BushBalm Did $30M Last Year With A Channel Most DTC Brands Ignore transcript

David Gaylord is the CEO and co-founder of Bushbalm, formerly of Shopify, building one of the most interesting e-commerce businesses I've seen >> [music] >> in a while. They started off pure play DTC, but now about half of their business, and it's a $30 plus business, bootstrapped and profitable, about half their business is built around their relationships with 22,000 and growing individual waxing salons. Bushbalm sells hair removal products that are skin first.

We're going to get into more of it in a second, but this is definitely a Profit Monsters episode of the show because this is a fascinating business, a fascinating model for a business that started off pure DTC, has added this wholesale element, and has no sales people, distributors, any any of those kinds of things. If they're doing it all in a different way, you're going to like this episode a whole bunch. There's also some interesting unorthodox opinions about team size in e-commerce.

You know, I'm a low OPEX guy, David might disagree with me. We're going to get into it right now. Profit Monsters episode of the Interfaces podcast with David Gaylord from Bushbalm. Let's do it. >> [music] >> Hello, David. How did I do? Did I get Did I get it right on the intro? Hey, yeah. No, that was great. I loved that. >> Okay. Good. Good. Uh and you saw the the blown the blown first attempt. Thanks for your patience with me.

Yeah, no, that's great. Okay, let's do the waxing salons right away. This is really fascinating. You could tell people what you sell, and then uh after you do that, tell them about this waxing salon business because you guys started off pure DTC, as I said in the intro, but you the thing that kind of got this conversation going was this fascinating growth of this channel where there's like no giant chains here. It's this wholesale kind of channel, but it's not like you're selling at a Costco or you're selling at a Target or something like that.

It's a real part of your business moving real volume one to three stores at a time. So so help people understand what this is and uh and light of what you guys sell and all that. Yeah, yeah, for sure. And then just to backtrack on like what we are as a business. So we yeah, we started as D2C, and our first product was originally called a bush oil, which we thought it was like multi-purpose like skin care down there, which was a good idea um until we realized people actually cared about uh razor burn, ingrown hairs, and post-wax irritation.

So, we kind of reformulated and made a new product there. Um but again, yeah, we were D2C purely, and it didn't happen until So, we launched in 2016. It was probably around 2018. We were still pretty small, but at that point, probably like once a week I'd get an email from a waxing salon, and they would say, "Hey, do you have a wholesale pricing?" And for like 2 years, I would just say no. And then, around 2020, I ended up building on a weekend like a new portal that we called Bushbalm Pro.

And over the the kind of remaining 6 years, we've like changed it drastically. It's like a a whole new portal that's very complex. And with that, yeah, we've gone from basically zero accounts to just over 22,000 individual waxing salon aestheticians, and that's active accounts. So, we've actually like had many more. Um we've got low churn, but it it's really kind of changed our business model entirely from from D2C. Um okay.

So, I want to understand a lot about this because when I, you know, I've at points run businesses that have like gotten up on fair and tried to do something like this where you reach individual wholesale accounts that are smaller parts of the business. So, let's let's let's talk about a couple things big picture first. So, um because you're talking about building a custom portal, that's really interesting to me. Uh the first thing is this channel sounds incredibly profitable to me.

Like, you're building this part of the business outside of the sort of like meta ads flywheel. Although, I'm also assuming that your ads approach and and all that uh are driving Solano and there's reaching Solano owners who are going and finding the ability to buy wholesale from you. So, start there. Like, how does customer acquisition happen? Is it as profitable as it sounds like it is? Like, it it feels like it should be super profitable.

Yeah, that the hard part is like digital can be hard at times. So, it it it's we have this like unique approach where there's a lot of parts that are like old school marketing mixed with like kind of the new wave of like whether it's Google Ads or Facebook. Um but the the origins of how we thought about the channel was obviously you know Shopify. So, when you're a new business, you go to shopify.com, you create an account.

That form you fill out is only like six fields, I think, or seven fields. And you complete it and then you're in and you create your account, you get started, right? So, in our industry, what we realized was everyone had this like 30 or 40 intake questions on a form. So, they would ask for your like license number, like a picture of your ID. And people would just not do it, right? And you literally lose Yeah, you'd lose a ton of great accounts.

So, we took that approach and it led to we get tons of people signing up, creating accounts. But we also took the same approach as Shopify is once you become a cut you're getting closer to becoming customer, you're ready. Like, they eventually need your like credit card, first off. They also need your like social insurance number and they need a picture of your driver's So, like if actually they asked for that day one, you would like abandon immediately.

So, that was like our initial approach to taking away the friction, which worked really well. And then the system and the portal really does verify as time goes on when you get call it hotter and hotter. Um and then as far as acquisition, we we now do >> Hold on. Sorry, before you go there, I want to understand that better cuz I I think maybe I misunderstood a detail. Um so, let's come back to acquisition in a second, but but Uh, so you're saying you don't ask for the driver's license, you don't ask for those things?

Yeah, we don't up front. Yes. Okay, so people can order without doing those things? Yeah, you can basically get through and but the the thing we've built is like say an order that really shouldn't come through comes through. We will quickly cancel that order through the system we built and make sure that you're not a customer. Right, and that and that Okay, the so the point of that stuff is just to make it so that like regular me, if I just wanted to buy some myself, right?

