Ep 525: Three Ships’ System for Trust‑Driven Beauty Growth with Co-Founders Laura Thompson and Connie Lo

23:57We don't do a ton of it on our landing pages. We'll have floating players that will pull in videos of Connie and I talking about the products, why we created them. Usually they're repurposed clips of us doing live shows. Live shows work incredibly well for us as well. Because again, it's another touch point of us to interact live with our customers, get to respond to their chats. and we'll take that content and creative and spice it up and put on different placements on our site. But otherwise, it's a pretty typical looking product page. The most important thing within beauty is reviews. That's what people look for when they look on your actual product pages.

24:30When we look at our hot jar sessions and those screen recordings of user behavior, typically they'll like flip through some of the photos at the top. So you need to have good imagery of photography. They might read that like one paragraph blurb. So make that as short and like direct to the point of what the product's going to do for them as possible. Then they skip everything in the middle and they just go right to the reviews. So telling this long story probably isn't going to be the thing that really moves the needle for them, but it'll form that emotional attachment and keep them coming back and keep them telling friends about you, driving word of mouth referrals and sales, which is still our biggest marketing channel is organic and word of mouth.

25:06Love that. So yeah, we don't go too hard on it because you still have to tell people that the product works. And then when it comes to that content, is it something that you film in batches where you kind of get together and do long sessions where you're doing it? Is it sort of, are you doing it all the time? How do you actually build in the founder content into your daily work? That's a great question. Something that we're still perfecting because Connie and I, when we became founders, we did not think that we were signing up to be content creators too. I'm sure that some other founders that are listening to this can relate.

25:36The amount of content that you're expected to produce now as a business owner is wild. I find that for me, batch filming works the best because I can just get into that right mindset. I can make sure I have my setup right. I can like have the lighting be really consistent. And then usually I'll just trade out outfits, but film things on the same day, just with different sweaters or shirts on. And Connie does the same thing. We're big into time blocking in our calendars anyways. So it just works well. But maybe for some people, they're like, I'm going to be too exhausted if I'm doing three hours of content in one block, even if that lasts you for like a month or three weeks.

26:10And maybe they want to splice it up into different sessions. We're also have become really regimented about asking the team to give us actual like shot lists and scripts. If they want us to film something, they need to give us an outline of what they want us to film, not just, Hey, film a video of you talking about brighter days, which is one of our products. And so they've become great at using like true briefs and scripts. And I think that's really important. It kind of takes away a lot of the burden and hurdle of like, where do I even start? What do I film first? And on that note, also something that if for your listeners, if they do have someone that helps them with scripts, even telling us something as specific as film this while walking and holding the camera, because it's more engaging as a hook, and then sit down on your couch.

26:55That's really helpful. Because like, I was given that advice recently from our social media coordinator. She's like, don't just start sitting on your couch, start by holding. I'm like, that's a good point. I wouldn't have thought about that. So as much information they can give you, the better. And then Laura, on the flip side of things, you mentioned things that have worked really well. What are some of the lessons you've learned, maybe the painful lessons you've learned about what doesn't work for your business? Most painful lesson is probably the amount that we've spent in the past on macro influencers.

27:21I remember one year, it was in 2021 or 2022, we spent$750 ,000 on influencers that year, maybe made 30 grand in sales. And like, even for the arguments of brand awareness, I don't think that that really translated to revenue because when they posted, we didn't see these huge spikes in sales, even if discount codes weren't used or whatever. Attribution is very fuzzy and very difficult. And that was a large portion of our marketing budget on these macros. So instead, I would look to doing smaller influencers. If you are wanting to go into influencer strategy or doing seeding and forming genuine relationships, try to find those up and coming influencers that haven't broken through and don't have like hundreds of thousands of followers yet because those influencers are just so expensive it's really hard to see the ROI so that would be a lesson learned that I would not I would be very cautious when it comes to going to big influencer contracts and agreements they have never worked for us and so even though you got burned there your influencers are still a major part of your growth strategy just a much more uh not macro influencers micro actual product seeding I think is the is what it is.

