Ep 547: Highland’s $10M Playbook: Lean Team, 2 SKUs, and Obsessing Over Unit Economics & CAC Payback

0:00We are not trying to just chase the dollar. We did this to solve the problem ourselves. We want to tell that story. What's impressive about Highland is that we got to eight figures just on the backs of two SKUs. We were really focused on, let's stay first order profitable. That's the best thing we can do. What we learned with our CFO is that we're leaving too much customer acquisition on the table. We were reluctant to join Amazon. We joined a year late. But when we did it, it was such an unlock. You need to be in every channel, on every platform where your customers are. Find people that can make consistent, great pieces of content for your heroes.

0:41Ben and Boone, welcome to the D2C podcast. I'm super excited to have you guys here. We had a great pre-interview a little while ago. Can you guys run us through your hero's journey? Why did you build Highland? Yeah, of course. Eric, thank you so much for having us on, dude. And first, just thank you for your work in the DTC community, the newsletter, the podcast. You make it a better space. And to anyone who is fortunate enough to engage your content, you make all of us better. So thank you. And really excited to be on today. I really appreciate that, man. So the Highland Journey, for us, it started out as my own issue and problem I ran into as a consumer.

1:17I grew up in Boulder, Colorado, which, if you're familiar, is a very health and eco-conscious place. just a really beautiful place to grow up. And I had those values imprinted on me from an early age. My dad too was actually a two-time testicular cancer survivor. So health was just a really prominent topic in our household growing up and something that I grew up really caring about deeply. Fast forward to me as a college student at CU Boulder, which is where Ben and I met and became best friends. I was a social college student caring probably way too much about what my hair looked like and using all of the quote unquote best in class men's hairstyling products from local salons, barbershops, you name it.

2:00And, you know, that got to a point after using enough products and experimenting with enough stuff that it felt really disconnected to me that the very best the industry had to offer is packaged plastic crap, which, you know, the deeper you go into these ingredient lists, the more harmful and damaging you find these things to be. we kind of think we're in this era of clean beauty. And although I think it's gotten a lot better, I think we, as an industry, we have a long, long way to go. That kind of led to my search of like, can I find something that does perform and make my hair look presentable in a way I want it to look?

2:37But that follows through on my core values as someone who cares about my health, and hopefully, you know, reducing my carbon footprint too, or my eco footprint. Finding that nothing really worked, I just started tinkering and ordering like bulk clays, waxes, oils, essential oils, and mixing up on our Denver apartment stovetop shortly after we graduated. You probably thought I was nuts. I did. Yeah. I mean, he would pass me over these samples and it looked like it was just kind of poop in a jar. And I would have to kind of swallow my pride and be like, you know, like, I'm just going to put this in my hair.

3:13I started to think, obviously, really highly of my appearance. And I wanted to make sure that my hair looked good. And I have these curls that I wanted to, to let shine. Right. And I was like, okay, you know, Boone's onto something here. I'm living with him. Let's just see if this actually works. But the early, the early results were, were nothing pretty. Um, no. Yeah. So that was sort of how process started. I had no chemistry background, so it was really just Google before the help of GPT or anything like that. Like looking at what are these ingredients and waxes that could potentially replace the same performance characteristics that the legacy, you know, hairstyling products carry.

3:48That iterative process went on for a while, kind of into the dog days of COVID. And Ben and I, you know, since we met at CU Boulder, and we were in the same strategic advertising and business entrepreneurship track, we shared this, I think, interest in doing something different. Of course, that led to us getting, you know, the same nine to fives out of college that everybody else got, but we still had that interest in our sights, I guess. So during COVID, we kind of had a look at each other. We had friends coming down to our apartment, taking these little cardboard paper pucks that we were packing our glacial clay pomade into and trading it in for their brands that we, I guess, don't need to name here today.

4:27But we were kind of onto something we thought. And during COVID, we realized we were going to be in our apartment for God knows how long and said, look, this is kind of the closest thing we've got to a business. Let's see where we can take this. That led to us getting it into a couple of local barbershops and salons, which was kind of that first point of validation. And to us sort of prove that we could overcome that stigma that exists within the professional industry, that natural products don't perform the way they need to. Like Tom's deodorant. I love talking about it on this podcast all the time, like it makes you smell worse or me smell worse than I would without deodorant.

