Add Creative - Episode 5 - Show Notes

During this Episode of ADD CREATIVE we are lucky enough to get to learn from Ron Shah, Co-Founder & CEO of Obvi about his teams journey over the last few years creating a bootstrapped brand.  

[00:00:00]

Ron Shah: You know what it was part of it stems from, we got $10,000 to not mess this up. And now if you take that and you boil it. So you put $10,000 on the wall and he said, okay what does this mean? Or you're like, okay, it gives you an order, right? The ability to order something cool.

What are we going to order? We're going to order something. That's going to give us the opportunity to be different and disruptive. Otherwise, why would anyone want to buy it? So now you take that and now you dovetail right off of that. And you say, all so if we have to be different and disruptive, what are two things we have in control to be different in disruptive?

So one is branding, color, design, packaging, and two is formula science. What's in the product, et cetera. So we said from there, we'd say, okay, cool. So basically what's in the front of the label and what's behind the label. Cool. So now let's boil that down more. [00:01:00] What can we do on the branding packaging design side to be so damn different?

That it becomes so obvious that you want this product when you first look at it. So we said, okay, what if we went female pink flavors, everything everyone's not doing. So we have one reason for you to come to the us on that. Then we said, all right, but what if they turn the label? And they say your formula is not that great.

Welcome to ad creative, a new show from pencil about the unexpected ideas that change the game for DTC, founders, and operators with a focus on actionable takeaways. I'm chase most city from the pencil team. Thanks for joining us.

My guest today is Ron Shaw. The CEO and co-founder of the DDC brand obvi. We moved from his origins in the big four to his time as a 22 year old controller for a startup that scaled like crazy and crashed. And what he learned from Michael Jordan and Kobe Bryant about winning.

Throughout all that Ron shares his strategy for forming a co-founding partnership. How he and his team came [00:02:00] up with the concept for obvi.

How he feels a great relationship with your manufacturers is an actual moat for your business.

And his big vision to give customers what they really want more than anyone else has on the college end game up until now.

This one is really special because Ron's wife just gave birth to their first child. So congrats to the whole ABI family.

We're excited for you to listen to this absolute zinger that Papa Ron drops here. Enjoy.

Chase Mohseni:

Really glad to be joined this episode with Ron Shaw CEO and co-founder of Obvi collagen. It's really nice to have you here Ron.

Ron Shah: Thanks for having me chasing the honor to be here because I'm excited to finally be able to connect you with you in a little bit more real time uh, outside of Twitter too.

So extended. Yeah, for

Chase Mohseni: sure. For sure. Oh, I want it to, obviously there's some accolades that we could talk about. You guys have been you guys have been scaling and doing a great job. I think I would love to hear about your history. Cause I know you moved from finance to consulting and then moved into marketing.

I loved one, one part of your bio that you worked at hooked on phonics. I think that's I want to hear a little bit about that. [00:03:00] That's amazing. But how does one go from finance and consulting to becoming a CEO of a company like Obvi, I'd love to hear the Genesis of that story.

Ron Shah: Yeah. And that's a great question. For me, I was actually brought up with following my dad's footsteps. So my dad's been an accountant. He's been working at a company called Ernst and young for 30 plus years climbed the ladder and that's what I was going to chase. And so I was an accounting major.

I always knew I'll be an accountant. So went to school for accounting, graduated with an accounting degree, got to work at a big four called Deloitte where I did accounting and consulting. And I was on that path. And it was funny because it was the apartment building that I moved to in New Jersey.

And uh, they were brewing a company called shreds there in the top floor of that apartment building. And I happened to run into one of the founders and the elevator. And he said, Hey, we're looking for someone with, some finance background. You're looking for a new role. And I remember I [00:04:00] had went to my dad and I said, dad, they were looking for a controller.

I could be a 22 year old controller. And my dad's like, ah, I got to meet the founders. So my dad came and met them, vetted them out and said, if I'm going to let my son take this opportunity, you guys better make sure you take care of him. So took that leap of faith, of leaving my accounting background behind in the sense of a career.

And took the leap of faith to become a controller at a startup called shreds. And from there that just spun into a whole world of learning marketing, and how to build a brand and how to incubate other brands and learning what mistakes to avoid learning, what mistakes can kill you. And so it was just such a great patch of learning.

One of the coolest things I got to do there. We had to work you're required to live in the building, but you have to work two shifts. So you work from nine to six, you go home, shower, eat dinner, you come back at 8:00 PM to do your second shift and you work till about two to 3:00 AM, [00:05:00] six days a week.

Your only day off was Saturday. That work ethic that got embedded in me early on has stuck with me. So it's you take some of the good, the ugly and the bad, and you mix it on and take an experience out of it. So that's where it started. And then, happy to walk down the journey.

But that was

Chase Mohseni: definitely cool. This really is really fascinating because, I talked to a lot of young people and you can feel the ones that just are hungry and are going to go get it. But I always advise younger people too. There's obviously the branding you want on your resume, but also you can't make, you almost can't make a makeup for the time that you go and spend at a startup and you're working those six more days.

And it's literally the Elon Musk thing where he's if you were going to start up and you work 16 hours a day, and you're dedicated those 16 hours a day, because the work is so intense, you essentially get three to four years out of every one year and you accelerate yourself, not exponentially, but like in two years, you're at a person who was eight years working at a regular nine to five.

And you see these people and I'm sure that kind of [00:06:00] intensity of work just helped you propel you into that kind of next few things that you did.

Ron Shah: Yeah. No, a hundred percent. And is that what you said about, when you're young taking that little bit of a risk? It is, it's very scary because so many startups are coined to failing.

