Episode 56: Executing a Successful DTC Roll-Up with Taylor Stitch’s Mike Maher

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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.

Michael Epstein:

Hey, this is Michael, and in this episode of the Nerd Marketing Podcast, we talk with Jacques Spitzer, the Emmy-winning founder of creative agency Raindrop, the agency behind video ads from brands like Native, MANSCAPED, Dr. Squash, Poopourri, and a whole bunch more. We talk about what it's like to have one of your ads air as a Super Bowl commercial, their creative process for creating really engaging ads and a whole bunch more. Hope you enjoy it. 

Great to be with you. The man behind ads from some of the biggest brands in DTC and some of my favorite ads. Going back, I will say, to the Squatch ad is probably the one where you guys first got on my radar and I remember seeing it for the first time and literally forwarding it to everyone on my team. I was CMO of a brand at the time, and I was like, that's an ad. That's what you got to do. 

Jacques Spitzer:

 You were a man of taste. I just want you to know, yes, you're a man of taste. I've known that ever since the day I met you.

Michael Epstein:

Well, I'm excited to talk. I think people are going to be super interested to hear what you have to say. First, let's start with a little bit of the history. Raindrop is the agency. How did that get started? How has that evolved over time? I don't think you started by producing Super Bowl commercials.

Jacques Spitzer:

No, most certainly not. In fact, very first ads I ever created were shot on a flip cam. I dunno if you remember flip cams. They were like, I think people, if you go back to this would've been 2008, it's pretty amazing now what you can do just on an iPhone. The iPhone lets you shoot 4K, whatever. That's insane because at the time, the flip cam was the first cam that was, I think it was like a $200 camera and you could shoot in 10 80 p, and it was mind blowing that for $200, 10 80 p. And so I had been at this for over 13 years. It started really, really small, literally just myself trying to help a local trainer, a local massage therapist. I actually joked that it wasn't like I was representing gyms, I was representing a single trainer or a single massage therapist.

Never in a million years would I think that a decade later, we have now two agencies, over a hundred people. I did not foresee that, but it has been an incredible journey. I love what I do and I'm excited to share some of the things that I love about storytelling. I mean, you and I saw you in person not too long ago at an event in Los Angeles, and we could talk for hours because the one thing that we both love is how to connect with people through your messaging. Obviously you're doing it right now in the mail, but your history goes back and the idea is, hey, everyone's just living their life and there's moments where you can get in front of them in meaningful ways and influence what they might discover. And I'm a big fan of that. And that's where things started to change for us, was both before the pandemic 2018, 2017 when we started working with Dr. Squatch, they were doing just $3 million in sales. The reason I say that is that ad that you saw was just the first of many that reorientated the brand and allowed them to really break through and break out to hundreds of millions in sales. Now they've gone national with their retail rollout and we've done really exciting licensing projects together, working with Warner Brothers and Disney and Star Wars and all sorts of things. During Covid, we had this breaking point where because we're based out of San Diego, we had these more local regional type of brands that were hospitality and tourism related. A lot of restaurant groups that's now with this agency, Marion Gold, that does incredible work. And then Raindrop is now very focused on really consumer facing products, both digital products. So we work with now some SaaS type of clients and companies. We also work with a lot of CPG brands. The success of Dr. Squat gave us the opportunity to be part of the success of so many other brands. Very proud of the work that we get to do, and you've probably seen our advertising if you spend any time watching television or on the internet, which is most people.

Michael Epstein:

Yeah, I love it. You mentioned storytelling. You're great at that. And as evidenced by that, I remember a story that you told when I saw you in person not long ago about the green Lamborghini. It was, you'll tell it better than I will, but it's like you're driving down the road and you see a thousand of the same car. You don't remember any car that you saw except the green Lamborghini standing out. 

Jacques Spitzer:

Yeah, I'm actually going to tell you two back to back stories, but they're the exact same idea. Okay, so I'm going to tell you one story that's going to parlay into another story. The first one's very personal. It's a very personal story, but I think it will help set up how these dots have been connected in my personal life and in my business life. So when my son was born, we needed him to get a very specific hearing test done, and the stakes were really high because my wife and I went through the adoption process and my son was literally four or five days old. It was just really filled with emotion. We couldn't process any of the documentation or paperwork until he got this very specific test done. And we walked into, my father went with me and we walked into the local children's hospital to try to get help.

My dad is just one of the kindest human beings I've ever met. He's so patient. He has the longest fuse. I think I've seen him get mad at me once or twice in his entire life and I could never forget it. And so we walked in and we're talking to this woman at the front desk and we're like, I have my infant son. We really need to have this hearing test done. We tried calling, we got through the phone system. Can you please help us? And she's like, oh, you can make that appointment online. And we're like, well, we understand that, but is there any way we'd love to get in to see someone today? And she's like, I'm sorry, that's just like, that's not how it works. And then out of nowhere, my dad slammed his hand down the desk super hard and he was like, that's not good enough.

And I was like, what the fuck? I was like, oh my gosh, my dad's about to get us kicked out of a hospital. I was just panicking internally. What are you doing? What are you doing? And he's like, that's not good enough. And then he's like, I'm sorry, I just did that. He's like, I need you to understand the situation. And then he looks to me and I explain it and she's like, let me see what I can do. And I was like, okay. And sure enough, we got the hearing test done that day. We walk out and we're driving back in the car and I was like, dad, what was that? How did you know she wasn't going to that could have gotten you banned from the hospital? Yeah, he looks at me and he is, in my experience, people are just sleepwalking through life and they're going with the point of least resistance.

