How Babylist is building a media empire for new parents

0:07Hello, everyone, and welcome to the Modern Retail Podcast. I'm your host, Cale Guthrie-Weissman, the editor-in-chief here at Modern Retail. This week, I'm really excited. We have Leanne Grant. She's the chief growth officer of BabyList. Usually, I give the things I want to talk about, but I'll start by saying BabyList is a really fascinating company because every time I talk with a brand that is in the baby space and I always ask them, you know, what is the most exciting sales channel? They always say it's BabyList. And they always name it as a really important channel to get into because parents clearly love it.

0:41BabyList has been doing some really interesting things to keep parents engaged, a lot of expansion plans. They, I think a year ago, maybe it was over a year ago, who knows what time is now, but had a really cool retail concept that they were testing out, I believe, in Southern California. I know Leanne was behind all that. I'm sure there are other new things that I don't even know about that she's going to bring up, and I'm really excited to talk about all of them. But Leanne, how are you? I'm good. It's so good to see you. Last time I saw you, we were in New Orleans. I know. We were in the big, easy, talking retail and eating good food.

1:09I miss those days. Yeah, same. So let's just start with you. For those who didn't see us in New Orleans, you've been at BabyList since 2020, I'm pretty sure. But what were you doing before? What is your career trajectory looked like until you got to the baby registry space? My background is kind of always been in technology companies. So graduated from college and moved out here to the Bay Area to work at Google. and since starting at Google, which was 17 years ago, it was a smaller company then. It was not a startup, but it was a little scrappier. I have worked at a variety of different companies in both media, so PopSugar, AOL, Google I consider kind of a media company, as well as e-commerce.

1:57So I worked at Brandless, which is a disruptive CPG company. I've started my own company. So I've done just a kind of bunch of different sizes and stages, but always kind of in this like media and e-commerce space. Got it. And so I feel like probably most, if not all of our listeners know BabyList or at least know the concept of BabyList where it's, you're pretty much, if it's a baby registry, that's one of the few places that parents will sign up for. But do you want to just give a quick brief history of the company? And I feel like it's a lot more than just a registry company anymore, but maybe you disagree.

2:29I don't know. Yeah, no, I think it It definitely is. So about 13 years ago, our founder and CEO was pregnant. It's kind of the, the, one of those classic and entrepreneurial stories. She couldn't find a product she wanted. She wanted to register for dog walking. She wanted to register for home cook reels and she wanted to register for a stroller. And she was a hacker. So she said, I'll just build my own, I'll build my own registry. And she has this great post on hacker news, which in the tech space, you know is like the place you you launch a product or used to where she said i'm an eight month old eight eight month pregnant hacker and i just built my first site what do you guys think um and so and they didn't destroy it i feel like hacker news could destroy these type of things um oh they loved it it was great i mean they gave they gave feedback for sure and it was a very much an mvp um but she um had her baby and she worked on this and she grew it and But the core is the core is the same.

3:31It's a universal registry. You can add any product from anywhere. And the original business model was affiliate. So it was working with a ton of different retailers and getting paid a commission. And then fast forward 13 years later, we are now this platform with a bunch of different offerings across health, e-commerce, content, kind of anything a family needs for a baby. And that includes expecting parents, new parents, best friends, grandmas, aunts, neighbors, coworkers. We have four different revenue streams. So the core is we're a technology company led by an engineer, and we've really kind of expanded beyond that initial vision, but still keep that initial product as our core.

4:16So what are the four revenue streams? There's affiliate. There's affiliate. There's media. So that's advertised baby brands coming to us and spending money on placements and distribution. We actually just won a telly award. Congrats. That's huge. Yeah. We're making TV commercials. Yeah. I was looking at the list and it's like Barbie, Mattel, Clinton Foundation and BabyList. I was like, we made it. So we're a media company too. We're an e-commerce company. So we have our own shop. So users can choose to either buy from BabyList or buy from Target or Creighton Kids or Etsy or anybody like that. And then our fourth revenue stream is our newest one.

