Episode 69: Building a Big Brand with a Small Team with Matt Mullenax of Huron

Listen and nerd out on: Apple Podcasts | Spotify

‍

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. Today on the Nerd Marketing Podcast. My guest is Matt Mullinax, who's the co-founder and CEO of Huron. It's a men's grooming products company. They make deodorants and lotions and cleansers and all that good stuff. Very crowded category in DTC, and yet they've been able to grow like a weed. And today Matt shares with us how he did it, his one key success factor that he attributes all his growth to, which will surprise you because it's so simple. It's something everybody can do, but man, they execute on it really well. So without further ado, Matt Mullinax, tell us about Huon. You graduate and then did you go right to starting Huron?

Matt Mullenax:

So I graduated in 2017 and kind of in the 11th hour of my business school career was kind of like, what do I actually want to do? Was interviewing at a number of traditional private equity firms, got dinged from all of them, quite frankly, and that was certainly a moment of reflection to say, who am I honestly trying to kid? I didn't really have tremendous aspirations to be this long-term investor or professional. I thought it was an easy way to pay back business school loans. And then after three to five years I could go do my own thing or do whatever I wanted to. But famous last words. I think for a lot of folks, what I had written, all of my business school essays around and apps around this notion of becoming a consumer entrepreneur. I had the great fortune of working for Andy Dun and Bryans Bailey at Bonobos and the very early innings of Bonobos, and that was just such an eye opening, informative experience for me.

And I think that sort of cultivated what I ultimately wanted to do, which is just how do you kind of fall in those footsteps? How do you bring this next level customer service business model to a category that I cared about? And it took me a while to kind of figure out what that category is, and it was almost kind of hidden in plain sight. But I think for me, launching something quickly became the area of focus right around graduation. So I ended up working as a brand consultant as a quote day job while I moonlighted as a skin entrepreneur, kind of researching what was going on in the industry, how do you make products, like what ingredients are efficacious, what are the brands that are out there? All of the early diligence things. Fast forward a few weeks later actually built and launched a fake brand, which I think was super compelling and a really risk mitigating effort.

On my end, I think a lot of people perceive entrepreneurs to be very risk seeking, but always along this journey you're looking for ways to figure out, well, what's the downside case? How do we avoid that? How do we protect ourselves against that? So for me, that downside case was like, well, let's just launch a fake brand. Let's market this brand to a consumer that I feel like I know quite well, which was me, someone from the Midwest who wasn't getting a lot of this new high fly brand attention. And if we can convert that consumer, then there's something to be had. So built this brand, only marketed to guys in flyover markets. So Cincinnati, where I'm from, Columbus, Cleveland, Chicago, Detroi, KC, again with the early narrative being, if we could convert this consumer, ask 'em to pay a few bucks more than he’s currently paying on basic personal care products, then you might unlock a super sticky consumer. So that was the early thesis, had a lot of success doing that. Ended up moving from SF back to New York and then got the ball rolling from there. In early 2018,

Drew Sanocki:

You did launch a brand, a fictitious

Matt Mullenax:

Brand? No, we had a terrible website and we had a social account because that's what you needed to essentially launch an Instagram account was an email in a URL, but we never took orders. So instead what happened was I got a bunch of hate dms being like, your site sucks, I can't check out, I'm trying to buy product. And I was like,

Drew Sanocki:

So this was like Eric Ries lean startup kind of stuff.

Matt Mullenax:

Just a really easy way to heat check and really low cost way to say, is there actually something to sprint at or am I just making this up in my head? And that turned out not to be the case thankfully. And we ended up kind of running it full-time and moved to New York to do so.

Drew Sanocki:

Did you actually get to the point where you were able to ballpark like a CAC off of social and then back into what you ultimately might have to charge for the

Matt Mullenax:

Product? A little bit. I mean honestly, it was more so just a truly yes/no kind polarization of do we think we have momentum and will this work? I think in hindsight, yes, it would've been really interesting to track what price points were we listing, what were click-through rates, all of that stuff. But quite frankly, I think I was just blown away by the volume of people trying to check out with these products. It was just one of those very visceral moments of I think this is going to work and just kind of made my decision then and there. 

Michael Epstein:

Was it that you were targeting a specific persona, you think that's what sort of clicked for folks? It's a fairly crowded category even at the time that you were starting it. So what was the secret to sort of breaking through?

