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Patrick Coddou (co-founder of Supply.co) shares the inspiring journey, packed full of wisdom and insights on building a successful DTC brand.
From literally nothing, to now a very successful, well known and respected DTC brand, Patrick tells us some of the mistakes he made, some things he got right, and what he's working on right now to take the company even further. It's a conversation that won't just inspire you, it will give you actionable takeaways that you'll want to apply at your business today.
This is an episode you shouldn't miss! As an online merchant, small or large, you need to understand tax and get it right.
Jay Myers: This week on own your commerce. I have Patrick Coddou; he’s founded, built, and successfully scaled a direct to consumer brand supply.co. He’s been successful on shark tank with multiple offers, from sharks to invest, and he used to sell fighter jets, which is interesting. And I don’t want to get into that a little bit, so this should be a great episode. Patrick, thank you so much for coming on.
Jay Myers: This week on own your commerce. I have Patrick Coddou; he’s founded, built, and successfully scaled a direct to consumer brand supply.co. He’s been successful on shark tank with multiple offers, from sharks to invest, and he used to sell fighter jets, which is interesting. And I don’t want to get into that a little bit, so this should be a great episode. Patrick, thank you so much for coming on. Patrick Coddou: Absolutely Jay, thanks for having me.
Jay: I think I want to start with a quote. There’s a trend among entrepreneurs today. We’re all trying to start a business that produces a passive income stream so that we can move to The Bahamas. So we can have that mailbox money, where this is coming already. And in honesty, that lifestyle sounds pretty amazing who wouldn’t want that. But I found in the past few years that there’s something I want even more than that more than the cushy lifestyle or the margarita is on the beach. I want work really hard. I want to build something that I’m proud of having an impact on the people around me. I want to go to bed at night, exhausted and wake up and do it all over again in the morning. This was something you wrote on your company’s Instagram page a little while ago. What’s the spirit behind this quote? Where does this come from?
Patrick: Yeah, it’s funny. I haven’t actually thought about that quote in years. I think Jennifer, my wife probably reposted it recently, so that is a blog I wrote when I first left my corporate job in 2017. And part of the mental calculus of leaving behind, kind of a cushy six figure job is, okay. I can’t really, I don’t know any people that have left a six figure job and started a company and started making that money immediately. And it certainly wasn’t my story. I was, we were ramen noodle, range in our first few years. And so anyways, a mental calculus is like, why are you doing this? What’s important, you know? And it can’t be about the money because you’re, you’re taking a downgrade in your lifestyle and for me, frankly, and it’s true today.
Like I’m the money, isn’t what matters to me about building my business what matters is doing something I’m proud of and that I enjoy at the end of the day. And that’s kind of where that quote came from. And it’s not rocket science, but like I I’ve found it to remain true since I wrote that, three and a half years ago, that’s the times where I’m most fulfilled and most passionate are the times when I’m not even thinking about the business numbers, right? I’m thinking about how to grow the business, how to make an impact on our customers, how to be creative and have fun and create an environment for our employees and our customers so that’s kind of where that thought process came from.
Jay: Well, it really resonated with me. I can appreciate, and I respect that feeling because that is exactly my sentiment as well too. You worded it a lot more eloquently than I could have. But it really resonated with me. So speaking of that, so before where you came from, you sold the fighter jets. Yeah I just, I do not; topic of the show is not fighter jets, but who sells fighter jets and who buys them.
Patrick: United States buys them.
Jay: Okay so you have one client?
Patrick: Well, yeah, I mean specifically in my previous life I worked hand in hand with a large team, these are multibillion dollar deals. It would be arrogant for me to claim responsibility for any of them. But you work with large teams, including the United States government to work with foreign allies. So everybody from Italy to South Korea, to other ones, all parts purchased military equipment, including aircraft from the United States government, so that you can quote interloper and have interoperability with your allies overseas. So I did that for eight and a half years, had a blast in a lot of ways and hated it in a lot of ways as well.
Jay: I guess. So anyone that’s not the enemy, you could sell them to pretty much.
Patrick: I worked on a deal. This is just a little side comment. I worked on a deal with South Korea for a number of years. And when you, most of the international community just refers to Korea as Korea, South Korea is Korea or the Republic of Korea, and everybody would ask North Korea, which Korea are we talking here? And it makes a big difference. That’s for sure it does.
Jay: Okay. So let’s jump into supply, which is what we want to dive into obviously. So what is it and why?
Patrick: Yeah, so we are a premium men’s grooming and shaving company. We started in 2015, our original flagship product was, and still is something called the single edge and it’s a solid metal single blade razor, and the value prop of air there’s multiple, but the primary one for a lot of guys, we find that roughly 30 to 40% of men struggle with irritation and ingrown hairs when they shave or just plain, razor burn. I mean, you name it, just any of the painful things that come along with, with shaving and Al a large, in fact, I think the primary, if not, the only reason that guys struggle with those things is because they’re using multi-blade razors when they should be using a single blade. So there’s a little bit of personal history there. I’ve, I’ve always struggled with that. And along the way I found, you know the gospel of the single blade razor and fell in love with that old style of shave that our grandpa paws and, really everybody prior to 1970, grew up using and cleared up all of my issues almost overnight.
And just kind of wanted to be able to design a product that was accessible and kind of more modern to consumers that, yeah, cause it’s kind of intimidating to use these old style raisers and so I wanted to design something that was more accessible to people. And so I did that. We launched on Kickstarter in 2015 and then we have grown over the years and we’ve got a line of shaving products, skincare products, and we’re expanding every year.