That I couldn't just go buy it at wholesale pricing. That's the reason for that that friction there. Yeah, exactly. And like for us it's less about that type of situation, but more about like we don't want distributors right now. Where we'll get huge distributors trying to sign up and they want to buy $20,000 worth and Shopify's not usually built for that. So it ends up it kind of susses them out anyway, but that's that's more of the use case we find versus the individual.

Okay, so you just cancel that order. So essentially, what you're saying is instead of creating all this friction for the individual salon owner to not be able to buy what they want, instead you just say, "Well, we'll see it if it's a 20,000 unit or $20,000 order that comes through, we'll just individually cancel it." It's almost like you're defaulting people into it instead of defaulting them out of it, basically. It's it's like it is like almost reminds me of the old 401k nudge where it's like you get Right, yeah, yeah. defaults it in, you know, it's it's just thoughtfulness about where the friction is and isn't and you take on a little bit of work on the back end in order to also generate a bunch more sales.

Am I understanding that correctly? Yeah, exactly. And then the other piece too is like you also have to build out data functions to collect. So like Shopify right now, you create an account, it's only a couple things, your email and your name. Whereas we also want to capture a lot of other stuff, whether it's like your type of business, your business name. So we've added those features into kind of our platform in in different ways.

Mhm. Mhm. Okay, so then for the customer acquisition side, how do you actually get people onto this? Cuz this is this is the dream of mom and pop wholesale for so many people. It's this idea that there'll just be this thing sitting there that just collects money. And people are normally cool with the idea that it's like small orders a little at a time as long as the customer can basically service themselves at a price that they want.

This this sounds fantastic to people. So, tell me about how you guys actually get customers there. Yeah, so if you're if you're trying to do the wholesale model like we are in in anything like this for the journey we've been on is since 2017, I would say, for this channel. And call it like 2020 2021, like it was still tiny for us. But momentum moves quickly in channels like this because I don't think a lot of people think that there's like big communities around whether it's aestheticians or even if you like own gift shops, like you're probably in a Facebook group with other people who own gift shops.

Like it it's kind of there. So, there's a lot of these like network effects in like the model. Yeah, our marketing we do I think this year we'll do eight trade shows. So, that's like a ton of in-person effort and work and we meet people, the brand like builds up. And then of course we have like the digital side. We've got like totally separate Klaviyo. We've got a separate ad account. We've got sep- We even have a separate Instagram and a separate TikTok.

So, those are all like completely separate. And then the other piece to this that is where there's like the hard work is obviously trade shows are a ton of hard work and effort and money. And then we do a lot of education. So, we'll do prob- almost weekly now, we'll do like a live demo or webinar that like educates. Um at first I thought it was going to be for like existing customers, but it turns out it's actually 75% like people who aren't customers yet.

So, So of got to pair all the brand elements with building out like a separate system that kind of brings people through the funnel. Whereas a lot of people screw up first off the acquisition side, you can't get people into the account portal. And then on top of that they it always drives me nuts where if you don't separate your pro business and your consumer business, like how could you ever run like AB tests? Like you you can't really do that.

Okay. There's that is really awesome. There's a lot there. So it actually makes me want to backtrack a little bit more because what you're describing is a 9-year journey at this point, almost 10-year journey from 2017 to to now. Um so you started off you you came from Shopify and you were you were like a D2C guy, that means. So how did you how did you decide that wholesale and these salons were going to be this big part of of what Bushbalm's future was?

Yeah, there there was probably one year, probably 2021, was when we started to see like the metrics. And you kind of realize the retention rate is so strong that even if you put a salesperson on it, you could potentially get the return you want. However, at that time we legit had no people on that team. I think we had like 400 pro accounts and no one servicing them at all. It was really just like someone would DM us on Instagram and we'd be like, "Yeah, go to this website.

Here you go." So seeing the retention and modeling it out, you you quickly realize like it's not the same as your D2C model. You you could really spend more money into it. Yeah. At yeah, at first we honestly didn't spend more money into it. We spent more people money into it. So we like hired a team around it and that kind of builds out a lot of what it is today. So you okay, so you that's interesting. That's that's the it's the same calculation anybody makes when they realize the subscribers are worth a lot more than non-subscribers and they just decide like oh I should probably go get more of those, right?

You're just saying there's the LTV LTV to CAC thing here where it's just like they just are retained way better. All right, can you say anything specifically about how much better the retention is for for the salon versus the individual like as a percentage or anything you want to say about that? That's okay if you don't want to speak to that, yeah. Yeah, yeah, like like mind-blowing. Like our a lot of our pros are if you we don't have that many that are like five or six years old but on average they're worth like seven grand at that point.

So like the compared to a D2C customer lifetime value, right? Like it just it's so different. >> Yeah. Yeah. Okay, that that makes that makes a lot of sense then. Go when you see the seven $7,000 customer versus the $100 customer or whatever LTV, [laughter] like you know what I'm saying? Go get the $7,000 one. That's how you get I get it. Okay, so then at what point are those customers profitable for you because you're talking about eight trade shows.

