speaker-0: The one thing I'll mention that's more interesting that I just loved and everyone on our team loved and was just such so informative and so helpful and so colorful was we set up we called it Heidi How. It was like a how did you hear about us qualitative survey. And it was basically after you purchased, you'd get a plain text automated email that looked like I wrote it that would come from me and my email address. Absolutely.
speaker-1: Absolutely. I huge fan of surveying at the agency. We do so much CRO over here, and it's immediately we go, all right, we're launching surveys, and here's you know, we're gonna email some recent purchasers, we're gonna email, you know, there's a lot of different strategies that we do, but the post purchase is just so easy. They've already bought, just ask Honest ECommerce is a weekly podcast where we interview direct to consumer brand founders and leaders to find out what it takes to start, grow, and scale an online business today. Honest ECommerce is proudly produced by Electric Eye, a Shopify Plus partner helping e-commerce brands sell more with strategic design and development. Visit electriqueye.io for more information. Hey everybody, welcome back to another episode of Honest E-Commerce. Today I'm welcoming the show the co-founder and CEO of Ergata, the leading game studio for home fitness, Tom Allette. Welcome to the show. Thanks, Chase.
speaker-0: Appreciate you having me here.
speaker-1: Absolutely. It's a long time coming as we were joking about a few minutes ago. but so let's just get into it. For for those that are unaware, you know, what are what is what is the leading game studio for home fitness means? What what are you guys bringing to market over there? Yep.
speaker-0: So practically we sell a series of rowing machines with gaming content attached to them. So they're beautiful rowing machines are made out of wood, they're designed to look like furniture, they store compactly, they go in the home, and then they have a tablet on them and a content experience on them, you know, I think kind of Peloton or similar. But rather than that content experience being classes and instructor based content, it is there it's gaming. inspired content. when you're rowing, when you're working out, you are playing one of several different games. You might be racing against other people in the community. You might be moving through T D 2D space, you know, avoiding obstacles, collecting tokens. You might be doing any one of kind of several different game experiences that kind of entertain you, motivate you through the workout and kind of keep you hooked coming back, much like a video game or a sports or something like that.
speaker-1: Absolutely. that's amazing. So just I and obviously I don't want to distill it down, but some people on the audience are as dense as I am. So it's like it's you know, if we wanted to make it really simple, it's like it's Peloton, but a rowing machine, but games instead of instructors.
speaker-0: Yes, exactly. Well said.
speaker-1: Awesome. Great idea. Where did it come from? Take me back in time.
speaker-0: Yeah. So the the first I've always wanted to start a company. I've always like been really, really pumped to do that. And I frankly I'm surprised it took me so long to do it. I worked for other companies for a decade before I did it. First I found the people I wanted to start a company with, two people that I worked with for many years, and we would meet every week and come up with business ideas. like i i it was kind of the founders happened before this specific concept. And then we honed down and we had kind of two or three concepts that we were really excited about. And you know, and the one that became Argata was kind of like rowing machine content subscription, but different type of content than classes.
speaker-1: Yeah, how do we be unique? How do we differentiate? Yeah.
speaker-0: And right. And then and then that was like the concept. And it how we flesh that out. The biggest answer I have for you is what we call primary market research. So we did hundreds and hundreds of interviews with would-be customers, and we did a lot of a lot of survey work to hone down to hone in on exactly who our customer would be, what the like nature of their problem and need was, and what was likely to be able to solve that need. so we kind of really hone down on who was not addressed by classes, who didn't want classes, but who still wanted to work out and what would work for them. What were the times in their life where they were in the best shape? What what what motivates them to get out of bed in the morning? You know, what what what what's the what what what else kind of gets them through workouts or inspires them to be active or, you know, achieve other things? That was the biggest that you we we obviously did a bunch of, you know, Talking to investors in the space, talking to industry experts, internal, strategy sessions, all the all the other stuff. But but the real unique insights came from that primary market research and really like the qualitative information from those interviews and that survey work. yeah.
speaker-1: You mentioned the co founders came before the company. talk to me about that. How did you identify you know, what a what a good co founder would be? How many co founders do you have over there on the team? Just talk about that process a bit.
speaker-0: Yeah, there's three of us. we needed to work really well together, communicate really well together. There needed to be no surprises in terms of what type of people we were and how we worked together and what our strengths and weaknesses were. we had to give each other energy and we all had to get along. and the way that that happened was just like it was my favorite technical and non-technical person that I worked with at my last company for years. so it was it was kind of A good skill set match and we all worked well together individually and as a group. So there just weren't it was very de-risked. There was just not a lot of surprises. We had done a lot of different types of work together. and our skill sets complemented each other. We gave each other energy, we communicated well. and then we also went through this process to come up with business ideas and flesh them out together before we signed contracts incorporating a business together and allocating shares across across the group. so That was how we that was how I went about it. It was I was lucky enough to have worked with them before and kinda knew who they were and knew that it was gonna work well.
speaker-1: Absolutely. Yeah. It it's always, finding a a good business partner is just like, you know, anything in life, a good partner in anything, even in in marriage and whatnot. It's you gotta make sure that the communication is there. You can have tough conversations. and then another thing that I always like to point out when we're talking about these types of things on the show is like you kind of need someone that is has strengths where you have weaknesses or enjoys doing things that you maybe don't do because if you guys are or gals or whatever are both good at something and not good at the same things, then you know, there's gaps in your team and also why do you need them kind of.
speaker-0: Yeah, yeah, totally. my y I agree with that to a large to a large degree, but like I also think like you guys just need to get along and communicate well and work well together and give each other energy and like you can hire to fill gaps, you can bring in investors or advisors to fill gaps. You obviously need to like have someone that's good at sales, have someone that can code, you know, need you need some basics on the team. but you can always close gaps later, I think. as long as you all get along, communicate well, you know, work well together. and I believe you have to date before you marry and like starting a business with someone is is a is very there's a lot of legal paperwork similar to marriage that so it's it's kind of an intense commitment and you wanna know who you're getting to bed with.
speaker-1: Do you know what's going on with Clavio? When is the last time you explored what it can do? Clavio has been shipping tons of new AI data and automation features designed to help e commerce teams move faster, personalize better, and automate more of the work that used to take entire teams. Most brands are only using a fraction of what is already inside their Clavio account. Clavio is not just email and SMS anymore, it is your customer data platform, your life cycle marketing engine. Your analytics layer, and now your AI-assisted execution layer all in one place. That means your customer data updates in real time. Your segments stay current automatically. Your flows and campaigns all run off the same source of truth. And now AI can help predict churn risk, forecast spend, recommend next best products, generate campaign content, and optimize send timing across channels. The big unlock is speed and efficiency. There are fewer tools to manage, less dependency on engineering, less time moving data between systems, and a lower total cost of ownership across your marketing stack. And brands are seeing real results from leaning further into Clavio. Dollar Shave Club has reported over 30% reduction in total CRM stack costs after consolidating onto Clavio. Brands like Third Love have seen a 15x ROI from SMS after consolidating channels. And companies like Corksicle have grown flow revenue over 90% after bringing email and SMS together inside Clavio. Across our customer base, almost every single brand we work with today is using Clavio. That is just where serious e-commerce customer data and lifecycle infrastructures are living these days. If you're already on Clavio but you feel like you're not getting everything you can out of it, or you're just running multiple tools and want to simplify without losing power, I think this is worth your time. You should head on over to clavio.com slash honest to learn more. That's K L A V I Y O dot com slash honest to learn more about what Clavio can do for you today. The start of the business, you mentioned that you did quite a bit of research and surveying. Talk to me. how did you find people to talk to? that's I think there are a bunch of people out there with great ideas. And I think that validating it with talking to your ideal customer is a great thing to do. So how did you do it?
