How To Scale Your DTC Business Past $10,000,000 transcript

how do you get your brand past the $10 million year Revenue threshold that is the topic for today on the interferes podcast and really what I want to think about is the journey from 10 to about 30 million I usually have called this 10 to 50 million but from 10 to 30 is probably its own journey I think somewhere from 30 to 50 it starts to shift and it might be sooner it might be later depending on a few things with your brand but from 10 to 30 there's a thing that happens I think most brands can kind of get the $10 million in revenue and be uh and sort of have a clear Playbook to that like it seems to me that you can get the 10 million in Revenue by getting a few things dialed in it's a lot of the stuff I talk about all the time right get your unit economics figured out make sure you run with the Lan Opex um have some LTV ideally that makes your life a lot easier got a meta ad system in place to where you can run ads and you're running with manual bids and scaling and all those kinds of things and um you know get your basic creative structure set up all of those things are in place for a brand and the more as as you sort of layer those on from launch through I don't know however long it takes you to do it uh you kind of layer those on until you end up at about 10 million in Revenue if everything goes well right and you can do that at some level but but the game changes once you get to there uh what gets you to 10 probably won't get you to the next stage now the thing I'm going to say upfront is that I don't believe you necessarily need to add channels either add channels or Revenue channels on top of your basic business to go from 10 to 30 that's not what I think it basically it comes down to primarily and so that's part of what I think the sort of demarcation line is here for a lot of Brands is that they once they get from you know around 30 again sometimes 50 sometimes sometimes 30 somewhere in that range and they want to kind of get to the next stage that's probably where you start having to get really good on on additional channels besides meta ads you know a meaningful part of your spend um and so on but how do you go from 10 to 30 I think you can do that without adding a lot in the way of channels but I think there's some things you have to do that are still sort of the core engine of the business that are going to get you to that stage so let me get into them I've got five of them for you in this episode okay and and so I want to go through them in an order and they kind of lead to each other in some ways okay uh and this is by the way where a number of my clients are right now and stuff that we're working on together so um so okay number one is profit and this is going to sound so obvious but I think it's actually really important because of what I'm going to say afterwards which is that at 10 million you really to go to the next stage you have to be sort of meaningfully solidly profitable it's going to be extremely hard to grow quickly at least to 30 million if you aren't running sort of at least a 10% bottom line in your business it could be a little more a little less depending on a few things in your business especially how cash intensive it is but um but for a number of reasons I think it's just really really hard to get to the next stage and the core reason for that is that um the next stage age is going to require very likely for a lot of businesses some operational investment uh that are going to make it that you're going to need cash to do you're going to be able to need to take some risks that are going to get you to that stage okay and that requires some money and so you H you you know when you're in an earlier stage business a lot of times you just have to account for every dollar in a way that makes it extremely challenging to grow too fast uh right and so um so every dollar you get in goes WR back out into the business in some clear way and you have to have a return on it pretty quickly you know I've had this conversation with agency types A lot of times you think about Google ads or something right like sometimes Google ads just takes longer to generate value from than meta ads does you know meta ads you can sometimes turn it on and kind of get value pretty quickly um and as you launch new creative you know as you try new things like there's just ways to to spend very little money on the distribution of your meta ads that isn't immediately profitable and especially leveraging manual bids Etc but you know Google ads doesn't really work that way now I'm not talking about a channel diversification strategy primarily but this is just like one of the examples I think of that that works like this where if you want to open up an you know let's say you did want to open up a new channel right let's say it was YouTube or something it's just really you can't go do that unless you're ready to lose money um and and in fact I would say this is the reason why Channel diversification is not the key at 10 million so much as a little bit later because opening up new channels sometimes takes a lot of money right whether that's like a really serious Amazon approach with Amazon um ads Tik Tok shop now is increasingly a high barried entry with a lot of money I had Jordan West and Paul howon recently both of them talk about this that it's just like you got to spend money on Tik Tok ads on top of the Creator fees like there's just a lot more to that than there was maybe when a very first started the sort of initial Arbitrage of the new channel is gone uh when you talk to those guys uh you can go check those episodes just search those names Jordan West Paul uh from BK Beauty uh that's probably the easiest way to find that and go listen to them if you want if you're interested in Tik Tok shops because that exactly what they say um you jack Rubin talked about YouTube just uh you know when they open it up it took them hundreds of thousands of dollars basically to figure out sort of how to make YouTube work for them and his advice to everybody was before you go spend on it make sure that you are ready to lose some money um those are like large amounts of money six figure Etc losses what I'm talking about is smaller things but that nonetheless make it so that when you can make when you make the investment it doesn't necessarily cost you too much if you lose out and so actually I would say to a number of Brands if you get to 10 million and you don't have access to Capital in a clear way and maybe that's I mean if you're really risky you could do this with cheap debt you know or if you if you have some equity in the business something