Episode 58: Crushing Conferences and Collabs with Joe Rogan—Carnivore Snax

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Transcript

Announcer:

Welcome to Nerd Marketing, an original podcast for e-commerce operators and marketers. Looking to level up? Drew Sanocki and Michael Epstein will bring you actionable strategies from their decades of running eight- and nine-figure brands along with interviews and insights from the leaders of some of the most successful brands in the world.

Drew Sanocki:

Hey everybody. Drew Sanocki here at the Nerd Marketing Podcast. Today's guest is none other than big Garrett Akerson, a friend here in Southern California. He is the CEO and founder of Kindred Bravely. It's a line of maternity clothing that he sold to private equity a couple of years back and he is now growing it now backed by a private equity partner, so that's really interesting to get into my co-host today is Mike Maher from Taylor Stitch. Hope you enjoy it. Thanks.

You started this maternity clothing and gear company how many years ago?

Garret Akerson:

We started in 2015. February of 2015. 

Drew Sanocki:

How big was it when you decided to sell or did you decide to sell or was it just these people approached

Garret Akerson:

You? I had gotten mentorship early on that was like, don't start a company unless you plan on exiting. You got to have an exit strategy or plan in place, so it wasn't that we were just build it and hold it forever type of plan. We did want to exit. I thought it would probably be another two years. I was kind of hoping for a five-year run, five or six. It ended up working out a little earlier than I thought, mainly because of this crazy environment. Right. We're talking mid 2021 and it's still on fire as far as the acquisition market, so when we look at going to market, we were at like $20 million top line kind of in there thinking we would be. We ended up a fair bit higher than that for 2020. Top line came in at like 32. 

Drew Sanocki:

You attribute the boost to Covid? 

Garret Akerson:

Covid. A consumer brand that could manage to navigate supply chain issues and crunch. We did really well there. I think supply chain managers and our ops team, that's like the unsung heroes of the last year. Marketing teams didn't have to do much operations teams. If you had a good one, man, they were worth their weight in gold. We have a phenomenal team and I think everybody in operations and logistics on our team did really well. We had very few stockouts.

Mike Maher:

Any hiccups with just the actual supply chain itself from producing clothes and getting things made? I mean I kind of felt the same thing. It was like everybody thought that China was going to shut down and China actually figured out how to work through the pandemic better than maybe anybody else in my opinion, but would love your opinion coming from another manufacturer.

Garret Akerson:

We didn't have any factory shutdowns. I guess we were fortunate other than that initial shutdown, we were worried, but then no, I totally agree, Mike. It was weird. A few delays mainly on the shipping side though

Mike Maher:

Shipping just got squeezed and bottlenecked and you had to push through it.

Garret Akerson:

Yeah, so it was early, Drew earlier than I anticipated, but I think the timing was right. We were the ones that initiated it. We were talking to a couple different investment banks. I had a friend that runs an investment bank here in San Diego and it's actually who ended up helping us out, so we used objective capital partners

Drew Sanocki:

To back up a step. This company is a hundred percent bootstrapped right by you and your wife? 

Garret Akerson:

A hundred percent bootstrapped wholly owned by Deeanne and I. Yeah, put our own capital in the beginning and managed all the way.

Drew Sanocki:

No other investors. When you put your own capital in, is it for initial inventory website? That's about it.

Mike Maher:

Yep. This is such an interesting thing having people don't realize how much of a feat this is to do when you have such an inventory heavy business. How are you guys able to finance inventory and growth? I mean you scaled to 30 plus million dollars in revenue in a five ish year timeframe. There's a lot of inventory and future inventory buys that generally need to do that, so how did you guys kind of solve for that problem?

Garret Akerson:

That's the stressful part. I think Mike, one of the stressful parts,

Mike Maher:

Clothing retailers have a lot of stressful parts. We can talk all day about stressful parts,

Garret Akerson:

But so many skews and so much inventory. For us, it was just a lot of lenders that came through. Even I think we got our first SBA loan in 2015 the year we started right out of the gate. Then we got another SBA loan. Then we found a local bank that would work with us that did a larger SBA backed loan and line of credit, but then interlaced with all of that or Amazon, Amazon lending. This was in 2018. I think we had 800,000 out with them alone.

Mike Maher:

Amazing that you guys were able to get the SBA loan so early I would call the SBA relatively conservative. Was it just you ramped so fast or was the magic touch

Garret Akerson:

Man, I wish I knew. I wrote a good business plan. I mean I was familiar with doing that. I had a good business case. We had some sales, but it wasn't much more than okay, yeah, we're getting some sales. You personally guarantee all that, so that probably helps

Mike Maher:

Takes some family risk.

Garret Akerson:

We had some real estate, so I mean that was always collateral. That was probably the real right there, Mike. The real truth is if you have some other asset and they know they can get their money back because they could get access to that asset,

Mike Maher:

That's a ballsy maneuver. I appreciate that.

Drew Sanocki:

In the early days you guys were on Amazon from the get-go, right?

Garret Akerson:

Yeah, that was our initial play.

Drew Sanocki:

Amazon only.

Garret Akerson:

Amazon only. Well, so we launched on Shopify and Amazon in 2015, but we did not focus on Shopify at all. We focused entirely on Amazon sales. 2015 was like Amazon wild, wild West, I mean latter end of it, right tail end I would say like 2013 to 15, as long as you understood a nine and how to rank on the algorithm organically it was printing money. So I had actually, that's my background. I grew up doing SEO in 2005, 2006, starting in digital marketing then and in prior startups all my experience was paid and organic marketing. If you do the SEO part, it was so easy to rank. That's

Drew Sanocki:

Really interesting. Mike's got a brand who, you guys aren't on Amazon at all, right? 

Mike Maher:

No. We went the complete opposite. 

Drew Sanocki:

It is just because of the timing of both companies that you could get traction on Amazon earlier.

Mike Maher:

Our customer wasn't really shopping for Taylor Stitch on Amazon. We're not going to differentiate on price or anything of that nature. 

