Sean Frank - E-Commerce Masterclass: How to Build, Scale & Win in 2026

21:59What's absolutely crazy for people out there listening is just, you're going to have, you can have just one weird outlier that's completely different than everything else. That's why it's just, I would only say recently, I would say probably you tell me in the last nine months to a year, like meta is just all about contrast and volume. The big thing is the contrast. People don't understand that you need to feed it completely different, creative, like completely different. Cause everybody's used to doing like what you're talking about right now is you found the body and the ending and they're just going crazy and just split testing that hook, but they need to do that a million different, which ways to Sunday and all different types of body and general concepts.

22:37I don't think people understand how much different stuff you have to throw in there. Yeah. More and different is what you need. Yeah. So, you know, Meta says creative is the new targeting. And what they mean by that is like, you know, there's Andromeda is the new ad engine inside of Meta, right? Is that drama? Andromeda. Oh, Andromeda. I thought you said drama. I was like, it's interesting. And inside of Andromeda, they've shown us what the AI system thinks is the same, right? So if you have a static image and the background's blue, and then you go to a pink one, Andromeda knows it's the same image.

23:09They're like, that's the same thing. It's not creatively diverse enough, right? If you take a static image of the wallet front on and then you change it a different angle and the background is nice like trees now, it still knows it's the same image. You need radically different static images in video content. That's what you're talking about. And so it's like, you can't just change. It's most important in the beginning part of the video because it has to serve to people who are different and new. And that's why we test so much different creatives. So the thumb stop's the most important, then the hook's the most important.

23:40But by the time you get to the middle and the end, it doesn't matter as much, but it's like really getting new people to see and have attention on that. But you need to have different, it has to be super, super wild. You have to make ads with just guys, with just girls. with different selling points, different pain points. Your static images, you have to have one that's on fire and you have to have one that's pretty people holding it. You have to - Like an actual 180 degrees, like a completely different difference. Guys, we talked about a little bit in the Shackofford episode about this. I'm going to put a little mini link to a white paper on best practices in relation to this.

24:13I think it'll help people a lot. I would love to know your thoughts because there's a very, very interesting conundrum on my side. With my company, we have a very, very high AOV. And let's just say we want to do a creative test and there's the same body, the same kind of core CTAs, and we want to iterate across 10 different hooks. But our AOV is so high, we can't spend enough to get kind of true testing. So for people out there, if they understand and know their AOV, how do you look at testing as a percent of budget, a percent of AOV, a percent of revenue? How much dollars should they be allocating on a per creative perspective?

24:48Yeah, so this is the hardest thing about giving advice to different businesses, right? But the other problem with a high OV product is you probably just don't have a lot of purchase signal. Even if you're crushing it, if your product's$1 ,000, you will have 10X less creative volume or purchase signal than I would at my$100 AOV, right? So like you can't actually test as much. That's what sucks when you're in a business like mine and we're good at media and we can't lean into it because we have a higher AOV. Yeah. And this is where I think organics are best friend, right? Because you should, everything that you, and this is what I would do if I had a high OV brand.

25:23I would make a bunch of different TikTok accounts or a bunch of different Instagram accounts that aren't necessarily focused with your brand and use those as like a creative testing field for all of your ad concepts to be organic, right? And so I would make, you know, if you make a high AOV sports thing, I would make one that's, I'd make a new TikTok account called Best Sports Highlights, right? Now you have a partner account that you can run on your meta account, right? They're pushing partner ads really aggressively. So like make a new handle. So new Instagram, it's called, you know, Best Sport Highlights, whatever.

25:51and then post all your organic content there, right? And just see what ends up working before actually pushing it into the paid performance gauntlet that you'll have to end up going through. The other thing is take all of your awesome ad concepts and then just set them at a higher, or I was gonna say a higher, instead of purchase conversion, go add to cart conversion or just page view conversion or something else. So you can get more signal flowing to it. Because yeah, the higher view kind of like, cripples you in a lot of different ways. But in terms of actual, if you have, let's call it a hundred million dollar budget, you should spend 1 % of your budget on tools, right?

26:27So I know that sounds crazy, but like if the tools make you 5 % better, they pay for themselves, right? So 1 % should go to either attribution tools or MMMs or incrementality testing, something, right? 1 % should just go to some sort of tools. Then I would say like... I want to unpack that a little bit right there. Everyone kind of knows like the North Beams of the world, the triple whales of the world. What are those secondary tools that you're talking about? So an MMM is mixed media modeling. And it's an old school way to figure out where you should be spending money. Right. So it looks at all of your different spend and then it runs, you know, different algorithms to figure out like if you spent money correctly, or it's like, oh, more money should go to TV or Snapchat or whatever else.

27:08Right. And this is like tools like Iris, where it's like, it can do mixed model, modeling mixes and different cohort analysis is kind of just analyze any and all of the metrics in relation to your spend. Correct. Iris is something very similar. You know, So MMMs are mostly sold by, Northbeam has one, a company called Measured has one, right? It's kind of falling out of favor, but it's one of the gold standards of actual paid media spend, right? The other one is incrementality. So an incrementality test is a holdout test. So let's say you want to figure out if Meta is working or not. It's like, hey, should I actually spend money on Meta?

27:42So what they'll do is they'll build sales. And what a sell is, is they'll be like, okay, we'll do North Carolina versus South Carolina. and South Carolina won't get any meta spend. Okay, we're going to totally exclude them. And then we're going to see the effect on your business if you didn't spend any money in a geo. I'm simplifying this. They end up doing way better sales than just state versus state. But like they can do three sales tests where they end up taking the population and they break it into these different things. And then they hold out spend to figure out, okay, you spent money on meta.

28:11It was this increment. It drove this level of incrementality in your revenue, right? More revenue showed up than you expected because you spent money on meta. How much revenue do you think a company needs to do to start investing in incrementality? I've never done incrementality tools to give you context. I'm just curious what you think. 15 million, 20 million? As soon as you start spending money on multiple channels, that's what it comes down to, right? So I think if you just spend money on Meta, you can get to$15 million a year, right? But some brands cap out. They can only get to$15 million a year spending on Meta.

28:42But where to figure out to spend your next dollar, that's where incrementality really comes in, right? So we use House. It's like, they end up doing all the holdouts test for us, but lots of people do this because it's like, it's just a tried and true science. It's with Meta is pushing really aggressively. Meta will actually do free incrementality tests for you because they're so confident that Meta is the best place to spend money. But as you get bigger, you have to spend money in more places. You have to validate where to spend that money, right? It's very easy to piss money away on Taboola ads or Criteo ads or whatever else, right?

29:09I just gotta just shout it out, Taboola and Criteo. We're going back to 2009 with those. The fact that you know that is, you got some black hat marketing. in your deep dark days in Washington. Taboola is making a comeback. They're trying to not be shitty. Guys, Taboola is, they're like weird fake looking listicles at the bottom of like ESPN saying, this is Kim Kardashian's 20 favorite makeup brand. That's crazy that you just mentioned that. Yeah, well dude, and you know, a lot of display ads. I mean, there's so much ad fraud, right? So as you start spending more money in these places, like PMAX, it's very easy.

29:41And PMAX is Google's ad tool, right? Performance max guys, yeah. Yeah, and PMAX is so easy at wasting money, right? Because like, it'll just take, you know, branded spend and display and email placements and everything just rolling together and just give you one pretty number. But if you don't measure that really, like really, really closely, you just waste money. So incrementality just helps you as you expand channels out. So maybe 15 million, maybe 50 million. Dude, if you're bringing it to$100 million just on meta, fuck it, just spend money on meta. Like just spend that million dollars on creative tools instead, right?

30:10I want to put a pin on the content for the people listening. Sean is a unicorn from another planet and doesn't go organic to paid. He just does paid and organics kind of, it seems as though it kind of does what it does. If you are doing organic, something that Oren talked about that has been amazing, and I'm sure you agree with this, take your best performing organic, throw them in meta, throw them in an ASE campaign. Dude, our two best, he told us to do this, our two best ads right now by a long shot are just our best performing Instagram posts. And now we just have a flywheel every single week.

30:42Best performing on organic goes into paid. That's undefeated. It's 70 % of our best paid ads are organic best performing ads. Yeah. If it wasn't clear earlier, organic is just the proving ground to get stuff into paid. If people like it, they'll like it as an ad, right? So the number one best practice is taking everything from your organic page and just pushing it into paid, right? And that's why you should have multiple Instagram accounts to test more organic stuff. Because if you find a winner, it's a winner. All of your ads should actually go through a gauntlet of organic before justifying being paid.

31:14Now, you call us a unicorn. It's just because I'm old. It's, you know, if any brand started before 2021, he's not good at organic content. And it's super, super true. Go through any of like the D2C darlings, you go through the Aways, the Glossiers, the Allbirds, put Ridge in there. It's because we grew up where ads were the most important thing, right? Like organic feeds were very like precious and there wasn't short form video to really get good distribution. But yeah, modern day brands, like it'd be stupid to start with paid, like only start with organic until you get to$10 million. Makes sense.

31:44I want to dive back into the measurement side. I know you're very interesting because I feel like you're deep in the weeds, but also you take a step back and you're seeing the macro perspective. When you're looking at numbers from e-commerce specifically, what are those two or three metrics that you're obsessing over that you're looking at daily or weekly? Well, yeah, our business is in the middle of a transition. So it's different than some people. But what I care the most about is product mix in our sales, right? So I'll bring up Yeti as an example. You think about Yeti, you might think about coolers, right?

32:17Like Yeti had a very famous cooler when they came out and that kind of built the brand. The cooler is less than 20 % of the revenue today. Like 70 % of the revenue was actually water bottles, right? They were successfully able to go from a high AOV product with low LTV to like a gift giving product that has way more mass market appeal. So Ridge is doing the same thing right now. So our wallet business is very strong. It's a hundred million dollars a year, but over half the business now is all the other stuff we made, right? So what I care the most about is percentage of revenue coming from these new product categories, right?

32:49How's the phone case doing? How's rings doing? And that product mix because the future of our brand is having way more different product lines that all can stand on their own and acquire new customers. So what I'm obsessing over is how many ring customers did I acquire today? How many ring customers in the UK did I acquire today? Because my ring UK business is bigger than my wallet business, right? So I'm looking at all those different things. And then the next one is just returning customer revenue. That's been the biggest weakness of my business. If you have a high OV product, you probably have the same problem where 70 % to 90 % of your sales are new customers because once they buy something, are they going to come back and buy another thing?

33:26With the wallet, people loved it. Our MPS is 97 % or whatever. People love this fucking - That's high, baby. Yeah. That's a high score. Yeah. I mean, we have hundreds of thousands of five-star reviews, but most of them were like, yeah, I love the wallet. Then I send them an email. Hey, do you want to buy another one? They're like, of course not. Why the hell would I want to buy another wallet? I only need one, right? So we've launched all these new products to solve that problem. And so now I look at returning customer revenue as our gold star. Can we ever get that to 50 %? That's what we're looking for.

33:54Makes sense. We're going to go super deep into product and product assortment because you definitely have done a lot of things that are unconventional. The fact that I definitely think you were labeled as a wallet company and now you have, I mean, I saw that the rings did like eight figures the first year. So I want to dive super deep into that. I want to go back into just more from a CEO perspective that obviously has marketing and analytics chops. What are you looking for holistically? I know you're obviously looking in platform. Are you looking at like ROAS in platform or MER holistically? What is that one big number that you're looking at from an efficiencies perspective for the business?

34:27Yeah. So I think the more rungs you move down in the organization, the more they care about channel-specific ROAS, right? So like, you know, Faroo on my team runs everything for US meta, right? And he cares a lot about individual ad ROAS, right? And then when you go up a level to Jimmy, my VP of paid, he cares really about Facebook ROAS in particular, right? And then if you look at my CMO, he cares about digital channel MER, right? I care about holistic business MER, right? I look at all those other metrics, they're totally fine. But like what I'm looking at is how's the whole business growing, right?

35:02So I'm including wholesale and Amazon and international markets. And then what is the whole business MER? And is that hitting the targets? Because I've been pretty open about this. Ridge as a business will spend half of our revenue on marketing sometimes. We'll have it. Wow. Yeah. Yeah. We'll have a 2X MER, right? And it's because we have the margins to support it. And we understand that we're an attention economy, right? I have to spend all of my money on marketing if I want this thing to grow, because that's the lever we have right now. I mean, I got to ask you right there, looking at a percent of revenue, you're saying 50 % on marketing.

35:33What's like your SG &A? Like what's your human capital as a percent of marketing? It's got to be like 10%, 15%. You have to have a super lean team, correct? Yeah, we have 45 full-time US employees or something. So it's like by the human cost, like human payroll is 7 % of revenue or something. 7 %? Yeah. Everybody out there is a percent of revenue. that is astronomically low. I feel like in consumer, I mean, I've been ballooned up to 25 before. I feel like people are at 25, 30. Where do you think you need to be to win? You have to be what, at 15 probably to win? No, 10 or less. Wow. Yeah, the modern market.

