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DTC Podcast
Ep 471: FabFitFun’s Billion-Dollar Subscription Blueprint: Scaling Through Customization and Value with Daniel Broukhim
00:43:17
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- [00:00]
Daniel Brukim
It's a sampling opportunity, getting in front of the customer. The brands make money with us. We have our first customer, which is our customer, and our second customer is the brands. We view ourselves as the platform for brands. And like today, in a world where like Meta is so expensive, purchase order from FabFitFun of 100,000 units of a product. Even if it's a smaller margin you'd make otherwise, it's still pretty meaty, especially for these small and upcoming brands. And even for big brands.
- [00:22]
Eric Dick
It's like a Meta DTC brand in a way, right?
- [00:24]
Daniel Brukim
Increasingly we're owning an operating brand. Some of them are private labels, some of them sit off platform, some of them were joint ventures. So much of our success has been predicated on just having what's the main.
- [00:35]
Eric Dick
Driver of growth in the business now.
- [00:37]
Daniel Brukim
You know, you kind of have to keep evolving the business. Making sure that you're driving a lot of value for customers is always the biggest challenge. And there's a reason why we have survived in our space when so many have not.
- [00:55]
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- [01:28]
Eric Dick
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- [02:23]
Eric Dick
Signup Daniel welcome to the DTC podcast. FabFitFun is a brand I've been following for quite a while now. Quite a behemoth in the subscription space. Can you give me your Hero's Journey that brought you to create that business?
- [02:40]
Daniel Brukim
Sure. Hero's Journey is strong. I like that. So I think it's kind of funny. It's been a wild ride almost 14 years. I think there's a lot of twists and turns that got us to the place that we're here. And I'd say initially the story is kind of interesting because my entrepreneurial career started in an interesting way in the sense that I was in law school and realized towards the end of my last year in law school that I really, really was not going to go down that path and didn't want to practice. It so happened to coincide with a time where my brother and his friend were going back to get their law degrees and MBAs and had started a digital agency that they needed someone to run. So I ended up running that with another friend out of law school and started building websites for other people. And out of that we kind of launched FabFitFun together initially as a newsletter and blog and ran it for a few years, the newsletter and blog, while running the agency. And didn't want to be in the client services businesses business because client services businesses aren't that exciting or scalable in some ways. And also didn't want to be in the newsletter business because subscale media brands online at the time, you know, still now it's like hard, you know, your subscale media brand, it's like hard to get ad dollars. It's hard. I mean, you run this podcast, I'm sure it's been a journey to get it to a point where you have a lot of, you know, you're able to kind of sustain yourself on that and so on and so forth and probably.
- [04:10]
Eric Dick
And it's a nerve wracking business where every month you just, the ground has to kind of come up to meet your feet as you go because everyone books last minute and yeah. So it can be a challenge.
- [04:19]
Daniel Brukim
Yeah. And then getting the ad dollars, unless you have like tons of eyeballs, like unless you're Facebook or Google or TikTok at this point, the media dollars are all flowing there. And then the subscale media brands, if you're building your Own direct sales force and this that it's expensive and then if the dollars come through or not is very dependent on the macro economy. So anyway, didn't want to be in that business either. Even though we had some modicum of success there, we got it to a sizable audience. And so we decided to evolve FabFitFun from this newsletter and blog into a more of a discount retail e commerce platform. And it started with the launch of our subscription box, which often I was actually at a charity event last night and I left with this great charity gift bag. And that was the initial impetus for the first version of the subscription box was the swag bag. So I left with a swag bag with 20 things. It might as well have been a FabFitFun box. Maybe a few more items than you'd get a normal one. But the same exact concept, cool brands, new products, things you haven't tried before for things that brands want you to try, some promotional things in there that are informative and so on and so forth. So that was the sort of thing that was an inspiration for the first FabFitFun box, was taking this sort of swag bag concept and consumerizing it. So we launched with our first 2000 in spring of 2013 or so. Or was it winter? Yeah, imagine you're starting to forget your dates now. It's just getting that I'm getting old in the tooth. And we sold out of our first 2000, and then it was kind of off to the races from there, then 3,000, then 5,000 and 7,500. And then we started putting more into Facebook marketing and realized, oh, we could actually acquire customers doing it. And lo and behold, before we knew it opened our eyes. We're at a million customers and growing and so on and so forth and raised a bunch of money. And that's the sort of, you know, long story short of what fab and fun is. Of course, in between that is so many interesting fun stories and takes and things like that. But that was the initial kind of impetus was like, I actually, you know, I grew up in a family where my dad was a doctor and he kind of went from a professional to an entrepreneur. My mom's side of the family is very entrepreneurial. And so saw that growing up, you know, given that background with like so many doctors in my family, not just my dad, his brothers, it was like always this push towards getting some sort of graduate professional degree. But then realizing that my dad was pushing us to do that at the same time, he decided to Barely practice medicine, even though he used his medical license to build businesses in the medical space. And so I was like, okay, I'm probably not the type of person who's going to be very happy working at a law firm, having seen what I've seen growing up. And also just my own personality, you know, just being curious about things, learning very business oriented, love deals, that type of thing. So I was like, how am I going to practice law? Almost seem unfathomable.
