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- [00:00]
Zach
A lot of people think that they don't want to have good competition so they could beat their competition. But actually the truth is you want to have the best competition because you want to learn from your competitors.
- [00:10]
Justin
The beauty of a crowdfunding campaign like that is like you get your product into the hands of thousands of people immediately. Our first day of fulfillment out of our warehouse, like, we ship a thousand orders. Well, within 30 days, we were getting a ton of feedback. We don't have a factory, we don't have a warehouse, we don't have an office. And as a result of that, we were able to pick up and move our supply chain overnight when tariffs hit.
- [00:32]
Zach
Being profitable early on was extremely important. If you're profitable, then you get to take those profit dollars, those proceeds, and reinvest it back into the business. We were able to bootstrap the business with the model, plus being profitable from day one.
- [00:53]
Eric Dick
Welcome to the DSE podcast, fellas. Had a great time catching up with you a few weeks ago about your journey at Tumble. Start me at the beginning. Give me your hero's journey. Why did you build Tumble?
- [01:05]
Justin
So it kind of starts a while back, Zach and I actually went to college together at Emory University. We had gone off and kind of done our own separate things, but we, around 2019, started getting together and talking about potential business ideas. And Zach had a background in home furnishing. So naturally we just started looking within the home category for different opportunities that we thought might be interesting. And we had come across the washable rug category, which was kind of new and emerging at the time. And we felt like it was a really interesting concept. We felt like there was a lot of potential and legs there and room for growth within the category. But as we dug a little bit deeper, we started to realize there was actually quite a few deficiencies with the products that were available in the market at the time. There's kind of a whole laundry list of things that we identified as we read through thousands of reviews and talk to customers and things. But kind of the main ones that come to mind were that, you know, the rugs were too thin. The rug pad provided no cushion. The rugs would curl in the corners. The they didn't have any sort of, like, spill proof coating. The need to wash them was kind of a pain. And then the fact that they had velcro on the rug pad made them really difficult to put down and take off when you did need to wash them. So we kind of studied all those issues and got our heads together as to thinking how we could do it differently. And what came out of that about a year later was a product that didn't use Velcro at all, had pockets in the four corners of the rug to keep the corners from curling. We have a quarter inch thick foam pad. We have a spill proof surface so that the liquids just beat up on the surface and it minimizes the need to wash it in the first place. And then we also came at it with a more kind of cost effective approach and we were able to provide better value for our customers as well as. So we basically studied this category and felt like there was a unique opportunity to do it better and to differentiate within it. And after that we decided that rather than going straight to market with a Shopify store, we felt like we could de risk a little bit by doing a crowdfunding campaign. We also discovered a different issue, which is that rugs is not a one size fits all category. It's not like mattresses, for example, where you can have like, okay, we have one hero SKU in a few different sizes. People want different designs, colors, patterns for their space. So naturally you have to have a pretty high SKU count. So we actually launched on day one with 120 SKUs. We had 30 different patterns in four sizes each. And so as a result of that, we felt like, you know, we need to figure out what patterns are going to sell and in what proportions. So we felt like a crowdfunding campaign was a really good way to get that, that learning. So we did a crowdfunding campaign in October of 2020 and that was a huge success. We did around 350k in our first month. And you know, at that point we felt like we had product market fit. We felt like we knew what the SKU distribution was going to look like and we had a little bit of capital to place a larger PO with. Our factory went ahead and did that and by Q1 of 2021 we were able to launch our Shopify store.
- [04:08]
Eric Dick
One thing that came out in the pre interview that I thought was really great is the value in not being first in a category, which I thought was, you know, a lot of people think they want to be the number one innovator leading the category to start, but there's so much opportunity to de risk as someone who enters a new category and fixes it a little bit, right?
- [04:26]
Zach
I think it's definitely true. So prior to Tumble, I had worked at a company called Noble House and we launched a bed in a box brand called Oki Okie and saw Immediate success. Very quickly, I learned a lot of things. What I did, what categories I didn't want to go into, like mattresses, super competitive US Manufacturers, very little product differentiation, all about the marketing. And then I learned, you know, what, you maybe do want to go into high product innovation, things of that nature. But what I found to be really interesting is you had Casper and then you had three to five people who launched within one to two years after and saw enormous amount of success. And so they completely rode the coattails of Casper. Now, they all maybe had their own different product in their own angle. You have purple with a different material. But they saw that a category was being created and a massive tidal wave was coming, and they were able to ride it. Now, in our particular example, what I think was really helpful is that our competitor, ruggable was a fierce competitor. They're as good as it gets. And so a lot of people think that they don't want to have good competition so they could beat their competition. But actually, the truth is you want to have the best competition because you want to learn from your competitors. One of my favorite anecdotes from a book on Sam Walton is that every single day, he would walk across the street. This is before he created Walmart. Walk across the street and look at all the prices of competition. How did they merchandise their products and how did they price their products? And he then go back across the street, he'd make some changes, and he would lower his price, be one penny less than his competition. People think today that copying is this, like, you know, negative word. Oh, you copied how they do their marketing. When. When really you want to look at all the people around you, both in your category and outside your category, and you want to get inspiration, see what's working for other people, what's not working for other people. And ultimately getting to learn from ruggable, but also having them spend a lot of dollars educating the market on the benefits of washable rugs was a huge benefit for us.
