346: 36 Million Dollars In 3 Years – The Story Of Brumate With Dylan Jacob

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You’re listening to the My Wife, Quit Her Job podcast, the place where I bring on successful bootstrap business owners and delve deeply into the strategies they use to grow their businesses. And today I have Dylan Jacob on the show and Dylan is the founder of Brewmate.com and he managed to grow his e-commerce store from nothing to an eight figure business in just two years. And in this episode, we’re going to break it all down. But before we begin, I want to thank Postscript for sponsoring this episode. Postscript is my SMS or text messaging provider that I use for e-commerce and it’s crushing it for me.

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I never thought that people would want marketing text messages, but it works. In fact, my tiny SMS list is performing on par with my email list, which is easily 10x bigger. Anyway, Postscript specializes in text message marketing for e-commerce, and you can segment your audience just like email. It’s an inexpensive solution, converts like crazy, and you can try it for free over at postscript.io slash Steve. That’s P-O-S-T-S-E-R-I-P-T dot I-O slash Steve. I also want to thank Klaviyo, who’s also a sponsor of the show.

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Now, are you working around the clock to build the business that you always imagined? Do you want to communicate with your fast growing list of customers in a personalized way, but in a way that gives you time to work on the rest of your business? Do you ever wonder how companies you admire, the ones that redefine their categories do it? Companies like Living Proof and Chubbies? Well, they do it by building relationships with their customers from the very beginning, while also evolving in real time as their customers needs change. These companies connect quickly with their customers,

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collect their information and start creating personalized experiences and offers that inspire rapid purchase, often within minutes of uploading their customer data. Now, Klaviyo empowers you to do the most important thing for any business, the relationship between you and your customers and the experiences you deliver from the first email to the last promotion. To learn more about how Klaviyo can help you own your growth, visit klaviyo.com slash mywife. That’s klaviyo.com slash mywife. Now onto the show.

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Welcome to the My Wife, Her Job podcast, where we’ll teach you how to create a business that suits your lifestyle so you can spend more time with your family and focus on doing the things that you love. Here’s your host, Steve Chu.

02:11
Welcome to the My Wife Quitter Job podcast. Today I’m thrilled to have Dylan Jacob on the show. Now Dylan is the founder of Brewmate.com, which is a company that sells beer cozies online. And Dylan grew this into a $36 million business in just three years. And the growth of his company was ridiculous. In his first full year, he made 2.1 million. The next year he did 20 and then last year he did 36. Not only that, but he owns the company a hundred percent and bootstrapped it to where it is today.

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And in this episode, we’ll discover how he grew Brewmate so quickly and his strategies for growth. And with that, welcome to the show. Dylan, how are you doing today, I’m doing great, Steve. Thanks for having me on. Yeah, so Dylan, for those of you out there who have never heard of who you are, give us a quick background story about how you got into e-commerce and then how your experiences led up to starting Brewmate. Yeah, so I grew up in a little small town in Indiana, Greenwood. So it’s like 20 minutes south of Indianapolis.

03:07
And there’s not a whole lot to do there. You’re sort of surrounded by corn fields and, you know, people typically get in trouble. I was one of those people that was like what I did in my spare time. seem to find myself in all sorts of situations. And, you know, over time I sort of grew out of that and was able to turn that energy into something a little more positive. And entrepreneurship was one of those things I always gravitated towards. You know, I grew up fairly poor and I was always looking for like odds and ends ways to make money.

03:36
And I was running a little cell phone repair company, like eighth and ninth grade. So I would buy up broken devices. So like iPods and iPhones, and I would have wore the parts from overseas and then I would refurbish them and then resell them. And then sophomore year of high school, a few repair shops popped up locally and that market sort of started to dwindle away. And so I saw an opportunity, you know, I had already secured really good supplier overseas for electronic parts and.

04:07
I started reaching out to the local repair shop. I went in, made friends with them. And what I found a common thread with all of them was that they were all getting their parts off like eBay and Amazon. And I happened to know that all the parts that were on there were BNC grade parts. So they had dead pixels and dust under the screen or they were, you know, I had already navigated all of that. And so I saw an opportunity and I basically told all of them that I could supply them with local parts, you know, same day, a local delivery and.

04:36
that actually started my first real business, which is called GV Supply Company. So over the few years throughout high school, we scaled to a little over 100 bear shops around the US that we were working with at our own Shopify store. I would scout our Instagram for hashtags and send people samples and drop in their DMs and reach out to people in any way that I could. And then they could order the parts directly online and get them delivered straight to their door.

05:03
Um, you know, he had like a year warranty so they could pass that on to their customers. And it was something that, you know, was, was really challenging for me and really fun. And you did this in high school. You yeah, this was in high school. Okay. Um, and so, you know, senior year is rolling around and, I have a very successful business, at least at that time. Um, you know, I was making well in the six figures and I was still like,

05:31
pretty unsure about the whole entrepreneurship thing. It’s sort of like joining a high school acting class and you’re really good at it, but then trying to move to Hollywood and become a big time actor. And so I really just considered it to be a side hustle. I was planning on going to Purdue for engineering, so I had a full ride there. I also had an internship at Rolls-Royce. So I’d leave high school half day and go to Rolls-Royce for the rest of the day. I worked in their engineering department. That was sort of my

06:01
plan. My plan was to be an engineer. wanted to do product development design. I actually wanted to be an inventor. And, you know, that was sort of the direction I was headed in. But I again, like I grew up sort of in this low income household, and I wanted the stability of like, you know, having a college degree and being able to have a steady job and paycheck and something that like entrepreneurship didn’t really offer. And I was pretty scared of. So I went to I went to college there for a semester, I was running this business out of my dorm room.