And he's like, we had to get her on our side. And the only way I could snap her out of that is to do something different. I had to get her attention. I had to get her to pay attention to what we were doing and want to work with us. And it sounds so ridiculous, but the next thought I had was like, oh my gosh, that's all I do with marketing. That's all I do is people are sleepwalking through their life. They're just mindlessly zombie-scrolling through their phone. They're watching television. They're not there for your advertising. They don't care. That woman sitting at that counter just like next, oh yeah, maybe want to get to it, right? If you want to influence or change someone's behavior, you got to shake 'em out of the reality. And that parlayed, that was kind of the first aha I had.

But then what it really connected for me was when I realized there was a science behind it. And that's the story that you're referring to, which is the green Lamborghini story, which is I have a good friend Joey Gilkey who mentioned, he taught me about the reticular activating system, which is a bundle of nerves that essentially helps you to filter out information. And the example I give is when you drive to and from work or to and from your friend's house, you get to your friend's house or to work. And if someone say, do you remember any specific car you pass on the way here? Most people are like, no, you don't take in so much information because if you did, it would drive you crazy. I mean, literally you'd go insane. Your brain is designed to filter out almost everything. And I'm like, but if you were to drive by a bright green Lamborghini, you would notice it.

You'd see it, at least for me, I'd be like, that's a bright color. That's an expensive car. That's a very bold choice. You're going with a bright green. I'm like, I wonder what that person does. They certainly don't mind the attention. I wonder if I hit that car, what would happen with my insurance? Does insurance cover that? I better not do that so I better slow down a little bit or switch lanes. I don't hit 'em. And then I'm like, then I start thinking, I wonder how much maintenance on that pretty expensive car to take care of. And then you kind of move on and you don't think about it, wouldn't think about, but it certainly gets your attention and it gets your attention long enough that you got into work or whatever and someone says, Hey, did you pass a green Lamborghini on the way here?

You'd be like, actually I did. Right? And so we started realizing that when we create any sense of advertising, we need to create those green Lamborghini moments because you're seeing 6,000, what, three to 6,000 logos a day you're, they're all just gray Hondas on the freeway of life. A lot of people use a lot of different words to describe the work that we do. At the end of the day, it's not boring and I'm really, really proud of what we do and that's the green Lamborghini story. But it didn't start there. It started with this reality of it. People are just not only sleepwalking through life, but their brain is hardwired to make them do that. So thanks for letting me tell my stories, Michael.

Michael Epstein:

I love those stories. Super powerful and the way you tell them is also memorable. That's the whole power of storytelling. 

Jacques Spitzer:

So do you mind if I ask you a question? I know it's your podcast, but

Michael Epstein:

You can fire away flipping around

Jacques Spitzer:

In your line of work, how do you see those principles playing out with the partners that you have who see the most success? 

Michael Epstein:

I think we're very much on the same wavelength in that respect and why we think direct mail in particular is an important channel is because it's that sort of pattern interrupt that you're describing. Everyone's expecting to see an email from a brand, get an SMS from a brand. They see them a million times on Facebook and sort of tune it out exactly as you described. But how often do you get a piece of personalized direct mail in your mailbox, something tangible from a brand that you're holding in your hand, you remember it, it's memorable. It creates that connection, an emotional connection with that recipient. And so I think that's why it's so effective right now because it follows the same principles that you're describing. It is different, it's unexpected and that's what makes it memorable.

Jacques Spitzer:

I mentioned we have the two agencies on the non-direct to consumer side. We saw a lot of success with direct mail, especially as it came to at the time, more localized things that have an actual geographical region around them. We started learning about things like direct door mail and all these other ways of going about mail, but to your point, it was like the amount of stuff in your mailbox was an all time high about 15, 20 years ago. And since then it's almost become so rare that unless it's a brochure, you hardly get any mail. I mean, I feel like I get back from a trip now and mail that's not bills is increasingly rare. And let me also ask you this follow-up question, which is on the mail side, is there any need for the brand to provide value to the person on the other end? Is it usually to announce a promotion and offer a discount or a special introductory thing or a new maybe skew that they've launched? Is there anything that you see that tends to move people more than others?

Michael Epstein:

I think the personalization elements part of it, so you can dynamically personalize it and that also feels like it was special. It was targeted directly to you at a particular moment in time for a particular reason. So that works really well and you see improved engagement across the board in general. It's more a function of we've tried to reach you through sort of standard digital channels and we're not connecting with you. How do we reach you? How do we engage you in a way that we think is actually going to capture your attention and you want to have sort of a reason you want to have, you want to announce a promotion, new product, something like that. You want to have some call to action usually, but it's often a function of we're not behaving the way that we expected you to behave. How do we get in front of you in a way that we're actually going to capture your attention? You bought a 60 day supply of our supplements, you haven't been back in 65 days. We emailed you already, you didn't engage. How do we interrupt that pattern to get you back on track?

Jacques Spitzer:

Yeah, I could totally see that. Where you're more likely to open a door that someone's knocking on, and if someone is literally not literally knocking on your door but ending up in your mailbox, it's like another, Hey, you're there and you're reaching people very directly. I love that. I've always appreciated direct mail and I truly believe that in this massive rise of digital, it's one of the pieces that can really support people's funnels. And I know we have brands that work with you all already, but I love direct mails as a medium for that reason.

Michael Epstein:

Totally. And yeah, we work with a lot of your brands like Squatch and it helps amplify the message as well as anybody or better than most. It's a multi-touch experience, and so you're hitting them with these really memorable creative ads that start to form those mental connections, those neural connections and adding additional touch points to that customer journey only sort of increases the overall performance of all of those touch points. They start working together cohesively.