Garret Akerson:

The key piece there Drew is Amazon is search-driven and so maternity and breastfeeding is really search-driven like breastfeeding or nursing bra. That's a need and if you rank for that search term, you're going to get sales. Whereas another brand like Taylor Stitch, Mike's company for example, there's not a ton of search intent behind it. It's so much more brand.

Mike Maher:

Correct. Yeah. I mean like for me it was, hindsight's 2020. I built a great brand, but it was much slower going and continues to be very steady. We focus on cohort stacking versus a niche thing that we can lean into. We talked about rifle shots versus buckshot we're much more of a buckshot brand than a rifle shot brand.

Garret Akerson:

For us it was so need-based, entirely rifle. 

Drew Sanocki:

Is that where you ended up? I think of Kindred bravely now as a brand.

Garret Akerson:

That's not where we ended up. No, I agree. Getting that flywheel going on, Amazon threw off a lot of cash, so then it allowed us to grow the brand. We started paid in 2017 paid social, so we weren't doing any brand related building for a good solid 18 months and then we had Amazon was producing enough cash and free cash to then plow a bunch of money into brand and advertising paid social and point all of that at Shopify.

Mike Maher:

That's a really interesting strategy. So I mean correct me if I'm hearing this wrong, but you guys really identified a few products and whitespace on Amazon that you knew could work from a kind of Amazon search perspective and really kind of built the business there and then strategically moved over to Shopify to build a brand and it's a really interesting way to do it and I'm sure it gave you a lot more brand recognition and probably customer repeat by doing that, moving those customers over to Shopify, which is, I mean Kuda has a super very tactical, smart way of doing things via e-comm.

Garret Akerson:

I don't think it would work for every brand and even now I'm not sure it would even work now, but at the time the timing was right. That strategy worked perfectly. I mean to give you an example, so we launched in 2015. The first product was in June. Then product two and three were in October of 2015. By January of 2016 I left the other company I was running and so that was about a year in and by then it was already on Amazon alone making about 200,000 a month a year in and it only had Mike to your point that there was only four products. They were super high-demand—search demand for those products was enough to build a company on.

Drew Sanocki:

You looked at Amazon, what could rank well, what categories you could own, and then did you go out and find a product designer to rethink those products at all or were you just sort of matching supply to demand of something that's already out there?

Garret Akerson:

Yeah, so backing up a little bit, I knew I wanted to start something in direct to consumer and I wasn't sure what. Deeanne, my wife, was breastfeeding. Our youngest was in this office and it was like, Hey, have you thought about breastfeeding and maternity apparel? I was like, no, I haven't thought about that.

Mike Maher:

The last thing that I thought about for,

Garret Akerson:

But then to your point Drew, I went and ran a bunch of data like search data, like old SEO keyword searches, but on Amazon to see what was where the demand was and then we just created product to fill that white space on Amazon and I just realized really quickly, oh there was no big brands on Amazon that were dominating in the space and there actually weren't very many Chinese brands either. There just wasn't a lot there and then we're close enough to LA that we could work with product designers and Deeanne was the one that took care of all of product development design and customer care still does run product development and that's what she loves and is good at. I mean she knew what she wanted as a nursing mom. 

Mike Maher:

Great partnership there. 

Garret Akerson:

It was a perfect partnership,

Mike Maher:

Natural born product tester and a natural born digital marketer.

Drew Sanocki:

And then you fast forward five years and when the private equity funds started showing interest, were they more interested in the brand or were they more interested in an Amazon operation? How did they think about your business? How do they value it? 

Garret Akerson:

Not Amazon, I think of anything Amazon. I mean it didn't discount our brand, but it wasn't a value add by that point. In our business, fast forward to 2020, Amazon's 30% of our business maybe, and so yeah, it's a chunk, but it's no longer the majority and now we actually have a well-recognized brand right now Kindred Bravely is the most awarded maternity and breastfeeding brand out there as far as awards and gets a lot of brand recognition and press. It's fun to see. It's very different than where we started.

Drew Sanocki:

TZP was the fund that acquired you.

Garret Akerson:

Yeah, TZP, a private equity group out of New York, they have three funds. This is their growth fund and I think they have $2 billion under management. They're kind of agnostic so it's not like they're all DTC, but they have other D two C portfolio companies as well. SA company is one of them. There's a number of other ones. Itsy Ritzy was another one that they just closed that's actually in the baby space, but they don't focus on baby either or baby and mother.

Drew Sanocki:

What do they aspire to do with your company?

Garret Akerson:

No rollup plans. No, let's combine you with anyone else. I think we got about 15 LOIs, narrowed that down to six LOIs and we just really liked them. I mean there was one other private equity group that we really liked that the actual team, their take was like, Hey, we just want to partner with great brands and great founders and we're here to support you in any way you can and help you grow and get to that next stage of growth. And that was kind of the pitch

Drew Sanocki:

As far as process. Your friend, the investment bank goes out to natural acquirers that he knows and that you probably helped him develop that list.

Garret Akerson:

Yeah, the team at Objective Capital Partners, they went out to 150 I think different. So it was a broad process and then of those I think there were 30 that had interest that got the deck and then that went down to 17 or 16, that submitted LOIs might've been a little less. And then out of that you get six LOIs that are serious offers

Drew Sanocki:

The fund typically gives you a multiple range, a valuation range or they say we're going to value it eight times EBITDA or something like that.

Drew Sanocki:

Would you say you vetted those private equity funds based off of that or based off of fit?

Garret Akerson:

No, certainly initially it was off that it was a pretty wide range, so I think the low end was like 7.7 times EBITDA multiple and the top end was 17.6, so that's like a huge spread. The 17.6,

Drew Sanocki:

Those guys make it to the next round, right? 

Garret Akerson:

Yeah. So you're like you're going to make it. 

The big multiple was the strategic. It didn't end up panning out, so it ended up in between there. We ended up with a multiple that was right around nine, it's like 11 something all in full consideration, but they mainly then came down to we did management presentations and it came down to do we like these individuals? Do we want to continue to work with them and their vision for the brand and the company and then the deal structure, how much they wanted us to roll over into the new company, the other working pieces of it if they wanted us to carry a seller's note. And I think those were kind of the other big considerations for us. 

