Exit Strategy S1:E4 // Nik Sharma: How To Build and Invest in Great DTC Brands

DTC Brands, Networking, and Performance Marketing - June 17, 2020 (almost 5 years ago) • 01:14:47

Moiz Ali and Nik Sharma discuss Nik's investments, largely in direct-to-consumer (DTC) companies, and his hands-on approach to assisting them. They analyze the impact of current events, including COVID-19, on the DTC landscape and explore the evolving dynamics of brand building and performance marketing. They also delve into the importance of networking within the industry.

Domain Names and Branding: Nik explains his strategy of acquiring short, memorable domain names, like judy.co, to strengthen brand identity. Moiz recounts challenges with Native's domain name and trademark acquisition.
Judy's Success: Nik attributes Judy's early success to its practical product (disaster preparedness kits) and the team's strong connections, leading to organic influencer marketing.
The DTC Landscape During COVID-19: Moiz and Nik analyze the pandemic's impact on consumer spending. They note a shift towards products promoting in-home wellness and discuss the struggles of travel and fashion brands.
Press and Public Perception: They examine the scrutiny faced by female-led companies, like Away, and discuss the importance of press angles and contextual relevance in PR.
DTC Marketing Strategies: Moiz and Nik share their experiences with different marketing agencies and emphasize the importance of finding partners suited to a company's stage of growth. They debate the effectiveness of brand marketing versus performance marketing, using examples like Hims, Casper, and Native.
Networking in the DTC Space: They highlight the value of building a network of industry professionals for advice and support. Nik explains his approach of learning by observation and emulating successful brands. He proposes an idea for a Shopify app to facilitate collaborations and customer acquisition between DTC brands.

Transcript:

Start Time	Speaker	Text
00:06	Moiz Ali	Okay, we're here on the 5th episode of the podcast with Nick Sharma. Nick and I have been friends for about a year. Nick, I'm gonna tell everyone a little bit about your background: You ran acquisition with Otter. You've been an investor in a bunch of direct-to-consumer businesses, including: - Judy - House (which is an alcohol company) - Some other ones that I was looking at on your LinkedIn profile yesterday Will you tell people a little bit about the companies that you've invested in?
00:32	Nik Sharma	Yeah, let's see. Judy House, Black Wolf Nation, Brightland. They're honestly mostly just D to C (direct-to-consumer) companies that I'm like a fan of first, and then fan enough to want to be involved on a deeper level.
00:51	Moiz Ali	and which one like are you involved in all of them on a deeper level or are you involved in all of them in like
00:56	Nik Sharma	I would say, like, pretty much, yeah. I definitely work on stuff like every week for each portfolio company. Wow! I help them out in some way every week, for sure.
01:07	Moiz Ali	okay great can you give me an example like what what's something that you did for like judy this week
01:13	Nik Sharma	For Judy, well today I'm actually pretty happy. I just finished the domain migration. I ended up getting judy.co as a domain, and I just set it like literally 10 minutes ago as our new primary domain.
01:28	Moiz Ali	oh that's awesome
01:28	Nik Sharma	so that was exciting
01:29	Moiz Ali	yeah how much did you buy judy.co like you had to buy it off somebody or it was available
01:33	Nik Sharma	yeah it it was a 5 figure domain
01:36	Moiz Ali	it was a 5 figure
01:37	Nik Sharma	I did the same thing at hand
01:38	Moiz Ali	Give me some details. Is it closer to $10,000 or $99,000? Five figures is too wide. Which one is it?
01:46	Nik Sharma	It's closer to 10. There was a lot of... I'm pretty good at negotiating these domains. So I did the same thing at Hint, where our first offer for hint.co was like $50, and it ended up at $6.
02:00	Moiz Ali	you guys bought hint.co for 6 k yeah wow
02:04	Nik Sharma	That's great! Yeah, so I'm just all about, like, if especially if it's a four-letter brand name, like "Hint." The first thing I did was get hint.co, @hint on Instagram, @hint on Snapchat, @hint on Twitter, and @hint on Facebook. It was just great for branding. I mean, you did the same thing with Native and then with Judy. I'm trying to do it as much as I can. You know, Judy's a little harder because it's a person's name.
02:27	Moiz Ali	Yeah, the hard part is that you have to sometimes steal the Instagram handle from a squatter. I remember, like, and that's not like... [expletive].
02:35	Nik Sharma	didn't even know that it was happening
02:37	Moiz Ali	Yeah, I didn't even know that it was happening. I just reached out to our Facebook folks and I was like, "Hey, could we get the native Instagram handle?" and they're like, "Yeah, here you go." And I'm like, "Okay, great." That was a lot easier than I expected. We actually never tried... Do you think domain names are important? We... like, I think Instagram handle is really important. I think Twitter handle...
02:53	Nik Sharma	is yeah
02:54	Moiz Ali	I never did that well with Twitter, but do you think domain names are [still important]? Because so much of the traffic that is driving to your site now is like being searched for on Google or being found on social [media], and not totally... yeah, people [aren't] putting in [website addresses directly into] Google.com.
03:07	Nik Sharma	Yeah, I don't think it's as important, but from a... Sorry, is that really noisy in the background?
03:14	Moiz Ali	no go for it
03:15	Nik Sharma	Okay, you're good. So, I don't... yeah, I think it's definitely important to some extent. You want a good domain. I think where some brands get carried away is when they try to put a verb in front of their brand, and then it gets too long. Like, Hint is "drinkhint.com."
03:36	Moiz Ali	yeah
03:36	Nik Sharma	It's usually like food and beverage or fitness-related things. But yeah, I mean, I like things that are just nice, short, and clean.
03:46	Moiz Ali	yeah
03:46	Nik Sharma	And so, I was really proud to get judy.co. But then, with other things like Brightland, I'm working on a landing page. For House, you know, things like connecting them with Postscript and getting Alex set up there. But yeah, it's like, I usually try to be proactive. If I see them trying to do something, I just think, "What's something easy I can do to help them out?"
04:14	Moiz Ali	yeah makes a ton of sense
04:16	Nik Sharma	yeah
04:16	Moiz Ali	You know, when it comes to brand names, before Native launched, I was like, "Okay, I want to start this deodorant business. What's a good brand name for it?" I went through a bunch of ideas and thought, "Okay, I want something that has a nod towards natural but doesn't explicitly say 'natural'." I considered names like "Deodorant Club" or "Deodorant Company" because I wanted to be able to sell other products as well. When we came up with the term "Native," I remember a bunch of people saying, "This is a bad name. It doesn't mean anything, and a lot of Native Americans are going to get upset."
04:50	Nik Sharma	yeah
04:51	Moiz Ali	native americans getting upset happened ton of people got upset about it
04:55	Nik Sharma	is that the first thing
04:56	Moiz Ali	But we never tried to buy like Native.com. However, we did have a huge issue with a trademark. I think I've mentioned this to you before. We tried to use the Native trademark, but somebody else owned it. It became difficult to sort of... we had to acquire that trademark. We bought the trademark like 5 days before we ended up selling the business to Procter and Gamble. That was... that's insane.
05:18	Nik Sharma	wow wow business wow wow and then when you're chatting
05:22	Moiz Ali	With other people, it would be like, "We're not going to give you an offer for your business until you own your trademark."
05:28	Nik Sharma	yeah and so
05:28	Moiz Ali	I really think one of P&G's advantages was they were like, "Look, we're ready to move forward in the acquisition process with the contingency that you buy the mark before we close." But other people...
05:37	Nik Sharma	like we're not gonna charge you like an arm and a leg for that
05:40	Moiz Ali	yeah they did it was yeah high 6 figure price
05:44	Nik Sharma	Well, so what's crazy is, you know, comparing that to a domain. You had to get that because that's the only way your deal would have gone through. Whereas a domain, you don't necessarily need it. But as you were saying that, this thing popped in my head. Soylent... I think it was like "Drink Soylent," and they bought Soylent.com off this dude who was into some weird stuff and promoted some things on that site. They bought the domain off of him for like $100,000.
06:16	Moiz Ali	Wow! So, I think they've raised $80,000,000. I feel like if you've raised $89,000, you don't know what $100,000 is anymore. Yeah, that is crazy! We never tried to buy native.com. Our domain name was nativecos.com, and people would be like, "What is the C-O-S? Is it cosmetics? Is it companies? What is it?" I was like, "I have no idea." It was the only thing available. So, like, we...