28:29And I wouldn't say that's a major part of our strategy. It's definitely an angle of the business, but it's not the area that we spend a large amount of our money on. I think it's important because it gives you UGC content that you can use, but it should never just be like, oh, I'm paying$10 ,000 for this person to post one story or like one reel. That's just not going to ROI. So it's much more about community building and relationship building is how we think about it instead of true like influencer marketing. I don't know that that really exists anymore in like a true repeatable scalable way.

29:01And then the other big mistake that has cost us a lot of money is working with external agencies that didn't understand our product and our audience. Like I remember the first agency we ever worked with, we hired them off of Upwork and we should have noticed the red flags because it was all men. Like they didn't understand at all our products. I don't think that they use any of them. They weren't like you of trying to use radiance and put together a skin routine. They really know curiosity over it. And what they wrote as copy for our first ads was they're like, oh, these are vegan products. And their ad copy was, you wouldn't put a hamburger on your face.

29:37So why would you use animal products in your skincare? And we're like, this makes no sense. Like in what world is this going to be the copy that will resonate with our audience? So whenever you look for external consultants, if you do use external media buyers, which there can be some incredibly talented media buyers out there, you don't have to run it in-house if you're not at that scale or if you don't want to deal with that part of the business. But you need to find someone that understands your brand and understands your customer and understands your buying journey. Otherwise, it's just like, regardless of how they've performed with other clients, it's not going to work for you.

30:12Nobody likes that image. No, it was a hamburger on your face. I was like, what is this? Why would we want that associated with our brand at all? It was all trash. And I think as a founder, it can be really easy to get distracted or just sidetracked with all these other fires that you're putting out in the business and the more pressing issues. And I think that we've had definitely the failings in the past of taking our eyes off of the creative ball because it's such an important part of the company. And I find that whenever either Connie or I are involved in the creative brainstorming and messaging and getting into the weeds of writing the scripts and finding the reference images, that's when we by far get the best results.

30:52So I would stay very heavily involved in that part of the paid channel strategy is like be really, really obsessed about the creative that you put out. And would you say Instagram is, you mentioned influencers not being the major part of your strategy. Is Instagram at this point and meta the biggest part of your growth strategy, growth budgets? For sure. That's where we spend the most amount of money. That's where we see the best results. That's really what drives the engine of three ships. And then just talk a little bit about your creative strategy there. Are you, you know, are you launching the creative that does well organically into your paid?

31:26Are you and maybe talk a little bit about how you're bridging sort of the idea of education into your paid channels as well? Yeah, great question. So I think creative learning across teams is something that we're constantly improving and iterating on and getting better because what Connie, for example, like her reps in store that work for her team members that will go and like talk to customers every day and sell the products. They'll have these really incredible insights of like, oh, this angle really works well for the consumer in store. And we now have processes in place for those team members to be on calls with their marketing team when we're ideating campaigns so that they can provide their insight from the field and bring that back to marketing to then write high quality copy.

32:04Same with our social teams, every single week, they'll report back of what were our top performing pieces of creative to the full team so that the sales team can learn and see what's working within social media, what trends are going on. They can bring that back into buyer discussions. If something goes viral on TikTok, buyers care so much about that these days. And they'll make decisions off of brands and products to carry off of what's trending on social. And then it also allows our growth team to see, okay, that piece of organic creative did really well. Let's put a bit of media spend behind it and see how it performs.

32:36Or this influencer made this organic post and it has a really good EMV. Let's see if we can whitelist that piece of creative and drive media spend behind it and see how that works. So sharing across team is instrumental. I love that. I enjoy your insight too about the whitelisting of your personal handles and running ad content through that. When you do that, is it always content that features either one of you respectively? At this point, yes. Otherwise it just feels like disingenuous. Yeah. And so you mentioned the challenges with working with like large agencies. How do you manage it now? Is it something that you work with agency on some stuff you, you have a consultants or you, you've built it all in, in house when it comes to your, your marketing capabilities.