Matt Mullenax:

Yeah, good question. I mean, it certainly wasn't as crowded as it is today, but there were very kind of similar core principles that I think we applied to that brand and it's very infancy to what we've ultimately manifested at Huron, which is just a relatable down to earth approach, very easy to understand copy, a fun but not funny approach. And I think there's certainly a difference there and just a brand that kind of made sense. Could we be a brand that you talked about while at BW-3’s, eating chicken wings, watching a game in that category, in our current category that rarely exists and we wanted to be that brand, that level of relatability, I hate the word authenticity, but we can use it here. And that grounded approach that would allow this consumer to do so. 

Michael Epstein:

And how has that played into the product expansion strategy over time? Because you've released new products across different categories, fragrances and other things, have you taken a similar MVP type approach there or did you develop more learnings over time that gave you more confidence in these categories?

Matt Mullenax:

Yeah, certainly a little bit of both. And just bridge the gap from what happened after fake brand into quickly what happened and where we're at today. So after moving to New York, I ended up meeting my co-founder here whose name's also Matt, which makes things either easier or more difficult depending on the call or the meeting. But Matt used to run product development and corporate innovation at Estee Lauder, so he's truly like a product fragrance guru. I think one of the benefits we have as a very small team is typically when you work with a contract manufacturer who's ultimately helping you build these products, you work with a salesperson, the salesperson relays your feedback to the chemist, the chemist works, those tweaks then that relay that, it's just this lengthy telephone line for us. And with Matt's background, he just speaks directly to the chemist. So he's talking ingredient level granularity, which again, I think speaks to kind of the level of product quality that we're able to put out in the market.

So anyways, we teamed up in early ‘18 with very complementary skill sets, worked on brand, the product build raised a little bit of money, launched July of 2019, and we've been really lean to date. So we're only four today. And from a channel perspective, just kind of across DTC and Amazon know major wholesale accounts, but when we think kind of the product and the assortment trajectory, we launched with a body wash, a face wash and a face moisturizer. And the ethos behind that very narrow corset was with body wash, we're giving people a very easy to understand product that has a very easy comp and market. It's like, Hey, I use deferment. Hey, I use Old Spice. Hey, I use this other brand. Do I like Huron compared to those products? Do I like the fragrance profile? Do I like the way it makes my skin feel?

Et cetera, et cetera, et cetera. So kind of creating that narrative of the world's best basics. And then from there, starting to slowly introduce this consumer to maybe products he's not as familiar with a dedicated face wash or a moisturizer. And then from there, just collecting a ton of feedback along the way. What products would you expect from us? What would you like to see from us? What categories should we be expanding into? We run that survey at least quarterly to folks who are first time customers at Huron. So we can constantly think about, what does the product development pipeline look like? Because we operate in a category that lead times might be anywhere from 18 to 24 months. So we have to constantly be teasing things out of not only what would you like to see from us, but what would you expect to see from us? So it's a little bit of qualitative and quantitative where we feel like we have an idea of where we want the assortment direction to be coupled with what are the data points that we're ultimately collecting from our consumer base.

Michael Epstein:

You touched on the lean team. That was one of my questions. I know you guys have run lean from the beginning, particularly relative to your size, probably more lean than a lot of organizations. How do you structure that team? What are the roles and responsibilities when you've got four folks—are you using a lot of external resources? How do you grow and execute at the rate that you guys are growing with a team of that size?

Matt Mullenax:

Yeah, so we do use a few external partners. I mean we kind of have to at four, but to answer the latter question kind of first, it's a maniacal level of focus. So it's thinking about what are the top three to four things that we need to be executing on in this particular moment in the next three months, in the next six months, and the rest is noise. And as we grow and scale, what will be to-do list item number 5, 6, 7 on my to-do list. It's been there for months now becomes that person's 1, 2, 3. So we just look at what is the intersection where we feel like there's a tremendous amount of growth or opportunity mixed with do we have the right people to execute against those strategic initiatives. So as we think about divisions of power, if you will, except Matt, my co-founder does so much in the product packaging, design, development, product marketing, how we talk about the products, which is so critical obviously to the success of our business.

We have a VP of marketing, Nate, he's our one remote hires in Ohio, and he has 14 years of DTC experience across food and Bev across apparel and also has Amazon experience, which for us is a huge channel. So when I was introduced to Nate, just hearing his background, this makes a ton of sense for where we are today and where we'd like to be 12, 18, 24 months down the road. And then we have director of operations, Katie, who does so many different things, quite frankly. So she's doing logistics, she's running a lot of inventory reports, she handles all cx, she and I split wholesale. So there's a lot of things that she's tackling on a day-to-Day, very fortunate to have her. And then I just report to the other three basically. So I'm kind of filling the stop gaps around where my best plugged in to support paid social, how do I think about supporting Amazon? Do I need to step in and have some wholesale conversations really kind of working in tandem across the four of us. But you have to be just given the size of the

Michael Epstein:

Team, how do you create those priorities or manage those priorities organizationally? Drew and I have used OKRs historically. And to your point, one of my favorite things about OKRs isn't just what you're prioritizing, it's what you're committing to saying no to, which is sort of all that external noise. And it allows you to sort of have a justification for saying, we're only going to do these things if it doesn't support my OKRs. How do you think about it?

