Should You Launch Multiple DTC Brands? transcript

what should Riley Strickland do with his life in business next that is the question at the heart of this episode of the Andrew Ferris podcast Riley is an old friend who I worked with a while back and I'm going to tell you that story or Riley's going to tell you that story a little bit ago on his way to being the CEO of a company called Loom cube that uh got to be an 8 figure Ecommerce brand really good really healthy business really cool product one of the first products I worked on ever as a e-commerce strategist at thread Collective that I thought man this is really really cool Riley though is no longer working with lomke we'll tell you the story in just a minute but he came to me and said hey I'm thinking about what my next step is I just thought maybe I can get your input and I said that sounds great can we record it and so uh that Riley graciously agreed to do that and so Riley's going to tell you more of the story in a second but the basic idea here is that Riley is thinking about what is next should he pursue a holding company should he pursue another product based business should he pursue a Services business and I'm going to tell him what I think right or wrong and uh we are just going to have a conversation about where he should go from here and what is really the landscape of e-commerce like right now where's the best place in it and where do I see opportunities and where I see opportunities I think this is going to be a great conversation if you want to think about uh where the best place to put your time money effort into right now is uh and so let's not delay it let's actually just jump right in with Riley strick Riley what's up man how are you Andrew great to be here man doing well doing well thanks for having me this morning I was trying to think about when we actually last talked it's been a few years at least right I mean we've had little interactions along the way but uh been a few years but I was really glad when you reached out yeah five or six probably you know there's people you come across in e-commerce uh or just in work in general everybody's had this experience I think where you go like oh that person is smart that person gets it and that was definitely my experience with you working with you at the time uh back in the Loom cube days and so I was quite quite glad to hear from you because ITN I actually remember I actually remember uh Taylor holiday saying at some point like what would we have to do to like pul Riley into Common Thread Collective and uh it was impossible you you owned too much of the business that you R I think for that I was head down for many years it nothing me out of that thing so okay tell people who you are I uh I gave a little bit of intro about Loom cube and some people may know Loom cube um really cool company uh I I always will remember some of the marketing materials that you guys created with uh uh night surfing with with lights on a surfboard and some of that stuff uh so tell people a little bit about Loom cubin um and what the business is yeah a lot of chapters in the business but uh nutshell story started as a kind of a GoPro accessory business off of Kickstarter in 2014 so small pop on light for a GoPro camera uh came to Market in 2016 and so yeah through kind of the variations of the years we were really ran a lot of Trends GoPro accessory business all LED lighting uh when drones popped out we had a lot of drone Lighting systems and then over the last few years really just built the business into a couple different verticals all focus on LED lighting but lighting for creators you know famili people are mostly familiar with ring lights uh Co you know we capitalized on a really big category of home office lighting uh and then kind of photographers filmmakers uh Action Sports GoPro so all things LED uh but just really form factor was a premium product and uh somewhere in the 50 to $300 range uh yeah so mostly was a direct consumer business mostly Shopify little bit of Amazon a little bit of retail but uh yeah 2016 scene we started and uh here we are eight years later and a nice little eight figure of your business yeah I um I remember working on Loom cube and thinking this is really really cool like it was a cool product I remember at the time I think there was already some thoughts that GoPros were were declining and so that you you guys were thinking actively at the time about how to sort of not be hitched to that wagon quite so much um or have your wagon hitched to the that cart I don't know what's the expression anyway you idea uh and uh and um and it and I was a strategist of CTC I wasn't even um an executive there yet and I uh and it was just like one of my accounts you know it was just a really cool fun interesting product to work on like I think drones were kind of on the up and up at that stage and so that was definitely becoming more of the business and um really really fast it's very easy to see the potential of of the business just because it was a really cool product and now as I as I stand in my office and have this conversation with my uh the bill of my hat creating a shadow over my face I'm thinking like I I don't know why I didn't think of going to Loom cube and just buying uh lighting for this exact thing it's not surprising to me to hear that like Co was really good for you guys so you started you were co-founder of that business and and and were the CEO of Loom cube uh at some point you didn't start as a CEO I know but became the CEO a number of years ago um guided the business to being really healthy uh through into that eight fig space and um and and so then uh not that long ago you are you've stopped being the CEO you were not fired you uh decided it was time to maybe take a few chips off the table and walk away a little bit and think about what was going to be next for you for all kinds of reasons tell people as much or as little about that as you want to but um I you know even even asking the question that way almost sounds Shady there's nothing Shady here like it went well but uh tell me tell me like sort of where you're at Crossroads wise and what you're thinking about yeah for me uh you know did my best to kind of Listen to My Heart last few years learned a ton I think many of us who had a really positive impact on the business from kind of the the 2020 2021 surge in Ecom the 22 and 23 were really challenging so that was a really really you know those two years I probably learned more than I did the previous six just really having to to unpack the business and got it to a really healthy place you know where we were healthy profitable uh you know seven figure months every month and through that we really elevated the team uh so you know we we grew very fast in covid so you know when went from kind of a rag tag team of of 10 12 you know young employees to having you know 15 to 20 year senior people and VP roles in every department so you know felt a with the journey from going you know in the backyard garage Kickstarter campaign all the way through just a really nice you know beautiful office here in San Diego with with about 15 to 20 employees VPS directors felt I accomplished what I what I set out to accomplish and learned a ton and then as I kind of look at the next five to 10 years in my own career I'm still on the board there still an equity holder still involved uh at a high level but felt it was the best time for me to to explore some New Paths and kind of take everything I had learned in my roles there and uh and deploy it on a new project and something I'm really excited to do so then let's get to the meat of this conversation then so what what are you uh what are you thinking is next and how can I be helpful yeah yeah it's interesting you sent me an email that the little bit the little bit here's a little bit of context you sent which was like you're thinking about starting a hold Co um uh there's one version of this podcast episode that goes like this you say that and I just say don't and then that's the end of the call but um but but uh but it's actually not that simple so uh so tell me give me a little more context you'd give me some basic context but like what what's what are you thinking about doing yeah I mean you know I I spent the last 10 years building a product based business so obviously there's an option there that I could rinse and repeat I know the road map I know the ecosystem um you know for me I'm a very passionate