Skip to content

By playing, you agree to uListen's Terms and Privacy Policy and YouTube's Terms of Service.

Tim FerrissTim Ferriss

How to Generate 8 Figure Revenue at Age 21 Or Any Age | The Tim Ferriss Show (Podcast)

Benedict Dohmen and Santiago Nestares of Benitago Group, both 21, met as computer science students at Dartmouth College. Both worked very long hours in the library and suffered from back pain.

Tim FerrisshostBenedict DohmenguestElaine PofeldtguestSantiago Nestaresguest
Jan 24, 20191h 59mWatch on YouTube

Summaries, chapters, transcripts, and FAQs on this page are made by uListen, not YouTube.

Great conversations run long. Their best ideas don't have to.

uListen is free on iPhone, iPad, Android, Chrome, and Claude.

See how

Transcript

  1. 0:00 – 5:50

    Intro

    1. TF

      Optimal minimal At this altitude, I can run flat out for a half mile before my hands start shaking.

    2. BD

      Can I ask you a personal question?

    3. EP

      Now wait to see my broken Italian.

    4. TF

      What if I give you the opposite?

    5. BD

      I'm a cybernetic organism, living tissue over metal endoskeleton.

    6. TF

      The Tim Ferriss Show. This episode is brought to you by Peloton, which I've been using probably for about a year now. Peloton is a cutting edge indoor cycling bike that brings live studio classes right into your home. You can also do on-demand, which is what I do. We'll come back to that. So you don't have to worry about fitting classes into a busy schedule or making it to a studio or gym with a hectic or unpredictable commute. I, for instance, have a Peloton bike right in my master bedroom at home, and it's one of the first things I do many mornings. I wake up, I meditate for a bit, then I knock out a short 20-minute ride in my undies, hard to do that at the gym, take a shower, and I'm in higher gear for the rest of the day. It's really convenient and has become something that I look forward to. So you have a lot of options. For one, if you like, you can ride live with thousands of other riders across the country on an interactive leaderboard to keep you motivated. There are also up to 14 new classes added every day with more than 8,000 classes on demand, and you can pick based on length, 45 minutes, 20 minutes, whatever, music, hip hop, rock and roll, or say low impact versus high intensity or interval. You can pick the class structure and style that works for you. And in my case, I quite like Matt Wilpers, and I tend to do on-demand and listen to a lot of and watch many of the same classes over and over. But I'm kind of promiscuous and also enjoy classes from a lot of the other instructors. They have, Peloton, an amazing roster of incredible instructors in New York City with a whole range of styles and personalities so you can find what you're in the mood for. You also get real-time metrics that you can use to track your performance over time, and that will help, I would say, catalyze you to beat your personal best. Now, that all sounds good, right? Gamification, yada, yada, yada. I didn't think that it would work for me or in any way incentivize me, but they really 100% hit the nail on the head. I was very, very impressed with how motivating it was, and it worked tremendously to keep me pushing, uh, which quite honestly takes a fair amount. I can get quite lazy, particularly with anything that edges on endurance, which is kind of more than five reps of anything for me. So check it out. Discover this cutting edge indoor cycling bike that brings the studio experience right to your home. Peloton is offering listeners of this podcast a limited time offer. Go to onepeloton.com. That's O-N-E, Peloton, P-E-L-O-T-O-N.com, and enter the code TIM, all caps, at checkout and get $100 off of accessories with your Peloton bike purchase. So get a great workout at home anytime you want. Check it out. Go to onepeloton.com and use the code TIM to get started. This episode is brought to you by Charlotte's Web, which makes a CBD oil, a hemp extract that has become one of my go-to tools. Now, I have never really talked about CBD oil, and cannabis has never really been the plant for me. I know we're talking about hemp. Uh, but nonetheless, after several nights of inexplicable insomnia, this was about a year ago, I just could not get to sleep to save my life, and after other fixes failed, so melatonin, California poppy extract, da, da, da, da, da, an elite athlete introduced me to this non-psychoactive extract, and bam, problem solved. I had some of the best sleep that I'd had in months. Now, I don't use sleep aids on a daily basis, but this has become part of my toolkit, and I hope to be exploring other applications soon. CBD oil products have exploded in popularity in the health and wellness and fitness worlds, and Charlotte's Web is one of the top players that offers broad spectrum hemp extract with CBD in the form of oils, capsules, and topical products. Charlotte's Web products will not get you high, so that maybe that is good news, maybe bad news to you, but it does have some powerful benefits and, uh, applications, and it works with your body's existing endocannabinoid system. Endo meaning from within, like endo versus exoskeleton, for instance. So endocannabinoid system works with your body. Some of the most common uses are for relief from everyday stressors, help in supporting restful sleep, which is what I most often use it for, uh, to bring about a sense of calm and focus. A lot of my friends use it for that. CBD is also known or becoming known for helping athletes to recover from exercise-induced inflammation. Charlotte's Web hemp extract has naturally occurring terpenes, flavonoids, and other valuable hemp compounds that work synergistically to heighten positive effects, sometimes referred to as the entourage effect, which you guys can look up, making it more complete than single compound CBD alternatives, or at least that is what I've been told. I do not know much about CBD alternatives nor single compound. In any case, check it out. This stuff has really worked for me. So jump over to cwhemp.com/tim. CW as in Charlotte's Web, cwhemp.com/tim to take a quick quiz which will determine the best product for your particular aims, lifestyle, et cetera, and they ship to all 50 states. Charlotte's Web are offering listeners of this podcast 10% off of their purchase. While there are some exclusions, I personally use the extra strength CBD oils or the extra strength capsules, and, uh, you can see what might be a fit for you on that page. And there is a 30-day risk-free guarantee, so why not try it out? So get 10% off of your purchase at cwhemp.com/tim. And disclaimer,

  2. 5:50 – 9:27

    Case study setup: one-person businesses, two 21-year-old cofounders, and the Supportiback origin story

    1. TF

      these statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease. Enjoy. [upbeat music] Hello, ladies and germs. This is Tim Ferriss, and welcome to another episode of The Tim Ferriss Show. And this episode is a case study episode, the most requested type of episode that I've been somewhat negligent in providing. And today we have three folks with me, two co-founders, and then Elaine Pofeldt. And Elaine, it's nice to have you back on the show. And, uh, could you perhaps just describe for a moment, aside from being a very accomplished journalist, you are an author, and what, what, what book of yours is most relevant to the conversation we're going to be having?

    2. EP

      Well, there's only one book so far. It's The Million-Dollar, One-Person Business. And what it looks at is how non-employer businesses, those with no employees except for the owners, are scaling to $1 million in revenue and beyond. And it's great to be here, Tim.

    3. TF

      It's, it's a subject that is endlessly fascinating to me, and to many of my listeners, one they wish I would explore more. So here we are. And, uh, I've two young gentlemen across from me. I don't know them that well, so they may not be gentlemen, but I suspect they are.

    4. EP

      [laughs]

    5. TF

      They're very well b- well-behaved so far.