I mean I I've done trade shows like that require time and money. There's travel costs, there's a booth, there's all of you know, the booth probably has gotten better over time. I guess you might as my guess. You guys have probably figured out all those things. So you're talking about real effort. You got team, all these things. Like how how do you think about timeline to profitability and and all that? Yeah, that yeah, that is the hard part cuz we we even had to like implement a a CRM that's pretty robust to cuz we do a few sales people now.

We have three sales people and we're actually ramping up account management. So those are kind of after costs that we had to set up the CRM and that was costly. But yeah, the trade shows honestly they took a like the first two years were kind of a struggle and and it cost a lot. Whereas now when we go there's like so much community around it that it's like so worth it. We kind of we even see sales like skyrocket. And typically trade shows you you just kind of building brand, right?

But yeah, people are talking with our team getting getting hyped. But I think the inflection point of like when it became tons of momentum was when like our community around the channel it's almost like our brand started to become like a cult followed brand for waxing salons and aestheticians. And you could sense it around even if you look at our Instagram. Like our pro Instagram has over 100,000 followers. And if you look at the engagement on the post that engagement is probably like 10 times 20 times more than our consumer Instagram.

And it's just cuz there's a kind of a cult following around it. So at that point it's almost like anything we do works to our advantage and just obviously like the numbers like you can now that we're big enough and can sustain it like we can spend a ton of money acquiring customers because we know the LTV is so high like in 2 3 years. We we make sure to keep like a we want to be profitable now versus in 2 years. So we we kind of maintain a margin on it but we we could spend more essentially.

Yeah. Um that yeah makes sense. Is there uh is there are there questions that when people who know you or hear your story like come and ask you or or there there's sort of common mistakes you see people making as they do this kind of thing? Cuz as you're talking here's what's coming through my mind. What's going through my mind is that people are not taking this the channel seriously enough. And I mean that in two ways both in terms of the opportunity they're sleeping on what's possible because it is so manual it's so one or two at a time.

It's not Target coming in saying hey we want you to 1,000 doors right now and it's like oh great you got a hundreds of thousands of dollar PO you know. It's like it's it's it's these individual POs that probably individually aren't that big right? But it's that and then so they're probably not recognizing the opportunity they're probably not recognizing the LTV opportunity. And at the same time, that then leads them to under consider how to make it a great experience.

Cuz what I hear you saying is, we actually cared a lot about what the customer portal looked like, and then we cared a lot about making sure the customer is serviced really well, and you know, all those kinds of things. So, um so, you know, that's that's sort of what I hear you saying is like, if like, don't think this is easy, basically. It's actually requires a whole bunch of work. Um and if you think it's easy, you're never going to make anything of it.

Is that true, first of all? And then secondly, are there other common mistakes as people come to you and talk to you about this that you see people making? Yeah, there's a few. So, one that's really common is we get this often where whether it's like an investor that I'm I've met will send me someone and say, "Hey, can you talk to this person about the professional channel? We think it's a good opportunity." And typically, they're like, "Ah, we actually this sounds like a lot of work.

We're actually maybe looking for just like a partnership that's with like a 10-location med spa that we can do like a press campaign around." And then quickly, I'm like, "Okay, well, that's more of like a partnership relationship. You're not trying to build a program." >> then the other one is people who are like, "Okay, well, we're just going to do fair cuz fair is the easy. It's like what we should do." And in the end, they don't build like a you really do have to build a brand around whether whether it's like a wholesale channel of sorts and and try to build flywheels that get people to reorder.

Cuz like, you could be on fair, but like, you you all of a sudden don't own any of the Right. You can't really do much, right? Whereas, we've tried to build like flywheels. We've built a We probably now have I think seven or eight backbar only products that like that only they can use for in-service that help with like sell-through at the front of the store. So, like, that's like super expensive to do. We didn't do it all at once.

Took a long time. But a lot of people like get hung up on like the minimums for something there. Because it's like a it's kind of a side channel. Where uh it's like ah I don't really want to do this signage thing because like it's such small revenue. But actually in like two or three years, like the repeat rate is makes it worth it. But yeah, people tend to not take it as serious. And they don't treat it like we probably run more AB tests and more dev work on our pro site than we do our D2C site.

And a lot of people would 100% not be thinking that way at all. And now it's a big enough chunk of our revenue that it makes it obvious, but even the last like year and a half, two years, we've been like pushing it way more for improvements versus on the D2C side, it's it's kind of status quo for us a lot. If you're building an e-commerce business, you need customer service help desk software. It's just part of the game, and you should be using Richpanel for yours like many of my clients are using for them.

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That's a lot salons. >> Yeah. Yeah, it's a lot. There's a lot more obviously than what we've gotten. And just when you think about it, it's like where do people get waxed? There's obviously waxing salons, but then there's like the whole nail channel. They typically have like one waxer as well. And that I think the combined aggregate of that is like 350,000 locations, which is kind of mind-blowing. And that doesn't even include like high-end hotel spas.

