2X eCommerce Podcast

Kunle Campbell (00:00.814)
So welcome back, Kelly. It's great to have you back on the show. Last time we spoke, it was back in, I can't believe it, it's October 2020. We had a fascinating conversation about how you and your team skilled teach -handling to an eight figure business in just two years, which is phenomenal. We discussed the power of influencer marketing, especially your strategy, your strategic partnership with Aaron Marino, also known as Alpha who helped teach -handling.

be the voice, you know, just get a voice up on YouTube. You shared insights on your innovative subscription model, which achieved an impressive 95 % subscription rates, which is unheard of. We delved into like your content strategy, focusing on importance of like long -term influencer relationships and decisions to focus on YouTube as your primary channel. There's a lot we caught on as inspirational, very, I think it's one of the most downloaded, episodes for, for that year.

And it's amazing to have you on. I've seen you a lot on LinkedIn. I was like, we have to catch up again. So, so a very, very warm welcome. Kelly.

Kelley Thornton (01:06.319)
Thank you, Kunlei. I am excited to talk to you. And you hit on some really interesting points when we think back the last four years. It's almost like dog years. That was like 30 years ago in DTC world. So excited to talk to you.

Kunle Campbell (01:10.2)
But.

Kunle Campbell (01:25.496)
Brilliant, brilliant. Are you still based in in Chicago? Okay.

Kelley Thornton (01:29.369)
We're in Chicago, you're downtown Chicago. And for those who are outside of the country that are paying attention to politics, have the Democratic National Convention next week on two blocks over from us, which is at the United Center, which is where the Bulls and the Blackhawks play their sports season. the convention for the Democrats are going to be there.

Kunle Campbell (01:43.4)
Kunle Campbell (01:52.258)
Hmm.

Kelley Thornton (01:58.863)
We're all a little bit nervous about it because in 1968, I don't know if that was the last convention that was in Chicago, but it was a crazy convention, a lot of protesters. we're hoping for a calm few weeks here at T. Shanley headquarters.

Kunle Campbell (02:14.23)
Mm hmm. So it's it's in a hockey arena.

Kelley Thornton (02:19.535)
Yeah, mean, there's right. It's a big sports arena that's sponsored by United Airlines and the Chicago Bulls play there and the Chicago Blackhawks play there. So it's probably a, you know, a 30 ,000 seat. I'm just guessing 25 to 35 ,000 seat arena. And that's where the convent, that's the primary place for the Democratic convention. So the building has already told us that.

Kunle Campbell (02:31.884)
OK.

Kelley Thornton (02:47.769)
They don't expect, they don't, they don't suggest that their office stays open. Yeah.

Kunle Campbell (02:54.351)
How do you run because I'm very familiar with Chicago. I was there actually two years ago. How do you manage an Ecom? Is your fulfillment center in Chicago or outside of Chicago? How do you manage an Ecom brand in Chicago downtown?

Kelley Thornton (02:58.328)
Sure.

Kelley Thornton (03:14.359)
Yeah, mean, all of our, first off, our offices and our warehouse are in the same building and we have contiguous space. So we have, you know, our finance and operations office and our customer experience office, and then all of our marketing and e -commerce and CRM data.

So we have this whole that whole configuration and then we have our we have two primary warehouses and a Warehouse where we do our own in -house packing and shipping so we have quite a few Square feet here, maybe 18 ,000 total something in that nature and we are in downtown Chicago and we are very much You know work from office type of company

So we have a flexible three, two hybrid. We were in a lot during those COVID years. We were in office a lot. We'd be in office and then we'd be out of office for three weeks and we'd be back in for a week. And so we're really good at having people work from office, but having the flexibility of working from at home or remotely for a couple of days a week and where.

Kunle Campbell (04:16.354)
Hmm.

Kelley Thornton (04:36.111)
Also, also summer hours, so everybody's out of the office on Fridays.

Kunle Campbell (04:41.294)
Yeah. Chicago is a beautiful city to live in. had our first son in Chicago about 13 years ago, and I just relish every moment of that experience. Okay. Let's, let's talk about your PNL. I like to start out with PNL, PNL management, profitability and growth from you were already profitable at the time in 2020 when we discussed this four years on have you managed

Kelley Thornton (04:49.154)
Wow.

Kelley Thornton (04:59.407)
Sure.

Kunle Campbell (05:09.462)
to have you managed to profitably continue scaling TIDG for the past few years? And what key metrics do you focus on in your P &L?

Kelley Thornton (05:17.775)
Yes, we've, yeah, we've, we've continued. So we've pretty much doubled our top line in that timeframe. And we're, we've been profitable every year, except 2022, which is a very difficult year for us, a lot of, a lot of capital went into managing supply. So we had a very tough time making sure that we had product delivered and on time and

Kunle Campbell (05:25.804)
Hmm.

Kelley Thornton (05:44.683)
and product to sell to our customers and it cost us a lot of money to manage it. And looking back, we probably could have done a better job. Sometimes the only solution is to throw money at a problem. And I think a lot of people are doing that. A lot of businesses were doing that when you couldn't get any product, you you were paying exorbitant fees for transportation. Stuff was getting stuck in on the sea for months and months.

We've been profitable ever since. know, the goal is to run the business at at least a 10 % EBITDA. And you know, we've been, it's very, very, very hard concept to both grow top line and grow bottom line for startup companies. Especially when you're trying to build a brand from scratch. It's very difficult. And you need to be.

Kunle Campbell (06:30.36)
Yeah.

Kelley Thornton (06:40.431)
you know, as a company, need to be extremely capital efficient. And, and when you have no, you know, outside capital, you're not sitting with like five or six or 10 large in the bank. you know, you have to be very, very careful how you can, how you spend money. You can get into some very bad habits. So we've been, profitable every year, every year, except 22. We've been profitable every month and every quarter, in 2024.

Although I you know, I found that 24 has been much harder than we expected We had a very big number for us. It would be you know in the in the low 20 million range in revenue In that 20 to 25 million in revenue range We've pulled back on it a little bit as you know as the year went on so we we budget going into the year at the end of q1 we we make any budget adjustments to

you know, a 2024 .1 budget, and then at the end of Q2, 2024 .2, and so forth and so on. And we've actually been, we've been actually reducing our expectations on our top line through Q2 and into Q3. We'll see what happens in September when we readjust. Fortunately, we've done this before, and we've actually,

adjusted our budget higher after reducing it and we've picked up a little steam heading into the fall. So, you know, I do think I know we will have our best year top line ever, but I'm afraid it'll come at a few points being shaved off at EBITDA.