    6. BD

      [laughs]

    7. TF

      We have, we have Benedict Dohmen and Santiago Nestares, both 21. Is that currently the case? Great, 21, so well-aged silver foxes. They met as computer science students at Dartmouth College. I've heard of that school. Very good [laughs] very, very good institution. And they worked very long hours in the library, both of them suffering from back pain. This is, this is relevant because they began collaborating on a prototype for a product that ended up being called the Supportiback. And, uh, in the process of developing it, gathered a lot of feedback from members of the Dartmouth community, including a local hospital president and professors, as well as students studying engineering and medicine. So we will revisit a lot of what we're discussing in this little intro/summary. They also experimented with pay-per-click marketing, set up a system for testing and tracking keywords using Excel spreadsheets or spreadsheets. They launched the product first on Amazon in the UK. And Benedict, Ben, who's from Germany,

    8. BD

      [laughs]

    9. TF

      Es freut mich. Uh, transferred to Cambridge University to be closer to his family. Santiago is based where we're recording this right now, which is Austin, Texas. And when it seemed their first small order was in danger of selling out, this I definitely wanna talk about, they arranged financing from their supplier and were off and running. They've since entered the US market on Amazon, and this year they're on track for eight-figure revenue. Uh, that means this year, 2018. Next year on track for nine-figure revenue. And, uh, they are in the process of introducing, uh, more than 120 consumer products which range across many, many different categories, including beauty, skincare, pet supplies, baby supplies, food, and nutrition. And in a sense, I hope we will have time to get to this, maybe that'll be a round two, but I think we can get into it, they are hoping to become an alternative to very large consumer products companies through a strategy of applying their scale-up strategies that they have tested successfully themselves to brands they acquire. So that's a mouthful, but I think it gives a nice overview of the landscape. Ben and, uh, Santi, welcome to the show.

    10. BD

      Thank you.

    11. EP

      Thank you for having us.

    12. TF

      And I thought, Elaine, maybe I'd let you kick this one off.

  3. 9:27 – 11:14

    How Ben and Santi met at Dartmouth and discovered a shared pain point

    1. EP

      Sure, that sounds great. Well, Ben and Santi, one of the things I loved about your story so much was the wonderful friendship that you have. Tell us how that came to be.

    2. BD

      Yes, sure. Um, so we met originally at Dartmouth College. We were studying computer science, um, kinda nerdy coders off into the library doing our labs, um, our classes. We met 'cause we are one of the last few guys in the library, um, and it so happens that at those hours you do eventually approach the other people around and, and see what they're working on, uh, what their struggles are, and also helping each other out. Um, so that's originally how we got, got close. Um, and yeah, just it really kicked off from there.

    3. EP

      And so how did you find out you both had back pain?

    4. SN

      Oh, and then to, to his answer of, um, he needed my help a bit in the lab, so I was always helping him out, and that's why.

    5. BD

      That is incorrect. [laughs]

    6. EP

      [laughs]

    7. SN

      Um, so I mean, inevitably when you're, when you're over the computer, you know, you don't have the best posture, um, and, and we started getting a bit of back pain, uh, that developed over time, especially when it gets to 3:00, 4:00 AM. So, so we took the really nerdy approach of trying to figure out why is this happening. To us, back pain seemed like something that only happened to really old people. Um, so, so we start geeking out and reading research. Um, luckily we had access to the Dartmouth-Hitchcock Hospital, which is renowned in back pain, um, and started to learn more about it and, and discovered that posture was the core driver for back pain. Um, and it's something that a lot of Americans are suffering, and people a- around the world, 'cause our bodies are simply not designed to be sitting down, especially hunched over a computer all day.

    8. BD

      Yeah, especially given the, the new phrase, sitting is the new smoking. That was kind of the, the guideline there.

    9. EP

      [laughs]

  4. 11:14 – 14:10

    From personal fix to product concept: modifying existing solutions and spotting demand

    1. TF

      Good. My, my, my friend Kelly Starrett would agree. He may have even come up with that phrase. I'm not sure where it originated. How did you guys then go from complaining about a common problem and doing some homework on it and research to considering creating a product or starting a company, right? Because, uh, I'm sure, especially in this day and age, you guys met how long ago? About-

    2. SN

      Two years ago now. Two and a half

    3. BD

      Two and a half years ago

    4. TF

      Two, two and a half, three years ago. Um, that, uh, there are lots of folks now hoping to learn to code or hoping to learn computer science because it has been become very clear that that is an enormous asset in entrepreneurship. So I think there are more entrepreneurs than ever within CS departments. But at, at what point did you guys decide that this is something you might consider as a business?

    5. SN

      Well, we, we, we initially developed the product Mostly for, for ourselves. We started looking at what products were out there that were already working. Big believer that you don't have to reinvent the wheel, just make it slightly better. Um, so we, we took products out there, started tweaking with them, initially just for our own use. So we were, we were not trying to make it a commercial... It was not in our heads.

    6. TF

      Mm-hmm.

    7. SN

      Um, eventually, so we came up with our two versions. One-

    8. TF

      So you were buying off the shelf and then modifying them?

    9. SN

      A combination of many things. So we bought a whole bunch, discarded, like, 95%, the few that worked, and we started tweaking them and making them better, adding padding. We're not engineers, but we, we were trying to figure it out just to increase our, our, it's called proprioception. It's basically our awareness of, of back pain, of poor posture that was leading to back pain, um, and made our two versions, one for Ben and one for myself. Um, and with time, we started seeing that our friends would, who were also young, which we did not expect to also have a bit of back pain, um, they were also coming to us and saying, "Hey, you know, I'm pulling an all-nighter tonight. Can I use your, your product?" Or, "Hey, I'm gonna go on a trip to New York. Can I take the product with me?" Um, so that's when we, we took a step back and said, "Look, there's clearly a need for it. We don't know how we're gonna sell it or commercialize it, but let's just, let's just sort of, like, the burn the ships, um, approach, and let's just make an order, and then we'll feel, we'll, we'll, we'll, we'll figure out how we're gonna sell it once, once they land."

    10. TF

      [laughs] Yes.

    11. SN

      Uh, so that's how the first order came about, uh-

    12. TF

      [laughs]

    13. SN

      There's a bit of a story behind it, but yeah.

    14. TF

      A- and I think that is also where what you just, uh, mentioned, the computer science background especially, is a hotbed or a breeding ground for a lot of modern-day entrepreneurs. Now, this is a physical product, right? So it's not a software. Um-

    15. SN

      Yeah.

    16. TF

      You're moving, moving atoms around.

    17. SN

      Yeah. [laughs]

    18. TF

      Not, not just bytes. [laughs]

    19. SN

      Not just zeros and ones. Um, but we, we see computer science as a, as a tool, a toolkit or a tool set, um, that enables us to enhance our products per se, and the physical products. So it's definitely varied. We've seen a lot of value in, in, in having that as our background.

    20. TF

      Mm-hmm.

    21. SN

      Um, yeah.

  5. 14:10 – 16:08

    The first $2,000 order: finding suppliers on Alibaba and creating a credibility story

    1. TF

      So Santiago said there's a bit of a story behind that first order. Well, l- let's talk about it. S- I mean, uh, how much money did you s- how much money did you guys spend on that first order, and where did it come from? Why did you have the confidence?

    2. SN

      Yeah, it was under, it was under $2,000. That was the whole, our, our whole budget. We, we'd put together our savings here and there as college students, and, um, so we started figuring out, like, where do, where are things even made? We didn't, we had no idea, so we figured out China was a main player, especially when it comes to physical products, and started learning how Alibaba was a great catalog for a lot of, um, suppliers. Not necessarily the product that we wanted to make 'cause it didn't exist. We were, we were trying to make it differently. Um, but you could see through, by seeing other similar products who were the key manufacturers out there in China. But obviously, with $2,000, you can't get really far when it comes to, to manufacturing a, a really big order. Um, but I refused, we, we refused to take the, the approach of, like, we need an investor and take that as an excuse not to, not to move forward. So we, we made up this whole story that we were a massive company out of Boston, and we had a big board, board meeting coming up. [laughs]

    3. TF

      [laughs]

    4. SN

      And, and, and we had over 100 board members that we wanted to distri- distribute samples to so that they would decide together if we were gonna place the big order.

