The Power of Storytelling in Business

0:00It was pallets and pallets of product that were stacked in a corner with the label destroy marked on it. And when I inquired just out of curiosity and inquisitiveness what that was, I very quickly learned that that was excess inventory and customer returns that was destined for the landfill. How do I increase margin here? How do I increase gross margin? How do I bring down CAC? How do I bring down marketing spend? How do I increase organic marketing? What's top line this month and this quarter, but also importantly, what's bottom line? At what point am I break even? At what point am I profitable?

0:31If you can't answer those questions confidently, I think you're in trouble. Welcome to the DTC Insider Podcast, where online business owners come to find actionable tips and tactics to grow their businesses. Now, here's your host, Brian Roizenthal.

0:55Welcome to another episode of the DTC Insider Podcast. My name is Brian Royce, and I'm your host. And today I'm super excited to interview Shreezy Tanden. She is the founder and CEO of Kitsi, and she has a very, very interesting story. No pressure, of course. Hey, Shreezy, thanks for being on the pod. Thanks for having me, Brian. Great to be here. My pleasure. So why don't you start by telling the audience about your background? Because you started as a, I mean, you're a former business journalist, aren't you? That's right. Yeah. My path to becoming a startup CEO and founder is very nonlinear.

1:34I don't come from an Ivy League background. I have no computer science or engineering degree. Never did the standard, you know, whether it was consulting or investment banking or sort of tech building that you typically see in a lot of founders. But I started as a business journalist. It was something that I always wanted to do and become ever since I was 14 years old. I went on and I studied journalism and political science thinking I wanted to become a political reporter, but ended up sort of learning a lot about business, economics and finance and saw how that really moved the world in such significant and impactful ways and how it also aligned with everyday decision making that people were contemplating in their lives.

2:17and spent, I think, almost a decade as a business reporter at some of the largest news networks across the world. And did you interview someone we know? And many people we know. I think I've interviewed, at this count, close to 700 people during my time as a journalist and then subsequently as a documentary filmmaker. I was able to leverage a lot of the journalism skills into filmmaking, directed and produced a feature documentary, which also entailed a lot of interviewing. And it's funny, during that time, I didn't realize this, but the lessons and all the skills I acquired as a journalist and a storyteller have really been the foundation of the work I'm doing today as an entrepreneur and as a CEO.

3:05Why is that? Well, I think so much of building a company and I think so much of running a startup boils down to one of the most important skill sets, which is storytelling. When I think about it and I think about sort of the CEO hat, every day you are storytelling. You're talking about your company. You're talking to customers. You are using storytelling in hiring in order to really hire and attract the best talent. You need to convey to them the mission of what you're building today and then the vision of what this is going to be tomorrow. And Kitsy is a venture-backed startup, and I see so much of that storytelling also play out in investor meetings and investor calls, where, again, it sort of all boils down to how well do you tell this story and sort of sell the vision for this company?

3:51And then internally as well, communication is something we're extremely good at and strong at as a team. Our internal comms is something I really pride myself on, and it all comes down back to that storytelling nugget. I can see it now. Thank you. Thank you. What was the most interesting interview that you have done that you remember? So many. And I think there were so many people that I've interviewed over the course of my career, whether it was the most powerful, wealthiest, most influential humans down to even people such as child laborers and folks that were enslaved or, you know, part of victims of human rights abuses.

4:30I think if we're talking about perhaps a really well-known figure, the one that really stands out to me is the president of Israel, Shimon Peres. I had interviewed him a couple of years ago in Davos, Switzerland, on the sidelines of the World Economic Forum. And I just remember walking into this room with a man that was extremely powerful. He had spent about 20 years at the top of politics in Israel, first as a prime minister and then as a president. And his humility, his warmth, he was essentially a peacemaker. He had always tried to strike peace talks between Israel and Gaza for a very long time.

5:07And it was sort of the time that I spent with him before the interview, during, and then subsequently after. A few days after my interview with him, I also had Shabbos dinner with him that I was invited to a private event and got to spend some time with him as well. And you really see the person behind the power. And that to me always remained such a memorable moment in my career. That's wonderful. I mean, I know nothing about journalism, but, you know, that we all leverage something from our, let's say, education, careers, and we bring that into whatever we build next, right? And that gives us a unique edge, let's say, if we use it well.

5:52Besides, we said about storytelling, which is true. correct me if I'm wrong because again I know nothing about that but I guess that it gives you many other let's say levers you can pull such as you know doing research being informed you know and then reading you know like in between lines you know because when you are a journalist or a business journalist even more you need to do your homework you know before you interview someone you You need to, you know, where the conversation happens, you know, that the media say something, but you really know the conversation goes on level below the surface.