speaker-0: Yeah. I just kind of had no shame. So I like, you know, like, you know, start with your network, you start with who you know. Like, so you just talk to people that fit, you know, people in your professional network, personal network that fit the profile. then ask them at the end of the call to introduce them to two or three people that would be interested or excited by this. I would also like go to the gym and just approach random people. like I would I I I remember I went to Equinox in Williamsburg at the time. And I would just go there and I would walk up to people that were getting on the treadmill or the road machine or the bike and be like, why do you do this? What do you find in b boring or interesting about it? What would what would entertain you? Would you be open to this type of thing? Like, I don't know. Like I I would just approach random people and then once you had someone on the hook, like ask them if they had any other people that they'd be willing to introduce me to to and then I kind of built up a file of like. It was four or five hundred people of would-be customers that fit our ICP that were interested or engaged, that would give us time, or answer, generally would answer questions. and that was our first little customer pile that we like sold to, that would go to to poll, to to test concepts, to to do some live prototype reviews, stuff like that. So that was how I approached it, how we approached it.
speaker-1: Absolutely. And I want to point out here, you were not sitting behind a computer doing this. You went to
speaker-0: Yes. Yeah.
speaker-1: where your customer was. You had awkward conversations with them. You know, I think it's something that's come up before here is you have to at at the beginning you have to do the things that can't scale and you just kind of have to just just do the work.
speaker-0: Yeah, totally. Yeah, and the and the in pr like 'cause you get biased data from people that are in your network. You like it's worth doing, but like you get less biased data by just like walking up to random people that are about to get on a treadmill and and asking them questions in my experience. So it you know, I think you need both.
speaker-1: All right, so you you're getting all this awesome data from chatting with folks out in the real world. How long does it go from we have this idea of a better rowing machine with some sort of elevated content model to we have this beautiful rowing machine with this well thought out kind of gaming strategy? L what was the the the timeline? Yeah the
speaker-0: Concept we had, it was September 2018. We incorporated February 2019. So, you know, three months of fleshing it out, and then everyone was on board, and then we had to, you know, quit our job, sign docs, et cetera. And then we actually delivered products a year later, Q1 2020. and then we we we kind of did pre-sales, like, you know, and and and alphas and betas throughout twenty nineteen, but shipping a final GA hardware product with with everything at full price was Jan Feb twenty twenty.
speaker-1: That seems pretty quick. Did you guys already have an in with the the ecosystem or did you collaborate with people that had familiarity there?
speaker-0: We didn't have an end, none of us came from the fitness industry. the biggest challenge there, like s you know, software you can build and ship relatively quickly and iterate on. The biggest challenge there is obviously hardware. and that was not our strength or our interest. and our big unlock there was we we built a partnership with a manufacturer close by that had kind of manufactured a lot rowers and shipped a lot of rowers that were similar to what we wanted and already cut ahead. gone down the cost curve, had all the, component parts and inventory, on site, had all the supplier relationships and and, we obviously had to tweak that and, you know, source a tablet and, you know, do some other stuff. But that that was the big unlock in terms of speed to market was the water rower it and the the the manufacturing partners called Water Rover. They're based in Rhode Island. We could drive there in four hours from New York. it helped us get to market much more quickly because We could see them in person, we could go to their factory, we could iterate on stuff really quickly with them. And they had like, you know, done a lot of the work that we could just build on top of and tweak the things that we wanted to tweak. so that that was that was the biggest kind of unlock in terms of the speed to market.
speaker-1: Absolutely. Yeah. I always say, it's just with anything. It's, building a product, building a brand, like you know, us building the agency. It's like hire someone that has done exactly what you want to do before.
speaker-0: Yeah, yeah. Right.
speaker-1: That's the that's the biggest cheat code to all of this.
speaker-0: Totally.
speaker-1: What is the next big idea that could change your business? A pricing change? A new bundling strategy? Adding subscriptions? Tweaking your shipping offer? Most brands make these decisions based on gut feel. They roll out the change, hope for the best, and have no real idea if it helped or hurt their business. IntelliGems fixes that. It is an AI-powered testing platform that brings CRO level clarity to the decisions that actually move the needle. Not just button colors and headlines, but the big stuff. Pricing, offers, shipping, new apps, even major site changes. Brands like Ridge, Jones Road, and True Classics are using IntelliGems to test their most important decisions and see exactly how each one of those impacts profit before they commit. Momufuku used it to test promotional offers ahead of Black Friday and found the version that increased profit by about 28%. Mott and Bow ran structured pricing tests that drove roughly 30% more incremental profit. We use it at ElectricEye with almost every client we work with. And now IntelliGems has a free AI-powered audit that gives you three specific ideas that you can test on your store today. No commitment, no credit card, just three opportunities worth exploring. Head to intelligiems.io slash audit and get your free audit in just a few minutes. That's intelligims.io slash audit. IntelliGMS.io slash audit. You know, something that's also like about this idea and a lot of ideas out there. It's not groundbreaking as far as the technology or the the physical hardware, but it's just a novel idea. So it's an iteration on something that already exists. So it's like we can get, you know, we can get there pretty quick. We just need to find people that have have done this before.
speaker-0: Totally. And I would what I would add to that is know what your special sauce is and what it isn't. And our special sauce wasn't hardware and manufacturing. what it was fundamentally was this gaming content. No gaming content for cardio existed out there. So, you know, that had to be good. We couldn't outsource that. That had to be innovative. That had to work really well. And then the second thing was just packed. Yeah. packaging it all together, marketing it effectively, right? As you said, it's bringing things that exist out there together into a single brand and value proposition that was compelling for people. yeah, so we so hardware wasn't our special sauce. So we were willing to partner with someone and outsource it and like iterate lightly on something that existed out there in the market that was proven. whereas a lot of our competitors like were like, no, we need to like be like Apple and own everything soup to nuts and you know, design from scratch a rowing machine and, you know, and manufacture it in Taiwan and take two years to get it. And like that just wasn't our approach to that.
speaker-1: Well, funny thing about Apple is they did not own all of it at the beginning. They slowly started to build out those components. They only got on their own silicone, you know, in the past decade. I I I like remember when they launched it, which it is fantastic. Like, don't get me wrong. It's an amazing, it's amazing product. And I'm glad it entered the space to like make other people innovate. but yeah, I mean, their older stuff was just parts from IBM. Yeah, totally back in the the nineties. So it you gotta get your feet into the market and you know, you're not gonna be some insane vertically integrated business overnight.
