Mantry founder Reggie Milligan on the rise and fall of subscription box companies

0:05Hello, everyone, and welcome to the Modern Retail Podcast.

0:30And so I wanted to get into the longevity of the company, how it's been going, how it's changed over time. I'm always interested in sort of the rises and falls and cadences of different business models. And this is one that was hot for a while and then wasn't. And I'd love to know what's on the horizon and we'll get into all of that. But Reggie, how are you doing? I'm doing great. Thanks for having me on. Absolutely. So I guess let's start with you. You've been doing Mantri, which you can describe what it is, but it's essentially, my understanding, a subscriptions box specifically for men, essentially, right?

1:02Like male-focused products. So 2012 is when you launched, is that right? 2012, yeah. Like 12 years, 13 years almost. Wow. Congrats. So what were you doing before this got launched? Actually, I had another startup. We would go into different big empty spaces like art galleries and breweries, and we'd throw big communal dinner parties. So it was in food, but it was more in the space of communal table dining. There used to be a startup that was a Y Combinator called Grub with us, and they bought us. They were a company out of the States. We were doing it in Canada at the time, and they bought us.

1:38So I was kind of like 23, had not much to do, didn't make that much money from that exit, but it was nice to kind of have an exit on the CV. And then that's when I rolled into Mantri. And so how did this come about? What made you decide, A, to get into subscription boxes and B, it's a it's pretty niche or it's a very specific subset that you're going for. So what made you go into men and male things? Yeah, no, it's it's a great question. I sat down with a buddy in Toronto and he said he was interested in the subscription model, the subscription business model, because you have recurring customers and it's easy that way.

2:18And you can kind of nurture an audience. And I said to him, like, I used to be a chef and I used to did a lot of work in food. And I remember back in university, I had a business plan for like a guy's food magazine back when magazines even seemed like a legitimate business model. but we so we already had that idea of kind of the men's focused food brand and he said i want to do a subscription model and i just said listen i think that there's companies out there like gq or esquire they're telling you try these 10 hot sauces or these five mustards or you have to try these cocktail bitters or whatever why don't we just put that stuff in a box and send it out so it really started with just two guys in the back of a bar saying hey this might work and then within a week, we had our first order going from the moment that we came up with the concept to selling it to a stranger.

3:12Wow. And so how did you, I guess, in the version one, iteration one, 2012, this is early e-commerce times. And also talking about this to a brand probably seemed a little bit foreign. So A, how did you choose what to include? The idea is that it's a pantry, but that can mean a bunch of different things. So how did you whittle that down? Yeah. I mean, honestly, in the very beginning, and it's just the way we started the business, We actually put the website up. We just wanted to see if anyone would be interested in the concept. We had some photos of different products that we had an idea of what we wanted to put in the box.

3:45And then we had my buddy create a buy button. He was kind of decent at tech stuff. We both weren't technically savvy. An order came through within like two days. I don't know where it came from. I don't know how the person found out about us. At which point my co-founder and I just, we went to the grocery store. and we literally bought like six cool looking gourmet food products. I think a hot sauce, a jerky. I remember there being like a Bloody Mary mix. We put six products in a box. We got in his car. We drove it over. We made it look all nice, wrapped it up, and we put it at the person's door.

4:19And literally, like, I think we knocked and like ran away. And so to be honest, in the beginning, it was always, that's how we launched it. And then from there, very soon, we were able to get coverage in this tiny blog called BlogTO up in Toronto. And that rolled in like a couple dozen orders. And from there, we were like, okay, let's start like ordering product. And so the curation process from the beginning was let's try and find small batch makers, things that aren't on major grocery shelves, things that are interesting. Obviously, when you're curating for a specific demo, like guys, there's a lot of bourbon and bacon, scented things and whatever.

