Ep 479: How to Build a Brand That Outlasts Performance Marketing Tactics with Preston Rutherford

Summary

Podcast Summary: DTC Podcast Ep 479 - How to Build a Brand That Outlasts Performance Marketing Tactics with Preston Rutherford

In Episode 479 of the DTC Podcast, hosted by Eric Dick, Preston Rutherford, Co-Founder of Chubby’s and creator of Marathon, delves into the intricate balance between performance marketing and brand building. The conversation navigates through Preston’s entrepreneurial journey, the pitfalls of overreliance on performance marketing, and the strategic shift towards sustainable brand growth.

---

1. Introduction and Guest Background

[00:00 - 03:24]
The episode kicks off with an introduction to Preston Rutherford, highlighting his success with Chubby’s, a direct-to-consumer (DTC) brand specializing in men’s shorts. The host commends Preston's commitment to content marketing and storytelling, which has significantly contributed to Chubby’s rise as a DTC darling. Preston expresses enthusiasm about sharing insights on brand awareness and scaling sustainable businesses.

Notable Quote:
"You’ve been building on the media side. I mean, it's legit and it's a perfect example of what's possible if you just do it and do it well." — Eric ([03:05])

---

2. The Challenge of Overreliance on Performance Marketing

[03:35 - 09:56]
Preston recounts the early days of Chubby’s, founded in late 2011 during a challenging economic period. The founders aimed to fill a niche for appropriately sized men's shorts, differentiating themselves from brands like Abercrombie & Fitch by adopting a more relaxed and authentic brand persona. Initially, performance marketing thrived with low Customer Acquisition Costs (CAC) and high Return on Ad Spend (ROAS). However, as the market evolved, Chubby’s faced increasing CAC and diminishing margins, challenging the sustainability of their growth model.

Notable Quotes:
"You had to have a bold stance and go out and do things in the world that people remember." — Preston ([00:05])
"You either don't grow or you die this slow death." — Eric ([17:21])

---

3. The Shift Towards Brand Building

[09:57 - 16:54]
Recognizing the unsustainable trajectory, Preston and his team grappled with the limitations of short-term metrics. The reliance on platforms like Meta (Facebook) for performance marketing led to vulnerabilities such as payment issues or ad serving disruptions, which could drastically impact revenue. This realization highlighted the necessity of building a resilient brand that could sustain growth beyond immediate performance metrics.

Notable Quotes:
"Nothing changes if nothing changes, he says." — Preston referencing Theo Vaughn ([17:43])
"We have to change. We have to have more resilience, more people coming to Google my brand and buy from me." — Eric ([15:14])

---

4. Strategies Implemented for Sustainable Growth

[16:55 - 27:02]
To mitigate overreliance on performance marketing, Chubby’s diversified their approach by investing in both paid and unpaid channels aimed at building brand awareness. This included:

• Content Marketing: Developing creative and engaging content that resonated emotionally with the audience rather than purely driving sales.
• Organic Growth: Enhancing efforts in SEO and increasing branded organic search traffic.
• Creative Campaigns: Shifting from traditional direct response ads to campaigns that fostered an emotional connection, thereby creating memorable brand associations.

Preston emphasizes the importance of building "memory structures" that enable consumers to recall and prefer the brand organically.

Notable Quotes:
"We'd never discount, we would never do like a fake urgency kind of thing to get people." — Chubby’s Founders ([07:21])
"What does that mean? We had to go through a process of trying to define that and to build some resilience." — Preston ([13:37])

---

5. Measuring Brand Value Beyond ROAS

[27:03 - 37:32]
A significant portion of the discussion centers on the challenges of quantifying brand value. Traditional metrics like ROAS are inadequate for capturing the long-term benefits of brand building. Preston introduces the concept of "memory structures," which represent the subconscious associations consumers have with a brand, influencing their purchasing decisions without direct prompting.

Key strategies include:

• Branded Organic Search: Monitoring the increase in searches for the brand name as an indicator of brand strength.
• System One Thinking: Leveraging automatic, emotionally driven decision-making processes in consumers.

Eric underscores the importance of shifting focus from immediate conversions to fostering brand loyalty and recognition, which ultimately drives sustained profitability.

Notable Quotes:
"We have to fix what seems to be the most pernicious problem facing modern DTC and multi-channel brands." — Mr. Unknown Host ([43:06])
"We want all the System One purchases we can get that brand building earns for you." — Eric ([27:08])

---

6. The Creation of Marathon: Bridging the Measurement Gap

[37:33 - 44:02]
Preston introduces Marathon, a solution designed to bridge the gap between performance marketing and brand building. Marathon aims to provide measurable insights into how brand-building activities contribute to both short-term and long-term revenue. By quantifying engagements and their future financial value, Marathon enables brands to make data-driven decisions that balance immediate performance needs with sustainable growth.

Key Features of Marathon:

• Quantifying Engagements: Assigning financial value to interactions such as shares, email signups, and other non-direct response actions.
• Statistical Connections: Linking these engagements to increases in branded organic search and overall revenue.
• Balanced Marketing Allocation: Guiding brands to allocate budgets effectively between performance and brand marketing.

Notable Quotes:
"Preston, welcome to the DTC Podcast." — Host ([02:00])
"Marathon is an attempt to fix the measurement problem that keeps us marketers from investing in both short-term revenue and building the brand for the long term." — Preston ([37:18])

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7. Conclusion and Final Thoughts

[44:03 - 51:11]
The episode concludes with reflections on the necessity of balance in marketing strategies. Preston and Eric advocate for a shift away from the incessant focus on short-term metrics towards a more holistic approach that values brand equity and long-term profitability. By leveraging tools like Marathon, brands can effectively measure and invest in brand-building activities, ensuring sustainable growth and resilience against market fluctuations.

Notable Quotes:
"We're trying to fix what seems to be the most pernicious problem facing modern DTC and multi-channel brands." — Preston ([43:58])
"It's our attempt to try to solve that big problem." — Eric ([42:26])
"We're trying to fix what seems to be the most pernicious problem..." — Preston ([43:58])

---

Key Takeaways

• Balance is Crucial: Sustainable growth requires balancing performance marketing with long-term brand building.
• Beyond ROAS: Traditional metrics like ROAS are insufficient; brands must adopt metrics that capture brand strength and memory structures.
• Content is King: Engaging, emotionally resonant content fosters brand loyalty and organic growth.
• Innovative Tools: Solutions like Marathon are essential for bridging the measurement gap between performance and brand marketing.
• Strategic Investment: Allocating resources towards brand-building activities ensures resilience and profitability in the long run.

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Final Remarks

Preston Rutherford’s insights offer a roadmap for DTC brands grappling with the challenges of scaling sustainably. By prioritizing brand equity and adopting comprehensive measurement tools, businesses can transcend the limitations of performance marketing and achieve enduring success.

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Transcript

[Preston]

Short shorts at the time were not normal. Some people were like, yeah, I get it.

[Eric]

Boom, I'm in.

[Preston]

But that's not a massive, massive business. So you had to have a bold stance and go out and do things in the world that people remember. I'm sure we've all had those days.

[Eric]

When the meta payment doesn't go through.