Matt Mullenax:

Yeah, I mean that point is spot on is just can you say no to 94% of the things that get thrown your way, which is not easy to do. But I think as we know where we want to be in 45 days at the end of Q4, as we think about 24, as we think about 25, as we think about 26, it's constantly oscillating between what is the 30 foot view and what is the 30,000 foot view and balancing those in between from a team basis. We do monthly business reviews. We do an in-depth quarterly business review as a dedicated time to look in the rear view mirror and figure out what worked really, really well, where did we miss fire, what were opportunities for improvement across the board. But then it's thinking about, and we'll get this off December 1st, which is just what does the next 12 months look like?

And we run a ton of scenarios and a ton of base cases and upside case and downside case and all that fun stuff to really tactically think about where we want to be as a business. Because my view is if we have 30 KPIs, then we have zero. So for us, the two prevailing goals that we're sprinting towards at all times is continue to grow top line and accelerated rate and be cash flow positive, which we will be in a very short period of time, which is really exciting. So I have a thesis that we want to be a standalone brand or business rather kind of crossing the chasm from brand to business where a business can operate, stand on its own two legs, and from there you can kind of control your own destiny. So that's kind of the thesis around not sacrificing top line growth, but making sure we're growing on both the top line and bottom line. Those are kind of our two prevailing company goals.

Michael Epstein:

I love the stress testing the business where you're creating those different base cases. I think it was the simple modern guys who were talking about that not too long ago, Mike and Brian, and creating those scenarios of catastrophic black swan events. Can we survive that? And then what's our more realistic scenario that we can sort of forecast against? But yeah, I love the idea of doing that.

Matt Mullenax:

Yeah, it's kind of a recovering financier. We probably have too many scenarios. I think going into 23, we had seven different scenarios, but it's like DTC, DC, upside case base case, Amazon upside case. So we're constantly tweaking and polling to say, well, if this hits or if this product takes off, or if this channel sees explosive growth, how do we need to forecast inventory buys? How do we need to think about hiring? How do we need to think about all these kind of secondary factors that will inevitably kind of bubble up in a very short period of time that we need to act upon? So we never really want to be caught totally blindsided, but the only consistency in forecasting is it's wrong. So it's like, well, how do you at least prepare and go through the thought process, which is oftentimes the most important part is just going through the exercise to make sure that we're aligned in where we want to be and if things go crazy up or hopefully not crazy down, the team has been exposed to those conversations and we know how to react. Did

Drew Sanocki:

You guys raise money to start the

Matt Mullenax:

Business? We did and we used that initial capital for brand building and early product launch and build just given how long the lead times are in this category. I know one of the things that we're going to talk about a little later is maybe other categories or areas that I'm interested in or would want to launch something in. I think one of the big learnings from this category in particular is just from product brief to on digital shelf, how long that is because at the end of the day, you're dealing with chemistry and we want to make sure we're not melting people's skin or burning off their hair or anything like that, which obviously would not be good for anyone involved. So it's just an extensive level of product testing and regulatory that has to go into the product development pipeline.

Michael Epstein:

And then you raised, again, not that long ago, what was the rationale sort of behind that and what were you seeing in the fundraising environment at that time and how do you think that's changed? Or do you think he got it at just the right time?

Matt Mullenax:

Yeah, the fundraising environment has definitely been interesting over the past 12 to 18 months. I think what we've seen is some traditional venture pull out of CPG totally because it's oftentimes I think a lot of folks who are looking for investments that will return a fund. It's harder to do that. It takes a little bit longer when you're dealing with widgets, when you're dealing with actual products. I think in SaaS and certain other areas, other categories, it is a little bit easier to have hockey stick type growth with 94% gross margins. It's a little bit more difficult to do that in traditional consumer products. What I think kind of stands the test of time is with the right story, with the right focus, with the right person leading the charge, there can still be really great businesses to be built. And I think again, for us, the story in and around just maniacal focus and execution, the use of proceeds and what we communicated to our new investors were, here are the things we're really good at and we're doubling down on those. This is not exploratory. Let's see what happens. Like, oh, we're going to dump a ton of money in this new emerging channel or platform. It was like, we know our strengths and we're just going to keep executing on those and slowly build a team to help us slowly branch out. But it was kind of like a 90% double down, 10% kind of look for other growth initiatives or opportunities, but it was more kind of conservative around how we want to map out our execution strategy going forward.