Kunle Campbell (08:23.714)
which is fair given the headwinds at the moment. So really everything boils down to Q4 right now, because we're recording this in August, in mid -August, right?

Kelley Thornton (08:35.107)
Yeah, and I tell you, I've got some an interesting hot take on this. I was just at a conference at Google's YouTube facility, Santa Clara, right in LA last week. And they Google was sharing data about their expectations of Q4. They're actually expecting a very good Q4. They really expect the consumer to be out.

Kunle Campbell (08:47.01)
Mm

Kelley Thornton (09:02.271)
and spending money and shopping really hard in Q4. When you think about it, it's kind of interesting. You know, we're concerned as DTC marketers, we're really concerned about, you know, potential rising Keck because of how much campaign money is going into platforms. And there's, you know, hundreds of millions of dollars being pumped in. Yeah.

Kunle Campbell (09:23.574)
elections.

Kelley Thornton (09:29.827)
you know, into all the digital platforms that we are so active on. And, you know, what is that going to do to what, what is that going to do to CAC and our ability to advertise and what, and can we even compete? Can we break through the election news, you know, to get the ear of the consumer? a consumer going to be tuning out that news and all those ads and you know, what, so we don't know that.

right, and we're concerned about that. We're very apprehensive. But I think as we go in, right, this is the elections early November. I think once we get beyond that, you know, there may be a bit of relief in the market with the consumer. And the consumer might be like, okay, that shits behind us. So, you know, let's really think about the people we love and care about. And what do we, know, and

Let's have a little, let's rejoice a little bit. I know the Bank of England lowered rates, their last meeting, we haven't seen any rates being lowered here. The next Fed meeting is next month, to September 23rd, something like this. I expect the Fed follows the Bank of England and reduces rates.

Kunle Campbell (10:31.405)
Yeah.

Kunle Campbell (10:38.286)
Yep.

Kelley Thornton (10:55.439)
If we got as much as a half point rate, again, I don't think that's going to matriculate its way into the market like next the following week. know, consumer, most consumers don't all pay attention to this, but it does mean that we'll see lower rates on people's credit card bills. Maybe they're paying 20 % interest on their outstanding balance. Maybe, maybe it'll come down to 18 or 17 or, you know, something like this and you know,

Kunle Campbell (11:22.446)
Mm

Kelley Thornton (11:24.463)
car loans will get less expensive, mortgage rates will get less expensive. And ultimately we want consumers to feel good about themselves and their ability to afford the general things in life. Hopefully they'll see the price of food come down just a bit. so I feel very optimistic about the consumer's mindset going into Q4. I really do. think we'll get consumer bounce here in early to mid November.

Kunle Campbell (11:54.498)
Hmm.

Kelley Thornton (11:55.179)
post -election, regardless of the outcome of the election. Because this is just, know, obviously everybody in the world is paying attention. It was messy election here, you know, for a lot of reasons. consumers are, the best of my ability, the best of my, you know, what I know and think from my team and from my friends is, you know, the politics these days have really worn people down. You know, they're just really, they're really turned off by it.

So we'll see, I'm very bullish about Q4.

Kunle Campbell (12:28.244)
Yes, I put in it in that context of the fact that the elections would be at the start of November. And obviously BFCM is at the end of November, it would most certainly release inventory quite dramatically. It would just make it a flush, or at least it would normalize things. It would normalize things.

Kelley Thornton (12:38.51)
Yes.

Kelley Thornton (12:48.481)
Yeah, I mean, I'm very, it's gonna be very, very, very interesting to see, you know, and see what's going on with inventory ad buying and our ability, you know, to make noise out there, you know, from probably early October, probably like mid September through, you know, through like early November, mean, the election's on the fourth.

You know, these campaigns are gonna spend like $100 million each, you know? I mean, it's just gonna be bananas. So we can't compete with that. And it'll just really be interesting to see what happens to CPAs where, you know, we saw earlier in the summer, we saw higher CPAs than we're seeing right now. We're seeing more efficient ad spend in August than we have in the last couple months. Don't know why. Maybe it's the calm before the storm.

Kunle Campbell (13:20.084)
Easily yeah easily

Kunle Campbell (13:33.368)
Mm

Kelley Thornton (13:44.911)
Honestly, that's what I think. I think it's a calm before the storm. think there was probably a lot of spending going into the primary and into the the conventions. Maybe it's a little calm before the storm right now. But I think before Black Friday, Cyber Monday, the customer is going to be excited about holiday. I know I'm going to be all this crap is going to be behind us.

Kunle Campbell (13:45.141)
Mm.

Kunle Campbell (13:57.432)
Mm

Kunle Campbell (14:08.75)
Yeah, yeah, it's it'd be refreshing for sure. What was your experience back in 2020? Because the last election cycle was 2020 wasn't it November 2020? What what impact you recall the impact you had on media buying at the time?

Kelley Thornton (14:17.326)
Yeah.

Kelley Thornton (14:23.193)
you know, I wasn't paying as close attention to it. And here are the reasons why. Most of what was going on in our business was fairly, was fairly like steady. So, you know, hiring was like not, you know, it was a reasonable expectation to be able to hire. Inflation, you know, wasn't

crazy. People were still making a decent amount of money. So we didn't have a lot of the pressures that came from the COVID years, the post COVID years, and then high inflation. Again, I think the high inflation was driven from US macroeconomic policies during COVID and how much money was pumped into

the economy, how much cash was pumped into the economy. Consumers went crazy. I mean, consumers drive everything, know, consumer spending is what drives the entire economy. So consumers went crazy in 2022. They weren't doing anything in 2020. They were hunkered down. They were pretty hunkered down in their houses in 2021. And in 2022, everybody came back out on the streets were going to restaurants.

We're traveling, we're going to concerts, we're going to sports events. They were just rejoicing to be out and about. And then in 2023, you know, people are out, but prices have gotten so expensive. It's very expensive to go to a restaurant here in Chicago. you know, Sunday night I was going for a walk in my neighborhood and my wife and I, there's a new restaurant that opened. We haven't been able to get in. The tourists went in there.

