Adam Robinson: So, today's guest is Ryan Babenzien. He's a founder and CEO of Jolie Skin Co, a beauty and wellness brand that addresses the purity of your water for better skin, hair, and well-being. Ryan Babenzien founded Greats, the world's first digital native footwear brand, which exited to a multibillion-dollar footwear company, Steve Madden, in 2019 after just five years. What we were saying right before I hit the record button is that the road to entrepreneurial success is paved in failure. And I'm really excited. We may not even stick to these questions that I sent you but I'm just excited about it.
Ryan Babenzien: That's good. I like to freestyle.
Adam Robinson: Yeah. I'm excited about your perspective because, I mean, I'm a second-timer in the way that things are going right now like I could have never even - I was incapable of imagining them during my first venture. You know, there was just so much friction in everything that we were doing and you just get so much better at the game, you know? And you also mentioned before we started that you think that Jolie is having so much success because of the framework that got developed during your time at Greats. So, can we just like rewind back, get the origin story of Greats, and then just start there?
Ryan Babenzien: Yeah. Well, good morning, by the way.
Adam Robinson: Yeah.
Ryan Babenzien: And I appreciate you having me on. Greats, see, look, I had spent a career in footwear marketing so I had a pretty good knowledge base of footwear/sneakers specifically. And at the time, D2C was a phenomenon that everybody was enamored with and I just looked at the market. I'm like, "Why has nobody done this for shoes yet?” It was pre-Allbirds. It was pre- Koio. It was pre-everybody else. And I thought footwear made a lot of sense to have a direct-to-consumer is what they call it then. It's ultimately digitally native. I think if you're not multi-distributed, you're going to fail in any product but I'll get to that later. So, I set out to launch the first digitally native sneaker brand, which was Greats. But at the time there was still this arbitrage in terms of what you could do with the direct business and what ads cost, right? Facebook was figuring out their ad model. So, it was a good time to get in the space because traffic was cheap, conversion was high. That's where all the margin was, right? That is where the model of direct-to-consumer made sense or when it made sense.
Shortly, very quickly, Facebook figured out their marketing or their ad platform, and then rates just went through the roof. And ultimately, that took away the opportunity to build a direct business because the margin erosion was so great that wholesale started to make more sense. Again, they just went from this, this was out and this is in.
Adam Robinson: Can you give us a timeline? So, 2013 you started it?
Ryan Babenzien: We sold out in like six weeks of our first drop. So, we did launch in 2013 but went dormant because we had nothing to sell. It was like, “Holy sh*t. We sold every pair we had in a few weeks.”
Adam Robinson: And the first customers were Facebook, like Facebook ads.
Ryan Babenzien: No. The first customers were totally organic. We actually did not advertise on Facebook for a full year.
Adam Robinson: And then what? Were you just blogging? Like, how did people find out? What does like getting Greats out? Like your friends?
Ryan Babenzien: There was so much endemic press and awareness around sneakers then and now, frankly. There was just sites and Reddits dedicated to footwear. And we were able to sort of leverage that word of mouth and organic growth in the first year.
Adam Robinson: So, I like questions like this, so forgive me for like digging in a little bit.
Ryan Babenzien: Yeah, sure.
Adam Robinson: Were you literally in the forums? Like, this is part of our business that I'm like trying to kind of figure out right now because it's something I've never done. We need to be doing it, right? Like, I’ve had people tell me to get in the Shopify Plus room and I'm like, “I don't have the f*cking time to do that.” Like, you know what I mean?
Ryan Babenzien: The short answer is no. I personally was not, and that's okay. We had advocates for us like people. And that's what you want. You want customers in the end to be your advocates and be your voice and be your growth engine. It's better than the founder because it's a more trusted voice. Like, we have an agenda, right? Like, you have an agenda for your business. I have an agenda for mine. My voice may not be as valuable to a random person than just a random customer who's like, "This is a great product. This is a great brand. Here's why.” And they reiterate the principles of the business. Ultimately, I believe that's the best one for marketing. So, no, I was not in the forums. However, that window sort of closed. So, we are on our way to 2014 and then we started to doing some marketing. We raised a little bit of money and off we went.
Adam Robinson: To how much?
Ryan Babenzien: Just a couple of million dollars. Not a lot. Truthfully, looking back, and this is lesson one, severely undercapitalized at our own mistake. We could have raised more. We just didn't. And we operated the business poorly, meaning we were out of stock in our best sellers 30% of the time for four years. That equated to millions and millions and millions of dollars in lost revenue and I refuse to pre-sell. I just thought it was a bad customer experience. Totally wrong about that, by the way. Another huge lesson. Like, if we would have been pre-selling things, we would have had higher revenue. No inventory outage technically because we were just pre-selling it. And again, another huge lesson in this space of selling products or items. But as we were growing, so by 2000, the business was doing phenomenal. So, I'm not saying Facebook killed our business. We didn't rely on Facebook a lot. Even when we were using it, it wasn't our sort of like core engine. It just became an expensive one and less valuable than it would have been in 2014.