Drew Sanocki:

Do you guys see going as part of, maybe you'll figure this out December one, but going into traditional brick and mortar as a natural extension of the brand?

Matt Mullenax:

Absolutely. I mean, I think really since day one, I've always viewed Huron to be a brand that lives on-shelf. I think in our category that's for us one of the one or two remaining massive inflection points, which is just how do you again cross the chasm for being on a digital shelf to a physical one? That's still how a lot of consumers buy in today's market, right? It's you go to your target, you go to your Walmart, you go to your altar, Sephora, and that's where you're shopping for this category. So we're certainly missing out by not being in front of consumers in certain select retailers. But I do think that is a decision that requires a lot of thought and a pretty well executed game plan. Getting in isn't always the toughest part. It's winning. So you want to make sure that you're partnering up with a retailer who's ready to support the brand that you understand the trade spend and the marketing dollars that are required to win on that shelf. So there's just a lot of thoughtful considerations that we've been making internally and we've discussed internally around who is the right retail partner, who's the right broker team to get us there? And then how do we think about co-creating an execution or a game plan strategy so that we're not just championing getting in, but we're championing the fact that we're selling through and our velocities are meeting or exceeding expectations.

Drew Sanocki:

It's definitely something we did with Overtone, which is this hair color company that I own part of, and they went from DTC to Target and it became the bulk of their revenue, but it's also a completely different beast. Even the packaging's, even different supply chain, everything is different about that part of the business, and it's almost like we had to build a parallel staff to deal with that part of the business versus the DTC.

Matt Mullenax:

Totally. And it's the different muscle to be flexed. I mean, you have to know how to think about how do you manage trade spend and knowing that if Target's going to run a promo to compete against traditional DTC sales for Black Friday Cyber Monday, you better know that Amazon's going to mark to market from a lowest price point perspective. So it's like what are all those volume trade offs and how do you think about pricing across multi-channel, which is not a very easy exercise to dive into. And to your point around packaging, I mean, again, as a lean team, we felt like two or three years ago when we were having some of these conversations that it felt like we were almost betting the house being like, okay, to get into this retailer, we need to drop from 12 ounces to eight to 10 ounces and then we're going to have skew proliferation and a lot of things that are just operationally very difficult to manage versus just saying, Hey, when you feel like the time's right, do we make the concerted effort to downsize packaging or do we make the concerted effort to make pricing adjustments?

I think we're in a much better position to do that today than where we were a few years ago.

Michael Epstein:

I think that's a really important point. There's so much appeal. It's so sexy to think I'm going to go into retail and just get my products onto a bunch of shelves. But to your point, in some cases it's betting the house. And if you don't do that well, both from a distribution perspective, but you touched on it earlier too, the sell-through velocity is key. So getting on the shelf we talk about is only a portion of the battle if you don't sell through that stuff shows up on your front door 60 days later and you're out of luck for a long time. So yeah, I think it's just worth reiterating the point that you raised around being very thoughtful about how you approach retail and have a game plan going into it about getting the right partners and how you're going to ensure that you're getting sell-through and you're it as much as possible.

Matt Mullenax:

And every brand is constructed and built differently. I'm always like when you read in industry news, again, you're being supportive of the team and the brand, but you go from zero doors to 2,500 Walmart doors, there's a lot of opportunity for things to go awry there. I mean, I think for us, what we'd be really excited about is can we regional test, can we test with this one retailer and select doors because we want to kind of embrace this crawl, walk, run retail strategy where we're understanding at each kind of size of footprint what it takes to absolutely crush it from an execution perspective. And I think having those learnings along the way, it's a lot easier to snowball. Might be a little bit of a slower build from a top line perspective. But again, that initial retail PO for 2,500 doors is only good so long as those pos keep coming and the time that the music stops, that's not going to be very enjoyable. So we want to make sure that we're understanding and stress testing any retail partnership the size of the po, and then to your point, how we can make sure we're executing against what's expected

Drew Sanocki:

Of us. I mean, it's like a very thoughtful business. You run it well, it's lean, you're going to cash flow soon. You've had great growth. What's the secret of success? What's the one thing that's gotten you guys where you've gotten today? What would that be? I mean, you focused on building a brand versus just selling something at commodity prices. So what do you think the secret of success is?