- [07:22]
Eric Dick
And the fact that it's ultimately time for money. I know a lot of lawyers and it's still like you get paid a lot for your time, but it's still, you're just billing out your time like crazy. Which is not a position I'm super keen on.
- [07:33]
Daniel Brukim
Yeah, for the vast majority now, of course you can do things like litigation and class action and stuff like that that have a little bit more of an entrepreneurial like you get the upside if you win, to speak. But like, it is, it is that. But those, those, those are also, I would say, very adversarial. Like having seen, you know, people who are lawyers and you know, have had great success in some cases. But yeah, you're, you're, you're, you're mostly, you know, you're not building something per se. Right. It's time for money. And then the nature of the thing is like, you know, I make a lot of women happy conceivably on a, you know, daily basis, weekly basis, monthly basis. You know, my dad was an OB gyn, he delivered babies. So like, that was joyful. Then he pivoted into the clinics and like, you know, providing care for people, like helping people. You know, I don't want to say lawyers don't help people, but it's very stressful, it's very combative.
- [08:28]
Eric Dick
They're helping one person, they're probably not helping the other person, they're hurting the other person involved with the torture.
- [08:34]
Daniel Brukim
There's another side. Right. And so I don't know if that's always the case in like the business context. And of course in the business world things are highly competitive and it's a fight and there's always things happening and so on and so forth, but it feels like more value creation and sometimes just seeing all the things that happen on the legal side and because of the law, I feel like 60, 70, 80% of the activity there is destroying value. It's like, how did this, let's get the lawyers out of here. And I love a lot of lawyers and friends with a lot of Them, but it just feels like it ends up costing more time and money and this and that. And so oftentimes it's just something that I couldn't see myself being part of in the long run.
- [09:18]
Eric Dick
You know, looking at. Looking at FabFitFun now, it's like a. It's like a Meta DTC brand in a way, right? Because it's like you took. Even back in the early, early days, you're probably taking a lot of, like, challenger brands or exciting brands that were kind of innovating in the space or doing things a little bit different, kind of bundling them together as this, like, real DTC experience. I'm curious about those early once when you really started to accelerate the business. You mention anecdotes or stories from that. Do you have any stories from that period where it was just like, absolutely meteoric rise that you were. That you. That you could recall? It's. It's.
- [09:53]
Daniel Brukim
When you say meteoric, it's very hard to. Like, it's not like you launch an app and, like, you're. You're dealing with physical goods, right? And, you know, you can't just like, you know, if you've launched Instagram, right, and you want to scale it, everyone can sign up for Instagram and the inventory is there. Like, hey, okay, yeah, go sign up. It costs us very little to reproduce. The marginal cost of, like, reproducing another app is almost zero, right? Like, once I've created this thing that I've spent all this money on, and it's a beautiful experience, like, I could distribute it as widely as possible, you know, with physical goods, it's not like I can just flip a switch and get more of the same product. So, like, even in the first box, I naturally understood that limitation, which is, like, we sold out of our first 2,000 boxes, and I was like, within two days and maybe even less. And I called all the suppliers. I said, can you give me more product? Can you give me more product? They're like, well, first, like, we weren't even paying for it at the time. So they're like, no. Yeah. So, like, of course I can't. But, you know, some. Some would. Even if we wanted to pay for it, they're like, no, that was like a promotional thing. We don't want to do it. Like, we did it once. Like, they will see how it goes. Like, it was just like, they had done their thing. And like, the others were like, you know, as you get bigger, it takes like, oh, yeah. Well, if you want to order 100,000 units of something. You have to give us a three month to six month lead time, right? So it's like all these reasons why, like, I don't want to. You know, there was that. And so. So that's probably not the true full answer because there's definitely times where we felt like we caught fire. Right?
- [11:27]
Eric Dick
Like, was that product specific? Was that when you really nailed a great product that everyone. A lot of it had to do.
