How Ridge’s Annual Revenue Hit +$250M & Sean Became a Dad

16:53Sean Frank:products no i mean we knew we would do some products but like it wasn't you know we didn't think hey we're gonna do power banks and phone cases and all this stuff yeah you wanted to make a backpack we made wallets together or whatever i mean obviously it makes sense to like go into this these tech products but like it was very much there was market pull in that direction after we

17:14Matt Bertulli:did it how much time do you get out of marquez to to film contrast him with like uh pedro pascal

17:20Sean Frank:Yeah, the reason why it's so much better to work with Marquez is we don't have to film him. He films himself all the time. He does it all on his own. And he's a pro at it. He's a pro. He has the credibility. He's a pro at talking about tech gadgets. Yeah, so we get 12 videos a year, 12 social posts a year, and we get four film days a year. But typically, he just films himself on those days. We've done a couple production shoots where we got there and filmed with him. But he has a team. He can run a sound studio. He can run commercials. He typically just does it for us and sends us the footage.

17:56Okay, so I want to dig deeper here. I mean, it's amazing, by the way, Sean. I think I really admire it from my point of view that I think when you originally did the deal with Marquez, it wasn't exactly as obvious to me that it was worth the price that it cost. And I think you've proven that it was worth much, much more than the price because you really built a business around Marques, I guess, almost like in a way that I didn't necessarily anticipate Ridge going. And one of the things that I hear from you is like just an eagerness to explore a lot of product categories, which I share. Let's start here.

18:32What are some of the product categories that you're getting into or that you're interested in but maybe haven't gotten into yet? Yeah.

18:40Sean Frank:So we just dropped chains and, you know, we have a big ring business. It's tens of millions of dollars a year. We have something like 4 % of all men's engagement rings or something. It's a really large percentage of the men's engagement ring market. You know what? Actually, I said four. I think it's actually 14. We sell over 100 ,000 of these bands. I think there's a million weddings. I think we have a huge percentage of the actual market when it comes to men's engagement rings.

19:07Sean Frank:That's obviously been a big hit. And it's like, okay, for a long time, we didn't want to do jewelry because we thought it was too feminine. It's like, oh, do guys want to wear jewelry? Am I going to have a bracelet section of my website? I'm like, that doesn't sound right. But what we've seen recently is men are just wearing more accessories. There's great brands out there like Crafted and whoever else that are doing really cool men's accessories. So we ended up going into it. Our whole approach is what we call cowboy chains. If you look at all of our photography, it's like guys in Utah who have horses and cowboy hats, like wearing cool chains.

19:39Sean Frank:And nobody's really making men's accessories for them. Like the GLDs of the world are like way more focused on like younger crowds, Gen Z crowds, whatever. So going after like the heartland market, dude, it's ripping. Like very, very rarely do you come out with a new product category and like day one, you're doing tens of thousands of dollars. Right. So like, yeah, it's, it's, I mean.

20:03Matt Bertulli:Existing customer or new Sean?

20:06Sean Frank:A little bit of both. I mean, a lot of the running customers are coming back and purchasing, but it's working on acquisition. So it's like, oh, yeah, this could be a standalone business doing$80 million a year within two years. So we're super excited about that. On the celebrity piece, we're doing a new product category. We're going to see a glimmer of it in this summer, but then more of it comes out next summer. And we're going to do drinkware, just like my good friend Mike here, and we're pairing it with a celebrity. so you guys are going to see that deal come out probably not this summer probably next summer when we actually start announcing it but there's going to be another celebrity who we think represents the rich guy and he's going to be him think about backyard barbecue type stuff we're going to be doing that type of stuff so that's what we have like on the on the roadmap right now and yeah I think I think all of them are going to be are going to be hits I think we really nailed product expansion pairing it with a celebrity going after a core demo and we have like a bunch of bangers coming out What's up, operators?

21:04Sean Frank:Welcome to the RichPanel ad read. RichPanel has been a sponsor for over 12 months. I've been a paying customer for over 12 months. And guess what? I just renewed to pay again for another year. We have cut our SaaS bill in half and automation dropped our cost per ticket by 70%. Our CSAT has also improved from 88%, which is still really good, to 96%, best in class, all powered by RichPanel. I told them last year, hey, you guys need to do the same thing with returns and now rich panel has a returns portal it's built to cut down your tickets and convert more refunds into exchanges they do the heavy lifting data imports self-service retention flows team training all of it and they'll be live in two weeks if you want to save 30 guaranteed on help desk and now returns book a demo what has changed sean like so you in the past talked about

21:52Matt Bertulli:product misses you guys did watches that did not go well there was some knife thing at some point for some, I don't know, there was like something, um, what has shifted? So like the celebrity thing, that's, I haven't heard you say that before. It's like launch pair with celebrity, but what else? Like what's making you guys so good at this now?

22:09Sean Frank:We just understand what makes products good for acquisition. Like the product here's the problem with watches. Nobody buys them. So like go try to sell stuff. Nobody buys. Right. And people are like, Oh, you know, there's Rolex and there's AP and like you people start to the swatch collab. I'm like, dude, it is, it's a different thing. You know what I mean? That's like you're trying to sell horses right now and you're like, well, there's a huge market. People are buying thoroughbred horses for racing. And it's like, yeah, but you got a pony. It's like, nobody wants this thing. That's the reality of watches.