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taking 18 credit hours and wanting to rip my hair out. And, you know, I remember Christmas break rolled around, so we had a few weeks off and I was down like 20 pounds, like I hadn’t been in the gym and everyone was like, you don’t look very well. And I was like, I don’t feel very well. Like I’m very stressed out and unsure and I don’t know what to do. you know, my friends and family were supportive and you know, I sort of arrived at the decision that I was just going to take a semester off.

06:58
focused on my business. Like I already had a business that was earning me more than I would have been making as an engineer. And even though I didn’t consider it like a lifelong plan, it was a good plan for the intern until I sort of figured out what I wanted to do. This is still a cell phone business, right? Yep. Okay. So I dropped out of college. And I don’t call it dropping out at the time. I really just took a semester off. But four months later, I did sell that company for $100,000.

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and I ended up fully dropping out of college. And that was sort of the turning point for me where I realized that like, you know, entrepreneurship was something that to me, it was everything, it encompassed like everything that I enjoyed. Like it had the building aspect of like what I enjoyed about engineering. You know, it had the potential for like the product development aspect of what I wanted to do for an actual career anyways. And so, you know, I sort of

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was like, Hey, I’m pretty much already doing this. Why not just pursue it and see where it goes. And, you know, as a backup plan, if it doesn’t work out, then I can always go back to school and I have, you know, a nice lump sum of money in my bank account. And, you know, over a few months period after that, I again was pretty unsure because I had just sold my company. And at this point, I was like, well, I need to like start another company because I didn’t want to get a job. And so I actually bought a house. So I spent a year remodeling this house.

08:23
watch YouTube videos, pull permits myself, did literally everything. And that was a nightmare. I didn’t get into it for like flipping houses. literally just wanted, I thought it’d be a fun project. I like building things, but there’s just a little too in depth and I ended up getting sort of trapped doing it for a lot longer than I would have liked to. Okay. How did you end up in beer cozies though? mean. Yeah, so I’m getting there.

08:52
I, in the process of starting or of remodeling the house, I started another company called Beachy Design. And so it was a high end glass tile company. We would do kitchen backsplashes. And I, again, like just felt like there was something missing in this business too. Like, you know, we were importing and designing glass tile for showrooms and interior designers and things like that.

09:18
But it was missing this like product innovation aspect. And so I had always kept this journal, you know, sort of where I would jot down different product ideas that I would have, invention ideas, whatever. And when I first turned 21, I started getting really into craft beer. And so at the time, you, I was sort of done with my house. I was running Vichy Design, which is a glass style company. But I was also looking for something else to really pursue and something that I’d be a little more passionate about that included like

09:48
me being able to take a concept from pen and paper to, you know, product development and also like being able to walk around and see people using my product. Um, and so, you know, I started getting into craft beer and I noticed that like a lot of those cans came in 16 ounce versions and every time I would drink one, the last quarter would always be warm. And so I had just jotted down in my journal, like way to keep 16 ounce beer cans cold. Uh, and that was actually what sort of started like roommate as a whole.

10:18
Um, so the concept for roommate actually started with one beer koozie. That’s our hops later tree out now. Um, but that was like our flagship product. And, know, as I started to investigate that market and realize like, no one was making a 16 ounce beer koozie that actually kept things cold. also realized that like the insulated drinkware industry as a whole was really focusing on the hydration category. So water bottles and coffee mugs and tumblers, no one was really focusing on alcohol. Um, and so that was where I identified like the concept.

10:47
for Brewmate as a whole, which was a company that was designed to like create a better drinking experience and make products specifically for adult beverages only. Okay. How much did it cost to make that first prototype for the 6-in-1 Spear Can? Yeah. So, you the other two businesses, I don’t typically go super in depth on those, but I think they’re important to mention just because they sort of gave me the fundamental building blocks and understanding of like how to source a product, how to get a product created.

11:16
and also like how to do it pretty scrappy. And so, you had mentioned earlier that like I scaled the company without any funding. A lot of that just had to do with the fact that like I had identified little hacks and ways to create products fairly cheap. And as we continue to scale, you know, we’re able to do so properly. And so with that initial prototype, I invested under 10 grand. It was a very rough prototype. I did not include like our current version has three different components. This one only had one.

11:45
but so it was a lot cheaper than like our current version to make. But I had already had sort of a light digital background and so I was able to, you know, Photoshop the product into people’s hands and make a landing page and sort of do like our own version of a Kickstarter. And runs Facebook ads to that page and basically collect emails and then we did pre-orders for that product. Then once it was created. Did ads to that landing page or how did you get people to landing page? Yeah, Facebook ads. Facebook ads. So what are some of your hacks for creating quick

12:14
prototype. Yeah. So, you know, I think the biggest mistake people make is like, they’ll go to a designer first. Um, so they get, you know, they spend three, four months like designing the perfect product and then they’ll take it to a manufacturer. And then the manufacturer shreds it apart and says like, this can’t be done. This can’t be done. This can be done. Um, and their engineers will like re-engineer it to be manufacturable. And so I had actually identified that like, if you find a manufacturer that has a solid engineering team at house,

12:42
Like typically not only will they do the engineering component for free, but you can get there a lot quicker. So, you know, I was able to go to a manufacturer that again, like had a very strong in-house engineering team. is in the US or in Asia? This is overseas. Overseas, okay. there’s a drink where there’s no state-side manufacturers. Okay. Okay. So you actually physically traveled there, I would imagine, right?