Drew Sanocki:

Did you find that there was a lot of variation in those aspects of the deal?

Garret Akerson:

Yeah, there was one that was a revenue share deal where they wanted to just invest on a rev share and then there's a number of companies that won't go over. They wanted us to retain 40% or they wouldn't go over 35 max or 30 and we were pretty upfront. I called it the squishy middle. I did not want the squishy middle. So our directive to the investment bank was I don't want any deals that are 25 to 70. I don't want anywhere in that middle. I either want a minority deal or I want a majority deal.

Mike Maher:

You kind of determine for yourself that over 70 was the magic number for you. 

Garret Akerson:

I wanted to make sure that we could take enough chips off the table to make it where if things went sideways or we never collected another dime that it was not an issue at all. It literally didn't matter.

Mike Maher:

Did you do that based on a top line dollar amount that you guys were going to get and you're like based on a rough multiple of EBITDA or something like that?

Garret Akerson:

Right. Yeah. It was just a number that Deeanne and I had that said, Hey, we don't want to do a deal unless we walk away after tax with this much. I think the other thing is a couple of business mentors that I had talked with, one was like, I wouldn't do any deal that was greater than 20% rollover. He was very adamant like don't roll over more than 20% because you're not going to have any control. So who knows what the future holds. You might as well say goodbye to that money if anything happens.

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Mike Maher:

Yeah, it is such an interesting balance because you can say from both sides where none of the groups that I've seen ever really want to get that involved in your business. The ideal thing is they give you money, you take that and then you go grow the business 10 x and then sell it again and they still in the majority and they didn't actually do anything. They just gave you that initial, those initial dollars. So it's always like it is this really fine balance where keeping you as the founder and currently co CEO still excited about doing so what motivates you day to day about continuing to do that? So after you just had a life-changing payday and could be anywhere in the world right now,

Garret Akerson:

And I think that was certainly a concern and certainly a concern with PE groups that didn't want to go over like 35 is they want to keep you engaged. I think from a personal standpoint, I also knew I didn't want to be in the frying pan, right? I didn't want to be a retaining 40% and feel like, okay, a lot's riding on this, I have to make it work. That wasn't the purpose of this, otherwise I would've just kept all the risk and all the reward. So for me talking to anyone thinking about exit, I'm like, man, do a minority. If you want just a little bit money off the table or some money into the business or be really honest with yourself, if you still retain 40% of a company, you are going to be quite motivated to make sure it works and you're not going to be in control, so you better hope you have a really good partner.

So I think one, they were an amazing partner, still have proven to be an amazing partner and we really vetted their portfolio companies, like other companies that had worked with them for years and had nothing but glowing things to say. Other founder, it was five years in and he is like literally nothing's changed on my day-to-Day and our business went sideways. They've just been there to offer advice and help. So we really liked the team at TZP I think on the motivation side, I was already doing what I enjoyed for the most part, we hired a president in 2020, beginning of 2020 for day-to-day management. And so I was already trying to just focus on, hey, where can I add value? What do I enjoy working on? So I'm still working on those things. 

Drew Sanocki:

What are those things?

Garret Akerson:

We launched two other brands, so that did throw kind of a little bit of a wrench into things because acquisition wise we weren't sure we wanted to part with those two brands, but the private equity group was like, Hey, we definitely don't want you not motivated or motivated on another company, so we'd like you to wrap all three brands into the transaction, but then trying to value those when they're brand new startups, peas don't invest in startups. So that was kind of awkward. So I had already started investing more time in a new brand we launched that was in the health and wellness space called Sensible.

Drew Sanocki:

Sensible is now owned by TZP?

Garret Akerson:

Yeah, it's part of the portfolio. So we had already launched another brand called Davy Piper in 2020, which was just a general bra brand, not maternity specific, and then we launched Sensible, the latter end right before the transaction was happening.

Drew Sanocki:

Is that related to maternity at all?

Garret Akerson:

Yeah, it's also supplements, prenatals, belly balms, stuff like that.

Drew Sanocki:

What kind of credit or valuation do they give you on a startup?

Garret Akerson:

They gave us zero valuation, but they gave us a credit saying like, Hey, it can lose X dollars and we won't count it against you. So it's not counting against ebitda, but in the end I had to be okay with that. I was like, okay,

Mike Maher:

Then if you have zero value in it, I mean I guess you still own 20% of the total ops, but it seems like it would just make more sense to refocus all the energy on Kindred Bravely.

Garret Akerson:

It's a good point, Mike. A good question. I think they kind of argue that as well, or at least we still haven't fully settled on how much value or how much time to put on the other two brands. I do think being small brands are still a lot of upside in those. We could grow 'em quite rapidly, but I don't know. It's a good question From

Mike Maher:

The last 30 minutes that I've known, you are the quintessential serial entrepreneur starting DTC business after DTC business. You sitting as co CEO for the foreseeable future of this. I feel like you're one of those people that can't not be itchy about starting something new and figuring out how to market it online.

Garret Akerson:

I have that feeling too, but I don't know what'll be next in the next chapter. 

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Drew Sanocki:

How many of the potential suitors were insistent that you stay involved?

Garret Akerson:

Everyone? There wasn't anybody that wasn't.

Drew Sanocki:

Got it.

Garret Akerson:

I think I was a little naive about that as well. That's one reason we brought in and started building out the executive team in 2020 was we wanted to say, Hey, we're owners, not operators, but nobody really bought that.

Mike Maher:

I was going to lean into that a little bit. As for hiring the president, we did the same thing. We hired a general manager at Taylor Stitch that just dealt with all the day-to-day stuff that I was honestly horrible at. It makes a difference, but it's still hard to prove that you are completely obsolete.

Drew Sanocki:

I like the idea, the strategy of creating a fall guy to sell off. You prop this person up as the leader of the team in the hopes that the private equity guys just bite on it and they're like, oh, this is the new CEO. We'll just take this guy. We'll lock him up for three years. I don't think it works. I'm trying to do it right now. It's not really working. 

