SharkNinja CEO Mark Barrocas on going from infomercials to TikTok

0:03Hello, everyone, and welcome to the Modern Retail Podcast.

0:30me if I'm wrong, but you guys brought in over a billion dollars in your third quarter earnings. That's a lot of money. So I'm sure you have a lot on your plate. You're thinking about a lot of different things. I want to just talk about product innovation. I want to talk about sort of the history of the company because it's been around for a while. And I also just want to talk about how you market these products, how you think about getting them because I know that I'm pretty sure, correct me if I'm wrong, but Shark Ninja in its early days was around in the 90s selling like via TV infomercials.

0:56And now we're in the age of TikTok. And I'm sure I know that your products are on TikTok. And so just sort of that general trend line. And also the holidays just ended. And I'm sure you have a lot to say about how the holidays went. So Mark, I'm going to pepper you with a lot of questions. But thank you so much for joining. How are you doing? I'm doing great. Thanks for having me. So Mark, let's start with you. You've been with Shark Ninja for a while. Correct me if I'm wrong, but you joined as president since 2008. Is that right? That's correct, Gail. Talk to me about what started in 2008, what the company was like in 2008.

1:25I always like to sort of paint a picture of a company through its evolution. Sure. Well, back in 2008, we were actually called Europro. And we had one brand at the time, and that brand was the Shark brand. And we were primarily selling steam mops and sweepers, quick cleanup products for both hard floor and for carpets. And it wasn't until 2009 that we created the Ninja brand. And ultimately, later on in 2016, as the Shark and Ninja brands became much more prominent, multi-billion dollar household brands, we changed the name of the company from Europro to Shark Ninja in the 2016 timeframe. When did, I guess, the Shark brand or the first company, what was its first product and when did it launch?

2:17Yeah, so the company was founded by Mark Rosenzweig back in the early 2000s. And one of the first main products that the company had was a hand vac product, quick cleanup hand vac product. And Mark did a really amazing job of marketing that product through catalogs and home shopping network and places like that. And subsequently after that, you know, launched products into retail stores and further continued from there. Got it. And so when you joined in 2008, was your mandate sort of this expansion with the Ninja products? Well, no. I mean, look, we were a small company at the time back in 2008.

3:00And, you know, our focus was around how do we really build an innovation pipeline as a company? How do we build a global engineering team? I'd love to say, Cale, that we had aspirations at the time to be the$4 billion business that we are today. But quite frankly, I mean, we just wanted to make a great product and stay in business and kind of keep the game going. And so, you know, in 2008, end of 2008, we launched our first no loss of suction vacuum cleaner called the Shark Navigator. That really put us into the upright vacuum cleaner business. In 2009, as I said, we created the Ninja brand. And really, I mean, from there, you know, we started to kind of really reframe the business around, you know, identifying either known or unknown consumer problems.

3:58and then building a technology and innovation company that was able to solve those problems and to do it across category after category. And you fast forward to today, nearly 16 years later, we're in 31 different product categories. We sell our products in 26 markets around the world, and we go to market with two multi-billion dollar brands, the Shark brand and the Ninja brand. Wow. I mean, that's a big expansion over the last, whatever, 20 years, a little less than that. Can you talk about over the years how you were able to pinpoint what new areas you would expand into? Like when you said we wanted to get into appliances, was that just because you knew that that would sell well?

4:41Did you get feedback from customers? What made you decide to go into the areas that you did? Yeah, well, look, it really started, you know, the push, you know, from vacuum cleaners and into other floor care products was really around this curiosity of, you know, wanting to identify, you know, the white space in these markets that existed. And we did that by, you know, exhaustive amounts of in-home user testing with consumers and really observing, you know, consumers, whether it was cleaning in their home or cooking in their home. And, you know, if you if you go and you do focus groups and you ask consumers about what their problems are, they really can't articulate them to you.