and heart- driven person uh so to just kind of you know find something on Alibaba or or find a random product and could I sell it and build that ecosystem sure you I want to wake up in the morning feeling like I'm I'm delivering value to my end customer and at the moment while I'm looking at a few different product categories I don't have something that I wake up in the middle of the night saying I have to bring this to Market and you know maybe there's a day that that happens but until that happens you know there's an old Jeff Bezos adage of like oneway doors and a doors and for me to go you know drop a six fig purchase order bring in thousands of units set up that you know that's a big Commitment if I'm not sure that there's a product that I really want to sell um so so that's something that uh I'm evaluating uh everything I've learned you know my second hat at the company was always kind of CMO so overseeing all the growth and all the marketing so there's obviously a world where I can take that and all all the knowledge and expertise and offer that as a service to a lot of different businesses I.E marketing agency uh you know not a particular vertical but definitely the service business from like a low cost of upfront capital and a kind of a lucrative aspect of cash flow it's a really appealing option um and then you know there's the other side where there's a hold Co you know it's much harder to start so it would be somebody who has a network in the direct consumer realm like myself there's been a number of unique opportunities that have come up for kind of acquiring distressed businesses good product just maybe got a little bit over their skis in the last two years you know knowing for someone being a CEO in 22 and 23 I know how challenging it was to you know if you're over inventory just managing payroll employees uh downsizing was a really challenging year for a lot of people had down years some can navigate that and come out the other side a lot of people weren't able to uh so there is some really interesting opportunities where let's say I was interested in you know random Choice like apparel you could go out there and buy three or four apparel businesses for pennies on the dollar roll them all together and basically it's a little small hold company um so uh you know when that's a thing it's been of Interest I've looked at a couple things there's obviously a lot of larger scale stories call it the solo brands or some other some other businesses that have kind of looked at doing that model and uh and as I was exploring that you popped into my mind as I know having experience in that and frankly at a very surface level if I was to talk like just total 30,000 foot view for somebody who had you know $3 million payroll and having this one business that had to support that payroll there's of course appeal saying man what if we had a little you know a second or third business as part of this little group that my finance team could service my PID media team could service and then hey Loom cube as a single business doesn't have to shoulder this entire pair especially in different seasons and stuff so uh from a rational and logical perspective I know there's it it like seems like it would make sense but then everybody I know who's been in it is pretty quick to the hey there's a lot more you don't know or a quick don't uh or there just no longer in it anymore I don't know the reasons but there clearly are re well I mean that's interesting you so you've talked to other people who who give that feedback they say they say don't or it's harder than it looks or something like that like has that been a fairly Universal chorus yep the theme is is you know twofold one whatever the thesis is that you're going off of that hey there's these four Brands and they share same customer you have to really be sure that that se thesis is going to play out because a lot of things might make sense but don't actually play out and then when you get down to it you know we had a 15 person team running one business and when I think about it I mean I still wish we had 10 more people because there's so much we wanted to do just up on that business that we couldn't do and I couldn't imagine running a second social Channel a second you know influencer seating program a second uh you know paid media and analyzing all that that data the easiest thing is probably like yeah you could close the books or the accounting team could Cross services but when you come to all the marketing you know I always felt we never had enough Personnel to handle all the marketing activities we wanted to do and that's just overseeing one business so um that's been the feedback so it's it's really interesting to hear you say that I I think it reflects really well on you that you've explored the process the way that you have and I think one of the things I hear and as you're talking is like that you're actually internalizing the advice that people are giving you here because what what you were reflecting about what people are saying is almost exactly where my mind goes for a lot of this stuff um so at least on the holding company side so I think most people know this right who who have been certainly like people who have subscribed to my content for a little while know that I was the CEO 4x400 which at time we had up to six brands in our portfolio at a time um and and I always I'm I try to be quick to reflect on that and say that like it was basically a failure even though we actually came out of it with one brand that did well it certainly was nothing like the thesis that we had initially suggested nothing like the valuation we thought we could get to and I would say I particularly did a pretty poor job as the CEO I think I'm on record giving myself a d or a D minus or something like that in a conversation with Taylor as a CEO of that company um for all kinds of reasons I think there's some ways in which I was like set up to fail that sounds like somebody set me up to fail that's not what I mean I actually nobody set me up to fail in fact if anything I was supported by really great people but um really encouraging people but just that the way that the business was structured was the the capitalization of the business was a disaster it was very it was a very dumb way of doing it and then I also was so undere experienced in that area that I did not know how to think about capitalizing a business like that and so I made that capitalization problem worse as a CEO that's maybe the way I would frame it is it was already bad and I made it worse and so there's that and then uh from there that has now has led me to all kinds of thoughts right so I've been on the brand side as a med media buyer one brand at Kao uh and kind of came up through marketing there then I was on the agency side including being an executive there and then was a CEO of a holding company and now um run my own business that's mostly a service based business with a little bit of other stuff but basically is is a small marketing agency so I've kind of seen that from each of those perspectives and some of the ups and downs um along the way um here's what I'll say about holding companies just so that we can sort of um check some of those things off the list the I think there's two sides of the coin that you're that you're referencing um I think that that the idea of being able to buy a distressed business that is poorly run and um and it's like good product good financials poorly run is possible I have seen some people do that uh and uh I know at least one person who is quietly one of the just like most incredible killers in e-commerce um and uh I don't even know if you'd want me to say her name so I I will not but uh she's a she runs a holding company I think she has like seven or eight Brands and she's running all of them at like two or three million bucks right so but her team is basically her and like a couple of vas and so she's ultimately got this like low to midate figure thing with extremely lean overhead and she just takes the money from each one of them she's not trying to push on any of them very hard she lets them all sit at a couple million bucks and um and when she does that she uh part of the way she does this is she acquires these businesses for like basically no cash um because they're all distressed and she looks at them and says like you're just kind of operating them wrong and so like I've just like watched smart people do that and make a thesis that way I