Jacques Spitzer:

Well, thanks for letting me hijack your own podcasts to ask my own personal curiosities.

Michael Epstein:

No, I love it. There's so many similarities in how we think about things. It's cool to talk about. So what is the creative process? How do you work with a brand to uncover what's the message that you want to deliver and how you want to deliver it?

Jacques Spitzer:

Yeah, it's a great question. Let me skip it this way. The ideal process, right? Because there's so many ways that people either need to work with partners or sometimes we'll get a brief and someone's like, here's what we need and go. But I would say the brands where it's been transformative to see their brand voices come out their journey and then see their, watch them create marketing that people really love. Really where it all starts for us is we go through this, we call it a brand identity process where we're asking a lot of questions of the brand to define something that's truly theirs. I think one of the mistakes so many companies and brands make no matter what industry or anything else is they make an ad that if they just were to put someone else's logo at the end of it, it could have been the same app.

They don't make something distinctly their own or distinguish it as their own in any way. It's sort of like, yeah, I got a brief the other day from someone and the core tenets of the brand were quality, transparency, integrity, integrity. And I just looked at it and I was like, oh my gosh. What brands tend to fail to do even at the biggest, highest levels is ask themselves, what's our version of quality? What's our version of integrity or transparency? How is that? What is a way that we can describe it? That's one of one. So what we tend to do is go through the process of trying to figure out, yes, you have these higher level themes, but at the end of the day, what's something that you can own that no one else can own? And that can be really, really challenging to do.

And the process internally is really interesting. In fact, I was just thinking about that this morning because we had this brand identity we're doing recently and I think we had the smartest people in the world personally, but I'm sure everyone feels that way that runs a successful business, but we are beating this thing up. I mean this poor lead writer on this was like, oh, on round three of it and the client hasn't even seen it yet and we're just like, it could be better, it could punch harder, it can be more specific. And then this morning we saw we were all looking at it and we're like, this thing is good. This is really, really good. I mean, we're closing in on probably 80 to a hundred hours worth of work that collectively goes into a brand identity. It's like before we even decide what type of ads to make or what to say, we've done the hardest thing, which is to stop and be as intentional as possible about how do we make sure that we are being a hundred percent authentically and uniquely ourselves with this brand and with this voice in a way that is the right jumping off point.

I think where it can get a little bit more difficult is as brands get bigger and bigger and bigger grow and grow and grow, their tone of voice and their brand becomes safer, watered down. It's kind of like a game of telephone where someone conveys it to the next person and they convey it to the next person. And so you get someone who's taking over a brand and maybe they're the fourth CMO in 10 years, and it's like whatever the nucleus of that brand is is so sort of watered down that they went from being a green Lamborghini to a gray Honda or at some point of time. That does certainly happen for a lot of brands. I mean, I think there's a reality that the world always wants to pull you towards safer and safer options as the brand grows. It's like, Ooh, let's not make anyone upset.

Let's not rock the boat there. I mean, that happens at some point for almost every brand, whether it's at the 500 million mark, the billion dollar mark, they start worrying more about what they could lose rather than what they can gain. It's just a functional reality. So I say all this to say the actual process really starts with defining that really unique tone of voice, that unique angle, and then we find marketing expressions for that to test. You can test it in words, you can test it in images, you can test it in videos. There's so many different ways to go about it. You don't have to necessarily test it. Some people have already done enough testing to say, here's working for us, let's create something new that jumps off of this as a starting point. I do want to make that clear too, that half the time a brand will be like, here's our top four performing ads in space right now across all these channels, and we can look at that and be like, oh, here's some theories on why those might be doing well. Here's what we would do next. But we also have a lot of brands that come to us and they're like, we have a great product, but we don't actually have a point of view or a story, but we're selling 20, 30, 40, 50, a hundred million dollars worth of product because people have a need and we're fulfilling that need process starts in a different place for everyone, but the same foundation is the same in terms of what we're trying to accomplish.

Michael Epstein:

So do you have to yank some brands, wake 'em up a little bit? Sometimes they come to you and you feel like they're just watered down. So part of that process is sort of establishing a fresh point of view for them.

Jacques Spitzer:

So the answer is yes, and I would say the thing that we see most often is that to some extent they've never actually done the hard work to understand brand voice. They may have a couple words that they use to describe themselves like, oh, we're clever, or we're this or we're that, and their brand team put together a brand guide that has their colors and their fonts and here's some words that describe us, and it's like, okay, but what makes you uniquely? I think a lot of people have never drilled that deep. I would also say though that on the biggest brand side, I think it's usually a game of give and take because whether it's work that we do on the licensing side or the work that we do on whatever, a lot of times there's a lot of stakeholders involved. You're not just dealing with one or two internal marketing people.

It's like this is something that needs to pass legal and pass this and pass that. And so I would just say that's just a functional reality of when you're wanting to push a brand. I mean, it's not going to be a surprise to anyone listening to this. It's like certain brands just can't get out of their own way just to put it bluntly. It's like they're just so afraid of upsetting one person in this universe that they're like, we can't say that. And you're like, okay, but if you try to be everything to everybody, you end up being nothing for nobody. And I think that that's just the reality of the process we go through. Usually what we do is we try to present concepts and ideas. You asked about our process. When we do a campaign, we always start with concepts because we want to say, here's how we think we can break through the noise and create something that people would want to watch or want to consume because it could be organic social, it could be paid social, it could be television commercials, it could be photo shoot. We just want to make sure that what we're doing isn't just another version of a stock image of the brand. We really want it to break through. So that was a very long-winded answer to that, but you can imagine that there's people that hire us and let us work magic. There's people that hire us and say, oh, well I know I said I wanted to take some risks, but we can't. And they're like, okay, all right. Well figure it out from there.

