Jesse Dao (2:27)

All right, background coffee experts spent 10 years in the industry wanting to get back into the industry in a different format. I came up with this idea that I seen kind of going around from business to business using coffee as an exfoliant. So I love the idea of using coffee and salts, almond butters, shea butters, essential oils for aromatheraputic benefits to enrich the skin on your body and wanted to get into it. But one of the problems I had with cosmetic industry is the significant waste that's being added to landing pills due to tubes plastic containers. I mean if you go take a look in the shower or in your sink, you're going to see tons of plastic. So I wanted to ensure that we packaged everything in completely compostable, certified compostable packaging which is literally just a coffee bag with food grade non toxic stickers on the front. And looking to kind of stick it to the cosmetic industry and say hey, if a small startup based out of Vancouver can introduce a cosmetic line using natural based products and eliminate waste, then why can't some of the bigger organizations?

Tom Bilyeu (3:31)

Very cool. And so tell me a little bit about. I know that you were in the selling game for a while and then you went to Corporate America and I think your exact quote was fuck this. Am I mistaken on that? Tell us about why you, why you went to corporate America briefly and then why you left.

Guest or Additional Voice (3:49)

Left.

Jesse Dao (3:50)

So yeah, I, I was in, in the coffee business for like I said, eight years with an organization out of Calgary, Calca. They're fantastic to work for. Still great friends with the CEO today. But I fell in love, moved out to Vancouver, Chase, Chase Love. And started up a painting franchise, got in the service based industry, got to.

Tom Bilyeu (4:11)

Work with what was, was it student painting.

Jesse Dao (4:15)

What'S called wow one day painting. It's a newer franchise model, maybe about two years old instead of a brand called O2E if you've heard of the company, 1-800-got- junk it fits underneath that umbrella. So I got to relaunch one of their painting franchises and it was great. Was off out of the gates as I think I mentioned. Shaking hands, kissing babies, closing contracts. It was great. And then the world has a funny way of sending you a few uppercuts and reminding you that business is still business and it's tough. So I ended up after eight months, soon realized maybe the service based industry wasn't necessary for me. I was firing more people than I was hiring. Decided to take a step back, go into sales again. That's where I joined Corporate America and It took, yeah, maybe 90 days to realize, fuck this, it's not for me. And I did a pretty immediate exit. I just found myself to be like a number. It was more about what you were doing in a day, not the quality of what you were doing. So I just took some time off to reevaluate and think, okay, well, what I want to do. And that's where I knew I had this deep passion for coffee. I got to travel to coffee grown regions around the world, work directly with farmers, source sustainable, ethically sourced coffee. And I want to get back into it, but not necessarily jump into the competitive coffee market that 80% of people consume. So I started Britain Diamonds Coffee Coffee Scrubs.

Tom Bilyeu (5:35)

Wow. Very cool. So there's a lot of fascinating stuff in there that I'm actually super tempted. I refer to Jared as my conscience. So I was sort of checking with him to see if I could totally derail us. But I won't really, really interested though, in some of the things you're going through that I think really will resonate. I think there's a huge movement happening right now and I'm just going to go on record. So Jared has been preaching Gen Z and it's really captured my imagination. And you're quite young, so I think you're sort of on the cusp between millennials and millennials are a little bit older than I had thought. So Gen Z, I think is some. They're really going to resonate with what you're doing with compostables and sticking it to the man a bit and getting outside of corporate America. I think that's really, really fascinating. But why don't we dive right into your questions? You have some great questions and I think people are going to get a lot out of this. So rather than take us down the Gen Z rat hole, I will just say, why don't we dive in? Question one.

Jesse Dao (6:36)

Cool. Awesome. I appreciate that. And I'm not a millennial. Well, I guess I would be a millennial. 31 years old, so.

Tom Bilyeu (6:43)

Wow, man, you're. You're aging fantastically.

Jesse Dao (6:46)

The next generation as well. I find it quite challenging. It's outside of my box. So hopefully you can help me with some of these questions. So definitely one of the first questions I had is I'm a big believer in give, give, give and reach out to influencers. Obviously live in a world where people build trust based off what an influencer is doing. I'm from the generation where I did research on things and I think people will buy based on who's consuming the product, such as Instagram. When it comes to reaching out to an audience, what did you do for Quest? How did you seek influencers? What was the protocol? What was said? Was it like, hey, John, my product? Like, what's the best practice that you did to get your, like quest into the, into the market?