22:43Sean Frank:It's like there is a market. It's incredibly high-end. It's incredibly limited. It's a very, very big ham because the dollar values are so high in what they trade for, but it's like, There's no market for it. The same thing with knives. The average guy buys probably 0.01 knives, right? There's a huge collector community of people who buy knives and love it and they're rugged or whatever. But it's just like, it's not a growing market. It's hard to serve. We did t-shirts. T-shirts suck too. Why did t-shirts suck? It's because True Classic makes amazing t-shirts for$8, right? Cuts, Buck Mason, they make great t-shirts for$35.

23:19Sean Frank:bucks. James Purse makes great t-shirts for$85. With that being said, all those shirts are basically the same. It's like the smallest differences between them, right? Like what is what makes those shirts what they are. And the average consumer just simply doesn't care. They just buy whatever shirt they got introduced to. And it's a knife fight market. Like it's so hard to stand out. There's no value props you can really have. So we made no money selling t-shirts. So anyway, we've tried a bunch of stuff. There's been just more stuff I've pitched. You talk about me being the driver of pioneering in the business of progress.

23:55Sean Frank:I pitch a lot. The team picks up what they're comfortable with, and then they run as far as they can with it.

24:01Matt Bertulli:Do they push back then? Do they actually tell you? That's a terrible idea, Sean.

24:05Sean Frank:Yeah, me and Connor got into a huge fight about I wanted to sell soap. I'm like, look, people buy soap. He's like, dude, we sell wallets. Why are people going to want to buy soap here? I'm like, people buy soap, people buy wallets. Who knows? maybe we'll figure it out. But like, I'm not dropping that. I think, well, I think at some point I'll be selling soap too. So. Well, and this, I want to dig on this, Sean, because, uh, I think it's one of the, the most interesting things that I've seen you talk about is the influence that maybe Shark Ninjas had on you and the way that you think about brand when it comes to product launches.

24:39Sean Frank:This is going to pair with a really good second point I'm going to make. I've been talking to a ton of bankers, okay? Because, you know, I wanted to sell my business before I had my kid. I just had my kid. I'm like, maybe I should talk to bankers. What's the market looking like right now? And the market is bad. You know, it's very much a tale of two cities. One city is shining bright on top of a hill, but very tiny, okay? These are brands that are subscription, that are in supplements, that are in health and wellness, that have LTV. they're trading at you know 12x 15x today in chat our friend bill said that he got outbid he bid 15 somebody bid 19 okay so there is that world for a 4 million evita company not even like a huge company that's a crazy multiple for uh for only four and evita yeah i i would kill for 19x evita okay like it's not it's not happening for me so yeah and i have a lot more than four million dollars in EBITDA.

25:35Sean Frank:So that world does exist, but I'm telling you guys, it is a very small percentage of brands. I talked to a very, very large banking institution who has a private equity arm, who has a investment banking arm, and they said over 70 % of deals since 2022 have not got a bidder. So that means they put together a SIM, they went to market, they signed a banker, they did the meetings. They did all the fireside chats and they got zero bids. Okay. That means like, there's just a lot of junk out there to tie those two points together. There's a bunch of bad businesses out there and they're all believed that brand was special, that, you know, you have to build a tribe of customers.

26:24Sean Frank:Like you have to have this avatar. You have to build loyalty with them, never sell a second product. That is like Allbirds. That is Casper. All these companies are influenced by that. Those companies aren't selling right now. You know what's trading at 25X EBITDA? Shark Ninja. What's growing 40 % this year? Shark Ninja. What's Shark Ninja's approach? People buy stuff, I'm going to make stuff. And I know that's very simplistic, but Shark Ninja has drinkware and coolers and whatever phone cases and blenders willing to try almost anything that they think they can sell yeah they they are opportunistic in a way that if the people will buy it they will try to sell it and if it fails who the cares they're gonna try something else we live in an asymmetric world like you know imagine in going back to 2012 or whatever and I launched the wallet and it didn't work or I launched some other product and it didn't work.

27:23Sean Frank:And I'm like, oh, well, my life's over. No, you would keep launching stuff. And then you find the wallet and on the wall, it's done a billion in lifetime sales. Okay. So it's like, that's an asymmetric world. Tens of millions, hundreds of millions of dollars in EBITDA from this one product silhouette over 10 years. Anybody can do that, right? Because it's an asymmetric world. So want to be Shark Ninja, try a bunch of stuff. The people who are born and bred, brand is everything, have brands that nobody will buy right. So you're better off just being Shark Ninja and being the whorehouse of products, whatever it takes, just bastardization of products.

28:00I mean, Shark Ninja is even like two brands. They just stuck them together. Well, I think about it. It was vacuum cleaners and blenders, which is like in what world is their natural synergy there? It's like we've talked about Bic before where it's like, what if we did pins and razors? That would be a great idea. but I think it's true that the customer doesn't care. The customer is just like, is it a great product? Is it a price I like? Done. It's not to say that brand doesn't matter because I think that brand really does matter but I think what matters more is do you have something that people find compelling?

28:35Matt Bertulli:Can I drill into that, Sean? 25 times, it's a 25P, right? Is what you're referencing because they're public. So what else is there? I mean, yes, they sell everything and anything but like how how do investors or how do you think they're looking at like quality of revenue because they're still selling like steam mops and rice cookers and waffle makers and i'm reading fire pits knife sets bakeware air fryers juicers like they're all over the dim but like none of these on their own would fetch any multiple near 25 times like these are all categories on paper This is like low quality revenue. All of them.

29:14Matt Bertulli:Doesn't matter where Shark Ninja sells them. So why together are they worth so much?