Jay: So this might be a stupid question, but can you not just, can you not buy a single blade razor in the stores?
Patrick: Sure you can buy the common, rose like big single blade razor, right. Those plastic throwaways and so the advantage of ours there, there’s a number of advantages. One my personal favorite is the weight of our razor. So it weighs around a hundred grams, roughly the weight of an iPhone. And it sounds like an insignificant thing, but it really significantly improves the shave when you have this weighty product in your hand, because essentially you’re allowing the weight of the razor to do that work for you. So you literally, you just kind of placed the razor against your skin. And I like to say you just kind of sweep the hair away with the razor. It’s really a gentle, enjoyable process. Whereas like this kind of BIC, whenever I have one of those in my hand, it’s just like you’re pressing and kind of trying to kind of pull and tug the hair out of your skin. And so not only that, it’s a, it’s an heirloom quality product it’s guaranteed for life, much less waste. Because you’re obviously not throwing away plastic handle every couple of days. So there are, there are a lot of benefits to our product over like a big,
Jay: It makes sense. Okay. I am the type of person that has the constant; I don’t know what you call it shadow. Like, so I’m a little bit ignorant when it comes to the actual razor side but yeah.
Patrick: Well, I’m curious, why is it because you have like pain or irritation when you shave?
Jay: Honestly, that’s a great question. Yeah, I do. I did and I had one of those like Gillette, five blade razors that and my neck getting into the personal stuff here, but yeah, my neck got really bumpy and one day I just grabbed like my head tremor and I used that like without a guard on it. And so it just kind of went down and, and my wife said, Oh, I don’t mind the evening shadow look. And I’ve literally done that for like eight years now. But with years maybe I wouldn’t have had that issue, but yeah, I got all the red bumps on my neck.
Patrick: Yeah. Yeah. And that’s exactly why I asked, because it seems, it’s really funny, like something about being a guy, like you just kind of accept that that’s a problem and like.
Jay: No idea. It was because of the multiple blades.
Patrick: Yeah. And you don’t, you don’t really think that it’s solvable. You just like, and it’s, I have this exact same conversation with so many guys. They’re like, yeah. I get all these bumps on my neck and I just kind of always thought, that’s just how it is. And I’m like, well, why don’t you take one of these and give it a shot? And we’ve literally, I’m not trying to make a commercial for myself, but like we’ve changed people’s lives. Like clearly they’ve told us you’ve changed life. I’ve dealt with this and for my entire life. So anyways, that’s kind of where I’m traveling.
Jay: I mean, without knowing any better, you would go to the store and think you need like the Gillette seven blade, because that’s what the marketing tells you, but it’s, it’s not, it’s wrong. Yeah so a little bit of background on the supply, so you started in 2015, obviously you were, it was you and your wife started it together, right?
Patrick: That’s correct.
Jay: What’s growth been like how many people are you now? Are you profitable or are you in growth mode and putting everything back in or what does that look like?
Patrick: Yeah, so we grow roughly kind of two to three X every year. What I like to say is we’re in the kind of mid seven figures right now. We’re profitable. We have a small team of seven people right now, and then an army of freelancers and partners that we work with. We’re based in Fort Worth, Texas. Got a small office here, we warehouse out of Austin. And yeah, that’s kind of the basics of who we are right now.
Jay: And, and are you, what’s your goal with it? Is it to, I mean, obviously you have lots of goals, but on the growth side profits slash growth, there’s always, there’s a mountain. I can tell you, like we use it. We actually have a ratio of bold. We use, we call it the rule of 40 and it’s, it’s kind of a known term in the public markets, but basically we, your growth or your EBITDA has to equal to 40%. So if you, if you’re growing 40% year over year, then EBITDA zero is okay, you don’t have to make profit, but if you’re not growing, if your growth is only 20%, then you should have roughly 20% EBITDA, but whatever it is, it needs to add up to 40. And that’s a healthy company and investors actually look at that. So I’m just curious,
Patrick: Oh yeah, Jay, I wish I had the right answer. It’s funny. I’m laughing because I literally just got off the phone with, a mentor and we were having this exact conversation. Like, what is the, what is the balance between growth and profitability? I want both, right. Obviously I want 20% EBITDA and 200% growth. There you go, exactly. The two 20 rule. Yeah, so it’s like this constant give and take in my, I’m constantly thinking about this topic constantly. And the challenge is as a founder of a consumer goods company and an e-Commerce company, the large majority, from what I can tell, and I’m not an expert in this area. So I don’t mean to portray myself as one, but, but the majority of transactions that happen in terms of people, acquiring companies like mine, they, they seem to be at least from the data I can gather based on an EBITDA, multiple, mostly kind of in the seven figure, low eight figure range.
Patrick: Right now there are always the criminal companies of the world, which is a shaving cream that just got bought by dwell for $235 million. Now I’m assuming, I don’t know, they got bought on a revenue, multiple, probably two to three X, but the guys like me in the S in the seven and the low eight, like you get bought on an, even on multiple. And like, I’m not saying that’s like my goal. Like I’m trying to sell my company tomorrow, but it’s how you look at. Yeah. It’s how you look at value. And so, and then there’s the other piece, which is like, what if I never sell my company? What if nobody’s interested in buying the company? Like, I want to have something that is; you know producing something for the amount of effort that I put into it.