5:27But if you watch them and if you're able to do that across large numbers of consumers, you start to identify patterns and you start to see workarounds that consumers are doing because their existing products simply can't do the things that they would like them to do. And I think a great example of that, Cale, is back in 2010, 10, you know, upright vacuum cleaners were designed to be able to clean your floor. And some of them happened to have had a hose that you pulled out to clean above floor. Now, if you watch consumers that had homes with stairs, they would plug the vacuum in on the bottom of the stairs.

6:06They pull the hose out. They'd go and they'd walk up half their stairs and they'd clean their stairs. You unplug the vacuum. You go and bring it upstairs. You plug it in again. You clean the stairs that are going down that you've missed. And odds are you've kind of missed the two stairs in the middle. And that was the impetus behind us developing what became, you know, a really market leading vacuum for us called the Shark Navigator Liftaway. And that lift away vacuum was the concept of you could clean your floors. But when you got to an area of above floor, you were able to pop the vacuum off and then go anywhere you wanted above the floor, whether that was cleaning curtains or ceiling fans or stairs.

6:48And instead of only having the length of the hose that was quite short, you'd have the 30 feet of the cord to be able to go anywhere. And so, again, that problem-solution approach is something that we have translated across nearly every product since then that we've developed. I wasn't actually expecting to ask about this, but it brings up something from an episode we had a few weeks ago where we talked with someone who works at an innovation arm of a GE company. And I'm always interested just to know for when you are, you're a$4 billion company and innovation is so important and you're testing out new products.

7:25How are you able to grow that internally going from a smaller team 18 years ago where you were able to test things and do these sort of tests? And now I'm sure you're a much bigger company. You have many more people. Things are much more rigid and systematized. So how have you been able to systematize innovation, I guess is my question. Well, Cale, look, I mean, I think we have a very unique approach to innovation. And I think that as our business scaled and grew, I think we were continuously told you won't be able to scale that approach. I mean, you know, we take a very maniacal approach to product development.

7:57I mean, to every little detail that goes into the product of what we're doing. And so I would say first, you know, in 2010, you know, we wrote the mission statement of the company, which was positively impacting people's lives every day in every home around the world. And I think that, you know, that undying focus on delivering a five-star product to the consumer is what today continues to keep driving everything we do in the company. You know, that has not gotten watered down. You know, in fact, if anything, that has, I think, gotten better and better as we've gone on through the years. I think if you go back, Kale, to 2007, 2008, you know, if a consumer wanted to buy a vacuum cleaner, the logical place for them to go would be consumer reports.

8:44They would open consumer reports and consumer reports would tell them what are the top 10 or 12 vacuum cleaners to buy. And I think that at the time, back in 2008, 2009, we felt like the great equalizer was online reviews. In fact, I remember back in 2009, you know, having a large retailer in the U.S. say to us, you know, people are probably not going to write reviews on your products. You know, you don't have a high engagement category. And I think if you go online today and you look up, you know, Shark or Ninja products, you'll see people write paragraphs and paragraphs about the products that they bought from us.

9:19And so although we were a small brand, we really believed that growing the business was about having one successful five-star review at a time and building our business through that word of mouth, you know, where the brand legacy wouldn't be as important as the consumer having a great experience and then telling 10 ,000 of their closest friends, you know, to go out and buy this product because they had such a great experience from it. You fast forward to today, as you mentioned, over a$4 billion business, and that maniacal focus on creating and developing five-star rated products has only intensified.

10:01I mean, we do that across everything that we do. We do that with five testing facilities that we have. We do that before we launch a product into the market. Nearly a thousand consumers have used the products in their home to tell us that they genuinely have had a five star experience with that product. So if anything, I would say that, you know, we have not gotten more rigid. We've stayed entrepreneurial. We've stayed very consumer focused. And that's really driven our business over the years. You brought up a really interesting thing. And I want to ask you because you're really uniquely positioned for this.

10:37So you mentioned how, you know, in 2008, people went to Consumer Reports. Online reviews weren't as much of a thing. Now, as I'm sure you know, online reviews are a huge currency. but it's also a much, it's very, very difficult to, A, not, you guys can get a review, I'm sure, but there are just so many different review platforms. There's so many different, there's just so much content out there focused on products that it's a much different playbook than it was two decades ago. So can you just talk about how has your approach to both word of mouth, but also just getting people to review and talk about your products online has evolved?

