#368 - The Bootstrapper's 9-Figure CPG Playbook: How Azuna Went From DTC to Amazon to Retail With 300% YoY Growth & 2x LTV

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Speaker A: What is going on DTC Pod? Today we are joined by Scott Dancy, who is one of the founders and CEO of Azuna, um, which makes products in the air freshener, uh, sort of space. So Scott, one of the reasons I was really excited um, for this interview is because not only the product category that you guys are in, I think it's super interesting, but the speed at which you've built your business, the uh, the product strategy that you guys have rolled out as well as um, you know, how fast you've been able to like really scale things across the board across multiple different channels. So I think it's really interesting. I'm super excited to get into it. So I guess before, you know, we get too far ahead of ourselves, uh, I'll kick it over to you. Why don't you give us a little bit about background about yourself, how you got into building Azuna, how Azuna started, and then we can get right into the rest of the details.

Speaker C: Yeah, I would love to. So, um, Scott D'. Ansey. I'm the founder, um, CEO of Azuna. So I started the business in 2000, end of 2019. And my background is I grew up in New Jersey. I went to college in upstate New York, moved around, um, moved to Buffalo. My now ex wife, um, we have two kids with, was uh, from Buffalo. So moved here to raise a family basically in 2003 when my daughter was born and now she's got 22 and a 20 year old, 20 year old daughter, 20 year old son and um, got separated I believe, I think it was 2014. And in about 2016, um, you know, just bachelor learning quite frankly how to do laundry again. And uh, my washing machine broke and my son had one of his best friends over playing basketball and the dad came in and said here, try this. This will get rid of the smell. And it was a tea tree oil based um, air freshener that his family's contract packaging firm was working on. And it worked. And I was like this stuff's great. Like where are you selling it? And they really weren't. And um, I don't know if you remember the show Envy or the movie Envy with Jack Black and uh, um, who was the other guy in it but, but where they literally, they create poop be gone and it just like blows up. And I was like this is like amazing. This like gets rid of everything. I tried in my kids room, a car and uh, to cut to the chase, about two years later I said what are you doing with it? He's like nothing. I said let me, let me try it. Right. I always thought it'd be cool to, to build a brand. I, my background was staffing industries, technology and healthcare. Uh, partner in oil and gas drilling programs, ah, gravel pits, a concert promotion. I mean a lot, a lot of stuff. Some work, some didn't. Right. Um, but I thought this was really cool and had an opportunity. So he basically said all right, fine. His company would manufacture. We gave him a little bit of equity for that and they would make money off the manufacturing. Um, and you know I started the business. We came up with the name Azuna. I like to tell people, kidding around. It's the ancient Mayan goddess of fresh air. But it was just another friend of mine who is now my next door neighbor became an investor that owned the domain name company and he owned it and I just thought it was cool. I didn't want to do something like clean air or something. I wanted to be like a name. When I took a business class in college, they talked about Kleenex. No one asked for the tissue paper. Right. They asked for the Kleenex. So I wanted to be. If you're going to ask for your teacher ail based air freshener, it was going to be Azuna. Ah. So we started in 2019 and for about seven to eight months I was literally packaging everything Myself. So if you can picture it, I would literally go to Home Depot every morning for the seven to 10 orders that we would get. And I almost failed kindergarten because I couldn't cut and paste really well. So I'm packaging things with crazy amounts of tape, bringing them to the post office, writing the ad copy. I'm a horrible speller, so I'd spell stuff wrong. Learning how to run ads. And in April 2012, we got up to $12,000 that month. And I was like, oh, this might work. Well, Covid hits, uh, may we do 105,000? I can't obviously keep up with the demand of just doing it myself. So we have to go to like a 3 PL and we've grown, you know, every year, 300% every year to the point where, you know, we're, you know, at that magical level of CPGs where it's, where it's, where it's a lot of fun. Um, and you know, that in the business has evolved from like, hey, you're a friend, you want to come work here? You're a friend's kid, you want to come work here. To, you know, hiring, you know, some really good professionals who actually understand marketing. Like, Marilyn is sitting next to me now, right? Like so now, you know, we've got our own, um, manufacturing facility. We have a big ah, three pl. We have 10,000 square feet of office space in the biggest building in Buffalo, which is, you know, kind of cool for where we're at. And I love the fact that we're doing it in Buffalo because, you know, most of these big CPGs, they're LA, they're New York, they're San Fran, they're Chicago. And you know, we've built this little unicorn in Buffalo and did it with a lot of people. And you know, today was an interesting day for me because I've been doing my one on ones with everybody for the past year. And I've owned several businesses and you know, this is one where I really feel like every single person is like in it for the, for the, for the business itself. You know, they want to, you know, individually grow. And that's, you know, my goal for them. You know, we have several guys who are former top 10 employees at Dr. Squatch and some other companies. And um, you know, they're, they're really having a good time and we're having a good time.