33:19So we just brought on our media buying in-house, like a couple of months ago, before that we were with a consultant who did a great job managing our account. I think that that's overall my favorite is to work with like smaller agency teams or smaller sub teams within agencies instead of like large, big, flashy agencies or individual consultants. And then once you get so large that you're like, okay, we need this person to be more integrated into our processes. We want them to come to our broader team meetings and share their learnings instead of us just reporting back. Then we'll look to hire that role on, but there's still a role for agencies, especially within the PR world, which maybe Connie you can touch on because there's PR agencies that we've worked with in the past that were the big flash agencies that so expensive and didn't get us results.

34:02And then small agencies that don't charge us very much, but drive great results. Yeah, totally. I mean, we've been through it all. I mean, starting from day one, going back to the scrappy days where I was our PR agency, I made a fake alias. Her name was Jenny and it was press at threeshipsbeer.com. and I would email editors as if I was our agency and loop people into me to chat. So it'd be like, oh, you want to have an interview with Connie and Laura? Looping in Connie and Laura and just loop in my email address. So again, you can do the whole gamut. And then from there, we hired a smaller agency.

34:38That was okay. And then we hired a freelancer. That was awesome. So again, freelancers can sometimes have better connections than small agencies. And because PR really is a relationship game. So it's really like, what is our little black book of contacts and how close are they with them? And then where we are now with PR and how we feel about it is affiliate PR. There's still a really big need for it. So we work with an affiliate agency slash consultant. She's a consultant, but she has like a few freelancers that work for her. And she's writing pitches to commerce editors. So within the PR world, there's like true brand editors, like an allure piece that's like no affiliate links.

35:19But then there's also commerce editors where they're like putting in those affiliate links. But more and more commerce editors are like taking over. And so we really see a big need for affiliate. But on the true brand PR side, we're not really investing as much in that. And we're using that funding to put that more into paid media, just because that seems to be doing a lot better for us right now. And what we're doing for the next year or so is I'm just managing PR because over the past few years, especially working with these agencies, we've been introduced to a bunch of these contacts. So I've kept my own little black book.

35:53And unfortunately it does require a lot of manual work, but also fortunately in a way, because a lot of founders don't do this. So Laura and I both follow almost every editor that we speak with and we're like regularly engaging with our content. So even just now, Laura, I didn't even mention this, but one of the editors that we met from Elle, she just put up an Insta story being like, has anyone had an experience of wearing makeup at the gym? And I replied right away. And I'm like, I mean, I've done that before. And she's like, let's have a chat. And that leads to a press hit. And that's something that other founders might not have seen or might not have jumped at.

36:23So that's the way we see PR. Does this mean that we won't have a PR agency again in the future? Not necessarily. But at the stage of the business, it's not the big line item that we want to be spending on. Talk a little bit about the affiliate side of things. I think that's interesting as well. And so that'll be these... It's funny. I come from affiliate marketing, but a very like kind of sketchy version of affiliate marketing where people are out running ads on a bunch of offers that they may have. You're talking more about Elle or Vogue or one of these actual websites that gets paid on a per sale basis, essentially.

36:57Yeah. So for example, we have a great article from Well and Good. And the subject line was, I found a cream that's just as rich and thick as La Mer, but a tenth of the price. And it was talking about our firm believer in neck and face cream, which by the way, is really good. and there's a bunch of links in the article and it's like firm believer, firm believer, firm believer. And then when you click on it, if you do end up purchasing through a website, they get like, I think a 10 % kickback. And that is like the way to go with PR. I mean, Laura and I were literally just in New York yesterday and the day before, and we're asking our PR agency, you know, who, like, what should we talk about and what should we really lean into?

37:34And they were like, you need to talk about affiliate. So we would be talking about our products and asking like, do you have any upcoming articles? And they're like, yeah. And then we'd be like, by the way, we work with affiliate. And they're like, oh, that's amazing. Because again, like these publishers, they're, they're consolidating and they're also going out of business. So a lot of the big publishers are gone and they have fewer writing staff and they need to make more money with those fewer heads. So affiliate is how they're making that money. Are you using any PR in your paid marketing funnels as well?

