E-Commerce Masterclass: How to Build, Scale & Win in 2026

If you're starting off as a [music] brand, don't spend money on advertising.

Just get really good at short form content. That should be able to take you

content. That should be able to take you to like at least $10 million in sales.

Sean Frank is the founder of Ridge, a 9 figureure brand that [music] has mastered direct to consumer growth.

>> The modern digital era is an attention economy. You have to win attention. More

economy. You have to win attention. More

people search Ridge Wallet than men's wallet every year. We're bigger than the category. And with Ridge, it's like

category. And with Ridge, it's like we're still in the marketing phase. We

can't forget that. That is our secret sauce.

>> But here's what shocked me most. Sean

admits Ridge's biggest [music] weakness.

And it's the one unfair advantage smaller brands have today. We're playing

life on hard mode and it makes the [music] business good. Company I'm close with, I think they have four employees, they'll do $100 million this year. If

you played life on easy mode, being loosey goosey [music] about margins, never having the tough conversations, never getting lean as a company, you'll just fail faster.

>> This conversation is a master class in direct to consumer. From content

strategy to [music] exact frameworks Ridge uses to drive hundreds of millions of dollars.

>> Look, Ridge is a great business. We're

going to run this thing forever and we make great products people love.

Awesome. What everyone screwed up [music] is like, "No, we should have just been focused on."

What's up, guys? It's Mark. Quick break.

Over 80% of you guys listening are [music] not subscribers. The more

subscribers we get, the bigger and better we can make the show. It would

mean the world to me if you got value from this episode or any of the past episodes [music] to hit the subscribe button below. Thanks for watching.

button below. Thanks for watching.

So, what is Ridg's actual marketing mix today?

>> It's still very meta heavy. Meta is the king of advertising for a reason, right?

If you look at their revenue growth over time, I think they had their first billion dollar year in like 2014. Now,

they'll do $130 billion, right? They've

taken over all that ad spend from TV and whatever else. So, half of my money is

whatever else. So, half of my money is always going to go to Meta. Some years

it's 75% but like this year is probably the lowest it's been at 50%. YouTube has

gotten a lot better since they rolled out shorts. So now the biggest problem

out shorts. So now the biggest problem with YouTube used to be that they just had one placement, right? And they also they sell their best audience a way to skip those ad placements which you know

through YouTube Premium you don't have to watch YouTube ads, right? So if

you're an advertising company, you don't want to take your most premium audience and remove them out of there. But

they've done a lot of things in the back end to change it. They've united more of the Google ad ecosystem. So Google as a whole is 20%. You know, search is maybe five and then YouTube's that other 15.

>> Wow. Only five. It's pretty surprising.

>> Yeah. I think most brands are overspending on branded search. Like

we've done a lot of incre incrementality holdouts. And you could probably

holdouts. And you could probably whatever you're spending on branded search right now, you can cut down. It

should be sub 1% of your marketing spend. And then shopping is actually not

spend. And then shopping is actually not very incremental is what we found out.

Most people are just wasting money on Google shopping. Now, non-branded,

Google shopping. Now, non-branded, there's there's some world there, but Ridge in particular, we have a lot of brand awareness. More people search

brand awareness. More people search Ridge Wallet than men's wallet every year. We're bigger than the category.

year. We're bigger than the category.

So, it's very hard for us to go win men's wallet searches. Those people

probably know about Ridge already, but that's those are like the two big buckets. There's a duopoly on

buckets. There's a duopoly on advertising in America for a reason.

It's either going to Meta or it's going to Google depending on your business.

And then we have influencer is a big piece. you know, MKBHD co-owns our

piece. you know, MKBHD co-owns our brand, so we get a lot of good YouTube exposure through there. And we were like a very early YouTube sponsor, right? I

watch a lot of YouTube, so I wanted to work directly with creators before that was like a thing, right? So like 2016, we started sponsoring YouTubers directly. It was like us and

directly. It was like us and Squarespace. We're like the only people

Squarespace. We're like the only people really doing it. We've scaled that up a lot. So we've worked with like 5,000

lot. So we've worked with like 5,000 YouTube creators in total. that has

shrunken since like, you know, 2021 crypto got into it and they just messed up the entire YouTube sponsorship ecosystem. We would typically give

ecosystem. We would typically give somebody like $10 CPMs. We're getting quotes that like, you know, people like FTS were giving them $3,000 CPMs. It's like, yeah, okay, we can't compete in

that market.

That's mostly normalized. So, we're

spending a lot more money there. Inside

of that, there's like I also include podcast, whatever else. Then there's

like all the tertiary channels. So,

let's just take a stat real quick. So

about 50 on meta, 20 on Google/YouTube.

How much on influencer?

>> Probably 10.

Yeah. And then that last 20 is what I call tertiary channels, right? So it is Snapchat, it is Tik Tok, it is Reddit, it is X, it is Apploving. It's all of

these channels that they're smaller. So

it's typically like they have 100 million daily users, right? Maybe a

little bit more, maybe a little bit less. They don't have as sophisticated

less. They don't have as sophisticated as an ad product as like a meta, but you should spend some money there, right?

You put Pinterest in that back bucket.

So it ends up being, you know, five to seven different channels, right? Like

you put, you know, linear TV in there, right? Where we don't have a dedicated

right? Where we don't have a dedicated media buyer doing it and they just kind of roll into either the meta buying team or the Google buying team. And then

those we spend somewhere between $1,000 to $10,000 a day across all those channels, right? And they just kind of

channels, right? And they just kind of eb and flow depending on the business.

>> What do you think is the most underpriced attention as far as those tertiary goes? The linear TV, the Tik

tertiary goes? The linear TV, the Tik Toks of the world. Well,

I mean, underpriced means you're buying it. And there's free attention to be

it. And there's free attention to be had. I think if you're starting off as a

had. I think if you're starting off as a brand, you should get really good good at organic content.

A short form video can go so many different places. You can put on

different places. You can put on Instagram reels, you can put it on YouTube shorts, you can put it on Tik Tok, you put it on Snap. Snap is a discovery feature. Everybody built a Tik

discovery feature. Everybody built a Tik Tok clone. Pinterest has a Tik Tok

Tok clone. Pinterest has a Tik Tok clone, right? So, if you're starting off

clone, right? So, if you're starting off as a brand, don't spend any money until you figure out how to make a good video.

And then those videos can get you views.

Views will get you sales, right?

Spending money on advertising is just like a is a shortcut to get attention, right? So, I can give meta $10 for a,000

right? So, I can give meta $10 for a,000 views or I could get really good at making content. I can get a free $10

making content. I can get a free $10 every time I make a good video that gets a,000 views. It's like the way to think

a,000 views. It's like the way to think about it. So, underpriced attention is

about it. So, underpriced attention is probably YouTube shorts. So, if you're going to start spending money, not a lot of people spend money on YouTube shorts as an advertiser, but I think the starting off, don't spend money on

advertising. Just get really good at

advertising. Just get really good at short form content. That should be able to take you to like at least $10 million in sales, right? So, annually doing $10 million a year without spending any money on advertising. That'll give you a better business because it'll give you

the chops to actually start spending money. Before we get back into the

money. Before we get back into the marketing mix, I actually want to jump forward to content because I completely agree first. I think content marketing

agree first. I think content marketing should be kind of part of that that marketing mix and people just underestimate from a a CPM perspective like how much more asymmetric reach you can get by just building brand through

really really good organic content. So I

just want to know about the ridge kind of content machine. What does that look like? Let's dive underneath the hood.

like? Let's dive underneath the hood.

What does that kind of accountability chart and team look like to then build out all of this organic and paid content?

>> Yeah. So we're super weak on on organic content, right? I mean, we we're like a

content, right? I mean, we we're like a more of a legacy brand in that stance where we missed the muscle building of 2020 to 2024, getting really good at organic content. Like our socials, we

organic content. Like our socials, we get a banger would be 50,000 views, right? Which is like nothing. So, all of

right? Which is like nothing. So, all of our muscles are built around getting really good paid performance content.

And luckily, we have the bank roll.

We're like, we can make that work. Now,

we're a multiundred million a year brand. So, if Pete, you're listening to

brand. So, if Pete, you're listening to this and you're not, get really good at the organic content because that is an unfair advantage you have. that like

bigger brands just don't, right? And

like that's a weakness in Ridge that I know and I'll own. But our paid content team is, you know, it all flows down from my CMO. So CMO is Connor. He's my

partner. We've been running this business for like 10 years together. He

has a VP of paid performance. And then

we have creative strategists, right? So

the paid team is like, hey, this is what we are seeing working. We're using, you know, a North Beam for analytics. We're

seeing clickthrough rates. We're seeing

what's actually driving sales. We have

five plus years of historical data of what's actually been working in the ad account that we we look at every single day, right? So, we're taking all that

day, right? So, we're taking all that data and then we're like figuring out what type of ads to actually shoot. That

goes to a creative strategist. So, we

have four creative strategists on the team. And what that person does is

team. And what that person does is actually look at the ads, look at the requests coming in, look at the new products, and then come up with the scripts, right? Like, hey, here's the

scripts, right? Like, hey, here's the angle we want to try, here's the hook we want to try. Oh, let's let's take this type of content, but cut it a different way. And so then they'll go out and

way. And so then they'll go out and source a bunch of UGC professionals, right? Or agencies or whatever else. If

right? Or agencies or whatever else. If

we need a high production shoot, they have six agencies on retainer they can go to. They have 50 different UGC people

go to. They have 50 different UGC people they pull from. If okay, we need a mom and a daughter. Oh, we need a couple.

They have all these people tagged and organized. We send them product. We get

organized. We send them product. We get

shots. They come back and then we have a bunch of footage. And that's when like it all comes together in the editing room, right? I always tell people, you

room, right? I always tell people, you know, you go see a movie and it's 2 hours. there's like 200,000 hours of

hours. there's like 200,000 hours of footage or whatever across all the cameras and they cut it down to 2,000 hours and they cut it down to what you actually end up seeing. So much gets left on the floor that actually makes a good movie. And it's the same thing with

good movie. And it's the same thing with ads. Like it all comes together in

ads. Like it all comes together in editing. We have so much content that

editing. We have so much content that gets shot. You have to put it all

gets shot. You have to put it all together and then we have, you know, two in-house editors that make every piece of content for us. So uh a direct question directly in relation to that which I think you with the amount of money that you're spending will have an

interesting answer on is you mentioned internal content creators UGC content creators I'm sure you have an army and or high production. What have you seen that has worked the best in Ridg's ad

account? Is it super high production

account? Is it super high production lowfi UGC or internal people or you guys really really control the narrative?

>> So the answer is you need all of it right? So we spend over $100,000 every

right? So we spend over $100,000 every day on ads. So this is on meta directly spending $100,000. And if you want that

spending $100,000. And if you want that level of scale, the only answer is more creative, right? Like the the biggest

creative, right? Like the the biggest best spending ad in an account probably taps out at $100,000, right? So you

basically need a banger ad every single day, but to do that you need 50 ads every single day. So like we literally launch hundreds of ads a week because that's what it takes to feed the beast.

So, inside of there, we always have like we we have a an in-house studio that does a lot of like high-end production and then we use all these agency partners and you need to have four of those going at any given time and then

you need a bunch of the UGC stuff, right? You need all of it in the funnel

right? You need all of it in the funnel and just fill the fill the bucket completely and then Meta will figure out what works and and put spend on it.

>> So, for the people out there listening that are just starting, you were just saying ironically kind of go wide and shallow to start with all different types of content. See what works. kind

of double down on what works more, but ultimately they have to be holistic and just throw as much stuff as possible at the wall.

>> Yeah. Well, if you're getting started, my advice is you make all your own ads, right? It's like we're we are just

right? It's like we're we are just marketing companies. Every company has

marketing companies. Every company has like a superpower, right? You know,

Apple doesn't outsource any software design. That is something they do

design. That is something they do internally. Manufacturing, they don't

internally. Manufacturing, they don't give a [ __ ] They're like, "Yeah, here throw it to some partners." You know, Amazon owns logistics like nobody's business. They would never outsource

business. They would never outsource their their logistics. They're actually,

you know, replacing USPS with their own services cuz they're so good at logistics. So figure out what your

logistics. So figure out what your superpower is. If you're in consumer, it

superpower is. If you're in consumer, it is marketing. Like we are just marketing

is marketing. Like we are just marketing companies. And you cannot outsource it

companies. And you cannot outsource it to an agency. You can't have someone doing your paid media. You shouldn't

have people shoot your own ads. If

you're getting started, you're not going to be successful unless you shoot a really good ad yourself. So I still get behind the camera. My wife gets behind the camera. Right? [snorts] Make really

the camera. Right? [snorts] Make really good ads.

In the modern era, they should work on organic, right? If you're starting out,

organic, right? If you're starting out, the there's a free gift from the meta gods, which is organic distribution.

Like, you just want to get as many views as possible for free. But if you're getting views for free, they will work in ads. That's what you do getting

in ads. That's what you do getting started. But as you scale up the ad

started. But as you scale up the ad account, you'll just need different types of ads for different people.

>> It's so funny that you said that. You

said something very interesting, and I say it all the time, and people think I'm absolutely crazy, is I think so many companies actually think they're a brand when they're actually a marketing company. I feel like with you, someone

company. I feel like with you, someone that's, you know, done a couple hundred million dollars a year in revenue, at what point do you think that you guys kind of cross the chasm to become a brand versus a marketing company? Or do

you think you guys still are a marketing company?

>> Oh, we're still a marketing company.

Like throughout like if we stop marketing, sales go down. It's like it's like it takes a really long time to become a brand, right? And I think brand is just like a Lindy effect, which means you you have to be in market for a

really long time before people start perceiving you as a brand. All brand is is like familiarity, right? I bring up Shark Ninja. Shark Ninja was like a

Shark Ninja. Shark Ninja was like a shitty knockoff company for a really long time, but it's been a long time.

Now they're the number one product on Tik Tok shop. They're a public company worth $10 billion and they're killing it. And they have whatever you want to

it. And they have whatever you want to buy. If it's a microwave or a cooler or

buy. If it's a microwave or a cooler or a water bottle, Shark Ninja has a version of it. I mean, they're in women's hair products. They're in

everything, right? And it's just because they've been in market for so long, they just continue to launch new things and eventually you build a brand out of it, right? So yeah, a brand is just it's

right? So yeah, a brand is just it's just a a shorthand code for familiarity, right? And familiarity is just comes

right? And familiarity is just comes from exposure. The more you see

from exposure. The more you see something, the more familiar you become with it. And with Ridge, it's like we're

with it. And with Ridge, it's like we're still in the marketing phase. If I cut my ads in 50%, revenue follows 50%. So

it's like we're very much a marketing company. We can't forget that. That is

company. We can't forget that. That is

our secret sauce. That's why that's why we're so special. For the people out there that are doing under $200 million, I agree with Sean. And I mean there's people that are literally doing $50 million and they're like, "Why? Why? I

need to be doing more organic brand content, yet they could put all of their ducks on the paid side and win strictly on the paid side. So, I agree with you.

>> Wait, did everyone everyone always was like, "Oh, I want to be Nike or Apple."

I'm like, "Okay, well, wait 50 years."

It's like it's like it's like Nike took that long, right? Apple Apple's been making awesome products for 40 years at this point. It's like they earned the

this point. It's like they earned the right to do that. They're worth a trillion dollars. We're not them, right?

trillion dollars. We're not them, right?

We can we could want to be them. New

Balance is a good example. New Balance

is a great brand, family-owned, been crushing it for 40 years. It's like I don't even know what their marketing budgets look like, but they just they've have so much exposure, right, that like they can just be familiar in the modern

digital era. It's an attention economy.

digital era. It's an attention economy.

You have to win attention and it's either good ads and money or it's being really good at storytelling, organic content. One of those two things, you

content. One of those two things, you have to get the attention.

>> With that being said, with you guys as a marketing company, do you believe in top of the funnel marketing or does everything have to have attribution?

Well, I believe that the tools we use to deliver ads, which is the the ad platforms, break sometimes, right? You know, everything

sometimes, right? You know, everything needs attribution. That's totally true.

needs attribution. That's totally true.

I think I think everything should you should be able to draw a line to something but we're talking about like a very messy world where it's like, you know, what ads did somebody see on their phone that made them Google something? And if we

had perfect attribution, you'd only spend money on the ads that worked, right? but because of Apple fighting

right? but because of Apple fighting with Meta over privacy and it's really because they they wanted to take a cut of Meta's ad revenue and like the whole thing just kind of exploded in 2021 that

sometimes the best ads are just top of funnel ads and it's it's not because you're actually you know reaching the top of funnel. Because Meta's ad ecosystem kind of circles the drains on

people it thinks that are interested and eventually you'll exhaust that funnel and it's not because you need to run more brand marketing. It's because that ad tool is kind of broken right so we spend a lot of money on top of funnel.

That's what I'm trying to say. YouTube

influencers top ofunnel podcast top ofunnel you know a lot of our meta campaigns 40% of our meta spend sometime goes to just top of funnel you know video view campaigns or upperfunnel conversion optimizations not getting

them to purchase but add to cart or even view the product page we're doing that right now but it's not it's not because like we believe top funnel is a strategy it's because the tools we have are limited and you have to go top of funnel

to actually make it work >> makes a lot of sense I want to go back into creative a bit and just give some people some tangible advice on the creative side. You know, you guys are

creative side. You know, you guys are basically like a just as much a marketing company. I'd say that you guys

marketing company. I'd say that you guys are like a a media machine. Is there

specific tools or naming conventions or anything out there from a content perspective that somebody early or even late in the game that you would recommend? What type of tools do you

recommend? What type of tools do you guys use from a content perspective?