Adam Robinson: Yeah.
Ryan Babenzien: But by 2017, I started to think about D2C is not even a – it shouldn't even be a thing. Digital is a distribution channel. That's it. It's not a business model, which is what it was positioned as in the D2C era 2013, 2014. That was learned lesson but venture was still throwing tons of money into it for some ungodly reason. And I was on vacation in 2017 thinking about what is a better product that would just sort of fit better in both digital and the world at large. And the framework for Jolie was established at this moment and I was literally like sitting in Barbados, sipping on rum and pineapples, like looking out into the ocean pondering what would I do after Greats? That was sort of the question I kept asking. We weren't trying to sell it. I was just thinking like at some point this will play out and I'll move on and what do I do next?
And I wasn't sure I was going to start a second company at that point but I said if I did, here's the framework I need. I need a product that is used every single day habitually without consideration because changing customer behavior is really, really difficult, maybe impossible. You just have these thoughts ingrained about what brand is better or what color is better, or like when you deal with trend, it takes a lot of manpower and resources to convince a customer that this is better.
Adam Robinson: Right. So, you see a shoe you wear every day but you're fighting against 20 other shoes.
Ryan Babenzien: You have a million things of what to put on even in your own closet, right? You've already owned it. Now, you're considering what to put on it. So, behavior was habitual for a product that you use habitually, a product that is universal in size because size and fits are really complicated things to solve, particularly from a digital side. Because if you're a first-time customer of a thing and you don't know how it fits, you’re generally going to buy a few sizes and that creates this incredible expensive reverse logistics experience.
Adam Robinson: Friction.
Ryan Babenzien: Exactly.
Adam Robinson: Yeah.
Ryan Babenzien: So, I wanted to eliminate that to zero. A one size fits all. And the first was a product that caters to vanity because vanity drives so much. Actually, originally, it was a product that catered to vanity or vice because these drive a lot of our considerations around purchasing. I chose vanity. I'd rather do good than evil. So, here's the framework.
Adam Robinson: Yeah. I’m thinking either Jolie or like a vape.
Ryan Babenzien: Yeah. Exactly. Like, that could have been a qualifier. I do it every day.
Adam Robinson: Yeah, vape with alcohol in it and like…
Ryan Babenzien: So, I leave this vacation, and I whiteboard this. A product that caters to vanity, a product that is universal in size or one size fits all, and a product that is used habitually. I looked at that for years. Around 2018, yeah, 2019, I sold the business but by 2018, I start thinking about that framework and I start researching water. I'm in the shower one day and I'm like, this was like my legs were getting dry. So, I'm like, "Okay. Why are my legs getting dry? I have plenty of products. Maybe there's something in the water.” Lo and behold, I find out that the water not only in Brooklyn but all of America has harmful contaminants that sort of dry out your skin and your hair. So, I love that because it's a vanity thing and I just start thinking about it. And a few months later, I had a shower thought. I'm in the shower again where I think a lot of us do our best thinking. It’s really the only place that we get to be alone. I have a young son now. I didn't at that point but now like the shower time is like my free space.
Adam Robinson: It's like $1 million now.
Ryan Babenzien: Dude, it’s so valuable. So, then the epiphany happened. It just hit me. I'm going to create a beauty wellness company that purifies your water for better skin, hair, and well-being.
Adam Robinson: Yeah.
Ryan Babenzien: Framework, caters to vanity. Do it every day. Plumbing size is universal. And at that point, so I fast forward. I sell Jolie. Sorry. I sell Greats. Stayed on for a year and offboarded myself and started working on Jolie as soon as I could.
Adam Robinson: Did the idea for Jolie inspire you to move quicker on selling Greats?
Ryan Babenzien: No.
Adam Robinson: It was just sort of like the right deal came along and the right buyer?
Ryan Babenzien: It was the right time.
Adam Robinson: And they were going to be working on the brand, and yeah.
Ryan Babenzien: Yeah. And then Jolie was - my wife's name is Jolie so I named it after my wife. It also means pretty in French so the full name accompanies the pretty skin company if you translate it. And this time so it's been so much different than the first time around. And the first time you usually get punched in the face a lot. There are just like really hard lessons, expensive lessons, painful, emotional. But I felt that the value that I had of all those learnings needed to be applied again. And if I didn't do it, I felt like it was a waste. It just sort of you get this great education and then not to do anything with it would have been criminal.
Adam Robinson: Can we go into some? So, lesson number one was you should have raised more money. Lesson number two was you wish you would have pre-sold. Like, what were some of the other lessons from Greats? Like, the framework, got it.
Ryan Babenzien: Yeah.
Adam Robinson: Like, when you're like, "Here are the f*cking ten things that I live and die by.”
