Meeting customers wherever they are requires a presence on multiple channels. But how do consumer brands know which channel to focus on first, and how do they assess when the time is right to expand into others – all the while scaling the business, developing new products, and exploring partnerships? Moreover, how do companies ensure they have established enough brand recognition that customers will follow them wherever they go?
These are a few of the big questions that consumer brands grapple with in today’s competitive landscape, as ecommerce continues to rapidly evolve.
To understand how some of the strongest brands are thriving with the omnichannel approach, Greylock general partner Mike Duboe hosted a wide-ranging discussion on Greymatter on what it takes to build the next generation of commerce companies with Color Capital co-founders Jaime Schmidt and Chris Cantino. The husband-wife team partner with companies creating the future of CPG, marketplaces, ecommerce, and media, and both bring a wealth of experience to the table. Schmidt is the founder of personal care brand Schmidt’s Naturals (which was acquired by Unilever in 2017), and is the author of Supermaker: Crafting Business on Your Own Terms, which evolved into a media company Schmidt and Cantino run together. Schmidt is also set to appear on a new show called Going Public, which follows founders on their fundraising journey. The show will be streamed on Entrepreneur Media.
In this conversation, Schmidt and Cantino share stories from the early days of Schmidt’s Naturals, which began at local farmer’s markets in Portland, (also known as “the original DTC,” sales channel, says Cantino); their views on bootstrapping versus raising outside capital; how to assess partnerships and potential M&A; and the growing importance of media and content in the ecommerce world. This podcast is part of a series of discussions on commerce hosted by Mike Duboe.
You can listen to the podcast here.
Episode Transcript
Mike Duboe:
Hi everyone, I’m Mike Duboe, a partner at Greylock. Welcome to our podcast, Greymatter, and our miniseries on commerce, where we’ve been exploring different aspects of the quickly evolving e-commerce landscape.
Today we’re here with Jaime Schmidt and Chris Cantino, who’d previously founded and grew Schmidt’s Naturals into an acquisition by Unilever, and are now partners at Supermaker and Color Capital, where they focus on the next generation of CPG and e-commerce.
MD:
I was an early admirer of what you both built at Schmidt’s prior to the DTC hype, and have enjoyed following your public thinking and CPG community building in the years since. This is also the first husband-wife duo we’ve had on the podcast, so I’m excited to hear your perspective on multiple fronts.
Maybe for brief intros, Jaime, we won’t do the full background of Schmidt’s justice today— and you’ve written a book on the topic—but for those listeners who might be unfamiliar with Schmidt’s, could you give us some background on the founding story and evolution of the brand?
Jaime Schmidt: Well, I was living in Portland, Oregon, the most creative city in the country;potentially in the world. I mean everybody here is a creator, maker, artist. And I wanted to fit in, so I started exploring different opportunities to pursue my creative itch. I was DIY-ing everything for a couple reasons, not just for the excitement around building something and creating with my hands, but also, we were on a very strict budget.
Chris and I were both social workers at the time;that’s where we had met, at a job working with kids at a residential facility. And I was also pregnant—and yes, it was Chris’s baby— so I was paying closer attention to the products that I was using on my skin. All of these factors played into the creation of the business.
I didn’t quite understand the business potential in the earliest days, I was more just making for the sake of making. But in Portland, there’s no shortage of opportunity to get out into the community and sell. So I did that. Every weekend I was out at the farmers markets, I’d pitch my tent, I had my baby with me in a playpen and just was having fun.
But when I started talking to customers, I realized there was an actual, real business potential in what I was doing. At the time, I had been making a bunch of different product lines, I had lotions, soaps, deodorants, sunscreens. And in being at the market, the opportunity in deodorant became really clear.
That was an industry that was in need of something new. It was a stale category, there hadn’t been any innovation, and there were only really a couple of natural brands that existed on the market at the time, and they had a reputation, frankly, for not working.
So I saw an opportunity to 1) create a deodorant that worked and that was natural, but 2) also to do it differently than had been done before. So that meant innovation in fragrances, in the packaging, in the way that I was talking about the product. Deodorant was not sexy at the time and I saw an opportunity to change that. With that, Schmidt’s was born.
MD:
Awesome.
You had built the brand at this really interesting point where when you started, DTC was not a thing. It wasn’t really a channel that was popular. In the years since, the pendulum’s shifted, and now I know you’re both excited about wholesale again, which is becoming more in vogue.
