'It used to be, look at these two Shark Tank kids coming to monetize our industry': Mad Rabbit CEO Oliver Zak on gaining acceptance from the tattoo community

0:28Hello, everyone, and welcome to the Modern Retail Podcast. and how it all started? Sure. Yeah. So Mad Rabbit was founded in college at Miami University with really no ambitions greater than being a little side hustle before my partner Salam and I graduated college. We had two or three tattoos at the time, noticed specifically the red flag and the healing process that there were no clean or natural alternatives as a way to heal your tattoo. So we got to formulating and came up with our first product that didn't actually address that specific pain point but was an all-natural spot moisturizer for tattoos to help bring old tattoos back to life saw a lot of success off of that for the first two years did about three million dollars off of that single product and quickly got to expanding our product lines into things like traditional tattoo aftercare which our soothing gel is our first product in that realm and daily maintenance products such as an spf 30 mineral base that was our first kind of entrance into daily skincare for the tattooed consumer.

1:30Got it. So did you, how did you make the first formula? Were you, are you a chemist? No, I'm not. I actually called my mom. She had years of apothecary experience and I was able to leverage her and her knowledge base for, you know, what ingredients are good for healing a tattoo and what ingredients calm the skin. And I kind of took my initial list of things that I wanted the product to evoke. And she gave me back a list of ingredients that would make it work. So we made that first batch in a crock pot that we ordered on Amazon, sold it through Facebook ads for that entire summer, and eventually offloaded it to a private label manufacturer.

2:08Got it, got it. And so pretty much it was all Facebook ads and Shopify, I'm imagining? Very much digital focused to start. Facebook was our only channel through the first two years of business, at which point we then expanded a little bit into Google. We launched our Amazon store, which is obviously a big launch. But it's only now that we're really dealing with kind of the in-person advertising and what it means to be a brand in the real space. Got it. And so did you have, like, what did you think when you were graduating college that you were going to be doing? Did you think you were going to be getting into this type of business, some e-com business, or did this just happen to skyrocket and that's it?

2:46Salam and I both had full-time jobs. So, you know, we were excited about entrepreneurship. I think we both wanted to be entrepreneurs one day, but we didn't think this would kind of be our ticket to do so. We both graduated on to full-time jobs. I went into M &A consulting. He went into corporate finance, as two good finance students do. And yeah, Mad Rabbit was just cooking in the background. And I really owe a lot of credit to Salam during that period because he was the one managing the ad account and things like that. So yeah, it was truly a side hustle that we didn't expect to land where we did.

3:21What did it take for you to realize it wasn't a side hustle? Hitting the three million dollar mark off of one product, I think was a huge validating factor. I think it gave us conviction in our product market fit and allowed us to then start trying to prove out brand market fit. So is this a brand that could then expand product lines and be a meaningful solution to tattooed people beyond our first initial launch? Outside of that, the callback from Shark Tank was definitely a big milestone for us. And that's definitely where it made a little bit easier to quit my job and tell my parents. So did you not quit your job until after Shark Tank?

3:56And first we should start. You were on Shark Tank. I know this, but I don't know if our listeners know this. So want to give the full story? Sure. So Salam applied to Shark Tank year two off of an Instagram ad. So they do like castings just to get more people in the door. He applied on a whim and we ended up getting a call back from a casting agent said we've never had anything this exciting nothing really focused on tattoos in the tank before come pitch so after several submission videos and several rejected submission videos where they told us we didn't have the energy we needed and it's tv right so you need to have you know big expressive personalities and they say 110 energy boils down to like 65 on tv so there's a lot of repetition in that sense which helped us figure We got our pitch and worked through the kinks.

4:45And it was an important part of the process. But they ended up sending us then to Vegas, where we sat in a bubble for 10 days during COVID, both working full-time jobs. I was, like, moving my mouse and, you know, pretending like I was online and really focused on knocking the pitch down. And went into the tank, got a deal with Mark Cuban for$500 ,000 for 12%, which is really exciting. We were pretty much speechless after the episode. It took a ton of takes to get the post-interview done. Salam couldn't get any words out. But that was really a pivotal point for the brand in terms of becoming a household name.

5:22Even though the Sharpank audience, I would say, is not a highly tattooed population, it's very likely the aunts and uncles that have nieces and nephews with tattoos. And it's great for gifting. So I think it was a great opportunity for us to gain broader brand awareness, which then set us up pretty nicely for the retail expansion that we would get into more this year. Yeah, I wanted to ask, we've had at least one, I found a couple of Shark Tank alums on here. And I always ask the Shark Tank effect. I know it's real, but how did it translate for Mad Rabbit? Did you see sales go through the roof the next day after it aired?