Which like there's probably 100,000 of those across the US alone. So, there's a lot of like market. It's just super fragmented kind of everywhere you look. Uh there's really only one chain, European Wax Center. There's one that's slightly smaller, but those two it's like 1,400 locations total. And then the rest is really kind of independent, which is is a tough market to crack. Yeah. Yeah. Interesting. There's a long way to go.

So, how long How far are you going to go? What size in the future version of Bushbalm? Uh how much of the business is D2C versus wholesale? And how big is the business? Like what are you trying to build here? Yeah. Yeah, so we've we've we the last 2 years we've kind of transitioned more and more, but we launched with Ulta Beauty as well in 2023. So, that's been an unbelievable kind of brand channel for us. So, it's it's it's a chunk of revenue, but the the hard part is like how do you compete and grow at as the same rate as this pro channel we're growing at.

So like the the pro channel should and will continue to take market share from our other channels like regardless just cuz it continues to grow so quickly. Um but yeah, I think long-term like one stock that I've just been kind of honing in on now is we bought industry data around uh hard wax. So we sell hard hard wax, we're about to sell soft wax in the future. And obviously waxing like that's the main kind of category.

So we're already in a I think it's 16 months since we launched our hard wax. We've already gained 4% of North American market share. Which is like That's a lot. That's crazy. That's a lot. It's crazy. Yeah. So like uh I really genuinely think we could be like the biggest wax company in the world and mostly driven by like we just launched the wax 16 months ago. We got a ton of feedback on the formula how it's like less painful.

Their clients don't like get red as much. So we recently just did a clinical trial and we we basically proved like yeah, that that is what happens. Um and we tested against the number one wax in the world currently. And the the fact I love is ours broke the skin barrier two times less than the number one wax in the world. So like obviously their client's less red, there's less pain. Yep. >> Um so yeah, we have a super superior product.

So I I genuinely think we could be the number one wax brand in the world and that's going to be a massive piece and then we do have a lot of retail expansion that we can do. Um Ulta's is doing an amazing job, but the the truth is right now like we're crushing pros. We love pros. Like S Editions are our heartbeat. Ulta's growing the brand and we actually have no desire right now to expand past Ulta because we want to keep our pros like extra happy.

We want to focus on them versus the more channels you go into, the harder the pro channel becomes, which is also a reason people can struggle with considering the channel. Um, is is that the real key for you? Is it that the uh, product is so much better? I mean, it's like it's funny cuz some of these I have these conversations all the time, right? And it's like I could talk to you about the mechanics of your program and tactics and all these kind of things, but when you're talking about running actual like clinical trials and things like that, which are expensive, right?

It's like you're talking about investing a bunch of money into a product which suggests a sort of long-termism about things, which is like we really want to make sure that this product is actually awesome because that's especially in CPG where it's going to be about repeat rate and things like that. We want to make sure that it's really, really great. I I'm just like I'm I sort of wonder if that's actually the place where people go wrong, you know?

Yeah, yeah. So, I guess that would be the piece that I think we've done right is instead of um, we've gone really deep with our product line. So, we often see it even in Ulta and Sephora, you'll have a brand that's like a body care brand or a face brand and they launch a body care line and they'll launch like one item for ingrown hairs and they'll they'll say, "Yeah, we've got this ingrown hair whatever it's called." Whereas we've got like four or five different items for that specific concern.

So, like the the waxing salons are like, "Oh, amazing." Like they they've got a solution for this type of ingrown hair and this So, we have like a lot of depth in what we're doing versus a lot of our competitors are like, "Here's a post-wax serum." And that's like it. Whereas we've got way more assortment. >> How did you How did you get to that level of detail in your product? Yeah, like some of it was like out of sheer accident.

We kind of just kept going. Um, and one was like very concerned-based too. So, we have a product, it's kind of funny name, but it's called the Vajacial. Uh-huh. So, we launched it, and the reason we launched it is like a lot of people get waxed, and they get redness like right away. Yeah. >> like a con- So, for the aesthetician, the waxer, like the worst thing that they can do is they get a client in for a first wax, that client leaves with redness, and never comes back.

So, we launched this Vajacial, which is you know the under eye masks, like the hydrogel? >> Yeah, yeah, absolutely. Basically similar to that. Um it's amazing formula, but you wear it for 10 minutes, and redness like goes away. Yeah. >> like shocking how well it works. So, that's solving like a very specific concern in a very specific moment. And like a lot of the other brands aren't even thinking about that specific moment.

Whereas, we also have people with like deep ingrown hairs, people are trying to prevent them. So, we kind of have as we've scaled, it's been nice to invest in product, whereas I think when you're small, you kind of can't, right? >> Can't do it. No, yeah. I mean, so but even that example, like I'll tell you why I'm pushing or I'm why I'm asking about this a little bit more. It seems clear to me that product development is this massive layer, especially for a lot of brands.

You guys are around 30, 35 million, something like that. Uh you're at a stage now where you're clearly past the point where you've had to develop some product development capacity. Many brands, I think stall around 10 to 15-ish million, and a lot of it is because they have not developed products well. And so, they're just sort of stuck on the products that can get them to 10 to 15, and there's a couple things you do, right?

