Advice Line with Serial Entrepreneur Marc Lore

25:55Welcome back to The Advice Line on How I Built This Lab. I'm Guy Raz, and my guest today is Mark Laurie. He's the founder of diapers.com, jet.com, and wonder. What do you say, Mark? Should we take another call? Sure. Caller, hello. Welcome to the advice line. Please tell us your name, where you're calling from, and a little bit about your business. Hi, I'm Lindsay Shores. I'm calling from Salt Lake City, Utah. I'm the founder of Baby A Go Go, a company that provides and creates innovative baby products to make parent life easier on the go. Cool. All right. Well, welcome to the show, Lindsay. Baby A Go Go.

26:29Tell me what your products are. What do you sell? Yeah, we currently have two products. We have a diaper kit that fits in your back pocket. It's a vacuum sealed compact diaper kit. It has one diaper, five wipes. And after usage, you wrap it back up, seal it up with a sticker provided on your wipes and it becomes an odor-free sustainable bag. So easy way to stash in your purse or if you're in a public bathroom, a way to seal it up and make it a lot less gross. And then our other product is a magic wipe. It's a small disc that fits in your hand. It's an on-the-go wet wipe And once you puncture the middle, it slowly grows into a full-size wet wipe.

27:06So that's very useful for parents on the go and all consumers on the go. So if you're familiar with the – do you remember those washcloths that you throw in like a tub of water and it expands? Yeah. Similar to that, but it's a little more magical because it's very unexpected. Wow. Okay. So these are like travel diapers, and it's a one-off, right? Because I remember, my kids are now teenagers, but we would always pack, I can't remember what they were, those different brands. We would pack the diapers in there, one or a few of them, and then there was a thin wet wipe. We'd put that in there. But this is just everything in one simple package.

27:44It's one diaper, some wipes. So it's designed really for like, I guess if you're at the airport and your baby is just like pooped all over the place. You've got to go to the bathroom. Exactly. Yeah. Yeah. Yeah. Do you like talking about the subject? I do. I love it. I love it. Yeah, it's definitely I know Mark's a big lover of diapers and the disasters and messes. Number one and number two. Yes, exactly. I have to know how you I mean, I have to know you came up with the idea because it's a great idea. And so much of so much of how I built this is those moments where people like we we have an episode about Larry and Lenny's protein cookies.

28:23And really, these guys were bodybuilders. And one day they were like, I'm sick of chicken and egg whites. Like, can we put the chicken and egg whites in a cookie? That's how it started, you know? And then it got to$100 million business. How did you come up with this? Yeah, so I was traveling a few years back with my family. At the time, my youngest was one years old. And we went to a family resort, a beautiful, very family-friendly place. I always pack diapers for two to three days and then get to the destination, go stock up. No brainer. That's always how it works. So going to this destination, I thought, of course, I'm going to find diapers.

28:57I was running out on day three of our day eight trip. And I searched and searched and searched the stores and nobody had anything accessible for babies or infants, food, diapers, wipes, all this stuff. so my next best option was to take a half a day and go into town take an uber pay the cost of that leave my family it was like this is crazy then it hit me that there's multiple moments at malls you're at the zoo you're at the aquarium you're at disneyland you're in all these places that you need these diaper kits that are not convenient so i jokingly told my husband the end of that week of our trip that like i can't believe this is such a huge void in the market i'm gonna start start a business tomorrow and fix this.

29:41And I did. That's awesome. And can you give us a sense of how you guys are doing right now? I mean, have you broken$100 ,000 in sales yet? No, not necessarily. But we are definitely in the small startup phase. Very excited, though. I love the advice you guys have given. Yeah, this is such a great idea. Where are you selling these right now? I'm selling these online. And then we just recently onboarded with areas, which is one of the largest travel and hospitality companies globally. So we're now in their airport stores as well as a bunch of their turnpikes. How many of their airport stores? Six.

30:15In which airports? In Atlanta, which is the number one airport. Oh, wow. Cool. Yeah. What's your question for us today? My question is there's always a really positive response when I'm speaking to retailers and buyers about these products. They're really excited about them. They immediately understand the need for them. But because they are new products and a new space, there's not much to compare it to. So my question is how to take the risk and build more credibility in an untested product market and get within the door without offering a discount or a testing phase that might not necessarily be the hook they need and could be a big loss for our company.