>> Yeah, look, there's a lot of really awesome tools. I mean, foreplay is like

awesome tools. I mean, foreplay is like a great, you know, ads library basically, right? It brings in all the

basically, right? It brings in all the best ads from everybody. Facebook has

ads library which is free. So, if you want to see anybody's ads, just go on ads library. But foreplay gives you a

ads library. But foreplay gives you a little more insight into that. Motion's

another great tool, right? We'll give

you more creative insights into what's happening. And then we measure

happening. And then we measure everything in like a an MTA solution. So

we use North Beam, but there's a bunch of other MTA solutions out there. That's

a multi-touch attribution tool. All it's

doing is you want to build your ads in a way where you can compare apples to apples across everything, right? So how

do I make a comparison from a Tik Tok ad to a meta ad to decide who gets more of my spend, right? and how do I compare inside of meta 50 static ads versus 50 video ads? What is the actual best one?

video ads? What is the actual best one?

So, we have everything named in a certain way and then inside the naming convention, we actually tag it to what we're testing on the creative side. So,

it's like here's the concept. It'll be

in the name. Then, it's like here's the hook name and then here's like the different edits we did. So, like inside of there, you could just very quickly see, oh, this hook is working across all these different platforms. We should go

more in on this hook. or hey Tik Tok really likes you know when videos are 15 seconds or whatever right so we have all these different things all named inside of Northbeam that's like the way we actually measure it and yeah it's just

how do how do we make something that's very messy which is creative production and attribution and make it as clean as possible so that everyone on the team can know where to spend the next best dollar because the best way to scale up

is fig out this concept called next best dollar right so why do I spend money on every goddamn ad channel on earth it's because every channel has a perfect level of spend and and your job as like a holistic marketer is to get to the

perfect level of spend on every channel possible. So it's like should your brand

possible. So it's like should your brand spend money on TV? Maybe, but only if your next best dollar isn't spent on the current channel you're on, right? So

spend meta all the way up until your next best dollar is better spent someplace else. And then figure out what

someplace else. And then figure out what the perfect level of spend there is.

Right? And it's it always changes. It's

a very messy, you know, messy mix, but that's how you figure out how to get to the highest level of spend possible at and still be profitable. Guys, quick 60C break. I am so excited to announce our

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For people out there listening, you went very, very deep there, very, very, very fast. And I would imagine you guys have

fast. And I would imagine you guys have six, seven, eight, nine, even 10 different naming conventions. Something

very, very simple to take. An example is like with iconic is just tag it photo, video or animation. Is it sports or is it motivation? And then what's the hook?

it motivation? And then what's the hook?

And that's obviously three levels deep.

I would imagine that you guys take it five, seven, 10, 15 levels deep. But I

do think the naming convention that will just get you so much raw data. And then

from there, from a measurement perspective, how what are you guys doing? Are you guys like exporting CSVs

doing? Are you guys like exporting CSVs into chat GPT? Are you guys using a third party tool? How are you analyzing all of this kind of granularity and and naming conventions?

>> Yeah. So this is this is what Northbeam does, right? So you have great naming

does, right? So you have great naming conventions. What we'd go further is

conventions. What we'd go further is like, you know, we'd have all those tags and then we'd additionally be like we'd have headtohead, you know, the intro of a video is a hook, right? That's what

it's called. So we would have 10 different hooks going AB C versus each other, right? So it's like, okay, this

other, right? So it's like, okay, this wallet is smart. You can't lose it cuz it has air tack dragging. That's a good hook, right? Or, oh, this is a perfect

hook, right? Or, oh, this is a perfect gift for the husband in your life.

That's a hook, right? So these are different hooks or concepts that we'll test versus each other >> with all other things consistent. So

it's a good split test.

>> Totally. Yeah. So and we we put all of that stuff in there. So like we'll have literally hundreds of ads running because we'll have 10 different concepts we want to try. Each concept might have three different hooks and

we're, you know, we're breaking down an ad into its actual units. So it's like what is what is the thumb stop? What's

the first image? Right? Right. So that's

a that's something we're going to test and it'll in the naming convention they'll be what the thumb stop is and then inside of Northbeam we will see okay this thumb stop across everything

is working 30% better than this other thumb stop we're testing >> and when you say working better are you talking about clickthrough rate are you talking about conversion are you talking about actual how the duration of the video? Dude, it's a great question and

video? Dude, it's a great question and we'll look at all of that, right? So,

it's like we'll look at, okay, this one's getting, you know, uh, you know, more watch time is one thing we'll end up measuring like, okay, this thumb stop is getting people to watch the 3se

secondond mark at 80% or whatever. And

that'd be a win for that particular thumb stop. And then what we'll end up

thumb stop. And then what we'll end up looking is like, okay, if people get too far into the video and they end up seeing the end card, that's actually a bad thing. It means that like the middle

bad thing. It means that like the middle message, the actual CTA call to action is not as effective if people are watching too much of the ad. So, it's

like there's a drop off there and we're going to measure all of that inside of North Beam and we'll show you all of that data >> to dive deeper into the content. Are you

saying there that you're doing a loose CTA in the middle and also at the end?

Is that your guys?

>> Oh, yeah, for sure. Like we're we're trying to get to the click to the platform, right? But then another thing

platform, right? But then another thing is we'll test this like sometimes we'll be like, okay, actually if they watch the full video and then click at the the ending CTA, if it's a 60second video, there might be two or three CTAs in there. They'll have a better conversion

there. They'll have a better conversion rate on site. So this is this is a massive job that like we have a lot of people on the team spending time on is creative analysis to figure out what

gets the best spend at the best results.

What's absolutely crazy for people out there listening is just you're going to have you can have just one weird outlier that's completely different than everything else. That's why it's just I

everything else. That's why it's just I would only say recently I would say probably you tell me in the last nine months to a year like meta is just all about contrast and volume. The big thing

is the contrast. People don't understand that you need to feed it completely different creative like completely different cuz everybody's used to doing like what you're talking about right now is you found the body and the ending and

they're just going crazy and just split testing that hook but they need to do that a million different which ways to Sunday and all different types of body and and general concepts. I don't think people understand how much different stuff you have to throw in there.

>> Yeah.

>> More and different is what you need.

>> Yeah. So, you know, Meta says creative is the new targeting. And what they mean by that is like, you know, there's Andromeda is the new ad engine inside of Meta, right? And

Meta, right? And >> is that drama?

>> And Andromeda.

>> Oh, Andromeda. I thought it said drama.

I was like, it's interesting.

>> Yeah. And inside of Andromeda, they've shown us what the AI system thinks is the same, right? So, if you have a static image and the background's blue and then you go to a pink one, Andromeda

knows it's the same image. They're like,

that's the same thing. It's not

creatively diverse enough. Right? If you

take a static image of the wallet, you know, front on and then you change it, you know, a different angle and the background is nice like trees now, it still knows it's the same image. You

need like radically different static images and video concepts. That's what

you're talking about. And so it's like you can't just change it's it's most important in the beginning part of the video because you because it has to serve to people who are different and new. And that's why we test so much

new. And that's why we test so much different creative. So the thumb stop's

different creative. So the thumb stop's most important, then the hook's the most important. But by the time you get to

important. But by the time you get to the middle and the end, it doesn't matter as much. But it's like really getting new people to see and and have attention on that. But like you need to have

different like it has to be super super wild. Like you have to make ads with

wild. Like you have to make ads with just guys, with just girls, with different selling points, different pain points. Your static images, you have to

points. Your static images, you have to have one that's, you know, on fire and you have to have one that's like, you know, pretty people holding it. You have

to >> like an actual 180 degree, like a completely different difference. Guys,

we talked about a little bit in the Shackleford episode about this. I'm

going to put a little mini link to a white paper on best practices in relation to this. I think it'll help people a lot. I would love to know your thoughts because there's a very very interesting conundrum on my side with my

company. We have a very very high AOV

company. We have a very very high AOV and let's just say we want to do a creative test and there's the same body, the same kind of core CTAs and we want to iterate across 10 different hooks,

but our AOV is so high, we can't spend enough to get kind of true testing. So

for people out there, if they understand and know their AOV, how do you look at testing as a percent of budget, a percent of AOV, a percent of revenue, how much dollars should they be allocating on a per creative

perspective?

>> Yeah. So this is and this is the hardest thing about, you know, giving advice to different businesses, right? The other

problem with a high OB product is you probably just don't have a lot of purchase signal. Even if you're crushing

purchase signal. Even if you're crushing it, if your product's $1,000, you will have 10x less creative volume or or purchase signal than I would at $100 AOV. Right. So, like you can't actually

AOV. Right. So, like you can't actually test as much.

>> That's what sucks when you're in a business like mine and we're good at media and we can't lean into it because we have a higher AOV.

>> Yeah. And this is where I think organic's your best friend, right?

Because you should everything that you if and this is what I would do if I had a high OV brand. I would make a bunch of different Tik Tok accounts or a bunch of different Instagram accounts that aren't necessarily focused with your brand and

use those as like a creative testing field for all of your ad concepts to be organic. Right? And so I would make, you

organic. Right? And so I would make, you know, if you make a high AOV sports thing, I would make one that's I make a new Tik Tok account called best sports highlights, right? Now you have a

highlights, right? Now you have a partner account that you can run on your meta account, right? They're pushing

partner ads really aggressively. So like

make a new handle. So new Instagram, it's called, you know, best sport highlights, whatever. and then post all

highlights, whatever. and then post all your organic content there, right? And

just see what ends up working before actually pushing it into the paid performance gauntlet that you'll have to end up going through. The other thing is take your all of your awesome ad

concepts and then just set them at a higher or I was going to say a higher instead of you know purchase conversion go add toart conversion or just page view conversion or something else so you can get more signal flowing to it cuz yeah the higher view kind of like you

know cripples you in a lot of different ways but in terms of you know actual if you have it's called $100 million budget you should spend 1% of your budget on

tools right so I know that sounds crazy but If the tools make you 5% better, they pay for themselves, right? So 1% should go to either attribution tools or MMSM

or or incrementality testing something, right? 1% should just go to some sort of

right? 1% should just go to some sort of tools. Then I would say like uh

tools. Then I would say like uh >> you I I want to unpack that a little bit right there. Everyone kind of knows like

right there. Everyone kind of knows like the north beams of the world, the triple beam, the triple whales of the world.

What what are those secondary tools that you're talking about?

>> Uh so an MM is mixed media modeling.

>> Oh, okay. And it's an old school way to figure out where you should be spending money, right? So it looks at all of your

money, right? So it looks at all of your different spend and then it it runs, you know, different algorithms to figure out like if you spent money correctly or it's like, oh, more money should go to TV or Snapchat or whatever else, right?

>> And this is like tools like Iris where it's like it can do mix modeling mixes and do different cohort analysis is kind of just analyze any and all the metrics in relation to your spend. Correct.

>> Iris is something very similar. You

know, MM are mostly sold by North Beam has one. A company called Measured has

has one. A company called Measured has one. Right. It's it's kind of falling

one. Right. It's it's kind of falling out of FLA favor, but it's it's one of the gold standards of actual paid media spend, right? The other one is

spend, right? The other one is incrementality. So, an incrementality

incrementality. So, an incrementality test is a is a hold out test. So,

let's say you want to figure out if meta is working or not. It's like, hey, should I actually spend money on meta?

So, what they'll do is they'll build cells. And what a cell is is they'll be

cells. And what a cell is is they'll be like, okay, we'll do North Carolina versus South Carolina, and South Carolina won't get any meta spend. Okay,

we're going to totally exclude them. and

then we're going to see the effect on your business if you didn't spend any money in in a geo. I'm simplifying this.

They end up doing way better sales than just state versus state. But like um they could do three sales tests where they they end up taking the population and they break it into these different things and then they they hold out spend to figure out okay you spent money on

meta. It was this increment it drove

meta. It was this increment it drove this a level of incrementality in your revenue right more revenue showed up than you expected because you spent money on meta. How much revenue do you think a company needs to do to start

investing in incrementality? I've never

done incrementality tools to give you context. I'm just curious what you

context. I'm just curious what you think. 15 million, 20 million.

think. 15 million, 20 million.

>> As soon as you start spending money on multiple channels, that's that's what it comes down to. Right? So, I think you can if you just spend money on meta, you can get to $50 million a year, right?

Some but some brands cap out. They can

only get to $15 million a year spending on meta. But where to figure out to

on meta. But where to figure out to spend your next dollar, that's where incrementality really comes in, right?

So, we use house. It's like it's a they they end up doing all the hold out tests for us. But a lot of people do this

for us. But a lot of people do this because it's like it's just a triedand-trude science. It's what Meta

triedand-trude science. It's what Meta is pushing really aggressively. Meta

will actually do free incrementality tests for you because they're so confident that Meta is the best place to spend money. But as you get bigger, you

spend money. But as you get bigger, you have to spend money in more places. You

have to validate where to spend that money, right? It's very easy to piss

money, right? It's very easy to piss money away on Tabula ads or Cro ads or whatever else, right? Uh

>> I just shouted out Tabula and CRIO. We

going back to 2009 with those. The fact

that you know that is is is you got some black hat marketing in your deep dark days in Washington.

>> Tabula is making a comeback. They're

trying to not be >> Tibula is there were like weird fake looking listicles at the bottom of like ESPN saying this is Kim Kardashian's 20 favorite makeup brands. That's crazy

that you just mentioned that.

>> Yeah. Well, dude, and you know a lot of display ads. I mean, there's so much ad

display ads. I mean, there's so much ad fraud, right? So, as as you start

fraud, right? So, as as you start spending more money these places like Pmax, it's very easy. And PMAX is Google's ad tool, right? Performance

Max, guys. Yeah.

>> Yeah. And PMAX is so easy at wasting money, right? Cuz like it'll just take,

money, right? Cuz like it'll just take, you know, branded spend and display and email placements and everything just rolling together and just give you one pretty number. But if you don't measure

pretty number. But if you don't measure that really like really really closely, you just waste money. So incrementality

just helps you as you expand channels out. So maybe 15 million, maybe 50

out. So maybe 15 million, maybe 50 million. Dude, if you're bringing it to

million. Dude, if you're bringing it to $100 million just on Meta, [ __ ] it. Just

spend money on Meta. Like just spend that million dollar on creative tools instead, right? I want to put a pin on

instead, right? I want to put a pin on the content for the people listening.

Sean is a unicorn from another planet and doesn't go organic to paid. He just

does paid and organic kind of it seems as though it kind of does what it does.

If you are doing organic, something that Orin talked about that has been amazing and I'm sure you agree with this.

>> Take your best performing organic, throw them in meta, throw them in ASC campaign. Dude, our two best He told us

campaign. Dude, our two best He told us to do this. Our two best ads right now by a long shot are just our best performing Instagram posts. And now we just have a a flywheel every single

week. Best performing on organic goes

week. Best performing on organic goes into paid. That's undefeated. It's 70%

into paid. That's undefeated. It's 70%

of our best paid ads are organic best performing ads.

>> Yeah. If it wasn't clear earlier, organic is just the proving ground to get stuff into paid. If people like it, they'll like it as an ad, right? So the

number one best practice is taking everything from your organic page and just pushing it into paid, right? And

that's why you should have multiple Instagram accounts to test more organic stuff because if you find a winner, it's a winner. All of your ads should

a winner. All of your ads should actually go through a a gauntlet of organic before justifying being paid.

Now, you call us a unicorn. It's just

cuz I'm old. It's, you know, if any brand started before 2021 is not good at organic content. And it's it's super

organic content. And it's it's super super true. Go through any of like the

super true. Go through any of like the the DTOC darlings. You go through the Aways, the Glossier, the All Birds, put in there. It's because we grew up where

in there. It's because we grew up where ads were the most important thing, right? Like organic feeds were very like

right? Like organic feeds were very like precious and there wasn't short form video to really get good distribution.

But yeah, modern day brands like it'd be stupid to start with paid. Like only

start with organic until you get to $10 million.

>> Makes sense. I want to dive back into the measurement side. I know you're you're very interesting because I feel like you're deep in the weeds, but also you take a step back and you're seeing the macro perspective. when you're

looking at numbers on from e-commerce specifically, what are those like two or three metrics that you're obsessing over that you're looking at kind of daily or weekly?

>> Well, yeah, our business is is in the middle of a transition. So, it's it's different than some people, but like what I what I care the most about is like product mix and our sales, right?

So, you know, I I'll bring up Yeti as an example. You think about Yeti, you might

example. You think about Yeti, you might think about coolers, right? Like Yeti

had a very famous cooler when they came out and like that kind of built the brand. The cooler is less than 20% of

brand. The cooler is less than 20% of the revenue today. Like 70% of the revenue is actually water bottles, right? They were successfully able to go

right? They were successfully able to go from a high AOV product with low LTV to like a gift giving product that has way more mass market appeal. So Ridge is doing the same thing right now. So our

wallet business is very strong. It's

$100 million a year, but over half the business now is all the other stuff we made, right? So what I care the most

made, right? So what I care the most about is percentage of revenue coming from these new product categories, right? How's phone case doing? How's

right? How's phone case doing? How's

Ring's doing? And that that product mix because the future of our brand is having way more different product lines that all can stand on their own and acquire new customers. So what I'm obsessing over is how many Ring customers did I acquire today? How many

Ring customers in the UK did I acquire today? Because my Ring UK business is

today? Because my Ring UK business is bigger than my wallet business, right?

So I'm looking at all those different things. And then the next one is just

things. And then the next one is just returning customer revenue. That's

that's been the biggest weakness of my business. If you haven't high OV

business. If you haven't high OV product, you probably have the same problem where you know 70 to 90% of your sales are new customers, right? Because

once they buy something, are they going to come back and buy another thing, right? With the wallet, people loved it.

right? With the wallet, people loved it.

We had a like our our MPS is 97% or whatever. People love this [ __ ]

whatever. People love this [ __ ] >> That's high, baby. That's a high score.

>> Yeah. I mean, we have hundreds of thousands of five star reviews, but most of them were like, yeah, I love the wallet. Then I sent them an email. Hey,

wallet. Then I sent them an email. Hey,

do you want to buy another one? They're

like, of course not. Why the hell would I want to buy another wallet? I only

need one. Right. So, we've launched all these new products to solve that problem. And so, now I look at returning

problem. And so, now I look at returning customer revenue as, you know, our our gold star. Can we get can we ever get

gold star. Can we get can we ever get that to 50%. That's what we're looking for.

