E131: Masterclass in Product Development (What Actually Works)

23:42You can also reposition with pricing when you're bringing freshness to the market. I've had it said to me, as a side note, that in CPG, this was somebody from like P &G, like an industry veteran. They were basically like, the only way you don't get grounded in the dust by the Walmarts of the world is by iterating around versions or, you know, quote, innovation. because the thing, once you get a skew in market, they're just going to drive that one direction. And so the only way you counteract that is by bringing nudeness to the market, either through like you're saying, Sean, kind of iterative improvements or even like step change improvements.

24:20Otherwise you just, you run out of margin. I just want to say that there's also like, yes, the iPhone's a good example, but there's an unofficial way of doing that too. Like there's the first production run of iPhones and then they're like, oh, those had some issues. Don't tell customers, but we're going to change it on the second production run. That's happening behind the scenes.

24:38Operators:We do that with Lomi. Every production run of Lomi, our goal is to say we've made it a little bit better than the last run. Yeah, and sometimes a lot of those features get engineered and designed and you release the refresh unit. But Mike, some of your water bottle lids probably suck when the first time you do it. And you're like, hey guys, for the next run, it's not a crazy thing, but we've got to make it a little bit better. And that's engineering time. That's hours that are going into it. that constant line improvement. Yeah, absolutely. So a couple of thoughts on that, Matt, that we've handled, how we've handled the process of deciding, hey, what do you do?

25:13One is that we formed an investment committee. And so we would have kind of our product pipeline bring ideas to us before they started working on it. And we would pass it through an investment committee. And we would just kind of talk about, hey, what do we think? We do a lot of like, what's the total addressable market? What do we think our chances of success here are? You know, how innovative are the ideas that we have? What's the size of prize? And then we'd either like kind of go, you know, does this really fit with the brand? We'd kind of go no go. More recently, I would say we've started dealing on our marketing function more than our finance function when it comes to how we decide what we're doing.

25:50And so it's a lot more, is this consistent with the brand, talking to lots of customers and gathering feedback to qualitatively inform what we're taking on? The investment committee idea is interesting. I kind of like that. It's a great exercise always to make people try to at least back of the envelope justify something with numbers. Like to take an idea out of the complete abstract and say like, okay, make some kind of a quantitative case. What do I have to believe for this to really be meaningful? And sometimes what you find is, well, I have to believe we win the market for this to matter because it's a small enough market.

26:33It's specific enough. that if we don't get to 30 % market share on Amazon, like what are we doing? Other times you're like, I mean, and you know, like this is electrolytes, I think is a great example of this. You start digging and you're like, the market's so big that you can have a really meaningful outcome if you're the number nine player in the space, which is obviously not like what we would aspire to, but it's also like, wow, like the range of outcomes that can still, you know, be meaningful financially is really large. And this is why one of my favorite quotes of all time is that when a bad market meets a great team, market wins.

27:13When a great market meets a bad team, market wins. And when a great market meets a great team, something special happens. In all of those cases, market is the most important thing. And so when we would go through the investment committee process, what you're really doing is trying to force people to quantitatively evaluate a market.

27:34Operators:Our best shots typically come from a marketing lens. So like it's the marketing team. It's like the people who are closest to the customer saying we should go make this thing as opposed to a product team saying we should go make this thing because we have the capability. I'll give you one reason why that's absolutely true. The marketing team has to be bought in because that team more than any other team in the organization can kill a product in the cradle or can neuter a product launch. If they're not really bought in and they don't believe in the product, then they're not going to give it their best on launch.

28:07And they're going to be looking to move on from that launch to talking about another thing as quickly as possible. So they have to have conviction. They have to have excitement, right? Yes. The one counter to this is, and I think we could get very in the weeds and we could go back to team structure and actually setting up one of these teams. It is good for the marketing team to be bringing ideas. but in my experience, they're going to be way more iterative than groundbreaking, right? Because the marketing team, customers only know what they want or what to be better, what to be improved on. And if we listen to the marketing team for everything, we'd have the wallet, we'd have the key case, but we never would have launched rings, right?

28:48Or travel or whatever, right? Because our customers aren't asking for it. It's not on the board of possibilities. So you do need both of those things, right? And that's why, like, just like marketing, it is a full-blown, you know, discipline where there is a million different, you know, nuanced jobs and perspectives. And we're trying to give product its flowers with all this.

