The Secret Strategies of Top DTC Brands with Nik Sharma

[Music]

welcoming Nick Sharma to the show

[Music]

pretty excited to have you here dude I

can't believe it's taken this long

it's all your fault

for the record is not my fault you are a

busy busy guy but I'm happy you're here

whenever I want a perspective on

anything d2c related Nick is my boy

I look forward to his Sunday emails

where he he sheds a lot of knowledge and

I just wanted to spend an hour talking

about d2c

let's do it

so

let's just start with

what's exciting you

in D to see land nowadays like you could

be doing anything

yet you have been doing d2c for like a

decade now

why are you still in it and what's

exciting I was just joking with somebody

before this that uh once I'm done with

this chapter I'm going straight boring

B2B software

like I'm going I want I want to make air

traffic control one percent more

efficient or in the back of an ambulance

some machine one percent more efficient

some contract that locks in for 50 years

and takes a year to close

why is it just because g2c is so

difficult that you're kind of like

should I do something more it's not that

it's difficult I think it's uh in fact I

think d2c is actually very

sort of straightforward but the

the thing is is you have to be really

good at being agile

agile with how you respond to things

that happen in the d2c world

um for example you know tracking changes

the ability of how tracking gets fed

back to a platform changes or there's a

new law or a new algorithm in Search and

that completely changes or you know

there's a new algorithm from a social

network that you were super reliant on

for distribution

and

um

in all of these changes there is a very

clear okay this is the change which

means this is what's going to happen

which means this is what we need to do

to react and respond but a lot of people

don't go to the third piece and or they

don't they see it but they don't accept

it this happens a lot too with like

brands that launch that

um you know they have the hardest time

going from zero to one and it's not

necessarily because they're doing

anything super wrong but it's like the

idea just sucks you know like nobody

wants adaptogen infused hummus for

example I'm just making this up but like

somebody is going to keep fighting for a

year or two years spending their whole

life you know trying to make this thing

within that two years trying to make it

a reality but it's like it's not even

wanted by the market so you know in that

case I think d2c is very simple it's

like well it's either going to work or

it's not going to work you're either

going to fit into something that will

sell and do well and of course there's

ways to test that or you're not but

trying to fight an uphill battle and

then blame it on something else I think

is like the lazy way out

how do you know if you're walking up an

uphill

mountain or if you're just just just

like almost at the top

you know Seth Godin I think calls it

calls it the dip

you know knowing like you've run your

clock up yeah I mean sometimes

you know I mean there's so many stories

of of entrepreneurs who've created

products who you know it's like they

have a week left of cash and then like

at the end they like figure it out like

you know Nikita beer for example

um you know TBH that app that he

eventually sold to Facebook like was

like I mean I remember him calling me

and being like hey dude like do you know

how to shut down an office and shut down

a company and I was like whatever

happened to that app that you were gonna

launch tbh and he was like I don't know

yeah we might just launch and see what

happens

like he was about to quit but he still

pressed submit yeah I think that's

different I think that's a little

different in the sense that

um

he's basically you know he's actually

doing the opposite of what I was talking

about this what I'm talking about is

like you know his version of adaptogen

infused hummus was like the product that

didn't work and one option

um

one option would have been like just

keep trying to figure out how to make it

work keep spending every last dollar on

ads to drive people there or convincing

people to turn it on but you know I

think what he did is what most people

should do which is the pivot of okay

this doesn't work let's take the

learnings of what what did work in this

process and it might it might have

nothing to do with the idea of what was

launched but it might be that oh we

found a great packaging vendor here that

got us good pricing we found a great

flavor house that developed good flavors

for us and then figure out what the next

step ad is

there's two ways to come up with an idea

for a d2c product one is like you walk

into the grocery store and you're like

wow I wish this product would exist oh

it doesn't I'm gonna go and create it

and then there's another way which is

I'm gonna like look at Trends and

competitive analysis and a bunch of

other ways to figure out if there's a

market need

which way do you recommend going

and yeah just share some light on that I

think it depends where your strength is

so a lot of Founders Who start these

businesses

um

you know like very little uh a small

percentage of people actually raise

money I'd imagine a lot of people who

listen to this probably bootstrap or

maybe you've raised a very small round

but you know very few people raise 10 20

30 million dollars to build a business

and as a result like if you're starting

a direct to Consumer brand or a cpg

