E033: Zach Stuck on the Core Marketing Tactics to Drive Growth As You Scale

Summary

Marketing Operators Podcast: Episode E033 Summary

Title: Zach Stuck on the Core Marketing Tactics to Drive Growth As You Scale
Release Date: November 12, 2024
Hosts: Connor Rolain, Connor MacDonald, Cody Plofker
Guest: Zach Stuck, Founder of Homestead

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1. Introduction

In Episode E033 of the Marketing Operators Podcast, hosts Connor Rolain, Connor MacDonald, and Cody Plofker welcome Zach Stuck, the founder of Homestead, a growth marketing agency specializing in e-commerce, growth marketing, and operations. The episode delves into identifying emerging trends, selecting products poised for exponential growth, and the strategic marketing tactics essential for scaling revenue from $100K to $5 million per month.

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2. Zach’s Background and Homestead Overview

Zach Stuck shares his journey with Homestead, recounting how he and his partner Riley Trotter launched the agency five and a half years ago. Initially focusing on customer acquisition and retention, Homestead has expanded to a team of 65 employees. Zach discusses his transition from running a successful agency to building a portfolio of Direct-to-Consumer (D2C) brands.

[04:33] Zach: "I'm the founder of Homestead, a growth marketing agency focused on customer acquisition and retention."

He highlights key milestones, including the acquisition of Public Supply, a notebook company, and the launch of Holo, an alpaca sock brand that has rapidly grown to $20 million in revenue this year. Zach emphasizes the importance of building brands that solve tangible problems, making them easier to market and sell online.

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3. Building a Brand Portfolio: Acquisitions and Launches

Zach details Homestead's strategy in acquiring and launching brands:

• Public Supply: A $150,000 B2B notebook business, the first acquisition.
• Home Decor Business: Focused on licensed products, partnering with brands like Anheuser Busch and Molson Coors.
• Holo: Launched three and a half years ago, targeting niches such as cycling, running, hiking, and hunting with alpaca socks. Holo achieved $1 million in the first year, $7 million last year, and is on pace for $20 million this year.
• Additional Brands: Including a sleep accessory brand and a supplement brand, bringing the total to five active brands.

[09:45] Zach: "Holo is obviously still the biggest one in the industry."

Zach shares a lesson learned from acquiring Fray, a laundry detergent business, which had a 35% return rate and ultimately led to selling his shares due to operational challenges.

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4. Identifying Trends and Product Opportunities

Zach explains his approach to spotting trends:

• Influencer Monitoring: Focusing on mid-tier influencers passionate about niches like health and wellness.
• Example - Red Light Glasses: Recognizing an opportunity to offer higher-quality alternatives to traditional blue light glasses.
• Collaborations: Working with influencers such as Matt Choi from Ridge to leverage authentic endorsements.

[15:07] Zach: "I'm usually looking at mid-tier influencers that are super obsessed with health, wellness, or something along those lines."

Cody adds insights on trend identification, citing how influential books like Omnivore's Dilemma and Four Hour Workweek have historically shaped industry trends. He emphasizes the power of creators and influencers in driving new trends.

[19:26] Cody: "Breath is just about breathing. It's a direct descendant of people caring way more about the quality of their breathing."

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5. Core Marketing Tactics by Revenue Band

Zach outlines specific marketing strategies tailored to different revenue milestones:

a. $0 to $100K per Month

• Static Image Ads: Utilize static ads to test various hooks and angles.
• Problem-Solution Fit: Ensure the product addresses a clear consumer problem.
• Customer Cohorts: Identify and target specific customer segments through effective positioning.

[40:26] Zach: "For the first hundred K, you're running static image ads... trying to find a customer cohort that resonates with that problem."

b. $100K to $500K per Month

• Video Ads: Transition to video content to engage a broader audience.
• Content Creators: Hire content creators from existing customer bases to produce authentic video content.
• Landing Page Optimization: Experiment with shoppable landing pages and A/B testing to enhance conversion rates.

[44:52] Cody: "To go from 100k to 500k, you're building out further, scaling channels."

c. $500K to $1 Million per Month

• Conversion Rate Optimization (CRO): Refine website elements like cart enhancements and post-purchase upsells to increase Average Order Value (AOV).
• Upselling Strategies: Implement significant upsells post-purchase to encourage bulk purchases.

[44:57] Cody: "Increasing AOV via upsells is crucial at this stage."

d. $1 Million to $5 Million per Month

• Partnerships and Whitelisting: Collaborate with creators for whitelisting deals, allowing their content to run as ads.
• Performance-Based Incentives: Offer creators a percentage of ad spend to incentivize higher performance.
• Storytelling in Ads: Focus on narrative-driven ads where the problem is introduced before the product solution.

[46:08] Zach: "Our secret sauce is finding creators that are very good at talking to the camera and storytelling."

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6. Channel Diversification and Scaling

Zach discusses the importance of diversifying marketing channels as brands scale:

• Meta (Facebook & Instagram): Continues to be the primary channel up to $1 million per month.
• Connected TV (CTV): Recently expanded into CTV using platforms like Applovin, achieving 2.5x - 2.6x one-day click ROAS.
• Cost-Efficiency: Emphasizes using top-performing creatives across multiple channels without overcomplicating the approach.

[52:24] Zach: "Spend on CTV as a platform called Applovin has been really, really interesting."

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7. Team Structure and Scaling Operations

Zach highlights the lean structure of his team, optimizing high revenue per employee:

• Current Team (7 Members): Includes heads of growth and operations, designers, and directors of e-commerce and performance creative.
• Outsourced Services: Utilizes Homestead for email and sometimes SMS marketing.
• Future Hiring Plans: Aiming to add dedicated roles for growth and operations to manage scaling from $20 million to $50 million.

[60:51] Zach: "Our OPEX is looking very good, giving us room to spend on acquisition."

Cody praises the team’s efficiency, noting how a lean team can handle significant revenue due to high leverage strategies.

[63:43] Cody: "You're sitting at almost 5 million per head. That's the highest number I've heard."

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8. Mentorship and Learning

Zach underscores the value of mentorship in scaling:

• Fractional COO: Hired Trey Sisson, a seasoned operator, to refine financial modeling and operational strategies.
• Continuous Learning: Collaborates with experienced operators and mentors to avoid common pitfalls and optimize business processes.
• Agency Experience Advantage: Leveraging insights from managing 250 brands to inform strategic decisions and avoid repetitive mistakes.

[37:23] Zach: "Trey was instrumental this year... He helped us rebuild our financial models from scratch."

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9. Future Growth and Potential

Looking ahead, Zach envisions substantial growth:

• Scaling to $100 Million: Plans to achieve this milestone with a team of 15 people, spreading revenue across three brands.
• Focus on Single SKU Hero Products: Believes in the potency of single-product brands for targeted marketing and operational efficiency.
• Leveraging Offshore Talent: Utilizes high-skill offshore team members to maintain a lean and effective workforce.

[64:41] Zach: "I think we can do a hundred million with 15 and split it between three brands."

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10. Conclusion

The episode concludes with Zach sharing actionable insights on scaling e-commerce brands through strategic marketing tactics, trend identification, and efficient team management. The discussion emphasizes the importance of a lean team structure, leveraging agency experience, and continuously adapting to emerging marketing channels to drive substantial revenue growth.

[67:37] Cody: "I'm super excited to see how teams get built over time and how big some of these brands can scale."

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Notable Quotes

• Zach Stuck ([04:33]): "I'm the founder of Homestead, a growth marketing agency focused on customer acquisition and retention."
• Zach Stuck ([15:07]): "I'm usually looking at mid-tier influencers that are super obsessed with health, wellness, or something along those lines."
• Cody Plofker ([19:26]): "Breath is just about breathing. It's a direct descendant of people caring way more about the quality of their breathing."
• Zach Stuck ([46:08]): "Our secret sauce is finding creators that are very good at talking to the camera and storytelling."
• Zach Stuck ([60:51]): "Our OPEX is looking very good, giving us room to spend on acquisition."
• Cody Plofker ([63:43]): "You're sitting at almost 5 million per head. That's the highest number I've heard."
• Zach Stuck ([64:41]): "I think we can do a hundred million with 15 and split it between three brands."

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This comprehensive summary encapsulates the key discussions, strategies, and insights shared by Zach Stuck on the Marketing Operators Podcast, offering valuable takeaways for marketers and e-commerce operators aiming to scale their businesses effectively.