We split a hamburger, we split a salad, we both had a glass of wine and it was 117 USD. That's a lot when you're splitting a salad and split a hamburger. We're not talking about a steak or, know, that's a lot of cash when you're talking about splitting a meal, having two glasses of wine. It's just, it's just insane. So people are like saying, you know, screw this. I'm not going to be going out as much. So anyway,

Kelley Thornton (16:45.903)
I think Q4 will be great. I think we need to get the election behind. I wasn't paying attention to as much. And then of course, you know, interest rates have been so high, right? There's not a lot of capital out there. businesses are, businesses, a lot of businesses I know, a lot of DCC businesses I know are just barely making it and or closing shop because it's just really fricking hard.

Kunle Campbell (17:04.898)
Yeah.

Kunle Campbell (17:09.92)
It is out there. is, is, is. And lots of conversations I'm having with operators is echoing your exact sentiments right now. If something's not done, I think particularly in the States, there's a need for a drop in interest rates. So we could sort of see the effects in Q4 at the very, you know, you know, for, for, you know, just to increase the share of wallets and indeed to see a discretionary income. Okay, let's...

talk about cost management. So with inflation and supply chain disruptions impacting many, many businesses, how have you managed to just curtail your costs, particularly in regards to talent? And what adjustments have you made to maintain margins? You just mentioned the fact that you might have to take a hit by a few points on your bottom line, even though top line is going to grow.

Kelley Thornton (17:40.623)
Sure.

Kelley Thornton (18:05.571)
Yeah. Yeah. Let's, well, I'll talk quickly about it, both from the operational side and then also from the, from the marketing side where we spend all our money from the operational side. We are constantly, our operations team is constantly doing things to look at our vendors and our supply logistics to see whether not there's costs to be taken out. So, and you know, our biggest costs are shipping costs, know, labor costs, cost of goods.

So we are constantly crazy fortunate to have multiple vendors to produce our products. We own our own formulas. We ask contract manufacturers to produce them. So we have a little bit of leverage because of that. If we were white labeling products where we didn't own the formula.

Kunle Campbell (18:55.948)
Hmm.

Kelley Thornton (18:56.749)
it wouldn't allow us to take our formula ownership and give it to someone else and code. So we're constantly making sure that we're getting the right costs from our products. On shipping, my shipping team, our in -house transportation team is constantly, they were here for two hours talking to.

vendors about rates going into Q4 and next year. we're constantly talking to DHL, FedEx, Sandia, USPS, UPS. you know, once every 12 months at the very minimal, you need to go, you know, you need to go to the areas where you're spending the most amount of money, and you need to do an RFP to make sure that your prices are in line. So I think like on the operational side, that's that's what we're trying to do. And then

We're also trying to push back to the extent that we can coonly with our vendors and you know not accepting price increases on certain things I'm just saying, you know, we're not gonna accept the price increase on packaging And we'll just have to go to another vendor and buy that packaging. So that's on the operation side, you know on the marketing side We're just looking really super careful at marketing mix and are you know kind of the overarching

number that we talk about regularly, is MER, our marketing efficiency ratio, which is really just our total span to our total acquisition. That's kind of a healthy metric to look at. We look at everything down on a channel level, but we're looking at MER overall to see how we're doing with our marketing mix and really keeping our total marketing expense down below.

We love our marketing expense to be in the 25 26. It's almost impossible. Sometimes it's you know, it pushes 30 % of our total revenue 31 32 % you know 32 % is we can't live with it, but it's it so we were seeing earlier in the year, know our marketing expense ratio to be you know closer to that 31 30 31 and we've just

Kunle Campbell (20:48.856)
Thank you.

Kunle Campbell (21:00.93)
Yep.

Kunle Campbell (21:10.936)
Hmm.

Kelley Thornton (21:12.003)
been much more efficient, renegotiated some contracts with some of our content providers and pulled our marketing expense down, cut anything that's not, you know, that's not clearly returning capital to us and constantly tweaking the marketing mix to make sure that all of our channels are, and anything, we're looking at every single day, so anything that looks like it's out of whack, we'll look at it right away and if it.

Kunle Campbell (21:26.423)
Mm

Kelley Thornton (21:39.599)
if we're spending too much money and we'll cut back on it immediately. We're not taking any big swings, so we're not swinging for the fences on anything right now, which means we're not spending $100 ,000 a month on TV ad placements. We're not putting any money in any magazines. We're not doing contracts with any sports talent.

Kunle Campbell (21:44.418)
Mm.

Kunle Campbell (21:58.189)
Yeah.

Kelley Thornton (22:06.799)
We're not doing any, we're not taking any big swings at all. It just, you know, we just can't afford it. We can't afford to drop a hundred thousand on something and it, you know, and it not performed for us. So we're being super conservative about how we're spending money on all our marketplaces. Same thing like tacos on Amazon, pulling back on those as well. and, you know, spending, being much more capital efficient, being really intentional about.

Kunle Campbell (22:28.801)
Mm -hmm.

Kelley Thornton (22:35.299)
you know, what keywords, what we're spending money on, how we're spending money, you know, how we're spending money versus our competitors, those type of things. also on the marketing side, taking a look at vendors and making sure any marketing SaaS, you know, anything that we're not using, anything that's not driving business deliverables for us on, you know, on the marketing side, we're cutting.

Kunle Campbell (22:38.22)
Mm -hmm.

Kelley Thornton (23:05.505)
any contract with new vendors to do work, we will require the shortest possible contract that we can get into. We're not going to get into a long -term contract with a vendor. Any sort of service vendor that may not work out and be beneficial, we don't want to be locked into any long -term contract. So just being really conservative across the board on how we're spending money.

Kunle Campbell (23:35.884)
Okay, thanks. Speaking about the operations, really, really interesting insights, I'm sure the guests would have been able to take some of the points you made there, which is always negotiating, you you talked about shipping, negotiating your shipping, you know, rates with all of the carriers, you talked, I think that flexibility in owning your formula, particularly in beauty is so important. So you can, you could easily switch.

If you were stopped to, to, to, to, to white label, would, you'd be stopped to, a platform essentially. And yeah, that flexibility wouldn't be there. So thanks for sharing that in the market. the markets inside of things, what's how's your, your, your Mer, your marketing efficiency ratio change from 2020 when we spoke to, to date, it sort of yo -yo or has it remained consistent between the, the late twenties and very early thirties?

