an end cap. At a, at a target. Um, and the efficiency of scales working with them is, is still really important.

AI assessment note: “Yeah, I very much do. I think today it's just much more of an omnichannel approach.”

Q I read at one point, Eric, that to prove that this really was non-toxic, you actually drank it. Like you drank, what did you, did you, what did you drink? Which one did you drink?

A So I was in London and, you know, I love the British press. They're so skeptical. And I was talking about our products that they're, you know, non-toxic and safe. And she said, is it, you know, safe enough to drink? I was like, sure. And it was a toilet bowl cleaner. And, uh, so we both took a shot at the toilet bowl cleaner, and then I immediately, uh, text Adam. It was still, you know, he was still sleeping here, and finally he got back to me. I was like, hey, just drink the toilet bowl cleaner. I'm gonna be okay, right? He writes back, well, it wouldn't have been my first choice. I think you kept it obvious.

AI assessment note: “And it was a toilet bowl cleaner. And, uh, so we both took a shot”

Q So, so right then and there at that moment, you both, I mean, it was almost a perfect storm for you, Adam, because you were kind of in this transition phase. Eric, you were still working at the ad agency, which actually- Was giving you this incredible experience. It was like sort of opening your eyes to this entire world that you hadn't been exposed to, right?

A Yeah, really understanding, like, understanding consumers, and this was really kind of driven by, so you go back to 1999, Ikea was just arriving in America. Home and garden television was just taking off. So it was a time where people were starting to think more about their homes as a reflection of themselves, and so the thought was, well, what if we design these products so they were like Pieces of decor. And hey, if a spray cleaner was beautiful enough to leave on the counter versus hidden underneath the sink, out of sight, out of mind, you might actually use it more. And I love the phrase, like, there's no such thing as low-interest categories, just low-interest brands. So our thought was, how do we take boring cleaning and not make it boring?

AI assessment note: “Yeah, really understanding, like, understanding consumers, and this was really kind of driven by”

Q I read at one point, Eric, that to prove that this really was non-toxic, you actually drank it. Like you drank, what did you, did you, what did you drink? Which one did you drink?

A So I was in London and, you know, I love the British press. They're so skeptical. And I was talking about our products that they're, you know, non-toxic and safe. And And she said, is it, you know, safe enough to drink? I was like, sure. And it was a toilet bowl cleaner. And, uh, so we both took a shot at the toilet bowl cleaner, and then I immediately, uh, text Adam. It was still, you know, he was still sleeping here. Finally, he got back to me. I was like, hey, just drank the toilet bowl cleaner. I'm gonna be okay, right? He writes back, well, it wouldn't have been my first choice. Like, thank you, Captain Obvious.

AI assessment note: “it was a toilet bowl cleaner. And, uh, so we both took a shot”

Q So Eric, while Adam was sort of looking into the category and looking at potential ingredients and stuff, what were, what were you doing?

A So our My plan was to create our first four products, which were the surface cleaners, and get them in the local stores. So Adam was working on basically doing everything in the bottle, and I was doing everything kind of around the bottle. And the style, uh, joke was style and substance. Um, and so what I started doing was we, we didn't have a lot of, you know, money to do custom tooling, and so I started looking for stock bottles, couldn't find anything I really liked. So I had this camping water bottle from Norway that I had found. Just a really simple kind of bullet design with these nice elegant shoulders. It had, it was very utilitarian, but at the same time would look almost like a vase sitting in someone's home. So we use that as the basis for the first bottle.

AI assessment note: “I was doing everything kind of around the bottle.”

Q brands, and a lot of them didn't, some of them didn't work out. And it's tough. It's tough market. It's tough to hit a hundred million dollars, right? Which is really where a brand is either, you know, a target for acquisition or raises more money and then pursues going public. I mean, is that, is it real? Is it true? And, and if so, what's your sense of why?