Speaker A: Yeah, I mean, it's awesome. And congrats on all the growth so far. Uh, I think there's a lot of threads that I want to Pull on here. So we'll, we'll kind of go down each one. But one thing that I think is really exciting that you mentioned is like, you start. This is super relatable because, you know, as tons of operators do, you start out building your own product. You start out packaging yourselves, fulfilling the orders. One day you get to a point where you're like, oh, wait a minute now, I can't do this anymore. I need to scale up to a 3pl. Um, and you know, I think this is, um, that's a major growing point because like a lot of brands are able to make it into, you know, the monthly six figures and stuff. But once you start to like, scale up and start to like, sc. Like once you get past like 10 million a year, it starts to be a. Scaling starts to become a totally different beast. Right? Um, getting your first sales, like, it's something that everyone can relate with. But I think what you guys have unlocked is like you said, it's just the consistent growth. It's being able to not just grow and do it that one time, but continually grow and grow and grow and get to the next level. So I'd love to kind of, you know, before we get too far into that store, I'd love to kind of first unpack the product layer. Right? Like, what were the first things that you did? What went into the R and D? What was the. I mean, you kind of described the MVP of the first product. But like, let's say once you're, you know, really starting to sell, you've moved into the 3 PL and you start to build the, the product that's scalable. What, what form factor did. Was it in? How were you thinking about like the product strategy? What was your, how many products did you have? Like, just characterize the business a little bit at the, at that time.

Speaker C: So when we first started, we were basically, it's a tea tree based gel and Marilyn's grabbing me some stuff right now. So when we first got started, we would just have these like real refill packages of gel and we would have these plastic, um, jars that you filled it in and we would sell them individually. And we were doing okay, but we had an average order value of about $22. Now it's 83. And the reason being is I'll sell mostly these plastic caulks for. You know, they were kind of expensive for what they did. Um, and we were selling everything individually. Then I sell these individually. And then I started looking online to buy shirts one day and there was this company True. I think it was called Tree True. True True Classic teas. And they didn't sell you one T shirt, they sold it to you in bundles. Right? So you felt like you were getting 50% off of everything. So I learned about bundle volume discounting and started building, you know, different bundles and then with discounts to it. And that helped our average order value. One of the big pieces was instead of plastic, especially as a sustainable business, we then got these glass jars. This was about four years ago. Um, when I bought them, they said, you have to order a million at a time. I did not have the money for a million, but I said, order them anyway because I'll figure it out. And we did and we went through them. It took about a year to go through them. M so it created a cash flow issue for about a year. But it was also like the catalyst that got us to that level. Because now all of a sudden we look like a natural product. We are a natural product. A natural product that actually works really, really well. But then the catalyst was that you could put it around your house and not have it look like this little plastic jar sitting around. Right? We still have the plastic. They're good for like our pet and our, and our active and other and other pieces. But this allowed us to really go to our target audience. Target audience is like almost 90% is 30 to 55 year old women. So, you know, now all of a sudden they want natural. They want, you know, something that looks good. And we had that. Then we developed into different sprays, both surface and air freshener sprays and wipes. And we've pretty much stayed with those levels. We, you know, eventually get in some other products. But you know, we're the largest purchaser of tea tree oil in the world. Um, so we, we basically have a really good, you know, connection for that that uh, gives us a nice moat around our business. Um, so I have to go to Australia pretty often and when I say teacher, I mean Australian teacher oil. Like there's Chinese, there's Indian, but like the Australian Atti certified, which is Australian Tea Tree Oil Industry association certified, there's very little, there's surprisingly little in the world. Right. So, you know, it's kind of like wines. Nothing against Long island wines, but I'd probably rather have Napa or, you know, you know, uh, the Bordeaux wines and where are those?

Speaker A: Got it. That, no, that makes a ton of sense. And um, yeah, I think that's really interesting, especially on the packaging front. That's something that a lot of businesses See, uh, as well, right? The moq just to get a custom bottle done. Like, you know, you have that glass bottle, it sometimes it can be insane. So you might start out and you might ask yourself when is the right time? And you know, in hindsight it seems like that was something that worked out really well in your favor. But I think there's also probably other brands that maybe that may not be the right decision for, for you guys, that form factor was everything because it needed to live in the home, right?

Speaker C: Yeah. And the other part of it was at that point it wasn't like I did that like day one. It was like people like this, but I know that they'll really like this and this will do it. I mean it was probably semi crazy, but you know, I've been a lifelong entrepreneur and done some kind of crazy stuff. So like it wasn't, it didn't feel like is nuts, but it was, it was definitely a seminal moment to get us to that, to that next level. And you know, we've done that a couple times. Like we've, we've been the official order eliminator of four professional sports teams, um, two major colleges. You know, like, those were hindsight good and bad decisions, but they were expensive ones. But they gave us credibility. You know, big, big net, you know, um, Bravo type influencers and things of that nature. We've taken some big swings to get to where we are. But you know, if you think about it, right, no one's ever seen a, uh, cheatru oil based odor eliminator job before. Like the average person was like, what is this snake oil? Like, so I had to have like, you know, some credibility behind it. And you know, we developed that, but the product really works. We have, we were just looking at it like we have one of the best retention percentages in the industry to the point where like our rep at Recharge called us and was like, can you consult for us on um, how this is going? Like, so our customers love the product and then that's the thing. Like, and I know if anybody's out there listening, that is building a product. If you don't have a good product, you're screwed. I don't care what anybody says, right? Like you can, you can sell Ice Tone Eskimo for all I care. Like, if you don't have something good, it's not going to last. And I think that's been, you know, the pillar of success here is that we do have a great product that, that is marketed well, but it's, it's a great product to start.

