How to Create a Product From Prototype to Launch: Operators Build (E2)

0:00Welcome to episode two of Operators Build, where you watch us create a brand from scratch, step-by-step, doing it in public. Today, we are going to cover what goes into making a product from scratch. In other words, your product development process. And to do that, we're going to hit on three big questions. The first is, what are you making? The prototype, the minimum viable product. The second question, number two, is how much should you make? How much market research are you doing to go into this number? what is the actual moq of your co-man the third question is who is going to make it back to that co-man who is the partner are you sourcing your own ingredients are they doing everything for you what's the product design all of this is part of product development and that is what we want to cover today and to do that we are going to go back in time so you can see the real meetings between all of us founders we recorded the actual work so you can watch it and hopefully learn from it I think the main focus of this conversation needs to be driving towards a PO.

1:02So Sean, to kind of just catch you up to speed, I think that when we were doing the Trevi stuff, and I know you're working on something similar right now, I actually was thinking about this just last week because it was kind of like the one-year anniversary of us going out and doing flavor development on it. and for us we wanted to move really fast and we started really pushing on a po around this probably around end of month maybe a little bit earlier and uh we got it to market like the last day of november so for our goal of trying to be around black friday like we've got to be we got to be basically on it right now unless they're going to execute quite a bit quicker than than we experienced.

1:46So with that in mind, we made some really great progress on packaging last week. And I think we all have gotten very excited about this idea of the kind of more mascot driven and potentially more of the kind of family, you know, including kids angle of this thing. So, Sean, if you want to talk about that, we can kind of recap that. But then if we're going to do that, we've looped in Chris with Curtis on text. And Curtis, I think you provided some die lines or maybe at the very least some packaging kind of dimensions. And Chris is working on that. It's huge that we have Chris because I will say like this part of the process is actually one of the most time consuming is just getting the packaging synced up.

2:34You can lose so much time here. But what we need to do, I think, is start to make some real like product decisions like, OK, how many what's the count? How many flavors? Like, when are we going to put in this PO? Who owns that process? How do we make sure that we get all the packaging on time? Is there a free gift? Where's the free gift coming from? Who's serving? You know, like that was something that I think you brought up, Sean, which I think is very much the right way to go, this kind of free gift. And once we had kind of the mascot, it's like, oh, wow, there's a lot of kind of cool free gifts that you could put in here.

3:06It could be a, you know, like a sleep mask. It can be nose strips. Uh, if this is really going to happen, it's July 14th, this PO needs to go in in the next 14 days. So we've got, uh, and, and all of us have other things going on. So I think that's kind of the focus of this conversation is how do we drive towards putting something in? Let's just recap. We're going through this. Yeah. I know you just recapped, but like I, what's the actual product we're going through this right now. And it's like, look, every flavor you add, you know, increases cost by 50%, right? So do we want to do one flavor in, I'll tell you how, look, because Mike, I would love to hear your thoughts on this.

3:46This is, this would help me, you know, in more ways than one. Trevi is competing with, you know, all of the best Gatorades out there, right? So like it has to come out in berry. And I think you launched with three flavors, right? A lemonade, a berry, and something else. we launched with um basically five variations we had a variety pack that had four flavors and then we individually bought the four flavors in the variety pack you only sold them as 30 packs we did 28 packs and then um we also did a couple of them in 10 packs and if i could go back and do it all over again, I think where I would start is just one variety pack on Trevi, and then I would branch out.

4:32So what we see as behavior is people don't know the flavor they're going to like, obviously. I mean, this is the hardest part about consumables. So, they're very drawn to the idea of a variety pack because it's like, okay, I get kind of four whacks at the pinata. I can find one that I like. But then, the behavior seems to be A portion of those people will continue on with the variety pack and then they'll start to split off like, oh, I really liked berry lemonade. So I'm just going to buy berry lemonade. So I do think there's a place for individual flavors. Like you're saying, Sean, the investment just scales.

5:10And I will say this. We really, really, really got our supply chain wrong right out of the gate on Trevi. fortunately and and we probably i don't know we probably set another an extra couple hundred thousand dollars on fire just kind of right sizing that um and we're almost kind of done with the right sizing of that i mean prime day helped a lot we moved a lot of units on prime day but um so the easiest way to get into supply chain hell is is to get seven variations and and to be wrong on quantities and distributions yeah can you explain what actually went wrong on the supply chain? Was it just overordering?