- [06:44]
Eric Dick
Yeah, Tip of the spear, right? It's the rising tide raises all boats kind of situation. You guys are eating market share from, like, Persia in a way.
- [06:53]
Zach
Right.
- [06:53]
Eric Dick
Or like. Or like rugs that aren't, you know, rugs that aren't washable in a. In a way. These. These much more expensive.
- [07:00]
Justin
Yeah. Well, I think washable as a whole, it's also growing the pie because you're able to put rugs places that you wouldn't have otherwise. Right. So like a rug in a kitchen. Not something you typically would have done Historically, but now it makes sense, right, because you can wash it. But I think to build on Zach's point, like, yeah, there is an element of like taking inspiration from other players and being the second. Being the second player has its own unique advantages. But there is also, you want to make sure not to just be a straight up copycat. Right. It's like, okay, I see that they're having some commercial success and I see there's lots of things we can borrow, but we need our own unique angle and our unique point of differentiation. And that's kind of like the key combination there. You can't just be a straight up copycat. And I think there's even more recent examples. So the bet in the box one was one that we looked at at the time, time that we started tumble. But you know, like a more recent example would be like hydration. Right. Liquid IV came out. They're the category creator in a sense. But there's an explosion of other hydration companies that have different angles. Whether it's it's for women, it's for people who are hardcore about exercise. Maybe it's a packaging innovation. But now there's like numerous successful competitors in the space and it's not a winner takes all market.
- [08:09]
Eric Dick
I've been really looking at the electrolyte market and elements. Big addition of sort of like 1000mg is a huge amount of sodium. But for people that are working out heavily, you know, Gatorade has a fraction of that amount of sodium in it. Now I'm seeing a bunch of brands that I'd been following that previously didn't have that much sodium. Now they're relaunching their extra strength version that, you know, to meet that, that market need. It's definitely such a hyper competitive space.
- [08:39]
Zach
You.
- [08:39]
Eric Dick
So you guys launched on Indiegogo. That was that. That was the platform you guys crowdfunded on.
- [08:43]
Justin
Correct.
- [08:43]
Eric Dick
I think that's such a hack to be able to, you know, get as many SKUs into the market as you did. Obviously, a lot of learnings came from that. But what were the key learnings that you guys kind of zeroed in on from that Indiegogo campaign?
- [08:54]
Zach
Well, I think the biggest learning for me was what designs and which sizes were we're selling. So actually tangible orders from our customers, which then led us to a secondary purchase order to launch on Shopify. That was a huge unlock for us and the reason why we did Indiegogo. I also think that it proved to us in the lead up to Indiegogo that we were going to have product market fit because we had built up a Facebook community. I should say a community in a Facebook group. And I think there was 10,000 or 20,000 people in this group, and we would start to tell them about different parts of what the product might look like. And we realized that there were problems with the competition that we had read about, we thought existed. And then people were confirming, and they were confirming that our product, both in the Facebook group and then with their dollars by buying during the indiegogo campaign, that we were onto something. And so that just gave us a ton of confidence. When you sell $350,000 in a month, like, hey, maybe I'm onto something. And that gave us the confidence to scale the business quite quickly over the next couple of years with cash upfront,
- [10:26]
Eric Dick
which is another huge thing, because you guys have bootstrapped this whole thing.
- [10:29]
Justin
Yeah. So I think it. It accomplished a few things. Like, there's the de risking component financially. Right. Because you get paid up front a few months in advance from. From these. They don't. They don't even call them customers. They're like backers of your campaign. Right. But even prior to the campaign going live, we were de risked even further because we ran ads for 30 days leading into the campaign, basically, like drumming up interest and collecting emails. And even just from the soft data we were seeing there, we knew that, like, hey, there's probably product market fit here. Like, we're getting a lot of email addresses. We're funneling people into a Facebook group. People are engaging. So it's like we were, like, working our way up towards the launch. And by the time we actually clicked Go Live, we had a pretty good sense that it would be successful. And we did over 100k in our first hour. But that's not like, literally, these people were exposed to at that hour. They had been waiting 30 days to click buy. And then I think the other key learning was actually after the. The campaign was done. The beauty of a crowdfunding campaign like that is, like, you get your product into the hands of thousands of people immediately. So it's like our first day of fulfillment out of our warehouse, like, we shipped, like, a thousand orders and then a thousand orders the next day. And I think it took us, like, three days to ship out. Let's call it 3,000 orders. Well, within 30 days, we were getting a ton of feedback, both good and bad. Right. And we learned so much in that first couple months, like, mostly around product quality and, like, quality control. Like, hey, like the Stitching is coming up undone, or there's this defect, or the packaging didn't hold up or whatever it may be. But I feel like we were able to iron out all the kinks. Not all of them, but a huge amount of the kinks in the first few months of the business because we just got, like, immediate product feedback. Whereas, like, maybe it would have taken us a year to get all those learnings had we launched in a. In a conventional fashion.