brand or retail brand

you sort of have to understand what

you're good at are you good at branding

are you good at storytelling are you

good at sourcing are you good at

Financial operations and cash flow

management uh or are you good at like

Performance Marketing are you really

good at you know the creative side the

business side the analytics side

and

um I think depending on what you're good

at you will find one of these paths to

discover what that product is somebody

who has mass distribution can take the

first route of walking into the grocery

store and saying damn I wish I had a

chocolate bar with four ingredients in

it six ingredients in it and then you

know you're you're competing with the

biggest companies in the world

um you know you're basically neck and

neck against Hershey's and Mondelez and

all these other companies

uh that would not work for the average

person who's bootstrapped and starting

but it does work for somebody who has a

ton of distribution already built in on

the flip side something like Jolie which

is a shower head filtered shower head

the the uh the value prop is not really

in the distribution but it's in the

innovation of the product itself and so

somebody who is more focused around

branding or marketing or

um even like you know sourcing can win

at that game better than maybe somebody

who just has a bunch of followers and is

coming to bring something so I think it

kind of depends I mean generally I would

say like both could do either one they

want

um

I think one thing I've learned too is

working with brands at a very early

stage you have to have some sort of a

moat something that will get you from

zero to ten very clearly

um whether that is a a very good

understanding of the market you know you

see a clear open space whether that's

the ability to go launch into retail off

the bat whether that is the fact that

you know black wolf nation is a men's

skin care brand they own their own

fulfillment center from the get-go they

save tons of money there and they were

able to you know do tons of things

around merchandising and upselling

products because they could and so I

think yeah I think a lot of people

arrive to it different conclusions or in

different ways sometimes it's

frustrations that somebody has on their

own sometimes it's

um you know something that they're just

passionate about and then sometimes like

you know there's a lot of businesses a

lot of the earlier e-commerce businesses

were started by like Finance guys who

just said oh there's a clear Market hole

right here here I'm gonna go build a

product it's going to cost this much

we're going to sell it for three times

that there's a clear Market opportunity

there's, demand, for, it, and, um you, know

we're going to run Facebook ads

um are the first uh examples of all

these big d2c companies like the

Casper's of the world like are they not

failures like they all kind of their

failures in the sense they like they

became billion dollar companies they

raised a ton of money and now when you

look at them on public comps either

they're because you know become private

in the case of Casper I think Casper was

privatized or a lot of these d2c

companies have like market caps in like

the 50 to 200 million dollar range where

they've raised like half a billion or

more yeah I mean uh Wall Street uh hates

e-commerce retail or not retail but

e-commerce and you know basically like

Brands generally uh they hate a lot of

the new brands like all birds is down 95

in the public markets you know Honest

Company I think think trades at less

than half of their revenue you know I

don't think that wall Street's Judgment

of a lot of these companies is an

accurate representation of how these

businesses could be run a lot of the

businesses were also run you know like

uh operationally they weren't that

efficient

um and you know to their credit like

they were the first ones doing it you

know Casper was the first company to put

a mattress in a box and figure out how

to sell it online and build that

behavior if Casper didn't exist like

whoever the next company was that did it

they would have had the hardest time and

you know ended up in the same position I

remember sitting in New York City

at a restaurant with co-founder of

Casper and maybe 2011 or 2012 and he

told me that he had just graduated

basically like mattress science and I

was like

that's a thing at first of all I was

like that's actually a thing like I

didn't know like I'm from Canada I don't

know I don't know like we don't have

that up there you know like yeah that

was the first and then he was like my

idea is like I'm gonna you know and I

create a prototype I created a mattress

in a box

and I just remember thinking to myself

like

this guy's crazy a mattress in a box

it's impossible that that's not how this

works

and so you're right like we got to give

them Credit in the sense of like they

took big leaps yeah big leaps and you

know Casper is a great example of uh

you know Casper walked so everybody else

could run like Casper Casper figured out

everything that didn't work so the

following companies could you know I

think most mattress companies now that

exist on the market they don't actually

have inventory that they own they're all

Drop Shipping on demand and so right

away it's like you know that was

something that Casper didn't figure out

early enough that they did you know

Casper had the beautiful big office in

New York City and Soho turns out you