[Preston]

For whatever reason or there's a crazy delivery issue, but ads stop serving, revenue drops and it's like, oh God, I am reliant on this way of operating. If you project out current trends with a lot of these businesses with what they're seeing with increasing CAC and all.

[Eric]

This kind of stuff, it's like e.

[Preston]

You don't grow or you die this.

[Eric]

Slow death because they didn't get this.

[Preston]

Fundamental balance figured out.

[Eric]

And they may have seen like a.

[Preston]

Rocket ship on the outside, but like.

[Eric]

We'Ve seen the cycles and we just.

[Preston]

Want brands to be able to get through this next cycle and to flourish.

[Unknown]

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I have been following you first with your work at Chubby's for a really long time. I've been in the content marketing game and the performance marketing game for almost 20 years now, which is kind of wild to think about. And when I first saw Chubby's coming out as this sort of DTC darling brand, solving this problem, finally getting men's shorts the right hem length essentially. And then what I really noticed next was your incredible commitment to content marketing storytelling and it really echoes, I think we were just saying. I've done a little bit with DTC and Pilothouse in creating an ongoing conversation that leads people back into the brand. And of course, just been loving your wise CMO dialogues that you have on the various platforms. We'll put your links in this post so that people can follow you and follow along. But man, just welcome. It's been a long time. I'm trying to get you on the podcast for a long time, but I'm excited to talk about how brands can raise brand awareness.

[Eric]

Heck yeah.

[Preston]

Eric, thanks for having me. I'm pumped to be here.

[Eric]

And congrats on the success of what.

[Preston]

You'Ve been building on the media side. I mean, it's legit and it's a perfect example of what's possible if you just do it and do it well.

[Eric]

And commit to it over a long period of time. Not only as a business can be.

[Preston]

A pretty interesting entity, but in terms of fueling other businesses, it can be really interesting.

[Eric]

So congrats to you. I'm excited to be here.

[Unknown]

Thanks, man. I'm sure you've told the chubby story a thousand times, but I'd just love to hear from your perspective the sort of hero's journey that you went on with that brand and how it's informed what you're doing now.

[Eric]

Sure. So hero's journey.

[Preston]

Very kindly.

[Eric]

Very kindly.

[Preston]

But maybe idiot's journey, at least from my perspective. But I'm one of four founders of.

[Eric]

The brand and started it late 2011 and to make a long story short, sold it at the end of 2021 and ridiculous story. I mean, all the credit to the team, to the other founders. I mean, amazing, amazing people who built Chevy's into, I think, what it is today and continuing to grow at a.

[Preston]

Scale that is far beyond what we could have ever imagined. But the general idea to get started is we had been working for other people four or five years out of college kind of thing.

[Eric]

We graduated in 2008. It was really sort of like a tough time economically.

[Preston]

Right.

[Eric]

And so a lot of stress, a lot of whatever, whatever. And when you work for other people for a bit, you're kind of like.

[Preston]

They'Re no smarter than me.

[Eric]

Why do I report to these people? That whole thing where I could do this, I could do this myself, I don't like having to fill out my TPS reports kind of thing. So myself three others generally wanted to try to start something and it wasn't going to be. A couple of people who lived close.

[Preston]

To us started Instagram and Snapchat and.

[Eric]

It was like well, that's not really.

[Preston]

In the cards for us, but maybe.

[Eric]

We could do some kind of something that maybe we knew a little bit.

[Preston]

More about, which was shorts. And for some odd reason, all four of us had a connection to shorts.

[Eric]

And the big thing though, that we.

[Preston]

Were really excited about was let's just create a consumer brand. But we weren't like, let's go create a brand. It was just like, let's do something.

[Eric]

That we would want to be a customer of that we don't feel like exists.

[Preston]

There was this connection to shorts and then at the time there was Abercrombie.

[Eric]

And Fitch, but the version of Abu.

[Preston]

Gorman Fitch from 2011, which is very, very different from today, as everyone probably knows.

[Eric]

But it was the perfect foil or.

[Preston]

The perfect thing for us to sort.

[Eric]

Of react to and be the opposite of. And then there was also like a product thing to throw up about, which.

[Preston]

Was at the time it was very.

[Eric]

Long cargo shorts that were sort of like the style. So I played rugby.

[Preston]

Tom and Kyle played soccer at Stanford.

[Eric]

Rayner spent most of his time growing.

[Preston]

Up in the Southeast. In all of those realms, it's a.

[Eric]

Shorter short that is the norm. So there was something where we could kind of tie shorter shorts to confidence.

[Preston]

And retro and the style of our fathers and sort of like how it should be done.

[Eric]

And if you're hiding your legs, what's wrong and what are you hiding in those pockets and associating it with the.

[Preston]

Abercrombie's of like, you have to look a certain way, they're spraying you with.

[Eric]

Cologne as you walk in all this baloney house music. So like, let's not be that right?

[Preston]

Let's just be ourselves. Let's have fun, let's not take ourselves too seriously.

[Eric]

And let's also hearken to sort of like true shorts wearing things along those lines. So that was kind of like the.

[Preston]

Foundation from which we tried to build off of.

[Eric]

But then outside of that, it was just trying to build something that was.

[Preston]

Different and stood apart. And we didn't have any money, so.

[Eric]

It was not like we could go out and buy super bowl ads.

[Preston]

So it was like, how do we.

[Eric]

Be creative and try to make people laugh?

[Preston]

Started selling product to our friends out of our backpacks.

[Eric]

This was pre Venmo, so like square.

[Preston]

Card reader style kind of thing. So it was basically door to door.

[Eric]

Sales and one thing led to another.

[Preston]

And we can go into any details that you'd like.

[Eric]

But yeah, it was effectively create content.

[Preston]

Was at the center of it. All right.

[Eric]

It's not like we had any ip, there was no patent. So it was like, let's just, we got to own a spot in people's.

[Preston]

Minds and get them to love us for some reason. And yeah, the product was differentiated. Product's fantastic. That's table stakes, right? That has to exist.

[Eric]

But then it's like, why do people care?

[Preston]

Why do they want to be associated with this? Why do they want to do something that is so different?

[Eric]

Right?

[Preston]

Because short shorts at the time were.

[Eric]

Not normal and some people were like, yeah, I get it, I've been looking.

[Preston]

For this, it doesn't exist.

[Eric]

Boom, I'm in. But that's not a massive, massive business. So you had to do these things.

[Preston]

And be very clear and kind of have a bold stance and go out and do things in the world that people remember.

[Eric]

And that's what we tried to do.

[Preston]

Made all of the mistakes along the way.

[Eric]

I can talk about how we got.

[Preston]

Obsessed with short termism, measuring my epic.

[Eric]

Metrics, doing the whole thing. Had a midlife crisis, I guess a.

[Preston]

Couple times, almost going out of business, which is embarrassing and a bummer, but.

[Eric]

Feel blessed that we were able to move beyond that and build a profitable scalable business and do so in a way that had brand at the forefront and go out of the over reliance.

[Preston]

On the short term and on short.

[Eric]

Term metrics and fighting that fight of hey, where's my roas? And building more of a balanced business.

[Preston]

That was able to expand multi channel, become much more profitable as revenue growth.

[Eric]

Started expanding, which is normally not what happens. So yeah, just a crazy set of lessons.

[Preston]

And again, all the credit to everyone else on the team. Right.

[Eric]

I mean they really built something that's.