Patrick: So like but then if you’re not big enough, then the edge Wells of the world, aren’t interested in you. So like you have to grow, you have to get bigger, but you also have to be profitable. So it’s a really challenging problem, especially for somebody like me who can’t really see the future, but what I like to think about is I like to be, we Microsoft, we’ve grown to three X a year, especially at our size, that’s doable to see, to keep that up for the next few years. But I like that growth rate, but then I also want to be profitable, and what feels good to me is the 15 to 20% range and anything higher than 20 feels like I should be putting that back in the business and anything lower than kind of 10, 15, feels like, something’s kind of broken. So that’s, that’s how I look at the world. It’s not like the answer, but that’s, that’s kind of how I view growth versus profitability. If that even comes close to answering
Jay: As it does, it’s different. I mean, we’re a software company, so we think about it very differently. And it’s interesting. The D to C world is investors are starting to take notice. And I mean, we’re seeing brands that we work with getting acquired and they’ll, they’ll look at revenue as two buckets. They look at it as your one time. And then for, if they offer any type of subscriptions, there’s a different multiple on that. But one time revenue is a multiple of EBITDA. And it’s usually we see three to maximum six EBITDA but then subscription revenue, they take completely different and we’re like, we’re seeing valuations the same as software companies get like eight, 10 X, you will recurring revenue, which is which to me is like super encouraging that you can build a product company. That’s doing a million dollars in a product subscription and, and you’ve got a seven or $8 million company like that wasn’t the case five, six years ago, like investors who really focused on product companies e-commerce now. So yeah, the answer is a focus of yours, I think, because it’s how you make decisions going forward.
Patrick: And I think about it as not only maximizing value, but probability of an outcome. Right and so, I know brands, I’m not going to name names that are, sacrificing, essentially zero profit, building to 70 500 million in revenue, with the intention of being acquired by a Unilever or a P and G of the world. And, that’s a good strategy, but what if Unilever is not interested in that kind of company, but if P and G and like your acquisition you’ve kind of painted yourself into a corner in terms of what your outcomes are. And like, you’ve kind of made yourself the Holden to the board of directors at P and G determining, like what’s the future for them. And so the other thing I like to think about is like, what’s kind of the probability of an outcome, so one pro one outcome for me is, I build a $20 million company that’s throwing off 20% cash and, that’s a quote lifestyle business, but that’s a great lifestyle as far as I’m concerned. And then another probability is like a strategic buys me, but then another one is a private equity company combined me. So like, there’s a, there’s a lot of outcomes for somebody in the, eight low, low to mid eights with a, throwing off 15 to 20 plus EBITDA. So that’s kind of what I think about a lot is probability in addition to the outcome.
Jay: Yeah. And I think something like the audience of this podcast, like we’re really focusing on the growing and scaling brands. We work a lot with like someone who’s starting his store today. But the brands that are scaling like this is this is something that I see stores get wrong. You can, I don’t want to say fudge growth, but like you can throw money at it through advertising and you can, but it’s not building a sustainable growth model. So it’s an interesting dilemma that a lot of e-Commerce brands face is like, how much gas money do you want to put at it versus actually building a perpetual growth machine that goes on its own based on a lot of other things. So speaking of which two questions wants to start with this one, what tactics did you use in the earlier days? To get customers to get sales
Patrick: Yeah, everything we could think of. So, we were on, I mean, we did everything. We did Amazon. We did, we went to shows, right? Like Christmas shows and, in person stuff, we did wholesale accounts, any wholesale account we could find, we’re obviously on Shopify, we started on Kickstarter, we did a couple other Kick-starters, so those early days, it was just trying to find any way to make money possible. And over time we realized like kind of the like time to value ratio or like pain to value ratio of a lot of those things. So like, we don’t do shows anymore, although I’m sure there’s great money that can, that can be made. In some of those, we were actually off of Amazon now, although like, maybe not forever, I could see ourselves going back one day, but like, what we learned real fast is when you’re a small team, like you think you can do everything, but you really can’t.
And so we kind of really pulled back a year or two ago and really just started focusing on our store only. So we’re 95% direct to consumer through our website. We have some small wholesale business. But it’s funny, like now what I find myself thinking a lot more is like, okay, how do we expand to be more Omni channel, but more strategic and thoughtful this time. But your question was, I think more around tactics and tactics used in the early days to, to acquire customers when you didn’t have the brand that you have. Yeah. So, I mean, no prize, I mean it was, so we started on Kickstarter. We would not exist without Kickstarter. It was where we made our first dollar and their first $80,000. And then from there, it was forums, read it word of mouth we didn’t send it to swimming like you going on forums and engaging conversation and absolutely. Yeah, definitely, all those things I just said, I show’s going to, throwing stuff on Amazon. We didn’t start spinning on Facebook until about like kind of one and a half to two years in that was a big part of that. Excuse me, why not? The first couple of years of our business were really more about figuring out how to make the product. We had a lot of supply chain and production challenges on the front end that just got you texted me.
Patrick: Yeah. I mean, our first two year, I don’t remember exactly, but our first two years, we probably did 200 K or less, over two years. And we just didn’t have product to. So anyways, so, but then after that, I agree with, I was just curious your logic. Cause I agree with that. I think that that’s the worst thing you can do early on is throw money, spend advertising. You have a leaky bucket. The only time I think sometimes it makes sense is if you want to validate a product and you just don’t have traffic on your site and need eyeballs on it. Sure. Pay for traffic. But otherwise you’re not actually anyways, just, I was just curious your take on it. Yeah so none of our tactics in the earliest will be, rocket science, but Facebook, once we started spending on Facebook and Instagram and social, that became a big part of our con told Justin quick fun fact about a Kickstarter.