But if you look past, because that's the startup I worked at in technicality failed to, we grew it to a hundred million and it went down to 10 million. And so in a way it was a failure, but the extraction of the experience and the embedded work ethic and the propensity to take on risk that never leaves you.

So like it pays off failure or success. And I think that part is often not recognized.

Chase Mohseni: Most people who have successes in their startups are not, these mark Zuckerberg stories, they're a person who has had one, two, even sometimes three times where they haven't hit a home run.

Maybe they had a single or they hit a single and then they,[00:07:00] they lost. And it's more about kind of the compilation of those stories and those lessons that you take that allow you to go to the next level. Cause you, you play smarter the next time, right? Yeah. That's super, super interesting.

I almost think we could do an entire podcast about what happens when you throw a company to a hundred million and then it drops down to 10. That story is I'm almost want to save that. Cause that

Ron Shah: sounds, we got to do episode two for that.

Chase Mohseni: Yeah, that'll be the next episode. We'll intro.

Ron Shah: I love that. So

Chase Mohseni: after that, obviously you worked at a couple of different companies and then you started, it was a ghost media,

Ron Shah: is that right?

Yeah, it goes three media. So what I got the opportunity to do is at shreds, I also met my two other co-founders who also double as my best friend who also where my best man at my wedding. It was really cool cause it was an experience that I never expected to, to extract on that end too.

But we basically all left shreds. [00:08:00] I at that time we all said, Hey, we'll do something together, but we still need financial freedom right now. So we went in, all, worked at different companies. I went and worked at a hoedown phonics where I was a marketing director, bringing their digital, bringing their analog product digital and then usher in my other partner.

And he went and worked at an Amazon marketing company and then worked at a vegan supplement brand which I also got to have a small stint app, but point being our goal was okay, we're going to have to separate right now cause we're leaving, but let's bruise something together. So goes three media was ghost.

The idea of it was, we're not going to tell anyone we're doing this because what if we get in trouble by these companies? And then three was just the three of us. And it's always been the three of us and we were a media company. So it has on creative as possible. That's the name of the company.

We started that in our goal was what if we can just start. I helping one other supplement brand avoid the mistakes that we saw the startup that we worked at make, [00:09:00] and that brewed into three years of helping 25 plus health and wellness brands in a boutique fashion of going in and almost being mechanics like, Hey, if you're doing this for your performance marketing, let's tweak this.

If you're doing this for your package design, let's make it a little bit better. If you're doing this for your ops and finance, let me tweak it a little bit. And it turned into we'd almost be like kind of business consultants for different verticals. And what's really cool about this was we each also redefined what we're great at and what we're craftsmen.

And so we basically started to take that now and say, all right, now we're going to use this information. And one day create our own brand. So what we call it is true. Was like our high school years, our media company was like our college years where you take your major and you say I'm going deep into it.

And then what obvi was, is our final thesis from everything we've learned in our lives. And so that's been the journey. Oh man. [00:10:00]

Chase Mohseni: I absolutely love that. It's such a it's funny because again, like I was telling you my, my dad he always talks about how he learned. He learned everything on the streets and then everything you, you build things up.

And it leads to new experiences. And, I could tell you, I could write a book about all the stories I have from him. But what I did was I learned certain things from that when my entrepreneurial journeys and good things happen, bad things happen. Cause maybe you take risks. You shouldn't when you're 24 and but I think what you just brought up is so fascinating is if you find the right people, you hold onto.

Because you know that something good will happen. It doesn't mean it's not now all the time, but it means that one day nothing. It's never, we're not closing the books. So I'm, so you were on the business ops side of shreds and then you obviously made a very concerted effort to help a very certain kind of company and start doing kind of company.

I'm I think I know the answer to this, but I'm going to ask the question anyway, is there a [00:11:00] real, a specific reason, like that sparked the idea to start a company and stay in this space? I got this, is it a business metric idea or like where does that start? I

Ron Shah: think it was purely how almost instant you can see your results.

Both on a simple KPI standard of direct response. Being a big methodology of how to acquire customers, but secondly, on the customer end, being able to see them get results and bring that feedback loop right away. It's phenomenal to see it. You think about some people who sell, let's say food or beverage that don't have, let's say performance and more so just taste elements to it.

The feedback loops a little bit drawn out because it's like, all right how often is someone's going to talk about like how good something tastes, maybe they'll leave a review or something. Whereas all of our products that we worked on and this industry is results driven and results in a lot of our different products are pretty much in the [00:12:00] first two to four weeks.

So to be able to do a direct response ad, send out a product in a week, get feedback, and two to four, you can literally carve out your business to be the way you want. So that's what interested us.

Chase Mohseni: And when you were choosing specifically like collagen and like how you're pricing and everything, obviously there is some math that goes in there where you say, okay, if we're able to model out, this kind of CPA or CAC, and we know that these products have this kind of, long-term LTV with a customer, we can be profitable here on this purchase.

And then we're going to be able to move forward from dollar, zero and start scaling our profit. Cause I know you started, you guys started the company with, a small seed of 10, 10 K and you bootstrapped from there. Yeah. Is that kind of, one of the other reasons why we said this just feels like the right product because you guys have incubated so many other brands?

Ron Shah: Exactly.

That was the other big piece of it is the low barrier to entry. [00:13:00] We could have done tons of other products, but if you really boil it down to it's, the crux is low minimum order quantity. Being able to come out with a business and there's pros and cons to it, that the con is anyone can do it.

Yeah. The pro is everyone has the ability to do it. And so it's cool because we were like, oh shoot, we could do this. Everyone put in $3,000 into a bank account, our first PO has gone for right. Our marketing. We don't have to hire an agency because Ash can handle it. Our design and packaging ONCA can handle it.