29:20Sean Frank:Because... Look, this is not a stock show. This is not stock advice. But our good friend Roman told me this about AppLovin. He's like, it doesn't matter what you think about AppLovin. And I don't trade AppLovin stock. He's like, it's just an expectation around what you think earnings are going to be. He's like, AppLovin is a$6 billion EBITDA business. I think it can be a$10 billion EBITDA business. I don't give a f*** what they'd do if you have a$10 billion EBITDA business. Something like that. It's the same thing with Shark Ninja. Look, people are not falling in love with the brand of Shark Ninja.

29:55Sean Frank:The investors, what they're falling in love with is growing 40 % year over year, earnings are growing faster than that, and earnings are a billion dollars a year. That's just an attractive business, no matter what you say. Compare that with Lululemon, which has this brand story, and it is at 10-year lows right now. The stock just got destroyed, right? Nike, the same thing. Stock got destroyed. There's no stronger brands than Lululemon and Nike. They're the best of the best. They're going to rebound. But strong brand is just shorthand for very good earnings, very good growth, very good EBITDA. And now we're in a world where we have abstracted brand, and now I'm just talking about what gets you good growth, what gets you good EBITDA.

30:34Sean Frank:And for me, new product expansion does that.

30:39Matt Bertulli:Call me a nerd if you want, but one of my favorite things is when one of my existing software partners, in this case, Northbeam, adds something that I would have had to have normally paid more and separately for. Incrementality was broken and Northbeam decided to fix it. Matt, you're not just a nerd, you're also cheap. Yeah, and one of the things my team and I are looking forward to with this is now having MTA and incrementality cleanly tied together. It's really nice having multiple views of a test totally integrated. From design to monitoring, we can just focus on the insights and not the logistics.

31:14Matt Bertulli:So now your incrementality test results, they just feed right into your NorthBeam MTA dashboards that we're just used to looking at every day. Yeah, I don't think any of us are going to say no to less work and making life easier for all of our teams. If this is interesting to you, go to northbeam.io and ask for a demo and feel free to tell them that the operator sent you.

31:37I'm going to make an argument, actually, that the reason why Shark Ninja has been so successful and also while they're getting the premium is actually because of scale economies when it comes to distribution. If you look at the way that they've expanded, what they've done is they've gotten in a section of Target and Walmart and these mass retailers. And so you'll be in a section that one buyer buys, you know, whatever, three roads in a row of stuff like household appliances. And they've just been like, we're just going to sell everything in this section. And the more of those categories they get into, the more shelf space they take up.

32:12And the more shelf space they take up, the more important they become to that category success and the more ability they have to box other people out. And they've just kind of functionally started to own entire sections of mass retail.

32:26Matt Bertulli:That's the same argument as Unilever or P &G then, right, Mike? Yes. I think they're an interesting approach. Whereas a lot of times with Unilever, what they'll do is they'll just go out and buy it. They'll wait till somebody gets to scale economies and then they'll buy it. But then they have tremendous negotiating power with the mass retailers because the mass retailers absolutely have to have them. They just have some essential brands. And P &G is probably the most extreme example of that. is that like, in fact, Doug McMillan, I saw him talking once and he was talking about how people will accuse Walmart of kind of being really hard on his suppliers.

33:03And he's like, look at the stock price of P &G versus Walmart over the last 30 years. They've gone up even more than we have. It's been even better for them than it has been for us. And so I do think there's a model out there that becoming a conglomerate can really help on the distribution side. I think Sean's actually an example of that because they've really built a strong hub of a brand and a type of target customer that they can add. I mean, like the way that I think about your brand, Sean, is like if I'm a woman that needs to buy a Father's Day gift or needs to buy a gift for Christmas or my guy's birthday, I'm just going to go to Ridge because they are going to be the best place that I can go and shop.

33:46And obviously you sell to men as well, but you just have like a very clear core demographic. And what's interesting is you've shown the ability to expand out in two different ways. One of it is like zero tech, you know, rings and chains are like as old as mankind basically. And then you have this other arm that's going into tech. So I don't know, I think that there's got to be, there's something there that you found that's really working, that's allowing this product expansion. And I'll be really curious as you're going through this to find out where you start to find boundaries where you're like, hey, it doesn't make sense to get into gum.

34:21Or maybe it does. I don't know. But at least right now, I've been pretty amazed. You've made some, I mean, like to say we're going to be going big in power banks and, you know, metal chains at the same time is not necessarily something I would guess would work.

34:35Matt Bertulli:If brand matters less, then why not put gut culture in Ridge? Yeah. So we need to actually introduce gut culture before that. So like, let me ask a question so that Sean can talk about that and then we'll come back to it because, okay, so Sean, we've talked about, you've done chains, you're doing all of this tech-based stuff, but you're also, I helped connect you to our command that we use for Trevi and you've got a product in the kind of hydration, you know, fiber space. Can you tell us about that?

35:08Sean Frank:Yeah. Before I do, Mike, Thanks for setting me up, dude. You've been my Evan Spiegel, if I'm Mark Zuckerberg. I'm doing powder like you. I'm going to do water bottles like you. So Jason better watch out. I might do pans pretty soon, dude. I'm coming for everybody. Just wait till you see my rings collection. It's going to be awesome.

35:28Matt Bertulli:Mike's wallet's coming soon.

35:31Sean Frank:Oh man, I think Mike's too smart to launch a wallet. So yeah, last year growth wasn't awesome. We had our slowest growth year in I don't know, a long time, right? And a lot of it was meta issues. A lot of that was like, this was before we had a smash hit in tech products. Like it was right before it came out. I'm like, okay, we should diversify this business. The weakest part of my business is LTV. To this day, it's the weakest part of my business. You know, so talking to bankers, I did a bunch of research. If we went public, we would have the worst customer retention rate out of any public company in the consumable space or the durable space.