Speaker A: Yeah. And I think the couple things, if you just like kind of zoom out on the macros of what you guys are doing, not only do you have like, good product, but you're also competing in a space where a lot of the incumbents are using a lot of synthetic in ingredients as well. Right. And that's something that people are really trying to move away from. So I think the fact that you've got the, uh, all natural ingredients is massive. But also just, um, yeah, the, the, the packaging, the branding and everything. One thing I'm curious about is when you were first starting to grow, what were your growth strategies? Were you just running meta ads? Were you seeding influencers? Was it doing creator stuff like initially to get you to that, you know, first threshold?

Speaker C: So when we started, it was basically meta and Google and we were just before iOS 16, so you could basically retarget people for 30 days. So our original ROAS was like 4 to 1 on new customer acquisition. Now people are lucky if they can get one to one on scale. Right. So I was like, this is pretty easy. I'm just, Right, I'm learning this stuff on my own. I'm writing ads that, like, I think I might have created the strategy of doing spelling mistakes so that people will tell you that it's spelling within there and then it becomes more, you know, engagement. Um, so in the beginning it seemed like it was a little bit easy, and then all of a sudden, like, it got hard and, you know, your, your metrics were worse. And now, like, our metrics are really good, but because we have returning customers. Right. So, but my, my strategy was, how do I get returning customers if I can't get nuance? And so we had to sustain losses for a couple of years and, you know, we didn't raise a lot of money. We raised, you know, some friends and family money, like nowhere near what most brands our size have raised. But we had to, we had to make sure that we realized that in my opinion, if you don't get to something in three years, that you can see that $100 million revenue point, whether it's five years later than that, then then quit, you know, just because, like, you have to, you have to have momentum. And the only way to get momentum is to be able to, you know, burn the midnight oil, sustain those losses. Because unless you're a celebrity, uh, brand or you go, you get lucky, you go viral in a video. Like the, the best videos only have a couple weeks of, of really good performance and you have to be constantly turning that. So now, I mean, not only do we spend millions of dollars a month on ads, we spend hundreds of thousands of dollars a month on content. You know, so like, and that's just to basically get average new acquisition, new customer acquisition performance. But if you can retain those customers, think about it, right? Whatever it's costing you to acquire a customer costs you zero to maybe 3 to 4% to keep them. So try and find them first.

Speaker A: Yeah, and that, that was the other thing I was going to say I love about the business model. Not only are you, you have this kind of tailwind of, um, the positioning of having a natural product in a space where a bunch of the incumbents like, are super synthetic, but you also have subscription, um, economics baked into your product offering, right? And you've got the refill sleeve. You've got something that works in both retail, in Amazon, indirect, um, people can refill. You're able to have subscription. That actually makes sense. I think a lot of people probably, uh, you know, force. There's some brands that like suit subscription really well. Other people here, oh, let me build a, you know, high, like a, uh, really high margin, cheap product that's easy to ship and throw a subscription on it. But it really needs to make sense with what your product offering is as well. And I think you were able, you guys, you know, have that.

Speaker C: I, I thought about it. Someone told me from the beginning, the best subscription model is the Razer razor blade, right? Like you buy. So here, um, here's your razor. Here's your razor blade. You know, this lasts 60 to 90 days. Get yourself. In the beginning when I started subscription, I would give people the option of one month to 12 months. Some people would do the 12 month just to get the extra percentage and they would be buying way too much because no one knew what it was. They would do like four different plastic jars of one of these every month. And then they would quit after because they just like, I have too much, right? So now we have like a really good visualization of what people need. And those customers are lifetime, like our lifetime values double the industry standard. Um, and even more than that for subscribers, right? And we're still relatively new. Um, you know, when you look at the life of Azuna, basically. Um, but you know, I think that because the gel is a consumable and because it works and because when it hardens, you know that you need to refill it, we have a perfect subscription model, you know. And the beauty of it is too is like it, you Know, you want to make sure that like, you're doing what you can to make a difference in somebody's household. And you know, the people can notice it, right. They're house is smelling more fresh. They don't, they're not getting sick. Their, their dogs aren't, you know, coughing up, you know, their lungs and stuff like that. It's kind of, it's kind of cool to see in the long run.

Speaker A: Yeah. And one thing I'd love to kind of also dig into is as you guys scale. So one thing that you said is like, you guys started to grow and as you grow, you, you know, you have to invest more into the business. And this is obviously a good problem to have, but it's something that, uh, you know, brands that are doing a good job are going to run into. How did you deal with funding the growth? Because if you're growing fast enough and you're constantly growing at like 300 every year, the inventory buys get bigger, the ad spend goes up, you need more money to fuel it. And I know you mentioned raising a little bit of friends and family capital. Friends and family capital. But as you were growing, what did that picture look like from the business? Right. Like, how are you thinking about your balance sheet? How are you thinking about your cash allocation? How are you thinking about reinvesting into growth versus, uh, you know, making sure you weren't burning too much? How, how did you balance that equation as you were growing?

