Diversifying Creators’ Revenue with Merchandising and IP w/ Saurabh Shah (Warren James)

0:00The goal is to create a standalone brand that can be purchased by somebody in the future where we're gaining equity value, making something meaningful, that can also live outside the creator. after some time.

0:16Hey, Sarab, welcome to the show. How are you? I'm doing great. How are you? It's great. We have a lot of things happening. I'm very excited about this episode. We already discussed in the past about merchandising for influencers and IP and so on, but since you specifically focus with your company on these, I'm very curious to learn more about it. But before we get started and we're going to the ins and outs of today's episode and topics, I would like to know a bit more about yourself. And we use this thing called the map. So basically, it's dividing three different sections. It's the mission. So basically, what do you aim to achieve with your work?

0:49Achievements, anything that you are really proud of, a notable milestone, could be in your life, could be your career, both of them. And the last one is the purpose. So why do you do what you do? Love to hear it. Yeah, I'm happy to dive into that. So in terms of what I aim to achieve, I think it's something that where I'm touching on both sides of my brain. So I really like blending the creative aspects and analytics into my career. And I feel like most careers are actually touching on one side or the other, right? It's like generally creative role or generally an analytical role. And I've gotten happiness when I blended both.

1:20So I really want to end up actually maximizing that when I'm like, okay, how do I blend both the creative and the analytics side in terms of achievements? I was, I've been a creative early in life. I was a magician from an early age. I became a member of, there's a place called the Magic Castle here in Hollywood when I was 13. I made a movie when I was going from high school to college at USC. And so that was really exercising on the creative aspect, but always had that analytical background too. So that's when I kind of pivoted to professional services. So I was somewhat risk averse earlier in life.

1:54So I joined in litigation consulting, then went to UCLA Anderson for business school. And then that's where I was like, okay, how do I continue to blend the creative and analytics piece? So I joined NBC Universal for an internship on their strategy department. That was an internship and it was a bunch of ex-consultants. And they basically said, go do a summer or something at a management consulting company. So I joined the Boston Consulting Group during my summer at Anderson and then worked my way to become a partner at the company. I was primarily focused on media, technology and telecom, those three primary industries.

2:30And we built a lot of startups for Fortune 500 companies. So we worked with our clients to actually build startups in-house. And then from there went from I love the startup side. So I joined Next10 Ventures. This was a fund to build creator businesses. So it was a$50 million fund dedicated to backing creator and influencer businesses. And that's where I actually met the co-founders of Warren James. So Ben and Kevin were the co-founders at that time. And then I became an advisor for the company because they were just starting the company back in 2019 and 2020. So I joined them. And then after that, I wanted to get more operational experience.

3:06So Jonu, which is a medical scrubs brand, Figs is kind of the big one in the industry. John was kind of the challenger player and he joined his chief growth officer, helped to really grow the company. And then Warren James or WJ, we got to such a size where my background, mixing both the creative and analytical sides, could really help scale the business. And we've done just that. We've grown over 50 % over my time as CEO and we really support the biggest and best creators here too. Fantastic. First of all, congrats on these and quite a journey, right? You went through different phases and different industries.

3:42So it's quite interesting to see also how you used the artistic part, the creative part, together with the analytics one. We're going to go, I think, more in detail, especially when it comes to analytics and also creative aspects, of course. And before we continue, is there also anything else on the purpose of why you're doing what you're doing? Yeah, I think the purpose really for Warren James and myself kind of blend together. So within Warren James, we're professionals in diversifying a creator's revenue outside of just content. And I really like to think about whether it's an entrepreneur or a business on how do you expand growth.

4:18My career at BCG was growth, right? How do you actually develop strategies that are around growth? Same thing with the creator's revenue. And a lot of the work that I did within media at BCG and same year was extending IP to physical products. So apparel, toys, comics, like we do here at Warren James. But it's also thinking about how do you take intellectual property and expand it beyond what is just content. So a lot of the work that I do at BCG has really framed how we're thinking about stuff at Warren James as well. Perfect. And before, like, you know, getting into all the, you know, creator SAP and strategies and so on, can you give us, you know, a little elevator pitch about Warren James, just for people that might not know the company?