11:13Well, look, Cale, I mean, first of all, it's got to be organic. Okay. It's got to be truthful. It's got to be organic. It's got to be at scale. I mean, I think when you read a review and you hear the authenticity that somebody has had about a great experience, look, Shark and Ninja products are not the most expensive products in the market. They're not the cheapest products in the market. But I think when you read a review of a Shark or Ninja product, I think what you hear is a consumer articulating, they got great value. They got extraordinary value. They got great performance. You know, they're able to call out kind of specific things that delighted them, that we call kind of a threshold of excellence, you know, in the product.

11:56But I'll tell you something also, Cale, that I think is really interesting. And that's the next evolution of online reviews that has really emerged over the last few years. And that's social media. You know, I think the idea of, you know, back five years ago, yes, it was going online and writing a review. I think what's so exciting today is to be able to go onto TikTok or Instagram and watch a 20 second video that somebody writes about the product. And so, you know, it's very interesting as you think about the evolution of this, you know, in 08, you had consumer reports, then you had these online reviews being written.

12:33And today, you know, Shark and Ninja products are some of the most watched brands on TikTok and Instagram. And those are, you know, incredible in terms of the consumer bringing to life the experience that they've had with the products. Was that something, when you began to see that TikTok was a real engine for discussion and likely sales, did you change any strategy? Did you push your social media team to focus more on it? How has TikTok informed what you've been doing at Shark Ninja? Look, Cale, I mean, back in 2008, you know, as you said earlier, I mean, we were running all of our advertising as long-form television infomercials, 30-minute infomercials.

13:14and people would see shark or ninja products, you know, on late at night or on Saturday or Sunday morning. And I think that was done because, look, every brand needs to find a unique way for them to be able to position themselves to the consumer. And for us, long form infomercials gave us the ability to be able to demonstrate our products and really articulate to the consumer our differences. You fast forward to today and the biggest advertising vehicle we have today is social media. I mean, we built our social media team up tremendously over the last few years. As I said, you know, we have products like the Ninja Creamy that have a billion impressions on TikTok.

13:54Our Shark Flex style hairdryer has over 700 million impressions on TikTok. And so not only have we evolved our marketing approach, but it's really forced us to evolve our product development approach. I mean, I mentioned earlier this concept of threshold of excellence that consumers got excited about, you know, we've created kind of a new way of thinking about product development, which we call threshold of viral. How do we develop a product that is so unique or special or demonstrable that the consumer will actually go and make a video about it and will create a TikTok or an Instagram post in terms of articulating how they have been able, you know, to customize that product to whatever it is that their unique, you know, desire is.

14:41And I think what's such an amazing experience about that is if you go on to TikTok and you look at the protein ice cream craze, I mean, that was not created by Ninja. I mean, that was created by, you know, content, organic content users that ultimately realized, you know, I can take my protein shake, you know, that might have 150 or 200 calories and I could pour it into a creamy pint. I can freeze it overnight. And instead of drinking my protein shake, I could eat ice cream. And, And that has created a tremendous viral trend for us with that particular product. Yeah, I did not even realize that I'm absolutely in that TikTok vortex of the creamy machine.

15:21And that totally is your product. So it clearly is working because I've seen many of those videos. But I want to talk about threshold to viral because I think that's super interesting. So is that a rubric? Is that just a, we think this, do you have numbers? How is that formulated? We, as I said, you know, before we put a product out into the market, you know, it could be in a thousand consumer homes using that product. And we want to ask consumers, you know, to develop content with the product as it's in their home. I mean, we want to try to understand what features are resonating most with that consumer, you know, whether that product has reached a point where they can demonstrate or do something exciting or compelling that they feel like, you know, developing a TikTok or an Instagram post, you know, will help them, you know, articulate, you know, the experience that they've had with that product.