Speaker C: Um, so we, last year was our first profitable year and we were profitable by the millions and we still weren't bank financeable. And that's the hardest part about being a CPG is that, you know, the best part about it is because I was in the staffing business where I would get paid 90 days and have to pay somebody like eight times before I got paid once we get paid the next day, basically. Right. We're Shopify store, um, proudly one of the few Shopify stores who've had a 1 million orders. You know, we've got that little thing up here. Right. Um, but I love that side of it. So there's a lot of MCAs out there. Um, we use one Clearco that I've used all of them, but I've had a lot of success with them. Thank you, Clearco. Um, you know, but it's still, it's still expensive money. Right. There's nothing worse than as an entrepreneur realizing that you made a million dollars in a month and you still feel broke because you literally had to reinvest all that. And like Teach Oil is like, you know, they plant it, you know, it's not like we can, you know, I gotta make sure that the crop is available, that it's distilled. Like we gotta have, you know, six to nine months of inventory on hand. And it's very expensive. Um, you know, these glass jars, you know, you gotta buy, you know, a couple million at a time. So I think that's where it becomes difficult and I think that's where a lot of people have gone, like the venture route, which nothing wrong with that. I chose not to, um, I'd rather, I'd rather feel broke for a little while than give up equity. Um, and I think, but I think it's a, it's a, it's a tough piece and it's all about how quick you want to go. Like, you know, to make a long story short, I went through a relatively nasty divorce and went broke. So I need to make this work. So I needed velocity. I needed to probably take chances that the average person might not have and knock on wood, so far they've paid off. But I, um, would suggest really getting a good accountant, which we did, who was actually my longtime personal and business accountant for several businesses, uh, sold his firm to come work here and gave him some equity. And he's literally changed everything around from an operational and financial standpoint where I can sleep at night. Um, but that would be my suggestion to any entrepreneur is to really understand your numbers. Like I get made fun of all the time because they're like, you know, you do everything. And literally this is like an example, like on the back of an envelope of what you think sales and cash flow is going to be. But I am within 1%. Last year, within the projection in the beginning of the year, very sophisticated board members who sold billion dollar businesses told me, you're going to do this number. We, I said we're going to beat it by 35%. We beat it by 35%. We were within, we were in the same amount of millions. As I said, more than, than that. And it's just, you got to know your numbers, right? You don't have to be, you know, uh, a financial accountant to figure out how to put it on the balance sheet. But you got to at least know what your revenues are and an idea what your gross profit is. Because at the end of the day, right, it's revenue. Gross profit times whatever your gross profit is minus your ad spend, minus your internal cost, that's how much you made. There's a million ways to go at it, but that's, that's what it is. And if you don't have a good understanding of what it takes to get that. I'm an investor in several CPGs. Some of them, I realize that that money's toilet paper at this point. Not because they don't have a good product, not because they're not like, passionate, you know, um, uh, entrepreneurs. They don't know their numbers and they don't care to. They care about the clicks and all the other crap. And honestly, you know, we have a thing here too, and it's sort of digressing, but like data doesn't care about your opinion. You know, like I don't care like what anybody says we should call something or what you think is good products. And we test it, test it, test it, consumer testing, and then lean into it. Um, and that's really. It took a long time for me to learn that because, you know, I always cared about my own opinion and others, and now I just care about the data and it's, it's much more financially successful for all of us.

Speaker A: Yeah. And I, I think there are so many nuggets of wisdom that you just dropped there. But I think knowing your numbers is so important. And one thing I like to. When even when we opened the conversation you were talking about, like one of the first things you mentioned was like your aov. Right. Like just being on top of the AOV and understanding that, you know, by having a higher AOV that creates more optionality for you. Right.

Speaker C: And uh, you're right. And sorry to interrupt, but like, when people come to me to invest in their business and they're like, well, I've got a, you know, amazing product and the margins are great, but the Average order is $20. I'm like, well, then you can only go to retail. You can't sell it online. Like, your cost of acquisition, I don't care how good you are, is going to be 50. So like, you can break even on that, but you can't lose two and a half times on the, on that first acquisition.

Speaker A: Yeah, exactly. And then I think the, the other thing that, that's super spot on is like knowing your numbers, especially as you're growing, it starts to matter because like when you, when these businesses start to blow up and start to take off, like you're seeing in like a, uh, many successful brands do, like these are, these are like orders of magnitude. The, the decisions just become exponential. Right. So when you're dealing with pos, like you're saying million bottle POS when you're dealing with pricing, you're hitting a million orders all of a sudden. These aren't like little sort of decisions. They're things where you have to be really airtight on because like being off by, you know, two or three dollars on a $50 AOV, that adds up really fast over, uh, you, you know, a lot of orders.

Speaker C: We were talking about our staff meeting today. Marilyn was in. I said 1% used to mean we didn't mean anything. Every 1% is a million dollars now, you know, so like every decision that's off by 1% either made or cost the company a million bucks, you know, so we have to be, you know, every. The devil's in the details on every single thing we do. And the funny part is I'm probably the, in my past life and even up to now, the most, least detail oriented person in the world. But you know, now I know, like, I know exactly what needs to be done. I know you know the numbers. I can't do it. Like in the beginning when I started, I did all the packaging. Like, that's why I tell everybody, right? Like, I know I can do it. Like, I, I literally set an alarm on my phone for two hours every day for two years so I could wake up and look at the Facebook comments and respond to them so that people knew. And sometimes I would be like, so sleepy I've responded. Or my own name as opposed to Azuna. And, and then you know, like, oh crap, now I got like 70 new Facebook friends of people. But, but like, it was cool because it was like, it made me realize, you know, in my mind, the product, the marketing is great. And I'm, um, sitting here with my VP of marketing. She's probably going to shoot me when I say this, but like, marketing is important, but if you don't have really good customer service and you don't have a good product team, like, you're screwed because the customer experience is the first line of defense. And if you don't have a good product, you can't sell anything, you know. So, um, obviously marketing is extremely important and so is, you know, the operations and logistics and all that type of stuff. But like, those are the two things that I did both myself to start, you know, and, and um, and it was fun and I'm glad I did it. And like, I probably spend more time with the customer experience team here than most CEOs do, but I just think it's so important to what we do.

