Advice Line with Eric Ryan of Method returns

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2:45Hello and welcome to the advice line on how I built this lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Leave us a one-minute message that tells us about your business and the issues or questions that you'd like help with. All right, let's get to it. Joining me today is Eric Ryan. He's a serial entrepreneur and the co-founder of Method, Olly, Welly, Tandy, just a whole bunch of incredible brands, and that's not all of them.

3:25And this is actually the second time Eric has joined me on the How I Built This Advice line to take your calls. Eric, thank you so much for coming back. Oh, so happy to be back, Guy. Thank you for having me. And of course, if any of you listening haven't heard the original story about how Eric and Adam Lowry built the Cleaning Products Brand Method, you got to check it out. It's an awesome story. We will put a link to it in the show notes. Eric, when you were on Advice Line back last summer, we got an update on some of the projects that you had kind of wound down. Give us a sense of what's going on right now.

3:56What are you up to? You are so busy. You've got all these different things happening at the same time, give us an update. Yeah. So I've moved much more into the venture investing space. And I joined Graycroft. We are launching a new$150 million dedicated consumer fund. We just made our first two investments. So I've officially made the move from entrepreneur to investor. Wow. And how does that feel? I mean, you were on the other side of the table for so long and probably had some opinions about some of the investors that you talk to? Yeah. What is that like? You know, it's like when you're an entrepreneur, as we're about to talk to several of them today, you very much feel like a quarterback and you get sacked over and over.

4:35So to be on the sidelines and playing coach feels really good, where you can say to somebody, get back in the game, you got this. So after years of getting sacked, I'm really enjoying starting to play coach. Tell me a little bit about, I know your philosophy about building businesses was basically identifying opportunities for brands that needed a disruption or cultural shift, right? Like cleaning products or vitamins or first aid, which is all these things you did. Do you apply that to what you look for in other startups that you're going to invest in? Yeah, very much so. And we work really closely with Target as a retail partner.

5:16And so I focus very much on identifying in any given category over the next three to five years, like what are going to be the big macro trends? And then it's just pattern matching and going out and scouting and finding founders and entrepreneurs then who are kind of building into that. Interesting. Yeah. As you know, you're here in the Bay Area and it seems like it's here with more intensity right now, this idea that investors are really cold on consumer products right now, consumer brands, CPG, right? Because of a variety of reasons. There was a sort of exuberant period where a lot of money went into consumer brands and a lot of them didn't, some of them didn't work out.

5:55And it's tough. It's tough market. It's tough to hit$100 million, right? Which is really where a brand is either a target for acquisition or raises more money and then pursues to go in public. I mean, is that real? Is it true? And if so, what's your sense of why? Yeah. I think it's a great time to be getting back into consumer. That's why I love our timing of building this fund. And what you said is exactly what happened. We really saw, you know, around 2020, 2021. And even before that, a lot of tech money poured into consumer. And the things that were like literally a recipe would suddenly be classified as food tech.

6:32And these insane valuations got applied that brought out all sorts of bad behaviors of trying to grow too fast. And I think now we've seen a really great reset. And it's never been easier to start a company, but it's never been harder to scale one. And I think as an investor, really picking the founders and the brands that you think fundamentally can be 100, 200 million brands. Like one of them I've been involved with for the last three years is Goodles, the mac and cheese. And trying to find those Goodles are not easy. All right. Well, I think that the answer to this question is yes. Are you ready for our first call?

7:06Let's do it. All right. Let's bring our first caller. Hello. Welcome to the advice line. Please tell us your name, where you're calling from, and just a little bit about your business. Hi, Guy. Hi, Eric. My name is Christina Pang. I am calling from San Diego today, and I am the founder of Haven Beauty. Our mission is to bring joy and beauty to the lives of all through scent, and the way that we are doing that is by building the first fine fragrance and skincare brand formulated without the 82 known fragrance allergens, so that everyone, including those who have had to give up fragrance in the past can enjoy it again.

