The Exchanges

Q walk into the grocery store and you're like, wow, I wish this product would exist. Oh, it doesn't. I'm going to go and create it. And then there's another way, which is I'm going to like look at trends and competitive analysis and a bunch of other ways to figure out if there's a market need, which way do you recommend going? And yeah, just share some light on that.

A I think it depends where your strength is. So a lot of founders who start these businesses, um, you know, like very little, uh, a small percentage of people actually raise money. I'd imagine a lot of people who listen to this probably bootstrap or maybe have raised a very small round, but you know, very few people raise 10, 20, thirty million dollars to build a business. And as a result, like if you're starting a direct to consumer brand or a CPG brand or a retail brand, You sort of have to understand what you're good at. Are you good at branding? Are you good at storytelling? Are you good at sourcing? Are you good at financial operations and cashflow management? Uh, or are you good at like performance marketing? Are you really good at, you know, the creative side, the business side, the analytic side? And, um, I think depending on what you're good at, you will find One of these paths to discover what that product is. Somebody who has mass distribution can take the first route of walking into the grocery store and saying, damn, I wish I had a chocolate bar with four ingredients in it, six ingredients in it. And then, you know, you're, you're competing with the biggest companies in the world. Um, you know, you're basically neck and neck against Hershey's and Mondelez and all these other companies. Uh, that would not work for the average person who's bootstrapped and starting, bu…

AI assessment note: “I think it depends where your strength is.”

Q Okay, well, we'll take the other side of the spectrum. What's a, what's a DTC company that's doing a really good job? And, and why are they doing a good job?

A Um, all right, here's one that I think is doing a really good job. Um, simple, straight to the point. I'm gonna drop it in the chat for you. It's a brand called Cadence. Um, they are, they're basically these beautiful little travel capsules made of recycled plastic. You know, these guys, they haven't raised an absorbent amount of money, very little cash. They're profitable on every purchase. They have a healthy margin baked into their product. They produce their own product, which also helps with that. They fulfill their own product, which also helps with that. And, um, they're very good at showing you the light at the end of the tunnel from a marketing standpoint and how you're going to get to the light at the end of the tunnel. Um, and then, you know, tactically, if you go to their site, their photography is next level. Beautiful. Their use of product renders also very beautiful. The way that they incorporate existing customers into their sales process to sell new customers. Fantastic. Um, their site experience in terms of understanding what you're getting, how many you're getting, why you're paying what you're paying, um, what the benefit of having these are and what the alternative is for not using this product. Also very on point. This is, I think going to be a very clear a hundred million dollar brand very soon.

AI assessment note: “It's a brand called Cadence. Um, they are, they're basically these beautiful little travel”

Q Would you ever start a D to C company or do you prefer supporting the industry?

A Uh, for sure start a DTC company. Like there, you know, I think from a standpoint of opportunity, there's no better time to start a DTC company. Think about how easy it is now to use open AI's chat GPT and just build a module for something. Like if we need something and a developer's unavailable, we can just go to open AI and it'll write the code for us and we just copy paste it. Um, so from that standpoint, it's The barrier to entry has gotten lower from the standpoint of product sourcing and product development. I think the barrier to entry has gotten lower. The thing that has gotten really hard is cutting through the noise and finding something that actually has legs in today's market. And I think for that, you have to be super in tune with who's doing what and who's finding traction or who is just about to find traction or who's seeing hints of traction. Um, you also have to just solve something real. Like there was a huge era of D to C brands that happened during, um, probably like right before COVID and then definitely during COVID or brands that didn't deserve to exist. The 48th men's skincare brand, the 37th white labeled supplement for bloating. Um, you know, these things, these are not solving real problems. They're just trying to be like money grabs. Those don't really last because consumers today are pretty smart and they will see that from a mile away. Whereas a br…

AI assessment note: “for sure start a DTC company.”

Q So if you were running Casper or the honest company, like pick a company. What would Nick Sharma do?

A Uh, so if I was running the honest company, I think right away I would, um, figure out what products to cut. Like, I think, I think some, some of these brands that exist, they, they sell way too many things and they don't focus on something. So they're not known for one thing. Honest company is like known for what good, honest ingredients, but. You know, does, do they really need to have a beauty line and wipes and cleaning products and bath and body and baby products? Like probably not. In fact, I would imagine that, you know, two of these categories do really well for them and the other six just completely, you know, they're just, they just exist. So I would probably do that. I think from a tech standpoint, uh, there's a ton of these early brands, honest included, which operate on a, on a technology infrastructure that was great. 10 years ago. But is not modernized and up to speed with what consumers are looking for today. Um, I think just between those two things, you could probably shave a ton off the bottom line. And then of course, like, you know, going into their customer acquisition and their customer retention and understanding their lifetime value of customers. There's probably so many little things you could tweak, uh, that would turn the business and go up into the right. Like, you know, whoever runs the honest company site, like they should be fired and unemployabl…

AI assessment note: “if I was running the honest company, I think right away I would, um, figure out what products to cut.”

Q value through SMS to me. Like to me, it's always annoying. Give me an example of how you can integrate SMS in a way that is respectful to the channel, i.e. it's a very intimate channel, uh, reserved for friends and family. Um, yeah. What's an example of something that you've seen, or if you, you know, if your, uh, cadence, like what would you do to integrate SMS well?

A I think the one thing that I think about with, uh, email and SMS and really anything tied back to retention marketing is your goal is not You know, there, there's like, if you think of your goal as a con or your, your, um, your outcome as like a, a two or three step approach or, or like a bus ride, let's do a bus ride. It's got three stops on the bus. You get on the bus. The first stop is actually just excitement and good content. It's something that gets somebody thinking that as they're running out of their cases of Hint water. You know, they get something fun, exciting, cute, quirky, funny, um, you know, interesting, insightful from the brand. And it's not selling them on anything. It's just good content. And they see, oh, this is from hint. Oh shit. Actually, I think I'm running low on hint. I should reorder. And it's just about getting mind share to be, you know, like to be the, uh, top five or a top 10 thought in somebody's head at any given point. That's like stop one on the, on the retention bus. Then I think stop two is understanding, okay, does this person actually need to re up or do they need to know at this point, do they need to see our brand again from a sales standpoint? Um, you know, this is where a lot of companies that sell consumables, uh, don't properly segment their list. And so let's say you sell deodorant and somebody is on a deodorant subscription. Well…

AI assessment note: “The first stop is actually just excitement and good content. It's not selling them”