4:59it's health insurance reimbursement, which is health insurance and health costs are really big for a lot of people, but especially new moms. So we help people through kind of a really easy to use technology, get their breast pump for free through insurance. And we do with all the back end, help them figure out what breast pump they need, because that's really good at product discovery and product decisions. And then we do all that kind of backend stuff of processing insurance reimbursements. That's super. I'm going to want to talk about that more, but, um, but First, is affiliate still the biggest one?

5:31It's not the biggest one, no. E-commerce is our biggest revenue stream. Really? Yep. But we still have, I mean, affiliate, I always say all four matter. I love all four. They all contribute to the fact that we've actually been profitable really consistently. So we grow our revenue and we're profitable and we couldn't be profitable without all four of our revenue streams. That is a rare thing. So congrats on that. You joined in May 2020, which is an interesting time to join a company. But I always ask people this, especially when it happened, say, during a pandemic. But what was your mandate? What were you brought in to do to help with the BabyList program?

6:09So I actually was working for a company that shut down because of COVID. It was really focused on in-person events and we just were like, we can't make it. And so, yeah, I was, I guess, laid off during COVID, like maybe some of the listeners. and thought, I don't want to go get a new full-time job. Like what is happening with the world? So I was actually connected with Natalie, our CEO, as a consultant. And she, I like very distinctly remembering, remember our call. She said, I have this company, BabyList. And I was like, oh, I've given some gifts off of it. And she said, we, our entire business is based on people having these baby showers because that's where you get these gifts.

6:52And those are in-person events. And so two or three months ago, when we heard about the shutdowns, we kind of freaked out, right? It's like, is our business, what's going to happen to our business? And she said, we were really worried people don't have events. Do they not give gifts? Like, what happens? And she said, actually, really quickly, we created a bunch of content, how to have virtual showers. Remember, before everybody used Zoom. Yes, I remember that. And how to, like, figure out what products you need without pushing a stroller in the store. and the business is actually thriving. Like we have, people are actually giving more gifts because they feel bad that you're having a baby during the pandemic.

7:30People are online shopping more. And so she said, I want, you have this great affiliate media background. Can you see like how else we can grow this business? And so I did a couple of projects for the team and I said, oh wow, this media opportunity is real. You have a very valuable, very engaged audience. And I worked with them for about six months and then I came on full time. Got it. And so can you give a more, like how has the media arm grown and what did you envision it to be? And is it now what your original vision was? Oh, it's so much more than I thought it would be. Oh, that's great. Actually, my very first assignment was, it was such a consulting project.

8:12She said, how big can our media revenue be? And it was pretty small. And I said, I think really big. I can make all the spreadsheets. I did a deck with market research and, I don't know, SWOT analysis. And I made a spreadsheet. And I said, but I think that the thing is, we could get financial services revenue. like every advertiser wants to talk to an expecting parent because you change everything like sure you need a stroller but also people get a new car they get a new house they get a they get a will they get insurance they start a 529 plan they need food delivery like like literally they need Tylenol like every every single industry wants to talk to these parents um but I said let's like, let's actually start with kind of an iterative MVP approach.

9:05Let's just talk to advertisers. Let's see how much we can grow it. And it success in the first three years, it'll grow even more this year. So it's one of our fastest growing revenue streams for sure. And the best part is like brands keep coming back. So we have really high repeat rate because our advertising really works for them. And so like that's, that's the measure of a good media business, right, is that people say, oh, this really performs for me as a brand. And how does it manifest? Is it just, you know, I could see it as a, I'm sure it is part of this, but like retail media where, you know, there's someone's on the registry putting up gifts.

9:44And if I'm, you know, bugaboo, I'll pay for a spot up there so that they know to use it. But are there other, what are the other media components of it? Yeah. Yeah, it's some of those media, or sorry, retail media placements. A lot of it is actually on kind of the content and brand side. Because as I was saying earlier, this is a life stage where kind of like product discovery is so key. And so people spend over 40 hours building their registry. They're using our app every other day, because they are there's so much information and it's so high stakes, like you don't want to mess up your car seat.

10:21That is there's safety. There's like, it's, it's not, it's, I think it's unlike any other life stage where you're like, I don't even know what a layout is. I don't know what a glider is versus a rocker. Like what is like, what are these baby monitors? And I do not want to get this wrong. And so brands mostly invest with us on, um, we create content for them. So that's videos, that's written content, that's emails. It's explaining what their product is, is explain the value prop. We do events, we work with influencers, and we have all those placement, you said, in like our shop. And then we have a personalized feed, kind of like Instagram, where it says, these are products you should add, these are things you should know.