4:54And so we were able to just start working with small makers. and honestly at the very beginning we would just go through lists on the internet that were already written and find out about products that way and then we put together the first box i think we had like 70 or 80 boxes and we sold through those pretty quick but with the subscription box the funny thing is you you have to come up with six things every two months so we did need to consistently develop relationships with small makers and we do that mostly by like traveling around the states going to something called the Fancy Food Show, which has thousands and thousands of food products, like football fields of food products.

5:30And slowly but surely over the years, we've built all these relationships with makers. And so it sounds like, I don't know if professionalization is the right word, but pretty much you were just testing something out to see if people would take it. And you went to the grocery store and then you had to forge these relationships with the makers. Yeah, it was not professional at all. It was not professional at all in any way. It was like, it was like if somebody buys this let's figure out how to do it like again i was a chef so i could come up with recipes right if i if i found a really cool like artisan ketchup i could say okay this is a great way to make a burger and use the ketchup or why don't you try this with different dishes so i knew like the content around it could be good but in the beginning like with any startup you just want to you can waste a lot of time coming up with ideas instead of just saying let's just see if somebody buys this and if somebody buys this then let's figure it out.

6:21So how long until you realize this was a thing, we have to professionalize this, we need to make a supply chain, and we need to like figure out margin structure, because it feels like, you know, if you're buying things retail at retail, that's probably not what you would like, as opposed to going to the fancy food show and getting things at their wholesale price or whatever. Yeah, so started in Canada, my last business literally did the same thing, the social feed, which was a the pop up communal dining thing, did the exact same thing as the American company did that bought us they just operated in la and new york and we were in like vancouver and toronto so i just didn't want to make the same mistake again which was just like essentially limit your market to the smaller countries such that america an american could come along and say this is what we're doing and we're going to expand into canada so immediately we set up u.s distribution so we forced ourselves like within the first couple months to get a 3pl a third party fulfillment center that was in like South Dakota or something.

7:19And we would ship all the products there. And we knew immediately we're focused on the U S. So we had to hit like minimum orders for that, which was kind of scary. Cause like in the beginning you have to hit minimum orders, but just went on like a press blitz, like honestly, just sitting around writing email after email to editors, uh, to different gift guide lists. And within the first year we got in i think one of the first major ones was like we were in a couple of the like i think we were in a usa today and then really soon like i think the first within the first year and a half we were on the today show so like the today show like jumped like i think we did like 70 or 80 000 in that day off of the today show kind of thing and then it's like okay we have like real customers they're strangers they're not like your mom and your friends buying it right so then you've got this.

8:12And luckily, because we'd set up the supply chain for the States. And the important thing to note there too, is like, as Canadians, before we got our immigration, we couldn't even work in the States. So that forced us to set up that supply chain, if that makes sense. Like I couldn't go and fulfill boxes in America, sitting in a warehouse. So we luckily when that ramp up came from getting hits at like the Today Show and USA Today, we had the scalability because we were with the 3PL. When you realized you needed it to be in the US, I imagine with, you know, imports, exports, all of that, were you focused specifically on makers in the US?

8:47Because I imagine getting things across the border from Canada would be a little bit more difficult than if you were just using US products. But maybe I'm wrong about that. Yeah, no, we just never want to do Canada. I mean, Canada, logistically, is like a nightmare for e commerce. I mean, it's changed a little, but like, yeah, it's a huge country. The population centers are very small. Shipping's expensive it's a headache we were always just like get to america like i'd lived in america previously like i i knew that was the play so we just made that the focus and the makers in the box we were like it's way cooler if we just make it all american made stuff and i'll be honest with you in the very beginning part of the reason we did that was because i had no clue how to import and export things and we were like dealing with things like jerky and like random hot sauces and stuff.

9:35And I was like, I have no idea what goes into that. But I know that if you buy something in America and ship it to an American warehouse and ship it to a customer, like no one's going to hit you with paperwork. So on that point, like we did have a couple of customers left over in Canada. Like I think we built the Canadian business to like 200K or something. But we started running into these issues where shipping from the US warehouse, they're getting hitting with duties and all this stuff. And we actually just wound down the Canadian business because it was just such a headache to run both countries.