You can go and pursue tactics to try to get you to the next phase, you can go and pursue um uh you know, hey, get on TikTok Shop and go do that, and you know, advertising. And actually, that stuff can all work, right? So, I I like there's lots There's times when we get brands that come to us at Agency of Growth, and they want our help, and and we say, "Oh, we actually think, you know, do a couple of these things right, we can get you from 10 to 20, basically just with better approach to your ad accounts, and all that stuff." Right.

For sure. But, I think a lot of brands at that stage, what happens is they they actually they actually really need to think about product development more seriously, whether that's what you might call like traditional line extension or something, or you know, you you mentioned like deeper into individual products, which is kind of what you're describing, or going wider, you know, into sort of doing that. And and it's different for different brands, it's for different categories and all those kind of things.

But, what I'm curious about is sort of like what happened internally for you guys to to uh create that particular product, right? Was it Was it that you're talking to aestheticians and you're getting feedback from them and they said, "Man, we love your stuff, but these people sometimes leave with redness and they're never coming back if that happens." Do you know what I mean? And so, you guys are like, "Oh, we can solve that." You know, like how do Or or is Or do you have a product dev lead who is like a a part of an operational machine that you know what I mean?

Yeah, yeah, yeah. Yeah, well, actually that's that's different context, too, and I'd be curious your take. Like, how many So, two things. How many people do you think we have in our product development team? And how many products do you think we'll launch this year? Like, what what would you expect is on the base of the combo and other brands you talked to? >> Um I would think you have like not that many. Uh I I don't know.

It depends what you define as your product development team. I think you have like a lead product dev person, individual, with some support, whether it's sort of like a junior person in that role, or sort of sciency people in that role, you know, like sort of Right. You know, it's because because you're dealing with formulas and some of that. Um and then I I how many you're going to develop this year, from what you've told me so far, let's call it five.

Uh so, I don't know. So, one of one other thing that's huge part of our strategy is we do these limited edition drops. >> Okay, yeah, yeah, yeah, yeah. Yeah, so that changes things. So we we do those every quarter and I'll explain that in a little bit. But yeah, we I think we have six people on our product development team. And then I think >> Um so we've got like obviously like a head of it and then I think we have we have three product developers.

Yeah. Um we've got two people who just do folk like focus on packaging design. Yeah. Um and then I think we have I'm trying to get the numbers right, but I think we have two other coordinators and then a project manager as well. If you are serious about growing your e-commerce business profitably, you should be using IntelliGyms as one of the core tools in your toolbox. That's exactly why most of my clients, maybe all of my clients, I can't even remember now, but basically all of my clients are using IntelliGyms as the split testing tool of choice [music] for them.

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Get started today. Amazing. Okay, so yeah, that that's uh when you think of This is why I asked like, "What uh what do you It depends what you mean by product development, right? Cuz like a packaging designer, I think of as sort of product development and sort of a designer role, even though I know what you mean, right? The marketing is part of the of the thing. Um so, it it depends on how you ask the question. So, how many products will you guys release this year?

What was the answer to that Yeah, so I think we're going to do 18. I think it's the total. >> Which is like How many of those are limited? Um there would probably be 12, I think, limited. >> Yeah. All right, well. Or maybe 11. Uh okay, I have a lot of questions about this, too. So, uh what uh what do you think of uh well, how did that team develop? Uh did You probably didn't go from one one per year or one or two products when you launched to 18 overnight.

Uh so, so how did you guys get to where you got to with this? Yeah, yeah, for sure. It took like obviously we hired one person, and she was the head of it, and she's kind of grown the team and built it out further. Uh but yeah, I'd say it's like small tests that led to bigger things. So, we launched like a new scent, and it was like a massive hit. And like huge hit, and then what happened was we kept it forever, and then it slowly became like not as exciting, and then we just had double the inventory, and then we realized like That's a big problem.

This isn't very helpful. Yeah, it's like long term. And then And then the other side of it too is in the early days of this product team, we actually tried to go wider than we should have. So we launched like a body cream, we launched a body wash. And we didn't do it with like the right scent expansion and so we've discontinued like those products that we've gotten rid of them. And then what happened was our limited edition strategy as well as our pro strategy kind of came up at a similar time.

So we launched those limited editions as like a new concept and what we realized is you know like a like a Macy's or Nordstrom's or retail store how every quarter they typically like change the front of store assortment and they make it like something fun and different and fall and So we realized like our S T editions are kind of the same concept. Like they're a retail store for the most part. So we use this as a way for them to like excite their clients.

And quickly we realized like holy crap this drives a ton of awareness and excitement. And then on D2C as well like it's a new thing to email about. So the first time we did it I think we sold out in like 10 days. And it was scent based? >> scent based. And then we're like holy crap that was sweet. So now we've slowly like changed it and but what we first did we launched only one of our oils and it was a new scent in the oil.

And we did that probably like three times in a row. And then I don't know who said it in a meeting was like why don't we try to launch one of our scrubs too? And everyone was like what an idea. And then now [laughter] we're we're about to launch a limited edition scent and we're doing it in four different items. So it's like a new collection that we'll launch all at once. So we're seeing how how many items can we go before people are like I don't want this big set.