don't need a big office with 75

people to sell you know e-commerce

products

um

so I think even though like a lot of

people would say that there are failures

and I do think to some extent there were

mess-ups like you know there's

definitely Founders who took tons of

secondary or you know took a ton of

money off the table and then you know

when layoffs come around they're sitting

high and pretty with millions of dollars

in their account and their employees

have to go figure out how they're going

to pay rent the next month I think

that's pretty messed up but I do think

they a lot of these early companies

don't get enough credit for like Paving

the way for

um for the behavior of e-commerce that

they created and instilled in consumers

that exist today

so if you were running

Casper or The Honest Company like pick a

company what would Nick Sharma do uh so

if I was running The Honest Company I

think right away I would um figure out

what products to cut like I think I

think some some of these brands that

exist they they sell way too many things

and they don't focus on something so

they're not known for one thing honest

companies like known for what good

honest ingredients but you know does do

they really need to have a beauty line

and wipes and cleaning products and bath

and body and baby products like probably

not in fact I would imagine that you

know two of these categories do really

well for them and the other six just

completely you know they're just they

just exist so I would probably do that I

think from a tech standpoint uh there's

a ton of these early Brands honest

included which operate on a technology

infrastructure that was great 10 years

ago but is not modernized and up to

speed with what consumers are looking

for today

um I think just between those two things

you could probably shave a ton off the

bottom line and then of course like you

know going into their customer

acquisition and their customer retention

and understanding their lifetime value

of customers there's probably so many

little things you could tweak uh that

would turn the business and go up and to

the right like you know whoever Runs The

Honest Company site like they should be

fired and unemployable in my opinion

okay so if you were bringing you know it

doesn't look like honest companies on

Shopify like if you were bringing them

on Shopify let's say

um what you know what sort of d2c

Nick Sharma prove

stack would you propose

um I mean I'd bring them to Shopify plus

almost immediately

um I would probably swap their

subscription system to a company called

stay which is really like a retention

tool that also does subscription

um you know they use things like hot jar

which is you know

expensive and old

um it looks like they've got clavio

which looks good explain what that is

like what's clavio yeah so clavio is uh

ESP email service provider think like

MailChimp

um

you know MailChimp is probably the

easiest comp for it but it's like an

email platform for e-commerce businesses

um you, know, I, think, like, right, away, just

moving them to Shopify would actually

probably bump up their bottom line a

good amount

um just because of the inefficiencies

that come with using Salesforce Commerce

Cloud which is what they currently use

um I would probably install a ton of

apps from subscription to analytics to

proper upsells to uh you know a proper

review system

um a referral program you know things

making things easy like build your own

bundle right now they have it but it's

very clunky and the ux is really bad

um and you know then I would start like

tweaking and optimizing you know I'd

figure out what does it take to get a

new uh customer in the door a new

subscriber in the door and I'd build

landing pages around that I'd try to

figure out

um you know I Have This Acronym called

the trace uh system which is like you

know how do you Align Technology

reporting audiences creative and the

site experience that somebody goes to to

try to build customer funnels that you

can rely on X number of customers coming

in every day new customers for the brand

at a sustainable pace so yeah I think

you know once once you make like the big

tweaks like moving them to Shopify

making the ux a lot simpler you know for

example like their diapers cost thirteen

dollars and it very it doesn't even tell

you how many diapers come in the in the

pack uh once you make all these like

obvious things that they should be doing

or whoever is in charge should be fired

for then I would focus on the one

percent improvements across the board so

how do you increase the email capture

rate by one percent how do you increase

the cart click-through rate by one

percent how do you increase the upt and

the aov upt as units per transaction or

items in your basket and aov is average

order value how do you increase that by

one percent every day

um and then it just becomes a game of

like chipping at it until you know it

gets to a point where it makes a lot of

sense okay let's let's let's continue on

this thread of Nick sharma's honest

reviews of d2c companies what's this is

going to get me in trouble no okay well

we'll take the other side of the

spectrum what's a

what's a d2c company that's doing a

really good job

and and why are they doing a good job

um all right here's one that I think is

doing a really good job

um simple straight to the point I'm

gonna drop it in the chat for you it's a

brand called Cadence

um they are they're basically these

beautiful little travel capsules made of