- [12:23]
Zach
Getting the feedback is.
- [12:25]
Eric Dick
It's.
- [12:25]
Zach
It's quick and it's efficient, but it's painful. Okay. You're getting a lot of feedback, and feedback is usually. It could be good, it could be bad. You're getting a lot of both good and bad feedback from a lot of people all at once. So you have to really have a thick shell when it comes to those things. Usually if you launch in your Shopify, I ship out 10 orders. Oh, I had an issue with how I put the labels on. Okay. The next day you fix it. When you ship out, like 2,000 packages over a day or two, you know, here you're going to learn if you've made a mistake pretty quickly. So that was an interesting thing for us to experience.
- [13:08]
Eric Dick
Accelerated learning phase from that. Yeah, you're right. If you're, if you're just relying on Meta or you're plunking away on Amazon sales, you're building up the momentum. It could take you a long time to learn the things that you guys learned in that first month with 3,000 sales or whatever you had.
- [13:21]
Justin
Yeah, and in manufacturing, like, you place your, your orders in, like, batches, Right. You're not placing an order every day, you're placing it every few months or so. So we were able to, like, get all the learnings in time that, like, by the time we placed our second purchase order, we had already made, like, numerous product improvements.
- [13:37]
Zach
And something that we, we do relating to batches is we actually have a batch number. A lot label is what it's called. And so every month or every quarter, depending on how big or small we want the batches to be, our first batch was just lot one, then lot two, then lot three. What that allows us to do is so every time a customer has a complaint, we log that complaint. What's the product, what's the issue and what's the lot? Then we have a summary of all that information, a pivot table, if you will. We're getting instantaneous feedback from our customers even today in this nice visualization for us. And then we reached back out to our team in Asia or our suppliers. And we're saying this lot had this problem. And so not only were we iterating quickly, but we got to see that, you know, lot four had this problem. It was solved by lot six. Lot seven had a new problem solved by lot nine. And so within a couple of years we, we were able to attack 90 plus percent of all of our issues.
- [14:42]
Eric Dick
How much did you guys double down on that second order? Like how aggressive were you able to be considering how much data and sales you gener in that Indiegogo campaign?
- [14:51]
Justin
We went all in, I think on every purchase order. But we're not talking about like crazy dollars at the time. But Zach could probably talk more about this in depth. But we, we built out like a cash flow model, right, to make sure that like, you know, we're going to, we're not going to run out of cash as we scale the business. But effectively like the determining factor for how much inventory we were going to order for the first, I'd say like two years was just how much cash do we have? It was like, we are going to buy as much as we can possibly afford. You eventually reach a point where you're like, okay, now I need to start forecasting demand and there's like a supply, demand equilibrium type thing. But in the first couple of years it was like, okay, demand is way higher than supply and we're just going to buy as much as we reasonably can without putting ourselves at too much risk.
- [15:34]
Eric Dick
From a cash perspective, anything you'd add there for the system you created?
- [15:37]
Zach
Yeah. So in terms of cash flow, I think the most important, a few of the most important things for us is the model that Justin referenced. Funny enough, we actually had an, an intern within our first year who built out this super robust cash flow model for us. And we still use a version of that today. And we see every single purchase order that's going to be placed for the next year. How much cash is required when that inventory is going to arrive in our warehouse, our forecasted sales. And so it's extremely dynamic and complex and we have a very good handle of our money. But also selling on Shopify. So Indiegogo, you had cash up front, that's great. Selling on Shopify, not as good, but still very good. You get paid within one to two business days. And in addition to that, I think we touched on this before. We would sell on pre order so as the inventory would ship from Asia. And this was very helpful early on, once the inventory shipped, we'd put those Containers on pre order with a shipping window of, let's say four weeks out, five weeks out, collect the money up front and then fulfill the orders once we had it. So between pre orders and shopify getting paid quickly, we had somewhere between a. Let's just say our cash conversion cycle was looking very favorably and sometimes it might even be a negative cash conversion.
- [17:03]
Eric Dick
I was gonna say negative.
- [17:04]
Zach
Yeah, yeah. Especially early on where we would have crazy out of stocks and 40% of our sales would come from pre orders. Since then it's come down a lot, which is actually a good thing for the business. But early on we were just bringing in money before we, we had to sell. And then of course, just being profitable early on was extremely important. If you're profitable, then you get to take those profit dollars, those proceeds, and reinvest it back into the business. If you're not profitable, then you have to come up with the money somehow and you're either going to get debt financing or you have to raise money from friends and family. We were fortunate enough that we were able to bootstrap the business with the model plus being profitable from day one.