29:11Operators:In the last 90 days, my brands, Pila and Lomi, have doubled our support capacity without adding a single new hire. And that is because we moved to RichPanel. Our CSATs are at an all-time high. I think we're in the 90s now. 50 % of our tickets are fully automated, which means the team can basically handle two times the volume without burning out or adding more people. And with their Trustpilot integration, both brands went from a two-star to a four-star plus, actually, I think four and a half, in like 90 days. And the migration was probably the easiest part. I was surprised. Richpanel handled everything, data migration, automation setup, training.

29:44Operators:We were live in just 14 days. That's insane. And they guarantee you'll cut at least 30 % of your tickets in the first 60 days, or you get your money back. Not bad. So if you want to be ready for Black Friday without scrambling to add extra agents, because, you know, I'm recording this and Black Friday's around the corner, you should just head to richpanel.com slash demo. Tell them Matt from operators or Sean or anybody. We all use this thing. That's why we're promoting it. Tell them that we sent you and they will take very good care of you. That's it. Let's get back to the show. Maybe we could all share some wins and some challenges that we've had in product development, right?

30:21We all started with a product. All of us made something, and it worked. And then we probably went through a long goose chase of trying to replicate that success. Or maybe you guys just killed it, and I'm the idiot.

30:32Operators:No, I've not killed it. I've killed companies in the process. Like the watch, Sean, that you guys did. Like we did, you know what's funny? So you want to know our biggest screw-up ever in product? We launched Eyewear under Pila six years ago. And in the first year, like sunglasses. That's what I'm like. It's just like basic sunglasses. We had a cool material, fit the brand story, launched the sunglasses. Did like a million bucks in the first year. But like relative to the case business, and then like a year later we launched Loamy and we're like, oh, okay, well like that's gonna do a hundred million dollars in 18 months.

31:08Operators:So like, let's just shut down the eyewear. Like that's a stupid category, kill it. Had we kept it, it's probably a$30 million plus year business today. Like it wasn't a bad business. It was just like, we, we viewed it as like, because it didn't meet this bar that the existing products set, we viewed it as like a waste of time. And I think what my lesson there was like, we didn't really give that product, that product didn't have a strong thesis or a purpose. It was just like, let's just launch the product. We launched, like I launched a pet care brand, like a pet, like compostable dog bags and other shit.

31:45Operators:We shot that one. And I've launched so many duds, guys. They're like, just did not work. But Eyewear is the one that I'm like, we should have kept that. That fits the brand. That would have been a great product line for us. We just didn't understand its purpose. And I think we just didn't really get that things don't start off as bangers. Well, one thing that I would say to that, Matt, is that I teach entrepreneurship. And when I teach one of the stories I tell is I'm like, you know, when you read the bio, you're like, Mike did this and did this and did over a billion dollars in retail sales here and then this.

32:23And it's like what my bio doesn't say is it doesn't highlight the like eight times that I was close to making a hundred million dollars. And then I just like screwed it up somehow. and like actually what's more remarkable about my career is how close I've been to making a crazy amount of money several times without actually pulling it off and so I've thought about this I'm like is is it that I'm just an idiot and what I the conclusion I came to it's actually interesting because they were talking about the same idea on my first million the conclusion I came to is like no that's the cost of admission of doing asymmetric things When you're engaged in asymmetric things, what that means by definition is that you're going to have several stories of like, try that.

33:10That was stupid. Shot it in the head. You know, that didn't work. Or, oh, had this good idea, didn't pursue that. It would have been a massive success. Somebody else did it. And you just have to kind of train yourself to not get too, like, hung up on it because that's the game. It's like a high variance game. And that means you're going to be wrong a bunch. It means you're going to be close and not do the thing a bunch. and that's okay as long as some of the time you do the thing that does work that's asymmetric

33:36Operators:yeah totally you know the i think i actually got this from sean is like this the idea is that like products are lottery tickets right and i've like started to actually use that language internally here it's like every product we develop is a lottery ticket so we just want to make sure that we're buying good ones and then the other thing that i think like we're getting better at now is discerning between like, is this an attach rate product for the case business? Like it's just something else that we can sell to the audience that we have. Or is this like a new hero? We can acquire new customers against it.