36:07You hear about these companies, there's a company I'm close with, they're in the hydration space. I think they have four employees, they'll do$100 million, right? Dime Beauty ended up selling and they had, I think, six employees and they were doing$65 million or something, right? I think we've kind of missed it. The leverage is there, right? Shopify has built the best website thing ever. I don't need web developers, right? Instead of Ridge, we do have a couple of web developers. We end up having three people on the team. But think about the most bare-bows teams possible, right? You can just use out-of-the-box Shopify.

36:39Facebook gives you all your customers. So that's the most important thing. Yes, you need CX, but AI is really helping with that. And you need product dev. So it's maybe you need four, maybe you need six, maybe you need eight people. And you could be doing 10, 20,$40 million Dan from Create, I think, was four employees doing$40 million a year, right? Routine gummy company. Yeah, yeah. So you asked the question, what do you need to win? I think it's so obvious what wins right now. Let's go one-to-one. You go one, I'll go one. You go one, I go one. You go first. What do you think? Okay, I think consumable is the most important thing possible in winning.

37:11Let's do a 1A, 1B. 1B will be you need a good LTV in conjunction with the consumables. Now you go. Okay, you need very small skew counts. Yeah, AG1, I agree with that. I think you need a massive TAM. Totally. Massive TAM is super important. And you need the ability to get into mass market retail. And mass market retail, there's only three that matter. Target, Walmart, Costco. There's the only three that matter. I agree with you. I would say, and this number has changed for me. I once thought it was 70 point margins. I would now say 75 point margins. Yeah. I think that's a good one. And let's even stop there because let's talk about what we just described.

37:50So a consumable with strong LTV that could be sold in mass market with a large TAM with good margins. And then Grooms comes to mind. Okay, Grooms is gummies. Okay, so they have one flavor. Anybody can eat them. They made them gummies because they're good for kids and moms and everybody. And they taste good, right? They help with immunity and vitamin support. And you can buy them in Target and Walmart and Costco eventually, right? They're in Sprouts right now. Layer on the vanity or health element of something. and then I think you, let's talk about it right now, the health element. And what did everybody fuck up previously?

38:24It's like, look, Rich is a great business. I make a lot of money and we're going to run this thing forever and we make great products people love. Awesome. I love this thing. What everyone screwed up is like, no, we should have just been focused on the internet lets us go as wide as we want. The best thing is a hyper-focused, awesome product with a large TAM that can eventually be sold in mass market retail. And this is why fashion is such a bad category to be in, right? Worst category, even worse than art. Yeah. Yeah. So, you know, we talk about fashion, you know, if you want to be selling high-end women's apparel, there are no wholesale accounts.

38:57You're like, okay, what about Nordstrom's? They just got taken private and they're going through a whole restructuring. What about Saks? They're not paying people. They actively aren't paying their vendors right now, right? All the money's in the bottom for apparel. And then there's just, everyone is trying to get to the bottom. There's still money in the middle at mall, but at the top and the Nordstrom's, the Bloomingdale's, those businesses, I mean, Barney's went out. Those are tiny businesses. If your strategy is like to win in Nordstrom's or Bloomingdale's, you're going to have like a$2 million business.

39:22Like you're not going to have anything in there. And they might not pay you, dude. Yeah. And anything that's cool is bad to be in because people will do it for free, right? It's the reason why being an actor sucks and being a dentist makes you a ton of money, right? It's because if it's cool, a lot of - Everyone wants to be. Yeah, a lot of people will do fashion brands for free or they have rich parents, they'll pay them to do fashion brands, right? So like fashion's the worst category we're in. And going back to Groans, it's like they have one SKU to manage, right? It's on subscription every single month.

39:48I think you can only buy it a subscription or it's like subscription first, right? It gives them predictable supply chains, right? They have a supply chain domestically, right? They don't have to worry about tariffs or anything else. It's like they're just taking gummies. I didn't know that. Yeah, yeah. So it is the perfect business. And that's where everyone was just wrong for 15 years, right? Like Away, I love the team over there. They're fantastic. Luggage is a horrible category to be in because Samsonite is the only people, they're the strategic, right? And they have 50 points of margin because shipping a suitcase places is really expensive.

40:20So I know about this with art. If it's over 39 and a half inches on one side, you get absolutely smashed on the shipping, especially internationally. Yeah, I mean, to further riff on what you're saying, I mean, I know that you've already thought this and definitely said it. You're on hard mode right now with these wallets. It's literally, it's a want, it's not a need. and if you get something that's a need with LTV, it just becomes, it's just such an easier game. The big thing is just picking the right game. And I think so many people just get into the game, aka I'm a perfect example. And then kind of it is what it is, but there is way easier games to play.

40:54Like what we're going back and forth on, the seven point checklist, there is an incredible amount of opportunity out there. I mean, I just spoke to Helium 10 and we did this little exercise in the back end of Amazon and we went super granular in all the fields, looking at how many, this is going to blow your mind, bro. How many creatine companies last month did over$10 ,000 in revenue? Oh, bro. Go, go. I was going to say 5 ,000. 232. But$10 ,000. And some of them had like two pictures on the PDP page. Like they're literally, and of those 232, I would imagine 219 of them have fake creatine or 2 % of the amount of creatine in it.

41:33So I think picking the right game for everybody out there listening, we've talked about in the past episodes is quite frankly more important than how hard you work or even who you work with. It's picking the right game and going through this checklist that we're talking about right now. Yeah. So Peter Thiel said this because Peter Thiel, I mean, did PayPal, made a ton of fucking money. And then he opened a restaurant and he's like, if you want to work really, really hard in a knife fight and super competitive and make no money, open a restaurant. And that's when he ended up building this whole thing that he ended up writing a book about how monopolies are good.

42:03He's like, no, you want to build a monopoly. He's like, whatever. Prometicians for losers. Yeah, exactly. And he's like, that's what running a restaurant is. That's what that taught him. Now, the advantage of doing something on hard mode is that we're both really young and that it teaches you a ton of skills to then go, like as soon as we got into a category that's easier, be that rings or whatever else, anything even slightly easier than wallets immediately took over the whole market and made a ton of money, right? And it's because trying to sell the 10th million wallet to somebody, everyone in America has already seen it.

42:31They already heard about it. But getting them to get that purchase is so difficult that once you learn that skill, we can go into something slightly easier and make a ton of money. So that's what we've been doing. I agree with you. I'm excited for that day. I want to go back into partner ads. You mentioned it briefly. I know, I've looked at your guys' ad account and I know that you guys are heavy on partner ads. For some people, a lot of people, me included, partner ads are actually performing better than standard ads. So I'd love to know, how are you guys utilizing partner ads? What percent of your ads are partner ads for standard ads?

42:57Just tell me a bit about what you guys are doing there. Yeah, it always changes. But no, partner ads are working better for everyone I talk to. And it's because the single handle really, really helps. And then also a meta is prioritizing partner ads. Like they have said internally that like it's a big goal for them. I mean, it's been public. Like why are they pushing this out so hard? And it's because they get better signal when there's two handles on it. They get better targeting when there's two handles on it. The AI algorithm prefers it. So, I mean, you know, it depends. Some ads don't make sense to run as partner ads.

43:28but it wouldn't surprise me if in Q4, half of our money is going on partner ads. 50 % of your money. Yeah. That's incredible. For people listening, just to give you full context, you basically connect with any other account on the backend systems and then you can run creative through both. And per what you just said, they're going to take audience data from both, which obviously makes the algo smarter because they're getting fed more data. How do you guys set up your whitelisting system? Are you guys paying people flat for the content, a percent of spend, a percent of revenue? I'll tell you how I'm doing it too.

43:59I'd love to hear how you're doing it. Yeah, we don't give anyone a percent of revenue. So like it is all just - I'm a nice guy for those people out there listening that I'm paying on the top, but keep going. Yeah, yeah. I mean, everything is, because the other thing is, what we found in our testing is the account doesn't matter that much. So like we have done deals with celebrities. So like we've run ads from, you know, Marquez is an owner in the business. We run ads from his account all the time, but we've done John Daly, famous golfers. We've played, we've done, you know, famous actors, famous musicians.

44:27And they don't perform that much better or statistically, like you can't really draw a correlation between like the name on the account and just a random account you create and own, right? And to take it a step further, the amount of followers is completely irrelevant. Yeah, yeah. So we have a bunch of accounts we own, right? Like I said, you should make a bunch of Instagram accounts, right? You can just do that and they could just be partner ads for you. Daily wall art is me, don't worry. Yeah, there you go. And you end up running it from the founder account. You end up running, they can run it from my account if they want my wife's account, whoever.

44:57And then if we do end up using with UGC people or influencers, it's always just a flat fee. I'm not going to get into the math of trying to figure out how much I spend on your account. And then you audit me and I send it over. I'm not doing that. It's just, I'm not, on theory, I'm not against it. Like I, but I'm not, it's not worth the two, three, four emails that's going to happen. So you're just paying, here's the SOP. I want this type of content. I want these hooks, these bodies. And then you're doing all the editing or are they giving you finished content? A lot of times we will send them stuff just to post on there and run.

45:28Oh, wow. Yeah, they might even be featured in the ad or not, right? Interesting. Yeah. So you're giving them the content and you're just using their account to run it. Yeah. Wow. I like that. That's rare. Anything else that you see big for the people listening on the whitelisting side that you would recommend? How are you finding people to whitelist with? Are you guys using a tool? Are you guys using Superfile? Are you using Social Snowball? What are you guys using to find those people? Yeah, I'm a big fan of Super Affiliate. We also do a lot of gifting. So we'll gift out, you know, ARK. No, it's a refund.

45:58So we'll gift out with refund. I won't get a bunch of people coming back in. And if somebody makes good content, because you're getting a free wallet, no money. And if they still make good content, oh, that person's now in our UGC funnel. We're going to pay them to make content. And if we give out 100 free wallets, maybe two people make good content or content worthy of spending ad dollars on. So that's how we source new people. But you only need a roster of like, at a brand our side, it's 30 to 50. if you get to 100, that's a ton of UGC people because you want to give them consistent work all the time, right?

46:27So Refunnel is the name of an app or a tool that you use to find the people. You're gifting them for free. You're seeing the content. If they're good, you engage and you bring them into your kind of internal UGC machine. Yeah, yeah. But yeah, a lot of people do TikTok shops just for this reason, right? You do a bunch of gifting. You find who makes good content. Now they're part of your UGC team, right? Superfilling has a bunch of great people in there. They have a partnership with Meta to get that going. So we use all those different tools and softwares. And then, yeah, we just have a roster of like probably 50 people and we'll use, and then part of the paying for UGC will also get access to their whitelisting.

47:01Love that. I would say for people out there listening, something that we've done that's been very, very successful, and I took it from other brands that are crushing the game, is giving a long PDF and SOP and literally saying, these are the 50 hooks. These are the three or four B-rolls of bodies. you get all of that raw content. And then our internal editing team can do all of those split testing that you talked about earlier in the conversation. They just have more malleability on the creative because to go back and forth to get somebody and ask somebody to do something is a lot. Yeah, you never want to be delivered finished assets because you're going to want to cut up and change it.

47:35The other thing is you guys are ahead of the game. I talk to so many brands who don't have internal editors. It's like, that is the biggest unlock you possibly have. I talk to a lot of brands. I'm like, you don't even need more content right now. you have a bunch of content that just edited like shit. It's like, we can make something really good out of this. It's so funny. We use pics.io, P-I-C-S.io. And it's like, it stores all of our content and it's an interface. And like when one of our new guys came in, that's the first thing he said. He's like, no more new content. We have 10 years. Look at all this stuff from 2019.

48:03Why are we not using it? So to give you context, it's overseas, but we just hired another two. We have six editors. And remember my company is a bit smaller than yours. Obviously, it's overseas, but I don't think you can over-index enough on editors. Totally, dude. And you say overseas, Latin America has some of the best editors on earth. So it's like, you should go to Argentina and Brazil and hire people from there because they're really fucking good at editing. Philippines. I'm actually the mayor of the Philippines. My business partner lives in the Philippines. Philippines, nice. Yeah. Philippines is nice on the creative side.

48:36I want to dive into Influencer. I, to give you context, I jump-started Iconic through, we've sent out 7 ,500 free pieces of art for the first five years of the company. No attribution, just top of the funnel, looked at blended myrrh and it worked well for us. You guys, I know, are a systematized machine. So I would love to understand and know what is the influencer strategy for Ridge? What is the SG &A, the team underneath it? How are you guys attacking and going after influencer? Well, yeah, dude, and it's changed a lot. So like in the early days, we were spending money on Meta. The business, like 2016, we were probably doing$10 million a year.