speaker-0: Right. Right. You're not gonna be like a vertically integrated closed ecosystem like, you know, brand that owns everything, you know, in your first year of existence. You gotta kinda, you know, start somewhere and then build on that.
speaker-1: Let's talk about that first year though. So you you find this partnership. the other half of it is the the gaming content. Yeah. How does that iterate? And what is the first, I guess let's is it an an app? Is it an experience? Like what are you calling it in your in your sales process? And like what did you launch with?
speaker-0: Yeah, so it's, you know, technically speaking, it's an app, it's it's an Android app that lives on an Android tablet that sits on a rowing machine. we called it a digital membership or digital experience. We still call it that. And like, yeah, the MVP was three different kind of like rowing experiences, two games and then like a kind of basic open row, free row situation. So one game was races, it was a multiplayer game where you Braced against other people, looks kind like a simplified version of Mario Kart, but with a refined design. Another one we called Pulse, which was a single player game that was like, you know, get in get into different power zones and hold it for a certain period of time, you know, basically like interval-based training, gamified interval b interval-based training. And then this kind of like more basic, open row, you know, free row experience that was like had a sleek but very simple digital visualization of your speed data, your cadence data, whatever. and then within each of those each with within each of those two games, there were like hundreds of workout options. so you pick pick at a couple of different workouts or courses or whatever you want to call them. So that was the MVP. And like, yeah, the the most fun thing, or maybe one of the most fun things, was like conceive it, yeah, you know, coming up with the games and testing and iterating on them and building them. Like that, there just wasn't a real playbook for gaming content on cardio equipment. and we yeah, we just followed kind of like software product management, you know, best practices. And we would like come up with concepts and like test them before we wrote a line of code, like wit live with people, get responses, get reactions, and then build super basic prototypes. put them on, a couple hundred rowing machines that people would like test and we would look at abandoned, abandoned rate data, completion rate data, and then we get a lot of qual, survey based feedback from them. So yeah, that that it was kind of like very iterative. we, we like defined core product principles at, you know, up front. It's like, what is this and what is this not? And then within that boundary, you know, we could brainstorm, we could come up with a bunch of stuff. And then we would like, test it, iterate on it, and kind of get, you know, a bunch of customer feedback along the way, and, you know, before before rolling it out. So it's pretty kind of de risk by the time it was out there.
speaker-1: Yeah. That's amazing. So you got this whole thing pretty well fleshed out and you're ready to go to market. You said you launched with a pre order campaign. Was that correct?
speaker-0: So there was we yeah, we like launched like a I forget what we called it at the time, like a pre-sale or like a soft launch or something where you could like buy the rower and pay for it, but but it was gonna ship in, you know, two or three months or whatever. And we launched that at holiday twenty nineteen. But the but before that, maybe the and this is maybe interesting to to to you and your and your followers, is like the way that we got our first 500 customers and that we had this. install base of beta testers that had rowing machines in their home with tablets and our app installed that were willing to test all these products, you know, with the hardware in their, you know, in their basement or whatever, was that we with Water Rower, they basically had, you know, Water Rower had, you know, hundreds of thousands of rowing machines in homes already. And the reason that were they were willing to do this partnership with us was that their customers were asking them for digital solutions, digital products, content. And that wasn't their what they were good at. so part of the reason that you know we said we can solve that problem for you. and and and that was kind of the the the core of the partnership. And so what they let us do was like email their customer base and say, Hey, do you want digital products? If so, you can buy a little tablet to bolt onto your existing rowing machine for 200 bucks, 300 bucks, whatever it was, which was basically cost, and you can get you can test out for free this Ergata app. And so we acquired, you know. First 250 and then 500 customers with no marketing dollars, with just having water rowers send an email to their install base, you know, or a subset of their install base and selling them tablets and costs. Because you know, can get people to test software on their phone or on their computer, like, you know, relatively easily. But if it has to be on a rowing machine, you know, with a tablet, like it just gets harder and it's hard to acquire those customers. Like, cause people aren't gonna buy a $2,000 rower from a brand they've never heard of, like without a lot of, you know. press or affiliate or reviews or what have you. So that that was a that was ha what got us off the ground and those became our ultimately our first five hundred subscribers over the course of twenty nineteen. And then yeah, we s we did a pre launch around holiday twenty nineteen and then we started to ship and did an actual our our hard launch, and this is funny, our actual launch where we like did press and where promise shipping within one to two weeks was March I believe it was March twentieth, twenty twenty, and New York New York shut down for COVID, I think like two days later or two days before. It was like right around the time that COVID lockdowns started, which was like crazy. yeah.
speaker-1: You have prepped all year, and all that hard work is paying off. Your store is converting, the ads are working, and this is shaping up to be your best holiday season. But your 3PL can't keep up. Orders are backing up, customers are asking where their stuff is, the reviews are starting to turn. All that hard work, all that momentum, undone by a fulfillment partner that can't scale with you. This is a nightmare scenario, and it happens to brands every holiday season. Enter eFulfillment service. EFulfment Service is the 3PL that scales with you. They are family owned, they've been in business for over 25 years, and they're built specifically for growing direct-to-consumer brands. There are no setup fees, no minimums, and no long-term contracts. You only pay for what you use. If you're scared your 3PL can't keep up this holiday season, now is the time to reach out to eFulfillment service. Go to eFulfillmentservice.com/slash honest and get up to eight weeks of account fees completely waived. That's EFP. U L F I L L E N T S E R V I C E dot com slash H O N E S T e Fulfillment Service dot com slash honest. Inopportune time to launch in the moment. but I believe there was quite a big home fitness kind of boom during that. So once you know People got used to what was happening. I'm assuming you guys saw like a bit of an increase. And how were you getting in front of those folks? Were they just actively organically seeking out in home solutions or were you also doubling down and getting into paid media, earned media? Like what was your yeah, what was your go to market strategy? How are you getting more eyeballs on this?
speaker-0: Yeah, it was it was originally it th it was kind of iterative. so it was first you know, we'd obviously set up a website and email par like all all our owned channels. then we got into earned, so we did a big press event. I remember at CES in Jan twenty twenty that like got our first ten fifteen legit press hits. It like CNET and gadget, you know, whatever it was. And it was like and then it was like so if you Google Ergata, you're like, this is a legit brand and I can get like reviews from credible sources that I've heard of. And then we started to slowly scale up paid media from there, you know, starting with, you know, Google, Facebook. But basically like what we found out pretty quickly was the way that people would find about us, whether they would start searching for home fitness or home cardio or home growing machines. And then they you know they would that would that was kind of the start of their, you know, discovery process. And then we would show up in, you know, press roundups that would rank well in in, you know, page search ads, in like, you know, YouTube videos that would rank well, whatever whatever it was. But it was that that was the trigger. It was like a non-brand generic search term for home fitness equipment that would eventually lead them to Orgata and eventually to a purchase.
speaker-1: Yeah. it's definitely a considered purchase. It I would say it leans a little bit more towards luxury, just where it sits in the market. you know, I'm assuming that's an interesting customer journey and you already mentioned a a bit about it, but you know, how did you set up like the feedback loop to learn about how to improve your marketing, where to spend your dollars?