06:41	Nik Sharma	the longest time by the name
06:42	Moiz Ali	of this company and I'm like I don't know
06:44	Nik Sharma	Yeah, for the longest time on Twitter, I never found Native because it's @native_cos.
06:50	Moiz Ali	It's so bad. Yeah, we tried to get Twitter to do what we had Instagram do or Facebook do, which is better than native.
06:55	Nik Sharma	well I told you the guy who had the instagram also has the twitter he's down the south
06:59	Moiz Ali	oh does he really okay yeah well I'm glad that he like got to keep one of them then
07:03	Nik Sharma	yeah
07:05	Moiz Ali	Alright, we'd love to talk about what's going on, not just in the businesses that you're invested in. I know you've said that Judy is sort of crushing it. It's a great time to launch beautiful branding. Actually, can we talk a little bit more about Judy? Yeah, Judy sells a disaster kit for your house, which is good timing because people are now staying at home and realizing that disasters may happen. Who are the other people involved in the Judy business? You've told me about this, and I sort of understand it, but I don't really understand all the relationships.
07:38	Nik Sharma	Yeah, so Judy is interesting because of two things. One, it's a really sound business. The product is basically a very functional product, and it's something that provides immediate value to the consumer. So, it's a very functional and necessary product, which we love as immigrants.
07:59	Moiz Ali	Yeah, yeah, no, it makes a ton of sense. I want a disaster kit for my parents, and probably one for myself as well. So look, you don't need to sell me on the business any longer. I am 100% in.
08:09	Nik Sharma	Yeah, so the other reason that's really interesting is because of the team that's involved. The core team was probably five people: myself, our ops person who's just a genius with operations, the head of customer service, and then the two founders—Josh Udashkin, who's a former founder of Raiden, and Simon Huck, who is the founder of Command PR or Command Entertainment Group. He also happens to be a celebrity in his own right, being closely friends with Kim Kardashian. He knows the A-list world like the back of his hand. So, it made it really interesting to launch because on launch day, I was learning all about A-list celebrities through Judy.
08:59	Moiz Ali	you know
08:59	Nik Sharma	There was like... every celebrity has posted to Judy, from Chrissy Teigen to Martha Stewart to Kim Kardashian, to like literally everybody.
09:09	Moiz Ali	And is that just because, like, is that because Steve Huck, I guess, sort of got all these people to post about it? How did that sort of happen?
09:16	Nik Sharma	Yeah, honestly, Simon is a very loved guy in the industry and in his network. I think when people saw that he was launching something, they recognized that he developed this brand because he saw that so many of his own family members were affected by disasters.
09:34	Moiz Ali	yeah
09:35	Nik Sharma	And so, I think when they saw that he was basically launching this brand and it was a real thing, they all just wanted to support. It's weird because none of the influencer posts have ever felt like ads. None of them are like, "Go buy this now." It's all congratulating Simon or just talking about how handy their Judy kids are.
09:55	Moiz Ali	Yeah, well, that's great. Trying to get that organic influence per reach is really, really difficult to get right.
10:05	Nik Sharma	Yeah, they did a really good job. Josh, who is the other founder, is the president of Ramallah. He’s just a beast of an operator. Especially on things like logistics, supply chain, sourcing, and marketing—he's a genius.
10:27	Moiz Ali	Is he related to, like, the founder of LVMH? I thought the president of Remo was, like, the guy's son or something, like Bernard... oh.
10:37	Nik Sharma	No, I don't think he's related to them. I have heard that name come up, but maybe Josh replaced them or he took a different role in the company.
10:46	Moiz Ali	Yeah, sure. Okay, let’s move on to what's going on in the direct-to-consumer industry now. I feel like you’re in touch with a ton of different brands, and there is certainly a perfect storm brewing right now. All of a sudden, people were worried about profitability and not just top-line growth. When Brandless sort of shut down its operations and when Outdoor Voices had whatever issues it recently had, people realized the bottom line really mattered. Then, all of a sudden, the stock market is collapsing. Investors are going to be a lot more cautious when it comes to writing checks. Finally, no one’s going outside because COVID has caused the stock market to collapse. You know, all of a sudden, the pair of Nike shoes that you ordinarily wear when you were running outside don’t really seem necessary any longer. What do you think? Do you think that the bottom line mattering or COVID is having a larger impact, or is it just impossible to tell right now?
11:50	Nik Sharma	It is kind of impossible to tell because, you know, we're in this sheltered or hibernation stage right now. We haven't fully accepted that, "Okay, this is the reality," and figured out the adjustments around that. We're all kind of in this... like, I'm sure you saw that New York Times article about how people are just turning to junk food. I know just from portfolio companies and chatting around that cookware is doing really well. Beauty-type products aren't doing as well, like anything really related to going out. But anything that promotes happiness, calmness, or wellness while you're staying in has just been crushing it. Everything from fitness gear, jump ropes, and bands all the way to adaptogenic drinks are doing well. Cookware, as I said, is doing well. It's kind of weird, though. It will be interesting to see when all this stuff does settle down, how people will adjust and what they will start to realize as their priorities. You know, I don't think people are going to be rushing to spend $100 to get, you know, face wash customized to their zip code anymore.
13:04	Moiz Ali	yeah
13:06	Nik Sharma	like it's just things things the perspective of money will definitely change
13:10	Moiz Ali	Yeah, it's crazy how fast that happens. You know, it took like 10 years for people to feel really bullish and for their wallets to feel fat. Then, they felt like, "Hey, I want to spend money making myself happy," to all of a sudden thinking, "This seems like a crazy luxury to have a customized face wash."
13:27	Nik Sharma	Yeah, right. I mean, if you think about it, that's literally a way, right? It's like you used to have a $25 Target suitcase or you have a $5,000 Saks Fifth Avenue suitcase.
13:41	Moiz Ali	set yeah
13:42	Nik Sharma	and then away kinda came in and found that like high earners but not rich
13:47	Moiz Ali	yeah henry
13:48	Nik Sharma	The Henry Playground, yeah. And then, I mean, they just had to let go of like 60% of their staff. The worst part is all the people who get affected, who, you know, just don't know how they're gonna pay rent in two months.
14:03	Moiz Ali	Yeah, I guess, look, let's take a step back. I mean, COVID is obviously a complete catastrophe for the country. It's just heartbreaking. You know, I think about it... a couple of days ago, I saw that there were nearly 2,000 deaths in the United States on a single day. I was like, "This is two-thirds of a 9/11 on a single day," and it's going to happen again tomorrow. It's really heartbreaking. You were talking about some businesses that are doing well, just by virtue of the fact that people have to stay in. Cookware companies, fitness bands... and you're right. I've tried to order fitness products, and the wait is like a month from now.
14:41	Nik Sharma	yeah I waited 3 weeks to get a jump rope
14:44	Moiz Ali	Yeah, it's crazy. Do you think that acceleration is permanent? For instance, if you haven't ordered from Instacart before and now you do, do you get off of Instacart? Are people going to be like, "Yeah, I want a Tonal or a Mirror," and "I want to keep this"? You know, Tonals and Mirrors are thousands of dollars, and then they have $50 a month subscription fees or something to that effect. They're incredibly expensive. But is this now the new reality? Is Equinox sort of like in trouble? Or, six months from now, are these direct-to-consumer businesses back to where they were and Equinox is back to what it was?
15:22	Nik Sharma	Well, I think there's two parts to that. One is: will people trust going out and going into a public gym again? I think that, yeah, like that to me is mind-boggling. But the second part is, you know, how much do they value getting that Peloton bike or SoulCycle bike for their house? Whether or not they will... I think they have definitely seen sales just jump. For them, their whole game is, you know, if they get a product in your house, then they kind of get happy with the subscription for quite some time.
15:58	Moiz Ali	Yeah, and what happens to the other companies? So, like Away Travel had to lay off a bunch of their staff. Everlane has as well. Mhm. You know, a lot of companies have just, as a result of the fact that sales were down, and you can't...
16:11	Nik Sharma	yeah
16:11	Moiz Ali	You know, it's a terrible thing to have to do, but at the same time, if the entire business goes bankrupt, there's nobody that can work there, right? So it's a good decision, but probably the right decision. Sure, what happens to these businesses in the future? Do they have down rounds? Do they go out of business ultimately? What happens to Away, I guess, in 6 months or a year? It was probably like the darling of the DTC community, right? A huge valuation, two female entrepreneurs who I thought were doing a fantastic job. I really admire both of them. I know, like, you know, I'd love to talk a little bit more about the press related to Steph Cordy and stuff later on. But, you know, what happens to this company that was doing everything right for so long? You know, investing in a brand. You go to the airport, and a ton of people are carrying their Away bags. What happens to that brand a year from now?