Chris, I know you were CMO. Tell us about the early days of marketing Schmidt’s and where you felt you were ahead of the curve, or what you saw before others did.
Chris Cantino:
Yeah, well, I didn’t really join Schmidt’s full time until a few years in, but Jaime starting at farmers markets was the original DTC. And then she went into wholesale because people were asking her to sell in the markets.
I started buying ads for Schmidt’s in 2013. The ad auctions were pretty cheap back then and there was a lot of green space. There was a lot of fun that we could have with marketing, because a lot of the other deodorants on the market were focused just on the functional stuff, like 24-hour protection, no white marks. But we were focused more on, like Jaime said, the scents and the packaging visuals and all the better-for-you ingredients. A little bit more like a natural food brand.
Some of the other stuff we did was go in pretty deep on grassroots, cold-pitching, and cold-emailing and sending cold packages to YouTubers, to bloggers, to editors. You know, “Attention: Allure Beauty Editor,” like, not knowing anybody and just hoping that one out of 20 packages would land and get some ROI for us, and that really worked.
As we scaled, we focused a little bit more on the machine learning side and AI to better our retention and improve the ad-buying. I think we were pretty early on that. And we did a lot of content marketing, more linear commerce feed, developed a blog called The Natural that had two million visitors within a couple months. More of a vertical linear media play.
And generally, we spent a lot of time collecting data about the way our customers saw our products across the different channels, whether they’re buying on Schmidts.com, or Amazon, and other retailers and I think that really made all the difference when it came to getting acquired and getting the attention of retailers as we scaled.
MD:
I think both of our experiences parallel each other where we started buying ads. For myself, I started to buy Facebook ads in 2012. It was just a very different landscape as far as your ability to find arbitrage by being a savvy media-buyer, which the markets have become so efficient in since;also very accessible.
But that leads to CACs tending to only go one direction as you scale. Which I think behooves you as a founder, as a marketer, to seek new ones and seek areas where others are not.
You have articulated, I think better than most, reasons why founders should think omnichannel and be more bullish on wholesale overall. What has given you such conviction in this idea? And if I’m the CEO of a brand right now, how do I know whether I’m ready for wholesale yet?
CC:
The marketplaces are getting so sophisticated/ Their scale’s offering them a level of personalization and incentive for customers, they have great rewards programs, they’re aggregating products into shipments, making it super-convenient.
They’re doing all the things at such a scale that they’re very difficult to contend with as a DTC. Unless you have some incredible IP, like you’re Peloton or something like that, and you can really justify that vertical DTC experience. It’s becoming harder and harder, not easier, to compete with the marketplaces.
There’s some great brands that do, like Glossier, or Lululemon, but if I’m, like, an earlier CPG brand, instead of trying to compete with Instacart or Amazon, I’m just going to try to embrace them.
The other thing is if you don’t, your competitors will, and then they’re participating in the market and they’re demonstrating their value to would-be acquirers and other retailers.
It doesn’t mean that DTC is not important. It’s incredibly important, but I think it’s more that it’s table stakes at this point, and the true contrarian play would be to be a wholesale brand first before you are a DTC brand.
But to know if you’re ready for wholesale, I think there’s a myth that it’s going to be really difficult or it’s going to dilute you, but it’s really similar to taking the leap into starting a business. It’s just like starting a DTC, and you learn as you go. If your customers are telling you they want to buy offline then you should be there.
If you have product market fit, it’s time to scale up, explore other channels, and just stress-test the limits of marketplaces that you might venture into. And that’s what Jaime did at Schmidt’s too, she started at farmers markets, then went into the co-ops and then national retailers and to big-box. And we had this omnichannel mix as we went.
JS:
Yeah, I would just like to add there that, to be honest, when I started Schmidt’s I wasn’t thinking holistically about like, an omnichannel strategy, what my ultimate goal was there. All I knew was that I wanted my product to be available to as many people as possible.
And so with that philosophy leading my every move, it just made sense that I would be selling across different channels. I really saw it as a fun challenge to bring naturals to the mainstream, right, at this time there weren’t a lot of natural channels, or excuse me, a lot of natural products that customers were excited about.
The couple that did exist, they were en masse, you would see Tom’s of Maine and maybe JĀSÖN on some store shelves. But once Schmidt’s was really going strong there were a lot of competitors that were quickly coming up behind me.