like that that you've raised you know there's some ways to have cash on hand for this but it's just if you have to account for every dollar uh that you make it's really tough and in fact when I see people do this with debt or Equity a lot of times because some of these things are not going to work they take that as an excuse to be to do them poorly and they just start throwing money away and so it's actually I think sometimes helpful for brands that have bootstrapped all their way but to have but who now have extra money because they've already gotten into the habit of accounting for every dollar they spend and they they care about it a lot they want to make sure that those dollars generate a return if that's the case for a lot of those Brands then they will be really good at looking at the things you need to do next to get you from 10 to 30 and recognize that you may lose some money but also not throw money away because there's a fine line there that makes it challenging so for me that's one of the core things I would be thinking about for that stage is and in fact what I might even say is if you're around 10 million and trying to get to the next stage but that 10 million is fairly lean on profit I might even worry a little bit more on sort of getting back under the hood and continuing to make sure that the engine uh works perfectly and everything is great before I push too hard to try to get to 30 it's not like you can't try to keep growing or or whatever but before I took any big swings I'd really I'd really probably try to make sure the engine is in a place where can really take me far because if you don't do that it's going to make some things really challenging okay so let's talk about what the first of those is that I think is is one of these things and and so here's number two that can see from 10 to 30 it's scaled creative output in the early stages from 1 to 10 million so much of the game of meta ads is like finding ads and angles that work uh and opening up audiences and opening up formats and all those things that can take three months that can take a year it can take two years it could take a long time could take a short time there's all kinds of different elements of it but it it can take a lot of work okay um once you get to that point where you feel like you have a sense of what to communicate to your audience it turns out there are like many many ways to communicate that thing so the what to communicate becomes a how to communicate and how much to communicate and volume of creative output uh again where that output is focusing on messages that work and angles and audiences that work for your audience becomes a lot of the game now the problem is scaling up creative output can be a little bit more expensive on the actual production side um depending on a number of things now this is where of course there are tools right now that are making this cheaper like AI but I just don't think that's going to solve the whole thing completely um what I'm thinking about more is like this is where you're bringing in thirdparty Creative agencies who are just scaling up output with very different creative than what you do I've seen this work really well for for at least one client of mine where they're adding additional creative on top of the creative that you know my agency produces for them it's really different than the kind of creative that I produce and so that's really good okay another way you might be thinking about scaling creative would be just with internal hires and with um production people and and things like that now again even if you work with like people like my friends at more Staffing or their design and video Studio behind the- scenes Studio you are going to have to pay some amount of money to get the volume of ads going that you need to do you might have to increase media buying fees as as part of this because now you have to build all the ads in meta ads and it takes time to do that there's like all of these layers of doing this where in some way or another you you do this and what a lot of people find is that as they start doing this they want to do more and more of it and it may require some risks it may require working with again third-party teams who cost some money and who you know cost some money up front and they are not and you don't necessarily want to shop that on price you want to find people who are good and therefore having some of that profit on hand is is part of what you have to do now as you scale up that output I think it's going to pay off for you and this is where you take your meta account sort of to a new layer into a new level to where you're outputting a huge amount of creative all the time with good quality stuff against the angles that you think are the most powerful for your audience and probably exploring new angles still you probably haven't solved them all at $1 million right um it's also where like uh you know working with my friends at formont who I've talked about like this is where probably they come in really really well um you know really from before five million in Revenue they're probably going to be too expensive for most people and really maybe even closer to 10 but once you get there now the ability to um spend at a level where your where your landing page and funnel experience is going to matter a lot more you can test funnel changes a lot more easily if your spend is If you're sort of sub 10 million in revenue on meta so that means your spend is probably sub3 million you know on on meta something like that maybe sub four it's like it's it's hard until you get to the top end of that to actually drive enough traffic to landing pages to really test them at all if your business is scaling your team is scaling and you are not looking in the Philippines to add Talent as you need it what are you doing probably I'll tell you what you're doing probably you're thinking about Filipino talent in your business as like $5 an hour virtual assistant and that is a mistake uh there is way better and way more talent in the Philippines than that I know that because more Staffing is my uh partner that I've worked with basically in every part of my business in some way or another and in a lot of their part businesses as well for over a year and I've seen them Place Talent across a whole range of stuff like manager director and executive levels like uh in fact more Staffing was founded by people who were working in us-based e-commerce businesses on the supply chain side and many of the very smartest supply chain people I've ever met in my life are people in the Philippines again we're talking about like executive level Talent here that is available