    5. TF

      [laughs]

    6. SN

      And the big order was gonna be, like, million, million-plus dollars. But bear with me, we only have 2,000 right now for this. [laughs]

    7. TF

      [laughs]

    8. SN

      So they, they, uh, I don't know if they believed it or not, but they, they did, uh, they saw something in it, and they, they said, "Look, let's go with it." I'm sure the margins were, were great for them for that, for those 2,000, but, uh, um, that's how the first 100 units came about.

    9. TF

      Mm-hmm.

    10. SN

      Um, they put it on a ship and send it, and then we said, "Now, now we have 30 days to figure out how we're gonna sell it."

    11. TF

      Right.

    12. SN

      So that was the story.

    13. TF

      Now, did the reason you have 30 days because it was net 30 terms for payment, or did you set that for yourselves as a deadline? Like a-

    14. SN

      So, so the first order wasn't, there was no, there was no terms yet, as of yet. Um, it was just 30 days that it took to ship via sea.

    15. TF

      Oh, I see.

    16. SN

      Yeah.

    17. TF

      I see. To get it over on the containers or whatever-

    18. SN

      Yeah

  6. 16:08 – 21:09

    30-day sprint to sell: choosing Amazon, learning copywriting, and dividing responsibilities

    1. TF

      ... was gonna take 30 days. So what did you guys, what were you hatching at that time? So Ben, maybe take a stab at this. Like, ha- you were, I'm sure, starting to think about how you might sell these things. Uh, were there any resources, websites, books, or anything that, that you guys were using to try to educate yourselves on entrepreneurship, marketing, sales, anything at all?

    2. BD

      Absolutely. Um, and at that point we... So we had the time window of around 30 days to figure out how would we sell these first, quote-unquote, "sample units."

    3. TF

      [laughs]

    4. BD

      Um, we delved into, first of all, researching what distribution channels were out there, looking at retail, on- and especially online e-commerce distribution channels such as Amazon, Shopify, Walmart. Uh, I mean, there's a whole range. We are big believers in focus, so finding one solution and then sticking with that until it works, um, even though there might be roadblocks on the way. And so what we did was we spoke to some people, some, actually some friends of ours, who had sold a, a, resold a product on Amazon, and I think eBay before. Um, they showed us some basic, basic marketing approaches or tactics, uh, relevant to Amazon and eBay. Um, and we decided to go with Amazon, um, and, and test that out and see if it works for our products, um, because obviously there's a, also a certain dependency. Some channels work better for other products, et cetera. Um, with that as a starting ground, we then had to figure out, okay, let's use this as a base, but how do we actually market our product specifically on Amazon? Now, that entailed multiple parts, um, just basic marketing principles essentially. Part of that was figuring out the copywriting. So we read, I personally read around four books, uh, on copywriting within those 30 days. I took around a two-day deep dive in copywriting 101 taught by myself, uh, that was reading The Boron Letters by, by Boron. Um-

    5. TF

      How do you spell that?

    6. BD

      B-O-R-O-N

    7. TF

      The Boron Letters.

    8. BD

      The Boron Letters, very good. Um

    9. TF

      Any other books you remember?

    10. BD

      Yeah. There was another one called Cashvertising.

    11. TF

      Cashvertising. [laughs]

    12. BD

      Yes, which was very helpful. Recommended. Um, so multiple... And then I synthesized all the tactics or all the learnings from those books into one big notes document. Uh, came up essentially with a 20-step sales letter, uh, formula synthesizing the different advices from the different books and also blogs on top of that.

    13. TF

      Your copy algorithm for-

    14. BD

      Essentially, yes

    15. TF

      ... for product descriptions.

    16. BD

      Essentially, yes. And then tried to apply that to the Amazon sales page.

    17. TF

      Do you recall what some of the steps were at this point?

    18. BD

      That's been a long time ago. [laughs]

    19. TF

      Yeah.

    20. BD

      Um, I can tell you that the key principles which have benefited us most in terms of copywriting and, and, and sales have been focusing on the benefits rather than the features. A lot of, uh, mistakes we see being made, um, or an incorrect approach is... people often take is they focus on the features of the products. Um, but what con- consumers or customers actually care about is what, what benefits them ultimately.

    21. TF

      Mm-hmm.

    22. BD

      So constantly focusing on that is kind of the 80/20 or, like, the one thing to copywriting-

    23. TF

      Mm

    24. BD

      ... as the main guiding principle.

    25. TF

      Well, it's, uh... makes me think of, uh, the iPod, which for, for those of you who weren't born in the dinosaur ages, uh, the iPod was this device about the size of a brick initially that, uh, played songs, no telephone, and, uh, it was not the first MP3 player that you could put in your pocket, but it was arguably the first to, instead of, uh, describing and selling the product in terms of the number of gigabytes it could hold and on technical specs, said something, and I might be getting this slightly off, but, "1,000 songs in your pocket," right? And making the connection much more clear between the purchase and the benefits that you derive from it. Okay, so you guys are l- are f- figuring out copywriting. How are you at this point at all in, in the beginning, uh, separating responsibilities or investigating different things, or are you guys all doing everything at that point? You have 30 days before these air quote "sample," uh, products arrive. Uh, how are you thinking of, of partnering on this? Because you don't wanna duplicate each other's effort constantly because that's redundant and would, would seem to be particularly abhorrent to computer science students.

    26. BD

      [laughs]

    27. TF

      Uh, so h- how are you thinking about working together?

  7. 21:09 – 25:06

    Keyword strategy and PPC experimentation: building an Excel-based bidding system

    1. SN

      I, I wish we would've planned it.

    2. TF

      [laughs]

    3. SN

      Um, it was, it was more like w- we're all in this same boat together. Let's see how we can get there faster. Now I think it's more we, we've divided that and compartmentalized that a little bit better. Um, I did gravitate a bit more towards the, the keyword, uh, science behind it, and, and Ben was more around the copywriting and sales science behind it. We, we took the same approach at everything is how can we make a formula for it to work every time?

    4. TF

      Right.

    5. SN

      Um, so I took a bit more of the, the, the pay-per-click, um, approach to it, so started understanding how did, uh, keyword-based algorithms work on platforms like Amazon and, and why were certain products displayed.

    6. TF

      How did you figure that out?

    7. SN

      Um, we-

    8. TF

      Or if someone came to you and said, "I want to figure that out," what would your advice be?

    9. SN

      The first thing I would say is go, go understand the basics 'cause it, it actually takes a while, um, f- it took me, it took a while for me to understand what a keyword-based algorithm... like, what a keyword-based search is and how long-tail keywords are different than short-tail keywords and different types of matches. Um, so I, I looked at a course by Brian Johnson. Um, it's, it's really, it starts from the basics, and it's a deep dive, um, into what PPC is, m- specifically on Amazon. Um, and then once you understand that, what we realized is a lot of those people were very... they really had no statistical backing to a lot of the methods that they were using to optimize. They were good rule of thumbs, but they were not necessarily the best. So we, to get an edge on that market and to get an edge on, on the keywords that we're bidding and to understand what truly are the keywords that we wanna go after, um, that are most likely to convert to our product, we started, um, developing an algorithm or a simple formula as to what was the right bid for that specific keyword, and that was all based on when is it statistically significant to discard a keyword, whether it's to keep bidding or to adjust that bid.