5:50We were just wrong. Well, we had no idea what to expect on quantities. This episode is brought to you by Sorol. You're practically renting attention on meta ads and rent only goes one direction, up. Influencer marketing done as one-off campaigns is just another form of rent. The fix is a system. Seed products at scale, convert the winners into affiliates, put your best performers on long-term retainers. That's what Saral is built for, finding perfect fit creators with their AI, managing personalized outreach at scale, built-in product shipping, one-click payouts, and tracking posts and ROI of all your campaigns so that your team can run influencer marketing like a machine.

6:35We're using them for the new brand that Operators is launching. Check it out at getsaral.com. That's G-E-T-S-A-R-A-L.com. in our case we were trying we were going to do the simple modern angle so we didn't know like how many people are going to gravitate over and the adoption was slower that kind of the way that it worked for us is like the scaling process was slower at first and then quicker later on than we expected but then also we didn't really have any feel for how often people would pick variety packs versus single flavors and what we have found is if somebody just kind of comes into your product at least in electrolytes, and I think this could be true in sleep also, and they know nothing, then they are going to, you're going to have a small portion of people that are just like, I like grape.

7:24And if you have a grape, I'm going to buy grape. But I mean, when we say small portion, I'm saying like 1 % of people. Then the vast majority of people, everything being equal, are just going to say, I'll buy the variety pack. And because that behavior is so strong, like when we're not doing anything with price where it's more attractive to go to other single flavors or whatever i think we we fluctuate between 50 and 70 percent of our volume just goes to the variety pack wow yeah it's it's pretty big so uh in in our case the safest thing to do is to first buy a pack that has two or three or four flavors whatever we decide however many we think are strong and then uh to make our and our follow-on buys by your very best flavor or like and you're probably experiencing this sean so if you think about it from a manufacturing perspective to the problem with going to a variety pack is that you'll have an moq so just for everybody listening to to kind of make this tangible let's say i have four flavors i have cherry i have grape I have orange, I have lemon, lime, whatever.

8:34Each of those flavors has an MOQ. Let's say that that MOQ is whatever, a quarter of a million sticks. So if I want to buy a variety pack, I now have to commit to a million sticks of production in order to be able to do that. Whereas if I was just going to do one flavor, I only have to commit to a quarter of a million sticks. This is kind of what you were saying, Sean, this is why it scales up. Now, the other side of that that's kind of nice is, well, once you've committed to doing a variety pack, it's easy to do really small quantities of individual flavors. So, and that's the way I would do it.

9:12So it's like, well, it's like if I'm already committed to a quarter of a million lemon limes, it's easy for me to break off 20 ,000 of those sticks or 30 ,000 of those sticks and bring to market. Now, the complexity there is you do that's more packaging to work through and every additional piece of packaging we're doing could slow us down and probably slows down the process um the other is so anyway all that to say i would i would say we start with how many strong flavors do we have and if we buy nothing else we buy a skew that's a variety pack of the strong flavors or if we've got one flavor that we're like, this is really the best.

9:53It could be that you just go to market with just that one flavor. Listen, guys, what is our brand distinctive? You have to kind of be able to say, what is our brand distinctive? Like, what is it we're rallying behind? And for Trevi, it's like, we are the best tasting electrolyte, the end. That's it. That's like, that's the entire story. So like, we need to be able to do the same thing with Winx. Just like, what is the thing? What is the problem that we are solving? And then it's really easy to get drawn into trying to solve like four problems. But that actually makes ineffective brands. Just like, you know, like it should be like an elevator pitch.

10:27Like, why do you drink Trevi? Or here's why I love Trevi. It tastes the best. The end. You know, here's why I take winks. It knocks me out. It's not like, oh, it knocks me out and it tastes good. It's like, no, it's like it helps me sleep. You know, I get the best sleep ever or whatever. And then you optimize around whatever that brand promises.

10:47Okay, before we go any further, Let's talk about what it takes to turn all of that product work into a purchase order. Yes, yes, yes. We are now talking about sourcing and manufacturing. And here are the questions I think you should be listening for. How much do you commit to before you have sold a single unit? We're talking mass production of something. You probably want to know what you're committing to. Who else is already selling this? So how does Winx even stack up? This is the competitive analysis part of the process. And then who exactly are you making this for? your target market, your target audience, the ideal customer persona.