13:05
I did, yep. Okay. So I had sort of created a list of different factories I wanted to visit, went and visited, interviewed their engineering teams, sort of went over the design that we had and then settled on the company that I felt most comfortable with. Did you have to commit to a certain number in order for them to do the engineering for you? No, I mean, their minimum order was like a thousand units. So that was something that, you know, I had to sort of negotiate with them on because I didn’t want to order a thousand units because I knew it wasn’t the final product. Okay.

13:33
I mean, just a higher premium to get a smaller batch done. Sure, sure. And this whole process of design, like, did you stay there for an extended period or did you do a lot of it back and forth in the States? I was there for two weeks interviewing engineering teams. And then once I sort of settled on the engineering team that I wanted to work with, then the majority of it was done stateside. So I worked with them directly through Skype and email to sort of dial everything in.

14:01
Did you do any validation on this product before you decided to manufacture it or did you just kind of go for it? Yeah, so the landing page that I mentioned, so before I had actually created or like placed our first order, I actually ran lead generation campaigns to our landing page and collected a couple thousand emails. I went to a couple of the local breweries here. They all had…

14:29
There were showrooms where they sell branded merchandise and chatting with some of the founders there and was like, hey, I think this would be a great addition to your showroom, like this is something you’d be interested in. So I got a commitment from those guys, Satsang King Brewery in Indiana. It like one of the first showrooms to ever carry that product. So I had had a commitment both from direct to consumer customers as well as wholesale customers on the concept. And that was what I used to sort

14:52
be comfortable to be able to pull the trigger on that product. So on this landing page, presumably there were pictures, right? So did you just kind of Photoshop mockups of what you thought it would look like? Well, we had CAD files for the product. So we just did digital renderings. Ah, got it. OK. All right. So it was basically the real thing, just not real images. Exactly. OK. But yeah, we able to take that and Photoshop it into people’s hands in different scenarios and do cut through so people could see how the technology worked and stuff like that.

15:20
Okay, so you spent under 10 grand, you get your first batch of about a thousand units. How did you sell those first units? So we already had a commitment for 240 of those from Sun King. So 25 % of those were already gone. And then the rest, you know, are from the email list that we had, I would say probably 50 % of the other 750 units we had leftover were purchased from customers on that list. And then I made a couple of giveaways on Facebook and then ran some actual Facebook ads after that. But we depleted inventory in under two weeks.

15:50
Wow. So on that landing page, did you talk about price at all or was it just pure interest? Nope. So it went over what the pricing was going to be. It also went over the fact that the product was not the final version. so it was sort of, you know, this is a product that never existed before. So again, it was like people were basically funny at Kickstarter. Like it was people that were interested in 16 ounce beers had had this same issue and wanted a solution for it and were willing to like invest in the original concept.

16:19
And that was how I positioned it. So a lot of those customers went onto an email list where as we were going through the design process for version two, they were kept in the loop and then we gave them a 50 % off discount code on the newer version when it came out, because they supported the original concept. I’m just curious, what was going on through your mind, whether to do a Kickstarter Indiegogo or versus what you just did with the landing page and Facebook ads? Yeah, I mean…

16:46
I had just interviewed a lot of people that had done kickstarters and IndieGoGo campaigns and like, you know, aside from the fact that they take a platform fee, I just felt like a lot of the marketing that went into, you know, driving traffic to their team and get to like the front page or get any sort of traction could have been better utilized, just doing it yourself. And like that was my hypothesis and it seemed to work. So.

17:09
So what’s nice about your product is it has really broad based appeal. So I’m just kind of curious though with that first Facebook ad, can you kind of describe what you targeted, who you targeted and like what your cost per lead was like? Oh, well Facebook ads back then were like very cheap. I honestly don’t remember like what the cost per lead was or anything, but I know like our return on ad spend was probably seven or eight X in terms of like the amount of people actually converted versus what I spend. Okay.

17:37
In terms of, you know, who I was targeting, was people that were interested in like craft beer. Okay. That was really all I targeted in the beginning. Even though like a lot of the light beer brands have 60 ounce can versions, it’s hard to like target someone, let’s say for like Bud Light, and then target someone that like drinks 60 ounce Bud Light cans. But most craft beer cans do come at 60 ounce versions. So like if someone’s interested in craft beer, the odds of them drinking out of 16 ounce cans are like much higher.

18:05
So in the beginning, like I sort of just targeted like men and women between like 21 and 45 that were interested in craft beer. And like that was sort of my target audience. I think with them too, you know, one of the hypothesis that I had was like early adopters are going to be really important. So like people that support Indiegogo or Kickstarter are like early adopters and people who are into craft beer are also sort of like early adopters. Like they like, you know, working with smaller breweries and like

18:34
you know, getting a variety of different beer and like supporting like new variances of beer and things like that. And so I was like, I feel like this is a really good audience to test this with because I feel like they’d be a lot more supportive than just your average drinker. Sure. It was a new concept and it seemed to work. So a lot of those customers were like, you know, very into craft beer and the product did what it said it would. And so they’re all happy. I guess the actual numbers don’t matter as much, but did you have any goals for how many leads you wanted to get?

19:04
and how did you kind of calculate or was it just, hey, let me just get a bunch of people and then enough to sell out this first batch and let’s go with it. No, you I had a lot of capital expenses at the time. So like I had my house, I had my other business, which I had, you know, warehouse for an inventory and everything else. I wasn’t trying to spend a lot of money. My goal, this was a side project. it literally was just something that I was doing on the side. wasn’t, never thought it would turn into what it is today. And so, you know, I wasn’t trying to garner like,

19:33
10,000 leads or anything. was really just, you know, I knew Insulated Drinker, where was one of the fastest growing sectors of housewares from my research. I knew that people liked the vacuum insulated water bottles and coffee mugs and things like that. I knew that there was a sector of the market that was being largely ignored. And, you know, I guess the point is, is like, if people like cold water, and they’re willing to spend $30 on a product to keep their water cold, why wouldn’t they spend

20:02
the same amount to keep beer cold, which one is more expensive and two is something that is like more important to people than water. Like not in terms of like from a health standpoint, but like people get more excited about alcohol than they do about drinking water. And so I was like, I just, felt like this was a market that was untapped, but I wanted to have some sort of validation. Right. Yeah. I I wanted some sort of validation before I sort of jumped the gun and like spending the money on the mold and

20:30
you know, investing in our first inventory batch and stuff like that. okay, it was. All right. So okay, so you sell that of your first batch, you said like a quarter of it was to already pre committed orders and the rest was to that list. Like, how do you go from there to like your first 2 million?