5:57What was the impact? I think, so it aired back in 2021. I think we did about$250 ,000 in attributable sales that weekend. So a very meaningful bump for sure. And was it mostly, I know it was a while ago, but was it all DTC? Was it Amazon? What were you seeing? All DTC. This is really our first year of meaningful retail presence. So in February, we rolled out to GNC nationally. As we'll talk about later in August, we're rolling out to Walmart. But prior to that, we've been 95 % online. Got it. Got it. And what is your Amazon strategy then? Because I know that that has changed over the years, right?

6:34It has. uh amazon is definitely we've seen some of our shopify customers transition to amazon customers i think a huge benefit of that is the two-day shipping people love the prime badge i do too i actually order mad rabbit from amazon as opposed to our you're burning your margins i know i know um it's you can't be the two-day shipping and especially i think it tends to be people who wait until the last minute to order their tattoo aftercare say that their appointment oh it's later in the week, I'll pick it up later. But, um, you know, you get to 48 hours before and you're like, oh shit, I gotta, gotta get my aftercare.

7:09So that's the importance of us selling in tattoo parlors as well. That's kind of another third leg of our retail strategy is having that point of care billboard space where the artist can say the best thing for your tattoo is at the front, go pick it up there. Yeah. I wanted to ask, cause I was reading before just about all of your different channels and it seems like tattoo parlors is clearly an important one, but a very not a very connected one, I guess you could say. Uh, so how, how have you approached finding out the right tattoo parlors to be in? How do you scale that when it's not like they're very networked?

7:42I imagine. Yeah, it's very fragmented more so than I would say hair salons are more so than car dealerships. Like it's, there's 30 ,000 in the U S uh, as of last time I checked and nobody owns more than three or four of them. Um, so it's, it's a difficult strategy and every shop is different and every shop owner is different. Some of them are owner operators. Some of them have never done a tattoo in their life. Some of them were brought up in an era of tattooing where it's really hard knock and it doesn't matter what you put on your tattoo. You just walk out and you deal with it. So the answer is it depends.

8:17We have a few things though. I think our most successful strategy is drafting our pro team, which Aaron has been helping me out with a lot recently. And it's the premise there is to land the best, most premier tattoo artists in the United States. They have a ton of followers in their own right, but they're not only the end consumer that's getting the tattoos. A lot of artists also look up to them because they're the best. They're making the most money. They're succeeding. So they want to see what kind of products that they're using. So winning over those artists on our pro team and educating them on our products and really turning them into advocates of the brand, I think has been a really good way to cast a wide net as far as brand awareness amongst artists go.

8:59Because keep in mind, we started as a direct-to-consumer brand, not a professional brand. So we're only just now kind of circling back and servicing the artist community with additional product launches. How do you determine who is the right fit or who is the best and what's the playbook with that? We have kind of a tiered system. So our pro team is 10 or less artists at the moment that fit the build of, you know, they're incredible content creators. They're extremely well-established artists in their specific style. They like to do events and like to be people-facing. There's criteria that they need to hit to be a professional artist.

9:37And we, in most cases, have already had very long-standing relationships with them. We have a second tier called sponsored artists. So a little bit lighter requirements, but you can still be featured on Mad Rabbit social media and take advantage of our platform and showcase your tattoos. And then the third piece of it is our ambassador program. So we have an ambassador program that has both consumers and artists in it. Both of them are very big fans of the brand and want to help out. but they most most their contracts revolve around creating content posting UGC sharing the brand and they get awarded brand points which they can then redeem on free product merch etc got it and how like what are how does with the first tier is that like a very traditional you're paying them to talk about your product or how does it all work um we pay them but I would say we probably pay them more for the content burden that we put on them.

10:34They already use all of our products. Most of them already sell it in their shops. Quite a few of them actually have their own tattoo parlors that they retail our products through. But we're more interested in is really compensating them for their time that they spend with us. And it's a nominal check. It's probably they can make that much money in a couple tattoos. That's clearly not why they're doing it. It's moving the future forward as far as tattoo care. So this is a space that before us, petroleum jelly was the leading recommendation for the last 40 years. And the issue with that is it's too occlusive.