Mike Maher:

If it's set up, you should be in a position where it sounds like you're still having fun. It sounds like you're getting to focus on the stuff. I mean obviously it's still very fresh, but we're in about the same timeline and I actually feel own a little bit less of the company going forward than you do, but feel incredibly energized about the next stage of things and the partnership as opposed to where if you'd asked me a year and a half ago, I was kind of tired and worn down, which is a conversation that I had with the group that we're working with as well, which would love your kind of perspective on, it sounds like you've kind of given it to a certain extent.

Garret Akerson:

I think for me, I felt the most worn down in 2018. We had five negative months. That was a super stressful year and we were very much in the operating mode. I think once we hit 2019, everything was already stable and on the up and up and then 2020, once we were able to build out the executive team more, it gets much more enjoyable the less stress you have about going out of business or managing financing or inventory. And I think it does make it more enjoyable, certainly less stressful, Mike. You can just enjoy it and I think even be more objective like, oh, okay, well what is the best business decision without worrying about your personal pocket?

Mike Maher:

Couldn't agree more. Yeah, I think there was that to your point, that first tilt of like, oh, we're profitable now and the business isn't going to go away. That took a massive level of stress off for me and then hiring the GM to deal with all stuff that he was really good at that I just clearly wasn't good at, was another stress reliever at that point. It was kind of pretty smooth sailing, at least for me. That's when I was really able to focus on this bigger rollup strategy that we're working on and the sale of the business and that partnership itself and giving yourself that mind space. I think it's a really important thing, at least from my perspective, that I think a lot of founders don't realize.

Garret Akerson:

I cannot imagine to deal with due diligence and running a company. It was so nice to have somebody running the day-to-day operations so that I could focus on all the private equity due diligence requests coming in from all those parties. 

Drew Sanocki:

Are you the CFO too? I mean you're sort of like the head finance person.

Garret Akerson:

So as part of the transaction, they wanted us to have a full-time CFO,

Drew Sanocki:

Right, but getting through diligence, that was you.

Garret Akerson:

So we had a fractional one that we already had been working with and have for years, had a fractional CFO, and he actually came on full-time part of during due diligence. They liked him so much that they were like, Hey, why don't we just invite? We had suggested it and wanted it as well, and they were like, oh yeah, why don't we invite him to join? So I didn't have to carry all those finance questions. No, thank God Drew dealing with the whole accounting firm coming in, God, not my favorite subject, quality of earnings. And then legal, well, obviously there's a lot of legal, but for us, SMS, so we were doing SMS, so they were super worried about SMS. That wasn't fun. And then the Supreme Court ruling came out during our process that basically made it a non-issue, but it was a week too late. So we had already spent all these attorney fees even on our end, on going back and forth, and then it all got wiped out and didn't matter. So at least it got wiped out and didn't matter, but it was still, it was a bill I could have skipped.

Drew Sanocki:

If you could sum up the last five years, what are some key takeaways? What are some pieces of advice you'd give somebody else who's growing A DTC business or an Amazon business now? 

Garret Akerson:

I think you need different skill sets depending on the lifecycle or where your business is. I think any company that wants to get beyond 5 million in revenue, the number one skill you need is how to recruit and hire top talent. I see so many companies that have no process and no clue on how to interview and build amazing teams. I've only briefly talked about our team. Our team is phenomenal. We have about 60 employees and our entire process that we developed over the years for hiring and recruiting,

It made a huge difference.

Drew Sanocki:

Are all 60 up there in Oceanside?

Garret Akerson:

No, we've been remote from day one, so all over the US and the Philippines and Canada. I think we have 16, 17 team members in the Philippines. 

Drew Sanocki:

High level. What's the process look like for you guys?

Garret Akerson:

We don't do any resumes. We never ask for 'em. We do an intake form where you fill in questions. It uses some of top grading, so it pulls in some top grading questions more or less, and then some culture questions and then some really basic ones like typing speed, can you use tech, can you type? And then that gets all filtered down into a group interview, but it's a group interview where it's 10 candidates and two team members. So it allows us to get through a lot of candidates at once. So we'll usually have three groups of 10, so 30 we'll get a pool of a hundred, 160, and then that'll be 30 individuals that make it to group interviews, which is three groups of 10. And then only three or four people make it into one-on-ones. And I think it's just that whole funnel. It's like a marketing funnel, Drew. It works.

Drew Sanocki:

So this is for your customer service and ops people?

Garret Akerson:

Yeah, well, it's for everything, but yeah,

Drew Sanocki:

Even so marketing people, merchandisers,

Garret Akerson:

All marketing, merchandising, everyone. The only caveat that it has not worked well for is accounting. Can

Mike Maher:

You expand on the three groups of 10? So this is two on one, just kind of speed dating for, I don't know, 15 minutes, half an hour, and you just spend a day doing that or how does that work?

Garret Akerson:

No, so it's 10 candidates and it's an hour long interview all at once on a Google Hangout or Zoom this.

Mike Maher:

There's two people and 10 candidates like a reality TV show,

Garret Akerson:

And it's only three or four questions and they're almost all cultural questions, but it's amazing what you can get out of a group interview like that where you see all the candidates head to head together,

Drew Sanocki:

Cultural fit

Garret Akerson:

Questions, it's cultural fit, it's easy questions. That's

Mike Maher:

Incredible.

Drew Sanocki:

As your two interviewers determine that someone is not a fit, can they just drop them off the call or is that 

Garret Akerson:

No, that would be too reality TV.

Drew Sanocki:

You're not left with just one person? No, this is like you need an email marketer or you need a paid ads person. You have 10 paid ads, people experts being interviewed by probably in that case you and maybe your CMO or something. It's more cultural fit. It's not so much what would you do with this funnel, that funnel? It's more like how do you work?