36:09Sean Frank:like if I if our 12 month repeat rate is like 1.2 okay yeti which tells coolers that bears can eat is 1.3 right figs is like a three nobody's coming back and buying wallets from us it's it's like I always tell people this people think I'm trying to keep them out of the wallet space I'm like I'm telling you man it is the worst product category to possibly be in like it is it has no LTV tied to it so we've always known that was an issue you're basically selling caskets at this point and Sean where it's like you're buying one and then you're, you're done. Yeah, dude. At least, at least caskets might have like, you know, maybe extra pillows or something.

36:44Sean Frank:Like I got, I got nothing to sell these people. So, um, we ended up, uh, like we, okay, we've always done this as an issue. I wanted to solve it. And the easiest way to solve LTV, something on subscription, how do you send a subscription? You make people eat it. So that's what like, we got to get into, we got to get into powders, right? There was a lot of debate internally. I was like, let's just do Ridge supplements. We'll make supplements for the same guy we know we're talking about, a guy who would buy a chain from us, a wallet from us. There was a lot of debate internally. It's like, let's spit it out.

37:15Sean Frank:Let's do a separate thing. So we launched Gut Culture. It is a fiber powder. It's probably been cooking for, it's been out to the public, eight months, nine months, by the time this is out. It is a decently successful business. It'll be a million, maybe a multi-million dollar product in the first year. and it also created a playground where we could actually learn how subscriptions work. With that being said, I just told you that chains might do$80 million. So by powder, doing a couple million is less exciting. But it was a good hedge because if let's say chains failed and techs failed and my business was flat year over year, I'd be super excited about the$2 million I'm going to make off Gut Culture.

37:55Sean Frank:I'd be going all in on that product, right? It was just a good hedge to make at the time, understanding the challenges to the core business. Now, anytime there's a problem, I'm going to look for a bunch of different solutions. So the problem in Ridge is like, hey, growth is slowing down, right? So we launched a bunch of products, we found growth. And now in May, 2026, I'm growing like 90 % year over year. So I'm like, okay, I've solved the growth. Which is wild, by the way, at your size. That's a wild number. Yeah, yeah. I feel like Jason Panzer over here. I've never noticed that his last name is Panzer.

38:31That's so appropriate. How does that not come up before now? I'm like, I got, there's so many jokes here.

38:39Matt Bertulli:Keep going, Sean.

38:40Sean Frank:We solved the growth problem. And now we still have the culture as a good hedge. It's been fun to learn how subscriptions work, right? As much as I know about e-commerce, they don't know anything about recharge. They don't know anything about rebilling. like I've never done this stuff before so it's been good to go in there and actually learn that and that's where we have great mentors like Zach and Jordan from Nits and Hydration who like the business model is so different because everyone loses so much money acquiring customers and then it's just like a prey that they stick around for four to six months and like optimizing that actual retention and how do you get your tax as low as possible so that like you can break even at three months instead anyway and we've been learning that whole game which is uh it's very rare you get to get paid to learn stuff.

39:23Sean Frank:So that's the beauty of gut culture.

39:25Matt Bertulli:Why not? Okay. So like you'd kind of like, why not put gut culture in Ridge if it's about learning and it's about all that stuff? Like if Brian doesn't matter and shark ninja can make everything, I mean, they'll probably launch supplements at some point. Uh, you know, why not put it in? Why not put it in Ridge?

39:41Sean Frank:Yeah. I mean, that, that is me losing debates internally. Like I, like I said, I'm the, I'm the driver, I'm the driver of progress, but there's other people who get a vote. So I'm like, dude, it's just going to be called Ridge Gummies and we're going to launch them tomorrow. Internally at Ridge, people are less enthusiastic about the Ridge Gummies of the world.

40:01Matt Bertulli:Is that their defense or their argument? Is their argument brand and customer?

40:08Sean Frank:We'll have Connor on the podcast. We have thought about this for five years. If the wall branch can sell soap and sell gummies and sell gut fiber or whatever else. So look, a good compromise is it's the same team working on the same stuff. And we just spin up a new LLC and we just do a new website and Ridge can loan the money to it and we can buy inventory through it. That's what we ended up doing. So I'm not complaining. I think it's totally fine. I love having it on a separate thing. But yeah, in the future, maybe we do Ridge supplements independently. Also for the first one, good chance we could have fucked it up.

40:39Sean Frank:So maybe that's one that like if you think there's going to be a second shot on goal, maybe that's the one you don't want to mess up. Nobody cares if we do shirts and take them away, but if we make a supplement and it tastes disgusting, maybe people aren't going to buy a second one from us. Or if you create something and you get 20 ,000 subs and then decide to kill it. It's just a little bit messier because you're kind of creating an ongoing expectation with people. My observation of your team, Sean, would be that you have a team that's elite at digitally acquiring new customers and that that cross applies to many product categories.

41:15Sean Frank:Yeah, I mean, let's go back to the Shark Ninja owning aisles. I think that's kind of, yes, they own aisles, but it's because they're willing to risk R &D. Target and Walmart do not do R &D. They are fast followers of products. They will make knockoffs of your products, but it takes them 12 months to do that, right? 18 months. And that's them acting very, very fast. What Shark Ninja promises is, hey, we'll have a new thing every six months that customers are going to want and we'll go into your store and buy. If it's the slushy machine or the Ninja Freezy or the glass air fryer, we're going to make new stuff and put it on your shelves faster than you even know what hit you, right?