17:07	Nik Sharma	Yeah, it's tough to say. It's so scary. Two immediate things that come to mind are: one is private equity, and the other is that it just gets acquired by one of the bigger luggage companies. They either acquire it and roll in capabilities, or they basically just keep the brand going but support the P&L much better.
17:36	Moiz Ali	Yeah, it's certainly tough to say. I imagine there are going to be down rounds for a bunch of these businesses. Aside from the founders, who I have a lot of empathy for because they built an amazing business, something terrible happened that was completely outside their control and hurt their business. I also have a lot of empathy for those employees that work there and had bought into that stock or exercised their options. Now, all of a sudden, they're in a lot of trouble. It's not just one company; it's Airbnb and a ton of other companies that were headed in the right trajectory and then all of a sudden are no longer going to do that.
18:14	Nik Sharma	yeah
18:16	Moiz Ali	Would love to touch base a little bit about... well, actually before we get there, do you think there are opportunities to buy distressed direct-to-consumer businesses? So, like Away Travel is obviously going to be a super expensive business, but like what happens? How do people buy and sell these distressed businesses?
18:38	Nik Sharma	To be honest, I'm not 100% sure. I've definitely been doing a little more research just because I've gotten curious recently about it. Yeah.
18:46	Moiz Ali	I figured
18:47	Nik Sharma	You'd have it, yeah. But I've been talking to, like, Mike for example, who's our friend at Greylock. I mean, I'm just trying to learn about it as well. It's like a completely new world for me. I never thought that all this would happen, and so I've never had to learn it before.
19:08	Moiz Ali	Yeah, okay, let's talk a little bit about, you know, not just COVID, but also about what happened with Outdoor Voices and the press related to Away Travel. I've seen a lot of articles suggesting that there are hit jobs going on against female entrepreneurs by other females. I have no idea what the answer is to that. At Native, we barely got any press when we were independent. I've never been a woman, so I have no idea whether people are doing that. It certainly seems like something is happening. There are a lot of terrible male-run businesses that don't seem to be getting as much scrutiny.
19:47	Nik Sharma	that totally
19:48	Moiz Ali	I'm not sure why that's the case, but you know, I'd love to... I think Outdoor Voices and Steph Curry are very different businesses. Like Away Travel, you know, certainly there were things that Steph said that weren't great. But I think if you look at anyone's, like, if you look at the Slack history I had at Native, you know, people would put me in prison. I was saying terrible things. Like if people messed up, I was like, "How could you possibly mess up like this, you motherfucker?" You know, like that's... it's a very intense process. Your livelihood and all of your energy is being put into something.
20:28	Nik Sharma	so tough yeah
20:29	Moiz Ali	Look, did you like the Away Travel one? I thought it was really unfair. She called some third-party logistics company "brain dead," and I was like, they probably are brain dead.
20:40	Nik Sharma	happens all the time
20:41	Moiz Ali	yeah yeah that's the nicest term I could think of a third for a third party logistics company
20:46	Nik Sharma	I mean, I have empathy on both sides. As an employee, if you're not used to that kind of environment, like the hyper-growth startup, it can be challenging. I feel like a lot of the really successful brands or even companies that sell products have a very intense marketing or customer success organization. That's why they're so good; they're critical about their marketing, sales, and onboarding. Some people are definitely not made for that. I also think you probably don't want to be yelling at employees on public or private channels, but again, that's up to you as a founder. If you choose to do that, that's your decision. I've definitely done it before. Like you said, if you're a founder, I always try to have empathy for the other person. If I were your employee and you were like, "How the heck could you mess this up?" I'm not going to get mad thinking, "Oh, Moises is mad at me." Instead, I'm thinking, "He's right. He has to deal with this company that's trying to acquire him, and he's probably dealing with 15 other things. Me not doing my job just puts something else on his plate." That's how I would view it, and that's how I have viewed it when I was at the last couple of companies I worked at. All that said, those messages were nothing I had never gotten before.
22:22	Moiz Ali	yeah there were nothing I've never sent before in fact they they were like
22:27	Nik Sharma	yeah I was like
22:29	Moiz Ali	joe exotic when I was running native and like everyone else was like carol baskin
22:35	Nik Sharma	Yeah, I think like, you know, if you're gonna do it, you own it. And you also obviously make sure that your employees are not, you know, pissed off that they're working for you. Sure, there are good times and bad times, and I think that's natural. But yeah, I mean, I think the thing with the press too is that, you know, female-founded companies are just, numbers-wise, could be considered anomalies. Because of that, the ones that, you know, started way earlier, when it was the ones that go through the Red Antlers or the Jim Lanes, they come out and there's like a press tour. It's a very normal thing where, you know, brands launch and there's a whole press tour. Everybody's goal is to get into The New York Times with a quote so they can throw that on their site. That said, I think the press, you know, good or bad, will follow you throughout because people are just intrigued by the story. The hook is so much different than what people are normally used to. I guess that would be my really zoomed-out, non-politically correct, just like off-the-cuff thinking.
23:48	Moiz Ali	Yeah, I guess there are two things about that. One is the other thing I thought about from the leaked conversations. They have a real commitment to customer service, and that's really incredible. You know, when they were late sending packages, they thought, "Okay, how about we send this person 10 suitcases or 100 suitcases to make up for it?" That’s what we want from customer service, especially with direct-to-consumer businesses. Companies that have a ton of empathy and do the right thing when something goes wrong. I really admire that. The other thing, from a press perspective, is that at Native, I was trying to court the press early on. All I wanted to talk about was Native deodorant and not the success of the business. What happened was that we couldn't get anybody to write about us. Then one day, randomly, we created a rose deodorant and accidentally launched it on June 21st. It wasn't even our goal; we didn't realize it was the first day of summer until we launched it. All of a sudden, all these press institutions picked up the product, which we never thought would happen.
24:55	Nik Sharma	yeah
24:56	Moiz Ali	But, like, we were on Good Morning America, The Today Show, and, you know, in Vogue and Refinery29—probably like 30 or 50 publications in the course of 24 hours. I was like, "Great, we've made it!" In reality, I tracked our revenue from that day. All of those publications got us an extra $25,000 in revenue. On that same day, Facebook got us like $50,000 in revenue. It was like we were in a mini viral sensation. Certainly, nobody remembers it like they do other viral sensations, but yeah, it was in a lot of publications, and we got $25,000 in sales.
25:37	Nik Sharma	totally well I mean what
25:39	Moiz Ali	what is the why are people court in press like this then
25:42	Nik Sharma	Yeah, well, I think it's like, you know, it serves both parties, right? Because you get picked up and it's good exposure. For a lot of these outlets, they just plug into your affiliate platform. If they can be contextually relevant for what consumers are thinking—like jumping into these "1st Day of Summer" articles and listicles—then they're going to try and make revenue off of it. It's actually a good strategy for when you try to launch stuff. If you can be super contextually relevant to as many people as possible, which everybody can enjoy on the 1st Day of Summer, then you just increase your chances of getting picked up and things like that.
26:24	Moiz Ali	Give me another example of something like that. Like, I'm sure with Judy... did it happen with Judy? Give me another example because I have a tough time completely understanding.
26:35	Nik Sharma	So, you know, with Judy, I'm not speaking as a member of Judy but more as an outsider. When Judy launched, every Kardashian was posting about their Judy kit. Chrissy Teigen posted it as well, and all of a sudden, there was an angle of like, "The Kardashians are promoting this emergency kit. What is it?" That became a press angle. There was another People magazine article that did really well, which was something around, "What is this new emergency kit that the Kardashians and Chrissy Teigen are promoting?" It's almost just like making sparks on one end, and the fire happens on the other. Does that make sense? That said, that one is a little bit different than like the rose, but similar in the sense that you can plan things like press. A lot of people tend to think that you just cold email reporters asking to talk about your product, and then they'll magically pick it up one day. But the real work comes in figuring out the reason for them to write about it or creating that angle.
27:54	Moiz Ali	yeah
27:54	Nik Sharma	Because they're also, as a publication, incentivized by ad revenue. You make ad revenue by getting more page views. You get more page views by having a good angle. Yeah, it's like a weird, weird loop.