20:49
So after we sold through that first batch, we actually didn’t relaunch our second version until 2017, like beginning of 2017. So we didn’t do a second batch for the Hopsilator. That first batch was just about validation, getting customer feedback. I would send emails and surveys to those customers about what they liked, didn’t like, what they’d like to see in the next version, stuff like that. So in the meantime, again, I had identified that there was this entire market that was being ignored.

21:19
And I had some other ideas. so our, next concept that I was working on was called the wine slater. So it’s our insulated wine growler. So you pour a bottle of wine inside, insulates, uh, and maintains the temperature for over 24 hours. And the idea behind that was like, you can’t take wine in glass free zones. So, you know, parks, uh, beaches, uh, on people’s boats. A lot of times they don’t want you to have them there campsites. There’s a lot of places that you can’t take class and therefore you can’t take wine. And so.

21:47
If you transfer it into a container that’s not made of glass, it takes care of the glass free zone problem. And then the added benefit is that you don’t need to cooler ice. Like you can just pour this into the wine slater, throw it in a backpack and for over 24 hours, like you’ve got perfectly chilled wine. That product was a little easier to create. I had less moving parts. Um, was a lot cheaper to make. And so did the exact same thing over again. At this time I targeted female only again, sort of same, same age demographic, much.

22:16
broader in terms of like who the audience was. So it’s people that were like interested in voting and outdoor activities and wine and sort of this wide variety of people that all sort of fit into this category that I believe like would get benefit out of this product. And this time we actually collected a little over 7,000 emails. thing I think for the 7,000 emails I probably spent under a thousand bucks. What? Okay. We had a landing page.

22:42
Same exact thing, like I had the CAD files turned into digital renders, which then add Photoshop into people’s hands. They’ve got through, talked about the benefits of the product, everything else. I ordered seven. Okay, hold on one sec. So you’re saying you spent like 14 cents a lead? that? Did I do the math correctly?

23:02
I honestly don’t remember, but I know it was a whole lot of money because again, like I had all my money invested in something else. I know it didn’t spend like five grand to do it. And I’m pretty sure it was probably in the like thousand dollar range. Okay. Out of those customers. So we had again, we seem to see like a 30 like open rates were extremely high. So our open rates for those emails were in the like 50 % range, which was actually phenomenal, especially from like

23:30
typically on Facebook, you’re not getting extremely high quality leads. Yeah. And it’s not even something like now when we ran campaigns like that, like we don’t get anything close to that. So I’m not sure if that was just like the period in time or sure or what. Can I ask you a question about the wine product real quick? So you actually have to pour the wine into the container. Yeah. So it comes with a little silicone funnel and you pour the wine inside. so is it just like a thermos then essentially just market it differently? Okay.

23:58
It’s shaped like a wine bottle. It holds a full bottle of wine perfectly. You know, it serves its purpose. It’s like… If you sell on Amazon or run any online business for that matter, the most important aspect of your long-term success will be your brand. And this is why I work with Steven Weigler and his team from Emerge Council to protect my brand over at Bumblebee Linens. Now, what’s unique about Emerge Council is that Steve focuses his legal practice on e-commerce

24:25
and provide strategic and legal representation to entrepreneurs to protect their IP. So for example, if you’ve ever been ripped off or knocked off on Amazon, then Steve can help you fight back and protect yourself. Now, first and foremost, protecting your IP starts with a solid trademark and Emerge Counsel provides attorney-advised strategic trademark prosecution, both in the United States and abroad for a very low price. And furthermore, the students in my course have used Steve for copyrighting their designs, policing against counterfeits and knockoffs, agreements with co-founders and employees,

24:54
website and social media policies, privacy policies, vendor agreements, brand registry, you name it. So if you need IP protection services, go to emergecouncil.com and get a free consult. And if you tell Steve that I sent you, you’ll get a $100 discount. That’s EMERGECOUNSCL.com. Now back to the show.

25:16
Sorry, I interrupted you. So you did the same process, but you got more leads. sounds like 7x more leads for this launch. And then what? Yeah, so same thing. I ordered 7,000 units, seven different colors for the Wine Slater. So we did all the… We tried to do a spectrum. So was like aqua, so blue, pink, yellow, green, black, white, and I don’t remember what the other color was.

25:45
Same exact process. you know, I, this time actually, you know, I had to invest into 7,000 units, which was a bit more of an undertaking, but like the response to the product was actually significantly better than the hops later was. Um, I think part of that was just the fact that one, we invested a little more into marketing and two, uh, we were targeting a much broader audience, but once that product came in, uh, so that came in November 26th, 2016, and that product sold out in two weeks.

26:13
So we did $270,000 in sales in that two week period. Sold completely out before Christmas. All those products arrived to everyone’s stores before Christmas. And that sort of ended our first year and closed us out at around $300,000 in sales for the year. So that was just based on Facebook leads that you generated in that email list that you had, right? No, the leads, like we had probably a 50 % open rate. And I would say out of that, you know, maybe 1500 to 2000 people actually purchased.