Transcript

[Connor]

Welcome to another episode of the Marketing Operators Podcast. We have the powerful Zach stuck on today. Zach's a brilliant mind in E commerce, growth, marketing and operations. Today we're talking about how to find trends and how to find products that are about to pop off. And then we're going to transition into talking about the different tactics required to hit various revenue levels, going from, you know, your, your 100k per month all the way to doing, you know, 5 million per month in which tactics kind of drive most of the growth at these varying levels. It's a very tactical, very fun episod. We're really, really happy and honored to have Zach on. Thank you as always to our sponsors, Motion House Rich Panel Impression and as always, if you're enjoying the show, we would love it if you could subscribe Leave a Comment Ask your question Share with a Buddy we're trying to get this podcast in the hands with as many marketers as possible, so if you could help us do that, that's much appreciated.

[Cody]

Motion is a company that we've all been using forever. Hexclad, Jones Road Ridge. We were all early adopters and now they're really gaining momentum. Motion just raised $30 million in their series B and a ton of new stuff is coming along with that. They've been pushing out new features. If you haven't checked them out in a while, you can book a demo and see all the new stuff that they've been shipping. But a few of the ones that really stood out to me 1. Creative research and Reza was on our podcast so he talks about this a bit. They want to improve the input into the creative strategist role so 1 you have creative analytics and 2 their new tool Creative Research completely free where you can build swipe files from all your favorite brands. Connor, Cody and myself put together our own so you can start there and then add some creative from your favorite brands. 2. Motion released a new advanced analytics feature called Winning Combinations. Winning Combinations helps you instantly answer complex business questions like what ad concepts work best for specific product lines, what messaging themes are working across different influencers, what angles, hooks and concepts are working best across all ad formats. This will help you get real clarity from all your testing variables and it takes seconds to pull insights. Plus they have even bigger features cooking that they'll be releasing soon. So head to motion app.com to book a demo and when you mention the Marketing operators, you'll get 50% off your first month. Or just start using the Creative Research tool as they are free. So an easy win for you and your team.

[Connor]

All right, We, Cody, couldn't make it today, so we had to replace one powerhouse mop raider with another powerhouse moperator. So we got. We got Zach stuck on the show today. Zach, how you doing?

[Zach]

Good. Glad to be here, guys.

[Connor]

Yeah, we're glad to have you. For those. For those of you who don't know, Zach and I go way back. I was working at Homestead for what, probably about three years. I guess it was just under three years. I think my. My first day at Homestead was the first day of at home lockdown during COVID in Wisconsin. So it was a very interesting time to be starting in a new role. But, yeah, me and Zach go way back. I've been excited about having you on the show for a while because of that, so it's good to have you here.

[Zach]

Yeah, dude, I'm stoked.

[Cody]

Our first former boss on the show.

[Connor]

Yeah.

[Cody]

Yeah.

[Connor]

I'm worried. I'm worried. I'm sweating.

[Cody]

I was hoping we'd get into some of the lore. Were you living in Wisconsin at the time, Connor?

[Connor]

Yeah. So. All right, so here's the lore, here's the quick and dirty story. So I had started doing, like, digital marketing stuff, media buying for, like, probably three years at this point in college. And I took a different job outside of the space right after college, but I knew I wanted to, like, do this full time, and. And so I kept doing the freelance stuff and I was posting stuff on LinkedIn about it and live, and I moved back to Appleton at the time. Zach's like, what are you, three grades? Four grades older than me. Three or four.

[Zach]

Yeah.

[Connor]

So Zach and I didn't know each other in high school, but I was putting out on LinkedIn about it, and Zach's business partner, Nate lit, hit me up, was like, hey, we're hiring media buyers. At this point. It was Zach, it was Tim Ayton, it was Riley Trotter, and then a handful of others. And then I ended up joining Homestead like, probably within three weeks.

[Zach]

Yeah. You were like, employees.

[Connor]

Yeah, I think it was six or seven. Yeah. Ryan was there. Uh, Veda was around. Yeah. And so then I. I joined Homestead, quit my job, joined Homestead within, like, three weeks. Worked at Homestead for, like, three years. And yeah, it was. It was a hell of a ride.

[Zach]

To say the least. Yeah.

[Connor]

To say the least. To say the least.

[Zach]

Yeah.

[Cody]

Maybe. People probably don't know Homestead at all. So I know we've got Zach. We were hoping to get a quick intro from you. Who you are, what you do sure.

[Zach]

Yeah. So I'm the founder of Homestead. It's a growth marketing agency we started at five and a half years ago, primarily focused on customer acquisition and retention. So we kind of split our team up 50, 50 between our email and SMS division and then our paid and paid creative division. So, yeah, that team has grown. As Connor mentioned, or might mention later in the pod, he was early at the company. We went from, you know, just me kind of kicking it around, doing some media buying to. Yeah, we're 65 employees now.

[Connor]

Wow.

[Zach]

And my business partner, Riley Trotter is the. Is the CEO now and runs the day to day over there. And then for the last year and a half, I've been focused on building on a portfolio of D2C brands. So we've acquired a few, sold one already, and we've started a few from scratch. And that's kind of my. My main operations now.

[Connor]

Oh, yeah, And I gotta, I gotta plug Homestead. They do great work. We still work with them on the paid social side. They do great retention work. Um, yeah, if you're an E. Com brand looking for some outsourced partners for that stuff, great option. I gotta, I gotta do the shameless plug here. They run over there. Um, so can we, can we dig. Can we like, highlight that last bit? Like, what you're focused on right now? Could you, could you dive into that a little bit? Like what your, what your strategy is with the brands and how you're thinking about, like. Yeah, like, I know you've acquired some, you've started some. Like, yeah, what's, like your overall strategy there?

[Zach]

Yep. So, I mean, as most people in the agency space, like, we always dream about, hey, I want to, you know, maybe at some point run my own thing. It's fun to grow other people's businesses. Can I do it myself? Right. So you know the intent of starting Homestead? I've always. I kind of started the business thinking, hey, let's build a. Let's build a great agency, let's build a great team. But eventually I want to transition to the brand side, so it's kind of the plan all along. And we finally got the agency to a pretty good spot. And like I said, my partner Riley, who's been crushing it, took over and more than doubled the business since I kind of stepped down as CEO. So, yeah, I mean, it's been about two and a half, three years, starting to build a brand portfolio. I started by buying a notebook company called Public Supply. I've learned a lot since then. Basically bought a company for all cash. I kind of joke about it every once in a while. It was like it was, it was $150,000 business that I bought, bought it all cash, didn't finance anything. And it's a B2B business that hasn't really grown since, since then and you know, is not the great selling notebooks and D2C is not necessarily the best product to sell. So yeah, I mean that was the first one. And then we bought like a home decor business that was licensed products, kind of similar thing. We ended up learning a lot through that business, just about licensing. We licensed through like Anheuser Busch, Molson Coors. It's a lot of like beer product stuff. Again, that was like another business that we bought for around that same amount. And around that same time we, we started a brand called Holo. It's a alpaca stock brand. Great product, by the way, stuff like that.

[Connor]

Great product.

[Zach]

Huge fan of the socks. You should both be wearing them right now. And if you're not, I'd be very, very upset. But yeah, so Holo has been kind of the main one. I've got a pair here on, on my desk for those that are going to watch this maybe on YouTube. But yeah, they're alpaca socks. We just rol white ones. But we, we started the business three years ago, a little over like three and a half years ago. And the intent there was like, hey, this is a product that actually solves a problem. Which is like what I'm usually excited about. Products that solve problems are much easier to sell online. And we launched the brand. I started trying to sell it to everyone by kind of, you know, running angles and tests and hooks to cyclists to runners, to hikers, to hunters. And this weird niche of like hunting started to resonate really well with the product. Very warm product, great at what it does, solves that problem for that, that consumer and kind of that cohort. And yeah, the business has kind of popped off since then. We found, found a few other, you know, areas we've started selling to like trades and more blue collar workers, which has been like a really interesting kind of cohort for us. But yeah, that, that business, we did a million our first year, seven last year and we're pacing to about 20 million this year.

[Connor]

Justin Hollow, just with hollow.

[Zach]

And then, and then since that, we've launched two other brands. One's in kind of like the sleep accessory space and one's a supplement. But those two are, are the newest ones. So it's five, five brands in total.

[Connor]

And those are your. And you. And you guys launched. You launched those other two brands or those were acquisitions.

[Zach]

Yeah. So bought the first two and launched these last three.

[Connor]

Got it. Got it.

[Zach]

Yep.

[Connor]

That's awesome.