34:12Operators:And I think we spent way too much time on attach rate for so long instead of like pursuing new heroes. I even saw Cody, you know, post this on X today in response to something. I said, he's like, yeah, Like we had to learn the product development less than the hard way. So like we just stopped working on like big bets, like those bigger lottery tickets. Right. And I think like Sean, you guys, obviously, like you said it, you were a marketing org for a long time and you realized you had to go back to being a product development one. Different products have different purposes, I guess is the point I'm getting at.

34:43Operators:And most of our mistakes have been like just not understanding that. Yeah. So we call that CAC versus LTV products. Yeah. And that was like the first lesson is that. Absolutely. Like an LTV product can make your business 10 % better. A CAC product can double your business, right? Right. And - Or way more than that. Like the iPhone 10X to Apple's business. Like it's almost unbound how much it can change your business, Sean. Yeah, totally. And like, look, as soon as I find my iPhone, yeah, I'll change the number to 10X. But like half my revenue now is non-wallet. And that's like, yeah, I've doubled my business.

35:18I've more than doubled enterprise value because I'm not just a wallet company anymore. There's nothing wrong with being a marketing-led org and there's nothing wrong with being a product-led org. They are equal outcomes, right? And your company will go through those different iterations. So if right now you have one product and it's good and the TAM is big enough, that can get you to$50,$75,$100 million. At a certain point, you have to stop being a marketing org and become a product org. Or if you've stalled out on growth and you've saturated, you're really good at marketing, you might have to go back to being a product org.

35:48You might have to invent your second hero item. And you're going to have to do both in your career. And if you're sitting here listening to this being like, no, I'm just a straight DTC marketer. I'm just going to grind this out. You will reach a ceiling. And if you're thinking like, no, I have the best product on earth. I don't have to do marketing. You have reached your ceiling. Like it'll happen to everybody. Because they're related, right? In our business, when we've had something that's a product that really is resonating, it's like four times easier to market it, right? And when you don't, it's just like almost impossible.

36:21And so like, I think that great product provides tailwinds for great marketing and great marketing makes it easier to tell the story of a, of a different product. But I completely agree with what you're saying, Sean, that they're, they're really linked. And I thought about, but maybe I will tweet this later today. I don't ever tweet anymore, but like I really my number one takeaway from 10 years and selling like 70 million units of stuff in consumer packaged goods is that your product better be exceptional. Like you can be not great, mediocre in a lot of areas, but you can't really be great unless your product is the best at something is kind of the way I think about it.

37:05It's the most durable one on the market. It's the most leak proof. It's the most fashion forward. It's the best tasting. It's the healthiest. It's the most inexpensive. It's the most convenient. You know, like whatever that is, like you need to be able to kind of frame your product in that way and live up to that. Or it's very difficult to market. It's very difficult to have success.

37:29Operators:Sean, just back to your old like CAC products versus LTV thing, to what Mike is saying. My first question is like, do you have a certain number of CAC products that you're trying to add every year or those shots on goal in ratio or relative to LTV products? Yeah. So what helps you acquire new customers? So CC launches can help you acquire new customers. Nothing moves the needle more for us than a bang or a new color, right? We have a color this year that by the end of the year will do$5 million in sales. Probably$3 million of that is incremental, right? We wouldn't have got those sales. They wouldn't have bought a different design.

38:06They have found a design that just resonates with people. and you can, that's easier to do because it's just color iterations, right? So like you can find those and you can scale those up. But then to Mike's point earlier, as soon as you find one of those, marketing's like, we want more of those. And it's like, okay, like, you know, not every song can be a hit, right? And songs you think are hits sometimes aren't and sometimes you get surprised. So like we have to chase into those hits, but we have a lot of those going on, right? LTV products, we probably only do a couple a year. an LTV product for us is like a screw color.

38:39So people can go in there and swap them out. Like we already have a really good mousetrap to get people to upsell into. So we're not really looking for that many more LTV products. And then net new silhouettes is what we call them. Like a thing that we don't make that we're going to start making in the future. We didn't make luggage. We had to make the silhouette of luggage, right? That's a net new thing. We at max do two a year. And you guys have all heard the rings versus watches story. There's another one of those. So rings versus watches was 2022. In 2023, it was luggage versus t-shirts versus razors.

39:09And I didn't care which one of those worked. You know what I mean? I would love to sell any of those, right? We built them with the same margin. We built them to all be profitable. I don't have t-shirts and I don't have razors on my website, right? I've done eight figures in travel in the past 12 months. And I'm like, yeah, I mean, I could have told you any of those would have worked for different reasons, right? Razors are a massive market. T-shirts are a huge market. And I'm like, dude, you know what else is big? I mean, we'll be the men's away. One of those ended up working. Maybe because we're working, he was excited about it.