6:29Right. So do you think that helped too? Yeah, that's a great point. I mean, so much of the journalism side you see, at least for my career, which is so visible because I was a television news reporter, is the interview piece. But there's also so many stories that we're reporting on that are very sensitive, very serious. You're in a very high stakes environment. The stakes are high because if you get it wrong, there could be many legal implications that happen as a result of the mistakes. And the penalties are swift and severe. And there's also this cancel culture that's always at play if you were to have a misstep or a misspoken sentence.

7:07And I think being really careful and thoughtful and exacting with what it is that you are presenting to the world and your ability to communicate on a facts only basis is something that you hone very quickly as a journalist. And that's really helped me really well in my career today as a founder. And then beyond that, to your point about being extremely investigative and thorough and taking a deep dive and peeling the layers, every decision I make today at KidSee is so data driven and informed. I mean, I could probably put out research papers and thesis on the why of everything that I do and why now and why today?

7:48And, you know, is the arc of history bending in my favor? And is it propelling this company forward? And what are the tailwinds and all the historical data points that are leading me to the decisions I'm making today, but that will also serve me in the future. And I think a lot of that investigative piece that I've really done my entire career has served me so well. So I think in many ways, it is a superpower to come from this sort of non-linear journalism investigative background. How do we connect these dots, journalism and Kitsie? Great question. So one of the things that you get exposed to as a journalist is you get to have a front row seat to many historical moments and developments that happen in real time.

8:33But particularly as it relates to Kitsie, it was during my time I was directing my feature documentary Invisible Hands, which focused on child labor and child trafficking within global supply chains. So I spent essentially four years of my life doing an investigative deep dive in supply chains all over the world. We shot the film in six countries, including the United States. So I spent many weeks and many months traveling to agricultural farms, warehouses, factories, construction sites, mines. And in one of my visits, I had signed an NDA and walked into a warehouse where we were really exploring their labor forces and their supply chain.

9:10And it was during that time when my eye sort of caught my eye to the corner of the warehouse. It was pallets and pallets of product that were stacked in a corner with the label destroy marked on it. And when I inquired just out of curiosity and inquisitiveness what that was, I very quickly learned that that was excess inventory and customer returns that was destined for the landfill. and it was brand new product. And that's where I sort of got my first front row seat to what that entailed. I walked away and I spent a lot of time researching it because I couldn't get this image out of my mind. I thought I was fairly well-read and well-informed as a person, but you learn something new every day.

9:53And that was certainly one of those moments. And at that time, I learned that returns in the United States was a 500, 600 billion dollar crisis, which is the total retail value of all the products that are returned in the U.S. at the time. Today, that number is closer to a trillion. It hit almost a trillion dollars in January of this year. Fast forward a year later, I was pregnant with my first daughter and I decided to be a really smart consumer. And I thought, well, instead of buying all of these items that I need to acquire for my child at full price, why don't I try to secure an open box, excess inventory, customer returned overstock item?

10:31So I started making some phone calls and I called a warehouse and I said, do you have any strollers that are excess inventory or customer returns? And the manager said, yes, I do. And I said, well, can I buy one? He said, well, I can't sell you the one, but you can buy the 100 or 200 that I have available. That moment and that phone call was sort of the very early innings of the wheels of Kitsie turning in my brain. You can only imagine like the meme, you know, going boom in your brain when you heard that. So, yeah. I mean, it's amazing how life puts us in a position. I mean, one thing that I think, talking about myself, I lost when I started working, let's say, remote, the pandemic, etc.

11:20I love working from home. We have a remote team. I love the culture we have built. but being in the field connecting with other people not only like even with people everywhere but work related seeing things what you have experienced couldn't have happened you know if you hadn't gone to to the place you know that you needed to do the research at right so that's what i think we we are missing on these days we we don't see what we cannot see from our homes right Absolutely. I agree. And I'm with you. I think the pandemic and the work from home culture that spurred after the pandemic certainly created so many wonderful pockets of opportunity.

12:06And it really democratized hiring in a way because so many times you were confined to the state or the city or even a five or six mile radius where your office was located for your hiring purposes. And I think the democratization of being able to access talent from not just anywhere in the country, but really anywhere in the world, and it having been okay and all these productivity tools and work from home tools that enabled this entire movement to happen has certainly had its pluses. But I'm a huge lover and believer of in-person. And as I continue to grow and scale Kidsy, we have a remote team.

12:45I often think about how can I hire as many people as possible? I'm based in Chicago, you know, within the Chicago ecosystem, because to your point, the level of information and knowledge sharing and exchange that happens in person in real time is simply non-existent in a remote environment. And then there's also something to be said about the serendipity and those moments of alchemy that get created where life or something serendipitously happens that you otherwise would not have known about or learned about if it was not happening in person in real time. We agree. So you got off that phone call.