Garret Akerson:

And then this interview, the one-on-one interview after that is a doing interview, so that's more like, Hey, can you do the job? All based on Cameron Harold from 1-800-GOT-JUNK. He was the COO of 1-800-GOT-JUNK, and I met him at a conference and was talking to him about this process and we've used it ever since. And it's phenomenal. Nobody uses it. Everybody thinks it's a little weird, especially at first if you're in the process, it kind of, it's totally flips the model on its head, but everybody comes away with a super positive experience. You get to see all your competition, all the other candidates. We make it fun. It's not meant to penalize you in any way, but at the same time you get so much good data on just even nonverbal cues. Is somebody engaged or not engaged? Did they join early or late? Do they ask good questions? And it's pretty easy to compare candidates rapidly when everyone's together.

Drew Sanocki:

You're asking a question and then everybody has a chance to answer or is it sort of

Garret Akerson:

Yep, you ask one question. So one of the questions is tell us a little bit about yourself and someone you view as a role model. And then Garret, let's start with you. And then we just go around, everybody gets a turn and then we'll ask the next question.

Drew Sanocki:

This is awesome.

Mike Maher:

Is it like a timer? Is this an Oscars? You start playing the music and pull 'em off the stage or

Garret Akerson:

No, that's the other totally fascinating part. We will say, Hey, we want to take about a minute or two to answer this. And so you'll see Mike, people that are long-winded and talk forever, and some people are super short. And then you'll see if it goes really long, it gets awkward. And what are the other candidates doing? Do they not like it? Do they like it? No, it is totally organic. You just let it go and they're all different.

Mike Maher:

This is such a cool thing.

Drew Sanocki:

You get your team and your remote team at this point. How do you, man, I don't want to take up any more of your time. We've used a lot. How do you maintain a culture as a remote team? How do you create norms with 60 people all remote?

Garret Akerson:

I think just being remote, you just have to be more of a written culture than a verbal one. If you have an office, a lot of it's verbal and you're coming in and hanging out and talking to people, whereas remotes, you have to be a pretty strong written communicator. Slack or email? No, I mean we have a lot of fun hangouts as well, I think. And culture from an early standpoint, we were pretty intentional, like how we wanted create it. We have these cool things where we did, we call 'em brave cards where every team member gets one of these where it's like how we can support each other. Things they're focusing on. They're not all business and then we use 90 day sprints kind of taken from the one thing. Or if you were using traction, it'd be like your rocks, right? What's the one thing you're focused on this quarter as a team member? Lots of other stuff. I could go on and on about that, but

Drew Sanocki:

Well, it does sound like the traction model, Garrett, that you're more of the, you are the integrator, is that the head, the visionary, the visionary, set the vision, established culture, come up with those norms, and then ideally you pair yourself with that good integrator who can do more of the management of the team.

Garret Akerson:

So we happen to hire a phenomenal integrator. Our president, she's amazing, and I'm totally the visionary. That's what I enjoy doing. If you're looking at the traction model,

Drew Sanocki:

Awesome. You guys use that.

Garret Akerson:

So we use a lot of stuff. Again, going back to part of our culture, we say we're good at absorbing content and implementing it. So yes, we use Traction, but we don't use it like verbatim. We don't call 'em rocks, but we essentially have a level 10 meeting and we call ours MIT's most important things, or that kind of goes into our 90 day sprints. So yeah, we took what we liked from Traction and used it. This was really interesting and I really appreciate you joining us. Yeah, thanks for the invite. This is fun. Thanks for sharing Garrett.

Announcer:

On this season of the Nerd Marketing podcast, you'll hear from the Wharton professor that literally wrote the book on customer centricity, along with Drew and Michael's experience in private equity and advice from VC firm partners on what they look for in investments. And you'll hear topics about brick and mortar retail strategies for CPG brands and much more. Alright, Drew and Michael will be back very soon.

Transcript

Announcer:

Hey, welcome to the Nerd Marketing Podcast. Join co-hosts and ecom OGs, Drew Sanocki and Michael Epstein. Get ready as they'll bring you trusted tactics and strategies for boosting your brand's revenue, operations, and profitability.

Drew Sanocki:

Hey everybody. Today's guest on the Nerd Marketing Podcast is Mark Ritz from Carnivore Snax. Mark grew Carnivore Snax from $3 million to $12 million in about a year, just an incredible growth rate. All the influencers in the carnivore and paleo space are into Carnivore Snax. He's got Joe Rogan interested. He'll tell you that story. He also will tell you how he's mastered events and uses events and trade shows to really get in front of the right people and grow his brand. So without further ado, Mark from Carnivore Snax. How long have you guys been in business? What's the story of Carnivore Snax?

Mark Ritz:

We started in 2019. We did a Kickstarter. Myself and my co-founder, Sylvia Tabor, we went out to White Oak Pastures who we started the source from and shot our Kickstarter video and threw up a campaign and in 30 days we did $200,000, which that included some of the post-purchase upsells that are available to you after the campaign. So that was April of 2019 and we launched our website, I think it was December of 2019. It's an

Michael Epstein:

Amazing Kickstarter campaign. How'd you get so much traction on Kickstarter? 

Mark Ritz:

We had a very successful Kickstarter because we executed on rule number one and that is to have an audience to sell to. My co-founder did the carnivore diet for nearly three years, literally just salt and water, meat, salt and water, just hardcore. So she was kind of one of the first names, I guess, in that space, and so she became very close with the other big names and as people were following her journey on social, all of those followers became our emails for this product that she created really for herself during a time where it was just really hard for her to find snacking options on the carnivore diet. So she basically sent me a message one day on Instagram, said, Hey Mark, do you know anybody that can make a website? I said, why do you ask? She said, I think I figured out a product.

I said, why don't you send it my way? Let me try some. Long story short, I asked to be a partner. She was excited about that, and it just made it really easy for me to start to build a business. I had built a business and prior to that, that failed. I didn't have an audience, so I really leveraged her audience and we ran some ads before the Kickstarter and sent a whole bunch of product to influencers and they all shared it and that's what made it a success. Who's your partner? Her name is Sylvia Tabor. She's been kind of known on social media. She started off kind of in the biohacking space and then she found the carnivore diet and that was really what cured a lot of different ailments that she was dealing with.