    10. TF

      Mm-hmm.

    11. BD

      Am I correct you did this all on Excel spreadsheets at the time?

    12. SN

      We did it... Yes. So a lot of people think when, when they hear formulas, algorithms, you can even name it AI 'cause, 'cause [laughs] nowadays they name a lot of things AI. But, uh-

    13. TF

      Don't forget deep learning.

    14. SN

      Oh, yes.

    15. TF

      [laughs]

    16. SN

      Ultimately, it's just a simple formula. You can write it on Excel sheets. Uh, deep learning, yeah. [laughs]

    17. TF

      [laughs]

    18. BD

      It was very deep.

    19. SN

      [laughs] It was all run on Excel sheets, and then that's when we said, "Look," um, and we... that I think we got a big edge, and that helped us kickstart or give that initial momentum to those 100 units that we had, um, that then when it started to show up organically on the-

    20. TF

      So these, these 100 units arrive, right? Des- describe the day. So you guys are doing all this homework-

    21. SN

      [laughs]

    22. TF

      ... getting educated. Like, describe the day when this stuff lands.

    23. SN

      We didn't even see it. So it went straight from, from, from China to our fulfillment network. We leveraged Amazon Fulfillment, FBA-

    24. TF

      Yeah

    25. SN

      ... um, as a fulfillment partner. They're the most efficient we found, and yet to this day we still use them. Um, we, we never saw the, the products them- We, we did, we did get some samples to do some quality control, but we really didn't see the whole shipment, so it was very abstract to us.

    26. TF

      Right.

    27. SN

      Um, pe- you think about 100 units, and you actually don't even know how it looks, and still to this day-

    28. TF

      Probably better for you guys in some ways.

    29. SN

      It, it was probably better.

    30. TF

      Yeah. [laughs]

  8. 25:06 – 30:58

    First sales shock and the Lean Startup mindset: product-first, feedback vs failure

    1. TF

      What, what did you do right when you look back? And what I'm also trying to, just so you guys have an idea of what I'm gonna try to do in this interview, there are certain things that people have trouble replicating-

    2. SN

      Mm

    3. TF

      ... if they don't have certain types of training. Not replicating isn't the right word, learning from, right? Uh, and then there are other principles and so on that they can borrow and apply and learn from that you guys have used. So I'll try to separate those two at different points, just because not everyone coming in is going to have the technical capabilities that you guys have, uh, or the statistical familiarity, say. Uh, but what, what... Looking back, like, what did you guys do right? So you sold, you said, a quarter of your inventory?

    4. SN

      We, yeah.

    5. TF

      Like, from one hour to the next, and you're like, on one hand, you're like, "High five. Awesome."

    6. SN

      [laughs]

    7. EP

      [laughs]

    8. TF

      And then on the other hand, you're like, "Oh, shit."

    9. EP

      [laughs]

    10. TF

      "Okay, this is, this is turning out differently than maybe we would've expected. Good news." Uh, but what, what did you do right? What did you guys do right?

    11. SN

      So I think, I think what we did right after, after reflecting, we still reflect on it, on it today. Every, every time we do a, a big move, we go back and think, "What did we do right and wrong?" And constantly try to learn from our experience. Um, I think what we did right then was take computer science approach at developing the product. It all starts in the product. You can have amazing copy, and you need to have amazing copy. You can have amazing keyword strategy, and you need to have it, but it all boils down to the product. 'Cause if you have a good product, it'll convert best, and you really can outbid any competitor in any keyword or any search ranking. So-

    12. TF

      Also, it's do returns, customer service issues.

    13. SN

      Yes.

    14. TF

      All of that.

    15. SN

      All of that it'll take care by, of itself if you start off with having something good to offer. But obviously, we were not back pain experts. Um, we still aren't. Um, and we're not experts in, in the pet industry. We're not experts in the, the beauty industry. What we did really well was take the customer as the expert. Don't take anyone else or anything else as an expert, but take the customer. And how can we apply what we've learned, like the lean startup methodology, um, the agile meth- that a lot of software companies use-

    16. TF

      The Lean Startup methodology, Eric Ries.

    17. SN

      Yeah.

    18. BD

      Yes.

    19. TF

      That, that school.

    20. BD

      Very influential.

    21. TF

      Mm-hmm.

    22. SN

      Really, really important book for us.

    23. TF

      Eric, Eric's a good guy.

    24. SN

      Yeah. [laughs]

    25. BD

      [laughs]

    26. SN

      So taking those, that approach that was so common in the software to the product development is our only goal at that point was, let's hear what's working out there. Let's hear what isn't. Let's put those two things together. Initially it was for us, eventually for the market, and then it was, how can we get those products on the ship as quickly as we can so that we can start selling? 'Cause the day we start selling is the day we start learning.

    27. TF

      The day you start getting feedback.

    28. SN

      Exactly.

    29. TF

      And this is sometimes, for people who are not familiar, referred to as the, the MVP or-

    30. SN

      Yes, exactly

  9. 30:58 – 36:14

    Tracking performance on Amazon: dashboards, third-party tools, and limits of testing

    1. TF

      And, uh, what are you using to track your sales at this point? Is there an Amazon dashboard that you use to track that? Or w- what are you watching?

    2. BD

      Yes. We used... So Amazon has internal dashboards just in the Seller Central, which is the approach we took-

    3. TF

      Mm-hmm

    4. BD

      ... um, where you can, where you can see basic reporting on like sessions, conversion rate-

    5. TF

      Mm-hmm

    6. BD

      ... the overall sales. Um, as we grew, we then also expanded into third-party softwares though, that give more, a more clear picture, more organized, more structured. Because I, especially in the beginnings, Amazon's internal reports and then their structure can be very confusing. Um, and you can, for pretty cheap already get a third-party, um, software that shows you all the key metrics you actually care about in a very clear and structured format.

    7. TF

      What are some of those options?

    8. BD

      So we use one called Sellics.

    9. TF

      Sellics.

    10. BD

      Yes.

    11. TF

      S-E-L-L-E-X?

    12. BD

      S-E-L-L-I-C-S.

    13. TF

      Ooh. All right.

    14. EP

      What does that mean? Is that just a brand name or-

    15. BD

      That's their brand name

    16. EP

      ... it's just a brand name? Okay.

    17. BD

      Yeah.

    18. SN

      We also used Cash Cow Pro at one point.

    19. TF

      Say again.

    20. SN

      Cash Cow Pro.

    21. TF

      Cash Cow Pro?

    22. BD

      Like Cash Cow Business, Cash Cow.

    23. TF

      Yeah.

    24. SN

      And then Cash Cow Pro. They're really, really affordable, um, and it... Know your metrics is really, knowing your metrics is really important, so yeah.

    25. TF

      Now, now speaking as someone who has not, uh, sold anything on Amazon and looked at the UI, uh, or the options for testing, let's just say split testing, is it po- This is more for my personal curiosity. I'm sure there's somebody out there wondering the same thing. On Amazon, uh, can you test different price points, like automatically serve like $29.99 to 30% of the audience and $19.99 to 30, another 30% of the audience and so on and so forth?

    26. BD

      It's tricky. Um, overall from a high level, there are many different variables, like there might be a, a deal of the day running or a lightning deal or, or there are so many variables, it's very hard to control for say price or for the images. There are certain tools out there who have tried to give it some type of testing. There's one called Splitly. So that's S-P-

    27. TF

      Splitly.