[Preston]

Awesome and continues to grow to this day and I'm just blessed to be.

[Eric]

A part of it.

[Unknown]

You guys came up in the heyday of like the golden meta machine where you really could, you could put money in it maybe more reliably, but you still, even from the beginning in your DNA it sounds like content marketing, storytelling was a real big part of the brand. And I wonder, I think I've mentioned, I've read in a couple of your bios that you did have some crises where you realized you were way over investing in ads. And I think that's kind of carried into what you're doing now. Describe that journey a little bit about coming up in maybe the heyday of meta's like most effective period and how that maybe got, you know, led to you getting drunk on your performance marketing at times.

[Eric]

Totally. I mean effectively pre Instagram, right?

[Preston]

Think of that, right?

[Eric]

Isn't that crazy? Why?

[Preston]

You know, you could reach effectively all of your audience organically on Facebook. And engagement rate was, I don't know, like 10, 20%. Right.

[Eric]

It was insane, right? Could you imagine? So that was the organic backdrop.

[Preston]

But then on the paid side, right?

[Eric]

I mean, there just weren't that many people doing this. And the people who got it were able to see some pretty ridiculous results, right? A dollar in, ten out. I don't know, just ridiculous stuff, right.

[Preston]

And. And then it was also.

[Eric]

It gave you this feeling of God.

[Preston]

Mode to a certain extent, right?

[Eric]

Or like, I put a dollar in.

[Preston]

And wow, my business does something and.

[Eric]

Then I see this awesome high number in a measurement tool and then time goes on and you just kind of.

[Preston]

Shift your whole business to support this very short term.

[Eric]

Put dollar in, get dollar out and you kind of lose the context.

[Preston]

Then it becomes like, I need this number to keep going up. And that's like all I think about. That's like what my identity is tied to. It gets a little bit disassociated from.

[Eric]

The actual health of the business where, yeah, maybe Rose is going up, but, you know, is my.

[Preston]

Is the actual profit dollar and profit.

[Eric]

Margin of my business moving commensurately for us? Not necessarily, you know, to keep kind of hitting that roas number, we started doing things that you might not feel super good about. Especially like when you're in the beginning.

[Preston]

Of the business, you're like, brand is all that matters. We would never discount, we would never.

[Eric]

Do like a fake urgency kind of thing to get people. But you start doing it right because.

[Preston]

That ends up working. That ends up driving that one day click DRO as or whatever your short term metric is.

[Eric]

And that's fine. I mean, it's not like all of.

[Preston]

It was bad, but I think we.

[Eric]

Just went way over indexed into that.

[Preston]

Kind of stuff and that kind of way of thinking and that kind of.

[Eric]

Way of operating and ultimately contribution margin, or ultimately our profit margin just started going down and down and down and down and down. And we didn't feel like we had another path. And so then you look at the creative that we were running, it felt.

[Preston]

Less and less good.

[Eric]

And it was just a mindset of.

[Preston]

Today is all that matters.

[Eric]

If it doesn't show up in platform.

[Preston]

Or in an MTA tool or in.

[Eric]

Whatever tool, it doesn't exist.

[Preston]

Yes, brand is important. We'll just keep doing some organic posts and hopefully few will go viral. And that's how we'll get the word out about the brand.

[Eric]

But no, I would never put money behind any kind of ad or any.

[Preston]

Kind of spend that doesn't generate clear, attributable revenue.

[Eric]

Like my CFO would throw up, my.

[Preston]

Board would throw up. It's impossible. Why would I ever.

[Eric]

That's stupid.

[Unknown]

Twitter would be so pissed at you for.

[Eric]

I see. Twitter would slap me in the digital face. So that was a bit of the mindset, but it was like, I don't know how else I can do this.

[Preston]

What is the solution?

[Eric]

Well, maybe it's like my CRO is off, I need to audit everything.

[Preston]

Where am I sending traffic?

[Eric]

Maybe I need a post purchase, upsell kind of thing.

[Preston]

Maybe I need to offer more gifts with purchase. Maybe my site needs to be faster. Or maybe I just need more ad variants.

[Eric]

Maybe I just need to run more tests.

[Preston]

Maybe I just need to try more angles.

[Eric]

Maybe I just need more ideas from ChatGPT. I don't know. But the thought around the fix I think was just largely wrong because we did all those things, we spent so much time on all that stuff. But in the heart of hearts, you're just sort of like, what do I really want? I want people to seek me out, I want people to search for my brand name. I want to build a brand.

[Preston]

So what does that mean? We had to go through a process.

[Eric]

Of trying to define that and to build some resilience and to be able to.

[Preston]

I'm sure we've all had those days.

[Eric]

When either the meta payment doesn't go.

[Preston]

Through for whatever reason, or there's a crazy delivery issue just broadly having nothing.

[Eric]

To do with payment, but ad stops.

[Preston]

Serving and it's like, oh my Lord, what is going on with my business?

[Eric]

Just revenue drops, plummets and it's like.

[Preston]

Oh God, I am reliant on this way of operating and I don't have.

[Eric]

This repeatable set of people showing up, knocking on my door and being like, I want to buy your stuff. No, I am like going out and.

[Preston]

Having to buy those transactions every single day.

[Eric]

Right?

[Preston]

Push that stone up the hill.

[Eric]

And I think we've all had some.

[Preston]

Version of that experience in building a brand. And that's another sort of wake up call.

[Eric]

Then you do the analysis. You're like, okay, discount rate, 20, 24, whatever year, name your percentage. Oh wow, that's like 3x higher than it was three, four years earlier. It's like, oh, wow, huh. No wonder why profit margin is going down or I can't grow if I'm.

[Preston]

Trying To maintain some kind of a profit margin. We were there, dude. We had to fire people because our.

[Eric]

P and L got all backwards and.

[Preston]

Very embarrassing and very sad. But we had to reset the business ultimately.

[Eric]

And he tried to find other channels.

[Preston]

Of growth, like new channels, new products, new GEOs. And those are ways to grow for sure. But do I have a thing that is worth growing? Was one of the things we had to realize.

[Eric]

Is there fundamental core net asset value.

[Preston]

In this core thing that we're building and does it have the opportunity to.

[Eric]

Be fundamental, unit, economic, profitable? If we were to dial things in.

[Preston]

A certain way, is there true equity value there?

[Eric]

We had to look ourselves in the face and be like, not as much as we would like there to be. Like we have to change.

[Preston]

We have to have more resilience, more people coming to Google my brand and buy from me.

[Eric]

You know, like I want. Yeah, if I look at my composition.

[Preston]

Of revenue, I want more and more of it to come from branded organic.

[Eric]

Search or people coming directly to my site.

[Preston]

Right. Drive those sorts of purchase behaviors, which.

[Eric]

We kind of realized, man, that kind of revenue is becoming a much, much.

[Preston]

Much smaller portion of our total revenue.

[Unknown]

And Facebook will let you spend all day. Facebook will let you spend all day on that. Like your 95, 5% post that I was reading. They'll let you spend all your budget on making sure that 5% who's already in market for your product will buy your product. And they're super effective at doing that. But there's so many other people out there who aren't who ads most likely aren't going to bring them into your market. Which is a big realization, right?

[Preston]

Totally.

[Eric]

Yeah. I mean the people listening to this.