>> Makes sense. We're going to go super deep into product and product assortment because you definitely have done a lot of things that are unconventional. The

fact that I definitely think you were labeled as a wallet company and now you have I mean, I saw that the the rings did like eight figures the first year.

So, I want to dive super deep into that.

I want to go back into just more from a CEO perspective that obviously has marketing and analytics chops. What are

you looking for holistically? I know

you're obviously looking in platform.

Are you looking at like rorowass in platform or myrrh holistically? What is

that one big number that you're looking at from an efficiencies perspective for the business?

>> Yeah. So I think the more rungs you move down in the organization, the more they care about channel specific rorowaz, right? So like you know furu on my team

right? So like you know furu on my team runs everything for us meta right and he cares a lot about individual ad rorowaz right and then when you go up a level to

Jimmy my VP of paid he cares really about Facebook rorowaz in particular right and then if you look at my CMO he cares about digital channel me right I care about holistic business me right I

look at all those other metrics they're totally fine but like what I'm looking at is how's the whole business growing right so I'm including wholesale and Amazon international markets and And then what is the whole business me and

is that hitting the targets? Because

I've been pretty open about this. Ridge

as a business will spend half of our revenue on marketing sometimes. We'll

have a >> wow.

>> Yeah. Yeah. We'll have a 2x me, right?

And it's because we have the margins to support it. And we understand that like

support it. And we understand that like we're an attention economy, right? I

have to spend all of my money on marketing if I want this thing to grow because that's that's the lever we have right now.

>> I mean, I got to ask you right there, looking at a percent of revenue, you're saying you're saying 50% on marketing.

What's like your SGNA? Like what's your human capital as a percent of marketing?

It's got to be like 10% 15%. You have to have a super lean team. Correct.

>> Oh yeah, we have 45 full-time US employees or something. So it's like my my the human cost like human payroll is 7% of revenue or something.

>> 7%.

>> Yeah.

>> Everybody out there is a percent of revenue that is astronomically low. I

feel like in consumer I mean I've been ballooned up to 25 before. I feel like people are at 25 30. Where do you think you need to be to win? You have to be what a 15 probably to win.

>> No, 10 or less. Dude, the the Wow.

>> Yeah. The modern market. You hear about these companies, you know, there's a company I'm close with. They're in the hydration space. I think they have four

hydration space. I think they have four employees. They'll do $100 million,

employees. They'll do $100 million, right? You know, Dime Beauty ended up

right? You know, Dime Beauty ended up selling and they had, I think, six employees and they were doing $65 million or something, right? I think

we've we've kind of missed that like the the leverage is there, right? Shopify

has built the best website thing ever. I

don't need web developers, right? In

inside of Ridge, we do have a couple web developers. We end up having three

developers. We end up having three people on the team. But like think about the most bare bones teams possible, right? You can just use out of the box

right? You can just use out of the box Shopify. Facebook gives you all your

Shopify. Facebook gives you all your customers. So that's the most important

customers. So that's the most important thing. Yes, you need CX, but AI is

thing. Yes, you need CX, but AI is really helping with that. And you need product dev. So it's maybe you need

product dev. So it's maybe you need four, maybe you need six, maybe you need eight people, and you could be doing 10, 20, $40 million. Dan from create, I think, was four employees doing $40 million a year, right? Creating company.

>> Yeah. Yeah. So you asked the question, what do you need to win? I think it's so obvious what wins right now.

>> Let's go one to one. You go one, I'll go one, you go one, I go one. You go first.

What do you think?

>> Okay. I think consumable is the most important thing possible in winning.

>> Let's do a 1A 1B. 1B will be you need a good LTV in conjunction with the consumables. Now you go.

consumables. Now you go.

>> Okay. You need very small skew counts.

>> Yeah, AG1. I agree with that. I think

you need a massive TAM. Totally massive

is super important and you need the ability to get into mass market retail and mass market retail there's only three that matter. Target, Walmart,

Costco. Those only three that matter.

>> I agree with you. I would say and this number has changed for me. I once

thought it was 70 point margins. I would

now say 75 point margins minimum.

>> I think I think that's a good one. And

you know let's let's even stop there because let let's talk about what we just described. So, a consumable with

just described. So, a consumable with strong LTV that could be sold in mass market with a large tam with good margins. And then Grun comes to mind.

margins. And then Grun comes to mind.

Okay, Grunes is gummies. Okay, so they have one flavor. Anybody can eat them.

They made them gummies because they're good for kids and moms and everybody.

And they taste good, right? They help

with immunity and vitamin support and you can buy them in a in Target and Walmart and Costco eventually, right?

They're in Sprouts right now. layer on

the vanity or health element of something and then I think you that's talking about it right now. The health

element >> and what did everybody [ __ ] up previously? It's like look rich is a

previously? It's like look rich is a great business. I make a lot of money

great business. I make a lot of money and we're going to run this thing forever and we make great products people love. Awesome. I love this thing.

people love. Awesome. I love this thing.

What everyone screwed up is like no we should have just been focused on the internet lets us go as wide as we want.

The best thing is a hyperfocused awesome product with a large tam that can eventually be sold in mass market retail. And if this is why fashion is

retail. And if this is why fashion is such a bad category to be in, right?

>> Worst category, even worse than art.

>> Yeah. Yeah. So, you know, we talk about fashion. You know,

fashion. You know, if you want to be selling high-end women's apparel, there are no wholesale accounts. You're like, "Okay, what about

accounts. You're like, "Okay, what about Nordstrom's? They just got taken private

Nordstrom's? They just got taken private and they're going through a whole restructuring. What about Sachs? They're

restructuring. What about Sachs? They're

not paying people. They actively aren't paying their vendors right now, right?

>> All the all the money's in the bottom for apparel and then there's just everyone is trying to get to the bottom.

There's still money in the middle at mall, but at the top the Nordstrom, the Bloomingdales, those businesses, I mean, Barney's went out. Those are tiny businesses. If your strategy is like to

businesses. If your strategy is like to win in Nordstrom's or Bloomingdales, you're going to have like a $2 million business. Like, you're not going to have

business. Like, you're not going to have anything in there.

>> And they might not pay you, dude.

>> Yeah.

>> And and anything that's cool is bad to be in because people will do it for free, right? It's the reason why being

free, right? It's the reason why being an actor sucks and being a dentist makes you a ton of money, right? It's cuz if it's cool, >> a lot.

>> Yeah. A lot of people will do fashion brands for free or they have rich parents, they'll pay them to do fashion brands, right? So like fashion is the

brands, right? So like fashion is the worst category to be in. Going back to Grans, it's like they have one skew to manage, right? It's on subscription

manage, right? It's on subscription every single month. I think you can only buy it as subscription or it's a subscription first, right? Gives them

predictable supply chains, right? They

have a a supply chain domestically, right? They don't have to worry about

right? They don't have to worry about tariffs or anything else. It's like

they're just taking gummies. I know

that.

>> Yeah. Yeah. So it is it is the perfect business and that's where everyone was just wrong for 15 years, right? like

away. I I love the team over there.

They're fantastic. Luggage is a horrible category to be in because Samsonite is the only people they're they're the strategic, right? And they have 50

strategic, right? And they have 50 points of margin because shipping a suitcase places is really expensive. So,

>> I know about this with Art. It's over 39 and a half inches on one side, you get absolutely smashed on the shipping, especially internationally. Yeah. I

especially internationally. Yeah. I

mean, to further riff on what you're saying, I mean, you already I know that you've already thought this and definitely said it. you're on hard mode right now with these wallets. It's

literally it's want it's a want. It's

not a need. And if you get something that's a need with LTV, it just becomes it's just such an easier game. The big

thing is just picking the right game.

And I think so many people just get into the game aka I'm a perfect example and then kind of it is what it is. But there

is way easier games to play like what we're going back and forth on these this sevenpoint checklist. There is an

sevenpoint checklist. There is an incredible amount of opportunity out I mean, I just spoke to to Helium 10 and we did this little exercise in the back end of Amazon and we went super granular

in all the fields looking at how this is going to blow your mind, bro. How many

creatine companies last month did over $10,000 in revenue?

>> Oh, bro, go.

>> Uh, I was going to say 5,000.

>> 232, but $10,000. And I mean, and some of them had like two pictures on the PDP page. like they're literally and of

page. like they're literally and of those 232, I would imagine 219 of them have fake creatine or 2% of the amount of creatine in it. So, I think picking the right game for everybody out there listening, we've talked about in the

past episodes is quite frankly more important than how hard you work or even who you work with. It's picking the right game and going through this checklist that we're talking about right now.

>> Yeah. So, Peter Teal said this cuz Peter Teal, I mean, did PayPal, made a ton of [ __ ] money, and then he opened a restaurant. And he's like, "If you want

restaurant. And he's like, "If you want to work really, really hard in a knife fight and super competitive and make no money, open a restaurant." And and that that's when he ended up building this whole thing that he ended up writing a

book about how monopolies are good. He's

like, "No, you want to build a monopoly." He's like, "Whatever,

monopoly." He's like, "Whatever, >> politicians for losers."

>> Yeah. Exactly. And he's like, "That's what running restaurant is." That's what that taught him. Now, the advantage of doing something on hard mode is that we're both really young and that it teaches you a ton of skills to then go like as soon as we got into a category

that's easier, be that rings or whatever else, anything even slightly easier than wallets immediately took over the whole market and made a ton of money, right?

And it's because trying to sell the 10th million wallet to somebody, everyone in America's already seen it. They already

heard about it. Like getting them to get that purchase is so difficult that like once you learn that skill, we can go into something slightly easier and make a ton of money. So that's what we've been doing.

>> I agree with you. I'm excited for that day. I want to go back into partner ads.

day. I want to go back into partner ads.

You mentioned it briefly. I know I've looked at your guys ad account and I know that you guys are heavy on partner ads. For some people, a lot of people,

ads. For some people, a lot of people, me included, partner ads are actually performing better than standard ads. So,

I'd love to know how are you guys utilizing partner ads? What percent of your ads are partner ads for standard ads? Just tell me a bit about what you

ads? Just tell me a bit about what you guys are doing there.

>> Yeah, it always changes, but no, it's it partner ads are working better for everyone I talk to and it's because the single handle really really helps. And

then also a meta is prioritizing partner ads. Like they have said internally that

ads. Like they have said internally that like it's a big goal for them. I mean

it's been public like why why are they pushing this out so hard? And it's

because they get better signal when there's two handles on it. They get

better targeting when there's two handles on it. The AI algorithm prefers it. So I mean you know it it depends.

it. So I mean you know it it depends.

Some ads don't make sense to run as partner ads, but it wouldn't surprise me if in Q4 half of our money is going on partner ads. 50% of your money.

partner ads. 50% of your money.

>> Yeah.

>> That's incredible. Well, for people listening, just to give you full context, you basically connect with any other account on the backend systems and then you can run creative through both.

And per what you just said, they're going to take audience data from both, which obviously makes the ALGO smarter because they're getting fed more data.

How do you guys set up your white listing system? Are you guys paying

listing system? Are you guys paying people flat for the content, a percent of spend, a percent of revenue? I'll

tell you how I'm doing it, too. I'd love

to hear how you're doing it.

>> Yeah, we don't give anyone a percent of revenue. So like it is it is all just

revenue. So like it is it is all just fun.

>> I'm a nice guy for those people out there listening that are that are that I'm paying on the top. But keep going.

>> Yeah. Yeah. I mean everything is because the other thing is what we found in our testing is the account doesn't matter that much. So like we have done deals

that much. So like we have done deals with celebrities. So like we've run ads

with celebrities. So like we've run ads from you know Marquez is an owner in the business. So we run ads from his account

business. So we run ads from his account all the time but we've done John Dailyaly, famous golfers. We've play

we've done you know famous actors, famous musicians and they don't perform that much better or statistically like you can't really draw a correlation between like the the name on the account

and just a random account you create and own. Right.

own. Right.

>> To take it a step further, the amount of followers completely irrelevant.

>> Yeah. Yeah. So, we have a bunch of accounts we own, right? Like I said, you should make a bunch of Instagram accounts, right? You can just do that

accounts, right? You can just do that and they can just be partner ads for you.

>> Daily wall art is me, don't worry.

>> Yeah, there you go. and we you end up running from the founder account. You

end up running you they can run it from my account if they want my wife's account, whoever. And then if we do end

account, whoever. And then if we do end up using with UGC people or influencers, it's always just a flat a flat fee. I'm

not going to get into the math of trying to figure out how much I spend on your account and then you audit me and I send it over. I'm not doing that. It's just

it over. I'm not doing that. It's just

I'm not a on theory I'm not against it.

Like I but I'm not it's not worth the t the two, three, four emails that's going to happen.

>> So you're just paying here's the SOP. I

want this type of content. I want these hooks. these bodies and then you're

hooks. these bodies and then you're doing all the editing or are they giving you finished content?

>> A lot of times we will send them stuff just to post on there and run like >> Yeah. They might even be featured in the

>> Yeah. They might even be featured in the ad or not, right?

>> Interesting. Yeah.

>> So, you're giving them the content and you're just using their account to run it.

>> Yeah.

>> Wow. I like that. That's rare. Anything

else that you see big for the people listening on the whitelisting side that you would recommend? How are you find finding people to whitelist with? Are

you guys using a tool? Are you guys using superfill? using, you know, social

using superfill? using, you know, social snowball. What are you guys using to

snowball. What are you guys using to find those people?

>> Yeah, I'm a big fan of of super affiliate. We also do a lot of gifting.

affiliate. We also do a lot of gifting.

So, we'll gift out, you know, our No, it's Refunnel. So, we'll gift out with

it's Refunnel. So, we'll gift out with with Refunnel, right? And we'll get a bunch of people coming back in. And if

[clears throat] somebody makes good content, cuz like you're getting a free wallet, no money. And if they still make good content, oh, that person's now in our UGC funnel, right? We're going to pay them to make content. And if we give out a 100 free wallets, maybe two people

make good content or like content worthy of spending ad dollars on. So, that's

like how we source new people. But you

only need a roster of like at a brand our size 30 to 50. If you get to 100, that's a ton of UGC people cuz you want to give them consistent work all the time, right? So, so Refunnel is the name

time, right? So, so Refunnel is the name of an app or a tool that you use to find the people. You're gifting them for

the people. You're gifting them for free. You're seeing the content. If

free. You're seeing the content. If

they're good, you engage and you bring them into your kind of internal UGC team machine.

>> Yeah. Yeah. But yeah, like a lot of people do Tik Tok shops just for this reason, right? You do a bunch of

reason, right? You do a bunch of gifting. You find who makes good

gifting. You find who makes good content. Now they're part of your UGC

content. Now they're part of your UGC team, right? Super has a bunch of great

team, right? Super has a bunch of great people in there. They have they have a partnership with Meta to get that going.

So we use all those different tools and softwares and then yeah we just have a roster of like probably 50 people and we'll use and then part of the the paying for UGC will also get access to their whitelisting.

Love that. I would say for people out there listening something that we've done that's been very very successful and I took it from other brands that are crushing the game is giving a long PDF

an SOP and literally saying these are the 50 hooks. These are the three or four B- rolls of bodies. you get all of that raw content and then our internal editing team can do all of the split testing that you talked about earlier in

the conversation to just have more malle malleability on the creative because to go back and forth to get somebody and ask somebody to do something is a lot per what you just said.

>> You never want to be delivered finished assets cuz like you're going to want to cut up and change it. The other thing is you guys are ahead of the game. I talked

to so many brands who don't have internal editors. It's like that is the

internal editors. It's like that is the oh my god >> that is the biggest unlock you possibly have. I talk to a lot of brands. I'm

have. I talk to a lot of brands. I'm

like you don't even need more content right now. you have a bunch of content

right now. you have a bunch of content that's just edited like [ __ ] It's like we can make something really good out of this.

>> It's so funny. We use pix.io, pics.io, and it's like a it stores all of our content and it's an interface. And like

when one of our new guys came in, he that's the first thing he said. He's

like, "No more new content. We have 10 years. Look at all this stuff from 2019.

years. Look at all this stuff from 2019.

Why are we not using it?" So, to give you context, it's overseas, but we just hired another two. We have six editors.

And remember, my company is a bit smaller than yours. Obviously, it's

overseas, but I don't think you can overindex enough on editors.

>> Totally, dude. And you know, you say overseas, Latin America has some of the best editors on earth. So, it's like you should go to Argentina and Brazil and hire people from there because they're really [ __ ] good at editing.

>> Philippines. I'm actually the mayor of the Philippines. My business partner

the Philippines. My business partner lives in the Philippines. Philippines

nice.

>> Yeah, >> Philippines is nice on the creative side. I want to dive into influencer. I

side. I want to dive into influencer. I

to give you context I jump started Iconic through we've sent out 7,500 free pieces of art and for the first 5 years of the company no attribution just top

of the funnel looked at blended myrr and it and it worked well for us you guys I know are a systematized machine so I would love to understand and know what is the influencer strategy for ridge

what is the the SGNA the team underneath it how are you guys attacking and going after influencer >> well yeah it's changed a lot so Like in the early days, we just we were spending money on Meta the business. Like 2016,

we're probably doing $10 million a year and I just watched a ton of YouTube.

Like I'm a [ __ ] computer nerd, right?

So I was just spending a lot of time watching YouTube and I I just started thinking, I'm like, look, if Squarespace is getting these people to talk about it, we should do the same thing, right?

And we started sponsoring probably 50 accounts that year. The next year probably did 500 accounts.

>> And what does that mean sponsoring?

