581: Bootstrapping a $1M Direct to Consumer E-Commerce Brand as a Side Hustle

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1:14What's up? What's up? Nick Loper here. Welcome to the Side Hustle Show because your nine to five may make you a living, but your five to nine makes you alive. We've got an awesome story for you today on building a brand, building a business, building an online income stream on the side from your day job. Stick around in this one. We're talking market research, the validation, and of course, all the fun marketing tactics that went into it. The brand at the center of our case study today is a men's skincare brand called Pretty Boy. You can find it at yoprettyboy.com. And joining me today are the best friends and co-founders, Kevin Niehoff and Ben Faze.

1:50Welcome to the show, guys. What's going on? Thank you for having us. Thanks for having us. Wow. Happy to have you here. Notes and links for this episode are at sidehustlenation.com slash prettyboy. While you're there, make sure to download your free listener bonus for this episode. It's my list of 25 e-commerce niche ideas I put together to spark some more inspiration if you wanna follow a similar path, Kevin and Ben. Once again, that's sidehustlenation.com slash prettyboy or through the show notes link in the episode description. So guys, you are two years spent in the market research phase, the product development phase, And now you're a year and a half post launch and you just post an almost$80 ,000 sales month.

2:33And that's huge. That's got to be incredibly rewarding and validating. But what does that feel like from the standpoint of, yeah, we're still working the day job. We're still trying to make this happen. What's going through your heads? It's very exciting. We're getting really close to go all in. And yeah, it's just cool. I mean, I started this three years ago. It's pretty hard to just get a product to launch. And now we're a year and a half in and just posting$80 ,000, like you said, planning to cross over a million this year. It's pretty cool. It's surreal, honestly. It's something we've always dreamed about doing together.

3:03So it's cool. Pulling for a big Q4. Ben, my question is, there's got to be dozens of skincare brands, some of them from huge brand names. What gives you guys the confidence to say, yeah, number one, we can build something that is either better, faster, cheaper, like effective. And we're going to be able to compete with these big guys. Trust me, a lot of sleepless nights at the beginning asking ourselves that same question. Kevin and I know, and we always talk about it, we're two very identical minds with separate skill sets. I think that one of the things for us was like any company like this, and anytime you're starting something, especially as a bootstrapped approach or that side hustle mentality, so often they start from personal problems encountered in one's own life.

3:44So Kevin, someone who suffers from eczema or a form of eczema, myself, I was that kid that when I was younger had kind of the acne prone skin, breakouts, oily skin, was super self-conscious about it. And as we had always dreamed about starting a company and when COVID hit, it started to really kind of lean into the skincare thing. We were just obsessed from the beginning with understanding what the desired customer would want or what that customer would desire moving forward with the product, really leaned into the things that we thought were marketplace gaps. Once we isolated kind of those factors that people made their buying decisions off of, what they thought was wrong with the current things in the marketplace, too many products like long, long multi-step routines, products that had that kind of more greasy or heavier texture and kind of figuring out what guys said.

4:24Yeah, if I'm going to do something every single day, this is what it's going to have to look like. We felt super confident that paired with kind of Kevin's creative genius from a branding side and our obsession with creating kind of that perfect product for guys that they actually wanted. We knew that if we did it the right way, we'd be able to get that loyal customer base, be able to break into the market with a splash. So even though there was entrenched competition, you still sound through either personal pain points or conversations with potential customers. There's still a gap. Like this particular audience that we want to serve, their needs aren't being met and we think we can do it.

4:55Without a doubt. I think another thing to that is like Kevin, former Ohio State football player, won a national championship there. Myself, like we're both very competitive people and innovation is best fostered through competition. So even though there's always people out there that are doing something, it was never for us being scared about the competition or the saturation. It was just, can we be unique enough and can we solve enough pain points by innovating on what's happening? And innovation can look different. It's technological innovation. It's also like process innovation. A lot of founders, when they start brands, it comes from an issue they've had.

5:27And yes, there was a lot of competition, but Ben and I have been going to dermatologists for over 10 years. We've been using products that haven't really been what we really wanted out of skincare. And when doing all this pre-survey data on what guys actually want. It is kind of funny. We started seeing some very key factors on what guys actually want out of skincare. Now, at the end of the day, skin is skin, whether it's men or women, skincare is really genderless, but men are different consumers than women out of skincare. And I think that's one of the biggest things is really understanding your consumer.