11:10Oxygen does not get to the skin quickly enough and it does not self replenish, which easy way to say it is it makes a scab. Scabs are great if you scrape your knee. It doesn't allow dirt or bacteria into the body. But with tattoos, your ink actually gets lodged in the scab. When your scab falls off, you get ink loss. So I think a lot of them are just very excited to be a part of a brand that is thinking about how to heal a tattoo better. At the end of the day, if they use our products, their tattoos are going to look better and their clients are going to be happier. So I think it's that. And I also think it's the massive platform that we have to leverage and provide them.

11:47So we have a million followers across our socials, which is awesome. And part of that is people love looking at tattoos, but it also affords us the opportunity to choose photos that were submitted from our pro team or our ambassador program or our sponsored artists. We no longer need to kind of search for that content. It's more of just like a self-replenishing funnel. Was it difficult to gain credibility from the tattoo community? I imagine, like I think you said hard knock earlier, and I've met a few tattoo artists and I know that they sort of run the gamut based on cities and different things like that.

12:21So being, you know, a brand, I can imagine some would sort of rankle at working with a brand. I don't know, maybe I'm wrong about that. No, you're spot on. Yeah. So when we first entered the industry, the biggest barrier we had was that we weren't tattoo artists. Tattoo artists, many of them have a problem with, you know, outsiders in quotes coming in and making money off the backs of tattoo artists. And it's to a certain extent, that is what we're doing. And that's why it's very important that we add value back to these tattoo artists and the tattoo community. But beyond that, I think over the course of the last three years, I've seen firsthand, whether it's the conventions I go to or the artists I'm talking to, the general opinion of it used to be, look at these two Shark Tank kids coming to monetize our industry to, oh, these guys aren't so bad and their products are pretty decent to this past year at conventions, it's been nothing but love.

13:15So I think it's been a process of giving back and being a platform for these artists to showcase their work, as well as just, you know, kind of being an ally in terms of random things popping up. I don't know if you remember the Christmas Day bombing in Nashville, but an RV parked outside of a block in Nashville and exploded the entire block. One of the tattoo shops was a business that was completely leveled. So we were the first and highest donor to rebuild the shop. It's kind of like little things like that and giving back to the community that show that we're not in it for ourselves. We're really trying to help bring this industry into the future.

13:54And natural ingredients have always had a place in skincare. Definitely more popularly in the early 2000s, right? But for some reason, tattoo care never really caught up with that. So I think we were really just trying to bring the space into the 21st century and it's really resonating with artists. Got it. Got it. Was there ever any pushback with the fact you were on Shark Tank? was anyone oh yeah they hate i mean that was a great thing for the consumer but it was horrible for our rapport with yeah i can imagine yeah so how was it just those small things that's that's how you overcame it and just being there long enough that they realized who you were and what your business was and having conversations like just speaking with artists and putting a face to the brand like we're not just the shark tank kids like i'm actually a decent person you know i like to let that shine through so it's a lot of it's just been you know having the opportunity to sit down with artists.

14:45And some of the people who were the biggest haters originally were, are now like huge supporters of the brand. I think we've really done a good job of bringing people full circle. We're going to take a quick break and we'll be right back. I want to talk about retail expansion. You mentioned Walmart, which is super exciting, but you've also, I know that you've done like both the tattoo parlors, but also been an urban outfitters. Is that correct? So how has, what has the step up been? Was that, was it just who would take you or was there an idea behind where you would place your products in mass retail?

15:17Sure. So the tattoo parlors, we decided to kind of hold off on building that channel out for a couple of years for the very reasons that we just talked about. There's quite an aversion to us originally. So we started very direct to consumer and then we try to figure out where is our audience, right? Where's the biggest customer overlap with the retailer? Urban Outfitters does a great job of testing new brands. And they have a very young urban living demographic, which by the way, has huge crossover with tattooed people these days. So they were our first retailer that took a chance on us. And we're still selling in them today.

15:53I think we're in all of their doors in the US and Canada. From there, it's kind of been about convincing other retailers to build a category around us. So we weren't really interested in having just our tattoo balm on the shelf anymore. We want our tattoo balm and our numbing cream and our soothing gel, body washes, lotions. We want the whole brand represented in a retail space moving forward. So there was a bit of a lull. I mean, it took, there's a, I believe a two-year gap between Urban Outfitters and our next major retailer, which was GNC. We convinced them to create an entirely new tattoo destination within GNC, which also makes sense, right?