5:01poor tom yeah yeah i know it's just so true he sold a long time ago i think we're fine he's fine okay yeah he probably made out like a bandit um but that's that's kind of how the the whole journey started we started selling you know a little bit here and there online we're making it in our apartment stovetop and then in my basement at our next house here in a kitchen aid mixer and you know for so long we heard like you guys got to find a manufacturer if you want to scale this up but i think you're reflecting back in those you know such a pain in the ass like hours spent just to make 30 of these cardboard tins.

5:34We're lucky to kind of prove our concept in that manner. I think that there is a greater market for this, that it wasn't just my own personal issue, but that consumers kind of shared this sentiment of, of wanting a brand that followed through on more values than just, Hey, how does your hair look today? But like, what are the deeper consequences and impact of wearing that product every day? And it has to work. And so you went to, so to validate it, you went the professional route first where you literally, these people are styling dozens of people's hair a day. And so it would have to work for them.

6:04And when it did, you had great product validation, right? Yeah. I mean, we brought it into the barbershop for the first time. I think we had some sort of into the barbershop and that owner, shout out Anthony. He's still with Highland today. He's become a partner of Highland, but it's, you know, Rollins Barbershop out in Boulder is one of our biggest wholesale accounts to this day. He brought it in and, you know, when he started liking it and wanting to be more part of Highland, And, you know, we had barely done any revenue yet. And we thought retail was going to be this retail as in, you know, barbershops and salons.

6:32It's going to be a massive chunk of the business. You know, obviously now DTC podcast, you know, DTC is a huge, huge, huge part of it. And not to say that retail isn't or will become one. But yeah, I think we proved out early and we were never really not confident in the product itself because we had people like Anthony and all of his stylists and barbers coming to us and raving about it, you know, from day one. So I think that was really, really great to hear, you know, as we are still kind of packing this ourselves at Boots Basement. So when you went to take it to the next level from the kitchen, did you look at fundraising or did you decide you want to bootstrap?

7:09Yeah, it was such an interesting time in the landscape. And, you know, Ben and I maybe knew a little bit about business, but not a lot. But it was really interesting, I think, during that kind of COVID era where a lot of these direct-to-consumer brands were raising well beyond probably what they should have been, evaluations that they probably shouldn't have been. And money was getting handed out left and right. And all these brands were spending all of their money on acquisition, saying, we'll figure out profitability later, right? And for many of those brands, unfortunately, it didn't work out.

7:40But it was a really interesting time for us to be on the sidelines and making this product in our basement where we got to have an honest look at each other and be like, there's a different way to do this. Hopefully, you know, let's let's figure out how to get that first dollar of profitability, because once we do, you know, we can, in theory, keep keep running this business alongside each other in perpetuity. So that was kind of the goal. We did raise a little bit from friends and family, you know, and we took it really seriously, like creating little pitch decks and getting on the phone with moms and dads and friends and family and and going through the going through the process of trying to pitch them.

8:14And, you know, not just asking for a handout, but proving to them, trying to prove to them why we were worthy to take a swing on. I think we raised like 150 grand from friends and family all in kind of over the course of like a rolling six month raise, which was great experience on its own. And, you know, I think that that ended up being plenty of money for us to go out and, you know, build our first two products with a legitimate manufacturer who helped go through the process of dealing with like truly natural formulations, which is really tricky and challenging in its own right and has so many inconsistencies.

8:49But, you know, we do still consider that to be really bootstrapped in a day and age where venture capital is king, right? Right. And part of what you built here really goes into the obsession with unit economics that you guys kind of came out of the gate with. Can you talk a little bit about how you balanced unit economics with product development? Yeah, that's such a great question. And, you know, especially like back to the natural formulations thing, when you're using natural plant derived ingredients, they tend to be more expensive than the synthetic stuff. And when you're giving a shit about packaging and trying to do the best you can for our environment by using materials like aluminum, that too comes with an additional cost.