5:59We believe there should be a skincare product for everyone. You go down the current aisle, there's a million different products really targeting women, right? There's not that many focused on men. And the current ones out there were super hyper-masculinized. Like Ben said, they didn't meet the texture. They didn't meet the performance. We would bring these products that may be more aligned with us from a branding perspective to our derm. And they would be like, I'm not letting you put this on our face. So really doing that pre-survey data, not only what we wanted as a customer, but what actual men talked about.

6:27So performance, actually using quality ingredients that have the most science backing, simplicity, all the data referred back to us was guys don't want you to use more than three products. Then why were current brands coming out with five-step routines or more? Texture is a funny thing. Like obviously there are people that want to use a thicker cream. That's fine. Use that. But texture was the biggest thing. Guys don't want to make it seem like they're wearing a mask all day. They want it to blend in immediately. You want to feel comfortable using a brand that represents you. And we believe there should be a brand for everyone.

6:57So we took on that kind of active male Nike of skincare approach, coach, but also wanted to have some fun with it. We took on the name Pretty Boy. Everyone's a pretty boy now. We all work out, eat healthy, want to look our best type of thing. And you said, am I the OG Pretty Boy in the earlier call? My football coach in high school used to call me a pretty boy for one. We're the visor, the towel, look good, feel good, play good. So we thought, hey, let's have some fun with it. Let's come up with a cheeky name versus just some kind of generic name that doesn't really stand out. Yeah, it might have been on an earlier interview with you guys.

7:26well, 10 years ago in Ohio, pretty boy wasn't necessarily a compliment. And so I was like, but hey, we can spin it and we can own that. And I like that how you guys did that to set out to make the Nike of skincare. And I want to highlight the other comment that innovation is best fostered through competition. Really want to underline that. Don't be afraid of the competition. Let that be fuel for coming up with something different, something better. And I think that's pretty cool. You mentioned this pre-survey. So this is before even trying to find a manufacturer or even start messing around with formulas because we get into a little bit of that too.

8:00But just trying to figure out, okay, what do customers really want? Talk to me about through the logistics of what you went through to collect some of that pre-survey data or this voice of the customer data. Kevin and I are perfectionists at heart, want to give ourselves the best chance to make the right decision as early in the process as possible. Obviously, we haven't made every right decision, but one of the ways we saw that was get as much data as possible on what people want. And so we created probably like a 30-question survey. It went out to a couple hundred people right in those first couple months of ideating.

8:31And we were incentivizing people. Where do you find those people? Initially, it would start with just friends and say, hey, we need you to take this. But then it was also, we want to get as far outside of our immediate circle so we're not operating in a vacuum. So asking them to send it to their friends. Sometimes there was an incentive. Sometimes it was, hey, once we get the product, you guys will get some for free for helping us out with this. But posting it wherever it was, social media, asking people to share it among friends, try to get as far outside that circle again to not operate in a vacuum.

8:56And that survey was what initially led us to that value prop for us was obviously the less is more approach. So many people want to start with building the brand. I have this name. I have this brand vision. The best thing we could have done is we went out, got data, understood our customer base, and then built the brand around that data. That was the best thing we probably could have done, spending two years on just creating a badass product that people love to use. And that's why our retention is so high. And it's really helping, especially when you bootstrap as well. Like you need that returning customer.

9:26Yeah, we're not talking five or 10 survey responses. We're talking a couple hundred at this point. A couple hundred on that initial, but then that, like, again, we're doing every single customer after 30 days of use gets a post-purchase outcome survey. A key part of this also was being accepted by that clinical community. And to get that kind of credibility, we not only, like we did clinical surveys where we were asking hundreds of dermatologists to rank our ingredient list against name brand competitors, smaller niche competitors based on the ingredient list that they're seeing. And that's what's gotten us some of that buy in from the dermatologist community already in like a pretty quick fashion for a company like ours.

10:00So talk to me a little bit about the process. And we don't have to spend a ton of time on this because it's going to vary based on whatever product, but like from the survey data to a sample, like trying to find a contract manufacturer. And even though like, well, what goes into this? Like I want a white label or want a private label, my own skincare brand, trying to figure out somebody to help you make this stuff? Or are you mixing over pots and pans in the kitchen by trying to get it this way? Not us. I don't think I ever got above a C plus in any science class from sixth grade until high school.

10:30And I conveniently stopped in college for a reason. It was really simple, honestly. We just approached, we were DMing dermatologists through Instagram to say, hey, we want to talk to you about this idea. And it was very, very simple. We said, we know that guys want a product that feels like this and these are the top concerns that they face and Kevin has eczema. Can you make a single moisturizer that we can with confidence market targeting these claims, having this texture and being safe for people with skin conditions like eczema, psoriasis, etc.? And the answer was resoundingly yes from a dermatologist and cosmetic chemist standpoint.