41:54Sean Frank:So there's no way for Target to launch a knockoff brand of a Shark Ninja, right? Because Shark Ninja is doing all of the testing for them and doing all the new product development and releasing that into the world. And that's why you go to a Target and there's knockoff microwaves, but there's no knockoff Ninja Freezy because the Ninja Freezy, it's too new to have a knockoff out. And that's part of their superpower is that they're driving people in store and they're doing R &D. Ridge's superpower is we have a very good product team. We're able to make products very fast in terms of the DTC world, but also we can put it on digital the next day and start selling it immediately.

42:31Sean Frank:So our superpower is instead of owning the aisles, we can own the ad channels, which is just spending a ton of money very effectively on Facebook or Google or YouTube or whatever else. And I think we'll get new superpowers by putting in celebrities to it or whatever other thing. Internally, we've started to talk about just rethinking certain parts of how we bring new products to market. And we would always talk about it like a product launch. And I've suggested that we change up our terminology and that we add what I call a validation stage. because it seems to me that with any new product launch, you really have to validate two things before it really becomes a product launch.

43:11And one is you have to validate the product quality. And I'd like to think we're pretty good at this. You know, we've done a lot of it over the years, but I think the reality is you never can totally tell how customers are going to respond to something and things that they're going to maybe not like when you're just playing with it internally. so you have to you just have to sell a certain number into the wild and hear people's feedback before you know if this is something that you want to go big with and then i think the second thing is you have to get a feel for is there organic demand like even you mentioned it sean it's interesting for as long as we've been in the game we'll still get caught off guard by things like it sounds like you were caught off guard by how well chains is going like you probably i mean you obviously thought it could be successful but maybe you didn't think it could be you would have this much kind of natural organic demand from your customers.

43:59And to me, that's the hallmark of products that end up turning into winners. It's interesting how there's so little correlation between how much you buy in the initial PO and whether or not they're likely to be successful. I think the things that I've seen as the predictors of success is that your ratings and customer feedback about the product quality come back extremely high and you see natural organic demand of not having to sell it to anybody. They just kind of see it and get it and want to buy it. And those are the ones that usually rip for us.

44:32Matt Bertulli:Most AI tools and software don't give you direct ROI every month, but PostScript does. I run two PostScript AI products at Ridge. Both show up on our P &L. Infinity Testing runs continuous A-B tests on our SMS automations completely in the background. It's driven$446 ,000 in incremental revenue, not just attributed, incremental. That's a 32X incremental ROAS with click-through rates up 43%. Then there's Shopper, an AI sales agent that answers every inbound text in under 40 seconds. We're running 23x ROI on messaging costs alone. If you want SMS software that gives a proven ROI, go to postscript.io and book a free demo.

45:10Matt Bertulli:Can I ask you both this question then on that, Mike? Sean, how do you size the bet for a new product? So you're going to launch chains. There's an R &D cost. So there's a product development costs. There's an initial inventory cost. Are all the bets the same when it comes to new product? Like you basically say like, Hey, we're committing like, this is the max we'll spend on a shot on goal. Or do you, do you have ways where you come up with higher conviction on some versus others? And then like, you're going to put more money into some versus others. I just, I've never really thought about like, how do you size the bet?

45:45Sean Frank:You never really know what's going to be a hit. The big problem at Rich is I am usually overly enthusiastic about everything we put on the board.

45:52Matt Bertulli:Oh, you're an entrepreneur. Shocker.

45:54Sean Frank:Yeah, I'm like, oh, that's actually going to make us billionaires. And I put that for every single product on there. And it's got us into problems in the past where I buy way too much shit that sucks. So we've standardized it to, if you're a professional gambler, it's called units. So typically, it doesn't matter how much money you spend, you break that much money into either 10 or 20 units. And depending on what you think your advantage is, you bet more units. So if you don't really have an advantage and you're just trying to stay in the game, you bet one unit. And if you really think you have a guaranteed chance to win, you bet 100 % of your units, 10 units or 20 units or whatever.

46:33Sean Frank:So you should learn how professional gamblers play because we're basically gambling. And you bring it over here. So we size our bets based on units. And if we're doing a product that we're just going to give away for free or we don't care about, it's$50 ,000, it's one unit. the average buy for a product ends up being$350 ,000. So like every new thing we launch is basically$350 ,000. Chains is a little bit less. Chains is probably two or three units, like$100 ,000 or$150 ,000 bet. And now we have to go and crank that up because it's going to be a big hit. So we're going to buy more of them and you have a supply chain that's nimble enough that you can chase stuff in three months or six months and get it here again.

47:09Matt Bertulli:And batteries was probably more expensive because there's like a bunch of stuff around batteries from what I understand that should make it harder to order. I think that one of the things that we've learned in this area is that the times where we've gotten ourselves into trouble has been when we've been greedy for growth right now. I remember years ago reading, I think it was Bezos said something about how on Amazon, they think about their bets as like planting trees and trees take a while to grow. And so they'll they'll plant things that they don't expect to really be able to eat the apples off of for three, four, five years.

47:42and in the early years of Simple Modern, it was like, hey, you launch it and it's going to rip immediately if it's a winner. It's going to like dramatically impact your top line, you know, from go. And now at the scale of company that we're at, that's harder to do, especially because we're more wholesale Amazon than D2C. So I've just really kind of been drilling it into my team. Like, you don't have to be in a hurry to kind of get this thing to full scale like we have been in the past. Like you can launch it in limited quantities and see if we've got something. And then and this is what companies do as they mature and they get bigger is they start to have roadmaps that are, you know, one, two, three years out.