[Zach]

And then what's your. We did have. Yeah, I was gonna say we had one other brand that we brought in called Fray that we bought and we ran that one for about a year and a half. That was a laundry detergent business. And we ended up selling Ry and I ended up selling our shares of equity in that business. We just didn't really see a ton of future with that one and just felt like it was a good opportunity to kind of get out of it. So it was a decent outcome. Nothing crazy, but. So technically there were six brands now Five. But yeah, Hollow is obviously still the. I mean the biggest one in the industry.

[Cody]

I've got a. I've got a question here.

[Connor]

We were really.

[Cody]

I was stoked to have you on because I joined Ridge when they were doing five or six million dollars when I joined, so like had proven out the concept and Connor joined hexcloud when they were very big. And I think Cody has a similar story with Jones Road. So we don't have a ton of background going 0 to 1. And you just listed off like a bunch of examples of that. And you said something interesting recently. You said that you would, I'm paraphrasing, never buy a brand again. That you would just like launch net new brands. So why is that?

[Zach]

Well, one of the things I think I shared this and this is even something that I maybe tweeted was like, you're never going to buy a brand that's catching a trend at the right time. So like for us, like the alpaca sock game, like no one has heard of alpaca socks before. It's always been wool or cotton or some synthetic of some kind. It's a great product and it's going to be a growing trend and we're kind of catching that right before it starts to pop. So there was like maybe one or two other competitors in the space. It's mostly mom and pop shop selling this type of product. And so for us, like to go buy a sock brand, like we wanted to find something that was unique and that was like pre trend. So my thought. And like starting from scratch and again, like I said, we've launched two other two new brands this year. They're ahead of the trends. You search like the categories that they're in. Sleep and some health stuff. They're early. No one is Googling this stuff. Yet if you go look at Google Trends, the line is basically flat. Still, when you want to buy a brand, there's a chance that most operators, at least people at my own personal caliber, they've probably already gotten a lot out of it already. They've probably already hit the trend, followed it, got as much out of it as they could, and now they're trying to sell because it's. They feel like it's a good time before maybe it falls off. So for me personally, I think if you know the right marketing playbook, the zero to one kind of playbook that we run, it's much better to just start, start your own versus trying to buy a business that may already be flatlining, that you maybe just start trying to maintain.

[Cody]

Totally. And that's an interesting distinction. I hadn't thought about it that way. But like your particular skill set isn't going 0 to 1 from a marketing perspective, ideating and executing on creative and ad angles and scaling that way. Whereas someone who might buy a brand might be more of like, you know, you might be looking for like distressed assets and like improving operationally. Right. So I think that's maybe an interesting distinction. People are out there like buying brands and being really successful, but it might be because they're approaching it from like a different perspective.

[Zach]

Yeah, an ops perspective. Yeah. I mean like when we bought Frey, the laundry business, they were a distressed business.

[Cody]

Right.

[Zach]

So like the amount of work though, that it took in that year and a half that I worked on it when we bought it and then I sold my shares in the business, it was the same amount of work that it would have taken to start a brand to get it the size that we got it to. Right. So like we got the business to mid six figures a month in revenue. I think we could have got a laundry detergent business to mid six figures in revenue in a year and a half and not had all of the mess and nonsense that we dealt with with like them burning, you know, relationships and us having, you know, debt on the book, stuff like that. So yeah, I mean, I think that's, that's my personal like approach.

[Cody]

Yeah, totally.

[Unknown]

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[Connor]

What do you, what are you looking for when you're trying to think ahead in and kind of find that trend that you think is going to keep trending upward? Like, what's the, are there any things in particular that you see that makes you think, oh, that's hot right now or oh, that's gonna be hot in a year and like we should jump on that? Like, is it like how much of it is quantitative? How much is it like gut feel? Like I'm curious. And then also I'm curious if either of you have any, I don't know, trends or like products that you think are on the up right now?

[Zach]

Yeah, I mean, I'm usually looking at what I would call like mid tier influencers that are super obsessed with either like health, wellness or something along those lines. And they're the ones that are like trying stuff and just like talking about it naturally and they're not posting. There's no affiliate deals, there's no, nothing like that. Like, great example. I just bought a pair of like red light glasses. Red light glasses have been around for a long time, but there was, I've.

[Cody]

Never heard of blue light. Blue light.

[Zach]

So these are like, these are so. It kills all the blue lights. Sorry. So I'll pull up, I'll pull up the name of the brand for you.

[Connor]

Interesting.

[Zach]

Plug them. But anyways, the idea here is like, blue light glasses have been around for forever, but no one is really making the lenses as quality as what they could have been to truly kill, like, everything. So there's a brand, there's like a guy that's super into health that I follow on Instagram, and he was just kind of talking about, like, hey, yeah, you can go to like, whatever, cvs, Walmart and go wherever and buy some blue light glasses. But the lens quality themselves is going to be pretty shit. And like, it's actually not going to solve the problem. These glasses, like, when I wear them, I, like, get sleepy. Like, it's crazy. Like, it literally kills all of the light. So it's, it's, it's solving a problem that I've, that I've had, which is like, yeah, I might still be on a screen until right before I go to bed, but at least this way it's going to like, help calm me down and calm down kind of like my nervous system and stuff. So, I mean, like, there's things like that, right? So this guy was just talking about them. So I think finding natural conversations with people that are usually ahead of just like trying things, right? So it could be any category. It could be like, you know, Connor, for you guys, it could be chefs talking about something, right? There might be some weird unique, like, appliance or something. That there's appliance or something.

[Connor]

Yeah, right.

[Zach]

That they're just like, they're like, it's a super niche thing. But when you think, oh, okay, this niche could be a massive tam. Everyone could. That. That works in front of a computer screen. All that could use these blue light blockers that are like extremely deep light blocking, like, stuff like that, right? So that's usually where I'm finding these things. Like, I mean, a good example is obviously all like the ice bath stuff, right? Like, that popped we. I was looking into doing those three years ago, right? Like, I, I saw it early, but I just like, didn't, didn't move on it because, like, the AOV was a little scary to me. You know, the first PO of like 10,000 units was going to be like 60 grand. And I was like, yeah, I might pass on that, so. Or 600 grand. I forget what it was like a hundred dollars a unit that I was looking to do. So, yeah, I mean, I think it's like identifying people that aren't necessarily, like, massive Influencers, but people that, you know are like on top of a game. Something specific, health, wellness to, you know, it could be a specific category. It could be like a runner. Right. If you're like wanting to start some type of running brand, running is popping off right now following a runner and then they're talking about some insu insert.

[Connor]

You're like, oh, yeah, so is that dude from Austin. That's who I think of that. That Asian guy. Matt Choi. Yeah.

[Zach]

So we actually, we're working with Matt Choi on Hollow right now, so.

[Connor]

Oh, nice.

[Zach]

Yeah.

[Connor]

I mean, that's for Ridge. Right? Like, that guy is the. Like, I don't think there's probably anyone better in the technology space to talk about, like, what he's interested in. I get like, I'm sure there's things he's talked about that became hot a year or two later.

[Cody]

Yeah. Yeah, I think that. I think that's a good one. I've got a slightly different answer. I think it's technically worse than like organic influencer conversations. But I think there's also a really interesting trend to like distill from books. So, like, I remember reading Omnivore's Dilemma, which came out in 2006, and like, so much of that content ends up dictating how we like all the trends in food over the next 20 years. Basically. The other one that comes to mind, Four Hour Workweek. Obviously if you followed that book in 2008, you could have built. You would have had. You'd have been early to virtual assistants. You had been early to like routine optimization. Four Hour Chefs. Kind of like that. A lot of Tim Ferriss stuff is like very early. And then the other one that I read more recently was Breath, which is just about breathing. That came out in 2020 and that like you can. I have no idea what the Hostage tape founder was inspired by, but it feels as if it's a direct descendant of people caring way more about the quality of their breathing. And I just. You can see kind of like cottage industries pop up around these trends. I think it used to happen in books and I think now it's happening with creators and influencers for sure.

[Connor]

Yeah.

[Zach]

Funny. Funny enough. What's really interesting is the. I've got a story about hostage tape. So they actually reached out to me on Twitter, dms, the founder did. Right before Black Friday. And what's fascinating is like, I was. I must have been in my feelings that day and just whatever. Or just like hyped up. I don't know. It was. I Must have been in a weird headspace. But I was like, hey, this is my brand hollow. Go copy us. Go copy our whatever.

[Cody]

And.