Finance ops. I got it. So we literally thought we can just do this brand and we don't even need to think about anyone else besides us three until this day. We're, our team is only nine people today, three years later, $30 million in sales later, it's at that mentality. Hasn't changed technically.

Part of it was being able to have no barrier to entry. I'm not having to spend tons of money to launch [00:14:00] something. And then also having the craftsman on our team that knew the space and be able to disrupt it right out of the gate with package design, ad formation, copy and creative.

Chase Mohseni: There's two dovetails off of this that I think are really important to talk about.

One is when you choose co-founders right? So a lot of times when you hang out at companies or with people, you hang out with people who similar to you, you're in the same org, et cetera. And you become homeys. You have not necessarily cross-functionally. So sometimes you have small places, so you work cross-functionally with people, but if you're in a bigger organization, you're just hanging out with your marketing friends or you're hanging out with your engineer, friends, I feel like you guys had the, almost like this perfect triumvirate where it said look, I got this, you got this.

And it's three legs of a stool. So you guys all balance each other out. How do you, when you talk to young, younger people who are thinking about starting a company or two people are asking your advice, how do you advise them generally to choose their kind of co-founder [00:15:00] cohort? If you will.

Ron Shah: Yeah.

That's a great question. And actually something I wish I was asked more often, because it's so important and is, it's so often forgotten that if you're doing it alone or just with another person, you're missing something that you're going to need to hire out the gate. And people don't realize we didn't need to.

So bootstrapped is sometimes not synonymous to the team. You have. We were able to bootstrap because we were able to save 20 K in costs and personnel. So to go back to tying your question one of the biggest pieces for us was. We were almost like at the first company you started at, we were the true operators of the business, whereas the C-suite or the true window shopping operators.

Which is great. They set a precedent, they taught us a lot, but at some point it became down to Ash, how are the ads, [00:16:00] Ron what's finance and ops looking like on kid, how is the next packaging design and website coming along? So when it came down to it, even in meetings that we would have with the board, it would be us three.

And so when you're having the dynamic where you're running the business almost in a way it was really cool. And then I think the second part that was really cool is till this day, eight years later We are completely agnostic to the other person's work. Like we, there's nothing like, oh, Onkit could you change the packaging?

I don't like it. Or there is nothing about Ash. Could you run the ads differently? It's not what I wanted to see it. Or I'll never have a question around finance or ops, and it's not because we don't know enough about the other domain it's we truly trust the other person to be the best in that domain. So with that being said, my advice to a lot of people [00:17:00] is it's okay if you have similar skillsets, but defining a domain for each person and saying you are going to be responsible for this, and I'm not going to be in your way, but I'm going to hold you accountable for handling.

It is so much more important than. Oh I'm giddy with my friend and we do the same stuff and we know the same things because conflict is inevitable in that model. So in my opinion, I think the better route to go with this is to find if you can, a very vast skillset base across whatever group of founders you have, if you can't defining the ability and the need to learn different skill sets and then owning them, I think is important.

Chase Mohseni: That could just be the clip. That's the whole pod right there. Absolute gold bars. I think one question that [00:18:00] comes off of that, and I have one follow-up, that's more about the brand specifically, but how do you, so you said at the time. They double as your best friends, they were your best men.

I'm sure they're going to be the first people besides your family at the hospital after your baby is born. How do you hold each other accountable? Cause I think like as much as we all want to be friends and businesses business, right? So how is there kind of like you re remove the friction from that so that you're able to cause you have to work together for a long time.

So there has to be some mechanism you guys have to be able to deliver feedback while also still maintaining the friendship.

Ron Shah: Yeah. The mechanism is and it's not applicable everywhere, so it's may not sound possible, but mechanism is if we're going to fail, we're gonna fail together and we have failed.

Uh, This was in our first business, but if we're gonna fail, even after building this $30 million business, if it goes down to zero, figure out the next thing And part of it, is it starting to [00:19:00] detach that, oh what if you want to live a different lifestyle and you want to live a different lifestyle, this and that.

And those dynamics do come up here and there, but at the end of the day, everything we've always done has been equal. It's a, there's nothing. If we have to put titles on our roles, because that's what the public demands. But there's no such thing as title we're co-founders and we get the job done. And so when it's so yo, I just need this done and can you handle it?

Can you do it? It's there's this layer of trust. That's so strong that you don't need to question it because there's been very few times something has been dropped or not brought to completion. And so when you have that consider it done attitude. It's hard to bring, break that down. Yeah.

And then lastly, I think again, no matter what we build our V2 or any of our other companies, we are okay with, if it goes down to zero, because the, what we're learning in this and the ability to share what we're learning, it's [00:20:00] phenomenal, the money making money is just the ability to buy more.

And so at the end of the day, it's like when you can take that element away and still be able to take away learning, that's the price that we're truly excited about.

Chase Mohseni: It's really funny. I had a lot of these conversations and I always have said this to people. The less, I cared about money, the more money found me.

And literally the more I cared about money, more and more money ran away from me. And so it's really interesting to hear every single person I talked to all the founders, all the high end operators are, they just love the game. And they'd literally do it for the love of the game. The outgrowth, obviously as financial if you do something well, you will be compensated well for it.

And all money does is just unlock doors, right? It's just grease, relax and allows you to go farther down the tracks or whatever, maybe in a nicer car or part of the training. Exactly. But I keep wanting this brand question, but things keep dovetailing off of what and this is we talked about both of, I'm Persian.

I know you're uh, [00:21:00] Indian. And so I'm curious because your co-founders are also Indian. Is there a level of cultural understanding that also allows a hundred percent the, like the dynamic to work, because I have seen different cultures work together and it's fine. But there is something, a little different where there's a shared experience across your entire life.