30:54Okay, Mark Laurie, I think you know a few things about diapers. I do, and retail as well. But is the margin structure in such a place that you feel good about, like the retail selling price? Well, what is the retail selling price? Yes, the retail selling price is$5.25. It's a good price. $5.25. Yeah. Can you do it for$4.99? It was$4.99 actually about a year ago. And because of inflation, it's$5.25. But depending on who retailers we're talking to, yeah, the$4.99 is still a possibility. Okay. And you make good margin at that. Yes. It's real good. I mean, have you offered it as returnable? I mean, that's always a protection for the retailer.

31:40Yes. That's not something necessarily highlighted. So that's a great idea. Yeah. I mean, that's the easiest is like put it on the shelf, make it returnable. And like, it's not the kind of thing that spoils, right? So they return it to you, you just sell it somewhere else. In fact, I mean, I would even probably start on consignment to get some sales history. But if you're really strapped on cash and there's no possible way to do that, the next best thing is to say, yeah, make it 100 % returnable. No period of time to return it. If it doesn't sell, we'll take it back. Tell the retailer you will stock all the shelves.

32:16Make sure you've got kind of one shot to make a first impression. So make sure you have good shelf space. It's on the counter. We're the right at, you know, customer eye level and have a little maybe point of purchase kind of display unit that looks really cool. And literally have that box of 20 or however you put in there and have it right there on the counter. Okay. Awesome idea. Yes. Yeah. I mean, I just feel like this is a no-brainer, Mark. A no-brainer. I mean, it's such a great idea. This is the same response I'm getting all the time. The only thing I worry about is it does sound a little bit expensive.

32:53Like if you're saying that the demand is there, then it's a home run. But I would think that at massive scale, if you're doing, you know, millions of these, that you'd be able to get the cost, I mean, sort of the retail selling price down even below$4.99. We can do that. I mean, just speaking and testing out, speaking to a lot of retailers and buyers, that's often the response is, oh, we've got to do these for$4.99 and now$5.25. and you know depending on what airport you're in some have suggested 750 and a lot of people i talk to during you know testing period and phase it's like you guys are dads you know it's at the point that you need it you're gonna pay whatever say you don't care the cost you don't care it doesn't matter yeah there's definitely the market for hey i'll pay whatever because this is a necessity right this second and then there's also the price point where it's like hey i'll i'll take a few of these.

33:47You never know. I might need them. It's hard to say, I'll take three or four of these and suddenly it's 20 bucks. You could buy a whole box of diapers for that. So I'm just trying to think about how to make the market size much bigger. It's really what you can do at scale. I'm always thinking about scale and working backwards. And I would say, at 10 million units, what's your cost of the display and the packaging? And then figure out what the retail price would be off the back of that. And obviously, your cost today is a lot higher, but I would sort of grow into it. I would basically take no margin in the beginning, you know, and get the right price point, create much bigger market size, and then eventually get the scale you need.

34:31So the combination, I would do the airport thing and the sort of emergency charge we need to charge, make a good margin on it, but simultaneously be working on the much bigger opportunity of a scaled version of it. Okay. Love that. Definitely consider that. We started at the DDC idea of subscription model, but to Mark's point, it was just too pricey to stock up. We have customers that do it. It's not the everyday customer. And so yeah, definitely excited to roll out into airports and start getting more feedback there. I want to see these vending machines in the bathrooms. Yes. Yes. Yeah. Vending machines, that's smart too.

35:09Yeah. Super cool idea. Lindsay Shores, Baby-A-Go-Go. theme parks too. Theme parks. Yes. Yes. Yes. Definitely. Congrats. Thanks so much for calling in. Thanks, you guys. I'm the biggest, biggest fan of the show. So, so happy to be here. So great to meet you both. Thank you. Good luck. Thank you. I like that idea that you're saying about putting it next to the register. Like you've got your five-hour energy, your Slim Jims, your pickles, and then the diaper. Yeah. Right next to that. You know? I think there's probably the actual cost though at$10 million. And she hasn't, I guess, gotten that yet.

35:42But, I mean, it's going to be a fraction of what she's getting now. And I just think that could be a big market. Like if you get that price point down, you could just imagine every parent having a few of those in their purse, pocket, whatever, right? Like, you know, where it's just kind of part of, you know, part of your diaper spend, right? I mean, how often – I find myself buying like shaving cream or deodorant at the airport all the time. I always buy snacks because I don't eat what they're serving on the plane. So I'm like looking for nuts. And you pay like$13 for like a little bag of nuts.