49:13And I just watched a ton of YouTube. Like I'm a fucking computer nerd, right? So I was just spending a lot of time watching YouTube. And I just started thinking, I'm like, look, if Squarespace is getting these people to talk about it, we should do the same thing, right? And we started sponsoring probably 50 accounts that year. The next year probably did 500 accounts. And what does that mean, sponsoring? So we would find their email, right? or we find their Twitter, we find their Instagram, shoot them a DM and say, hey, we'll give you$500 to talk about Ridge Wallet as a 30 second mid-roll read, right?

49:42So this was so early that a lot of these terms weren't defined, but a lot of people, when they thought about sponsoring YouTube videos, they wanted dedicated videos, right? So like I go to a gaming channel, hey, make a 30 minute video about why you love Ridge Wallet. Nobody wants to do that, right? Your opt-in rate's gonna be super low. We want integrated ads inside your content, just like a mid-roll ad on YouTube. YouTube pays you an RPM for talking or for showing ads on your content? Pseudo organic or basically it's looking like an ad within it. I mean, we have people say, hey, this video is brought to you by Ridge Wallet, right?

50:12And they talk about it for 30 seconds. And we were really early to that. And so we would just, we had, you know, we probably had two people internally who would just find a bunch of YouTubers. So they would either pay scraping services or they would, there's like a couple like databases of YouTubers. Now there's a bunch of social tools. They all fucking suck. So I don't know if they're going to sponsor your podcast, you can bleep them out. but Grin sucks, Creator IQ sucks. Like they all suck because all of the data is just so old. And those lists have just been destroyed and abandoned. YouTube's a dynamic thing, right?

50:43Like an account that's big this year wasn't big last year. So if somebody did create a database from three years ago, they're not even on that fucking list. You want to be on like the best accounts and their best accounts typically are rising right now, right? So we would try to find new YouTube accounts that we wanted to be everybody's first sponsor. That was like the goal of the company, right? So if you had 10 ,000 subscribers and you've never done a brand deal before, we'll give you$50 and teach you how to work with brands, right? So you could get good pricing? Yeah, we got good pricing. We were early on it.

51:09We built those relationships. We were, Theo Vaughn is like a super famous podcaster. We were the second person to sponsor his podcast. The first person was a local pizza place. So like I did the deal with him on the phone, right? Now his ad rates are probably whatever, six figures to work with him. But back then it was a couple hundred bucks, right? So we wanted to be super early with sponsoring all these accounts. and build a good relationship over time. We ended up working with, you know, Anthony Fantano for five years or whatever, right? We ended up working with, you know, Marquez back in the early days.

51:39So - And is this going specifically after people that influence your specific ICP or with something like wallets, where you're just going kind of like super broad? We were sure. So YouTube is a male dominated platform. So we thought we could just reach anybody on the platform. So we were agnostic and we were not brand safe. So like - Oh boy. So we were able to get really, really cheap CPMs because I'm like, I don't care when you post. I don't care what you say. Just tell people to buy the wallet. So we would work for fishing channels and music channels and comedy podcasts and everything. A lot of brands come into it being like, oh, I just want to work with this one awesome account.

52:14I just want to work with Mr. Beast, or I just want to work with this very prestigious female influencer. That's really hard and really expensive. We're like, we want to work with anybody at this price. And we were getting five to$10 CPMs to sponsor all these YouTubers with really, really good ad units. And were you tracking with UTMs? Were you just looking at like Google Analytics? Dude, it was just referral. It was just coupon code and they all had banded URLs. So we could see clicks coming through direct revenue and then coupon code usage. And the idea was that like Facebook cost, you know,$15 through 2 ,000 people.

52:44I can get a better, longer ad read with a creator talking directly to a camera for$5 or whatever, right? And the thing that everyone, everyone misunderstands on that platform, It's evergreen. I have, I mean, who knows if it got leaked on coupon sites, but I mean, we have stuff from a long time ago that we still get sales from. It's crazy. Yeah, totally, dude. I mean, we have Theo Vaughn from episodes from 2017 still driving sales, right? So yeah, we have, you know, we've worked with over 5 ,000 YouTubers at this point. Our peak year was probably 2020. As soon as the world shut down, you know, there's a lot of people who needed revenue.

53:18So we just ended up signing long deals with everybody and ended up, a lot of people were watching YouTube. So we ended up having a huge year those years just based off YouTube Influencer. So that was the original strategy. Really small team, two full-time US people working with VAs or contractors or data scrapers to get us a bunch of lists. Cold blast all those lists with very clear instructions. We'll give you a free wallet. We'll pay you this price,$5 CPM. Let's talk about us. So we did that at scale. And that worked really, really well. We got to 5 ,000 YouTubers or whatever. 2021 rolls around.

53:49And that's when things got crazy because crypto got into the space, right? So like I said earlier, crypto literally was spending a thousand times what we would spend. And it didn't make any sense to us. Obviously, they don't have any cogs, but I'm like, mathematically, they can't give you$3 per view on this YouTube video. It doesn't make any fucking sense. Now we all know it was a scam, right? FTS stole a bunch of money. They burned it. And then 2022 happens. There's a big crash early 2023. Then all these YouTubers actually need to, they need money again, right? Like all the money got washed out of the system.

54:20It was a big boom, then it was a big bust. So we ended up getting back into sponsoring a lot of YouTubers, but there was still a lot of price memory. People like, I used to get$1 ,000 CPMs. I'm like, yeah, but your views have gone down and also no one would ever give you a thousand CPM. That's crazy. So 2023 and 2024 was hard navigating that as like influencer was in flux across the board. And the strategy now is we're actually trying to do less YouTuber deals and be way more involved in the YouTuber deals. So like MKBHD is a good example where, you know, we'll get, we'll be on 20 of his videos this year and they're all very high touch.

54:54They're all really, really integrated. We get ad rights to that content. We get to whitelist that content and we're picking the content that has the biggest cultural impact. So we're trying to do fewer, better deals. So this year we might only work with 300 YouTubers, but we're trying to make those videos like as standout as possible. So we used to spray and pray work with everybody going up to this big boom. Then there was a massive bust. Then it took us a year or two to figure out our footing. And now we're just trying to get really deep integrated deals. I would recommend that sequencing for anybody is spray and pray, see what works before you go deep and narrow.

55:28You just casually glossed over a guy with 20 million plus subs, this Marcus Brownlee deal. Tell us about how that came about and what does that actually look like? As much or as little as you want to tell us. Yeah, so we, I said this earlier, our biggest weakness is that we're not good at organic, right? And we saw the boom of creator-led brands. And it makes so much sense that like in the future, there'd be more creator brands because people buy from people, right? We talked about, you know, the all birds of the world or whatever. Like. Brand is just a short form for familiarity. We talked about that.

55:59And Allbirds had to raise hundreds of millions of dollars to spend money on ads to get you to be familiar. Where in the future, the people you already watch every day and them getting into products just makes more and more sense. So Feastables is crushing it, Joyride's crushing it. But there's also a bunch of creator apparel brands. There's a bunch of brands you've never heard of that'll do$50 million this year that have no marketing spend. They are just creators who are making cool stuff and people are buying them. And it's every little pocket of e-commerce. And so we saw that happening and we're like, we need to get ahead of this wave.

56:29How does Ridge become a creator brand? Context, what year was this when this epiphany happened? Like 2022, maybe. And I put a tweet out and I was just like, maybe it was 2023. And I put out a tweet. I'm like, hey, we want to bring on our chief creative partner. We want to give them a million dollars a year. And the tweet probably got 500 likes or whatever. And I said like, hey, our dream get is Marcos Brownlee, but if he's too busy, apply here. And we had a bunch of applications, like a thousand people came in. I offered it to Colin and Samir at one point, They were too busy. And, you know, but we ended up, you know, going through this list and we worked with Marquez in the past.

57:01We had a really good relationship. I'm like, hey, I'm going to make sure he saw this, right? So I just sent it to him like, hey, are you interested in this? And he's like, yeah, totally. He's like, let's get on the phone. Let's have the details. So it ended up that he ended up coming and being an equity member of the business. So Ridge is still bootstrapped. We've never raised any money. Six people own it. So me, my partner, Connor, the three original founders and Marquez Brownlee. So there's six of us in the cap table. and in exchange for that, he helps us plan our product launches, right? So we have new products.

57:30He gives us feedback on them. We create products together with him. We use his image and likeness, you know, in Best Buy. If you go to a Best Buy right now, there's a big picture of Marques Brownlee and then there's our phone cases and our power banks and our cables and our wallets all right there. So it's like legitimizing and wholesale and then we get distribution on all of his channels, right? So, you know, we get, we're going to be on 20 plus videos this year, a bunch of social posts, all of the type of stuff. We do, you know, creative shoots together. So like we're getting him in ads and everything else.

57:57And it's just helped us be better at storytelling and like more of a, you know, Gen Z brand. Like I think Gen Z creators are fucking crushing it, being creator brands, TikTok shops, whatever. This is our learning to get in that direction. So for context, I mean, this wasn't a sweat deal. You're paying him and he's tied to different marketing deliverables and things he has to do? Yeah. Wow. That's a great gig for him too. And he's got equity upside? Yeah, dude. I think it's a great gig all around, right? Because he brings just like a ton of legitimacy. Like we're getting into tech products for the first time, right?

58:26Like our phone cases, a million brands do phone cases, right? If you ask anybody like, oh, what a saturated market, people said the same thing about rings and wallets and whatever else, but we'll do eight figures the first year in phone cases, right? And it's because we have wholesale distribution that he kind of brought on board, right? We'll be in all the Verizon stores, all the AT &T stores, all the best buys, right? And also being able to use his credibility on our ad channel and everything else. If you had to tie one thing, what is that one fundamental thing that he brings to the table that you get that asymmetric benefit?

58:56Is it trust? Is it distribution? What do you think it is? Yeah, I mean, the asymmetric side is distribution. I mean, we're talking about what would a brand pay for 500 million long form YouTube views, right? We probably won't be in 500 this year, but over the course of the deal, it'd be over a billion views in his content with our products and our ads. that's just like, that's worth a ton of fucking money, right? I mean, tens of millions of dollars, just the distribution piece alone. One piece of this, I think for people out there listening to, and I just spoke to somebody yesterday about this, understanding and knowing, there's a word called strike price.

59:28We'll probably go into a whole episode. You have the same lawyer as me, by the way, Goody. Yeah. Goody is the greatest lawyer of all time. Goody Agahi, shout out. Dude, he better be paying you for this. Do you know how much lawyers make, dude? He's the greatest. I love him with all my heart, Goody. Understanding and knowing strike price, strike price is the valuation of your company when you issue equity. And if you issue equity at, let's just say$20 million, you only participate in the pro rata equity that you have in the overage. So you doing that deal with Marquez, that's a great win-win deal because he doesn't participate in all of the value that you guys built up until, I don't know, hundreds of millions of dollars.

1:00:03But at the same time, he's obviously taking the bet that you guys get to a billion dollars, which quite frankly, he's got a hedge because you're also giving him a million dollars a year. So this is like a win, win, win, win, win. So for people out there listening, when you get to a little bit of escape velocity, I'd say even like a$10 million valuation, you can bring in people that only participate in the upset. And people don't understand and know that. That's a huge win for you. Yeah, yeah. We should break that down. So you could give people options. You can give people warrants. You can do something called the profits interest units, right?

1:00:31All this is, is people get really scared about giving away equity because they're like, I built this whole thing, right? Well, let's say your business is worth$50 million. You can't actually give someone 1 % of your business because they would have to pay taxes on that, right? It's like to them, to the IRS, it's a material gain, right? Maybe this is way too in the weeds for everybody. It's not. That's why you give PIU units, which are not taxed. They're only taxed on a change of control. Yeah. And it locks in that first 50 million. That's still yours. You own that completely, right? But everything from 50 million and up, I will participate in whatever that percentage is, right?

1:01:05So it's a way to bring more people in the equity pool without giving up what something you've already built? Because we both agree it's only worth$50 million today. Wouldn't you give up half if somebody could double your business? Because it's only worth $50 million. And what it also does too is it really incentivized people to take early bets when the company is valued lower because you get a bigger upside with the company. That's why people do seed investing or early investing because they're getting at a low strike price. Totally. Where even if you get in at five and you sell for 50, you still tend extra money.

1:01:35So I think people need to understand strike price. I love that deal that you did. What about any other channels? Anybody else you want to call out? The guys mentioned this Linus Tech Tips. I'm not a big tech YouTube guy, but is there any other big partnerships that you want to touch on that have had a big, big benefit in your company and why? Yeah. Well, look, there's probably like 10 names that come to mind. We worked with Theo Vaughn really, really, really early. And he definitely drove millions of dollars in value when we were just getting into the whole podcast space. So I think working with him opened up the doors to like more comedy podcasts and everything else.