16:33Because the gym health fitness consumer cares about what they put in their body and what they put on their body. And they care about how their body looks, especially if they have tattoos. So that's a new partnership that we rolled out in February. And we're really excited to watch mature. And then where do you go from there? It's beauty and mass. I think we're kind of the next two boxes to check. We're still working on the beauty retailer. I think that will come hopefully this year. But we also convinced Walmart, the big dog, to create a category around us. In their words, they're creating a tattoo destination with Walmart, with Mad Rabbit at the helm.

17:09So they took a chance. I think a lot of what they saw in potential was partially coming from Amazon and the success that they had by creating a new category. It's a lot easier for Amazon to create a new category than it is a brick and mortar retailer. They just make a link. Exactly. So success from that and just general category growth, right? So 10 years ago, 20 % of US adults had at least one tattoo and pushing 46, 48 % this year. So tons of normalization and cultural growth happening at the same time. And I think Walmart just decided now is the right time to do it. I want to go into that sort of category creation, but let's start with the GNC because it sounds like it was category creation there too, right?

17:53How, where did it physically live and how did you make sure that people knew what it was? Cause retail is difficult. It is. Yeah. And especially, so GNC has corporate doors, but it also has more franchise doors. So even at that point, it's, it's a little bit tough to dictate where your product's going to sit. And I think it does kind of vary depending on the store setup, but they've increasingly been investing in skincare in general, which is kind of where I think we tend to fit within their product assortment. Got it. And with Walmart, is that going to be the same? Or how do you create a space in retail for people who don't even know what they're looking for?

18:29Yeah, that's a great question. And we're still proving it out for sure. But I think a big key is screaming tattoo on the signage opportunity that you do have, right? I've never walked down to Walmart and seen anything related to a tattoo before. So if I'm a tattoo person, if I'm debating what body wash to buy and I see got tattoos or something that very clearly evokes that we're a tattoo brand, I think the sheer foot traffic should allow for a very successful partnership. Outside of that, we're going to have to get creative on advertising. We've historically been a very digital-focused brand. I think that's our strong suit, but now we have the opportunity to do out-of-home and TV ads and more top-of-funnel things that will help people get more familiar with the brand as they walk down the aisle of Walmart.

19:13Have you done that yet, or that's just in the pipeline? It's like right now, like happening as we speak. Like, so how are you thinking about out of home? Is that going to be billboards? Is that going to be connected? Like, where are you going to be investing in? It's going to be a variety of things. Billboards, buses, poster ads, or what's it? Weed paste ads, things like that. Very geo-targeted, right? So we're not going to place those things in a market that doesn't have a couple of Walmarts nearby that carry us. But yes, it's an exercise we're going through right now. Got it. And how are like, can you talk about, is it going to be its own unique type of campaign?

19:46Are you going to, what kind of creative are you going to be using compared to what you've been doing digitally? That's a good question. I think specifically within Walmart and on the shelf, I think it's going to have to be very before and after focused, right? So very clearly demonstrating what the product does for your tattoos. So that's where I think before and afters are very effective. We have done some billboards in the past with some of the sports talent that we've worked with before. So we've shot NFL players and thrown up billboards to them in their home city. I think that's a good thing as far as building, you know, brand alignment with a market, right?

20:21So, for example, people in Buffalo like Mad Rabbit because we did a billboard with Stefan Diggs, their favorite wide receiver. So I think you can be a little off the cuff with it, but at the end of the day, it still needs to be a creator for the brand. So I think it'll probably be a mix of product focus and lifestyle depending on the market. You talked a little about product expansion. Can you go a little bit more into that? How many new products have you added and how are you going to continue with that? Or is it just now channel expansion? Both. So the way to think of our products, we have pre-care, after-care, and daily care.

20:54So any of our existing nine products will kind of fall within one of those categories. We just recently, for the first time, launched our pro category. So we're finally developing products that are better than what tattoo artists had been using before. Our first launch in that was an all-natural and vegan tattoo glide. So again, replacing petroleum jelly as an alternative in this space. a tattoo glide is a product that the artist uses on every single tattoo they smear it over the canvas or your skin and it ensures that the needle does not snag throughout your tattoo process so we're expanding in that way we're kind of opening up a whole new side of the marketplace that you know won't sell in walmart but will service the tattoo client um and then we're also working on some exciting patch innovations so we have lunch tomorrow actually which is really exciting that is in our aftercare line.

