Use Strategic Debt to Grow an 8-Figure Company

0:00Hey, Benjamin Gottlieb checking in. Guess what? Shopify Masters is now on YouTube. So if you'd like you can watch interviews with myself and Schwang directly on YouTube or in the YouTube app. Just search for Shopify Masters. Episodes like this one you're about to hear. And thank you, as always, for listening and watching. When you get an email from Ralph Lauren, you go, yeah, let's do whatever they want to do.

0:27Hey, everyone. Welcome to Shopify Masters, your companion for starting and building a business. I'm Shuang Esther Shan. If you scroll through social media or taken a workout class lately, you might have seen Bala Bengals, the sleek, colorful wrist and ankle weights that are redefining the fitness industry. No one had ever done for equipment what had been done for virtually every other category. Life and business partners Natalie Holloway and Max Kislivitz launched Vala in 2018 with a mission to make fitness equipment more playful and designed for everyday people. We had to find ways to sort of growth hack our way to cultural relevance and partnerships were an amazing way for us to do so.

1:14The result? More than$20 million in sales in just two years and partnerships with Equinox, Poochie and other iconic brands. Here to tell us more is Max. Thank you so much for being here. Thanks for having me. When things were started, you and your wife, Natalie, you were taking a step back from your marketing career and you were really interested to jump into the fitness industry. What kind of gap were you trying to fill? Yeah, I mean, I would love to pretend that it was really thoughtful and deliberate, but actually it happened through like a series of happy accidents. So early in our courtship, when Nat and I were just dating, I think I'd drunkenly said to her, you know, we should quit our jobs here at the ad agency.

1:59We work and travel the world. And she sort of called my bluff. And so before I knew it, we had bought one-way tickets to Tokyo and spent the next eight months traveling. And it was actually on that trip we went to a yoga class that ended up being far more meditative than we'd wanted it to be. Frankly, long-term travel, particularly with like a new love interest, sounds really romantic, but there are times where you inevitably want to kill one another. And so we went to this yoga class and left like deeply unsatisfied. And we were like, how could we have controlled the intensity of this class-based workout?

2:33And before we knew it, we were talking about redesigning and reintroducing wrists and ankle weights to this kind of increasingly fashion-conscious consumer. And that was really the very first thought for Bala Bangles. And I think actually last time we spoke in 2020, when folks were stuck indoors and trying to find ways to work out from home, you know, the bangles were going nuts from a sales perspective. And it was at that time that we realized that no one had really done for fitness equipment and accessories what had been done for the adjacencies like athleisure or boutique fitness. So, you know, people are dressing up to go to thoughtfully designed gyms, but the products they're working out in those environments are hypermasculine, they're utilitarian, they can be intimidating.

3:18It's all about function, not at all about form. So it's a long-winded answer, but we weren't thoughtful and deliberate about the problem we were trying to solve. We'd actually tripped over this sort of opportunity that was hiding in plain sight alongside all these really thoughtfully designed sort of adjacencies. Well, I feel like you're not giving both yourself and Natalie enough credit because you were a trendsetter in this category. I mean, before, I feel like in the 90s, you had some beanbag looking thing that you strapped onto your wrist and it is not looking like what ballets look like today.

3:53So I feel like the fact that you realized that there was this gap, it was way ahead of a lot of competitors and copycats today. So we embraced a sort of ethic of iteration. So the very first sketch was just like, hey, this could be interesting because here we had a product in wrist and ankle weights that everybody was familiar with. But to your point, they they didn't have great thoughts and feelings about wrist and ankle weights. They were made of neoprene with iron filing. So they would slide around your wrist. They would absorb sweat and smell bad. But you had a product that everybody was aware of already.

4:26So we introduced a much more beautiful, much more functional version with like a real fundamental question at stake, which is, is it a viable product idea to reintroduce something that people are no longer using? Which is just kind of backwards way of getting to the eventual business. But I think we'd found this sort of passion and like genuine advocacy for our brand because no one had ever done for equipment what had been done for virtually every other category. You know, you think about razors, mattresses, you know, every consumer products business that exists today, you know, each category had had that sort of care and craft, but for fitness equipment.