39:38Maybe because who knows? But that was ended up working. So we do those head-to-head tests all the time. We had one this year and now I'm a tech company. So I got iPhone cases and all this different type of stuff. And that'll do eight figures in the first 12 months, right? Next year, I got a couple more coming out. So I'm always trying to do those head-to-head tech tests to get net new silhouettes to acquire net new people. So two a year, one winner usually.

40:00Operators:Where do most of your net new silhouette ideas come from? Is that you, like I'm the owner of the brand and the brand vision. So like long-term, we want to be in these categories or is it like they're just coming from all throughout the org? Like people will be like, Hey, we should try luggage. Going back to what I said earlier, the top of the pyramid, the hardest thing is what are we going to make, right? Today, we did a cease to at company standup. Everyone pitched a color that we should do, right? Color, collab, something like that, right? So they're bringing those ideas. Occasionally, we do silhouette pitches, but those are really hard to do company-wide because somebody will say something like, we should do office chairs or whatever.

40:37And it's like, oh my God, that's such an endeavor. And if people get excited about doing office chairs, it's like, okay, guys, the reason we don't do silhouette pitches is because silhouettes take two years to make, to do design, engineering, find a factory, prototype, get it into production, the whole thing. So we sit down every month and we just kind of debate what would make sense for a brand. And we try to lock those in. We're doing 2027 now. What are we going to try to make that's net new to the business in 2027? It's me, my CMO Connor, my chief product officer, and our VP Brett. That's kind of like the core group.

41:13We also have Austin, our chief design officer. And then we have Avi, our CFL in the room. So we have all those people sitting in the room debating this out. We'll nail those down. That takes the longest. We try to do those the furthest out. All right. Operators, real talk. If your dashboards are a week old, they're not insights. They're history. You probably heard me talk about cleaning up our data. Well, we finally have it dialed and it's because of Sarah's pulse. We have a data foundation we can fully trust. Pulse connects us to over 200 sources. We've got it connected to so many sources, Shopify, Amazon, TikTok, Fulfill, NetSuite.

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44:15Operators:The other way to think about this, Sean and Mike, I'm curious how you guys do this, is how do you decide when a product is ready to launch? So like you go through all this work, product team is like, here it is. Because my experience with my product team is if I didn't launch it, they would work on it forever. Product people are like, they're engineers. It's never really done. I'm going to clip this and send it to Daniel, the chief product officer at Ridge, because he hates when we make them launch. We're like, hey, here's the deadline. Make it. This is exactly why I brought this up. I actually think this is like the central tension that, you know, it's like, yeah, you got to decide what to get into.

44:52But then there's a separate tension. One of them is when product comes to something and they're like, look at our pretty thing that we invented. And you're like, we're not going to launch it. Like that is really demotivating to people. And then the other is when they're like, Hey, look at this really cool thing. And you're like, that is a really cool thing. I think we should like actually sell that to people like right now. And they're like, it's not ready yet. You know, it's still baking. And, and you come back to them an hour, you know, like a month later and they're like, it's still baking, you know, not yet.

45:24Exactly. They're like, we're, we're, we're adjusting the tab to reflect a swan's wing. It's a very small detail, but we think it's, you know, and you're like, okay, we got to get this to market.

45:36Operators:So PTSD right now. Yes, we can all relate with this, right? Yeah, dude. And so Daniel, he's like, I can either make it as soon as possible and we can launch it. Oh, I hate this. Yeah. Or he's like, here, I'll tell you the launch date. Give me 18 months. I'm like, okay, man. He's like, I'm making it as fast as humanly possible. I can't make it any faster, right? And I'm like, because in an organization, we want to have samples and shoot them and get them to influence their hands, all this type of stuff. And that was a really hard thing to overcome the first, I don't know, four years of product development from like 2016 to 2020.

46:09He's like, you try to put them on a calendar. He's like, it'll be done when it's done, right? And he's pretty good about it. You know, he's not as precious about it, but he's like, guys, I can't make the thing faster. He's like, our old launch schedule was as soon as it was done, we'll launch it. And we've had to change the organization to be on like an actual timer. Well, and really practically, the reason why this is so hard is that it's really a question of not when is a product, quote unquote, done? Because, Sean, you just said this, like actually good product lines are kind of continually evolving, right?