Speaker A: Well, it's so important because you're I mean through that, that's giving you a, a uh, a super important lens to make a lot of the decisions that you're making. Like you were even saying like on the jars that you guys ordered, like putting in that PO and pulling the trigger on that. Like you probably had a much better pulse on that from just being constantly in the weeds in the comments, understanding what's going on, how people are experiencing your product. So I think is a step one, like you know, being in the weeds on it is like super, super important. But then, you know, always being on top of your numbers as well, that's going to help everything. So on the topic of uh, numbers and all this fun stuff, let's talk about channels. Right? Um, you know you guys started D2C, you were killing it, but now you guys have expanded. You're, you've got re, you've got some retail stuff going on. You've got Amazon ripping as well. So talk to me about your channel mix. Um, what was the first channel you went after, after you were selling, um, direct. And then how did you kind of, what was the strategy to, to manage the, that channel rollout and how to go.

Speaker C: So first thing was direct, mainly Facebook, Google, um, TikTok really wasn't big when we started, um, and TikTok wasn't really good until recently to be honest with you. Then we got into Amazon, you know, and nothing against agencies, but we do everything in house. I've had horrible experiences pretty much every agency I work with, um, from you know, the direct to the Amazon side. And you know, we brought a guy in who's now our chief revenue officer who was um, a partner in a business I invested in 10 years ago that then sold and then sold again. And he's brilliant, right? And he really knows the numbers. He's a former cpa. He's like the only former CPA he knows is like an amazing like Internet strategist. So like he came on part time and he5x our Amazon monthly within six months. And now the Amazon is of scale where it's you know, uh, almost mid eight figure Amazon, uh, business, just Amazon. And those are our two main channels. We do have our first retail, uh, so we go into Fresh Time, which is a Midwest grocer, 75 stores. We'll start there March 21st I believe it is.

Speaker A: Yeah.

Speaker C: So right around the end of March. Um, and then we have a couple of the bigger ones that are a little bit bigger than them that should be done, but I don't want to. I really, in New Jersey, we call it shooting the clown. Like, you never say anything until it's done or you never talk about a bet you made until the game's over. So I don't want to shoot the clown on anything, but Fresh time is done. We got our P and we'll start there. And you know, we're going to invest really heavily with any retailers. I know that we're going to lose money on those. But, um, we need to prove the concept that we can do it. And we have different packaging and different products for those. Can't sell an $84 average order value air freshener, you know, at a grocery store. Um, so we've come up with other packaging which, you know, 19.99 to 29.99, which I feel good about because everything's expensive now. Candles are 40 bucks, right? So I feel pretty good about it. Yeah.

Speaker A: One quick question. On the, the D2C and Amazon front, what was there any difference that you guys would do in terms of like, the product mix that you would sell direct versus Amazon? Obviously, subscription was a big part of your business, whereas on Amazon, like, they've got subscription but you can't really handle it. It's more like on demand. So, um, how, how did you think about those two channels, just in terms of product mix and everything like that?

Speaker C: So out of pure ignorance, when I first started the Amazon, I was like, I hate Amazon. They take 26% of your money, but they also pay for the shipping. They also have a ROAS that's five times higher than you can get on there. So, like, if I wanted to build just a lifestyle business, I'd probably do just Amazon. Right? Because Amazon, you know, profits are probably 50% by the time it's said and done, not including the cost of your internal team that, you know, is indirectly, you put that all towards everything else. Um, so for a couple of years I was sort of anti Amazon. I'm very pro Amazon now. I also thought as a shopper, like just being blunt, like, when I see something, I go on Amazon and buy it because I want it the next day. So I'm sure there's a lot of people. So we spend it a lot more time and money on Amazon. Amazon's about 25% of our business right now. Um, our DTC is great because we have a huge subscription, you know, millions upon millions of dollars in subscription revenue. Tens of millions. Um, and that allows us to basically reinvest that money back into new customers. Um, so, and that's the other Part right when you're growing, if you don't have the returning customer, you can't make money. If anybody tells me, like, like, one of the companies I invested in, they brought in all these quote unquote experts, and they're like, we're getting 50 cent CPMs, I'm like, then you're probably getting on the worst traffic possible. Right? Like, I can do that, too. Our CPMs are what, like, 40, 50 bucks? Like, they're high, but. But we're getting really good qualified traffic. Um, and that's the other thing. Like, everybody's an expert in this business. That's what I, that's what would drive me crazy if I had to do it over again. It's just, you know, weeding out the noise. Like, there's so many people and they all live, seem to live in Dubai and that would like. And it's like, you know, I just, you know, you got to really get through, through and find genuinely good, smart people that know what they're doing. And I just think that there's so few in this, in this space.