Michael Epstein:

As you work with some of these larger and larger brands, how did their success metrics change as you see brands evolve and achieve different levels of scale? A lot of people asking, when should I move from direct response performance advertising to brand advertising? What do

Jacques Spitzer:

You see? That is a great question and here's what I'll say. What I've noticed is people come from two different backgrounds. Some people come from such a performative background that they can't let go enough to understand that you'll never be at a certain spend level and a certain number of channels. You'll just never be able to fully track what is exactly moving the needle, right? It just becomes a point where if you're at retail and you're running television and you're running social and you're running all these things, it's like, how can I possibly do that? And I'll give you some examples of how some of our partners look at it. This term I use a lot lately is escape velocity because I see this with a lot of brands where when you shoot something into space, gravity's pulling it down and there's a point though where they break through.

All of a sudden you were literally in outer space. You are now in a different stratosphere. I know it's cheesy when people are like, we're going to scale it to the moon, but brands really do hit that point. I'm watching brands, I mean a lot of people on Twitter are following these brands. The event we were at, it was like listening to Steven at Cuts and listening to David with Mary Ruth and Jason Panzer with Hex Clad and Dr. Squatch now of course, and who have experienced this moment where they realize that if you're spending on more than one or two channels and your product's available in multiple places, you have to start looking directionally at it and just look at, is my business growing? Are people having a positive experience with the advertising and do they want to purchase based on the advertising they're seeing?

So of course they're looking at things like actual sales to a website or their Amazon, but then they're also looking at things like average watch times and video rates and some more engagement type metrics because if you're going to run an ad, I always say this on Facebook, if you're going to run an ad, it doesn't cost any more for it to be an image versus 10 seconds versus three minutes, you're still paying for that consumer to engage your brand. And so if you can get three, five, 10% of people to watch a longer ad, why not? Why wouldn't you do that? That's why we do get excited about having longer form advertising being part of the overall media mix because it's like there's a place for it. So is there a place for the higher velocity stuff on my podcast Marketing people love? Just to plug it right there, we do spend a lot of time talking about this because it's the biggest question people have.

I mean, my last conversation with Shady Rays, for example, sunglass brand went from 20 million to 40 million to, I don't know if they're allowed to talk about it, their numbers, but they kept growing. They finally got off of meta only and really were able to lean into a mix of television and YouTube and they hit that escape velocity where he is like, look, in platform metrics look okay, but we know it's having a significant lift in these other places, and the more that we throttle that spend, the more it lists all the boats and they start seeing a lot of post-purchase attribution. They see a lot of really interesting trackability. The brands that are at the biggest levels when we're working with brands that are already doing, we'll just say a billion dollars plus in sales, they don't go into it with the expectation that they are going to be able to triangulate the best form of success.

Instead, what they're doing is saying, this is our budget. How can we maximize it? How can we get the most sort of attention and move the needle the most for this amount of money to spend? They're not thinking about it from the standpoint of like, well, if it does this, then I can spend more on it. Right? Actually, that was a very interesting thing coming from a performative background. We started working with these bigger brands. I'll never forget we had this brand that we did so much work with very big company and they had seasonal products we're like once they sold out, they just shut off the ad. They're like, well, you're not going to make more product. The season's over congratulations. We sold out. And I was so used to these brands that were like, oh, we'll just keep making more product and growing, and they were like, Nope, season's over.

Good job. Glad we sold it out. And so I started realizing that as we worked with bigger and bigger brands, it was really about making sure that we were making ads that frankly, I know I use marketing people love, but that's a barometer that people want to feel proud of the marketing as someone who works at the company. You want your marketing to be something that you're proud of. It doesn't matter where you run the company, when you see your own commercial for your own company on any platform when you're a billion dollar company, do you want it to be something you're proud of? And I think that that's also what we attempt to do is marketing that people connect with that does move the needle. I think some insurance brands do a great job of that. Geico in particular I feel like does a really nice job. And so the State Farm where they've reached a point where everyone knows what Geico and State Farm are and maybe they can be convinced to switch on a variety of reasons, but the success metrics are not going to look like, well, we spent $50 in required a new customer. I mean, there's some point where you're like, no, we just ran our 10 TV commercial during the same game. Let's be honest, we're spending at Velocity and they've reached escape velocity a hundred percent.

Michael Epstein:

I'm smiling every time you say escape velocity because we talk about it, love it. We talk about it all the time. That is our driving goal for the year this year. So I love to hear other people talk about it. There's obviously not one formula for the perfect ad, but what are the essential components that people should be thinking about that make for a good ad?

Jacques Spitzer:

One of the things that I will do, it's just like a practice I'll do mainly for my own organization of thought, but I realize that very much is a big part of it is like I write down what is the story in the simplest way possible. So I'm like, this is what you have now. This is what this solves. This is why you're going to want to keep buying it. This is what I want you to do next. Just very, very, very simply, it's almost like creating an outline or a thesis statement for whatever the ad or product's going to be or campaign I should say, not product, but whatever the ad or campaign is going to be. What I realized in doing that is there is something a little bit more formulaic about some aspects of what we do. If your brand is one that actually solves a problem, you'll never create.

In my experience, we've never seen an advertising campaign that says, here's why. This is the best outperforming campaigns that say these are the problems and here's why this is better. And we have made so many, we've tested so many openings, so many angles, and it's like going back to you mentioned you love the opening line where it's like, listen up, the soap you shower with is shit. I'm sorry, but someone needed to tell you. Right? That's the opening line is like, you probably still use the same bar of soap your mommy bought for her little man, right? We create this, we kind of dredge up the soil emotionally. I'm like, here's the problem statement. You're using crappy soap. You've never really thought about your soap. Great problem statement secured. We didn't start with introducing the best smelling hydrating bar of soap you'll ever use. It just never hits the same way.