9:29So we had to like dig in and work with people and take advice from people who are smarter than we are. We were really fortunate to get connected to Oliver Zak early on, the founder of Mad Rabbit, who has become a great advisor to us and sits on our cap table today. And, you know, he connected us to a bunch of different people in the industry and he walked that road of being an early first time founder and and, you know, going the venture capital route, too. So we were fortunate to not just trust our own instincts, although we did do that too, but really leaning on the experience of others. For us, it was about trying to get to around 80 % gross margin on our products.

10:07And that's roughly what we try to target today still to try to support. Can you go out and acquire customers, you know, try to get close to first order profitability and build something that is actually a sustainable business? Not from an environmental perspective, but like, can you survive? Keep the lights on. Yes. Yeah. Talk to me about when you started to scale it, essentially. Was Meta the tool of choice? Yeah, it was. I mean, and kind of to backtrack a little bit too, this family friend's round was to get us off the stovetop. Oliver was pivotal in introducing us to our now current contract manufacturer and 3PL who helped us recreate our natural formulas and helps us to this day for new formulations.

10:48But when we got off the stovetop and they were able to recreate it, we knew that we could scale. So we actually had a friend out of college who offered, you know, we, I think we posted a story and we're like, you know, we have no experience in media buying. We have no experience in running ads or creating content. You know, we have ideas for how we can, you know, paint the picture and tell the story and, you know, make it about Boone and myself and how we are not trying to just chase the dollar. Like we did this to solve the problem of ourselves. We want to tell that story and what's missing in the current industry.

11:20So we got with this guy and shout out AJ. He helped us get to where we are. And he kind of came on and helped manage the media buying side of things while we had our current first time employee, Brendan, really, really make us look like an eight figure brand before we were from day one. And he helped us tell that story. And we were really skeptical about Meta, especially after the iOS updates. You know, we were not going into it being like, you know, this is going to be, we're not going to be a DTC business. Like we're going to try this out. We're going to see if it resonates, but we're really going to try to push barbershops and salons.

11:54We know it works there right now, but let's just try to tell our story. We'll have Brendan, you know, with his awesome equipment, help us tell those origin stories. And lucky enough, you know, within the first few months, that origin story founder-led content really started to hit in the meta machine. And, you know, we started kind of building upon it, telling that story through the lens of the salons and barbershops that we were partnering with, helping us build that credibility from early on, which I think just kind of humanized the brand as well, because it was just us behind the camera. We didn't know what the hell we were doing.

12:25Also, we were just trying to be like honest and conversational. And I think it really, really went far. But I think we started in December of 2023, something like that, when we started running Meta. And then from there, it's kind of just scaled into this beast. You don't generally think, you know, hair care products or hair gel for men more particularly, that they're going out of their way to buy it online. But I guess your story-based content kind of hooked people in. I think it's a great lesson that when you're trying to sell something that might not be traditionally what gets bought on those platforms, like storytelling becomes that much more important.

12:58It was essential. It was essential in us building the business. And I mean, if you're looking at all of these, you know, Walmart, Target brands that, you biggest household named haircare brands, there's no person behind it. It's not personable at all. You don't feel excited. It's not a representative of what we like to do and our athletic nature and telling it about how we're fashion forward and who we are as people of how can we get people to buy into the mission. We felt so disconnected to everyone that every brand beyond just haircare and personal care as well. How can we shake that up and tell a story that actually resonates?

13:30And I feel like we didn't do that on purpose. We were just being ourselves. And I think it just hit from day one. That performance is so important, but I think it validated it for us. Maybe we didn't even know how big the issue was for us as hair product users from the beginning because all we thought is this product doesn't speak to me. But I think the route we tapped is a lot of other people, men and women alike, are experiencing this where this industry for some reason is lagging. And yes, maybe they're delivering performance, but they're not kind of capturing that holistic view that customers are looking for today, where they're not just looking for performance.