26:43
or at least 1500 to like 2000 units. over that two week period, a lot of that we were running Facebook ads and stuff. again, like I don’t remember what our return on ad spend was, but I know it was very high. And yeah, so over like a two week period, you know, between the email list and the Facebook ads that we were running, we sold out. Could I ask you why you decided to do so many colors on that first run? So funny, it ties back into V2 design.

27:11
Um, so whole concept behind VG design was actually, uh, I had like walked into a granite tile showroom or a granite showroom and spent like four hours picking out granite from my kitchen. And then I walked into a tile showroom to pick out a backsplash and for glass style, were like four color options. Um, and there, just thought there was a disconnect. So like our whole thing in VG design was like, we had the largest color selection for glass tiles. So like a little bit of something for everyone’s taste. And so I sort of applied that same concept to drinkware.

27:40
All the drinkware at the time really came in like solid colors or just stainless steel. And so I thought like bringing color into this and like allowing people to personalize and like using as a conversation piece or like match it, you know, to their outfits or like having it be really like a fashion accessory instead of just a product for their wine would make it a little more powerful. And so it’s just something I wanted to test because with the Hoffs later, we only did stainless steel and black for that first version. Okay.

28:07
with this product since we were targeting women, I just thought as an opportunity to like get a little more funky with the colors. And that actually worked really well. And you know, I now we have, you know, 30 plus different colors for the majority of our products. Dang. So you didn’t find that like one color dominated all the sales and then you had problems getting rid of some of the other colors? No, because we didn’t do like different shades of the same color, right? Like, that was sort of what I was talking about, like with the color spectrum. It was like picking like one green, one blue, one pink. Got it. Okay.

28:36
I’m trying to pick something that fit in each category and like was most popular. So for like blue, did like a Tiffany blue, like Aqua for pink, we did like a neon pink, you know, for, for orange, did like a coral color cause like world’s popular. So, you know, I looked at like Pantone color trends and what’s popular and use that to basically figure out like which color I wanted to select for, each part of the spectrum. And that worked really well because you know,

29:03
Again, like everyone has different buying preferences. So when you have, you know, thousands of people looking at a product, like not everyone’s gonna want to have the same exact thing. Okay. Yeah. All right. So it’s the start of 2017 and it sounds like you have two products at this point, right? Yep. Was it just more of the same to get to that first 2.1 million? Yeah. So we had a product that allowed you to bring wine into glass free zones, but there was nothing to drink it up. So February, 2017, we launched our Uncork series, which was our insulated wine tumbler.

29:34
So now we’re able to create like an insulated wine tumbler set where you could get two wine glasses and the wine slater sort of as a set. And that was like one of our most successful basebook campaigns for like all of 2017. Is this all digital marketing at this point to get sales? Yeah. I mean, we had some retailers, like we had a become a dealer button on the website where people could apply, but we probably have like 50 retailers in 2017 if that.

30:00
And we weren’t actively looking for any, yeah, it was all direct to consumer. All right, did you use anything outside of Facebook? Were you using Google, shopping? We didn’t start using Google till the end of 2017. Okay. So I was actually running all of our Facebook ads until October 2017. I did, again, did not know a lot about Facebook ads. I just knew how to run very basic campaigns. And I started to see, as I was trying to scale our budget, it just wasn’t performing.

30:30
nearly as as I wanted to and we’re starting to see diminishing returns. And so that was when I sort of brought on our first hire, which was Mitmar. Can you comment on why you hired someone versus maybe just getting an agency first off? I talked with agencies. So I talked with Talk Media at the time. They were just a little too expensive. had a minimum commitment and we weren’t in their spend level at that time. then I think their minimum fee was like 10 grand or something.

31:00
So it was like fairly expensive for me. And I also just didn’t really like, you know, I had other friends who had started companies and like they had heard negative things about agencies. So I wanted to have someone like working on our account day to day and not just like sort of touching it, you know, for an hour or whatever. And so I ended up just hiring a contractor. So I used up work and, you know, sort of interviewed probably 10, 15 different people that had.

31:26
good reviews and done a fair amount of work. So like over $100,000 earned and had them do like an audit of our account and put together like a of a roster of like things that they would do differently if they were to come on and then sort of pick the best person for that. Is this a full time hire then or just a contractor in the beginning? Just the contractor and a contract at that time. Okay. And then he basically scaled what you were doing.

31:51
Yeah, so we had done a million dollars in sales from January to October and then from October to December we did another million. So he was able to come on and like pretty much revamp what we were doing and get not only better results than what I was doing, you know, at scale he was able to condense what I had done in 10 months into three. Okay. And we’re getting better results. so

32:16
We didn’t start you asked about Google and other so we didn’t start advertising on Google like shopping network and Snapchat and like all other places that we advertise till 2018. Okay. You sound like a smart guy that you could figure out Facebook ads. I’m just kind of curious what they what your consultant did that you weren’t doing that allow you to scale so quickly. So for me it was like look like audiences and segmenting. It just wasn’t something that I was fantastic at. And so he was like really good at sort of analyzing the data that we had and creating

32:45
I was just kind of beating the same audience over and over and over. And so, you know, our, um, like frequency rate was going up and, know, I’ve tried and create other audiences, they wouldn’t work as well. So it always go back to like what was working. And, um, you know, he was able to like successfully create lookalike audiences where we were able to target new people with similar interests. We’re again, like we’re bringing down the frequency that they’re seeing these ads and we’re getting significantly better results by doing that. So.