But the one thing that made us different was that they just didn’t have this motivation to reach the masses. And so for me, that was a fun challenge to bring naturals mainstream and so I was saying, “yes,” to channels that the competition just wanted nothing to do with.
Naturals tend to associate themselves with being a niche offering or more of a luxury product, but I wanted everyday Americans in the middle of the country to have access to the products that all of these niche customers were privy to.
MD:
There’s an interesting point here around trade-offs on… I think one of the reasons why DTC feels powerful and is valuable, in my opinion, for brands to do earlier, is you have a much deeper understanding of who the core customer is.
Both from a qualitative sense and then also now with the advent of Shopify, you’re able to get a good quantitative sense and get the data back as well, directly. Which, when you’re going through another channel, there’s varying degrees of how granular you get.
I’m a little bit influenced by this because at StitchFix our core competency was quantifying people’s fashion and really getting to know them and their taste better than we thought they could do on their own.
And also for our brands, we were actually feeding them back really interesting data that they typically weren’t getting back through their retail partners. And so, in this case, how did you think about that trade-off?
JS:
I think the cool thing about deodorant is most people use it, it’s one of those products that most people can relate to wanting or needing, and so that opened up a lot of opportunity. I, not even knowing it at the time, I really embraced this philosophy of, Don’t make assumptions about who your customer is.
It’s important to start niche. I think what every brand is told in the early stages of their business is, Know who your customer is, have a niche, and have a target that you’re always catering to and I think that’s very important.
But as the business grows and you got that really strong core established, then you can start safely looking beyond that. I think what’s really key here though is making sure that you’re carrying that niche with you.
So as big as you get, the more customers that you’re bringing in, if you still have that solid core customer who was there from Day One, who really resonated with what you’re doing and they’re scaling with you, that’s where the magic is.
MD:
When we talk about wholesale, typically people think offline, getting into physical retail. There’s now been a way of digital wholesale, i.e. embedded third-party marketplaces, and now as a brand you have more options to actually sell through other vertical marketplaces or even other retailer sites. How do you think about that in the stack?
JS:
Yeah, for sure. I mean it all just plays into this omnichannel approach, we were saying, “Yes to every opportunity and so the marketplace just made sense.
I think back to some of the earliest retailers of Schmidt’s that… For example, we had a food-buying club locally where I would literally drive to this person’s house every week and drop off these orders and I just saw the opportunity there for so much growth in that.
And Chris, you mentioned international, too, that was one channel that we were always open to that I think is intimidating for a lot of new brands. There’s a lot of regulations that go with that, a lot of considerations that just aren’t at play when you’re selling domestically, so that was another way for us to really open ourselves up to new channels.
MD:
Yeah, international is such an interesting one. I didn’t actually realize this is a key part of Schmidt’s story. What did you have to do to actually pull off international early?
JS:
I remember getting the first phone call from this international retailer and thinking, This isn’t even something I had considered. But yes, we’re going to say, Yes to this and so that meant definitely digging deep into regulations around labeling and what the expectations were for packaging and ingredient disclosure and things.
And we were always transparent on our labels of course, but there were some standards above and beyond in Europe, for example, where you had to list the percentage of different ingredients on these separate spreadsheets that would accompany the order that you’re shipping—so much to learn.
There’s a regulatory body called Responsible Person in Europe, and they were really helpful and kind of hand-holding and letting me know what exactly was required. And every country’s different too.
And it’s not just in the packaging and the disclosures and things, but also in the way you’re talking about your product and the norms around how you’re marketing it. It can go pretty deep if you allow it to.
MD:
I want to shift gears briefly to talk about funding. It seems like today, CPG founders, outside of venture, have such a variety of options with funding sources. How has the dynamic changed? Would your decision to bootstrap look any differently today, and now that you’re on the other side of the table investing, do you think about that tension any differently?
JS:
Yeah, I think it’s so specific to the founder and their situation. And I try to be cautious about preaching that one way is the right way. My story just happened to play out in that I did bootstrap it.
But when I started my business, my roots were so organic that I hadn’t given a whole lot of thought to the funding strategy. It just grew from my kitchen, the demand was slow in the beginning and I just followed it and didn’t look too far ahead and with that it worked well for me and the type of product that I was selling.
I don’t think it’s the right answer for every brand. I think that it’s worth considering for most, and I think there’s a way to support that, whether it’s through loans or lines of credit. But as an investor today, I won’t invest in a brand if I think that they could see more success in bootstrapping. I’ll only take equity if I think that there’s a good reason for them to be giving up equity.