to you and of course crucially because it's in the Philippines that Talent is uh meaningfully less expensive for you than it would be hiring equivalent talent in the US and at the same time because it's less expensive you can actually hire at the top of the market in the Philippines which attracts better quality people to your team is a win-win it is great for everyone and these are some of my favorite people to work with uh across the board I really love more Staffing I have seen like I said supply chain people who do incredible work I have uh worked personally my team has been staffed up for uh my agency with design and edit help from the Philippines as well I have great designers and editors who do really good quality work there's all kinds of uh Talent available to you across the business and you should at least be exploring at least get on a call go to Mor staffing.com staffing.net person we'll do everything that is needed to get access to and then train on board and provide great coaching to Great e-commerce talent for your business go check it out today and so um so you really you know it's really about more creative on platform first but you know you get a tool like format which isn't cheap and now you can actually do a whole bunch of stuff with that but that also means you need man hours to put into uh something like that uh to put into firmont even with the help that they give and so now you've got all these things and so what I'm saying is there's this piled up approach you're testing angles and creative and ads and and look the tools are amazing that there are agency supports who are awesome and all those things and that is actually how you get to that next stage so it is an investment well worth making i s I'm telling you right now go do that that's why I have the sponsors that I have that's why believe in them um for this part of the business is why I'm using them myself right but the but my my point is um that is the thing that gets you to that stage and the reason you number one is so important is that if you have um you have to have some profitability to play with to start to use those things and unlock the tools um and unlock the stages that get you there okay so um I hope that makes sense so number two scaling the output so if number if stage one of a meta ads account is about finding um sort of the messaging fit for your audience and finding the ads that are working stage two is about spending uh against creative output to sort of push that forward at a lot more scale okay um and that can be again Lander website could be all all kinds of things um to to as part of that full funnel build okay now number three also an extension of this this is where I think influencer and seeding becomes basically a non-negotiable for a lot of Brands look the reason they're called influencers is because they Influence People I just think influencers probably are an important part for the vast majority of Brands Journeys in some way or another now it's different than it used to be I think there's still a lot of people who think of influencer as being somehow synonymous with pay for post and I don't think that's it I think the influencer game has changed in a lot of ways which makes it tricky in a lot of ways to understand how influencer works and what's different about it now versus what it used to and different brands engage with influencers in different ways and how you get content for paid and do wh list and all those things but like this is another thing that just like is going to require some testing for your brand to figure out what is the actual best approach for you and because it's going to require some testing it's going to require some money you're going to find who The influencers are that work well you're going to to seed and send product to a lot of different people and it's as you do that that you're going to be able to engage with influencers who power your brand to go to the next level because now you're getting to a larger brand that's reaching more people and look um as much as I would love it if rational argumentation about why your product is better uh than others was the main driver of driving sales because uh you know whatever maybe that maybe I would like the way the world worked better if everybody was behaving more rationally I'm not sure but the truth is influence and story is better like any almost any supplement works this way like yeah sure you can go research the the medical journals of why um a given ingredient might be good for your gut health or something you know um or you can listen to somebody you trust who has done that research for you as best as you can tell tell you to take it okay which means if you're the supplement brand you need to get the person who people already Trust on your team uh and that means sending out product and uh and that means creating relationships and that means paying sometimes for posts or for usage rights it might mean doing collabs and Partnerships and all those kinds of things but it it's a larger program and I think for most Brands to get from 10 to 30 they're going to need to do that now you don't need to go full macro you don't need to go try to hire Justin Bieber for your brand at $10 million like I'm not talking about you know going and finding extremely expensive people okay uh but there is a stage there now I do think the other value of this is that to go from 30 to 50 and beyond that to 100 Etc like you're going to start thinking about larger Partnerships and larger influencer relationships and larger collaborations and all the things that kind of fit in this category and so developing some skills on smaller and midsized um Partnerships can be really valuable as well you'll you'll begin to build the muscles that you need to go do this at the next stage but I think you should be exploring that to to get to that stage and certainly that also helps in your ad account as well again with content that you get from influencers that you can run as an ad with whitelisting all those things okay number four uh number four product development this is another aspect that I think um is easy to miss uh and again different brands will have different ones of these be primarily important relative to the others but a lot of times there is a product that a brand um makes that can get them to 10 million and part of the way they're really going to get to the next level it really depends a little bit on your category here is by um releasing new products or upgraded versions of your products or limited edition versions of your products or whatever it's going to take the audience you've already acquired the customers you've already