10:04I can imagine. One thing you mentioned that I found really interesting is that, you know, you did a press blitz, and this is 2012, 2013. And this is kind of early days for that type of SEO type of work. And there's sort of like a growth where then brands figured it out, then there was an onslaught, like I was doing some sort of Googling before, and you see a million things from 2014 to 2018, like the best subscription boxes you can get, and now they don't really exist anymore. They're not in the same way. But can you just talk about sort of how you approach that? And it seems you were a few years ahead of it and you were able to ride that wave, correct?

10:39Yeah, I mean, I was just like, it was part like vanity. It was a part like trying to convince like my friends and family that we were doing something legit. We had very little marketing budget. So I was just like, I need to get legitimized by getting in some of these magazines, right? I need to be able to show this to customers, to potential customers, show this to friends and family. Like, I just need to make sure that this is a legitimate business and that we're not fooling around so we started sending boxes to different editors you know we just reach out and we had our ways of like finding the email address and then we'd send them a note that literally was like one sentence i think the subject line that worked for us was like mediocre gift like it was just like a downplay and then it would be like sending a tip about a gift guide from manntree.com it was like one sentence we'll send you a box so we sent out a couple boxes obviously man tree man's pantry being kind of like jokey it like hit those gift guides really hard um so it wasn't really as much of a strategy as it is i think there was this amazing point in uh editorial where it might be more like pay to play now and affiliates but like there was this time at the tail end of i'd say 2012 to 2015 where like a lot of the major Hearst and Condé Nast and the people that run like the GQs, Esquires, all that, like they would legitimately just be like, your thing's cool.

12:00We're going to put you in the magazine. Right. And so if you got to that editor, that editor vetted it and they thought it was cool, they would cover you. And like the earned media dollars, the equivalent marketing budget would have been hundreds of thousands of dollars. So that was always the strategy from the beginning was just like let's try to get press and that's why you see that fury of of articles and i think and i say this to people all the time and new entrepreneurs i'm like you have this little tiny moment too where you're like the new thing in the new space and these companies still to this day like they have to cover something new every day so like for us as you can see that period was when we got so much of that content i mean we were on the today show like twice like literally two years later, they put us back on.

12:49I don't know if someone forgot that we were on it or whatever. Like I didn't ask any questions, but yeah, it was just this nice period. And a lot of those articles, when you mentioned SEO, like they still drive traffic today. They still trickle up because those brands like update them. So like they'll take a 2014 guide and then they'll just like make it the 2018 guide and they, they leave the same products. They update the links. So like a lot of that stuff still pays dividends today. It definitely helps with like SEO and all that. I also think, and this is probably a huge diversion, but it's this thesis that I've had for years, which is that I think that editors made independent decisions in 2013 and 2014.

13:28And then everything after that is a referent of those original articles. Yeah. That makes any sense. Absolutely. No, we noticed like we got in, it's like a waterfall. Like if you get in like the Cosmo 12 best Valentine's gifts, you'll just get this waterfall of like all these other editors and bloggers that are searching gifts to give. And that article pops up and it's literally like exponential, you know. So it's it's I always say like it's not even about getting you just need the one hit from one place and that'll create a bunch of different new press hits. so has that changed or is that what you're still relying on like how has the business evolved because we're in a very different time seo wise business model wise etc from 2015 onward so talk to me through the evolution of the of the company oh man like i'm like a dinosaur like in e-commerce like i mean 2012 is like pre-shopify like i remember having to pay like fifty thousand dollars to get a website made you can do what we did for 7.99 now yeah you know back then there was just Facebook there wasn't even Instagram so we saw Instagram come in and then you try to learn that like I mean by that I mean like people weren't shopping strongly on Instagram maybe it existed but like it certainly wasn't a place that people were shopping and there was influencers and whatnot so we had to sort of adjust to that whole world of starting to see that people were seeing things on Instagram and that was sort of providing social proof I would even say like today, I don't think being in a GQ or an Esquire brings the same credibility as like the right influencer who is naturally plugging whatever product you have.