1:02:08So that was a really good one. We worked with Anthony Fantano from The Needle Drop for years and ended up being like a meme in his own community. And you want to work with a channel long enough that you end up being a part of the community, right? And we also found that there's like unique alpha in like very funny sponsorships, right? It's like Squarespace sponsors everybody with the same exact ad read, right? I'll pick on them or I'll pick on HelloFresh or whatever. It was funny for the number one music critic on earth to be talking about why you should buy a wallet. And for him, it's a non-competitive deal, right?

1:02:42What I bring up all the time, Linus Tech Tips is a great example. We worked with Linus Tech Tips for seven years at this point. We'll be in 50 videos this year, right? Something like that. They can only work with so many tech sponsors, right? Because if they start working with too many GPUs or too many monitors or whatever, right? It ends up calling their credibility in the question. If Marques did a review of an iPhone, but then he took money from Apple, wouldn't that make him, people are like, oh, well, are you actually reviewing it? Or are you protecting your bag or whatever? So these are called non-endemic sponsorships.

1:03:16So endemic sponsorships is if you're a tech reviewer and you take money from Apple. That's pretty bad. Nobody really likes to do that. So people look for non-endemic sponsorships. So I would never sponsor a wallet account who talks about wallets all day long, but also I'll sponsor anybody else. And it's going to be premium priced as well too there as well, because that's how they make their money. Totally. So like, um, you know, we work with, uh, you know, Strad man, he's a, he's a, he's a big car YouTuber, right? Now, if I sold, if I was a car auction website and I tried to sponsor him, I would have to pay out the teeth or he wouldn't even like that deal.

1:03:46Right. But he's like fucking wallets. Who cares? Yeah, man, this is my car. I like, I drive Lambos. I have a fucking McLaren. And anyway, here's my Ridge wallet. Next, next video. Right. So those non-indemnic sponsorships were really crucial to that growth. It's so funny you say that because that's one of the reasons why we win so big in licensing is it's just, we've turned on examples like Monopoly. They were not making money in the art category. And then we have a seven figure a year business with them. We just turned the lights on and we were just net new money. So for people out there, if you want to go sponsor an athlete and you're in the apparel space, probably not a good space to be in because they're getting paid a shit ton of money from companies like Nike and Adidas.

1:04:21So being niche actually can help in getting really, really good priced deals. Yeah. So on that one point, we tried to do a wallet deal with Harley and they wanted a crazy amount of money because Harley sells a lot of wallets. They're like, hey, you're coming into our space. We price it really high, but we do a deal with the NFL and they're like, there's no other wallets. So they're like, yeah, sure. We'll give it to you for cheaper. The Harley deal was more expensive than the NFL deal, which is crazy. That is wild. I want to tie a bow on e-com and just a bunch of random questions to just fire off from you, I guess let's just first start with Twitter X.

1:04:56Underused platform or e-commerce storytelling? How do you use Twitter? Because obviously I see you posting on there a lot. What's your personal thesis on Twitter? Well, if you're a brand, it makes almost no sense to build there, right? The reason to build on Twitter is it's where the smartest people on earth are hanging out. But also you have to put up with a lot of bullshit. It's the least controlled platform. It's the only platform where they still have pornography and Nazis and everything else going on. But with that, you just have the largest breadth of the smartest people. So if you want a tweet to be seen by Mark Andreessen, it's like, look, he's not going on Instagram.

1:05:35So the highest level conversations are actually happening there. And if you really care about one particular subject, there is 50 to 100 people in there who are sharing cutting edge research. right? Like if you care about economics or like care about like China relations, like the experts are on there talking to each other, right? And you can go in there and actually figure it out. So think about it like, uh, like, you know, I think Reddit kind of has that same sort of thing where there's smart people having, you know, niche sub conversations, but like, this is real time and like in the flow with everything else reacting to news.

1:06:06So I think it's a great platform. I think it's underused by the average person, but it makes no sense for brands to be there. Right. I started building there because also it's the easiest thing. I I can just fucking, any stupid idea I have, I can send off. And then who knows what's going to happen. Guys, this episode is sponsored by ManyChat, the tool that is quietly powering all those comment to DM posts that you guys are seeing across Instagram. I am personally a power user of ManyChat. I absolutely love it. I use it for my personal brand, the podcast and Iconic. When we started using it, Iconic was doing 8.5 million impressions a month.

1:06:38We're now doing over 20 million impressions a month. It boosts engagement. It drives more reach. It allows you to collect emails and segment them with crazy precision. In short, you create a customized experience and you can collect data. They're Meta's official business partner, trusted by over a million accounts, and it's free for your first thousand contacts. The links below in the description start turning your comments into conversations. What's one thing you used to believe about e-commerce that you no longer do? Yeah. You know, I've probably been, I've been very dogmatic in my approach that like, you know, you have to do things X, Y, or Z.

1:07:16And the more businesses I learn about, the more people I see do things different ways. And I'm like, oh, there's a million different ways to win this game. If anyone ever tells you you have to do X, Y, or Z, there's about five different caveats in there that they're not telling you. Right. I'll bring up two good examples. Do you know, do you know dude wipes? Of course. Okay. In 2012, they did$100 ,000. By 2018, they might have did a million dollars that year. So it's like, we're talking about slow, slow growth and they'll do over$300 million this year, right? I would have called that business dead all along the way.

1:07:50I'd be like, you've been doing this for four years, you're doing a million dollars, you don't make any fucking money. I mean, even in 2019, I think they did$10 million that year, right? And I still would have been like, this is too... Ridge was bigger. I'm like, this is too small of a business. you've been doing this for too long, but like time and market builds brand, right? It's just about familiarity. It's just a short code for that. And then they end up just having a couple crusher years and now they're, but at the end of the decade, they'll do a billion dollars a year in sales, right? It's fucking awesome.

1:08:16So I would have in the past believed that business was dead on arrival, that they missed their growth window or opportunity, that you're not going like this and you're going like this for too long, you're going to die. But just sometimes something happens. The other one I'll talk about is Baseball Lifestyle. Do you know that brand? I have known Josh for five or six years. I know Josh and Bill, we're trying to get them on as well too. They're moving at warehouses right now to Denver. So it's been a bit busy, but I've known Josh since he was, I don't know, 19, 18. The guy was posting five times a day on Instagram as like a seventh grader.

1:08:48Crazy, crazy story. Yeah. And it's the same thing. It's like that business made no money up until 2020. When I say no money, like maybe a million dollars a year, maybe$2 million a year, then they have a couple crazy growth years. They'll do over$150 million this year. And to give everybody context, I mean, we're talking about, I don't know the exact numbers. I can't remember, but it's like 1-1-1-1-1-1-1, 5-25-60, and then like 150. It's the most insane retail. They're smashing it right now. Yeah. And so taking a step back, there's a lot of different ways to win. A lot of people try to think consumer is tech, right?

1:09:27And it's like, we're so different. Things take way longer. Trend is really important. Culture is really important. This is why raising money is bad. I'm going to raise money to grow. It's like, your business will grow when it's ready to grow. It's way more like water in a plant, right? It's like, eventually you'll get apples out of it. And you could be in the fucking desert for 10 years, the wasteland for 10 years, then all of a sudden get hella rich. So yeah, man, just like, they're all, every business is a different, beautiful creature and just they all take their own time. Last question for Ecom.

1:09:56What do you think has been the most critical factor in Ridge's Ecom success over the last, let's call it almost a decade now? Never raising money. Yeah, I know like you're probably looking for like a good tactic or something, but like if we would have raised money, we would have died. We tried to raise money. You know, we're bootstrapped and people say that proudly now being like, oh yeah, we bootstrapped this thing. Bro, I was in Comcast Ventures office in 2017 be like, will you please give me money? You just gave away money. And they, no one, no one believed in the vision at all. Because if we would have raised money, we would have done stupid stuff, right?

1:10:25The fact that we've had to be profitable every single time, the fact that I don't make money unless my business makes money has just made us to be way more conservative, make way tighter bets and cut things that are failing, right? If I'm not making money on something, I don't have a big VC back to make sure I can just keep bleeding this thing because eventually it'll work. We've just had to be so ruthless and pivoting. And I fail all the time. I'm one of the biggest failures you've ever known, dude. We try a bunch of different stuff, fails, whatever I throw it away. But we try so much stuff and we do it all very profitably, very constrained that we can find a winner.

1:10:58Next year, probably not next year, by 2027, half of my revenue will be a new product that came out this year. So we're talking about hundreds of millions of dollars in sales, that much, the same amount in enterprise value created, just because I took a bunch of random chances and we're going to keep doing that. So why and when should someone raise money, do you think? if you're in consumer, you should raise the smallest amount of money you possibly can the fewest number of times. Because just like we said, we're playing life on hard mode, that makes the business good, right? If you played life on easy mode with being loosey-goosey about margins, never making the tough conversation, never getting lean as a company, you'll just fail way faster.

1:11:41So it's like, look, we raised 200 grand off a Kickstarter, right? So like pre-orders basically. And that was the only money that's ever came in this business. No equity was ever sold in this business, right? So if you don't have a bankroll to get your thing started, we're probably going to skip ahead to like tips for entrepreneurs out there, right? Don't just start being an entrepreneur. Get a job someplace and learn what that job is. Learn what those people need and do that for a while. Before Ridge, I had an agency business. Before my own agency business, I worked at an agency. You have to learn something before we actually who's got there and just like, I'm going to fucking start a business.

1:12:15It's like, you have to, you really have to like be in the grind first. So my advice is be in the grind first, figure out what you're going to do, save up money, then do it. And if you have to raise money, the smallest amount of money possible. What about debt? Do you guys use like debt for POs? You can kind of look at debt as kind of separate than raising money. Do you guys use that or no? So we, every business should have a revolver of debt. And we start, there's debt a couple of different ways, right? So things you can do with debt, You can do a debt recap. So let's say you have a business, it's been running for a while, it's profitable, but you haven't really made any money.

1:12:49Just for everyone in the audience to understand, your business can do$5 million a year in profit and you can make 300 grand a year. And people on Twitter or dropshippers never tell you that, but it really takes until about eight figures in profit, $10 million a year in profit before you can actually start making a million dollars a year yourself, right? Actually taking chips off the table because it doesn't affect the cashflow. Yeah, yeah. Because if you're growing, more money has to go back in the business. And if it's not coming from business operations, it has to come from investors or has to come from debt.

1:13:16It has to come from somewhere. So a lot of times when a business is at that stage, they'll do a debt recap. A bank will come in, they'll give you money that you have to pay back, but you can take it off today, right now in your pocket. And the debt is secured by the business, not by you personally. So it's one way to de-risk the business, take some chips off the table. The other thing you can do with debt is just have a revolver open. Throughout the year, sometimes your business will have too much cash and you'll put it in treasuries or have not enough cash and you'll need to take in debt. If you place a big PO, you'll end up having to use debt to fuel normal business operations because that money just went to go pay for a PO or whatever else.

1:13:56The other way you can use that is factoring. So this is, you get a, someone tries to order from you, like a Target or whatever else, they give you this big PO and you need money today to fulfill that. You can go to a bank and then they'll give you a line of credit versus that PO. So there's a bunch of different ways to use that as a business. We have an open retainer. We never use money on it. It's empty right now. And for people context as well on that last part, with a retailer, you'll have like net terms, like a net 30, net 60, net 90 under the assumption that you're going to pay the person back once the retailer pays you back.

1:14:27Yeah. And the more blue chip the retailer, the cheaper that debt is, right? If Target gives you a PO, Target's going to pay you, but they're like, hey, give me my inventory today. I'll pay you in 90 days or 120 days or whatever. And if it's a big order, you don't have the money to go actually get that made. You use a factoring bank to get that done. And then you're negotiating better terms, lower interest rates with the factoring people per the strengths of the retailer. Yeah, totally. If you get one from Costco or Walmart, you're going to pay almost no interest. But if you get one from the container store, they might not want to give it to you because they're bankrupt or whatever.

1:15:00So I want to go deeper into kind of like exit strategy, TAM, what kind of long-term opportunity went to raise money. What's your framework for thinking about an exit strategy? Like how early should founders be planning for that? It depends on if they have any money or not. So like you should as quickly as possible get to one to$5 million in personal net worth, right? And that's just because then you can't be taken off the table. Like that's what it comes down to. I grew up like broke. Like I had no fucking money. Me and my CMO, Connor, we lived in a one-bedroom apartment in Koreatown. We took his hand-me-down shitty Honda Civic to agency meetings.

1:15:40If you said, Sean, gun to your head, give me$1 ,000, I could figure out how to get$1 ,000. You said$10 ,000, I'd be dead. I could not figure out how to get$10 ,000. And I was like 20, dude. I had no fucking money. So life gets way easier as soon as you secure$1 to$5 million in just personal net worth. So whatever it takes, I don't care if you're selling your business early. I don't care if you have a bad deal. If someone, as soon as you can get that, your life, like your stress level goes down completely. Life gets so much easier. So that's a life tip number one. And I'll actually, I'll never talk my friends out of deals if there's one to$5 million.