- [11:32]
Daniel Brukim
With, like, products that went in the box and then like taking that. That item. And there was this Gorjana and Griffin scarf. It was like, it was a gray and pink. It was beautiful. And I think it was like the first time we took a product in the box and marketed it on Facebook, right? Because the first time we did a box, we put an email out, said, buy the box. You get Moroccan hair oil in it. You get this other stuff. Moroccan Hero was like a hot beauty product at the time. You'd have to pay 50, 60 bucks for it. And the box was like 40 with a discount. So you get the Moroccan Hero and get everything else. So it was this idea of the spoiler or the hero product driving sales. And then we're like, okay, what if we put that and tried a Hero product to put it on Facebook and started marketing it and say, sign up for FabFitFun. You get this beautiful Gordjana Griffin scarf. And that worked. And that's the first time our Facebook ads started working because we hadn't tried Facebook ads in earnest till then. And so that was like a light bulb moment where it's like, oh, we could get products from these. You know, I think it's interesting how you, you know, you nailed the sort of we're like a meta DTC brand in the sense that we're. And it's not just DTC brands, though. Like, we're a meta brand, right? We're retailer in a way, and we sit on top of all these other brands and we curate them and give you access to those brands at, like, you know, basically democratizing access to those brands because we're giving it to them, you at a huge discount that you wouldn't be able to get them otherwise and ability to try those products for the first time or, you know, get your hands on things that you, you know, you want, you know, even if you tried them before because, like, they were doing a promotion with that brand at that time. So there have definitely been points of time where it's like, wow, like, you know, we're adding so many customers A day and things like that where it feels like lightning in a bottle. But like it's a more linear path than something that's like an app that can just. You can have 10 million subscribers in one day and like we, if we even had the demand for it, we couldn't fulfill it.
- [13:21]
Eric Dick
Or even something where you're mass producing a single product or something that catches fire, whereas you're having to manage logistics across the whole customer life cycle with all these different products. That, that's kind of my. I'm actually just curious when you, when you get your first box, this awesome grouping of all these great things, then when you subscribe, is it all new things every month where you're being exposed to new products every month for the life of your subscription?
- [13:44]
Daniel Brukim
So it's a seasonal membership and most our members are annual. It costs $55 a season or $220 a year. The box itself drops four times a year. But throughout the season we're refreshing the products that are going there in the sort of box curation. So you know, when you come it might look like a slightly different menu. And that's something we're doing more of now. And we did it sometimes in the past and we had different mid season drops in the past, but now we're kind of just refreshing the curation throughout the season more and more. And that's something that we think will be a direction we increasingly head into. But then as part of the membership you also get access to sales where we're offering the lowest price on the Internet on those products. And so that's a big part of our business as well. And you know, it's almost half our revenue are people who are not just shopping the box, but shopping things outside the box or they're adding things to the box or they're shopping our sales, so on and so forth. And then we, you know, have a business where we partner with brands. Some of them we, you know, partner or own brands. Some brands we actually own wholly and some brands like we partner with like one of our partner brands is actually a well known D2C company called our Place that you know, helped incubate and get off the ground from day one. And we love them, they've been fantastic for us and they've done some partner some, some products on our platform. Another one's called Unhide, which is a, you know, a blanket brand that is like literally the coziest, comfiest blanket you'll ever feel or touch in your entire life. And then we have a kind of B2B side of our business where we do fulfillment for other brands, but we're also doing product development, sourcing and also doing starting to foray into some trade finance. So those are like the three kind of buckets. It's like the core retail business, which is the box and sales and you know, that's the still 80, 90% of the business itself where we're spending our time energy making that experience great. Increasingly we're owning an operating brand. Some of them are private label, some of them sit off platform, some of them were joint ventures. And then there's the sort of B2B side that's also developing.
- [15:36]
Eric Dick
And then now what's the main driver of growth in the business now? Is it Meta ads?
- [15:42]
Daniel Brukim
Meta is one of the largest ones.
- [15:43]
Eric Dick
Yeah, super cool. And in our, in our pre interview you mentioned this is something, it's funny, I've talked to, I talked to a bunch of big brands this week and they were kind of in a similar phase that you kind of articulated in our pre interview about going from a period of hyper growth, even if it was lots of moving pieces. And then really when the dust settled after Covid and after iOS 14 and all that, when the tide went out, everyone shifting focus from top line revenue to bottom line profit. Can you talk a little bit about that journey with FabFitFun?
- [16:17]
Daniel Brukim
I mean we had unprecedented growth for seven years and then things became a little bit more challenging. You know, around post Covid like there was, you know, everyone knows everyone had this like acceleration and kind of reversion to the mean and managing that, you know, up and down is, you know, when you have inventory is very, very difficult. And then also like, you know, the normal startup stuff of like, okay, well we hired a bunch of people to deal with a bunch of problems, but now we need to become more efficient about how we manage those things and cut costs and you know, operate in a kind of real lean, mean fighting machine kind of way. So it's like, you know, managing both the sort of growth side of it and like that trajectory which was been, you know, I'd call it very dynamic. And then there's the sort of like, well we have a bunch of heads to deal with these problems and like, you know, it's not the cheapest way to address something when you can leverage technology or systems or you know, how to do things in a more efficient way.