4:57Yeah, I mean, we develop the brands and premium merchandise for the world's biggest creators. So we've worked with Good Mythical Morning, Hassan Piker, Brittany Broski, Pay Money Wubby, Crew District, Call Me Chris, Sea Dog, many, many others. And we are an end-to-end servicing platform. So we do everything from designing the product, developing the product, using our team that has boots on the ground in Asia to actually work with vendors to manufacture. We have in-house fulfillment, website design, marketing. We We basically want to build the biggest and best premium merchandise for the world's biggest content creators.

5:36Fantastic. So let's go a bit more about, you know, the strategy. So you said from, you know, end to end, right? So from A to Z. Now, I would like to understand a bit more. How does it work from day one? Is it these content creators slash influencers that come to you, be like, hey, I have this idea. Can you help me? Or do you go to them? So let's say you see there is a YouTuber talking about, you know, cereals or coffee or beauty products. and you go to them and be like, you know what, we have an idea. Is it a mix? So it's both like, you know, you looking at scouting and also they coming to you?

6:04Like, what is usually the duration there? It's exactly that. And we've shifted over time. In terms of how we usually work with creators or how we get deals, it went from very much we would be approaching, working with primarily the big agencies as well as the digital first agencies on, hey, we want to work with so-and-so creator. Here's an idea. now the Warren James name has really become synonymous with premium merchandising and brands so a lot of the deals do come more inbound where creators are vying to actually work with us and that's very humbling especially over the last like two to three years and in terms of both where do the ideas come from we're usually the ones that really try to take ideas to the creator so we'll come in with something that is like especially on the merchandising side with day one around here your content looks like this.

6:53Let's now form creative or designs that can look like this, or your content has this kind of, these aspects, let's develop a so-and-so products. I can get into a couple of examples that we can talk about in a second here too. So we definitely try to come in with the ideas. Sometimes like we did with Mythical, they said, we want to create a cereal brand, right? And they thought about with Rhett and Link, the two flavors that we originally came out with were very much nostalgic for their childhood. We'll talk about that in a second as well. Sometimes they do come in with a pretty baked idea and then we'll help them develop it, craft it, create a brand around it, and then take it to market.

7:28Interesting. And so how does it work for like the IP component there? Is it a sort of a partnership? Do you like, you know, revenue share with the creators? Is it mostly like licensing so you can use their, like, tell me a bit more about the behind the scene and business models there. Yeah, it's both. So on the traditional merchandising side, it'll largely be a licensing rev share or profit share model. So that is a majority of the business that we develop for our traditional apparel products, plushies, and other high-end merchandise. When we're actually creating a new product, we'll usually go into a joint venture with a company.

8:06So as an example with Be Good Bakery, this is a protein and supplements line that we created with Will Tennyson, who is a fitness creator, has a massive audience, really has phenomenally hilarious content that he plugs into with his audience around fitness. And so it's not that big, bulky, strong guy kind of thing. It's just like, here's how to make fitness in a much more approachable way. And so we created this brand, Be Good Bakery, and formed a joint venture where we're partners with them in the business. And that one, again, And the goal is to create a standalone brand that can be purchased by somebody in the future where we're gaining equity value, making something that's meaningful, that can also live outside the creator after some time.

8:51Got it. Yeah, because also that is another challenge, right? If the brand is very related to the creator, it's a pro and a con, right? All the time, because you're using the image of the influencer, but at the same time, then if you want to either buy it out or if there is any scandal right around the influencer, these days, right? It's so easy to get, you know, resurface a tweet of, you know, 20 years ago or so, right? Basically. And then there is a scandal. If it's like very associated to the face of an influencer, then it's a bit problematic to detach it, right? As a brand. So that's also what was one of my questions.