36:14Yeah, like for the pistachios, I pay like 15 bucks. And I'm like, all right, so it's available. We're going to take a quick break. But when we come back, another caller, another question, and another round of advice. I'm Guy Raz. Stick around. You're listening to The Advice Line on how I built this lab.

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38:33Welcome back to The Advice Line on how I built this lab. I'm Guy Raz, and today I'm taking calls with Mark Lorre. So, Mark, let's bring on our next caller. Okay. Hello. Welcome to The Advice Line. You are on with Mark Lorre. Please tell us your name. where you're calling from and a little bit about your business. Hi, Guy. Hi, Mark. Thank you for having me. Nice to chat with you guys. My name is Ryan Thompson. I am from Vail, Colorado. In 2014, I started Tenth Mountain Whiskey and Spirit Company. We are a philanthropic, award-winning craft distillery named in honor of the historic Tenth Mountain Army Division.

39:08Thanks for calling in. Tenth Mountain Whiskey. Tenth Mountain, I believe, is no longer in Colorado. I think they're in Fort Drum, New York. They're on the border with Canada today. You're exactly right, Guy. I'm impressed with your military knowledge. Many years ago, I was a reporter. I covered the Pentagon. So that's the only reason why I know that. But cool, so cool name. And tell me how you got into this business. Yeah, when I first moved to town in the late 90s, I bartended around town under the ski bum lifestyle, skiing the 80, 90, 100 days a year and bartending at night. In 2002, I started a restaurant that I still have my thumb on today with my two original business partners 23 years later.

39:47About 12, 13 years ago, I was watching what the craft distillery movement was doing. I homebrewed just for fun, for friends and family, and was watching what a couple of competitors and other ski resorts were doing. And I thought someone in this town was going to make whiskey sooner or later, and just thought, might as well be me, right? So you guys bought a still, and you bought all the things that you need to start? Yeah, that's correct, Guy. You got it. We distill, we mature, we bottle all in-house. We have a tasting room at the distillery where we hold events, do tours, and hold tasting classes.

40:24And we have an off-site tasting room, which is at the base of Vail Ski Resort in Vail Village as well. All right, cool. I'm curious, right, because there's a lot, and I'm in Northern California, where the wine industry is going through some challenging headwinds right now, right? Because every day it seems like there's another article about alcohol and being bad for you. And I know that younger people aren't drinking as much as people my generation and older. Are you seeing any headwinds at all right now? Yeah, certainly. You nailed it, Guy. There's almost every day an article comes out in regards to alternative opportunities to relax and enjoy cannabis or no and low walk movements, the high and dry movement, if you will.

41:13And so that is part of my question. So we're at a pivotal point within the business. We're just celebrating our 10 year anniversary. We're doing well. Thank you. We're doing well here in the state of Colorado. We self-distribute in the Vail Valley. We have a large distributor that distributes outside of our area, but within the state. And so about 80 % of our sales comes from within the state of Colorado. About 20 % are in a number of other states and distributors. However, 80 % of my headaches comes from that as well. So a little bit about the 80-20 rule, right? And so I own 100 % of the company.

41:50I've gotten this far without having to sell equity. I have an SBA loan. bagged, borrowed, and scraped as much money as I could put together over the last 10 years. However, I'm to a point where if we continue to grow, do I look to sell off some equity and bring on some investors? Or given the structural market shifts within the industry, do you think it'd be smarter to maybe pull back some of our distribution in some of these outlying states and just focus more locally and then our direct consumer models as well? A lot to think about here because Mark, Mark, obviously, I know you know a little bit about this market too, and it's complicated.

42:29Every state has different regulations. So the question, I guess, is should he double? There's a couple questions. Should he bring on equity partners, but also should he double down on where they're doing the best or really try to push into expanding into some of these markets that are also proving to be a bit of a headache? Yeah, I have a couple questions. First, nice to meet you, Ryan. Great story. You as well. what percentage of the market are you in your current state in Colorado? A percentage of the overall market, I'd say we're about 10%. So there's certainly some room for growth there. 10 % of the whiskey market in Colorado?