- [17:14]
Eric Dick
What would you say has been the biggest challenge scaling this business?
- [17:18]
Daniel Brukim
I mean, I think you kind of have to keep evolving the business because the consumer landscape's changing so quickly and making sure that you're driving a lot of value for customers is always the biggest challenge. How do you make this great for customers at the end of the day is the number one. And there's a reason why we have survived in our space when so many have not. And that's because we've evolved the customer experience so much. Even the concept of shopping or getting a fabfitfun box is a totally different thing in some ways than it was before. In the sense that you get to customize everything now. So you're essentially picking a curated menu of the greatest latest picks. And when it started off as a mystery surprise package, and if you don't want to pick, you can still not pick today. So you can still have that mystery or surprise feel to it. But in order to scale our business, I think giving people a sense of control over the shopping experience and making a real bona fide shopping club is how we like to think about ourselves. Where we're giving you access to these kind of, we call, like to say front of life cycle products, like products that are just coming to market. Right. It's not liquidation, it's stuff that is the coolest, newest brands, the latest launches and so on and so forth. And giving to those at a discount. I think that's been a real novel innovation for us. And no one has really been able to do that in the world and that's been interesting. But the challenge for us has always been how to innovate on that experience and make it more compelling over time.
- [18:39]
Eric Dick
You mentioned in the beginning the products were gifted and that you had trouble getting more because they were sort of gifted at this. And I guess at the size that you're at now, you're kind of a. You're no longer a small media player. You have this huge, huge community. So when you go into these products, are you, you know, these IT products that, that may be hard to get and you're able to offer them at this like crazy discount. Is that how do those conversations go? Is it just basically because everyone recognizes the buying power that is in your community and so therefore you're able to sort of negotiate these great deals for, for these products.
- [19:08]
Daniel Brukim
I think it's a mix. Like we still get a lot of free products, products, but not in smaller sizes. A lot of it's people recognize the value of the. It's a sampling opportunity, right? So like getting in front of the customer and getting the product out there and then also in the hands of Influencers who promote it and so on and so forth. So they see that and they are often brands. The brands make money with us. Like, we have our first customer, which is our customer, and our second customer is the brands. We view ourselves as a platform for brands. And today, in a world where meta is so expensive and you can't guarantee ROI, you know, purchase order from FabFitFun, you know, of 100,000 units of a product, even if it's a smaller margin you'd make otherwise, it's still pretty meaty. Especially for these small and upcoming brands. And even for big brands, it's like if you go to your CMO at a company and a CMO comes to you and says like, hey, I have a profitable purchase, profitable marketing platform for you from day one. Like, we're going to make a little bit of money. And like, then, you know, there's opportunities to sell more to the customer through the various e commerce offerings that we have as we expand our store. You know, also with drives conversion, both in retail and on our own D2C platform because it creates awareness. Like there's, it feels like a really nice solution.
- [20:19]
Eric Dick
You mentioned getting into creating your own products and I'm curious, what was the thought process that went into which products you were going to create?
- [20:28]
Daniel Brukim
Well, initially, now it's evolving, but initially it was like, literally we just, we wanted products for the box. Now we couldn't buy, right? And like, oh, we saw like, you know, we couldn't find like a great, you know, inexpensive, not expensive, but like reasonably made blanket, right? And like, you know, we couldn't get it from our, you know, third parties. Like, so we're like, okay, what if we made something that was like perfect for FabFitFun box? And so that was one of the impetuses to do so. So often it's just like we couldn't actually find the thing that we wanted and at the right price, with the right brand, right kind of, you know, but we knew the customer demand was there for the product and so we would go and make that. Now I think, you know, there's a lot that goes into like that process and something that we're working through. Exactly. You know, what are the things that, you know, both we think our customers want, but also expand the potential scope of our market because we're offering those things as a way to become a, even a FabFitFun member. You might be able to subscribe to something entirely different than the box eventually to become a FabFitFun member. And that's the kind of path we're heading down, and that's why we're creating some more products.
- [21:37]
Eric Dick
You've got this great community of buyers. Where does that community actually live? How do you conceive of this community and how are they interacting with each other?