Tom Bilyeu (7:27)

So the, the big thing there is to really identify who has a voice to the people that you care about that are really going to be your customer. And this is critical. And we'll talk more about this in, in one of your later questions as well. So identifying your market, like who right now are you solving a problem for? And that's a big thing. Like there needs to be a group of people out there that are waiting, they're chomping at the bit for your product, otherwise it's going to be an uphill slog. And I've talked a lot about this before. It's about leveraging behavior, not about trying to change behavior. If you're, if you're in the game of changing behavior, you've got a really long and painful road ahead of you. But if you're able to leverage it, even if you're leverage behavior to get people to do something new or to get a dramatically different result, you want to leverage something that's existing. So if you think about habit loops, you want to be replacing something and that is, it's just going to give a lot of momentum to you. So find that group. Who are the people that want this product? So I mean, if you're an exfoliant, you're, you're not going after probably 20 something guys because they're not thinking about that. Right? They're not thinking about beauty. Youth is on their side and so there's a lot of effortlessness to their routine. And I don't know that your product would address that, but women obviously are much more fascinated with beauty, with beauty products. And so I would be going after the influencers that I know speak very well in that market. So if you think of somebody like I believe her name is Michelle Fan with an N. I should have looked this up. But she's one of the biggest YouTubers. She was just on the COVID or is about to be on the. Ooh. It hasn't come out yet, so I'm not sure.

Jesse Dao (9:09)

Wow.

Tom Bilyeu (9:09)

Well, we'll stop there. But she's being taken very seriously. She's being taken very seriously and she's built a huge following in this space. So she's known for beauty products. So she would be at the upper end of that spectrum, somebody. I think she has multi million followers on YouTube. I would assume the same holds true for Instagram, Twitter. So if you think of her sort of as. As being at the apex of that group of people that you want to go after, and then you sort of scale down from there and find people that really are going to not only care about your product, they're going to understand it, and that's what you need. So at Quest, we went after people that we knew would understand what we had done with our product. And that ended up being a really big deal because we didn't have to explain it to them so we could send it to them. And we. So we identified who they were. We knew that they meant something to the audience, that we were trying to attract the problem, the group of people that cared about the problem that we solving. And that when they turned over the product and read the ingredients, that they would understand it. They would get the things, not only the things that were in there, they would understand the things that weren't in there. So you don't want to be in the business of having to explain this to people. You don't want to be in the business of having to explain to somebody that, hey, this is a compostable bag. And let me explain to you what composting is. It's where something biodegrades, right? You want somebody who looks at that and goes, whoa, this biodegrades in 18 months. You have to be kidding. Like nothing else. Like, this is on the market. This is crazy. So that they're off and running with it. And the moment that you have to be sitting there explaining your features and benefits, you're really, really in trouble. So go after and then make sure that you're going after not just the top of the pyramid, the Michelle fans of the world, but that you're also going all the way down to somebody that maybe has five or 10,000 people. You get enough of those people that are really speaking in a super meaningful way, authentic way. They're connected. They have a really engaged audience. That's super critical. And for any of you guys out there that are interested in influencer marketing, I'm telling you right now, indoor air.

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Tom Bilyeu (13:18)

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Tom Bilyeu (14:08)

Engagement. Engagement is the name of the game. It is not about the vanity metrics of followers. It's really about are people Engaging, are they commenting? Are they liking? Are they sharing? So reach is a big deal. Making sure that the people that you're engaging with have tremendous reach. Reach is really defined as how many people share their content. When somebody shares the content, you know one that they really believe in it, that their fans are, they want to help spread that message. So if you find somebody that gets a lot of shares in their content and that those shares reach a lot of people, that's worth their weight in gold. So they may, the influencer themselves may only be followed by 5,000 people, but if they have hu reach, it means that there's people following them that have a bigger knock on effect. So that can be really, really valuable. And there are tools out there that help you identify the influencers and the people that have reach. Then from there, and this is the important part, you need to find an authentic connection with those people. And that was something that I'm really proud of. The way that we handled at Quest was we understood that it's about really reaching out to somebody that we understand, we know what their value proposition is and we know that we can actually help them do something great for their followers. And so that was where we started and we wrote them very detailed letter that explained to them that we knew who they were, that we understood the value that they were trying to bring to their community, and that we felt that our product was going to do that. And so we sent them the product for free. And we said, all we want you to do is tell people about it. If you love it, tell them you love it, but if you hate it, tell them you hate it. Like, we're not trying to control the script. And that ended up becoming something that we became known for was, you know, and this is you talking like six years ago now, when influencers were just beginning to understand what a brand relationship looked like. And so brands were beginning to give them contractual stuff and they. Sorry, I'm blanking. Cindy. What's up, homegirl? Welcome back. It is so good to have you back. So Cindy's been gone. She has been horrifyingly missed and. And it is very, very good to have her back. So now I can think again that I have greeted Cindy. So that was really, really important and making sure that you're bringing it all the way around, that it's something that's going to be valuable to their community, that it's something that is super authentic, that really is the way that you approach influencers. And if you're not trying to control the script, Then you're going to set yourself apart from all the other brands that are. And so like I was saying six years ago when this was really beginning, everyone was trying to say to the influencer, you need to say, you need to mention us this many times a month, you need to say these exact words. And we said, nah, we don't need you to do any of that. Like, we just want to really bring authentic value to you. And if we deliver that, then our belief about humans is you're going to talk about it. And so I think that's the strategy.