It's a gray Honda driving down the street. And so when you ask, is there certain aspects that need to be in everything? I would say figuring out what you're fundamentally solving is super important. Otherwise, your ad will come across the second one I said, which is like all carrot, no stick, and I feel like the best advertising brings a mix of both. For those of you that are not familiar with the carrot and stick analogy, you can look, Google it, but yeah, I would say what we found is that it's a mix of both. And when we lean into one or the other too heavily, people just don't respond to it.

Michael Epstein:

Makes perfect sense. And you also obviously started with the hook that got your attention instantly.

Jacques Spitzer:

Yeah, I would say again, it goes back to not assuming any attention. The way that we consume information and the way that we storytell fundamentally changed about five to seven years ago. I don't think people have grasped how drastic it is. We have told stories the same way for thousands and thousands of years. There's a beginning, there's a middle, and there's an end, and you can still get away with that to some extent in some mediums, of course, in a book, you can do it in a movie, you can do it even in sometimes a television commercial because you can't necessarily skip it in a lot of cases. But in things that you can skip, which is a lot of things, and including even direct mail, you can skip it. You could just not pay attention. The number one thing that we're looking at is can it get attention?

Because without attention you have nothing. And we've established that over and over and again in this podcast. And I think the fundamental thing that where brands mess that up is they're more interested in what they want to say than what people are willing to stop and hear. So every time I see a brand send, they like to put together their massive briefs. It's like none of that matters unless people actually watch your ad. So we got to start there. So when you say another story with the hook, it's like, and that's why, because that's going to be massively important to see success.

Michael Epstein:

It's so interesting to me how still so many folks think like, well, yeah, everybody's going to watch the whole ad I put out, or I'm just going to send this long email because I'm sure everyone that's opening it is just going to read from top to bottom. Every word that I said, it's an attention economy. We all know that. But it's just interesting to hear how many people they think, well, oh, they recognize me. They've done business with me, so I'm sure they're interested in every word that I have to say.

Jacques Spitzer:

Here's where it almost makes me scared is we are in the top 1% of the the world at this, and I catch myself doing it sometimes and I'm like, this is hard. It is hard. It is probably the hardest thing to do. And I'll also add, when you watch people who do it really well, man, they understand attention in ways that it can be leveraged for good, it can be leveraged for bad, but I look at certain celebrities, political figures, rappers, musicians, you could mimic back to me a list of names that come to mind where it's like they're always in the news, they're always getting attention. They just flat out understand attention. I think that the best marketers in the world are surfing whatever that is in the culture at any given moment and finding where the brand matches with where the waves are because it's just a reality that if you don't have attention, I don't love any attention is good attention. I don't necessarily agree with that. However, I also don't disagree with it, if that makes sense. I don't like it. I don't think it's fully true, but I understand why people say it and I can't say they're totally wrong.

Michael Epstein:

There's this concept of starting with your why, you actually have a little bit of a contrarian take on it or a little different spin on that concept that storytelling processes have existed forever, but it continues to evolve. And so I think there's a little bit of a different new spin on that. What is that?

Jacques Spitzer:

I'd love to share that and I'll add—earlier when we were talking about direct mail, you said something that really stood out to me. You said the more personalized the mail piece is, the more someone feels like it's for them, yes, that is going to drive better results, better action, because people feel connected to, they feel understood, they feel like you see them. The way I think about this idea of defining your why is that corporations or organizations as a whole have gone through this process of in the nineties, the popular buzzword is we need a mission statement. That was the thing. We need our values and we need our mission statement. And it was like a whole industry around defining your mission statement and a lot of mission statements were almost around what you would do. We do this better than anyone in the world.

And what Simon Sinek came along and said is like, no, people don't buy what you do or even how you do it, but they buy why you do it. Which in and of itself was a revolutionary thought that people are like, oh, wait, you're right. There's a functional benefit to what people are doing, but there's also this emotional benefit. People really connect with your why. What we have found as our guiding star, and I think people really resonate with this, is that, and the analogy I give is when we first as human beings discovered that the world wasn't flat, it was a big discovery. Defining your why as a company as a brand is a big discovery, but it's flawed because even after we figured out the earth was round, we still believed it was the center of the universe. Our whole perspective was that everything revolved around us.

And as a brand, people do not revolve around you. They are the main character of their own story. Everyone's the main character in their own life, a hundred percent. And so what we found out is that as humans, we realized, oh, shoot, we actually revolve around the sun. We're just one planet. We're not the middle of the universe. And I think brands are starting to realize that there is a lot of value in having your why as a brand, but if you can't figure out the why of your consumer, you are always going to be mismatched. And when we were working with Dr. Squash in the very early days, and the reason I keep using 'em as an example is obviously you're familiar with their company and their brand, their owner, Jack is incredibly passionate about the healing properties of all natural soap and what it could do for people's skin.

And the thing was, that was his why. It was powerful and his story has a place, but we had to find a way to make it part of other people's lives and their why. What's in it for them? What's their why? What we realized in all this is we're not selling soap. We are not selling soap, soap as a commodity for probably 12 to $15. I'd have to check. If you go to Costco, you could probably get 30 bars of a generic soap product, which is the cost of about two bars of Dr. Squatch. And what we realized in the form of the advertising and the branding was that we were selling joy. You're selling joy when you got the package, joy every morning when you use the product. When you thought about the funny commercials and it's like, what is the ROI of Joy?