- [21:46]
Daniel Brukim
First, the customers live everywhere. But we actually have an online forum that sits behind our paywall where you can go in and see customers talking to each other. And there's all sorts of discussions. And we get a lot of feedback. Like, we just implemented a new change where as part of one of your customizations, it's a trial. We're testing whether an annual member can, if they don't like a product in a box, they could literally just swap it for cash, and they can spend the cash in our store, which is really making it even more customizable than literally, like, okay, if you don't like something in a slot, take the credit and spend it. And we're getting a lot of feedback real time about that change as it's happening. And is it good? How are customers perceiving it? Is it, you know, and there's all, you know, before we launched it, we had some questions, and getting that feedback can help us go in one direction or another. But at the same time, no, you. You have to listen to community. But sometimes, you know, there's business reasons why, like, you might not do something the community wants. There might be, you know, even just like your understanding of the community reflects a certain. The vocal part of it reflects a certain part of the whole customer base. It's not the whole customer base. So it's like, we definitely, you know, I think probably the most valuable part of FabFitFun is our community. But it's not, you know, it's a data point for us that we listen to very carefully. But we also have to use our own kind of judgment in navigating the parts of the community that we kind of take and have that dictate the sort of decisions we make versus the ones where it's like, oh, we can't actually do the thing that they want us to do because it just would be very bad for business and torpedo us. Or it doesn't reflect what the other 80% of customers who aren't as vocal are feeling or thinking. And so you have to kind of parse that out. And it's akin to Facebook would make changes and change the newsfeed, and everyone revolted. But now the new news feeds, the thing that everyone likes. I don't think Ours have been on that magnitude of reaction and things like that, but it's still a, it's not a dissimilar dynamic.
- [23:45]
Eric Dick
And most customers are probably coming to you for that curation aspect that you guys, you know, you know what's cool, you're, you're getting a lot of these, these great products in. So I'm sure that's a big part of it for a lot of your customers is that you guys are kind of setting the taste.
- [23:57]
Daniel Brukim
Yeah, I think curation, I think discovery and I think value. Like it's an amazing deal at the end of the day. Like you're getting these incredible products highly, you know, that, you know, you're learning about often for the first time. And then the, the value of it is like, you know, you're paying 55 a season, you're getting 2, 3, $400, one box. And then you're getting access to the sales where it's like, you know, we're guaranteeing you the lowest price on the Internet. Like that's a pretty compelling offer.
- [24:22]
Eric Dick
Can you give me any examples of sort of the things, the kinds of things you've done over the last couple years to improve profitability, even if it is potentially at the cost of you know, crazy top line growth. Can you give me example of like some belt tightening or some focus that you've put on the business that helped improve profitability?
- [24:40]
Daniel Brukim
Yeah, I mean, look, I think, well, inflation just made things very challenging. So you had no choice, I think of your consumer brand at this point to raise prices. So that's something that we had to take on and it was something we avoided for, I'd say almost 10 years. We had no price increase, which is when you think about just regular deflation, that's a big thing to take on. And so that was a decision that we had to make that felt at some point we just can't make zero money if we don't raise prices given where inflation is going and the cost of goods. And then there's just certain functions in the business where it's like, okay, do we need this many data scientists and is it really adding up to the right ROI for us versus investing in more merchants and so trade offs there and just like where can we leverage AI and customer service to cut some expenses and improve the sort of experience, things like that. It's like one great one actually is we were able to cut down on our hosting costs by using a third party tool called Usage AI. That really helped us a lot. So it's been A labor of love. It ideally doesn't really ever come at the cost of the customer experience. And that's for the most part where we've tried to hold line, where it's like we never want to compromise on the experience. But if it's hosting bills, that doesn't really have much to do with what a customer is experiencing. If there's a way to reduce that or reduce your legal expenditures or so, you know, whatnot, I think those things are, you take those wins 10 out of 10 times 100%.
- [26:15]
Eric Dick
Obviously your merchants, in a lot of ways kind of are your influencers or they're the things that can really. People can resonate with in the ads if it's a certain product, whether it's the scarf or something else that, that people really want. What else have you guys done with influencers? Because I imagine there's a lot like this, this kind of. The genesis of this is kind of like that celebrity gift bag thing in a way. So you're kind of like, you're in L. A. You've got. You've got sort celebrity culture. Like what, what has your influencer strategy looked like?
- [26:39]
Daniel Brukim
I mean, look, I think we were one of the pioneers of influencer marketing. So, you know, we've done so many things with influencers, but, you know, the sort of table stakes was like the, the unboxing, right? That was like the first influencer campaigns for us. And that really helped propel the business and gate gain a lot of notoriety for us. But now, you know, they're. They're intertwined in a lot of different ways. Like they could be even involved in some of our product developments where we say, like, hey, we want to work with this influencer, or this brand wants to work with this influencer. Like, hey, why don't you guys work together and launch a product? That box through us. That's something that's happened. I think the potential there we're still scratching the surface on, but like they're part of our creative now, just beyond unboxing. And so how do we involve them in the entire process, I think is an evolving thing, but we're working with them all the time.