- [17:46]
Eric Dick
And so you were extremely effective at drumming up demand with your ad campaigns leading up to Indiegogo. And I imagine after Indiegogo when you just. When you moved to sh and started running ads, were you able to constitute the same demand or unlock much higher demand even like was demand in. Especially early in those early days just kind of off the charts on meta?
- [18:09]
Justin
Yeah, I mean, I'd say it was in the sense that like, you know, we measure everything with mer, like marketing efficiency ratio. Right. How much basically how many dollars you have to spend to generate or how many pennies you have to send to generate a dollar in revenue. And we were just extremely efficient out the gate. Obviously as you reach more scale into the tens of millions and nine figures, whatever, it gets more difficult. But those first few years we were able to scale quite linearly in the sense that like even as we scaled, our efficiency stayed flat or even improved. But you know, in the last couple years, of course, like law of large numbers plus the economy has been a little bit more shaky. It's been more difficult. But I'd say like the first three years of the business, we were able to kind of put the pedal to the metal quite a bit.
- [18:53]
Eric Dick
And you guys kept it extremely lean during those first three years. I think something up until your first over 10 million, you guys were. Didn't even have an employee, is that right?
- [19:02]
Zach
Yeah, first employee, two and a half
- [19:05]
Justin
Years in, yeah, we were like north of 20 million I think when we tired our first, our first full time like salary W2 employee. But we were working with quite a few like freelancers, contractors, agencies, things of that sort. But yeah, Zach and I were kind of holding things down for quite some time.
- [19:23]
Eric Dick
What position was your first hire?
- [19:25]
Justin
It was a paid social marketing manager. So he's actually still with us today. Andrew. He was our first full time hire. Although we were working with our rug designer Carrie for years prior, but she didn't join full time. She was a contractor for a while. So in a sense Carrie was one of the first and Andrew was technically the first. But basically our textile designer, lead textile designer who's still with us today and lead a paid social manager. Well now he's the director of growth because we just felt like, you know, like what are the core competencies of the business? We need to design amazing rugs and we need to market them online. Right. So those are the two kind of first capabilities to bring in house.
- [20:04]
Eric Dick
And then you guys have kept that focus on an extremely lean team to this day.
- [20:09]
Zach
Yeah, yeah, we've hired a couple people recently so maybe 18 to 20 full time employees plus contractors worldwide, of course, agencies as well. But when we, we look at the total costs, like all the contractors, all the agencies, any company that will provide you a service that you could in house plus all the full time employees, we aggregate those together and against all industry benchmarks, it, let's just say it's significantly less than 10% of our revenue. And so we know against industry benchmarks where other companies are. And yeah, we're, we're, we're quite lean. And then in addition to that we don't, we're remote so we don't have a, an office. So we have to save on, on that part of the, the OPEX as well. And yeah, we just like to hire really good people instead of hiring a lot of people. Everyone who we hire, we're very thoughtful and slow to hire and we want to hire some of the best people within a particular role and that way you don't have to have a huge team, you just have a really good team.
- [21:13]
Eric Dick
Especially today. I was just going over this in this meeting I had with some, with some folks last night of the, the concept. One of the hardest parts about building a business is that your best players, you end up in the agency game, I can speak to you end up elevating them into sort of management roles or director roles or things that take them off the tools A little bit, but that's really what they're best at. I feel like we're in an age of like the empowered individual contributor. And so that idea of like really focusing, hiring really great people who can be autonomous, who can run and it's like, you know, the new paradigms, you no longer need to insulate them into management roles and have these maybe big teams under them. You just need a really empowered individual contributor with like very clear things that they're running on. Right. Are there any other aspects of the business you guys have been able to sort of like? There was a note here about your CX being largely automated. Are there like, what are the key areas you say you've been able to compress costs on in the business?
- [22:07]
Justin
Well, I mean, I do think that we just get a lot of leverage out of our existing team, especially nowadays with AI. Right. I think AI has definitely like paired very well with our business model that we had prior to like the AI tools becoming broadly available. I think you're referring to are able to like, yeah, we've been able to automate what, 60 plus percent of our tickets, leveraging AI as well. But we just run like a really asset light model. Right. There's no corporate office, we use three PLs, we use contract manufacturers. So we just try to keep things pretty lean from that perspective and nimble because again, it's out of necessity in a sense that we never raised outside capital and we don't have any debt. But also we just want to build a resilient business. And when tariffs hit last year, for example, and that completely rocked our industry and we were very, very severely impacted, we didn't lay a single person off. Everybody got their full bonus, for example. We didn't even like slash anyone's compensation, nothing whatsoever. Because we had kind of like built ourselves to weather a storm like that.