think the only question I would ask is why are they distressed um and sometimes sometimes it's because of things that are actually solvable like it literally is just very poorly run like you you've got enough uh reps and I've got enough reps to where we've both probably seen some very very poor operators who really can take a pretty good business and turn it into a bad one um and like that's definitely possible H but I'd always just have some questions about like is there something more fundamental here that made this business distressed in the first place um sort of more genetic to the brand and it's not about an operator having said all that like I do think that's possible I think the biggest hurdle to that is sometimes those businesses are also loaded with debt haven't gone through bankruptcy Etc and therefore like actually acquiring them is expensive because you get like saddled with a bunch of debt that you have to figure out how to pay off or something like that um and this is where like this is where there's some folks have particular expertise around navigating the legal and financial side of distressed businesses uh the guy who comes to mind here um is uh matab uh uh whose last name Escapes Me Right Now I want to say card because that's what his company's called but um anyway matab um is uh Bogle matab Bogle matag uh matab is This brilliant dude who um you know you talked to him about this like he just like deeply understands sort of like how to handle essentially getting rid of debt um on a company without without buying it and so um and so like there's some of those things that I think becomes an area where I don't know if you feel like you have expertise in that but if you especially if you have that I think that's where it becomes really interesting and possible to like get an extremely good price on a pretty good asset that is just underpriced because of mismanagement but harder than it looks um but I think it's definitely is doable so uh before I say anything else about the the hold Co thesis um um I I definitely have other thoughts but um but let me I'll pause there and let you just respond to anything that I just said no I agree I agree I think that uh that makes a lot of sense the assumption is just that it's it's few and far between where there is a distressed asset that truly can be a good business and has good product Market fit and that's where you do see you know yes there's secret sauces but if you have a good product Market fit and a good brand chances are there's a agency running it where it's going to prevent it from being distressed and and they're going to figure something out so if you're truly distressed underwater to mess up a good product I mean we went through a transaction in 2018 where we had a majority buyout uh of a financial partner that came in and had transition in in majority ownership and I mean you could have qualified Loom cube as a distressed asset in 2018 because we had some challenging times flow wise and that's why we did the transaction holy moly was his was the following 12 months for him very different than what he anticipated and we had a term for it and it was like all right what's the gut punch this week where's the skeleton in the closet what's the vendor that we have to pay out that didn't come up in due diligence where it's like okay I like the brand seems cool I get the product and then the following year is just getting gut punch after gut punch with all this you know these skeletons in the closet and fortunately we navigated our way through it but um it's it's certainly not glamorous so I think that's one of the stressed asset is if you think it's going to be like we're just going to run to the sunset it's going to be a battle and you got to be ready for that so uh yeah so I appreciate that I mean that's interesting though because just says to me that you have some experience doing it which which is a Advantage you know right so that turnaround aspect I've been through it in our own business of having really dark days and then having to turn it around you know Le lay off half the team really restructure the business focus on different channels so so there's definitely a component of of a skill set there that you I would know what to do much better this time around than the last time around but uh you know doesn't mean I want to sign up for that that battle so yeah yeah yeah right I mean that's part of it too I mean you told me there's a new baby coming and stuff so that's maybe the wrong time to go through gut punches every week um yeah I think the other thing is like good businesses are fairly hard to find in general and so if the if the pile you're looking through is the pile of businesses that are defined by being crappy it's it's probably even harder to find a good one right yeah yeah uh so like there's a selection bias problem there um but again like I I have seen it so like I think you know it's not out of the question to me that you could find that business it's just I think it's just going to be fairly difficult and I I think if I was gonna make a hypothesis about where that business uh what that business looked like I would guess that it would be a business that had previously raised a bunch of money but was actually not a very um but was was run poorly precisely because they had raised money um this is I think something I've seen a number of times where a business that has um that has raised external Capital could be a much better business if it behaved completely differently uh probably grew slower really focused on profitability from day one but because of external pressure to deliver EV valuation for uh investors or just sometimes sometimes I think there's even like the CEOs core skill is raising money and not actually running Commerce business yeah and so those are the kind of businesses where I think it's more possible and I do think like like when I talk to my friend fan by who looks at a lot of businesses all the time uh and I did an episode with fan a while back and I'll link it in the show notes but um but uh you know fan and I were reflecting on uh the state of e-commerce and what he's seen one of the things that he he says is that like essentially like bonobos launched a 100 million bad businesses like and the idea was that like that like there's all this money coming in for a while and that money then uh created businesses that were were had raised money and and were performing poorly and were looking to like sell on a revenue multiple and those things are just like really really gone even though those days did exist and so now we're actually on the back end of that to where like still a lot of those businesses are coming up for sale and there just isn't much there the problem is they're actually isn't much there still on a lot of them right like they actually aren't very good businesses they're coming in with like terrible margin and all that the unit economics of a good e-commerce business don't look like those businesses and so right right yeah if meta ads is a significant part of your media spend you should be tracking your performance with 100% serers side tracking so that you get better data quality in your ad account and you can do that with Billy it's b i ly. a billy is 100% server side tracking third party tracking tool that I use with my clients and the reason I use it is because Billy reached out to me and said hey we would like to sponsor your show and I said not so fast let me see if I actually like this tool think it's any good uh there's a number of third party tracking tools out there and so I tested Billy I tested Billy against the native Shopify integration and it crushed it uh there was no question about it we saw better roas better event match quality uh in every possible way you could see it I also have tested Billy against other third party server other third party tools and 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your events on your website that's billy. a b. go check it out okay so let's talk about the thesis uh uh General the shared services thesis this is the thing I think looks the shiniest from the outside and is actually the most wrong and I bet you I I can hear from your answer that people have told you this um paid media in particular um just like I mean it's it's funny because I'm like an agency guy so I'm actually literally doing paid media for multiple Brands right now but the problem is like to have the service-based business of paid media stretched