Kelley Thornton (24:33.071)
Yeah, I was out of control in 2022. I mean, it was all over the place. We could not get it under control. We had many outside vendors who we were not performing well for us and we were, you know, we're locked in the contract. So 2022 was a pretty significant problem. 2020.

three was a lot better and very consistent throughout the year. And when we see opportunities to scale and spend more money and to increase our marketing efficiency ratio, we are doing that. We are spending more money when we can be efficient. We're surprisingly seeing a lot of efficiency. Over about 90 days, we're seeing a ton of efficiency on YouTube.

some of our, some of our best numbers on YouTube in a long time. So we're spending a lot, you know, we're spent, we're shifting a lot of our budget, you know, hundreds of thousands of dollars into platforms that are performing well for us. So, you know, I think. Our historically, you know, our, our, our channel, efficiency has been inconsistent. I'd say with the last 18 months, it's been a lot more consistent. That just takes a lot of time dialing it in, having the right people on the team.

you know, and really understanding truly, you know, how you're spending money and what your ROI is on that money.

Kunle Campbell (26:01.237)
And speaking of team house, what's what's your, your approach? Do you have a marketing director on board? Do you work with a lot of agencies you prefer to keep? You know, marketing in house or what's what's the approach to teach?

Kelley Thornton (26:16.439)
Yeah, very. So we have a very strong in -house team. So my approach, which is admittedly, I think this is the harder approach is, you know, to develop a strong internal team. So that's, that's my approach. It's, it's hard. It's harder because getting really good talent on your team is super hard. but so is hiring really great agencies.

to support you. I think, you know, they're both really difficult. It's a little easier to manage an agency than it is to figure out and hire good talent and then develop a team, you know, a team structure. but we, we prefer to develop it internally. So our team right now is, if I look across the board, it's, it's just, really, really, really good, like really smart.

very skilled people that are very, very committed to the business, that are very clear about the objectives of the company, the mission of the company, where we're gonna be in the next 12 to 24 to 36 months. We've developed, we do every few years, we just started in 2024, a new three -year roadmap. So we're eight months into a new year, three -year roadmap.

five very specific points in the three year roadmap with the company, everybody in the company is engaged in that roadmap. So very, very clear kind of what we're trying to do. And then we just, when we do work with an outside vendor, we really...

are very, very intentional about the type of vendor we want and what their skill set is and how they operate. mean, and unfortunately, it's come from being burned so many times and just not being very smart and intentional about who we're working with. So right now, when

Kelley Thornton (28:20.996)
We want to make sure we're really aligned with an agency. So we only have really just one or two agencies that we work with.

Kunle Campbell (28:32.57)
And I guess there'll be like for content creation. What do they

Kelley Thornton (28:37.283)
Yeah, we have we have an Amazon agency, we do our own Amazon ad buying in house and we do Amazon management, operational management in house. We have an Amazon team that helps us look with our international expansion and kind of, you know, taxation, things that nature we have, we have some agencies that help us with like, global registration of our products.

And then we have some we have a lot of content creation agencies that we use we manage that in -house in within the framework of teach creative studios we have a creative studio with in -house and kind of in -house people there and then they manage, you know a lot of our a lot of our vendors so That's we don't have as we and we have a lot of

Kunle Campbell (29:17.134)
Okay.

Kunle Campbell (29:27.948)
Yeah.

Kelley Thornton (29:31.939)
partners that are doing things for us like, know, Clavio and things like that.

Kunle Campbell (29:37.523)
Yeah, because adaptability to whichever changing macro environment in the world of marketing is so important. We'll talk about like TikTok, shop how that has taken off and

You know, several, most in -house teams don't have the capability or competency to really scale TikTok shop. Unless if you have a genius who just sucks up, know, information is, and is, is almost an intrapreneur, you know, in your company. So, so how do you seize new channel opportunities given that you're very in -house centric?

Kelley Thornton (30:07.535)
Correct. Yeah.

Kelley Thornton (30:17.687)
Yeah, I mean, so the answer to that question is that this might be a bit of a too much of a tell. But what we'd like to do is we would like to hire an agency. So let's talk about TikTok. We're doing well on TikTok. We have TikTok shop. We're doing well on TikTok shop. We do manage it through an external agency. So.

If we don't have the core competency in -house, we will hire an agency to help us. But the intent from day one is that whoever is going to be the lead on that channel internally, even via an agency, will

work towards developing a skill set to manage that channel in house at a at a very specific future date. So we'll be like, you know, we're going to bring in an agency that's going to help us do this. We intend to engage this agency for a year's worth of time. And you know, by summer of 2025, we expect our channel lead to have enough knowledge and learn enough knowledge from

that agency that will be able to manage that in -house. And we will be pretty clear upfront, maybe not explicit, but clear upfront with the agency that we do intend to learn and to experience how they're managing process around that channel with the intent of eventually taking over the channel in -house. that's kind of our approach.

Kunle Campbell (32:00.514)
Yeah, knowledge transfer, which, is, which is key. So again, it's taking that ethos of owning your formula from the operational standpoint and from a marketing standpoint, actually owning the methodology and process, you know, in house, even if you're, getting the, you know, the knowledge from, from a third party. Love that. Love that.

Kelley Thornton (32:21.315)
Yeah, mean, it's kind of, you know, it's kind of like a combination of being a bit of a control freak, and also being able to kind of control your own destiny. It's like a combination of those things. Because, you know, if you you said it a minute ago, they if you don't have the knowledge in house, and it's really hard to manage a partner. So

You know, so I think like our strategy is to really truly understand a channel as much as possible so that we can have the flexibility of scaling that channel internally.

Kunle Campbell (32:53.059)
Mm

Kunle Campbell (32:59.566)
Hmm. Funnel question in the P and L management side of things is just your investment priorities, particularly how they've shifted in recent years. And I want to kind of understand whether you're, you know, you're you know, 70 % DTZ company or whether you're, you're, you're more diversified, child divers. I think you're one of the first people who told me that,

told me about like channel diversification, where you don't want that stock with me for a while, can you imagine four years on where you're like, I don't know whether you remember this, but you're like, you didn't, your approach is not to make a channel sort of account for more than 25 % of top line, you want to distribute it evenly. So is that still the case? What are your investment priorities right now?

Kelley Thornton (33:45.881)
Yeah.

Kelley Thornton (33:50.381)
Yeah, mean, I, so, all right, well, this is a big question. Let me answer the first part of the question the way you asked it. I mean, our investment priorities is to invest in our people first, right? So we want really fucking good people on our team and that's extremely hard. So.