recycled plastic you know these guys

they haven't raised an absorbent amount

of money very little cash

they're profitable on every purchase

they have a healthy margin baked into

their product they produce their own

product which also helps with that they

fulfill their own product which also

helps with that

and

um they're very good at showing you the

light at the end of the tunnel from a

marketing standpoint and how you're

going to get to the light at the end of

the tunnel

um and then you know tactically if you

go to their site their photography is

next level beautiful their use of

product renders also very beautiful the

way that they incorporate existing

customers into their sales process to

sell new customers

fantastic

their site experience in terms of

understanding what you're getting how

many you're getting why you're paying

what you're paying what the benefit of

having these are and what the

alternative is for not using this

product also very on point this is I

think going to be a very clear 100

million dollar brand very soon the the

photography is I'm just noticing this

the photography is drop dead gorgeous

it's like absolutely stunning

the other thing I'm noticing is there's

actually probably about 20 to 30 percent

of video

on, on screen

um ends up being Auto played but it's

it's really helping me understand like

what this product is and why why I

should want it like sometimes I'll you

know go on some e-commerce sites and

I'll see video and it feels just like it

feels like someone feels like they

listen to a podcast and someone was like

put video on your Ecommerce page and

they did versus this is like really

integrated into the experience

yeah you'll also notice too like with

all this video there's no lag and or no

yeah there's no lag and load time or or

slow down Insight speed as a result they

also have this cool feature called text

for 25 I assume that they're getting

people's obviously uh phone number

capture there

uh which is pretty smart I haven't seen

that like creating an SMS relationship

are you seeing more more of that

nowadays yeah definitely more on SMS

um yeah I mean SMS is like it's it's

generally a very hard thing to get the

conversion rate of grabbing somebody's

phone number is

um you know probably half if not lower

for most brands than what it is to grab

email and also then you know the

follow-up to that is how good is a brand

at actually using that channel and

sending things that are you know not

coming off as spammy

um but yeah SMS is definitely something

that you know I I think it's like every

every brand wants to have somebody's

phone number you know because your open

rates nearly 100 maybe 99

um and your click-through rates way

higher your Revenue percent in general

your Revenue per recipient that you send

to for SMS is usually significantly

higher than if you were to comp the same

Revenue per recipient on email but a lot

of people don't know how to use that

channel in a way where it's like not

annoying or it comes or it doesn't

um you know like a lot of people don't

know how to bring value through SMS as

their brand and so that you know then it

separates the ones that are good I can't

think of any brand that brings value

through SMS to me like to me it's always

is annoying give me an example of how

you can integrate SMS in a way that is

respectful to the channel I.E it's a

very intimate channel uh it's reserved

for friends and family

um yeah what's an example of something

that you've seen or if you you know if

you're uh Cadence like what would you do

to integrate SMS well I think the one

thing that I think about with uh email

and SMS

and really anything tied back to

retention marketing is your goal is not

you know there's like if you think of

your goal as a con or your your

um your outcome as like a a two or three

step approach or or like a bus ride

let's do a bus ride it's got three stops

on the bus you get on the bus the first

stop is actually just excitement and

good content it's something that gets

somebody thinking that as they're

running out of their cases of hint water

you know they get something fun exciting

cute quirky funny

um you know interesting insightful from

the brand and it's not selling them on

anything it's just good content and they

see oh this was from hint oh

actually I think I'm running low on hint

I should reorder and it's just about

getting mind share to beasts it you know

like

to be the uh top five or a top ten

thought in somebody's head at any given

point that's like stop one on the on the

retention bus

then I think stop two is understanding

okay does this person actually need to

re-up or do they need to know at this

point do they need to see our brand

again from a sales standpoint

um you know this is where a lot of

companies that sell consumables uh don't

properly segment their list and so let's

say you sell deodorant and somebody's on

a deodorant subscription well if they're

on a deodorant subscription they

actually don't need to see that you're

running a sale because you don't want

them to unsubscribe and now buy from the

sale and now you've lost somebody who

would have stayed another eight months

or you know three quarters and then the

third part the third stop I think is

actually sending that message and when

you send that message it has to be sent

in a way where it feels like it was

written just for you quick Interruption

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thank you enjoy the rest of the show so