across a few Brands and at the same time have a brand that is actually compelling requires not just like an agency team but probably like an internal brand lead for um for each of those Brands who can really actually make a dent uh if if you want those Brands to get very big like can actually make a dent in like doing something really compelling so even in the example I gave before of this woman who is like this total killer I was saying like she's just not trying to grow very big Brands and so she doesn't need to take Big Marketing swings to get you to a 4050 million doll business or even a$2 million doll business she's really content to have two three million businesses that just like exist off of essentially like the sort of it's almost the Arbitrage of the power of meta ads and Google ads and she's really good at those and she just goes like I just run my ads I make a margin on it and I run them extremely lean and that's it she's not trying to grow those things there so the um so so so like if you are trying to grow something that's a if you're trying to do that you can do it you know you can just do a great job with expertise and paid media across multiple Brands I think if you're trying to actually like grow let's say let's just call them eight figure Brands it's just incredibly hard to do that with on just the back of sort of like paid media Arbitrage and so then the paid Media Services model doesn't work very well and you actually need like real talented I mean you've seen the like you mentioned right at Loom cube you you ended up with like people with 15 years of experience in executive chairs uh even though the team was not particularly big it's a really experienced team uh and and that matters in a business like that right and so um if that matters if that's true that Loom cube runs so well partly because you have all that experience the the coraly to that is that you need that kind of experience to build other brands that are really good right like it's just really really hard to do and um and so I think in that respect uh it's wrong I think actually the other point you just made which is like uh things like accounting and like sort of Basic Finance is probably one of the only things that can really work as a shared service you know maybe customer service um some of that but there's not that much savings there and in fact I'd say d2c already runs really lean um in general it's already a really business model and it's hard to make it a whole lot leaner I have one suggestion of how to do it but yeah so I I think that that thesis really doesn't work especially when especially when um you add another layer to this which is that inherently one or two of your businesses of your brands in that scenario will be drastically more valuable than the other ones um and so it will suddenly not make rational sense for you to put invest for you to invest dollars in uh brand a when brand B is just a brand and to say nothing of Brand C and D um and that's but eventually what happened to for 400 it became very clear that bamboo worth was a much better asset than the other ones for some things inherent it was about margin and LTV and Tam and all those things and we just looked at it like this is a no-brainer like this is like clearly the best one of these businesses and so even and there were a couple of bad businesses in there as well but like at the same time it just was so clear that it was it was not worth trying to solve the problems in the other businesses because bamboo Earth had so much more potential than the other ones so far as we could tell um and and so then the shared media services shared media model works even worse because now you you actually just want to put your best resources on the best opportunity um and and so yeah so when I've seen aggregators go right and I again I have seen it I actually recently had a client who's doing this pretty well I'm trying to get them to come and talk about their Model A little bit at some point they still have really disproportionate um levels of investment in their different brands and the and the kinds of investment they're making in those brands with their shared media teams and so that just has to become inherent to the model and they're also like staffed up a little bit more than you would think uh for some of those opportunities interesting okay I'll pause again interesting no we we even saw the same thing within our own brand uh paid media while with with products you know product a that's exactly right and then well hey yes we're spending 30 grand a month on product B but I could put that on product a and probably get the same returns if not better learn more put more product out into the market and so we had weekly in our paid media meeting we had massive discussion over just the assortment like what's the distribution of paid media dollars within this product set and so um I could see that much more at a grand scale where uh yeah like you're kind of robbing Peter to pay paaul where it's like hey wait a minute if we just put this here we can get better returns and grow a bigger larger Enterprise Value so and that is that's what I've heard consistently any aggregator model usually has their thesis blows up and then they have one primary brand that's doing 80% of the revenue of the hold Co and then a couple of these kind of stepchildren that they're like yeah it's it's up and running but all of our team and money is is funded focused on this one and uh yeah and then yeah we dealt with that on a micro level just bringing in 50 products where four of them do the majority of the revenue and then you're like what the heck do I do with all these other products I still got to get rid of them but um and it becomes a headache so that makes but you're right it's it is actually the exact same brael right at some point like GoPro was no longer the place where you should put your investment dollars and instead like you know what I mean and and and some point like drones you know and so how you invest in products and and of course like how you invest in the marketing assets related to each one and how you invest in like how much inventory do you buy and how much you invest in like really dialing in the supply chain for yeah product a versus product B and like because those the thing is like those problems are not easy to solve right and so they require time and effort and and and so yeah so I think it ends up being ad was a huge undertaking every month and deciding what product do we go create content for is it the home office lighting category is it the ring light products you know is it the outdoor well ring light's doing better this now so let's switch that up and and it becomes and it's very quickly can happen where we'd look at it and we'd be kind of chasing the Golden Goose for a few months and then be like holy smokes we didn't do anything for this other product line no wonder it went from 100 units a day down to 20 units a day because we didn't feed it at all and yeah so I could imagine that I didn't look at it that perspective just on a much grander scale where you have a a much higher risk profile because instead of I can sell through those products and not worry about that but if you have a brand that you've acquired that's a much heavier risk profile interesting yeah I think and I think the alternative to that that I could see somebody doing really well is like if you build that if you recognize that from the beginning then I think there's probably somebody out there who could think about designing the hold Co not so much as a way to think about like I'm going to grow five brands at once but more like I'm going to cheaply test a lot of ideas and then pick and so it's going it's going to it's going to help me sift through a lot of different options and take a lot more swings and um and if you could find a way to do that while keeping the investment relatively low you know like again if you could acquire the brands cheaply or start the brands cheaply or something like that and you decide like I just don't want to put out too much capital on any one of these um I want to run the business profitably from the beginning Etc so I'm going to um use this as an opportunity to um I don't know if you can figure out a way to invest 20 to 30 grand to get to spin up the beginning of a brand five times or something like that you know or maybe it's a little more than that then you know it's becomes a decent chunk of change but it's like