[Preston]

Are probably like, you know, media buying extraordinaire. So they get all this.

[Eric]

I'm not saying anything they don't understand, but like just the reality that, yeah.

[Preston]

Meta is really good at doing the thing that you tell it to do.

[Eric]

But we realized we needed to be.

[Preston]

More careful about what we were telling it to do.

[Eric]

So if we're looking for clickers and.

[Preston]

Buyers in an attribution window, then we're.

[Eric]

Going to go out and find those people.

[Preston]

And over time that becomes a smaller.

[Eric]

And smaller set of folks that we hit up.

[Preston]

And if we're not actively filling that funnel with paid, with, non paid with.

[Eric]

Whatever, with going out and doing billboards on whatever highway in your local jurisdiction, whatever it is, then it's going to.

[Preston]

Get tougher and more expensive. Fundamentally, there is gravity, meaning costs are going up.

[Eric]

If status Quo continues.

[Preston]

Listen to Facebook's latest earnings call. Their average cost per ad is up.

[Eric]

11% year over year.

[Preston]

11%. That's pretty wild.

[Eric]

If you do nothing, you will be 11% less effective. So where are you going to find that then? And how are you going to grow against that?

[Preston]

It's crazy.

[Eric]

So, yeah, I mean, you're exactly right.

[Preston]

We have to change.

[Eric]

One of the quotes I love is from the lauded philosopher Theo Vaughn.

[Unknown]

I don't know if you follow the Tao of Theo.

[Preston]

The Tao of Vaughn.

[Eric]

I love that.

[Preston]

Nothing changes if nothing changes, he says.

[Eric]

So what does that mean? It's like we want to see different.

[Preston]

Results in our business.

[Eric]

But I was still so focused on.

[Preston]

Like, I need to measure it in a certain way. It's got to look a certain way, feel a certain way.

[Eric]

But, you know, when you realize these sorts of things, it's like, dang, we're simply playing this super, like, myopic game.

[Preston]

Where there's so many other people who we could be reaching.

[Eric]

And no, they're not going to click on my ad right away.

[Preston]

And no, I shouldn't even be showing them content that is begging them to.

[Eric]

Click on my ad right away, because.

[Preston]

That'S just not real. That's not how people shop.

[Eric]

You know what I mean?

[Unknown]

That's not the vibe of the brand really either.

[Preston]

Right?

[Eric]

It's not the vibe of the brand.

[Preston]

I mean, it's just not the vibe.

[Eric]

Of how people's minds work. In learning about new brands, there are.

[Preston]

Some people who you can convert. And then it becomes a question of, is that incremental? Is that dollar that you spent actually.

[Eric]

Changing the behavior of someone who saw it highest?

[Preston]

Roas stuff?

[Eric]

Generally, the answer is no. And that's a whole other conversation that we can have. But yet the general idea that I want to be prepping people, you know, more so than emptying the funnel.

[Preston]

Not that I shouldn't be emptying the.

[Eric]

Funnel at all, but we get out of balance. I think that's kind of like the key thing is, like, when we're spending.

[Preston]

And I can only speak for ourselves.

[Eric]

But like, we're spending 95% on the 5%, you know, and so it's just like, completely lopsided.

[Unknown]

So give me some examples of what you did at Chubby's. Then when you made this shift aside from the team restructuring, things like that. But when you realized you're probably overspending on the bottom of funnel at that time, what were some of the big changes? Changes on the marketing or growth side? You were able to make to start filling the top of funnel more effectively or building brand awareness.

[Eric]

Sure. I mean, I think broadly there are.

[Preston]

Paid things and then there are unpaid things.

[Eric]

The thing I and what we did.

[Preston]

And then what I wish we did even more of is unpaid stuff like.

[Eric]

Imagine paid Facebook, Google, TikTok. Imagine that just isn't even an option. Imagine you cannot spend money to buy, you know, eyeballs. That's.

[Preston]

That's where we tried to start media.

[Unknown]

Right. And I think that that was the interesting thing came out of the last election cycle when you had Trump even referencing earned media like in his campaign, basically because that's what he had. Right. He did have a lot of eyeballs that people, you know, platformed him essentially for free.

[Preston]

Is. Yeah, I saw some of those stats. I'm sure you saw the same stats. Not only impressions and people reached but minutes of focused attention, which is the true currency.

[Eric]

And wild. I mean, totally crazy. But yeah, that. I mean stuff like that.

[Preston]

So start. There is one thing we wanted to.

[Eric]

Sort of try to get back to.

[Preston]

To be clear, this was a mess.

[Eric]

Right.

[Preston]

We were just trying to stay in business.

[Eric]

So it was just like what? But coupled with okay, intuition tells me my gut as a brand builder is.

[Preston]

That, you know, we need to be doing these things.

[Eric]

I want to feel these things.

[Preston]

I want to feel the same thing.

[Eric]

I want people to feel the same thing about Chubby's that I feel about my favorite brands. You know what I mean? And like, how do I align those things?

[Preston]

Because the measurement isn't there, but I know I need to be doing those sorts of things.

[Eric]

So trying to get back to like unpaid things that get you what you want to get.

[Preston]

And what does that mean?

[Eric]

It's reaching more people with content.

[Preston]

And content means anything. Content means like with a thing that has an impact on a person. So that's an event, that's a partnership.

[Eric]

That'S an ad, that's an email, that's.

[Preston]

A billboard, whatever it is.

[Eric]

Content reach many more people than we.

[Preston]

Had been reaching with content that makes them feel some type of way. What does that mean? Emotional connection. But specifically what does that mean? It means they see something, they feel something, and you lodge yourself in their.

[Eric]

Frigging minds to where they don't view.

[Preston]

You just as like some meme account. Right. Because we can all play that game.

[Eric]

That'S kind of hike. You can get brand awareness. And we tried to play that game. We were one of the top 10.

[Preston]

Most viewed brands in the world.

[Eric]

I think that's the stat but one.

[Preston]

Of the things we learned is we were playing the virality game and so we in some ways kind of like became a meme account.

[Eric]

You know we were getting a lot.

[Preston]

Of views, a lot of whatever, whatever.

[Eric]

But we weren't accomplishing. So we were earning the engagement but we weren't earning the.

[Preston]

Or we weren't checking these other boxes.

[Eric]

Which is like, you know my brand name, you know what we sell and.

[Preston]

That I am trying to sell you.

[Eric]

Things ultimately and why US vs Walmart.

[Preston]

Vs Amazon, cheapest version of XYZ category. And that starts to look and feel more like an advertisement and most likely does not go viral.

[Eric]

But trying to think about okay, what's.

[Preston]

The creative like you got to reach.

[Eric]

More people and do it with creative that does those like four things and, and that is fundamentally what we're trying.

[Preston]

To do when we build brand awareness. So that's like how I want to do as much of it as I.

[Eric]

Can without paying anything.

[Preston]

But then if I am going to.

[Eric]

Have to pay stuff then how. So it was kind of like blindly.

[Preston]

Trying to stumble forward and find things out because it was not what people really did.

[Eric]

But I mean we started effectively spending.

[Preston]

More on creative that you would have never spent on if you were operating.

[Eric]

On a one or seven day click.

[Preston]

Basically because it didn't drive a lot of short term revenue.