48:23It sounds like that's where you guys are going as well, Sean, where you're like, you're really starting to build a roadmap where you've got good ideas that'll hit next year and next fall and maybe in 28. And that's I think that that's just a necessary discipline as you get bigger.

48:36Sean Frank:Yeah. And my biggest advice to people watching this is like, you need their roadmap, but you don't get too rigid because I talked to Yeti once and they had a five-year product roadmap. And I'm like, that means if they have a good idea today, it's not coming out till the end of the decade. And that's not good. And you've seen them get caught flat-footed. You've seen them become stagnant because of that. They totally missed the the Tumblr trend, they totally missed, you know, Prince patterns. Like everything Mike's doing that's making him a ton of money, they totally missed that because they have a five-year product roadmap.

49:09Sean Frank:So it's like we used to have a two-day product roadmap where as soon as stuff showed up, we'd start selling it. And we've moved to this like in between where like we have next year totally planned out and it's the best stuff we've ever launched. And I'm bummed because I want to launch it right now, right? And it's like that's the perfect place to be.

49:26Matt Bertulli:So if you are sizing the bets in units, so it's like, you know, a hundred to 300,$400 ,000. What is the minimum amount you need to see in like year one from a new product to keep it like a new category?

49:42Sean Frank:Yeah. So we unfortunately keep categories too long. That's something we're going to talk about internally is that like, you know, we have pens, pens are fine. We do a couple of million dollars in pens. I've wanted to shut pens off forever, but we don't do it because, Oh, what about the revenue? Right. And at a certain point, it's like, you have all this baggage. We have to have meetings about ordering pen colors. And it's like, look, we have rocket ships in the business right now. We should make sure that they're taken care of before we have this sync about pens or whatever else. So I wish we could cut them sooner.

50:13Sean Frank:I think the next phase of Ridge is cutting stuff sooner that is underperforming or just isn't living up the potential, isn't worth the dollars going into it. So yeah, I think we should cut them sooner. And then in terms of successes, we just know kind of the first week, if it's working in ads, we have something there. If there's market pull towards it, it's like, okay, like this bet wasn't wasted. We can double down and order it and chase into it. No, I totally want to emphasize what Sean just said because the way that the thought process from people will go is you launch a category and maybe it's great at one point or maybe it's never great, but it's fine.

50:51And then it's kind of like, well, we've done all the work. we should just leave it up. Like, why wouldn't we reorder it? Like, people are buying some of it and we've done all the work. But I think it's about editing. What I'm kind of coming to believe is that you have to constantly be adding things to your company and editing things away. And so that over time, the very shape of your company does start to change. And sometimes you have a, hopefully you have a real core, like Sean has a real core around wallets. I don't think they'll ever edit wallets out of Ridge. Although they could, who knows you know if tech stuff took off to a certain point there might be a point where it's like hey we're going to edit out all the non-tech stuff but if you're going to keep adding you have to be willing to edit when we were we moved recently and when we moved we had just a really bad experience having to move all the stuff out of our old house and the reason why was for 10 years all that happened was stuff flowed in.

51:50You know, we had kids every day, 10 Amazon boxes showed up and it's just like a math problem. And eventually we had stuck stuff everywhere you could, I mean, we moved out of that place. We had stuff stuck in parts of the house I didn't even remember existed. And your company can get that way, right? Where it's like, if all you're doing is launching new things and adding things, then you get the equivalent of scope creep. And so if you want to add the skillset of new products, then what you have to do is pair it with the skill set of being willing to put things in the ground.

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53:07Matt Bertulli:Would it be fair to say there are exceptions to that, Mike? Like the guy that jumps to mind for me is who we had on the Titans, Gibran from, was it Utopia? Right? Like he's in 500 categories. They're doing 780 million or$800 million a year. And I'm like 500 categories. I'm like, I'm just doing the math. I'm like, so you have categories that might do like a million bucks. Well, I think it depends on your distribution channel. I mean, Gibran has an amazing Amazon business. So like, I mean, it's the best one in the world. So for them getting into more things. But you know what? I bet if we asked him, I bet he would say they've probably killed 40 to 50 percent of the SKUs they've ever won.

53:52Matt Bertulli:Right. And so they're left with the 500. They shot, you know, 300 other ones. Yeah. Yeah. Because we're just not going to like, I mean, like when we launch a product, it's an asymmetric exercise. And I'm really having to drill it in my team's head constantly. This most likely will fail. The odds are that this will die, that this will fail. And every time you launch a business, it's just like every time you start a business, every time you launch a product, the most likely outcome is that it's going to die. And so if you can kind of institutionalize that where everybody understands that, that what we're searching for is the 10x, 100x, 1 ,000x, then you don't get...

54:31Because here's the problem, is that everything in your business takes mindshare. And somebody's got to manage it. It adds the complexity and it drags you away from the thing that's the most important, like Sean was just saying, that you end up having another meeting about pens instead of having another meeting about power banks. And that's a net negative for the organization.

54:51Sean Frank:Look, I'm not going to tell Utopia brands how to run their stuff because they're obviously killing it. But I bet they could do, if they're going to do 800 this year on 500 categories, I bet they could do 700 on 100 categories. And then it just comes down to, is$100 million worth the effort? And if you're Amazon, probably is, right? It's very easy to run a new category on Amazon if there's organic demand there. It's very hard to do it on DTC where you're launching 500 ads a week or whatever.