28:05	Moiz Ali	Yeah, you definitely have to be proactive. You can't just say, "Here's this product, please write about it." You have to explain, "Here's why I think it's interesting to your readers." I remember when, right at my first e-commerce business, I would constantly look for people who had written about something else in the space. Then, I would reach out and say, "Hey, here's something you should talk about." We had a business that sold alcohol online. For some reason, a TechCrunch reporter wrote about a distillery in New York City. I thought, "Well, that's not very TechCrunchy." But I figured if he was willing to write about that, maybe he would be interested in us. We knew that distillery well, and we were the number one seller of their products. So, I reached out, and he said, "Okay, great! Let me write about you guys." He wrote about us, and then Bloomberg picked us up, and so did CNBC. It was just random, but it created this kind of flywheel effect that one single publication can have. So, yeah, you have to be persistent, but you're right—those angles are really important.
28:55	Nik Sharma	Yeah, if you can nail one of those anchors, whether it's an exclusive or they pick it up first, then the others will definitely make a move to try and cover it. Just because, you know, if it's coming from like TechCrunch or Bloomberg, then they probably assume people are going to be searching for it.
29:13	Moiz Ali	Did you guys hire a PR agent already at Judy, or how are you guys doing that? Do you not need one because you have all these influencers?
29:21	Nik Sharma	yeah they use no they they use an agency
29:24	Moiz Ali	Gotcha! Yeah, when we were running Native, I tried to get an agency. We ultimately settled on one, but before that, I called up the guys who are doing a lot of direct-to-consumer PR work in New York. They were like, "Yeah, we charge $25,000 a month plus 1% equity." I was like, "Oh wow, that's crazy!" I don't understand where this number came from. It was a 1% equity ask, and I thought, "You don't know anything about my business, and you want 1% of it?" I might be Allbirds, and you could be asking for 1% of that, or I could be a brand that does $10,000 a year, and you want 1%. Those are two completely different apps, right? One is worth more than $10 million, and the other is probably worth a dollar. So how could you just ask for 1% equity without knowing anything else about it?
30:14	Nik Sharma	my that's insane
30:16	Moiz Ali	have you have have you seen people like do that kind of stuff
30:19	Nik Sharma	Oh, totally. Well, some branding agencies do it and still do it. I haven't seen it from PR. I know there are a couple of firms in New York that will do growth marketing and they'll also take some equity. Yeah, but it's... I don't know. I think that concept is kind of weird. It's almost like exchanging currency, and I think your currencies just have to be, you know, the same.
30:47	Moiz Ali	yeah that's why we use cash
30:48	Nik Sharma	You shouldn't... yeah, you shouldn't mess with changing equity for services. It just gets really messy. Also, I was talking with somebody, and he was saying that when you get to, like, let's say you're early and you're a native, for example, and you go off, if you didn't get acquired and you started raising like round C and D, those investors start looking at your cap table thinking, "Why the heck does this branding agency have 2% of the company?" They might just knock them off, and so they'll end up getting screwed later.
31:20	Moiz Ali	Oh, that's interesting. Yeah, I didn't realize that people would do that. I mean, from a branding agency perspective, I'm a little bit more amenable to it because presumably your business has just started when you work with that branding agency. So you're both at like, you know, it's worth nothing and you might not have a ton of cash. I was just surprised as, like, this... you know, Native was probably doing $2,000,000 to $3,000,000 a month. And this person said, "Do you want 1% of your company?" I was like, "Do you want 1%? Like, this company could be doing $3,000,000 a month or it could be doing $30,000 a month. You don't know, and you're just asking for the same amount." It just makes no sense to me.
31:51	Nik Sharma	right that's insane
31:55	Moiz Ali	Yeah, I would like... you know, I wish that somebody had put together like a Yelp of vendors that e-commerce companies use.
32:02	Nik Sharma	Yeah, I know there's honestly... that's one of the things I get asked the most: "Who are the best?" You know, I always get asked, "What's a great paid media agency?" Really, where people go wrong is, one, they just read stuff on the internet. Agencies are all marketing themselves, so they'll all call themselves the best. So, one mistake is going by that. The second mistake is thinking, "Oh, you know, this agency looks sick. I want to work with them." I made that mistake at Hint, where I thought an agency was a sick agency. They did good work, but the problem was you realize that certain agencies are built for businesses at different stages. We were too small for that agency to really care. But now I've kind of narrowed it down to, you know, if you're under $200K, there's a different person. If you're between $300K to, I don't know, $1 million or $2 million, it's a different stage than, you know, $2 million plus, which is a different stage altogether.
33:15	Moiz Ali	yeah that that's a great.
33:16	Nik Sharma	And saying those for like PR and, you know, everything—email, PR—like all your services are affiliated too. They're all different at different stages.
33:26	Moiz Ali	Yeah, you don't want to be like the smallest fish in a ginormous pond. You don't want to work with an email agency that is also working with, like, Nike. Exactly.
33:37	Nik Sharma	and because you're never their priority
33:39	Moiz Ali	Yeah, exactly. It is interesting that you, you know, at Native, what happened is the first, our first like 6 months of the business, we lost our contract. The person who was making our product was like, "I'm gonna stop making this." So we had to find another company. The other company that we were working with, I think you know them, was this 800. They were working out of an 800 square foot facility at the time or something tiny. It was perfect for us because when we called them up, we were like, "Hey, we want to order 1,000 units a week." They were like, "That's fine. That's a very manageable request for us." Other people we spoke to were like, "You need to order 100,000 units out of the gate." I was like, "We can't even afford that." So this is a...
34:17	Nik Sharma	non starter did you share what your cogs were
34:21	Moiz Ali	when we launched when we launched the business at first it was $5.50 to make a stick of native deodorant
34:27	Nik Sharma	geographies so like it was july for 2015
34:29	Moiz Ali	and we were selling it for 12 yeah
34:31	Nik Sharma	12
34:32	Moiz Ali	so and you were profitable
34:33	Nik Sharma	with facebook
34:35	Moiz Ali	we were profitable with facebook which is crazy
34:37	Nik Sharma	nice that's insane
34:39	Moiz Ali	In 2015, our Customer Acquisition Cost (CAC) was around $2. By 2016, it increased to $4, and by the end of 2016, we were generating $1,000,000 a month. There was a ton of EBITDA that the business was generating, but the Cost of Goods Sold (COGS) decreased significantly. It went from about $550 with the original manufacturer to around $320. Every time we grew, they brought the cost down. We went from making 1,000 units of a deal run a week at the end of 2015, or at the beginning of 2016, to making 21,000 units a day by the middle of 2017. We had increased sales by about 20 times, or 100 times, basically. Our costs came down to below $2, substantially below $2. What was amazing is that we found a manufacturer that was really able to grow with us. They moved from an 800 square foot facility to a 20,000 square foot facility, and now to a 40,000 square foot facility. Rarely do you find service providers that grow with you. Usually, you go to a service provider, outgrow them, and they don't make the necessary infrastructure changes. Then, you have to go find someone new.
35:46	Nik Sharma	Totally, totally. Did you ever consider, you know, like especially when you were doing, let's say, 5,000 deodorants a day? Did you ever think, "Oh, why don't I just buy the facility to do it and buy the raw ingredients?"
36:03	Moiz Ali	Yeah, certainly did. Not too seriously though, like... you know, we were like the business was growing exponentially. If you could work 80 hours a week just on the business without touching a single piece of the back end, and so it became really difficult. It just... it didn't have the bank, but for...
36:19	Nik Sharma	you it was just like it was also peace of mind that it was like being taken care of
36:23	Moiz Ali	Yeah, and the simplicity... like when we sold the business, there were 8 employees at the manufacturing facility. I think there were 140 at the shipping facility, and there were like another 100 people. So, you know, there were 8 employees, and we had created something like 250 jobs. But I only had to manage 8 employees. I think one of the things I realized working at Native was that one of my weaknesses is managing employees. It's something I'm trying to work on, like giving them structure and goals and communicating with them well. And yeah, I was like, I can barely do that with 8 people sitting here. If there were 250, I'd put a bullet in my head right now... like they would put a bullet in me, actually. Yeah, and the person who was making it was just fantastic at it. She had very few problems and worked really hard to make them well. So that really gave me a lot of peace of mind.
37:12	Nik Sharma	that's awesome
37:12	Moiz Ali	What are other agents you know? You talked about Postscript, which I think is fantastic when it comes to text messaging. It's like the playbook of text messaging. I'm not sure if you've ever dealt with ShipMonk. They're based in Miami, I believe. They do... they're fantastic.