46:43They go through versions, they add features, they get better over time. I mean, like I've used the iPhone example a couple of times. imagine Apple being like we're not launching the iPhone until we have DSLR quality photos and we have a fully functioning app store and all this stuff never would have launched right so like you have to kind of pick this point in time not when you feel like you've actually gotten everything you can into a product but where you've gotten enough to put that version into market and then you're continuing to work on the product to get future improvements in and I think that's the art.

47:18The art is understanding because like this is what practically will happen with us all the time. It'll be like, we really like the product, but we have a couple of ideas to make it a little bit better. And so it's like, do we wait three more months or do we just launch with this? And then a year from now we refresh with these couple of ideas. And like usually the product team is like, well, we really want to put these ideas in. I'll make the product better. you're paying us to make great product. And we know how to make the product better. And so like, let's wait. And, but then like the business side is like, yeah, but like if we launch now, we think people will really love this.

47:54And then we've already got like the next version kind of baking in the oven. And so practically, I think this is where a lot of the tension exists.

48:02Operators:I think you can kind of come at that too. I guess there's like two ways I would come at that question. At least I have. So the first is like, we all have competition, right? So are we iterating on a product to ensure that we stay in whatever position we're in in the market? One, two, three, four. So we just need to make better drinkware. Let's just continue to innovate within this category. So that's number one. Then number two would be, so that's more about market share, I guess. The second way for me, at least we see this with Lomi, is centering on a metric that we need to move. So like NPS around the product where we want to iterate on it.

48:44Operators:So like, it's good, but if we could make it, like if we could get five or 10 more points in NPS by just making the product a little bit better, that will then make the business better. Like word of mouth will go up. Like there'll be something else that we're doing with it. Cause like, I don't know about you guys, but like, we have definitely been caught by making a product better that didn't need to get better. Like there was no actual reason to make it better. other than some product person was like, it can be. It adds cost and the customer doesn't think it's better. Totally. You know, like it's the same, but it's more expensive now.

49:17Yeah. And we've kind of iterated into a worse product just by making it more expensive, a feature people don't want. Yeah. I mean, going back to like, you know, if something is ready to launch, when we launched luggage, Samsonite made better luggage. You know why? Because they've been doing it for a hundred years. You know what I mean? I'm not going to make better luggage than them. I just, it's impossible, right? it's my first time making it and it's released and people buy it. And then we can hear what people say about it and we can make changes. Oh, they want different wheels. They want different whatever.

49:49We can make those changes. But I couldn't just sit there in a lab and build up to be as good as Samsonite. It's never going to happen. They have 10 million bags in people's hands today. You know what I mean? Always improving, always better, always cutting costs. So the best time to get something in the market is as soon as it's the minimum viable product. Right. If you're not, I don't think you should be embarrassed by it. People always say, if you're not embarrassed by your first thing. That's a tech thing. That's bull. That doesn't work on physical goods. Sorry. Totally. Like in the innovator's dilemma and innovator solution, they actually talk about disruption almost always comes from somebody who enters the market at the low end and then works their way up and disrupts the person at the top end, which is kind of counterintuitive, but that's usually where it comes from.

50:34And there's a lot of different technologies where they talk about why that ends up being the case. But like you're saying, Sean, like you can't disrupt some of the legacy players that have scale and have huge capital structures by saying, we won't launch until we're better than them. You just have to be different or unique on enough of a vector that you can kind of peel off some of the market and get the capital and the time and the user base to make your product better.

51:01Operators:You know what would be a really cool example of that recently. Do you guys, I actually don't remember the name of the car, but that, that like super bare bones car that launched, uh, it's like brand new company. Yeah. Slate. Like what a, a great, I'm hoping it's successful, but like a case study of, I'm just going to make a far simpler, more stripped down version in what you would argue is like, it's cars. Is there a more competitive consumer goods industry than automobiles? Like there's just not very many new car companies, But like they came in, Mike, to your point, like at this very low end of the market, they're like, we're just going to strip everything else out and make a car that people can afford to buy without like sweating their ass off every time they buy it.

51:44Operators:I thought that was genius. I don't know if like if you guys think of your products that way sometimes. I'm like, man, I wonder what categories we can go into where the category is actually just built up too much. Well, and this is where I think the idea is that are you best on some vector, right? Like you don't have to be the best overall quality. you can be the best value for your dollar. You can be like the best entry price point or, you know, like whatever, like there's a bunch of different ways you can define best. And there's like, there's a consumer for best. You just have to have a point of view.