11:04So it's really kind of integrated throughout, like kind of awareness, consideration, and conversion, because that is so key for this life stage. You're not just going to like impulse buy a stroller. Yeah, that's very true. But especially with the educational media part, that's something that's I imagine you pretty much said that there's parents want to know about it. And so they're going to watch that content. But then there's also the sort of straddling the line of like, this is a brand that's trying to sell. Like, how do you deal with the fact that, you know, this is a very important thing. How do you put a kid in a car seat, for example?

11:38But also it's a brand trying to sell their car seat. Do you make sure that the content works and that it fits within the confines of what it needs to be so that it's actually useful for the parents? Yeah, so we have pretty strict editorial guidelines, both for our organic editorial as well as our paid. We actually say no a good amount. So there's certain types of advertisers like weight loss. We will not work with a weight loss company because, as you said, that user trust is so important. and then we're an integrated content studio and distribution platform. So we create all of the content that we distribute.

12:17And so brands have to commit to that upfront. We're not going to send out an email with your brand value props. It's not going to work well and our users don't like it. And so that's like, I can't see a world in which we would ever get away from that. Like we must create our content in order to distribute it. Got it. And so, you know, the media arms began in its infancy in 2020. It's been really growing. For the last year, what has been the main focus or the main three focuses in terms of the growth of the company? So you actually mentioned one of them, which is last year we opened our first permanent physical location, Babyliss Beverly Hills.

12:55It's a showroom. And what that means is it's actually kind of not a traditional retail location. It's really about the brand and our partner brands. Um, and so again, like because this life stage is so much about discovery and learning, we, um, created a space where I think it's 18 ,000 square feet, 90 % of it is just touch, try, feel. And so brands have the opportunity to show up there. They pay for placements that can be kind of a, I'm not going to call it traditional end cap because I think it looks so much cooler than that. Um, but I did, um, or it can be like a real activation. So we have like a Barbie pink car and you can be the car seat sponsor and like all these influencers and celebrities and parents are coming in and like playing with the car seat.

13:43So that's been huge for us. Babyless is a brand because we're getting all of this content out of it and awareness, but also huge for our media partners because so many baby brands don't have their own physical space, want to show up in real life. And like BabyList is kind of this, you know, like co-op or place where they can like do that test and try without having to sign their own lease. So that's been huge for us, a lot of fun, obviously a lot of work, but great for the brand and great for the business. And so with that, like, how do you what are the metrics of success? Because usually if you are a brand, for example, and you open up a store, it needs to be four walls profitable or, you know, But yours doesn't really work that way.

14:30You're really not trying to get people to buy there. And the brands are playing for placement. So should it be profitable with the brands paying in? Or how do you conceptualize the economics of such a showroom? It's so funny. We had our quarterly board meeting recently. And I had to go to the board about a year and a half, maybe two years ago, and say, I want to spend all this money. And I lead marketing and sales. So like I'm used to going to them. But I was like, we're going to open this space and we're going to sign this five year lease. And we're going to do all this build out. And we're going to measure it on like brand awareness.

15:10So PR impressions, social impressions, content. But also like it's just about the vibes. Like it's just like I did the. Yeah, I'm sure investors love that. And to your point, brands are going to fund it. And so I'm going to, I'll take it on as part of my marketing budget, but I think it's mostly going to be funded by the brands. So we had our quarterly board meeting a couple of weeks ago and we've now been open for three quarters. And I was reporting on the press impressions. And I said, you know, I think some of us at this table didn't understand really how this was going to work. And our audit chair looked at me and she said, I know you're talking about me.

15:51Like, I know you're the one she so they pushed me, right? Like, the it's hard to as a board member as an investor to understand the payback period. But I think I'm both lucky and have done a lot of work for them to trust that this is if it it might be directly profitable in a couple years. But even if it isn't, it's such a good investment in the brand that will lower our CACs and increase our brand awareness. And they're seeing that, right? It's not directly measurable, but they see the celebrities show up. They see the press coming out of it. And so I report on the metrics and I say, but like, look at all these screenshots too.