So I've been trying to joking around with the Persians I find on DDC Twitter. I said, we've got to make Persian DDC Twitter thing. And I think we'll just make middle east pur DDC Twitter thing, because then we can bring everybody together. Yes. We all want to dance and have long parties.

Ron Shah: Yes. The culture is one in the same. So

Chase Mohseni: I'm curious how much that has helped you guys also whether some of these things, cause there's so much shared experience that you guys have. It's

Ron Shah: huge. It's huge. Because when you tied back the personal overlap when there's less and less of a disconnect there, it's naturally going to pay in your favor.

So for us, [00:22:00] it's huge because our wives can also talk to each other. We've somehow found ourselves in the same friend circle now, they understand like when I was going through my. The wedding is going to cost me six figures, and it's going to last five days and I need to save up for that.

It, there's so many different dynamics of different things that come up that you can't teach sometimes because it can come off as, what are you trying to say here? I don't have to teach anything and nor do they have to teach me anything because we get it. So that's a huge part of it.

Yeah.

Chase Mohseni: So it's so cool. I love that. So the question I've been keep pushing down the line is I really believe in this idea of moats. And so it's something that people talk a lot about in a, in like we talked a lot about like B2B, SAS, what is the moat or the unique thing that gives you protection in your business?

And small, you said something earlier, was it like, look, the barrier to entry is we had 10 K we were able to place our first PO. So there is no barrier. It's more, anyone can do it, but also the barrier is anyone can do it, so [00:23:00] no one will actually do it. What I have found. And again, forgive me for putting words in your mouth is Obvi has incredible branding.

That is very different. It almost zigs where everyone's zags and that's the blue ocean you guys went for, because there's very specific way that all the rest of the brands in this space, vital proteins ancient nutrition, youtheory, all of them do it in a very specific way. And it all is they homogenize that branding style.

Yep. Obvi the antithesis of that. And so that almost feels like the moat that you guys with and then built into, all the community stuff. So I'm curious what was the thinking there? Was there was it a concerted thing based on what you'd learned at goes three or where did that all start?

Yeah.

Ron Shah: You know what it was part of it stems from, we got $10,000 to not mess this up. And now if you take that and you boil it. So you put $10,000 on the wall and he said, okay what does this mean? Or you're like, okay, it gives you an order, right? The ability to order [00:24:00] something cool.

What are we going to order? We're going to order something. That's going to give us the opportunity to be different and disruptive. Otherwise, why would anyone want to buy it? So now you take that and now you dovetail right off of that. And you say, all so if we have to be different and disruptive, what are two things we have in control to be different in disruptive?

So one is branding, color, design, packaging, and two is formula science. What's in the product, et cetera. So we said from there, we'd say, okay, cool. So basically what's in the front of the label and what's behind the label. Cool. So now let's boil that down more. What can we do on the branding packaging design side to be so damn different?

That it becomes so obvious that you want this product when you first look at it. So we said, okay, what if we went female pink flavors, everything everyone's not doing. So we have one reason for you to [00:25:00] come to the us on that. Then we said, all right, but what if they turn the label? And they say your formula is not that great.

The packaging looks great, but your formula is not. So he said, okay, so then the second thing we're going to make it is we're going to make the strongest college and formula on the market. So we're the only college we don't even get to talk about it, but we're the only college on the market that has vitamin C vitamin E iron calcium, magnesium.

And bioteine added to the formula, which is hand selected because it increases the absorption rate of the amount of collagen you're taking. Most of the collagens on the market are just dosed with collagen and you'll see 20 grams, 30 grams, whatever your body excretes, 90% of that, because it can't absorb it.

So we said, okay, now if the branding packaging and design is different and the formula scientifically is different, we now have something to present to the judges, which is called the world of disruption. So that judges panel is going to look at everything and say, are you disrupting or not? So when we looked at and then [00:26:00] built this product off of the, making it so obvious that you have to get our product, why would you look at anything else helped with the brand name, but also helped with the boat?

I dunno if that answered a better

Chase Mohseni: a hundred percent, is that where the Genesis of the name was like, it's so obvious.

Ron Shah: So it was, it kept on being something that we said dude, like we're building, we were getting excited. Like we're building this this is sick. We still hadn't had a name at this point.

We're like, It's gonna be so obvious, like why would anyone buy vital proteins or anything else? And then I think Onkit my other partner. He was watching mean girls one day and one of the girls said the word Obvi. It was one of the girls, it was one of the lines and he's guys, I got it.

We're going to go with Obvi. And it was like four in the morning. He had already put the logo, made the logo, designed it, and we woke up to a finished label and we said, all right, that's it. We're going with it. And we sent it to the printer next week.

Chase Mohseni: That's a, that's one of those like moments. You never forget your [00:27:00] whole life.

Never, literally electric. That's incredible. I love hearing those Genesis stories. So just uh, cause I, you know, I want to nerd out a little bit with you on the finance portion of it. So you're, you're adding in all of these ingredients. There are obviously you're buying bulk, you're buying bulk orders to be able to create these formulas.

Once you've made your formulation, did it have a meaningful impact on your margins? Did you have higher or did you just take the hit? Because we know that it's going to help us in the long run? No,

Ron Shah: we price higher. We went out the gate as a premium product. Our collagen and per serving is about eight to 10% higher than the average.

Our thing was though, if we give them so many reasons to why we're better and only charging 10% more we shouldn't get crucified for it. And one of the things we learned is stick by what decision you make when you launch a company obviously optimize and curate other variations, but your initial thesis and why [00:28:00] you're going with what you're going with.

