Podcast Summary: Episode 550: He Went From $0 to $50M Selling THIS Product | Mike Smith

Introduction

In Episode 550 of The Foundr Podcast with Nathan Chan, host Nathan Chan sits down with Mike Smith, the visionary founder behind ZeroCo—a company dedicated to revolutionizing personal care and home cleaning products while actively combating global waste. This in-depth conversation delves into Mike's entrepreneurial journey, the challenges faced, strategic pivots made, and the impactful mission driving ZeroCo's success.

1. The Genesis of ZeroCo

Mike Smith shares the transformative experience that led to the birth of ZeroCo. After selling his previous venture, Cake Wines, Mike and his wife Alyssa embarked on an 18-month global trek, exploring remote regions. It was during this journey, particularly trekking along the Afghanistan-Tajikistan border, that Mike became acutely aware of the pervasive global waste problem.

Mike Smith [00:00]: "We trekked for a month along the border of Afghanistan and Tajikistan... I said to myself, I'm going to make this my life's mission now, to try and solve this global waste problem."

Realizing the enormity of the issue, Mike decided to focus on actionable steps: reducing plastic consumption and removing existing plastic from oceans, rivers, and beaches.

2. Building ZeroCo: From Concept to Kickstart

Upon returning from his travels, Mike was determined yet uncertain about the specific path forward for ZeroCo. With $100,000 from his previous business and remaining savings, he immersed himself in understanding plastic usage in everyday products.

Initially, Mike considered a closed-loop food business with reusable packaging but quickly recognized the challenges related to low margins and strict regulations in the food industry. This realization led him to pivot towards personal care and home cleaning products—categories notoriously laden with single-use plastics and stagnated by decades of little innovation.

Mike Smith [06:00]: "So I put 100 grand into this business and started going down to the supermarket to understand where the plastic was coming from."

Kickstarter Campaign Success

In 2020, Mike launched a Kickstarter campaign to build a community around ZeroCo's mission. Emphasizing radical transparency and authenticity, the campaign resonated deeply with consumers, raising approximately $750,000—a staggering threefold increase over their initial target of $250,000.

Mike Smith [17:44]: "We set a target of 250, but we ended up raising about seven and a half thousand customers who backed the Kickstarter."

The timing coincided with heightened public awareness of waste management issues, further amplifying the campaign's success.

3. Overcoming Supply Chain Disruptions

Shortly after the Kickstarter campaign, the COVID-19 pandemic erupted, causing significant disruptions to global supply chains. ZeroCo faced delays from suppliers in China and France, threatening their ability to deliver promised products within six months. This period tested Mike's resilience and commitment to his mission.

Mike Smith [24:18]: "To be honest with you, it nearly killed me. There were 2am calls with factories in China... It was one of the most stressful moments of my life."

Despite these setbacks, Mike maintained open and honest communication with backers, fostering trust and community support. This transparency not only kept customers informed but also strengthened their loyalty.

4. Scaling Operations and Strategic Funding

Following the successful Kickstarter and overcoming initial supply chain challenges, ZeroCo began scaling operations. Mike focused on building strong relationships with manufacturers and formulators, ensuring alignment with ZeroCo's core values of sustainability and quality. After demonstrating proof of concept and achieving substantial pre-orders, Mike secured an additional $1 million from an Australian angel network, facilitated by strategic networking within his previous industry connections.

Mike Smith [21:14]: "We raised $1 million from an angel network... It was a crazy moment to have these two big things back to back."

Subsequently, ZeroCo attracted a $6 million investment from Square Peg Capital, a prominent Australian venture capital firm known for backing tech-focused startups. This funding provided the necessary capital to expand ZeroCo's reach both domestically and internationally.

5. Innovating Sustainable Packaging

A critical pivot in ZeroCo's journey was rethinking their packaging model. Initially operating with a closed-loop system—reusable bottles with paper refills—ZeroCo encountered inefficiencies such as high carbon footprints from reverse logistics and low refill return rates (43%). To address these issues, Mike spearheaded a comprehensive R&D initiative to develop a more sustainable and user-friendly packaging solution.

Mike Smith [35:00]: "We rebuilt the whole business... we moved to concentrated formulations, shipping 75% less freight emissions."

The result was a groundbreaking paper-based refill system, reducing plastic usage by 97% and simplifying the refill process for consumers. This innovation not only enhanced sustainability but also improved customer convenience, bolstering ZeroCo's market appeal.