>> So we would so it we would find their email, right? or we find their Twitter

email, right? or we find their Twitter or find their Instagram, shoot them a DM and say, "Hey, we'll give you $500 to talk about Ridge Wallet on as a 30-cond midroll read." Right? So, this was so

midroll read." Right? So, this was so early that a lot of these terms weren't defined, but a lot of people when they thought about sponsoring YouTube videos, they wanted dedicated videos, right? So,

like a like I go to a gaming channel, hey, make a 30-minute video about why you love Ridge Wallet. Nobody wants to do that, right? Your optin rate is going to be super low. We want integrated ads inside your content, just like a midroll

ad on YouTube. YouTube pays you an RPM for talking or or for showing ads on your content.

>> Pseudo organic or basically it's looking like a an ad within it.

>> I mean, we have people say, "Hey, this video is brought to you by Ridge Wallet, right?" And they talk about it for 30

right?" And they talk about it for 30 seconds. And we were really early to

seconds. And we were really early to that. And so we would just we had, you

that. And so we would just we had, you know, we probably had two people internally who would just find a bunch of YouTubers. So they would, you know,

of YouTubers. So they would, you know, either pay scraping services or they would there's like a couple like databases of YouTubers. Now there's a bunch of social tools. They all [ __ ] suck. So, I don't know if they're going

suck. So, I don't know if they're going to sponsor your podcast. You can bleep them out, but Grin sucks. Creator IQ

sucks. Like, they all suck cuz all of the data is just so old and they those lists have just been destroyed and abandoned. YouTube's a a dynamic thing,

abandoned. YouTube's a a dynamic thing, right? Like an account that's big this

right? Like an account that's big this year wasn't big last year. So, if

somebody did created a database from 3 years ago, they're not even on that [ __ ] list. You want to be on like the best accounts and their best accounts typically are rising right now, right?

So, we would try to find new YouTube accounts that we want we wanted to be everybody's first sponsor. That was like the goal of the company, right? So, if

you had 10,000 subscribers and you've never done a brand deal before, we'll give you $50 and teach you how to work with brands, right?

>> So, you could get good pricing.

>> Yeah, we we got good pricing. We were

early on it. We build those relationships. We were uh Theo Von is

relationships. We were uh Theo Von is like a super famous podcaster. We were

the second person to sponsor his podcast. The first person was a local

podcast. The first person was a local pizza place. So, like I I did the deal

pizza place. So, like I I did the deal with him on the phone. Right now, now his ad rates are probably whatever six figures to work with him, but back then it was a couple hundred bucks, right?

So, we wanted to be super early with sponsoring all these accounts and build a good relationship over time. We ended

up working with, you know, Anthony Fantano for five years or whatever, right? We ended up working with, you

right? We ended up working with, you know, Marquez back in the early days.

So, >> and is this going specifically after people that influence your specific ICP or was something like Wallace where you just going kind of like super broad?

>> We were, so YouTube is a male-dominated platform. So, we thought we could just

platform. So, we thought we could just reach anybody on the platform. So, we

were agnostic and we were not brand safe. So, like

safe. So, like >> uh Oh, boy. So we so we were able to get really really cheap CPMs because I'm like I don't care when you post. I don't

care what you say. Just tell people to buy the wallet. So we we would work for fishing channels and music channels and comedy podcasts and you know everything.

A lot of brands come into it being like, "Oh, I I just want to work with this one awesome account, right? I just want to work with Mr. Beast or I just want to work with this like very prestigious like female influencer. That's really

hard and really expensive." We were like, "We want to work with anybody at this price." And we were getting5 to $10

this price." And we were getting5 to $10 CPMs to sponsor all these YouTubers with really really good ad units.

>> Were you tracking with UTMs? Were you

just looking at like Google Analytics referral?

>> It was just coupon code and and they all had banned URLs. So we could see clicks coming through direct revenue and then coupon code usage. And the idea was that like Facebook cost, you know, $15,000

people. I can get a better longer ad

people. I can get a better longer ad read with a creator talking directly to a camera for $5 or whatever, right? And

the thing that everyone everyone misunderstands on that platform, it's evergreen. I have I mean, who knows if

evergreen. I have I mean, who knows if it got leaked on coupon sites, but I mean, we have stuff from a long time ago that we still get sales from. It's

crazy.

>> Yeah, totally, dude. I mean, we Theavon from episodes from 2017 still driving sales, right? So, yeah, we have, you

sales, right? So, yeah, we have, you know, we've worked with over 5,000 YouTubers at this point. Our peak year was probably 2020. as soon as the world shut down, you know, they there's a lot of people who needed revenue. So, we

just ended up signing long deals with everybody and ended up a lot of people were watching YouTube. So, we ended up having a huge year those those years just based off YouTube influencer. So,

that was the original strategy. Really

small team, two full-time US people working with VAS or contractors or data scrapers to get us a bunch of lists, cold blast all those lists with very clear instructions. We'll give you a

clear instructions. We'll give you a free wallet, we'll pay you this this price, $5 CPM to talk about us. So, we

did that at scale and that worked really, really well. We got to 5,000 YouTubers or whatever. 2021 rolls around and that's when things got crazy because crypto got into the space, right? So,

like I said earlier, crypto literally was spending a,000 times what we would spend. And it didn't make any sense to

spend. And it didn't make any sense to us. Obviously, they don't have any cogs,

us. Obviously, they don't have any cogs, but I'm like, mathematically, they can't give you $3 per view on this YouTube video. Doesn't make any [ __ ] sense.

video. Doesn't make any [ __ ] sense.

Now, we all know it was a scam, right?

FTS stole a bunch of money. They they

burned it. And then 2022 happens.

There's a big crash in the early 2023.

Then all these YouTubers actually need to they need money again, right? Like

all the money got washed out of the system. It was a big boom. Then it was a

system. It was a big boom. Then it was a big bust. So we end up getting back into

big bust. So we end up getting back into sponsoring a lot of YouTubers, but there was still a lot of price memory. People

like I used to get $1,000 CPMs. I'm like, "Yeah, but your views have gone down." And also, no one would ever give

down." And also, no one would ever give you $1,000 CPM. That's crazy. So 2023

and 2024 was hard navigating that as like influencer was in was in flux across the board. And the strategy now is we're actually trying to do less YouTuber deals and be way more involved

in the YouTuber deals. So like MKBHD is a good example where you know we'll get we'll be on 20 of his videos this year and they're all very hightouch. They're

all really really integrated. We get ad rights to that content. We get to whitelist that content and we're picking the content that has the biggest cultural impact. So we're trying to do

cultural impact. So we're trying to do fewer better deals. So this year we might only work with 300 YouTubers, but we're trying to make those videos like as standout as possible. So it used to

be we just spray and pray worked with everybody going up to this big boom, then there was a massive bust. Then like

it took us a year or two to figure out our footing and now we're trying to get like really deep integrated deals. I

would recommend that sequencing for anybody is spray and pray. See what

works before you go deep and narrow. You

just like casually glossed over a guy with 20 million plus subs. This Marcus

Brownley deal. tell us about how that came about and what does that actually look like as much or as little as you want to tell us.

>> Yeah, so we I said this earlier, our biggest weakness is that like we're not good at organic, right? And we saw the boom of creatorled brands and it makes so much sense that like in the future

there'd be more creator brands cuz people people buy from people, right? We

talked about, you know, the allirds of the world or whatever. Like

brand is just a short form for familiarity. We talked about that and

familiarity. We talked about that and Alber has had to like raise hundreds of millions of dollars to spend money on ads to get you to be familiar where in the future the people you already watch every day and like them getting into products just makes more and more sense.

So like Feastables is crushing it, Joy Ride's crushing it, but there's also like a bunch of creator apparel brands and like there's a bunch of brands you've never heard of that'll do $50 million this year that like have no marketing spend. They are just creators

marketing spend. They are just creators who are making cool stuff and people are buying them and it's every little pocket of e-commerce. And so we saw that

of e-commerce. And so we saw that happening and we're like, we need to get ahead of this wave. How does Ridge become a creator brand? So

>> context, what year was this when this epiphany happened?

>> Like 2022 maybe. And I put a tweet out and I was just like maybe 2023. And I

put out a tweet. I'm like, "Hey, we want to bring on a chief creative partner. We

want to give them a million dollars a year." And it the tweet probably got 500

year." And it the tweet probably got 500 likes or whatever. And I said like, "Hey, our dream get is Marquez Brownley, but if he's too busy, apply here." And

we had a bunch of applications. Like a

thousand people came in. I offered it to Colin and Samir at one point. they they

were too busy and you know but we ended up you know going through this this list and we worked with Marquez in the past we had a really good relationship and I'm like hey I'm going to make sure he saw this right so I I just sent it to him like hey are you interested in this

and he's like yeah totally he's like let's get on the phone let's head out the details so it ended up that he ended up coming and being an equity member of the business so Rich is still bootstrapped we've never raised any money six people own it so me my partner

Connor the three original founders and Marquez Brownley there's six of us on the cap table and in exchange for that he helps us plan our product launches, right? So, we have new products, he

right? So, we have new products, he gives us feedback on them. We create

products together with him. We use his image and likeness, you know, in Best Buy. If you go to Best Buy right now,

Buy. If you go to Best Buy right now, this big picture of Marquez Brownley and then there's our phone cases and our power banks and our cables and our wallets all right there. So, it's like legitimizing and wholesale. And then we

get distribution on all of his channels, right? So, you know, we get we're going

right? So, you know, we get we're going to be on 20 plus videos this year, a bunch of social posts, all that different type of stuff. We do, you know, creative shoots together. So, like

we're getting him in ads and everything else. And it's just helped us be better

else. And it's just helped us be better at storytelling and and like more of a, you know, Gen Z brand. Like I think Gen Z creators are [ __ ] crushing it being creator brands, Tik Tok shops, whatever.

This is our learning to get in that direction.

>> So, for context, I mean, this wasn't a sweat deal. You're paying him and he's

sweat deal. You're paying him and he's tied to different marketing deliverables and things he has to do.

>> Yeah.

>> Wow. That's a great gig for him, too.

And he's got equity upside.

>> Yeah, dude. It's a I think it's a great gig all around, right? because he brings just like a ton of legitimacy. Like

we're getting into tech products for the first time, right? Like our phone cases.

A million brands do phone cases, right?

If you ask anybody like, "Oh, what a saturated market." People said the same

saturated market." People said the same thing about rings and wallets and whatever else. But we'll do eight

whatever else. But we'll do eight figures the first year in phone cases, right? And it's because we have

right? And it's because we have wholesale distribution that he kind of brought on board, right? We'll be in all the Verizon stores, all the AT&T stores, all the Best Buys, right? And also being able to use his credibility on our ad

channel and everything else. If you had to tie one thing, what is that one fundamental thing that he brings to the table that you get that asymmetric benefit? Is it trust? Is it

benefit? Is it trust? Is it

distribution? What do you think it is?

>> Yeah. I mean, the asymmetric side is distribution. I mean, we're talking

distribution. I mean, we're talking about what would what would a brand pay for 500 million long form YouTube views?

Right. We probably won't be in 500 this year, but over the course of the deal, it would be over a billion views in his content with our products and our ads.

That's just like that's worth a ton of [ __ ] money, right? I mean, tens of millions of dollars just be just just that the the distribution piece alone.

>> One piece of this I think for people out there listening to and I just spoke to somebody yesterday about this understanding and knowing there's a word called strike price. We'll probably go into a whole episode. You have the same lawyer as me by the way. Goody.

>> Yeah.

>> Goody is the greatest lawyer of all time. Goody Agahi. Shout out

time. Goody Agahi. Shout out

>> dude. He better be paying you for this.

Do you know how much lawyers make dude?

>> He's the greatest. I love him with with all my heart. Goody. Understanding and

knowing strike price. Strike price is the valuation of your company when you issue equity. And if you issue equity

issue equity. And if you issue equity at, let's just say $20 million, you only participate in the Pratta equity that you have in the overage. So you doing

that deal with Marquez, that's a great win-win deal because he doesn't participate in all of the value that you guys built up until, I don't know, hundreds of millions of dollars. But at

the same time, he's obviously taking the bet that you guys get to a billion dollars, which quite frankly, he's got a hedge because you're also giving him a million dollars a year. So, this is like a win-win win-winwin. So, for people out there listening, when you get to a

little bit of escape velocity, I'd say even like a $10 million valuation, you can bring in people that only participate in the upset and people don't understand and know that. That's a

huge win for you that >> Yeah. Yeah. We should we should break

>> Yeah. Yeah. We should we should break that down. So, you could give people

that down. So, you could give people options, you give people warrants, you can get something called the profits interest units, right? All this is is people get really scared about giving away equity because they're like, "I built this whole thing, right?" Well,

let's say your business is worth $50 million. You can't actually give someone

million. You can't actually give someone 1% of your business because they would have to pay taxes on that, right? It's

like to them to the IRS, it's a material gain, right? Maybe this is too way too

gain, right? Maybe this is too way too in the weeds for everybody.

>> It's not. That's why you give PIU units, which are not taxed. They're only taxed on a change of control.

>> Yeah. And it's it's it it locks in that first 50 million. That's still yours.

you own that completely, right? But

everything from 50 million and up, I will participate in whatever that percentage is, right? So, it's a way to bring more people in the equity pool without, you know, giving up what something you've already built cuz we both agree it's only worth $50 million

today. Wouldn't you give up half if

today. Wouldn't you give up half if somebody could double your business, right? Because it's only worth 50

right? Because it's only worth 50 million.

>> And what it also does, too, is it really incentivized people to take early bets when the company is valued lower because you get a bigger upside with the company. That's why people, you know, do

company. That's why people, you know, do seed investing or early investing because they're getting at a low strike price. Totally

price. Totally >> where even if you get in at five and you sell for 50, you still 10 extra money.

So, I think people need to understand strike price. I love that deal that you

strike price. I love that deal that you did. What about any other channels?

did. What about any other channels?

Anybody else you want to call out? The

guys mentioned this Linus Tech Tips. I'm

not a big like tech YouTube guy, but is there any other big partnerships that you want to touch on that have had a big big benefit in your company and why?

>> Yeah. Well, look, I there's probably like 10 names that come to mind. You

know, we worked with Theo Vaughn really, really, really early and he definitely drove millions of dollars in value when we were just getting into the whole podcast space. So, I think working with

podcast space. So, I think working with him opened up the doors to like more comedy podcast and everything else. So,

that was a really good one. We were we worked with Anthony Fantana from The Needle Drop for years and ended up being like a meme in his own community. And we

you want to work with a channel long enough that you you end up being a part of the community, right? And we also found that there's like unique alpha in

like very funny sponsorships, right?

It's look Squarespace sponsors everybody with the same exact ad read, right? I'll

pick on them or I'll pick on HelloFresh or whatever. It was funny for the, you

or whatever. It was funny for the, you know, number one music critic on earth to be talking about why you should buy a wallet. And for him, it's it's a it's a

wallet. And for him, it's it's a it's a non-competitive deal, right? What I

bring up all the time, Linus Techups is a great example. We worked with Linus TechTips for seven years at this point.

We'll we'll be in 50 videos this year, right? something like that,

right? something like that, they can only work with so many tech sponsors, right? Because, you know, if

sponsors, right? Because, you know, if they start working with too many GPUs or too many monitors or whatever, right, it ends up calling their credibility in into question, right? If Marquez did a

if if he did a review of an iPhone, but then he took money from Apple, wouldn't that make him people like, "Oh, well, are you actually reviewing it or are you protecting your bag or whatever?" So,

it's these are called non-endemic sponsorships, right? Right. So endemic

sponsorships, right? Right. So endemic

sponsorships is if you're a tech reviewer and you take money from Apple.

That's pretty bad. Nobody really likes to do that. So that people look for non-endemic sponsorships. So I would

non-endemic sponsorships. So I would never sponsor a wallet account who talks about wallets all day long. But also

I'll sponsor anybody else. And

>> it's going to be premium priced as well too there as they make their money.

>> Totally. So like um you know we work with uh you know Strad man. He's a he's a he's a big car YouTuber right now. If

I sold, if I was a car auction website and I tried to sponsor him, I would have to pay out the teeth or he wouldn't even like that deal, right? He's like,

"Fucking wallets. Who cares?" Yeah, man.

This is my car. I I drive Lambos. I have

a [ __ ] McLaren and anyway, here's my Ridge Wallet. Next video, right? So,

Ridge Wallet. Next video, right? So,

those non sponsorships were really crucial to that growth.

>> It's so funny you say that because that's one of the reasons why we win so big in licensing is it's just we've turned on examples like Monopoly. Like,

they were not making money in the art category and then like we have a seven figure a year business with them. we

just turned the lights on and we were just net new money. So for people out there, if you want to go sponsor an athlete and you're in the apparel space, probably not a good space to be in because they're getting paid a [ __ ] ton of money from companies like Nike and

Adidas. So being niche actually can help

Adidas. So being niche actually can help in getting really really good priced deals.

>> Yeah. So on that one point, we tried to do a wallet deal with Harley and they wanted a crazy amount of money because Harley sells a lot of wallets. They're

like, "Hey, you're coming into our space. Like we price it really high, but

space. Like we price it really high, but we do a deal with the NFL." They're

like, "There's no other wallets [laughter] NFL." So, they're like,

[laughter] NFL." So, they're like, "Yeah, sure. We'll give it to you for

"Yeah, sure. We'll give it to you for for cheaper." The Harley deal was more

for cheaper." The Harley deal was more expensive than the NFL deal, which is crazy.

>> That is wild. I want to tie a bow on ecom and just a bunch of random questions that just fire off from you. I

guess let's just first start with Twitter X underused platform or e-commerce storytelling. How do you use

e-commerce storytelling. How do you use Twitter? Because I obviously I see you

Twitter? Because I obviously I see you posting on there a lot. What's your

personal thesis on Twitter? Uh well,

if you're a brand, it makes almost no sense to build there, right? Like the

reason to build on Twitter is it's where the smartest people on Earth are hanging out. Um but also, you have to put up

out. Um but also, you have to put up with like a lot of [ __ ] It's probably like the it's the least controlled platform. It's the only

controlled platform. It's the only platform where they still have pornography and Nazis and everything else going on. But with that, you just have like the largest breath of the smartest people. So like if you want a

smartest people. So like if you want a tweet to be seen by Mark and it's like look he's he's not going on Instagram.