speaker-0: Yeah. The I mean, we did a lot of like normal best practice stuff. The the the one thing I'll mention that's kind of more interesting that I just loved and everyone on our team loved and was just such so informative and so helpful and so colorful was we set up we called it Heidi How. It was like a how did you hear about us qualitative survey. And it was basically after you purchased, you'd get a plain text automated email that l looked like I wrote it, that would come from me and my email address that was like Thank you so much for finding and purchasing Ergata. We're an early stage startup, our early customers mean the world to us. if you have two minutes, I'd love to hear from you on a couple of questions. And it was like, How did you find out about us? What were your biggest hesitations? Were there any reviews or materials that were particularly persuasive? And like, what got you over the hump? And like, is there anything else I should know? And I would read every single one. Everyone on the marketing team and product team would read every single one. I would often like, respond back to them and ask clarifying questions, and then all of those responses, and they were all qualitative, like would get dumped into one single doc. And then, you know, and we'd iterate on the questions over time. And like the response rate was super high at first and kind of went down over time. But that the you know, that was that was how we got just this super rich, colorful, qualitative picture of like who our customer was, how they found us, what was pers what were hesitations, what was persuasive, what would get them over the hum. how considered it was, was it a week, was it a month, was it a quarter, was it a year? who else did they what what were the com what was our competition? Was it just nothing or was it another rowing machine or was it Peloton or and all that was just fascinating. And that was how we got like the core basics of like who our customer was, what our journey looked like and what our marketing strategy should should look like and consider.
speaker-1: Absolutely. I huge fan of surveying at the agency. We do so much CRO over here. And it's immediately we go, all right, we're launching surveys, and here's, you know, we're gonna email some recent purchasers. We're gonna email, you know, there's a lot of different strategies that we do, but the post-purchase is just so easy. They've already bought, so just ask them, ask them some clarifying questions. And, you know, some of it is about the store and the experience, the bundle, the offer. Some of it's more, all of the stuff is useful to create those optimizations. And it's also like something that we're always, you know, saying it's like all this information we're learning that we're using to optimize a store, you can just give to your marketing team to help write better ad copy. You and you know, it's it's useful in all these different places.
speaker-0: And give your product team to understand the customer better. ever it's just such a rich and and interesting data set for everyone. particularly the qualitative like storytelling component of of of certain survey work.
speaker-1: Hey everybody, just a quick reminder. Please like this video and subscribe if you haven't. We're releasing interviews like this every week. So don't miss out. Now back to the interview. So the name of the show is Honest E commerce, and it it the conversation thus far has been you guys have had home runs left and right, knocking things out of the park, making the right choices. I know the truth though. It's you know, you know, do you guys make any missteps along the way that you can share? Yeah.
speaker-0: Definitely. the the biggest one that I like wish I could get back and that I tell people is just we raise too much money. Like, you know, we have a great business. It's very profitable. It's super consistent. You know, we're clearly solving a market need. Like, you know, our customers really, really like our products. Like, you know, there's a growth engine, there's a retention engine, there's a word of mouth engine, blah, blah, blah. But it's not a billion dollar IPO business, right? and and with with the kind of venture back startup space, there's this notion that you should raise as much money as you possibly can. And like there's this like gravity that pulls you towards like I'm gonna, you know, run a twenty billion dollar public company or whatever it is. And the right goal for us was probably for this type of business was probably like a 50 to 100 million dollar outcome. Rather than a $10 billion outcome. And that points you towards a specific capital structure and a specific amount of cash to raise. And we raised $35 million. That was in retrospect too much. And it was just, I honestly didn't that wasn't my goal. It just like it became such a hot space at the time. And there was just so much demand that and everyone, the all the energy was just like raise as much as you can at as high evaluation as you can. And yeah, that that's the one I would take back. I would I'd be clear about how big is this business gonna be realistically and what is my goal and then work backwards from that, how much money should I raise so that I can get there and that when I get there it's lucrative for all of our shareholders, common preferred, you know, employees, everyone.
speaker-1: Absolutely. Yeah. And I think that a lot of our audience can read into that a bit more and make their own kind of evaluation about that statement. And I think that's I think that's the first time anyone on the show has said something like that. So I I truly appreci appreciate that level of transparency there. It might help some people about to raise right now and on the fence about asking for more or or or just, you know, they might have a number in the head their head that they think it should be. and so hearing it from somebody that's been in that shoe in their shoes, you know. five, ten years down the line, yeah, I think that's super amazing. Great.
speaker-0: Great. And yeah, even now, if if it's a software business, you could probably get it off the ground for even less than you used to be able to do. So so, I think being super careful about how much money you raise and how big the outcome is really likely to be, and kind of sticking to your guns despite the like all the pressure in the venture ecosystem to say, you know, our TAM's a trillion dollars and, you know, we're gonna IPO for, you know, a hundred billion dollars in five year, whatever it is. Like it's just Not realistic for every business, obviously.
speaker-1: Absolutely. Now is there anything I didn't ask you about Tom that you think would resonate with our audience?
speaker-0: E-commerce and growth marketing, like it tends to be such a quant game. And the quants, people that are super quantitatively driven, tend to do well. And like it can be a very data-driven enterprise, which is great. And I'm and I'm all for that. But I I think having a clear perspective on what your brand is and how it shows up, and having a specific Design aesthetic that aligns with how you're pricing your product and who your customer is, and keeping that consistent over time is super, super, super important. And that's not really a quantitative thing. That's like, you know, knowing who your customer is and what their problem is and how you're solving it and how you're pricing your product and matching that to a brand identity and a product marketing strategy that. is consistent over time and that you don't change with, new data. I think we have gotten a lot of credit for having a premium design forward brand that people want that has some lifestyle appeal, that has some luxury appeal that not that our competitors don't have. and that's been as big a part of our marketing success as, channel optimization, creative optimization, conversion rate optimization, like I think that's really mattered a lot. like when you read when you read like, you know, the the when you do interviews, when you read the qualitative survey data, it's clear that that matters to people a lot. And that's been a that's kind of registered with our leads, with our customers as well. And that wasn't intuitive to me because I come from a very acquisition quant driven marketing background. And that was and brand was always like, that seems soft and fluffy and a waste of money, but it but it it really wasn't. And and having a clear concept of what your brand is and how you're gonna show up from a visual design, product marketing, messaging perspective, and being consistent about that, not changing it with the kind of wins, was was a good thing for us.
speaker-1: Absolutely. I think that that's something that really makes sense at the kind of investment that the product is for the the customer. Yeah. They wanna, you know, the the value is subjective and the one thing that increases perceived value, and you you could look right at Apple to this again coming up twice, is their aesthetic and their design is one hundred percent also in line with the value of the product. If if it If it was this and you could argue that you can get the same performance out there of similar products, for less price, but the you know, the packaging design, the experience, the unboxing, the s store you get it at, it you know, it isn't that that isn't the same experience.
speaker-0: Totally agree. Apple's a great example.
speaker-1: They tend to be a great example across the board.
speaker-0: No, they seem to keep coming up.
speaker-1: Awesome. Tom, I cannot thank you enough for coming on the show today and sharing all those amazing insights. Thank you.