[Zach]

And he like, I was like, just copy it one for one. Like, you know, copy our ads or listicles, whatever. And he sent me a screenshot like a week later and was like, yo, it's popping off. But I think to that point though, there's like very good people that are good at identifying trends, but they might not be a marketer, right? So this is where like the combination. So for me, for all of my businesses, I've got a co founder in all of them and it's a product person. Like that person. I didn't come up with the idea for Alpaca sucks. I have a co founder, he's a minority owner of the business. He brought the idea to me, was awesome.

[Connor]

Yeah, shout out.

[Zach]

Shout out to Brian. Shout out Brian Davis. Yeah, but yeah, I mean, I think it takes the combination of both of Those things so 0 to 1 to do it right. You have to have the product concept, which us as marketers. Me personally, I'm not the product person. I'm not the one finding these things. I'm finding the people that love to be super deep into new things and just catch the trends early. And then I'm just the Internet person that goes in searches and says like, hey, who's selling this? And is there an opportunity? Yeah, does the math on saying, hey, can we, you know, acquire a customer and make the. Make the math work. Right? So that's.

[Connor]

Connor, I texted you about this last week, right? With your new Ridge. Just launched this new design that I love. It's kind of this like almost like psychedelic, you know, super punchy colors. And I was like, what is like, I'm just so impressed by the, by the volume of Ridge and how, like how you guys continue to roll out just amazing varian of your hero product. But that's basically the split you guys have, right? Like the, the founder and I mean, it's the founder's a father son combo, right? They're all product and you guys are all, all marketing, all sales. And that's exactly what Sack's describing right now. It's like these guys are producing incredible products and you're selling it. Do you have any, like, are you totally, totally, totally out of product development? Or like, is that. Is it like a true, true split or are you kind of involved a little bit like on the trend side of things? Connor, like, what. What does like that working relationship look like between you and that in that father son combo. Because I think that's very close to what Zach's describing.

[Cody]

Right, right. Yeah, it. No, it is, it is, it is pretty natural. I mean, Sean and I came in as the marketers to help scale what was a. Like, it was already, like I said, it'd been proven out in terms of product market fit. You have this minimalist wallet brand. They're doing a couple million dollars a year. It was just Daniel and his two buddies, Daniel's son and his two buddies living together, they just stopped shipping wallets out of their house. It was like as, as nascent of a, of a business as it could be in many ways. And this is a bit of a long winded answer. Right. But we came in because we, we came in first as agency. Sean and I started an agency together. Ridge was a client. So that's how we started. We went internally because Ridge clearly had a very long Runway, highly differentiated product, large addressable market, super high margins, great payment terms, cheap to ship, cheap to store is what I always say. It was like from a D2C growth perspective, it was like the ideal product. So that's why we went internal. And it's exactly that. We, we had a growing trend in like men beginning to buy wallets for themselves and for different reasons. And the marketers who could help scale that up. For a long time there was like, I had very little influence on product that's kind of converged over time only because growth at this point requires like really close alignment. And it comes down to like my favorite product recommendations are like small accessories and things. Like the coin tray was my idea, which is like a $17 little attachment that goes with the wallet. I've talked about it before. It like solves a problem for people. We've actually sold more wallets because we introduced the coin tray. So that's where I've found, that's where I think I've been the most influential. I'm not really.

[Connor]

So then they'll develop it, Connor. So like you're like, hey, I think this coin tray would slap. And then they're like, okay, I agree, we're going to go design this. And then they come back to you with a product and okay, got it.

[Cody]

And that's just me like kind of shooting out ideas. Right. The other big one was the key case. I was like, I was like pounding the table for years. I'm like, dude, the Ridge wallet of keys is a no brainer attachment. And like, because again, from a growth perspective, it was like, look, we can scale this wallet. But we need to be driving up units per transaction. We need to be driving up aov. We need an item that we can promo alongside it in bundles and kits. Let's do the ridge wallet of keys. Some sort of key organizer. There were examples out there. Key smart orbit key people like that. I'm like, look, people are doing it. What is our version of that? Because I think it could really help from a marketing and growth perspective. So that's where I've, I've done it. But we've got people with much cooler tastes deciding on like the designs and the colors and the patterns and stuff like that.

[Connor]

So are they. The ones are, sorry, Daniel and Paul's.

[Cody]

The dad and Paul's not super involved. Daniel's like, like a, the main product. Like a true product guy. Yeah. Right. And then one of his best friends, Austin, is our chief design officer and he's actually managing a lot of the, like, we call it surface design and material design that's going on existing silhouettes.

[Connor]

Got it. So are they the ones cultivating relationships with artists like this? The one that I really liked was an artist collab. So is that Daniel? Does he have these connections to all? I would assume. Right? Like he's an artist.

[Cody]

Yeah. That was Austin finding an artist that he liked and then connecting with her and then launching it.

[Connor]

Okay, cool, cool. Very interesting. I, I wanted to ask a follow up question here. Do you guys have any products or trends? I have one that I'm, I am really bullish on right now. Do you guys have that? You're like, this is going to be hot. I think people should jump on this.

[Cody]

You go first.

[Zach]

Yeah, you go first.

[Connor]

I. All right, so this is, this is from uh, my girlfriend who is like. And now she's kind of transformed me into this as well. But she's super up like on. She tries all the skincare. Um, and she's like super early on in it. And I'm starting to see other people getting more and more onto this specific type of like, I guess moisturizer for your skin. But beef tallow based skincare is a fucking amazing dude. It's unreal. I have this whipped be. It's a beef tallow and manuka honey and like some essential oils from this, this company called Little Tallow Company. It's amazing. Like it feels so good on your skin. It, it, it's unreal. It's. I, I like it better than anything else I've used. And then if you go look out there, there's, there's a handful of brands that are doing it and I actually think a handful that have decent volume based on their review count. But like none of them have super strong brand affinity or even like a super strong focus. So I think there's room for a brand to come in and make an incredible product but really win people over on like the brand valence and just like make a brand that people feel really attracted to. So that's my. And It's a like 50 jar, 54 ounce jar. You probably run through that in two months. And like it's one of those things you use every single morning, every single evening before, like after you shower. So I think there could be really nice lifetime value potential. So that's mine. That's the one I'm excited about right now. I'm curious to see if anybody takes some big swings there.

[Zach]

I just thought of one. So not sure if you guys are familiar with cane footwear. So this is basically like if you took Crocs and made them like sporty, they're positioning them as like recovery shoes. We were speaking of out, you know, like a few runners and stuff like that. So like Choi is one of their influencers. I know that they have a guy named Eric that we're familiar with and working with with Hollow too. But I think these guys are going to be a monster business. I think this is a, this is a nine figure business. And coming in the next.

[Connor]

God, these shoes are so ugly.

[Zach]

So, okay, this is what I said. This is what I said. And you try them. Dude, I wear them around the house every day now. Like they're actually really nice. Um, I've been off the croc game. I like completely just disowned everyone that owns Crocs. But like, for some reason these cane shoes are actually really nice.

[Connor]

Um, great camping shoes.

[Zach]

Could. Could be great cam shoes.

[Connor]

Yeah, for sure.

[Zach]

But I think this is, this is a new one. I think this is like better look, slightly better looking Crocs, let's call it. That are. That are. You know, obviously the positioning is solid too. So that's mine.

[Connor]

It's kind of following that futuristic shoe trend that I feel like easy kind of started a little bit as well.

[Cody]

Yeah, totally. They do kind of like Yeezys.

[Connor]

Yeah. Although now what? Easy selling their shoes for. For what, 25 bucks, right?

[Cody]

Well, dude, that's giving them the thing. That's the thing. Like, like at 80 bucks, I'm sure these. I would think they have great margins. Like, I think there's something about the material like they sell Crocs for cheap.

[Connor]

Right.

[Cody]

30, 40 bucks or something like and I'm sure they have good margin. So if you can get something similar 80 bucks, you make it kind of to your the point you made earlier like problem solution like yeah, these are something you should wear around the house as recovery shoes. Yeah, I like it. And footwear's footwear is big. You get the whole family wearing them.

[Zach]

Yeah, I mean it's, we do have, we have a handful of footwear clients at the agency and the, the worst part about that is like size so like returns is just brutal. So like a lot of these footwear brands have like 30% return rate.

[Cody]

Right.

[Zach]

Which is just brutal. But I mean you, but it's a.

[Cody]

Lot of product that's a little, it's a lot of Exchange. Is it 30% true returns or does that include exchanges?

[Zach]

So I'd have to look but I remember we have one client specifically that it was like 35% return rate. It was insane.

[Cody]

Yeah, that's brutal.

[Zach]

Like very high.