37:26	Nik Sharma	like 3 people you've introduced me to them
37:29	Moiz Ali	They're like the only three people I've ever met that is run by a young person that's in the 21st century. Like they... yeah, they have really good tech. What are some of the other agencies that you recommend to people? Or some of the other companies that you recommend to people?
37:43	Nik Sharma	So, like most media buying, I recommend Metric Digital. Their bread and butter is direct-to-consumer (DTC) brands, especially if you have a retail presence. They're really good at that. Let's see... for texting, SMS, and email, I would probably suggest Klaviyo. If you're an influencer for texting, use Community.
38:05	Moiz Ali	is that what you use
38:08	Nik Sharma	yeah
38:08	Moiz Ali	okay
38:10	Nik Sharma	Yeah, let's see. Landing pages... build them on Netlify Commerce. Use Shopify, although you're not really a... you'd rather... I'm not sure what you prefer.
38:19	Moiz Ali	Not a Shopify first-hand experience, yeah, which is crazy because like WooCommerce is... you know, when I used to use it, I was like, "I'm so embarrassed telling people that I use it." Now, having used Shopify, I'm like, "You idiots!" You guys are... now I'm embarrassed with Shopify. Shopify is great, but it offers... you know, our conversion rate went down by a significant material amount once we switched from WooCommerce to Shopify. It's because Shopify's checkout page... I thought that like Shopify would be better than it is. I thought Shopify would have all these network effects, and yeah, it really doesn't have those. Its checkout page is terrible. It's a multi-step checkout page, and the coupon code box doesn't appear on the cart page like it does for WooCommerce.
39:05	Nik Sharma	most of
39:05	Moiz Ali	The business is at this point. It's only on the checkout page that you can't control the server. You know, at Native, I actually bought a bunch of servers. We didn't use AWS for a long time. I bought some servers and put them up in server farms, and our site was blazing fast. At Shopify, you can't do that. We use our subscription portal, which was a lot cheaper than Recharge, which is what Shopify uses today. In fact, it was free.
39:36	Nik Sharma	and how does recharge charge you
39:39	Moiz Ali	they charge a percentage of your subscription sales
39:44	Nik Sharma	what what a beautiful business
39:46	Moiz Ali	Yeah, I mean, look, we went from things like $1,000 a month. It was crazy. My next business will be on WooCommerce again, and next time I will not have any shame whatsoever. No challenges on WooCommerce. You know, like someone asked Margaret Thatcher, "How can you have the position that you have when there are 80 people that disagree with you? How does that make you feel?" She said, "I feel bad for the 80 people because I'm right and they're wrong." That's now how I feel about WooCommerce. The hardest part was just the developer community. It still needed some more... there should've been more developers.
40:21	Nik Sharma	Well, that's my biggest tough thing: finding really good developers on Shopify. I have one developer who I just have on retainer for myself. I have a Shopify developer who's on my payroll, and anything I need done, I can hit them up. It's just so necessary because...
40:41	Moiz Ali	yeah
40:42	Nik Sharma	A lot of times, you know, like Shopify agencies that are on retainers for some of these brands, they're also sometimes not the best developers. And then, you know, you can't necessarily rely on just internal developer teams either. For me, I like having my own set of tools.
41:02	Moiz Ali	yeah yeah definitely especially ones that you understand yeah
41:06	Nik Sharma	and I
41:06	Moiz Ali	I think it's really hard, you know? You're working on a bunch of different businesses at the same time, and it's really difficult to say, "Okay, these guys use Unbounce, this guy uses something else, this company is a different part of you for a landing page." And now you're like, "I have to learn all these systems." It'll be helpful, yeah, but it is really difficult to do all that.
41:23	Nik Sharma	yeah it is actually oh sorry
41:26	Moiz Ali	go ahead no no go ahead
41:27	Nik Sharma	no we can finish that
41:29	Moiz Ali	Okay, what are other industries like, you know? Direct... Yeah, when we launched Native Deodorant, when I launched Native, I was thinking about doing Native or another mattress company. I'm not entirely sure that... I think the mattress company could have been even better. It seems like everyone who makes a mattress company has $100 or $1,000,000 in sales. It is an insane industry. But you know, hindsight is 20/20, and like, no one was really doing deodorant at the time. And today, there's like 5,000 companies doing deodorants.
41:56	Nik Sharma	yeah
41:57	Moiz Ali	And like, you know, they're so... they're not annoying. I'm just like, "Look, this is a $3,000,000,000 a year industry." The two biggest players, Unilever and Procter & Gamble, have made acquisitions in the space. You know, we're digitally savvy. We have a huge first mover advantage. We have a good price and a good brand. Where do you look? How much of a business are you looking to acquire? If you're looking to build a $10,000,000 a year business, I get it. If you're looking to build a $200,000,000 a year business, you know, that's 7% of the market. That's going to be really difficult to do. There are other industries that are untapped today. Like, where should people be? Do you like... what's a good example? When Quip came out, I was like, "Wow, this is great! You guys are doing a great job with the brand." No one's touching electric toothbrushes. Great industry to be in. What are other businesses that need revolution? Some are hard. For instance, I think diapers are a great business. It's really hard because to make diapers is really expensive. You need a lot of inventory and a lot of different sizes. There are very few companies that can private label diapers. You need a very expensive paper machine in order to make a diaper.
43:05	Nik Sharma	Yeah, to be honest, I'm not 100% sure what the most ripe opportunity would be. Just from observations, though, I think pet products are one area that hasn't really been explored from a product side. There are a lot of pet food brands out there, but not necessarily in terms of products. I still think there's a lot of potential in the area of convenience and accessibility. Even some of these brands that have come out with new products are just making things simpler. So, I think that's one area. I don't know, the other day I was thinking about direct-to-consumer sauces. There's no sauce company—there's no direct-to-consumer buffalo sauce. Somebody told me I should say "buffalo sauce."
43:49	Moiz Ali	that's really funny yeah that would be interesting
43:51	Nik Sharma	or like dressings
43:52	Moiz Ali	but
43:52	Nik Sharma	have you heard of sergio munoz I I have yeah yeah their stuff is good
43:57	Moiz Ali	Yeah, they're probably the closest to that. What are some direct-to-consumer brands that you really admire right now?
44:05	Nik Sharma	Dude Wipes is one of my favorite brands because I think they have some of the funniest content.
44:12	Moiz Ali	dude wipes like a butt wipe it's like the one wipe charlie from dollar shave club
44:16	Nik Sharma	Yeah, okay. They were on Shark Tank years ago, and they're really good operators. Because they're really good operators, all they've done is just build their brand in the coolest way possible. Their emails are just the best. Other brands I admire...
44:37	Moiz Ali	How rare is it for you to look forward to an email from a direct-to-consumer company? Like, all the emails that people...
44:43	Nik Sharma	oh so rare
44:44	Moiz Ali	my promotions tab I'm just like I hate like I don't wanna look at any of this kind of stuff
44:48	Nik Sharma	yeah highlight all and hit archive
44:50	Moiz Ali	yeah yeah
44:51	Nik Sharma	I'll usually scan through and see if there are any cool new templates or interesting things that people are doing with their audience. Aside from that, I signed up for Quibi, and I've been checking out some of their emails, but nothing's really that great. Honestly, lately, it's just been full of sales. Everybody's just trying to liquidate.
45:18	Moiz Ali	Yeah, alright. I'm sorry, but I interrupted you because I think you had a couple of other brands that you said you were going to mention that you admired.
45:25	Nik Sharma	Oh yeah, a couple of other brands. You know, I think what House is doing is pretty awesome because they're very... they're super. All their manufacturing is done literally on their farm, and they have all the bottles as inventory to fill. Helena is just a great brand marketer, and she's really good at pivoting and making things pop, which is insane. So that one's really exciting for me to watch and also learn from. Then, you know, I usually have a couple of favorites. I like a few on the brand side and then a couple on the performance side. Not necessarily that they're that good at brand, but they just crush it with performance. They have great landing pages, great ads. Like, really, yours is the native one, which is one of my favorites. Just the homepage, the landing page, the cart, all the upsells, the payment token holds.
46:24	Moiz Ali	yeah yeah the
46:25	Nik Sharma	all the fancy
46:25	Moiz Ali	The upsells... you know, the upsells were crazy. We have a post-purchase upsell where we sell a travel-sized deodorant, which we couldn't sell otherwise. It sells for $3 and has free shipping. We couldn't sell that individually, and we would lose so much money if we did. You know, we sell hundreds of thousands of those mini-sized deodorants every month, and they're very profitable as well. Often, our EBITDA was... you know, like at Costco, their EBITDA is basically just their membership fees. I was like, "Wow, our EBITDA is almost all from, you know, mini-sized deals that we're selling because there's so much money."
