Episode description

9:56 - From bio major to builder

Daniel’s journey into entrepreneurship started as the desire to make money for weekend college fun, despite the fact that he didn’t have time to work a traditional job.

“I was a biology major. I was actually going to school to be a dentist and. I always knew that I wanted to be an entrepreneur. And that's what drove me. That was interesting. And doing new projects, stuff like that. Obviously, as a 19-year-old kid, I just had no idea what I wanted to do. And the online landscape was nothing like it was today. There's so much information you can find out there, and it's so accessible, there’s communities and all that stuff going on. When I was in sophomore year of college, I had no idea you could even make money online. I had no idea that was even a thing. So it's a lot different than it is today. But what inspired me at the time was just a conversation. My friend was telling me he was making $45 a week on his phone. And I couldn't get a job, because I was focused on my studies. At first that's just what inspired me. I was like oh, I can get some money to go to the bar on the weekends. But what allowed me to really gain motivation was really I became passionate about it. Passionate about being able to grow a following, being able to engage with other people in this community, being able to learn all this new information that was solely reliant on me building something.”

15:19 - The decision to ditch dental school

Daniel’s first ventures were doing well enough that he decided they sounded more exciting than dental school.

“I started that platform May going into my senior year of college. I was going to the library every day to study for my DATs. I started the platform, it started getting traction and all this stuff. So you could say I was getting distracted very often. And I would say one month of studying and I knew that, number one, I was absolutely miserable. I hated the stuff I was studying. I never really wanted to be a dentist anyways, but it was just literally torture. I was already committed and whatnot. So I knew essentially by the time I was going to take the test, which was I think in August, that I didn't want to be a dentist for sure. And I didn't get a good enough score to get me into the right dental school anyways. So that made my decision very easy. With the platform getting so much success, I decided I'll take a year after college, see what happens. And if things keep going, I can still go to dental school. I can do whatever. But there's too much of an opportunity right now.”

26:31 - Hitting the ground running with GOATcase

The phone case company GOATcase was an immediate success. The major challenge was on the fulfillment side.

“We went from literally zero to a hundred in one week. How do you fulfill that? That was the biggest thing. Within one week I remember we ordered 15,000 phone cases. Where do you put them? We should've gotten a 3PL. We thought about doing that, which was definitely the biggest mistake. And many people told me I should do it, but it seemed so expensive at the time versus what we could potentially do it for. And decided not to do it, which was an awful mistake. But like you said, in the first six months, we moved four times. Imagine how much time that takes, and stress, and all this other stuff. So logistics and fulfillment or a complete shit show.”

29:30 - Getting a 3PL

Once GOATcase and Daniel’s next brand, Perfect Sculpt, gained even more momentum, they were able to get a 3PL and ditch their nightmare of a warehouse.

“It took us a year and a half to outsource our fulfillment. And that was when we launched our second brand Perfect Sculpt, which was substantially bigger than GOATcase even. And ended up taking more space because we went from phone cases to bras and waist trainers and shapewear, which just take a lot more space. So now we moved into a legitimate warehouse, 8,000 square feet, and had a legitimate kind of fulfillment operation going. And we just dealt with so much bullshit. Employees stealing, weird stuff going on from the security cameras, and all the stuff from managing warehouse workers that you might imagine. Just crazy stuff. And number one we weren't doing a great job from an accuracy standpoint on fulfillment. And because we had leverage because of just the volume of the business, we were able to find a 3PL that would pay. Because I got to the point where now we had substantial costs. We had our warehouse, we had a team, we had all this, we had some equipment and stuff like that. So because we had the leverage of our volume, we were able to get the 3PL to pay for the entire move, and to pay for our lease, to buy us out of our lease.”

32:24 - The early days of Shopify

At the time Daniel started his businesses, the online ecosystem we know today was in its elementary form.

“We were on Shopify day one. But all of stuff that we take for granted today with Shopify was nowhere near it is what it is today. And all up and all the partners on it that you mentioned weren't anywhere near as capable and mature as they are today. Klaviyo at that time was a startup. $10 billion company today. So it was a bunch of startups just getting started, and obviously their tools just weren't as mature as they are today. But it also provided a lot more opportunity, because there weren’t as many players in space in terms of competition yet, so costs for everything were cheaper.”

34:04 - The decision to ignore Amazon

At the time, Daniel and his team didn’t have the bandwidth to explore Amazon. It worked out fine in their case, but today Amazon is much more attractive.