33:14
I’m not 100 % sure. I would say a lot of it was just attributed to campaign structure and audience structure. Okay. Well, because I know since I run all my own ads also, it’s a pain in the ass to kind of rotate creatives. I was just wondering, since you’re running this other company, perhaps you might not have had just the time to give it your all in terms of Facebook ads. That’s kind what I was getting at. I was wondering if that was the case. Yeah. I mean, probably a little bit of everything.

33:41
You know like our the creators we were using weren’t fantastic The copy was written by me like I’m sure there’s a lot of factors that played into like why it did significantly better after I brought Him on. Okay. Were you still were you starting to run your Facebook ads directly to your products at this point? Or were you still trying to get leads? No, so we only did leads for the initial two. Okay, you would actually stock inventory. We were running acquisition campaigns

34:09
Okay. I’m able to actually directly to like collection pages. Okay. Hey, I just want to make fun of Austin Bronner here because I saw in one of your other interviews that you said the Spindle Wind pop-up increased your signups by 4x. Was it? Yeah, I wrote about that on a blog post and I got a 2x increase and thing but then everyone started making fun of me because I for you, you got 4x right in terms of the number of leads that you were getting versus the old form, right? Yeah. Yeah. Okay.

34:39
There you go, Bronner, Spend-A-Win pop-up for the win. Okay, sorry, sorry to say that. Do you know who Austin is by any chance? We still use our own version of that today. We have different versions. Like we use a text signup form and then we also have, we just do know, but we did our own custom Spend-A-Win version and it still performs extremely well to this day. Yeah, I wrote my own also actually. Yeah, it performs better than the ones that you can get off the shelf. Okay, sorry, I just wanted to, I thought I’d bring that up just in case people

35:09
still doubt the power of the spin to win. All right. Okay, so you hit 2.1 million in 2017. And then all of sudden you like 10x the following year. What happened? Yeah, so a couple things. I in 2017, I sold my house, I also sold my other business. So I was able to like, so towards the end of that year, I was able to fully invest in roommate. So all the money went in towards investing in inventory for Q4.

35:36
And then a lot of the money that we made in Q4 was reinvested back in inventory for Q1 of 2018. like going into spring and summer, we had pretty solid on an inventory to be able to sustain growth. Cause in 2017, like for a lot of the year we would run pre-orders. So, you know, I would literally drive people to the website, they would pay for the product and then, you know, it’d say like 90 day lead time or whatever. And then we’d get the product created and then I would air ship it in instead of shipping it by sea. So we get it quicker and then we would ship out.

36:05
product and do that in batches. Because again, like I didn’t have the money to really invest in like 1000s and 1000s of units to just talk about that real quick, actually, because I run an ecommerce business and cash flow is always a problem. Right? So you bootstrap this you still own 100 % of this, right? So yeah, we actually just closed an equity deal last Friday. Last Friday, but hitting 36 was all on your own bootstrap, right? Yeah. Okay. How do you get the money to fund the inventory?

36:35
Well, so again, like I had sold my first business, I had rolled that into my second in the house on the house itself. Once it was finished, I was able to pull a line of credit on the house. Okay. I able to leverage that and use that for the business. And then, you know, you’re only allowed to finance 70 % of the house value. And the house wasn’t appraising as high as what I actually sold it for. like, there was just a lot of leftover money that was in that house that

37:03
that I can really touch. when I sold that, you know, I had access to like a significantly larger amount of capital. But yeah, I mean, it was something, you know, I was using this line of credit, but you got to remember like thousands and thousands of units, you know, trying to invest the money into having that on hand, plus having like production deposits on future orders. So you’re not like, you know, running out of stock and placing an order and then waiting 90 days for it to come in, like trying to balance all of that was really difficult. So pre-orders was sort of my answer to that. It allowed me to, you

37:33
pre-sell the product and we didn’t even do it at a discount. But again, these are products that didn’t exist and they came in unique colors and like people wanted them. So they’re willing to wait and we would get maybe 10 % of the customers that didn’t read and you know, didn’t know it was a pre-order or whatever. And we’d either refund them or like explain and a lot of times they were okay with it. But I use that really all throughout 2017 to help grow. I didn’t have to, cause at the same time I was also investing money in like molds and things like that too. So.

38:01
You’re trying to balance all that was difficult, but pre-orders was sort of the answer because it allowed me to pre-sell the product. You get the product in after 90 days, ship it out, and then repeat the process over and over again and sort of roll the money back into the company. But 2018 was the changing point because not only did I sell my other business, my house, we also got our bank line of credit because we had had our two-year anniversary. So after like two years of business, we were able to get a formal $250,000 line of credit from the bank.

38:29
And so it was an unsecured line of credit. It wasn’t collateralized against inventory or anything. I was through SBA. And that was a few month process. I started working on that beginning like January 2018. think end of February, we probably closed that. So like right in time for spring, we were able to place some pretty large orders on top of, you know, the orders we had already placed from the money we had made from Q4 2017. But yeah, I mean, I think, you know, again, like

38:57
I had brought on the guy that I was using for Facebook ads at the end of 2017. We had started seeing really good results with scaling, you know, the financial aspect of like having a lot more money to put in the inventory. think all those things combined are what allowed us to grow so quickly in 2018. And then on top of that, we added in, you know, Google and Google Shopping Network and Snapchat and Pinterest and Bing and Influencer Marketing, like a ton of different channels throughout the year.

39:24
So we’re just reaching customers in a different way and really finding out and figuring out what works for us and what didn’t. Okay. So outside of Facebook, what are those other channels have worked the best for you? So Google works extremely well. Snapchat works very well for us. Influencer marketing works really well for us. Pinterest is okay, but it’s not super scalable. Snapchat even then we weren’t really able to scale it for a long time. It took a year and a half working with our team in beta programs and whatnot.