[laughter] It's like so like the the highest level conversations are actually happening there and if you really care about one particular subject there's 50 to 100 people on there who are sharing cutting edge [clears throat] research

right like if you care about economics or like care about like China relations like the experts are on there talking to each other right and you can go on there and actually figure it out. So, think

about it like uh like, you know, I I think Reddit kind of has that same sort of thing where there's smart people having, you know, niche sub conversations, but like this is real time and like in the flow with everything else reacting to news. So, I

think it's a great platform. I think

it's underused by the average person, but makes no sense for brands to be there, right? I started building there

there, right? I started building there because also it's the easiest thing. I

don't have to film a video. I can just [ __ ] any stupid idea I have, I can send off and then who knows what's going to happen. Guys, this episode is

to happen. Guys, this episode is sponsored by Many Chat, the tool [music] that is quietly powering all those comment to DM posts that you guys are seeing across Instagram. I am personally

a power user of ManyHat. I absolutely

love it. I use it for my personal brand, the podcast, and Iconic. When we started using it, Iconic was doing 8.5 million impressions a month. We're now doing over 20 million impressions a month. It

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What's one thing you used to believe about e-commerce that you no longer do?

>> You know, I've probably been I've been very dogmatic in my approach that like, you know, you have to do things X, Y, or Z. And the more businesses I learn

Z. And the more businesses I learn about, the more people I see do things different ways. And I'm like, "Oh,

different ways. And I'm like, "Oh, there's a million different ways to win this game." If anyone ever tells you you

this game." If anyone ever tells you you have to do X, Y, or Z, there's about five different caveats in there that they're not telling you, right? I'll

bring up two good examples. Do you know Do you know Dude Wipes?

>> Of course. Sure.

>> Okay.

>> In 2012, they did $100,000. By 2018,

they might have did a million dollars that year. So, it's like we're talking

that year. So, it's like we're talking about slow, slow growth and they'll do over $300 million this year, right? I

would have called that business dead all along the way. I'd be like, you've been doing this for four years. You're doing

a million dollars. You don't make any [ __ ] money. I mean, even in 2019, I think we did $10 million that year, right? And I still would have been like,

right? And I still would have been like, this is too Ridge was bigger. I'm like,

this is too small of a business. You've

been doing this for too long. But like,

time and market builds brand, right?

It's just about familiarity. It's just a short code for that. And then they end up just having a couple crusher years and now they're by the end of the decade they'll do a billion dollars a year in

sales, right? It's [ __ ] awesome. So

sales, right? It's [ __ ] awesome. So

what I would have in the past believe that business was dead on arrival that they missed their growth window or opportunity that you're not going like this and you're going like this for too long. You're going to die. But just

long. You're going to die. But just

sometimes something happens. The other

one I'll talk about is Baseball Lifestyle. Do you know that brand? I

Lifestyle. Do you know that brand? I

have known Josh for five or six years. I

know Josh and Bill, we're trying to get them on as well, too. They're they're

moving warehouses right now to Denver.

So, it's been a bit busy. But I've known Josh since he was I don't know 19 18.

Guy was posting five times a day on Instagram as like a seventh grader.

>> Yeah.

>> Crazy crazy story.

>> Yeah. And it's it's the same thing. It's

like that business made no money up until 2020. When I say no money, like

until 2020. When I say no money, like maybe a million dollars a year, maybe $2 million a year, then they have a couple crazy growth years. They'll do over $150 million this year, right? And like

>> and to give everybody context, I mean, we're talking about I don't know the exact numbers. I I can't remember, but

exact numbers. I I can't remember, but it's like one It's like 1111 5 25 60 and then like 150. Like it's the most insane retail. They're smashing it

right now.

>> Yeah. And and so taking a step back, there's a lot of different ways to win.

A lot of people try to think consumer is tech, right? And it's like we're so

tech, right? And it's like we're so different. Things take way longer. Trend

different. Things take way longer. Trend

is really important. Culture is really important. This is why raising money is

important. This is why raising money is bad. I'm gonna raise money to grow. It's

bad. I'm gonna raise money to grow. It's

like your business will grow when it's ready to grow. It's way more like watering a plant, right? It's like

eventually you'll get you'll get apples out of it and you could you could be in the [ __ ] desert for 10 years, the wasteland for 10 years, then all of a sudden get hella rich. So yeah, man.

Just like they're all every business is a different beautiful creature and just they all take their own time.

>> Last question for ecom. What do you think has been the most critical factor in Ridg's ecom success over the last let's call it almost a decade now? never

raising money.

>> Yeah, I know like you're probably looking for like a good tactic or something, but like if we would have raised money, we would have died. We

tried to raise money. You know, we're bootstrapped and people say that proudly now being like, "Oh yeah, we we bootstrapped this thing." Bro, I was in Comcast Ventur's office in 2017 be like, "Will you please give me money? You just

gave away money." And they no one no one believed in the vision at all cuz if we would have raised money, we would have done stupid stuff, right? The fact that we've had to be profitable every single time. The fact that I don't make money

time. The fact that I don't make money unless my business makes money has just made us to be way more conservative, make like way tighter bets and cut things that are failing, right? If I'm

not making money on something, I I don't have a big VC back to like make sure I can just keep bleeding this thing because eventually it'll work. We've

just had to be so ruthless in pivoting.

And I fail all the time. I'm one of the biggest failers you've ever known, dude.

We try a bunch of different stuff, fails, whatever, I throw it away. But

like we try so much stuff and we do it all very profitably, very constrained that we can find a winner, right? like

next year, probably probably not next year, by 2027, half of my revenue will be a new product that came out this year. So, we're talking about hundreds

year. So, we're talking about hundreds of millions of dollars in sales, that much the same amount in enterprise value created just because I took a bunch of random chances and we're going to keep doing that.

>> So, why and when should but should someone raise money, do you think? If

you're in consumer, it's you should raise the smallest amount of money you possibly can, the fewest number of times because just like we said, we're playing life on hard mode. That makes it that

makes the business good, right? If you

played life on easy mode with being loosey goosey about margins, never making the tough conversation, never cutting things that don't like never getting lean as a company, you'll just

fail way faster. So, it's like look, we raised 200 grand off of Kickstarter, right? So like pre-orders basically and

right? So like pre-orders basically and that was the only money that's ever came in this business. No equity was ever sold in this business, right? So if you if you don't have a bankroll to get your thing started, I actually actually we're

probably going to skip ahead to like tips for entrepreneurs out there, right?

>> Go.

>> Don't just start being an entrepreneur.

Get a job someplace and learn what that job is. Learn what those people need and

job is. Learn what those people need and do that for a while. Before Ridge, I had an agency business. Before my I own agency business, I worked at an agency.

You have to learn something before you actually just go out there and just like I'm going to [ __ ] start a business.

It's like you have to you really have to like be in the grind first. So my advice is be in the grind first. Figure out

what you're going to do. Save up money then do it. And if you have to raise money the smallest amount of money possible.

>> What about debt? Do you guys use like debt for POS? You can kind of look at debt as kind of separate than raising money. Do you guys use debt or no?

money. Do you guys use debt or no?

>> So we every business should have a revolver of debt and we should look at there's debt a couple different ways, right? So

right? So things you can do with debt, you can do a debt recap. So let's say you have a business, it's been running for a while, it's profitable, but you haven't really made any money. Just for everyone in the

audience to understand, your business can do $5 million a year in profit and you can make 300 grand a year. And

people on Twitter like or drop shippers like never tell you that, but like it's it really takes until about eight figures in profit, $10 million a year in profit before you can actually start making a million dollars a year yourself, right? actually taking chips

yourself, right? actually taking chips off the table because it doesn't affect the cash flow.

>> Yeah. Yeah. Cuz if you're growing, more money has to go back into the business.

And if if it's not coming from business operations, it has to come from investors or has to come from debt. Has

to come from somewhere. So a lot of times when some when a business is like at that stage, they'll do a debt recap.

A bank will come in, they'll give you money that you have to pay back, but you can take it off today, right now in your pocket, and the debt is secured by the business, not by you personally. So it's

one way to derisk the business. Take

some trips off the table. The other

thing you can do with debt is, you know, just just have a revolver open, right?

Throughout the year, sometimes your business will have too much cash and you'll put it in treasuries or have not enough cash and you'll need, you know, to take in debt. If you have if you place a big PO, right, you'll end up

having to use debt to fuel normal business operations because that money just went to go pay for a PO or whatever else, right? The other way you can use

else, right? The other way you can use that is factoring. So this is you get a, you know, someone tries to order you from you like a Target or whatever else, they give you this big PO and you need money today to fulfill that, you can go

to a bank and then they'll they'll give you a line of credit versus that PO. So

there's a bunch of different ways to use debt as a business. We have an open retainer. We never use money on it. It's

retainer. We never use money on it. It's

it's empty right now.

>> And for people context as well on that last part with a retailer, you'll have like net terms like a net 30, net 60, net 90 under the assumption that you're going to pay the person back once the retailer pays you back.

>> Yeah. And the more blue chip the retailer, the cheaper that debt is, right? If Target gives you a PO,

right? If Target gives you a PO, Target's going to pay you, but they're like, "Hey, give me my inventory today.

I'll pay you in 90 days or 120 days or whatever. And if it's a big order, you

whatever. And if it's a big order, you don't have the money to go actually get that made." You use a factoring bank to

that made." You use a factoring bank to get that done.

>> And then you're negotiating better terms, lower interest rates with the factoring people per the strengths of the retailer.

>> Yeah, totally. If you get one from Costco or Walmart, like you're you're you're going to pay almost no interest.

But if you get one from, you know, the container store, they might not want to give it to you because they're bankrupt or whatever.

>> So, I want to go deeper into kind of like exit strategy. Tam, what kind of long-term opportunity when to raise money? What's your framework for

money? What's your framework for thinking about an exit strategy? Like,

how early should founders be planning for that?

>> It depends on if they have any money or not. So, like you should as quickly as

not. So, like you should as quickly as possible get to$1 to5 million in personal net worth, right? And that's

just because then you can't be taken off the table. Like that's what that's what

the table. Like that's what that's what it comes down to. I'm I grew up like broke. Like I had no [ __ ] money. When

broke. Like I had no [ __ ] money. When

I start like me and my my my CMO Connor, we lived in a one-bedroom apartment in Korea Town. We took his like handme-down

Korea Town. We took his like handme-down shitty Honda Civic to agency meetings.

Like we were we if you if you said Sean gun to your head, give me $1,000. I

could figure out how to get a,000 bucks.

You said 10,000, I'd be dead. I could

not figure out how to get $10,000. And I

was like 20, dude. I had no [ __ ] money. So life gets way easier as soon

money. So life gets way easier as soon as you secure $1 to5 million in just personal net worth. So whatever it takes, I don't care if you're selling your business early. I don't care if you have a bad deal. If someone if as soon

as you can get that, your life like your stress level goes down completely. Life

gets so much easier. So that's that's a life tip number one. And I'll actually I'll never talk my friends out of deals if there's one to $5 million. like if if they have no money and they can actually

get something off the table cuz I we have a lot of friends in e-commerce, they'll get deals and unless the deal is like fraudulent or they're trying to [ __ ] them over like in some way, I'm like, "Look, yes, your business is probably worth slightly more, but if

you're broke right now and this guy's going to give you money, you should just take some money, right? You could always build another business. You you're still going to have a big chunk of your company. Just whatever it takes to get

company. Just whatever it takes to get to one$1 to5 million." So that's that's rule tip number one. Then we can start talking about exits, right? The best

consumer brands are privately held for long periods of time, right? So the

Europeans have this figured out way more than Americans, right? Europeans have

awesome great luxury brands that like be cared for and handed down generation to generation where they don't think about the quarterly performance. They really

care about like what are we building for like the legacy, right?

>> These are hold codes with with multiple brands underneath them.

>> Yeah, totally. And like LVMH does the best job of this because brands can't be hot forever. We'll talk about Stanley

hot forever. We'll talk about Stanley real quick. Stanley did $75 million a

real quick. Stanley did $75 million a year forever. Like we're talking 30

year forever. Like we're talking 30 years they were at $75 million a year.

And then they had one year where they got to 300 million. Then they had one year they went to 750 million. The

Stanley Tumblr blew up. Now they're back at $300 million, right? And that's

because things can't stay hot forever.

Why does Brad Pitt only do one movie a year, right? It's because if you saw

year, right? It's because if you saw Brad Pitt in every goddamn commercial, you'd be sick of seeing Brad Pitt.

There's overexposure risk, right? So

what LVMH does is they have a portfolio of brands and then they just slowly start rotating them through. So there's

always one hot brand and as soon as that brand starts to die, they put another hot brand in there. Now they've been able to keep, you know, the the namesake brand Louis Vuitton like very hot for a very long time. But Gucci hasn't. Curing

is another hold co and they're super screwed right now because they have Gucci, they have Balenciaga, they have YSL, they have all these different brands, but all of them are kind of screwed right now. They don't have the

next hot thing, right? So anyway, the point I'm trying to make is European brands are really good at like understanding the legacy of consumer in a way that Western or American brands aren't. There's a couple American brands

aren't. There's a couple American brands who do it really really well, right? So

New Balance, I brought them up earlier, privately held, family-owned, profitable business that'll be I think they'll be great forever because they they don't they have no reason to hurt their brand right now, right? Another brand I really

love is James Purse. I wear a ton of James Purse and James Purse is privately held, owned the thing for 35 years at this point. And he's able to if the

this point. And he's able to if the business shrinks, who cares? If the

business grows, who cares? He can open hotels, he can open stores. They every

year he takes $40 million out of that business. That's a [ __ ] fantastic

business. That's a [ __ ] fantastic business to own forever, right? So, if

you can own it forever and be profitable, you should just do that now.

And if you that's a privileged position. And then

we could talk about like the actual sales process maybe if we were to go into that.

>> Yeah, I definitely don't want to go on that because I think people sort underestimate the amount of touch points and the length of time you need to be engaged with someone to actually get a deal across. Like people don't

deal across. Like people don't understand like even in 19 we raised a million dollars and that took 6 months and they were a pre-existing partner with us. I think people just sorely

with us. I think people just sorely underestimate that. So yeah, I'd love to

underestimate that. So yeah, I'd love to just have you walk through like timeline just understanding and knowing how long it takes to actually get a sale.

>> Yeah. Well, there's a market for businesses under $5 million. And those

sales happen pretty quick.

>> And those are like the micro acquireers of the world, those smaller kind of aggregate websites.

>> Yeah. Like you can go on Flippa or Quietite or whatever. These these are searcher funds basically. So it's a guy who has some money and he gets an SBA loan and he's going to buy your business and he's going to run it better than you. That that's the whole idea. He's

you. That that's the whole idea. He's

like >> for four to 12 times the IBIDA depending on >> Bro, if you're if you're getting 12, >> you're getting 12. I know. Maybe a

little subscription or something behind something good. But like the the current

something good. But like the the current market's like 1 to2, right? Like it's

>> one to two.

>> Yeah. The market has collapsed cuz Thasio is not buying anything, right? So

there was a big moment in time where Amazon aggregators were buying every business on earth, driving up the multiples.

>> I don't want to talk about Thrasio cuz I knew from the start that wasn't going to work. We know I can go down a whole

work. We know I can go down a whole entire rabbit hole why that makes no sense. All of those made no sense.

sense. All of those made no sense.

That's a different episode.

>> Yeah. So So anyway, the current market is one, two, three act multiples. And

Ridge buys some businesses here. We we

own some FBA brands. We've bought there.

But if it's under $5 million, it it's pretty fast to get a deal done. But once

you have a real business, it's time kills all deals. Things just take a really long time to get them done cuz they have to know you. They have to trust you. They're going to look for

trust you. They're going to look for fraud. They want to see accounting

fraud. They want to see accounting statements. And also, they want to

statements. And also, they want to prolong the deal to make sure that like you're not inflating the numbers, right?

If I start talking to you on the first of the year, we probably close in October. That's typically how long this

October. That's typically how long this stuff takes. And it's because they want

stuff takes. And it's because they want to see that you hit your predictions.

You said you're going to do this. Let's

let's make sure you're going to do it, right? They don't want to buy something

right? They don't want to buy something that's that you're propping up from being hot and then you know they buy it, it falls apart, right? And we're saying they who buys businesses. It's mostly

private equity funds, right? So private

equity is a whole asset class of capital where they raise money from institutional investors or retail investors, whoever, and their whole business model is to buy your company,

run it better than you, and take that profit and and eventually sell the brand for more money someplace else. They

think they get better returns doing that than in the stock market, right? So,

private equity buys almost all brands, right? The other class of buyer is

right? The other class of buyer is strategic acquirer, right? That's

typically a larger company or a publicly traded company who wants to buy you for some special magic reason, right? So,

good friend of the brand Dr. Squatch.

They got bought by Unilever. Fantastic

deal. That that was a strategic acquirer. But before that, they actually

acquirer. But before that, they actually were owned by Summit Capital. So, they

were owned by a private equity group.

And that's typically the transaction.

It's very hard to go from privately held I own everything brand straight to strategic acquirer. That almost never

strategic acquirer. That almost never happens. You typically have to stop

happens. You typically have to stop through a private equity group.

>> A good conduit to it too guys just to understand and know on the PE PE side there's something also called like a rollup where maybe PE buys a company and for them to get the multiple that they want they're going to have to buy

multiple companies to jack up the revenue to get the multiple. So be on the lookout when there is rollups because if someone you know buys you guys and want to MP wants to roll it up they might buy a wallet company doing

you know $5 million in revenue $10 million in revenue to just get more market share to blow it up.

