How do you scale a consumer brand company to profitability without losing the human touch? Moreover, since marketplace platforms like Shopify have made it relatively simple to launch an ecommerce business, how do you stand out among the noise and reach customers in the first place? And how do you measure how well those methods are working?
This episode of Greymatter is one in a series of growth discussions featuring Greylock’s Mike Duboe. In this conversation, Mike chatted with Moiz Ali, the founder of personal care company Native Co. (acquired by Procter & Gamble) and Nik Sharma, the CEO of CPG advisory and marketing firm Sharma Brands, which advises companies such as Hint and The Pill Club. They talked about the key decisions entrepreneurs make at pivotal moments for their companies, such as navigating constantly- evolving marketing channels; the power of experimentation; fundraising, and the overarching need to be customer-obsessed.
“As marketers and e-commerce entrepreneurs, you have to constantly be on the cutting edge of finding out what’s new. You can never go to bed being like, ‘Okay, I got this.’ It’s like studying for an exam, and it’s the next day, and you’re like, ‘I’ve got to study tonight for the exam tomorrow.’ But then there’s another one tomorrow because you’re like, ‘What happened today? What’s new? What are other people doing? Where should I be investing time and resources?’” -Moiz Ali
“You have to be worried about market events that have no relevance to your business, yet somehow still affect your advertising or your business, and that’s hard to do.” -Moiz Ali
“Today, the price of paid advertising is much more expensive. And so it has to be used and adjusted in a different way. Before, you could probably launch solely on paid, whereas today paid simply just has to be an extension of what’s created organically, whether that’s through community that you build, or the buzz or the press, your initial customers, your testimonials, your reviews.” – Nik Sharma
“Think of paid ads as an accelerant rather than a crutch, and the laws of gravity kick in at scale. But it’s not a sustainable differentiator for growth if you have nothing to accelerate yet.” – Mike Duboe
“I love SMS especially because it gets to everybody whether you have a flip phone or an iPhone. Also, I think your phone numbers, like a bank account, your email is like a credit card number where one changes and the other doesn’t. But it has to be used very carefully, there’s a whole art of copywriting that comes with SMS and you learn very quickly if you’re bad at it, because everybody unsubscribes.” – Nik Sharma
“I always advise brands to do some kind of product market testing, whether that’s running ads to a pseudo brand or a pseudo store online or, on the flip side, going to the retail buyers and seeing if this is something they would carry. But getting validation before jumping in is super critical.” – Nik Sharma
Measuring CAC Attribution
“Here’s a way to think about attribution: I just flew from New York, got here, checked into the hotel and came to the podcast room. And if you asked me how I got here, I’d say, “I took an Uber.” But we’re forgetting the flight, the Uber from my apartment to the airport, and everything in between. And all of that is attribution. So, you don’t necessarily get the right answer all the time. It’s hard to get it.” – Nik Sharma
“Sometimes brands are too quick to assess which channels are/aren’t working, and thus evaluate channels in solos. Viewing channels within an overall marketing mix and meeting your customers where they are at different points of intent is a more holistic way of thinking about it. [If you only measure direct attribution], you tend to associate one customer with one channel, which is why [at Stitch Fix] we actually started to take a step back from that, look more globally, and conduct rigorous incrementally testing.” – Mike Duboe
“One of the important trends [re in- vs outsourced teams] is the need to actually iterate. [As you grow], there is greater importance of developing, testing, iterating on pages with increasing speed. You’re getting more data, so you need to be able to action on that data much faster than in the past. And so the worry then is about being reliant on an outsourced developer, or anyone externally. Even internal teams need to make sure they use that candidate fast enough. As an investor now I look at opportunities to actually solve both those problems. There are interesting ways to mitigate dependence on in-house or outsourced designers as well.” – Mike Duboe
Fundraising or Exit?
“When you’re running a business, you have a good idea of what your business is going to look like this month, maybe this quarter, possibly even towards the end of the year. But it’s tough to understand what the business is going to look like five years down the line, especially when you’re a brand new business.” -Moiz Ali
“It was the personal decision of like, what exit is going to be meaningful enough for me to not have to worry about finances any longer. But it was also about the future of the company where I was like, ‘there’s eight people working here, at some point I’m going to have to take the eye off of growth and focus on building an infrastructure within the company.’ We had one person running operations, we had five people in customer service. We needed more people basically everywhere.” – Moiz Ali
The Founder’s Mindset
Do you live and breathe this business? Almost all the entrepreneurs that I talk with (and invested in)…they know their metrics inside and out. As soon as you ask them,”What’s your CAC?” They’re not like, “Let me go look at it.” They’re like, “I know exactly what it is.” If I said, “What was your revenue last Thursday?” They’d know that number offhand. They’d be like, “Which hour are you talking about?” -Moiz Ali
“The founders that tend to win the most are the ones who are really obsessed with their current brand or their current business, not necessarily ones that are building something today with the mindset of where it’s going to be in five years. The ones who are obsessed with today’s business, today’s brand, today’s customers, today’s customer tickets even, those are the ones that I think tend to win more.” -Nik Sharma