47:05	Nik Sharma	Yeah, that's awesome! But, I usually have like a small tab of brands that I just keep looking at their stuff.
47:13	Moiz Ali	Yeah, yeah. Likewise. You know, I talked to the guy who founded Hims and Hers for this podcast about a week ago, and he's like, "When we launched the business, we separated our marketing budget. We got our board of directors to sort of say, 'Okay, we're gonna spend X percentage of our marketing budget on performance and Y% on brand' like right out of the gate." And I thought that was... [impressive/interesting].
47:35	Nik Sharma	you know what that was
47:36	Moiz Ali	no he said the majority was still performance
47:40	Nik Sharma	yeah
47:41	Moiz Ali	But that was... and he's like, "You know, we do brand stuff. Like, we buy coasters at bars." So if you're... yeah.
47:48	Nik Sharma	Honestly, my favorite thing about HIMSS is Andrew. He is just a genius at what I call finding that new "quote unquote" inventory. You know, like above urinals, the coasters, or what Bumble used to do with coffee sleeves. I love seeing brands do stuff like that.
48:08	Moiz Ali	it's great like
48:09	Nik Sharma	I would like to me is just like so creative
48:12	Moiz Ali	Yeah, and like how many guys are at bars on Friday night? All of a sudden, you might be able to have a conversation about it because it's on your coaster. It's a product that these people like. The bars are giving away coasters, which are disposable, certainly. Like, it was...
48:25	Nik Sharma	really yeah you cover their cost too
48:27	Moiz Ali	Yeah, it was a great idea. But look, one, I was really impressed by the marketing channels that he had created that didn't exist beforehand. And then, two, I've never heard of a direct-to-consumer business at such a young stage having the ability to spend so much money on brand marketing. Usually, you have one marketing budget, and you know, you spend some on brand and some on performance. But in reality, you have these numbers that you have to hit. And he's like, "Look, this is how we do it. We have to invest in brand if we want to be around 20 years later."
49:00	Nik Sharma	yeah
49:01	Moiz Ali	it's a
49:01	Nik Sharma	good I mean it's definitely a good.
49:03	Moiz Ali	Yeah, it's great. I feel like Away did that. I feel like Albert's did that as well. I just don't know, like, Native never did that. They never spent one penny on branding.
49:13	Nik Sharma	well a hint I mean all our marketing budget was performance too
49:17	Moiz Ali	and a hint
49:18	Nik Sharma	Yeah, most of it was performance. You know, actually, pretty much I would say most of the brands that I've touched— and it could just be because I mostly work with like the hyper-growth ones or the more performance-based ones— a lot of them have their marketing budget focused on performance. Then, either what's left over or a very tiny percentage is dedicated to brand. But I do think that brand is important. I mean, Andrew did a great job building Hims; everybody knew what Hims was.
49:51	Moiz Ali	Yeah, everybody knew like the day of launch, basically. That was a really good job. I wonder, you know, like then I look back on things and I'm like, "Okay, what is right and what is wrong?" Like, Outdoor Voices certainly spent a ton on brand and is struggling to find an exit and struggling to sort of maintain its valuation. Away seems like it's going to struggle as well as a result of COVID, maybe not, but... you know, spending a lot on brand and not necessarily enough, like as much on performance.
50:18	Nik Sharma	and then I'm
50:19	Moiz Ali	Like, you know what? Look at all these brands that I really like. Casper spent a ton on branding, right? They have all these beautiful out-of-home ads with stunning imagery. I see their TV commercials and I'm like, "Did you hire Vincent van Gogh to create this ad? This is fantastic!" I want to freeze this ad, print it out, and hang it on my wall. Yeah, and then I'm like, "Oh, but then you have a $100 million valuation after raising $400 million." So, you know, are they right to be doing this? What is the outcome here?
50:52	Nik Sharma	Yeah, I mean, it will be a really interesting case study, you know, in 15 years to look back on it and really examine what mattered. Because, I mean, just from how I've seen Native—like, Native has always been well... Native. And I think they hinted at it really well too when I was there, which is like performance branding. You build your brand equity on the back of your working media dollars.
51:20	Moiz Ali	yeah
51:20	Nik Sharma	And like, I think Native, you guys simplified the messaging a lot, which helped. That's why I like Black Wolf Nation as well as the company. The messaging is just simplified. At Hint, we did the same thing, but also to some extent, a lot of these products provide convenience and an actual function. They're also consumable, which I think matters less than function, but they're very functional products and they have functional benefits to the consumer.
51:55	Moiz Ali	yeah and so as a result like the the work like
51:58	Nik Sharma	I think you have to work a little less on the brand side because if you can show them the outcomes or the benefits of the outcomes.
52:05	Moiz Ali	yeah
52:05	Nik Sharma	then you just have a stickier brand
52:08	Moiz Ali	yeah
52:09	Nik Sharma	But that said, it will be interesting to see. I also don't think there's one path to doing it that's applicable to everybody or the right path.
52:19	Moiz Ali	yeah
52:20	Nik Sharma	Because, also quite frankly, I would bet money that some of these companies that spend a lot on brand probably tried to do what you were doing at Native but just didn't have the skill set to actually execute it. So their pivot was to whatever they ended up doing.
52:37	Moiz Ali	Yeah, yeah. Look, you know, it's really hard to build a performance-based company that has $500 million in revenue. But I think the only way to do that is once you're investing in brand. But I'm not sure... like brand marketing can get you to a $500 million company. I'm just not sure it can get you to a $50 million company. That's the crazy part. I think you need some of that performance in order to... it's almost like an airplane, right? You need some energy to take off.
53:05	Nik Sharma	you create that ripple there yeah
53:07	Moiz Ali	Yeah, exactly. It is really great. It's crazy to think about what will happen in this community. You know, I think about Harry's and the Edgewell thing, and the FTC sort of saying, "Yeah, this isn't gonna happen." I don't know what Harry's does now. P&G certainly can acquire them, but they're going to have another antitrust problem, and P&G knows that. Harry's knows that too. I don't know how Billy feels because Billy's supposed to be acquired by P&G. You know, I don't know what the next few months will hold.
53:37	Nik Sharma	That was supposed to start when we were boxing in New York. That was a long time ago.
53:43	Moiz Ali	That deal was supposed to... Yeah, that deal. Yeah, yeah, yeah, that's right. And so, I wonder what Harry's [likely referring to Harry's Razors] is like, you know? If I were sitting... if I were like Jeff, Randy, and Harry's, I'd be like: > "You know, I built this amazing brand. Somebody else agreed to pay $1,400,000,000 for it, and now I can't get this done. Like, what happened? What is going on in this world?"
54:03	Nik Sharma	I know it must be crazy
54:05	Moiz Ali	Look, if Sprint and T-Mobile can merge so that there are only 3 phone carriers, if United can even merge with Continental, and Delta with Northwest, why can't my DTC company sell to a strategic? I'm a direct-to-consumer new company that has launched in the last 5 years, and you're saying there's an interest concern here? That really blows my mind.
54:27	Nik Sharma	I think it's it it sucks and it's also a compliment
54:30	Moiz Ali	Yeah, it's certainly a compliment, and I respect their business immensely. I think, like, you know, our lives—both yours and mine—were made so much easier by virtue of the fact that Andy Dunn and Jeff and Andy from Harry's sort of paved this path for us. You know, Andy's like, "We're gonna build a direct-to-consumer business online." Everyone's like, "What the heck is that?" And he's like, "Yeah, we're gonna spend a bunch of money marketing," and didn't know how to spend it well. He built, you know, pop-up shops that other people are copying. The Harry's guys are like, "Yeah, we're gonna take this direct-to-consumer business and we're gonna launch into Target, and it's gonna be successful there." When it came to Native, I was like, "Great! I know exactly what to do." Then I built the direction for my business like Andy did, and then I launched into Target like Andy did. Yeah, and like, you know, Target was like, "Yeah, we know why this is." Look, we didn't have to convince Target, you know?
55:22	Nik Sharma	was like yeah
55:23	Moiz Ali	I know why this is a good deal. Harry's has been taking a ton of market share, and you know, Native is now 12% of the deal in sales at Target, 13%.