13:28What happened next? I quickly called some of my friends and family members, cousins, relatives who were parents, and I started asking them if they would ever buy something that was excess inventory or customer return. And these are people who had had kids and I was pregnant at the time. So I was yet to go on this like explosive journey of being a parent. But I was on the cusp of it and I really wanted to understand what the demand side looked like and what the customer quote unquote sentiment was around this feeling. And when I shared with them the prices and the access they would have, I could just sense the level of excitement and this resounding yes that happened.

14:07I mean, guaranteed it was probably a poll of like seven or eight people at the time. But it's all about looking for those early signals that you need. And I think there's a little bit of also like suspension of disbelief. Like you think that seven people is all you need to convince yourself that this is a great idea, as opposed to the hundreds of thousands of customers you will then go on to serve. But it's looking for those early signals. So I think I just wanted to get some validation from my own network of whether or not this is something they would buy. Yeah, I totally agree. I mean, that makes sense.

14:43It's a double-edged sword. You know, I discussed, you know, go to market strategies with many amazing founders on this pod. And, you know, two things they say, you know, on one hand, validating things with friends and family or your network is great because you don't need to go to strangers and it's fastest, cheaper to get validation from them. But on the other side, depending on who you ask, they'll tell you what you want to hear. Right. So how did you deal with that? Absolutely. Yeah. I mean, I've guinea pigged my entire network of friends and family so many times. They're probably sick of me.

15:22I've guinea pigged them for interviews, for stories, for even my film and even even even in the naming of Kidsy. It's always relying on my network and getting them involved in the process and hearing from them first because you don't have a customer yet. So you just make up these pseudo potential customers and then you try to get really quick responses from them. But really, for me, the early days was just trying to validate both the market, the supply side. How healthy is the supply? How big is the TAM? At the time, I wasn't even thinking of TAM. I just wanted to see how big was the market and what was the potential?

15:56Is the market growing? Is it shrinking? What are the headwinds? What are the tailwinds? What's happening economically across the country? What's happening on a consumer sentiment level? What's happening on a micro and macro level? And then what's happening politically? Like, are there going to be any political headwinds? Like, for example, if this was an infant formula company, it is very politically charged and you have to play nice with so many political bodies in order to make that happen. So I just wanted to get the full lay of the land on the supply side and then later on the demand side as well.

16:29How do people feel about this? Is there a level of educating that needs to happen as we do something that's quite disruptive? And then to your point, it goes back to that journalism, the investigation, the data driven, building a thesis. I was going to say something like that, you know, that there was the journalist talking, you know, like probably another founder, you know, couldn't have said, you know, something about politics or anything like that. And when, you know, launching their products and it's because you're a great background in journalism. So then you launched, you know, your company launched Kitsi.

17:07And I understand that the first six months were wild, right? So could you please explain? Yeah, it was wild then, wild now. I'm sorry? Yeah. Yes, it was wild then, it was wild now. So we launched, you know, we were in semi-stealth or beta for about, I would say, six, seven months in early 2023. Just doing very small invite only experiences on our platform. And we came out of beta and launched in September of 2023. So we're less than two years old. And within the first six and a half months of KidZ, we accrued a million dollars in sales, which if you actually look at like pre-pandemic levels, like hitting the$1 million revenue mark at that point was a Series A company.

17:51So we were doing Series A numbers, you know, for two standards, six months into launching the business. And it hasn't slowed down since. The growth has been explosive. And it partly was surprising to me, but also not surprising because I, again, I had seen the data. I had seen the numbers. I had ran, you know, to whatever point I could stress test the supply side and stress test the demand side. I had run those configurations already. So I knew what was happening to us was almost inevitable. And I think this is what happens when you put a product out into the market that has a huge demand side, a huge supply side, and a very acute pain point that you're solving for people in real time.

18:332023 wasn't an easy year, exactly, right? It was tough. It wasn't, you know, 2020, 2021. I think that, well, 2022 wasn't easy either. There were many, like a lot of layoffs in 2022, 2023. Really, really wasn't easy. I remember it was a year because we do a recap from time to time with multiple guests here of the evolution of e-commerce in the last years, before pandemic and after pandemic. And 2023, if I recall correctly, was the year that brands started to realize that there was something called profitability and bottom line, and the top line revenue wasn't just enough. It sounds silly to think about it now, but it was a serious conversation back then.

19:29You know, everyone like money was cheap and everyone was selling. So top line revenue was the name of the game. But then it wasn't. So I think that it wasn't pre-pandemic standard, as you said, but it was very, very tough. It wasn't a million dollars in 2020 that it was, let's say, easier. Yes. And that to me has always blown my mind. Like I've covered the tech space during my time as a business reporter and I could never understand. And I know, you know, the term blitz scaling was coined by Reid Hoffman. And that's what a lot of companies were doing in order to be venture backed. You had to have this absolutely insane growth that solely focused on top line revenue.