7:43All right. Welcome to the show, Christina. So Haven is a, it's basically perfume, but that is for people who stopped using it because they were allergic to it? Yes. So we do perfumes as well as fragranced skincare. And we also have some home fragrance products. And it is designed to be suitable even for people who haven't been able to use it. So So we're not like excluding people who just generally love fragrance, but we're making it possible for those who haven't been able to enjoy it. You know, I think as somebody who reacts to things like my skin, I think most, maybe not most, but like I feel like at least a third of the human population has some reaction to things.

8:27And so this is really interesting to me because I imagine, right, a lot of people are allergic to things in perfumes and they stop using it. Tell me the idea behind it. Did you have this issue yourself? Yeah. So, you know, my background has been in the beauty industry. But then when I had my eldest child, he was born severely allergic and had also severe eczema. And so what we found was that he was just reacting to everything. So even clean, natural products, we were getting reactions to. And it wasn't until we cut all fragrance out of our lives, including natural fragrances, that his skin began to clear up.

9:09So naturally, we kind of started looking into, hey, what is it about fragrance that is causing so many issues? And what we found is that fragrance ingredients in general, including natural ones, they contain a lot of allergens. And so it's not necessarily toxic, but if you're allergic to it, it's going to give you a reaction. And because he also had multiple food allergies, from that journey, we had discovered, hey, if you exclude what he's allergic to, you know, we're still able to make great food. So it's kind of a similar concept we were applying to fragrance, skincare, beauty. That seems really hard, right?

9:52Because a lot of fragrances are just oils, right? Like lavender or something. And I mean, imagine you can't create a line of endless scents, right? There are only certain ones that work. Yeah, it's really, really challenging. And that's also why it hasn't really been done, because you're effectively going from thousands of fragrance ingredients, limiting that palette to maybe a couple hundred if you're lucky. It's also something you can't necessarily do at home yourself in your own kitchen. You do need to partner with a specialized fragrance lab because they use these techniques to kind of separate the compounds that are allergenic from those that aren't.

10:32And tell me a little bit about the business. What did you say you launched? So I started the business August of 2024 after I left my corporate job. We were already kind of working on candles and things. And then we started working on the beauty and personal care. After that, we launched our first product last summer in July. Okay. And tell me about your sales last year. How'd you do? We ended the year a little bit over 100 ,000. This year to date, we're on track to maybe get to 250, 300. But we do have a stretch goal for ourselves of 400. And where are you selling the products? We initially launched on direct-to-consumer.

11:14We also have wholesale accounts with several luxury resorts and spas. And just last month, we launched nationwide at Anthropologie. Okay, awesome. I want to bring in Eric Ryan. But before I do, tell us your question and we'll see if we can answer it. Yeah, so effectively, there have been millions of consumers with eczema-sensitive skin. They've been trained to think fragrance is bad and just to avoid fragrance entirely. And even the experts that they trust, like dermatologists, have been trained to think that as well. So when you're introducing a new idea into an established category like that, How do you rebuild that trust and help people feel comfortable giving fragrance a try again, especially if you have a very limited marketing budget?

12:01Okay, Eric, I want to bring you in. Any thoughts, ideas, questions that you may have for Christina? Yeah, I think you nailed it, which is you've got a really good idea. Fragrance is a hot category, particularly with Gen Alpha and Gen Z. Let me ask you a quick question. What percentage of consumers have fragrance allergies or are easily irritated by fragrances? So there's about 30 million Americans who have eczema, and then more than 100 million people who self-identify as having sensitive skin. So that's a pretty big number because you can assume that most of them, a significant portion of them, aren't able to use fragrance products.

12:43Yeah. Okay. It's fascinating because you're entering into a huge category that's growing, and there's a really big addressable audience today, but you nailed it, which is the challenge of re-educating them, going from fragrance is bad to me to fragrance is safe for me. That's a huge leap. I think really educating consumers is hard. Re-educating them is even harder. And so I think you're approaching it the right way. Just looking at the packaging, it's really beautiful. And I think you have to create a brand that is appealing to everybody that just happens to be allergen free. And really kind of run two paths, which continue to bring in people who don't have sensitivities, but really love this idea of a fragrance that's just better for me in general, right?