- [23:14]
Eric Dick
Talk to me about that storm because I can imagine, you know, you saw the storm clouds aligning. But the day that the news actually hit, what were some of the key actions you took? Did you have to raise your prices?
- [23:26]
Zach
It was crazy. We did a few specific things to get through that time. We did raise our prices, but very modestly, I think we raised our prices on average 1 to 2%, which is nothing. And then some of the price points have actually come back down to where they were before. One of the things we had to do, well, I'll talk with the most obvious one was shift your business out of China. We saw the writing on the wall earlier than April. Trump would talk about it was his favorite thing to talk about. Said tariffs are the most beautiful word in the English language. So we knew that that was happening and had an in England or, or thought at least 50, 50 he was going to get elected. And so we started to put the pieces in place to move out of China and we've subsequently moved to Thailand. So those that was fully in the works before April. However, within 30 days of the tariffs going from like 25% to 175%, we had completely shut down China to zero and had scaled up to, you know, 30, 40,000 rugs per month. Another thing we had to do is we had all this inventory that was in Mexico. We were historically using section 321. So you have millions of dollars of inventory that's sitting in Mexico untariffed, waiting for you to cross the border into the United States. Well, when that tariff goes to 175% and you have all that inventory sitting in Mexico, you're in trouble. So we said, okay, well what could we do with that inventory? Well, there's your favorite country of, of Canada and they don't have the same tariffs that, that we have in the United States. So we did two things. Within 30 days we completely shifted to Thailand and we opened up the Canadian market. And that's everything from labeling, relabeling certain products, understanding compliance, setting up our website, building our marketing engine, importing the rugs. And so by like, I don't know, maybe mid May or early June, we were up and selling in Canada. I think our team handled it really well. We had nightly calls every single night for three months because we have people in Asia, we have team in the west coast and the east coast. So every morning and every night for three months we had a one hour call just to align on exactly what we had to do in order to get, to get through that time. But yeah, so it was, it was crazy. And I feel like we're a much stronger company as a result of what we had to go through last year.
- [26:20]
Eric Dick
I'm on your website right now. You're Canadian, your CA and you even have a Victoria Day sale, which is a Canadian specific holiday. So you're very, you're localized that you might, you might have some. Do you spell color the British. You do. I'm just looking color spelled the British way.
- [26:33]
Justin
Yeah, I spell color the right way.
- [26:35]
Eric Dick
You're fully localized. I feel right at home on here. How has Canada been as a, as a market for your products?
- [26:40]
Justin
It's been pretty strong. I mean it's at the end of the day, it's a much smaller market. Right. It's less than 10% of the U.S. but it's, we're, we're punching above our weight in Canada. I'd say the marketing efficiency is pretty much apples to apples with that of the US and we've been able to scale it from, you know, zero a year ago to now the point where it's like approaching double digit percentage of the overall business. So that's just been a, yeah, it's been like a fun test case for, you know, we kind of accidentally almost fell into that market. It was very much on our radar prior to the tariffs, but the tariffs massively accelerated that, that timeline. And then now we have plans of expanding into other markets as well. And the good news is that we have like a really solid playbook that we can basically leverage going forward.
- [27:25]
Eric Dick
Thailand is near and dear to my heart. I used to live in Bank. I lived in Bangkok for a year and a half and I visited back in Thailand multiple times. Love it as a, as a place. What, what was the hardest thing or the, about switching from China to Thailand or the biggest difference that you faced in working with a Thai manufacturer versus a Chinese manufacturer?
- [27:47]
Zach
I think every country has its own nuance. We, we work with a manufacturer in Mexico, in Thailand, Taiwan, China, Turkey. Not now, Turkey. We're, we're starting to dabble a little bit in India as well. And, and they're all, they're all different, they all have their different working ways. I, I've come to realize that there's pros and cons to, to all of them. An example of a Thai factory would be the cost of labor is cheaper in Thailand, but they're less efficient in Thailand, so the price nets out and you have to learn all these different things. Also working with factories, the, the bosses, the leaders of those different factories, they're, they're, they're different. And so there's always a learning curve. You know, we do some play mats out of Taiwan and, and Vietnam for example. You just have to learn your new manufacturers. But it's no different than, than anything else that you have to learn along the way. It's just, it's always a challenge to move from one country to another and it's always a challenge to start working with a new, with a new factory. But within six months to a year, you kind of iron out those kinks and then it's really not that different from one country to the next, I would say, you know, then you have, obviously there's real things that it's slower to get your goods from Thailand to, to the United States but in terms of working we've been, we're in a pretty good position within, within a year.
- [29:19]
Eric Dick
Super cool. When it comes to other global expansion. I think global expansion is going to be a huge factor in E commerce, even more so than it already has been. And I don't know if it's going to play into it but like it's you know the, the genius act or whatever Trump is doing with stablecoins. If we're, if we do get into that more sort of like digital currency environment, I see like cross border payments become becoming easier and so I see like in terms of being ahead of the curve like getting the idea of expanding globally for brands you guys is going to become even more attractive. Where, where on your like, where are you guys thinking about expanding outside of North America?