You might not know this, but I guess we actually worked with you on your Kickstarter campaigns. Cause we own kick booster, which is yeah. So that’s yeah, we don’t, it’s kind of got its own branding, but that kick booster is a, a crowdfunding affiliate tool, which I actually, before the ship, I saw you on Kickstarter. So I just looked up in our database and sure enough, you used it for your everyday DOP campaign. I don’t know how much you generated from it, but it’s so we knew each other even before.
Jay: That’s awesome. Yeah, so then fast forwarding to know what’s changed in those tactics. So five years later, little bit more of a mature company, but definitely so growing, how have those tactics change and how do you look at acquiring customers
Patrick: And a lot of the same way. It’s just kind of matured a bit. So we think about, less about like tactics, like how do we buy media and how do we change the two seconds of this ad to, to create the outcome that we want and more about like what’s the strategy and the process through which we view growth and we’re iterating and testing. And like that’s been a very, very recent thing that we’re talking a lot about. So, it just, just hired a couple months ago and who head of head of growth. And so I’m personally kind of taking myself out of the growth equation and we’re in the middle of an exercise right now where we’re fortunate enough to where we can kind of pull back and say, okay, tactics, have gotten us this far, but like the future for us is principles and process.
And the challenge with our products is, and I’m sure this is applicable to anybody, but I feel it very keenly is there are so many things that can be said in so many ways we can talk about our products and that we can advertise them. And there’s a different value props that speak to different people. And so what we’re doing right now is, is designing a process where we can ever, two to four weeks kind of launch new ways of talking about our products and testing new Landers, new offers, new just entire we don’t have to go down this rabbit trail, but we’re using the jobs to be done framework to. I love it. Think about how we talk about our products. And so anyways, the answer is we don’t think much about tactics and we think a lot more about how are we going to build, how are we going to maintain this kind of machine well into the eight figures and beyond
Jay: That’s a software approach. You’re ahead of the game. Jobs to be done are how we look at things when we’re building. Like I am one of my favorite things is I, I often tell people, I say like, if someone’s selling a screwdriver, do they really want your screwdriver? Or do they want a shelf on the wall? Do they really want; do they really want a shelf on the wall? Or do they want a place to store books? And we always try to go, how can you take like three layers down? Because what you’re, what you’re selling is not a razor. You’re selling comfort, you’re selling, you’re selling you mean you can speak the language better than I can, but
Patrick: Freedom from irritation and redneck.
Jay: A hundred percent rednecks brownies could get that right with e-commerce. That is huge because they get so caught up in the product. And that’s actually not what you’re selling.
Patrick: It’s funny that you mentioned it’s a software approach because all the reading I’m doing and consuming of information about you, that’s informing our planning. It’s also, it is all SAS material. It’s all software. Cause there’s really not a lot of material out there. Like there’s so much how to go from zero to one out there for e-Commerce and consumer brands. There’s not a lot how to go from one to 20, you know? And so, but there is there’s some of it for SAS. And so, I feel like the SAS world is, is, leagues beyond the e-Commerce and consumer world in terms of like process and principles of growth, kind of one to 20 range. So all the reading I’m doing right now is all software and it’s trying to take those principles and apply them to, to what we’re doing. And it’s, I think it’s very, it seems like it would be very different, but I think there’s so many similarities that it, it, it’s not that much of a stretch to take software principles and apply them to package goods.
Jay: I think you’re smart to do it. I mean, like it comes up with, for us, we, when someone asks for a feature in a product, it’s always like, well, what are you then then are, do we do we do design sprints around these features? And it is design sprint is actually thinking about, well, how, what are they actually trying to do? What problem are they trying to solve? And it’s usually never that like this button has to go here and there’s a different way to think about it anyways. So I love that. I think once, what the job to be done is of your product that informs your whole, your copy, your marketing, your, your image, like everything, about the way you position the company.
Patrick: Yeah. I’m excited.
Jay: And so you’re going though process right now, is this a bit of an exercise with.
Patrick: Yeah, right now we’re kind of rebuilding, we’ve had the fortune of like just kind of being able to rely on tactics and hacks to get us to where we are now and not have to think very strategically about growth. And we’re starting to get into the range to where like, hacks, aren’t going to get us to, to where we want to be. So kind of taking a step back and really, really looking at how we view channels and performance and, messaging and positioning, et cetera, et cetera. So anyways, the answer to your question is, or we’re kind of in the middle of a transition right now and trying to figure it out. And that’s just some of the thoughts that we’re working through. Literally right now,
Jay: This is one of your podcasts back in January. And one of the things you said on it was you were doing Instagram, paid average, paid advertising at the time, but you hoped you wouldn’t be in the future. I guess my question is, are you still, and do you still feel that way?
Patrick: I don’t remember saying that,
Jay: But if I said it Patrick,
Patrick: I don’t believe it. Yeah. You’re making it up. If I said it, it was probably in the context of like; I’d love to not have to spend money on Instagram and tech.
Jay: Fair enough. Fair enough.
Patrick: So, I mean, yes, it still applies.
Jay: I’d love to, not to me to take it out of context. That is something to that extent, but I, what I took from it was a, you would hope you weren’t paying to acquire customers, but maybe it was more along the lines of getting, having that perpetual motion machine going.