Ryan Babenzien: I would have raised the same exact amount. I would have done it in a different sequence because we sort of raised like two and eight, and I would have just raised ten. Had I done that, I would have really solved my inventory outage issue because I was always just trying to keep up with the demand and we simply couldn't. And then in order to mitigate that, I should have pre-sold but I didn't. So, those were two huge, huge lessons. You can't grow the product business being undercapitalized. And at this point, it's really hard to get capitalized for product business. It's not a venture-scale business.
Adam Robinson: It’s like a way different environment than when you were…
Ryan Babenzien: Totally. Back then, they were throwing money at anybody that was direct-to-consumer of anything but most of those businesses aren't very good. They're just not right businesses.
Adam Robinson: Right. Love to venture capital is gone.
Ryan Babenzien: You need to build a brand, that is for sure, and you should be multi-channel. Digital should probably be your biggest but we didn't go omni fast enough. That was another lesson. We had demand from a bunch of retailers. And my thought was, "Well, I can't even make enough stuff to satisfy my direct channel. Why would I open up a third-party channel?” Huge mistake. Again, I should have opened those channels, showed this a totally different growth profile, which was already pretty strong, and just raise money. And around this sort of we were the best in the category at the time and we truly were. So, those are the three big lessons like raise the right amount.
Adam Robinson: Yeah.
Ryan Babenzien: Never be out of inventory. And if that means presale, do it and go omni from day one. Cut to Jolie, we launched in December of 2021.
Adam Robinson: Yeah.
Ryan Babenzien: We were omnichannel.
Adam Robinson: So, like one year and one month ago today.
Ryan Babenzien: Exactly. December 6th specifically was our launch date. And in the first calendar year, last year, we did over $4 million. We are profitable.
Adam Robinson: Congratulations.
Ryan Babenzien: And we have a completely different business profile on every level. And I'm convinced it's because of the framework. A product that caters to vanity, a product that is universal in size, and a product that is used every single day without thinking about it. And it solves a huge problem. So, I'm not saying it's only a framework. We are solving a problem that everybody has. Everybody's water has contaminants that are bad for your skin and hair. That is a full-stop universal problem, whether people know it or not, is a different challenge but it is a real problem. And there's 300 million showers, residential showers in North America. It's an enormous market that everybody has a problem, that everybody does every day that we are solving. And when you marry all that...
Adam Robinson: Every other water filter showerhead looks like f*cking Ghostbusters.
Ryan Babenzien: Yeah.
Adam Robinson: I mean, like I have a Jolie, I don't even know it's there. You know what I mean? It's a beautiful thing. It was kind of like, yeah, I totally get it.
Ryan Babenzien: And that's where a brand comes in, right? So, we design something that is elegant and beautiful and really looked at Nest as the inspiration. You know, before Nest, a thermostat was a brown box with a slider on it that turn your heat up or down. Nest brought an incredible amount of design and style and so much so that it became a social cue. If you walk into somebody's home and you see a Nest, there's sort of a, “Oh, I get you.” You should relate to their interest. And we wanted Jolie to do the same thing, and we also wanted it to be identifiable by its DNA. We wanted you to be able to walk into your friend's bathroom and just see it and go, “Oh, you have a Jolie,” like without being able to read anything, just the way it looked. And we've accomplished that. It is amazing how many people have shared stories about going to a friend's house or, “I went to my mom's house and she had a Jolie.” Just the word of mouth around this sort of community that we continue to build has been really helpful.
And again, I think that's the best part of marketing for me. When you can convert a consumer to an advocate, you will see outsized growth. And to put that in context, we have generated over 4,000 pieces of unique user-generated content in 12 months, which is pretty staggering if you think about it on a monthly basis, like how much is getting created. And without that, I don't think our growth is as profitable as we've been able to do. I think you need people to talk about you and promote you to see the type of growth we are seeing with the efficiency we have. You can buy growth, but that's a different strategy.
Adam Robinson: It sure is. So, you didn't raise this time at all?
Ryan Babenzien: No, we did. We raised a relatively small amount.
Adam Robinson: But, I mean, you would have fixed that problem if you could. It's just a totally different environment. So, like that lesson couldn't really get fixed, right? The lesson of like I should have raised more upfront. And the way that it's getting mitigated is you're actually just like you created this great product that's got word of mouth.
Ryan Babenzien: Yeah. Look, we raised money. We invested and raised money that we felt was the right amount and it turned out to be. And now we're profitable, really profitable, and our intention was we were going to be raising around now. We thought a year ago, I thought, okay, we will raise a formal, proper round in January of 2023. By October of 2022, it became very clear. We don't have to. We can grow the business off the balance sheet. And I've shared this on LinkedIn so it's not unknown. We did $1.3 million in revenue in December with 16% EBITDA. Okay.
Adam Robinson: It's incredible.
Ryan Babenzien: We will keep just reinvesting in our growth and we're flattered by the offers that we continue to get. But at the moment, we just don't need venture or any other outside capital.
Adam Robinson: I love that.
Ryan Babenzien: Me too.
Adam Robinson: I haven't ever taken any money in like it’s just...
Ryan Babenzien: Well, you're my hero. You're like...