    28. BD

      Yeah. Splitly. What they do is they subsequently test, say, image one against image two, or price point one against price point two. You can't do it simultaneously, so you can't do normal AB testing. Um, but it, it's a close, a close, uh, approximation.

    29. TF

      Mm-hmm.

    30. BD

      Um, and even within that, the price range very, very tactically on Amazon, you can't jump the price from, say, $19.99 to $9.99, or especially the inverse. So you can't just drastically raise the price because Amazon, Amazon will then disallow you to own the buy box, which is a crucial part to your conversion rate. Um, so there are certain intricacies, um, but some approximations as to get some rough idea-

  10. 36:14 – 41:21

    Customer feedback at scale: reviews, Q&A, and scraping data into structured analysis

    1. TF

      How do you, coming back to the MVP and customer feedback- Uh, get actionable feedback. Uh, so part of the reason I use Amazon as much as I do is to very deliberately avoid interaction with many merchants, right? I do not want to get email. I do not want to get questionnaires. I do not [laughs] want to have any more interaction than absolutely necessary. So how do you guys get feedback on products?

    2. BD

      We aggregate a whole bunch of data, and that data comes from within Amazon, but also off Amazon. Within Amazon, some of the main sections we look at are reviews, feedbacks, um, competitors' reviews, competitors' feedbacks, products in the same industry or category, their reviews, their feedbacks. So feedback and, and reviews from many different sources.

    3. TF

      I suppose questions too, right? Because you have the questions and answers-

    4. BD

      Questions and answers

    5. TF

      ... so you, so you can see what's confusing people.

    6. BD

      That's another, another way. Um, and then we scrape all of that. Like, we have bots that aggregate that and put them into a Google Sheet, essentially. Um, analyze it by keyword frequency or some search query frequency, and then we try to see some statistical trends as to, all right, um, this complaint, say, with the memory foam, this complaint has come up X many times over potentially that many purchases. It's roughly statistically significant. Um, this is something we should add to our list to then implement in on our product development on, on the sourcing and manufacturing side. And then off Amazon as well, like looking at, um, social media engagement, social media postings, et cetera, aggregating all of that, and then combining that and synthesizing with the on-Amazon data to come up with a list of features we can then implement on the sourcing side. And the way that works is, um, so we, we have this list of features for every product that we would like to implement, which we... where we see from the real customers that they crave or in some way desire that. 'Cause it's a different story if people say, "Okay, this pillow"... If you have two people saying, "This is, it's too firm for me," and two other people saying, "It's too soft"-

    7. TF

      Mm-hmm

    8. BD

      ... that is in no way statistically significant. [laughs]

    9. TF

      [laughs]

    10. BD

      Um, so we have this list of, of suggestions, and then we speak with our manufacturers in China, um, depending on, on where the products are sourced. Some are sourced in, in the EU, some in the US, all over. Um, we speak with them to evaluate how, the, the feasibility of this feature, of incorporating that, um, the costs of it, how fast can they turn it around, will it affect the lead times as to how fast they're gonna even produce then all the subsequent batches, um, and, and a whole bunch of smaller, smaller decisions. If we decide to go ahead and it makes sense from a cost-benefit perspective, we implement that into the next cycle. So the next order, we already have version N plus one. Um, if we decide at this point it doesn't make sense to implement that, then we keep it on our, on our hold list, and we revisit in, say, three, six, nine orders down the line. We revisit, okay, does it make sense now? Does it complement any of the other features we've just incorporated in, in the past orders, et cetera.

    11. TF

      Are the... And, uh, I don't know, I don't know if this is too much secret sauce discussion, but I'll let you decide. Uh, is- are the... When you say bots, right, this is a word that gets thrown a lot, uh, into media that people have seen, and it's, uh, I think generally poorly understood, right? The, the term scraping and bots and so on. Are you guys using off- have you used off-the-shelf, uh, programs or services for that? Or are these things that you guys have coded yourselves? How does, what, what does that look like?

    12. BD

      To answer your question, we've... Uh, it's a great question, by the way. Um, we've, we have computer science backgrounds, so we coded it ourselves in, like, Python and some, some libraries that are out there anyone can use. Um, it's just a way to automate it, to au- to automate the process. Um, anyone can do this. It's just, it will then require more manual work, which would otherwise be done by a, by a, by a script. Um, so anyone can go into 50 listings of competitor, um, competitor's products, look at their reviews, put them into an Excel sheet, and then look over and, and count the number of words or the number of queries, and then m- map them out, essentially. The- these are the queries. We had 45 of them over all these reviews, et c- et cetera.

    13. TF

      Yeah, or just display as many as possible, then Control + F and search for whichever term, right?

    14. BD

      There you go.

    15. TF

      It'll show you right at the top-

    16. BD

      Yeah

    17. TF

      ... of the browser how many occurrences.

    18. BD

      That's how we did it the first time.

    19. TF

      It- yeah.

    20. BD

      Yeah.

    21. TF

      Yeah.

    22. BD

      Super simple.

    23. TF

      Yeah.

    24. BD

      Yeah.

  11. 41:21 – 44:51

    Launching in Europe first: adapting copy by culture and using a smaller sandbox

    1. EP

      A- have you found that the information you gathered in the European market was d- directly relevant to the US market? Are there, are there differences in terms of the types of feedback that comes in?

    2. TF

      Did you launch initially in Europe?

    3. EP

      Yes.

    4. TF

      Or it-

    5. EP

      Right?

    6. BD

      Yep.

    7. TF

      So, okay, yeah, that's great.

    8. BD

      Yeah.

    9. TF

      That's a great question. So walk us through that.

    10. BD

      Yeah. So there's certain differences between consumers in Europe and the US based on what we've seen. Obviously, our data set is very limited based on, on our, on our own products as well as our own personal experience. Um, to give you an example, German consumers, I'm, I'm German myself, tend to focus more heavily on technical, technical aspects of the product.

    11. TF

      Shocker. [laughs]

    12. BD

      Exactly. [laughs]

    13. EP

      [laughs]

    14. BD

      And the, the American direct response very... To, to Germans, it seems very salesy and very off-putting.

    15. TF

      Yeah.

    16. BD

      Um-

    17. SN

      And, and similarly across even within Europe, you have the Germans, you have the French, Spanish, Italian-

    18. TF

      [laughs] Very different

    19. SN

      ... the British.

    20. TF

      [laughs]

    21. SN

      They, they're all, they all have very different consumer behaviors in a sense.

    22. TF

      Mm-hmm.

    23. SN

      And so you have to cater, say, the, the copy and adjust it, uh, slightly to, to each. Um-

    24. EP

      What about the keywords? Would y- you change those also?

    25. SN

      Well, the keywords are independent of that because the keyword pillow, for instance-

    26. EP

      Oh, so-

    27. SN

      ... it's the same-

    28. EP

      They're generics then.

    29. SN

      Exactly.

    30. TF

      Then the product copy you use to convert them is different.

  12. 44:51 – 52:30

    Scaling without investors: negotiating supplier financing and payment terms

    1. TF

      and iteration in a place like New Zealand. So let's, let's backtrack for a second. Look at the phone. OMG, we've sold a quarter of our inventory. So I'm coming back to what I said I would definitely come back to, and here's the line. When it seemed their first small order was in danger of selling out quickly, I would say that the story qualifies.