52:15And then like, okay, if we're going to do luggage, we're doing luggage best in this particular way. And that's going to attract a particular type of customer. Yeah. This is, this is where brand actually matters, right? I think about like why our luggage was successful and it's like, yeah, the wall it's durable, people just assume our luggage is going to be, right? We get a little bit of credibility. And for a long time, half of the luggage we sold was to returning customers, right? So it ended up being a CAC product, but the best LTV product we've ever launched. Because wallet customers came back and buy luggage.

52:45So it was able to be a double hit there. All right, operators, quick break. This episode is brought to you by Northbeam, the marketing attribution platform that we use every day. Now, we all know there's a ton of attribution solutions out there, but I want to talk about what makes North Green different and why everyone across the operators trust their data. The North Green difference, it just doesn't give just last click credit. It spreads credit across the entire customer journey. So top of funnel campaigns finally get the recognition they deserve. This is huge, especially for me, trying to grow our brand.

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55:11And clearly Northbeam has paid for itself over and over. And we'd be flying blind without it. So, I mean, everyone uses Northbeam. Every big brand I know, every good brand I know, uses Northbeam. Manscaped, Dollar Shaped Club, AG1, Ridge, everyone in my chats. I trust Northbeam. They're one of the foundational platforms that we use here at HexCloud. And so if you're ready to cut through the noise, stop guessing and actually see which ads are driving your business. Book a demo at northbeam.io forward slash demo and tell them the operators sent you. Join the club. You know, I wanted to tell this episode how to make iconic products or, you know, how to build award-winning product teams, something like that.

56:00So we talked about some failures we've all had, but like, you know, what are some hard won lessons that by listening to this podcast, it could save them five years of time or something?

56:09Operators:Oh, God. You know, the first thing that comes to mind for me, Sean, is material science is really hard. Like innovating in materials is not for the faint of heart. Like, so if you're looking at a product category and you want to enter it and the way that you're going to try to differentiate or be better is going to be like, I'm going to do this in a new material, that would be a flag for me. like you might be increasing the difficulty of your product development by a lot and and part of that guys is like in our experience when we one of the most difficult parts of peeling case early on was the getting to the tools made you know like typical injection molding tools with the right steel that could handle this weird material that nobody had ever pressed before so like the amount of iteration we had to do on steel for the tools to make a freaking phone case was insane because we we increased the difficulty of making a product that was like fine on its own but we just had it in our head we're like no no it needs to be this material because it's awesome it's compostable it's flexible but then every manufacturer is like i'm not working with that it's going to screw up my machines i don't want to cut i don't know what steel to use so like i i think that like with product dev you have to pick your hard uh like where are you going to increase the, like, if you're going to go like Mike, your point, you pick a vector to be better at, like to be best at in some product.

57:39Operators:There's a lot of ways to make that really hard on yourself. Materials is one of them. Yeah. And nobody I can think of has won off the rip with materials. It's just, I'm like, I'm like, you know, do you typically start with design because, because you can design things differently, but like, Oh my God. Yeah. I mean, you know, now you have Nike doing cool foam materials, else but when they started they were just they were just hawking you know japanese shoes or somebody else they weren't even their shoes yeah at first they they uh they were a distributor basically that grew into making product but we're talking about wins right or just lessons yeah i mean i i think that probably my overall lesson is that uh i would invest if i could go back and do it again i would have invested even more in product of i think that's probably my number one takeaway, like we're right in the middle of something with Trevi.

58:33We, we went out there and the first batch of flavors we came up with was what we launched with. And I had confidence in it because we'd done some blind test testing versus our competitors. And we were consistently coming out ahead of our competitors and these blind taste tests, but not like crazy ahead, just better than. And so we went into market and we kind of figured out what we were doing. And by about two or three months in, it was like, hey, this can work. And this can actually be like a valuable business, like a good contributing business. And then we started, we brought in our second batch of flavors.

59:09So like the way we develop flavors is that we will go out to our co-man and we'll like really spend time developing these. A lot of people like are not being as in-depth. But this has become a thing we've invested in. We've probably made, I don't know. So there's been quite a bit of time, quite a few trips around just flavor development. So the second round of flavors come out and we're like, hey, our retention numbers on these are like quite a bit better. Like people are digging the second flavors. It seems like we're getting better at this. So when we released our third kind of batch, which is what we just released, I kid you guys not, like the retention is like two and a half times.