- [27:30]
Eric Dick
I could see that like a celebrity curated box, right? Like the, the Snoop Dogg but, you know, box or something like that. Or like I could see there being an interesting aspect of celebrity curation there as well, right?
- [27:43]
Daniel Brukim
Or, or like what's the. The box that they would pick of our menu? Like, they curate that, you know, and so like maybe they have a couple items that sit in sit in that are from their brand and I would choose this product and this product and this product on the FabFitFun sort of curation menu.
- [27:57]
Eric Dick
Very cool. Can you talk a little bit more about your marketing mix at this point? I was talking actually just with my girlfriend before this and she was just saying how constantly retargeted she is. So she says hi because she feels constantly retargeted. She loves the brand. But I'm just curious, what does your marketing mix look like?
- [28:13]
Daniel Brukim
You know, it's an ever evolving thing. Like I think we used to be on a lot of platforms and went really wide, then we pared it down to focus a little bit more on Facebook and Meta in the last few years and now we're kind of expanding our scope back out. So, you know, Pinterest, Snap, TikTok, like these are all part of the mix. But I still think that for most people meta is like the number one.
- [28:38]
Eric Dick
Have you experimented at all with more like true top of funnel platforms like TV or Postcards or anything like that?
- [28:44]
Daniel Brukim
We've definitely done TV in the past and it's something that we're still doing now and it's gone up and down in terms of how much we've done based on the sort of market for TV at the time and what success we were finding. I think it's something that we're looking at more and more and I think as we open up the FabFitFun platform right now it's just like a box subscription funnel, right? But we're gonna open up the store so that people can browse it more and experience it more where going to FabFitFun.com becomes a much more shoppable experience if you're not a member. And I think once we do that, it will open up the opportunity to do a lot more top of funnel market.
- [29:18]
Eric Dick
Super cool. I, I'm just picturing your retention, your segmentation strategy in the back end with your, with your email marketing or your, your SMS or whatever night you've got, you know, people on, you've got cohorts of people in subscriptions. You, you're following up with people about products that you, that they have got that they may want to re up with. Can you just like, I just imagine you've got a lot of segments going on on your back end. What, what ESP do you use?
- [29:43]
Daniel Brukim
We're with Brace, with Braze.
- [29:44]
Eric Dick
Cool. And can you talk a little bit about your like high level, talk about your sort of segments segmentation strategy on.
- [29:51]
Daniel Brukim
I mean, there's so much going into that now. So, like, of course, and I think people think like, you see us and we're like a big company, right? But, like, to nail these things takes a lot of time and a lot of money, and it takes a lot of work to nail that kind of like customer life cycle, segmenting and messaging to different cohorts and things like that. And so I think it's actually just like work in progress. It feels like still a big opportunity for us. So much of our success has been predicated on just having a thing that customers really wanted and now really honing the operations. And this is like 10 years into the journey. I still feel like there's tons of opportunity in terms of our retention strategies and our customer lifestyle segmentation and targeting with more merch. That's this campaign for this person that can be. It's still something that we're kind of. Of working through. I mean, we do a ton of things. I don't want to say that we're not doing a lot there. We definitely are. But, like, I think, you know, with AI, the level of sophistication that you're going to be able to have around this is going to be, you know, tenfold. So it's. It's something that, you know, we're working through now.
- [31:01]
Eric Dick
Any. Are there any tools you mentioned usage AI? Are there any other tools in your tech stack? Like, I think there's so many interesting SaaS players that are coming to the fray right now that all are offering incrementality, they're all offering revenue that they can prove that you wouldn't have got otherwise except through them. A lot of neat AI tools and stuff like that. Are there any tools that you found really, really beneficial for your biz?
- [31:25]
Daniel Brukim
I mean, I think there have been tons of tools along the way that have been very beneficial, but whether it's good or bad, I feel like there's some stuff on the AI side with customer service that we're leveraging right now and testing different tools. I think that's definitely proving to be benef. But of the latest and greatest, I'd actually have to go back to the team and say, what are you guys finding super impactful or influential? I'm lucky at this point, and maybe it's for better or worse that I'm not in the weeds of the tooling and the instrumentation of our business as much as I used to be. We've built a lot of our stuff in house. That's been an interesting journey I think the question for us now is there are all these third party tools and sometimes you're just like, it's so much easier to pick off a third party tool than to build something. And so, so we started our e commerce journey before those tools. Shopify wasn't that great then and now Shopify is amazing. And so there's real questions around do you make the switch over to some of these third party tools? And those are the things that we're kind of exploring now.