I don't know. I've never been able to answer that, but that's ultimately what we realized is that people's why is that they have mundane things that are part of their life and they were able to upgrade it. And so their why is that it made them feel elevated, it made them feel clever. It made them feel like they were doing something fun and slightly better for their skin and for themselves that was worth the premium, not necessarily the fact that it could cure eczema or something. And I think that that's really what we're seeing is when people start tapping into other people's whys, it connects on a really deep level because it's everything we buy, the reflection of who we believe we are or who we want to become.

Michael Epstein:

It reminds me of Donald Miller's approach of making the customer the hero of their own story.

Jacques Spitzer:

Yes, absolutely. I'd share a lot of similar perspectives as some of the StoryBrand formulations and everything else. I think a hundred percent, and I think Donald Miller is a fantastic storyteller. I think he's figured out he's reverse engineered what goes into telling a story.

Michael Epstein:

Last question, what was it like creating an ad that appeared on the Super Bowl?

Jacques Spitzer:

That is a good question. So here's what I'll say. It was an out-of-body experience in the sense of it, especially when it actually ran. I just remember one feeling very, very anxious because it was a floater spot, so we didn't know exactly when it was going to run. And so it felt like the longest half of my life watching that Super Bowl, it was supposed to run in the first half, and I think it ran during the two minute warning, which ended up being a great placement, but we were just like, oh my gosh, when's it going to run? Every time there's a timeout or an injury? I was like, oh my gosh, here it is. And then it was like, oh, no. So I was like, it was like two hours in and I was exhausted on the viewing end, and then when it finally went out, I think I've never gotten more text messages than the 30 seconds following that ad running.

I mean, it was amazing that that moment in terms of actually creating the ad, we weren't sure that it was going to run in the Super Bowl, so we were making a television ad that we knew they were in negotiations with, I think it was CBS, but whoever it was at the time, they were in negotiations. And so it was definitely interesting creating a commercial that you're like, either they're going to put a lot of money behind this to just do national TV this year, or they're going to actually run the Super Bowl. Of course, we were incredibly excited and what an amazing moment when we realized that we had gone from this brand being two employees and $3 million in sales to the Super Bowl, and we were part of this journey, and that was, yeah, I think I'll never forget it. This year we had a regional Super Bowl spot and it was incredibly exciting. It's just like to take a brand from where they were to being able to afford and leverage the Super Bowl spot was incredibly gratifying.

Michael Epstein:

That's awesome.

Jacques Spitzer:

I appreciate you asking about it.

Michael Epstein:

Yeah, this was awesome. One of the things I love hearing you talk about, and one of the reasons I wanted you on was because I think so much of what you say is so practical, can be operationalized and actioned by people that have a big creative budget, but also folks that are still trying to figure out what works and create stuff on their own and sort of break through. So thanks so much. Super valuable, actionable advice, and I really always love talking to you and hearing from you.

Jacques Spitzer:

Always good to see you, Michael. Thank you for having me.

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.

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. Drew Sanocki here, on the Nerd Marketing Podcast. Today's guest is my longtime friend Mike Maher. Mike, who's the founder and CEO at Taylor Stitch. A couple years back, he sold Taylor Stitch to an e-commerce holding company called Digital Stronghold within the Digital Fuel capital family of holding companies. So it was really interesting to hear not only about how he started one of the most innovative direct to consumer apparel brands, Taylor Stitch, but also what it's like to run a holding company like holding companies have been this sort of old private equity approach. They're also called Roll-ups. You buy a bunch of companies in an industry and you hope to get the valuation up and exit at a much better multiple someday. While he's doing that, right now it's working. They own Boston Scally, they own the Tie Bar, and he's going to share a little bit of learnings about how you put companies together and make them bigger than the sum of their parts. So without further ado, Mike Mahar, how's the rollup business going?

Mike Maher:

Rollup business is great. At this point in time. I feel like we have a really good team in place. There's just a lot of things that are working. There was some stuff that we needed to fix. There's an integration period where we basically bought two other companies on top of Taylor Stitch in the first year and then have spent the last year getting it organized and sorting things out. And now I feel like we have a group of people in place that are all gelling in a good way. And despite the macro environment, I think all the businesses are doing pretty well. We have one business that's a little bit softer, but our focus is driving profitability. So that's been where we've spent all of our time is undoing some stuff from a promotional perspective, specifically at Taylor Stitch doing a lot of price testing things, trying to drive more margin to less increase ebitda, and I've never been interested in just driving crazy top line revenue growth for the sake of it. I think a lot of that can falsify the true underlying performance of the brands. There's a lot of ways you can artificially prop up revenue, EBITDA profits to back it up. Like what the hell was the point? You probably destroyed your brand in the first place. 

Drew Sanocki:

When you added two more brands, tie Bar and Boston Scally. What did you have to do to integrate them? Were they all on Shopify?

Mike Maher:

Scally's on Shopify Tie Bar is on kind of like a weird headless version of Shopify that we're trying to fix right now just due to the massive SKU counts that they had. So that was one thing that we just need to be concerned about. That business has historically thrived off of SEO. SEO and paid search, and we were worried that we'd screw that up if we did a lot of stuff around changing SKUs around and things of that nature. What was the

Michael Epstein:

Thesis around those acquisitions? Why those two? 