a lot of people they they fill out the

SMS piece as they're doing the email

piece they're generally grouped together

in a media plan or in a promotional plan

and

um that's where I think it goes wrong

it's written from this promotional POV

like you know somebody's writing a 15

off email they write the 15 off text

whereas uh if I were writing a text I

would say okay who is a friend that I

have that embodies the customer that

we're going after so we have this girl

in our office named Carly she's like the

customer for every client we work with

and so you know if I were writing a text

I would say okay now how would I text

Carly that we're running a sale for 15

off and that's exactly what I would then

you know I'd remove her name Carly and

replace it with bracket first name and

put that in and and let it blast off but

the the real like I think sauce comes in

one there's a lot of retention marketers

that don't rely on good content or it's

like folk it's too focused on sales it's

not focused on like you know it's like

hey let's go let's go uh let's go to my

bedroom instead of yeah let's go to

dinner first and grab a couple drinks

um and then the second one is the the

Miss of segmentation you know like every

almost every SMS or email tool you use

today has the ability to segment

customers based on products they bought

when they bought what type of even like

shade of the color they bought

um but it's obviously just easier to

ignore that and send the text out to

everybody I'm wondering if uh there's

there's an opportunity to create like a

Carly AI bot

where 100 right how do we do that how do

we do that no I think I'm curious if you

thought much about how to use AI to

personalize communication but it feels

like that's kind of where things are

going like if you're able to upload data

about

someone's habits how they talk where

they live demographic data and then

basically speak to them

in a way that they really want to be

spoken to

I I'd pay for that service so for

something like that actually you're the

perfect person to ask I've had this

question on my mind for so long

so let's say I wanted to build Carly bot

and it was like you know I I train you

know in theory I train this bot on who

the customer is uh what we're selling

why they're buying you know the common

objections or pain points they have

before making a purchase like where do I

even start to do that well I think

so the key question is do you actually

have that data so first the Assumption

let's just assume that you have that

data okay

so which isn't necessarily going to be

true right so I think there's that's

actually where I think

um

some of the bigger retailers and and

e-commerce players like the Amazons of

the world have so much more data that

they actually have an unfair advantage

if they want to go down this route

because you could get into a situation

where you know your car they bought

operates at 50 but Amazon's car they

bought operates at 100 or 97 percent

and that's actually we can talk about

that later but that's where it gets kind

of scary that as we enter this AI age

there's an unfair Advantage for the

large players not the small for sure-ups

whereas in the pre like where it's been

previous like as we've grown up it's

always been in the startups that have

been more agile but yeah so you have

this data and you know you you'd have to

well I I just actually just tweeted

about this today there's something have

you heard of Auto GPT no

so

um Auto GPT is new so you don't don't

feel like you're behind or anything like

that I already feel like I'm buying

um and you know one of the

the big problems right now with chat GPT

is number one it's not connected to the

internet number two it doesn't have

much memory in terms of it doesn't

remember a lot and number three it can't

operate in real time

the problem if you were just to build

Carly bot on a

um you know chat GPT type playground the

problem is

it's what if you responded to it right

like you know and the memory wasn't very

deep or what if you you know

it's it's very hard for chat gbt to make

real-time decisions based on how things

are changing so an auto GPT does

is

you know let's just say the example is a

customer service representative and auto

GPT can understand customer inquiries

Provide support suggest upsells

and it could also speak literally speak

in any language

possible 24 7. so you can actually have

it like you can be texting with it Carly

bought and it responds in a voice note

wow

like that's

that's why you know not enough people

are talking about Auto GPT in my opinion

but like is that so like tactically how

would I set that up do I just go and

start talking to it like hey I'm gonna

feed you information

yeah yeah there's like you go into

GitHub like there's a reason why the

number one GitHub repo right now and

project right now is auto GPT over the

last week because people are downloading

it and playing with it and they're

trying to figure out

okay I want to make a customer service

bot I want to make a social media

management bot I want to make whatever

bot

but I wanted to act in real time I want

to connect it to the internet and I

wanted to have

uh strong memory management and I also

wanted to have text to voice that's

insane I got to play so so you could

like do I need to know how to code

yeah yeah and you know

yes yes like I think you know even

downloading a GitHub repo without really

understanding how to code is difficult

right um that being said like I think

that people actually

underestimate how cheap it is to

actually prototype some of these use

cases

and someone like you like you actually

have a lot of data because you know