A Yeah. You know, I think it's a great time to be getting back into consumer. That's why I love our timing of, of building this fund. And what you said is exactly what happened. We, we really saw, you know, around 20, 20, 21, um, and even before that, a lot of tech money poured into consumer. And the things that were like literally a recipe would suddenly be classified as food tech. And these insane valuations got applied that brought out all sorts of bad behaviors of trying to grow too fast. And I think now we've seen a really great reset, and it's never been easier to start a company, but it's never been harder to scale one. And I think as an investor, really picking the founders and the brands that you think fundamentally can be 102 hundred million brands, like one of them I've been involved with for the last three years is Goodles, the mac and cheese, and, you know, trying to find those Goodles are not easy.

AI assessment note: “what you said is exactly what happened. We, we really saw”

Q Eric, you also, it's amazing how many categories you have experience in, and you built brands, and you have experience in jewelry as well. Uh, how do you, I mean, it's, I'm putting you on the spot a little bit here, but how would you think about starting to build a brand around, you know, a light-up crystal, a pendant around your neck?

A It's a really exciting challenge, but it's not an easy challenge, and that's why I was going back to, like, it's how does this product make you feel when you wear it, and how does it allow you to express your feelings to other people? And I think in a lot of ways, you've kind of created the modern day mood ring. And if there's a way to be able to really build into it, that you can express your mood or your energy on the spot through it. And I think that's, that does what Guy said is like it, then it creates conversations. So when you're in a social setting or a bar and somebody like recognizes it, that's a great conversation starter. But I think that's really the big idea here is, like I said, jewelry's always been about Expressing individuality and personality and what you care about, but no one's ever been able to express their mood in real time through jewelry. And now because you can apply digital technology to do that, I think that's really the big idea. And that's what drives the community that guy is referring to.

AI assessment note: “I think in a lot of ways, you've kind of created the modern day mood ring.”

Q I think it's a great thing to explore, for sure. What do you think, Eric?

A Yeah, I think it's free cashflow. So that's always a great, a great thing. Less likely to get knocked off and somebody trying to work around your patent if they're just able to access it. And I think it'll put pressure on you to build props into something bigger than just that feature if you're going to be able to license it to, to others. So, and same thing, like you don't have to make the choice to do it or not. You just make the choice to go explore it, see what opportunities come along, and then you can make the decision to, to execute a deal like that or not. But, uh, free cashflow for a founder, like yes, all day long.

AI assessment note: “Yeah, I think it's free cashflow. So that's always a great, a great thing.”

Q And is, for example, with the candy, is it enough to have an end cap or, or to have, you know, decent placement at target or, and then, you know, if you, if you build it, they will come kind of thing, like it will sell on its own, or do you still have to, you know, are you still, you know, putting in considerable dollars into marketing the thing?

A Yeah, I think of, you know, I still think of advertising as a tax on an unremarkable product. And the better you get the product, the packaging, and something that creates that immediate connection, then marketing is really just gravy and jet fuel to, to be able to accelerate that. Um, but today, no, you've got to, you got to be able to win on shelf immediately. You got to do that through great visual merchandising, great packaging, a product, you know, a product that is instantly under, you know, you can instantly understand, uh, But then, no, you have to be, uh, building through Instagram, social, TikTok. Um, you kind of have to do it all today to, to build a modern brand. And the ones that are really breaking out, you're, you're seeing their ability to do that.

AI assessment note: “you kind of have to do it all today to, to build a modern brand”

Q You would go there, what, into the grocery store and like?

A You set up a table, and I was wearing a lab coat, which is comical to look back, years later, and it's kind of funny, I look at these photos, and I was standing in the wine aisle, And I think I just realized that people shopping for wine were way more interesting to talk to than people shopping for cleaning products, but we were really big believers that the packaging would have to be the primary marketing vehicle, and you would see it on shelf because of the design, you would buy it because of unique fragrances, you would get home, find out it works, turn the bottle over, and realize it's good for you and good for the planet, and that would start to create a following. And if you talk to most Americans at that time, they would say green doesn't clean. The only way we're going to make this work is we had to get the mainstream into a green product, and we thought a lot of it as it's a Trojan horse for good. We had to put our green credentials on the back of the bottle and almost kind of hide them.

AI assessment note: “You set up a table, and I was wearing a lab coat”