CC:
I think we would have probably crowdfunded at some point, Jaime, don’t you?
JS:
Yeah, I think that would have been a smart place to put our energy. It didn’t make sense for us to spend our time chasing after VCs and putting together fancy decks, because we just, frankly, didn’t need the capital and we were fortunate in that we were able to recycle the funds back into the business.
The earliest days I had a couple side jobs to help act as the seed money and then Chris had his jobs at home that were sustaining us on the personal side. But not every founder has that situation.
But yeah, I think crowdfunding makes total sense. It wasn’t as trendy back then; I think it’s a great way to incorporate ambassadors for your brand and would have been a really smart play for a brand like Schmidt’s for sure.
MD:
This feeds into a topic I wanted to ask you about, which was around acquisitions. It’s an area that I know you’ve brought to Color Capital, given you sold Schmidt’s to Unilever.
I’m curious for your take on this. What is your advice for founders who are in the process of scaling brands, what should they keep an eye on when it’s time to think about exiting?
Acknowledging that it’s a very personal decision at the end of the day, but are there indicators when growth is becoming more challenging or less capital-efficient?
JS:
Chris, I know we both have thoughts here, and I think the first thing I would say is, Don’t start out chasing the acquisition. You have to really stay focused on the vision that you have for your brand. While it can be lingering in the back of your mind and your ultimate goal, I think thinking about it too much can be distracting.
At the same time, in today’s industry, every category is just so competitive, so it is smart to have a sense of, Okay, if I was to be acquired, what type of acquire would I want to be pursued by, and how would I fit into that family of brands? And so having a little bit of strategy there around the product that you’re launching might actually be beneficial.
CC:
Keeping your head down, like you said, is the right way to play it. But then once you get closer, there needs to be some realignment, right? You really want to make sure that your product and your category extensions are totally aligned with the acquirer. If they’re divesting this division that you’re planning on getting into, you obviously don’t want to pitch them on that, right?
You’re trying to keep all these letters of intent active, you’re trying to drive up the bids, you’re trying to make sure that you’re pumping enough advertising so that your sales don’t plateau or dip, because the last thing anyone wants to see in that month before acquisition is a drop in sales.
And then the other thing is when you do get acquired, just keeping in mind that you’re not necessarily acquired to keep up this really disruptive behavior that you might have had as a start-up, but rather to play nicely alongside a family of brands.
So those incentives that worked for you before probably don’t work when you’re in Unilever and they also impact Dove and Rexona and Degree and Axe and all these other companies that you’re now partnering with.
So there’s just a lot of implications when the brand is integrated from supply chain efficiency, to the way that the products are sold across different aisles, to the cost of integration itself that a lot of founders probably never consider when they’re building their brands.
That real, directional alignment with the strategic is difficult to come by, but I think we definitely had it with Unilever. They definitely understood the strengths of Schmidt’s and worked to apply that across their portfolio and they gave us a lot of independence to grow after integration too.
JS:
Yeah. And product roadmaps and in-house manufacturing are pretty major considerations, too.
We had interesting timing, actually, Schmidt’s was really… We were lined up to launch across new categories right around the time that Unilever approached us and we were sort of frozen and wondering, Do we move ahead with this? Or do we wait? How does Unilever perceive this? and so that made for an interesting conversation in an approach to launching.
And then also, one thing that I’m really proud of in building the brand was that I had built out in-house manufacturing, built a factory. And there’s a lot of advantages to that that were really beneficial to the brand.
However, when it came time to acquisition, it complicated things, right? Unilever didn’t love the idea of taking a factory under their wing and dealing with all of the responsibilities and liability that go along with that, and so that’s another consideration.
Fortunately we had a backup co-packer at the time, we had partnered with somebody once we launched en masse, more as a backup in the case of emergency, or just to fulfill the demand that we couldn’t necessarily meet. And so I think that’s important to think about too, is your manufacturing and what that looks like.
MD:
Yeah.
CC:
Yeah, I can tell you Jaime always was adamant that we needed a backup for every partner that we had, whether it was manufacturing, or if it was like, even in advertising, it was like, Well why don’t you diversify what we’re buying by 10%, by hiring this one agency on the side to at least test and stress-test what you’re already building.
MD:
It’s much easier to find those redundancies when you’re part of a much bigger conglomerate like that. But I’m curious: presumably you went into the acquisition with some assumptions about big CPG. How has it compared to your expectations?