9:24Are you saying more like, you know, again, stand-alone products that are basically promoted by the influencer, but are potentially then either run by your team or the team of the influencer? And how difficult it is then to, again, having this product that is alone detached after some time from the influencer, if it is even possible? Yeah, we see both. So again, on the core merchandising side, it's usually attached to the creator. We have had pretty good situations where even for something like, for Call Me Chris, for instance. So for Call Me Chris, she's big both on TikTok and on YouTube. And what we were hoping to do, we crawl, walk, run into something that can live outside of Chris.

10:04So for instance, I think we started with a brand called Otto. It's named after her grandmother. And we have it as Otto by Chris for now. And our goal is a mix of pieces that have the actual brand name Otto, Chris's likeness and phrases, but it also incorporates other models and talents so that it's not just Chris. Right now, she's primarily the person that's on the website. But our goal is to make this something that can live a little bit outside of her so that she can push it when she needs to. but others would potentially recognize it. And that's our goal is just like, if there's something where, even if it's not necessarily like an old tweet that's surfacing, but if the creator decides to not make as much content over time or decides to take a break for six months or something like that, we want the brand to be able to live.

10:53So that's how we're trying to approach it. I would say 80 plus percent of it is going to be directly attached to the creator, especially on the merchandising side. But for any joint ventures, we're really trying to make sure that it stays separate from them. It takes about a year to 18 months for that separation to really occur. That's why we do that kind of crawl, walk, run approach. It's like mix the likeness, create enough of a brand identity that lives outside the creator. And then eventually you can say, okay, here, we'll go ahead and separate it apart. Once we have a big enough email to serve, do we have enough of an audience?

11:27Does it work for us to actually put paid ads against it? And then we can work with the creator's team to actually launch it too. Hello! Is your brand ready to amplify its reach? Well, the Influencer Marketing Factory is here to do just that. We are a global influencer marketing agency helping brands ignite their growth. From influencer identification to campaign strategy, handling legalities and agreements to managing shipping and logistics, we have it all covered. We work with hundreds of brands across different verticals from Fortune 500 companies to DTC brands. And we don't just stop there.

12:01With detailed ROI analysis, we help brands like yours measure success, transforming impressions into actionable conversions. You can find us at theinfluencermarketingfactory.com or just search the Influencer Marketing Factory on Google. Makes sense. Thank you for answering that. I'm also curious to go a bit more in detail about type of products, right? Because back in the day, the majority of things, because it was a bit difficult to make them, right? It was t-shirts, mugs, typical merchandise here, right? And then now you have like influencers that are doing something, something a bit more niche in certain verticals could be food and bev, could be beauty, right?

12:38It's the majority of them. Then there are a few of them that are doing something completely crazy. There is like one of a kind type of thing that could be a hit or miss. Are you noticing any patterns? Is it like, are they influencers, content creators still trying to stay on the, I would say, safest side, right? Where there's something that, okay, it's a t-shirt, it's a hoodie. Of course they're going to buy it. or are you noticing them to go to something that is a bit more unique to find a sort of blue ocean for them? So are you noticing anything there? I don't think it's as much creator-driven.

13:10Creators definitely get a little tired and bored sometimes if you're just trying to push t-shirts on them. But we really pride ourselves around product innovation. It's critical to draw in fans throughout the year. So we actually use a strategy. Even if it's core merchandise-related, we want to make sure that each collection has at least one unique piece or the entire collection can be something unique too so we launched muumus with britney broskies these are nightgowns right so it's not something that most people wear but these were a phenomenal hit like i i doubt most of our audience wore a muumuu but she really helped to create the demand and this was something where she came in with the idea where she was like hey my grandma used to wear this i kind of wear this around the house when I don't have anything going on.

13:55She brought something that was like over 40 years old in a bunch of colors with it. And then we decided to take a spin on it. We made it unique. And so that's where we really pride ourselves around a product innovation point, where if a creator can bring us any idea, awesome. And then we're usually part of that as well. So we've done like, you know, those magic eight balls that you shake and a little answer comes out. So we've done stuff like that. We've done light boxes and more. So while, yeah, we do have, we do sell a lot of hoodies. We do sell a lot of t-shirts, but we really make sure that there's some level of innovation in there.