Adam Robinson: I look at some of my friends that have and if it's great, everything is awesome. If it's even a little less than great, like these guys are spending their entire lives dealing with investors in the next round. So, that is amazing. I'm not a physical product guy and so like I look at what you do and all of our customers are in similar situations to you. Like, this was an idea in your head. By some act of God, you were able to create one, right? Like, how do you do that?
Ryan Babenzien: Yeah. During COVID.
Adam Robinson: So, this is like what our ads are going to turn into, right? So, it's like this was your idea. By some act of God, you were able to create one. Now, you have to manage this incredibly complex manufacturing and supply chain business. You have to like have the right amount of inventory for the traffic that you're driving. And then you have to do this omnichannel marketing thing, right? Like, I feel like I only have to do like one of those things. You know, I have a guy who's incredible at building software, and then we have to sell it, you know.
Ryan Babenzien: Yeah. But the software has to be developed. Look, I…
Adam Robinson: Totally. Yeah. But it just seems like it's way more complex and capital-intensive. You got to at least give me the capital-intensive side.
Ryan Babenzien: I think in general, you're right. Product is more complex. There's more moving parts as a physical good, and generally, it costs more money to make. However, if you learn lessons like I did in the first business, you understand there's a couple of like you need a margin profile that is bulletproof and actually, you'll appreciate this. Our business if you stripped out like the item and didn't know what it was and I just shared you like an Excel sheet, it looks like a SaaS business, literally. We have a margin profile that is right on the border of where SaaS companies live, I mean, within 2 percentage points. We have a subscription. It's subscription. You have to buy a filter and 80% of our customer base on our first purchase subscribed. So, we have recurring revenue. We're north of $2 million in ARR in one year on subscription.
Adam Robinson: Beautiful.
Ryan Babenzien: We have less than 3% churn in one year on a total customer profile.
Adam Robinson: Incredible.
Ryan Babenzien: Which outperforms the best SaaS companies in the world. Maybe not yours, but everybody else.
Adam Robinson: Well, yeah, that's been a problem until recently but, you know.
Ryan Babenzien: So, these are the components of a SaaS funnel that we have outside of having to make a thing. However, the benefit is our sales cycle is days. Your sales cycle is months if you're really good, maybe a year. And it gets long, right?
Adam Robinson: Yeah. From when they first hear about it to when they actually buy, it's a long time.
Ryan Babenzien: Right. Ours is a week.
Adam Robinson: Right.
Ryan Babenzien: Okay. So, there's different pros and cons to physical products and SaaS. We have a bigger market, we have a shorter sales cycle and, historically, most product businesses, most subscription product businesses had none of the things I just mentioned. They had lower margins, higher churn. And that made them not that great of a business. We are the opposite. And again, it goes back to the framework. We cater to vanity. So, this is going to be a sticky product. It's a one size fits all so this is going to be a sticky product. The switching cost is high. A razor blade goes on sale. Your loyalty to one razor blade or the other is probably pretty low, right? You go in and this one is $3. Lastly, you're like, “Alright. I'll try that one.” We don't have that, right? We have an experience that you're living with every single day where the competition is very low. As you mentioned, they look like these weird Ghostbuster things and they're not very good. Not only do they look like sh*t. They perform really poorly. We're the best filtering shower in the world. So, we made the best product in the market.
And we expect competition like we fully expect somebody to join this market tomorrow if not sooner. But again, a big market. Anybody that says, "Oh, once competition comes in, this is a bad business. It’s not practical.” There's not a market in the world where there’s one.
Adam Robinson: Totally. And, look, I think we're in this weird position too where we have like Wunderkind kind of does what we do, like this company, AddShoppers, kind of does what we do, but like no one actually does what we do, and it would take a while. And those companies can't really change what they're doing because of who they're selling to. And it would take a while for someone to actually figure out how to do it and build the software and everything. But like it's nice to have competitors in some ways. Like, they're helping to educate like your competitors in particular, they would like educate this market and then if they're any good, they would be different enough from you to where it would kind of segment out audience, right?
Ryan Babenzien: Yeah, and we do have competitors.
Adam Robinson: They could even help to some extent.
Ryan Babenzien: There are people that make filtering showers.
Adam Robinson: Yeah.
Ryan Babenzien: And we welcome that and we aren't the first one to do it for sure but the complexion of our business is very SaaS.
Adam Robinson: Yeah. And you probably, I mean, you have set up the financial characteristics of it to actually experience exponential growth, which I like.
Ryan Babenzien: Again, all lessons from...
Adam Robinson: Yeah, totally.
Ryan Babenzien: Because I talked about the framework. I didn't talk about the business. The business model of our business is high retention meaning not did I sell another unit, although we're getting that too. It's as long as you're a subscriber and you don't leave, the LTV value on a customer gets very big, very fast. And now that we have a full year's data and a sub 3% churn on the total customer file, that is an anomaly in any subscription business.
Adam Robinson: Totally.