W if you change from it, you'll often lead to a path of regret. And if you spit, if you stick with it, The much more proud of what you've created as you journey and Trek down. And it's easier said than done because some people just don't have it right from the get-go. And we struggled there times we still struggle.

Retail is tough for us to get into because they're like, why are you priced so high? We're priced so high because our product is the best. If you don't believe in it, that's fine. So I think you have to have that in you a little bit, because most of the people are initially going to be brushing you off if you're not commoditized.

Chase Mohseni: So there's this thing that I really believe in here, which is know your business inside and out before you actually start. So it's almost do a pre-mortem on the business because it does postmortems. And then in the middle of we all get scared and we start over optimizing. But if you can, pre-board them something.

You'll have the ability to first have the confidence to [00:29:00] stick to your guns. Like you just said, and secondly, you'll know what to optimize cause you have a true north star and I think it's really grounding, but I want to maybe dig a little bit deeper on how you actually action that as a team or just even as yourself where you say okay, for instance, retail, we could price it a little bit under our price just to get in the door and have there been deals you've walked away from because they are essentially asking you to be antithetical to the core principles that you started the business with.

Ron Shah: Yeah. Yeah. I think for us, the biggest piece has been being able to see so much failure early on has led us to the point of there is no timeline or clock on this. And we look at examples like vital proteins, right? Vital proteins got acquired on the nine year mark nine years. And there's this constant buzz right now. That's [00:30:00] how much money have you made in how much time? And this race that people put on you. And yeah, we love the race because it sets business goals, but the race does not define us. If we had hit $3 million versus 30 million, our motto and our go about it would be the same because we're not full, we're not chasing the money.

So for us saying, no is literally no problem. We said no to target. For example, we back in 2020 we've said no to Sam's club earlier this year. There's zero issue with it for us. Although it could be great. Revenue can also be the first path to killing you. So I think we're just a little bit more tactical in saying no.

More often than we say yes.

Chase Mohseni: I think this is such a good lesson for founders. Especially like first time around you guys, first rodeo watching this happen. You guys have built, worked at treads, worked at other companies and then help build, like you said, 20 plus other companies going in there as business analyst is saying no is your biggest [00:31:00] ally, because it's actually easier to say yes, pay the fucking Piper afterwards because not all good revenue, not all revenue is good.

No, I think her on you. So I think that's a really salient lesson that everyone should really take to heart because it can really fuck you. And we all get excited. You get a big deal contract oh my God. Target

Ron Shah: always. Oh yeah. And that's the first, that's the first emotion you get excited.

Yeah. And it's we've learned to take in and sometimes, on the flip side of this, I'll argue is sometimes we've become a little bit too numb. And I think I'm very cognizant of it. So I try and use different things to enjoy the moment too, but give you an example.

Last year we won branded a year through stack 3d. We did 26 product launches, $19 million in revenue, phenomenal performance profitably. When we won that, we got a trophy. Took a quick video. We made a couple posts on [00:32:00] social and it lasted three to maybe four hours of a high. And by next morning there was not even a chirp about it and not the point isn't to dwell on these things.

Because that's also, it's a waste of time, but sometimes when you're built in, you're building your mindset to be like, all right, just keep moving along. I know doesn't mean really know forever that changed your mindset to start becoming numb to even the wins and the yes', because now you're like, all right, it's just another step to the flow.

I, again, I think there's always two sides to everything, so it's never to be an absolute on anything. But I do agree with the point you made is a no, is a. Sometimes the most powerful thing.

Chase Mohseni: Yeah. I think it's also one of these it's a little strange for w in the echo chamber of social media people, celebrate the [00:33:00] wins and very rarely will say, you know, I fucked up.

Or I'm well, or who cares? It's great that we did this, but, just do your job and let's, let's keep going. This is just a, another summit on the way up to the never ending, Mount Everest, I'm up Mount Everest, this is just the basics. So getting into like more tactical stuff, I know you guys this is something I've been trying to push people to look at and pay attention to is one of the cheat codes.

Ash talks about a lot. Yeah. Your guys' community and how that allows you to seed ideas, build product launches, build things that people actually want, rather than in a lot of times people build products in silence because they're just going and doing what they think is right versus what actually matters to their consumers based on having that really active community, but also spending, spending a fair amount on on paid media.

What is your retained customers versus new customer acquisition? Split look like on a monthly basis. Yeah. [00:34:00] So

Ron Shah: we're, we sit on a metric level probably between it's about 70% new, 30% retained on a month where we're doing a restock or a big launch where usually 60, 40. But I would say it's good.

Take a good average is 65, 35. And we feel that's pretty healthy, but we're always trying to improve that. Yeah.

Chase Mohseni: Absolutely. I guess I'm on your side when you're looking at the finances and what would be your ideal place that you would recommend. So if I came to you, I said, Hey man, my, I'm in an 80, 20 split, what should I actually aim for as like a stretch goal?

Ron Shah: 70 30 for sure. Yeah, 70, 30 it gets you is just, even on the sense of having a good understanding is when you have 70% on the acquisition front, it's enough pressure figure that piece out, right? Cause if you go too much on the other side of 60, 50, 40, or 50 50, there's not enough pressure to need to scale, to hit 70% new acquisition every month you are figuring out scaling [00:35:00] somehow.

But then the days that you can't and we always call it a factor of three on our end is out of every 10 days, we need to factor for three tough days. And what that three tough days do for us is that's where our retention comes and says, I got your back, keep going. And so if you take a factor of, that 10 out of the seven to three ratio over 10 that's truly how we look at it is if Ash is pumping great for seven days, but then it tanks for three we're.