Patrick: Yeah. I mean, look, I think you’re, you’re always going to have to be paying somebody, something in this world that we live in and I’m, I’m not naive enough to think that I can build a business to the size. I want to build it, completely on SEO or, a YouTube channel on; I wish that were the case. Maybe somebody out there has figured it out, maybe, but somebody like me who is not famous, is going to have to pay a toll to somebody like Facebook, Instagram, et cetera. So yeah I don’t see that changing anytime soon. Yeah man, I sure would love to not have to pay him. I prefer to reach my customers.
It’s interesting. I saw I’m sorry. I just got to throw this in there. I heard, and this is just a soundbite that I may have taken out concepts, but I heard some survey the other day where the large majority of gen Z purchasers expect brands now to like find them where they are, where they are. So like, I don’t know. Don’t take my word for this, but it’s like, they kind of expect you to advertise like they’re not out looking for you. They expect you to find them and it’s either organically or through influencers and that’s not really organic cause you got to pay him or it’s through, advertising. And so they kind of expect to be advertised to now. And I just don’t see that changing anytime soon. I would agree with that sentiment even for my own personal shopping.
I don’t, I actually rarely use Google and research and it typically comes through social, through people I know through it’s a, it’s a, the buying journey is less and less a Google search. I actually can’t think of the last time I was like, I needed a product. I’m going to go to Google and search and do research. And I don’t know, I just like, I’ll throw it out to friends on social or typically I have an idea of who is, who knows that space. Well, but yeah, it’s and that’s that, that’s the micro influencer movement that a lot of people talk about. It’s not the people with millions and millions of followers. It’s how do you empower your everyday customer? Who shops on your store to be a micro-influencer? They might only be able to influence five people, but you want them, that guy who buys that razor his friends around to get it
In the fall of 2019, Patrick and his wife appeared on shark tank. It was an event that he said changed his life and changed his business shark tank. Isn’t always what it appears to be though? Although Patrick had two offers on the show, one from Kevin O’Leary and one from Robert Herjavec and ended up taking a deal from Robert. It ended up not going through in the end. It would still, however, prove to be a massive impact on his business and in the event he would later reflect on as one of the highlights of his life.
Jay: You were fortunate enough to go on there. That’s a lot of entrepreneurs dream is to be on shark tank, even if they don’t get an investment because obviously like the publicity. So, well, how did that come about that you ended up on shark tank? Was it, what was the process like and how has it been since
Patrick: Your question it came about with a lot of work, then it just fall in our laps. We applied three years in a row. So I actually left my previous corporate job in January of 2017. And like the first thing I did the week after I quit was I applied for shark tank and then I made it real far. Didn’t get on through but again, the next year didn’t get very far, but again, the third year and finally got through. So it was a ton of work. I’m happy to go into any details than I can. But at the end of the day it was, I mean, I hate to say this cause it’s, it sounds almost pathetic, but it was like one of the highlights of my life today, obviously well behind, getting married and having kids, but it was so much fun, especially doing it with my wife.
Who’s my co-founder, just like the crucible of standing there on the, on the rug and then preparing for it’s like the hardest, if he went through college, think about the hardest final you ever took and then do that times 20 and so just a phenomenal, enjoyable experience. Everybody, the sharks and the entire production crew behind the show are just phenomenal people, really, really great people and really just the opportunity of a lifetime. It’s hard to think how, like what kind of experience could top that I’m sure. I’m sure I’ll, hopefully there’s more, it’s not downhill from here, but that was just so much fun.
Jay: Maybe, my dream is to get on survivor one day, so yeah. So did you, you got a deal with Robert, right. And did they go through because often they sometimes don’t run through after the show.
Patrick: Yeah. Roughly half of deals don’t close and we actually did not close our deal
Jay: Okay. Yeah. So I, one of our investors at bold is Bruce Croxton who’s he was a dragon on Dragon’s den and dragons den actually came out before, before shark tank, shark tank, but it’s the Canadian version and you just don’t have as many people in Canada, so it’s not as well known, but so he was a drag. We have dragons, you have sharks space. Did you notice the day it aired, like you already had an online store, right?
Patrick: Oh yeah, definitely.
Jay: So the day it aired, what did that do to your sales?
Patrick: I mean, we did more sales that day, than we did probably our first year of business. Yeah. I mean, it was, it was outrageous, and that was a record month. Bye, bye. We air on November 3rd and by November 4th we had already had a record month and by the end of the month we had for extra previous record month. So it was certainly a spike for us. Ideally it would, maintain, that spike. it’s kind of died down a little bit since then in terms of like kind of free traffic, but it certainly put a ton of wind in our sails because it, you know just momentum brand momentum, brand recognition, but a ton of wind in her sales, but then it also being a bootstrap brand, we didn’t close the deal and, we’re entirely, self-funded just kind of, frankly just put a ton of cash in our pockets that we could then really invest in the brand and specifically an inventory, right.
It’s always a challenge when you’re our size and small and bootstrapped is just keeping it in stock and having just the cash conversion cycle. And so it gave us the ability to start thinking more strategically and kind of play offense with our brand and kind of always playing defence and in terms of just trying to stay alive. So it was a huge inflection point for us and we’re not only we’re grateful for the experience, but the airing turned out amazing and then it’s just really, really accelerated our business. So we’re just grateful all around
Jay: And you’re still allowed, I’m assuming as the same as Dragon’s den, like you can still use terms on your website as seen on shark tank or like that kind of language.