>> Yeah. And so they often call these platform plays right the other there's a very there's a very big one right now called Mammoth Brands. They have you know Harry's razors and they just bought a diaper company because they're doing a

rollup to go public right so you'll see these like and they're trying to become a strategic. So, there's a bunch of

a strategic. So, there's a bunch of different ways to get this done, but you should do whatever it takes to get your first $5 million. And then it's like only take money that'll change your life. I think you should own your brand

life. I think you should own your brand for as long as you possibly can, as long as you love doing it, as long as you love running it. And even if you don't love running it, hire a CEO. You know

what I mean? [clears throat] Try to keep stay in control for as long as possible.

But if you really reach a point where you're like, I can't do this anymore, only take deals that'll change your life. Because if your life's not going

life. Because if your life's not going to change, why the [ __ ] are you going to sell your thing, right? multiples are

compressed right now to good brands are being sold for 8 to 10x multiples and it's like wouldn't you rather just own your company for 10 years get all the money anyway and then at the end still own your company right so multiples are

not very frothy right now maybe they get frothier in the future they were frothy for everybody listening we've talked about it in 2021 22 and people at crazy crazy valuations crazy crazy multiples

yeah Ridge got offered $300 million when we were doing like $100 million a year I should have taken that deal it fell apart because the market fell apart. If

the market was hotter for another six or eight months, I would have I would have I would have sold my brand because it made no sense for someone to buy that business at that price, right? But there

it was a publicly traded company. That

company ended up getting punched in the face.

>> What do you think are the key reasons why someone would buy a company outside of obviously the PE and the strategic?

Is it margin profile? Is it your product mix? Is it having meat left on the bone

mix? Is it having meat left on the bone in retail? Like what are what are the

in retail? Like what are what are the big reasons why you think someone buys a company?

>> Yeah. So let's put strategic in a bucket because strategic can do whatever they want for whatever reason that they internally see, right? There's somebody

internally who has an idea and then that's their prerogative. They can do whatever, right? I often like I say will

whatever, right? I often like I say will buy you for magical reasons. It's very

much you have no idea what their strategy is. I'm close with like the

strategy is. I'm close with like the Hershey's head of M&A and he's like, "Yeah, you know, we wanted to get out of chocolate so we thought popcorn was good." And they bought three popcorn

good." And they bought three popcorn brands for a billion dollars, right? And

then they're like, "Yeah, now we think pretzels is good. So they'll just do whatever the [ __ ] they want. [snorts]

But then what private equity is really looking for is a sustainable business, right? You'll hear private equity get

right? You'll hear private equity get scared if revenue is growing too fast because they're like, I don't know what's going on here. What they're

looking for is they have a playbook, right? These are these are everyone in

right? These are these are everyone in private equity is old. They all went to business school. Like they are all like

business school. Like they are all like they have gray hair and they've never actually ran a business before. They're

going to buy your business and then they're going to hire someone to run your business and they want it to match a playbook. So they want really strong

a playbook. So they want really strong IBRA. They want really strong cash flow

IBRA. They want really strong cash flow because they're typically going to buy you with debt and maybe we'll talk about that after this. So they want really strong business, really strong cash flow.

>> And on the EBA side, what do you think?

What's strong to you on the consumer side? 15% plus.

side? 15% plus.

>> Yeah. Yeah. Look, if you're if you're getting IBIDA at 15, that's great. 15 to

20. I mean, if you're above 20, they start being like, what's going on here?

Right. You're probably not spending the correct and you won't get credit for it.

The big thing when you sell your brand is you're like, make sure you get credit for it. If you're like, "Yeah, we have

for it. If you're like, "Yeah, we have no team. Our Ebida is 40%." They're

no team. Our Ebida is 40%." They're

like, "Well, I can't run your business with no team. I'm gonna have to hire a team." So, your IBIDA is really 30%. And

team." So, your IBIDA is really 30%. And

they'll they'll there's add back and subtractions that they'll do to tell you what your IBIDA is, right? It's all

negotiation. It's all dance. But 20%

IBIDA growing 20%, they would love to see that. They're like, "Okay, this and

see that. They're like, "Okay, this and if you're growing 20% every year for 5 years or 10 years, like, oh, it's sustainable. There's some sort of moat

sustainable. There's some sort of moat tied to it. Maybe it's IP, maybe it's relationship with, you know, retailers.

Maybe there's some sort of special thing happening in your business, right? So,

they want some sort of mo and then they would love if there's meat on the bone and they won't tell you about it. Maybe

you have to tell them what the meat on the bone is, but like internally they're like, "Oh, we can do x, y, or z and make this business better." They'll have to see the meat on the bone. If you don't want to be like, "Hey, this is this business is grow is doing 20%. It's

growing 20% and it's perfectly optimized. There's nothing you can do to

optimized. There's nothing you can do to grow this business. It's the best." I I always give that advice to everybody from meat on the bone for people listening. I would say the two core meat

listening. I would say the two core meat on the bones I would say is product and distribution. Like, hey, we haven't gone

distribution. Like, hey, we haven't gone to retail yet. Hey, we haven't gone on Amazon yet. Or the product side. Hey,

Amazon yet. Or the product side. Hey,

we're a clothing company, a men's clothing company. We haven't done

clothing company. We haven't done women's yet. To leave them room to go

women's yet. To leave them room to go make that make that multiple that you're talking about.

>> Yeah. And to and to close the deal, be like, but we're going to do that next and here's all the designs, [laughter] right? So that they can see the vision

right? So that they can see the vision coming together, right? So they want to buy it before you do that thing. It's

the X factor on that. If you're like, "Hey, look, we have we're not we haven't been in retail yet, but we have this offer from Target and I we're thinking about taking it for Q1 next year."

They'll that'll rush them to get to the the deal to be done.

>> Looking having been in this kind of DTOC mix for I don't know now, including your agency, probably like a decade. What is

the biggest thing you've learned from all of these exits?

>> You most people don't understand deal terms. They get [ __ ] on deal terms. You should read about the DraftKings deal, okay? And

deal, okay? And You need to learn about what participation means and you have to learn about

the second bite of the apple probably never happens, right? So,

for a lot of different reasons, and I I I did a Twitter thread on this and it's not very intuitive, but everyone knows that when private equity buys brands, brands get worse or when they buy anything, it gets worse, right?

>> I think that is the case a thousand% of the time. And I I know hindsight's 2020,

the time. And I I know hindsight's 2020, but some of these people that buy, especially these DTOC brands and like the 2020 2021, I just don't know in what world they thought that they were going

to take this company for 100 to even 500, but continue. I'm sorry.

>> Right. So, and look, there's a lot of really good private equity groups and they do really really good work. There's

some that I'm I'm close with and I think they're awesome and there's a lot of brands who run private equity and they're still crushing it. They're doing

a great job. But like when you ever you hear about a brand blowing up, it's probably because private equity put debt on it, right? to explain that even if a brand goes bankrupt, it can still be a

good business trans a good transaction for private equity, right? Because all

private equity cares about is return on invested capital, right? How much money do they put in and what is my what is my return over whatever time horizon.

They're just looking to make the fund 20% on that capital every year. And if

they can do that, it doesn't [ __ ] matter, right? So, let's talk about how

matter, right? So, let's talk about how private equity buys things with debt.

So, they're called leverage buyouts. I

have a company that's worth $100 million. You have a private equity

million. You have a private equity group. You agree to buy my thing for

group. You agree to buy my thing for $100 million, right? We we we agree on the price. You go to a bank and let's

the price. You go to a bank and let's say my business has $20 million in IBIDA. So, it's a 5x multiple. I know

IBIDA. So, it's a 5x multiple. I know

it's a lot of numbers for everybody.

It's annoying, but $20 million in IBIDA, 5x multiple. My business is worth $100

5x multiple. My business is worth $100 million. You're giving me $100 million.

million. You're giving me $100 million.

I get $100 million today. Okay. Well,

that private equity group doesn't have $100 million. What they have is we'll be

$100 million. What they have is we'll be generous with this. We'll say they have $50 million. They're gonna give me their

$50 million. They're gonna give me their $50 million. Then they're going to have

$50 million. Then they're going to have a bank give them $50 million for the asset of Ridge. It's secured by my company Rich. Then they give me that $50

company Rich. Then they give me that $50 million. I now own 0% of Ridge and it

million. I now own 0% of Ridge and it only cost the private equity group $50 million. Yeah, they have to pay this

million. Yeah, they have to pay this loan down eventually, right? But they

they were able to buy $100 million asset 50 million bucks. Sounds like a good deal. That's a leverage buyout, right?

deal. That's a leverage buyout, right?

Now, we saw in peak zer people doing those buyout deals with six or seven turns of IBIDA, right? What that means is if you had $10 million in IBIDA, they would get $70 million in debt, right?

That's very very bad. Like two to three is is is a conservative number.

>> They say lever, you're levered up too high.

>> Yeah. Yeah. And so with too much debt.

So anyway, how does this end up being good for the private equity group? So

they have a $100 million asset. They

spent $50 million on it. They want this to turn that $50 million into $100 million eventually. They just have to

million eventually. They just have to get this debt out of the way. So, let's

say two years go by, the business grows a little bit, and they're able to refinance that debt, and then they're able to take their $50 million off the table. Now, they own Ridge, they have

table. Now, they own Ridge, they have all this debt on it, but they had $50 million put in and now they're at a net zero return, but they still own this asset. Another two years go by, then

asset. Another two years go by, then they do another recap on that debt. They

find another bank to give them more money. Then they, let's say they're able

money. Then they, let's say they're able to pull out another $50 million. Now,

they've doubled their money. So in four or five years they took $50 million and they've taken out hund00 million in debt. They don't give a [ __ ] if Rich

debt. They don't give a [ __ ] if Rich goes bankrupt anymore because they've they've hit their their their core objective is not to run good brands.

It's not to grow the brand. It's just to get return on invested capital. It ends

up being a diversion. As a brand owner and operator, your goal is to build the best possible brand that serves your customers and makes money for you and everybody. And it's like a beautiful

everybody. And it's like a beautiful happy ending. Private equity can do the

happy ending. Private equity can do the same thing, but their actual ultimate goal is just return on invested capital.

That's the only thing they actually care about. So that's why you can have a

about. So that's why you can have a really good business, go bankrupt, and still be a good outcome for private equity. And that happens all the time.

equity. And that happens all the time.

So anyway, that's leverage buyouts.

Maybe this gets edited out because it's too [ __ ] boring.

>> No, no. I love I I love that there's not many people on here that can talk about that. I do want to talk about product

that. I do want to talk about product though, product and supply chain because like I said earlier, you know, you guys were definitely known as a quote unquote wallet company and you've really kind of reformed into a whole accessories

company. I guess let's just dive into

company. I guess let's just dive into what is that internal framework for evaluating new categories. Is it TAM? Is

it margin? Is it cross-ell? Like what

does that look like?

>> Yeah. So, it's three steps and they've changed a lot over time. The first thing is is it is it a CAC or an LTV product?

Can I acquire customers on this or is this to sell to our existing customers?

That's the first tree, right?

>> How do you figure what is your your thought process and how that works?

>> Yeah. So, a CAC product has certain characteristics that work with performance marketing. So, it has to be

performance marketing. So, it has to be over $50 in price point, right? It has

to have a big enough TAM like it can't be a complement to something we already do, right? So, you know, we sell a wallet. If I if I make an attachment

a wallet. If I if I make an attachment for a wallet, it's an obvious LTV item, right? Where it has to it has to not

right? Where it has to it has to not plug into the ecosystem perfectly already.

>> So, CAC is net new and then LTV is just your current base.

>> Yeah, totally. So, like rings, I can go out there and acquire new customers for rings who've never heard of the wallet business at all. Right? Luggage, I can go out there and acquire new customers who've never heard about this before,

right? We sell a keycase, which is like

right? We sell a keycase, which is like a thing that goes with your wallet. It's

like you put your keys in, it kind of looks like their wallet. I cannot

acquire any keycase customers. Like, I

can't run ads for it, right? So, that's

it can only be sold to existing people.

So, that's the first split is CAC versus LTV. The next is

LTV. The next is is there some sort of LTB play here, right? Is it going to overall, you know,

right? Is it going to overall, you know, if if it's a CAC product, we want to be able to add 10 20 30 40 $50 million in in net revenue off of this. And if we're doing that, how does it fuel LTV for the

rest of the business, right? So like it passed the first thing, which is CAC, so that gets a check mark, then it's okay, but what what is the LTV ramifications?

So what we found out is that luggage customers are very likely to buy wallets from us, right? So like it ends up feeding into the rest of the LTV thing.

So >> and is that something based off intuition or was that like a focus group? Because common intuition I would

group? Because common intuition I would not think that maybe it's like the aluminum and the aluminum and like my wallet looks like the luggage. Like how

did you guys come to that? We saw that, you know, we're known for carrying stuff and this kind of carries stuff and a lot of this is like has we've learned over time, right? It's like when we we start

time, right? It's like when we we start we launched a bunch of different [ __ ] and these are the things that have worked and now we've learned what's worked from those, right? And then the last one is there's some sort of

distribution play, right? So it it'll either work on Amazon or it will work in wholesale or something like that, right?

So it's more than just DTOC, right? We

want a CAC product that influences LTV that can also have some sort of, you know, distribution X factor tied to it.

So like phone cases are a good example.

So phone cases, you're like, okay, is it really a CAC product? It's, you know, it's they're between 40 and 75 bucks and it's, you know, we think there's companies out there acquiring customers for phone cases and we can compete in that ad auction and win, right? So we

end up launching it. Then what we see is, holy [ __ ] the LTV is awesome, right? People who are buying our wallet,

right? People who are buying our wallet, love to buy the phone case. People to

buy the phone case, love to buy the wallet. There's a lot of cross-ell right

wallet. There's a lot of cross-ell right there. Kind of d-risk the whole thing.

there. Kind of d-risk the whole thing.

And then with the phone cases, they work great on Amazon. They work great in Best Buy. So like we would do it just for

Buy. So like we would do it just for those reasons alone. If Best Buy asks or something, we'll make it for him, right?

And that like little checklist has like really pushed us into getting all these new product categories. And yeah, it's totally changed the business.

>> Guys, Sean is out here just giving straight codes. That that's that's an

straight codes. That that's that's an amazing code, an amazing thought process. Yeah. Conventional wisdom like

process. Yeah. Conventional wisdom like I always think of phone cases in the licensing world. We we call it like a

licensing world. We we call it like a chachki business business and they kind of come and go. Yeah. Yeah, I would look at it as LTV. Like someone that has, you know, a red aluminum wallet, they're going to want that to match with their

phone case. So, I can see how that makes

phone case. So, I can see how that makes sense. Throughout the whole entire

sense. Throughout the whole entire years, all these years, is there an example of a bad launch where you failed and and if so, why?

>> Yeah, dude. We've had a bunch of bad ones. Like I often say that like product

ones. Like I often say that like product launches are are lottery tickets or it's like you're like if you're in the music business, you're making a hit single, right? So, like an album comes out,

right? So, like an album comes out, there's 12 songs on it, one of them is the single. Like, how come they're not

the single. Like, how come they're not all singles? People at people people at

all singles? People at people people at the company I always say this all the time. It's like we'll make a bunch of

time. It's like we'll make a bunch of products. Some of them work, some of

products. Some of them work, some of them don't. And they're like, "Well, why

them don't. And they're like, "Well, why don't we try to make the other ones work?" Right. So, some bad launches were

work?" Right. So, some bad launches were we did watches, we did mini knives, we did apparel at one point, right?

>> Yeah. Yeah. Like a mini like a little Victorian competitor. They just didn't

Victorian competitor. They just didn't [ __ ] work, right? And people were like, "Well, we should go back. We

should try different marketing. Try to

make it work." And it's like, "No, it the song isn't a hit." It's like, [laughter] it's fine. Not every song is a hit. We found winners. Let's let's

a hit. We found winners. Let's let's

take those all the way, right? And it's

like lottery tickets, you know, you think you have lucky numbers. Like

you're like, "Oh, I'm gonna pick seven, whatever, 11, like all these different numbers." It's totally [ __ ] random

numbers." It's totally [ __ ] random what ends up working, right? So, you can have a system with your lucky numbers.

You can think you know what's going to work. You have no idea. We did the watch

work. You have no idea. We did the watch launch first and it was a massive flop.

It flopped so hard we thought the website was broken. We're like, we had a thing in Zapier hooked up that like every time a watch sold like it would ping and it would ping in Slack and we didn't get any pings and we're like, "Oh, it must be broken." Like everyone

should log in and make sure they can actually buy the watch. Nobody bought

them. Like it was a disaster, right?

>> Those are the worst days when uh You think the website isn't working?

>> Yeah. It's

>> like no, it's a slow time right now.

>> Yeah. And that was the first product launch we did I thought of wallets. We

were like oh my like we're dead. We're

dead on the water. Two weeks later we launched rings. Exact opposite.

launched rings. Exact opposite.

Immediately people start buying it and internally no one thought rings were going to work. Everyone thought watches were going to work. But I'm like hey we're trying a bunch of stuff. The

engine is like we're trying stuff, right? It's okay to fail. We're just

right? It's okay to fail. We're just

going to try a bunch of stuff. Luckily

Rings totally worked. Saved the whole business, right? Cuz like if we were

business, right? Cuz like if we were just wallets, we would have fired everybody and just been a tiny little wallet company. So Rings end up working.

wallet company. So Rings end up working.

We end up scaling that. But then we tried a bunch of different stuff. We do

an apparel launch. We tried selling belts. Try selling all this stuff. A lot

belts. Try selling all this stuff. A lot

of it didn't work. But then we find luggage and luggage did work right. And

then earlier this year, we tried, you know, all these different tech products and then we tried like a bunch of different knives or whatever and the tech products just ended up crushing. So

you have to like go through your own discovery period, what works with your brand. But then what we figured out is

brand. But then what we figured out is like it has to have a high enough price point to work on DTOC because that's what we're experts in, right? Then like

it has to like be relevant enough to our audience that there is some cross-ell potential. That's that LTV question. And

potential. That's that LTV question. And

then there has to be the X factor. Can

this work on Amazon as a standalone thing or can it work in wholesale? Will

Target give me a PO for this? And if it will, [ __ ] it. We're doing it.