5:06And you very quickly try to make sure that you can validate this idea. You turn to Kickstarter, which allowed to crowdfund the business. And then in the midst of COVID, you also appeared on Shark Tank and secured such a great deal with Mark Cuban and Maria Sharapova. So how has that funding journey changed the business? It's such an interesting question because now for four or five years removed from our Shark Tank airing, it continues to sort of have this like joyful response. If ever we happen to mention we were on Shark Tank, but the funding that we received at that time was almost immediately allocated toward inventory and was sold through in like weeks or months, not now five years later.

5:54And so it's not as if we'd continued what can often be a vicious cycle of raising to try to like achieve the next level of scale. We actually sort of made a thoughtful decision to run the business as efficiently as we possibly could and embrace this idea of like slow but sustainable growth. And so the Shark Tank funding wasn't isn't all that relevant to where we are today in like, you know, at least through that lens. But I will say that the platform of being on Shark Tank, particularly when we were on Shark Tank, just ahead of the pandemic, was like a very dramatic springboard for the business and brand and sort of propelled us to a level that we might not have achieved for many, many years otherwise.

6:40wise. That's an interesting philosophy, right? You could have leveraged that momentum, raise more money, gone down into the VC route, but you chose to be more thoughtful and sustainable and just grow at your own pace. Like what was behind that decision? Yeah, I think that there's a lot of romance associated with raising a lot of money. And it's actually advice from Mark, believe it or not, he's like, you know, that check represents an obligation, right? You know, much as it's amazing to see founder friends posts about the influx of cash they've received, it's fundamentally an investment from the VC and its LPs and they expect results.

7:19And if things don't go according to plan, you know, it can get uncomfortable quite quickly. And, you know, from our point of view, around the time of Shark Tank, we were a single product company. It was Bala Bangles. And it was at that point that we'd made a kind of thoughtful decision to diversify the product assortment and try to effectively like bolify every product and gaps in that space. You know, I think hindsight 2020, it was like a good decision for us not to sort of raise institutional funding. And Mark and Maria have been awesome partners and kind of strategic advisors over the last four or five years when we need them, which is great.

8:01Yeah. It's great to hear like you found the path that makes more sense for you and Natalie. And I feel like that's just kind of the most important thing at the end of the day. Instead of developing maybe venture capital relationships, you actually developed a lot of great brand relationships at Equinox and CorePower. You can actually work out with Ballabangles and other equipment. How did those partnerships come to be? Actually, it's I I think because we, you know, didn't have this massive bank balance from raising that we'd had to find ways to sort of growth hack our way to cultural relevance and resonance.

8:39And partnerships were an amazing way for us to do so. You know, we'd partnered with the likes of Summer Fridays, with New Balance, with Max Bone, a dog consumer products company. Just this year, we've done Poochie and Ralph Lauren. We've got some very exciting partnerships on deck for 2025. But I think similarly, we thought at the brand level, there are very interesting and compelling partnerships. But then, you know, the most authentic place to discover Bala product is at the gym in studios. Equinox, for example, has a retail footprint at the front of every Equinox. So too does every studio. And so when folks started emerging from their sort of pandemic bubbles and returning to the gym, we tried to follow those trends and establish relationships with Exponential Fitness, Equinox, CorePower, Lifetime Fitness to get Bala in store, both from a pure play retail standpoint, but also to program in classes and kind of differentiate from classes that might be going on at the studio or gym down the street.

9:45And what's amazing is now you can take Bala Bengals or Bala Bar or Power Ring-fueled classes kind of all over the country, which is an awesome phenomenon. Yeah, and I imagine such a unique marketing channel as well. You're exposing so many new potential customers that might have not heard of Bala otherwise. Yeah, totally. Totally. Partnering with these fashion brands like Poochie and Rafflorin, how did you make sure that those relationships made sense for both teams evolved? It's an interesting question because the true answer is when you get an email from Ralph Lauren, you go, yeah, let's do whatever they want to do.

10:24I mean, you have to be sort of accommodating to the bigger fish in the pond. But, you know, equally, the people on the other end of the email thread or phone call are fans of Bala as well. So there's this really sort of like mutual admiration for one another's brands. And you've got to just find out where the sort of boundary lines are and where and how the partnership can sort of come to life. Every partnership is sort of unique. Every brand has its idiosyncrasies. You know, it's not just about saying, oh, let's put our logos on one another's product and have it be sort of a merchandising exercise on site.