Drew Sanocki:

Got it. Yeah, I know a little bit about the space. Just having done a carnivore diet myself for a couple years, lost 30 pounds, changed my life. Hell yeah, man, I love it, but I also know that it's become a very competitive space like liver crisps or rib eye crisps. There are a lot of providers now. There were a lot of supply chain issues. How do you differentiate, I don't want to say it's a commodity product now. There seem to be a lot of providers of liver crisps, right? But some of them can't get product. You guys can. How do you think about differentiating?

Mark Ritz:

You've definitely touched on one of the things that has allowed us to grow and kind of separate ourselves, I think from our competitors and we have a really good grip on the supply chain. We're very involved in the regenerative space. We know a lot of people that know a lot of people and it's really helped tremendously in terms of the differentiation with the product. It's one of those things that I tell everybody, you got to try 'em all, and the answer is very clear. Our texture is just very different than the competitors out there. A lot of people kind of think about Carnivore Snax being like a meat chip or a jerky, and when they try it, they quickly realize it's really none of those. It's very airy, crispy and it really melts in your mouth because we keep the fat. We use a lot of the premium cuts that jerky manufacturers do not, and it's, it's a very different experience, and so people always touch on the texture. And then I go back and I look at brand. I've been in the e-commerce space now for seven years, and I'm very humbled day to day by everybody who compliments the look, the feel and the messaging behind Carnivore Snax. If I would put it up against any of the competitors any day.

Drew Sanocki:

Yeah, I got to say I love it. I've been a consumer of Carnivore Snax, a customer of Carnivore Snax for years and off and on whenever I get sort of anal about the diet, it's like my first move is order some Carnivore Snax. I want to eliminate the other crap I've got in my pantry. Hell yeah, man, and yeah, I

Michael Epstein:

Love it. I think you touched on something interesting too. You launched with somebody who is essentially an influencer in the space, but wouldn't be considered like a celebrity influencer, and yet you had a ton of success because those folks were highly engaged and bought in and this was a really credible person in the space. So there's a good lesson in there and that folks that are looking maybe to launch by getting involved with a celebrity influencer and you're seeing some of those even start to fizzle out now, they didn't always represent a level of authenticity and credibility with the product or the brand, but yeah, knocked it out of the park on Kickstarter by leveraging somebody with an audience that was highly engaged.

Mark Ritz:

Yeah, well said. It also kind of takes out some of the fear of how long people think it may take to start a business. Many times you do see that the recipe is to build an audience first, and that can be overwhelming, but it doesn't have to be you necessarily. That goes and builds the audience. You can leverage someone else, you can leverage your relationships and really kind of pinpoint opportunities that way.

Michael Epstein:

I mean, that really helped you initial traction and now going forward, now that you've sort of found this product market fit, have dialed things in, now you can go big and you get the Joe Rogans on it to start tasting the product and speaking about it, endorsing it publicly.

Mark Ritz:

Oh yeah, yeah. He found us through one of our Facebook ads.

Drew Sanocki:

This is Joe Rogan, the big podcaster has an affinity for Carnivore Snax. He's mentioned it a couple times on his podcast when he mentions you guys, do you see sales just go through the roof? 

Mark Ritz:

He shared a crinkled up bag at 2:00 AM of Carnivore Snax on Instagram and an Instagram post lives for 24 hours, right? I think we did $43,000 off that. 

Drew Sanocki:

That's awesome. Obviously you can't depend on it, but the business was successful before Rogan, but I think after Rogan, is it just taking it to another level? I would

Mark Ritz:

Say yes, because he has shared it now four or five times. He's a big customer of ours. He's built a ton of trust with his audience, so a lot of what he recommends, it just converts really well because of how authentic of a soul he is. But I do think it has definitely changed the business. We track some of the cohorts from those days from new customer acquisition to just really see how valuable they are, and there's no question that he is the absolute best person for our product in terms of the voice behind it

Michael Epstein:

And the first time he posts, do you even know, are you just looking at sales and all of a sudden things go through the roof and you're trying to figure out where it came from? He tags you and you figure it out and you're like high fiving around the office. What's that like?

Mark Ritz:

Well, because it happened at 2:00 AM somehow I just ended up, I think my kid woke me up crying or something in the middle of the night. So I come back to bed and I go to the dresser, grab the phone just to whatever, pop in, and I see it and I immediately message my co-founder and she gets up and we're pumped. This has kind of been a, we've talked about Joe for a while, being kind of our main guy and it happened and bigger things could happen moving forward. I don't know yet, but we stay in touch with Joe and it's been a really, really cool experience. There's no doubt.

Drew Sanocki:

Congratulations.

Mark Ritz:

Thanks man. 

Drew Sanocki:

I had a question about events because you've been posting a lot on Twitter about how you guys just dominate events, I guess. What do you mean dominate events? Is that important to your business and how do you go about dominating events? What is dominating events?

Mark Ritz:

What I have to go off of is my circle of very close e-commerce buddies who have bigger businesses than me, smaller businesses than me, and when I share what we do in terms of sales at an event, every one of their responses is really jaw dropping. Keto con, we did almost $25,000. We just did the biohacking conference. We did a little over $20,000 there, and we have a strategy where we bring coupons to handout and we will leave one of our top sellers behind, so we won't bring it. When people try the product and absolutely love it, we say, Hey, well you're going to want to take a coupon with you because we don't even have our top seller here or our number two seller, and then we track those coupon codes and see that it drives another, like for Keto Con, it drove another $9,000, and so really attributed to the event you're looking at $35,000 and for the biohacking event, it's amazing.

I mean, literally only three people came up and said they tried the product before they were customers of ours. Keto Con is a little bit different, so the customer acquisition is great. You just get so many people at the event because the product's so unique and it looks so different. They all pop onto Instagram and the amount of mentions during the event just goes haywire. And then people that aren't at the event get fomo and they're buying on the website and then you go and we run every expense, we track every expense of an event, and then we track the ROI and the fact that we're coming out ahead, even having six or seven people in all their travel expenses, it just makes a ton of sense for us and it's a good change of pace from being at the warehouse for some of our employees and it's great all around.