- [32:26]
Eric Dick
Are you familiar with Nift? They're a sponsor that's been on the podcast before. We just about to release. I just see them being a really good fit with what you're doing. They basically they pop an offer, they have partnerships with Tinder and Uber. And so once you buy a subscription on Tinder, something pops and says, hey, you've now got an opportunity to get a FitFab fun box for X percent or whatever. And they basically like just. It's like a traffic network that just pops offers to people that have, that have already bought something. I just see that being a really good fit that we had someone come on the podcast who, who has like a wine box subscription and they've like, it's become one of their biggest channels actually, which is kind of crazy. But have you heard of them?
- [33:05]
Daniel Brukim
I have not heard of this, but it's definitely something I will check out. And we do have a tool that, you know, pops offers from on our own platform. I can't remember the name that, that you're using it, but this sounds like it cycles in third party things. And it's like a widget that's distributed where I could market FabFitFun on NIFT. Yeah, that's cool. And there's a lot of those sort of contextual kind of commerce like plugins that have existed and so like that sounds like a newer one that is definitely worth checking out.
- [33:30]
Eric Dick
Yeah, it's all on a CPA too. Right. So you just basically you just put your bid in. I'll send you the link after because I think there's maybe a good fit for you there. What about Q4? Any how does. How does. Obviously it's a seasonal business because you've got, you know, seasonal boxes. How big of a deal is Q4, Black Friday, cyber Monday for this seasonal business?
- [33:49]
Daniel Brukim
So it used to be less of a big deal, but because we're leaning into so many of our sales and realize that people are shopping FabFun as they shop a lot of these other platforms, it's Become bigger and bigger for us. And last year we really blew it out in Q4 with Black Friday and Cyber Monday. And I think this year we'll look to do even more. So in a sense, we're less seasonal than most traditional E commerce players because we have the subscription business, but it's definitely not as seasonal as other ones, but something that's important for us.
- [34:19]
Eric Dick
What advice do you know, you guys came in very early and you've kind of walked this, this golden path. And it sounds like you've really, you've evolved the business in all these ways that you might not have been able to keep your head above water if you didn't, which is, which is amazing. What advice do you have? And for the longest time in the heyday of D2C, the subscription box was this like, be all, end all. Everybody wanted to launch a subscription box. And I think there's probably a lot that have fallen by the wayside. What advice do you have for maybe someone listening in the audience who's thinking about starting a DTC brand? Maybe a subscription box?
- [34:52]
Daniel Brukim
I mean, I don't know why. I think there's a point in time in which you are a first mover in a space where it makes sense to do something right and there's a white space. If I were to go back and start a business again, I don't think I would start today a subscription box, but I would look towards what would be next. Unless there's something really novel or interesting about your offering that you think would differentiate it. At the time we did ours, we were one of the first to do it, but it was also very different than what was out on the market. No one was doing it across lifestyle categories, which people thought was insane. Nobody was doing full size products and nobody was really doing it on a quarterly cadence. So those were three things that really stood out in terms of just a D2C brand. I'd say the same advice, the number of Shopify brands. If you just look at that, it's the long tail of people who have a brand. It's so many are small brands. So what is going to make you rise above noise? At the end of the day, it comes to having some sort of novel or innovative product that stands out from the crowd or some sort of brand IP that really differentiates you otherwise. I think most of these things are commodities 100% randomly.
- [36:07]
Eric Dick
I just saw on your website that you taught a course on curb your enthusiasm. Is that true?
- [36:12]
Daniel Brukim
I did in college. So I went to UC Berkeley and they had this thing called Democratic Education of California. And me and my friends, we were just. Senior year, we said, well, we should not go all four years without teaching a class together. And we decided that Curb Enthusiasm was the one to do it. And it was fun and, you know, got a professor to sign off and we had 40 students and they all got two credits and it was something that they were excited about.
- [36:39]
Eric Dick
What's. What's the lesson that we can take from Curb youb Enthusiasm? Just be complain all the time. What's. What's the.
- [36:45]
Daniel Brukim
Oh my God, I don't even know. I think it was just our excuse to have fun and hang out together at the time.
- [36:50]
Eric Dick
That's awesome.
- [36:51]
Daniel Brukim
I would. I think my lesson is it's always good to laugh a couple Curb episodes just to change your set and setting or whatever it is like step away. I think having that there is always a positive thing or anything to take you away from your day to day show or something. Meditation or something to relax with is, you know, the meta lesson, I would say. And Curb represented that for a while for me.
- [37:25]
Eric Dick
I liked you reacted when I said Hero's Journey, the Joseph Campbell quote that all people kind of, It's a great way to kind of visualize your life. And I see on your Instagram you have find adventure where others find fear. And I feel like that's such a great moral for founders, for DTC people is just to really take heart in doing challenging things.