Patrick: Yeah, there are all sorts of contracts we signed. But we can say that we were on shark tank for sure right. There were some specific things we can do, but for the most part, I mean,
Jay: Can you speak to why the deal didn’t end up closing or is that off the table?
Patrick: Yeah, I can’t speak to specifics, but just difference in opinion on some of the shifts of terms fair enough. Which is that’s yeah, yeah. I mean, it’s like any deal, right? I mean, the high level stuff that’s on TV is, is nice, but there’s a lot more conversations that go on behind this stuff.
Jay: For sure. Yeah. I have a friend that was on Dragon’s den, exact same thing, got an offer. Then it ended up not going through, but what their business is doing. Great and it was the tailwinds from it are just as good. Do you have an option at that point? Cause it was Kevin O’Leary that offered the royalty deal. So, or is that still on the table when something else, or is it, you only are negotiating with the shark that you accepted on the show?
Patrick: I mean, I’m sure I could go email Kevin and say, hey, you want to, make good on that too. Yeah.
Jay: They’ll still want a buck 50 right,
Patrick: Exactly but even at the end of the day I love the fact that I still am my business, my wife and I are a hundred percent and I like the outcome and I don’t really want to go back to Kevin’s a great guy, but that’s an interest me.
Jay: Well, that’s good. Well, congratulations either way. Like it’s yeah, we, we work with a lot of brands that end up on one of the two Dragon’s den or shark tank. And it’s quite common that I actually would say it was, would be more than 50% that don’t go through
Patrick: That number I got from. I can’t remember who did it, it may have been the hustle or some, some newsletter did some big study. It was probably two years ago where they went and they called, it’s not like a scientific study, but they called like all the people who had done deals and they got as many answers as they could. And they roughly found out that half of them closing the deals and like the majority of that was Mark Cuban. Like he goes something like 80 or 90% and the rest of them are in the like 30 to 40 range.
Jay: Wow. Well, he’s probably the wealthiest of the group. I would say.
Patrick: I think his net worth is more than the rest combined. Yeah.
Jay: Right so it’s less worrisome for him. He can be a little more lenient with his terms, I guess. One thing I wanted to touch on was you actually said something earlier that you might see yourself going back on, on Amazon in the future, but like that’s been something you’ve been, I don’t know, a little bit vocal about in the past is, is making a move from Amazon. I can’t remember where I think I saw it in a blog post or something that you previously were on prime with Amazon. You made the move and completely cut off. And I guess what the thought process there was and where is that still the case of the logic behind that?
Patrick: Sure. Yeah. I mean, look, I’ve kind of beat my chest a little bit. I’ve gone through phases of love, hate relationship with Amazon. this time last year, I really hated them. They really kind of just screwed us over in ways that are really harmful for small businesses of the size. We were like we just kind of didn’t have the ability to play the Amazon game at that time. Like I wanted to play an honest game and like that’s not the Amazon game. A lot of the times, like they lost inventory of ours, like significant amounts of inventory of ours. And it took me months to get that money back. They started advertising their products on my listing squatters. They started to let sit squat on our listing. They want to take them off selling counterfeit products.
It’s just all these challenges of selling on Amazon that is kind of just part of the game. And I just didn’t have the number one, the stomach for it, or, and it just kind of I don’t know, maybe my ego is too big for it. Like I was just, I was just tired of dealing with it. And so but the, the reality of the game is, something like a hundred million people are prime customers or something like that. And so you’re really missing out on some significant traffic if you’re not on Amazon. So I think maybe one day we’ll be ready to play that game. But for the products we sell, it’s a really tough game to play and it’s just not something just to, Oh, I’ll throw my shaving cream up on Amazon, it’s like, you got to be ready and kind of go in with battle gear on. And so we just didn’t have a right gear on and maybe one day we will we’ll suit up and put some money behind, watch it on Amazon, but not, not right now.
Jay: Your sentiment is bang on. And I went through the exact same thing 18 years ago. But so back in like 2001 E-bay was the big thing back then, you’d be like, I mean, this is like before Amazon was even on the radar everyone was selling on eBay. And so anyways, I yeah, I had all my products on eBay, but also on, on my, on my e-Commerce stores.
Well actually first it was just, but eBay had stores. It was actually very similar to Amazon and eBay could have definitely been what Amazon is now. They kind of took the course, but for me it was, I had to decide like when you’re, you’re essentially renting customers on eBay or Amazon, and at some point you have to decide if you want to build a brand and, and make that switch. And it’s hard cause you cut the, you get off the nipple of Amazon or eBay or anything else. And I mean good on you for doing that. And once you get yourself in a place where you have a strong brand, I don’t personally see a reason not to, but never, I mean, Amazon does not have your best interests in mind, as they’re concerned about that. I mean they have algorithms to know what products are selling the best. And then at a certain point they will have an Amazon version of it, like it’s, or to sell advertising on top of it. But I was just curious.
Patrick: Yeah, if that was still the case and where you’re at with that, I think that the right strategy with Amazon is you’re making a deal with the devil and you just got to know that going in and, be ready to play that game. And I kind of, I actually, I’m a customer, I’m a prime customer on Amazon cause it’s just, there’s so much easy stuff anyways, we won’t go into it, but at the same time I hate them. And I think they’re a destructive force for, commerce and small mom and pop shops. And but like I’m also a believer, that they, provide a service that people want to purchase. And so anyways, so, it’s just, you, you’re kind of doing a deal with the devil and you just got to play the game on their terms and be ready to, like I said, kind of go to go to battle.