[Cody]

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[Connor]

So one thing I've been super impressed with watching from the outside in is watching you like get really, really good at something and then kind of put yourself back at the ground level of the learning curve again. And from my pov, that's what you did with Homestead. Like you got Homestead into an amazing spot, super successful agency. You then, you know, then Riley transition as the CEO ultimately because you wanted to go and start at the ground level again and launch and acquire own brands. Very, very, very different. I mean you and I have texted and talked about a little bit, but like very different skill sets and requirements. So I'm curious first off, like what's your title? Are you like, do you look at yourself as like the CEO of these brands and then what are you really focused on? Like what have you had to learn in the last two, three years running your own brands versus scaling other people's brands?

[Zach]

Yeah, it's very different obviously than agency life. Right. So the one thing candidly about agency life is it's a cash flowing business. And you know, you're, you're able to kind of look at your P and L very, very lightly and be like, cool. We're cruising, we're growing, kind of know where we're at profitability wise. We know if we can hire, we know if we need to. Fire people are your biggest cost in that business. So that's kind of like what you're, you're essentially arbitraging people, which sounds really kind of shitty to say, but that's kind of the reality of it, right? So it's, it's very simple otherwise of a business. So I think, I mean my financial knowledge pre building brands versus where we're at now is just like night and day. We didn't need to understand debt, we didn't need to understand, you know, cash conversion cycles. We didn't need to understand any of that stuff. Right. In the agency world. So I think what I mean like what made me do it really was just I wanted to build something bigger. I want to build something that's either a nine figure business alone or a nine figure holding company. And just like something I've aspired to do and wanted to do for the last Five years since starting Homestead and watching brands like hexcloud and others that we've been able to work with achieve that and it's just like seeing other people do it. You're like, okay, maybe I'm, maybe I'm capable of doing this. So I mean, that's kind of the main reason why I wanted to do in the first place. But yeah, I mean starting over, it's, it's kind of brutal to be honest, because you need to, you need to learn how, how the cash flow of an E commerce business works. It's so much different, right? I mean you're basically fronting a ton of cash to buy inventory. You usually have really bad payment terms out of the gate with these manufacturers. So you're usually just like not taking any capital out of the business for a while. I mean like Holo for example, I kind of shared numbers earlier, but million, like a million two. In our first year I think I put in like 50 grand and then we were able to kind of like roll that and roll that and roll that. I didn't take any money out of the business. Year one we ended up having to get like a bunch of debt. Year two to grow from one to eight. And then this year was just like absolutely brutal when it came to like going from 8 to 20. It's a whole different ballgame. Like it's just like the numbers get so much bigger that learning how to not only navigate your like 13 week cash flow for you know, statements and forecast, but like then navigate like relationships with bankers, lenders, your credit partners, right? It's like so much more about the finances side I've learned on going brand side versus agency side than it's then it's anything else. I mean obviously the marketing stuff we've known pretty well wouldn't say I'm like the best in the world at it, but I know it pretty well to the point that we kind of knew what to do. We could kind of just line up the dominoes and knock them over in that sense. But financing and growing the business really just that was like the majority of stuff. I had no clue what to do. And like when we're on the, I mean I think what also changed is it seems like in the last one or two years profit has become obviously a bigger focus for a lot of direct consumer brands. So us as an agency have gotten way more involved, right? Like now we're working with you know, finance softwares like Iris and we're getting access to P and Ls and we're looking at daily contribution margin and stuff like that, where three years ago it was very rare for a brief brand to be like, hey, what's our daily contribution margin goal? Like, it just wasn't the thing. It was like, here's your MER goal and go spend into it. So, yeah, I mean, that was a massive transition. I think if I was like still agency side today and then went brand side, I'd be a bit more knowledgeable. But that's been the biggest gap that I, that I didn't have and I didn't realize how much I was lacking in understanding on that side.

[Connor]

Have you been able to service? Like, obviously you're not an operator in Homestead anymore, but you're obviously still pretty connected and I'm sure you and Riley are communicating regularly. Like, have you. I think you, you started to say this, but do you feel like you've been able to service your clients better because of what you've learned running your own brands?

[Zach]

100%. I mean, like, just to the financials perspective, we built on the brand side of what we call a profit matrix, essentially builds in with your contribution margin, with your OpEx, with your cost of delivery, everything into a spreadsheet, then that allows us then to kind of play with revenue and offset your opex. Offset things to understand, like, at what scale are we producing what contribution margin. So like some brands will come into Homestead and they're like, hey, we need to hit a three emerge. And we're like, no, you actually need to hit two seven but double your revenue and you're going to put twice as much to the bottom line. So things like that, that I've been able to kind of like force inject in from just lessons and mistakes we've made in the brand side have been good, I think. Other than that. Yeah, I mean, it's using your own money to spend against, like trying things out is obviously like scarier, but has been fun. I mean, like, we've learned some things on just from like software that makes our team more efficient, all sorts of stuff. Right? But yeah, I mean, I think the mistakes that were made like earlier in the brand building, like really even just like nine months ago, have been, have paid dividends for Homestead clients at this point because it's just like, hey, don't go make this mistake. Hey, go talk to this lender. Hey, I bet you can extend your, your credit card payment terms with this vendor. Like, we're having all those conversations on the brand side that you don't realize. If you can just Add that extra value to your clients, they might stick around a bit longer.

[Connor]

Yeah. Have you had mentors that have helped you figure stuff out? I mean, I'm sure a lot of it's just baptism by fire, right? You try things, you see what works and doesn't work. But have you actually seeked out anybody to, like, show you the ropes here? Cause I know that's been huge, like, for me. That's been huge for me in the last year where, like, with Hexclad, like, I'm working with a guy named Daniel Pearson. He's mentoring me on some stuff, and I am just thrilled at how much quicker. I've learned a lot of these things by having him in my corner. Have you had some folks like that?

[Zach]

Yeah, I brought in a fractional coo. Trey Sisson is his name. He ran a brand called Baboon to the Moon.

[Connor]

One of my favorite brands.

[Zach]

Yeah, Trey's. Trey's an incredible operator, awesome person at the end of the day, but he came into hollow right as we were wrapping up last year, and I was like, yeah, I want to go from 8 to 20. And he's like, okay, well, your. All of your models are completely screwed. Like, we need to start over from zero. Like, we need to build you, like, better. Better modeling here. So, yeah, I mean, he was instrumental this year, to be honest. Like, he. He helped myself, and I brought in a junior finance employee. He taught us a lot.

[Connor]

Lot.

[Zach]

And then since that, we've. Yeah. I mean, we essentially now will go out and go try to find fractional CFO. COOs are the main ones that we talk to of nine figure brands that are. That are building, you know, in similar adjacent industries to just be like, hey, pick holes in our models and make sure that we're thinking about this correctly. Also, just for connections. Right? So like, lending connections, bank lender. I mean, like, it's. Half of it is about. Yes. Learning, but half it is just about, oh, yeah, I can get you an extra half point cash back on your credit card spend. And when you hit the scale that we're starting to hit with Holo, it's like, yeah, we're spending 800,000amillion dollars a month. An extra half a point on cash back is like a salary for the owner. Right. So it's just like things like that that can really move the needle through these relationships. But, yeah, totally. I mean, I'm. By no means do I have this figured out on the brand side yet. It's definitely been, like, a very scary and also, like, Enjoyable period. But yeah, I mean, you gotta have other people. There's no way. There's no way. I mean, also, I mean, to your point, we have the agency, right. So I've been able to meet some incredible operators that way. I mean, like meeting the team and Hexclad and everything. Right? Like, even just the people on the podcast, even Cody, like, just to be able to text these people and be like, hey, this is what I'm seeing. Am I wrong? Am I right? Am I dumb? Like, what am I, what am I missing here? And people are just being honest. And, you know, that's been, that's been massive.

[Connor]

Yeah, Cody. Cody's been able to get out his, his urge to send Shopify screenshots through our, through our group chats so he doesn't have to put it on Twitter now.

[Zach]

Yeah.

[Cody]

Yeah.

[Connor]

So I thought what would be fun, Zach. So you said that Hollow is pacing to do what, 20 million this year?

[Zach]

Yep.

[Connor]

I thought what would be cool is to almost talk through some, like, different revenue bands in spite. Speak to like, broadly. I wouldn't have to get too detailed. I think what we should focus on most is like, the, the tactics that have taken you to where you're at now in like the last year. But even if you want to like, quickly be like, like making that first 100k in revenue, making that next 400k to 500k, getting that million, getting to 5 million and then getting from like 5 to 20, I have some different revenue bands. I think it'd be cool just to hear you speak to like the, let's call it the core tactics that drove like 80% of that, of that revenue in that band.