- [29:57]
Justin
I see your points. I guess the one thing I would say though in our case is like we do deal with a pretty heavy, bulky physical world product. So getting the product overseas, whether or not the payments are an issue, whether or not like the, you know, Shopify has made these things quite easy right to like spin up new markets and things. But what a lot of brands will do is they'll be like okay, I'll just start running ads in Europe and I'll drop ship from the US like I'll just ship from my US3PL and yeah it'll make less sense economically but I'll still like make you know, eke out a profit. And then if I prove the European market then I'll open a European warehouse. We unfortunately can't do that. Like it would absolutely make no sense to drop ship a 50 pound box to Europe from our American three plus. So we basically have to commit and have local domestic inventory on day one. So in Canada we spun up a warehouse just outside of Toronto. And then to answer your question, the next market we're looking at is the UK and we're going to have a domestic warehouse there as well on day one. So we have that constraint and then the other kind of obviously major constraint is like language and culture. And so for us we think it makes the most sense to start with English speaking countries that have similar culture, culture, similar design sense. So Canada made a lot of sense. UK would be next, Australia would likely follow and then we can start looking at like broader European EU opportunities. But for example, you know, something like Japan as much as like Zach and I would love to launch in that market and you know, a time will come, we'll, we'll look at it closely. The way we approach it would probably be quite different. Maybe we have a local operator, like a joint venture type thing. Like, you know, we haven't really explored it closely, but I think you have to really think about each market in like, in a different way and how you're going to approach it. The other piece is, by the way, is customer service. Right. We can do customer service in the UK from a same centralized CS team, whereas we might need a dedicated team for another country. Although with AI nowadays maybe you can do Japanese cs. I'm not sure.
- [32:05]
Zach
I'm sure.
- [32:06]
Eric Dick
Sure cloud can do it all.
- [32:07]
Justin
Yeah.
- [32:08]
Eric Dick
Talk to me about how things, how things have changed for you on Metta over the years. You guys have the luxury of having a high AOV product. It does, it's expensive to ship, but it probably has some fairly long consideration cycles for people looking to buy it. I see people on Twitter just this week there's a, there's a resurgence of people talking about this, this really being the golden age for e commerce for meta. Still meta, like the Andromeda, appears to be working pretty well. People are talking about the changes that they're making to they build their creative flywheels to satisfy the avatar life cycle that you're aiming to talk to in meta. Has your strategy had to change at all in the past year for how you guys handle meta?
- [32:51]
Justin
So I think our strategy is always changing within the advertising space broadly. But meta has always been the bulk of our spend. When we launched the company it was probably 70% Meta, 30% Google. Meta's still 60 to 65% of all our ad spend. I think Google has actually shrunk a little bit and that budget has gone to things like Applovin is a new channel that we're actually spending like double digit percentage on TikTok, Pinterest, things like that. And then I'd say the biggest shift for us personally has been shifting more to like top of funnel channels. In the last couple years like we reached kind of a level of scale where only coming at it with like direct response, mid to bottom funnel ads, you kind of reach a point where like that stops working and stops being as effective. And you need to build the top of funnel awareness and just get comfortable with channels like YouTube. We're on podcasting now and we're looking into like linear and connected TV as well. The issues with those channels is that you can't measure them quite as effectively. There's not clicks there's not pixels, but you can get a directional sense for how they're performing and you just have to get comfortable with that. That's actually been a huge adjustment for our team. Is just like getting comfortable spending six figures a month or something on a channel that you're just like. I think it's kind of working, but I don't have the hard data to prove it. The other thing we've been doing a lot of is incrementality, like lift studies. Right. To try to get at that as well. But, but even incrementality, it's difficult. You'll run the same test three times and get three different answers and then you'll have to try to just read between the lines and get comfortable with a little bit of uncertainty.
- [34:33]
Eric Dick
Did you have to rethink your creative with this push to top of Funnel? Did you have to invest more in in depth explainers or how did you think about content when as you're trying to build the top of Funnel?
- [34:44]
Justin
Our top of Funnel content's a bit more like high production. So we used to rely like really and we still do really heavily on like UGC type content. We send you a free rug, you give us content back and we have perpetual usage rights to that. Now we're kind of moving more into the like a working with bigger tier creators who we have to pay up front and like license their content or making the content ourselves through like third party agencies and stuff that we partner with. So basically our content budget has had to grow quite a bit rather than relying on just like you know, freebie, you know, rugs in exchange for UGC that's shot on an iPhone. But yeah, I mean our content strategy is always kind of evolving as things change.
- [35:26]
Eric Dick
Anything you'd point to, that's work. I know it's attribution is a little foggy. It's working. You're creating a halo effect. Any observations about which of your endeavors top of funnel have paid the most dividends or created the best halo for your other activities?