it it's um it's it becomes maybe a way to think about okay how do I like test a lot of things as cheaply as possible and and the reason I'm thinking about that is like is could you I'm I think of some brand brands that I know where they built really inherent to their strategy in D Toc like they built the flexibility in right you don't have to go put a bunch of products on shelves and retailers and have the timelines and Lead times and sell through problem like all those things related to that like with DDC right you just like you can put up the product page put up the ads and try it and and so I I've seen some Brands really effectively test product launches as a way of determining you know like you see apparel brands do this where it's like they just they just try a bunch of different Collections and they see which ones work and then they they kind of like go from there that's hard to do too it's hard to do it's cheap enough and so you could sort of treat brands that way and see which one's the best place to actually put your money and I think that would be maybe one case for for a hold Co is like essentially the whole point is that you will not end up with all of them the whole the point is that you will you will try them and again I've seen like one aggregator recently one hold Co where that's basically what they did like they bought a brand at a price they thought made sense there was not very much risk to buying it they could they knew they could sell it if it didn't work out and they thought like we'll try it and we'll see if it works and they're going to and it turns out they're going to sell it that you know maybe there wasn't as much um you know juice to squeeze out of as they thought and so that could be maybe one way to approach it but then I would want to like build that into the model like how much Capital do I need to do that how many Brands am I trying to build like you know something like that um so in that case though again the idea is from the beginning you're not actually trying to grow them all you're trying to find the winners and then do that you just want to take more than one swing at once that that could be compelling I think could be interesting I think I think that's an interesting view on it is is what is the ultimate goal of any of these brands because we found that even in our own brand you know the the female kind of you know Ace that you're talking about that makes sense where I think without doing a full you know Omni Channel marketing approach influencers everything you can get to a two three4 million run rate pretty effectively with a purely paid media strategy kind of turning up the dial understanding your time you're creative you know what's working landing page strategy very low cost but we found that for sure as we were scaling you know past call it half a million a month you start we started not yeah we started to experience some serious diminishing returns in just a pate approach and then really analyzing our traffic as we got bigger than that it became hey we're way over indexed on paid media here and in order to break through the 10 million you know $15 million levels as the brand okay now we have to have awareness coming in from other channels we've got to have you know really focus on retention and becomes okay I need a full person retention manager you know handling email I need an influencer manager handling all those Communications because that was in our experience you know you could go from spending 10 grand a month to 150 Grand a month and literally experience this massive growth in paid media without having to really scale your team you can kind of just turn up the knob and do it more effectively if I want to work with 10 influencers a month or 100 influencers a month that's a lot of conversations a lot of people it's a it's a more manual process um so that's an interesting approach of am I looking for one of the brands to be you know hold Enterprise Value 10 15 20 million plus or is it a it's a $10 million hold code made up of five $2 million brands with a VA supporting each one so that's two different approaches and I appreciate that look on it interesting which one do you think you would do because I think that's right like I think that it it depends a little bit on what outcome you're trying to create here yeah um I in in my experience if I were to choose one of the two and I think I'd like to have a few minutes to even inquire about some of the service side of things but uh for me scaling the team internal operations processes finding the right people I mean our team is about 20 people now but I looked at our our Google admin account you know over this eight years we employed over 150 people so you're cycling so I would say it's more appealing to have a $10 million hold coat of a couple small businesses with some vas processes very lean versus you know trying to build Enterprise Value in a product and consumer brand and differentiate yourself from the competition on Amazon and get Mass awareness you know it's an expensive game it really is and um breaking that the hardest thing for us was to break past that like $15 million Mark um where it became much more complex and you can't just run ads and and try kick up a landing page um so I would say the more appealing one would be a hold Co of smaller lean businesses where I'm kind of a behind the scenes you know just quietly being a kind of Seal Team of a few different operators uh versus trying to build Enterprise Value again which is yeah that's interesting because I I think that's a really important factor here is like would you like to try to like there's some people who want to go deep on one thing and they love building beautiful marketing campaigns and and making bigger SPS you're completely right like I'm I've got a client right now that is like has reached like that kind of eight figure thing like they just they they've done it where they the me Facebook spend works great they're doing all the stuff they should be doing and we're going to see how far we can take that we're going to keep trying to push it as far as we can but we're just all we're kind of having these conversations now of like we might have gotten this way of doing it pretty far um we probably need to add one other paid media channel we think we can crack that given some time time so that's fine but really if this business is get to 50 or 100 given the particular economics of this particular business you know there's no massive LTV or anything like that um we we're going to really need to think about how do we grow it like with some bigger some bigger efforts and that's probably on the product side or you know the community side or something like that and so we're having those conversations it's really fun like I'm I I like that kind of work a lot I think like it it allows you to think creatively and think big and and some of those things but it's just so different than like what got them to 10 million you know oh yeah yeah when we got to that you know $20 million level the next level was 50 and yeah the definition of what got us here won't get us there I learned really really hard way and for us we were very similar where we didn't have a crazy LTV you know we had about a 20% repeat order rate so we couldn't rely on this subscription sticky Revenue just coming in to build as a a strong base so it became pretty expensive massive Swings with awareness campaigns with product you know we I tried two or three products in the last three years out of probably six that we created that you think it's going to be a perfect fit it makes total logical sense and just a flop you know for for whatever reason another and those are expensive challenges and mistakes um and you know I think building a brand scaling a brand is harder than it's ever been there's a lot of noise out there there's a lot of lowcost competition out there so it comes down to like all right we got to be the the brand that's first of mind for everybody in this category and boy talk about getting into a more expensive space is is kind of Big Brand building it is just massive swing so um but yeah if done right it can be really rewarding and that's something that I did enjoy doing uh but it's it's definitely not about just like the daily execution of of kind of you know the the foundational stuff you got to go above and beyond to to get that yeah yeah I think I think that's right I mentioned it in this conversation but I really have staffed up my team