Jay: I made a suggestion one time at a, it was a DDC conference and I was on a panel. And I think you’re in a different position because you, you have a good brand now in the majority of your sales are coming through your site. But a lot of brands are like 50/50, or they’re even like 80% Amazon and 20% on their store. And one of the things I suggested, which really resonated that a bunch of brands picked it up was that on your site because you’re paying roughly more than this, but it’s like 15% and up to Amazon when you fell on them. So I encouraged a bunch of brands to put a, to find a charity and every time someone bought on their website, make it clear that the say thank you for, for buying from us and not Amazon, we’re donating 15%, which is what we would pay to Amazon, to this charity.
I love that. And you can do that. It’s not against Amazon’s terms. And it gives that customer a really good feeling because I try to shop from stores as much as I can. And I’m a prime member too. And it’s, it’s a little bit of a pain cause you got everything in prime and it’s easy, but I’ll take a couple minutes and I’ll go and I’ll search and see if I’m on that website. And if they say like, thanks for finding us and buying direct, we’re going to donate 50% of this to this charity, like it just gives that good feeling. So yeah, it’s interesting. A lot of brands struggle with that. So what’s your biggest goal next 12 months, 12 months and five years?
Patrick: 12 months, five years, 12 months, if I’m sitting in this 12 months from now, I’m done with what I call what I’m going through this year, which is what I call the kind of transition from founder to CEO, which has been tough for me personally right? So it’s if in case it’s not immediately obvious its transition from you’re doing everything to your building the team and processing and empowering people to do everything; so ensuring that the company doesn’t depend on me for survival and in fact is doing a lot better without me. Messing around with the details, so made some progress on that past few months, made some really key hires would like to make a few more over the next eight months. But really it’s more of a mind-set in the day empowering other people and setting up processes and trying to become more of a leader a doer.
Jay: I just want to say, I respect a ton of that. You understand that it’s a personal pet peeve of mine, that when someone starts a company and it’s one person and their title is CEO. My definition of a CEO is someone who leads people are out really makes people around them the best version of themselves and orchestrates strategy. And you’re measured by the success of the people around you. So, I mean, when you’re one or two people, there’s just, you can’t there’s no. So anyways, it sounds like I appreciate your understanding of
Patrick: That term. Yeah it’s tough because like survival is no means written in stone for us. Like every day is a new day and a new challenge and a new battle to fight. And like, don’t just, I’m not just throwing out of tons of cash flow that I can just go hire 20 people, you know? So it’s a challenge for sure. Because I still, like, I’m kind of like in this limbo where I still have to be very involved in it and I want to be like, I love, I love working on the company, but at the same time, like I know that it’s outgrown, my abilities. So it’s a tough transition, but an enjoyable one and the right one, there’s a, there’s a quote I have on my wall. It’s from a book called the E-Myth and it says, I bought you a little bit, but it’s like I love that book. Oh, hang on one sec.
Jay: Have you read the email re E-Myth revisited? No, I haven’t. Is that a good one? Yeah, it’s, it’s, it’s updated a little bit, but it’s, it says concept.
Patrick: Same book, but updated. It’s essentially like if your business depends on you, you don’t have a business, you have a job and it’s the worst job in the world because you’re working for a lunatic. I am working for a lunatic, so I’m better. I better start having another people work for them. Then I will make sure I put that in the show notes. It’s good. So anyways five years from now that’s a great question, man. I’d love to be a lot, not just from an ego, like I want to be bigger, but I just growth is important to me. It’s like; it’s a sign of like something’s working. So, I want be bigger. I want to constantly, and like, I don’t want to be doing the same thing I’m doing now. I just want to be taken on new challenges and so if that means, like we’ve been acquired by Ben. Awesome! If it means I’m still at the helm, running the show. That’s also awesome. I have a lot of fun doing what I do. So I don’t have any, any like a specific five-year goal, but it’s just like, keep getting better. Keep getting bigger and keep just kind of taken on new challenges like I have just had a lot of dreams for.
Where I want our brand to go in terms of who I want us to be, and like the causes and the things I want us to support and the things I want us to stand for. And like those things take time. I have so many dreams five years ago when I started this company of stuff that I would do in the first five years. And I’ve gotten to like maybe 90, excuse me, I’ve gotten to maybe 10% of them. And things are just taking so much longer than I ever thought they would. And I don’t think that’s a bad thing. I think it’s just a reality that we, I think it was Bill Gates, maybe that said, or maybe I’m making it up. We significantly overestimate what we can accomplish and, a week or a month, and then we underestimate what we can accomplish in a year. And so it’s like the years that matter, it’s not necessarily the weeks and the months.
Jay: Yeah. It’s interesting. I’m actually reading a book right now called atomic habits. It’s a lot about forgetting goals, forget these big lofty goals. It’s what is the, what are the process or the processes that you’re going to do every day between now, and then that’s going to get you there because you can have any goal, but we way over-value. Like if you look back, in a common question, I was even tempted to ask you this. Like, it’s a question I would normally ask, but a question is like, what’s the, what’s been the one key to your success, or what’s been the one biggest thing you’ve done. And we overvalue big important events. When really what make you successful is the thousands of small 1% increments every day. And if you improve by 1% a day, you’ve 37 X in a year, that’s a crazy mathematical thing but if you can just improve 1% a day, the power of that compounding is, is mind blowing. So I’m trying to shift that a little bit in my own life to think. It’s not like I have ideas of where I want to be in the company to be, but just today, what’s the one thing, so, yeah.