16:13So, yeah, I mean, before we launch a product into the market, you know, and this doesn't apply to every product that we do. I mean, you know, we might have a basic coffee maker that I'm not sure that somebody is going to do a whole lot of TikTok videos around that coffee maker. But I think we have a segment of our products, you know, that we feel like do fit into that, you know, viral, you know, TikTok, Instagram nature. We're now going to take a quick break and we'll be right back. You mentioned the product development side of things. Is that based on feedback you directly get or does your team sort of scour social media and see like you guys are in hair care, for instance, and I know that hair care TikTok is blowing up.

16:56Did you launch products because you saw they were trending on TikTok or how does that all work? Well, look, it comes from a lot of different places, Cale. I mean, you know, we have a large group of, you know, insights, ethnographic researchers that are, you know, scrubbing reviews, scraping social media content, you know, looking for keywords that consumers say. We're in hundreds and hundreds, you know, of consumers' homes watching them as they're cooking or cleaning or just doing regular household chores. You know, we're going into commercial environments, we're going into restaurants and we're seeing how chefs are using products.

17:37You know, we're going into commercial cleaning environments, you know, like buildings or schools and seeing how things are clean. So, you know, the nuggets of insights come from lots and lots of different places. You know, secondly, I mean, we have a global team of over 750 engineers that are in a really diverse group of skill sets. I mean, mechanical engineers, electrical engineers, software, software, AppIoT, Mechatronics, and they're coming up with inspiration and ideas. And then our product development teams are, of course, thinking about where do we feel like the brand can go? I mean, where do we feel like the Shark or Ninja brand, you know, can operate?

18:16Where will the consumer travel with us? Where will the customer or retailer travel with us? And I think, again, you know, if you think back five years ago, you know, and if I would have told you that, Shark is one of the fastest growing hair care brands in the world, or Ninja is one of the fastest growing outdoor cooking brands in the world, you'd say, well, you're not in those categories. But this is a business that has really reinvented itself over the course of the last 15 years. I wanted to ask about the social media content. Do you produce your own social media content? Or is it all focused on either organic or having people use your products?

18:54Because the tool, you know, starting out as an infomercial company, that's long form, that's a half hour. So how has your storytelling evolved if you are doing it yourself, or are you now mostly focused on other people evangelizing you? You know, listen, I mean, we do some content internally, you know, to help us, you know, inspire others or to think about, you know, what's possible, you know, with the products. I mean, we work with third party influencers. There's lots of organic content as, you know, hundreds of thousands of our products get out there into the market. So it's really comes from, you know, a lot of different places.

19:33And I think, Cale, that's what's so exciting about the world today is that the consumer, you know, has so much power. I mean, the consumer, you know, has so much ability to kind of influence a brand and, you know, the way they, you know, are attached to a brand or to products. And so, you know, that content is coming from all different places, both internally, you know, as well as externally outside of the company. On the internal side, look, every product has a story behind it. I mean, every product has a journey, you know, of where the idea came from and how it evolved. And you'd love to say that product development is a starting point and an end point, but it's a meandering point.

20:18I mean, it's not a straight line. I mean, hypotheses that you have at the start of the product development process may get proved wrong as you go through the process. And I think there's value to that journey. There's value to articulating that journey and communicating it that ultimately gets you to a place where, you know, you develop a product that generates lots of five-star reviews and then it becomes really validating. Got it. Got it. Can you talk a little about the evolution and the change of sales channels? Like you've seen, you know, 2008 online wasn't that big. Now we're talking about TikTok.

20:55How have shopping patterns changed? And is, you know, retail big box still as important as it was before? Or where are you thinking, where are you seeing the biggest areas of growth? Well, look, our strategy has always been to be relevant where the consumer chooses to shop for our products. And, you know, obviously, as you point out, you know, back in 2008, that was much more at big box retailers. You know, that has obviously evolved more to online. We have a robust direct-to-consumer business. We're on TikTok shop. I mean, it's, you know, the platform now is so many different places, but it all comes back to the same strategy, which is we want to be relevant where the consumer chooses to shop for our products.