21:47It's a repair patch that instead of walking out of a tattoo parlor wrapped in saran wrap and your arm hurting and you have to get home and wash it and then just hope you don't scrape it on anything. We came up with a patch that not only speeds up the healing process, but it also is a deterrent from bacteria and dirt getting into the open wound. With the pro lines, do you think of those as revenue generators or more like just ways to stay so that you're top of mind with the tattoo community? Both. Definitely both. I mean, we have great margins on it, but we offer it to tattoo parlors for back bar for very cheap.

22:27And to your point, like if an artist really likes the glide that they're using to apply the tattoo, they're a lot more likely to recommend us for aftercare. So it's kind of like a flywheel effect. And but like, since you're launching in big box, how do you think the channel mix is going to change? Like, do you think Walmart is going to be begin taking a huge amount of your sales and the tattoo? Like, as I imagine right now, tattoo parlors make up a big amount of your sales, right? Actually, not at all. Oh, really? Oh, that's our smallest market. Really? It's a new channel for us. And we haven't had a product that, what it boils down to is tattoo parlors, generally speaking, don't sell anything.

23:01Yeah. unlike salons or barbershops where you know they have pomades and hair dye protecting shampoos that they can sell you tattoo parlors because there hasn't been a brand worth selling typically don't sell anything to date so prior to launching our pro products we've had to convince them that retail is a viable business option for them so it's kind of like you have to convince them that they can sell and then you sell them the product now that we have this pro line i think it does open up the market in a lot of ways. I think a lot of brands will be, or sorry, a lot of more tattoo parlors will be open to retailing other products.

23:38So I'd like to see a lift in that, but I think we're only in 600 or so as of today. What are you thinking in terms of packaging with Big Box? This is just top of mind because we wrote a story literally today about how as brands go into new retail, especially ones that were more digitally focused, they realize they have to do a different type of storytelling and yours is especially true because it's the thing that has never existed in Walmart before so are you changing your boxes or is it all just about the signage explaining what you're doing yeah no we're rolling with it I think we have our packaging evokes kind of tattoo you can tell it's a tattoo product when you look at our our packaging and it says tattoo all over it and we definitely had to cross our t's and dot our i's to make sure that it did scream tattoo but i think a lot of the kind of eye-catching side of it outside of it being mostly black packaging there's been a huge trend towards white and colorful and the aisles like totally overstimulate you if you walk into a walmart now so i think we'll stand out from kind of a being a sheerly black product um but outside of that i think the signage is really gonna have to speak volumes for us we only have a few more minutes left but i want to just talk about the other big plans that you have for the rest of the year so it sounds like probably this retail expansion is the big one.

24:50What else are you thinking about? What are the big things you need to achieve this year? I'd love to get more tattoo parlors. As we talked about, it's the point of care and winning over that recommendation from a tattoo artist speaks volumes for customer lifetime value down the line. If your artist tells you to heal with Mad Rabbit and you do and you like it, you're probably going to check out our skincare too. So it's a very important part for us to win over. And then outside of that, I think I'm also most excited for putting an office down this year. So we've been a completely virtual company for the last four and a half years.

25:22We're looking to put an office space down that can really serve as a production hub for these tattoo artists. So all of them are, you know, kind of celebrities in their own right. They have YouTube channels, great social media, produce a ton of content. We want to build an office that has all of that technology enablement ready to go so that they can grow their platform powered by Mad Rabbit. So they get the increase in platform and viewership, etc. And we also get to be the brand that helps them do it. So I think it's kind of a self-fulfilling prophecy in that way. Got it. I have a follow-up with the first one.

25:55If you said that tattoo parlors represent such a small portion of your revenue, how are you attributing lifetime sales for the people who learn about them through tattoo parlors? It seems like that's a difficult task to do to make sure that you know that it's actually working and this is worth your while. Right. I think it's tough to attribute on a case-by-case basis, but I think we'll probably be able to identify a trend in a shop not selling anything. They decide to try our glide. They then decide to start to retail our products. If their retail orders continue to grow, I think that's kind of how you would have to track the trend.

26:30Because realistically, you don't want to send them down the street to Walmart if you sell the product at the front of your door. So as they continue to make those recommendations, I think winning over them as a retail partner becomes a little bit easier. Mm-hmm. Makes sense. And lastly, like, do you, what are you seeing competition-wise in terms, because as you said, this was a pretty untapped area, tattoo skincare. Are you seeing a lot of copycats these days? Are you, you haven't yet? No, not yet. Thankfully. I mean, we have, of course, we have copycats and like, I think three weeks after we launched on Amazon, there's like a Chinese copycat that like totally knocked off our logo and all of that.