Patrick: Yeah. Amen.
Jay: You know what that means. It’s time for our lightning round. Let’s get Patrick in the old e-commerce hot seat and ask him some quick hitting questions and see what he really thinks. I don’t know if you read, did you read these beforehand or not?
Patrick: I did not.
Jay: It’s okay. This is off the top off the cuff with Patrick kudu. Okay. Well, what’s the biggest mistake? Biggest mistake you’ve made in e-Commerce, not in life.
Patrick: Maybe I should have prepared too many to pick from.
Jay: No I don’t. You can pass. What’s the biggest thing that we’ve done?
Patrick: That’s stupid to say. I don’t have any mistakes. Whoever’s editing is going to have to cut this maybe that’s.
Jay: I don’t know maybe back to your life, your outlook on life. Nothing’s a mistake.
Patrick: Yeah nothing is a mistake. I have a lot of mistakes. Just one comes to mind. We hired a three PO last year and it was a complete nightmare. I should have been more careful signing the contract and vetting them. In fact, all of my biggest mistakes are our poor vetting of vendors and partners. Those are always my biggest mistakes. And so I got, I interviewed one, sorry, this is supposed to be winding around, but yeah, no, we’re getting poor vetting of vendors that have really screwed me over.
Jay: I like it. What’s the biggest thing you’ve done right?
Patrick: I’m working with my wife. I love working with her on this business.
Jay: That’s awesome. That’s, do you have your, your, your good days and your bad days? Are they just, it’s not even like that.
Patrick: Oh yeah. It’s not all roses, but the large trend is w we love working together.
Jay: I feel like I’m working with my wife now, because we’re all remote, upstairs. And then downstairs, I’m basically working with her, but she’s on her own job. I’m on mine. What’s a pet peeve you have, or you see other store owners do.
Patrick: Yeah. I mean, I have lots of pet peeves. Usually it’s like the sleazy marketing stuff like, only three left in stock. And if you look at the developer tools, it’s like we can change the number, kind of reset the countdown timer. And I don’t know, I guess YouTube thinks I’m interested in this, but like, I get a new ad every day about how to, 10 X my business, or become a drop shipper or sell on Amazon and my, I hate all that stuff. It’s none. There’s no formula to any of this. It’s not easy yet.
Jay: Yeah other than your e-Commerce platform, what would you say are what’s? The most valuable piece of software you use to run your business or top couple?
Patrick: Yeah, so we use all the Google products, Google drive. I love data studio and Google sheets. I’m a numbers guy, I’m an engineer. I’m constantly in our Google sheet dashboard and our Google data studio dashboard.
Jay: What’s the first metric you look at when you want to know the health of your store?
Patrick: Monthly revenue and try not to look at daily trends, monthly revenue. And then, one thing we’re looking at a lot lately is like percent of revenue spent on, on advertising, making sure that’s healthy, you know? So when you’re growing as fast as we are, you’re dumping a lot of money into advertising. You just want to make sure it’s not; you’re not over leveraging there.
Jay: Customer acquisition against LTV is like, that’s your magic ratio.
Patrick: Yep overstock, gorgeous and Klayvio loved those guys always nice.
Jay: Actually I think having both of them on the show soon. So they’re both partners of ours other than supply. What’s your favorite online store to shop at? Or the last place you bought them, if you don’t have a favorite one?
Patrick: Not Amazon. The first one that comes to mind is it’s funny it’s beard brand, because Eric’s just a good buddy of mine and I use his hair products.
Jay: Are they competitors? Are they complimentary?
Patrick: Well, they’re kind of conflict, right? They sell products to take care of your beard and I sell products to get rid of your beard. So depending on where you are on spectrum and sometimes you may be right in the middle, like I’ve got, I have customers who are also customers of Eric’s as well.
Jay: So like you could buy from both people.
Patrick: Bingo. Cool.
Jay: Okay. Last question; if you had one piece of advice or wisdom that you could give for stores looking to scale, so not start, but let’s say they’ve, go from a thousand orders to a hundred thousand orders. What’s some wisdom or advice you can give them that all that you’ve learned or that you want to pass on?
Patrick: Yeah so I’m really big on operational excellence and making sure the foundation of your business is set before you try to build on top of it. So I’ll try to be short, but like your three PO make sure all your processes, they are set and solid your pricing on, your shipping, your rates, I’m constantly another number I’m looking at is my gross margin. Like my job as CEO tends to be a lot of just hammering costs down constantly because they will inflate unless you’re staying on top of them. So operational excellence, financial excellence, making sure you’re keeping costs down and just constantly putting better processes in place to scale, right tactics and hacks. Don’t matter if you don’t have a solid foundation to build on top of.
Jay: What you value as a start-up. I mean, just nimble and flexible and what you value as a scale up is completely different. And I have come to really value operational excellence at bold in the last couple of years. And, beginning, you take pride in being completely flexible, but I’m at a point operational excellence, excellence is so important. So I’m actually really glad you, you mentioned that. Thank you so much. That’s it, that’s all my questions. Where can people find you and your brand to buy the world’s best razor?
Patrick: Yeah. So you can find us [email protected] and then you can find me on Twitter at sounds like canoe, like the, not a kayaker, but a canoe.