Matt Mullenax:

It's going to be a really boring answer. We've kind of talked about it a little bit already, but I think just knowing and focusing on what has worked for us and what seems to be resonating with our consumer. I mean, we can look over our left and right shoulder and peek at other brands intra-category and say, well, this seems to be working for this brand. Maybe we should try that and have it totally flop, right? But I think that very open line of communication with our customer base has driven a ton of insights around, Hey, this is what created a thumb stop for me on Instagram. This is why I bought from you. And you start to collect enough of those data points, you start to pattern recognize to say, we might think that we are company X, but really why customers are shopping Huron is because reason X, Y, and Z.

So I think again, having that kind of understanding of what has worked for us previously and why customers are ultimately choosing to support us with their wallets, really focusing on that versus trying to project to the industry why someone should be buying from us. I think, again, it's a really vanilla answer, but I think it goes back to just that notion of execution, just focusing on what we can control and trying to put blinders on things that we just fundamentally cannot, we can't worry about what competitor brand got into target. We can't worry about what competitor brand received a PO from Walmart. We just need to focus on what's been working for Huron, and that's been hugely successful. To get us to the point we're at today,

Drew Sanocki:

You learn a little bit about DTC, learn about running a CPG brand, and if you were starting over today, would you go right after the category you went after or would you go for something else?

Matt Mullenax:

Well, another boring answer, but I would consider myself the furthest thing from a serial entrepreneur. I got into this category because this was me seven to 10 years ago. I had zero self-confidence. I had horrific skin issues. I had a boss tell me when I was working on private equity like, Hey man, we can't take you to any more management meetings until you fix this, which is not the biggest vote of confidence from a senior professional in your firm. So I think for me, waking up every day, I know exactly who we're fighting for and who we're building products for and who we're marketing towards. And I think that for me has been really, really rewarding, especially just getting certain inbounds and emails being like, Hey, I suffer from eczema and this body wash is one of the few that doesn't flare that up, or I had really bad acne and I've been using the face wash and I haven't had flare ups in months.

Those little tidbits of customer feedback just go so, so far. So for me, it's not quickly what can I do next? I just feel so intimately involved with this consumer because it feels like it was me seven to 10 years ago. It would be fun to explore. Slight rephrase of the question is what does the total opposite end of the spectrum look like from a super high price point or AOV item? I mean, we've seen a flourish of cookware brands, a few of 'em seem to be doing incredibly well. What is it like to sell a thousand dollar cookware kit? That sounds really, really interesting. And when you think about CAC and payback periods and ltv, those dynamics are just completely the opposite of the category that we operate in. So I think if I were to think about what would be next if that were me, something with a slightly higher consideration period, but just from a gross profit, dollar generation is substantially higher.

Michael Epstein:

That's interesting. I think it was Alo was talking about doing something about going super high-end like thousand dollars leggings or something like that, like going luxury brand on it. Interesting thing to think about. Gives you a lot of margin to play with to do marketing.

Matt Mullenax:

Totally. We're friendly with a bunch of brands that kind of operate in some of those fields. It's just a totally different marketing game. You need so many touch points. You're getting that person probably one time every few years at best. Whereas us, I mean if you shower every day, in theory, you can be a customer of ours every 30 to 60 days. So that's certainly exciting from a velocity standpoint. But again, the gross profit dollars are obviously very attractive in some of those higher price point categories.

Drew Sanocki:

We'll have to do a podcast sometime on our move from DTC into software because I think that's the big difference is the lifetime values are so much higher. It's a different marketing challenge. You can just really go deep and I enjoy that change. You don't have to start the next month trying to acquire a whole new set of customers, which is kind of nice. Yeah,

Matt Mullenax:

So true. But there are challenges nonetheless, and I think that's what's interesting is even at various stages of Huron, people are like, well, what's different today than when you started? I'm like, well, the problems never subside. They just shapeshift, right? They're just of different magnitude and they take on different beings now versus where they were in summer of 2019. So it's not like, oh wow, this is so much easier now. It's just the problems change and evolve.

Drew Sanocki:

Well, this is really awesome, Matt. Thanks for joining us.

Michael Epstein:

Yeah, congrats on all the growth and success of the brand. Thank you both. Appreciate it.

Announcer:

Thanks for listening to Nerd Marketing. Don't forget to check out all of the other great episodes, some of which include interviews with e-commerce Marketing Masters, working with Mr. Beast and Joe Rogan, plus Drew and Michael's experiences in private equity, advice from VC firms on what they look for in investments and so much more like share, subscribe, and tune in every week for a new episode.