Speaker A: Yeah. And, and I think another thing that you said there that's really important is I think in this space, just in general, there's. It's like super Shiny object syndrome, right? Where there's always a new strategy, there's always a new, there's always a cheaper cpm, there's always a hack that's gonna, like, blow up your product and make you go viral. But if you've got a good business and you find tried and true channels that you can scale that are reliable, that you can, like, build processes around that, like. And again, it's you knowing your business. So if you know what your AOV is and what your CPA is and everything like that, then you can, like, reliably, profitably start to, like, grow your business. Whereas you could just be on a hamster wheel constantly chasing the latest trend. Maybe you, like you said, maybe you do get a lower, uh, cpm, but is that traffic going to convert? Like, you don't know, right?

Speaker C: So, I mean, I fell for the shiny syndrome object just six months ago, and it cost me $5 million.

Speaker A: You know, what was that? What was that?

Speaker C: Uh, I let an agent, I led an agency said this strategy will work. And they were, they had credible. It wasn't like just some guys off the street. We tried it. And, you know, and I think what happens in most of these places, you know, the A listers sell you and the C listers do the work, and next Thing, you know, we're spending twice as much and getting less revenue. I was able to shut it down in 45 days and you know, we built back to it. But like, you know, I almost laugh when they sent me a bill. I'm like, are you kidding me? Like, you almost destroyed my business.

Speaker A: You know, what was the, what was the strategy or what was the space that you guys were, were trying to do?

Speaker C: They thought that there would be a better opportunity on YouTube, different landing pages. There was all these things that sort of made sense but then they didn't implement them. You know, they just started spending more and they're like, you know, I've had people tell me, you know, let's go after the lowest AOV traffic and then people will come back, hired nobody. You know, your second order can be higher sometimes but like, you know, you want to like my perfect world is a 75 is, you know, like get people to get like that 75, 80 new customer acquisition and then they buy one of these for 60 bucks and they do an add on, you know, our margins are great on that. Right. So um, I, we've tried everything. I've literally, I've fallen for, Tick tock. I've fallen for, I literally, you know, if anybody ever, ever did it, you know, was to like mentor somebody who was, you know, in that five to ten million dollar range. I'd be like, just do what you're doing.

Speaker A: Right?

Speaker C: Because like that's when everybody comes after you and says how smart they are and they've got, they've got a new software, they've got a new strategy, they've got. I've had a dude who like had this, what I forgot, I wouldn't even say his name, but the one guy basically told me he's going to double my revenue. He got a shut off of Facebook within for like four days. That cost me a lot of money. You know, so like I, for lack of better words, only trust the in house people at this point.

Speaker A: Yeah. And, and I think it's, I think those learnings like you said, are really expensive. But now that you're operating as you scale, you'll have better frameworks to continue to make decisions as you grow. And like the future decisions like you're going to make more money than, than those expensive mistakes would be in, in sort of hindsight. Right.

Speaker C: And we've got an amazing team of people. I think we have the smartest people in the industry. Everyone's an owner in the company, so people are incentivized to make to make this work, you know, um, you know, some people have come from. Never been in the D2C, as I said, some from like, Dr. Squatch is probably one of the, the largest D2C success stories last couple years. I mean, the, the guy was the number two employee. The second employee there has been working for us from the beginning. He's awesome, you know, as well as a couple others. Um, but I've also had plenty of people from that same company that I can't believe are even employable, you know, so, like, I always tell everybody here, I'm like, man, if this works and we sell for a big number you're going to have, you could suck at your job. And you'll get five more awesome jobs before people figure it out. Um, because everybody's trying to, you know, find the. That you said that shiny toys thing is, you know, it is what it is. But like, now, like, all I care about is the data. Like, and, and then when we get the data, lean into the data.

Speaker A: Talk to me a little bit about, uh, retail and how you guys are thinking about it. So a lot of, like right now, retail is obviously all the hype with a lot of brands, a lot of brands even earlier, uh, are starting to go omnichannel, um, you know, early on. And granted there's a whole different mix of products, right? There's some products that work beautifully online. You guys have the, you know, subscription economics down. You guys have the form factor, you have the product, you' scale that business, uh, online. So, like, you know, I do understand, maybe you don't have the same need to go into retail as, uh, maybe a grocery product that is obviously going to be better suited.

Speaker C: We don't need to. But like, just being blunt, like, at some point, you know, we're in this to monetize the business, whether it's to a strategic private equity, whatever it may be. And you know, I don't think that they need you to be hugely into retail, but you need to prove that you can do it in retail, right? So I think we have a strategy over the next couple years that we're not going to be like, in my budget for this year, I only have the expenses for retail. I don't have the revenues, but there will be revenues, right? And it'll be in the millions. But, but I don't want to count on that. Um, you know, and you know, for any retailers out there listening, you will have the best partner in the world. We will, we will have celebrities in store. We will do activations we will TV in those markets, we'll do promos. Because to me, it's all about the scale of getting into retail. Like, when I think about, like, not that we're trying to get into Target, but whatever. Target's got 6,000 stores, right? Something like that. Just say if you sell two units a day in each store, that's 12,000 units a day. That's, you know, a half million dollars a day for like a $30 product, you're $360,000 a day. See, I know my numbers, you know, and you don't have to do anything except ship it in. You know, how hard that is to build up to that in D2C, you know, and we're close to that now. And it. But it took six years, whereas you get it into those places. But we're not ready for that yet. But we have a strategy to be ready for that. So, like, it probably won't be under my ownership when we get to that level, but under my ownership we're going to prove it and some of these smaller grocery chains, other, you know, different, smaller, but pretty good size retailers, uh, and make sure that we have the right product mix.