11:23What changes once real orders and real feedback start rolling in? Should we refine the product? How do we learn from that feedback? That's coming up right now. We have to make this decision very fast. I would like to conserve capital and just come out the gate with one great flavor. I wouldn't do variety packs and I would just hit on the fact that this thing makes you sleep. I would pick the best flavor we got. And we could talk about putting in extras or whatever. It's just like if we want to take capital and put it into that, right? That's really probably a second or third order thing. It's like, can we just get this thing in the market and try to sell it for the sticks?

12:07And then we can obviously improve it, right? But I'm incredibly conservative when it comes to that stuff. Curtis, you're doing the dev. Do you think we should do the variety pack? Mike's kind of saying variety pack, but I don't know how to make a call here. I actually, I think you might be right, Sean. I think if we're going to aim at kids, I think you literally just go out there and you say we pick a cherry or a grape or whatever is the most coded to what you would see in kids' products. But this is where it's like, who are we aiming at? Because we started to feel like last week that aiming at kids, parents that have kids that are having trouble sleeping or families or whatever, is the easiest market to target here.

12:45And if that's the case, I think you're right, Sean. It's like we don't, you know, Tylenol doesn't have like 10 flavors of children's Tylenol. They have like two or something, you know? Yeah. I mean, being devil's advocate and not disagreeing with what you said, Sean, obviously there's capital costs associated with that. I reach out to our co-man to see what we can get our MOQs down to and what that would look like for, you know, multiple SKUs. Here's the thing. You said it like a gut health or, you know, an AG1 as an example. Like it's a one fit, like all in one solution. And people are solving a pain point that they don't give a shit about flavor.

13:24We're looking at habit forming every single day. Also, are we family focused or kid focused? Like the way I look at it is, is that we have, I would say three in the front running for like flavor profile, which is lemonade, great and peach. like far, like destroyed the other ones that I, that we had mixed berry, raspberry and, and a lemon lime. And my wife is like, lemonade is amazing. My daughter's like, I love peach. I'm a great guy. And so it's like, for me, a family of four, it's like, man, I would be like, we're going to pick this. We're going to pick the variety pack all day long. Cause I don't want to have like three different pouches.

14:07And also if we want to have encourage, I'm curious about behavior. If we want to encourage, this is a daily routine. Are people going to get tired of like, if it's AG1 or a gut health, you kind of just know that it tastes like and you just got to drink it. And you know, you're going to feel healthy. If we're focused on a sleep solution, it's not like people are taking NyQuil every single day. Well, some people in the world probably take it every day. Um, but you know, if we want habit forming, do people want like a, after 20 days, I want to switch it up after a hot night. I want a little lemonade flavor versus a great flavor.

14:42Like, do they want to switch it up so that we can encourage them to, to really have that adoption every single day, you know? And so I get torn because removing the capital costs, which obviously is a big decision. What's going to encourage families? Like if we're the, let's say we call it, we're the only natural, we're the only natural family focused sleep supplement in the world? I don't know. Like we're, we're the best family focused sleep supplement. Um, you know, what does that look like? You know, from a flavor profile, do you like, I almost on one side, we're not going either, even though we're a hundred percent organic, a hundred percent natural, you know, it's extremely health oriented, you know, it's science backed based on the ingredients, you know, we're not, we're also being friendly and, and accessible with our marketing and our style and who we're targeting to.

15:36We're not targeting to the optimizer. We're not targeting to just like that, that health oriented person. We're actually targeting families that are struggling with a major problem. And so I'm wondering if the variety caters to everybody in the household a little bit more. I don't know. Yeah, of course. I definitely hear you. i think variety is a better product but does it make for a better launch right so like you know nyquil comes in one flavor which is you know dark goop uh yeah and this is where like look i want to put in those strips i want to put in the little stuffy like you guys sent those things over i'm like adorable let's go those things made to be awesome yeah i i want to make the little cup i want to make like all this stuff but i'm like actually that's probably year two right like Like, let's, like, the timeline we're working on of, like, right now, if we go incredibly fast, we get them here November, or sorry, December 1st.

16:33We have to start marketing this thing, you know, December 25th so that we can hit, you know, new year, new me, get banned, all the challenges we're going to have to face. And I would just rather do that with a smaller buy off the rip. One flavor, we put it on there that it's, you know, I think you guys said, like, grizzzy, zz grape or whatever, like, and just nail it. I think a very tight launch so we can make sure we have something and then tweak it going forward. Shoplift is a CRO platform built for e-commerce operators and the only one that Shopify Plus certified. We're using them for the new brand the operators ourselves are launching.