Kunle Campbell (33:59.192)
Okay.

Kelley Thornton (34:13.631)
to the extent that we can make sure that we have the right people on the team. that'll allow us to get, you know, we five year or three year roadmap. We have the right talent that's going to help us get to that. then, you know, I believe in product actually a lot products really important to me. So physical, our physical product, our physical.

formulations and science in our products really important to me because if we don't have really great products that work really well that guys love, we can sell that product all night and all day one time, but we can't sell it two times and our business doesn't work unless

Kunle Campbell (34:57.944)
Mm

Kelley Thornton (35:01.101)
people love our products. So we invest in people and we invest in physical product. And the way we invest in physical product is through our people. Like we have an insane chief product officer, Fadi Murad, and he's been with us for several years, first as a consultant and full time this year. And so we just have a really, really, really good product innovation roadmap.

And really trying to understand where we want to be with our product this year, next year, and the following year on like in channel investment and channel diversity. Like, you know, if you have. So I learned this at my previous company, my second company that I created, which is a global advertising agency. And what's when you have services business, you know, it's always like the 80 20 role, you know.

80 % of your revenue comes from 20 % of your clients. you know, and that's a good thing while it lasts. But if you lose one of your big clients in the service industry, that's, you know, represents 50 % of your revenue or more. Things change really quickly and not for the better, but for the worst. So, you know, making sure that you're diversified.

And we learned the hard way here at Teach. We had a big problem with Amazon several years ago. I think it was around 2021. We had problems with Amazon and there were technical problems with some of our products. We were able to recover really quickly. We were able to recover in 60 days or less. But, you know, just you realize how dependent you are on income from a channel.

And Amazon was under 20%. So it wasn't, it wasn't a huge thing, but 20 % of our business was pretty big deal. So to shut off 20 % of our revenue for 60 days is very frightening, you know, and you can't, you can't bounce back quickly from that. So being diversified in your channels is really important. What's really good is when all the channels are killing it, you know, when all your channels are doing really, really well.

Kunle Campbell (36:58.924)
Hmm.

Kunle Campbell (37:09.923)
Yeah.

Kelley Thornton (37:26.041)
That's the magic. You know, unfortunately, that's not usually the case. Usually some channels are doing well and other channels are not doing that well. So being diversified, you know, being on TikTok, being, you know, doing really well on on on paid doing really well on

you know, meta properties doing really well organically, micro macro influencer, you know, affiliates, you know, all of these things brand doing very well on brand. When you're doing when you don't, you know, pretty well on three of the five, then you don't pretty well, you know, when you when you're sucking on all of them, you're really in trouble. So I think like, you know, what and what we see

kum -le is that we'll have a couple channels that are doing really well, like through the quarter, you know, these channels are performing very, very well for us. And other channels are not. So we'll do two things, we'll try to figure out why a channel is not doing well for us. Is it you know, is it the talent? Is it the creative? Is it the messaging? What is going on? Is it that we've changed something and how we're buying on that channel? You know,

Is it the data's not right? Is there a technical problem? Is something technically broken? We'll try to evaluate that. In the meantime, we'll be shifting dollars quickly into a channel that's performing for us. And that happens very quickly, like within a week or weeks, we'll be shifting dollars out of. And usually we have enough scale in our channels that we can effectively shift dollars.

Kunle Campbell (38:50.093)
Mm.

Kelley Thornton (39:05.421)
If you don't have scale in your channels and you're shifting dollars, there's no place to put the dollars, you know, in the, in the channel that you're, that you're scaling towards. So you have to have enough scale in each one of your channels that you can, you know, you can shift yet. You need to have diversity first in your channels. And then secondly, you need to be able to shift money and have room to, to, to, to, to utilize additional capital in that, in that channel. So that's what we, that's what we're thinking about all the time.

Kunle Campbell (39:35.218)
That's a real key point in terms of getting to statistical significance through scale to know if it's working or not and then shifting it really quickly. what are your, what's your feedback loop? What are your, how often do you collect the data and how often do you react to the data and how do you even collect the data to make these decisions?

Kelley Thornton (39:58.509)
Yeah, it's hard to say. I wish I had a feeling for how data -driven other companies were. mean, from my pretty ignorant perspective, because I don't know where other companies are in their data game, I think we're incredibly knowledgeable when it comes to data within the company. We have our own data team. And so

We're you know, we are looking every single I get a scorecard every day. That's one page that tells me everything about our business. It's like everything and it's all homegrown. It's something that we create ourselves. You know, it talks about, know, channel.

Spend channel efficiency from the day before, from the week before, from the month before, where we acquired customers yesterday. We're actually looking at performance by channel. And then we're understanding cost by channel. then

Kelley Thornton (41:04.687)
we're looking at, you know, attrition of customers or return on customers on that channel. We're looking at a future 12 month earning on that channel and then figuring out basically tomorrow, how much money are we willing to spend on that channel to get, to get like customers. then 30 days from now, we're looking at whether or not our, predictions on that channel were correct or not. and we're looking at.

30 days from now we're looking at today and we're also looking at June 13th, which was 60 days or July 13th and we're looking at June 13th, 90 days and we're looking to see if the assumptions that we made on those channels were correct or not. And then of course we're just every single day putting that back into the feedback loop to figure out how much money we can spend today to acquire customers.

how efficient we are with our spend. If that makes any sense.

Kunle Campbell (42:09.042)
It makes a lot of sense, Kelly. So from a new customer acquisition standpoint, from a CAC perspective, what you're not start, is it the purchase or is it the subscription? Cause I'll speak for one of our businesses. we're working with the agency, we essentially just focused on saving subscribe.

Kelley Thornton (42:22.895)
Sure.

Kunle Campbell (42:31.982)
How many subscriptions is this, you know, as your work sort of delivered at a skew level. So we kind of understand what the growth is and we chatted that over time for, for Teage when, you know, at the time we last discussed, you're like a 95 % subscription rate. Has, has anything changed there from a subscription standpoint?