43:08Correct. Yep. Okay. And what is it about your product that is special relative to other whiskeys? Certainly where our distillery is, we're at 6 ,300 feet in altitude. So it's an ambient, dry, arid climate with some diurnal temperature fluctuations, which adds some different flavors to our products. Certainly matures our whiskey a little bit quicker than other areas. Our Angel Share is mostly water that evaporates. And so we're able to get some higher proof whiskeys and do some special single barrel picks. And so we're well known for our whiskeys. We make a bourbon, a rye, and a single malt. We make four other additional spirits as well.

43:53And then certainly the amount of respect and support we give back to the military, both active and veteran soldiers alike. One last question. In terms of your goals, would you be happy doubling the size of your business over the next few years? Are you really saying, no, I really want to go for 10x or 100x? or know in the next few years, if I could double the size of the business and keep 100%, I'd be really happy with that. So originally 10, 12 years ago when we were starting, we wanted to be a national brand. And that was the original goal. Given the industry market shifts, I'm thinking it might be smarter to pull back and just be a regional brand.

44:34However, I still have inside me that I wanna grow this. I love the challenge of it. It's a tough industry. It's an exciting industry. I love all aspects of it. And so in one hand, it's do we lose the battle to win the war and pull back? Where on the other hand, if you're not growing, you're dying. Right. And so it's a little bit of both that I'm having to struggle with here. Are you growing? Are you on a path to grow this year? Yeah, guy, we have been growing about 10 percent year over year. This year, we're going to be about we're going to be flat, which in the industry, from what I've been told, is a win.

45:10Yeah. So if you're 10 % share in Colorado and 10 % growth, that means you'd be going from 10 % to 11 % share if you just focused in Colorado or 12 % share is 20%. It feels like just from the outside looking in, given all the things that you've said, where you have a competitor advantage, I would double down on that competitor advantage that you have in the state of Colorado. It's working. The brand resonates with that audience. You've got physical brick and mortar. People are feeling and touching your brand. And if you only have 10 share, I mean, you can go to 20 share. That's why I was asking.

45:5020 share and double the size of your business. That's some pretty good growth over the next few years if you were able to double your penetration. I think the level of focus is not to be underestimated. Like you said, there's a lot of complexity in going into other states. You don't have the same marketing power that you do in Colorado. And it takes a lot of time. And so I think there's a benefit of focusing and saying, hey, we're going to double share in Colorado. And this is how we're going to do it. And get everyone thinking on the same lines. And then after you start getting that real traction there, maybe you pick a second state that's closest in that you think would most likely be a state to resonate.

46:32But I wouldn't, it doesn't feel right to me on the outside thinking about taking the brand national without the same marketing budget or bang or that some of the bigger players would have. Right, Mark, exactly. I appreciate that insight and your opinion there. And that's exactly what keeps me up at night is trying to figure that out. And so certainly respect your career and love your insight to that. So I really appreciate that. Yeah, the challenge is the next state over is Utah, and I don't know how great of a market that is. Yeah, I think we probably look to go north to Wyoming or south to New Mexico first.

47:08Right now, I may have missed this, but did you mention your annual sales right now? We're a little bit north of$2.5 million. So one question I have for you is what's sort of the end game for it? I mean, Vail is a really important, you know, if you're talking about building a brand, Vail is a great place, especially a whiskey brand, a great place to do that because it attracts obviously skiers from around the world. It's, you know, it's one of the probably the five greatest ski areas in North America. I mean, is there a world where you want to, you would one day want this brand to be acquired by a Diageo or a bigger, you know, a bigger multinational?

47:44Right, guy. It's, I certainly love what I'm doing. I love growing it. I love the challenge. I could see me doing it for a number of more years. But I get asked this question often and everything's got its price, I think, certainly. We'll see if there's a price I can't or an offer I can't pass up, then it might be something I'd entertain. Maybe one day. If you are thinking about selling it, then it would be more valuable to have deeper penetration in a regional market than a shallow penetration in a national market. So that's something to consider as well. Got it. Thanks, Mark. I think that's great advice, Mark.