17:11They've built a free CRO resource hub at shoplift.ai slash operators. Real conversion benchmarks by category, the seasonal patterns most tools hide, and practical CRO. for how you actually run your store. Two ways in, get your free benchmarks or start a free trial at Shoplift. Go to shoplift.ai slash operators. One thing to encourage you guys, if we're right and we find product market fit, the flavors aren't gonna prevent us from getting there. Like we can't expand outward into it. Ultimately, does the product work? And the thing about choosing something like grape is that if you're going to go after families, like the kid has to drink it.

17:58And my kids, I don't know if they're like your kids, but like when you're trying to give them something, they're like, what's the flavor? You know, before they'll even put it in their mouth, they're like, what is this? You know, and so being able to pick something like grape or lemonade that's really obvious and accessible to them, I think is fine. I think you're right, Curtis. Like if you're going to drink this every night, you're eventually going to want variety. but also to make the initial first purchase. Like really one of the things that has been helpful to me over the years is to learn there might be 10 questions I have to answer but I don't have to answer them all at once.

18:36The thing we need to solve for right now is like what do we need to answer in the next, you know, before February 1st? And I think the number one thing we need to answer is do we have product market fit with this formula? when it comes to helping people sleep? And can we find an effective way to cost affordably acquire new customers? And if the answer to both those is yes, all the other stuff we're going to be able to work out. The distribution questions, the flavor questions, the scaling questions. And if the answer to those is no, then we're done, you know? So we need to put all our kind of wood behind those two arrows of like, does the formula really work can cause people to rebuy?

19:21Can we cost affordably acquire new customers? And that's why, Sean, I actually will defer to your opinion here. You're running marketing. So I want to make sure that you have the material you feel like you need to go and tell us, hey, I can do this or I can't, because that's the most important question by far. And this is also why I think the positioning of like the positioning matters a lot because it really impacts who we're marketing to and how we're marketing it. A conversation that's worth having right now. I am a big first principles thinker and I'm a big, you start with what's the end goal and you work backwards from that.

20:00And we haven't really talked about, hey, what is the goal of this brand? Is the goal of this brand that we try and hit maximum velocity in 12 months and sell the thing? Is the goal that we turn this into a cashflow monster? Is it the goal that we grow to the point that we can hire a management team and we can be passive owners? Because I do think that that will impact the way that we approach some of these questions. I mean, you guys have any thoughts on that? We're never going to sell the flavor, okay? Because when you're selling flavors, I brought this up, I'm like, okay, Pepsi wins. Coca-Cola wins.

20:34It's like Gatorade's going to win. They're going to put sugar in their thing and they're going to have a better tasting product, right? because Mike you're selling flavor but you're also selling hydration and all these other things right it's the best tasting hydration thing and that's your angle to win it's not the only angle to win what we're going to sell is put your kids to sleep sleep better I'm going to post about my 100 % sleep score because I use this product right the flavor just needs to be good like it's on the list of value props we're going to sell it's like okay what problem does this solve get deeper better sleep non-habit forming yeah well and yeah to expound on that point sean if what you're trying to sell i mean it is interesting like if you're selling hate your kids will sleep and so you will actually sleep that's an actually an interesting value prop of like as much as you taking it so you'll sleep you know the number one thing that wrecks your sleep if you have young kids it's your kids waking you up in the middle of the night but um to your point sean if you want non-habit forming you almost don't want it to taste awesome.

21:35Like we have a problem with Trevi. I mean, I'm gonna use problem loosely, but we'll have people send us notes. Like how many of these can my kids drink a day? Because they were just constantly like, I want more, I want more, I want more. So it's like, you don't necessarily want to optimize this thing where kids are like, I want to drink seven weeks, you know, today. So I think you're right. I think, I think it's like really clear value proposition is like, this puts your kids to sleep, you know, this will put you or your kids to sleep in a story. And then that it tastes good enough that nobody's going to have taste be a blocker.