Ryan Babenzien: It's power because of this framework. I'm sure of it. You do it every day. It caters to your vanity and it was one-size. I didn't have to make 13 versions to fit the market. I only needed to make one critical. It's make somebody feel/look better. They're pretty invested in that product, right? The average customer in North America spends $2,500 a year on beauty and skin care products. We are the essential beauty skin care product. We call ourselves step zero regardless of the trend in skincare. Whatever prescriptive tool you're using for the ailment that you have was likely caused or exacerbated by the water you're showering every day. Fix that problem, and then these problems will be less. So, people understand that now. They get it and I'm looking at our January numbers. We're day three and our acceleration from Christmas has been like you said before like you couldn't fathom this. I am struggling fathom.
Like, I'm trying to understand what the f*ck is going on out there because we're pretty good marketers. It is not that. Our marketing savvy is not what is doing that. It's that sort of magical X factor that everybody hopes and prays for. And when you experience it, you're like, “Oh, wow.” We've had to reassess our inventory three times in six weeks.
Adam Robinson: It's like you've read about it.
Ryan Babenzien: I've heard about it.
Adam Robinson: Yeah, exactly. But when it starts happening, it’s like, "Oh, man. Like, I'm in the middle of this now. This is incredible.” And I want to talk about like this community thing in user-generated content where I have this like model of the world in my head that relates to product market fit. We're like the world is set up in a way with these social media platforms that your product has to be so good that people are out there talking about it and doing this UGC stuff on their own with you not helping them at all in any way. If you have that, then you can pour gas on it and make it go faster. If you don't have that, good luck. Don't even buy ads.
Ryan Babenzien: Yeah. I mean, that's a binary view but I agree. You will succeed more faster if you have organic ambassadors. And I'll give you an example. And I have to give a lot of credit here to Charlotte, who is our first hire and really manages our total sort of content and social profile. And of course, Arjan, my co-founder, who is on a well-deserved holiday at the moment. So, normally we do these things together. I know you asked me directly, but he's on vacation.
Adam Robinson: Well, I mean, I would ask him too. I just never met him.
Ryan Babenzien: Yeah, no, no. It’s all good. But the amount of content we're getting just from customers is, again, it's something I could have never imagined. And about ten days ago we had a customer post a video on TikTok. That video has since gone on to get 12 million views and a million likes and somewhere in like the 25,000-ish shares. So, 25,000 people are like press the button to share it with somebody else. That is magic in the land of marketing.
Adam Robinson: Yeah. It's like what would you have paid for that, you know?
Ryan Babenzien: Thousands at least, right? But you can't model that into your growth. You can't model that into your P&L. That's when magic happens. And I always say I'd rather be lucky and good because the businesses that have really, really, really done exceptionally well are not because of these genius founders. I'm pretty good at what I do like I'm a thought leader and I advise a lot of people and, heck, yeah. But this is not because of any of that. It is just the unknown X factor that you should all pray for. Every founder should pray for X-factor growth because it's magical.
Adam Robinson: Totally. I like couldn't agree. I mean, I just have thought a lot about this recently.
Ryan Babenzien: I think there's things you can do to sort of get yourself in the zone of maybe getting sucked up into the stream. But after that, that's all you can do and pray.
Adam Robinson: I listen to this podcast about the Twitch.tv founder and like those guys were trying all sorts of stuff.
Ryan Babenzien: He was walking around with like...
Adam Robinson: Yeah. 1% of their customer. Yeah, exactly. Justin.tv. And like long story short, they got rid of 99% of their customers to favor the gamers who were like a thousand times more use than anybody else. And the girl who's interviewing him was like, so the interesting thing to me about this whole deal was the dude's brother who he was living with after he sold Twitch for $1 billion, started and sold Cruise, the automatic driving car thing for $1 billion a year later in the same house.
Ryan Babenzien: We should move into that house.
Adam Robinson: I have this crazy thing going on where like Dave, I have been renting an office from Dave Rogenmoser, the founder of Jasper, Jarvis, whatever it's called now, Jasper.ai for like three years. Like, we were both like bootstrapped, stuck entrepreneurs when I started sharing an office with this guy. They were literally running out of money two years ago. I had started get emails and I had these two bootstrapped startups that were both super profitable because I was running them super lean and he was doing the opposite. And I'm like, “Dave, like just get rid of this office. Let a few people go. Start another one of these things. If you start to two more like you're going to make a couple of million dollars a year, whatever, like you're living in Aspen in the summer.” And he's like, "You know what? You're right, man.” So, they downsized. In January two years ago, the next thing that they do goes from 0 to 50 million ARR in 12 months before they hired anybody. They raised 125 million secondary at 1.5 billion. Eighteen months after, they were literally contemplating selling this thing for like $2 million to go open a restaurant.
Ryan Babenzien: This is hard. I’m going to go - so, yeah.