1:16:14Like if they have no money and then they can actually get something off the table. Cause we have a lot of friends in e-commerce, they'll get deals. And unless the deal is like fraudulent or they're trying to fuck them over, like in some way, I'm like, look, yes, your business is probably worth slightly more, but if you're broke right now and this guy's going to give you money, you should just take some money, right? And you could always build another business. You're still going to have a big chunk of your company, just whatever it takes to get to one to$5 million. So that's rule tip number one.

1:16:39Then we can start talking about exits, right? The best consumer brands are privately held for long periods of time, right? So the Europeans have this figured out way more than Americans, right? Europeans have awesome, great luxury brands that like be cared for and handed down generation to generation where they don't think about the quarterly performance. They really care about like, what are we building for like the legacy, right? These are holdcos with multiple brands underneath them. Yeah, totally. And like LVMH does the best job of this because brands can't be hot forever. We'll talk about Stanley real quick.

1:17:09Stanley did$75 million a year forever. Like we're talking 30 years, they were at$75 million a year. And then they had one year where they got to 300 million. Then they had one year they went to 750 million. The Stanley Tumblr blew up. Now they're back at$300 million, right? And that's because things can't stay hot forever. Why does Brad Pitt only do one movie a year? It's because if you saw Brad Pitt in every goddamn commercial, you'd be sick of seeing Brad Pitt. There's overexposure risk. So what LVMH does is they have a portfolio of brands and then they just slowly start rotating them through.

1:17:38So there's always one hot brand. And as soon as that brand starts to die, they put another hot brand in there. Now, they've been able to keep the namesake brand, Louis Vuitton, very hot for a very long time, but Gucci hasn't. Curing is another holdco and they're super screwed right now because they have Gucci, they have Balenciaga, they have YSL, they have all these different brands, but all of them are kind of screwed right now. They don't have the next hot thing, right? So anyway, the point I'm trying to make is European brands are really good at like understanding the legacy of consumer in a way that Western or American brands aren't.

1:18:10There's a couple of American brands who do it really, really well, right? So New Balance, I brought them up earlier, privately held, family owned, profitable business. I think they'll be great forever because they have no reason to hurt their brand right now, right? Another brand I really love is James Purse. I wear a ton of James Purse. And James Purse is privately held, owned the thing for 35 years at this point. And he's able to, if the business shrinks, who cares? If the business grows, who cares? He can open hotels, he can open stores. Every year he takes$40 million out of that business. That's a fucking fantastic business to own forever, right?

1:18:45So if you can own it forever and be profitable, you should just do that. Now, that's a privileged position. And then we can talk about the actual sales process, maybe, if we were to go into that. Yeah, I definitely do want to go into that because I think people sorely underestimate the amount of touch points and the length of time you need to be engaged with someone to actually get a deal across. People don't understand. Even in 19, we raised a million dollars and that took six months and they were a pre-existing partner with us. I think people just sorely underestimate that. So yeah, I'd love to just have you walk through a timeline of just understanding and knowing how long it takes to actually get a sale.

1:19:20Yeah. Well, there's a market for businesses under$5 million. And those sales happen pretty quick. And those are like the micro acquirers of the world, those smaller kind of aggregate websites? Yeah. Like you can go on Flippa or Quietlight or whatever. These are searcher funds, basically. So it's a guy who has some money and he gets an SBA loan and he's going to buy your business and he's going to run it better than you. That's the whole idea. For four to 12 times the EBITDA pending on... Bro, if you're getting 12... You're getting 12, I know. take it. Maybe a little subscription or something behind it.

1:19:48Something good. But the current market's like one to two, right? One to two? Yeah. The market has collapsed because Thrasio is not buying anything, right? So there was a big moment in time where Amazon aggregators were buying every business on earth, driving up the multiples. I don't want to talk about Thrasio because I knew from the start that wasn't going to work. I could go down a whole entire rabbit hole. Why? That makes no sense. All of those made no sense. That's a different episode. Yeah. So anyway, the current market is one, two, three X multiples. And where did you buy some businesses here?

1:20:14We own some FBA brands we've bought there. But if it's under$5 million, it's pretty fast to get a deal done. But once you have a real business, time kills all deals. Things just take a really long time to get them done because they have to know you. They have to trust you. They're going to look for fraud. They want to see accounting statements. And also they want to prolong the deal to make sure that you're not inflating the numbers. If I start talking to you on the first of the year, we've probably closed in October. That's typically how long this stuff takes. And it's because they want to see that you hit your projections.

1:20:42You said you're going to do this. Let's make sure you're going to do it. They don't want to buy something that you're propping up from being hot and then they buy it, it falls apart. We're saying they, who buys businesses? It's mostly private equity funds. Private equity is a whole asset class of capital where they raise money from institutional investors or retail investors, whoever, and their whole business model is to buy your company, run it better than you, and take that profit and eventually sell the brand for more money someplace else. They think they can get better returns doing that than in the stock market.

1:21:14So private equity buys almost all brands. The other class of buyer is strategic acquirer. That's typically a larger company or a publicly traded company who wants to buy you for some special magic reason. So good friend of the brand, Dr. Squatch, they got bought by Unilever. Fantastic deal. That was a strategic acquirer. But before that, they actually were owned by Summit Capital. So they were owned by a private equity group. And that's typically the transaction. It's very hard to go from privately held, I own everything brand straight to strategic acquirer. That almost never happens. You simply have to stop through a private equity group.

1:21:50A good conduit to you guys, just to understand and know on the PE side, there's something also called like a roll-up where maybe PE buys a company and for them to get the multiple that they want, they're going to have to buy multiple companies to jack up the revenue to get the multiple. So be on the lookout when there is roll-ups because if someone buys you guys and PE wants to roll it up, they might buy a wallet company doing, you know, $5 million in revenue, $10 million in revenue to just get more market share to blow it up. Yeah. And so they often call these platform plays, right? The other, there's a very, there's a very big one right now called Mammoth Brands.

1:22:24They have, you know, Harry's Razors and they just bought a diaper company because they're doing a roll-up to go public, right? So you'll see these like, and they're trying to become a strategic. So there's a bunch of different ways to get this done, but you should do whatever it takes to get your first$5 million. And then it's like, only take money that'll change your life. I think you should own your brand for as long as you possibly can, as long as you love doing it, as long as you love running it. And even if you don't love running it, hire a CEO, you know what I mean? Try to keep staying in control for as long as possible.

1:22:51But if you really reach a point where you're like, I can't do this anymore, only take deals that'll change your life. Because if your life's not going to change, why the fuck are you going to sell your thing, right? Multiples are compressed right now to good brands are being sold for eight to 10X multiples. And it's like, wouldn't you rather just own your company for 10 years, get all the money anyway, and then at the end still own your company, right? So multiples are not very frothy right now. Maybe they get frothier in the future. They were frothy for everybody. Last thing we've talked about it in 2021, 22 and people had crazy, crazy valuations, crazy, crazy multiples.

1:23:22Yeah, Ridge got offered$300 million when we were doing like$100 million a year. I should have taken that deal. It fell apart because the market fell apart. If the market was hotter for another six or eight months, I would have sold my brand because it made no sense for someone to buy that business at that price, right? But it was a publicly traded company. That company ended up getting punched in the face. What do you think are the key reasons why someone would buy a company outside of obviously the PE and the strategic? Is it margin profile? Is it your product mix? Is it having meat left on the bone in retail?

1:23:52Like what are the big reasons why you think someone buys a company? Yeah, so let's put strategic in a bucket because strategic can do whatever they want for whatever reason that they internally see, right? There's somebody internally who has an idea and then that's their prerogative. They can do whatever, right? I always think, like I say, strategic will buy you for magical reasons. It's very much, you have no idea what their strategy is. I'm close with like the Hershey's head of M &A and he's like, yeah, you know, we wanted to get out of chocolate so we thought popcorn was good. And they bought three popcorn brands for a billion dollars, right?

1:24:22And then they're like, yeah, now we think pretzels is good. So they'll just do whatever the fuck they want. But then what private equity is really looking for is a sustainable business, right? You'll hear private equity get scared if revenue is growing too fast because they're like, I don't know what's going on here. What they're looking for is they have a playbook, right? Everyone in private equity is old. They all went to business school. They have gray hair and they've never actually ran a business before. They're going to buy your business and then they're going to hire someone to run your business.

1:24:48And they want it to match a playbook. So they want really strong EBITDA. They want really strong cashflow because they're typically going to buy you with debt. And maybe we'll talk about that after this. So they want really strong business, really strong cashflow. And on the EBITDA side, what do you think? What's strong to you on the consumer side? 15 % plus? Yeah. Yeah. Look, if you're getting EBITDA at 15, that's great. 15 to 20. I mean, if you're above 20, they start being like, what's going on here, right? You're probably not spending the correct and you won't get credit for it. The big thing when you sell your brand is you're like, make sure you get credit for it.

1:25:20If you're like, yeah, we have no team or EBITDA is 40%, they're like, well, I can't run your business with no team. I'm going to have to hire a team. So your EBITDA is really 30%. And there's add back and subtractions that they'll do to tell you what your EBITDA is, right? It's all a negotiation. It's all a dance. But 20 % EBITDA growing 20%, they would love to see that. They're like, okay, this, and if you're growing 20 % every year for five years or 10 years, you're like, oh, it's sustainable. There's some sort of moat tied to it. Maybe it's IP, maybe it's relationship with retailers, maybe there's some sort of special thing happening in your business, right?

1:25:50So they want some sort of moat. And then they would love if there's meat on the bone and they won't tell you about it. Maybe you have to tell them what the meat on the bone is, but like internally they're like, oh, we can do X, Y, or Z and make this business better, they'll have to see the meat on the bone. You don't want to be like, hey, this business is doing 20 % EBITDA. It's growing 20 % and it's perfectly optimized. There's nothing you can do to grow this business. It's the best. I always give that advice to everybody. Meat on the bone, for people listening, I would say the two core meat on the bones, I would say is product and distribution.

1:26:18Like, hey, we haven't gone to retail yet. Hey, we haven't gone on Amazon yet. Or the product side, hey, we're a clothing company, a men's clothing company. We haven't done women's yet. To leave them room to go make that multiple that you're talking about. Yeah. And to close the deal, be like, but we're going to do that next. And here's all the designs, right? So that they can see the vision coming together, right? So they want to buy it before you do that thing. It's the X factor on that. If you're like, hey, look, we haven't been in retail yet, but we have this offer from Target and we're thinking about taking it for Q1 next year.

1:26:46That'll rush them to get to the deal to that. Looking, having been in this kind of D2C mix for, I don't know, now, including at your agency probably like a decade. What is the biggest thing you've learned from all of these exits? Most people don't understand deal terms. They get fucked on deal terms. You should read about the DraftKings deal. Okay? And you need to learn about what participation means. And you have to learn about the second bite of the apple probably never happens. Right? So for a lot of different reasons, And I did a Twitter thread on this and it's not very intuitive, but everyone knows that when private equity buys brands, brands get worse.

1:27:31Or when they buy anything, it gets worse, right? I think that is the case a thousand percent of the time. And I know hindsight's 20-20, but some of these people that buy, especially these D2C brands and like the 2020, 2021, I just don't know in what world they thought that they were going to take this company for a hundred to even 500, but continue, I'm sorry. Right, so, and look, there's a lot of really good private equity groups and they do really, really good work. There's some that I'm close with and I think they're awesome. And there's a lot of brands who run over private equity and they're still crushing it.

1:27:59They're doing a great job. But like whenever you hear about a brand blowing up, it's probably because private equity put debt on it, right? To explain that, even if a brand goes bankrupt, it can still be a good business, a good transaction for private equity, right? Because all private equity cares about is return on invested capital, right? How much money do they put in and what is my return over whatever time horizon? They're just looking to make the fund 20 % on that capital every year. And if they can do that, it doesn't fucking matter, right? So let's talk about how private equity buys things with debt.

1:28:32So they're called leverage buyouts. I have a company that's worth$100 million. You have a private equity group. You agree to buy my thing for$100 million, right? We agree on the price. You go to a bank and let's say my business has$20 million in EBITDA. So it's a 5X multiple. I know it's a lot of numbers for everybody. It's annoying, but$20 million in EBITDA, 5X multiple, my business is worth$100 million. You're giving me a hundred million dollars. I get a hundred million dollars today. Okay. Well, that private equity group doesn't have a hundred million dollars. What they have is, we'll be generous with this.