11:01Instead, it's sort of like, hey, we have mutual interest in one another. How could we bring this to life in the most interesting and kind of thoughtful way? Yeah. And of course, like any relationship, they're different and unique to the interactions that you have. So you've got to adjust and accommodate for those relationships. Are there anything that was like surprising you've learned or you wish like new founders can know about when they're approaching partnerships? I would say that partnerships are like an important piece of our marketing puzzle, which might not have been my understanding at the outset.

11:35Right. Like when Nat and I sat down and sketched out Bengals, I maybe would not have envisioned us eventually partnering with Ralph Lauren, you know, to like amplify the brand. Right. But I think, you know, Bala enjoys this like amazing community of folks that have formed around it. And we have tried to be sort of irreverent and playful in a landscape of really serious fitness brands. And partnerships have actually allowed us to sort of step outside what most folks would expect of a fitness company. You know, they expect you to sort of potentially pay an athlete to be the face of your brand versus what we've done, which is look to fashion brands or, you know, other categorical adjacencies to make people think differently about our brand.

12:26Brand partnerships can be a really meaningful part of the marketing mix. Don't sleep on them, you know, and think outside the box to the extent that it makes sense for your brand. Yeah, totally. It might have not been on your bingo card before. Yeah. But yeah, it's totally unlocked so many cool projects and new opportunities. I feel like a lot of Bala users were working out at home during COVID and now they're working out together in studio, which is a result of the community aspect of Bala. What does community mean to you today? Yeah, I would say it's been amazing to have this growing community form around the brand and become its biggest advocates.

13:09We've tried to speak to folks beyond just their fitness selves. We've spoken to their sort of whole selves, inclusive of their fashion interests and, you know, various workout types. And so, yeah, the community has been huge for us. My answer to community from a product perspective is, you know, how do we make products better, more interesting, more of them to satisfy all the kind of idiosyncratic ways people are working out? But I will say that from a more of a brand perspective, you know, we try to showcase studios that are, you know, advocates and users of Bala that equip their studios with Bala product.

13:49We try to do so with influencers, with trainers, with tastemakers, and just have that be as reciprocal a relationship as possible. Bala would be a fraction of itself, like a very small fraction of itself without the support of our community. Yeah, I mean, even for myself, I see so many new creators with Bala bangles. Maybe they're doing their hair, maybe they're cooking, but they have them in videos. and it's so cool to see how much love there is on social for Bala. What's been awesome, and it's something we theorized sort of early, is the countless ways people have used the product, to your point.

14:28You know, some people are just wearing them around the house, doing their hair, taking their dog for a walk, where others are, you know, doing HIIT training, you know, with like death metal on. I mean, you know, it's like the spectrum is broad, And that's exciting. It's very cool. Yeah. Because there's so much social love, how are you maybe amplifying that showcase by different people on social to kind of grow that message even more? I think if you're on our social, you'll find that it's very eclectic and feels like not terribly well produced. And I think that's deliberate. You know, really what we're just trying to do is showcase the vastly different ways people use Bala.

15:15And so, you know, for every one thing we post that is really just a mirror to our community, for every 10 of those, maybe there's like more of a Bala produced message in there. You know, kind of sincere in saying that Bala is really a product of its community from a brand perspective. Of course, community shifts throughout the years because this is a group of people. How has the team changed or thought about evolving with the community throughout the years? A lot of folks are surprised to hear that Bala is actually made up of just five people. And we found that there's strength in being this sort of lean and mean team that we can make decisions quite quickly, that we have sort of the necessary conflict to actually get to a new and better and refreshing place we might not have otherwise seen.

16:05So, you know, we've evolved and I think matured as like marketers and brand operators. But yeah, I think the sort of core principles of Bala have stayed intact. Yeah. But I think that's incredible, right? Small team, but you're able to achieve eight-figure revenue lines. And I think a lot of new founders are trying to understand that because they want to be financially disciplined. They want to be able to have their own runway and be healthy. So I feel like that's incredible what you've achieved with the team that you have. I should say there's like freedom in it also. You know, you have the right folks at the table to make quick decisions, to disagree with one another, but do so in a productive and constructive way.