38:03Like does PR play into what you're doing on the meta side, Laura? It does. Yeah. All the time. We'll take those big, incredible clickbaity headlines and we'll take screenshots of the actual top part of the article and run that as static ads. It allows us to test out great hooks that we can then incorporate into longer form videos or creative that takes us more time to actually produce. And then even in our reels, as we get through the storytelling reels, once you get to probably the final 75%, we'll throw up some of those logos of different publications that we've been featured in to again, build credibility for the consumers they're watching.

38:41So PR is definitely a great tool for us to have within paid channels too. Especially when it fits so well into your exactly how your product is categorized, like that comparison to La Mer, which is super expensive. That's exactly where you want to be. You want to be the high quality, lower cost version of these products. Exactly. But like, we can't say that about ourselves. It's not authentic or genuine. And And like, people won't believe it, but we didn't write that article. We didn't ask them to write it. All that we did was send them the product. And then that's what they came up with from their experience.

39:10And so it's kind of like press in some ways is filling the same void as influencer because it's just a trusted source that people view as third party. Same with reviews on Amazon or reviews on people's sites. So some brands do really sketchy things with those. So I think the more that you can show of external credibility, especially within the space of cosmetics and personal care where people are looking for something out of your product, all of those areas and touch points serve a purpose. And a good tip for your listeners, especially if they're like a smaller business is to land some clickbaity press hits.

39:44You should keep track of how often your product goes out of stock. Because a lot of times consumers don't really realize the reality of like why a product goes out of stock, sometimes just due to demand planning. And we have a huge spike in sales and we didn't realize that this product was going to be out of stock. But to them, when they see an article that's like, this serum went out of stock three times or it sold out three times and it's back in stock now. That's like, oh my gosh, I'm going to buy this. So when we're writing press pitches to editors, we'll reference like this product has been sold out four times, eight times, 10 times.

40:16And like many of these commerce editors will just pick up that and make that the headline. So it's very applicable to your listeners if they have a product-based business. Same with how many units your product sells. Like if you first launch something and in that first like day that you have all that hype, you can say, oh, a product was sold every 30 seconds when we launched it. Or like every 10 minutes, anything that quantifies the speed at which to make it feel like it's like hot, trendy, everyone wants it. I feel like numbers. Yeah, any numbers. That's funny. That works in the podcast world as well.

40:47Any podcast title that has a, this brand went from this to this, it always does a lot better. It's a basic human fact, I think. It is. It's just more relatable. We can digest it and be like, oh yeah, that's really significant. 100%. So you guys started Bootstrapped. And then since then, you've taken some different rounds of funding. What are the biggest lessons that you've learned from this journey? I mean, there's so many. Again, how long do we have, Eric? So maybe I'll start off with some. And Laura, feel free to fill in any gaps because we have a laundry list of them. But our first round was in 2019 when we were about to rebrand Three Ships in 2020.

41:25And that was what we call a friends and family round, even though it wasn't really friends and family because we were too scared to take money from friends and family. We didn't want to make decisions that were too risk averse, knowing that we had a parent's check. So that$135 ,000 took us like five or six months to raise because that was a round that we say we made all the mistakes. We had no hard end date. So make sure you have a hard close date. We didn't dedicate 100 % of our time to fundraising. So what this meant is we'd get on a call, but let's just say you were interested in investing and we had our first call with you and you're like, okay, let me take this away.

42:01Let me review the materials. And then a week later, you're like, okay, let's get on a call. Well, by then Laura and I had other calls, other work things happening. We'd schedule something for maybe two weeks later and you need to strike when the iron's hot. So what we did for the round subsequent to that, which we closed 1.4 million in two weeks, Laura literally slept over at my home. and we blocked off our whole schedule from day to night, no social events either on the weekends. And we would just have calls from like 8am sometimes earliest all the way up to like 10, 11 at night. And we were able to close them so much faster.