48:19The brand is called Tenth Mountain Whiskey and Spirits, Ryan Thompson. Thanks so much for calling in. Guy, Mark, I appreciate your time. Thank you very much. Thank you, Ryan. Good luck. Good luck, man. Yeah. I mean, we've had a couple of spirits brands on the show that have been acquired and some that haven't. But I think that's such an important point, Mark, which is better to really be a known quantity in a region than to kind of just be. Yeah, to be something special, like really stand out. And I think you start going into the 20 share plus and start, you know, you're become a meaningful brand in that region.

48:55That's where I would focus. I think also he said before, like how 80 percent of his time is outside of the existing region. So just switching focus is going to help build that brand. And he's got a much better chance, I think, of doubling in Colorado than he is trying to do it nationally. Mark, before I let you go, I want to ask you about, you know, here you are, you're still a young guy, you're only in your 50s, and you've accomplished all these things. And you've got a whole new business now that you're that, you know, we're going to be hearing about for the next 20, 30, 40 years. If you could go back to when you started diapers.com and even before with what you were working on and you could give yourself advice and say, hey, you need to know this.

49:44I'm coming to you from the future. What do you think you would have said to that guy? Oh, there's so many lessons. If you're asking for like what's the number one lesson? Sure. Yeah. I think I have to – if I could only pick one, I think people. I think I would, I've learned so much about the type of individuals that can really help propel a company. And at the end of the day, like you win or lose, it's down to execution and it's people. And how do you find the people that are going to be most successful in an early stage startup? I want somebody that showed a demonstrable level of success in everything they've done in their career.

50:26You know, they don't have to go to the best school. But in the workforce, they've shown a demonstrable level of success. They're in a company. They've been promoted. And when they move from one company to another, it's a big step change. They make an impact. Yeah, stars make an impact. And when they move, it's noticeable. And those people are the ones that, I mean, 20 % of your folks do 80 % of the work. And if you can get those top 20 % or even top 5%, if you're lucky enough to get that, that could make the company. And every company that I've had, there's always a few people that are top 5%.

51:04And those are the people that really drove and made the company what it is. So I would just, I didn't really know that back then and just hired people and just, you know, I was like, thought I can interview somebody and find out if they're good. And you just can't. It comes down to resume. You have a history. You've been in the workforce. What have you done? That's actually really great advice. It's because you've got to surround yourself. Great entrepreneurs are not great entrepreneurs. They're great people who surround them. That's really – I think the greatest entrepreneurs are often the greatest talent spotters.

51:38But you're right. It's hard because you can talk to somebody who really liked them and it just doesn't work out. Yep. I call it honeypot. You sort of – it's like, oh, I can get a beer with this person. They took a good game and in an hour you're like, oh, I really connected. I like this person. but then they're not able to really push the ball forward. And there's only a small percentage of the population that can truly invent, create, and make stuff happen. And there's a certain resume that it shines through, and now I can spot those. And so I would teach myself how to spot that if I went back in time.

52:16Yeah. That's great advice. Mark Laurie, founder of diapers.com, jet.com, and wonder. Thanks so much for coming back onto the show. Thank you, Guy. It's great having you. And by the way, if you haven't heard Mark's original How I Built This Episode, you've got to go back and check it out. You can find it in the podcast description. Just click the link there. And here is one of my favorite moments from that interview. I'm happiest when I'm doing something entrepreneurial, building something. It could be inside of a big company building something. It's really about the autonomy to just sort of like just run and build fast and not have to get, you know, traditional corporate buy-in before doing everything.

52:58Because, you know, corporations, they just tend to shy away from risk and low probability outcomes. And I sort of gravitate more toward low probability outcome, but massive upside. And I think that's where the opportunity lies for an entrepreneur. Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for free at GuyRoz.com. Each week, it's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest entrepreneurs ever. And if you're working on a business and you'd like to be on this show, send us a one-minute message that tells us about your business, the issues or questions you'd like help with.

53:43and hopefully we can help you with them. And make sure to tell us how to reach you. You can send us a voice memo at hibt at id.wondery.com or call us at 1-800-433-1298 and leave a message there. And we'll put all this in the podcast description as well. This episode was produced by Kerry Thompson with music composed by Ramtina Rablui. It was edited by John Isabella. Our audio engineer was Sina Lafredo. Our production staff also includes Alex Chung, Chris Messini, Carla Estevez, Elaine Coates, JC Howard, Catherine Seifer, Devin Schwartz, Neva Grant, and Sam Paulson. I'm Guy Raz, and you've been listening to The Advice Line on How I Built This Lab.

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