through Sharma Brands like your agency

and through you know hooks you know your

landing page product you you just you

understand a lot of

um different segments right so there's a

way for you to basically like if I were

you I'd like contact a lot of my clients

and be like hey I want to create this

thing I want to create this Carly bot

I'm gonna give it to you for free

um the catch is I want some of your data

you can go and create a prototype for

probably relatively cheap

and see if it works yeah I think the

cool thing about Ai and your space like

an Ecom is it's gonna do two things it's

gonna drastically reduce the costs for

for just owning and operating it for

example yesterday we were talking to you

know we have a an AI and automation

agency called you probably need a

robot.com and we were talking to this

company that spends three hundred

thousand dollars a month on customer

service reps and what we modeled out is

that using AI you can actually get that

to twenty five thousand dollars a month

interesting do you still have like a you

know a management layer but

so number one it's a cost savings and

number two

um arguably customer service is an

example like the user experience for

most people is pretty bad so arguably if

the AI if Carly bot is good enough it's

a better experience because there's no

waiting times like there's literally no

waiting times imagine customer service

is no waiting times yeah man all this

stuff is so fascinating I feel like the

biggest Gap I have is what I mentioned

here which is like the process of okay I

have this idea to do like an on-site

chat bot or a customer service bot or

um a Carly bot for you know writing up

SMS messages and then making the actual

like application that goes live that Gap

in between is the part I don't

understand

and don't even know where to start

outside downloading some GitHub repo if

I came to you and I was like

hey I really want to create a d2c

product and I wanted to hire charmer

Brands to do it like you would be like

very oh you got to do these 100 things

like you've rattled off 45 products in

this 30 Minute Podcast so far right like

that it's second nature to you right

right but like that there's a similar

stack that exists in AI that you can

leverage you know people have been

people act like AI is like fresh in 2023

like people have been building an AI for

a decade it's only like recently that

there's been like huge consumer ux new

products like chat GPT that have come

out so my point here is that it might

seem daunting but once you actually get

into the weeds it's actually a lot less

daunting than you think the the customer

service application is really

interesting there's a company that

exists called certainly have you heard

of this yeah tell people what certainly

is certainly is like a chatbot you can

train

so uh you know one example here is like

when feastable is launched we had I

think

um 16 customer service agents

fully trained up and ready to go

and we came across this company

certainly that we wanted to layer in

into the customer service stack it would

live on the site as a chatbot

and we could basically train it it's

called feastybot on uh on the website

you could train it to basically

understand the brand speak like the

brand the tone of voice teach it how to

answer questions

and this bot eliminated 96 of customer

inbound inquiries

um and you know the customer service

stack went from like 14 to 2 at the time

I think now it's maybe double that but

it was crazy how much money it just

saved in human capital human resources

and also just time yeah and I I I'm just

on their website now like I love their

their tagline which is create a digital

twin of your best sales person yeah

that's a great tagline right because

that's like really what they're trying

to do

so when you see a company like this do

you think oh these guys are screwed as

soon as chat gbt gets to you know

somebody else's hands or or are they

like you know they have something here

about certainly in chat GPT or is that

just because you know people like me

have now played with AI through chat GPT

and like that's the the best way to cast

the wide net of bringing me into their

funnel if I'm like the CEO certainly

am I getting eight hours of sleep

absolutely not am I getting three hours

of sleep

no absolutely not am I getting five to

six hours of sleep yes so I'm basically

like

I I'm definitely weary that I could lose

to a chat GPT plug-in

uh or shop you know maybe even Shopify

competes directly but if I'm certainly

the number one thing I'm focusing on is

how do I make the ux for the end user

like the most high quality experience

possible that I'm light years ahead of

whatever anyone's gonna create on you

know competing platform because

feastables will continue to use

certainly if uh the end consumer is

having a good experience you know what

what feasibles doesn't want to do is

like get like a cheaper solution that

even might have better AI models and has

been even trained better but the actual

core experience that people are using to

have these personalized conversations is

worse than my take is that they're still

they'll they'll retain it certainly

interesting and I guess if certainly can

continue to take their like data exhaust

and turn it back into more proprietary

info for them to make the conversations

better more efficient faster Etc then

that is kind of how they'll stay ahead

of the curve totally and it's a bit of a

land grab for them like if I'm them I'm

trying to raise as much money as

possible right so I can hire my real my

real sales people to call up Procter and

Gamble and some of these larger