42:33Also hiring a really good deck designer is important, at least from our experience. Because if you think about it as a founder, you're so in the business that sometimes it's hard to take a step back and realize like, actually, what is it about us that people really find inspiring or impressive? So we worked with a designer where we showed them all our data and we're like, hey, these are repeat rates. This is like when we started. This is how much we've done. And they crafted the narrative and put it into the slides that Laura and I spoke to. And that worked really well versus the first round we did ourselves in Canva.

43:05It's kind of cute looking back at what we did and not bad for our first time. It was so bad. I look back on it and cringe. I don't think it was cute at all. We were so proud of it, though. I mean, there were some elements that were. Yeah. I'm sure. I think that's really smart though, going from what you think is the most important, impressive part of your business, then going to a professional who really knows how the audience really thinks about things, right? So they can frame it up to make it easier to digest. Yeah. That was probably the highest ROI,$800 that we've ever spent on everything.

43:35That$800 deck raised us$1.4 million. Maybe that could be your headline, Eric. Yeah. That's a good one. That's a good one. On top of that, we also were really organized. So we had a dashboard that we created. where Laura and I would assign ourselves different contacts that we spoke to because we didn't want to have both of us messaging in threads with the same investor, which is something we still do to this day. Like we assign contacts to each of us and we would have columns for like percent likelihood to close, what we think the check size would be, when the last touch base was, like when we think it's going to close, things like that.

44:11And we had a running tally of how much we thought we were going to close at the bottom. So that kept us hyper organized. Also having a lawyer to do all the chasing down of signing the safe documents and transferring the funds. The first round that we did, we were doing a lot of chasing ourselves, which just wasn't the most professional. And you just don't want to be doing that. And it's just good to have a professional to do it. So those are some things. The last thing I'll say, and then maybe Laura, I'll pass it over to you. There's so many. You should really think about what the most common questions are that investors are asking you as you're doing your calls and document them.

44:46Because if you're starting to hear the same question over and over again, you either edit the slide to address that question at the start. So then they know that you're thinking in the same fashion, or you make note to have a talk track to that question throughout the deck. So again, you just need to be anticipating what investors are going to be thinking and then show that you're smart enough to be thinking the same way. Makes sense. Laura, anything to add? Oh my gosh, so many things. I have three written down here that I'm like, these would be my big takeaways. One of them is timing is everything.

45:17Investors, as much as they'll say, oh, I'm a disciplined investor and I make decisions off of the numbers and the growth of the industry. It's so much of it is FOMO, especially in the early stages. Anything pre probably series B is a lot of FOMO driven decision-making from the investor's parts. And so if you can time your round with some sort of big news or big event within the business, that's where you'll see the best results. So if you get into a new retailer that they finally said, yes, we're going to be bringing you on. We'll be launching you in six months. Start your round after you get that buy-in and that yes, it'll be so much easier for you.

45:51Or like that round that we raised in two weeks of the 1.4 million, we timed it so that our Dragon's Den episode premiered right in the middle of when that round was going on. So we were able to say like, oh yeah, we just appeared on Dragon's Den or we're going to be premiering in two days. And it really drove a lot of FOMO and hype and momentum behind the brand. And that will do so much good for you. The other piece of advice or another piece of advice I would give would be asking for intros every time that you get a no. So most investors will give soft no's. They'll say, love what you're doing.

46:23Let's keep in touch just a bit early for us or like just not right now. We are having this other thing going on. They'll come up with some reason that they don't want to invest in you. And really anything that they say that's not a yes is a no. When you get that no, ask, okay, no problem. We'll make sure to keep in touch as we continue to grow. Can we add you to our newsletter, which I'll get to? And also, do you have two to three people in your network that you think would be interested in taking a look at this? Can you introduce me to them? Connie and I knew literally zero people, zero investors before starting the business.