1:29:00We'll say they have$50 million. They're going to give me their$50 million. Then they're going to have a bank give them$50 million for the asset of rich. It's secured by my company rich. Then they give me that$50 million. I now own 0 % of rich and it only costs private equity group$50 million. Yeah. They have to pay this loan down eventually, right? But they were able to buy a$100 million asset for$50 million. Sounds like a good deal. That's a leverage buyout, right? Now, we saw in peak ZERP people doing those buyout deals with six or seven turns of EBITDA, right? What that means is if you had$10 million in EBITDA, they would get$70 million in debt, right?

1:29:39That's very, very bad. Like two to three is a conservative number. They say lever, you're levered up too high. Yeah, yeah. And so with too much debt. So anyway, how does this end up being good for the private equity group? So they have a$100 million asset. They spent$50 million on it. They want to turn that$50 million into$100 million eventually. They just have to get this debt out of the way. So let's say two years go by, the business grows a little bit and they're able to refinance that debt. And then they're able to take their$50 million off the table. Now they own Ridge. They have all this debt on it, but they had$50 million put in and now they're at a net zero return, but they still own this asset.

1:30:15The other two years go by, then they do another recap on that debt. They find another bank to give them more money. Then let's say they're able to pull out another $50 million. Now they've doubled their money. So in four or five years, they took$50 million and they've taken out$100 million in debt. They don't give a fuck if Rich was bankrupt anymore because their core objective is not to run good brands. It's not to grow the brands. It's just to get return on invested capital. It ends up being a diversion. As a brand owner and operator, your goal is to build the best possible brand that serves your customers and makes money for you and everybody.

1:30:43And it's like a beautiful, happy ending. Private equity can do the same thing, but their actual ultimate goal is just return on invested capital. That's the only thing they actually care about. So that's why you can have a really good business, go bankrupt, and still be a good outcome for private equity. And that happens all the time. So anyway, that's leverage buyouts. Maybe this gets edited out because it's too fucking boring. No, no, no. I love this. There's not many people on here that can talk about that. I do want to talk about product though, product and supply chain. Because like I said earlier, you guys were definitely known as a quote unquote wallet company and you've really kind of reformed into a whole on accessories company.

1:31:15I guess let's just dive into what is that internal framework for evaluating new categories? Is it TAM? Is it margin? Is it cross-sell? What does that look like? Yeah, so it's three steps. I mean, they've changed a lot over time. The first thing is, is it a CAC or an LTV product? Can I acquire customers on this or is this to sell to our existing customers? That's the first tree, right? How do you figure, what is your thought process and how that works? Yeah, so a CAC product has certain characters that work with performance marketing so it has to be over$50 in price point right it has to have a big enough TAM like it can't be a compliment to something we already do right, so you know, we sell a wallet if I make an attachment for a wallet it's an obvious LTV item, right, where it has to not plug into the ecosystem perfectly already So CAC is net new and then LTV is just your current base Yeah, totally, so like So rings, I can go out there and acquire new customers for rings who've never heard of the wallet business at all, right?

1:32:17Luggage, I can go out there and acquire new customers who've never heard about this before, right? We sell a key case, which is like a thing that goes with your wallet. It's like you put your keys in, it kind of looks like the wallet. I cannot acquire any key case customers. Like I can't run ads for it, right? So that can only be sold to existing people. So that's the first split is CAC versus LTV. The next is, is there some sort of LTV play here, right? Is it going to overall, you know, if it's a CAC product, we want to be able to add 10, 20, 30, 40,$50 million in net revenue off of this. And if we are doing that, how does it fuel LTV for the rest of the business, right?

1:32:52So like it passed the first thing, which is a CAC. So that gets a check mark, then it's okay. But what is the LTV ramifications? So what we found out is that luggage customers are very likely to buy wallets from us, right? So like it ends up feeding into the rest of the LTV thing. And is that something based off intuition or was that like like a focus group? Because common intuition, I would not think that. Maybe it's like the aluminum and the aluminum and like my wallet looks like the luggage. Like, how did you guys come to that? We saw that, you know, we're known for carrying stuff and this kind of carry stuff.

1:33:22And a lot of this is like, it has, we've learned over time, right? It's like when we start, we launched a bunch of different shit and these are the things that have worked and now we've learned what's worked from those, right? And then the last one is there's some sort of distribution play, right? So it'll either work on Amazon or it'll work in wholesale or something like that, right? So it's more than just D2C, right? So we want a CAC product that influences LTV that can also have some sort of distribution X factor tied to it. So like phone cases are a good example. So phone cases, you're like, okay, is it really a CAC product?

1:33:53It's, you know, they're between 40 and 75 bucks. And it's, you know, we think there's companies out there acquiring customers for phone cases and we can compete in that ad auction and win, right? So we ended up launching it. Then what we see is, holy shit, the LTV is awesome, right? People who are buying our wallet love to buy the phone case. People who buy the phone case love to buy the wallet. There's a lot of cross-sell right there, kind of de-risk the whole thing. And then with the phone cases, they work great on Amazon. They work great in Best Buy. So like we would do it just for those reasons alone.

1:34:17If Best Buy asks for something, we'll make it for them, right? And that like little checklist has like really pushed us into getting all these new product categories. And yeah, it's totally changed the business. Guys, Sean is out here just giving straight codes. That's an amazing code, an amazing thought process. Yeah, conventional wisdom. Like I always think of phone cases in the licensing world. we call it like a tchotchke business and they kind of come and go. Yeah. I would look at it as LTV, like someone that has, you know, a red aluminum wallet. They're going to want that to match with their phone case.

1:34:46So I can see how that makes sense. Throughout the whole entire years, all these years, is there an example of a bad launch where you failed? And if so, why? Yeah, we've done a bunch of bad ones. Like I often say that like product launches are lottery tickets or it's like, you're like, if you're in the music business, you're making a hit single, right? So like an album comes out, there's 12 songs on it. One of them is the single. Like, how come they're not all signals? People at the company always say this all the time. It's like, we'll make a bunch of products. Some of them work, some of them don't.

1:35:12And they're like, well, why don't we try to make the other ones work, right? So some bad launches where we did watches, we did mini knives, we did apparel at one point, right? Mini knives. Yeah, yeah. Like a mini, like a little Victorinox competitor. It just didn't fucking work, right? And people were like, well, we should go back. We should try different marketing, try to make it work. And it's like, no, the song isn't a hit. It's like, it's fine. Not every song is a hit. we found winners. Let's take those all the way. And it's like lottery tickets. You think you have lucky numbers. You're like, oh, I'm going to pick seven, whatever, 11, all these different numbers.

1:35:47It's totally fucking random what ends up working. So you can have a system with your lucky numbers. You can think it's going to work. You have no idea. We did the watch launch first and it was a massive flop. It flopped so hard, we thought the website was broken. We had a thing in Zapier hooked up that like every time a watch sold, like it would ping and it would ping in Slack and we didn't get any pings. We're like, oh, it must be broken. Like everyone should log in and make sure they can actually buy the watch. Nobody bought them. Like it was a disaster, right? Those are the worst days when you think the website isn't working.

1:36:17Yeah. It's like, no, it's a slow time right now. Yeah. And that was the first product launch we did. I found a wallet. We were like, oh my, like we're dead. We're dead on the water. Two weeks later, we launched rings. Exact opposite. it. Immediately people start buying it. And internally, no one thought rings were going to work. Everyone thought watches were going to work. But I'm like, hey, we're trying a bunch of stuff. The engine is like, we're trying stuff, right? It's okay to fail. We're just going to try a bunch of stuff. Luckily, rings totally worked, saved the whole business, right? Because if we were just wallets, we would have fired everybody and just been a tiny little wallet company.

1:36:47So rings ended up working. We ended up scaling that. But then we try a bunch of different stuff. We do an apparel launch. We try selling belts, trial selling all this stuff. A lot of it didn't work, but then we find luggage and luggage did work, right? And then earlier this year, we tried all these different tech products and then we tried a bunch of different knives or whatever. And the tech products just ended up crushing. So you have to go through your own discovery period, what works with your brand. But then what we figured out is it has to have a high enough price point to work on DTC because that's what we're experts in, right?

1:37:13Then it has to be relevant enough to our audience that there is some cross-sell potential. That's that LTV question. And then there has to be the X factor. Can this work on Amazon as a standalone thing or can it work in wholesale? sale. Will Target give me a PO for this? And if it will, fuck it, we're doing it. For people out there that want, you know, Sean has mentioned, clearly the watch was just a dud and or these other products that smashed. Like for us, we have a lot of SKUs. Like we have like kind of this mini test where we'll hit a new piece of art to our email list and we'll say, hey, if it gets over X sales, this thing has legs.

1:37:45B, how does it perform on organic? Because usually organic directly ties into how to perform on paid. And then C, we'll spend X amount of money on paid. And if it doesn't perform there, if it doesn't win on email, doesn't win on organic and doesn't win on paid, then we know it's a dutter. So that's a good kind of a mental model for people to do if you wanted like a smaller kind of test. Yeah. And try to never bet the farm. That's what we end up doing because I really think it is, it is you're, you're playing roulette. You have no idea what's going to come up and you have to keep a bankroll because you have to be able to hit winners.

1:38:15Right? So we limit like the cost of a new product launch to under$500 ,000. I don't care what the minimum quantities are. I don't care. It's just, we are only doing something if we can do it for less than$500 ,000. And I talk to some brands, they're like, we're going all in on X. We're going to spend$5 million on it. Big fucking photo shoot, roll it out into the world because they think that raises the chance of success. You actually have no idea what's going to work. Like none of us have any idea what's going to be a hit product. And it's just giving yourself the room to fail and try it again.

1:38:43Just try a bunch of different stuff. How do you know if a product category is not too saturated versus still having white space. I know that you have kind of your original rubric, but at what point are you just like, there's too many players in the space right now? Well, it ends up being if it's a trend or not, right? So like, I think actually there's, you could enter any category you feel good about. Like, I don't think there's any category that's too overexposed. We sell wallets, dude. Like you can buy wallets at Walmart for$10. You can buy wallets at LVMH for$400. There's price points all throughout there.

1:39:16It's an old, stupid, stuffy category. Same thing with men's wedding bands, dude. You can buy them everywhere. And we're able to build an awesome business out of it. So I don't believe in things being too crowded. It's like somebody out there is doing a chitty and you can do it better than them. But what you want to avoid is a trend that can just go away overnight, right? I would avoid collagen right now because health trends have this natural thing where collagen was really hot for like five to six years and then it kind of starts falling apart. And then you see creatines on the rise. We probably have two to four more years of creatine peaking and then it'll go down.

1:39:48Protein has been on a ripper. Yeah, for a long time, but it probably goes down. So you just want to avoid those type of trends. Do you want to know what's next? Fiber. Fiber is the new protein. I may or may not spoke to a guy yesterday that's starting a fiber company with massive distro. You want to get in on this one too. I'm not going to say his name. You want in on this one. He's good. Yeah, we're - He's good. This guy gets it. We're looking at the space too, man. It makes so much sense. Yeah, I think what's really, really scary is, again, if it's evergreen and kind of has been tried and true for the test of time, then you're fine.

1:40:20But like, if you make your brand identity embedded in that single product, like this creatine thing is this create, I get it, they're winning right now, but that's dangerous. Totally. Because they don't have the ability to be malleable and iterate off for it. Like having some sort of kind of core identity about like, I'm a health company and I can go into this, this, and this. Because that fad game, I think a lot of people are playing with fire there. I agree completely. Will from IQ Bar. Do you know IQ Bar? Yes, I'm talking to him on Twitter right now. I want him on. Yeah, he's fantastic. He's a gangster.

1:40:49Yeah, he's fantastic. I'm stealing this from him. He's going to talk about it in the episodes. You got to bring this out. It's called trend surface area, right? So he chose IQ Bar specifically because he can be, if like low fat's in, he's low fat. If gluten-free's in, he gluten-free. If protein's in, he's got protein. Edo, he's in all of them. Yeah, so whatever the trend is, he creates packaging and messaging for that trend, right? You compare that to kettle and fire. I always talk about being bone broth. You don't wanna be bone broth. Bone broth had this massive spike. They got huge revenue, but then people don't want it anymore and it falls off like a cliff because people like trends, right?

1:41:23And that's what we're talking about is like, create cannot be anything else besides a create company, right? A creatine company. So it's good for them when it's working, but there is the risk that like you're tied to the trend too much. They should probably sell that company on the way up. That's, I don't know. When I saw with Helium 10, that backend, that was absolutely crazy to me that like, you have to see some of these PDP pages of people making 10K plus on Amazon with creatine. Like literally one or two pictures, it looks like a fake Amazon PDP page and has over$10 ,000. You can't see, I don't know how much they've spent on ads against it with this tool.