Jesse Dao (16:56)

Yeah, you know, it's, I've seen both sides of that where people say, hey, we want you to reach out to us, you know, you want to do three or four shuttle for us. And it just seemed very inauthentic and building a long term relationship with that influencer. So I appreciate that. It's almost a sense of validation and just kind of being natural with, with building that relationship.

Tom Bilyeu (17:15)

Yeah, for sure. And you, you said in some of your comments that you're a patient guy. I, I respond super negatively to the word patience, but I actually know what you mean. If you're willing to play the game for a long time, which I think is much more important to focus on than being patient, I say don't be patient, but do play the long game. So knowing that, yeah, they might not bite right away at the beginning, but that if you're focused on building that authentic real relationship, and one thing you really should do is be super active in their communities, make sure that you're one of those people that are liking commenting, sharing, because, you know, speaking as somebody that, you know, at Quest, we had millions of people following. Here at Impact Theory, we're edging up towards 100,000 people in the community. But the people that are active, I see them like, I know who they are, I know their usernames, I've clicked on their accounts, I've looked at their stuff. So I'm aware of who they are because they're, they're ever present in our community and they're really adding value to us because, you know, our big ask. And I'm sure that you'll have a very similar ask which is, hey, be active. Right? Let us know what's working, what's not working, share the content. And so when people are actually doing that and adding value to you, you get into this, you know, a wonderful relationship. It's social in nature, social media, it's not, you know, the same as the person who's going to Be the best man at your wedding. But it is, I find, very, very valuable, enjoyable and you know, it takes time, so you just have to be there and deliver value to them first.

Jesse Dao (18:43)

Awesome. All right, next question here. How's my, is it still working? A little bit, yeah.

Tom Bilyeu (18:50)

We've somehow done the zoom back in thing and you're the, the quality is a little bit lower, but man, they can hear your, your wonderful voice. You'll be fine.

Jesse Dao (18:58)

Beautiful, Beautiful. Okay, I'm gonna shoot, I'm gonna shoot around on some of these questions. Yeah, go for it. Based on the answers you give me. So when it comes to hiring your first three employees in 2007, what would you look for? Are you hiring CEO right away? Warehouse logistics, some of the help with formulas. How would you plan your hiring test from your first one to three employees?

Tom Bilyeu (19:20)

So you need to read a book called the E. Myth Revisited by Michael Gerber. It's really, I think, one of the most important books for any upstart entrepreneur to read because he has this really important concept in there called you want to be working on your business, not in your business. So, so I'm going to guess that because you're good at marketing and selling and that's been your background, my gut instinct is you're going to want to hire somebody to do your bookkeeping. It's going to be somebody focused on finance because you're going to lose a lot of time to that, especially if you're not good at it. So you could get good, you could learn it, but you know, you want to talk about something that'll just really, really consume a lot of your time, when you could get a part time bookkeeper to take a lot of that stuff off your plate. And so it really comes down to. Because that's not universal advice, right? So that's specific to you. That may be true for a lot of people, but you really want to go in and identify what are the things that are going to suck up my time. Because at the end of the day, sales solves everything. If you're not selling, you've. That's like the number one problem. So sales and marketing trump everything else. Those need to be the, you know, the, the focus beyond the product. So get the product right. You need a great product. Because if you don't have a great product, then all the sales and the marketing in the world is just going to erode your model because people are going to realize, hey, I bought this because you have great sales and marketing, but it's actually a bad product. So I'm going to make the assumption that you, you have something in your product. There was something. Either you've already worked with the formulator or you are the formulator and you were able to come up with something that, that's winning. If you don't have that, then that for sure is step one. But assuming that we have a great product and you're able to do the sales and marketing, then you want to go on to what are going to be the things that are going to eat up your time that aren't value add to the sales process and the sales process in the long run. Right. So not just getting the first sale, but the great news is you have a consumable business. And being in the world of consumables is awesome because now you have multiple times to touch people. And when you're a value add company, when your sales, your marketing, your social strategy, everything is about value add. Now you're in the business of the more times I touch you, the more likely you are to come back and buy the product again. That is a solution for just tremendous longevity. And that's one of the reasons that quest was so successful and one of the reasons that because of what's happening in social media, that that really is where people have to apply their focus is to be thinking about earning trust through every interaction. You want to be evangelizing your customer at every touch point because especially in the consumable business now they're going to become die hard, they're going to be loyal, they're going to be there for years and years and that's how the business really becomes sustainable. So you want to look at hiring people that are going to alleviate anything that's going to stop you from adding value to that sales cycle. So my gut instinct here is it would be finance.