13:34Because we're all questioning what's in these products, while at the same time bringing in this group that's written off fragrances. But I think if you focus only on them, it's a much slower build. And just like nailing your emotional hook, the idea of like, you know, fragrance you can finally wear. And finding influencers who previously have never been able to wear a fragrance, finally I can wear fragrance again. Right. So, Eric, what you're saying is that it's probably a better idea to try and appeal to everybody who's looking for a quote-unquote better-for-you fragrance or better-for-you products.

14:09I mean, one of the things that I think Christina would probably benefit from is having some kind of clinical study. And if that's not possible, like even dermatologists who could speak to the products like testimonials or even customer testimonials. I mean, your website's great, but I don't see any of that. Maybe I'm missing it. Is that something that you're exploring and that you might want to try? Yeah, we have done several clinical tests. Actually, you can imagine clinical tests are quite expensive. So we've done some on sensitive skin first, and they have come out with just incredible results.

14:48So we do share those with dermatologists that we speak with. We were also trying to work with some third parties to kind of like get different seals and everything. But again, it's quite expensive because there's just so many tests involved. And then I think one of the things we found is a lot of times these tests are also testing on healthy skin. And so since we're trying to prove something works for skin that's been really sensitized, it's also more expensive to recruit that population. so we are working on it but it's taking a little bit longer yeah one other idea too so you're currently working with anthropology and i would imagine you're starting to think about alta and really working with a retailer to create this you know fragrance safe at the end of day like you're not really building a brand you're building a completely new category and i would really brand that category maybe around the idea of allergen free fragrance and make that a destination inside of a retailer.

15:47So if you sit down with Alta, it's not about selling Haven, which by the way, is a great brand name. I think again, the design is beautiful and you can really see your beauty background coming through. But if you sit down with like an Alta or a Target and work with them on this idea that Haven is not a new brand, it's really a new category and then brand that category and then position yourself, of course, as the leader of that category. That's really great. I love that. I really think the this idea of allergy free is relevant to everybody because it really means it's a safer fragrance. I think you want to really build this fragrance back to like at the end of the day, it is the most beautiful, amazing, like it just wins as a great fragrance that, oh, happens to be allergen free.

16:32that core audience who is really a need for them. I think that's a marketing tactic that is going to be a harder climb of convincing them that actually now fragrance is safe for you. Yeah. But I think ultimately turn this into a big brand. You've got to serve both audiences. And look, most innovation comes from like really serving the needs of an extreme user that then you apply that to a general population. And fragrance, the challenge with fragrance is yes, it's a big category, it's growing, but it's insanely crowded. And I think the allergen-free really gives you a meaningful point of difference that's both rational as well as the emotion of selling a beautiful, fine fragrance.

17:11The brand is called Haven. Christina Penn, good luck. Thanks for calling in. Thank you. Thanks, Christina. Great to meet you. All right, we're going to take a quick break, but we'll be right back with another caller and another round of advice. Stay with us. I'm Guy Raz, and you're listening to The Advice Line right here on How I Built This Lab.

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20:39Welcome back to the advice line on how I built this lab. I'm Guy Raz and my guest today is serial entrepreneur Eric Ryan. And we're taking your calls. And Eric, you ready for our next one? Let's do it. All right. Let's bring our next caller. Welcome to the advice line. You're on with Eric Ryan, co-founder of Method and founder of many other products. Tell us your name, where you're calling from, and just a little bit about your business, please. Hey, Guy and Eric. It's an honor to be with you guys. I learned a lot from this show, so thanks very much for the opportunity. My name is James Chambliss.