>> For people out there that want, you know, Sean has mentioned, clearly the watch was just a dud and or these other products that smashed. Like for us, we have a lot of skews. Like we have like kind of this mini test where we'll hit a

new piece of art to our email list and we'll say, "Hey, if it gets over x sales, this thing has legs. B, how does it perform on organic?" Is usually organic directly ties into how to perform on paid. And then C, we'll spend

x amount of money on paid. And if it doesn't perform there, if it doesn't win on email, doesn't win on organic and doesn't win on paid, then we know it's a dutter. So that's a good kind of a

dutter. So that's a good kind of a mental model for people to do if you want like a smaller kind of test.

>> Yeah. And try to never bet the farm.

That's what we end up doing because I really think it is it is you're you are playing roulette. You have no idea

playing roulette. You have no idea what's going to come up and you have to keep a bank roll because you have to be able to hit winners, right? So we limit like the cost of a new product launch to under $500,000. I don't care what the

under $500,000. I don't care what the minimum quantities are. I don't care. It

just we are only doing something if we can do it for less than $500,000. And I

I talked to some brands like we're going all in on X. We're going to spend $5 million on a big [ __ ] photo shoot.

Roll it out into the world cuz they think that raises the chance of success.

You actually have no idea what's going to work. Like none of us have any idea

to work. Like none of us have any idea what's going to be a hit product. And

it's just giving yourself the room to fail and try it again. Just try a bunch of different stuff.

>> How do you know if a product category is not too saturated verse still having white space? I know that you have kind

white space? I know that you have kind of your original rubric, but at what point are you just like there's too many players in the space right now?

>> Well, it ends up being if it's a trend or not, right? So, like I think actually there's you should enter any category you you feel good about. Like I don't think there's any category that's too

overexposed. We sell wallets, dude. Like

overexposed. We sell wallets, dude. Like

you can buy wallets at Walmart for $10.

You can buy wallets at LVMH for $400.

Like there's price points all throughout there. It's the oldest. It's an old

there. It's the oldest. It's an old stupid stuffy category. Same thing with men's wedding bands, dude. You can buy them everywhere and we're [snorts] able to build an awesome business out of it.

So, I don't I don't believe in things being too crowded. It's like somebody out there is doing a shitty and you can do better than them. What you want to avoid is a trend that can just go away overnight, right? I I would avoid

overnight, right? I I would avoid collagen right now because health trends have this natural thing where collagen was really hot for like five to six years and then it kind of starts falling apart and then you see creatine's on the rise. We probably have two to four more

rise. We probably have two to four more years of creatine peaking and then it'll go down. Protein has been on a a ripper.

go down. Protein has been on a a ripper.

>> Yeah. For a long time, but like it probably goes down. So like you just want to avoid those type of trends.

>> Do you want to know what's next?

>> Fiber. Fiber is the new protein.

>> I may or may not spoke to a guy yesterday that's starting a fiber company with massive dro. You want to get in on this one, too. I'm not going to say his name. You want in on this one? He's good.

one? He's good.

>> Yeah, we're >> He's good. This guy gets it.

>> We're looking at the space, too, man. It

It makes so much sense.

>> Yeah. I think what's really really scary is again if it's evergreen and kind of has been tried and true for the test of time then you're fine but like if you make

your brand identity embedded in that single product like this creatine thing is this create I get it they're winning right now but that's dangerous totally >> because they don't have the ability to be malleable and iterate off it like having some sort of kind of core

identity about like I'm a health company and I can go into this this and this because that fad game I think I think a lot of people for playing with fire there.

>> I agree completely. Will from IQ Bar. Do

you know IQ Bar?

>> He is. I'm talking to him on Twitter right now. I want him on.

right now. I want him on.

>> Yeah, he's a gangster.

>> Yeah, he's fantastic. He has a he I'm stealing this from he's going to talk about in the episode. You got to bring this out. It's called trend surface

this out. It's called trend surface area, right? So, he chose IQ Bar

area, right? So, he chose IQ Bar specifically because he can be if like low fats in, he's low fat. If

gluten-free is in, he's gluten-free. If

protein's in, he's got protein.

>> Keto, he's he's hitting all them.

>> Yeah. So whatever whatever the trend is, he creates packaging and messaging for that trend, right? You compare that to kettle and fire. I I always talk about being bone broth. You don't want to be bone broth. Bone broth had this massive

bone broth. Bone broth had this massive spike. They got huge revenue, but then

spike. They got huge revenue, but then people don't want it anymore and it falls off like a cliff because people like trends, right? And that that's what we're talking about is like create cannot be anything else besides a create company, right? A creatine company. So

company, right? A creatine company. So

it's good for them when it's working, but there is the risk that like you're tied to the trend too much. They should

probably sell that company on the way up because that that's that's I don't know when I when I saw with Helium 10 that back end that was absolutely crazy to me that like you have to see some of these PDP pages of people making 10K plus on Amazon with creatine.

>> Like literally one or two pictures it looks like a fake Amazon PDP page and has over $10,000. You can't see on it how much they've spent on ads against it with the with this tool. Really really

interesting tool. But yeah, I couldn't believe what I saw.

>> Yeah. And

>> I got angry about what I was doing. I

was like why am I doing this?

>> Yeah. Yeah. people people are testing that almost none of them have creatine and it's and it's it's partially because creatine is actually very hard to put into gummies. It's like it's not it's

into gummies. It's like it's not it's not the natural state of it. Anyway,

that's like that's for for a different podcast for a different day. This

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I want to dive deeper into product. What

do you think are the biggest kind of profit margin killers? What are the things that people overlook when they're looking at profit margin?

>> Yeah, it always comes down to shipping.

So, the gross margin number we were talking about earlier, right? You said

you wanted gross margins at least at 75%. And then the big question I ask

75%. And then the big question I ask people is, are you including shipping to customers? Right? Because a lot of

customers? Right? Because a lot of people don't include shipping to customers in that. And it's like, okay, then your business is [ __ ] up. Because

every publicly traded company, that gross margin number you see is science and seal delivered cost to customers door, right? So it includes Amazon fees,

door, right? So it includes Amazon fees, it includes payment processing, it includes everything.

>> This includes 3PL, pickp pack, ship, they're charging you 15 cents to do a branded insert, all that little small minutia.

>> It's whatever it costs to get the sale, right? So like like you know Hermes will

right? So like like you know Hermes will even go so far as to include like the manufacturing of their good because they they do all their own manufacturing.

They have all their machines, right? So

like you you have to really dive in company by company to see what people are including in their gross margin.

Yeti has a gross margin of 51%. Because

they have wholesale distribution, they have all these shipping costs or whatever. And a lot of people just don't

whatever. And a lot of people just don't factor that in, right? They'll be like, I have 80% margin. They're talking about product margin, not gross margin, right?

They're like, no, my cogs were 20 bucks.

I sell it for 100 bucks. I'm like,

that's a different thing, right? So like

you have >> that's a completely irrelevant thing that's literally irrelevant to the business.

>> Yeah. What does it cost to get it to the person's store, right? And anyway,

that's like the biggest mistake I see people making all the [ __ ] time.

>> Yeah. I think also another thing too, we've had great success with this is there's also margin to be made on shipping. Understanding and knowing you

shipping. Understanding and knowing you can get your product to someone's door for X in in six days and charge them rush shipping for four or five stuff like that. I think that there's a huge

like that. I think that there's a huge game where people overlook analyzing how they can make net new dollars on actually the shipping rates.

>> Yeah. Look, and for 10 years, like the rule of thumb is just do free shipping.

I think that actually changed during COVID where you can actually start charging people for shipping. I bring up James Purse. Every [ __ ] James Purse

James Purse. Every [ __ ] James Purse order cost $7 to ship to your door. I'm

like, "Bro, I'm spending four grand. You

can't give me free shipping." And they just don't do it.

>> Yeah. We use free shipping. That's an

offer for us.

>> Yeah. Totally. There you go. with with a big AOV. When you're launching all these

big AOV. When you're launching all these new products, are you looking at them as basically like a new business unit or are they blended across the whole entire kind of company ecosystem?

>> No, it's a good question. We talk we talk about them as business units. So

like we have separate ad accounts, separate media buyers, separate like everything we do for everything else we duplicate over for these new business units. Now courses blend over like email

units. Now courses blend over like email is going to talk about the same [ __ ] to everybody, right? Offers are going to be

everybody, right? Offers are going to be for everybody. So there's some organic

for everybody. So there's some organic revenue spillover. But no, we're trying

revenue spillover. But no, we're trying to acquire Ring customers profitably.

We're trying to acquire phone case customers profitably, right? And we we look at that totally separate from everything else.

>> So mostly on the marketing side.

>> Yeah.

>> They have the like I think product development organizations are unique to every company, but like we have PMs, the product managers who manage specific

lines of business. They don't talk about wallets or whatever else. They're just

doing travel.

>> Makes sense. Tying a bow on the physical product. Are you more a speed guy or a

product. Are you more a speed guy or a perfection guy?

>> Oh, speed all the way, dude. There's

other people on the team who are perfection guys, but I am the speed guy.

>> Just get it out, get data, come back and optimize it.

>> Totally.

>> I like that. I could see that. Last

block before we go into the last block.

I want to talk about international expansion. I think we've had some people

expansion. I think we've had some people that have talked about it, but very, very lightly. I want to go as deep as we

very lightly. I want to go as deep as we can into there. I guess I'll just first start with what has been the biggest kind of learning lesson from scaling a ridge internationally.

>> So section 321 has gone away. Okay. And

for everyone listening section 321 was the ability to ship crossborder into America from other countries. Right now

Canada had the same thing. So you could have a a US warehouse and ship to Canada. You could have a Canadian

Canada. You could have a Canadian warehouse and ship to the US. All duty

and tariffree pretty seamlessly. And it

it built Timu and Shien like their whole business models were built on this one thing, right? for what? For various

thing, right? for what? For various

reasons, it's gone. The Trump

administration banned it, so it's gone.

With that being said, if you want to do international now, that means you have to have localized warehouses serving those markets. So, what does that look

those markets. So, what does that look like? If you're an apparel brand, you're

like? If you're an apparel brand, you're kind of [ __ ] It's really hard to have apparel. If you're doing seasonal drops

apparel. If you're doing seasonal drops available in all these different markets or you're charging a ton for international shipping and duties and tariffs and everything else, right? So,

I would you should come up with a business that has limited SKUs. Go going

back to Grunes. Why do I think they're they're the [ __ ] darling of all darlings? They're going to totally crush

darlings? They're going to totally crush it. Chad's the amazing operator for for

it. Chad's the amazing operator for for a bunch of different reasons, but Grunes can take their package, their container, and they can move it over to the UK.

They can import it there, have a localized warehouse, and ship it out.

And they all they have to do is just keep that one skew in stock like clockwork. Right. As many elements of

clockwork. Right. As many elements of possible of the production process moved over. So they probably Yeah, I'm sure

over. So they probably Yeah, I'm sure it's easy to send over in like big jugs the product, but then are you saying like the actual packaging and such is done locally or it's just it's cheap to get it over there and then just the 3PL?

>> What I'm what I'm saying so for actually take a step back. Here's here's what Rich does. Rich has localized

Rich does. Rich has localized warehouses. So we have a US warehouse, a

warehouses. So we have a US warehouse, a Canadian warehouse, a UK warehouse, an Australian warehouse, an EU, a Hong Kong warehouse. So we have and inside of

warehouse. So we have and inside of those markets we might have more than one warehouse, but there's seven different warehouses. So if you're in

different warehouses. So if you're in the UK and you place an order on Ridgeuk.co.uk,

Ridgeuk.co.uk,

that order will only ship from the UK.

So like we have a separate Shopify, we have a separate, you know, everything built out around UK customers. Why do we do that? It's we did it in 2020 or 2019

do that? It's we did it in 2020 or 2019 because we wanted the fastest, most localized experience possible. So you

can check out in pounds. You can only see inventory that's going to show up to your next door the next day. And we did that for two reasons. Payment processing

rates are way cheaper. So yeah, it's a pain in the ass having seven different Shopify stores, but payment processing rates in the UK are 0.5 versus 2.5 in the US or whatever.

>> Oh, I didn't know that.

>> Yeah. So really, really cheap payment processing rates. And then the cost to

processing rates. And then the cost to ship inside the UK is really cheap, right? So you can get next day shipping

right? So you can get next day shipping in the UK anywhere for like four bucks.

Okay? You know, to ship the cheap the cheapest you could possibly ship in America is five bucks, right? And that's

like the smallest package going wherever. really really cheap shipping

wherever. really really cheap shipping rates, really really low payment processing rates. So when you do the

processing rates. So when you do the math, my UK store runs totally independently, right? Different website,

independently, right? Different website, different Shopify, different everything.

And I can acquire those customers and I can they can have different price points. They can have all the different

points. They can have all the different type of localization can happen, right?

So we're only we're only able to do that because of the small nature of the products. So if you go in the UK, you

products. So if you go in the UK, you can't buy luggage from Rich, right? It's

just too it's too hard to get luggage over there, right? But you can buy our ring business and our wallet business and our phone case business. So anyway,

that's how we end up doing it. And the

lesson from that is if you want to do it the way Ridge does it, a couple things to consider. Since that has happened,

to consider. Since that has happened, Shopify has launched Shopify Markets Pro. I think they changed the name of

Pro. I think they changed the name of it, but like whatever their premium international thing is, the payment processing rate on that is at least 5%.

It could be 7%. So you could have a localized Shopify store at a 0.5% or do payments pro have one Shopify store do everywhere at 7%. So at a certain do the math at a certain percent a certain

Yeah. $100,000 in revenue or whatever,

Yeah. $100,000 in revenue or whatever, it's cheaper to have the localized store, right? So, think about your

store, right? So, think about your business. Think about that. Then think

business. Think about that. Then think

about if you have a business that can support an entire market with limited inventory, right? So, if you guys are

inventory, right? So, if you guys are doing art, probably not. You probably

just need too many prints, right?

>> We do licensing deals, too. So, we can license out the art and they have local production and they just run the business and we just get >> Oh, see. Yeah. That's

>> like a a distributor model is a good way to do it. But let's say, you know, going back to Grunes. Gruns has one flavor.

So, it doesn't matter where they [ __ ] actually even make it. Let's say they make it in America, they export it to the UK. Well, they don't do any seasonal

the UK. Well, they don't do any seasonal drops. So, like they don't have to

drops. So, like they don't have to manage [ __ ] shorts inventory and jacket inventory, whatever else. Every

month it's the same thing. So, it's

very, very easy to run, right?

>> And there's no marketing narrative. It's

just the same product over and over and over. It's just maybe sales, Black

over. It's just maybe sales, Black Friday, Cyber Monday, holidays, >> dude. And the whole the whole world's

>> dude. And the whole the whole world's globalized at this point, dude. China

does Black Friday, Cyber Monday. You

think we have Thanksgiving? It's like,

no, dude. The whole the whole world's globalized, man. Anyway, so the first

globalized, man. Anyway, so the first market I would start with, it used to be Canada because section 321, your US warehouse could fulfill Canada or vice versa. That's gone now. So, I think the

versa. That's gone now. So, I think the first market's the UK. They speak

English. They have enough money to buy stuff and the the shipping is super super cheap. Okay. Then the next market

super cheap. Okay. Then the next market I'd go to is Canada. Then I'd look at doing the EU as as a whole. The EU is hard because you if you're our website's only in English, so that we can get all of Belgium, we get all the Netherlands,

we get all the Nordics, we can get Switzerland, but then as soon as you get to like France, Germany, Spain, Italy, you have a 60% English penetration for.com shopping. So you have to start

for.com shopping. So you have to start doing more localization, right? Then you

have to start doing ads and localization, right? So like I am I

localization, right? So like I am I going to run German language wallet ads?

It's like maybe AI makes this a lot easier, but like the order of operations is UK, then Canada, then you go to the EU, Australia, maybe you end up doing maybe you just serve that from Hong Kong, just air shipping. But anyway,

>> so operational simplicity over demand in GA. So, so you're just even saying like you have crazy demand in India. You just say leave that alone

in India. You just say leave that alone because it's going to be too much of a pain in the ass.

>> Dude, I have never met a brand who successfully went to a market like India. Like I know people who have

India. Like I know people who have tried, but like it's really really hard, right? Until you get to the billions of

right? Until you get to the billions of dollars in scale, like it's just you're not going to make any goddamn money.

[laughter] And that's the other thing is people love these big international businesses.

Why am I so focused on localization? To

even go take a step back further. Why

don't I just ship all these orders from America, right? And it's because you are

America, right? And it's because you are probably losing so much goddamn money on shipping and you're not even paying attention to it. Yeah, you have orders coming in from the UK. Did you just air a pair of shoes to the UK? Okay. Do you

have any [ __ ] idea how expensive that is? Like it's $40, right? I've watched

is? Like it's $40, right? I've watched

brands lose, you know, the like we're doing $5 million international markets, spending $3 million on shipping, you're not going to make any money, dude. So,

it's it's why I think it's smarter for brands to actually shut off shipping to international markets until they really understand the costs. It's great advice.

When do you think it's the right time to start shipping outside the US? What is

what is that inflection point for a brand? Is it total revenue? Is it

brand? Is it total revenue? Is it

traffic under the notion that sequentially they should go in the countries that you mentioned?

>> Yeah, it it it comes down to to just total revenue, right? And you you'll see it in GA because you have orders coming in and then you have to determine if they're profitable or not. But probably

at also like when when can your business support it, right? Like okay, let's say you have one skew and it's working and you know it's going to work over there.