59:45It's like almost 3x the retention. And so the business unit has gone from like really, really good to like potentially like life changing type business unit. But a lot of it is just we invested the time into product dev. And so what's interesting is like even now, my big advice to Corbin, who's like the incredibly talented CEO we have running it, is I'm like, don't stop now. You should keep doubling and tripling down on this because we're going to be the best tasting electrolyte in the world. That's what we're going to be. That is what we're going to be best at. And we should, even on flavors that are doing really well, if we can spend a week of flavor development, make it 5 % or 10 % better, that's worth it.

1:00:30And so like that's kind of more of the mindset I have towards product development in general is that like you said, Matt, there's ways you can set money on fire when you're doing material development and stuff. But there's a lot of product dev that is not particularly expensive. It's just time consuming. It's just kind of like annoying because you just want to put something in market and it kind of sucks to be in process a lot. And I wish I'd done more of it. And then I think conversely, I wish I'd killed some projects earlier in the pipeline than I did. I allowed some projects to kind of persist, even when it was obvious that they were like not looking promising and they were taking up resources and attention that could have gone somewhere else.

1:01:16Yeah. Well, dude, I mean, that second lesson is so powerful because nobody wants to do it. You work on something, you get ready to launch or even you launch it, and it's only okay. And to actually have the will to kill it is hard. This is why being a CEO is hard because ultimately that's just – that's a CEO. Nobody else is going to go to somebody who's invested several months of their life into trying to bring a product to life and say, you know what? I'm killing it. The one person in the organization that I think really has the power to do that is the CEO. And there's really no upside to it if you think about it.

1:01:53There's been money invested. There's been a lot of time invested. Somebody's very emotionally invested. This is why the job sucks sometimes.

1:02:02Operators:What about you, Sean? What are some of your lessons? Hard lessons learned or won with PD? Mike's first lesson was all about taste. Physically making the thing taste better, right? And you can't train that. You have to, and like, you know, maybe with food you can, like people, people have an inherent taste, but if you have the wrong person making product decisions, it's the worst possible thing for your business, right? Like it's, it's the, you know, it's the ethereal taste. Like, does this person understand what is good for my brand and my business? Because everyone has their own different idea of cool and whatever.

1:02:39But one of the worst things we did is we hired someone who was cool on paper and came in and had cool ideas that were just wrong for our business. Maybe they'd be good for Arcturx or whatever, but when we put those things in practice, our customers were confused and didn't buy them. What our customer likes is we make the luggage orange and say that you can throw it off a building or whatever. There's another brand. I brought them up, Peak Design. They made luggage for different people. Their luggage is$600. and like has carbon fiber and whatever. And it's incredibly successful. They did a great job selling that luggage.

1:03:13If we try to sell the luggage to our customers, they wouldn't like it, right? So the wrong person in that seat making those decisions can set you back years and waste millions of dollars. So it's why it needs to be founder. It needs to be CEO. Like you have to have a really big hand in product because it takes so long and it's so mission critical, right? Yes, a bad marketing hire, a bad CMO, someone deploying capital badly can ruin your business. But slowly, there's so many points where you can bring it back up. The worst spent Facebook ads are only 70 % as good as the best spent Facebook ads.

1:03:56You know what I mean? You're still getting impressions. You're still doing whatever. It could be optimized. But a bad product launch is an actual zero. and like and yeah so or even worse than a zero if it hurts your brand equity when you have a brand if you like i mean we could probably come up with some examples of this where people launched a product and it wasn't just like hey nobody bought it and that inventory was a total you know uh loss but like people actually thought less of the brand from that point forward it was kind of a turning point yeah totally and you tie up two years of time like the fastest you can possibly make a new product with development is like eight months.

1:04:37And like that is designed to engineering, to factory, to production, to land it. It's like when you add all those things up, it's like, yeah, if we went, okay, tomorrow, this is what we're doing from scratch. Everyone at the company's point is worth this goal. It's like eight months. I've got one hack, by the way, like, or the hack is maybe not the right word, but I've got, I want to riff on something Sean said. The reality is that we have more tools than ever before to kind of gather customer feedback. And And I think all that stuff, I'm very analytical. I think all that stuff's great. One of the things that's been impressed upon me recently is that ultimately judgment is what separates people that are great at product from people that aren't.