55:31	Nik Sharma	that's awesome
55:31	Moiz Ali	Sells over $1,000,000 a week there and I'm just like... we're walking in the footsteps of giants. Yeah, unfortunately Andy Dunn didn't have the best outcome at Bonobos. I think the outcome for Harry's is too early to tell now.
55:48	Nik Sharma	right you
55:48	Moiz Ali	know it's certainly made our lives a lot easier
55:51	Nik Sharma	Oh, totally! I think one thing that always gets lost, even back to those press pieces slamming the founders, is that a lot of these people paved the way or created these movements. This is something to be appreciative of. And, you know, like you said, it allows us to have a job.
56:12	Moiz Ali	Yeah, I really think that like 60% of this industry is about building your business, and 40% is about getting the timing right. For example, Outdoor Voices is a hot brand. They brought in Mickey from J.Crew as their chairman and someone from Nike who was like president or something. They just didn't get the timing right for when to find a home for that business. The same thing happened with Casper. They are a fantastic brand, absolute brand geniuses that created that. Mmm... you know, and they are great operators as well. In the first month that they launched, they had $1,000,000 in revenue. They were sending out air mattresses because they couldn't fulfill orders. So, they said, "We're going to send you this air mattress until we can get you a Casper mattress." They also pioneered out-of-home ads, particularly in New York. I don't remember seeing subway ads until I saw Casper. No.
57:02	Nik Sharma	never and then
57:02	Moiz Ali	I was like, "Shit, all direct consumer businesses are now doing this." I just didn't find a home at the right time for that business.
57:10	Nik Sharma	Yeah, it's crazy. I want to know. I know you committed to some ads this summer. What happens to those buyers? Do you know?
57:21	Moiz Ali	Yeah, we're trying to... so Native had sort of agreed to do some subway ads in New York. You know, deal room sales pick up in the summer because it's warmer. All of a sudden, you feel more about sweating and you're outside, as opposed to when it's 12 degrees in New York. You're sweating while you're walking. So, we want to buy some out-of-home ads, and they were pushing for... I don't remember exactly what time they were pushing for. At the time, I was still at Native, but I pushed for the summer, which is now the worst time ever to run a subway ad because subway ridership is down probably 90%. We're trying to push them out a little bit so that we can still get some traffic. You know, you agree to look at a price, and you're like, "Okay, this is what the CPM backs out to based on the number of riders that somebody has." Then you don't agree to a CPM price. You don't say, "Okay, you're going to have this many riders," right? You say, "This is the price based on your historic traffic." I had terrible timing there. I certainly couldn't foresee it, but it was just absolutely terrible.
58:28	Nik Sharma	Well, yeah, I mean, it's nothing you could've predicted. I wouldn't... I was pretty excited though.
58:36	Moiz Ali	Yeah, I was super excited too because I wanted to run all these fun ads. I would say, "What stinks down here? Not you, if you use Native Deodorant." And those subway guys were like, "You have to be careful because you can't make fun of the subway while you're running these ads. You have to buy the inventory from us. You can't be an asshole to us, and we're not going to let that happen." You know, you could be like, "This place is a shithole. Use Native Deodorant. Avoid the rats. Use Native Deodorant." Yeah, they would not have been cool with that. Exactly. I think the "What stinks? Not you. Use Native Deodorant" would have been okay with them. But yeah, I mean, look, it is crazy how ad inventory has sort of changed. When I talk to people who are advertising on Facebook these days, they're just like, "Prices are down substantially. CPMs are down because Marriott, United, and Toyotas of the world just aren't advertising on there now."
59:30	Nik Sharma	Yeah, yeah, actually, yeah, totally. And then the ones that, you know, when all the big agencies pulled out, then all the really savvy people like us went in and started, you know, creating these campaigns.
59:45	Moiz Ali	yeah
59:45	Nik Sharma	and the overall inventory got super cheap
59:48	Moiz Ali	Yeah, I remember like in 2017, Mark Pritchard, who's the Chief Brand Officer at P&G, went on The Wall Street Journal and said, "We're cutting our Facebook ad spend by $100,000,000 because Facebook just doesn't provide the return on investment that it should." I was sitting there, like this is pre-acquisition, and I thought, "Fantastic! You have no idea what you're missing. It's fantastic out here if you're savvy about running Facebook ads." So, like, yeah, yeah, you're right, it is bad. It is bad. Don't worry about it, stop spending. Meanwhile, I'll go ahead and increase my spend. That's what happens in auction-based platforms.
01:00:22	Nik Sharma	totally
01:00:23	Moiz Ali	If somebody was going to... you know, I know we're running over time already. If someone’s going to start a new business today, what is the best way to learn about digital advertising? I feel like you’re an expert at it. You were doing it at Hit Water. By the way, I spoke to Kara earlier this week, and she was like, "We ran a Super Bowl commercial, and it cost us under $1,000,000 to run that Super Bowl commercial." I was like, well, when you said you focus mostly on performance ads, I was like, okay, it sounds like that’s changed now. Super Bowl commercials are primarily performance-based. So it’s also interesting to hear that it just cost under $1,000,000. Yeah, like, you know, you’ve run acquisition in a bunch of companies. You’re advising a bunch of companies when it comes to acquisition. You’ve run your fair share of Facebook ads. I certainly admire your expertise there. What’s the first step that somebody should take if they’re cold and they’re working at, you know, I don’t know, Johnson and Johnson, or they’re working as a paralegal somewhere, and they want to run this direct-to-consumer business? Where should they go to learn about direct-to-consumer advertising? Or should they...?
01:01:25	Nik Sharma	They know to be... yeah, you can definitely text me the main thing. I had always tried to find whether it was that one site that was really good at educating you or, you know, that one course or whatever, but it just doesn't exist. Also, this world changes so fast that there's really nothing that can constantly keep up. I found that for me, the best tool is that I just started building a group of people that I constantly talk to. So, you know, whether it's like these are people—most of them initially were just actual acquisition people. So, people like, you know, the head of marketing at 3rd Love or Madison Reed, or somebody who's with big D2C brands. Then I just started figuring out that I could use Twitter to network. Now, I'll talk to people who are running, you know, tens of millions of dollars in ads, all the way to people who are, you know, doing $1,000 a month in sales and they're really proud of it. It's easy for me to just kind of learn through seeing what other people are doing. The other thing I'll do is just, you know, like stalk the really, really good brands and see exactly how they do it. Whether it's looking at their creative... you know, there are things you pick up. If you go to, you know, probably even Native, if you go to Native's Facebook Ads Library, 80% of the creative looks the same. That's the creative that's doing really well. So, I constantly have a list where I'll go through, you know, the top 50 or 60 brands and just see what all their landing pages are looking like. If I identify similarities, it's because it works. I just learn by observation. I like looking at what other people are doing, figuring out the why, and then basically taking the why and trying to make that my own version.
01:03:19	Moiz Ali	Yeah, that's great. I think, you know, someone made fun of us for having a landing page that looked like Harry's. I was like, "You're using this as an insult?" I picked up what you said and put it on myself as a badge. It was like a compliment. Yeah, I'm like, "Thank you!" We didn't spend the money to do it, but we looked at other people and we emulated their best.
01:03:41	Nik Sharma	Yeah, and you know, if you look at a lot of these brands that spend, you know, $1,000,000 a month, we don't have to do that. They've done the testing for us.
01:03:54	Moiz Ali	yeah for sure
01:03:55	Nik Sharma	We just have to see what, you know, they've come out with. Yeah, I'm a big fan of "work smarter, not harder."
01:04:04	Moiz Ali	So, I agree with looking at competitors and actually best-in-class sites to see what they're doing really well. When you said you developed a network of people on Twitter and presumably Slack, and you communicate with them, some of them are spending, you know, $1,000, and some of them are spending $10,000,000 a year on Facebook ads. How does that work help you?
01:04:28	Nik Sharma	It helps me in a few different ways. For example, if I know that I'm helping out a telemedicine brand onboard new customers, and part of their customer journey requires going through insurance, I have a friend who runs marketing at another telemedicine brand for women. They have that whole kind of funnel and have gone through that entire process. So for me, it can be as easy as texting him and asking a question. In other cases, it could be like when I needed a Shopify developer two months ago. I asked a couple of friends, and right away they were just like, "Oh yeah, here, use this guy. He's the best."
01:05:18	Moiz Ali	yeah
01:05:18	Nik Sharma	And yeah, I usually just learn that way. I'm a big "questions" person. My theory, initially, I think the reason that it kicked off was because I don't really have a formal education in anything. So my thought process was that, and I also wasn't a big reader. My thought process was basically like, instead of going to books and instead of going to college, if I just surround myself with the people who write these books and I get the information first, then I should be in a good enough position.