of e-commerce Talent with Incredible people from the Philippines and I'm looking to do more of it in the future I've probably got another hire coming with my friends at more Staffing more staffing has been an incredible partner to me and to many people to whom I have sent them in e-commerce the value proposition is very simple you can attract incredible quality talent in the Philippines by uh in your e-commerce business by paying above Market rates in the Philippines and that will attract great talent there it will still be less than you would pay that same talent in the US more Staffing can help you find those people they will help you build a JD they will help you recruit train coach onboard they will provide all kinds of growth coaching for you and for the team around how to best use that talent and how to best locate that Talent how to best help them in their careers as well it's a no-brainer you should be Staffing your e-commerce business with Incredible people from the Philippines go toor now.co AF to get started more now.co to get started they are awesome I love them you should use them too I think uh just for the sake of time let's think about um the other sides of the things that you're considering so um service Bas what do you think your service would be uh you know I have a lot of experience the last few years in this space of just kind of focusing on really Less customer acquisition but more looking at a lot of conversion rate optimization landing page tests really helping helping our own business understand you know what dollars were being spent well you know we went through a year where you know a year ago we had six figure losses and turning that around to to seven figure profits just by analyzing traffic and kind of re realting the strategy and testing different landing pages storytelling um I found kind of that that thesis you know if I have call it $100,000 a month for me to get to 200,000 do I want to drive twice as much traffic or do I want to just at 100,000 people double my conversion rate and you know what's what's less expensive um so that would be interesting uh you know obviously so let me pause there do you think the service could be then like essentially CR uh would be like would be like what the service is a version of that I think there's a modern take I spent a lot of money on cro um over the years and there's some really poor things that I think there's a lot of work that's being done that's not really moving the needle and then for us you know in the most recent testing highly optimized landing pages with our paid media campaigns was what really massively mve the needle for us um and understand like basically building out custom funnels you know this adets going to this custom landing page tell this story to convert this type of customer and for us our top seller was a ring light so you know of five buyers it might be a 15-year-old YouTuber a tattoo artist a beautician like a very versatile product so maybe unique but cro would be one of them and then uh so let me let me so let's let's give some people some tactical help here while we're on the subject so yeah let me let me uh let me pause on that so what's the bad kind of cro that you were just referencing that you know that you went through and what's the good kind of cro that what's what's the better version of it where we experienced and spent six months trying you know hey let's add a little icon here at checkout let's you know optimize the button here and move it and ab test that like so many tests $10,000 each page to two different pages when we started creating custom funnels and saying okay we have an ad of this tattoo artist using a ring light to do their all their tattoo work and talk about how effective it is in that realm tattoo was a seven figure channel for us is it going to our standard PDP where it shows a vlogger using it at in a kitchen or is it going to a tattoo specific landing page you know and building out those custom funnels that's where we saw 30 40 50% swings in conversion rate where you know the creative in the ad set that Drew the The Click was leading to a landing page that was optimized for you know that interest based and speaking to that customer um so that for us was what worked the little minuscule hey we'll do minor Dev changes here see if that helps nothing ever drew a a tangible swing for us yeah uh so that's that's funny this is almost exactly my take on cro uh is that it's it's about that like people people just test the wrong stuff and essentially they don't they don't really do marketing what they do is like these little like attempted optimization switches kind of things and there's probably some best practices there that are probably somewhat helpful but I've just never seen it really really matter everybody's heard the button color story oh we changes button color in it and it you know whatever and I you know customers like green they you know green means go red means stop that like whatever I there probably there's probably something to that somewhere but I'm also certain just having been around e-commerce now for a little while that like many of those tests that yielded these like massive result changes from those kinds of tiny little tests uh were those tests were probably conducted so poorly and non-replica that like it just it does it's meaningless um so I'll I'll put my finger on that and say like your perspective there on cro and your experience there is unique to the space I think you I think that service I think you have a good quality service there right away um and I think there's I think I think you know like you said like it costs basically no money to start a service business there's some cash flow right away you can take on as much or little work as as you want the question is going to be for you and and I think you have a unique offering there like I would say that service can tell a story really really well on social media channels to where you can generate business pretty clearly I can think of clients right now where I would say like yes righty come work on this with me like I I know the way you're talking is the way I like to think please help me think better about that for these businesses right but what I don't um what I don't know is or what the challenge of the service business is building it up past you the question I would have for you is like do you want a team and a lot of Revenue and something that's a sellable asset or do you want a Riley cash business because if it's the former where you actually want to build a team my so I'm actively not building a service business right I I have a service business right now but when I think about where like margin expansion happens for AJF growth it is not in adding more clients I have a very small book of business I like my clients a lot I would like to stick with them for a very long time but I'm not trying to add a lot more I'm not trying to go a big team and there's a really simple and clear reason for me which is which is that I hate building process I hate it um I do not like building I am like I just feel like it just feels so hard to transfer my knowledge to other people that like they are supports for me and uh that my my my us my my team is supports for like my services and they are talented and can deliver these things that I want but I and I'm trying to give them like some career growth type thinking and and some of that but I don't expect them to have like massive futures of like going and giving them a million clients at at AJF growth that they manage and and now I'm not managing the clients and I'm just a manager you you know like it's just I just don't want to do it I don't I don't like it I don't enjoy it at all I would much rather stay a little more focused and I actually like the execution a little bit more that's part of why I also like to be in this in the accounts with clients like those things it's just what I enjoy and so um so yeah so for me I think that's um yeah I think that's one thing I I would put my finger on what you're saying right there which is like when you say you have this I said that is a unique perspective that is a very sellable perspective where you could get in with somebody and actually do great work building landing page or building funnels specific to specific audiences within a business all those things and maybe actually that's even the kind of perspective you could apply across a number of brands in a holding company right um to