JS:
Yeah, everybody knows that big CPG moves more slowly, so that was something that we were prepared for.
And in terms of surprises, I’d say that they were all on the positive side. We’re three-and-half years post-acquisition now and very happy with the traction of the brand and how it’s being managed.
But one thing that’s been really fun for me is connecting with the siblings—the brothers and sisters that have also been acquired by Unilever— and really sharing stories and experiences and bonding in that way. And really thinking about new opportunities to work together, too.
So there’s a lot of newfound opportunity in an acquisition, and of course a little bit of loss and adjustment. But overall, I think Schmidt’s, it’s fair to say that we’re happy.
MD:
Yeah. So on the final point on this acquisition topic: It seems like there’s certainly is a lot of money going into the category and I’m sure if you were starting Schmidt’s right now, you might be approached by some of these sooner rather than later, and maybe some of your portfolio companies are.
What are your thoughts on this conceptually, and how might founders be thinking about this?
Well, I think there’s a lot of interesting things going on. There’s all these little roll-ups starting to look like mini-conglomerates. Building the blocks for a next-gen house of brands, I think that’s really compelling. I think there’s going to be a lot of failures.
But the leaders in those markets, I think, are only going to get more funding and get larger and more sophisticated. So I think it’s coming. It’s just going to be a decade of learning. But I think we’ll have something that looks a little bit more like a mini-Colgate or mini-Unilever.
MD:
Can you believe the efficiencies you can drive across brands are real in this case? I know you’ve experienced it from the Unilever standpoint, but for these holding companies or roll-up plays that are better a tier down.
CC:
Yeah. I think the aggregation of the demand is a place where you see the efficiency and the marketing, and as long as we’re really talking in-house efficiencies that makes sense.
I think some of it’s overblown; I don’t think we’re going to see major supply chain or cost of goods reduction, buying-powerwise.
But when it comes to inventory or ad buying, I think that there’s clear efficiency there.
MD:
Yeah. It feels like the media companies are becoming e-commerce ops and brands are launching their own media arms as a place to bolster other marketing efforts. You probably have quite unique perspectives on this. As you think about brands or creators who are running the linear commerce play well, who comes to mind, who do you look up to on this front?
CC:
I love Glossier. They’re kind of the original, right? They started out as a blog and built it into this totally vertical superbrand and they’re phenomenal. I don’t think there are a lot of brands that do it well.
I think it tends to work better when the narrative, the media side of things is developed before the product side and then you can weave the product in. If you do it backwards it’s a lot harder. It’s a lot harder to start with the product then draw people in with media that’s around the product.
MD:
I couldn’t be more aligned with that and it’s one that a lot of people miss is that they spent years of not monetizing and really just building a community to build loyalty and eventually convert them to loyal customers.
A lot of brands now don’t have the luxury of time, and they’ve already raised money and have high expectations and so, trying to tack on community, post- having a product that you’re already spending marketing dollars behind, is I think a little bit… I mean, it can be pulled off, but it’s just much tougher.
CC:
MSCHF is a brand that does it really well. With MSCHF it’s the story, it’s the headline that brings people in, it’s not necessarily the product.
It’s not that people care so much about getting one of the 666 Lil Nas X Satan shoes, it’s like, they really want to participate in this conversation and be a part of this cultural moment.
I think that’s the hack: Give customers the incentive to participate on the cultural side of the moment, or even the financial off-side of projects. What we’re starting to see as the emerging use-case.
But otherwise I think that the creators in general need to be a little bit more content-minded, content-first, before they are commerce-minded.
JS:
We can’t miss GOOP, right? I think that’s one of the obvious ones too, and I think about influencers, too. Not necessarily media vertical so much, but even one of our portfolio brands, Live Tinted.
The founder is Deepica Mutyala, and she’s an influencer who had built up this incredible community, sharing thought leadership and content around this community of women who wanted to feel inspired and who could identify with their culture through makeup.
And so that was a beautiful segue into her launching a brand, and she’s even been able to put out merch with, maybe it’s a certain slogan or whatever people associate with that community.
CC:
Yeah. A Color brand that does it is, A Kids Book About, too, where they’re literally selling the content, the content is the product. So, disrupting publishers—instead of waiting eight months or nine months to develop some content, you could actually capitalize on a cultural moment and put out a book in three months.
JS:
Yeah, I think it’s just putting purpose behind what you’re selling. And I feel like every brand needs some sort of connection to linear, whether it’s an obvious play or just a little more subtle.