speaker-0: Thank you so much, Chase. This has been great. I I'm I'm I'll come back anytime. I appreciate you having me on. It's been great.
speaker-1: Awesome. Thank you so much.
speaker-0: Thanks, Chase.
speaker-1: Absolutely. I huge fan of surveying at the agency. We do so much CRO over here, and it's immediately we go, all right, we're launching surveys, and here's you know, we're gonna email some recent purchasers, we're gonna email, you know, there's a lot of different strategies that we do, but the post purchase is just so easy. They've already bought, just ask Honest ECommerce is a weekly podcast where we interview direct to consumer brand founders and leaders to find out what it takes to start, grow, and scale an online business today. Honest ECommerce is proudly produced by Electric Eye, a Shopify Plus partner helping e-commerce brands sell more with strategic design and development. Visit electriqueye.io for more information. Hey everybody, welcome back to another episode of Honest E-Commerce. Today I'm welcoming the show the co-founder and CEO of Ergata, the leading game studio for home fitness, Tom Allette. Welcome to the show. Thanks, Chase.
speaker-0: Appreciate you having me here.
speaker-1: Absolutely. It's a long time coming as we were joking about a few minutes ago. but so let's just get into it. For for those that are unaware, you know, what are what is what is the leading game studio for home fitness means? What what are you guys bringing to market over there? Yep.
speaker-0: So practically we sell a series of rowing machines with gaming content attached to them. So they're beautiful rowing machines are made out of wood, they're designed to look like furniture, they store compactly, they go in the home, and then they have a tablet on them and a content experience on them, you know, I think kind of Peloton or similar. But rather than that content experience being classes and instructor based content, it is there it's gaming. inspired content. when you're rowing, when you're working out, you are playing one of several different games. You might be racing against other people in the community. You might be moving through T D 2D space, you know, avoiding obstacles, collecting tokens. You might be doing any one of kind of several different game experiences that kind of entertain you, motivate you through the workout and kind of keep you hooked coming back, much like a video game or a sports or something like that.
speaker-1: Absolutely. that's amazing. So just I and obviously I don't want to distill it down, but some people on the audience are as dense as I am. So it's like it's you know, if we wanted to make it really simple, it's like it's Peloton, but a rowing machine, but games instead of instructors.
speaker-0: Yes, exactly. Well said.
speaker-1: Awesome. Great idea. Where did it come from? Take me back in time.
speaker-0: Yeah. So the the first I've always wanted to start a company. I've always like been really, really pumped to do that. And I frankly I'm surprised it took me so long to do it. I worked for other companies for a decade before I did it. First I found the people I wanted to start a company with, two people that I worked with for many years, and we would meet every week and come up with business ideas. like i i it was kind of the founders happened before this specific concept. And then we honed down and we had kind of two or three concepts that we were really excited about. And you know, and the one that became Argata was kind of like rowing machine content subscription, but different type of content than classes.
speaker-1: Yeah, how do we be unique? How do we differentiate? Yeah.
speaker-0: And right. And then and then that was like the concept. And it how we flesh that out. The biggest answer I have for you is what we call primary market research. So we did hundreds and hundreds of interviews with would-be customers, and we did a lot of a lot of survey work to hone down to hone in on exactly who our customer would be, what the like nature of their problem and need was, and what was likely to be able to solve that need. so we kind of really hone down on who was not addressed by classes, who didn't want classes, but who still wanted to work out and what would work for them. What were the times in their life where they were in the best shape? What what what motivates them to get out of bed in the morning? You know, what what what what's the what what what else kind of gets them through workouts or inspires them to be active or, you know, achieve other things? That was the biggest that you we we obviously did a bunch of, you know, Talking to investors in the space, talking to industry experts, internal, strategy sessions, all the all the other stuff. But but the real unique insights came from that primary market research and really like the qualitative information from those interviews and that survey work. yeah.
speaker-1: You mentioned the co founders came before the company. talk to me about that. How did you identify you know, what a what a good co founder would be? How many co founders do you have over there on the team? Just talk about that process a bit.
speaker-0: Yeah, there's three of us. we needed to work really well together, communicate really well together. There needed to be no surprises in terms of what type of people we were and how we worked together and what our strengths and weaknesses were. we had to give each other energy and we all had to get along. and the way that that happened was just like it was my favorite technical and non-technical person that I worked with at my last company for years. so it was it was kind of A good skill set match and we all worked well together individually and as a group. So there just weren't it was very de-risked. There was just not a lot of surprises. We had done a lot of different types of work together. and our skill sets complemented each other. We gave each other energy, we communicated well. and then we also went through this process to come up with business ideas and flesh them out together before we signed contracts incorporating a business together and allocating shares across across the group. so That was how we that was how I went about it. It was I was lucky enough to have worked with them before and kinda knew who they were and knew that it was gonna work well.
speaker-1: Absolutely. Yeah. It it's always, finding a a good business partner is just like, you know, anything in life, a good partner in anything, even in in marriage and whatnot. It's you gotta make sure that the communication is there. You can have tough conversations. and then another thing that I always like to point out when we're talking about these types of things on the show is like you kind of need someone that is has strengths where you have weaknesses or enjoys doing things that you maybe don't do because if you guys are or gals or whatever are both good at something and not good at the same things, then you know, there's gaps in your team and also why do you need them kind of.
speaker-0: Yeah, yeah, totally. my y I agree with that to a large to a large degree, but like I also think like you guys just need to get along and communicate well and work well together and give each other energy and like you can hire to fill gaps, you can bring in investors or advisors to fill gaps. You obviously need to like have someone that's good at sales, have someone that can code, you know, need you need some basics on the team. but you can always close gaps later, I think. as long as you all get along, communicate well, you know, work well together. and I believe you have to date before you marry and like starting a business with someone is is a is very there's a lot of legal paperwork similar to marriage that so it's it's kind of an intense commitment and you wanna know who you're getting to bed with.
speaker-1: Do you know what's going on with Clavio? When is the last time you explored what it can do? Clavio has been shipping tons of new AI data and automation features designed to help e commerce teams move faster, personalize better, and automate more of the work that used to take entire teams. Most brands are only using a fraction of what is already inside their Clavio account. Clavio is not just email and SMS anymore, it is your customer data platform, your life cycle marketing engine. Your analytics layer, and now your AI-assisted execution layer all in one place. That means your customer data updates in real time. Your segments stay current automatically. Your flows and campaigns all run off the same source of truth. And now AI can help predict churn risk, forecast spend, recommend next best products, generate campaign content, and optimize send timing across channels. The big unlock is speed and efficiency. There are fewer tools to manage, less dependency on engineering, less time moving data between systems, and a lower total cost of ownership across your marketing stack. And brands are seeing real results from leaning further into Clavio. Dollar Shave Club has reported over 30% reduction in total CRM stack costs after consolidating onto Clavio. Brands like Third Love have seen a 15x ROI from SMS after consolidating channels. And companies like Corksicle have grown flow revenue over 90% after bringing email and SMS together inside Clavio. Across our customer base, almost every single brand we work with today is using Clavio. That is just where serious e-commerce customer data and lifecycle infrastructures are living these days. If you're already on Clavio but you feel like you're not getting everything you can out of it, or you're just running multiple tools and want to simplify without losing power, I think this is worth your time. You should head on over to clavio.com slash honest to learn more. That's K L A V I Y O dot com slash honest to learn more about what Clavio can do for you today. The start of the business, you mentioned that you did quite a bit of research and surveying. Talk to me. how did you find people to talk to? that's I think there are a bunch of people out there with great ideas. And I think that validating it with talking to your ideal customer is a great thing to do. So how did you do it?