14:08They're looking for a brand, like Ben said, that is a reflection of themselves and their own values. And that's something you absolutely need in 2025. And I think that's one of the main reasons that Highland has been able to take up a little bit of market share and become relevant here in the space today. How has your content game evolved? I think in our pre-interview, we talked a little bit about even just recently the 2023 playbook kind of running a little bit dry. So I'm curious, how has your social scaling evolved over the years? Yeah, I mean, you're right. The 2023 playbook has kind of died down and we can get into more of that.

14:43Like that's I feel like more on the media buying side and like how you're setting up your systems too. And we're grateful to have a lot of great people on our team that help us really get into the weeds of that while we're kind of more over high level overseeing. But in terms of the content pillars, how we've kind of evolved to think about is we want to keep it simple, right? We want to keep it to three main pillars, right? If founder led storytelling, that's including brand storytelling as well. You know, what are we doing day to day? How are we thinking about new product development? How are we thinking about telling the story and evolving the story with our current products as well?

15:15And, and how boom is saying they're a reflection of ourselves and where we want to take the industry. So that's one. And that's kind of where we started. And then we were like, okay, cool. Like, how can we find the experts in our field and tell that story through them as well? So I think we did a really, really good job also unintentionally from the beginning of tapping into that professional network of salons and barbershops. How can we have them honestly tell the story of their personal experience, which were genuine? And, you know, if you're going to a barbershop, you're probably going to listen to the person cutting your hair and what they're recommending to you.

15:48So how can we kind of tap into that content wise? Also, from day one, we were lucky enough to get connected to a celebrity groomer. I'm still on our team, Courtney Housen, around in LA. We love her and she's awesome. And she's connected us to a lot of awesome people similar to her in the space of how can we get into high profile hair and get them to fall in love with the product in scrappy ways, red carpets, campaigns, photo shoots of where Highland is being used as the hero product to achieve those styles for the likes of Jay Shetty, Joe Burrow. I mean, the list goes off. Bill Nye, which was hilarious.

16:20Um, Oh, nice. Yeah. That was really funny. Um, I just saw Joe Burrow on your site too. I think that's such a smart way in to, to, rather than trying to get the celebrity, you go to the groomer and then does the groomer. Okay. You guys using the celebrities image in the, like, I guess they're just looking for more publicity, right? That's it. We're promoting the groomers content. So it may be a little bit of a gray area to be honest, but, um, you know, we're so proud to see our product in Joe Burrow's hair, but the lens we come at it through is let's promote this groomers content. And yeah, that's been a huge point of validation for us.

16:53And Eric, you asked about like the evolution of that content. Those pillars I've been speaking about, those are constantly having to evolve too. Like that being founder led was something that we, I don't think we ever like sat down and said, we need to do this. We just kind of backed into it and discovered that to be important and successful for the brand. But less and less these days, do people care about, okay, yeah, you made this product on a stovetop. Like how do you evolve that story now. And for us, it's about, you know, becoming a bigger voice within the industry and trying to evolve clean beauty and take things a step further, creating that unmatched performance with really clean and effective lines of products.

17:30So those content pieces and storytelling, that has to change too, right alongside all of the media buying strategy, which as you know, is constantly evolving. Right. Yeah. And, you know, it's an evolving story, has been saying. We don't have it all figured out forever. We're going to have to keep putting new caps on and thinking about it in different ways. But for everyone listening to this right now, we, eight-figure brands, seven-figure brands, we think that if we could go back and tell more people, finding the experts in your specific industry, whether it's a fragrance expert or a dermatologist, finding those people that have true credibility in your space can help you tell your story in really meaningful ways that give you that extra oomph and like, and really make you appealing to the everyday consumer, which maybe, you know, maybe they don't know much about hair care, but they can help kind of paint the picture for you in really creative ways.

18:21So I think that's been a really good pillar. The third pillar, just real quick to brush over is just at home, UGC, honest people, everyday people, aspirational though, for us, you know, we always want to make sure that we're creating content that people want to aspire, you know, their hairstyles to look like day-to-day or their health or beyond any of our other pillars, sustainability, but telling it in a very native kind of way, organic feeling. What can you guys say about where you're at today in terms of scale? We're into eight figures. You know, we're not anywhere close to nine yet, but we definitely have our sights set on it.