So yeah it's it's kind of a cool program but it's a ton of work cuz like legit the packaging design team like they only do packaging design. Like they're they're not working on like marketing. It's like purely packaging, which is kind of mind-blowing in my opinion. But it's a lot of products. That's kind of why. Yeah. Um You are Let's come back to the question I asked a little bit ago cuz the product dev team is part of is part of that broader question.

You are trying to build uh Well, like can you quantify like a a size of company you're trying to build at some point and cuz even what you're describing is a lot of team relative to product development for a $30 million e-commerce business. Um Yeah. It is. I mean like a $30 million team doesn't There are a lot of businesses that don't have six people on their product dev team, you know, even even at even at that stage.

So, what how big of a thing are you trying to build? Yeah, so I think right now we just passed like by the end of this year we'll hit uh I think 80 85 people in total. >> Wow. Yeah, so it's like getting bigger. Like right now I think we're 60 um 60-something. But the the big thing is like we're not servicing our customers as good as we can right now. Like our pro customers. So, as we grow, as an example, like we just hired a head of education.

So, she's going to be doing a ton of work to like help them grow their businesses and there's all kinds of stuff there. And then account management um we've done a great job of not needing a ton of sales people. But we're also missing out on the on opportunity to like cross-sell, upsell, even just help If we can help some of our top accounts or middle accounts become amazing business owners and sell more and help their clients more, get more clients, like we'll grow our revenue.

So, we're investing more money there and I honestly think we'll we could have a like by the end of next year like we'll probably go from three to 15 account managers on the team. Wow. Like just just to improve service levels. Um and then that team in general could be 50 people. Like, if you look like a Dermalogica, right? They probably have two, 300 people on their account management team across the >> Sure. the globe.

And then is there a goal for the total revenue of the of Bush Balm at some point? Like, do you guys want to sell it at some point? Do you have a Do you have a revenue number you're trying to get to? Anything like that? Yeah, I actually have uh this is something I'm getting better at, but building out like your P&L goals for every single year and kind of trying to map to it. Um, so yeah, I've got all these like targets around EBITDA, probably like yeah, team size.

But I think just in general, yeah, I think in the next 5 years, I think we can probably get to like 150, 200 million would be our goal. And we last year was I'd call it our breakout year. Like, we we grew I think we grew at 70% last year. Um, which is like a crazy breakout year considering tough market. Um, the year before >> only grew grew 35%. So, it was really a true breakout. What Why? Why'd you break out? We launched that wax products that just like exploded.

And it you think about it, I guess, uh Ulta Beauty we got into almost like they typically say like within it's like 2 years until they're profitable at retail. And Ulta had like a breakout year as well for us last year. Um, and then funny metric, but if you look at like our brand um, earned media due to the pros Oh. last year like blew up. And to the point where our D2C revenue now um, if you look at the you know the post-purchase survey?

It's like, "Where did you hear about us?" >> yeah. Yeah. >> It's uh we're at we just passed 15% of revenue is referred to us by a pro. So, that's like that's like more than our TikTok channel. Yeah. >> Which is kind of crazy Yeah. considering how much we spend. Uh but yeah, I think that kind of helped last year kind of break out. It's interesting cuz what you're describing is first of all, very large team relative to the size of your business.

Is some of that because you're in Canada? And so it's just the team is less expensive? Um, I don't think as much. Like we're in a city in Canada, so it kind of adds up that way. I think it's more so just structure of team. Like we we do a lot in-house. Like we try not to use agencies for Like we only use an agency for Amazon is what it is. And now that we're at this new stage, it's kind of funny actually. We're starting to consider using agencies for things that were like, "This is a lot easier to hire like an expert who's in the space to do it." Yeah. >> So, but we we built like Um, so like one thing that we're we're working on is like a a dev agency and I'm not talking like you know, like a CRO agency is one thing, but like genuine Yeah, yeah. >> dev for all kinds of stuff.

Um, so that that's a big one. Um, and then there's certain things that we do ourselves that like like all the trade shows. Like we we bring the booth ourselves, we set it up. There's like agencies we can work with there. Um, and then the other one that we could do, but I don't think we will is we we have an amazing design team that like all of our photo shoots, we we have like a studio in the office now. So, we have a ton of people who are kind of building their chops here um, from that perspective and it'll be interesting to see like I think next year we'll do a TV commercial.

And I've actually like hopeful that our team like can level up into doing the production for it. But that would be obviously one that's like primed for kind of outsourcing in different ways. >> Yeah. Um, is is am I understanding correctly, am I intuiting correctly that part of the the that you guys are doing this is just by allocating your the percentages of your P&L differently than other brands because of your wholesale business, right?

So, my guess is that means you're paying less in sort of Meta ads, digital like sort of digital ads as a percentage of your revenue than most brands and instead you're reallocating that cost towards servicing your wholesale business where you've it's more team intensive and and I'll also um allocating towards product which has outsized impact on Meta performance and things like that, but also on your past customers, right?