01:05:54	Moiz Ali	Yeah, I think that's absolutely right. There are two things I'd say: I have a formal education, and I can tell you I never use it on a single day unless, you know, unless someone's saying something that requires me to do something I don't want to do. In which case, I'm a lawyer, and I don't have to do this. I'm not your slave. I think that's the only time I use it. You were talking about networks in San Francisco. What I started doing when we were growing Native and we were really small, I began hosting an eCommerce brunch. So, like, every one Sunday a month, I would get about ten people who were all in eCommerce into a room, and we would talk about the problems we were having from an operations perspective, a personnel perspective, and really a marketing perspective. I was like, "What is working for you guys from a marketing perspective? Where are you spending money?" That network really helped me understand the shift from desktop to mobile, from mobile static images to mobile video, landing pages, colors that would work, how important creative was versus headlines, and how important the display image was before it started a video. All that kind of stuff. That community, aside from the fact that it was really easy to voice my concerns to other founders who came to the brunch, was super inspirational. I remember coming out of those brunches thinking, "It's Sunday at 2 PM, and I have nine hours of work to do today," because all of these guys had such good ideas. I needed to go and start executing some of them.
01:07:27	Nik Sharma	Yeah, and myself, Scott Swanson, who I don't think you've met, but he actually used to work at The Hustle. Me, Scott, the head of marketing at ThirdLove, the head of marketing at Madison Reed, and Mike Dubow when he was at Stitch Fix, we would all get lunch once a month. Sometimes we would come out of these meetings and we all have pretty much the same customer, but we were not competing. So it's great! We would come out of these meetings, and Scott and I would take an idea that we discussed over lunch, and it would make us an extra $100 the next weekend. Yeah, it's crazy, but it totally did help with like, you know, ThirdLove and Madison Reed did a ton in podcasts and TV. So we learned a lot about that before we stepped into it. It helped us with figuring out things like the right agencies, you know, who are the right buyers. All the way down to like, you know, "Oh, how do you know we're hiring? We're trying to hire a head of retention. How do we go about hiring that?" Or, you know, we have this issue on the team where this person thinks they're supposed to be doing email and affiliate. Just like random issues. But it helps to have that group where you know the chances of one of them having already dealt with that issue is pretty high.
01:08:42	Moiz Ali	Yeah, that's a great point. It's like your personal Yelp, where you have a bunch of people who have had various experiences. It's just like brainstorming in a way. Sometimes, you need to get other people's perspectives who are doing the same thing you're doing, even if it's in a different industry, to really open up your eyes. For me, we had a guy named Eric who runs Nectar Mattresses. I saw his business go from $0 to north of $200 million, and I was just like, "What the heck is going on over there?" Every month, we'd come in, and I'd be like, "How is your growth that huge?" It was really helpful. So, when I was looking at it from a marketing perspective, I'd go to him. Then, when I needed to discuss a small team issue, I would talk to the guys at Vinebox or Japan Crate or somebody else who was in a similar position—small but sort of growing and struggling. They had a lot of insight. I think those networks are underappreciated; they're totally below the radar.
01:09:38	Nik Sharma	it's a total advantage too
01:09:40	Moiz Ali	Yeah, it really is. You know, you're talking about how you guys had different businesses, but how certain things would work. I don't understand... there needs to be a private equity firm that sort of buys up a bunch of these businesses and spreads... like everyone's biggest cost, or one of their biggest costs, is certainly customer acquisition. It's gotta be in the top 5, or probably the top 2.
01:09:58	Nik Sharma	oh definitely yeah
01:10:01	Moiz Ali	You know, someone needs to spread this around because you're right. The customer who's a native customer is probably a Hint customer, and the customer who's a Hint customer is probably an Outdoor Voices customer. We're all paying Facebook to sort of acquire these customers as opposed to saying, "You know what? We have this one email address that would probably apply to all three of us," while we're trying to share this resource.
01:10:22	Nik Sharma	Yeah, there... I've thought so much about this. There was actually a company that I think the furthest it got, as like us operators were trying to do that, was sharing Facebook audiences, like lookalikes among brands. But everybody got super... well, one, people got really protective about their email list, especially if it was a big list. Everybody was really cautious. And then secondly, anything from a bigger company that had, you know, I would say like more than 50 people, they naturally had like a Chief Technology Officer, Chief Privacy Officer, or Chief Legal Officer, and that's where it gets really tough. So, it is tough. But if somebody could figure that out... or, you know, it's another one. I think I sent you a screenshot one time, but it's... if you could develop a Shopify app, the hustle is like the perfect audience for this. A Shopify app that... imagine if like I was at Hint and you were at Native, and it was one landing page. You check out on the landing page, and it pushes the order out to both Hint and Native. So on the back end, it gets fulfilled like a normal order, and on the front end, the customer pays once, puts their information in once, and it basically goes out to two stores rather than checking out on my site and I send you an Excel sheet or vice versa.
01:11:44	Moiz Ali	you're saying so there'd be one checkout like one website that sells both of our products
01:11:50	Nik Sharma	No, so, well, I... yeah, it could be that, but it's more so like, you know, the reason a lot of people don't do things like acquisition collaborations is because it's like, "Well, who owns that customer?" Technically, is it on my store that they check out or your store? And then if it's just another site like Amazon, then Amazon owns it. So in this case, everybody wins.
01:12:15	Moiz Ali	Yeah, I think you're absolutely right. I think the first step to getting there is actually like the worst step, which is like the private equity company coming in and buying 5 of these businesses. And start sharing... because once they prove that, "Hey, this kind of stuff works," then we can bring your marketing cost down 35%. That's your biggest P&L [profit and loss] line item you have in terms of expenses. Now all of a sudden everyone's gonna be like, "Well, this company's got a competitive advantage."
01:12:43	Nik Sharma	and we have to figure that out
01:12:44	Moiz Ali	I think there are certain companies that are trying. I would be surprised if Atomic and like Kims and Hers don't share that kind of stuff. I'd also be surprised if, you know, the new Jin Lane isn't trying to do that as well.
01:12:55	Nik Sharma	yeah
01:12:56	Moiz Ali	It is like, I like... no one has done it well. And like, yeah, you know, they show a...
01:13:01	Nik Sharma	lot of people are attempting it
01:13:02	Moiz Ali	Yeah, there are a lot of people attempting it. Back when Facebook would share interests with you, I would look at the natives in the audience and I'd be like, "What are the other things you like?" And I'm like, "Great! Oh, these other... like 60% of our customers also liked Honest." And I was like...
01:13:16	Nik Sharma	this doesn't
01:13:16	Moiz Ali	make it like you know that's
01:13:17	Nik Sharma	How I would find a lot of media partnerships? We saw... yeah, I think the first time I ever did it, it was like "The Skin" was in the top five. I was like, "Yeah, we're running placements with The Skin."
01:13:27	Moiz Ali	Yeah, it was great. We have the exact same audience. Honest Co and Native had the same audience, and we each have to acquire our own customers independently. It doesn't make any sense. It's just the way it is right now, I guess.
01:13:42	Nik Sharma	yeah
01:13:44	Moiz Ali	awesome nick really appreciate your time we're way over already
01:13:48	Nik Sharma	yeah that's fine
01:13:48	Moiz Ali	So, thanks so much for being on this episode. If people want to follow you, if they want to follow your community that you've created, where should they text you? Where should they follow you on Twitter?
01:14:02	Nik Sharma	You can text me at 917-905-2340 or you can follow me and tweet me on Twitter at @MisterSharma.
01:14:10	Moiz Ali	Fantastic, Nick! Thanks so much for your time. I really appreciate this. I always love chatting with you. I feel like you and I have the same perspective on performance marketing and direct-to-consumer businesses.
01:14:20	Nik Sharma	yeah
01:14:20	Moiz Ali	And there isn't all this like hoopla bullshit. You know, there's no... you don't put yourself out there like you're royalty. You're like, "Look, I'm a commoner fighting the good fight."
01:14:32	Nik Sharma	exactly and it makes it
01:14:33	Moiz Ali	a lot easier to to chat with you
01:14:35	Nik Sharma	yeah awesome
01:14:36	Moiz Ali	awesome thanks so much for your time

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Exit Strategy S1:E4 // Nik Sharma: How To Build and Invest in Great DTC Brands

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