companies yeah and and get them to sign

up with me even if it's for 12 months or

six months or 18 months and get that

data in I think certainly is a real

business like I would love to I would

have loved to invest in this company

um all right let's do another honest a

Nick Sharma honest review talk to me

about a creator-led d2c example that you

think is

high quality I'm gonna go with rare

Beauty

which is Selena Gomez's

um beauty company I like this company

for a few reasons one I think Selena

Gomez is just badass

um second is the way that she decided to

build this company was like how DJ

Khaled puts albums together

she basically just found the opportunity

and then brought all the pieces together

she brought the CEO together the CMO Etc

um the other thing is she innovated

around the packaging and the way that

they merchandise products so they have

these like Minis that they sell in

Sephora and online which gets them well

I should say the minis plus the fact

that she is Selena Gomez and has this

Mass audience and distribution that she

does not pay for that allows her to sell

products that aren't you know super

expensive and where she can still make

money which allows her to make these

minis which allows her to drive way more

sampling than you know maybe any other

Beauty brand in the category so this is

a brand that I think you know they

mainly sell online for Sephora as well

which does pretty well for them

from what I could tell they're very much

a come sit with us type of brand versus

a you have to try to get into our you

know tree house or whatever and I think

they're very smart about how they go

about building the brand you know this

is a brand that could be successful

um even after an acquisition and Selena

is no longer involved whereas you know

you think of other some other celebrity

brands that exist in the beauty category

you know their name is in the product

itself and it makes it very hard to

separate post acquisition or you know

long term

rarebeauty.com versus

honest.com

the first thing I notice is how

different the nav bar is when when I was

on honest.com it was like a thousand

call to actions on the nav bar like

there's just like a lot going on

when I go to rare Beauty there's

literally three tabs

so you can shop there's a shade finder

which I'd love you to talk about

actually I'd like you to talk about

shade finder and rare impact both those

tabs because I find them both quite

interesting yeah so

um you know the the simpler the nav bar

is the better it is uh generally in

e-commerce you want to make things

easier from a ux perspective versus make

them harder you know when you land and

you see this site above the fold meaning

you don't have to scroll it's just

whatever you see in your window you want

this to feel like you just walked into a

store in SoHo or in on Fifth Ave and

then as you go through and see things

for example you saw the shop the shade

finder and the rare impact you want to

almost like limit the options to guide

them through the store so if you go into

a store on Fifth Ave you know somebody

looks at you and says all right I know

exactly where to take this person in the

store that's sort of what a navbar here

does whereas like in the honest example

you know there's probably like a hundred

to 150 options of what you could click

as soon as you hit the home page and

look above the fold there's things that

are changing scrolling side to side it's

kind of hard to know where to look

whereas here it's very clear you land

you've got a hero product right in the

middle and then if that's not what you

want your best sellers is there above

the fold so you can always just go right

there or you just hover over shop and

you can immediately choose if you want

to shop all the products if you want to

see just what's new because maybe you

came to the site knowing that there's

something new out if you're new to the

brand you might go to Best Sellers and

if you're a bit you know if you're not

new to the brand but you know what you

want you don't want to go to shop all

you just choose between face or eye or

lip and so

I think this is merchandised super well

for the type of traffic they get you

have to remember too with celebrity or

Creator Brands they get a shitload of

traffic traffic that they didn't pay for

traffic that they didn't send and so you

know because of that you have to really

focus on how you merchandise and bring

somebody through the store

um now they probably tested into both of

the share find shade finder and the rare

impact being on top given who her

audience is and what they're interested

in

um you know they probably realize that

the rare impact fund which is actually a

real fund that they have that they

contribute to is

um something that matters to them and

something that matters to Their audience

quite a bit and you know generally when

you have some sort of a you know like

what's what sets apart Selena Gomez's

brand from the next the next uh product

on on the Sephora shelf selling blush or

bronzer well it's the fact that like I

now know that when I buy the lip oil or

the bronzer stick

that I'm also contributing to something

good and you know that's what separates

products from Brands is what keeps you

coming back and what and especially in

the beauty category where loyalty to a

brand is so low I think it's only

something like 14 of consumers

will stay with a brand they'll still try

other things but you know the brand part

comes in when you have things like an

impact fund or uh you know it could be

as lucrative as an impact fund it could

be as simple as like surprise and

delight and really good text messages