“We always dabbled a tiny bit into Amazon. I never gave it a ton of mental bandwidth for myself to figure it out, so to speak. And I would say that looking back, that maybe I regret that. Just because we always had so much success with what we had in front of us. And there was always moving and change and all the stuff you need to do to operate a business day to day. Amazon is a completely separate beast itself. So it's like, to stop what I'm doing to learn it myself seemed like an arduous task. Versus where we were at and the scale we were at, you may as just hire someone to figure it out. So we never put a ton of focus into that. I think looking back it might've been a mistake. But it also just wasn't our business model. We were trying to build brands, not just sell forks or dishes or whatever. But the M&A activity in the Amazon space is a lot more active now.”

36:49 - Founders shouldn’t do it all

Daniel made the mistake of trying to hold all the cards in his business early on, when he should have been hiring and delegating sooner.

“To build a great company, at least at the time, I felt like I had my fingerprints, so to speak, on everything. I had to manage everyone, I had to tell everyone to do anything, they were extensions of me. That's not right. Today I realize that's not the right way to do things. To build something that’s scaling fast and efficiently, you need to find great people and get them to do that stuff. And if that trust isn't there, then you can't build a real company. Now that's how I approach things, and trust in my leaders and managers and stuff like that, who are able to bring the company tons of value that’s not reliant on me.”

39:34 - Why you need to be on marketplaces

Marketplaces are where your customers are, pure and simple. With very few exceptions, such as subscription-based brands, Daniel thinks everyone should be on them.

“The overwhelming majority of brands should be on Amazon. And you should be on every marketplace you can get on. Why? Traffic is so expensive today that unless you are wherever your customer is, it's now harder more than ever to generate profit. So customers simply go from Facebook ads to Amazon to buy products today. That's what happens. That's not questionable at this point. And if you're not there, then your competitors are there. And if your competitors are there, they're winning off your traffic and getting revenue and getting your customers. So for that reason alone, it's my opinion that you should be on every marketplace that you can get on.”

43:27 - Subscriptions are the winning model

Long-term, Daniel thinks subscription-focused brands will win out due to the element of streamlined and sustained customer acquisition.

“In my opinion today, if I'm launching a brand or I'm thinking about launching a brand, if it doesn't have a focus on subscription, I’m not even considering launching it. Because just like I touched upon before, it is now harder than ever to acquire customers profitably. And unless you have a really good metric for LTV and retention of your customers, it's just so hard to build a brand today. Pre iOS 14, it was extremely easy. You could for almost any type of stuff, if you had a good idea of what you're doing from an ad standpoint and creative and influencer, you could make it work. You could typically scale it pretty quickly. But with how tricky it has become since iOS 14, it's the brands that are able to focus on subscription that are thriving more than ever. Because typically the LTV is higher, they're compounding every month, and they don’t need to focus on day-to-day.”

50:11 - Know your margins

If you don’t have a high enough margin on a product, you can’t be successful.

“I tell brands it would be ideal to have at least 75% margins on a product. If you’re under that, it just becomes really tough. Just from a marketing standpoint let's say advertising is 50% of your expenses. Which today a lot of brands are in that docket. And let's say, like I said, you only have 50% margin on the product. Now you're zero for everything else. You can't hire employees. You can’t pay for software. You can't you can't invest in anything like influencer content. So unless you have a good enough margin, it’s tough to really invest in a lot of things you need day to day. So roughly that's what I’d say, because then a lot of the numbers start backing out.”

51:05 - You need a killer content strategy

From working with influencers to ads, a good content strategy (or lack thereof) can make or break your business.

“Having a good content strategy is the most important thing. And I think influencer marketing, leveraging that kind of goes hand in hand with that. Especially when it comes to building a brand, because a lot of time brands that have brand equity from the influencers you are working with, from the celebrities you are working with. Because that's how people remember a brand. It's like Nike, do you remember it was Michael Jordan. A lot of times you don't say, ‘oh, I love this brand because their ads I see on Facebook.’ It might acquire the customer, but unless you are getting the likeness from a lot of people along the way, I think it's tough to have that brand equity that a lot of people aspire to have.”

Full video interview: https://www.youtube.com/watch?v=5mDY_VLkWS0

Daniel Snow: CEO of Snow Agency

Ramon Berrios: CEO of Trend.io

Blaine Bolus: COO of Omnipanel