39:53
their tracking just wasn’t great back then. like, trying to actually track results from their platform was like nearly impossible. So we would spend a little bit of money here and there, but you know, we can fully invest into it because without knowing where we’re getting out of it, like that would have just been like, it didn’t make sense to do. I think Google would be I guess you’re probably talking about shopping then. Or Yeah. Okay.

40:20
I would imagine that the keywords for your thing would be just really expensive. Maybe you can pull it off, but are you using Display Network at all? Yeah, we are. And out of those, which one is working for the best for you in terms of Google land? Between Facebook, Google, and everything else, we spend $2.5 million a month. Our marketing team is 13 people now. I honestly don’t know. I don’t really have my hands in that. Okay. I’m just curious if you knew. Yeah.

40:48
What would you say I mean, man, the fact that you bootstrap this from the ground up means that you were you probably have working knowledge of all aspects of your business at some point in time. So what would you say were your biggest struggles early on? Yeah, so biggest struggles were definitely fulfillment. You know, with the pre order method, it wasn’t super difficult. So I had a shared warehouse. So VT Design, I stored a tile there, when the product would come in, I’d have it delivered to that warehouse. And then I I’d have

41:17
10, 15 friends come help me package these orders over a couple of day period and get them out the door. But it wasn’t until like we got our first facility and started hiring employees for day to day fulfillment that I really understood just how difficult getting products out the door was on time and how much of a distraction it was for me. Because like I, what I really enjoyed in the business was the product development innovation aspect and like.

41:44
there’s none of that in in order fulfillment. And so it was a huge time stock for me. I spent a lot of my time doing this and I didn’t enjoy it at all. No sort of where like shit monk came into play. So like we use a three PL even to this day, which allowed us to completely free up the fulfillment side of things and you know, really focused on what we’re good at. then the second cheaper going with three PL just kind of when you run all the numbers in terms of headcount and mindshare. I definitely did. Yeah, I did at the time even now.

42:13
at the current scale we’re at, it’s iffy. But if you’re under 20, $30 million in sales, definitely for a variety of reasons, like you obviously have the pick fees and warehousing fees and things like that. Typically, the warehousing fees are just passed on, so it’s going to be pretty similar to what you’re paying in your own warehouse. So really, your additional costs are going to be the initial pick fee and then additional pick fees on top of that. If you look at the shipping rates that you get as, let’s say, a company that’s shipping

42:42
200 packages out the day, 200 packages out the door a day versus like a fulfillment center that’s shipping, let’s say 30,000. The rates that they get offset the pick fees. So, you know, I know like our average cost to ship a product was over $10 because our products are really heavy. Like our average package is almost three pounds. Okay. So really heavy, really expensive to ship. And that dropped by over 40 % when we moved over to a fulfillment center, which completely covered.

43:11
Plus, um, you know the initial pick fee and additional pick use for those orders Nice. So there was also a forcing function right because when you sold that tile business presumably the warehouse went with it or um No, because so we ran fulfillment ourselves for seven eight months Okay, so the tile business went I had gotten a new warehouse and which was just for roommate and then we actually upgraded that warehouse three times in a year period so we went from

43:38
3500 square foot warehouse, like 7,000 to 20,000. And same thing, like it was really in that 20,000 square foot warehouse that, and this is beginning of 2018, that we were just seeing major growing pains. Like we had just moved in there, got everything set up. And I remember we got like four cargo containers then, and we were putting it all up on racks and stuff. And it took up like, I don’t know, a third of the warehouse. And we pulled out of that in like three weeks.

44:07
Oh man, crazy. And I was like, oh my gosh, like what a complete waste of time. Like we just set up this new warehouse and like it’s not even going to be big enough for this next order we’re going to have to place. And I had met Dan who owns Shipmong through Forbes 30 under 30. And you know, pretty early in 2018, I started getting, so I think we gave them maybe 30 % of our daily volume upfront. Just to sort of test the relationship. Yeah. We’re like a two or three month period. ended up moving 100 % of that over.

44:37
And then yeah, warehouse, you know, ended up buying out the, think we stopped, we stood out for a year and then the subway serve, um, sort of bailed on that place. And then I just bought out the contract early. Are you guys on Amazon? Yeah. Yeah. So we’re using a FBA. Yeah. So we did the vendor relationship with them for a while. Hated it. Went back to FBA, but yeah, we’ve been on Amazon since late 2018. Okay.

45:06
So in terms of the way product gets in there, do you just have Shipmunk ship over whatever products are as needed to kind of top it off on Amazon? Yeah, exactly. We warehouse all of our stuff in one place. you know, big retailer orders ship out from Shipmunk, direct consumer orders ship out from Shipmunk, FBA shipments are pick packed and fulfilled by Shipmunk. So they, if we if we send five cargo containers to ship or to FBA, then

45:34
They’re the ones like labeling all the cartons and palatizing it, setting up the pickup and whatnot. Okay. And then you’re in a bunch of retail stores. Can you kind of comment on your efforts there? Like is the retail segment more than the e-commerce segment? Nope. So in 2018 we were diversifying our marketing channels. But outside of that, I really wanted to diversify our actual sales channels and create like a true omnichannel brand. I’ve seen too many companies, you know, I talked about like Facebook ad costs.

46:03
So from like 2016 to 18, the amount that like the cost per click and you know, everything else went up across the board was just ridiculous, especially for us. And I just didn’t see it as being sustainable if we were running 100 % of our sales and 100 % reliant through just digital marketing. And so I wanted to create a brand that, know, I had, again, a hypothesis that there were like three different types of customers. There was the…

46:31
brand loyalist, which wants to shop direct with you and they’re on your email list and text list and like they want to be on the know and limited product releases and all that stuff. And then you have your Amazon customer who like they see an ad or someone talk about the product or whatever. And the first thing they do is just go to Amazon because they want like unbiased reviews in Amazon Prime. And then you have the sort of older, more reserved customer who would much rather like see and touch and feel the product in person before making a purchase. And so that’s been in the three categories. It was direct to consumer, Amazon and retail.