46:56We did not come from wealthy families or big money backgrounds, our dads weren't in private equity or venture capital. And all the people that we've met through our networks are from intros, from people who turned us down. So you can get so much value out of those connections. And then the final thing they'll mention is these quarterly newsletters I mentioned. When we would do a round, we would take all those people that had invested in that round, as well as the top quality people that we want to keep in touch with that turned us down. We would put them into a mailing list in Klaviyo. And every quarter, we would send out an update to that whole group, where it would be like, this is the area that we could use help two to three asks, key KPIs from that past quarter, what did we budget versus what did we actually perform at, and then key wins or key initiatives.

47:40And by sending those out, you passively keep these investors that weren't ready to invest in you yet or turned you down for whatever reason, you keep them engaged with the brand and the storytelling over time, They can watch a growth of the company and they can tell like, okay, yeah, they said that they were going to do this and they did it. And they see that behavior over time and can really pattern match. And that's allowed us to be able to raise money so much easier in subsequent rounds because we're keeping these investors kind of warm and engaged throughout those couple of years in between rounds.

48:10On that note, when we decided to open our next round, what we did is we looked at those past emails that we had sent out to those investors in Klaviyo. and we checked which ones had opened our emails and which ones had opened them multiple times because then we knew that those ones were the ones that were the most engaged. So that was really smart. Two other things, just because we know this is like a big topic people think of. One thing that worked really well for us was the preview videos. So in our last round, what we did is instead of just sending like a couple bullet points about the company, we recorded like a maybe two and a half minute video of Laura and I talking to the camera and saying like, these are some of the things that we've done recently.

48:47we didn't mention our exact revenue, but we said, if you want to learn more, hop on a call with us. And the number of times that investors told us we'd never seen anything like that. And like, we are going to recommend this to everyone was insane. So highly recommend you film a preview video because they're so used to getting all these random pitches via email. And the other thing that Laura said that made me think of something else is when you're talking about the no's that you get, know when to like cut ties and like be done with the conversation too. Because in that first round, when we were raising that 135 ,000, the number of times that we heard someone say like, oh yeah, like, let me just do some more thinking on this.

49:22Like, just give me a couple of weeks and I'll come back to you. And like, if you think about from the investor's perspective, there's no downside to them dragging it out. But for you as a founder, your time is so valuable. And so eventually we learned like, okay, that's pretty much a no. And so you have to have a direct conversation with them of like, okay, seems like this is not a fit for you right now. Let us know when the time is right in the future. Maybe the pre-series A was too early. we'll chat with you again in like two years. Because again, your time is the most valuable thing as a founder.

49:50Just absolutely great advice. There's like five more questions on my list here, but we're already at time. So I guess it means you're going to have to come back. I know we've got some fun stuff cooking up as well with a potential partnership in the future, which we'll just tease. And maybe that'll come to fruition soon. But otherwise, thank you both for making the time and coming on the D2C podcast today. Super excited for your journey and to keep following you guys. Yeah, thanks. This was great. Our pleasure. Thanks for having us. If people want to follow your journey a little bit more, where do you recommend they do that?

50:22On LinkedIn, maybe? Instagram is great. So at 3ShipsBeauty or Laura's handle is Laura.ATompson with a P. And mine is at It's Connie Lowe. So I-T-S-C-O-N-N-I-E-L-O. I would say like our personal Instagrams are where we post the most. We should really get on LinkedIn more. it's just not really an area that we're either of us are interested in. Fair enough. That means you'd crush there. It reminds me of my old job in sales. I was in tech sales before going full time. And so pretty much most people that are on there that I follow or follow me are like people in marketing tech. And I'm like, I don't think this is the audience I really wanted to speak to.

51:02No. Although a founder recently recommended, she was like, Hey, a lot of buyers are on LinkedIn. You need to be posting more. And I'm like, Oh, so now I'm building into my process. every week I need to review LinkedIn again. So if you have any tips, Eric, feel free to send them our way. Get back on it. Nice. Cool. All right. Well, we'll talk to you again soon. Thanks for coming on today. This was fantastic.

51:29Thanks so much for listening to today's episode. If you're not a subscriber to our newsletter, you can do that right now at direct to consumer, alloneword.co. I'm Eric Dick, and this has been the D2C Podcast. We'll see you next time.