So, you're sort of able to generate more returning customers because like you said, you launch a new scent and a new product and you keep expanding expanding expanding do it all limited edition you blow through a whole bunch of stuff. Now you've made all of your existing customer list more valuable and now you're not spending so much of your revenue on uh just acquiring new customers with Meta etc. So, my guess if I had to just guess what your P&L looked like, it would be compared to a traditional D2C pure play brands P&L, your P&L is probably less lower on CAC as a percentage of your total revenue >> Right. >> but much higher on OpEx and you've sort of moved that cost over to be able to do a much more hands-on serious uh service of your pro accounts which then like you said actually refer people back to your site so it's sort of it's sort of is a roundabout way to generate uh new customers even uh on out of D2C level.

Did I get that right? Yeah, for the most part and then the piece I guess as you see us long-term is our ad spend or percentage of revenue to marketing Yeah. >> we're seeing anyways is it it's going to continue to drop because >> Yeah. the repeat rate for 5 6 7 10 years, right? It's just going to be there. >> And then the other piece is depending our ratio of service levels Um yep. pay payroll should I think remain flat or decrease kind of with economies of scale with different teams.

Sure. But yeah, definitely it's like our path to profitability is likely or sorry, our path to I'd call it 30% EBITDA. That's our That's our goal some some point in the future. We kind of I'd say have to lower payroll slightly, maintain >> percentage, yeah. Yeah, as a percentage. Yeah, yeah, maintain gross margins, and then we'll make up a lot of the revenue in marketing percentage if we can decrease it. Call it 5, 10% would be massive.

And then other costs kind of in the middle there as we get like more economies of scale. Like software costs would go down kind of as time goes on. But yeah, marketing's probably the biggest bucket. And then maybe payroll as a percentage, like two or three points would be pretty huge. Yeah. Yeah. Yeah, I mean you're It's interesting how much you're investing in team. I Like I said, I'm I'm a regularly trumpet how low your op-ex can be as a percentage of revenue in D2C, but I'm not thinking about a business when I say that that's 50% pro accounts that are worth drastically more than your others and also refer individual D2C customers back to you.

And I think what you're describing makes sense to me, which is like make sure those accounts are having a fantastic experience and you do that with humans. You do that with people serving them and and providing a great level of service. And you do that with great product. And so you develop a big product development team and you put the money required into clinical trials and like, you know, it's like it's really interesting to me what you're talking about, which is like building infrastructure.

But the net result of that as I hear you talk about it is an incredibly high quality of revenue because if you're talking about extremely high retaining uh salons who are also now the face of your product to exactly the right customer to you. And the people probably I mean if you just think of the ideas like you know, uh I remember Taylor Holiday used to always say there's two things that influence a a purchase than anything else, which is number one, price, number two, a recommendation from somebody you trust.

Right. >> all the You're getting all the people they trust, right? Instead of some influencer online, on TikTok or whatever, you're getting the actual person who's doing the waxing. Like, so to me it feels like it's it's it's almost like a giant uh it's it's like a giant influencer deal, but the influencer only influences a a has a huge amount of influence over a small group of people, and also it's profitable for you, you know?

Oh, yeah. Yeah. So it's it's just But it's But the But the result of that is a ton of stability of the revenue. Yeah, the revenue is incredibly stable. And then yeah, the other piece to end your point there is we're also trying to figure out more ways to give back to that relationship. Like obviously like an influencer deal, you pay and they do something, and we're actually trying to figure out more ways that we give value back to those pros.

And a good example, last year we hosted, which is for a small brand that guy's kind of crazy. You know You know the Apple Summit where they like reveal a ton of products and it's like a huge deal. >> So we did that, and we did it for just our pro channel, and we revealed our 2026 road map. And like we spent a ton of money. Like our October P&L was not good from it. Like we It was like I think I don't know how much it cost, but I think it was like almost 200 grand.

Yeah. And that event though, like the value we got because the community of the estheticians who came was like, "Oh my god, like this is amazing." >> them out? Like did you Yeah, we flew out a handful, and then we had I think we had like 70 people all over the US and Canada fly into Ottawa in October, which is terrible weather. But we had We had a ton of people fly in for it. So when they came, like we gave them a ton of free products, like the limited the new stuff that's not out yet.

Um and then the other thing is we streamed it to I I on the stream on average we had like 600 people, and it was like a 4 or 5-hour day of people kind of watching in. Um so, yeah, it was a huge event, but that's like a investment in the it's kind of like CAC in a different way versus it being like as measurable, you know? For a long time people who have listened to or watched my my podcast for a while have heard me talk a million times about my experience at Qalo getting into CrossFit.

Qalo silicone wedding ring company. You guys remember these guys, right? So, that's where I started. And I've talked about this experience a lot of times because uh because it was exactly the kind of thing you're talking about. We'd go to CrossFit events. We would fly people out. We were going to trade shows. We were like we were doing all that kind of stuff in those days. Um and this is like 2014, 2015. But, um yeah, 2015 mostly.

Anyway, um when that all happened, I've told this story a lot of times with with the the the sort of application point, the takeaway being like if if your customer converges somewhere important, you need to be there. And in fact, you don't just need to be there. You need to invest in it in a way that shows that you actually care about them. You actually care about their experience and all that kind of stuff. That's always the takeaway.