where you could actually do that at some scale but like um but yeah I think if you wanted to start a service business there there would be immediate market for it and I think the question would be like do you want to start a longer term service business or not you know yeah I think that's that's the the golden question there which I can't I spent a lot of time thinking about and you know when I think of the long-term view for me I do identify myself as kind of a a builder establish a vision and then let's go hey this is where we want to go in five years and let's go build and build and build and find the right people and and that's what I've done the last 10 years uh you know build a team to execute around this larger Vision but as as I mentioned earlier on you know coming into a phase where I'm a few months out from welcoming my first child there's a lot of you know time where just uh you know fractional CMO C you know cro type stuff there's a peel there where you can it's call it a little bit more of a lifestyle business you can really have a couple High retention clients bring in cash flow where you're living a great life but you're right is there Enterprise Value in terms of an asset that you're GNA exit for eight figures down the line no probably not um not unless you build it up yeah right right which comes with you know a lot of different types of unique headaches and people challenges and attention challenges and there's a you know any agency The more I've looked at starting an agency frankly I've sat down with a lot of guys who've built and exited large agencies and most of them have said I wouldn't do it again you know there's so many challenges along the way that you know it's just it's a challenging business to to scale an agency to 10 20 30 people um yeah and yeah you know that that that reflection is interesting though which is like uh I wouldn't do it again I I almost everybody says that because there's a lot of challenges in every business right like I think there is there is a thing I remember Taylor said this Taylor holiday said this to me a long time ago he's like like you're going to climb some Mountain you just have to like pick which one you're gonna climb you know so like but like at some point it's gonna hurt to climb the mountain and so um yeah yeah I found myself telling people that if if if a kid came to me and said I want to start you know a d Toc lighting business I'd be like dude don't so hard at the end of the day that I had a conversation with a mentor of mine recently and they you know kind of gave me a little slap in the face of like dude if feels like you're sitting here waiting for this unicorn business that's high margin scalable yeah like low effort it's like dude that doesn't exist you know you're gonna climb some Mountain it's gonna suck a lot of the time kind which one are you gonna choose and so that business is called skincare and there's 900,000 of those businesses and therefore they've all competed away the margin yeah right right and it becomes that's that's the challenge in product that I look at is it's kind of becoming a race to the bottom in so many areas um Mar just getting squeezed out so what what does become more appealing to me is is can I deliver high quality service to a small number of clients and then from there maybe unlock something do you like people do you like servicing people because this is another Taylor holiday is and but I remember him saying a long time ago the service business is really the hospitality business like that's what an agency is and I think there's something to that um you know like I I think this is this so like I'm in a career stage where another reason I keep a small book of business is that I just have a no jerks policy like they just like if I was working with a client and they blew up at me one time you know maybe if they blw it with me once everybody everybody gets a maybe they're having a bad day or whatever it is but I would I would immediately respond to them and say hey just so you know like I'm not interested in keeping your business if that happens again because right I I won't be spoken to that way I don't need you like I'll find another brand you know so it's like you've got enough Network and some of those things to where I bet you could be in that stage but at the same time you are going to have to deal with people at some point who see things differently than you and all those and so you have to learn to like you have to be able to love that and and love that business and want to do that so like I mean that would be another question I have for you is do you like that you know that is do you like not getting yelled at not getting yell that but I mean do you like people do you like serving people in that kind of way or do you want to be a little more solo that would probably be as I've I've been on this journey where I've experienced the most resistance internally uh in my gut of you know do I want you know seven different kind of people I I report to 100 100% when they when they call I have to answer part of the reason that I've pursued my own path and and left you know I had a chairman of the board I had uh shareholders and when they called I had to jump and and service their expectations and one of the reasons I stepped down to pursue my own thing was so that I could kind of free myself of that in nature and you know while I think I could deliver a great I would probably just step into it with a very similar policy as you like at least at this point they're not my chairman you know I can fire them um and pass that so that's probably where I felt the most resistance of like do I want if it was a product based business call it the you know the ace Ecom woman that you're mentioning like I could be still behind the scenes I don't report to anybody I make all the decisions and and you know move this all around or do I have six or seven people who are calling me every week saying it's not good enough because transparently you know I don't think I was a jerk but I was certainly my job was to kind of be a nightmare for the agencies that we were paying and keep cracking the what else can we get out of this how can we push more and uh you know I think any good Steward of a business is certainly putting the pressure on any agencies but whether or not I want that for myself is uh to be on the other side of the fence has been where I've been a little bit uncertain yeah I uh so I I won't lay my vision for my life on you but um here's how I've dealt with the the exact things that you're referencing personally which is so I a couple things about one thing about me is I'm not motivated for a huge financial outcome so that's something I know about myself I don't care that much about that that's a little more Financial Freedom sounds nice but I don't I make enough money like it's okay so um so uh part of the reason I want to grow margin some of that is just because it's a game to play like it's like I just like you know what I mean it's just like you just like it's just fun to optimize and try to fix the next problem and so solve the next problem next that's kind of my mentality and if you kind of do that enough times you get some more so that's that's one thing about me so that so I'm not trying to structure my business for an outcome like that so that's one thing secondly um I do want more freedom and I want to be in the actual work a little bit more I don't want to just be a manager and therefore um this the way I have my service Bas business works really well for me because I can service clients and they're clients who I love like they're all great they're all really good good quality people whose businesses I like whose products I like all those things um you know I'm not selling anything that I think is making the world worse which is nice you know like um so yeah uh I'm also not making anybody Rich who I think uh would make the world worse if they were really rich you know um so those things are like really important to me because they might get rich if I help them enough um so and then to the point uh that you're dealing with here's the way I've thought about it like when I think about margin expansion for me I think there's possibly two routes one of them is to continue to grow the content output that I'm doing things like this right podcast and I'm definitely thinking about that um growing Advertiser Revenue Etc I've got a couple advertisers now maybe there's a way to do that secondly