22:08But Mike, going back to your original question, like, are you talking about, you know, when you talk about like goals and reverse engineering, what we want to try to achieve, like, are you talking about actually the impact that we're having and how we go to market? Are you, I thought you were talking about actually like the exit, like what does that look like? We were just talking about this other business kind of anonymously and they're looking at selling or whatever. And I think the way that you go about scaling this could be different depending upon what our outcome was. If we were like, hey, let's launch this thing in Q4, let's scale it for a year and then sell this thing for 50 or a hundred million dollars.

22:43I think that's one kind of playbook. I think if the playbook is, hey, we're trying to turn this into a cashflow monster or eventually go really, really big with this, it's a little bit of a different playbook. I don't think it impacts the way we do this initial order, but it will impact some things. And Sean, I totally agree. I mean, one of the reasons why I'm excited about doing this is that I think you're exactly right. You can do exactly what that other brand was doing in this vertical. And, um, and I think that what that shows is that this is clearly a nine figure opportunity. Yeah, dude. And okay.

23:15So to tie the two things together, we have to figure out what the we're ordering. I'm team. we should do the smallest minimum order possible make sure it works and then improve on it right like so i'm i'm in favor of let's have awesome packaging awesome photography possible one flavor no matter what we do now we're going to change it like that's the reality of every product you ever launch like we can make all of these decisions in a vacuum we want to put out in the world and we're gonna be like never mind we have to do this thing right so i think curtis is probably right where we will need more flavors and it'll be important but i'm like we haven't proven that yet Like what we should do is just get it, get it out there, get the response.

23:52And it's like, if we can get that done for 75 grand and like, and we can spend 200 grand on marketing, we'll have some sick metrics to understand where this thing can go. I'm getting back into the weeds. And one of the things I'm probably the rustiest on is email. I'm super excited to be using OmniSend. They're using them on Winx. We're AI pilled. We are using it to do everything. I'm running most of our email program from Claude and Codex using the MCP. And it's awesome. We also have email, SMS, and pop-ups all in one place. We have all of our flows, welcome series. It's all talking to each other.

24:23I love the platform. The analytics are really good. I highly recommend it, especially if you're in the position that Wings is in. New brand starting out. But if you're on a different platform and you're paying too much and you want to switch, they will do the migration completely for you. No lost data, no lost list. It takes only five days start to finish. And they are giving our listeners 30 % off the first three months. go to omnisend.com slash nine operators to try it out for yourself. If I wasn't, if I had not launched Trevi inside a Simple Modern, like let's say I was positioned just like I had to make every dollar count, I would absolutely have just ordered our berry lemonade flavor and gone all in on that.

25:03Because I know that it's like if people can choose berry lemonade or they can choose the variety pack, they'll choose variety pack. But like I just would have gone single skew if i was trying to be capital efficient for sure no matter what we do right now we're gonna have to change it right like once we get it out there into the world and get real customer feedback response whatever we're gonna have to tweak it anyway so i've just i'm team smallest capital shot most money for marketing so we can figure this stuff out yeah so that's the product side to tie it to what uh what the goal of the company is look if i think we can get But it took the other brand.

25:41It's like, you know, I think the first year, actually, so this actually would be the second year of business, but the first year they did zero dollars. It was like they were just bumbling around at like 50K a month or whatever. And then they're like, OK, we figured something out. Then they went into it. And then, you know, the second year of operation, they went from 50 grand a month to five million dollars a month. I think we could totally do that. And I can totally get us an offer for, if we're putting a bag with gross numbers, 10x revenue, like 10x runway or whatever. And I think we take it.

26:14Unlike the other brand, if anyone offers that, we're taking it. Well, and here's one of the reasons why I was talking actually to a guy who owns a very valuable business. He was kind of thinking through this question earlier this week. It's a friend of ours. He's trying to figure out what to do. And one of the things I was explaining to him is if you really think you're going to sell a business, his question was kind of like, do I expand? Do I hire sales reps and expand into convenience and international and all this stuff? And I was saying, well, it depends on are you trying to cash flow this thing or are you trying to sell it?

26:44Because if you're trying to sell it, you actually want to leave some cards on the table that aren't flipped over. Because an acquirer is going to see that and they're going to say, oh, I can do X and Y. In some ways, flavor is the same thing. You know, that like what you want is you want to kind of intentionally create a picture for an acquirer of like, oh, there's all this stuff that we haven't done because we're so busy running these other businesses and, you know, whatever else. And so I'm with you, Sean. Like if we can do that. I love the idea of creating an unoptimized business because I actually think we can use that to create a bigger multiple on exit.