6. Expanding Impact Through Cleanups

Beyond product innovation, ZeroCo is deeply committed to environmental stewardship. Initially conducting local beach cleanups, ZeroCo expanded its efforts by building a dedicated team in the Philippines and planning global cleanup projects in Bosnia, Ghana, India, and Central America. A pivotal moment was establishing a direct link between product sales and environmental impact:

Mike Smith [31:35]: "Every time you buy one of our products, we are removing 10 water bottles from the ocean on your behalf."

This "10 for 1" promise has become a cornerstone of ZeroCo's messaging, embodying their mission and fostering a strong, trust-based community.

7. Navigating Challenges and Setbacks

Mike candidly discusses the myriad challenges ZeroCo has faced, from supply chain upheavals during COVID-19 to the complexities of pioneering sustainable packaging technologies. These obstacles have necessitated continuous adaptation and unwavering perseverance.

Mike Smith [48:55]: "ZeroCo has been one perpetual setback after another... it's been the hardest business I've ever done."

Despite moments of doubt and near dropout, Mike emphasizes the importance of resilience and staying true to one's mission:

Mike Smith [51:42]: "You need to get really comfortable with discomfort and being in a place where you are in over your head and you don't know what you're doing."

8. Future Goals and Scaling Plans

Looking ahead, ZeroCo aims to scale its operations significantly, with a target to remove one billion water bottles from the ocean within five years. This ambitious goal will be supported by expanding into international markets, enhancing product offerings, and establishing a robust presence in physical retail.

Mike Smith [54:37]: "Next year the goal is we're going to try and remove 30 million water bottles from the ocean."

To achieve this, ZeroCo is investing in a senior leadership team, allowing Mike to transition from day-to-day operations to a more strategic, figurehead role. This shift is crucial for managing both business growth and environmental initiatives effectively.

9. Advice for Aspiring Purpose-Driven Founders

Mike offers valuable insights for entrepreneurs aiming to build purpose-led businesses:

• Find Your Why: Identify and commit to solving a significant problem.

  Mike Smith [56:33]: "Find your why. Work out what you're actually really trying to do, what's the problem you're trying to solve."

• Simplify Your Message: Clearly articulate your mission in simple terms.

  Mike Smith [43:55]: "Simplify your message. Less is more. Just like '10 for 1.'"

• Embrace Transparency: Build trust through open and honest communication.

  Mike Smith [23:16]: "We leaned into radical transparency... people rally around us."

• Persevere Through Setbacks: Maintain resilience and adaptability in the face of challenges.

  Mike Smith [51:42]: "You need to get really comfortable with discomfort..."

• Learn Continuously: Equip yourself with essential skills and knowledge from day one.

  Mike Smith [60:58]: "Get all of the tools on day one... learn as much as you can as quickly as you can."

Conclusion

Episode 550 of The Foundr Podcast with Nathan Chan offers an inspiring narrative of Mike Smith's journey from a passionate traveler to a successful entrepreneur committed to environmental sustainability. Through strategic pivots, innovative solutions, and unwavering dedication, ZeroCo stands as a testament to what purpose-driven entrepreneurship can achieve. Mike's candid reflections and actionable advice provide invaluable lessons for aspiring founders aiming to make a meaningful impact.

Notable Quotes:

• Mike Smith [00:00]: "I'm going to make this my life's mission now, to try and solve this global waste problem."
• Mike Smith [17:44]: "We set a target of 250, but we ended up raising about seven and a half thousand customers who backed the Kickstarter."
• Mike Smith [24:18]: "It nearly killed me... it was one of the most stressful moments of my life."
• Mike Smith [31:35]: "Every time you buy one of our products, we are removing 10 water bottles from the ocean on your behalf."
• Mike Smith [48:55]: "ZeroCo has been one perpetual setback after another... it's been the hardest business I've ever done."
• Mike Smith [56:33]: "Find your why. Work out what you're actually really trying to do, what's the problem you're trying to solve."
• Mike Smith [60:58]: "Get all of the tools on day one... learn as much as you can as quickly as you can."

Key Takeaways:

• Mission-Driven Entrepreneurship: Aligning business objectives with a broader mission can drive both success and positive impact.
• Adaptability: Being willing to pivot and innovate is crucial in overcoming unforeseen challenges.
• Community Building: Transparent communication fosters trust and loyalty among customers and stakeholders.
• Sustainability as Core Value: Integrating sustainability into the business model enhances brand credibility and market differentiation.
• Resilience: Perseverance in the face of setbacks is essential for long-term success.

For those interested in embarking on a similar entrepreneurial journey, Mike Smith's experiences with ZeroCo provide a blueprint for building a purpose-driven, sustainable business that not only thrives commercially but also contributes meaningfully to addressing global challenges.