[Zach]

Yeah. So I mean, the first hundred K really comes down to, from my perspective, like, you're running static ads. You don't necessarily even need to worry about videos. My, in my opinion, from your first hundred K, you're running static image ads usually going to be slightly lower cpm, slightly lower cost of traffic. And the whole intent there is you're running usually some type of hook angle, some type of positioning. Right. And then ideally what you're trying to do there is you're trying to find some leading indicator of a winner. Right. So depending on what you're selling. Right. The intent here is that most brands should sell something that solves some type of problem. If you're going to go full fashion, great. Completely different strategy. What I'm talking about here, you're probably going to go hire a bunch of influencers, seed a bunch of product to get your first hundred K. But for most of the brands, 95% of people probably that listen to this and are thinking about starting a brand eventually create a product that solves a problem. I mean that's like the number one thing that I would recommend. And then you're just trying to find a customer cohort that resonates with that problem and the solution that you're presenting and how you kind of present it. So I think yeah, it's mostly done through, through static ads to a product page to start. You start to get traction. One ad has a higher click through rate than others. Maybe that headline you then turn into a five reasons why listicle. You start running that ad to a listicle, oh great, now you've doubled roas. Like that is the tactical approach that I always take.0 to 100k, 100k to 500k. This is where like videos start to really like become necessary. Usually what I'm trying to do is I'm trying to hire customers first. Go to customer list, go see, reach out to them, see, hey, we're, we're hiring content creators. We see you bought the products, we see you left us a five star review. Do you know someone in your network or are you a content creator that we could hire to make content to talk about the brand? These are people that are usually like already care a little bit more and are usually people that are like usually a lower kind of price point, higher. So usually those are people that you can hire for 100 to 250 to shoot a piece of content. Usually what you're trying to do is you're trying to brief them high level with the top ad hook angle that you know is already working in static ads. And then this is also where like landing pages start to become a bigger deal. This is where maybe now you're taking just the five reasons why landing page. You're maybe testing a shoppable landing page with an offer. You're using landing pages to kind of like a b test headlines to see like what, what value props or what angle or positioning actually resonates. That's kind of where you take that the Next step deeper. 500k to a million. And I'm not sure if this is like per month, but I'm kind of treating it as like kind of per month. 500k to a million per month. This is where I think that it's like CRO on your website. Like most people can kind of not give a shit about their website until they get to 500k a month. In revenue, 500k to a million. You might be able to make a couple small changes to adjustments to your cart, to the way that you're positioning your offer to, to things like that that might increase your AOV a little bit. So like for example, Hollow. Hollow's AOV last year for all of last year was $75. Pretty, pretty solid. We're like cool. $75 is great for socks. This year we knew if we wanted to push up from, you know, 7 million to 20 million, we needed to increase our AOV to close to a hundred. So we rolled out a couple new offers, we rolled out new bundles, we tried a bunch of different things, we tried some price testing adjustments. We were able to get AOV up to 105. So like now we're sitting at $105 AOV, which just allowed us to spend 10 more dollars on CAC, which just pushed us even a little bit further. Um, so I think like that 500k to a million a month, people really need to look at their website. Where are you pushing traffic to? What is the one or two things you can do to push up aov? Uh, is that like upsells in your cart? Is that upsells that are just pop up upsells? Is this post purchase upsells? Like the post purchase upsell game is like undefeated. I don't if people are not spending enough time on that, like you can increase your AOV 1020 by just having a great upsell post purchase. For us, it's usually like you want to send it, like you want to do something that's just like an egregious amount of some the unit that they just bought and then just discounted heavily. So like for us we would do, you know, if someone buys 1, 2, 3 pairs of socks, we'd upsell them 10 pairs of socks but for 50% off and it's just like boom, that AOV just went from 60 to 170. But the take rate on it's 30%. So like the aggregate of that moves up your AOV $20 and it's just insane. So I think go for it.

[Cody]

Is that, is that like a pretty accurate upsell that you just walked us through?

[Zach]

Yeah, that's like what we run. Yeah.

[Cody]

So yeah, yeah, yeah. So it's like a really large average order increase and then you're getting a take rate of 30%. Sounds like a lot, but like you'd be fine having a relatively lower take rate but just getting total massive increase. Yeah.

[Zach]

Even if it's Even if it's 10% take rate, I mean just that the total, that the averages of that starts to back out really nicely. Totally. So yeah, I mean that's one thing that I always recommend trying. Like they just, a lot of people say, oh, they just bought a pair of 180 shoes. They're not going to buy another pair yet. They might if you discount it properly enough. They've already bought one, why not buy another? Right? So it's the best place to sell. And I think a lot of people like don't put enough emphasis on that because there's like I need them to fill out my post purchase survey. No, you need to sell more shit first then do that. Right. So anyways, that's kind of how I think about 500 to a million and then a million to 5 million a month. To me this is the number one strategy that we're following. It's, it's, it's partnerships, whitelisting deals. This is like the money maker. You want to go a million a month to 5 million a month. Like that is the bread and butter that we are, we are doing.

[Connor]

So you can go to media white listed from these people review style ads.

[Zach]

So our, our secret sauce to this is finding creators that are not just great at posting beautiful photos or just like beautiful lifestyle photos, but very, very good at talking to the camera. So you're trying to find a creator that is already shooting content, talking to the camera, educating people. Ideally you find them in your niche now, the sweet spot. And like what we've been doing is we've been doing a lot of deals somewhere between 3,000 and 5,000amonth for one video and then 30 days of whitelisting access. It's pretty expensive compared to like your normal UGC deal. But the real sauce is you have this person talk about a story that leads to a problem that then your product solves. But you don't let them talk about your product until 30 seconds into the video. Do not mention your brand, do not mention the product, nothing. So all that this is, is just someone that you know, if they like click through the profile, oh, they have 300,000 followers, they have 800,000 followers. They must know what they're talking about. They go back to the ad, they watch it, it's just storytelling for 30 seconds and then they get into a problem and then they get into why your product solves the problem for them. These are ads that are helping to scale drastically. So right now like at HOLO we have four creators signed. So we're spending, call it 20,000amonth on creator fees. I bet by January 1st we'll have 10, all at 5k a month with some type of performance bonus. So like one thing we started doing with these creators to get them really excited about the brand is we'll pay them a percentage of ad spend. It's a small percent, but it's like the new customer CPA we're driving with these types of ads, these white listed, very genuine ads from people of authority in the space. It's like it's not even comparable, it's 20%, 30% less CPAs. So paying 3% of ad spend to this creator and giving them some upside to be like, hey, we spent 300 grand on your ad last month, here's a $15,000 check. They're gonna be like, hell yeah, I wanna shoot more content for you. Or like, hey yeah, next time I'm in your state or next time I'm running a marathon in Chicago, I'll come, come up to, you know, Green Bay, Wisconsin to come visit you. Right? So like these are the types of things that like we've found that allow brands to really crank up volume. And it's just like a new thing. Obviously there's like FTC just rolled out some new regulations so there's gonna be a little bit of like kind of figuring out kind of the sweet spot there. But that to me is like the number one tactic to go from a million to 5 million that a lot of brands aren't spending enough time on.

[Cody]

Dude, fantastic breakdown. Yeah, I think, I think that's a really good. So what I heard to say it like super simply, I think like 1 to 100k it sounded like finding product market fit, like what is the problem solution that resonates with someone. What's that angle then? Yeah, the next two are basically building that out further, which I think that's like when I joined Ridge was it was like, oh, how do we just scale this up? How do we drive up aov? How do we increase conversion rate? Like you're optimizing it. And then that last point is like how are you going much wider at the top and like how are you hitting people in different ways with that problem and solution? Yeah, very, very compelling outline there.

[Connor]

Yeah. And also very I. One of the trends I was noticing is like in informed high lift tactics, right? Like don't go shoot videos and make landing pages which require a lot more resourcing, a lot more time, a lot more thought before you know what the angle is that works well and you can validate that with your static ad. So now you're going into this phase two. We're going to go, you know, shoot ugc, you're going to select creators, you're going to make landing pages. But you know what you're going after. Like you're going after the. What you said was the hunter. That is like one of your big Personas.

[Zach]

Totally. Yeah. And that's, I mean this is the exact playbook we use for Hollow to get us to 20 million this year. Right. So it's like to a T what we did. I think like the one thing is people like you said, Connor, they waste resources too early. Don't waste the resources too early. Run a bunch of different static ads like try to find the real cohort of customers that you can grow into that can be a 10 million a year cohort and then worry about all the other stuff.