Okay. We got the metrics to support our backing. And we've seen that ratio often, right? Media buyers talk oh, great week. Damn this week started off horrific and you need that support. So I think that's the right balance in my opinion.

Chase Mohseni: I always talk about with people that like retention is the power plant of your business.

And it is literally because of that exact thing that you said, is it smooths over rough patches on the acquisition side? Because there's just, there will be volatility. Like we [00:36:00] all, I think we all act like we can control algorithms and we can't. And so we try to like, everyone has their own version of I'm going to test this, I'm going to do that.

And it's dude, some days you just, the algorithm wakes up on the wrong side of the bed. Like you can't control it. And so you just got to ride the wave and building that backlog of amazing customer support will help you. And I think frankly actually it's not even, it's not even a revolutionary of what I'm going to say.

No brands focused onthis.. This is like a big B2B thing. B2B people are very focused on their communities and building it up and they become rabid. Air table has a crazy community. Atlassian has a crazy community. Notions community is mindboggling. Yeah. These people who don't get paid by notion, teach classes to other people just because they love notions so much.

Like your customers are building recipes doing stuff for you guys. And I still think people haven't cracked this code. And it's interesting because I was talking to someone the [00:37:00] other day about, Hey, I want to make an agency. What should I do? And I'm like, dude, make it community building agency. Like no one like that is literally no one has, it's a good point.

Ron Shah: It's such a good point. Nobody has that. Nobody is focusing on that. And I think the biggest piece of all the community element to it is too, is. I kept even when I was in Miami doing my keycaps speech, the one thing I kept stressing on the community portion is the authenticity piece.

There are a lot of people that want to do community, but within that, a lot of group, there's very few people that want to do it the right way. Put the time in it, tort themselves in front of it. And lastly, get hit in the face with the good, bad and ugly of a community. Because till this moment we still see the negativity.

We still see the positivity and we don't treat those [00:38:00] differently. We treat each of them as learnings. So I think that part is very hard for someone to fathom, unless you're okay with saying your right to the customer and soaking that in. .

Chase Mohseni: What you said is incredible because community is a very trendy thing. It's I have a question, which is like, what is the buzzword you're hearing a lot of, and I hear everyone say community, but it is, are you willing to take us like, say someone says, oh yeah, being a parent would be fun.

It's dude, it's amazing. It's not fun, amazing moments. And then it's hard and it's not like the most rewarding thing ever, but community is a super power and a cheat code and all of those things, but you have to be willing to essentially go through the swamp to get there and earn it.

And there are a lot of practical things you need to do. . So Not to, it's not to necessarily be sobering to people. It's just to understand that. It's really easy to say something is all, this is cool and it will help our business. It's another thing [00:39:00] to actually do the work to, enjoy the business outcomes of something.

Ron Shah: Yeah. No, a hundred percent. That's I think you, you encompass that perfectly. Okay. So

Chase Mohseni: I'm curious for you guys, what idea do you guys think is gonna change the game for where the business goes next? Obviously we've talked a little bit about retail and you guys are in, vitamin shop in some other places.

When you obviously have your, you have the B to C channel, you have the community, w what's the next big thing you guys are really excited

Ron Shah: about. Bringing a little bit more authenticity on our product level. What we saw happen with Entenmann's was phenomenal. People absolutely loving the nostalgic.

We are loving the conversion rate and people overall are loving the ability to see a small-scale brand work with a billion dollar brand because it bridges the [00:40:00] gap a little bit. If we could do that across all our products, what if all our cereal flavors were Kellogg's? What if all of our ice tea flavors are Snapple?

W what if, our coffee flavors were Dunkin or Starbucks that world isn't unreachable anymore. That world, that opportunity, isn't impossible. As many, few years ago with coin it today, the world we're in. Overnight, you can be a trending success on Tik TOK. Uh, You could be getting reached out by Kellogg because they saw that your fruit loops posts went viral.

So I think we can, the amount of authenticity we have in our community, I feel like we owe it to them to bring our authenticity to our product. I love our fruity cereal collagen, but I would love for it to be fruit loops or fruity pebbles. Fruity pebbles is taken by another company, but point being I want to completely re authenticate our brand [00:41:00] to saying, Hey, you trusted us with something that was completely generic.

Now we're going to give you an even better version of that so that we can create your stickiness forever with us.

Chase Mohseni: The intimates thing is such a what's your bringing up is there's two folds. There's my, the marketing side of it, which is you say, okay, well through osmosis you become like this household name with people because you're essentially going with all these brands that have all this emotion tied in for decades with people.

And so that's an incredibly powerful marketing message and it allows actually the floor of your sales for just standard products to actually raise because people associate you with, good feelings after that. I'm I guess I'm also, I'm wondering, how does that work in terms of rev share?

Do you guys have you, you have to have obviously one-off deals or deals with these companies, or do you go in license the name for kind of a given amount of time?

Ron Shah: What does that look like? So it's always a, it's always time bound. It's usually between three to five years. [00:42:00] You have to guarantee them a flat rate over those three to five years.

And then anything above and beyond that is a percentage. So it's like a typical royalty deal. That's time bound. But what's tricky is as you talk to higher caliber accounts, such as your Mandalay's Kellogg's general mills they know what their work, they're worth billions. And so the ask is also higher.

And so for us, sometimes what we'd like to bring to, or bring to manifestation is purely bound by a financial constraint and not being backed by any funding and stuff like that. That is one of the things we'd have to explore if we did go down that route, but more so I just wanted to tie the back of vision that we'd like to see,

Chase Mohseni: come about.

I think the vision is, I think the vision is incredible, right? It's essentially what will make customers happy? And healthy at the same time. That's an incredible vision, right? I think a lot of [00:43:00] brands will say, okay, we just want to make them healthy and we want them to do it our way.