- [35:41]
Justin
Yeah, I'd say YouTube right now seems to be pretty promising. Although it took us like nine months to kind of get it to a point where we felt like it was actually working. We experimented with like reach campaigns, demand gen campaigns, different types of creative, different audience targeting. We brought in a couple like agencies at some point to help us figure things out. But our kind of North Star for something like YouTube would be a house incrementality lift study because you really can't rely on like in platform reporting and the last study we did, we actually put YouTube head to head with meta. So we put same fixed dollar amount into each channel. Third of the country gets nothing. Third of the country gets meta. Third of the country gets YouTube. And we measured the lift of YouTube versus Meta and it was actually like on par with meta. And that gave us quite a bit of confidence to scale the channel.
- [36:32]
Eric Dick
That's awesome. Have you had to invest in the organic presence on YouTube more or has it been enough to run ads on it?
- [36:39]
Justin
We haven't, but that's actually something we're talking about right now. Like how can we do that at scale is kind of the question. Right. How can we get enough of an organic presence at scale that it's worth our time and energy? But there are tools I'm hearing about that help with that. But to date our presence on YouTube is like 99% paid.
- [36:59]
Eric Dick
I have an idea for you the Tumble concert series, like the Tiny Desk series, because you see rugs all the time underneath bands, like garage bands and stuff. You guys should. You could do music videos where they're performing on your rugs. Tumble concerts.
- [37:12]
Justin
I like it. I like it.
- [37:13]
Eric Dick
What are you guys most excited for this? Because I think in the pre interview you said you guys are closing in on nine figures of revenue this year. Is that accurate?
- [37:20]
Justin
Yeah, we're. We're in that range.
- [37:22]
Eric Dick
What are you most excited about for this year?
- [37:24]
Zach
There's a lot that we're excited about. I was just talking to Justin a couple hours ago. I haven't been this excited since we started Tumble since we launched on Shopify just over five years ago. We have so many things in the hopper. I'll tell you about a couple of them. In addition to going to the uk, we're in both early and late stages with a couple of different in store retailers. I'm not going to share more about that, but a few of them are in the hopper and then maybe what I'm personally most excited about also something within my part of the business is the product side. We probably underinvested in the product side for the first like three to four years. We spent a lot of time on product improvements, but we had one core product and it served us well. It got us to where we are today. But you don't go from a hundred million dollars, let's say a half a billion dollars in revenue with just that. That one product you were talking before about. There was the a thousand milligram sodium and the 100 milligrams of sodium. You're Talking about product differentiation, something for one person might be a different thing for another person. And so we're doubling down on washable rugs, where we're coming to market with different types of washable rugs that we're extremely excited about that have different features that are maybe suitable for different parts of your home. And we've spent close to a year developing those products. They'll probably be in the market in the next, I would say six months. And I think within 12 months our business will look very different as a result of a few of those different things.
- [39:11]
Eric Dick
And right now you're 0 retail, 100% Shopify today, 100% D2C Shopify going into retail. And again, most people probably buy their rugs at stores where they can look and touch and feel them.
- [39:23]
Zach
We're not even on Amazon.
- [39:24]
Eric Dick
Yeah, why not?
- [39:25]
Zach
We will be soon.
- [39:26]
Justin
We're asking ourselves that question. No, we're very much exploring that as well, I think. Why not? I mean, the answer previously was like, you know, Amazon's not really the go to place for like home furnishings or big and bulky products, right. With like higher aov. So it wasn't like the perfect fit. But I very much do think it makes sense and that's why we're looking into it currently.
- [39:49]
Zach
We just, we had so much demand on D2C that we didn't even have a time to think about another channel. And then what Justin's saying about big and bulky, if you want to be successful on Amazon, you need to have a Prime badge. You wanted the prime badge. There's a couple of ways, but the most obvious way is you sell through fba. And if you sell through FBA and your product is bulky, they're going to kill you on fees. So that's what we're trying to solve for now is how do we, in a cost effective way, get the prime badge?
- [40:18]
Eric Dick
Closing question. What would you say is the operational lesson that you guys have learned, maybe each of you that has come compounded the most to create value over time?
- [40:28]
Justin
The operational lesson, you're pretty instructional, I
- [40:32]
Eric Dick
think, in just how you've thought about bootstrapping and cost control and staff, which, which sort of stands out as a, as a lesson you've really learned that works.
- [40:41]
Zach
I think for me it's all about the, the product. So it's not an operational lesson, but it's the time that we took before we launched to think really hard about an opportunity in the market, spending the time investing in product development to have a differentiated product from the market. So that when it comes to all those questions you're asking about marketing, Justin and his team, they actually have things to market about. You're not just marketing a Me Too product, but you get to talk about all the different value props that you have. So we talk a lot about value props within our organization. Oh, you want to launch this product? What are the three value props that you have? So to me, that was probably the biggest takeaway is being extremely thoughtful about the product and making sure that it has those key differentiating points.