20:14But I think that is so broken from just pure business fundamentals. And again, having come from a business journalism background and having looked at and studied businesses, not just private companies, but also looking at the P &L and balance sheets of public companies, it gets very ingrained to you early on the importance of looking at not just top line, but also bottom line growth. So for us at KidZ, I mean, the North Star from day one is top line growth needs to be really healthy. But at the same time, you cannot be scaling on unit economics that are not profitable. So you have to look at every single driver of the business and think about how do I increase margin here?

20:55How do I increase gross margin? How do I bring down CAC? How do I bring down marketing spend? How do I increase organic marketing? What's top line this month and this quarter? But also importantly, what's bottom line? At what point am I break even? At what point am I profitable? Like if you don't have those numbers readily available to you and the answers to those questions, if you can't answer those questions confidently, I think you're in trouble. And that's really been the North Star for our company from day one. And I, again, would have to sort of thank those like just business fundamentals that were taught very early on and to not get sucked into the VC game.

21:31Because I see what's happening to a lot of consumer companies now, not just my peers, but others even in the consumer e-commerce, D2C world is so many of them that were building and growing at the time of the pandemic. I mean, consumer funding is down 90 % over the last 12 months. And no venture capital company wants to back or pour money into a balance sheet that's a net loss, regardless of how strong top line is. And so I think always thinking through those fundamentals and giving yourself optionality. Optionality is the name of the game. Survival is the name of the game. So, you know, can you grow really aggressively?

22:09But more importantly, if you never raise a dime of venture capital funding again, can you continue to run this business? And if you can't answer yes, I think you're in trouble. Which metrics do you track regularly? You mentioned a few already, you know, CAC and others. So how often do you track them? How do you keep your team accountable? Which ones? Yeah, I love this question. So there's a few metrics that I track internally that are deeply important to me. One is gross revenue, net revenue. I also look at COGS, cost of inventory, shipping as an individual percentage, but then also as a percentage of net sales.

22:49I look at ads and marketing. What is that in terms of just, you know, dollar amount, but also as a percentage of like how much of that is driving X percentage of revenue? What are ROAS? What is the spend across the channels? What's the conversion across the channels? and what channels are scaling profitably and what channels are not. What campaigns are scaling profitably, what campaigns are not. And then we double down on the ones that are working and we pull the ones that are not. I would say those are the big ones. And then I also look at contribution margin. That's another metric I've been tracking very closely since day one.

23:19And having positive contribution margin and being able to have contribution margin expansion. I would say those are the key ones that I track. How often I track them? I have a weekly call with our CFO. every Wednesday, we have a one hour meeting, and we open the P &L and the balance sheet. And I, maybe there are some founders that do it. For me, it sort of just became good habits. I think having good habits early on that compounds, and I can see and feel sort of the net benefits of that over the last two years. And then in terms of the team, what I really do is I try to give one person in the team a metric to own, and to really run.

23:54And so if everybody has a metric that they're moving on the team, I think they can take full accountability for it. And I also give them access to the P &L and the balance sheet. So we remove like salaries from those numbers, but every other number is in there and everybody has access to our P &L. I like that. How does this work? Could you please give us an example? Yeah, great. So for example, you know, we have someone on our team that's in charge of inventory and merchandising and partnerships. And so that person is solely responsible for the COG spectric. So cost of goods, cost of inventory.

24:26And as part of COGS, like pickpack ship is also really important. And the pickpack ship line is something that him and I work really closely together on because it is very operational heavy. But the COGS metric is the metric that he moves. And the way I like to sort of give it to the team and make it really achievable is I don't say this metric needs to come down by 5 % by the end of the 30 days. So my CFO teases me. She calls me the 1 % harvester. That's a nickname that we now have in the team. We've actually joked that we should start creating merchandise at Kidzie saying the 1 % harvesters.

24:59But I always tell every member of the team, I need you to move this metric down by 1%. Give me a 1 % saving on this metric. Again, it's about building good habits that compound over time. And it feels like such an achievable target. So say hypothetically, if your COGS is 20%. By next month, let's bring it down to 19. So in the next 30 days. And you'll see that when you give people very achievable targets and metrics that they can really own and move, it happens. And 1%, 1%, 1 % every month, by the end of the quarter, you're down 3 % right there. I love, you know, talking about productivity. I love reading books about building habits.

25:44I love all of that. And I have implemented like, I don't like the word framework per se, but let's say a process in my agency to build 90 day roadmaps for quarterly plans for our clients, which are, you know, brands. And the biggest challenge, typically, not for us, but for everyone, I think based on everything I have learned so far about this, is not defining a goal. You can define a goal. And if it's an achievable goal or not, it's something else. But you can define a goal. The thing is, that's the output, right? The thing is, how do you define, how do you properly define the inputs? and how do you hold your team and yourself accountable every single day, every single week, and every single month to be on track for those goals.