15:11So we saw that evolve. And then, of course, Instagram became TikTok and so on. But I think from a press standpoint, gift guides still do really well. I think it's important to mention at this point like that Mantri is targeted to guys and when we started using the product and making the product we thought it would be like a bunch of cool bachelors like in their New York apartment using this learning how to cook better cooking for their friends for dates for their wives whatever. and what we realized really quick was that guys are extremely hard to shop for and half of our audience was women buying for men as gifts so like a lot of our and we found that by press like we would send it to an editor at like brides magazine like a wedding magazine and she would be like this is an amazing gift for groomsmen right and like we just never thought like that until we put the product into the market so a lot of our press in the early days were that gift guide thing and then slowly as it's evolved i think the space has become much more like if you don't have an affiliate program those pieces like don't come as often and a lot of it's just straight up pay to play like you'll get people who just say you know to be in this month's gift guide it's got to be like three thousand and to get a feature story written about you it's going to be a couple thousand bucks so the media i don't think it exists the same way but we have adjusted to a lot of like influencer and ambassador marketing through social in the last like five or six years, which has taken that place.

16:42And has the, you know, that's happened concomitantly with a sort of fall off of the subscription box in general. So like velocity wise, what are you seeing? Is it just because you are in this niche, where men are traditionally hard to buy for? And so people are always looking for gifts like this, that you've been able to stay afloat? Or how has that gone? Yeah, that's a good question. So the subscription box world has died. It was a trend. It was huge. We could have gotten a remarkable amount of funding when Birchbox and Blue Apron and some of these other companies sort of began exploding. You're all bootstrapped, right?

17:21Yeah, we're all bootstrapped. So like we, we, yeah, there was, there was a moment where, where subscription boxes were like the it thing, right? It was almost to some extent, like how people would view like NFTs or something. I don't know, but it was like the retail equipment of that. It was just like what everyone was talking about. So you saw like a subscription box for everything, for fishing, for cocktails, for knitting, for babies, like whatever. and the space exploded and press wanted to talk about that and customers really interested and then the bottom fell out I'd say around like 2017 is like when you really started to see it cool off and you'd reach out to people or even like the way you're talking about it now like you'd be talking to somebody about a business and they'd be like oh yeah wasn't that like a thing a couple years ago and you'd be sitting there like as a founder and be like oh no like am I just on a downward trend of an industry, right?

18:13But what ended up happening is like a lot of the bigger funded companies that had built themselves to really big sizes, but weren't profitable, like they kind of ran out of funding and they couldn't raise more. So they kind of went away. So some of these like bigger people that used to occupy the space kind of disappeared. And a lot of the smaller bootstrapped ones that were always profitable along the way kind of stuck it out. So to answer your question, the gifting side of it has always been very predictable. Every Valentine's Day, every Father's Day, every Christmas, we're going to send gifts to guys.

18:52And for the subscription box part of it, since we had a nice base of customers, it was more about nurturing that customer base, but also realizing that that base isn't going to 2 or 3x that year. And don't try to go for that growth. You know, we went through a period where we spent like a ton of money on marketing to try to grow, grow, grow. And we spent that money in like 2017, like$100 ,000 plus spends on marketing. And we tried to grow in like 2017 and we just weren't getting the return that we were even like naturally and organically getting in 2014. So like we were spending money into a market that didn't care about subscription boxes anymore.

19:35So at that point, we were like, okay, let's go back to the low and slow, be profitable, run this thing, be smart, nurture customers, use referrals, right? Be a little craftier. And that's how we were able to kind of like get past that boom. You know, last thing I say is like, it was incredible to be a part of a boom because you can't build a business from zero to like a million dollars in a year without some sort of big trend in your industry. and so we were able to like capture that and then maintain enough of a of a steady ride that we were we were legitimate okay business um but yeah the the trend fades out and you'll see it i mean whatever's trendy now in the food world you see a lot of matcha companies that crush it or someone doing something with turmeric crushes it right now everyone's obsessed with like grilling and you see these grilling people in the grilling influencer world and that's like a huge trend right now.