Jesse Dao (22:08)

Appreciate that.

Tom Bilyeu (22:08)

Yeah, for sure.

Jesse Dao (22:11)

You know, you're a big believer in giving equity to individuals that come on your first hires, employers. Now, I understand this isn't advice. I'm asking for more of just a perspective. How do you take that approach? You can very quickly give out a big chunk of the company, which could, could leave you pretty volatile. So, you know, in. And again, best practice, how would you say to offer equity in the company, shares in the company? I understand we're a very small store, we've just made a first sale. But this is something to think about when hiring, ensuring that people are coming on because they believe in the product, they're here for the long game and they want to be a part of something big. And, and there's, there's some sweat equity in there for them.

Tom Bilyeu (22:51)

Yeah. So this is incredibly complicated. And one of the few times that even I feel compelled to say a disclaimer. Normally my team has to beat me into doing disclaimers. This is not legal advice. I am not a lawyer. So I will just see legal counsel on this one. I'll just give you some of the things that you should be thinking about. So one, it's typical to give away between 10 and 20% of your company. I don't think anybody's going to sneeze at that. I could see going a little bit north of that. Probably doesn't make a lot of sense to go too much farther north of that unless people are giving their pledging money to the company. And I think the initial group of people you want to be probably somewhere in the 10% give out range. So whoever's on the founding team, think about giving away 10% of the company to them. The reason is you want to leave upside because inevitably as you grow, you're going to need to give away more of the company to attract higher caliber talent. And that goes on for a very long time. So to give you an idea, Quest is still offering equity to high level hires when they come under the company now, and this is what, six, seven years into the company. So you want to make sure that you have that pool of equity that you're thinking into the future. And I assume what you meant by you can get yourself in a volatile situation has more to do with voting rights than just giving away equity in the company. So as a startup, I would not give away voting rights. I would give away a common class of shares that don't have voting rights. And also one thing that I would. And the reason that you want to do that is you want to maintain control of the company. And when people buy a piece of your company, then normally they do, depending on how much, they're almost certainly going to demand voting rights. So you can rapidly get yourself into a situation where you're making decisions to please the board rather than to do what's right for the company in the long run. Because the board is thinking usually three to five years is an exit, maybe seven. On the outside. I'm trying to help birth a movement called the Evergreen Movement, which is started by a guy named Dave Wharton, which is, I think the, it's not right for everybody, but I think that it's, it's such a viable alternative strategy which is where people make money off of Dividends, so they get ownership, but they're really paid out in dividends versus them ever expecting to sell. And that's certainly how we've structured the company here. Nobody's expecting a big exit. Hey, if it happens and for whatever reason we decide in the future that that's what we're going to do, so be it. But like you'll notice all of my socials are/tom billyu it's not/ the company just because, you know, who knows what comes in the future. But right now we don't have any intention of selling the company. And so it's really a dividend play. It's about, you know, excess cash we'll call it. I won't derail us now on that, but so one thing that you can do since you're not going to be, I would advise in my non legal opinion, you not to give away any voting rights that you want to. You can do things like, hey guys, here, I'm giving you this amount of equity, maybe it's 1%, maybe it's 2% to your founding team member. But I also need you to sign, pre sign this document saying that if you leave the company for any reason within the next five years or maybe longer, some people, you know, do this forever. But if you leave the company before X period of time, that you return your shares to treasury and so that it's already pre signed and so if you guys decide to part ways that you know, you've got something in writing again, this kind of thing that you want to get drafted by a lawyer, if you just cannot afford that, I'm sure that there's stuff online, but this is the kind of thing, man, you do not divorce the same person that you marry. Okay, let's all let that one sink in for a second. You do not divorce the same person that you marry. So the people that you love right now and you can't imagine like anything ever going wrong, it can. And at that moment, like people see things from their own perspective. It's human nature, no need to be angry about it, but it's human nature. And so the likelihood of them seeing things the way that you see it are virtually zero. So you want to make sure that you've had some sort of prearranged agreement on what happens at that moment now. Yeah, so I mean I've got my, my whole take on that about what that does to a relationship. So you have to be careful. But that's the most prudent advice I'll just give quickly A flip side to that co. When you have people sign prenups, it's weird and it does something weird to the relationship. So anyway, something to think about. We've taken a slightly different approach here, which is so we have a vesting period and if people leave before the vesting period, then, you know, they would get nothing for that other than whatever they got from a dividend perspective while they were still here. And I think people should be in an evergreen model anyway, way more concerned about sharing in the excess cash flow than they are the equity. Because if you don't ever plan to sell, then you've, you know, you've got nothing. But it does. Having that equity ownership makes people not have to pretend that they're an owner, not have to act like an owner. They actually are an owner. And so I think it aligns selfish desires. And I just realized we could do like a whole episode on that.