16:50We found it to be a strength and sort of a superpower of ours. Because you are the product guy, I think it's incredible to see like the range of products that have expanded as well. And I also love like how thoughtful you were about designing the ring for the workouts that the community loves. Talk to us even about this water bottle, because I feel like that is also inspired by how people wanted and needed to, you know, interact with their phone during workout classes and stuff like that. So I want to understand how you're able to expand in such thoughtful ways. We've sort of identified what we believe to be the product scape that would be relevant and appropriate for us to explore.

17:30In instances, it's a little bit of the tail wagging the dog where the development timeline for each of those products can be wildly different from one another. So much as we would like to launch new products every three months, you know, sometimes that's just not the reality of the time it takes to get the product right. In the case of the water bottle, I need to give very clear and explicit credit to a company called Ringo who actually developed the bottle. And so we worked in partnership with Ringo to effectively bolify his bottle and bring it to our audience because of the thing you just described.

18:07Like, it feels so wildly appropriate that you'd have a phone mount on a water bottle with which to film workouts or watch content to drive your workout and also stay hydrated. So this is a great example when we think about partnerships of finding the virtuous aspects of the product and industrial design in Ringo's case and the Bala brand in ours, which is wildly different than maybe how we approach Pucci or Ralph Lauren or any of the others. Yeah, it's fascinating to think about that partnership can also work in product expansion as well. Yeah, yeah, totally. And we've done so very sparingly. I think this is the only company with whom we've worked on this sort of collaborative product.

18:50But it's one we're really excited about. And the product's great. I mean, I use one every day. You mentioned how the Shark Tank investment was immediately used for inventory, which I think for any product-based business, inventory is such a huge undertaking. How are you thinking about, you know, your financials and inventory today to make it more easy on the team? I wish I had a good answer for that, sincerely. But it's something we've thought about endlessly. So if you have too little a product, you'll find yourself sold out, as we often are. If you have too much product, you have too much cash tied up in inventory.

19:34And then you can't be as proactive about sales and marketing as you would to sell through it at the appropriate clip. And in our category, you know, you've seen the highest of highs in the context of the pandemic for fitness. And then you saw a lot of changing consumer behavior, you know, as folks started to emerge from their homes. And so predicting the unpredictable has been nearly impossible for us. From our point of view, it's important to allocate cash to the core product while still reserving money for newness. And we have since expanded from just the bangles, you know, where we started this conversation to, I believe we have about 20 different products in a number of different weight and colorways.

20:24But we have another 20 on the way in the next 18 months or so. So there's a lot of newness on deck. So it's important to just kind of balance the inventory we need to accommodate the sort of demand that we have today. But sometimes and uncomfortably, we need to make hard decisions between launching something new that we're excited about or keeping in stock of all the existing products and colorways. Gotcha. So you haven't unlocked some magical forecasting formula yet? We've certainly explored it. So there's maybe a lot of background and context that would be cripplingly boring to discuss. But it's like we've explored ERPs.

21:04We've explored predictive AI. We've used Google Sheets. We've used napkins. We've used Excel. You know, inventory is the crux of any and every consumer products business. And so we're no exception to that. It is very much the thing that will keep all of us up at night. But, you know, much as we've tried to solve it, we just we haven't cracked the code just yet. Yeah. You have embraced certain factors you might have not played a lot with before, which is getting comfortable with debt in a healthy way, in a sustainable way. So, yeah, I guess like talk to us a little bit more about that. It goes hand in hand with solving for inventory.

21:43You know, right now, for example, we're in the very fortunate position of having more demand than we can accommodate, right? So, you know, the way that reads and probably frustratingly for a potential Bala customer is, hey, they're sold out of two pound sand bangles, right? And I'm a sand enthusiast. I want it to match all the other sand products I have. So that can be frustrating. I think, you know, we have debt partners that have allowed us to be a bit more aggressive in buying into sort of the appropriate amount of inventory plus a responsible buffer to accommodate for that variability. Sort of like if you're tiling your bathroom, they're like, make sure you order 10 to 15 percent more tile than you think you need.