It's no, we want them, we want to do it their way so that they feel good while they're doing it because in this country or a lot of countries, frankly, it's hard to get people to be healthy. Very hard.

Ron Shah: Yeah. It's a very hard,

Chase Mohseni: it's it's, it's a it's a problem in this country, other countries.

Yeah. So being able to tie it back to things that sometimes weren't part of their kind of health journey, like it almost allows you to grow, you're talking about money, it almost allows you to grease the tracks towards health, even in a more in a more dynamic way than they would, naturally saying take collagen.

Exactly.

Ron Shah: Yeah. A hundred percent.

Chase Mohseni: So I always like to know where you get your best ideas.

Ron Shah: Yeah. That's a good question. I think one of the, one of the high-level answers to this is being inspired by our community is a big part of [00:44:00] it. But I think truly I get my best ideas by being plugged into a big group of different manufacturers that I'm speaking to on a daily basis.

And it sounds pretty nerdy, but I'm in my top nine in my iPhone, you get to pin nine people. Three of them are manufacturers. And they don't work for a company. So I don't even work with one of them as with any product, but where I'm constantly doing is I'm just understanding what's coming.

What's going on in the market. So the other day a manufacturer told me, Hey, listen, then we've been able to figure out how to add bioteine in jellybeans. Are you interested? And I'm like, yeah, send me the dieline, send in the packaging, send me samples. And thought my idea, but someone pitched me an idea, but I think he pitched it because the last nine months we've been talking about 90 different ideas.

And I think keeping that door [00:45:00] open and changing the way we treat manufacturers is, again, something just not talked about enough. Everything's coined under relationship building. It's not relationship building it's time. It's giving people the time they need to feel like they could actually help run your business.

When we got awarded the 2021 award for brand of the year, the first person I FaceTimed was our manufacturer and said, thank you. Thanks for making this happen. And There's just so many little things we forget to do because we expect them to do their job, but they're just another cog in our wheel that could completely derail us.

So if you don't oil it up and if you don't take care of it it's going to get rusty and then did the idea of funnel also gets rusty. Ours is so fresh too. Like the other day I've manufactured all this, Hey, I got edible glitter. I want you guys to be the first one that come out with it. There's just little things. And you're like, yeah, I'm doing it. And so ideas are coming from [00:46:00] the ability to spend time with different people in different parts of the business, not just, Hey, let's market this what are we going to get to market?

Chase Mohseni: That's the cool part. I love that flip.

I think we all talk about what are we going to market? Not what are we going to get to market? And yeah. You can't market shit. If you don't have epic products, literally has there's no point. It's uh, we always talk about it. Pencil. We can make you a lot of ads, but if you put shit in, you just get a lot of shit out.

Yeah, exactly. Exactly. It's the exact same thing. I mean, this is, this is the second conversation I've had with founders who are really dialed into their manufacturing, obsessed with it. Literally said, if you don't have good relationships with your manufacturers, you are absolutely. Positively fucked. And yeah,

Ron Shah: you're just a time bomb ticking. Yeah.

Chase Mohseni: I've seen it happen, absolutely happen where the, you're in a, you're in a crunch and you've been a Dick. Yeah. You ask them for some. I know I owe you no favors. You speak for every penny, you made my life [00:47:00] miserable and you didn't treat me like a human being.

I don't have your back. And we forget, I always tell people like, look, we look at all these data points and every data point every sale you guys have as a human is having an experience and wants certain things. And so it's the same thing with the manufacturer.

Ron Shah: I'm exactly the same exact thing. And I think that's again, I think you have said you have such a good handle and understanding because you're getting to talk to so many people have probably tying in different conversations and whoever the other person is so correct in you are going to get screwed at one point, because for us, our dynamic with our manufacturers are, if at any point we get into a financial constraint, I rather not eat, or I'd rather not have food on table.

And no matter what size of company you are, I will never ever not pay them on time. Because there is a real. Engine behind this weird, the marketers behind it. Yeah. And being able to almost treat them like they're part of the company is very important for us.

Chase Mohseni: Yeah. That's [00:48:00] a, no one talked about this, so thank you.

This is not going to be two episodes we talk about. And I think it's so important in this space to be on the operational side of things, because you can't market shit. If you don't have a good profit margin, you don't have good profit margins and you can't actually get interesting, unique things to market in a way that's going directly value

Ron Shah: to the country.

I can't be a, you can't be another me-too product. That'd be a me-too company. Those are the ones that actually I feel bad for. Because I see them come about. And and a lot of people say aren't you scared of sharing so much information about obvi, like where someone copies you.

And I was like, the people who will copy me will never be able to copy our work ethic. And they'll never be able to copy our time spent with our manufacturers or the way we facilitate different things internally. So you can copy my packaging of won't go anywhere. That's a big piece of that is because of the way the dynamics we have internally different operation pieces.

We

Chase Mohseni: talked about modes for the business, being some of the branding and [00:49:00] packaging and name, et cetera. But another one is infrastructure, right? If you have the right infrastructure to your business, that's another moat, we're looking at all these companies crashing and burning right now.

And it's because yes, you can build infrastructure, and the minute things got tough, you got to pay the Piper sometime. And so that's like a, an , if you will, are you built instead of on concrete, you're built on sand. And so it's going to essentially have something bad is going to happen eventually if that doesn't happen.

So these are the philosophical questions portion of it that I think is I really like. And so I'm, I would love to know what the best piece of advice you've ever received, where it doesn't have to necessarily be business advice, but just in life what is the best advice you've ever received from somebody?