Mike Maher:

Tie Bar was convenient. It was going through an A, b, C workout, so it was less about paying a multiple of EBITDA and more about we can basically get this thing for free. We're mid pandemic still at that point. So we thought that the wedding market, which is Tie Bar's core channel, would come back a lot. And so the kind of thesis there was, this is a game of patience and that was the thought there. Boston Scally was just this really interesting customer dynamic. Hass done an impeccable job building a following of consumers that need to have every single hat he makes. I equate it to the same people that collect sneakers and I guess there's a lot of people that collect regular ball caps and things like that as well, but he carved out a niche theoretically, this more blue collar guy that identifies with this S scally cap and built a following around them. I mean, guys are purchasing like 70 of these things. Wow, it's wild. And so he's just done an incredible job knowing his customer, relating to them building a great community. That was our kind of thought around that one.

Drew Sanocki:

So he's still involved.

Mike Maher:

Yeah, our whole thesis is generally fine. Founder led businesses, they want to go sell majority, take some chips off the table and have a thought partner, and that's where we feel like we really shine. So it's like, hey, we want you to be doing what you're good at and what you started this for, not having to worry about all the tiny ancillary menial tasks that A may not be good at and b, just didn't want to do in the first place. 

Michael Epstein:

So how do you structure the org and the teams, what's like a shared service versus what are the brands retaining control over directly?

Mike Maher:

So the kind of core things that the brands retain control over are brand content marketing, merchandising, product design, anything that feels like very core to the brand. One thing that we're very cognizant of is we don't want the whole thing to feel like a mono brand. We don't want you to look at it and be like, oh yeah, all these brands kind of look the same. Think that's when you kind lose the secret sauce of brand and product and community. We put things like digital marketing, digital product, finance and accounting. I think one of the big chunky things that we still need to tackle is shipping logistics, what you expect of a private equity rollup, but with a lot of the digital stuff rolled up as well. And then we build channel managers within the digital function to run those channels.

Drew Sanocki:

And so the thesis is like this guy, Carson Bitterman at Digital Fuel Capital wanted to start rollups in different categories.

Mike Maher:

I think they have four or five. 

Drew Sanocki:

And so they buy them at one multiple of ebitda, combine them and exit them all at a higher multiple of ebitda.

Mike Maher:

Yeah, yeah. Our belief is we're better together and we're worth more together. I think if you look at lower middle market private equity speaking in the generality, you see exit multiples expand north of 10 million of ebitda. You see 'em expand more north of 20 million of ebitda, just the universe of buyers gets bigger, hence they're more competition willing to pay more. Our theory is by aggregating these all up together, the first bite of the apple may not be the biggest bite of the apple, but it gets cash off the table, creates really strong alignment for everybody and everybody gets to benefit from that higher exit multiple down the road because you're retaining the equity that would then exit that. Are you

Drew Sanocki:

Always on the hunt to buy more? 

‍

Mike Maher:

Yeah, we call it a men's interest roll up. So really anybody that the predominant consumer is a male, we'll look at it. So we looked at cigar businesses, we looked at health and wellness things, pretty apathetic as to what that is. We just believe that the common thread with these things should be some sort of same general interest or space.

Michael Epstein:

I'd also love to hear a little bit more about the origin story of Taylor Stitch because one, we've always held it up as a great example of a brand that really knew who they were and was very thoughtful about their brand. And then some of the other innovations that you've had with pre-ordering of product also was sort of really new and innovative for the channel. So I would love to hear one, how you approached it when you first started and how you thought about rolling out some of these other capabilities and elements of the site. 

Mike Maher:

I like to think of Taylor Stitches just as one big entrepreneurial experiment. I never thought of myself as someone who would end up selling clothes. If you had to ask me as even a 20-year-old in college, what kind of business are you going to start? My buddy Barrett that I started with and I were planning on starting a van rental business, one that we had seen in Australia when we were abroad there, and then we kind of got back and it was 2007, 2008, so the recession hit. Gas prices were five bucks a gallon. It didn't seem like people were going to be really excited to go on long road trips. So his dad had always brought back custom shirts from Hong Kong and less expensive custom shirts. These are not the ones that you go to sack's and get tailored for 2 50, 300 bucks a pop. And he always stole 'em from his dad and brought 'em to school.

And so he kind of had this really interesting conversation about what would it be like to make a less expensive custom shirt? That was the original origin of the brand. It was like, how do we make a custom shirt that fits better? And the other thing that we were seeing was we had graduated college on the east coast, we'd moved to California. We were starting to see tech companies pervade the country, thus making the dress code much more casual. So we were seeing 25-year-old engineers come in and get their first custom shirts and they didn't a crisp stiff collar white shirt. They wanted something that was more casual, but it still fit them. And so we kind of carved out this niche of making a really high quality custom more casual feeling shirt. We still did white and blue dress shirts and things like that, but we found that our guy wanted something that was more style and he was wearing these less with suits and more with jeans washed khakis.

And so that was kind of how the brand formed and it was really, that was something that we figured out over the years. It wasn't like we went into this and we were like, oh, we were just a bunch of stupid early 20 something boys trying to figure out how to get dressed ourselves. And I think that we learned a lot by finding our own personal style. And I think it was this amalgamation of preppy plus agrarian East coast roots mixed with more of a California style and it kind of created this vibe that worked for both the East Coast and West coast and a lot of people in between. I think that was the thing that helped us find our brand. And then I think from there it was really just a bunch of repetition around making sure that things were consistent from a visual standpoint and a storytelling standpoint that we were talking about earlier too.

Michael Epstein:

In the earlier days, like pre sort of 10 million in revenue, how much of the marketing was focused on brand marketing versus direct response?