21:07I'm from Orange County, California. I'm the founder of Pigeon Toes, which is a fun kids flip-flop brand. Our goal is to build the world's raddest, comfiest kids' flip-flops. And our core focus and motto is built for comfort for kids. Welcome to the show, James. So tell what makes your flip-flops, right? And what makes them different or special from other flip-flops? Yeah, we've done a couple of core things, which one of the number one complaints of kids for the first time getting into flip-flops is the scratchy toe cord between their toes. And so when we did some research and starting this out, we found that out.

21:42And so we've come up with just a really pillowy, soft toe cord. And then the second thing that kind of helps us stick out is kids can customize their strap design. And so what happens on our website is they're able to choose their flavor, which is the color. So that's the first choice. And then they're able to choose their topping, which is the strap design, which is kind of fun for them. Oh, cool. So it's customizable. So it's not just like ready to wear. You can actually design the flip-flop. Okay, cool. And tell me, you said you launched it last year. Have you been in the apparel business or in footwear or like, how did they start?

22:19Yeah. So I've actually been in the apparel business. I started my core company out of college. And so I've been doing this for a while. I started with screen printing, doing mainly t-shirts and delivering them to the dorms. And, uh, you know, it's kind of a funny story, but I used to put the t-shirts in my oven in my kitchen because I didn't have a big conveyor about oven to cure the ink. And so I would deliver them to the dorms hot out of the oven. So I've been doing that for a while. Now I do some help with branding and kind of the, the brand imagery, which is what I really love to do. And that's kind of what I did with Pigeon Toes.

22:48All right. You launched last year. Tell me how you're doing so far. Give me a sense of like, you know, of your sales, like quarterly sales. Yeah. So, so far today, we're about 15K. So, and we really got going to end of Q4 last year and started hitting the ground running then. Got it. Okay. Before we dive in further, tell us your question. Yeah, so in a saturated market where I'm competing with brands with far more resources for content generation, plus the ability to undercut my$39 per pair price point, what can I do to build brand awareness and reach more customers? All right. Eric Ryan, Pigeon Toes, flip-flops, customizable and more comfortable.

23:30Questions or thoughts for James? Disappointed you're not solving the biggest problem with kids' flip-flops. losing them. The number of times I had to buy more flip-flops. I finally got to the point on a vacation, I always pack two pairs for every kid, knowing that we would need a backup. I'm just looking at the website too, and I love the branding, the overall approach. Let me ask you a question. At the heart of it, what are you really solving? That's a good question. I'd say that in the industry, I saw a gap where all the kids' flip-flops were mainly adult lines dabbling in kids. And so I really wanted to come in and say, hey, we are the best done kids flip-flop brand dedicated to creating awesome kids flip-flops.

24:16It's, you know, really trying to win on a product iteration is tough because it almost becomes more of an invention than building a brand. I love the name Pigeon, by the way. I don't know if you can just drop toes and just like Pigeon and just gives you a little bit more space to go, but even the idea of pigeon flip-flops. And that I think will help you unlock again, like this bigger idea of like, what do you own? Do you own summer? Do you own kids first flip-flop moment? Do you own kids shoes? But I think there's a bigger idea here that you're kind of working on. First though, is you got to win in this category.

24:48I think the customization really is, I think making that the hero is super, super smart. That's what's going to drive content. And I would really focus as much as you can on driving customization and then telling those stories. The other part I'm really, I think you could do well here as part of customization is licensing. Licensing, especially with retailers, is a great quick shortcut to really build, even though you're borrowing someone else's brand equity, but particularly for kids, bringing in kids' characters and being able to custom on top of that, I think would really get that flywheel going and be able to drive a lot more content around it.

25:26That sounds like a lot of fun. Yeah, I agree. I saw, I must have been on Instagram or something, a shop somewhere in Southeast Asia where you go in and there are flip-flops on like a wheel and you spin the wheel and you can stop it on a, maybe you've seen this, and then you can pick the strap. And I saw that and you could create these customizable flip-flops. Now you're doing it here. And so when I look at this, I think this is an experiential business. I think the direct-to-consumer is great, and I hope it really blows up. But I think this is something that if you can kind of turn it into almost like a Build-A-Bear kind of thing, I mean, that's probably not the best analogy.