[Connor]

Yeah.

[Unknown]

So one thing we talk about a lot on this podcast is upper Funnel investment measuring, YouTube, measuring TV measuring, you know, out of home, all that kind of good stuff. It's something that's top of mind but it's not very easy to do. Recently Jones Road turned to prescient AI to help us as our new MMM media mix modeling tool. And we have been super impressed, no joke. It's really helped to quantify some of the things that we thought were true. Some of the things that some of our tests, you know, showed us, but especially TV was very hard to measure. We were spending about 10% of budget on TV and we just weren't really sure how it was doing. Boiler alert test of the week is actually looking great. It's actually looking like our most effective efficient channel thanks to Prussian AI. So we are in the midst of scaling it up and results look good. We are very happy with it. YouTube looks great as well. You know, been been spending and scaling up YouTube a lot based on this data. So we are very happy with it. It's actually not something that we were getting. We didn't feel like we had confident data back from other MMM providers that we worked with before. And so we are thrilled with some of the prescient data that we are getting. We're getting halo effects. We're actually able to see know how much value are we driving directly from clicks on channel versus how much is coming through organic direct and it's quite a bit. Being able to measure TV has been really difficult until now, but it feels very accurate and it's giving us a lot of confidence. Things are volatile in D2C. We're able to build these new optimizations, these new scenarios, you know, within days. Setup was super easy. Unbiased cross channel, you know, measurement. We're not on Amazon but I know brands like hexcloud will use it to also measure and validate, you know, spend going to Amazon. And so we're thrilled, we're super happy with it. Couldn't believe how easy it was. And the team is getting a lot of value out of there. There's really used by top brands like of course Jones Road, none other than Hexcloud, Good American Symbiotica, Timbuktu and many, many more. Mike, the co founder hits me and Connor up pretty much every day just telling them about some of the new brands that signed a lot of them from, from listening to this. So we are thrilled with prescient. It's made a huge difference so far and it's really going to help us leaning into Q4. So if you want to be like us, like Hexcloud, like Jones Road and many more, go to pression AI.com operators to book a demo and see for yourself.

[Cody]

I was going to ask about channel diversification. Like we talk white listing and partnerize and that's obviously getting more juice out of a Meta or something like that. Yeah. Where are you at with channel diversification?

[Zach]

So we, so we're now spending about 30k a day on Meta and we just started spending on CTV in a platform called Applovin. So Applovin's actually been really, really interesting. I can run you guys through our numbers, but it's been, it's been great to us so far. Um, so yeah, I mean I think, I think you can spend in a Meta till you're at a million a month and spend and not worry about anything else for the most part. I mean like, I think people overcomplicate it all the time. They worry about TikTok shops and this and like can I spend more on Google? No, do a better job at Dr. Creatives mixing in your kind of branded content, mixing in all, you know, diversification of creative. Everyone talks about this. It's the reality. Like if you can do that right, you can, you can start bringing in these whitelisting contracts. You can get to a million a month and spend on just meta and maybe 50 to 100k a month on Google. And I think that that's where most brands should focus their time and energy. Once you're at that point, then I think you can start thinking about other channels and that's kind of right where we're at right now. So yeah, we started running Connected tv. We're working with Neon Pixel. They've been great to work with. Brooke and her team are awesome upvote.

[Connor]

Yeah, they are.

[Zach]

We basically took our top creative from Meta and just chopped it up and made it tv. Made it. Right. So you got the domain at the end and it's a 15 second clip, right. So it's really nothing special. It's the number one hook that we had, the number one problem. So we just like call it out. Are you sick of your toe toes being cold at, you know, whatever. All these different one one off hooks. That's the, that's the first three seconds and then it's a couple of value props talking about why our products better than others. And then a CTA at the end. Um, nothing. Nothing crazy. Right? Um, but yeah, we're spending 5k a day now seeing the same kind of one day click roas. And our MMM model is showing like the same Roas as what we're seeing on Meta. So that's been great. I think it's like, again, don't overcomplicate it. Like be a little bit more direct. Take your top creative, take your top hook, turn it into a 15 second clip. Like, give it a shot before you try to like over invest in some like $300,000 production shoot before you launch TV. Like, you don't need to do that.

[Cody]

Totally. You know what I'd also say, or at least what I'm hearing. One reason I like the outline so much and I'm biased because I advocate for this all the time. So you're like, you're talking my book here. But I think it's like the highest leverage approach, right? You're like, hey, we're going to identify this problem solution. We're going to get good at content, we're going to scale up and then we're going to scale across channels. And it's like you can imagine that system happening in a really high leverage way. It doesn't take a big team to spend a lot of money. If you've nailed the problem solution, the content, you get on the right channels, you allocate budgets accordingly. Where. And I have this conversation with other brands. This was a while back, there was some sort of cool blanket brand and I was like, this is, this is rad. I think it packed up or something. But they, they reached out to me because they wanted to talk about doing Influencer and they were at like 4 or 5 million a year. And I'm like, way too early. I'm like, don't you have to build out a whole net new function? It's like a low leverage way to do it. You need different people doing different things, different measurement, et cetera. Where I was like, what you need is like, you need to offer tests, you need to increase, you need to get Facebook to work way better. And then even then, if you get Facebook to work better and you scale that up a lot, your next thing is not to do influencer. Your next thing is to like expand channels, get on TV, get on Snapchat, TikTok, all those other things.

[Zach]

I was literally talking with Jacques from Raindrop earlier today, just like a little bit ago. And I'm like, it's funny, we were talking about, what are the brands that you see really hit with, like, clients that they've worked with on these kind of bigger production shoots. He's like, they're all like 20 to $30 million brands. And those are the ones that like, when they, when they get meta, right? And then they can take that same concept and pop up production and, you know, tell the same story, but do it in a more beautiful way. And then they can get TV to work or linear or connected tv, then that's where the, you know, twenty to a hundred million really starts to happen. But yeah, it's like, get really, really good at meta because it's going to be the quickest one for you to figure out what's working, what's not working, what your customers are saying, what people are saying in the comments is like so valuable and no one ever looks at it. Yeah, I 100% agree with that. And then I mentioned Apploven. That's the other channel that we just started spending into. Started at like 1500 a day, then three grand a day. Now we're spending 12 grand a day. So, like we've been able to scale that one up in like two weeks. Mmm.

[Connor]

Is that net new traffic?

[Zach]

Net new traffic? Yeah, it's looking really good. So we're pulling like a 2526 on north beam one day click roas from that traffic, which is like pretty spicy. So how's that compare?

[Connor]

Facebook one day click.

[Zach]

It's like, it's like pretty in line.

[Connor]

Wow.

[Cody]

Pretty in line.

[Zach]

Yeah. Yeah, it's pretty.

[Cody]

We're seeing the same. It's just about the same as Facebook for us too.

[Zach]

Yeah.

[Cody]

Oh, you launched Connor a couple like maybe two weeks ago.

[Connor]

Nice.

[Zach]

Yeah, it's the team over there. I've Talked to them a decent amount. Now we'll. We'll onboard a couple more brands and some more Homestead clients over there. But yeah, it's very good quality traffic. It feels like early days of Meta. It's very weird. I don't know how they're doing it. Like, I haven't gotten into the nuance with them, but yeah, I mean, if you're spending 600 to 900k a month plus on Meta, like, Applovin is definitely something to look into. This isn't like a checkout, Snapchat and maybe spend three grand a day situation. This is like, could be another acquisition channel for you.

[Connor]

Yeah. I have a question for you guys about channel diversification and how it affects Meta. I'm curious if you guys agree or disagree. I think I heard this from Matt from Lomi, like a year or two ago, and I, and I agree with it. I think I look at our ad account, our Facebook ad account the last two years, and each year we've been able to scale up, like two years ago, like, 60% increase in spend year over year. This year, like 45, 50% year over year increase in spend. And our efficiencies may remain pretty flat both years, which I think is a major, major win whenever you're scaling up, spend aggressively. And I think part of that's absolutely from all the creative diversification that we do and the, you know, angle diversification, landing pages, all, you know, all the core levers you pull in a Facebook ad account. But I also think part of it is because by expanding to CTV and Linear TV and Twitter and Snapchat and app love and all these channels, you're reaching people that are. You're not reaching on Facebook. Like, you're reaching fundamentally new audiences. You're driving new people to your site that Facebook's never. That pixel's never seen before. So you're basically giving Facebook, like an entirely new signal to go and, you know, in theory, create lookalike audiences off of. And I really think that's a real thing. And so I think your. Your Meta account gets even better. And this is not remarketing, by the way. Our net new visit rates have. Have also stayed like 70 to 80% over these two years. So do you guys think there's any merit to that theory? You think that's what's happening?