55:16Matt Bertulli:Yeah, your paid machine is the level of difficulty is higher, right? There's a lot more effort.

55:21Sean Frank:There might be no other channel as easy to have product categories as Amazon. Because if you're in wholesale, you're meeting with suppliers. You have to meet with that buyer. You have to take them to dinner, right? to have a category that does a million dollars a year, right? That's worth nobody's business. But on Amazon, I'm kind of like infinite shelf, infinite brain space. It's funny because Brian, the new thing that Brian's working on has a more D2C element of it. And he's just like, man, I'd take him for granted how easy a lot of this stuff is with Amazon. Because his role had over time kind of morphed at Simple Monitor where he was primarily managing Amazon, even though he was over all the e-commerce stuff.

56:02And, uh, once you have, have kind of been on the juice of Amazon for a while and then you're like, Oh wait, I've got to do all of this stuff. Like it's just way more complexity than sending orders into Amazon and saying, you guys figure out, you know, storage and shipping it to the customer and refunds and whatever else.

56:20Matt Bertulli:I would love to expand on the wholesale thing that you just mentioned, Sean, cause like dealing with suppliers, you know, Amazon's just the buyer, right? Their vendor. So you've gone from purity to C. You guys actually have pretty sizable retail business now, right? You're in Best Buy. You're probably expanding that. How does that factor into the product development now? Or does it at all?

56:45Sean Frank:Chains doesn't have a wholesale element to it. And I wish people would be more realistic about what's available in wholesale to them. And that's the big problem with our wallets. And I think I've had that with Connor. Our wallet business does eight figures, but barely. It's a pathetic eight figures in wholesale. And it's because name places you can buy a wallet in the real life, right? And it's like, you can buy them at Target. That's true. You can buy them at Walmart. You can probably buy them at Costco. Our wallet's too expensive to sell at any of those places, right? So it's like, where else can you buy a wallet?

57:16Sean Frank:You can go to Nordstrom's. We're there, okay? We've exhausted the list. Like, look, there's and I do sell them at Shields, right? I sell them at Dillard's, okay? There's regional places I end up selling them. But if you're not in those three mass markets, which you can't because of price point, where else am I going to sell these things, right? That's where you have to end up opening your own stores, right? Chains is the same way. Which is also what made jewelry work. Jewelry in general, you're never getting into anything wholesale with your jewelry. But if you can create your own demand and your own kind of storefront, then it's a huge market.

57:56So, uh, you guys have made that work again, going back to being elite at being able to generate traffic and, and generate demand. Yeah.

58:04Sean Frank:It was just, it's understanding from the rip that it's not going to be a wholesale category. So like, I'm never look, if Shields, you want to buy the chains, I'm happy to supply them to you. Right. But like, you know, there's Zales is like the only and you know they sell their own stuff so it's like i'm not there's no wholesale opportunity for my jewelry business um tech is the exception where i'm going to be in all those i'll probably by the end of 2027 being 4 000 doors with tech because there is a market for tech in those and because there's nothing intimidating about those price points in those parts of the store like the price points you guys are at it's interesting sean one of the things like to the point that you just said.

58:43I think this is where when you do launch a product, you should have some vision of like, hey, what is our best day with this? Like, how could this play out? And actually, now that I've finally gotten to like, we are totally in the flow with Trevi. We're having, you know, we're on a very profitable trajectory now. Like, I think you could get maybe to eight figures of profit next year. We'll see. But the, I have contribution profit, not even gross profit, but contribution profit. But what I realized is I would have gone back through the process differently even now than I did. I would have started like first principles and said, well, what's my best day?

59:19And my best day is with my skill set is I'm selling a lot on Amazon and I'm selling a lot in physical retail. OK, if I'm going to go into physical retail and I expect this to be able to work for a multi-year period, what's the price point that really works in physical retail? Well, it's Gatorade. What is Gatorade's price point? 50 cents a serving. So that's the bar that I need to kind of think backwards from is that if I'm going to sell a lot of this the way that I want to sell a lot of this, which is different than the way you want to sell a lot of things, then I need to start thinking in terms of 50 cents a serving.

59:49And then I need to think, OK, if 50 cents a serving, where is my first channel where I can profitably acquire customers? All right. I figure that out. And how am I going to be able to get affordable CPAs but then still make good enough nominal profit to make this work? and that's how we ended up getting to the right answer but i could have gotten there a lot quicker if i'd just known to go through that that flow chart and so like you said when you got in change you knew wholesale is off the table that's not our best day our best day is selling a lot of chains to the website and it helps you to launch that product well yeah and like you know we have

1:00:21Sean Frank:a good wholesale team they're working really hard to try to sell a lot of stuff to a lot of people who who don't necessarily want it or it's hard to sell to and when we get into product category like drinkware, you have to sell those in-store. It's like, how do I get, and I'm not going to take shelf space away from Mike, right? Because I think Mike has a different customer, but there is a men's focused water bottle in Target right now. And how do I replace them? It's like, that's the conversation we have to be having is like, that's the best business for drinkware is Yeti and it is all over DSG.

1:00:56Sean Frank:It is all over, you know, REI. It is any hook and bullet store in America has an entire shelf. If you go to a Shields, they have not only a shelf, they have like four walls dedicated to Yeti. And it's like, okay, how do I make an impact here? Because this is what winning looks like in these businesses.

1:01:11Matt Bertulli:Is it fair to say, Sean, that like a product that is priced, I guess like a non-consumable price for DTC probably doesn't work at retail because the price point needs to be higher. You just need more because you need enough contribution dollars or enough gross margin dollars to actually run a proper acquisition machine in DTC, which means your price point is probably too high for most of the mass market retailers.