1:05:13And that you can't really teach judgment. I mean, this is, I think, in one of Amazon's kind of core tenets of their business that like, you know, like there's just, you wanna hire people that have great judgment because they just tend to be right a lot. You know, you wanna hire people that tend to be right a lot. And so you want, obviously, your product team to have people with good judgment. But you do kind of discover some of these ways to get a feel for whether a product is likely to succeed. So one example for me is like inside of our organization, whenever we're making a product, we will distribute samples.

1:05:49And we do not mandate that people use it. We don't mandate what people do with it. We just give out samples. It is incredibly predictive what they end up doing with those samples. so like for example if i walk into one of our tuesday morning meetings and i'm like noticing like obviously everybody has drinkware with them at this meeting and if i'm noticing like 75 85 of the drinkware in the room is the new bottle that we're about to launch i'm like this thing's going to crush it you know because i'm working with people that literally have access to every piece of drinkware known to man and they're all for whatever reason just voluntarily choosing to use the new thing we have.

1:06:26And the opposite's true as well. You can have something that you're supposed to be really excited about and you're pushing to customers. And if you notice nobody's using it, then it's like you're in trouble, you know? So like I think judgment and I think learning to like watch people's behavior, especially people that have good judgment is a really good way to kind of predictively understand how, if a product's likely to land. Mike, in those Tuesday meetings, did anyone ever have the balls to show up with a Stanley? It's actually kind of funny because, okay, so the very first time I went to China, we're on this train.

1:07:01We took the train from Hong Kong into China and somebody left a hydroflask in the train. And so Brian kind of, my co-founder as a joke, picks it up and he uses this hydroflask the whole trip. Because Brian, he's just being kind of ridiculous. And this has kind of become a thing with Brian is that Brian just loves, he loves hydroflask. Brian loves Yeti, you know, whatever else. And so like it becomes a joke. And so he's kind of leaned into it. And occasionally he'll just bring in competitive, just to mess with people, which is kind of funny. And is that how Brian got COVID, dude? Just using a random water bottle on a Chinese train?

1:07:37That's a pretty good way to do it. I think he's patient zero, actually. So good. And Sean said it, not me, that COVID originated in a hydroflask water bottle. I would never say such a thing. Ooh, okay. Hilarious, dude. To end the episode, I just want to go over the org structure again. So we have a leader, so chief product officer, and he has a right-hand man and VP of product. They can take any product, any idea, and get it done. They can manage engineers. They can manage designers. They can manage factories, right? Underneath them is a team of product managers. So per product line in our business, we have a product manager.

1:08:17Austin's our chief design officer. He does all CC and color work. We have some, Allison does all of our tech stuff. We have all these different product managers, right? Across wallets and rings and travel and whatever else. And then they use an engineer resource and a design resource just across, like as they need. Sometimes we'll pull in third parties or contractors, but like the product managers, like, oh, I need this render and I'll go to this render person. I need these designs and I'll go to this design person. And all of that work is done with the production partner. So with the factory, right?

1:08:49Because we want to design things that are easy to make. That makes your costs better and everything better. So you have people who know soup to nuts how to make everything. They're managing product managers who will eventually learn how to make everything. And then they use resources of engineering and design. So that's the way we do it. If you wanted to come away with this with a little bit of an org chart, that's the thing we promise you. And that's kind of the pyramid.

1:09:14Operators:Yeah, I think we're very, very similarly structured. maybe a little heavier in engineering because of the lomi side and I have like a software team because we have firmware and an app for the damn thing but that would be like not typical in consumer unless you're making appliances man like if you're making blenders and or anything else like Shark Ninja Eight Sleep like they would have very big engineering arts as well alright guys we did an hour thank you Fulfill, Northbeam, Postscript, RichPanel, Saris Analytics, five softwares that I use and pay for, five softwares we love. We have a collaboration with EcomFuel.

1:09:55You can sign up there, ask Q &A questions. That episode, top of the iTunes charts. People love that thing. Like, subscribe, comment. We want to hear from you. Matt will answer any question you have personally. He'll give you a cell phone number if you comment below. We'll get you Matt's number, man. I will not. No, no, no. I already said it. It's part of the contract. It's 431. All right, everybody. Thank you for being here. Thank you. Talk to you later. Goodbye.