[Unknown]

Non direct response like just sort of more.

[Eric]

Yeah.

[Preston]

Creative that was.

[Eric]

Yeah.

[Preston]

Not your classic let's call it product offer urgency. Right.

[Eric]

Where and product being you know like.

[Preston]

Problem solution, very like rational appeal. Not that we didn't do that stuff at all but it was just an evolution to more balance. Right. Where maybe this spend was going broadly like from a, from an audience perspective going upper funnel. Right.

[Eric]

Trying to hit people that had shown.

[Preston]

No interest in us at all. Excluding maniacally excluding everything which again shows.

[Eric]

Lower roas because it's highly incremental and these people give zero, they give zero.

[Preston]

About you generally at least before they saw your stuff.

[Eric]

So audience generally growing upper funnel objective. We could be somewhat tactical and specific about objectives starting to go more toward.

[Preston]

Engagement and like traffic to profile view and dare I say boosting posts.

[Eric]

Right.

[Preston]

So like that kind of stuff became a larger mix of the total.

[Eric]

Let's call it budget allocation, you know like where it's just engagement campaign for.

[Preston]

Post engagement or traffic campaign to IG profile view. Right.

[Eric]

Optimizing for shares of content and follower growth.

[Unknown]

One thing I really liked from what you've spoken about is that and then you move your metrics a Little bit from this like direct response, move them down the funnel to what I heard heard you coin and Rick Cadot from four Sigmatic Coins as memory structures in a way.

[Preston]

Right.

[Unknown]

I really like that as a term where you're trying to set out these sort of associations or memory structures that will allow someone to bring your brand into their life.

[Preston]

Rick's the man.

[Eric]

Yeah, he actually is the.

[Preston]

I need to give him props publicly. I hope he sees this.

[Eric]

But we were talking one day when I think I met maybe some of your colleagues at Pilot House and, and one of the posts that did pretty well is it opens with this idea.

[Preston]

Of I can get you two ROAs.

[Eric]

Or a 20 ROAs if I just.

[Preston]

Mess around with a couple of different things.

[Eric]

And I don't know, that seemed to.

[Preston]

Take off with people where they're just like, holy shit.

[Eric]

Yeah, you can manufacture any row as you want.

[Preston]

That was all from Rick in a conversation we were having in New York one day. Which is I guess somewhat obvious, but.

[Eric]

The way he put it was really clean.

[Preston]

And I was like, oh, wow, that's pretty awesome.

[Eric]

So props to you Rick if you watch this.

[Preston]

But yeah, memory structures, absolutely. It's like, what is this association or memory basically that I've got in someone's mind?

[Eric]

Because there's this whole thing about how people think.

[Preston]

System one thinking, System two thinking.

[Eric]

There's this guy, Daniel Kahneman, Nobel prize winner, smart dude. But a lot of how people think and system one thinking is automatic, emotionally driven. We use these shortcuts, a lot of subconscious type stuff. That's how we want our purchase behaviors.

[Preston]

To happen for our brand.

[Eric]

Where it's like, okay, I need a sweater. Okay, sweet, I think sweater brand. And rather than okay, I set up my spreadsheet, I've got my 10 competitors.

[Preston]

Here'S the price, here's the features, here's.

[Eric]

The fabrics, here's the whatever.

[Preston]

And it's like a very heavy conversation.

[Eric]

Or a heavy decision and then you.

[Preston]

End up buying whatever has the best features at the lowest price. That's the race to the bottom and that's a game no one wants to play.

[Eric]

Rather than like, okay, boom, I have a problem to solve. This brand solves it. I go to them or I search and I buy. I'm generally more likely to buy at.

[Preston]

Full price and buy a lot over a period of time.

[Eric]

So for optimizing, for contribution dollar generation from a 12 month LTV basis, we.

[Preston]

Want all the System One purchases we can get. Is what brand building earns for you.

[Eric]

That you Just don't earn when I'm jamming. Here's my product, here's the urgency.

[Preston]

Buy 15% off in the next 15.

[Eric]

Minutes and I'm just hitting these people. And you don't earn that memory structure.

[Preston]

Or that automatic purchase, you earn some of it. Because every marketing thing does a little.

[Eric]

Bit of short and long term. But the problem is that if we're optimizing everything off of how it drives short term revenue, if we look at a total, I spend $1 and I.

[Preston]

Want to maximize the number of contribution margin dollars that I get over a 3, 612 month period.

[Eric]

It's not nearly as great as if.

[Preston]

You'Re a little bit more balanced with the way that you're marketing.

[Eric]

The unfortunate casualty normally is in platform roas, but true profit, dollar incrementality in.

[Preston]

Both the short and the long term is the real winner.

[Eric]

And that's the thing that gets you.

[Preston]

Acquired for hundreds of millions of dollars generally. Right, because that's where a lot of.

[Eric]

The equity value is.

[Unknown]

And then what, so what do you recommend? I guess you're always going to keep an eye on all your core metrics, including roas, no matter what it is. But what are some metrics that you're looking at that go deeper than that? Is it really looking at down to just incremental growth and contribution margin?

[Preston]

Everything should ladder to that, right?

[Eric]

I mean that's what business is. But. And I'm being an idiot, but that's. Yes, but what can you look at.

[Preston]

That are representations of that happening if you run E Comm or if you.

[Eric]

Are an E commerce business, Just like total revenue from branded organic search, is.

[Preston]

That going up nominally? And is the percentage of your total revenue coming from branded organic search or.

[Eric]

Just organic search in general going up? I mean, if the answer to both of those questions is yes, you're probably doing pretty good.

[Preston]

And I would think that most brands cannot answer yes to both of those.

[Eric]

Questions right now because you have to be doing things that don't necessarily drive immediate short term to I think drive.

[Preston]

Growth and revenue from organic search or revenue from branded organic search both on.

[Eric]

A nominal and on a share basis. So I think that's probably a great.

[Preston]

Thing to look at. And what's the leading indicator of that.

[Eric]

That brand organic searches.

[Unknown]

And if you're talking memory structures, I bet you'd actually start to potentially see those ideally in that data as well. If you're trying to put out there that, you know, Chubby's is a brand, that's for people on Boats or whatever memory structure you're trying to. And I was curious, do you remember any of the. Of the memory structures that really helped grab. Grab attention?

[Preston]

Hmm, that's a good question.

[Eric]

I'm probably going to give you a.

[Preston]

Non answer but by up leveling it to like some of the.

[Eric]

The notes that we were always trying to hit on like taglines matter. It seems like dumb and like traditional advertising or marketing y but like we.

[Preston]

Just tried to hit on a very few small number of ideas a million times. You know, you do that for a decade and something happens.

[Eric]

But like we were always about like this notion of like the feeling you have at Friday at 5. That was one of the things that.

[Preston]

Like represented Chubby's and represented the use case of like Friday at 5, you're done with bosses and cubicles and TPS reports and pants, you're home.

[Eric]

Time is now yours.

[Preston]

Rip off those leg shackles and throw on some shorts and time is now yours.

[Eric]

You're now relaxed. That is that feeling of tension and release. Like classic narrative structure that we hit on all the time.

[Preston]

The weekend has arrived. So this is the weekend brand. So Friday five weekends arrived. Sky's out, dies out.