So, with the influencers, people do charity givebacks, people do events, like you know, magazine sponsorships, like all of all of these kinds of things that are local like this, right? I've been wondering I've been looking for who like who in our space, who in the sort of small mid-size D2C brand space is actually taking that playbook forward. I have a client right now that's doing some interesting things along these lines as well, but I think your story is what you're describing is is probably the best example of that that I've seen in a long time.

Like you're putting in a bunch of money that like you said, your October P&L probably looks like a disaster, but you're you're making the bet that in the long run, if you want to be authentic to a group of people who you really care about supporting you and your brand and your product, the only path to doing that is actually being authentic, you know, and not require time and money and a long payback window. And you can't fake it.

People know. They They just know, you know. Um and and so it strikes me as a great example. Like I I really like the way you're talking about this and this is really cool. And I'll just say also thing I always tag this with, which is that it sounds way more fun than trying to spin up the meta aspect >> [laughter] >> of it harder. It sounds like way more interesting. It's real humans you get to connect with and people whose businesses you get to care about and support.

It's like it's just it's just so much more interesting, you know? Yeah, no, for sure. And there's something to be said there, too, of involving the the community. >> Oh, for sure. For sure. >> Bring them in. Like we we actually, on your point, is we just launched uh a pink wax. It's a pink version of our like best-selling wax and we did it in partnership with breast cancer research foundation. >> Yeah. And like we didn't just pick them and do it.

It actually was like our community said like, "Hey, they this means a lot to them. It's super important." And that's been a huge huge hit. So, yeah, I think you you got it. Like it's further than just a lot of people talk the talk. Like I hate when people are like, "Oh, this is a community-focused thing." And it's like, "Well, like we're just re-sharing influencers, right?" It's not >> Right. Right. Right. Right. >> Get There's no exchange here of of the community side.

Yeah. So, yeah, I think that's the long-term play is like, can we build a better flywheel between consumers and the waxing salons to the point that like our waxing salons get We want to send them clients. We just have to figure out like, how do we do such a thing in like a mass scale? Yeah. It's kind of tricky. So, we're Yeah, we're working on that. But yeah, we want to give them more value because long-term they we know they're going to give us a lot of great value.

So, it's just figuring that out. Yeah. Awesome. David, anything we missed that you want to hit before we uh sign off here? We got just a couple minutes left and just a moment we got got to talk about it. Yeah. >> That was great. I'm a huge fan of the podcast, actually. I didn't tell you that before, but I've been listening for Honestly, I don't know how many years you've been doing it, but I've been listening for >> yeah.

Yeah, like it's probably at least 5 years I've listened. >> Yeah. Thanks, man. I really appreciate that. I uh people occasionally tell me this sort of thing and it's so funny cuz it's like a it's, you know, uh it's not a very big community, the e-comm world, right? So, people all know each other. Um and uh and so when I but so still though I sort of never expect to meet people who are actually listening or whatever. So, um anyway, I always figure that means that you've given me a bunch of your time and attention and and that I actually is is meaningful to me.

So, thank you for saying that. Yeah, yeah. Yeah, I think the big thing too is you there's often hard times in this industry Yeah. >> that like you're you're you can't really talk to your friends about them cuz people unless your friends are in D2C or consumer, right? So, yeah, I think it's kind of like having a friendly voice when you're going through kind [laughter] of a hard time. Yeah, there probably going to be more of them, so there you go.

Yeah, exactly. >> Yeah. All right, and I'll be good to go. All right, thanks. David um people should go follow you on LinkedIn. Uh you said you respond to messages there, which is a dangerous thing to put on the internet because who knows what messages people will send you, but but go do that. Go check out Bushbalm.com uh to go check out products and all those sorts of things as well. Link for David is in the show notes.

Big shout out to my friends, also uh my our friend I mentioned earlier, I think, Alex McEachern and Intelligems for setting up the conversation um because uh he had talked to you and talked about how smart you were and this was an obvious awesome conversation, so so thanks, Alex. Appreciate that. And they're they're one of the sponsors of this episode, too, so happy to shout them out. Um David, thanks very much, man.

Yeah, appreciate it. All right. >> [music] >> Big thanks to David for a fantastic conversation. I have a bunch of great episodes coming up that you're not going to want to miss, so make sure you subscribe because uh you're not going to want to miss them. Like I said, we've got Shereen Albiez coming soon, the great Shereen Albiez, talking about offers, something I'm really thinking a lot about right now. I'm I'm very excited to talk with her and what she's up to.

Got Andrew D'Arienzo coming soon to talk state of the e-commerce landscape from his e-commerce operator survey he's done every year. This very week in just a couple days I'm going to have a joint episode with my friends at Scalability School with Andrew Foxwell to talk about his state of the agency report. Talk about sort of what is actually going on for ad agencies right now with all the AI shake-up. Are prices going down?

Are prices going up? Really good conversation you're going to really enjoy. I've That's already recorded. I really had a a great time with that conversation. Foxwell just has so much good stuff to say. So, subscribe. There's a bunch of other episodes coming up that are going to be great. You're not going to want to miss that. Subscribe wherever you're watching or listening. Go to ajfgrowth.com. Uh fill out a little bit of information there if you want to work with AJF Growth uh with what we're building.

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