- [41:34]
Justin
I think for me it's like basically the importance of staying nimble. You know, you talk a lot about like startups and why they can disrupt these larger companies. It's usually just because they can like move fast and they're nimble and they can expect adapt quickly. That was very much the case for us when we started. But I think even though we're a nine figure brand now, like that's still very much the case. And Zach and I like to run the business that way because it allows us to stay nimble. You know, like we've talked, we've touched on this, but we don't have a factory, we don't have a warehouse, we don't have an office. And as a result of that, we were able to pick up and move our supply chain overnight. When tariffs hit, we've been able to move 3 PL. I think we're on our like 5th 3 PL at this point because we keep outgrowing them or we, you know, for different optimization reasons, we, we reprioritize where we want to be fulfilling out of. We can hire nationwide, for example. We don't have to hire in a specific market because we're distributed. So having that nimbleness is kind of like a superpower that a lot of big companies don't have. But also a lot of startups, they eventually lose as they get bigger, right, because they become more entrenched. And I think that we've just done a pretty good job of maintaining that and I think that's something that's definitely served us well and we want to try to maintain going forward.
- [42:46]
Eric Dick
Last, last question. What part of your tech stack are you currently trying to Vibe code on, Claude? Any.
- [42:53]
Justin
We Vibe coded an mmm, which was pretty cool. Someone on our team, Jeremy, Vibe, coded an mmm, which was like, that's not a tool that we had currently, but it was a tool that we had been considering for a long time. And we're like, actually maybe we could try to build something ourselves. I don't know. Zach, are we like ripping anything out of our stack?
- [43:13]
Zach
Where we're starting to get a lot of leverage is we have people in the Philippines and in China or Asia more broadly who are contractors for the business, but they spend a lot of time working with Tumble and they handle a lot of the mundane processes where you could say do this, then do this, then do this. And that's very cost effective for our business. But we're starting to automate those things. And so we're not by coding an app, but we are using, let's say Claude or ChatGPT to help us automate where they might write the JavaScript, for example, and that lives in like Google Apps scripts. And so we have, let's say, 10 different automations that we wouldn't have been able to do otherwise. And that allows us to take our cost from cost effective to essentially free. And that's just one thing that we're starting to do across all the different departments, whether it's invoice review, creating commercial invoices and packing lists, all those little things we're slowly taking away.
- [44:18]
Justin
My kind of hot take on this is that at least in our experience, the AI automation and the cloud code and all that, it's been fantastic for automating manual tasks and things. But I, quite frankly, I'm not at the point where I've found a good use case where I can literally rip out an existing piece of software and replace it with a Vibe coded version of that. Because the reality is these things require maintenance. So even if you go and you vibe code like I'll vibe code like a tool and then one week later it breaks and then I have to fix it. If you're ripping out your whole tech stack, that's a lot of maintenance. Whereas if you're just like automating a manual task that you, the prior world, you were literally doing it manually and now you've automated it, that's, that's, that's much more worth your time than like, okay, I can save 200 bucks a month by Vibe coding it. And then, then you run into the headache of having to maintain it going forward.
- [45:12]
Eric Dick
Yeah, I think the best uses I'm seeing for it are people building dashboards that allow them to deploy certain things or just to centralize their data to have to, to basically have that data layer, that queryable data layer.
- [45:24]
Zach
We launched, we.
- [45:25]
Eric Dick
It's funny, we're an agency, pilot house is this agency, but we've on D2C, we do 20 to 30 grand a month in user acquisition. For the newsletter. And this week we fired our lead generation agency and we now have Gary who is a 24 hour media buyer that we chat to on Slack and he is, he is a bot. So we have a creative analyst as well named Blanche. So we are, we're, we're hurtling into the future here and so far the results are as good or better than the agency. So we're sort of like that's awesome. Dangerous dog food.
- [45:55]
Justin
We're, we're testing good name to Blanche.
- [45:58]
Eric Dick
Gary was actually the guy that taught me how to Media buy in 2005, way back in the day. So I'm glad that we're. The cycle is complete, guys. Thanks for coming on the podcast today. This is super cool. Anyone looking for a sweet backdrug, you got to go to tumbleliving.com or CA. If you're in Canada, shop for Victoria day. Up to 35% off. Thanks for thinking of us and our queen. And then guys, if people want to follow you, maybe I'll include your LinkedIn handles here. You should get some nice outreach for some other operators. Yeah, fantastic.
- [46:28]
Justin
Cool.
- [46:28]
Zach
This was a lot of fun. Thanks for having us.
- [46:30]
Eric Dick
Nice. We'll have to have you back. Once you launch your retail and you guys are you're pushing your next 100 million, then we'll have you back on for an update. I'd love to catch up.
- [46:38]
Zach
Sounds great.
- [46:45]
Eric Dick
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.