[Eric]

That was more of like an organic thing. I don't know if that's trademark, but maybe it is. But just like hitting on these very kind of like specific ideas that ended up being taglines, shortcuts, even just your.

[Unknown]

Tagline on the website right now because I haven't been there in a while and it's just proper length shorts and it's just, it has this tongue in cheek sort of like you're doing it wrong kind of mentality and it just gets the message across right away.

[Preston]

Yes.

[Eric]

And the general idea of like being.

[Preston]

An insider and you want to be.

[Eric]

An insider, you want to be a part of the community. So hitting hard on all this notion.

[Preston]

Of yeah, this is the way to.

[Eric]

Do it, there's just no other way to do it.

[Preston]

This is obviously how things should be done. And taking that strong, bold stance on something as insignificant as the length of your shorts in the grand scheme of life.

[Eric]

But this was what we lived for our whole lives. Absolutely. That.

[Unknown]

I'm curious if you were building this again today because it seems like the founders all did a really good job of not having to make themselves front and center in this. I'm sure you did in some ways in your emails and your content. Maybe there was some social video. But I'm wondering if you were to. If you were building this brand again, if you and your founders, co founders or maybe a few of you would be really dedicated to making TikTok videos where you're talking about stuff. If you, if you would do it a more personality. If you felt you would have to do it a more personality forward brand in today's day and age.

[Eric]

It's a great question.

[Preston]

I don't know, but answer would probably be yes.

[Eric]

I mean, I think there would potentially be some strategy of trying to build our individual personal accounts and cross posting or blah blah, blah, blah blah. Right. Because you can get distribution from human accounts. I don't know, maybe there's something there.

[Preston]

I think it would also just be fun and interesting. I mean, I think I had insecurity, I can only speak for myself. I had insecurity about it because it felt selfish. Right.

[Eric]

It wasn't clear to me that it.

[Preston]

Would directly serve the brand and I think that was a short sighted approach.

[Eric]

And I think broadly though in 2011 it wasn't as obvious how valuable an evergreen audience is.

[Preston]

But it is obvious, right?

[Eric]

I mean people with audiences is valuable.

[Preston]

But it just wasn't something that I think we operated around.

[Eric]

But what I would say is all four of us were in most of.

[Preston]

The photo shoots for the first 10.

[Eric]

Years of the business and yeah, we signed every email. It was, we did all of that stuff.

[Preston]

So it just manifested, I guess in a different way.

[Eric]

Like email was big for us and.

[Preston]

Building up those own lists, if you.

[Eric]

Want to call it that. And yeah, we tried to do that.

[Preston]

But I think it would have been.

[Eric]

Cool if we were writing stuff about.

[Preston]

What we're going through on LinkedIn or.

[Eric]

If we were making more videos. I think that would potentially be interesting.

[Preston]

Because all four of us and the.

[Eric]

Broader team, there's so many different, different.

[Preston]

Personalities and angles of the brand because.

[Eric]

It was all of us coming together to I think create what then externally is Chubby's. Because it's not just me, it's not.

[Preston]

Just Tom, it's not just Kyle, not just Rainer, it's not just Mason or Phil or whoever, whoever.

[Eric]

And so I don't know, I think that would have been cool just thinking about it.

[Preston]

This is sort of like I'm brainstorming.

[Eric]

With you life, but I don't know.

[Unknown]

Can you talk a bit about your email? Because I think that's maybe even where I entered Chubby's from a marketing perspective was starting to read your email subscribing and you get, you guys were pretty creative and I feel like when I was reading them, I'm sure, you had lots of sales focused emails, but you put a lot of attention into just creativity and connection with people rather than just driving sales trying.

[Eric]

I think the idea is that this.

[Preston]

Is our life's work to some degree.

[Eric]

And it's like you've got these. I'm going to sound like an idiot, but in some ways I feel this way because it's really serious stuff. You've got this canvas, you've got this canvas to try to make people feel as good as possible with and then sales will come. But you've got the canvas of like an email, you've got a sub, you've got a second line and then you've got header and you've got images and you've got buttons and you've got links.

[Preston]

And you've got alt text and you've got all of this stuff. And then like with a Facebook ad, you've got the asset, you've got the title description, the cta.

[Eric]

Like, you've got all of these little elements that you can call your canvas.

[Preston]

And there's so much that you can do with those components to make them interesting to people and be different from.

[Eric]

The people who are just trying, trying to check boxes. So that's like a broad approach that.

[Preston]

I think we tried to take, which.

[Eric]

Is just like, how can you not wow people but do something to where.

[Preston]

It'S like, holy shit, this is awesome.

[Eric]

You know what I mean?

[Preston]

So we tried to do that with email.

[Eric]

Yeah, we made some. We would have a Friday email called.

[Preston]

The Weekender that would officially kick off your weekend. And it was just a content email.

[Eric]

And it took a variety of forms over time.

[Preston]

But the general idea is this is an email that in and of itself.

[Eric]

Is great content, that when you see it, it makes you laugh, you feel.

[Preston]

Great, it elevates your mood and it's something that you want to share with.

[Eric]

Someone else because it's so good.

[Preston]

Regardless of who it comes from, it is in the running to be the.

[Eric]

Best piece of content you see that day. That was our aim, you know what I mean?

[Preston]

So, yeah, we tried to make everything.

[Eric]

Interesting and I don't know if it.

[Preston]

Follows all of the rules, it probably doesn't, but we would mess with subject.

[Eric]

And sender where wouldn't always be from Chubby's. And I honestly, I don't think you.

[Preston]

Could do that anymore.

[Eric]

But like our audience opted in to it, right?

[Preston]

And they liked it and it made them laugh.

[Eric]

They're like, holy shit, I love this whole whatever sending it from, you know, Dr. McShortsy face.

[Preston]

That's a horrible name. Horrible example.

[Eric]

That's not what it is. And I don't want that to be sort of like what I'm putting stake in the ground.

[Unknown]

Boaty McBoatface, I would love it. I think that's, I think that's great.

[Eric]

But yeah, we tried to make the.

[Preston]

Medium as interesting and fun to engage with as possible.

[Eric]

And even if it was like a.

[Preston]

Sales focused email, just again, tried to make it interesting so it never felt like it was checking a box.

[Eric]

Because everything that you do as a brand is either a deposit or a withdrawal. And if you're just withdrawing too much.

[Preston]

You go out of business and you.

[Eric]

Run out of money and you then have to do funny stuff to stay alive. So just trying to make more deposits, I guess.

[Preston]

And a deposit is like what feels.

[Eric]

Great, you know, when you interact with.

[Preston]

It, what feels awesome. And that's what we were trying to do more of.

[Eric]

And you know, you just have these different channels and canvases or whatever you want to call them to try to.

[Preston]

Really, you know, try hard and serve the people who are taking time out of their day to interact with you.

[Unknown]

And then follow it through to what you're doing with Marathon. Because I feel like Marathon is a real culmination of kind of what you've learned at Chubby's, what you've learned about brand and content marketing. What is Marathon?

[Eric]

Marathon is an attempt to fix the.

[Preston]

Measurement problem that keeps us marketers, brand builders, from doing the things we know we need to do, which is invest.

[Eric]

Both in driving short term revenue and.

[Preston]

Building the brand for the long term.