Speaker B: Yeah.

Speaker A: And I guess my question is specifically about retail for you guys. I think a lot of founders in your exact position may have, you know, maybe a year or two in or even less are going to be like, looking at retail. And clearly you guys have waited, you've grown the business where you're doing, you know, a ton of revenue, you've got a ton of scale before you're even entering your first retailers. So just walk me through that calculus for, you know, why you guys prioritized, you know, coming in now as opposed to doing, having this conversation that we're having today, like three years ago.

Speaker C: So funnily enough, we. So three years ago, I'll tell you a funny story, and it relates to where we get to there now. I always do things kind of cockeyed and a little bit advanced. Like I bought a loyalty reward software for us before we even had any customers, which, like, there was no reward or loyalty. But. But we still have that same one. So three years ago I decided, let's go into retail. I hire a consultant. We didn't have any even thing close to a retail product. We decided to go to the Atlanta Mart, and my retail consultant was another one was that, you know, selling you the world. Um, we get there and two days before there's a huge snowstorm in buffalo. We paid 10 grand to get there, and then I'm told that if you don't show up, you can never go to the land of mart again and you're done with retail. All the flights are canceled. We literally get a private jet which we didn't have the money to do to get to Atlanta, to get there to basically be put in like the toy section. And you know, besides I let the lady from Melissa and Doug's which was really cool and she was awesome and I got talked to her. But we talked to the buyer. Fresh time there. We were not ready. But three years later, you know, when we did hire the right consultants and we like thought about, you know, retail and how to get into it, you know, they remembered us from there. So I don't want to say it's ever too early, but like, at least for me I didn't understand what it took. I didn't understand the numbers of what it took. I didn't understand the breadth of what it take. And it was, it was by accident that you know, because if we had gotten in we might have killed our chances at ah, retail. We probably would have failed. You know, we probably wouldn't have the right product mix. Now we have like, you know, amazing product team. Not that we didn't before but like it's enhanced and like everything's in the right spot to know what it, what works there. So I mean it all depends on your average order value, right? If you don't, you know, if you have a low average order value, I think you gotta go into retail right off the bat and your chance, I mean I was just looking at Shopify. You know, only 5% of Shopify businesses ever do a million dollars in lifetime sales.

Speaker A: Really?

Speaker C: Yeah.

Speaker A: 5%. Wow.

Speaker B: Wow.

Speaker C: I didn't know that.

Speaker A: That's uh.

Speaker C: So like, so how hard is it to like. And then like, you know again we're nine figure business and we're just getting to retail. Like, like how hard is it to break into retail? And like why would a retailer take you on besides they think your product might be good if no one has heard of it. Right. Like now I can go to retailer and say we spend tens of millions of dollars a year on advertising. We have this, we have already have these customers. They're going to see it like then it's like. And it's still really hard for us to get in. You know, I don't know how these ones get into it and then take off. Like so like I think happens to the world. These others, like I applaud them because like, you know that had been really hard to do.

Speaker A: No, but I just think that context is super fascinating, even from, like, my vantage point, because, like, I see a lot of brands, right. And the fact that you guys made it so far and you're like, yeah, like what you just told me, you bring a ton of, uh, marketability, you have a huge customer base, like, for. From my perspective, like, retail makes a whole bunch of sense for the buyer that's going to buy your product. Right, right. Because a lot of the brands that they're doing, they're, you know, they're. It's a product advantage, but it's not necessarily a brand advantage and a, um, marketing spend and promo coming with it. Um, so it's, it's just fascinating to me. It seems like a lot of the brands that make it in, you know, either have connections through, um, you know, some of their investors, their backers. Um, it's a lot.

Speaker C: It's a lot of celebrity brands these days.

Speaker A: A lot of celebs. Yeah.

Speaker C: Like, H. Bieber's brand sold for like, you know, over a billion dollars. And like the banker that they use, I know pretty well been in their conference. And like, that was only three years. Like, it's really impressive, you know, like, like, you know, so, like, makeup is those completely different businesses, completely different ball games. But, um, you know, the, the, the vitamin industry, the makeup industry, those are like, like, really, really, like boom or bust. But so is ours. But, like, I don't even know how food and beverage get it. Like, that's, like, that's. To me, I'm super impressed by that, you know.

Speaker A: Okay, anyway, so now we've covered. We've covered D2C, we've covered Amazon, we've covered retail. Now I want to talk a little bit about some of your. You hinted at it earlier, but you were talking about marketing splashes. I know you guys have done some crazy NFL partnerships and all of this. So I'd love to explore, you know, when it comes to growth and building brand, like, true brand marketing for, you know, a business like yours. Like, how have you guys approached it?

Speaker C: What.

Speaker A: What have some of those experiences been? Like, what are some of the highs? What are some of the lows? What are some of the learnings you've carried forward from these?