16:31Yeah, you're like, so what, can you talk about how, you know, was it just a, if you build it, they will come type of thing? Or how was it, how do you make it so that you get celebrities to come to your showroom? Is it just that it's cool and has a nice vibe? What was the overall vision and how did you make that work? It's both. So as you actually like took the words right out of my mouth, I said part of the strategy is a field of dreams approach. Really? Wow. Yeah. And that was the leap of faith part. There was the metrics and there was the efforts. But the field of dreams approach is if we build, we have these like baby name gumball generators.

17:09We have that 360 TikTok thing. We have great lighting. and like, we didn't know, we've all these different, we didn't know it was going to hit. Right. But we said, if we show up on the right street, we chose Beverly, South Beverly drive, the right location. Um, then people will like, there is this consumer need to try these product and there's not a really cool, big baby space. So let's try it. So that the field of dreams approach was like, maybe where they really had to take the leap of faith, but it's worked. Um, Like, every couple weeks, somebody on our showroom team will say, this celebrity just, like, send a picture.

17:46This celebrity just popped by. This mom and daughter who are influencers came by. And we've had a number of celebrities reach out directly to us and say, I want to announce that I'm pregnant. Do you mind if I do it at the Baby List showroom? And we say, of course not. I'm sorry. Yeah, like celebrities planning their announcement. That's so foreign to me, but that's great for you. Oh, it's great. And like, you know, they want the photographer, but they want it on their own terms, right? They don't want paparazzi seeing them going into the OB office. And so Gabourey Sidibe, who was precious, is having twins.

18:26She came in a couple months ago, announced that she and her fiance are the sweetest people, and they allowed us to press around it. And so like the Field of Dreams stuff is working and the team has put a ton of effort. So we have a team reaching out to influencers. We have a social media person on site every day. Like there is there are plans to make it happen. So both things are working. Is this something you think will be replicable or is this just you're in Beverly Hills? You have the space. It's a great branding engine and you'll you'll let that sit there. we we always said we're opening this as a flagship showroom it's big it's not you know this is not it's not by definition a scalable strategy and that was purposeful i think we understand what works and can and may open another one in new york or dallas or you know like there's we can do it it's you can never have i don't think you can have a hundred of these because celebrities aren't a But they aren't in every city.

19:29But we know what's working, what's not working, and it's replicable. We're going to take a quick break and we'll be right back. I want to talk about the health side of things because I find this extension really fascinating. And also, it seems like it would be a different type of toolkit than what you've been doing before and probably like one that's mired in bureaucracy. see. And so can you just give you gave an explanation at the front, but just is is is it essentially tying in with like FSA money or like how does it work? So it's actually we actually do have an FSA HSA offering, but this is in addition to that, which is you can you go to Babyless Health, you come to Babyless, you go to our health division and you give us your insurance information.

20:16So state and insurance provider, we let you know if we work with your insurance provider, and then we show you breast pumps. And we, so the part that's replicable is like we know how to show you product. We've worked with these breast pump vendors. We know how to display products. We have guides that help you pick out what breast pump is best for you. We also show you the price with insurance. A lot of the pumps are free because of the Affordable Care Act. Every pregnant woman should get a free breast pump. So we show you those options. You give us your OB information. You have to have a prescription that says you're actually pregnant.

20:54And then we process that transaction for you. So we get paid by the insurance providers. And so we're getting paid by Blue Cross Blue Shield. And then we ship you your breast pump. And then we can now actually help you get your replacement parts for the breast pump for free every 30 days. So what's totally different than our e-commerce affiliate media business is we now work with insurance contracts. We have billing specialists on the team. So that's different. But the vendor relationships are the same. As I said, we're a technology company. So a lot of while we had to make some custom technology, there's a lot of like replicability there.

21:36But our company offsites are really fun because we have billing specialists, media salespeople, merchants, supply chain people. People who never thought they'd be in one space at the same time. Yes, exactly. So was it just that you were in kind of an advantageous quasi middleman position where you worked with these vendors who had, you know, needed to have relationships with insurance companies? And like, so what sort of new know-how did you need to bring in? Was it essentially making inroads with insurance companies and then, you know, hardwiring them to your platform? I'm sure that that's not a good description of it, but that's how it works.