1:01:36Sean Frank:Yeah. And so what you described because durables in Target, it's like, yeah, walk around. Who are they selling? If you go to the fashion aisle, Target is now 95 % owned. So those are all in-house brands. This is also why they're going and they're like, we need the ridges on our shelf. We need the hex clads. We need the baseball lifestyles. We need these brands like that instant hydration. We need people that are generating buzz online because, well, I mean specifically, they want to see brands that have a lot of heat on the internet and specifically social media because they they're trying to like if you think about it as a retailer your your job is to produce EBITDA growth well you can't build more stores you've already got a huge store footprint if at most you're going to build your store account by like two or three percent if it doesn't go down because there's some places in the United States you have to put everything behind you know uh key in chain, you know, to keep it safe anymore.

1:02:40But so you can't grow stores. So what these retailers basically did for like, I don't know, a decade or two is they were like, well, we're just going to gradually make it where we sell everything in the store and our margins will be better on that and we'll grow EBITDA. And they went all the way, you know, like in clothing, Target went all the way as far as you could go. And eventually people were like, wait a second, you know, I think I'm just buying Target's brand version of everything and it starts to hurt your foot traffic. And that's kind of where Target finds itself. And so now they're swinging back towards like we need brands that'll independently bring people to stores that are going to delight people when they find them in stores.

1:03:17And that's creating some real opportunities for some brands that we're close to. We know several brands that are going into Target right now and getting opportunities that have been purely digital up until this point.

1:03:29Sean Frank:Yeah, and huge store rollouts too. I mean, full chain. But anyway, so the reason I bring that up is like, yes, if you're non-consumable, you're already in a very small part of the store because take out the whole middle, which is the fashion. You take out two thirds, which is two thirds of an aisle, which is beauty. The back is all food. So you got to take all that stuff out too. And then it's like you have stationary and then you have like hearth and home, like all of their home goods or whatever. Like there's just, there's not a lot of places to go on a target. And that's why it's like, okay, they're not going to buy my wallets.

1:04:00Sean Frank:It's like they, they do sell men's wallets for$4.99. So it's like, I was like, I can't go in there. There is the back tech section. And that's the session, the section of the store that, um, you know, it has the highest ASP. So, you know, they, they're typically selling stuff for$200,$300. So I can go back there, but also it has like, it's the least productive space in the entire store. So the average sell through is really, really low. Everything's locked up. I'm actually surprised that all targets still have TV sections, to be honest. So much of the world has been eaten by Amazon. But anyway, maybe you'll see us there soon.

1:04:38Matt Bertulli:Can we circle back, John? So all this to say, right? All these product categories, wholesale, you started off talking to bankers and multiples in sort of like a company like yours versus, you know, the one that Bill was talking about where there was a 19X on 4 million in EBITDA. If you had to guess, what is the multiple for a business of Ridge's profile? Like, or, or like similar to Ridge, like smaller, larger, like, where do you think the market is right now? Because that people are going to, we're going to get a message, man. So we may as well just answer it.

1:05:12Sean Frank:And look, if there's anybody listening, you can email me, shawnaridge.com. And I'm happy to make intros to either bankers or PE groups, just depending on your size. The reality is half of things just won't get a bid. So if you're distressed by any measure of that word, so if your revenue is not growing or you're not profitable, you are not going to get a bid. Nobody wants to buy you. And that's really fucking sucks to say. Even if you're like, well, we are going to be profitable this year, dude, nobody's going to buy you. There's just, and like, it's so painful. There's literally no buyer. Private equity groups do not want to buy you.

1:05:47Sean Frank:And if you did get an offer, it would be for such a low amount of money, you would be so mad, right? Like I'm talking, I got pitched a business that is, they're going to do$30 million this year. They're in a good category. They did, their peak was 50. They've never made a profit. What would you bid on that business? like like my my bid might be five hundred thousand dollars right it might be a million and that might not cover assets like this they owned a building they had inventory it's like look so much of this business is a liability i just don't want to take on right um that's just the reality of uh of of what's ahead of us right now if you're growing decent 30 even 20 something like that.

1:06:31Sean Frank:If you have EBITDA, a 5 % EBITDA and above, let's say that's your business. You have 5 % EBITDA, you're growing 20%. You're probably going to get a bid for 5X that EBITDA number, 7X that EBITDA number if you're not in a really, really hot category like health and wellness or beauty. A business like Ridge would get bids for 10X EBITDA. We're growing, we'll call it 50 % this year with double-digit even up percentages. And I'm still getting a 10X because my categories, people just don't really believe them right now. Now, if you want to buy my business, I'll happily take that 19X that we were talking about earlier or whatever else.

1:07:13Sean Frank:Because you have to think, I'm not at a place in my life where I have to sell the thing. I could run this thing. We have a great leadership team. We have awesome growth coming out. uh we'll distribute 20 million dollars or more this year i'm like it's pretty yeah i don't know i'm having a great life so i'm gonna keep doing that um but if yeti you want to buy me dude so it's 20xd but i'll say i'll send my wire information over to you this is john sell his business pod he's another nanny that's what we uh also confirmed look and i know it sounds prestigious i know i never i never had a nanny i grew up very poor i didn't think about getting a nanny, dude, it has made my life so much happier.

1:07:57Sean Frank:Oh, 100%.

1:07:57Matt Bertulli:No. 100%. You're also running a company, dude. Like, 100%.