47:01
And we really only had direct to consumer. So throughout 2018, we started ramping up our Amazon efforts. We started working with retailers, you know, and moving into 2019 retail was a really, really big focus for us. So this year, wholesale will probably be roughly 30 % of our business. Okay. Another 25 % of that is Amazon and then the rest is direct to consumer. So.

47:29
roughly half of what we do is direct to consumer and the rest is made up by other channels. you know, if we see a downturn in retail, like it’s not really going to affect the overall business and you know, if the cost for advertising goes up and like we have to pull back a little bit on spend for the month on direct to consumer, then like wholesale and Amazon usually make up the difference. So we’ve created this really cool ecosystem where, um, you know, there’s ebbs and flows, but you know, typically our months always end up very well. Um, just because, you know, we do have such a diversified way of

47:58
of reaching customers and selling to them. So I think I saw in another interview that you’re trying to grow this to a nine figure company. What’s it going to take to get there for you? what’s on the road We’re going to be there this year. So we’re at almost $70 million in sales for the year. Wow, nice. Q4 is our biggest quarter. So we typically do 30 to 40%, if not more, of what we do in Q4. So we’ll be over $100 million of revenue this year.

48:26
But a lot of that is attributed to wholesale. So wholesale last year we did 3 million. This year it’s going to be 20 to 25 million. We brought on 115 sales reps across the US. We got into some pretty major retailers that were in Dick’s Sporting Goods and Cabela’s and Bass Pro and Nordstrom and Palmetto Moon and Total Wine and Spirits. We’re in almost 5,000 retailers now. And that’s a big component of it.

48:55
We’ve had a lot of new product releases and our teams continue to grow and we’ve gotten a lot more scrappy. Yeah, it’s a combination of a lot of things, but we’ll be there this year. Let me ask you this question. If you were to do it all over again, would you still go with the digital marketing route followed by retail or would you have gone the other way around? No, absolutely. I would do it the exact same way. Okay. What we’ve seen with retail and why retail is so successful for us is because of direct-to-consumer.

49:24
Think about this, okay, you walk into a store and you see a product for the first time, like you’ve never heard about it, you’ve never seen someone talk about it, you’ve never seen an ad for it. You’re probably just gonna walk by it, right? Like, it’s not gonna stand out to you, because it’s not familiar. With direct-to-consumer, there are, I mean, think about, you know, we reach millions and millions and millions of people every single week, so we’re not getting millions of orders every week, right? So like, people are seeing.

49:51
the brand and seeing the product. But again, they might fit into that category of like people that want to shop direct or like touch and feel the product first before buying it or whatever. And so they walk into a store now and they see roommate and like they’re familiar with the brand. Like, you know, our displays that we have are like designed to stand out and catch your eye. And so we’ve just seen like massive adoption and sell through and a lot of the retailers are seeing something that like they’ve never even seen before.

50:18
just because of that relationship we’ve already built with the consumer before going into retail. Whereas if you do it in the reverse, like you’re really relying on the retailer to like tell your story and you know, they’re not going to do a good job of that. Oh, exactly. Like they can’t tell it the way you can. So if, if you can do that yourself and then just basically use them as a vessel for selling the product, then it’s a, it’s a symbiotic relationship because now they, it’s hands off. Like all they have to do is literally just put it on their shelves.

50:45
And we don’t have to worry about them like telling the brand story wrong or like not positioning the products right or whatever it is because the customer already knows what it is. Like, and now they can touch, feel and buy the product in person. So that’s been something that I think was extremely beneficial. And one of the reasons why wholesale like not only has been so successful, but has been able to scale so quickly. And I think if we did it in reverse, it would not have been that way. Yeah, no, that makes a lot of sense. Hey Dylan, if anyone has any questions about your company or

51:13
want to buy your products, where can they find you guys? Yeah, so my Instagram is at Dylan d y l a n dot Jacob. If you have any questions, just drop me a DM. I answer DMs all the time. And if you want learn about the product, you can go to roommate.com. So BRU m a t e.com. And then our Instagram is BRU dot m a t. Awesome, Dylan. Thanks a lot for coming on show, man. Really appreciate it. Cool. Thanks, Steve.

51:41
Hope you enjoyed that episode. Now I love insane growth stories like Dylan’s when all the pieces just magically come into place. For more information about this episode, go to mywifequitterjob.com slash episode 346. And once again, I want to thank Klaviyo, which is my email marketing platform of choice for e-commerce merchants. You can easily put together automated flows like an abandon card sequence, a post purchase flow, a win back campaign. Basically all these sequences that will make you money on autopilot. So head on over to mywifequitterjob.com slash KLABIYO.

52:09
Once again, that’s mywifequitterjob.com slash KLAVIO. I also want to thank Postscript, which is my SMS marketing platform of choice for e-commerce. With a few clicks of a button, you can easily segment and send targeted text messages to your client base. SMS is the next big own marketing platform, and you can sign up for free over at postscript.io slash Steve. That’s P-O-S-T-S-C-R-I-P-T dot I-O slash Steve. Now, if I talk about how I use these tools in my blog, and if you are interested in starting your own e-commerce store,

52:38
Head on over to mywifequitterjob.com and sign up for my free six day mini course. Just type in your email and I’ll send you the course right away. Thanks for listening.