acquired get more value out of them by providing value with new products and also open up new audiences with the new products that you have and again this may or may not be the case for your particular brand but I think um product development is an easy thing to overlook again especially if you're in the fog of War of trying to get your brand A10 million in Revenue right that's that's hard work to do that and a lot of times what brands are doing to get there is they're um Building Product or they've got a couple of hero products that they're using all the time and they're maybe doing some additional you know flavors or colors or whatever changes they can um to do this some line extensions in some way or another but they're not really thinking hard about like what is what is really going to open up a whole new uh range of audience what's going to really provide a bunch more value now that I've got $10 million worth of customers behind me right what would make them just delighted my brand or more people like them just delighted by my brand and so to get to that next stage a lot of times what brands are going to need to do is invest in product development now once again this requires money this is again why I think it's probably important to be solidly profitable at this stage um or to have some access to Capital ideally profit um these things can be risky I remember doing this at an earlier stage for a business at one point where we released a product we were really excited about it and just like totally fell flat um but if you could do this well it can be like a whole bunch of bolted on revenue and it's really high margin Revenue in the process um and then of course also like I said especially if paired with scaled creative output now you can take this new product give it to the creative teams that you want and you can rinse and repeat the process that got you to 10 million except on new products um so there's ways that this goes wrong Brands release products because they're supposed to not because they're actually really adding any really value they they actually become time sucks against core products in fact sometimes maybe you don't need to do product development till 30 or 50 or whatever uh because your core product is so good and there's so much Tam for it but um but product development is something you should be thinking about to create more moments and open up new audiences okay number five Brands need to to get from 10 to to 30 you've got to be able to master moments okay um and this is partly product releases like I'm talking about it's also sales but now I'm thinking less about the product itself and more about dialing in things that are repeatable at scale this is fresh on my mind from Black Friday this year um where I'm seeing Brands like some Brands really get to a point where even if they had a solid black Friday they they really don't have a sale that they love yet like their offer hasn't been spectacular and they're kind of turning around and going like n maybe we should change that offer and they just don't know what it is for their customer in their category that really moves the needle yet or they just don't have the sort of like creative and landing page approach and maybe it's like maybe for a brand it's like ah we wanted them to go choose and gave them a stack discount on the site where it's like 40% off if you buy $400 or 30% off if you buy $300 you know that kind of thing maybe it's a BOGO maybe it's a flat 20% off or maybe we pre-build some bundles on a landing page where we tell people go get this particular bundle and we don't want them to go shop around the site we want to tell them what to buy like there's a lot of different ways to run these sales and how you handle the email portion of this and how you list build on it and um and and how you think about ad spend going into those moments There's real skill to all these things they um there's similar ities and there's things to learn from other brands who've done these things plenty of times before you there's also um differences and distinctions for how they're going to be met with your particular customer and again there's also just skill like I said where there's a muscle to build here and so um if you can get really good at that you can push moments further there's a occasionally brands in categories where this is less important I'm thinking of supplements or really anything where subscription is a main um part of the business because subscription um if you can really crack a subscription funnel then the main way you keep growing is by getting better and better and better and better at sending more of traffic through that funnel because typically subscribers are so valuable that the way you actually grow is by generating a ton of returning customer Revenue off the back of the new customers that you're acquiring um and you just try to do that at scale and yeah open up more products and keep going keep going keep going it's more Evergreen it's more iterative that kind of thing um but for almost everybody else I me let's say your LTV in a year is less than 100% okay pretty much for everybody else creating moments is the way you do it and in fact a lot of times the way you generate LTV is with moments this is really underrated the the obvious example of this is apparel okay the way you generate LTV and apparel is by releasing new products and by having sales and because I came you know let's say I bought uh you know for bfcm this year I bought your brand now I'm paying attention to it and it's the first time I ever bought from you uh during your sale let's say I got a sweatshirt from you and I think it's awesome and I love it and I wear it well what happens in three months when you release something else new that I like well I'm probably going to think about coming back or if there's another sale or whatever it is and so the moment actually generates the LTV there is no better landing page and funnel building software than format as I said on a recent episode of mine fmat is like the Ferrari of landing page software it's really crazy that's why I was just talking about on this episode um it just can do so much more than almost anything else I mean definitely not almost than anything else I've ever seen in the space like it it has the table Stakes elements of really great smooth easy landing page building that is awesome it's also the fastest loading landing pages I've ever seen like so they the lag time from ad click to landing page is virtually nothing it's crazy uh but at the same time it can go Way Beyond just that there's the ability to build full custom funnels including custom enhanced pdps with