Jesse Dao (27:44)

But that's awesome. That non legal advice.

Tom Bilyeu (27:47)

Yeah, Non legal advice.

Jesse Dao (27:49)

Okay, here's, here's a big vulnerability for me, and this is something that is, is, is probably my biggest vulnerability when starting this company up. I'm, I'm a passionate guy. I'm very outgoing. I can communicate to 99% of people. I'm great at getting on a deep level someone. However, when it comes to communicating in a written form, I'm garbage. Like, I'm, I'm actually just garbage at. And I know you focus so much on mindset and, and I have this, I have this battle where I unveilt is a term that you were using where I unveiled the ability to structure just great sentences and. Startup phase. A lot of the content is coming from me and it's, it's an online store, so it requires that. So I'm very much a go, go, go, go, go kind of person. I don't like to stop too much having my stuff edited. And it's, it's, it slows me down. Especially when you kind of got a Kickstarter. You got to continually engage with your audience. What advice do you have around that someone that you feel would. I. I don't know where you are intellectually with, with written language, something I struggle with. Any feedback on that?

Tom Bilyeu (28:59)

Yeah, man. So in your notes, and hopefully you're not, not saying this out loud because you didn't want it out loud, but in your notes anyway, you said that you're dyslexic. And most entrepreneurs pick a platform that.

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Tom Bilyeu (31:05)

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That's how good leads the way.

Tom Bilyeu (31:31)

Being dyslexic is a superpower now. It's a superpower that has like a weird side effect that you're not enjoying, which is that the written language can be very difficult. But read the book Disrupt yout by Jay Samet. Not only does he give a list of the most incredible human beings that are dyslexic, from Steve Jobs to Richard Branson, I just read something said Steven Spielberg is. I don't know if that's true, but that there in the book and I don't remember them off the top of my head. But he goes through like literally 7 or 8 of self made billionaires who are all dyslexic. And he said the reason is that in school it definitely seems like a deficiency because of your difficulty with the written language. But actually the way that a dyslexic mind works is that they see problems much more holistically and they're able to make connections that other people don't make that get so myopically focused on one detail. And I thought that was really fascinating and does explain why so many dyslexics go on on to be so successful because they're able to really, really succeed in the world of being an entrepreneur because they're able to make these unique connections, they're able to put things together that other people might not see solutions to problems. Where other people just see the problem, they actually see this sort of holistic global view of how. Oh no, wait, if you actually, you know, build a bridge from here to here, now you've really got something. So, you know, going back to what you're saying about my obsession with mindset, I would really, really, really encourage you to reframe in your mind. Thank God I'm a dyslexic. Oh my God, this is going to work out. So am I have to hire a copywriter when it's something that's going to be forward facing. So for the website or a really important email to say a potential investor or something like that. Yes. Then I will work with copywriter which now are so easy to find on like upwork and things like that. But I'm so grateful that I have this superpower that allows me to see things more holistically. That's probably one of the neurological firing patterns that's made me so good at sales, that's made it easy for me to conceptualize a business and grow a business. So I'm super grateful. And all of a sudden it just takes the edge off of a. The insecurity of like if you knew that being dyslexic actually made you a more effective entrepreneur, isn't it a relatively small price to pay to not be good at sending emails? Yes. Especially because you can speak to people very easily that you don't have a hard time conveying the ideas, you have a hard time writing them down. And so like that's a relatively minor thing. There's people that you can leverage to help you with that. And so it becomes much more important to have the problem solving skills that to be tied to being dyslexic so that I would just look at it that way. And, you know, being insecure about it doesn't serve you, so I wouldn't be insecure. And it's just about, it's in the beginning, like you're going to say that to yourself, it's not going to be very effective. But you start doing that for a year, two years, and all of a sudden you're going to be giving talks, like to kids that have dyslexia about how advantageous it is. And one day you're going to step back and go, whoa. I'm actually totally like, I believe that to the core of my being now. Just because I've been saying it. I've been looking for evidence that proves that. And so you just get into this bubble positivity around something that up to this point has been a negative. So, yeah, I wouldn't sweat it. Is the long and the short.

Jesse Dao (34:40)

Cool, man. Really appreciate that.

Tom Bilyeu (34:42)

For sure is.

Jesse Dao (34:47)

All right, I'll jump back up here. I mean, given what you know about the small month that you know about the company and the way we're starting, the compostability side of things with, with the all natural ingredients, like, how would you, if you were getting something like this, execute the first 12 months, what's the best plan of action that you would put into place? Is there some reference points, some books you'd recommend me checking out? That really to create the strategy and work my way backwards? You hear that all the time, but I feel like it's quite a vague explanation and fundamentally finding where to go for that or how to create that plan outside of a business plan. I've put together the business plan, but those are all kind of benchmarks and goals. They, they can change month to month.