    2. SN

      [laughs]

    3. TF

      They arranged financing from their supplier and were off and running. Walk us through that. Arranged financing from their supplier. This is really important, I think, because, and I don't even know the story, but most people think, and a l- this is, this is particularly true, I think, in startup land, where people hear the word startup, and if, I think particularly for a lot of people who are 20, 22 year old, however old CS students, it's like, ooh, go out, venture capital, Sand Hill Road, Silicon Valley, raise a bunch of money, and they, they have that particular narrative when they think of financing. This is something that is not that uncommon, but it's something very few people know about. So can you walk us through this?

    4. SN

      Yeah. So from the get-go, um, Ben and I, we, we went in with the mentality of removing obstacles rather than, than coming up with obstacles. Um, and we, we had-

    5. TF

      What do you, what do you mean by that?

    6. SN

      So this is a great example is do you need an investor to put you a second order, otherwise you'll run out of stock? That is, that is an obstacle that you might actually be putting there by yourself. Um, so we had this problem, which was we need to make a way bigger order now. Um, we did have the profits from the initial order. We had a clear proof of concept. Um, and we, we, we had heard this narrative where you need investors to scale, but we said there must be a better way out there. This must, there must be a quicker way out there. Um, so who do we went to? Our biggest partner so far, our, our company that would, thought we were a massive company out of Boston and said, "Look, we're gonna place this bigger order, but as we are a big company, we expect good terms." Um, so we convinced them to-

    7. EP

      [laughs]

    8. SN

      ... to give us the good payment terms. Um-

    9. TF

      What d- and, and for those people who are wondering-

    10. SN

      Yeah

    11. TF

      ... what are, what are good payment terms in this situation?

    12. SN

      Um, so-

    13. TF

      What did you, what did you ask? Did you first, did you ask for specific terms, or did you say, "What are the best terms you can offer?"

    14. SN

      No, no.

    15. TF

      What was the, what was the approach?

    16. SN

      We, we came in really demanding 'cause we were a big company out of Boston. [laughs]

    17. EP

      [laughs]

    18. SN

      That's... So we said, "Look, um, we're, we're gonna be placing a bigger order." Again, we, we were pursuing cash flow. We were pursuing profit. We were not pursuing an investor and have a tank and spend that money and then figure out what we're gonna do. So at all points, we were like we, we knew that we needed to be profitable. One, the biggest issue with physical products companies is today you have to put the order that you're gonna sell in three months.

    19. TF

      Yep.

    20. SN

      So if your sales are up today, um, and you expect them to be even bigger, and that's a problem we still encounter on a day-to-day basis, we're gonna have to put in more capital today to hopefully make up for the sales tomorrow. Um, so, so we said, okay, the- they can be our biggest partner, came up to them and said, um, "Big companies like Walmart expect 60-day credit terms, 100 net." And they were like, "No, that's not happening." Um-

    21. TF

      Now explain for people what that means.

    22. SN

      Uh-

    23. TF

      60-day credit and then-

    24. SN

      It means they produce the whole thing. They send you the whole batch, and then 60 days after you get it, you pay for it. Uh, so-

    25. TF

      And then? Yeah.

    26. SN

      Then obviously they said, no. We went back and forth.

    27. TF

      But what was the second part of the terms? So you said-

    28. SN

      100%, so-

    29. TF

      Something, something net.

    30. SN

      60 day, 100% net.

  13. 52:30 – 1:06:46

    Focus as a growth lever: committing to Amazon and studying Buffett/Munger’s rationality

    1. TF

      Super basic. Uh, so what were... But you guys have done very well. You have a very steep trajectory on sales. You're launching new products. So you, at this point, you have Supportiback, right? And you have more units coming in. What were some of the smartest decisions that you guys made, or worst decisions, they're both, both are important, in sort of the months that followed?

    2. BD

      One of the key decisions, and then Santiago, you can add to that, I'll, I'll dive into the first one, was to focus. And we're big believers in the Pareto principle-

    3. TF

      Mm

    4. BD

      ... in honing in on what's working and keeping on that and getting better at that and not getting distracted, removing distractions.

    5. EP

      And Ben, you, you had mentioned to me you're fans of The 4-Hour Workweek. Was that what made you think along those lines?

    6. BD

      Absolutely. I mean, Tim, you mention it, uh, i- in The 4-Hour Workweek. Focus and removing distractions has definitely one, been one of the key decisions, even if it was an unknown decision.

    7. TF

      Mm-hmm.

    8. BD

      So un- un- unseen, so to say.

    9. TF

      Mm-hmm.

    10. BD

      Because you neglect something you, you don't see-

    11. TF

      Right. Right

    12. BD

      ... the, the, the thing you neglected. Um, so what that meant in, in this particular case was we had many options, um, to expand into different channels, say walmart.com, jet.com, even eBay, where we could figure it out, but one of the key decisions we did was to focus in and hone in on Amazon in growing both our expertise as well as our sales on that platform. Um, and unknowingly, one of the effects that had is the way Amazon works, um, from a very high level is the more sales you have, the more sales you have. So it's a snowball or a cumulative, um, advantage, attribution, however you wanna call it, um, in that Amazon ultimately cares about transactions on their site, so the more transactions you have on their site The more they like you, and what the more they like you means is they rank you higher, they give you access to advertisement, et cetera, to a whole bunch of, uh, other benefits based off of that. So it's-

    13. EP

      So you, you classified those other sites then as distractions it sounds like.

    14. BD

      Yes. And so we... Warren Buffett and Charlie Munger are big idols of ours. Um, and Warren Buffett mentions, or one of his concepts remo- in, in, in distractions and focus is there are 20 things you want to do right now, we're, we're really burning to do. Say for us, that was expanding to other channels like Walmart. But you have to scrap them all and focus on the one thing that ultimately will push you forward. And real distractions are things you're dying to do. So we applied that in our case and, and kept on focusing on Amazon. I think that was crucial.

    15. EP

      And does one of you reign the other in? I mean, are, is, is one of you better at narrowing the focus or do you both do that for each other?

    16. BD

      It's both for each other, and I think there's a lot of value in a partnership in particularly that point because one can easily lose track and, and get distracted oneself, but having kind of a, a second pair of eyes is definitely where two plus two is way greater than four in that sense.

    17. EP

      Mm-hmm.

    18. TF

      You mentioned, you, you guys have mentioned, well, before we started recording and also now, Warren Buffett and Munger. Uh, why are th- aside from, yes, they're very successful investors. That's, that's great. Uh, and they're certainly, uh, among the best the world has ever seen. But beyond that, uh, or maybe in addition to that, like why, why are these two so interesting to you guys? And when you say we idolize them, that's great, but does that mean you study them? And if you study them, how do you study them?

    19. BD

      That's a good question. Um, we-- I think what we admire the most out of them is the ability to... Or, or the constant pursuit of truth and rationality. Is how do we, how do we really understand the reality and keep emotion and irrationality out of it as much as possible? They even admit there's no such thing as perfection in, in that. Um, but they're always striving to do that. Um, so the most, the most studying we do is both on, on what they have to say. I think our, our favorite, um, one of my favorite pieces of Charlie Munger's speech in Harvard, I think in 19- uh, you can look it up on YouTube, Charlie Munger Harvard.

    20. TF

      Yeah. Just look up Charlie Munger commencement.

    21. BD

      Commencement.

    22. TF

      I think it's also in Poor Charlie's Almanack-

    23. BD

      In, it's also in there

    24. TF

      ... in the, in the, in the newer editions. Mm-hmm.