I'm thinking about um uh potentially at some point starting another starting a brand myself and then trying to bring some of that brand into my current Services which allows me to straddle the line so with the idea here is like if I if I started a brand I would not have AJF growth run it run its growth unless the brand could actually pay AJF growth full salary so the idea would not be to Arbitrage the costs or anything like that it would have to pay the same amount um and uh and I would have to really feel like I could do that without without hurting my service to other brands I think that would be a really big challenge immediately I have way more interest in one of these than the others so um so you know I've I've seen that go wrong uh per per yeah in the past so it's part of what gives me some pause about that um but yeah so those things uh are kind of the way I've I've thought about this problem for my own business is like how is is I could maybe try to take a larger swing with the brand that I operate myself um but the service business actually allows me to sort of flex work volume up and down by have flexing uh clients up and down it allows me to sort of keep my feet in both places um I like one last thing I'll say about this which is like I've also tried to do some assessment of what I'm actually best at um and I think I'm best at two things this is I say this not to brag but just to give anybody to you or anybody watching or listening to this uh some sense of how I'm thinking about this problem um I think I'm a really good teacher and so that's that compels me to the content side of things so like I think I can do a very good job explaining ideas in say podcast or video form or something like that sometimes in tweet form some of that so I think I'm uniquely skilled there I also think I can write enough I don't think I'm a great writer but I think I'm a good enough writer to make written content a part of my output yeah uh uh and then secondly um I think I'm particularly good in sort of uh thinking about dtoc growth with meta ads and really how to make that happen meta ads specifically like I'm I'm not particularly good on Google or anything but um and I know nothing about Amazon so um so so that means that like those are the things that I'm thinking about like how do I leverage those particular talents to be the create the most value for me if I'm uniquely skilled in those areas then I probably want to invest there so maybe like my last question to you would be like where are you uniquely skilled um and where could you leverage those unique skills the most that's why the cro answer you gave me earlier is really compelling to me and I like latched onto that is like that's actually a unique skill that not a lot of people really have the storytelling to a specific customer all the way down through a from ad all the way through full funnel people aren't thinking that way all the time uh so um so you know that's an area where I hear that and go like could you act you could develop a good service around that I'm sure um and so you know yeah so maybe maybe I don't know I don't know if there's anything else you think of in that bucket as like here's where I'm really best but that's probably what else think I think about yeah I would say similar on kind of the the leadership and team building side of things that's where I uh I think I excelled in our in BR people helping them find what they're best at putting them in the right seat empowering them so uh yeah and so question I final question for me uh to you on that because it's kind of the the two paths are like you want want to build something Enterprise Value or is it more of this kind of service solo business that can bring in enough cash flow for me and the family to live a great life um you are a chapter ahead of me father of two young kids uh going into that chapter where have you found obviously varies based on the Sur but your kind of ceiling is it you know five customers clients uh is there a number of clients that you found hey this is where I tap out where I find service diminishes I can't you know sufficiently do this yeah good great question I have four managed clients right now I may add a fifth okay but I won't add a sixth um I have a team that I've I have two in the US five in the Philippines um that I staffed with the sponsor that I have my main sponsor for a long time called more Staffing I talk about them all the time um and I may add somebody else in the Philippians um to continue to take some take some things off there but the team shouldn't get a lot bigger than it is right now um and that's um and that's uh that's four manag Services clients some coaching here and there at an hourly rate and then um basically one podcast episode per week and I'm trying to scale up some content output um so that represents the totality of my business when my full team is fully staffed nobody's on vacation all those kinds of things um that is really workable and I think I can deliver a really good service it's taken me a about six months of onboarding my most recent team member to feel like that has been the case to where like okay my time is really the most free I felt pretty frazzled for a year and a half of doing this um you know even maybe two years uh I started in 20 I guess when did I start in 202 okay so yeah basically about two years um there's my two-year-old right there um I don't know if you heard him in the background but yeah um so yeah but now I can like work basically 40 hours be home at the end of you know with my boys afterwards Etc again not withstanding somebody being on vacation or something but um that's right yeah I'm gonna go on vacation next week I'll have to work a little but I don't think I'm gonna have to work a ton so that's that's a dream beautiful man well we have a very similar view of of quality of life that we want to be able to attain so I uh I really appreciate your perspective on it and uh and sharing thank you well thanks thanks again for doing this in such a transparent way and for uh letting people get to hear hopefully learn a little bit from your journey uh uh what you built at Loom cube is insanely impressive and so I'm I'm certain you'll be successful with what's next but um that's a lot of years of learning how to run a DTC business and a lot of ups and downs to go from go from semi- distressed business going through that to covid to postco and iOS 14.5 and to see one business through all there and upate figures is pretty pretty impressive that's a lot been crazy bunch of years where should uh people find you LinkedIn yeah I think that's gonna be the best place so there you go um yeah literally literally cabinets falling apart in my house right now sorry where should people find you said LinkedIn linkedin's best LinkedIn is going to be the best yeah yeah Riley Strickland I'm I'm active on their daily so going to start putting out some content and would love to chat with people Well With a Little Help from my 2-year-old pulling a shelf down we have ended the episode that is what you heard in the background of that sorry about that but a big thanks to Riley Strickland for joining me for that conversation kicking around some ideas about the state of e-commerce where he should put his talents let me know if you think you have some advice for Riley about where he should go or Heck if you want to see about trying to get Riley to work on your stuff I certainly thought that when he was talking about cro I thought like man he should come help me with my stuff because I could use some help there you can uh reach out to Riley on LinkedIn if you want to reach out to and follow up with him as always I would love if you'd subscribe wherever you are listening to or watching this episode and uh follow with my sponsors don't forget they are great I vet them use them personally for all of them I don't take sponsors that I don't actually use and so go check out billy. a and use the code AJF to get $1 for first to get your first month not one off to get your first month of 100% server side tracking for $1 and uh go to more Staffing go to uh more now.co and learn about how to staff up your team with Incredible Talent from the Philippines uh so that's it next week on the show I've got what do I have another solo episode and uh it'll be good so subscribe get ready for it if this episode was helpful to you I'd be so grateful if you would share it with somebody else that's it talk to you next time [Music]