Tom Bilyeu (35:35)

Yeah. So focusing on what's real and what actually matters is going to be critical. So number one is profitability at the end of the day is all that matters. Okay. So all the top line, you could be making a billion dollars. And if you're losing $50 million a year, you're losing $50 million a Year. Right. So this is the one thing I'm so glad that I am naive when it comes to this stuff and that I' stupid because I remember this is probably 15 years ago now. I looked at the stock market and I said, this is like trading baseball cards. Like, unless a stock pays dividends, the stock is worth only as much as people say it's worth. Like there's no intrinsic value to it. And I remember trying to convince people and they're like, oh man, you're just naive. Like, you don't understand. No, no, no. Like, now that I've been playing the game long enough, I promise you that is exactly what a stock is. If a stock pays dividends, it's real because you get cash flow out of it. And that's based on, on some real fundamental metrics in the business where they have excess cash flow and they distribute that to the people that own their shares. And therefore you can actually make your money back while still retaining the stock. And so it doesn't matter what somebody's willing to pay for it, it only matters what the fundamentals of the business are. But if it is literally the company doesn't pay a dividend, then if the stock is worth, let's say, you know, 50 bucks a share, if no one's willing to buy it for me from me for $50 a share, it's not worth $50 a share. Which is why overnight you can lose in the stock market because people simply say it's no longer worth that, or then they'll say it's worth twice that and you just made a bunch of money. But unless you sell it, you have nothing, right? So you could be up $10 million one day, down $10 million the next day, and like, none of it really matters because until you sell it, none of that's realized. So getting people to understand that top line revenue is the same thing, right? You could be making a ton of top line revenue. But if your goal is to sustain, to sustain your company, the only way you can do that is if you get somebody to invest money in you. So we're living in this super weird time where essentially the VCs of the world will invest so much money in something that has a lot of promise. And they use what's called a portfolio strategy where they don't need. Out of 10 companies, they may only need one to be successful. So the other nine you're looking at and going, wait a second, they're piling money into this, I don't see how they're ever going to make their money back. They're probably not. Not. And once you realize they're going to lose that money and they're just going to make money on the one company that smashes it and has a 10x return that it makes up for the other companies and that they're just okay with that. And because they don't know which one is going to hit, I mean, they're Doing their best to like, figure it out and base it, you know, on things that they've seen historically, but nobody knows, right? Which is how we got the tech bubble in 2000. It was like, people are just going nuts. And I remember I was super young when that was happening. And I was looking at that, going, going, dude, like, how are they doing? There was this company called cosmo.com and I remember thinking, how can they afford to deliver this stuff? Because they would deliver things like within an hour, like they would go buy a CD at Target and bring it to my house for like pennies. I remember thinking, what? Like, how are they doing this? And of course they went out of business because while they had top line revenue, they weren't profitable. So focus your attention on things that actually matter. Profitability matters. People could say your company's worthless if you're making $100 million a year in profitability. Profit, you're laughing like you're laughing all the way to the bank. And so nobody gets to tell you anything because you've got so much profitable cash flow. So focus on that. Also trying to figure out how you should be spending your time. Look at where the bottlenecks are. Like, what are the things that you're doing that are taking up your time? What are the things that are doing that lead directly to sales? What are the things that are that you're doing that are stopping you from being profitable? Like looking at your profit and loss statement and just finding out, like, where are we hemorrhaging cash, right? Is it payroll? Is it our ingredients are too expensive. I mean, there's going to be like, in a business like yours, there's going to be stupid stuff that eats your profitability. There's going to be a drought in Paraguay where you're buying one of your ingredients from. And that drought causes the cost of that ingredient to go up and it makes it harder to get a hold of. You're the small guy, so other people are buying it up. So the guy comes to you and says, hey, you still want your coffee grounds? You're going to have to pay this much for it. And by the way, you're going to have to sign a contract at that price for 12 months or 18 months or 24 months. And you're like, oh God, I gotta do it. And so now for the next 18 months, your profitability just got crushed, right? What are you gonna do? That's about, you know, some drought happening. So you've gotta be prepared for that stuff. You've gotta move from Strength to strength, you've gotta be looking all the time at what are those things that are hampering my profitability? And then looking at your marketing and saying, okay, like I love doing, let's say you love doing the videos, right? Oh man, I love doing is content marketing is amazing. Like, it's my shtick, I love it. And then you realize, huh, it's not actually building my community. So, and if it's not building my community, then what's it really doing? And it's taking up a lot of my time. So treating your time like you treat your money right and expecting a return on that time and so being really honest, like, we just made a change to the way that we do our book reviews and the way that we do our impact quotes. Why? Because our impact quotes were, we know that our long content dramatically outperforms our short content. And we know that when we on YouTube, when we marry visuals to something that, that does way better. So our impact quotes, even though it was short content, was doing really well. So we're like, huh, that's weird. And the format of it where I could just riff and I'm doing it, free flow means it takes very little of my time and then does really well. So what if we put imagery over that? And then the book reviews, which we were doing on an image basis, but also I had to write them to make them really concise. And so it was just like the amount of reward that we were getting from the book reviews was very low and the time was very high. The amount of reward we were getting from the quotes was very high and the time was very low. So what we did was we basically switched the format so I could afford to put a little more time into the quotes, make them longer and then, and make them visual. So, and I can outsource the visual part. I don't have to do that. So that we could, you know, increase the effect that we're having there. And then in the book reviews, I started doing them free flow, which means they're going to be longer, which is good because our longer content performance better. So anyway, you have to be auditing that stuff. You have to be looking at the results, steering by results only results matter. Steer by the data. Steer by the data. That's going to be key. All right, I can keep going on in that, but we'll, we'll wrap it there.