Ron Shah: Yeah. It was definitely my dad. It's pretty simple and pretty, pretty much out there commonly, but if you're going to do something, learn to become the best at it. And I think every day, even as of this morning, we're still perfecting what we're doing. We're still learning. Just because [00:50:00] we record podcasts doesn't mean we don't listen to podcasts.

Just because I do mentor pass and mentor other people, it doesn't mean I haven't signed up for mentor pass and joining other mentor calls. The learning piece cannot stop because we always need to work on becoming the best version of ourselves. So that was definitely the best piece of it.

Chase Mohseni: Yeah. It's the Reed Hastings. You need to be an infinite level, right? Yeah. Your dad sounds like a really wise man. He is. What's the skill that you think has served you best in life,

Ron Shah: Being relentless, I think there's just nothing that comes as like a fear. It's you look at something and you're told something and you're like, okay, I'm going to go figure it out, let me get to work.

And it could be the worst news or the best news. You're like numb to the feeling of fear. Everything is like, We'll figure it out, we'll figure it out. And so I think that has served me well, [00:51:00] to be able to do a lot in a short time with something like, obviously,

Chase Mohseni: What do you attribute that to?

Because that's not, it's easy to say it's another, it's a harder thing to act, especially in the face of, 90 day terms and all of these other things bearing down on you. Where does that come from?

Ron Shah: It's I think it's the same thing that I referenced. I think in the other question, which was, I think it ties together is there's zero fear of failure because even if I fail, I'll come out of this learning so much that I could go and do, I can get, if I get to 99% point with this, I've learned 99% of it.

Now I need to just make sure that last 1% is perfect. I'll get to 100% at some point. It's okay. If we take a wrong step, take a step back and have to restart. So when you have that able to you're able to swallow that you look at things and you're like, all yeah.

What's the worst that's going to happen?

Chase Mohseni: Yeah. I always say there's nothing final [00:52:00] except a death. So as long as you have breath that you can always come back and you can always learn something new and then do it again and do it better. The last one that I think you've essentially done this whole time, but if I, if you could sum it up as like your capstone here what would you tell a young founder?

If someone came to you and you said, I said Hey, I'm going to start a company and I'm 25 or 26 or 27. What would you wish that they had told you

Ron Shah: before. You know what I actually would rather reference a book if that's okay, because this book has changed in some of the pathways of my mentality, especially in the last probably 18 months is a book called winning by Tim Grover.

I don't know if you've read it. And he's, the coach of Kobe Bryan, Michael Jordan and such. And there was this one quote one question in there that said if you add to answer this question, what does winning mean to you? Or how do you know you've won? What is that feeling like?

And [00:53:00] he gave answers of different people in different places. And what was really cool was, and I'd love to ask, Jay asked, actually ask you are, unless you read the book, but if you had to define winning in a sentence or a phrase, what would you say?

Chase Mohseni: Oh God, first question back to me on this whole process.

Sorry. No, it's good. Winning to me is it's not about accolades. It's about personal satisfaction with the work that's been done. Do I feel like I have given my all to something so that I don't feel like I left anything on the table. That's winning. If I can say I did that in a certain situation, I'll have one because I know if I eat that good things will are the outcome.

That's I care more about the work than anything.

Ron Shah: Do you think you've won yet? Absolutely. Yeah. No, I love the, you're in the same exact page because what was really cool about that book and answered the way it answered the question [00:54:00] was some people say winning is winning is when I'm happy.

Winning is when I'm content or winning is me doing everything that I had set on my goal task list, and saying, Hey, this is what it is. And then he had asked the question to Michael Jordan and Michael Jordan. His answer was winning is everything. There's not a single other thing that matters.

Then he asked the same question to Kobe Bryant and Kobe Bryant said winning is nasty. It's gross. You have. There is there's other adjectives you'd use, but basically saying it is one of the dirtiest processes in the world. And what that taught me is until my answer feels like one of those.

Yeah. I haven't done anything. Yeah. So you're just on this journey to constantly try to win, but until it gets to the dirtiest point or when it may, or when it gets to a point where it was everything that it is today and [00:55:00] you've won. So the, my opinion my, my advice to those founders, younger founders would be don't think you've won because you hit a milestone.

That's just a step in the journey and don't create a milestone as your goal to win.

Chase Mohseni: Damn. I am ready to I'd love closing it off with MJ with air. What does air and the black Mamba. That's fantastic. That's great. Ron, everyone is so lucky man, for what you're willing to share and how open you and your team are. Good things happen to people who give and so I'm, I wish you guys nothing but success.

We're going to do an episode just talking about shreds, because

Ron Shah: one of those,

Chase Mohseni: What did they talk about? We like in an audit, an audio journey, or I forget what they call it, but it's like a being, being by the fire in the old days, telling you. So yeah, we'll do that again. I really want to thank you for coming on

Ron Shah: and sharing those [00:56:00] pleasure.

Thanks for making the experience for me. A little different too. Cause it's typically one in the same question sometimes, which is not bad. I still want to keep doing that, but this was cool because it felt different. It was a lot of different pivoting to a little bit deeper context. I appreciate that.

Chase Mohseni: Oh, that's great, man. I I'd love that. We were able to dive deep and people learn about you and get to learn from you. They're very lucky. Yeah, I appreciate

Ron Shah: that. Thank you. I'll do it again. Thanks for listening to this episode of Add creative from pencil. We hope you enjoyed our chat and learn a thing or two that can help you grow your business and think more creatively. If you have someone you think we should interview. He hit me up on Twitter.

Also a small favor. If you could please share and review this, we want to make sure as many people see this podcast and are able to learn from my guests as possible. Until next time. Add some creativity into your life. . Thanks

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