22:30You know, we've taken a similar tacked on inventory. So, you know, but that's largely it's almost entirely possible because we have great, great debt partners. Yeah. Yeah. And it allows you to have that flexibility when you need it as well. Yeah. Yeah. And look, I think it literally and sort of metaphorically, debt is a four letter word. It can it can be scary and intimidating. But so long as you're accounting for the the hit on margin associated with their terms, it can be really powerful when used responsibly. As you're growing the product line and inventory, there's also the sad fact of Mimicry and other brands that want to copy Bala.

23:13How have you been handling just knockoffs and people trying to emulate? You know, I cry a lot. No, you know, it's a frustrating and sort of demoralizing realization that if you do something new, it won't be new for long. And I think we acknowledge that our space in fitness equipment and accessories had just been sort of shockingly overlooked. You know, you think of Lululemon in the early 2000s, kind of asking the fundamental question, why are all workout outfits made of black spandex? And you've seen this like explosion of athleisure and performance apparel. And weirdly, nobody had just looked at the products in the gym like we had, right?

24:00But I think whilst we acknowledge that the space was sort of underserved, we found that sort of simple changes could be really actually profound and powerful. So, hey, why do all pieces of equipment have to be black? Why do all dumbbells have to look alike? Couldn't we potentially introduce new form factors for weight that could be ergonomic and useful and versatile? right and so even something as simple as a yoga mat we were the first ones to sort of say what if we were to just round a mat and have the mat itself not just be the foundation for your practice but be a design element in your home or studio and you know on the heels of having done so we've just had you know relentless mimicry you know there are people launching the bangles and though we have a patent on the bangles the onus is on the patent holder to sort of pursue them and it's just a game and worlds you don't necessarily want to play or live in.

24:56So our answer has been to lead with brand and innovation, to continue to keep our foot on the gas on new product and doing things from a brand perspective that others, you know, simply won't. Whether it's a big brand, you know, we've had household names sort of knock us off. We've had brands launch with all of our product just under a new name. And it's just kind of a wild phenomenon. on. So I suppose the advice would be, you know, protect yourself where you can, but it will be important for you to continue to do what was effective at the outset of like thinking about new product ideas, new ways to sort of get your brand message out there.

25:38Yeah. And just maintain that leadership position. Yeah. And taking the approach of like innovating versus trying to be on the defensive all the time. I feel like the loyal Bala lovers would want to support you and all of the new product ideas and things like that. So yeah, no, absolutely. I mean, I think, you know, the best defense, it's such a cliche, is a good offense. And, you know, I think our like our best players on that sort of proverbial team are our customers and Bala enthusiasts that are sort of advocating on our behalf. And, you know, the knockoffs don't have that. It's kind of a down market, cheaper alternative than the products that we've carefully crafted to make great, right?

26:23You know, I think that's a very high bar for us is each of our products has to be the world's best before we're prepared to launch them. And that is not the standard of a lot of the knockoffs. So thanks, community and those that are doing the hard work on our behalf. Both Natalie and yourself have come such a long way from having that date, traveling the world, having that boring yoga class. I guess to close off the show, if there were something you wish you knew before starting everything, what would that be? I'll say on the one hand that I have learned more than I'd ever imagined I would. So there's probably countless things I could speak to that are more tactical in nature.

27:06I think the biggest learning, though, is the power of persistence and consistency. I'd had plenty of product and company ideas before Bala that frankly died on the vine because I was excited about the idea, but not about the necessary reality of bringing those ideas to life. And I think that this is like people get social currency for being like, hey, wouldn't it be cool if we had cars with six wheels, right? But they never actually pursue those opportunities. So I suppose what I wish I'd known then or what I would tell folks is embrace sort of the small iterative baby steps to bringing something to life.

27:48Yeah, it feels like the end of a country song, but like you don't actually know where those steps will take you. And that's OK so long as you keep taking them. So we're very much still taking those baby steps and it's become sort of second nature to us at this point. Yeah, such great thoughts to end on. Well, thank you so much for joining me today, Max. Thanks for having me. Thanks for tuning in to Shopify Masters. Join us Tuesdays and Thursdays for brand new episodes. We'll see you next time.