Kelley Thornton (42:47.759)
It's pretty similar to that. mean, it really is in terms of our top line revenue. You know, mean, on our domain teach .com, you know, our subscription revenues in the high 80s of 87, 88 % on a daily basis. yeah, I mean, just back to this conversation, what we're doing and you think about Keck, we're backing into Keck based on, you know, our channel specific costs.

our cost of product, right? And how much it cost us to acquire that customer will actually also include variable cost and fixed cost, fixed and variable marketing expense. And then we're, because we have the benefit of having years and years of data,

We're estimating the future value of that customer. And we're really good at it, like plus or minus a percent or two. I mean, it's that tight. It's plus or minus like 2%. And on the channel level and based on the

the creative and the mix and the offer that someone bought. So for instance, if someone's buying a, you know, comes in and they're a customer and they're coming in through Meta and they're buying on full price or they're buying at 20 % off or they're buying, they're buying something and getting, you know, a free gift or they took a quiz and got a coupon, whatever it is. So each one of those customers we expect to, will perform differently. So we.

You know, we'll look at the behavior of each one of those customers and say, what's the likelihood that they'll receive another box from us, another box from us, another box from us. We can take that and predict a future 12 -month earnings. So we know the value of this gentleman named Kunlei who lives in the zip code.

Kelley Thornton (44:56.291)
who bought on this offer through this channel will have a very good, a very high predictive degree of what his worth is going to be to us. And that'll allow us to figure out how much money we wanna spend to get more kumles tomorrow. And that will drive our keck. And the better we are at predicting it, the more comfortable we feel

with adjusting keck guardrails on a daily basis. we'll, you know, we may be more than happy to whatever the number, I'm just throwing it out there, you know, $50 today. And this week, we may be happy to spend $50. Next week, we may be happy to spend $75. And the following week, we may only want to be spending $42.

So, and that's exactly how we run our business.

Kunle Campbell (45:55.662)
Hmm. Hmm. Yeah. Very CLTV driven, customer lifetime value driven. Does that mean to some what I'm hearing from you, it means that customer preferences regarding subscriptions has essentially remained the same over the last four years, even though you see you've doubled the business.

Kelley Thornton (46:13.153)
Yeah, you know, that's an interesting question. That's a damn good question. I actually think there's less subscription aversion today than there was before. So right. Because I think we're you know, we're a modern day subscription company. And I think a lot of e commerce companies have come to grips with if they're going to be a subscription company.

They really need to be customer focus and genuine with their customers. so, you know, we have a reputation out there that will do what's right for the customer. And if they sneeze and they're upset, we'll return their money, you know, their cost of purchase.

If they didn't get something, we'll help them. Yeah, and there's people out there that are abusing it. And we do a lot to monitor abusive customers. And we block them and we banned them. But most customers are like, I believe most people in the world are good. Maybe I'm naive, but that's what I believe. And so we treat everybody with kindness. so I think people see the value

Kelley Thornton (47:32.811)
Right that the value of having a subscription outweighs the hassle right people don't in my mind consumers Do not have any concern about getting out of a subscription Right because the cool consumers probably thinking I'm gonna get my bitch on and I'm gonna get out of the subscription, you know And if I have to call ten people to get it done

I'm going to get my bitch on and I'm going to do it. So, so I don't think consumers believe that they can't get out of a subscription. think what consumers think about is how much hassle is it going to be? Like, how do I need to call five people or can I just chat in with somebody or send an email and get my problem solved? If they, right. And so if, if a consumer thinks that

Kunle Campbell (48:05.112)
or enough.

Kelley Thornton (48:30.583)
All they need to do is chat in or email or whatever and they get an immediate response and we solve their problem right away. I think they're cool with subscriptions because the benefit of it in my mind as a consumer outweighs the potential hassle of having to get my money back. I don't have to do anything. I can make changes easily. I can get what I want when I want it. It's more convenient than having to go to a store.

You know, so the benefit of the subscription outweighs it as long as you make it super easy for the customer.

Kunle Campbell (49:10.764)
Yeah, true. True, true, true. And yeah, it's about convenience, speed, convenience, and yeah, that predictability. Could you paint me a picture of a customer? So take me for instance, if I was to go into tidge today, and subscribe to a pack to a package, what

Should I expect what's my customer experience? How have you crafted the, the customer experience? Do I get a welcome plaque? Do I get direct men in the post? What kind of emails and SMS is what I expect to get from TIDG? What's my conversation with, with TIDG like posts, posts subscription? How do you treat me?

Kelley Thornton (49:55.799)
Yeah, I mean, we're really so we're the routine company. We're routine experts. We really we really want you to be successful with your skincare routine. We want you be successful in life, right? And we're just a little we play a little bit of a part in that. So we want you to be successful. So we're going to try to help you. I'm to try to make sure that you have very high visibility to receiving your box. We want your customer experience on

Selecting what you selected and checking out really easy and then we want to make sure that you had a good experience Receiving your your box. So that's super important to us We want you to we pay a lot of attention to how long it takes for you to get your first order And we're paying super close attention to what you're between placing the order and receiving that order so we're paying attention to

whether or you're making changes, you're changing your shipping address, you're doing all kinds of stuff, so we're paying attention to all that. And then we're welcoming you in to try to understand how to have healthy, like how to be successful and have healthy skin and get good results. So we're helping you with all that.

And then we're talking to you about the value of being a subscriber and what what it is that you will receive from us So those are the main things we're doing

Kunle Campbell (51:23.852)
Interesting, interesting. then from a channel mix perspective, you're obviously DTC, you have an Amazon front, you mentioned a TikTok shop. you also Brick and Mortar? Do you have any distribution deals or is it just those three channels?

Kelley Thornton (51:39.257)
But we do not, we just started our wholesale journey as part of our.

Kunle Campbell (51:44.588)
Hmm. International wholesale or domestic?

Kelley Thornton (51:49.645)
domestic US wholesale. We just started it is there's another reveal it's one it's one of our five pillars on our

Kunle Campbell (51:51.959)
Okay.

Kelley Thornton (51:58.797)
our three year growth plan. So in June, we hired our first again, not outsourcing to, you know, a sales agency, we decided to hire in house, we hired an in house wholesale manager, global wholesale manager who we are thinking about global, but we want to, you know, we want to get our feet under ourselves. So

Kunle Campbell (52:12.119)
Mm

Kelley Thornton (52:24.815)
And actually we made very quickly, we made great progress. starting in January, we know we're already going to be in several hundred stores of a sizable US retailer. And so there is an appetite out there for our products to be sold.

you know, at retail and, and this just goes right to what we were talking about earlier, I think it's important to diversify. And so we want to be we want to be diverse in our channels. the DTC business isn't doing, you know, growing at 25 % year over year, maybe maybe the wholesale business is growing at 20 % year over year, I don't know, because we're not there. But we do want to be diversified.