Drew Sanocki:

So for you guys, it's like a good opportunity to get in front of influencers within that community. They may become end customers too, but the people by nature who are going to those events, those biohacking events or paleo diet events or keto events are all so into it that they probably have their own blogs, their own Instagram accounts, their influencers themselves. Exactly. Doctors

Mark Ritz:

And our head of partnerships comes and she's just dialed in there building relationships, executing after the event, the repurchase rate there, people will buy on Friday, they'll come back to the booth, they'll buy again on Saturday, and then they'll buy again on Sunday before they leave to bring stuff home on the plane. So it really is just a really good experience for us. No shipping fees on any of that, so it's pretty

Drew Sanocki:

Cool. Do you aspire to be in brick and mortar retail at some point, or are you just, is it too complicated? 

Mark Ritz:

I get asked that probably I feel like five times a week. For me, it's like I never want to shoot down the possibility of it happening. I think it would be really cool to see that, but our core values as a brand sourcing only from regenerative farms in the US, from US ranchers, that's where it becomes very hard. If we wanted to go out to New Zealand, we could absolutely quadruple the business in probably no time and probably say 50% on raw material, but it's just not something that we want to do as a brand. Supply is what holds me back from wanting to entertain less profitable sales channels and to just continue to ride this wave of DTC. It continues to grow to a point where I’ve got to still spend tons of looking for supply. 

Drew Sanocki:

That's like a rarity right now. I see so many CPG brands feel like DTC has been tapped out. They’ve got to go brick and mortar to get volume up, and meanwhile you guys have built a good profitable business, just sort of blocking and tackling on D two C courting influencers as your main strategy. You guys do anything outside of that influencer event strategy? Are you doing paid or is everything built around the influencer strategy?

Mark Ritz:

Believe it or not, paid is by far our greatest acquisition. We probably should go even harder on influencer stuff, but again, the product really does a lot of that on its own just with the virality of it. But paid works so well because we've just been able to get content pieces of people pulling the product out of the bag, which will convert astronomically better than anything like lifestyle looking like if I put a picture up or somebody traveling with it, just like a bag hanging out of their backpack or something, it just doesn't do nearly what it does if somebody pulls it out and kind of just shows that texture and what it looks like. I mean, we're profitable on verse purchase, so we just continue to pour what we can in there and it works.

Michael Epstein:

What are some of the other goals aside from just essentially coming out ahead from a cost perspective? Is securing influencer content a goal there? You talked about not necessarily pushing into retail, so you're not courting retail buyers there. What's considered wins at the trade show aside from just sales?

Mark Ritz:

Definitely seeding affiliates. We run a successful affiliate program. We use Social Snowball for that. We don't necessarily look for tons of volume on the affiliate side. We really look to build relationships that we can maintain through hopping on quarterly calls, which our head of partnerships does. So we're definitely out there seeding affiliates. There's also other opportunities that come up that you just never even expect ending up in a couple documentaries. So there's a couple leads that we have there where they want to put us in documentaries. Some of it is just, I can't tell you there's any sort of genius tactics necessarily. It really is about being self-aware when you're at the event of the opportunities that kind of come up to the table and then going out and getting them. So yeah, I mean we're very aggressive and building relationships and it's panned out. Are

Michael Epstein:

You only focusing on some of those larger conferences or are you doing smaller events or even other tasting opportunities in local areas? I

Mark Ritz:

Would say it's kind of those smaller events. We haven't done Expo East or West. It's something we're looking into, but again, there's a lot of buyers there and they're going to see the product and they're going to be like, wow, this is different. They're not going to love the shelf life. We're six months unopened. A lot of what you find traditionally retails really anywhere from 12 months to 18 months of shelf life and they want to buy boatloads of it, so it's probably a good reason why you haven't seen a lot of companies come out with a product like this. It takes a lot of time to make it. I mean, there's a lot of companies out there that can spin up two or three batches in a day and that's just not how it works with us

Drew Sanocki:

Knowing the market a little bit. Right. You've got the trove kind of products. What are those like Bill tongs, you've got the Epic food guys have their meat bars. What makes yours different from a manufacturing point of view? So you're not outsourcing, that's the first thing, right? You guys do it? We

Mark Ritz:

Do everything. We got 30 employees or so. The biggest difference is just the two ingredients, and that's really what a lot of these people that are just conscious about what's going into their body are looking for is minimal ingredients. And we've seen a pivot to that over the last five to seven years. But it's just like, okay, when you see the front of packaging and you read minimal ingredients, you turn it over and it's still like six or seven, it's just not 80. And for us it's very shortlist. It's just meat and salt in every single one of our products. On the rare occasion we're asked, Hey, are you going to do any spices or anything? And that's just not who we are. People can add whatever they want to it if they choose, but every product we come out with is just going to be meat and salt and we're going to keep it in-house all the time so we can control a hundred percent of the customer experience. Doing our own fulfillment is vital to being able to personalize and take care of customers on the support side even better and just really double down on that customer experience, whether it's throwing something in the box in their shipment, a note or something. It's just worked really well.

Drew Sanocki:

You do this all in Ohio?

Mark Ritz:

Yep. We're just outside Columbus, Ohio. We got a 12,000 square foot facility.

Drew Sanocki:

So the actual raw materials come into that facility like the Oh yeah, you buy fresh beef liver and you're dehydrating it right there.

Mark Ritz:

We haven't actually got into organs yet, but yeah, we're buying all the meat and it's getting shipped to us and we're turning into Carnivore Snax. We got our own freezers and huge cooler where our team goes inside the cooler and works in there for a good portion of the day. USDA, everything. It's dialed in, brother. I dunno. 

Drew Sanocki:

I keep bringing up liver, but you guys are right. You don't carry liver ribeyes.