1:41:55Really, really interesting tool. But yeah, I couldn't believe what I saw. Yeah, and - I got angry about what I was doing. I was like, why am I doing this? Yeah, yeah, people are testing that almost none of them have creatine. And it's partially because creatine is actually very hard to put into gummies. It's like, it's not the natural state of it. Anyway, that's like a different podcast for a different day. This episode is sponsored by Lindi, the AI platform that builds and runs powerful agents for both work and life. We set up agents to answer support emails and resolve common issues without anybody touching them.

1:42:28Where it really shines is handling all those repetitive tasks. You can set guardrails too so it never oversteps, like escalate any refund over$500 or auto-loop in this human for this type of request. And it does a million other things like automating sales follow-ups, managing workflows, even building internal apps without code. Get$20 in free credits at go.lindy.ai slash openresidency or click the link in the description. Now back to the full episode. I want to dive deeper into product. What do you think are the biggest kind of profit margin killers? What are the things that people overlook when they're looking at profit margin?

1:43:06It always comes down to shipping. So the gross margin number we were talking about earlier, right? You said you want to gross margins at least at 75%. And then the big question I ask people is, are you including shipping to customers, right? because a lot of people don't include shipping to customers in that. And it's like, okay, then your business is fucked up because every publicly traded company, that gross margin number you see is signed, sealed, delivered, cost to customers door, right? So it includes Amazon fees. It includes payment processing. It includes everything. This includes 3PL, pick, pack, ship.

1:43:36They're charging you 15 cents to do a branded insert. All that little small minutiae. It's whatever it costs to get the sale, right? So like, you know, Hermes will even go so far is to include the manufacturing of the good because they do all their own manufacturing, they have all their machines, right? So you have to really dive in company by company to see what people are including in their gross margin. Yeti has a gross margin of 51 % because they have wholesale distribution, they have all these shipping costs or whatever. And a lot of people just don't factor that in, right? So they'll be like, I have 80 % margin.

1:44:05So they're talking about product margin, not gross margin, right? They're like, no, my cogs are 20 bucks, I sell it for 100 bucks. I'm like, that's a different thing, right? That's a completely irrelevant thing. that's literally irrelevant to the business. Yeah. What does it cost to get it to the person's door, right? And anyway, that's like the biggest mistake I see people making all the fucking time. Yeah, I think also another thing too, we've had great success with this is there's also margin to be made on shipping. Understanding and knowing you can get your product to someone's door for X in six days and charge them rush shipping for four or five, stuff like that.

1:44:36I think that there's a huge game where people overlook analyzing how they can make net new dollars on actually the shipping rates. Yeah, look, and for 10 years, like the rule of thumb is just do free shipping. I think that actually changed during COVID where you can actually start charging people for shipping. I bring up James Purse. Every fucking James Purse order costs$7 to ship to your door. I'm like, bro, I'm spending four grand. You can't give me free shipping and they just don't do it. Yeah, we use free shipping. That's an offer for us. Yeah, totally. There you go. With a big AOV. When you're launching all these new products, are you looking at them as basically like a new business unit or are they blended across the whole entire kind of company ecosystem?

1:45:13No, it's a good question. We talk about them as business units. So we have separate ad accounts, separate media buyers, separate, like everything we do for everything else, we duplicate over for these new business units. Now, of course, there's blend over. Email is going to talk about the same shit to everybody, right? Offers are going to be for everybody. So there's some organic revenue spillover. But we're trying to acquire ring customers profitably. We're trying to acquire phone case customers profitably, right? And we look at that totally separate from everything else. So mostly on the marketing side.

1:45:41Yeah.

1:45:44I think product development organizations are unique to every company, but we have PMs, the product managers, who manage specific lines of business. They don't talk about wallets or whatever else. They're just doing travel. Makes sense. Tying a bow on the physical product, are you more a speed guy or a perfection guy? Oh, speed all the way, dude. There's other people on the team who are perfection guys, but I am the speed guy. Just get it out, get data, come back and optimize it? Totally. I like that. I could see that. Last block, before we go into the last block, I want to talk about international expansion.

1:46:19I think we've had some people that have talked about it, but very, very lightly. I want to go as deep as we can into there. I guess let's just first start with what has been the biggest kind of learning lesson from scaling a ridge internationally? So Section 321 has gone away, okay? And for everyone listening, Section 321 was the ability to ship cross-border into America from other countries, right? Now, Canada had the same thing. So you could have a US warehouse and ship to Canada. You could have a Canadian warehouse and ship to the US, all duty and tariff-free pretty seamlessly. And it built Timu and Sheehan.

1:46:51Their whole business models were built on this one thing, right? For various reasons, it's gone. The Trump administration banned it, so it's gone. With that being said, if you went to international now, that means you have to have localized warehouses serving those markets. So what does that look like? If you're an apparel brand, you're kind of fucked. It's really hard to have apparel if you're doing seasonal drops available in all these different markets or you're charging a ton for international shipping and duties and tariffs and everything else, right? So I would, you should come up with a business that has limited SKUs.

1:47:22Going back to Grooms, why do I think they're the fucking darling of all darlings? They're going to totally crush it. Chad's the amazing operator for a bunch of different reasons, but Grooms can take their package, their container, and they can move it over to the UK. They can import it there, have a localized warehouse and ship it out. And then all they have to do is just keep that one Q in stock, like clockwork, right? As many elements as possible of the production process moved over. So they probably, I'm sure it's easy to send over and like big jugs the product, but then are you saying like the actual packaging and such is done locally or it's just, it's cheap to get it over there and then just the 3PO?

1:47:54What I'm saying, so actually it's a setback. Here's what Rich does. Rich has localized warehouses. So we have a US warehouse, a Canadian warehouse, a UK warehouse, an Australian warehouse, an EU warehouse, a Hong Kong warehouse. So we have And inside of those markets, we might have more than one warehouse. Let's talk about there's seven different warehouses. So if you're in the UK and you place an order on ridge.co.uk, that order will only ship from the UK. So we have a separate Shopify. We have a separate everything built out around UK customers. Why do we do that? We did it in 2020 or 2019 because we wanted the fastest, most localized experience possible.

1:48:33So you can check out in pounds. You can only see inventory that's going to show up to your next door the next day. And we did that for two reasons. Payment processing rates are way cheaper. So yeah, it's a pain in the ass having seven different Shopify stores, but payment processing rates in the UK are 0.5 versus 2.5 in the US or whatever. Wow. I didn't know that. Yeah. So really, really cheap payment processing rates. And then the cost to ship inside the UK is really cheap, right? So you can get next day shipping in the UK anywhere for like four bucks, okay? Okay. You know, to ship the cheapest you could possibly ship in America is five bucks.

1:49:05Right. And that's like the smallest package going wherever. So really, really cheap shipping rates, really, really low payment processing rates. So when you do the math, my UK store runs totally independently, right? Different website, different Shopify, different everything. And I can acquire those customers and I can, they can have different price points. They can have all this different type of localization can happen. Right. So we're only able to do that because of the small nature of the products. So if you go in the UK, you can't buy luggage from Ridge, right? It's just too, it's too hard to get luggage over there, right?

1:49:33But you can buy a ring business and our wallet business and our phone case business. So anyway, that's how we end up doing it. And the lesson from that is if you want to do it the way Ridge does it, a couple of things to consider. Since that has happened, Shopify has launched Shopify Markets Pro. I think they changed the name of it, but like whatever their premium international thing is, the payment processing around that is at least 5%. It could be 7%. So you could have a localized Shopify store at 0.5 % or you do Payments Pro, have one Shopify store do everywhere at 7%. So at a certain, do the math, at a certain, yeah,$100 ,000 in revenue or whatever, it's cheaper to have the localized store, right?

1:50:08So think about your business, think about that. Then think about if you have a business that can support an entire market with limited inventory, right? So if you guys are doing art, probably not. You probably just need too many prints, right? We do licensing deals too. So we can license out the art and they have local production and they just run the business and we just get. Oh, so yeah, that's like a distributor model is a good way to do it. But let's say, you know, going back to Grooms, Grooms has one flavor. So it doesn't matter where they fucking actually even make it. Let's say they make it in America, they export it to the UK.

1:50:37Well, they don't do any seasonal drops. So like you don't have to manage fucking shorts inventory and jacket inventory, whatever else. Every month, it's the same thing. So it's very, very easy to run, right? And there's no marketing narrative. It's just the same product over and over and over. It's just maybe sales, Black Friday, Cyber Monday, holidays. Dude, and the whole world's globalized at this point. Dude, China does Black Friday, Cyber Monday. Do you think they have Thanksgiving? It's like, no, dude. The whole world's globalized, man. Anyway, so the first market I would start with, it used to be Canada because Section 321, your US warehouse could fulfill Canada or vice versa.

1:51:14That's gone now. So I think the first market's the UK. They speak English. They have enough money to buy stuff. And the shipping is super, super cheap, okay? Then the next market I'd go to is Canada. Then I'd look at doing the EU as a whole. The EU is hard because our website's only in English. So we can get all of Belgium. We get all the Netherlands. We get all the Nordics. We can get Switzerland. But then as soon as you get to like France, Germany, Spain, Italy, you have a 60 % English penetration for dot-com shopping. So you have to start doing more localization, right? Then you have to start doing ads and localization, right?

1:51:47So like, am I going to run German language wallet ads? It's like, maybe AI makes this a lot easier, but like the order of operations is UK, then Canada, then you go to the EU. Australia, maybe you end up doing, maybe you just serve that from Hong Kong, just air shipping, but anyway. So operational simplicity over demand in GA. So you're just even saying like, you have crazy demand in India. You just say, leave that alone because it's gonna be too much of a pain in the ass. Dude, I have never met a brand who successfully went to a market like India. Like I know people who've tried, but like it's really, really hard, right?

1:52:21until you get to the billions of dollars in scale, like it's just, you're not gonna make any goddamn money. And that's the other thing is people love these big international businesses. Why am I so focused on localization? To even go take a step back further, why don't I just ship all these orders from America, right? And it's because you are probably losing so much goddamn money on shipping and you're not even paying attention to it. Yeah, you have orders coming in from the UK. Did you just air a pair of shoes to the UK? Do you have any fucking idea how expensive that is? Like it's$40, right?

1:52:50I've watched brands lose. They're like, we're doing$5 million in international markets, spending$3 million on shipping. You're not going to make any money, dude. So it's why I think it's smarter for brands to actually shut off shipping to international markets until they really understand the costs. That's great advice. When do you think is the right time to start shipping outside the US? What is that inflection point for a brand? Is it total revenue? Is it traffic? Under the notion that sequentially they should go in the countries that you mentioned. Yeah, it comes down to just total revenue, right?

1:53:20And you'll see it in GA because you have orders coming in and then you have to determine if they're profitable or not. But probably at... It's also like, when can your business support it, right? Like, okay, let's say you have one SKU and it's working and you know it's going to work over there. I would probably have$15 million set up the UK warehouse, right? And then maybe$20 million set up the Canadian warehouse, right? Then maybe$50 million set up the EU warehouse. Just because the UK will do as much money as Canada. Oh, sorry, as California. That's the way to look at it. Canada will do as much money as California.

1:53:53So just go in GA. It just comes down to GDP, right? Have you heard the whole stat that like California is the fourth largest GDP? Yeah. Yeah, it's bigger than those countries. So there's more people in California than Canada. It's not like there's a big honeypot of revenue in any one of these markets. So like start thinking, what would you do to have another California? And is it worth all of the complexity? You can just look in GA, what's your California revenue? And then that determines going over there. I like the blend of GA and a little chat GBT for GDP. I like that nice little formula you have there.

1:54:23As far as fulfillment centers for people out there, how would they even just go about finding those fulfillment centers and those partners? How did you go about doing that? Did you have inbound and people wanting to partner with you? Did you just go on the internet and find random people? What was that process to actually lock in those partnerships? Well, your domestic 3PL probably has what they call a 4PL relationship, people abroad. Let's talk about the big 3PLs in America. There's Shipmunk, there's ShipBob, there's Seco, there's Flexport, just launched one. They took over Shopify's old one.

1:54:52So like, those are four big ones. There's probably another four really, really big ones, right? And if you're with any of the big ones, they'll have what they call a fourth party logistic relationship. So they will manage a relationship with a local warehouse in every market you want to go into. So if you want to go to Canada, they'll be like, okay, we have a 4PL there. They'll even present it like it's their own. It's not their own. I'm telling you right now, Like it's not their own. It's, it's some other local warehouse provider and they'll manage that relationship for you. So those tend to be pretty shitty.

1:55:18We ended up actually going international through a company called Brand Access that just got bought by Passport. So like they're experts. If you want to talk to Passport, they'll help you with whatever. Great advice. I've never heard of 4PL. Last block we're going to get into is just Quickstrike. I'm just going to fire off a ton of questions and then we'll end with three or four questions I ask everybody. I guess first is, is DTC dead? Well. consumer brands are not dead and selling consumer brands directly to consumers is not dead. But the whole D2C is, here's what I'll say. D2C 1.0 was pets.com, okay?