11:03They said yes you can. We then go and approach the contract manufacturers. We say hey we validated that these types of ingredients work together. These are the claims we want to be able to make with confidence. The process of evaluating manufacturers absolutely sucks. It's exhausting. And that's probably the closest we've ever come to doubting whether or not this was able to happen just because it's such a frustrating process. Are you able to mystery shop like three, four different potential suppliers that say, hey, can you make us this formula? Are you able to pit them against each other? I have no idea how this process would even work.

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13:37Try it free when you go to quo.com slash side hustle. That's q-u-o.com slash side hustle. You can even keep your existing number. Quo. No missed calls, no missed customers. We didn't know what the hell we were doing early on. We were using Google. We We were calling manufacturers, just trying to get on the phone, calling people in China. And it was pretty stressful because if they're going to be making a product, you got to trust that they can do this. A lot of products are manufactured overseas. So that was just there is a language barrier. It took a while. Thankfully, my girlfriend, her former boss, worked at a company that started the EOS lipstick, the little egg-shaped lipstick.

14:15And we kind of used her as a mentor. I mean, that's one of the biggest things we can buy, just continue to network. In this startup community, people love to help each other. If they can't help you, they probably know somebody that might. She loved our story, was able to connect us with their contract manufacturer who worked with some pretty big brands. And it was honestly a godsend. They're based in the US, but have relationships all over the world and can really be that middleman and kind of handling everything. They are professional. They've been doing it for 30 years. And it was really huge for us because like Ben said, we were getting to a point where like, can we even do this?

14:45Like, how are we going to figure this out? Yeah. In contrast to just going down the Alibaba rabbit hole of like, who can make this stuff? The other thing that was really fortunate about that time was you're waiting on samples that can take a couple of weeks at a time. Like you're talking to all these different labs. It was in that almost what I call like our dead period where we were able to then also start transitioning into understanding then same survey, same type of thing. Like, what do people actually want to see out of a skincare brand? How do we want to live this brand out? What do our consumers see?

15:13And for us, a big thing was like people want their lifestyle reflected in a brand. They want complete authenticity, transparency. And so that started like setting up the future for that's when you do some of the business planning and the marketing planning and go, OK, now we know we have this like six month time of this product once it's going to be manufactured, where we can really start focusing on the delivery model and the marketing model and how we're going to go to market without feeling like you're taking a step back. And so there's always a silver lining. And that was kind of where we got to with that stuff.

15:41Yeah, it's an opportunity to create a ton of value for all parties involved. But just as we're going through this, there's a lot of moving parts in here. I think it's really smart of you to use this manufacturing time, like this formulation time to, well, okay, now let's talk to our customer base about the branding side of things and really letting everything from the sounds of it be very customer driven. And I think that makes a lot of sense, especially since it's like, well, we're not taking outside funding to do this. So you finally get the formula right. What kind of minimum order do you have to put in to say like, all right, let's see how many of these things we could sell?

16:17Too much. Yeah. Too much. skincare is a little different than a lot of brands. It's a minimum 10 ,000 that you got to put in, which is pretty steep when you're bootstrapping. But I mean, Ben and I kind of looked at us, we're extremely competitive people. And we're like, hey, if we're going all in on this, like, it's got to work and it's going to work. So we're either going all in or taking our shot and miss. But we were obviously confident in ourselves and shoot or shoot. So it's been going good so far and we've been able to play small to order. So we made the right decision. Yeah, I had a line because I asked him and his minimum order was like three grand.

16:51I forget what he was selling, but he was selling Amazon FBA in Japan. And I was like, three grand, that's pretty steep. What made you confident to make that investment? Were you nervous? And he's like, man, at a certain point, you got to take a swing or tomorrow is going to look like today. And that's a line that has definitely stood out to me. So you guys plunk down the 10 grand to order the first batch of product. Then what happens? Like now we got to figure out how to sell this stuff. Yeah, just to clarify what we both said too much, honestly, 10 grand would have been absolutely amazing. It was a 10 ,000 unit MOQ.

17:18So that came in right under 70 grand, plus you've got the regulatory testing, plus you've got just some other ancillary like stability and certain things like that. So to Kevin's point, I mean, we were literally like, that's a different conversation. Yeah, it's a different conversation. Thankfully, we've both been as judicious with saving money as you can living in LA for seven years, but we're able to do it again. For us, it was literally Once we got the product, we had 100 % confidence in ourselves. Our goal was to sell through the first 10 ,000 in the first year. And we did that basically the day that a year turned over.