Jesse Dao (41:48)

Of course, of course. I, I appreciate your book reviews. I, I, I'm listening to the book. Oh, I'm drawing a blank now here.

Tom Bilyeu (41:57)

Really Impacting you, huh?

Jesse Dao (41:59)

Yeah. Right, right, right. Unnatural selection. Sorry.

Tom Bilyeu (42:04)

I love that one.

Jesse Dao (42:05)

Yeah, it's good. It's good. Okay, so I mean, putting myself out there and saying that I have a company that uses nothing but compostable material, that is definitely putting my back into a corner in an industry saying, hey guys, look, this is my lifestyle and I'm still going to fall victim to purchasing certain things. I'm still a consumer at the end of the day. Day. I'm sure that when you guys were building quite nutrition, one of the things we're putting in, hey, well, we could find a better ingredient. We could find a better ingredient. And there's margins and there's, there's, there's. That stuff costs money. So over time, being a better product, as you guys developed your better, A better product, putting better ingredients into the, into your bars, I'm sure you probably had your back against the wall where someone was saying, hey, why are you guys using this when you could use this? Same for me. It's like, why are you consuming this when I thought you're all about compostable product. How do you deal with, with the conflict and friction that that could cause? I mean, yes, well, there is always better things we can do and, and kind of getting called out in a spot because I'm sure that will happen where some of them that'll face itself and building this company, company. And as we build up products like, you know, what we're packaging and what we're using, shipping it over, shipping it across the planet, what that does to emissions and what the box looks like we put into like it's all, it's all questions. Well, I'll get kind of my back against the wall and I'll have to answer strategically. So what did you do with Quest when it came to answering those questions?

Tom Bilyeu (43:41)

I, I wouldn't be strategic. I, in fact, the one strategy I would say you should employ is be super authentic and just tell people exactly why you're making the choices that you're making. And if it's like d for the product to be profitable, this is what we had to do. We had to make this concession. Just be open with people, be totally transparent. Let them know what you're about. There will be people who will hate on you for it and they will try to burn you down. They call you fake a fraud and all that stuff. But the people that see that you're really trying to make the product better over time, that you're trying to bring costs down for them over time, that you have a profit margin and you're just willing to live with that. One thing we did at a quite request was we made a way higher quality product with a smaller margin. We just said that's the way it's going to be. Like we get that. And so to bring this product to people, to not be gouging them to hit a price point they'll pay for, quite frankly, we're just going to have to crush our margins. But we're not willing to crush the quality of the product. So understanding that the product quality is your best marketing material ever, right? So your product has to work. It has to be something that influencers get. They look at and they say, whoa, it's got the almond oils, the essential oils, the, the, you know, the sea salts, it's got the high quality coffee grounds, like whatever the things are that they're really going to understand, that they're really going to resonate with you. You have to make sure that you have that. But then you have to charge something that gives you a profitability level that lets you stay in business. So that's the, the key is understanding how you can make the product better over time. That you're not trying to gouge the customer, that you're being totally transparent, that you're being authentic, that they can see what you stand for. And that if you stand for compostability, 100% natural and that's going to be the niche that you go after, then you can't ever betray that. Now that doesn't mean that there aren't going to be things in the process that are less than perfect. There will be. But if they see, for instance, let's say that you have somebody that you're working with to get the coffee grounds and they're sustainable, but you think they could be doing better if you lay out like here's our three year sustainability plan. I'm actually working with the person that we're sourcing the coffee grounds on this three year plan. We're reinvesting money into them now. It's like one that's awesome because people see that you really care and you care enough to allocate not only dollars but time to it and that you're putting your mental energy into it, that you're sharing it with them, they're going to love that. And that's a big thing. Why do we make all this content here? Because we want to share with people. I want to give away as much as I can for free to deliver as much value to people as Humanly possible, because we're all going to have an ask, right? And so, so for us right now in phase one, the ask is share, please share. So, but we're going to try and give everything away. We're inviting people behind the scenes, I believe. And to Jared's point about Gen Z, I think that what is going to make Gen Z a force and what's going to change the way that companies do business is they're going to demand. They're going to demand transparency. And so now they're going to reward businesses that are run by people who are authentically in line with what they care about. So the reason that I'm building a personal brand is I want people to understand the human being behind the company. And so I want them to really know who I am. Because, look, in the amount of content, we put out something like seven hours or more of content every week. More. It's more than that. We put out more than seven hours of content every week. Like, I can hide somewhat, like I can give you like a crafted message for a few hours, but at some point it's like, like you take it all together in aggregate and you just can't hide. And so that, that is where the world is moving. That is why content creation is, is going to be more and more and more important for brands. People have to see who's really behind there. They have to know what you care about.