[Eric]

So that I can build this scalable, profitable business and get out of only.

[Preston]

Having to sort of buy short term transactions and play the algo game.

[Eric]

So. So we all know brand is important.

[Preston]

That's why it's called a brand.

[Eric]

You know what I mean? And the obvious problem is I can't measure it. So I don't know if I'm going to be wasting money. And we don't have money to waste. But we all intuit that the strongest.

[Preston]

Brands are the most successful, the most profitable. Right?

[Eric]

But it's hard to make that leap. Like, what does brand look like?

[Preston]

What does it mean if it's strengthening? Yeah, I can run some surveys. Those are expensive.

[Eric]

Especially if you do big brand tracker.

[Preston]

Surveys when you're trying to understand, okay, is my brand getting stronger or weaker.

[Eric]

And how do I quantify it?

[Preston]

Expensive survey bias, all that kind of stuff.

[Eric]

But that's the traditional way that when.

[Preston]

You get to a certain size, brands.

[Eric]

Start to measure their brand because you want to strengthen it and that's sort of broken.

[Preston]

And so we did a lot of that, we spent a lot of money on surveys.

[Eric]

But then the knock was always. And the knock on any kind of brand measuring, it's like, well so what?

[Preston]

How does it actually connect to my business, to my revenue? How do I get confidence that if I allocate a resource could be money.

[Eric]

But could also just be people time, focus, whatever to not toward solely driving.

[Preston]

Short term revenue, but to drive this long term resilient baseline of revenue, which is I think the best manifestation of brand.

[Eric]

You've got this indestructible SaaS type revenue that just you can't mess with, right?

[Preston]

And you're building this layer cake of.

[Eric]

This rock of revenue that just grows and grows. Like that's what a brand is. And where turn off marketing, et cetera.

[Preston]

You still have a business and I'm not saying that you should turn off all of your marketing or never run.

[Eric]

Discounts or anything like that, but like have some balance. So try to fix that problem, right? Measuring your brand and how investing in brand, whatever you want to call it.

[Preston]

Brand marketing, top of funnel, influencer, friggin doing fun stuff in the world that.

[Eric]

You know is awesome. But like I don't know if it drove revenue today. Like I don't know if like the.

[Preston]

One they click Roas Liquid Death is.

[Unknown]

Really good at that.

[Preston]

Yeah, Liquid Death I think has gotten a good reputation for just creating awesome.

[Eric]

Videos that are not trying to get.

[Preston]

You to click and buy.

[Eric]

I'm sure if they threw those pieces of creative in a conversion campaign, people.

[Preston]

Would click and buy. But it probably wouldn't compare to, I.

[Eric]

Don'T know, something that was just like a white background in a product shot.

[Preston]

Of a bottle with like 90% off right now. Right? I mean no one would run 90%.

[Eric]

Off ads but like shit, that would.

[Preston]

Get a lot of clicks and that would probably show some pretty high roas.

[Eric]

But it's awesome, it's awesome content. It gets people to talk about it.

[Preston]

You remember it. I mean we could both spout off.

[Eric]

Probably five of their last videos that were like those are fucking awesome, right?

[Preston]

And they've earned that in our mind. And it was prob really hard to.

[Eric]

Create that content and really scary because.

[Preston]

It doesn't show short term roi.

[Eric]

So it's like how am I going to spend money on that? You got to either have a lot of faith or you got to find.

[Preston]

A way to measure it and know.

[Eric]

It'S the right way to do it. So that's what Marathon is. It's basically like, man, customer acquisition costs are up.

[Preston]

I'm discounting more than I want to. I feel like I'm on this hamster.

[Eric]

Wheel of tomorrow, if you will.

[Preston]

And I don't know what to do about it.

[Eric]

I mean I can do the whole.

[Preston]

CRO thing and you should be doing CRO, of course. Or I can do more ad variants and you should of course do more variants.

[Eric]

But what about the brand?

[Preston]

Like how am I doing things in.

[Eric]

The world that get people to want.

[Preston]

To buy from me without needing to enter the ad auction? How do I get people to search for my brand and buy at full price?

[Eric]

Right. I mean if you necessarily have a.

[Preston]

Stronger brand, if more people are searching your brand name and buying it full.

[Eric]

Price, less price sensitivity.

[Preston]

These are all the things that are obvious that we all want. But there's this disconnect between the actions.

[Eric]

That we take and the things that we want. And we continue to sort of like.

[Preston]

Die this slow death of optimizing ourselves out of business because we can't measure.

[Eric]

How strengthening your brand, however you want to do it, top of funnel brand ad whatever makes you more profit than.

[Preston]

If you were to take those dollars or those resources and throw them into this bottom funnel conversion campaign sort of thing.

[Eric]

That's the whole thing in a way.

[Preston]

Where the CFO can get on board.

[Eric]

And be like dope, I get it.

[Preston]

I'm going to make more money because of this and I can measure how.

[Eric]

I'm going to do that.

[Preston]

This is existentially important because contribution dollar growth is all that really matters at.

[Eric]

The end of the day. So it's our attempt to try to.

[Preston]

Solve that big problem.

[Eric]

And it was, we took an approach while at Chubby's. It was effectively in the vein of.

[Preston]

And has inspired what is Marathon, which.

[Eric]

Is just this general idea of we can quantify. I'm all about being one day click direct response marketers.

[Preston]

But what is that direct response?

[Eric]

You know, we want I can drive.

[Preston]

A purchase or I can buy a brand response. There's a conversion value on a purchase.

[Eric]

It's revenue. There's also conversion value of earning an.

[Preston]

Engagement like a share or an email signup. These are indications of interest of future.

[Eric]

Demand that have non zero financial value.

[Preston]

In terms of how they'll manifest in terms of future revenue.

[Eric]

Not unlike a Preston shared and he's going to buy in 180 days. But in the same way that you.

[Preston]

Get a representative sample and do 3,000 surveys and you say that's representative of.

[Eric]

Total demand, that I'm growing or shrinking.

[Preston]

Same thing here, except you've got millions.

[Eric]

Of these engagements you can go off of. They all have financial value.

[Preston]

So you can find statistically significant connections.

[Eric]

Between your revenue, particularly organic search, and these engagements that you're earning in the world where people are like, yep, fuck yeah, I'm going to follow them. I'm going to share this.

[Preston]

And obviously creative matters, right?

[Eric]

You can engagement hack your way to out of business as well. So this is about being reasonable adults here. But that's the general idea of we're.

[Preston]

Trying to fix what seems to be.

[Eric]

The most pernicious problem facing modern DTC.

[Preston]

And multi channel brands. But like how the heck do I.

[Eric]

Get out of this short term hamster.

[Preston]

Wheel and start building for sustainable profitable growth? I start to see margin expansion.

[Eric]

Can you imagine margin exp. Expansion?

[Unknown]

I think of all performance marketing. We actually talk about it at Pilot House all the time between our various efforts with CRO and Lanny Pages. It's like we're scre. We're squeezing the rag. You know, we're just. It's all about like squeezing the rag. But you can only squeeze that rag so much until you're affecting the texture of it. Maybe you got to get a loom that can build a larger rag or something like that. More rag to squeeze.

[Eric]

I like more rag to squeeze. Yes. I love that. I think that's a great, the great way to think about it. Or like. Yeah, I mean if I'm going to. I don't know, I was going to.