[Zach]

I mean, for us, rising tide lifts all boats. I mean, we're seeing it right now, but again, we're not at the scale that you guys are at. So I'm curious what Connor has To say, so far it's proving yes to us. But again, we're a $20 million brand, not a, you know, nine figure business.

[Cody]

Yeah, yeah, I don't, I don't know what to make of it. I mean, you know what they used to say, that's all I'll be able to say is like what people say because I have no like real data around this. But what you used to say about TV is that there'd be like a halo effect that like you're serving more impressions, people might find you more recognizable. When they do see you on their Instagram feed or whatever else, they become more likely to react. So like they talk about, yeah, this small lift that you'd see across other channels if you're running tv, that's like always how they do it. We didn't see that when we first got on Linear. The other thing. And Cody has maybe described this on a podcast or directly with me, but he said exactly that. Was that driving a new visitor who's converting to your site. Facebook will observe that and then they know to go after a different type of person and that that can help you scale meta. I don't know, maybe I don't know.

[Connor]

Any way to validate it with data. Like, it's hard to be like, well, how much of this efficiency being flat was from all the assets we're pumping into the account? How much? It's like, there's really no way to tell. It's. It's just a guess, I guess. Yeah.

[Cody]

As long as number goes up into.

[Connor]

The right, you know, that's all we care about. Yeah, exactly.

[Cody]

Yeah.

[Connor]

So I think the, that was an awesome segment on like the tactics. I think like a final punctuation mark would be like, how are you doing these things? Like, what's the team stack? Are you, are you utilizing Homestead to service your brands? Do you have like actual, actually separate employees that are focused on what is it? Easy street? Is the Holdco or like that's focused on the Easy street brands? Like, what's that team stack look like?

[Zach]

Yeah, so we, we have a team of seven on the brand side now. So we have Cool, Head of growth, head of Ops, operations assistant. So two ops people, a designer, a director of E Commerce, director of performance creative. I'm missing someone, which is terrible.

[Connor]

What about retention?

[Zach]

And then so retention, we use Homestead. So all of our brands use Homestead for email. SMS will sometimes get it started like on a launch brand. We'll kind of like internally whip it up, copy basic flow, stuff like that. But Then once we had enough volume, we, we become a Homestead client. We, we pay actually just like a Homestead client. I have different partners in some of the brands than I do with Riley. So we're actually a, you know, I'm a client of my own business, which is kind of cool. So yeah, I mean it's a very lean team. I think like our OPEX is like I think 120k a month, something like that. And you know, the businesses combined are doing you know, three, three, five top line a month. So like OPEX as a percentage of our revenue is looking very good which gives us a lot more room to go to go spend an acquisition. But yeah, I mean that's, that's kind of the pod that we have right now. I think we're trying to figure out a sweet spot if we're going to actually start to build out teams underneath the brands. Like Hollow is getting the point now where it's like I might need a dedicated head of growth growth. If we want to push from 20 to 50 over the next two years, like we probably need someone just completely focused on this versus seeing other accounts. The one thing that we're trying to figure out though is like oh, finance. I have a finance assistant. That's the other role that I forgot the there's a few things. So design will float across all brands and I think it can continue to float. Our one designer who's just an absolute savage can just like kind of work across all of them. Finance can definitely float across all of them for a while yet. Growth and operations though, those are the two like that. We just need more dedicated resources. So in the next like in the next three months we're hiring ahead of partnerships who will manage kind of this influencer stuff that I'm talking about because that's becoming such a big piece of our playbook. And then we'll probably hire head of growth, another operations person to start to, to kind of work across the two top brands.

[Cody]

So one I like, I know how Homestead and easy street work and I've always been fascinated by it. And one thing I'd love is like it is going back to the point around how high leverage you're building the brands in terms of problem, solution, to content to scaling channels. It's like you can see that in the team structure, right? You said seven full time people essentially doing three five top line. So let's call it 35 million annual revenue. You're sitting at almost 5 million per head. Like I think that's the highest number I'VE heard and that's just insane. And that's, that's, it would actually make more sense if it were a single brand. But the fact that you're able to execute across a handful of different brands at such a high revenue per person just shows how leveraged the whole model is.

[Zach]

Yeah, I mean I think obviously like having the agency experience is a hack. Right. That's my hack. Right. We've been able to see 250 brands, the inside of them, how they operate, the team org structures, the like the, their marketing tactics, their, their, their, their products, the way that they think. You know, once you see inside of 250 businesses, you get to kind of learn all the mistakes to try to avoid. Right. And I'm not saying that I've avoided all of those mistakes by any means. There's still mistakes we make every day. But that's been helpful. Right. And, and I think forcing ourselves to be lean this way has just been, it's, it's made our team so much better. It allows us to pay our team more, which is really fun and everyone to take more ownership of what they're doing on a daily basis versus just feeling like we're too bloated.

[Cody]

Yeah. So I, I, I've got one more question here and then Connor, I'll kick it to you. Um, do you have like, have you thought about how big it could be with how many people? Like, do you think you could do a hundred million with 12 people or something?

[Zach]

I think we can do a hundred million with 15. Yeah, we've kind of, we've kind of mapped it out. I think we can do a hundred million with 15 and I think that a hundred million will be split between three brands. Yeah, I, I think Hollow can get to 50 and two of our new ones can definitely get to 25. Um, and we're pacing for that now within the next like 24 months. So yeah, I think our team can be 15 and we can do a.

[Cody]

Hundred and I, I think this is super cool. And it just seems like this also seems like a new development within D2C2, like these super, super lean, high growth teams. It's obviously correlated with like people's focus on profit.

[Zach]

Right.

[Cody]

In cash flow. Like you said earlier, nobody used to ask about daily contribution margin and it's like, oh yeah, people obviously weren't too concerned about headcount, you know, three, four years ago. So it all kind of pencils out. But I'm super excited to see how teams get built over time and how big some of these brands. Scale.

[Zach]

Yeah. I mean, for example, this is a wild one. We had a brand come into Homestead as a client that we're now working with. Um, so I have to be a little cautious of what I say here, but it was like three full time employees and 20 offshore team members and they were doing, they were at like a nine figure run rate. It's absolutely insane. Just absolutely insane. And it's like, yeah, if you, you know, you leverage the business right and you're able to bring in really talented offshore talent, like it's the opportunity for, for putting pretty big numbers to the bottom or is still there and you come totally.

[Cody]

And I don't know that brand, but I would bet it's from a skew perspective. Low. I bet it's got a great problem and solution. I bet they're great at content, they're great at media buying and high ltv.

[Zach]

Yeah, spot on.

[Cody]

Yeah, it's like that's what does it. You can see a bunch of like.

[Zach]

Yeah, yeah. Four skus, four skis in total. So yeah, I mean that, that pretty much gets you there, right? It's pretty wild.

[Cody]

Yeah. We're going to. I, I actually haven't talked to Dan about this, but we're trying to get Dan McCormick on from Create. The creatine guys, very similar thing. Because I had the same conversation with him last week. I was like, dude, it feels like Create could get massive with like a really lean team because it has everything I just described. High aov, high ltv, basically single skew product. Like, it's just that that recipe seems promising. I wouldn't, I wouldn't. I almost said undefeated. I wouldn't go that far, but it's like, it's potent.

[Zach]

Yep. For sure.

[Connor]

Are these like, what's the. For the offshore folks that this brand you mentioned is hiring? Are these like director level people? Are these like manager level people? Like what, what's the level of skill that they're finding?

[Zach]

Offshore folks at extremely impressed with them. Yeah, I mean there's, yeah, director level. Like it's, it's incredible. Like they brought, I know that they brought one individual on as just a VA and they've migrated that person to like their chief of staff now. It's crazy.

[Connor]

That's badass. That's awesome.

[Zach]

So yeah. Yeah.

[Connor]

We love a single SKU hero product, don't we Zach?

[Zach]

We do, yeah. That's the way to do it.

[Connor]

That's the way to do it. Yeah. That's a solid up right there.

[Zach]

Thanks for having me on. Guys.

[Connor]

That was fun, dude.

[Cody]

Thanks for coming.

[Zach]

It was a good time.

[Connor]

All right, that's a wrap on this episode of the Marketing Operators podcast. Thank you to Zach for joining and sharing. So much knowledge, so much actionable stuff to do. Thanks again to our sponsors, Motion House Rich panel and Prescient. And please make sure to subscribe if you're enjoying the show.