- [37:48]
Daniel Brukim
Yeah, I think you have to naturally. Well, naturally you have to embrace the uncertainty in order to be an entrepreneur. And I don't think I fully appreciated that because like I had, you know, seven to 10 years of like straight up into the right to begin my entrepreneurial career, which was like unbelievable. But even in that, like, there were a lot of ups and downs, to be fair. And then I had like, you know, challenges in my personal life with some health challenges and you know, unfortunately I was diagnosed with cancer in the middle of like this peak of my entrepreneurial career, which is kind of wild. But thank God I'm on my fourth year of remission. Then followed by some business challenges. And now we've thankfully seemingly worked our way through a lot of those, both on the health side. Thank God I'm healthy now, four years later. And the business is also doing great. So nothing to complain about, but you really do have to if you're going to choose the entrepreneurial path. And I think there's different versions of it too. There's like building a big venture scale business and dealing with, with the challenges that come with that versus sometimes building a smaller business. And I actually think there's a lot of virtue in that. And I talked to a lot of, I used to push people towards being an entrepreneur and I still think I lean towards pushing people towards being entrepreneur. But now having gone through all the crazy ups and downs and realizing how few and far between who do go down the venture path or the sort of going bigger path or even like smaller path where it's like, well, you know, like the other side of it, like if you're really smart and talented and like you're making a lot of money in like a well situated situation working for one of these big incredible companies, like there's a lot of virtue in that in and of itself. So there's no shame in that. And I kudos to those people who, you know, end up in the right landing spot. Like, if you ended up at Tesla early on, like, you know, like it's different. Like you don't have the same. I think you have to develop different skills, but it could be very rewarding if you attach yourself to the right ship. And I used to look at that and be like, but now it seems very reasonable. It's like there's all these incredible other ways to have a life and your career is one part of a larger part of your entire life. So I would never trade my entrepreneurial experiences for anything. And I think I'm only at the beginning of my journey and I think, think having just turned 40, 40 and got into this point where I would feel like I've achieved a good measure of success. Hopefully there's another 40, 50, 60 years of success ahead of me. And at the same time I can realize that not everything is your work and your career and it's not for everyone. And there's a lot of ups and downs to building a business that you can find plenty of rewards elsewhere.
- [40:33]
Eric Dick
I ran into a friend of mine who's a brand owner at the dog park. I didn't even know she lived in my neighborhood. And I wish I could have recorded it as a podcast. We just, and walked around and she was explaining to me her business and how the default of like, growth at all costs had been her mindset for a really long time. And she was really, I think she just found out she was pregnant actually and was really trying to like reconcile what she wanted her business to be. And she's, she's taking some very conscious steps to. She wants, she doesn't want to sell the business. She wants to keep the business. But she was taking some very conscious steps to kind of pare it down or to like, or to like, move off of this growth at all cost mindset and instead create a business that really worked for her life, lifestyle. And I feel like that's not a story you hear a lot of. And it was really kind of refreshing to hear that. It's, you know, you just doesn't have to be growth at all costs. You can build a business that works for you and supports your life.
- [41:24]
Daniel Brukim
I, I think there's, there's definitely some truth in that. And I also think that growth at all costs is not really the thing that's being rewarded at this point. So, like, why would you pursue it? Like, it's like where they were telling me to grow, grow, grow. And I have a lot of friends who, you know, like, they were in that, you know, you, you have to. At the end of the day, you're responsible for your own decision making, making. But we're in that seat and decided to grow, grow, grow, and spend, spend, spend. And then all of a sudden the lights came on and everyone's like, oh, wow, everything doesn't look as good when we turn the lights on and stop growing and save money and this, that. And it's a very difficult thing to go through. And so it's definitely one if you're doing it just because you realize that ultimately you built a business for you, right? Like to make money, to have a life. Like, that's part of why you build a business, like, naturally. But also it's, you know, interesting that the risk reward profile on that has totally changed 100%.
- [42:23]
Eric Dick
Nice. Well, Daniel, thank you so much for coming on the DTC podcast today. If people want to catch up with you, they want to follow your entrepreneurial journey, where do you recommend they find you?
- [42:30]
Daniel Brukim
You know, I'm on. I guess you could probably follow me on Instagram or Twitter. And I think I'm Daniel Brukim on both and I post, I'd say on both from time to time. So I've become more of a. Well, on X. More recently. I've been doing more, but historically just, you know, my life on Instagram.
- [42:49]
Eric Dick
So cool. Well, great to meet you, man, and we'll stay in touch.
- [42:53]
Daniel Brukim
Sounds good. Thanks so much.
- [43:01]
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- [43:09]
Daniel Brukim
Co.
- [43:10]
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I'm Eric Dick and this has been the DTC podcast.
- [43:13]
Eric Dick
We'll see you next time.