And I think with COVID, that has really emerged as a key strategy in a lot of ways.
CC:
The days of that beautiful product shot, carrying you all the way to a DTC exit, those are gone.
MD:
Okay, so veering off of linear commerce, I know you both have been experimenting with different community mechanisms and media outlets, from Clubhouse and Discord, to writing books, to various flavors in between, like shared reels on Dispo. What have you learned along the way?
CC:
We see Supermaker and Club CPG as omnichannel brands, like any startup, just trying to learn along the way and testing out all these new mediums and see what sticks. Just having that startup mentality.
We developed followings at Supermaker and Club CPG, and then people started asking us for things like a live chat, or private groups, and you can’t really do those things on Clubhouse, so it makes sense to test them on a place like Discord.
I think that creators will be omnichannel just like brands will be omnichannel. We’re just meeting them where they’re at. Getting better at creating those touch points across the channels has been challenging, and really worthwhile learning for us.
It doesn’t mean that you have to spread yourself thin, though. It just means that you have to create more and more, and sometimes that means investing in other people to help you carry and moderate and develop the platform.
JS:
And I think as a whole, we need more thought leadership and community-building in CPG. Like, in tech, there’s an abundance, but with consumer we don’t really see that.
And that lines up with the vision I had for my book. When I wrote Supermaker it was really to empower consumer brands, creators, makers, who were looking to turn their passions into a business.
I always say I didn’t want to write a playbook, like, Here’s how you have to do it, this is the only way and this is what’s going to get you success. It’s more like, This is what I did, and here is an abundance of stories to help inspire you, to give you new perspective.
And so I think that’s the goal, always, in us bringing together these communities, is to have a place that we can all come together, share our experiences, learn from one another without having this super-rigid set of rules.
CC:
And everything is changing so fast, too, that you kind of feel incentivized at one point to go all-in on Twitter, to go all-in on Clubhouse and stuff, but then you’re really beholden to these platforms and their algorithms and they change there regularly.
I think that we’re making more of an attempt to be vertical and to contain the audience and to eliminate the noise as we go.
MD:
Have you thought about doing something like what Web Smith has done and just have it all on your own, like basically own the channel as well?
CC:
Yeah, I think that we would take it the same way we did with Schmidt’s and continue to say, Yes, to all omnichannel things, while also building out a vertical offering until something breaks.
Jaime was saying there’s a real lack of leadership in consumer, and the institutional transfer of knowledge is really lacking there, so that’s what we set out to do with Supermaker— to write a book that was really low-barrier to access, that people could learn from the earliest days of starting their company to selling it.
And so that’s what we’re doing with Club CPG too.
And you know, it’s not to say there isn’t a benefit to us too, because when we create that content, it’s really a magnet for great deal flow and meeting some awesome partners and unearthing all kinds of opportunities to expand the reach of the platform as we go.
So right now we’re just a little bit more interested in scale and impressions and eyeballs and being everywhere, than we are necessarily just trying to optimize for a single channel.
JS:
Yeah, and I think one of the key points there is that we’re not limited by this necessity to make money. We are fortunate in the fact that we can take on these endeavors without having to turn a profit on them and that opens up a lot of opportunity for us.
CC:
Yup.
MD:
Yeah. So I guess if you zoom out, do you think the way you are managing those other channels that you’re running your communities on, how do you think it parallels what brands should be doing on this front as well? How should they think about balancing the relevant channels and allocating their time?
JS:
Yeah. I don’t want to see a brand on every one of our channels. I think that if we do, then they’re not focused enough on what they’re building.
In fact, when I was building Schmidt’s, I wasn’t on Twitter. My Instagram account was devoted strictly to the brand.
And times have changed and I think it would look a little different now, but I think these brands and these founders have to pick and choose which platform speaks to them and really find the time that they can make work and hopefully learn a thing or two.
CC:
Yeah and approaching it in terms of sales channels and exploring all these different channels you might sell in. We’d like to see brands testing everything, I think that’s what we did at Schmidt’s is say, “yes” to Amazon, say “yes” to commercial boutiques.
But I think we had over 20,000 different retailers at some point, literally individual accounts that were within our system and we’re servicing all these different accounts and it’s a very high touch, but to be everywhere was important to us and to have that strong retail base where people saw us on shelves all the time, it really worked.