[Preston]

Take your metaphor a little bit further.

[Eric]

Yeah, loom or like where am I getting the cotton? I got to plant the cotton trees or the cotton bushes or the cotton plants or whatever.

[Preston]

How am I laying those sorts of foundations?

[Eric]

Or frigging think of Tesla, I don't know, number one performing stock, spending so.

[Preston]

Much money in this self driving taxi baloney.

[Eric]

I don't know, it's certainly not making them any money right now, but it's kind of going to make them trillions.

[Preston]

And trillions of dollars in profit over time.

[Eric]

And everyone thinks about that.

[Preston]

They're like, yeah, you're investing for future.

[Eric]

Profits, but then again you match it.

[Preston]

To like, well, what are my actions and how am I investing capital? I am not investing for future profit.

[Eric]

Expansion with the way that I'm allocating capital today. But the same thing applies to consumer brands. But it's like they pie in the.

[Preston]

Sky they'll run some spreadsheets on how.

[Eric]

Much profit they're going to make from.

[Preston]

This investment that's yielding no revenue today.

[Eric]

We have to do the same thing. And so that's what Meredith and tries to make it really easy to do.

[Unknown]

And in the Tesla example too, it's the fact that they are thinking about these moonshots is mainly the reason for their huge valuation. You know what I mean? Like, when you look at cars on the road, they're pale in comparison to these other car companies, but it's because the fact that they're thinking about these soup, even though they haven't cracked the code on them, they will make money with them eventually. But people are bought in on that big vision.

[Eric]

And I don't want to use them like because I don't want to. I don't want to equate, you know.

[Preston]

Building a sustainable brand building with moonshot necessarily. You made a perfect point that it's.

[Eric]

Like could be viewed as moonshot, but it's like just investment for future profit growth that doesn't necessarily pay out today.

[Preston]

But in order to build a moat.

[Eric]

Right, because ultimately that's what it's accomplishing for them.

[Preston]

It's owning what will be a massive business where there is already future demand and building a moat around that. And Buffett talks all about this, right? He's like, brand is the most powerful moat.

[Eric]

I buy businesses because I want a high probability stream of profits into perpetuity. And what am I buying?

[Preston]

I'm buying a brand. I'm buying that memory structure we were.

[Eric]

Talking about, that is the most powerful moat. And I'm like, well, can't argue with that dude.

[Preston]

I mean, that guy's made a lot.

[Unknown]

Of money and it just makes everything better. I've been referencing the. We had Eugene Healy, I don't know if you know him, he's like a cultural theorist. He came on the podcast a couple weeks ago, but he references referenced this tracksuit study, that tick that they did with TikTok shops that was basically trying to quantify the awareness advantage. Essentially they found it was almost three times more likely for someone to buy a brand, go figure, that they were aware of. So it's like when you do put all of this stuff into place, it makes your ads better as well, is what I'm trying to say.

[Preston]

Right, right. I mean, yeah, when you hit more.

[Eric]

People and they feel more positive about you.

[Unknown]

Yeah.

[Eric]

They're going to be more likely to.

[Preston]

Open your emails, click on your emails.

[Eric]

Click on your ads. Right.

[Preston]

Follow you Engage on your ad which.

[Eric]

Then makes gives it that social proof that then makes it much more effective.

[Preston]

For everyone else that sees it.

[Eric]

So yes, it is a rising tide that lifts all boats and we just have to be able to pull ourselves out of this requirement to see short.

[Preston]

Term roas and really understand what am I trying to build here? What is true equity value growth mean?

[Eric]

How do I build stream of profits.

[Preston]

Out of this entity that is this company, that is this brand.

[Unknown]

Very cool. Well Preston, I want to thank you for coming on the DTC podcast today.

[Preston]

This was fun.

[Unknown]

Going to keep we're going to have your links to all your social profiles because you got to follow Preston for his Socratic dialogues between the clever CMO and the CFO who's getting it. This I love it.

And if you're a CMO out there.

It'Ll give you lots of ammo for how you can go about having these conversations with very numbers minded people. And I guess that's what Marathon does as well as it gives performance marketers and people who traditionally require that data or that evidence, it gives them wings or it gives them that ability to take bigger, bigger stabs up, up funnel 100.

[Eric]

Yeah, it takes it from like, like.

[Preston]

That one to nice to have brand budget that gets cut every time you miss a monthly number.

[Eric]

To man, there's a world where this.

[Preston]

Should be 50, 60% of where I'm spending my money, which is what the research shows.

[Eric]

60, 40 to brand is what historically has shown to be ideal for most.

[Preston]

I think modern brand operators, e comm owners, media buyers, 60% of brand is.

[Eric]

Like get out of my face, I'm going to punch you. But that's the reality.

[Preston]

But it's like how do you get there? You need numbers. This needs to be concrete, it needs to be data driven. That's why we're doing this whole thing.

[Eric]

Because if you project out current trends with a lot of these businesses, with.

[Preston]

What they're seeing with increasing CAC and.

[Eric]

All this kind of stuff, it's like.

[Preston]

You either don't grow or you die this slow death.

[Eric]

But ultimately it doesn't end well. Tom and I, we started Marathon. TOM CO FOUNDER AT Chubby's We've seen like you've been in this game for 20 years.

[Preston]

We've been in this game for nearly as long.

[Eric]

We've been seeing so many brands go.

[Preston]

Like this and then just go bye bye. Right. Because they didn't get this fundamental balance.

[Eric]

Figured out out and they may have.

[Preston]

Seen like a rocket ship on the.

[Eric]

Outside but like, we've seen the cycles, you know what I mean? And we just want brands to be.

[Preston]

Able to get through this next cycle and to flourish and just help them.

[Eric]

And it's a measurement problem in a lot of ways.

[Preston]

But the reality is, if you have this data, you'll realize, man, you're going to be spending your money dramatically differently on dramatically different creative, and you're going.

[Eric]

To make a lot more profit. Like, everyone can do this and, and it's just so possible and doable, but.

[Preston]

It'S like a here to there kind of thing.

[Eric]

And we just want to be that.

[Preston]

Bridge to what everyone knows is where they want to be, which is this balance of brand and performance.

[Unknown]

And it's going to be more fun if you're not just a slave to pumping money into meta all the time. If you can do the fun things that brands like Liquid Death are doing, it'll free you up for more creativity and connection with your audience.

[Preston]

Not only for you, but yeah, for.

[Eric]

Your audience, for your customers. You're going to give them a lot.

[Preston]

Better experience and they're going to repay.

[Eric]

You with full price, purchases.

[Preston]

Everything benefits because of this. That's the reality.

[Unknown]

Very cool. Well, Preston, we will catch up with you again maybe later in the year, but otherwise, great to meet you.

[Preston]

I appreciate it.

[Eric]

I'm grateful to have been part of.

[Preston]

This with you, Eric, and great work.

[Eric]

On what you're building here. It's a lot of fun.

[Preston]

I appreciate it.

[Eric]

Thank you.

[Unknown]

Thanks so much for listening to today's episode.

If you're not a subscriber to our.

Newsletter, you can do that right now at directtoconsumerall. One word co. I'm Eric Dick and this has been the DTC podcast.

We'll see you next time.