Adam Robinson: And then now all of a sudden, like our thing is on it. And by the way, like this mimetic desire idea, like I did not know that I wanted that until I watched it happen to them. And like then we almost sold our business last February. Because it was a life-changing amount of money for me, I was devastated for 24 hours when it happened. And I sat down with Dave for an hour and he's like, “Dude, like you got to just like look at what we're doing. Like, your business has some incredible qualities. Talk to the CRO who I just hired, this guy, Shane Orlick, and he will totally change your perspective on what you're doing.” And this guy sat me down. He's like, “Why do you only have one salesperson? Like, I've never heard of anything like what you're doing. I have an idea for you. Two salespeople. Why don’t you start there?”
Ryan Babenzien: Yeah. Double your sales.
Adam Robinson: Yeah. Like, try to get to five salespeople by the end of the year. And then like one thing led to the next. And I met this guy, Santosh, who built these five unicorn data companies. He's now like my co-CEO and like we're f*cking gunning it. Like, we hired like 40 people in the last whatever. Like, it's turning into a real company. It's so clear how this is the same thing.
Ryan Babenzien: I actually almost laughed when we onboarded with what was called getting out at the time.
Adam Robinson: Yeah. No, it was like right at the moment.
Ryan Babenzien: I was like, “What the f*ck is going on here? This feels…” and I knew it was going to work. I was so like, okay, that was easy for me and this is another valuable lesson. Some founders are generally looking for these shiny new toys. They want to plug in all these new tools all the time before they've really been beta tested, all that sh*t. Don't do that. You don't have to be first. Somebody comes with the greatest thing. Let them test it on ten other clients. But you had already proven it out and I was like, "Okay. I know the guys have laid out really well and like they were like, “Yeah, it works.” That was the endorsement I needed. But it was so rudimentary in the way you expected. I was like, “Oh my God, we have to figure this out on our own. We're literally on our own.” And it was working from the day we started. So, I was like, “We need to understand,” and this is a problem I have and a challenge I always have with SaaS tools. You got like incredibly smart engineers building these really powerful tools with no like user manual.
It's like, okay, you just gave me a f*cking Ferrari and I don't know how to drive. So, like it doesn't mean sh*t to me. You've got to give me basic lessons, which you guys ultimately did, credit to you, but at the time we were like, “Hey, here it is. Good luck. Go for it. Figure it out.”
Adam Robinson: Yeah. That was just such an interesting moment because like it was just... I had started getting intro.
Ryan Babenzien: It was an inflection point.
Adam Robinson: We were like, yeah, we were just like enough known. Like, if you want to call them direct consumer founders, we're doing well enough to where I was getting intro’d left and right. Like, I didn't know whether I was supposed to be on the phone talking to people about this. And you reached out to me and you're like, "Dude, like you got to stop doing this.”
Ryan Babenzien: Yeah. You can’t do the onboarding call.
Adam Robinson: Yeah, I told the same thing to Brian Long like, "You got to f*cking stop.”
Ryan Babenzien: Yeah. Stop doing these phone calls.
Adam Robinson: And, I mean, the acceleration between then and now is just insane. Like, the week of Christmas, I got 500 inbound over email brand intros but it was like not all of them are qualified because we're so focused on this like top of Shopify Plus. But it's just like coming up with a system to deal with that is crazy.
Ryan Babenzien: Do you know we're not even on Shopify Plus?
Adam Robinson: How about that? You will be soon, maybe.
Ryan Babenzien: No, we won’t. Don't need it.
Adam Robinson: Why not?
Ryan Babenzien: Because the value that Shopify Plus provides doesn't apply to us. Right? We are…
Adam Robinson: Got it. What is the value they provide anyway?
Ryan Babenzien: Not sure yet. I was on Shopify Plus. In the beginning, the latency is better. You know, there's some dedicated sales rep, whatever, but those are not the tools we need. I think Shopify Plus is more useful for brands that have a breadth of products, and we will certainly have more than one, but we will be very focused. Our business is very focused. We're focused on purifying your water for better skin and hair, and that allows us to avoid a lot of the noise that is what are we making next and where are we going to find growth? Again, addressable market is huge. We don't need to make 20 other items to go after the addressable market, which is a beautiful thing. It's a very focused market.
Adam Robinson: I love focus. So, can we switch gears a bit? Like, you have a bunch of really cool advisory stuff on your LinkedIn. How do you get those? How are you? Like, Attentive raised like a $7 billion valuation or something last year. Like, how are you a guy that's like…
Ryan Babenzien: So, when Brian, those guys have done, I mean, it's just an amazing feat to me would attempt to build. Greats was very early in trying to figure out SMS marketing and…
Adam Robinson: Yeah.
Ryan Babenzien: My logic was really simple. I’m a simpleton. I just think about the regular person and how they behave. And I thought, well, text messaging and this is in 2014, text, you’re trained to respond immediately. You open 100% of your texts. You don’t open 100% of your emails, particularly marketing ones. The world is going very sophisticated in how you filter certain types of emails. And as a marketer, that was going to be a problem that I was clear. I was like, “Hey, that’s going to ultimately erode the value of email.” Doesn’t mean it goes to zero. It’s just not what it used to be in 2012. That’s played out to be true.