So we were always seeking out whatever new channel it was and seeing where the ROI was. And we weren’t afraid to cut things, either. But it’s just having that mentality of, testing, testing, testing is key.
MD:
Yeah. One of the channels I’ve seen you speak about is live video and social commerce. I think it’s clearly an interesting space right now, and there’s a lot of people studying what’s happened in China and trying to assess what translates across borders versus not.
Do you think live makes sense as a standalone network? Or as an additive engagement layer for existing networks or marketplaces that are pre-existing liquidity?
CC:
Whether or not livestreaming makes sense as a standalone network or if it’s more about a layer, I think it’s both. Livestream marketplace is, they’re going to have their place in the ecosystem, whether it’s Pinduoduo or if it’s Popshop in America.
Because you have to have these aggregators of the smaller merchants that want to have better ways to connect with their audiences, so I wouldn’t be surprised if you see Etsy launch one.
I think basically all of the e-commerce platforms are going to launch it as a way for sellers to communicate better with their brands and grow and manage their audiences on the platform, without requiring them to get their information and their legion from Instagram and Facebook.
They’re going to dip their toes in the water. Like, Shopify: I would really love to see them do livestreaming and stories directly within the Shopify Shop app, I think that would be really cool.
MD:
Studying what’s happened in China, what do you think translates versus not here?
CC:
So a lot’s been said about the economics in China that make it work, like there’s people in rural areas using Pinduoduo and that’s driving a lot of this livestream shopping growth single-handedly.
And so, shoppers are doing that so they can earn discounts by group buying, and WeChat’s wildly popular of course, very commerce-driven. So the key is getting customers to get used to transacting on social media platforms where they previously haven’t been used to doing that.
But it’s becoming more normal, people are tipping on Twitch, people are gifting each other coin on Reddit, TikTok has tips, Clubhouse has tips.
And you can really have this incentive to participate in the community because you earn these badges and you unlock all these benefits, and in the community you become a power user, Discord is killer for this.
So I think that’s the gateway of those micro-transactions. The market’s definitely growing in the U.S., obviously it doesn’t compare to China which is, like, $400 billion a year, it’s probably a tenth of that here in the U.S.
MD:
Even if this becomes a role for brands, should I, if I’m a brand, should I think about hiring someone that has this as a capability?
JS:
I’d love the opportunity for brands to really have the potential to engage with their audience. I think a lot about makers—that’s where my roots are and that’s the community that I really resonate with, and I think about this potential to reach an audience where you otherwise don’t even know where to start.
We can sell DTC, we can engage on social media, we can tap into retailers, but if we’re truly connecting with our customer live, through a platform like Popshop for example, it just opens up a whole new world for the maker in a way to show some authenticity behind the brand and some behind-the-scenes looks, what it means to be a founder.
Almost a great way to kind of practice being a founder and to really test your audience in your messaging and get real-time feedback.
CC:
Yeah, it’s smart for brands to invest in having spokespeople on those platforms, too, because that just represents an opportunity to punch-up against the incumbents.
MD:
We’ve been talking about e-commerce at large, but we’re also seeing the move to online and transformation of the entire supply chain and other verticals as well. Grocery’s been an interesting one and one I’ve invested behind.
What are you seeing in that space that’s interesting?
JS:
I love, personally, MilkRun. It’s a business that is founded in Portland, and they deliver groceries to consumers to their homes, residentially. And that was before COVID, but then once COVID hit they just spiked and grew so fast and I think there’s a lot more there.
Basically, they partner with local farmers and food makers to deliver food to consumers’ homes and I think that’s really going to give a lot of stores a run for their money, a lot of grocers.
Of course we have Instacart and Amazon Prime delivering our groceries, but I think some of these more local-based organizations are really going to probably challenge some of these bigger incumbents and we’ll see a lot more popping up in that space.
CC:
I think Jaime’s right, there’s going to be a split where a lot of people are going to seek a return to a simpler form of food, like it’s the stuff that they can source locally from farmers, they want to support their local economy.
And then there’s going to be this other side, where it’s really tech entering the food space. So you know, cellular-based products whether it’s Perfect Day replicating milk proteins or if it’s a new tuna that’s made entirely from cell-based product, or Beyond [Meat].
Beyond is just a machine, they’ve been expanding into retail like no other. I think they’re in over 100,000 retail stores in 50 countries.
The sight of tech entering food isn’t slowing down and then there’s all this, of course, retail technology that’s changing the way that we shop, too, whether that’s contactless, hands-free kind of shopping.