speaker-0: Yeah. I just kind of had no shame. So I like, you know, like, you know, start with your network, you start with who you know. Like, so you just talk to people that fit, you know, people in your professional network, personal network that fit the profile. then ask them at the end of the call to introduce them to two or three people that would be interested or excited by this. I would also like go to the gym and just approach random people. like I would I I I remember I went to Equinox in Williamsburg at the time. And I would just go there and I would walk up to people that were getting on the treadmill or the road machine or the bike and be like, why do you do this? What do you find in b boring or interesting about it? What would what would entertain you? Would you be open to this type of thing? Like, I don't know. Like I I would just approach random people and then once you had someone on the hook, like ask them if they had any other people that they'd be willing to introduce me to to and then I kind of built up a file of like. It was four or five hundred people of would-be customers that fit our ICP that were interested or engaged, that would give us time, or answer, generally would answer questions. and that was our first little customer pile that we like sold to, that would go to to poll, to to test concepts, to to do some live prototype reviews, stuff like that. So that was how I approached it, how we approached it.
speaker-1: Absolutely. And I want to point out here, you were not sitting behind a computer doing this. You went to
speaker-0: Yes. Yeah.
speaker-1: where your customer was. You had awkward conversations with them. You know, I think it's something that's come up before here is you have to at at the beginning you have to do the things that can't scale and you just kind of have to just just do the work.
speaker-0: Yeah, totally. Yeah, and the and the in pr like 'cause you get biased data from people that are in your network. You like it's worth doing, but like you get less biased data by just like walking up to random people that are about to get on a treadmill and and asking them questions in my experience. So it you know, I think you need both.
speaker-1: All right, so you you're getting all this awesome data from chatting with folks out in the real world. How long does it go from we have this idea of a better rowing machine with some sort of elevated content model to we have this beautiful rowing machine with this well thought out kind of gaming strategy? L what was the the the timeline? Yeah the
speaker-0: Concept we had, it was September 2018. We incorporated February 2019. So, you know, three months of fleshing it out, and then everyone was on board, and then we had to, you know, quit our job, sign docs, et cetera. And then we actually delivered products a year later, Q1 2020. and then we we we kind of did pre-sales, like, you know, and and and alphas and betas throughout twenty nineteen, but shipping a final GA hardware product with with everything at full price was Jan Feb twenty twenty.
speaker-1: That seems pretty quick. Did you guys already have an in with the the ecosystem or did you collaborate with people that had familiarity there?
speaker-0: We didn't have an end, none of us came from the fitness industry. the biggest challenge there, like s you know, software you can build and ship relatively quickly and iterate on. The biggest challenge there is obviously hardware. and that was not our strength or our interest. and our big unlock there was we we built a partnership with a manufacturer close by that had kind of manufactured a lot rowers and shipped a lot of rowers that were similar to what we wanted and already cut ahead. gone down the cost curve, had all the, component parts and inventory, on site, had all the supplier relationships and and, we obviously had to tweak that and, you know, source a tablet and, you know, do some other stuff. But that that was the big unlock in terms of speed to market was the water rower it and the the the manufacturing partners called Water Rover. They're based in Rhode Island. We could drive there in four hours from New York. it helped us get to market much more quickly because We could see them in person, we could go to their factory, we could iterate on stuff really quickly with them. And they had like, you know, done a lot of the work that we could just build on top of and tweak the things that we wanted to tweak. so that that was that was the biggest kind of unlock in terms of the speed to market.
speaker-1: Absolutely. Yeah. I always say, it's just with anything. It's, building a product, building a brand, like you know, us building the agency. It's like hire someone that has done exactly what you want to do before.
speaker-0: Yeah, yeah. Right.
speaker-1: That's the that's the biggest cheat code to all of this.
speaker-0: Totally.
speaker-1: What is the next big idea that could change your business? A pricing change? A new bundling strategy? Adding subscriptions? Tweaking your shipping offer? Most brands make these decisions based on gut feel. They roll out the change, hope for the best, and have no real idea if it helped or hurt their business. IntelliGems fixes that. It is an AI-powered testing platform that brings CRO level clarity to the decisions that actually move the needle. Not just button colors and headlines, but the big stuff. Pricing, offers, shipping, new apps, even major site changes. Brands like Ridge, Jones Road, and True Classics are using IntelliGems to test their most important decisions and see exactly how each one of those impacts profit before they commit. Momufuku used it to test promotional offers ahead of Black Friday and found the version that increased profit by about 28%. Mott and Bow ran structured pricing tests that drove roughly 30% more incremental profit. We use it at ElectricEye with almost every client we work with. And now IntelliGems has a free AI-powered audit that gives you three specific ideas that you can test on your store today. No commitment, no credit card, just three opportunities worth exploring. Head to intelligiems.io slash audit and get your free audit in just a few minutes. That's intelligims.io slash audit. IntelliGMS.io slash audit. You know, something that's also like about this idea and a lot of ideas out there. It's not groundbreaking as far as the technology or the the physical hardware, but it's just a novel idea. So it's an iteration on something that already exists. So it's like we can get, you know, we can get there pretty quick. We just need to find people that have have done this before.
speaker-0: Totally. And I would what I would add to that is know what your special sauce is and what it isn't. And our special sauce wasn't hardware and manufacturing. what it was fundamentally was this gaming content. No gaming content for cardio existed out there. So, you know, that had to be good. We couldn't outsource that. That had to be innovative. That had to work really well. And then the second thing was just packed. Yeah. packaging it all together, marketing it effectively, right? As you said, it's bringing things that exist out there together into a single brand and value proposition that was compelling for people. yeah, so we so hardware wasn't our special sauce. So we were willing to partner with someone and outsource it and like iterate lightly on something that existed out there in the market that was proven. whereas a lot of our competitors like were like, no, we need to like be like Apple and own everything soup to nuts and you know, design from scratch a rowing machine and, you know, and manufacture it in Taiwan and take two years to get it. And like that just wasn't our approach to that.
speaker-1: Well, funny thing about Apple is they did not own all of it at the beginning. They slowly started to build out those components. They only got on their own silicone, you know, in the past decade. I I I like remember when they launched it, which it is fantastic. Like, don't get me wrong. It's an amazing, it's amazing product. And I'm glad it entered the space to like make other people innovate. but yeah, I mean, their older stuff was just parts from IBM. Yeah, totally back in the the nineties. So it you gotta get your feet into the market and you know, you're not gonna be some insane vertically integrated business overnight.
speaker-0: Right. Right. You're not gonna be like a vertically integrated closed ecosystem like, you know, brand that owns everything, you know, in your first year of existence. You gotta kinda, you know, start somewhere and then build on that.