Mike Maher:

We didn't figure out how to do direct response marketing until probably 2016, 17. And I still, I don't know if we ever figured it out in the way that a lot of these people really do. We and to this day are heavily reliant on just making great brand and product and telling those stories and making people connect with them. So I think it's always been about both of those things. We don't have a strong direct response product promise in the way that a mattress company does or something like that. All of our products are built to last a long time and they're built out of responsible materials. So it's kind of like a mix of brand and product promise at the same time. You can kind of say it's direct response in some regards, but this is what we've been really good at is find a consumer that likes the way we think about building product and then get them to come back again and again and again because they trust us. I think a lot of the challenge is getting that customer to make that first purchase and then once we've done that, we have a high degree of confidence that we can kind of hook them.

Michael Epstein:

And then the workshop I kind of equate to Kickstarter for apparel, which I remember when you launched it, it was really unique at the time. How'd that come about? 

Mike Maher:

I mean, honestly, the workshop came about because we had no background in running a clothing company and we didn't know how to inventory plan. Our whole thesis on building this brand was that we were going to launch super short runs of product and sell 'em out over and over and over again because what we had seen was all these large brands were launching things on the retail, the wholesale calendar. So they'd have a huge collection that comes out and call it January or February by the time summer actually hits, the only thing they had to talk about was whether they were 30, 50 or 70% off, yet we were doing something more of a drop. Think of it like streetwear where we're dropping something new every week, which was pretty different at the time. And as those drops got bigger and bigger from an inventory perspective, we got more and more scared because the buy got bigger. And so we kind of said to ourselves, Hey, we'd done some successful stuff on Kickstarter. What if we actually put this back to our community and said, you guys want this? And that was the original impetus for the workshop, which as you described is really it was just our version of building an internal Kickstarter to launch new products through to see if they worked or not.

Drew Sanocki:

Any thoughts around rolling that application out to Boston s SC Lake, where there's a strong community and they're really into the new edition of the hats?

Mike Maher:

Totally. We haven't done it yet, but we've talked about it and we're trying to figure out if it makes sense. There's a lot of limited releases too, and we're trying to find the balance of how that would work or if the guy that buys scaly caps cares where there's a limited number of them out in the world or not, or they just want to get them. But yeah, it's not interesting for Bar since they're more of a basics business not doing drops, but it could absolutely work for Sally.

Michael Epstein:

Have you ever contemplated opening up retail for Taylor Stitch and why or why not? 

Mike Maher:

We have. I think at the point we're at right now is there's still a lot of juice left in the lemon from a direct and digital perspective, and it's a pretty big financial and operational lift. I mean, we're kind of in the business of buying into more ebitda that just creates a bigger, when you look at opening more retail, do you

Drew Sanocki:

Think the rollup strategy is sort of here to stay?

Mike Maher:

I think it's here to stay.

Drew Sanocki:

What makes a good rollup?

Mike Maher:

I think what makes a good rollup is having brands and businesses that are much akin to one another. There's actually things that you can fix across the portfolio, whether it's channel or the products are much the same. You kind of ship 'em the same way. Anytime you can actually find true synergies. I think a lot of people put things together that don't really fit that well. What Eric does at Resident is really interesting because he's really good at direct response driven brands and they know their playbook and they go at it. What we're better at is finding brands that maybe have more of a lifestyle component to them, and we're looking for longer tail retention metrics from our customers. These are all things that need to be thought about when looking at acquiring brands. But yeah, I think they're here to stay and listen, roll-ups have been happening for a long, long time, decades. It's just that we are now in this. Okay, how does this look as it relates to, we can call it direct to consumer brands or omnichannel in Atory? It feels like people have just rebranded it in a way that kind of tries to make it feel hot again or special, and it's really kind of the same thing, just repackaged.

Michael Epstein:

I think there's also something to be said for how you've structured the org around it. You've got some rollups that we're thinking, we're just going to mash a bunch of things together, centralize the marketing function. But as you said, sort of leaving it founder led, who still owns the brand, the merchandising and product strategy. Let's see how you combine those across disparate brands and categories.

Mike Maher:

I totally agree with you, and the reason that I've kind of always said I don't want to buy anything that has less than 2 million of EBITDA to it is for that purpose is when you just try and smash all these small things together, how do you manage them? The complexity gets significant very fast. And I've always kind of said, I want to have enough EBITDA where I can confidently hire an adult and pay them enough to be in that room to run that business. Otherwise, if something falls apart, you're going to be scrambling to jump in there and try and figure out how to fix it. And when the businesses are too small, you're kind of pulling the guts out of them, try and optimize it. It feels like almost like a sunset job where you're like, okay, we're going to pull the brand out. We're going to just optimize around these few products and hopefully it lasts long enough for people to get a return.

Drew Sanocki:

So what if you were starting from scratch today? 

Mike Maher:

I don’t think it would start a business from scratch today unless it was a total art project and I didn't give a shit. If it ever made money, I would buy a business and optimize it.

Drew Sanocki:

And then you get to that, it's got to be doing 2 million or more in EBITDA as one of your criteria kind of busted.

Mike Maher:

Yeah. It doesn't even have to be busted. Listen, buying something that works is a hell of a lot easier than buying something that's busted. I think there's a lot of business. Tell us about it. Yeah, I mean, I think there's a lot of businesses in this world that are just suboptimized great businesses. It could be a legacy business that can have a great boomer business that just didn't ever want to make it any bigger or better because they were totally happy clipping however many millions of dollars they were every year, but there's a big opportunity to grow. It just didn't put the pedal down. I think there's a lot of interesting stuff like that out there. I think especially as we're call it now through five, 10 years, you're getting a lot of boomers that are retiring and they built great businesses and create a lot of wealth. And I think those things are the interesting things to me.

Drew Sanocki:

Mike, thanks for joining us. It was great seeing you again.

Mike Maher:

Great to see both of you fellows as well. The best thank you

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.