    25. BD

      What they have to say. Um, pretty much any insight into their lives. I know they're, they're usually pretty private, but, um, there's, there's plenty of content out there for free that you can, you can, you can see. Um, but it's that pursuit of, of being rational and staying down to earth and keeping emotions out of things, um, that help, has helped us both in, in per- in our personal lives and in our relationship as co-founders, as in our ability to dissect the business and focus on the few things that actually move the needle.

    26. TF

      Uh, Ben, what about you? And as it relates to the, that dynamic duo, are there any resources that you would recommend or...

    27. BD

      Poor Charlie's Almanack is definitely there. I think there's another book, From Darwin to Munger, um-

    28. TF

      Yep. Peter Bevelin.

    29. BD

      Yeah.

    30. TF

      Uh, Seeking Wisdom I think is the title.

  14. 1:06:46 – 1:21:02

    Expanding the product line: from three back-pain products to 22 launches in three months

    1. BD

      the manufacturers themselves in how professional, um, they would behave and, and how effectively they would communicate, um, what companies... Un- under nondisclosure, but what type of companies, what size of companies they'd worked with in the past, um, example products they've worked and, and produced themselves in the past. So many different variables we looked at, um, to vet them, and ultimately like a checklist where they had to tick off different, different boxes.

    2. TF

      What were some of the questions you asked on the phone? And at what... So you have 30 to 40-

    3. BD

      Yeah

    4. TF

      ... you reach out to. How many of those would you say you guys called?

    5. BD

      Well, we contacted all of them.

    6. TF

      Mm-hmm.

    7. BD

      Um, and it's like a marketing funnel, right?

    8. TF

      Yeah.

    9. BD

      You have cer- certain dropout, and then we obviously cut off a per- certain percentage 'cause it's a huge time investment on our end to speak with 50 different people simultaneously. Um, so, like, we had an initial cutoff in terms of poor communication, and that was indicated by, say, poor English, um, their, some certifications they could not hold up, et cetera. Um-

    10. TF

      Right. Meaning they couldn't provide certificates to show you.

    11. BD

      Exactly.

    12. TF

      Mm-hmm.

    13. BD

      And then, so that was a big cutoff. Then another step in the funnel was actually having a lawyer go over the, um, certifications and counter-checking them that they were accurate and not fake. There's basic services or, or basic lawyers who can do that for 100, 200 bucks. Um, so that was another stage in-

    14. TF

      How did you find the lawyers?

    15. BD

      Google search.

    16. TF

      Got it.

    17. BD

      Yeah.

    18. TF

      And those were based in the US or based elsewhere?

    19. BD

      Those were based in Europe, actually.

    20. TF

      Based in Europe.

    21. BD

      Yeah.

    22. TF

      Got it.

    23. BD

      But the lawyer can be from anywhere because these organizations are global.

    24. TF

      Mm-hmm.

    25. BD

      The, the certification.

    26. TF

      What do you search on Google for someone like that? What might you search?

    27. BD

      Yeah. Um, so it depends again on, on the category of product you're manufacturing. Um, a general good certification to have is good manufacturing practice.

    28. TF

      GMP, yeah.

    29. BD

      GMP. So you can look up for GMP certificate, lawyer approval, uh, verification, et cetera, and you'll get a whole bunch of results.

    30. TF

      Got it. All right.

  15. 1:21:02 – 1:32:18

    Building execution capacity: freelancers, SOPs, Slack, and structured vetting

    1. TF

      So do, so do you, do you have... Did you have and do you have help, and if so, what does that look like?

    2. SN

      Okay, so we, we scaled the team. Orig- originally, I don't know if you guys are familiar with, with Dartmouth, but it's pretty much a little town in the middle of snow.

    3. TF

      Yeah.

    4. SN

      Uh, so th- there's really not much room to hire full-time people, besides that we were running... Like, we were still in school. Um, so we, we went to a platform like Upwork. There's, there's many out, like, them out there, and started looking for freelancers, um, that would help us execute some of these tasks. And what we actually were surprised to find is the, the quality and the level of the people in those platforms. They're very, very smart people, very educated people.

    5. TF

      So you mentioned Upwork.

    6. SN

      Yeah.

    7. TF

      Any others that really come to mind for you?

    8. SN

      For the most part, we use Upwork. There's Freelancer-

    9. BD

      Freelancer.com.

    10. SN

      Yeah.

    11. TF

      Mm-hmm.

    12. BD

      Freeup.

    13. TF

      Mm-hmm.

    14. BD

      But we've mostly stuck with, uh, Upwork.

    15. SN

      With Upwork, yeah.

    16. TF

      Got it. Okay.

    17. SN

      Um, so, so we s- we were completely surprised by the quality and the s- the level of s- of specialty of the people, um, on those platforms, and we started hiring remote people that would dedicate one or two hours of their day. Um, they usually had other clients as well, that would do a very specific task. So say copywriting, we would hire a copywriter in each of the languages. Um-

    18. TF

      Here's our 20-point checklist.

    19. SN

      Right.

    20. TF

      Follow this.

    21. SN

      Created SOPs.

    22. BD

      Or improve it.

    23. TF

      Or, or improve it.

    24. SN

      Created the SOPs. Um-

    25. TF

      SOP.

    26. SN

      Yeah, SOP. Standard operating procedures.

    27. TF

      Yeah.

    28. SN

      A fancy word for-

    29. TF

      Just, yeah

    30. SN

      ... checklist. [laughs]

  16. 1:32:18 – 1:38:22

    From niche brand to broader CPG play: moving to Austin, building an exec team, and build vs buy

    1. SN

      back, uh, and said... By then we were already on, on, on track to the, to the eight figures, so about the 10 million. Um, and, and we said, "Look, we've, we're, we've done something right. Um, we've scaled it up." Uh, and, and, and we started learning a bit more about how the bigger market and the consumer packed goods and just packaged goods in general worked. Um, and so Ben and I researched into how CPG companies were doing their development. Again, acknowledging that our key s- key component to success was our ability to, to, to use data as the development, uh, guideline or the, the North Star.

    2. TF

      Mm-hmm. And CPG for folks is consumer packaged goods-

    3. SN

      Yeah

    4. TF

      ... which can range from protein bars to-

    5. SN

      Shampoo

    6. TF

      ... shampoo-

    7. SN

      [laughs]

    8. TF

      ... to just about anything. Think, think Procter & Gamble or any of these large, large brands.

    9. SN

      Exactly. So we started learning how they were doing a lot of the development. Um, not any in specific, just in general. But they were doing a lot of the product development. It, it was usually not very data-driven. They would, they would have focus groups that were not statistically significant, and there was not real consumer behavior or purchasing intent. Um, and, and they really didn't... Uh, the reason why we discovered they, they weren't really putting a lot of effort into the development is because they have all the leverage from all the household brands, um, that they use then to push new products into the market and eventually, hopefully become a household brand. So they have a lot of leverage into the distributors and the retailers. Um, so there's no incentive there. Uh, but the digital era is allowing us to change that and, and that's what we've been doing with Supportiback without really knowing it, is going straight to the customer and saying, "Look, we, we can make it better. What can we do better about this product, and, and how can we make that, um, y- make a better product for you?" So we said, can we replicate that approach across the bigger, the bigger industries such as beauty and skincare and, and the pet supplies and pet food and baby and even nutrition? Um, so, so Ben and I said, look, if we want to get to that point, we obviously need to have people that have been there, done that, uh, sort of as professors come in and, and, and tell us how to scale to that point. So, um, that's when we, that's when we kind of decided to take a big turn in life and, and, and put the studies on hold and come here to Austin, um, and build what we call the exec team or, or the people, um, above, uh, above us even that'll help us scale to that, to that portion.