14:28And then we also have other divisions. So we have Bad Egg Publishing, which is our comic book division. So, or I would broadly say publishing, so that we do comic books, we've done graphic novels, we're doing manga, we're doing a bunch of different aspects that are related to publishing, because that's, again, an extension of the IP into another format. Food and beverage, same thing. Pointed out a couple of examples, Mishmash Be Good Bakery. your specific question was around, is there any trend around a specific category? Not really, but we see interest across, we see interest across the board.

14:59I would say in terms of timeline to get to market, sometimes there is a level of like impatience. So food and beverage takes 18 to 24 months minimum to get to really strong market. T-shirts we can spin around very quickly. And then what we usually try to do is we work nine to 12 months in advance for these kinds of like cool and different products that we really want to launch into market because it just takes time for development too. Very interesting. You already mentioned, right, like one example, you know, the mishmash, right, by RectorLink. So we covered that in our blog post. I probably know that.

15:32Thank you. Yeah, of course, you know, because we are doing a lot of blog posts about the top 10 influencer funded something, something brands. So we did it for food, we did it for beverage, we did it for beauty, we did it for fitness. We're doing a few others. Soon we're going to do something for like courses and so on. They're ranking pretty well on Google. And I noticed that more and more people are looking for that. It could be maybe reporters they want to cover it or I think other competitors, other creators, right? They want to see, okay, what else is out there, right? So let's take this one specifically.

16:02It's very interesting. It's like a nostalgic serial, right? Tell me a bit more again. Like, I'm very curious to know, is it something that they were talking about it on their videos and there was like already their audience saying something about it? Like, oh, I would love to see them. or like, I would like to understand a bit like, did they leave hints here and there in their videos? Is it like communication? Like for instance, I know that some content creators have a Discord channel, right? Where they can talk more privately, right? With their strongest communities that can tell them like, what if we did this, would you buy it?

16:32How much would you spend for it? So tell me a bit like, if you can, about, again, the process behind that, the behind the scene from ideation to understanding, is this something that the audience is gonna buy? At what price? how many items should we even produce, right? Because then it's another question I have later for you is about DTC2 retail. We're going to get there in a second. But can you tell me a bit more specific for these case studies? How did you approach it? It's a great question, especially with background research. And there's always a blend of how do you get enough research so that you can make sure you're making informed decisions without having it leaked to the audience?

17:06Because that ends up being something that creators want to hold to. This one was a two-year path where they came to us saying, they're synonymous with two things good mythical morning is synonymous for a morning show and food and so they're like what's the best thing to do breakfast and then within breakfast they are really thinking about within cereal that was not really in terms of a ton of like oh let's go and survey the audience but we did a couple of things the first was from terms of flavor development actual flavors that came from their childhood so sweet mac and mellow and peanut butter and honey sandwich were things that ret and link kind of like made as part of their childhood So they were particular about how do we make this happen?

17:46So Sweet Mac and Mellow, as they came to us with the idea, we said, how do we create a macaroni shape that has never been done before in cereal? And that way, what we wanted to do, the brand concept was both nostalgic, but also think of it almost like the Ben and Jerry's of cereal. So a really indulgent brand, something that can be very unique in terms of what you see. And that's where we got a little bit more into the research side. with typical food and beverage research. So let's create the shape. Let's create the flavors. Let's test different ways on how it's potentially looking. We definitely talked to a few like big key audience members that have watched the show for a while, but not in something that was, I would say, a way that I would normally do survey research.

18:32We actually do a lot of survey research with our creators. I can talk about that in a second. But with this one, this one was like very much on instinct, what will work, and it did. So in terms of once we got to the flavor profile with food and beverage, we purchased what is basically the minimum order quantity and we sold out in basically the better part of a month. So it moved very fast. Now, because the because the product was like very customized, it was really expensive to make it. And that's why we did have to sell it at a pretty high price. And look, we saw we saw some backlash, rightfully so.