from the Carly bot the shade Finder 2 is

something else that does really well in

Beauty it just helps feel you know it's

it's like the the concept of

personalization is alive here and it's

uh working it's not truly personalized

because there's not that many levels of

how deep this goes but it's a very

simple way to add that touch and feel of

personalization where somebody feels

like they're now being heard or being

recognized for in this case their color

of their skin and making sure that

there's products that match that also it

just probably helps from a customer

service standpoint of making sure that

there's less returns because somebody's

color that they bought is more you know

connected to the actual color of their

skin would you ever start a d2c company

or do you prefer supporting the industry

uh for sure start a d2c company like

they're you know I think from a

standpoint of opportunity there is no

better time to start a d2c company think

about how easy it is now to use openai's

chat GPT and just build a module for

something like if we need something and

a developer is unavailable we can just

go to open Ai and it'll write the code

for us and we just copy paste it

um so from that standpoint it's the

barrier to entry has gotten lower from

the standpoint of product sourcing and

product development I think the barrier

to entry's gotten lower the thing that

has gotten really hard is cutting

through the noise and finding something

that actually has legs in today's market

and I think for that you have to be

super in tune with who's doing what and

who's Finding Traction or who is just

about to find traction or who's seeing

hints of traction

um you also have to just solve something

real like there was a huge era of d2c

brands that happen during

um

probably like right before covid and

then definitely during covid or brands

that didn't deserve to exist the 48th

men's skin care brand the 37th white

labeled supplement for bloating

um you know these things these are not

solving real problems they're just

trying to be like money grabs those

don't really last because consumers

today are pretty smart and they will see

that from a mile away whereas a brand

that is actually solving a real problem

for the consumer but also hopefully for

something bigger those tend to stick

around and you know have really no

problem growing or sometimes like

cookware look at cookware Brands over

the last four or five years they've all

just exploded every cookware brand I

know is doing over 100 million dollars

in revenue and

um you, know, it's, just, like, when, when, the

trend starts to go if you can jump on

that train you will ride that to the top

yeah those companies that are doing 100

million in Revenue let's say like what's

a bottom line an average bottom line

probably like 20 15 to 20 percent it's

not bad yeah yeah not terrible for like

you know cash in the bank at the end of

the day all things paid cool yeah I mean

I'm interested Nick like if you ever

want to collab on a

on a juicy let's do it let's make the

Carly bot what we should do is you you

handle like the d2c concept fulfillment

marketing and then I'll handle the

Tech

stack

like AI car they bought and some cool

fun AI stuff

that and and Community stuff that just

like makes the experience unique yeah

I'm totally game for that

um all right Nick

thanks for coming on like I think

everyone should sign up to your

newsletter where could people find your

newsletter the easiest place is just

nick.co email Nik dot Co slash email I

think if you just Google Nick email

it comes up as well yeah and this is

like this email I subscribe to it and

I'm not huge in the d2c space I think I

told you this Nick my dad

who has like us has a Shopify store as

like a side Hustle was telling me about

you not knowing that we knew each other

and he loves your emails without some

emails and shout out to Mr eyes Mr

Eisenberg and uh so it's really it's

really it you know what I like about it

is it gets me thinking and you you give

good examples of other brands doing cool

stuff so yeah I think a lot of the

things I talk about too I try to be

super tactical and explain it as if I'm

talking to a five-year-old and I think a

lot of those things can be applied in

other other Industries or other

verticals exactly and then uh you do

have a podcast which is also awesome can

you give a quick shout out to that yeah

uh I'm a co-host of a podcast called

limited Supply it's myself and this guy

Moyes Ali who founded and sold native

deodorant to Procter and Gamble uh we

talk think of us as like the uh the

Bloomberg business for e-commerce retail

and d2c we try to take things that are

interesting to us or happening or sort

of like current events in the industry

break them down talk about them and try

to find takeaways for our listeners and

people can watch that on YouTube I guess

and Spotify and yeah YouTube Spotify

Apple podcast basically wherever you get

your podcast just look up limited Supply

I've been finding it hard to get YouTube

subscribers so recently I've been yeah

like we've been trying to like Double

Down on YouTube so like people who are

listening to this like there's visuals

if you go to YouTube so go to YouTube

where it happens and subscribe

um so you you know we'll put like the

images of some of the websites that Nick

was talking about and it's just it's a

way better educational experience but uh

Nick tell tell the people to subscribe

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subscribe to YouTube If you're not

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YouTube your business is going to fail

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