But we want to be very thoughtful about how we do it. Like the goal isn't to be in every door that we can be, it's to be in the right stores and to be profitable.

Kunle Campbell (53:24.29)
That's right. That's right. That's right. That's that's phenomenal. One thing I one point I wanted to make about TikTok shop is just the fact that it's not mature enough to support save and subscribe or any form of subscription. How are you tackling that? What are you doing to

Kelley Thornton (53:42.029)
Yeah, well, this is what I think. And actually, I'm very bullish on tik tok shop. I actually think that the mindset for us brands should be that it's not a competitor of Google or meta. So it is not it is not a Google or meta. It's a

which is kind of where my mind was for a long time on it. It's really a direct competitor of Amazon. So, so,

Kunle Campbell (54:15.328)
It is. It is. It's.

Kelley Thornton (54:21.399)
You know, I mean, I think, I think they're after, you know, I'm firmly believe that TikTok by dance is after Amazon. They're not after Metta. So, you know, I think it's really important to be.

to have a really good tic toc shop strategy and to, you know, really seriously consider it as a distribution channel like meta. mean, like Amazon, and, you know, begin your journey with with them. And it's going to be if it's going to be anything like Amazon, it's gonna be a long haul and trying to figure out how to be on there, how to have a great shop.

and how to grow that shop over time. Understanding that right now, tick tock shop owns the customer. You know, they own the customer. mean, I guess you have the customer address, but realizing that they're here to stay and they're here to compete against Amazon. And so you better get on the platform and you better figure out how to, you know, play within the guardrails that the tick tock shop is set up.

And, know, hopefully have a successful shop. mean, I think it's clear how you can be on that platform and win. So, you know, and it's early in my opinion, right? It's, very early. So I think, I think, you know, getting a great, having a great strategy and building Tik TOK shop and committing to it for the long haul is really important.

Kunle Campbell (57:46.008)
Okay. sorry. I realized I was just talking to myself because I was on mute.

Kelley Thornton (57:50.888)
I had an audio problem. I had, yeah, I had an audio problem there and I was trying to figure out what was going on, but that's okay. Can you ask me the question again?

Kunle Campbell (57:59.854)
So your audio is now has changed. I'm going to just mark this and bookmark this clip so we don't lose. So your audio is kind of changed. the quality of your audio is dropped.

Kelley Thornton (58:16.46)
Yep, I'm going to fix that right now. And I apologize for that. was trying to shuffle off there why I lost you. I didn't realize what the problem was.

Kunle Campbell (58:18.63)
Okay.

No worries.

Kelley Thornton (58:29.72)
There we go. Can you hear me now?

Kunle Campbell (58:32.652)
I can't but you're still, I think you're still using your computers.

Kelley Thornton (58:37.698)
to see.

Kunle Campbell (58:38.702)
Okay. So it does say you're using your, okay. Let's, we'll proceed. We'll proceed. I think, think, yeah, it's better. It's better. Yeah. So, so I was saying that, it's, it's interesting where matter is going in comparison to, to, to, to, to bite dance. I was listening to the Q2 earnings report for 2024, where matter and Mark Zuckerberg was talking about,

Kelley Thornton (58:46.38)
Yeah, I think it's better now. I think it's got it.

Kunle Campbell (59:07.522)
how they're doubling down on Meta AI. So, you know, they've been investing a lot on AI to improving the just time spent engagement and performance of, of, of their platforms, you know, when, when the platforms are interacting with customers. now they're creating a chat GPT kind of lookalike called Meta AI and they're throwing a lot of resources at that. Meanwhile, ByteDance seem to be focusing more on commerce on their TikTok shop.

since they saw the, the attention, you know, challenge, you know, Tik Tok will, will hold you as a, as a user for, for, hours, you know, for minutes, if not hours. So it's, it's interesting how, how, diverse or how, how different their strategies are at the moment. But one thing I'd like to see, Tik Tok shop have is, is a save and subscribe option, know, Claire save and subscribe.

where you're able to essentially subscribe to a brand, but they're also quite good, anecdotally speaking, when you purchase something from, like if you purchase a beauty product from Meta or a skincare product from, sorry, from TikTok, TikTok is quite good at retargeting you again. And it would incentivize you to get that tech and purchase through. And it's quite persuasive and I think it works.

Kelley Thornton (01:00:32.012)
Yeah, so.

You know, I concur with everything you said on my comment on, you know, the subscription aspect of TikTok shop. You know, to me, it will only be a matter of time. TikTok has been very, very, very deliberate. If you really looked at kind of how they've rolled out things. I, to me, there seems like there's no expectation that they would, there should be an expectation that they'll have, you know, the ability to do subscribe and save over time.

Kunle Campbell (01:01:05.184)
Absolutely. They have the know -how for sure. Okay. Once you swiftly move on to influencer marketing, at the time, you essentially had a brand ambassador. It was Aaron Marino, Alpha A, think, or Alpha

He was a significant part in Tidger's early success. Can you share why he's no longer the face of the brand? What led to this change and how has it impacted the brand's identity and marketing strategy?

Kelley Thornton (01:01:35.958)
Yeah, well, first off, Aaron Reno is intimately involved in the brand. mean, he's engaged with the brand on a daily basis. he is still a minority, a very high minority stakeholder in the brand. He sits on our stakeholder board. So he's a critical person in the brand. And he's a very savvy.

marketer and a very savvy businessman. So he's very engaged in the brand. know, I think he is and knowing that the brand, you know, the brand is very fortunate to have Aaron be so engaged early on in helping us develop and grow the brand. Without him, we wouldn't be where we're at today. So with all that being said,

Kunle Campbell (01:02:32.355)
Hmm.

Kelley Thornton (01:02:35.22)
You know, there's a natural, this again goes back to the channel conversation, there's a natural ebb and flow of every channel. You know, there's just, there is, and there's a natural ebb and flow of content and content creators. you know, Aaron created content for us for many years. He still creates content for us regularly.