22:12No, it's great. Okay. Yeah. Yeah. Yeah. So what actually happened is like, we've had this vision, not always, but for a couple of years of saying like, what are all the ways we can serve parents, right? It's not just getting products. Like there's, as I said, so much going on when you have a baby. And our CEO is really good about ingraining in the entire company, like talk to your users, understand their needs. And we knew health insurance was something that like is a pain point. It has some of the lowest net promoter score and the like nobody likes insurance. I'm not going to explain that to you.

22:48That maybe we could help with because we have great content and we have great technology and product experience. And then we actually acquired a company that had some of the insurance contracts. So that would have been, we kind of got that jumpstart on the insurance contracts because it does take a while to get those contracts. And so we acquired that company, I think within eight months of that acquisition, maybe six, we launched the first beta site. And so we had to have, there's like APIs for insurance validation. We took a very much a software approach, engineering approach, like figuring it out.

23:28But this is not like a five-year plan. It was very quick and iterative. And then we've kind of improved since then. Got it. Got it. Have there been any other major focuses or major expansions over the last year? I feel like we talked about pretty much the retail store, but I feel like there's something that I've missed, but I can't remember what it is. Well, yeah, so we opened the showroom, we acquired, we launched Babyless Health about a year and a half ago. So that's been incredible growth. And then about a year and a half ago, we also bought a company called Expectful. And that is our, so it's like Babyless is everything, all the products you need, the stuff you need, Expectful is like mind and body.

24:10And so it was a meditation app for trying to conceive pregnant and new parents. So very much a wellness app. We've now grown it into a real kind of media property with social media presence, emails, content, about a variety of topics related to health and wellness for that entire life stage. So birthing classes, real stories about birth, birth plans, lactation, kind of all of that type of information. And is that, do you keep it as Expectful or did you decide to bring it into the BabyList branding? We have it. It's a good question. We only have two brands. One's BabyList and one is Expectful. And we wanted to keep BabyList as really kind of like the products and services you need and then have Expectful be this kind of larger health and wellness brand.

25:01Got it. Got it. And so how, like, you know, given that BabyList creates its own media, like how do you differentiate between the two? And is there overlap or cross? And do you want expectful people to know that it's a BabyList property? Yes, yes. So we cross-promote a lot. BabyList has always had newsletters and feed placements to other properties. We don't think we're the best. We think we create great product guides. And there's a ton of things going on in the baby space. So our weekly newsletter, for example, links to Parents.com, CNN, Wall Street Journal, New York Times. When there's RSV news or anything vaccine related.

25:46We don't cover that. We like trust the experts to cover that. And so similarly with Expectful, we'll link to Expectful from BabyList when it's kind of health and wellness content. And Expectful will like link to BabyList when it's about product guides. Got it. I wanted to zoom out a little bit and just ask sort of like an industry question, because I feel like, yeah, like with I guess Babies Are Us is technically back, but like it's But I feel like or like and what's called Bye Bye Baby, that's gone. And so you guys are pretty much the ones where you think about a presence for a registry. And that's one of my intro.

26:23And I was talking whenever I talk with a baby company, they're like, well, they're you know, there's Amazon and there's BabyList, essentially. And so what are your observations about where this space is going? Like, who do you think your competitors now are, especially given that you have all of these other services that expand way beyond what someone would think a registry company does? Yeah. Yeah. So I think we've there's I think the dream of a lot of companies is to have a flywheel or network effects. And that's actually real in Baby. And so we have about 20 percent of people who create a registry of BabyList have already given a gift off of it.

27:03And when you think about real people, that makes sense, right? If I'm pregnant, a couple of my friends are probably pregnant or have had babies in the past, right? It's very much a life stage. And so we really benefit from the fact that people have trusted us, they've used us to give a gift. And then they say, oh, I'm going to create the same registry that my sister created or like use that same service. Um, so there's hard, that's all to say, like, it's hard to start a new company and baby because there is so much of that trust word of mouth, um, to like get started. So we have that and that's a huge advantage for us.