Adam Robinson: Right.
Ryan Babenzien: But we were trying to figure out SMS. We were using the most rudimentary tools in the world of just sending marketing email, marketing text messages. If I was smart enough, I would have built Attentive, but I wasn’t. But I knew the power of SMS marketing was going to be valuable.
Brian had reached out to me. He had sold his first business to Twitter, actually, and was like, “Hey, we’re building this thing. We love what you’ve been trying to do. I think you have good insight around your needs and behavior on how we should think about this tool.” And that’s how I joined.
Adam Robinson: So, how much of your time do these different gigs take, like…
Ryan Babenzien: They’re all different. I think the younger brands demand more time, like the younger earlier figuring it out are more time, and the more established unicorns are much, much less. But I think I provided the value when they were in the early stages, right? Like, they were trying to figure it out and that’s where my value was.
Adam Robinson: Totally.
Ryan Babenzien: At least in that instance. But with TryNow, I talked to Ben monthly, and probably share communication a few times a month and we’ll be on a call any second he asks. So, they’re still building and in growth phase, early stage, and doing well, but that demands a little more attention than something else.
Adam Robinson: Yeah. Interesting. And then how are you getting paid for stuff like this? Did they just throw you a quarter point here, a point one there?
Ryan Babenzien: Options, yeah. There’s been other sort of consulting cash, but I prefer equity for most of them. If I’m going to provide value, it means that I would rather take the equity position because I either believe in the product or don’t. There are plenty of people I said no to, by the way, and I can’t help you. And it likely means I don’t really believe in the long vision of the product or the business.
Adam Robinson: Totally.
Ryan Babenzien: So, I prefer equity.
Adam Robinson: Man, that’s awesome. I mean, I think we covered everything. So, the one last thing I kept thinking about is you were talking about going omnichannel earlier with GREATS. Did you just immediately somehow figure out how to be omnichannel with Jolie from second one? Like, are you in stores? Is that how that works? I mean, I just don’t even know.
Ryan Babenzien: I wouldn’t say we figured it out. I’d say we started building it and doing it early because I know– I don’t even believe, I know that showing up in the physical world provides value to the digital world.
Adam Robinson: Right. It’s like some brand thing, like brand impressions or whatever, it’s just like, yeah…
Ryan Babenzien: GREATS was not built to be in retail. And when we went into Nordstrom’s, I was getting emails from people who knew exactly what I was doing, who know me very well and knew my vision for GREATS, and my vision was not to be in retail. But they thought I won the Super Bowl. Like it was like the validation of being in Nordstrom added something to the market. And it provides another touchpoint.
So, as long as your economics are sound in the product at wholesale and that’s where a lot of D2C businesses got upside down, they didn’t price accordingly to manage a wholesale business and that causes pain. Jolie was price margined in a way to build a wholesale business in addition to a direct business. We thought that for a beauty wellness company, we got to show up in beauty wellness stores, which we’ve done. We thought hair is a big channel, so we’re into salons and continue to grow that channel. And it’s a fascinating channel to me as a channel. The hair salon industry has 900,000 independent hair salons in North America.
Adam Robinson: That’s bananas.
Ryan Babenzien: It’s really challenging to get your hands around that, but if you can crack it, it’s a monster. You’re talking about if you get 10,000 salons, you have a $20 million business there a year, right?
Adam Robinson: It’s crazy.
Ryan Babenzien: So, we’re working hard there.
Adam Robinson: And what is that, just B2B sales? Like…
Ryan Babenzien: Yeah, we have a…
Adam Robinson: Trade shows and stuff.
Ryan Babenzien: We’re likely going to show up in a few more for learning than like spelling. But we are in discussion with some distributors that have fixed Sunday and some off. We do have a sales rep that represents us for sort of specialty because we can show up in really interesting stores. We don’t have to just be one thing, and that’s sort of what’s unique about building a great brand.
We’re on Hawk Perry. Hawk Perry is a guy's site that sells really cool things. They sell fashion, they sell knives. And we crush it with them. It is probably our best wholesale account. Not something we would have thought would have been our number one account. It’s a men’s site. And yet, they’ve done more volume than any single account that we have.
Adam Robinson: Yeah, that’s so cool.
Ryan Babenzien: Those are fun discoveries.
Adam Robinson: Yeah. Cool, man. Well, this has been fantastic, by the way. Thank you so much for coming on.
Ryan Babenzien: My pleasure.
Adam Robinson: I love all of these lessons that we got. If you could write one thing on a billboard for everyone to see, what would it be?
Ryan Babenzien: Oh, man. Learn how to say no. I think as a founder, opportunity comes to us and we can get distracted by those opportunities, right?
Adam Robinson: Yeah.