speaker-1: Let's talk about that first year though. So you you find this partnership. the other half of it is the the gaming content. Yeah. How does that iterate? And what is the first, I guess let's is it an an app? Is it an experience? Like what are you calling it in your in your sales process? And like what did you launch with?
speaker-0: Yeah, so it's, you know, technically speaking, it's an app, it's it's an Android app that lives on an Android tablet that sits on a rowing machine. we called it a digital membership or digital experience. We still call it that. And like, yeah, the MVP was three different kind of like rowing experiences, two games and then like a kind of basic open row, free row situation. So one game was races, it was a multiplayer game where you Braced against other people, looks kind like a simplified version of Mario Kart, but with a refined design. Another one we called Pulse, which was a single player game that was like, you know, get in get into different power zones and hold it for a certain period of time, you know, basically like interval-based training, gamified interval b interval-based training. And then this kind of like more basic, open row, you know, free row experience that was like had a sleek but very simple digital visualization of your speed data, your cadence data, whatever. and then within each of those each with within each of those two games, there were like hundreds of workout options. so you pick pick at a couple of different workouts or courses or whatever you want to call them. So that was the MVP. And like, yeah, the the most fun thing, or maybe one of the most fun things, was like conceive it, yeah, you know, coming up with the games and testing and iterating on them and building them. Like that, there just wasn't a real playbook for gaming content on cardio equipment. and we yeah, we just followed kind of like software product management, you know, best practices. And we would like come up with concepts and like test them before we wrote a line of code, like wit live with people, get responses, get reactions, and then build super basic prototypes. put them on, a couple hundred rowing machines that people would like test and we would look at abandoned, abandoned rate data, completion rate data, and then we get a lot of qual, survey based feedback from them. So yeah, that that it was kind of like very iterative. we, we like defined core product principles at, you know, up front. It's like, what is this and what is this not? And then within that boundary, you know, we could brainstorm, we could come up with a bunch of stuff. And then we would like, test it, iterate on it, and kind of get, you know, a bunch of customer feedback along the way, and, you know, before before rolling it out. So it's pretty kind of de risk by the time it was out there.
speaker-1: Yeah. That's amazing. So you got this whole thing pretty well fleshed out and you're ready to go to market. You said you launched with a pre order campaign. Was that correct?
speaker-0: So there was we yeah, we like launched like a I forget what we called it at the time, like a pre-sale or like a soft launch or something where you could like buy the rower and pay for it, but but it was gonna ship in, you know, two or three months or whatever. And we launched that at holiday twenty nineteen. But the but before that, maybe the and this is maybe interesting to to to you and your and your followers, is like the way that we got our first 500 customers and that we had this. install base of beta testers that had rowing machines in their home with tablets and our app installed that were willing to test all these products, you know, with the hardware in their, you know, in their basement or whatever, was that we with Water Rower, they basically had, you know, Water Rower had, you know, hundreds of thousands of rowing machines in homes already. And the reason that were they were willing to do this partnership with us was that their customers were asking them for digital solutions, digital products, content. And that wasn't their what they were good at. so part of the reason that you know we said we can solve that problem for you. and and and that was kind of the the the core of the partnership. And so what they let us do was like email their customer base and say, Hey, do you want digital products? If so, you can buy a little tablet to bolt onto your existing rowing machine for 200 bucks, 300 bucks, whatever it was, which was basically cost, and you can get you can test out for free this Ergata app. And so we acquired, you know. First 250 and then 500 customers with no marketing dollars, with just having water rowers send an email to their install base, you know, or a subset of their install base and selling them tablets and costs. Because you know, can get people to test software on their phone or on their computer, like, you know, relatively easily. But if it has to be on a rowing machine, you know, with a tablet, like it just gets harder and it's hard to acquire those customers. Like, cause people aren't gonna buy a $2,000 rower from a brand they've never heard of, like without a lot of, you know. press or affiliate or reviews or what have you. So that that was a that was ha what got us off the ground and those became our ultimately our first five hundred subscribers over the course of twenty nineteen. And then yeah, we s we did a pre launch around holiday twenty nineteen and then we started to ship and did an actual our our hard launch, and this is funny, our actual launch where we like did press and where promise shipping within one to two weeks was March I believe it was March twentieth, twenty twenty, and New York New York shut down for COVID, I think like two days later or two days before. It was like right around the time that COVID lockdowns started, which was like crazy. yeah.
speaker-1: You have prepped all year, and all that hard work is paying off. Your store is converting, the ads are working, and this is shaping up to be your best holiday season. But your 3PL can't keep up. Orders are backing up, customers are asking where their stuff is, the reviews are starting to turn. All that hard work, all that momentum, undone by a fulfillment partner that can't scale with you. This is a nightmare scenario, and it happens to brands every holiday season. Enter eFulfillment service. EFulfment Service is the 3PL that scales with you. They are family owned, they've been in business for over 25 years, and they're built specifically for growing direct-to-consumer brands. There are no setup fees, no minimums, and no long-term contracts. You only pay for what you use. If you're scared your 3PL can't keep up this holiday season, now is the time to reach out to eFulfillment service. Go to eFulfillmentservice.com/slash honest and get up to eight weeks of account fees completely waived. That's EFP. U L F I L L E N T S E R V I C E dot com slash H O N E S T e Fulfillment Service dot com slash honest. Inopportune time to launch in the moment. but I believe there was quite a big home fitness kind of boom during that. So once you know People got used to what was happening. I'm assuming you guys saw like a bit of an increase. And how were you getting in front of those folks? Were they just actively organically seeking out in home solutions or were you also doubling down and getting into paid media, earned media? Like what was your yeah, what was your go to market strategy? How are you getting more eyeballs on this?
speaker-0: Yeah, it was it was originally it th it was kind of iterative. so it was first you know, we'd obviously set up a website and email par like all all our owned channels. then we got into earned, so we did a big press event. I remember at CES in Jan twenty twenty that like got our first ten fifteen legit press hits. It like CNET and gadget, you know, whatever it was. And it was like and then it was like so if you Google Ergata, you're like, this is a legit brand and I can get like reviews from credible sources that I've heard of. And then we started to slowly scale up paid media from there, you know, starting with, you know, Google, Facebook. But basically like what we found out pretty quickly was the way that people would find about us, whether they would start searching for home fitness or home cardio or home growing machines. And then they you know they would that would that was kind of the start of their, you know, discovery process. And then we would show up in, you know, press roundups that would rank well in in, you know, page search ads, in like, you know, YouTube videos that would rank well, whatever whatever it was. But it was that that was the trigger. It was like a non-brand generic search term for home fitness equipment that would eventually lead them to Orgata and eventually to a purchase.
speaker-1: Yeah. it's definitely a considered purchase. It I would say it leans a little bit more towards luxury, just where it sits in the market. you know, I'm assuming that's an interesting customer journey and you already mentioned a a bit about it, but you know, how did you set up like the feedback loop to learn about how to improve your marketing, where to spend your dollars?