I would probably at $15 million set up the UK warehouse, right? And then maybe, you know, $20 million set up the Canadian warehouse, right? And then

maybe $50 million set up the EU warehouse just because the UK will do as much money as Canada or sorry, as California. That's the way to look at it. Canada will do as much

money as California. So just go in GA.

It just it just comes down to GDP, right? Have you heard the whole stat

right? Have you heard the whole stat that like California is the fourth largest GDP?

>> Yeah.

>> Yeah. It's bigger than those countries.

So there's more people in California than Canada. It's not like there's a big

than Canada. It's not like there's a big honeypot of revenue in in any one of these markets. So like start thinking

these markets. So like start thinking what would you do to have another California and is it worth all of the complexity? You can just look in GA

complexity? You can just look in GA what's your California revenue and then that determines going over there.

>> I like the blend of GA and a little chat GBT for GDP. I like that nice little little formula you have there. As far as fulfillment centers for people out there, how would they even just go about finding those fulfillment centers and those partners? How did you go about

those partners? How did you go about doing that? Did you have inbound and

doing that? Did you have inbound and people wanting to partner with you? Did

you just go on the internet and find random people? like what was that

random people? like what was that process to actually lock in those partnerships?

>> Well, your domestic 3PL probably has what they call a 4PL relationship with people abroad. Let's talk about the big

people abroad. Let's talk about the big 3PLs in America. There's Shipmunk, there ship Bob, there's Seco, there's Flexport just launched one. They they took over Shopify's old one. So, like those are

four big ones. There's probably another four really really big ones, right? And

if you're with any of the big ones, they'll they'll have what they call a fourth party logistic relationship. So

they will manage a relationship with a local warehouse in every market you want to go into. So if you want to go to Canada, they'll be like, "Okay, we have a 4PL there. They'll even present it like it's their own." It's not their own. I'm telling you right now, like

own. I'm telling you right now, like it's not their own. It's it's some other local warehouse provider. And they'll

manage that relationship for you. So

those tend to be pretty shitty. We ended

up actually going international through a company called Brand Access that just got bought by Passport. So like they're experts. If you want to talk to

experts. If you want to talk to Passport, they'll help you with whatever.

>> Great advice. I've never heard of of 4PLO. Last block we're gonna get into is

4PLO. Last block we're gonna get into is just quick strike. I'm just gonna fire off a ton of questions and we'll end with three or four questions I ask everybody. I guess first is is DTOC

everybody. I guess first is is DTOC dead?

Well, consumer brands are not dead and selling consumer brands directly to consumers is not dead. But the whole DTOC is here's

not dead. But the whole DTOC is here's all say DTOC 1.0 was pets.com. Okay? DTOC 2.0 was

was pets.com. Okay? DTOC 2.0 was allirds.com. DTDC 3.0 know is small is

allirds.com. DTDC 3.0 know is small is brands who just [ __ ] get it. So

they're like Gen Z kill killers on Tik Tok. They are people who do supplement

Tok. They are people who do supplement brands. They have high subscription.

brands. They have high subscription.

They have low skew count. They have

really small teams and they're just ninjas out there executing and making money. So DTOC 2.0 is totally dead,

money. So DTOC 2.0 is totally dead, right? Like DTOC 3.0 is actively

right? Like DTOC 3.0 is actively thriving and it's just it just like everything else. It just changes. I just

everything else. It just changes. I just

bumped into Dollar Shave Club. I'm

trying to get him on. That's the OG from from 2.0. Now,

from 2.0. Now, >> totally. Yeah. And an amazing exit. And

>> totally. Yeah. And an amazing exit. And

you know, here's the thing. The founder of Dollar Shave Club made a ton of [ __ ] money and totally killed it. Then it was owned by Unilver for a while. Then they sold it to a PE group. It still exists, but it's a shell of its former self or

whatever. And they're trying to figure

whatever. And they're trying to figure out like how to make this thing keep going. But it's like that is the path of

going. But it's like that is the path of most brands. These things just get kind

most brands. These things just get kind of plunked around >> up and down and up and down.

>> That's why you guys got to sell on the way up. The first year you have that's

way up. The first year you have that's plateaued. on the way down, you just

plateaued. on the way down, you just shot yourself in the leg.

>> As soon as you can get life-changing money, you deserve it to change your life. Like, imagine being like

life. Like, imagine being like you having it almost in your hand and then you [ __ ] it up and fumbling it.

If you can get life-changing money, don't be greedy. If you can get $5 million and like you can take your kids to school every single day and and then you like, "No, but I want 15 cuz I want a bigger house." And you [ __ ] that up.

It's like, dude, just take the [ __ ] money. A couple more. four types of

money. A couple more. four types of businesses service product SAS and content. You're starting over today.

content. You're starting over today.

Which do you pick and why?

>> Content. Because content is um like you you say the word leverage, but it's like Yeah. It's like it's the only thing that

Yeah. It's like it's the only thing that like it's a flywheel. It builds on itself, right? Like you shouldn't launch

itself, right? Like you shouldn't launch a consumer brand unless people know who you are, right? You have some sort of credibility, some sort of audience to sell into. Same thing with services,

sell into. Same thing with services, same thing with everything else. If

you're young, one, go get a job, learn something, become an expert at it, then talk to people about it. People want to hear about stuff, right? And then then you make a service based on that or you make a product based on that. You make a SAS based on that. But like content is

the first and best business.

>> Do you think the window to create content and build distribution and trust is is shrinking or do you think that's going to be forever? Obviously with AI, >> I think it is shrinking but slowly. But

here's here's what I'll say. You can you couldn't build Mr. Beast today, right?

this multiund million subscriber thing, right? You couldn't build that today,

right? You couldn't build that today, but you could build an awesome podcast that gets 5,000 listeners and like make a living off of that. And like that's what you should be shooting to do. The

future is like a bunch of more micro creators all being experts in their own thing. And you can make a ton of money

thing. And you can make a ton of money doing that, dude. Imagine a podcast about high frequency trading, right?

Would you listen to that? Probably not.

Super [ __ ] boring. But like the sponsor you'd get would give you like $5 million because nobody else is making content about that.

>> Yeah. understanding and knowing the niche that you're serving and then who are the people that are going to pay for those ears and eyes is huge and you've understood that with your podcast as as I do with mine is just knowing who

you're talking to and are you going down market to the masses low ticket or are you going to B2B SAS that have unlimited cash cact LTV is through the roof and then yeah I just think on the content

side people just give up and I've I've been up and down and up and down and up and down where I was on a 18 months in a row filming every day and then I stopped and I had a podcast and I stopped. And I

completely agree. For me, I think that content and media, not necessarily as the business, but I think content and media as the top of the pyramid flywheel is what gives you the leverage to drive any and all the things below which we

spoke about. That's how I see it.

spoke about. That's how I see it.

>> 100%. I think about it correctly. And

then on the burnout, it's super true, but it's like going to the gym. Finding

something that you can do consistently beats everything else. It's like if you like I'm going to the gym hard and like like you do it for three days you get sore then you skip three three weeks it's like you're not helping anybody right it's like that's why I think

Twitter people more people should post on Twitter because it's it's so easy gets you into creating content in a very very low easy form >> is the lowest of all low you you could do anything high if you want to be consistently consistent go on Twitter

and you can just spit out random six words I should probably do that more but that's a different conversation >> but also it lets you test ideas right before you do a podcast before you like do whatever Hey, here's the concept. Put

it out there in the world. And it took you no effort to actually start giving feedback. That's that's why I think it's

feedback. That's that's why I think it's a good platform.

>> Oh man, I'm just not on there. I got to do it. What do you think the keys are to

do it. What do you think the keys are to winning on Tik Tok shop today?

>> Well, dude, it's changing. I mean, what I would say is it has to be impulse price point. So, under 29 bucks, maybe

price point. So, under 29 bucks, maybe 39 bucks. But really has to be a good

39 bucks. But really has to be a good value for what it is, right? Shark Ninja

has the number one product right now in Tik Tok shop. We don't know the economics. Maybe they're spending a ton

economics. Maybe they're spending a ton of money super unprofitably, but it has to be impulseish.

Then it has to be female first. So it

doesn't have to be a female only product, but it has to be like women are going to buy it either for somebody or for themselves. And you have to have

for themselves. And you have to have spillover distribution. So like Tik Tok

spillover distribution. So like Tik Tok shop will only capture 5% of the value it creates. It'll it'll be on Amazon and

it creates. It'll it'll be on Amazon and Walmart.com and your own website. So if

you go through that checklist, do you know Hudson from Comfort?

>> Of course.

>> You got to get him on here, dude. He's

he's a crazy person.

>> Yeah, he's the number one, right? But he

does it perfectly. He has an awesome value product. He has, you know, very

value product. He has, you know, very strong female audience and then his all of his sales are happening on his website. Yeah, he does okay on Tik Tok

website. Yeah, he does okay on Tik Tok shops, but like he does hundreds of millions on all these other channels. So

like that's that's the pyramid for Tik Tok shops.

>> Really really interesting episode. It

was the first episode that really went off is Kenth from Neurogum. They were

the number one fastest growing Tik Tok shop in 2024. and the marriage between Amazon spend and Tik Tok spend. Talk

about like incrementality.

Exactly what you're saying. He just

turned off the spend on one and the revenue didn't change because it was just the leakage was just going going elsewhere.

>> We got to do dive deeper into that incrementality another time cuz I feel like a lot of people are just spending to spend probably. I think that that's a bigger problem than people probably think that they have. It's the classic

Oglevy quote. Half my marketing doesn't

Oglevy quote. Half my marketing doesn't work. I just don't know which half. With

work. I just don't know which half. With

incrementality, you try to figure out the half that doesn't work.

>> Like that one, dude. I love this, man. I

Googled you and I found this. You've

said Ridge only has two types of people.

Those who sell wallets and those who save money. What is that? And how how is

save money. What is that? And how how is that implemented in your company and your hiring and your systems? Is that

just in theory or is there is that how you hire? Is it this person or that

you hire? Is it this person or that person?

>> Yeah. Well, yeah, it's team make money, team lose or save money. It's like

there's only two teams. We had at one point 75 employees. So revenue has gone up every single year and I've been able to reduce headcount. A lot of that's AI but also it's just reducing bloat in the

business. It's like you end up having

business. It's like you end up having people who like their whole job is just reporting back what other person said and I'm like I can just post in Slack.

I'll read it. Right? So it's removing all all that bloat out and just getting to a core business where it's like very very easy to understand. Do you help us make more money via wholesale sales or

performance marketing or making creative or whatever? Or are you on ops, finance,

or whatever? Or are you on ops, finance, product, whatever, helping us save money? Are you cutting costs? Are you

money? Are you cutting costs? Are you

finding cogs to be removed or whatever else?

>> So, from an evaluation perspective, are you looking at a human and saying you're this person or that person? Or is it more kind of >> It's Yeah, it's it's it's people know exactly what team they're on.

>> Wow, I love that. How is your org chart?

Is it semiflat? Like how many different layers are there to it?

>> Well, a unique thing about our business is everybody can talk to me, right? I

think a maybe maybe it doesn't shock the audience, but a lot of companies like the CEO gets really far removed from the people doing the work. We have a daily standup where every single day every person in the company is on for an hour

and either they're talking or I'm talking and it's an o we're incredibly transparent about what's happening in this organization, right? So like

they'll know marketing performance or sales performance or big priorities coming out and I'm saying it or they're and they're giving me feedback and it's it's very very flat in that way. Before

this we had daily standup. I had a I had them come here referred from that. So it

happens an hour every single day and then it's you know me the executives and there's five or six of us then there's five or six VPs and then there's everybody else. So that's how many

everybody else. So that's how many layers there are.

>> I love that. I love that transparency and and the cadence there. What are the key things that you look to get across in that first meeting where it's companywide? Is it just this is our

companywide? Is it just this is our sprint for the week, the month, how we're pacing towards the quarterly goals? Is it like here are the big

goals? Is it like here are the big updates in the company? Like what are those big things that you always want to touch on?

>> Well, I have a VP of AI. His name's Adam and he he his standup's his baby. He

like runs the whole thing, right? So

Tuesdays we do sales performance. So

what happened in the past seven days, right? What worked, what didn't work.

right? What worked, what didn't work.

Wednesday we do ops and, you know, fulfillment and product updates. What's

on order? that's what's what's at risk, whatever else. Thursday is typically a

whatever else. Thursday is typically a product thing. And then Friday is me

product thing. And then Friday is me sharing like a company vision or we have a guest speaker come in or we talk about AI. And then Mondays it's just, you

AI. And then Mondays it's just, you know, we went over we're launching a new brand internally. So like today I had

brand internally. So like today I had like explain it to everybody what it is, when we're launching, what's it going to look like, all that type of stuff.

>> I love that. So just one big category in the company every single day basically.

>> Yeah.

>> Love that. How far ahead are you from a product perspective? Just curious. We

product perspective? Just curious. We

have 20 by the end of this [clears throat] month, we'll have all of 2026 planned. So, we have Q2 2026

2026 planned. So, we have Q2 2026 ordered. We have Q3 2026 planned and

ordered. We have Q3 2026 planned and then we have to just finish Q4 2026.

>> I don't know about that inventory life.

You have fun. All right, last three questions. Favorite book or podcast and

questions. Favorite book or podcast and why?

>> You know, I'm not I'm not a big book guy. I mean, probably zero to one like

guy. I mean, probably zero to one like anything Peter Teal's written. I just

bought Bagman by the guy who made Coach.

So I'm gonna I'm gonna read that. Coach

is an amazing story. Like Tapestry is an amazing holdco podcast. BG Squared. So

which is >> Oh yeah. The two guys.

>> Yeah.

>> Girly and >> Gersner. Isn't Isn't Gurley the other

>> Gersner. Isn't Isn't Gurley the other one?

>> Yeah. So So Brad Gurley and Brad Gersner, but Girly just left. He left

the pod. So

>> Oh wow.

>> Anyway, but that's a fantastic one. And

then dude, I listen to the operator's podcast all the time. [laughter]

>> I knew he was going to do it.

>> Yeah.

>> Sean has a podcast, guys. It's very,

very good. It's very, very granular on the ecom side. I mean, I've listened to it before. I highly recommend to anybody

it before. I highly recommend to anybody and I know you guys have a bunch of different offshoots happening. I think

you guys are doing God's work for the ecom community. I don't think there's

ecom community. I don't think there's many resources out there, period. I

think in aggregate all the people that you have speaking, it's just you guys are doing so much revenue and you guys are so big that anybody can learn about ecom with your podcast >> and it's niche ecom content. There's a

lot of people doing, you know, how to get started or whatever, but it's okay.

We have Hexcloud on there and Hexcloud will do almost a billion dollars this year and it's okay what's your org structure [laughter] stuff like that but yeah it's good >> I love it this is a big one you could take your time on this entrepreneur or

brand that you want to give flowers to and why >> well dude I mean there's so many good brands I the thing the thing people don't know about me is I'm a I'm actually like a brand dork

I spend so much goddamn money on on brands and shopping brands I think that are doing really well like I think Kith has been on top for a really long time.

>> I was just going to say that that I I saw you rocking a bunch of kit. I didn't

I didn't take you as a kid a hype guy.

>> Yeah. So, like I I just I you know, credit where credit's due. They just do fantastic collections that are very thoughtful. At the same point, like I

thoughtful. At the same point, like I mean uh ALD doing the same [ __ ] stuff. Totally crushing it. Probably

stuff. Totally crushing it. Probably

like the hype's died down a little bit on them, but they're they're doing great. I said earlier that I'm a huge

great. I said earlier that I'm a huge James Purse fan. I think they're doing better than anybody else. I Jeremy and Cassandra have a company called Kit.

They do like women's hair accessories.

So methodical about product expansion, you could learn a ton from these people, right?

>> What about an entrepreneur brand that's doing under 15 million? Anybody on your radar that you kind of see starting to bubble that you think has big upside?

>> So there's there's a lot of I mean there's a lot of good operators. I don't

know if they want their brands public or not because it's it's been so much that people want to build in silence right now. But look, you should I I'll say

now. But look, you should I I'll say Isaac has a company called Mini Katana.

huge huge YouTube channel. He kind of just built an agency. He has a candy brand that's that that was crushing it for a long time. So, I think Isaac's doing fantastic.

>> You know, David Herman is a behind the scenes ad guy. He's like pretty pretty >> I got to introduce him. Herman Digital.

>> Yeah. Yeah. But he's actually a partner in a brand that's doing incredible right now. And then Zack Stuck has three or

now. And then Zack Stuck has three or four brands that are all doing fantastic. Yeah, man. Look, I mean on

fantastic. Yeah, man. Look, I mean on there's a lot of these brands you'll meet in the 10 to 15 million and then very quickly they'll explode. There's a

company called Turtle Box. They do, you know, outdoor speakers and when I met them, they were probably doing 15. I

think they'll do 300 this year and it's like they're killing it. So, all those are great brands.

>> Love it. Um, how big do you think Rich can be?

>> There's a very clear path to a billion dollars a year in sales. Probably by the end of the decade. That is, you know, Tapestry, Coach, Coach does $6 billion a year in sales. They do a billion a year in men's. I often say internally, I'm

in men's. I often say internally, I'm like, there's no reason men should buy coach products, right? I never met a guy stoked about getting a coach product.

So, I think that's like a clear place we're we're moving into.

>> I agree with you on that. I don't know one male that has a coach product. Dude,

I had an amazing time. Where can they find you on the internet?

>> Just find me on Twitter, dude. There you

find me on LinkedIn and I'll be back on this podcast soon. So, we'll be doing it again.

>> Oh, man. Appreciate you. What's up,

guys? If you guys got this far in the episode, [music] I would assume that you enjoyed it. If you got any value, it

enjoyed it. If you got any value, it would mean the world if you hit the subscribe button, give it a like, post a comment, tell a friend. We could keep going bigger. Bigger guests, bigger

going bigger. Bigger guests, bigger locations, more value. See you in the next episode.