20:36But in the food world, it's very trendy, like fashion. So you just see keto, like for two years, like you couldn't avoid a keto product. And now that's like, way has totally been on the descent. So the companies that were able to like capture, capture that curve, and keep enough customers from it are still around. But the ones that thought that would just go forever, like aren't, that makes sense. That makes a lot of sense. There's something you said earlier that I just find really interesting, because a lot of when we talk about the demise of subscription boxes, it was just the big problem of churn, you know, just people would join.

21:10But it sounds like you sort of went about it another way where you were like, churn's probably going to happen. We should nurture these customers, but also we're a gifting product. And that is more important than the actual necessarily recurring revenue that you get in the non-gifting periods. Am I saying that correctly, would you say? Yeah, we're about 50-50. I never wanted to be like 100 % like a flower company that's like you just chill. and then like valentine's day you go crazy and like one other day you go crazy and the rest of the year you're you're chilled but the the churn thing is real in subscription boxes and like when it starts happening aggressively because people naturally fall out of interest with a product it's a bit scary but what we did is we did a really simple thing in the beginning which was like if you stay on for a full year we'll give you a box to send to anybody okay and just make sure that person is going to enjoy Mantri, right?

22:03So that became like a nice built-in referral program that's also like people appreciate it because like the box is worth 85 bucks. So it's like if you go to them and say, hey, you've been on for a year, which is getting six boxes because it comes every two months. You say like send this to like your brother or your friend that you think might love Mantri. In that box, we have some promotion that tries to get that person to sign up or allows them to sign up. And it became this like nice little stable referral program that was also sort of a surprise and delight for our customers. And that's cool.

22:35And we've been able to keep people on our list. Like we have people that have been on our list literally for like 12 years and I just can't believe it. Yeah. It's like, and we used to be every month until like 2015. So like we're talking, you know, near a hundred boxes, right. That they've received and they've been there and they've gotten products and it's just like when we see stuff like that it's awesome and we've even reached out to some of them to be like is this like a lapsed card like like you know what i mean like like is this literally some corporate card that the person left like 10 years ago and they're just we're just sending a box to an office somewhere you know what i mean but no it's so we've been able to keep that and nurture that the customer base you know because with food it's easy to like send them an interesting tool or a cool product or here's a free box or you know what I mean?

23:21Just to, and there's books on that, like membership economy. And, and, and there's different books that talk about, like, you have to think about a subscription box different than one-off customers. Like it's more like a club that you're, you're nurturing a group rather than focusing on like the next sale, the next sale, the next sale. Yeah. Makes sense. Talk about just the selection and how that's changed over time, because, you know, you have people who have been getting this for 12 years. You said, I imagine that what, you know, the typical demographic you're going for in 2012 through 2014 is different than what you're going for now.

23:57But maybe I'm wrong. Like, what are the types of brands you're working with or what are the types of products? And how do you make sure it's both new but also in line with what you're offering? Yeah, you know, that's a question I get a lot. And the truth is we've tried a lot of stuff. we've always tried to shake like the super stereotypical dude stuff okay so like when we first started it was like hot sauce and bourbon barrel maple syrup and jerky and a barbecue spice rub and you know i i grew up in kitchens working restaurants working sort of i worked in a michelin star restaurant like i'm all about yuzu and and and and cool funky aged fish sauces and like i'm i I cook with like tons of tahini and Middle Eastern spices, whatever.

24:44Like just, I love finding really unique products from around the world that are challenging to use. But honestly, every time we tried to introduce that, I think people come to Mantri for grilling stuff, for barbecue sauce, for jerky. So we've had to sort of just like, not kill our darlings, but just admit that like you do this thing. And because you've created this niche, that's who you're talking to. And that's what people expect. And like most people just want a product they can put on their weeknight dinner that's going to upgrade their dinner in like 10 minutes, five minutes, right? So that's a great sauce, a great condiment, a great spice rub, or they want like a snack.