speaker-0: Yeah. The I mean, we did a lot of like normal best practice stuff. The the the one thing I'll mention that's kind of more interesting that I just loved and everyone on our team loved and was just such so informative and so helpful and so colorful was we set up we called it Heidi How. It was like a how did you hear about us qualitative survey. And it was basically after you purchased, you'd get a plain text automated email that l looked like I wrote it, that would come from me and my email address that was like Thank you so much for finding and purchasing Ergata. We're an early stage startup, our early customers mean the world to us. if you have two minutes, I'd love to hear from you on a couple of questions. And it was like, How did you find out about us? What were your biggest hesitations? Were there any reviews or materials that were particularly persuasive? And like, what got you over the hump? And like, is there anything else I should know? And I would read every single one. Everyone on the marketing team and product team would read every single one. I would often like, respond back to them and ask clarifying questions, and then all of those responses, and they were all qualitative, like would get dumped into one single doc. And then, you know, and we'd iterate on the questions over time. And like the response rate was super high at first and kind of went down over time. But that the you know, that was that was how we got just this super rich, colorful, qualitative picture of like who our customer was, how they found us, what was pers what were hesitations, what was persuasive, what would get them over the hum. how considered it was, was it a week, was it a month, was it a quarter, was it a year? who else did they what what were the com what was our competition? Was it just nothing or was it another rowing machine or was it Peloton or and all that was just fascinating. And that was how we got like the core basics of like who our customer was, what our journey looked like and what our marketing strategy should should look like and consider.
speaker-1: Absolutely. I huge fan of surveying at the agency. We do so much CRO over here. And it's immediately we go, all right, we're launching surveys, and here's, you know, we're gonna email some recent purchasers. We're gonna email, you know, there's a lot of different strategies that we do, but the post-purchase is just so easy. They've already bought, so just ask them, ask them some clarifying questions. And, you know, some of it is about the store and the experience, the bundle, the offer. Some of it's more, all of the stuff is useful to create those optimizations. And it's also like something that we're always, you know, saying it's like all this information we're learning that we're using to optimize a store, you can just give to your marketing team to help write better ad copy. You and you know, it's it's useful in all these different places.
speaker-0: And give your product team to understand the customer better. ever it's just such a rich and and interesting data set for everyone. particularly the qualitative like storytelling component of of of certain survey work.
speaker-1: Hey everybody, just a quick reminder. Please like this video and subscribe if you haven't. We're releasing interviews like this every week. So don't miss out. Now back to the interview. So the name of the show is Honest E commerce, and it it the conversation thus far has been you guys have had home runs left and right, knocking things out of the park, making the right choices. I know the truth though. It's you know, you know, do you guys make any missteps along the way that you can share? Yeah.
speaker-0: Definitely. the the biggest one that I like wish I could get back and that I tell people is just we raise too much money. Like, you know, we have a great business. It's very profitable. It's super consistent. You know, we're clearly solving a market need. Like, you know, our customers really, really like our products. Like, you know, there's a growth engine, there's a retention engine, there's a word of mouth engine, blah, blah, blah. But it's not a billion dollar IPO business, right? and and with with the kind of venture back startup space, there's this notion that you should raise as much money as you possibly can. And like there's this like gravity that pulls you towards like I'm gonna, you know, run a twenty billion dollar public company or whatever it is. And the right goal for us was probably for this type of business was probably like a 50 to 100 million dollar outcome. Rather than a $10 billion outcome. And that points you towards a specific capital structure and a specific amount of cash to raise. And we raised $35 million. That was in retrospect too much. And it was just, I honestly didn't that wasn't my goal. It just like it became such a hot space at the time. And there was just so much demand that and everyone, the all the energy was just like raise as much as you can at as high evaluation as you can. And yeah, that that's the one I would take back. I would I'd be clear about how big is this business gonna be realistically and what is my goal and then work backwards from that, how much money should I raise so that I can get there and that when I get there it's lucrative for all of our shareholders, common preferred, you know, employees, everyone.
speaker-1: Absolutely. Yeah. And I think that a lot of our audience can read into that a bit more and make their own kind of evaluation about that statement. And I think that's I think that's the first time anyone on the show has said something like that. So I I truly appreci appreciate that level of transparency there. It might help some people about to raise right now and on the fence about asking for more or or or just, you know, they might have a number in the head their head that they think it should be. and so hearing it from somebody that's been in that shoe in their shoes, you know. five, ten years down the line, yeah, I think that's super amazing. Great.
speaker-0: Great. And yeah, even now, if if it's a software business, you could probably get it off the ground for even less than you used to be able to do. So so, I think being super careful about how much money you raise and how big the outcome is really likely to be, and kind of sticking to your guns despite the like all the pressure in the venture ecosystem to say, you know, our TAM's a trillion dollars and, you know, we're gonna IPO for, you know, a hundred billion dollars in five year, whatever it is. Like it's just Not realistic for every business, obviously.
speaker-1: Absolutely. Now is there anything I didn't ask you about Tom that you think would resonate with our audience?
speaker-0: E-commerce and growth marketing, like it tends to be such a quant game. And the quants, people that are super quantitatively driven, tend to do well. And like it can be a very data-driven enterprise, which is great. And I'm and I'm all for that. But I I think having a clear perspective on what your brand is and how it shows up, and having a specific Design aesthetic that aligns with how you're pricing your product and who your customer is, and keeping that consistent over time is super, super, super important. And that's not really a quantitative thing. That's like, you know, knowing who your customer is and what their problem is and how you're solving it and how you're pricing your product and matching that to a brand identity and a product marketing strategy that. is consistent over time and that you don't change with, new data. I think we have gotten a lot of credit for having a premium design forward brand that people want that has some lifestyle appeal, that has some luxury appeal that not that our competitors don't have. and that's been as big a part of our marketing success as, channel optimization, creative optimization, conversion rate optimization, like I think that's really mattered a lot. like when you read when you read like, you know, the the when you do interviews, when you read the qualitative survey data, it's clear that that matters to people a lot. And that's been a that's kind of registered with our leads, with our customers as well. And that wasn't intuitive to me because I come from a very acquisition quant driven marketing background. And that was and brand was always like, that seems soft and fluffy and a waste of money, but it but it it really wasn't. And and having a clear concept of what your brand is and how you're gonna show up from a visual design, product marketing, messaging perspective, and being consistent about that, not changing it with the kind of wins, was was a good thing for us.
speaker-1: Absolutely. I think that that's something that really makes sense at the kind of investment that the product is for the the customer. Yeah. They wanna, you know, the the value is subjective and the one thing that increases perceived value, and you you could look right at Apple to this again coming up twice, is their aesthetic and their design is one hundred percent also in line with the value of the product. If if it If it was this and you could argue that you can get the same performance out there of similar products, for less price, but the you know, the packaging design, the experience, the unboxing, the s store you get it at, it you know, it isn't that that isn't the same experience.
speaker-0: Totally agree. Apple's a great example.
speaker-1: They tend to be a great example across the board.
speaker-0: No, they seem to keep coming up.
speaker-1: Awesome. Tom, I cannot thank you enough for coming on the show today and sharing all those amazing insights. Thank you.
speaker-0: Thank you so much, Chase. This has been great. I I'm I'm I'll come back anytime. I appreciate you having me on. It's been great.
speaker-1: Awesome. Thank you so much.
speaker-0: Thanks, Chase.