That’s the stuff that I get really excited about: making retail more easy to shop in, and offering new, exciting products that maybe bring new people into the category.
MD:
Chris you had tweeted recently, “You could find more interesting products at farmers markets than at any grocer in America.” I wanted to push you on that, is that inevitable?
CC:
I think what I was saying was that when you buy a product at a farmers market you get a more interesting point of sale experience. You’re literally buying from the person who picked that product, or the person who fermented it, or developed this kind of recipe, or it was passed on through their family and they’ll tell you all about it.
So in that way, it’s really more interesting. But that product could also make its way onto the shelf in retail and I think there’s incredible ways that people can tell stories in retail now and I think that’s getting more and more sophisticated.
And I think that is going to be a huge area of expansion over the coming years, too. I think that retail will eventually be as interesting as farmers markets, and as compelling, and I think the formats are going to look a lot different.
You’re not going to see the standard aisles format, I think you’re going to see a little bit more of luxury environments popping up; more, just intuitive, things that feel more like a lounge, or like an experience or entertainment, than they do actually shopping.
That’s my favorite part about going to a farmers market, it’s half entertainment and they completely sell through discovery, right, because every time you go there you’re probably going to find some new product and that’s the whole point, is literally to discover. And spontaneity.
That’s what I value about that ecosystem.
MD:
Yeah.
JS:
I think as a farmers market-born brand, Schmidt’s, I can speak to the experience on both sides.
I think what’s really opportunistic is creating an experience that your customers can grow with. I have some customers that I was interacting with at the farmers markets back in 2010 who are still users of Schmidt’s, and they are the most impassioned customers because they were there growing alongside me.
MD:
Yeah. I mean the metapoint making here on having the space to tell your story in an authentic way and directly to the consumer.
In our rush toward efficiency and conversion and all of that, we’ve lost some of the spirit of that in retail and e-commerce and it does feel like with the growth of mediums like Live, perhaps we’re actually realizing the importance of that again and we might see more of that.
As a last point, any brands doing novel things that you want to shoutout?
JS:
I’ll plug a brand, but it’s an old-timer. Estée Lauder, the fact that they embraced this QVC strategy, I think is just super cool and really telling of the times. It goes back to this live streaming that we talked about and I love when a heritage, a really old-school brand can take a new approach to their distribution.
I want to shout-out one more brand, it’s called Proven Skincare. It’s a brand that I’ll be working with on a series called Going Public, which will be streamed on Entrepreneur.
They have a customized skincare product where basically you take a quiz, there’s a set of questions, about 30 questions or so, that speak to your lifestyle and your habits and what you consume. And then they recommend a skincare product based on your answers.
I think there’s going to be a trend towards more of these customized products like this. I had a conversation with the founder the other day and what really resonated with me was when she said, “As consumers, we’re expected to be experts in skincare,” for example, every product we buy we’re expected to be an expert in that category.
And so it’s hard, it’s overwhelming, you have so many products and options for the skincare products that we purchase and with something like this, it takes all the guesswork out of it.
So I just think there’s going to be a lot of potential across different categories for more of these customized offerings.
CC:
Well one that I’m interested in right now is NUGGS, and SIMULATE is their parent company. The photo that is the package of their chicken nuggets is literally… by the way it’s a vegan chicken nugget, it’s not a real chicken nugget… but they’re feeding this vegan chicken nugget to a chicken on the package. And all their other iconography is super minimal. There’s just the symbols and everything they do feels very high-end tech and slick and sleek as hell.
They’re a really curious, just strange company, and I’m always happy to see the innovation of the branding space like they’ve been able to pull off. So they definitely stand out and got my attention.
They did eight million last year, they’re now launching it in Walmart, Target, Sam’s Club and a bunch more. I expect they’ll probably be starting to get some acquisition offers over the coming months, I think they’re an interesting company to watch, especially because they feel like a tech company, but they also feel like a meme at the same time.
I think there’s very few brands that can actually kind of… I don’t even know any other brand that could, I guess beside Tesla, that sort of feels like they can poke fun at themselves.
MD:
Yeah, well I agree, yeah.
Well thank you both, it’s been a good chat. We’ve covered a lot of ground and have left a lot uncovered, and so looking forward to our next chat and yeah, thanks both for joining.
JS:
Cool. Yeah, thanks Mike, those were thoughtful questions and it was fun.
CC:
Thanks Mike.