25:21And as far as finding those things, it's been years of like literally physically traveling to cities. Austin, Charleston, going to Santa Barbara, going up to Seattle, just going through markets and local markets to find things. Like everywhere I go, every time I go to a city, I take photos of all the local products at farmer's market, whatever. Then I'll go back to the computer when I get home and I'll just reach out to every single one of the products I saw. Things like the fancy food show work, like the big, small matchmaker kind of creator events. But honestly, like boots on the ground, nothing beats that because we are in the business of introducing people to products.

25:58Like the reason people have stayed with us is because like a lot of the time it's discovery. and we've done a lot of surveys around this like people just want to find the next cool thing so we get like a mike's hot honey when it's in its first year we're like right now banshan's uh japanese barbecue sauce is massive like i remember buying it off justin when he first started out like so we're kind of in the business of like oh hot honey is going to be a trend so we were putting that in the box in like 2016 and so we are able to yeah i think boots on the ground and just going to cities and really looking around and always having your eye open.

26:34But now that we've worked with a bunch of different makers, a lot of the times they come back to us when they launch a new product and they're like, Hey, we want to put this and feature this in the next box. And that's always way better because like working with new vendors kind of sucks. Like they're great people usually, but like 20 % of the time, like the person doesn't ship on time or they just disappear. Like when you have a relationship, you like know that person's there, they're coming back, They know how it works. You know what I mean? I'm sure it's like having somebody come on a podcast a second time as opposed to like new people.

27:07For me, that's like the main thing is just if we can get new products from great makers that we know exist already or finding the next thing, like try to read the trend reports, try to go off our own gut at what's going to be big and then try to find some of that stuff to put in the box. Got it. What would you say, given that the company's over a decade old, is the plan just what it's always been, that you found this niche, you have the target audience and it's going to work? Did you have visions of expansion? Are there visions of expansion now or sort of even an exit of some sort? How do you think about that?

27:43So, yeah, visions of expansion for us, we've had a couple acquisition offers through the years. For me right now, it's like, how do we, we have 194 ,000 people on our email list. so I'm like how do I start other businesses that are in the same vein that can that can help these people so we launched a online cooking school that teaches people how to cook without recipes and we've launched that about a year ago and that's going really really well it's basically like you go on there's obviously course tutorials and videos and stuff but the bulk of the program is if you were to sign up you take photos of what's in your fridge and what's in your pantry and then we have a chef or me do the meal plan for you based on what's in your pantry or in your fridge so that you're cooking right away and dishes are chosen on like different techniques that you want to learn so it's all about somebody being able to go into their kitchen and cook with what they have and not have to go out and buy things so because like nowadays people are just they buy a lot of groceries they don't use them they waste them so i saw a little pocket in the market where I was like, I cook like a chef, which is just making stuff up based on, okay, each dish needs to have like salt, sweet, acid, a little heat and a little crunch, right?

28:57So you can add salt by having like Parmesan or salt or anchovy. You can add sweet with honey or sugar or whatever. You can add crunch with peanuts or whatever. And once you start understanding how to put dishes together, you can cook for yourself and you don't need recipes. So that's been the major focus is like expanding the subscription box it is growing right now but i'll be honest with you like sometimes it just doesn't grow sometimes it shrinks for whatever for whatever reason it's growing right now um but we we i don't have any visions that it's going to like double let's say unless we were to go out and i think raise money and put like a couple million straight up into marketing, into Facebook and Instagram, TikTok ads.

29:44But I'll be honest, I've never felt 100 % comfortable that the ROI is there with that strategy for long-term. I think you see a lot of companies that do that. They spend the money. They never build sustainable growth and they kind of like blow up. So yeah, it's just finding different brands that we can put under the umbrella. And then the other thing that we do is we have started working with different makers and different brands that focus on guys to run campaigns for them to our audience. So working with Manscapes or working with a cool razor company that if they want to kind of access our list, we do a social post for them.