But the type of content that he's creating for us is changing a little bit. So he's not talking on our YouTube channel, you know, regularly. Really, the blog on our YouTube channel is really about kind of the making of our brand and what we were doing with the brand every week. And, you know, we felt that that content was got to the point where it wasn't, you know, as relevant to our customers anymore.

you know, Aaron and I, in our business partner, Rob decided that we weren't going to continue making that kind of content. you know, Aaron has made a lot of content that he's presented to his YouTube channel for many, many years. And we just felt collectively between Aaron and Rob and I that we weren't going to rely so much on Aaron's YouTube channel to help us grow our business. So,

So, you know, we've leaned less on Aaron and it's been, you know, not just one year. It's been year after year after year. We've relied less on Aaron to grow the business and we've relied more on our ability to be good marketers to grow the business. So, and so that's it. you know, you don't see Aaron, you know, I don't know, I'm sure there's images of him on our website.

There's some videos of him somewhere on our website, but he's just not front and center to everybody. And that's okay. It's good for our brand, you know, and it's good for Aaron. We need to be broader and bigger than just one person, bigger than me, bigger than Robin, bigger than Aaron. need a brand that's going to be sustainable around the world.

Kunle Campbell (01:04:50.796)
Yeah, good, good, good stuff. Good stuff there. So do you have any, so what's your influencer markets and strategy now?

Kelley Thornton (01:04:59.064)
We create three to 400 pieces of content every month. And we're creating content with people that are great at delivering content that we think our customers are looking for. So if our customers are looking for a specific type of content, our goal is to be engaged and embedded.

in that content that they're interested in. And we need to be talking about what is important to teach, which is skin care. So we're producing an exorbitant amount of content all the time that is relative to men and talking about skin care.

Kunle Campbell (01:05:43.054)
Okay, okay, makes sense. then how's the content, how's it funneled, the three to 400 pieces of content you create, is it purely paid or do you also use it organically? Okay.

Kelley Thornton (01:05:54.124)
Both, we have paid contracts where we're doing just, it's just being used on our content providers channels and sometimes we're doing things that are being used across all channels. It's everything, sometimes we're using it solely on organic channels. We use content everywhere and it's different in form and function.

Kunle Campbell (01:06:21.708)
Okay, makes sense. it makes sense. Right. We're gonna jump into like some wrap up questions. So we get this going. So what is the future outlook, you know, just looking ahead? What were your next big mouse and she talks about some your your five year plan for t t jump? How do you plan achieving them?

Kelley Thornton (01:06:27.852)
Sure.

Kelley Thornton (01:06:45.376)
The outlook is super bright. You know, I mean, it is great. Our brand is strong. Our economics are strong. Our team is strong. The market is maturing and more guys are interested in taking care of themselves. We're very well positioned to be market leaders. So, you know, I don't see anything but all of us up and to the right. You know, I think we

as a brand have a lot of work to do. Things that we talked about briefly on this roadmap such as product and launching great innovative products. We have a lot of work to do.

being well better known in the market, right? Having more visibility so more people around the world become familiar with our brand and wanna trust us to try our brand to be their go -to skincare brand for dudes. So, you know, I think the future is very, very bright. If we wanna be specific, you know, we see a continued global expansion, we see product expansion, we see brand expansion.

We see US marketplace expansion, so lots of opportunities ahead.

Kunle Campbell (01:08:05.534)
Expansion, expansion, expansion. So speaking of international expansion, would we would you going to have a local UK presence or local European presence very soon?

Kelley Thornton (01:08:08.214)
Yes.

Kelley Thornton (01:08:17.696)
I would love to, you know, we do really, really well in the UK and we'd to have presence there in the UK. We do very, very well in Europe, so we'd like to be there too. so I think, yeah, I mean, it's definitely on the roadmap.

Kunle Campbell (01:08:35.31)
Okay. Okay. Good stuff. All right. Given everything you've learned about, you know, since our last conversation, what's the one piece of advice you'd like to give to aspiring entrepreneurs, especially those looking to skill their DTC, you know, beauty businesses in 2024.

Kelley Thornton (01:08:52.13)
Do it, man. Get after it right away. Be prepared for a grind. Get after it right away. I'll probably say the same thing that I would say to you back several years ago is creating that voice in the market is really, really hard. We were just talking about Aaron and how important he was for Teach and is to Teach. So having a great voice, figuring out how you're going to have a voice in the marketplace, and how you're activating on that is really important. So get out there and figure that out.

Kunle Campbell (01:08:53.912)
Yeah.

Kunle Campbell (01:09:12.622)
Okay.

Kunle Campbell (01:09:19.468)
Yeah, yeah, that sure has been your own fair advantage, you know, in this really, really competitive world of, know, men's skin care, men's grooming. So final thoughts, is there anything we haven't covered that you think is important for our listeners just to know about Tej or, you know, the men's grooming industry in general?

Kelley Thornton (01:09:42.046)
You know, we tell that to each look, you know, I think it's important for all guys. So if we talk about to each, think it's all, I think it's really important for guys to be thinking about how they're going to have healthy lives, you know, take care of themselves, mind, body. So having a healthy skincare is really important. I prefer to use our products, but if you're going to get out there and, know, use teal teals or somebody out there lab series, you know, or.

It's globally known that produces good products, not as good as ours, that give offer some block protection like SPF. It's really important for guys to get out there and to embark on a skincare journey. For marketers, think 2024 has been a lot harder year than we all anticipated. I think consumers came off of COVID, spent a lot of money and have been really fatigued by inflation. And we need some help on what

looks like. Q4 looks solid. I'm very bullish on it and I think if we could get behind the US election and we could quiet down some of the noise that's in the world, it's incredible that with 2024 we still have wars raging everywhere and if we could quiet down a little bit and consumers could feel better about the future, it would bode really well for us in 2025.

Kunle Campbell (01:11:04.29)
Yeah. And there's this YouTube shop and channel now, which, essentially puts YouTube into, into the mix as, as a viable channel. So I'm really looking forward to that one too. Kelly, it's, it's been an absolute pleasure having you on the 2XE Commerce podcast. people who want to find out more about TGE, it's tge .com, T -I -E -G -E .com. I'll link to it in the show notes. You're active on LinkedIn. I'll link to your, to your LinkedIn profile.

This is really good. Four years was a bit too long. Maybe next time we'll catch up in another 18 or 24 months. What do you reckon? Okay. All right. Cheers. And thank you so much for being so open. Appreciate it. All right. Cheers.

Kelley Thornton (01:11:38.956)
Hopefully, hopefully another two years max, hopefully.

Kelley Thornton (01:11:47.01)
Thank you, sir. Appreciate having me.

Kunle Campbell (01:11:51.05)
Okay, all done. I'm gonna really really appreciate it. Great combo.