17:52But since then, that first year was like$187 ,000 a year for us. We sold through the 10 ,000 units. We've ordered 45 ,000 units since then. And so some of those are hitting here soon. I mean, you can post this stuff on your own website. You can upload it to Amazon. But just because you built it doesn't necessarily mean people are going to come. what's driving the initial sales even before selling out the first 10 ,000 unit order, but it's like the first hundred units. Like where are these sales coming from? Friends and family initially. That was the greatest day. You see the first month come in and you're like, I think we did like a couple hundred units that first month.

18:27And then the next month is where you drop off. You're like, nice. We got some money passing through Shopify. That's where the real work started. More with Kevin and Ben in just a moment. I know you're looking for strategies you can actually apply to your business. That's why you're here, right? Well, I've got another podcast recommendation for you to start and grow your side hustle. It's called This is Small Business. This is Small Business is an original podcast from Amazon for aspiring and early stage entrepreneurs, just like you. For example, one of the toughest parts about starting and growing your own business is figuring out how much you should charge.

19:00Like, what is your product or service actually worth? And how much do you need to charge to make a profit? it? Well, there's a recent episode called how to find your ideal price point, where you learn how to figure out what customers are willing to pay and when you should start thinking about raising your prices. The show answers so many questions that early stage entrepreneurs have, like how to find your ideal customer, how to know when you're ready to launch your product, how to hire your first employee, and why you should protect your intellectual property, plus tons more. Learn more about how to start and grow your small business.

19:31Check out This is Small Business on your favorite podcast app. And big thanks to This is Small Business for sponsoring the show. We all want to feel better, be happier, and have more freedom. I know that's one reason you're listening to this show. The good news is there are endless resources to help us achieve those goals. The bad news is wading through the sea of self-help books, podcasts, and workshops takes more time than most of us have. That's why I recommend the podcast Self-Helpful with Kevin Miller. Kevin's a pro athlete, peak performance expert, published author, and personal development guide.

20:06On Self-Helpful, you'll meet today's most important influencers and change makers to learn what drives them and actionable self-improvement tips that you can apply right away. Here are a few recent episodes I think are worth checking out. First up, focus like a monk, even when you're an entrepreneur. Love that qualification. Love that subtitle. Number two was moving beyond fear-based thinking to opportunity-based thinking. And finally, peak wellness. Dominate your day before breakfast, something definitely relevant for side hustlers with limited hours. From personal fulfillment and work-life balance to spirituality, relationships, and motivation, each of Self-Helpful's four-part series distills the guest's greatest wisdom into practical, transformative steps that anyone can integrate into their life.

20:52Tune in to Self-Helpful with Kevin Miller to elevate your personal experience and improve the way you show up for yourself and others. Once you create a good product, word of mouth does spread, which has been huge. Thankfully, we've talked about networking, definitely try to find people that have started ecommerce brands and been successful and get advice from them. We know that brands that are doing seven figures, eight figures, Facebook ads still is the name of the game. Now, one thing we would stress is if you want to go all in on organic, if you don't have money to start putting low dollars into Facebook ads like we did, definitely you can go tiktok but we stick with one that's the best thing don't try to do too many things we try to do too many things in the beginning just stick with one become a master of it once you can cross over a couple million dollars then you can start really branching out and trying new marketing channels but for us facebook was number one obviously it's not the heyday of facebook advertising where you get five x on every dollar you spend but it's still where people are putting their money it's still where you can find new customers and then really nurture those customers through the back end of like email, social media, etc.

21:54Is there a metric you like to be at in terms of cost of acquisition? From a profitability and break even point, we want to be in the mid 20s because of our LTV, which hovers in the$70 to$80 range. And because of how frequent people transition to subscribers and then how long those subscribers stay for us. I mean, Nick, I'm sure you're familiar with Andrew Ferris. I don't know that name. Okay. He's a big econ guy, does a podcast. He talks a lot to brands like ours at his podcast. We're his target audience. We listened to this podcast that we found so interesting, which is like, if you start to see that your repeat customer rate is basically exceeding your new customer rate.

22:28So if returning customer revenue is outpacing new customer revenue for sustained months, what that tells you is that you should be basically doing everything you can to throw a boatload of cash at getting new customers. So now that CAC metric for us hovers more in that like 35 to the low 40s range, because we know again with that LTV that that customer, we are willing to bet heavily that if you buy our product once, you will at least buy one more. And we think a vast majority are going to subscribe. About 60 % of our revenue on a given month comes from subscribers. Okay. You have the subscribe option versus just, okay.