Jesse Dao (47:28)

I love that. No, I love that. I think transparency is, it's, it's, it's fundamental and, and it's exciting because you're putting it all on a line and there's, there's no other way to do business in, in my personal opinion. So I know I've been jumping all over your questions.

Tom Bilyeu (47:42)

It's all right. Nobody knows the order you sent them to me in, so it's fine. All right, so we're nearing the end, so one more.

Jesse Dao (47:50)

You want to hand it over to Facebook, see if they got a question? Yeah, sure. Let's do it. Quick questions for you, Jesse. So one, how long have you been producing the product? And the other is, do you distribute it globally? So we have some people from the UK who are interested in getting Nice. So to answer that question, yes, we are going to be distributing it globally. We're probably about two weeks away from that. As I mentioned, we're in Kickstarter phase. We haven't actually said, hey, we're live. That happens in, in an hour and 20 minutes. So once we do that, it's going to be e Commerce based business that gives us direct cash flow. So we're able to grow from that. I don't have to put any consumables in stores, beauty sources, stores. It allows us to keep everything really tight. And the second, first part of that question, sorry, how long have you been producing the product? So, producing the product, I mean, as I mentioned, we're in the Kickstarter phase. So we haven't, we've given out samples, we've done some R and D. I've had a few hundred people try the product. The recipes though that are developed for that, we're talking about 15 years worth of experience that those are coming from. So. So I've sourced out some third parties that have really helped me dial those in, making sure that we do have the right amounts, you know, the right amount of almond oil, shea butters, coconut butters, salt. So the actual formulas for it, those are. Yeah, there's gotta be 15 plus years worth of experience. I don't want to release the person's name, but they've been helping from the get go on that.

Tom Bilyeu (49:27)

There we go. All right, man. Well, that brings us to the end. Thank you so much for coming on. And everybody, this is Grit and Diamonds. You can go to gritanddiamonds.com it is a coffee and salt body scrub. Very interesting. Really, really appreciate you taking the time, Jesse. And again, the Kickstarter is a minute or an hour and 20 minutes away roughly from being done. So go check it out if it's something that you want to participate in in get yours today. So my friend, thank you so much for joining us.

Jesse Dao (50:00)

Thank you for having me. I really appreciate this. I will say real quick here, you know, I put a list together about seven months ago of people I wanted to meet and believe it or not, you were number two on the list.

Tom Bilyeu (50:09)

Wow.

Jesse Dao (50:10)

So not only did I have the opportunity to meet you, I got the opportunity to be in your studio live. So I mean, part of, you know the phrase grid is just giving, given it everything you have. And, and that's where, that's fundamentally where this name came from. I know it is a greedy substance, but I built it off of a characteristic and a personality that, that I believe that I hold in myself. So thanks for this, man. I really appreciate it and I look forward to, to launch this product and put another for you guys.

Tom Bilyeu (50:39)

My pleasure. And I have to ask, who is number one?

Jesse Dao (50:43)

I knew you're gonna ask that. I mean, who wouldn't want months to like literally go kite surfing with Richard Branson?

Tom Bilyeu (50:50)

I did. I'm with you. I think you've chosen very wisely. Well man, what an honor to be on the list. What an honor to have you on today. Really, really appreciate it. All right guys, be sure to check it out. Gritanddiamonds.com really appreciate you guys joining. Thanks for asking the questions there at the end. Always, always awesome to have the Facebook community join us. Really appreciate it guys. If you haven't already, this is a weekly show so be sure to subscribe and until next time my subscribe friends friends be legendary. Take care.

Jesse Dao (51:14)

Peace out.

Guest or Additional Voice (51:16)

Everybody.

Tom Bilyeu (51:17)

Thank you so much for listening and if this content is delivering value to you, please go to itunes, go to Stitcher Rate and review us. That helps us build this community and that is what we are all about right now. Building this community as big as we can to help as many people as we can deliver as much value as possible. And you guys rating and reviewing really helps with that. Alright guys, thank you again so much and until next time my friends, be legendary. Take care.

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