1:55:54D2C 2.0 was allbirds.com. D2C 3.0 is brands who just fucking get it. So they're like Gen Z killers on TikTok. They are people who do our supplement brands. They have high subscription. They have low skew count. They have really small teams and they're just ninjas out there executing and making money. So DTC 2.0 is totally dead, right? Like DTC 3.0 is actively thriving and it's just, it's just like everything else, it just changes. I just bumped into Dollar Shave Club. I'm trying to get him on. That's the OG from 2.0. Totally. Yeah. And an amazing exit. And you know, here's the thing. The founder of Dollar Shave Club made a ton of fucking money and totally killed it.

1:56:37Then it was owned by Unilever for a while. Then they sold it to a PE group. It still exists, but it's a shell of its former self or whatever. And they're trying to figure out how to make this thing keep going. But it's like, that is the path of most brands. These things just get kind of plunked around. Up and down and up and down. That's why you guys got to sell on the way up. The first year you have that's plateaued on the way down, you just shot yourself in the leg. As soon as you can get life-changing money, you deserve it to change your life. Imagine being like you having it almost in your hand and then you fucking it up and fumbling it.

1:57:10If you can get life-changing money, don't be greedy. If you can get$5 million and you can take your kids to school every single day and then you like, no, but I want 15 because I want a bigger house and you fuck that up. It's like, dude, just take the fucking money. A couple more, four types of businesses, service, product, SaaS, and content. You're starting over today. Which do you pick and why? Content. Because content is, like you say the word leverage, but it's like, yeah, it's like it's the only thing that like it's a flywheel. It builds on itself, right? Like you shouldn't launch a consumer brand unless people know who you are, right?

1:57:44You have some sort of credibility, some sort of audience to sell into. Same thing with services, same thing with everything else. If you're young, one, go get a job, learn something, become an expert at it, then talk to people about it. People want to hear about stuff, right? And then you make a service based on that or you make a product based on that, you make a SaaS based on that. But like content is the first and best business. Do you think the window to create content and build distribution and trust is shrinking or do you think that's going to be forever? Obviously with AI. I think it is shrinking, but slowly.

1:58:12But here's what I'll say. You couldn't build Mr. Beast today, right? This multi-hundred million subscriber thing, right? You couldn't build that today, but you could build an awesome podcast that gets 5 ,000 listeners and make a living off of that. And that's what you should be shooting to do. The future is like a bunch of more micro creators all being experts in their own thing. And you make a ton of money doing that, dude. Imagine a podcast about high-frequency trading, right? Would you listen to that? Probably not. Super fucking boring. But like the sponsor you'd get would give you like$5 million because nobody else is making content about that.

1:58:46Yeah, understanding and knowing the niche that you're serving and then who are the people that are going to pay for those ears and eyes is huge. And you've understood that with your podcast as I do with mine, is just knowing who you're talking to And are you going down market to the masses, low ticket? Or are you going to B2B SaaS that have unlimited cash? CAC to LTV is through the roof. And then, yeah, I just think on the content side, people just give up. And I've been up and down and up and down and up and down where I was on 18 months in a row filming every day. And then I stopped and I had a podcast and I stopped.

1:59:18And I completely agree for me. I think that content and media, not necessarily as the business, but I think content and media as the top of the pyramid flywheel is what gives you the leverage to drive any and all the things below, which we spoke about. That's how I see it. 100 % if I think about it correctly. And then on the burnout, it's super true, but it's like going to the gym. Finding something that you can do consistently beats everything else. It's like, if you're like, I'm going to the gym hard and like you do it for three days, you get sore, then you skip three weeks. It's like, you're not helping anybody, right?

1:59:48It's like, that's why I think Twitter, more people should post on Twitter because it's so easy. Gets you into creating content in a very, very low, easy form. This is the lowest of all low. You could do anything. If you want to be consistently consistent, go on Twitter and you can just spit out random six words. I should probably do that more, but that's a different conversation. But also, it lets you test ideas, right? Before you do a podcast, before you do whatever, hey, here's the concept, put it out there in the world. And it took you no effort to actually start getting feedback. That's why I think it's a good platform.

2:00:17Oh man, I'm just not on there. I got to do it. What do you think the keys are to winning on TikTok shop today? Yeah. Well, dude, it's changing. I mean, what I would say is it has to be impulse price point. So under 29 bucks, maybe 39 bucks, but really has to be a good value for what it is, right? Shark Ninja has the number one product right now in TikTok shop. We don't know the economics. Maybe they're spending a ton of money super unprofitably, but it has to be impulse-ish. Then it has to be female first. So it doesn't have to be a female only product, but it has to be like women are going to buy it either for somebody or for themselves.

2:00:51And you have to have spillover distribution. So TikTok shop will only capture 5 % of the value it creates. It'll be on Amazon and walmart.com and your own website. So if you go through that checklist, do you know Hudson from Comfort? Of course. You got to get him on here, dude, because he's - He's a crazy person. Yeah. He's the number one, right? But he does it perfectly. He has an awesome value product. He has a very strong female audience. And then all of his sales are happening on his website. Yeah, he does okay on TikTok shops, but he does hundreds of millions on all these other channels. So that's the pyramid for TikTok shops.

2:01:28Really, really interesting episode. It was the first episode that really went off is Kent from NeuroGum. They were the number one fastest growing TikTok shop in 2024. And the marriage between Amazon spend and TikTok spend, talk about like incrementality, exactly what you're saying. He just turned off the spend on one and the revenue didn't change because it was just the leakage was just going elsewhere. where we got to dive deeper into that incrementality another time because I feel like a lot of people are just spending to spend probably. I think that that's a bigger problem than people probably think that they have.

2:01:58It's the classic Ogilvy quote, half my marketing doesn't work, I just don't know which half. With incrementality, you try to figure out the half that doesn't work. I like that one. Dude, I love this, man. I Googled you and I found this. You've said Ridge only has two types of people, those who sell wallets and those who save money. What is that and how is that? implemented in your company and you're hiring in your systems. Is that just in theory or is that how you hire? Is it this person or that person? Yeah. Well, yeah. It's team make money, team lose or save money. It's like there's only two teams.

2:02:30We had at one point 75 employees. So revenue has gone up every single year and I've been able to reduce headcount. A lot of that's AI, but also it's just reducing bloat in the business. It's like you end up having people who like their whole job is just reporting back what other person said. And I'm like, I can just post in It's like, I'll read it, right? So it's removing all that bloat out and just getting to a core business where it's like very, very easy to understand. Do you help us make more money via wholesale sales or performance marketing or making creative or whatever? Or are you on ops, finance, product, whatever, helping us save money?

2:03:06Are you cutting costs? Are you finding cogs to be removed or whatever else? So from an evaluation perspective, are you looking at a human and saying you're this person or that person? Or is it more kind of - Yeah, people know exactly what team they're on. Wow, I love that. How is your org chart? Is it semi-flat? Like how many different layers are there to it? Well, a unique thing about our business is everybody can talk to me, right? I think maybe it doesn't shock the audience, but a lot of companies, like the CEO gets really far removed from the people doing the work. We have a daily standup where every single day, every person in the company is on for an hour and either they're talking or I'm talking and we're incredibly transparent about what's happening in this organization, right?

2:03:45So like they'll know marketing performance or sales performance or big priorities coming out. And I'm saying it or they're, and they're giving me feedback and it's very, very flat in that way. Before this, we had daily standup. I had to come here for far from that. So that happens an hour every single day. And then it's, you know, me, the executives, and there's five or six of us. Then there's five or six VPs and then there's everybody else. So that's how many layers there are. I love that. I love that transparency and the cadence there. What are the key things that you look to get across in that first meeting where it's company-wide?

2:04:18Is it just, this is our sprint for the week, the month, how we're pacing towards the quarterly goals? Is it like, here are the big updates in the company? What are those big things that you always want to touch on? Well, I have a VP of AI. His name's Adam and he stand-ups his baby. He like runs the whole thing, right? So Tuesdays we do sales performance. So what happened in the past seven days, right? What worked, what didn't work? Wednesday we do ops and fulfillment and product updates. what's on order, what's at risk, whatever else. Thursday is typically a product thing. And then Friday is me sharing like a company vision or we have a guest speaker come in or we talk about AI.

2:04:52And then Mondays, it's just, you know, we went over, we're launching a new brand internally. So like today I had to like explain it to everybody, what it is, when we're launching, what's it going to look like, all that type of stuff. I love that. So just one big category in the company every single day, basically. Yeah. Love that. How far ahead are you from a product perspective? Just curious. We have 20. By the end of this month, we'll have all of 2026 planned. So we have Q2 2026 ordered. We have Q3 2026 planned. And then we have to just finish Q4 2026. I don't know about that inventory life.

2:05:27You have fun. All right. Last three questions. Favorite book or podcast and why? You know, I'm not a big book guy. I mean, probably zero to one, like anything Peter Thiel has written. I just bought Bagman by the guy who made Coach. So I'm going to read that. Coach is an amazing story. Like Tapestry is an amazing holdco. Podcast, BG Squared. So, which is - Oh yeah, the two guys. Yeah. Gurley and - Gershner. Isn't Gurley the other one? Yeah. So Brad Gurley and Brad Gershner, but Gurley just left. He left the pod. Oh, wow. Anyway, but that's a fantastic one. And then dude, I listened to the Operators podcast.

2:06:02I knew he was going to do it. Sean has a podcast, guys. It's very, very good. It's very, very granular on the e-com side. I mean, I've listened to it before. I highly recommend to anybody. And I know you guys have a bunch of different offshoots happening. I think you guys are doing God's work for the e-com community. I don't think there's many resources out there, period. I think in aggregate, all the people that you have speaking, it's just, you guys are doing so much revenue and you guys are so big that anybody can learn about e-com with your podcast. And it's niche e-com content. There's a lot of people doing, you know, how to get started or whatever, but it's okay, we have HexClad on there and HexClad will do almost a billion dollars this year.

2:06:37and it's like, okay, what's your org structure? Stuff like that. But yeah, it's good. I love it. This is a big one. You can take your time on this. Entrepreneur or brand that you want to give flowers to and why? Well, dude, I mean, there's so many good brands. The thing people don't know about me is I'm actually like a brand dork. I spend so much goddamn money on brands and shopping. Brands, I think, that are doing really well. I think Kith has been on top for a really long time. I was just going to say that, that I saw you rocking a bunch of Kith. I didn't take you as a hype guy. Yeah. So like I just, you know, credit where credit's due.

2:07:12They just do fantastic collections that are very thoughtful. At the same point, like, I mean, ALD doing the same fucking stuff, totally crushing it. Probably like the hype's died down a little bit on them, but they're doing great. I said earlier that I'm a huge James Purse fan. I think they're doing it better than anybody else. Jeremy and Cassandra have a company called Kitsch. They do like women's hair accessories. So methodical about product expansion, you could learn a ton from these people, right? What about an entrepreneur or brand that's doing under 15 million? Anybody on your radar that you kind of see starting to bubble that you think has big upside?

2:07:47So there's a lot of, I mean, there's a lot of good operators. I don't know if they want their brands public or not because it's been so much that people want to build in silence right now. But look, I'll say Isaac, he has a company called Mini Katana, huge YouTube channel. He kind of just built an agency. He has a candy brand that was crushing for a long time. So I think Isaac's doing fantastic. You know, David Herman is a behind the scenes ad guy. He's like pretty famous. I just got to introduce him. Herman Digital. Yeah, yeah. But he's actually a partner in a brand that's doing incredible right now.

2:08:16And then Zach Stuck has three or four brands that are all doing fantastic. Yeah, man. Look, I mean, a lot of these brands you'll meet in the 10 to 15 million, then very quickly they'll explode. They're a company called Turtle Box. They do outdoor speakers. And when I met them, they were probably doing 15. I think they'll do 300 this year. It's like, they're killing it. So all those are great brands. Love it. How big do you think Ridge can be? There's a very clear path to a billion dollars a year in sales, probably by the end of the decade. That is, you know, tapestry, coach. Coach does$6 billion a year in sales.

2:08:47They do a billion a year in men's. I often say internally, I'm like, there's no reason men should buy coach products, right? I've never met a guy stoked about getting a coach product. So I think that's like a clear place we're moving into. I agree with you on that. I don't know one male that has a coach product. Dude, I had an amazing time. Where can they find you on the internet? Just find me on Twitter, dude. There, find me on LinkedIn. And I'll be back on this podcast soon. So we'll do it again. My man, appreciate you. What's up, guys? If you guys got this far in the episode, I would assume that you enjoyed it.

2:09:15If you got any value, it would mean the world if you hit the subscribe button, give it a like, post a comment, tell a friend. We could keep going bigger. Bigger guests, bigger locations, more value. See you in the next episode.