Ryan Babenzien: You have to really be diligent about what you’re doing and why, and then understand the timing of, man, this is a great opportunity, but is it going to distract me from what I’m building and what is really working? This is a challenge like I’ve had. I love creating products. And we had this really amazing product road map in the beginning. And then once the business started running, we’re like, why, why? Like, where do we think we cap out? And then we should add that stuff on because right now, it would just be a distraction, it would be a use of capital brain space. To learn how to say no is sort of my– I think, you’re saying of founder guidance.
Adam Robinson: I love that. That resonates deeply with me. I feel like I’ve wasted a lot of time on sh*t that I shouldn’t.
Ryan Babenzien: Yeah, but again, like you did it in the first one. Now, the second one is like super focused and very lean.
Adam Robinson: I mean, like I got somebody messaged me on LinkedIn right now. It’s like, oh, you could have this product for B2B and every executive meeting is like we need to only do this big Shopify store thing. We need to cancel all of the other accounts that even pay us because we don’t want to train these people we’re hiring up on any other use case other than this one thing. And I think there’s a lot of power in that.
Ryan Babenzien: I think that’ll serve you well and it does serve most businesses as well. It’s scary because in this world, we like distractions as humans, we like to not really focus on the hard thing. It’s like the office, the theater of the office is a f*cking waste of time for most.
Adam Robinson: Oh, man.
Ryan Babenzien: Think about the hours wasted from getting to the thing, deciding what you’re having for lunch, the socializing. I think I’m not saying office offices are bad. I’m saying that they’re inefficient. And managing efficiency is the key to a successful business. In every single vertical of that business, you’ve got to just be focused and efficient.
Adam Robinson: Yeah. Santos, this guy who I mentioned earlier, his big thing is eliminate friction, go for velocity in every single part of the business because he’s like, that’s what stops companies’ friction, stops companies from going. So, look at every single department and try to just remove the friction.
Ryan Babenzien: I think that’s exactly right. It’s the same thing. It’s a more elegant way. Santos is obviously much more elegant than I am.
Adam Robinson: He’s amazing. I need to have him on this thing. He’s got lessons, man.
Ryan Babenzien: You should.
Adam Robinson: Yeah, 100%, I’ll get into him. So, the final five here, what’s your favorite book?
Ryan Babenzien: The title is, it’s a negotiation book, Never Split the Difference. I think that’s what it’s called.
Adam Robinson: Yep.
Ryan Babenzien: And it’s like a former FBI hostage negotiator. And it was given to me, I’m going to call him out, Peter Rahal, RXBar. He is an investor in Jolie. And when he invested, he sent me two books, and that was one of them. And I found the book to be really helpful.
Adam Robinson: I’m going to get it. I suck at negotiating. People always run me over because I have this abundance mindset and I’m just like what– you know what I mean?
Ryan Babenzien: Yeah, it’s all good. You’ll like it.
Adam Robinson: No, I’m like, why are we wasting time on this, right? Like…
Ryan Babenzien: Yeah, I agree with you. I try to just say, like, hey, let’s just pick the fairness here and like…
Adam Robinson: Yeah, yeah, exactly like…
Ryan Babenzien: I don’t have a lot of time.
Adam Robinson: Don’t come needle d*ck me after just your great offer. I’m going to get this right now, actually. And then do you have a person that you follow that you’re very interested in and that you think is worthwhile? Like, whoever, a CEO or like a…
Ryan Babenzien: Not really, but I would have to say, Scott Galloway.
Adam Robinson: Scott Galloway?
Ryan Babenzien: Yeah.
Adam Robinson: Who is he?
Ryan Babenzien: He’s a former entrepreneur/podcaster at this point. He’s got a podcast, Prop G, with Kara Swisher. And he’s also a marketing professor at NYU. He is a no bullsh*t f*cking– came from a divorced family, like very similar to me, sort of came up from the bottom and calls it as he sees it. And I just appreciate his point of view on the world. And I would say, Scott, known as Prof G.
Adam Robinson: Prof G. Relationship status? I heard a child. You mentioned it earlier. You’re married with a kid, live in Brooklyn. What’s your favorite vacation you’ve ever been on?
Ryan Babenzien: I’d have to say our honeymoon in Vietnam, actually.
Adam Robinson: Sweet.
Ryan Babenzien: Yeah, it was an amazing pre-baby.
Adam Robinson: How long?
Ryan Babenzien: We went for two weeks. It was awesome. We went like top to bottom in Vietnam. My wife is Vietnamese, born and raised in L.A. but Vietnamese. And it was so good, man. Food was amazing.
Adam Robinson: Oh, that’s great.
Ryan Babenzien: Yeah, it was awesome. I want to go back.
Adam Robinson: Dude, Ryan, thank you. This was awesome.
Ryan Babenzien: Appreciate it.
Adam Robinson: Yeah. I hope to have you back on in a year. And you could tell us that you racked up $50 million in the last 12 months.
Ryan Babenzien: No, we’ll talk about the exit. We’ll talk about the exit.
Adam Robinson: Totally, totally. Cool, man. Well, signing off. Thanks a lot.