customized bundels you can literally change the product name really easily you can change all of the um different elements of the product build separate custom bundles without having to go do all this weird backend work and Shopify and create duplicated products and all that stuff it's just it just allows you to make it so that your messaging is super smooth and supery easy for very different kinds of customers even if it's the same product that you are attempting to sell them okay and so it allows you to build really really tight funnels as you reach different audiences um in really good ways and I've personally seen that with clients that I work on where um using all of these different features of the software has allowed me to reach new customers and and again when we I've told said this before but when we first launched it with a client of mine we saw a basically a 50% increase in spend almost immediately by using uh tighter messaging all the way through my funnels than anything I'd had before so I'm a huge fan of fmat if you're building up your ad approach more seriously than you have before if you're at the stage of business I'm talking about in this very video you should consider using formont go to formont commerce.com formont commerce.com to get a look at it and see if it is right for you at the stage of business you're in it is really awesome go check it out and getting really good at doing those and even maybe doing more of them uh this is where like yeah maybe you release three products a year what happens if you can go to uh eight product releases and four sales so you get one good moment every month what happens if you can get to um releases every every two weeks I I remember talking to a brand at one point that had gotten so dialed in they were an apparel brand they' gotten so dialed in on their process and this is exactly what happened it took them from about 10 to scaling up this process took them from 10 to 30ish and then from 30 to 60 right by just doing this more and more here's the process they released more they had more product drops more often until eventually when they were getting to that um you know midate figure stage really from 30 to 50 or 30 to 60 when they were getting there they were releasing products every two weeks on payday and they had figured out how to do that that meant they dialed in the process of photo shoots for all those products of email releases of product development itself of approval processes of figuring out pricing of inventory buying of inventory forecasting there's all these little details of doing that really well right um sales are similar actually like if you're gonna um if you're going to do that you have to get good at understanding how the inventory is going to work and preparing your 3pl and um forecasting those moments and the more of them you do the better of them you'll get at it you'll Bank learnings along the way and as you Bank those learnings you turn those into better versions of it next time and the more you can rinse and repeat and dial in things that you know move the needle for your customers the easier it is to make each moment bigger than the last one um and to use each moment to acquire more customers than the last time and to use each more C each moment to drive more returning customer than the last time and so that's the way you do it I think if you do those five things really really well you can get from 10 to 30 um you know I won't say easy I almost said easily but it's not it's not easy it's hard it requires building more organization requires more touch points it's challenging this is I probably should have put in here somewhere like something like you know add EOS or something into your business if you want to hear again I've did an episode recently with matap Bogle who talked through like management strategy and some of those things because this this is a stage where you really have to be thinking about a lot more of that kind of stuff usually okay but um but the uh but if if you can do them it's maybe not easy but it is doable and it is and there is a clear road map to doing it it's not rocket science either right um You just get better at those skills over time and rinse and repeat as much as possible okay so I'll go back through them one more time just for Simplicity number one you need to be solidly profitable at 10 million before you can probably go do this really easily or else the capital required is going to be tough number two you need to scale up your creative output particularly on meta but this would probably be true on almost any channel that is your primary Channel and for most people that's meta number three influencer and seeding um this fits with number two as well but uh beginning to use influencers costs more money upfront requires bigger risks um but can really really pay off and can be something that is important muscle to build in your business number four product development um reactivating past customers opening up new audiences and feeding that meta machine that you're building like I said and number two um and then number five mastering moments getting really good at coming up with the um product drop and sale strategy and all of the operational elements of doing those things well um that are required if you could do those things really well you can get from 10 to 30 and that's what it looks like that's what the Playbook is to make it happen thanks so much for watching or for listening from a different location than usual my my wife told my boys that we're on a termite Adventure our house is being fumic so we're in an Airbnb brought my microphone with me uh thanks for bearing with me um podcast at AJF gr. comom is where you can email me if you have any thoughts on this episode I would love to hear them or you can tag me publicly at andrewj Ferris on X that would be a fantastic way to have the conversation in public get other people involved I would love that and of course AJF grow.com is where you can go for absolutely everything that I'm doing don't forget to follow with my sponsors more Staffing and forat they're both great worked with them for a while because I really believe in them really use their stuff really like them and uh I don't shill I only take uh sponsors whose products I really use and so I'm really happy to recommend both them to you don't forget to subscribe did I already say did I already say that I think so anyway subscribe wherever you're watching listening you know to do that I've got all kinds of great content coming soon and I if you like this content uh you'll like more of the stuff that's coming down the pipe so thanks so much I'll talk to you soon [Music]