21:45And, you know, as the retailer landscape evolves and changes, we need to evolve and change with that. And I think that the company has really effectively done that. I mean, when you think about COVID and, you know, as stores locked down, you know, our business seamlessly transitioned online and direct to consumer. and as stores opened back up, you know, we saw resurgence, you know, to the brick and mortar business. I mean, you know, brick and mortar is still a very sizable portion of our business. I mean, consumers want to touch and feel the product and they want to look at the full assortment, you know, as they're shopping through retail stores.

22:22And there may be other consumers that, you know, very much kind of just know what they want and, you know, we're able to do it in an efficient way online. So it's not for us to dictate where the consumers should shop for our products. It's our job to be relevant where they choose to shop for them. Can you talk a little about how the direct-to-consumer channel has shifted a few years after the pandemic began? So people obviously were looking for products online in 2020, 2021. Have you still been focused on trying to direct traffic to your own site and sell that through there. How has that shifted?

23:00Because I imagine that's a very new skill to hone and then to suddenly be like, oh, people are back in stores now. We don't need to focus on that anymore. Yeah. We've continued to see our direct-to-consumer business grow nicely since COVID and post-COVID. But it has been in certain product categories. It's been in categories where we think we can offer the consumer a unique product or a unique configuration or unique merchandising approach. I mean, if you go to our website today to sharkbeauty.com, you can build your own configuration of our Shark Flex style hairdryer. I mean, that's the only place that you can do that.

23:40And so the consumer has the ability to customize the specific accessories that they want with the product. So, you know, we have to give the consumer a reason to buy direct-to-consumer because there's lots of other places for the consumer to be able to shop. And so, you know, we try to do that through exclusive products. We try to do that through exclusive offers, through more customization. And, you know, that's worked very effectively for us over the last few years. I wanted to switch gears a little bit. The holidays have just ended. We're like you're in a great position to sort of talk about, A, what you saw in Q4 sales, but also B, what you think, how that will bode for 2024 in terms of overall consumer demand, given that you have so many products and it sort of is an interesting thermometer of where people are spending their money.

24:32So first, were there any surprises you saw as you're tallying up your holiday sales in terms of what happened or what sorts of products people bought? We had good momentum heading out of the third quarter and into the holiday season. And as a result of that, you know, we provided, you know, external guidance that we felt like Q4 would be a strong growth quarter for us. And it was. You know, we didn't see discounting above the levels that we saw them prior year. I think that was a big concern for folks as to how promotional the holiday selling season would be. And for us, you know, we invested very heavily in new product development.

25:09We invested very heavily in marketing and advertising. and you know we were very happy coming out of the holiday season and we feel like you know our inventories are at a good level our new products you know products like the ninja thirsty at-home beverage maker products like our shark carpet expert you know which was our first launch into carpet extraction and spot and stain cleaning performed very well you know it's the first holiday season for our Ninja Woodfire oven, an outdoor oven. So, you know, it was an opportunity for us to really, you know, present a lot of new ideas to the consumer.

25:47And I think that's what resonated. You know, what resonated was, you know, we have to give the consumer a reason to part with their hard-earned money. We have to give them a lot of value. We've got to give them a lot of innovation and excitement. We've got to create awareness for our products. And I think those things came together for us and we had a strong holiday season. What do you think the next year is going to look like in terms of consumer demand or just demand for Shark and Ninja products as a whole? I feel like I hear different things from different economists and different analysts that I talk with in terms of it'll be better than 2023.

26:22There will still be issues. What are you thinking about, especially as you're thinking about who will buy your products and what products will be the most popular? Yeah. So look, good economy or bad economy, you know, you have to work hard to win over the consumer. And, you know, I don't feel that if you don't have innovation, if you don't aren't creating demand for your products and awareness for your products, then I think invariably it comes down to price. And I think that's not a place that, you know, we want to position ourselves and our brands to be. I mean, we want our products to sell at a great value, but we want the consumer to see us for our innovation, you know, for the excitement, for what we can do to improve their homes, both in the home as well as outside the home.