19:05it was a$10 a box, right? So, hey, it's$10 a box. Yeah, there's some other cereal brands that are potentially priced there, but that's kind of expensive for cereal, right? At the end of the day. But even there, we saw it more of as a collectible. Now, as we talk more to the retail path, which is exactly what we're exploring right now, we're determining how do we change up the product enough so that it can be retail ready and something that people would want to see on shelves at a price point that's much more approachable too. Yeah, exactly. Just like I mentioned before, it would be very interesting for me to see, first of all, when is the right moment to go from DC to retail, first of all, because it's not for everyone, right?

19:42You need mass, you need to convince retail to accept you amongst like thousands of other products, right? That every day are trying to get into retail. So first of all, like, again, are you, I don't know, is there a formula that you calculate? Is there something like, okay, there is a tipping point in our Google sheets that if you sell this by that, you know, in these capacity in this industry yada yada there is a sort of formula that tell us like okay it's ready or or not uh and then once you get in retail again are you able to lower the price there first of all and then the last question on this is if you go from DTC to retail are you seeing uh you know because authenticity and reliability and everything it's huge right when it comes to the creators so if it's the creator selling directly right it's something like oh okay you know it's not mass produced it's just for the community yada yada what happens if they go to retail?

20:34Is it seen as a good thing? Is it a bad thing? Is it neutral? Again, I know there is a bunch of questions, but I'm quite fascinated by all these and so on and again, from the DTC to retail. You can start from whatever questions I ask in these ones. It's good and they're all very connected. We have to weigh all three based on both basically, are we able to produce it at a price point that makes sense so that it can sell into retail? Do customers actually want it and will it be viable enough where we can actually, everybody can end up making money. So all three pieces are connected. We usually work with creators that are fairly big.

21:11So we're looking for creators that can sell about a million dollars in merchandise per year or more. That's what we're usually trying to target. That being said, when we're already working with the biggest creators, it's usually that there is going to be a path to retail. I'll separate food versus apparel. On the food side, This one has been a conversation with, I would say, two big pieces. Number one is, can we get the product to a price point that makes sense to be on shelf? And that is a long drawn out process where we're trying to say, what kind of flavors can we do? How can we look at the formulation?

21:46Does it work on a cost basis if we want to sell it for something like$6,$7 for a box of cereal? So that part is kind of the supply and cost piece of it. Second, both on the demand side is like as far as the tipping point that you're talking about for food and beverage. We want to make sure that at minimum with co-manufacturers that we work with, it gets to a scale that they can actually produce it, which is usually means a lot of boxes. And when they're saying a lot of boxes, it needs to make sure that we have agreements with multiple retailers that can get through a lot of doors. So that's where we start the demand generation in terms of working with retailers to say, are you interested in these products?

22:28Here's a price point that we're thinking about. How do you actually look at it? So we're having meetings ongoing to see how many doors can we probably get into. And then those two things have to meet. Okay. The cost side, all right. The demand generation and the order quantities that we're considering. And then to the final point around like, will it work or do the customers kind of want it? Absolutely the case. It is such a new piece where we've seen, especially after the pandemic, the pendulum sort of shifting back onto having physical experiences and being in retail. So that very much people want to see it on shelf.

23:02We've done the product placement, especially for the apparel side with some of our creators already. And we're going to continue to do so with Pay Money Wabi. We have this collaboration between Five Nights at Freddy's and Hex that we're looking to place globally as well. And so it is both a, let's have the conversation with the retailer or a distributor, make sure that there's enough of a PO to place. And then do we look at our existing product or do we create something that would be brand new, that would be specific to a retailer? So it is a lot of push pull because, and we actually just hired somebody on the retail front, primarily for the apparel side.

23:38He's a stone numin. He's a professional who's been in the industry for quite some time. And he's going to help us basically get into more doors, especially on the apparel retail side for both specialty and mass stores too. And, you know, going back from retail to DTC for a second and also like channels to use, you know, another one that I saw, right, that you have is the Lil Bean store, right? Quite, you know, unique as a product there as well. And I'm curious to know, since that is the typical, like, It's very difficult that someone look for that product, right? Like, unless you already know about it, right?