Mark Ritz:

That's right. Ribeye is by far the number one seller. Brisket is number two. What

Drew Sanocki:

About growth tips For anybody listening to this, we've got a lot of people who operate in D two C and fewer. Looking back at your journey, what are some top things you'd recommend that grew the business? I

Mark Ritz:

Think for us, really running lean for a long time helped. Our overhead was so low in the beginning that we were just able to put a lot of cash in the bank and then utilize that when we moved to Ohio and get a large facility to maximize a lot more product just to be able to make more product. So that was huge. And then being able to build a nice bank account gave us the opportunity pretty early on to lean on tools like Settle. We use Settle for all of our inventory purchases and we've just been able to grow that line of credit and increase it by building such a good relationship with them. And so we've just been able to really optimize the cash conversion cycle, which has allowed us to really be aggressive on the advertising front, play around with cool video deals with some influencers.

That's been absolute key is to get the pricing down from the beginning. That's one thing I think I'm probably most proud of is just running through a lot of different pricing models before launching and ultimately landing on an untraditional size bag. We only really sell five ounce bags. When you go into a retail store, typically you find somewhere like one ounce or one and a half ounce bags unless you go into Costco. And I worked for Costco for 12 years and I just really loved that model. So I told myself if I was going to get into this business, I wanted to have competitive pricing. It is an expensive product, but I wanted to have better pricing than some of the competitors, and my ultimate goal was to sell more of it than anybody. And that's kind of the Costco model. So people come to the website and they buy four or five bags at one time and having an average order value of $114 on a meat snack has been absolutely, absolutely incredible to just putting more cash into the bank. So that's been the biggest lever. I think

Michael Epstein:

That's how you get to first order profitable, right? Because you're not going to do it on a $25 AOV.

Mark Ritz:

Exactly. I mean I've seen some people just talking about all kinds of products on Twitter and stuff. It's just like, Hey, what would you do with a cookie? Or what would you do with this? I'm just thinking, yeah, you could go the bundle route obviously, but you could also just look at creating packages that just have more product and then go and look at competitors and beat 'em.

Michael Epstein:

So if you weren't doing Carnivore Snax today, what would you be doing? What's the business you'd start today?

Mark Ritz:

I think my buddy Chris Zaki and I would do, we'd probably start selling nicotine pouches.

Drew Sanocki:

Dude, I'm with you on that. There's one or two players that have reinvented nicotine gum. Perfect subscription product. Exactly. Biohackers. Love it. You got guys, I don't think Asprey, but who's the guy in Colorado? Greenfield. He's written a lot about it. Just like performance enhancers.

Mark Ritz:

Yeah. Probably the most common brand out there is Zen and they come in those little plastic things and stuff and I would find a way to just double that size,

Drew Sanocki:

Just 10 x the amount of nicotine in one piece of gum, right? Just wire people up.

Mark Ritz:

Yeah, that would be what I would do, to be honest with you. Have

Drew Sanocki:

You heard of this, Mike? 

‍

Michael Epstein

I did not hear of that. 

Drew Sanocki:

Yeah, the idea is nicotine itself is not really dangerous. I mean this is not health advice. 

‍

Michael Epstein

Correct.

Mark Ritz:

I dunno. 

Drew Sanocki:

Check with your doctor, whatever I have to say, I think it's often the carcinogens in tobacco, correct that cause the problem when you're smoking is the theory as opposed to the nicotine, which is you slap a patch on, you're not getting the carcinogens that are in a cigarette, right? So nicotine can suppress appetite, increases focus. I played around with it. I mean my years in the Navy, everybody, this is going to gross everyone out, but everybody dipped in the Navy. This is what you did on a ship for six months. It's like you just sat around and dipped. So that was my foray and nicotine. It's great. I mean the downside, it is very addictive, so you crave it when you get off of it, but so is coffee, right?

Mark Ritz:

Very true.

Drew Sanocki:

Really helps when you're intermittent fasting, if you want to extend a fast. The days that I've tried to do dry fasting for probably three or four days, it's a tall order, but a little bit of nicotine.

Mark Ritz:

You got it.

Drew Sanocki:

Gets you right through. 

Mark Ritz:

Very true.

Drew Sanocki:

All right Mark, how big is Carnivore Snax?

Mark Ritz:

We are on a about $12 million run rate, so I think we could crack that by the end of the year. And we did 3.6 in 2021. So we're growing very quickly. Focus is just supply, supply supply working in terms of acquisition right now

Drew Sanocki:

And cash flow positive? Absolutely. You're not losing money. Yeah, I think if you look at Google trends, carnivore, diet, keto, metabolic health, these things are all up into the right. So it's like the future's bright for sure.

Mark Ritz:

And I mean the markets that have found us, it's been really cool. I mean I've learned a lot. I didn't really, we obviously leaned heavily into the carnivore diet community in the beginning, but we're getting a lot of the outdoors type market, the campers, the hikers, the hunters, the overlander people that are climbing cliffs with vehicles and stuff. It's pretty sweet. Through our post-purchase survey with no commerce, I just feel like I find something new every day, I learn something new about who the people are that are buying from us. And for us it's just like, it kind of makes it fairly easy to test stuff out and to figure out which audiences are going to be the most successful for us.

Drew Sanocki:

I think people are waking up to how important protein is in general. There's a lot of theories around protein adequacy. You've got to get the basic daily amount of protein. You're going to be hungry until you hit that. I represent another market in that. I like buying it for my kids because I don't think they get enough protein if you throw 'em in the lunchbox. It's a great way to kind of, it's

Mark Ritz:

A great point. 

Drew Sanocki:

Jam with protein a little bit.

Mark Ritz:

It's a great point. Kids, my kids love it. They love every cut that we've made. And protein. That was probably the biggest topic at the biohacking event. It does seem like the keto stuff is kind of, keto is probably not where it used to be. Carnivore seems to still be high up there, but everybody's just shifting to this instead of diet necessarily. Like let's get back to prioritizing protein as the macronutrient and man, we got a ton of protein.

Drew Sanocki:

That's awesome. Thanks man. 

Mark Ritz:

Absolutely.

Announcer:

On this season of the Nerd Marketing Podcast, you'll hear from the Wharton professor that literally wrote the book on customer centricity, along with Drew and Michael's experience in private equity and advice from VC firm partners on what they look for in investments. And you'll hear topics about brick and mortar retail strategies for CPG brands and much more. Alright, Drew and Michael, we'll be back very soon.