18:53I think, you know, what's a little bit impressive about Highland is that we got to eight figures just on the backs of two SKUs. And to, you know, to anyone listening, I think if we could have gotten a little bit more serious about product development and product line expansion early on. We're now looking at that as obviously a huge, huge lever for growth as we enter 2026, just around the corner. Wish we had got on that a little bit sooner. Definitely be thinking about expanding your line and your offering, not just for average order value in LTV, but inviting more people kind of into your brand tent.

19:25How many products are you up to now? Just three SKUs. Three SKUs, okay. We have a few more in development that we're really excited about, you know, expanding. Obviously, continuing to own hair is our primary focus, but I think some of our customers can get really excited about us starting to branch out of hair a little bit too as we move forward. Is the pomade still the hero product? The pomade and the cream are the hero products. They kind of go back and forth a little bit, which is cool to see the pomade, I think still is sort of that bread and butter. That's our origin story. So I think it only makes sense, but you know, trying to scale the other product up as well.

19:57And hopefully we can get some new launches to go and compete with those two, at least from a revenue perspective, but not cannibalizing. Right. And we only launched our third product, the wash in March. It's been barely six months. And we've been, it's been really cool to see it kind of evolve into this retention kind of product. And our existing customers really love it as they've been using our pomade for years and they now have a shower product too. So try to think about that in regards to product development, how can we keep building upon that story and creating offerings that have, you know, have never been seen before are incredibly innovative compared to what's out there that go beyond just cleansing or styling, but like really leaning to the longevity of hair and scalp health.

20:38That's just it because there's such a move. There has been such a movement for, for health and wellness as a whole. And people are getting into sauna, cold plunge, eating well, exercise. And like, this is such an easy lever to pull to just upgrade your routine to a product line that matches that, that matches your day-to-day routine and your core values. So I think personal care is going to continue to grow and move into that space. I want to go back to something you said, though, Eric, because you were talking about kind of the scale we're at today. And we can talk about from a revenue perspective, but I think it's equally important to your listeners probably where we're at internally.

21:15We've got here with four full-time employees. We have a lot of help outside of that. But I think that's what's been successful for us and what we would encourage others to do. It's allowed us to stay really lean so that, of course, you got to be focused on your unit economics on the product side, but on your operational expense side too. How can you stay as lean as possible? Maximize that kind of revenue per employee metric that is becoming more and more talked about. Get the most out of your team. Of course, not with burying everybody in work, but leaning on agencies and contractors where you can, things that are easy to move in and out while taking care of your core team.

21:54We're really focused on lifting each other up as people here, you know, building careers for people, you know, just taking care of the Highland family, of course. How have you guys divided? Are you a two-headed monster or how do you divide the labor among the two of you? Oh, man. I mean, yeah, like that's such a crazy. Yeah. Yeah. There's not one answer essentially, you know? Yeah. Like long story short, we wear a ton of different hats. It's been really cool. I mean, as our business has entered the eight figure range, we have to own certain areas. I can't always be in Boone's business. He can't always be in mine.

22:25Right. So we have to, there's that trust factor and like that co-founder relationship. I know we really wanted to get into is like, you know, it's hard to start a business with your best friend. You have to, I mean, there's been bumpy moments and I mean, outside of just work as well, but But like that respect and invulnerability you have to have with a co-founder, like I wouldn't be able to do it without this dude. And I know me for him as well. Like I can't imagine anyone growing a business without a co-founder. I saw you had the rotten guy on as well. He's a solopreneur. He is. Which is kudos to him, man.

22:57That's insane. It must be lonely, honestly. But anyway, I mean, I don't even know what we were talking about at that point. But yeah, it's naturally kind of divided. Like Ben has always sort of veered towards that marketing hat. I've been more on the operations, finance, and product development side of the business, I guess. And the four of us, we just moved into our first office in downtown Denver, which is super exciting. It's fun to build that kind of culture and camaraderie. And there's a ton of overlap, but, you know, we're still trying to figure out how do we own that? And more importantly, how do we delegate outside of the business to these agencies, to these contractors who can help us continue to scale and get the most out of our own day-to-day without being just completely buried in work.