    10. TF

      And one thing that folks might not realize, and I didn't know this until I actually got to Austin, is that some of the best CPG entrepreneurs and investors in the country, maybe in the world, are here in Austin. And, uh, a lot of that is thanks to a university known as Whole Foods. [laughs]

    11. SN

      [laughs]

    12. TF

      Uh, because the, the alumni and former execs and so on, uh, and serial entrepreneurs who've built, say, consumables companies, right? Whether that's like Epic Bar or, uh, Deep Eddy Vodka or whatever you might find, tend to stay in the area. And, uh, so you have this very dense network of people who v- really understand how to build, uh, CPG companies, whether that's cold brew coffee or, you know, the shampoo or, uh, gluten-free tortillas or fill in the blank.

    13. SN

      [laughs] Yeah.

    14. TF

      There, there are many, many examples here.

    15. SN

      Yes.

    16. TF

      I had no idea, uh, before I got here. Uh, so are you guys looking to build or buy or both? So, right? Meaning-

    17. SN

      Yeah

    18. TF

      ... are you looking to build all these brands, which you guys have, have shown you can do? Are you looking to buy or acquire in some fashion companies or products? How are you guys thinking about that?

    19. SN

      So we don't see it as mutually exclusive.

    20. TF

      Sure.

    21. SN

      We are very good at ramping a brand up from scratch, and we've done that and are doing that many times over now with the additional products. Um, and then creating a longer term higher growth curve because of our product development process, et cetera. Um, so acquiring right now at an early s- like an early stage brand or company that would fit our portfolio does not currently justify the premium we would pay for that.

    22. TF

      Right.

    23. SN

      However, once these other brands are also up and at the same level as Supportiback and, and, and growing, it can... It's definitely within our trajectory to look at other brands we can bring in that fit strategically with our current brand portfolio, and then to bring them in, to roll them up, to leverage any, any complimentary products, uh, audiences, et cetera. So it's definitely-

    24. TF

      Mm-hmm

    25. SN

      ... definitely a consideration. We've been speaking

    26. BD

      With other back pain brands already for Supportiback. Um, yeah. So it's within the trajectory from the early stage, it's n- doesn't justify the pr- the price premium.

    27. TF

      Mm-hmm. And there are also, I should say, uh, there are options C, D, and E and so on, not just 100% build or 100% buy.

    28. BD

      Yeah.

    29. TF

      For instance, uh, there are almost infinite number o- of ways you can structure an acquisition, where you might have... Not that you necessarily wanna get into exchanges of equity, but you could have an equity component where you're giving a piece of the company as opposed to upfront cash. You could avoid that, or in combination with that, have, uh, very elaborate earn-out clauses where people are, they're getting paid for their brand, but only after they have been assimilated and proven that they can transport their skills a- and/or perhaps their customer base and so on to the portfolio products. So there are ways to do it where you can mitigate against the upfront costs, but it is fascinating world that, uh, that we won't get into just yet today.

    30. BD

      [laughs]

  17. 1:38:22 – 1:58:52

    Motivation, learning systems, and closing advice: why they scale, what they read, and where to follow

    1. TF

      But I, but I, what I, what I wanna ask you guys, because we're gonna wrap up in, in just a little bit here, is among other things, why? So what I mean by that is, a, a different way to phrase that would be what for? Uh, what I mean by that is you're growing, you're, you are going to be hopefully accelerating growth based on your current enthusiasm for it, which seems very palpable. Where do you want this to be in three or five years? Like, what are you guys trying to do? And, uh, yeah, and, and I, and I might, I might stress test your answer a little bit, so we'll, we'll see. But yeah.

    2. BD

      [laughs]

    3. TF

      Like, what are you, what are you, what are you guys trying, what are you guys trying to do, and why is it worth all the time and energy and so on that you're putting into it?

    4. SN

      So, so I'll start with the why. Um, I think, I think Ben and I have both really big drive for, for delivering value. And I know this sounds a bit, a bit abstract, but I think the role of an entrepreneur in the world is to find ways to do things better or more efficiently, and then try to do that as many times over with the help of other people. Um, so that's something that's really driving us. So when we find a way to do things better, it's like, how can we do more of it? And it becomes almost like a drug into like, okay, we found a better way to do better products, um, and we see that direct impact in the people that we're giving them. So the back pain products, people go back and say, "Look, it actually helped." Um, and when it comes to, you know, the, the few products that we've tested in the other industries, like this product is much better than the one I had. Uh, and that fuels a lot of what we do. Um, now where does that, how does that tie into the company and where we wanna go? Is again, all we're doing is replicating that first initial back pain product that we're doing. It's the same concept is how can we deliver a better product, a better packaged good to a customer? And I think that the big companies have done it a specific way, and that way is changing, and it's gotten better with digital. So we want Benitago Group to become the new, I hate the word conglomerate, but the new group of brands or a new group of, or a new accelerator for products, um, a, a launch platform for new and better products for customers around the world, um, where we actually give them a voice, and that is reflected in the quality of the products that they're, they're getting. That's the ultimate vision. Um, how does that look like in terms of size? Um, I have no idea. How does that look like in terms of structure? Have no idea. As long as our core focus or, or the way we lead our actions is how can we do that initial value delivery that we proved with our Supportiback back in our college dorms? How can we deliver that same value m- many, many, many times over? So we're doing it 120 times. Hopefully, we'll do it more and more times over. But obviously, it's not just the one time that you launch it. It's how can we iterate it many, many, many times over?

    5. TF

      Mm-hmm.

    6. SN

      Does that answer a bit?

    7. TF

      It does.

    8. SN

      [laughs]

    9. TF

      It does. It does. I'm curious to... I should have had you in separate rooms.

    10. BD

      [laughs]

    11. SN

      [laughs]

    12. TF

      So, so-

    13. SN

      It's a bit abstract.

    14. BD

      Yeah. And then a lot of the intrinsic motivation-

    15. TF

      Mm-hmm

    16. BD

      ... for, and I, I speak, I, I think both on, on behalf of Santiago and myself, comes from learning and actually going back to, to computer science, just solving problems.

    17. TF

      Yeah. I think part of what, I mean, I barely know you guys, of course, but I mean, part of what seems just, I'm using something very non-quantitative right now, which is just like my, my intuitive feel of you guys-

    18. BD

      [laughs]

    19. TF

      ... is that you get a real high from creating the recipe and seeing if you can replicate.

    20. BD

      Yeah.

    21. SN

      Yes.

    22. TF

      Right? Like, did we get it right?

    23. SN

      It's the same feeling you get when you debug a program and it works-

    24. TF

      Yeah. Yeah

    25. SN

      ... and you're like, boom.

    26. TF

      Yeah.

    27. SN

      Now I can do the same operation a billion times.

    28. TF

      Yeah.

    29. SN

      Same thing.

    30. TF

      Yeah.

Episode duration: 1:59:11

In the uListen app, the transcript lights up word by word as you listen. Get uListen

Transcript of episode pV3TLyWKhuI

Get more out of YouTube videos.

Read along on your phone, search it beside the video, or ask your favorite AI app what was said.

iOSAndroidClaudeChatGPTChrome