Speaker C: So we've done two. Two football, two NFL teams, a hockey team, an NBA team, and two major colleges and m. Some have been disaster, some have been moderate success. We did a partnership with American Kennel Club. That is like, ridiculous roi, Right? Maryland just got back from the you know, Puppy bowl or whatever it was down there. And, uh, you meet. Meet the Breeze down there. And, like, that was a tremendous success. So those type of partnerships I've done part. I've done celebrity influencers like Captain, um, Sandy from Below Deck and some others. Uh, like DJ Envy was, um, uh, the Breakfast Club podcast, one of the largest, you know, and they've been really good. They're great people. Still great friends this day. But I will say this, I feel like sometimes we've done better with just in Healthy Girl Kitchen. Danielle Brown. Got to give her. She's awesome. Like, she's like a partner in the business. She's got what, like 8 million followers or something crazy. And she's been doing it for years. But, like, sometimes these micro influencers are awesome and you get multitudes of people. Um, you know, but at the same point, like, I follow, like. Like, I love Gruins branding. Um, I've seen a couple others where all of a sudden, m. I'm like, how much money do they spend on influencers? But you're seeing them everywhere. Um, Dose. Dose has been really cool. I know some of the owners of Dose, uh, or at least people are investors in Dose, and like, so that type of stuff is great. So we're. We're trying to. To mix in that micro macro with a couple celebrities. I, um, could see us doing another partnership, and I would love to partner with a bigger line, you know, something like that. Um, you know, other things that we could potentially work on down the road. You know, different things. But, like, the AKC was. American Kennel Club was awesome.

Speaker B: Yeah.

Speaker A: And how did that. Why don't you just tell me a little bit about that partnership? What did it look like? How did it roll it out? What did you know from. From a partnership perspective? Yeah.

Speaker C: Our first one was with the Buffalo Bills, and next thing I knew, every freaking sports team called me in the world, every NASCAR driver, and I was like, oh, the Bills one kicked off great because we're from Buffalo. Then I signed with the Sabers, which is great. New York Giants. My. One of my best friends was the head coach at the Giants at the time. So I was like, all right, we'll do that. And we did Ohio State University, Texas A. And, um, M. Like, they were all decent, but, like, I thought that meant licensing rights. They come to you. In hindsight, it was too many too quick. So I was ready to never do another partnership. And then the American Kennel Club kept calling and calling. I'm like, this one actually makes sense. You know, my investors are like, you got to stop with these partnerships. But American Kennel Club financially, and what it would do by having Azuna pet sponsored by the American Kennel Club made a lot of sense, and it's been a ridiculously profitable partnership.

Speaker A: And, and what did it sort of like, you know, what, what is the American Kennel Club? And like, how did, how did they bring the Azuna, like, activation to life?

Speaker C: American. The American Kennel Club is like the number one, um, source for like, breeds of dogs, right? So like, every, every dog breed is certified by the American Kennel Club and they have a lot of cachet, um, by doing that, uh, 88% of American households have a pet. Whether it's a dog, cat, ferret, whatever it may be, uh, pets universally stink. Um, so we basically wanted to make sure that we had something that was backed by somebody of significance. And the American Kennel Club was probably the premier backing for that. You know, if we were going to have a car backed by the, you know, whatever track and drive or auto club, like, it'd be the same, same type of thing.

Speaker A: No, a, ah, hundred percent. And I think it, it's just, it's cool to see because like you were saying, you have to test about, test a bunch of these things. And sometimes the things that like, are most obvious, like, and flashy, maybe those don't pan out exactly how you will. And maybe something that you underestimated a little bit turns out to be, um, insanely profitable and, and a partner that you want to really scale with. Um, so, Scott, uh, last things before we wrap up here. What other learnings have you had along the way that really sort of stick out, that if you were like, starting this brand all over from day one, that you would, you know, make sure you, you'd implement yesterday?

Speaker C: I mean, I think the, the really not nothing in some ways, because every mistake was a learning that that did something. Now the last agency mistake I was, that was a dumb part of. We were, we were too, like, you're too old to make that, that decision. But I would say that, you know, like, every little thing happened for a reason. You know, some of the failed partnerships, some of the spending too much on a manufacturer, um, spending, you know, like way too much, um, on different pieces and then learning the numbers. You know, there's, there's Nothing like having $12 in the bank and realizing that you, but you, but you have something to fortify good decisions down the road.

Speaker A: You know, that, that, that makes a ton of sense. Um, Scott, thank you so much for joining us on D2C pod today. We learned a ton. Congrats on all the success. Exciting for you guys to roll out in retail. Um, and for anyone who's tuning in, where can we connect with you? Where can we follow along with the story? Why don't you shout out your socials? Or where we can connect with uh, you and Azuna.

Speaker C: Uh, yeah. So it's azuna.com a z u n a dot com. Our Instagram is Azuna at Azuna Fresh. A Z u N a F R E S H A U When we first went to go buy the domain name Azuna was not available then I had to pay a lot of money for it later. And then Facebook is also at AzunaFresh as same as TikTok at AzunaFresh. Hold on. TikTok. My TikTok's kind of newer for us, um, but Azuna.com, you know, if you go on the page, um, you know, there's a bunch of different products and scents. We just rolled out Espresso Martini last week, um, which I think has been really cool and TikTok, uh, is, is doing a fresh ah, well as well. Um, and then that's it. So like it's uh, you know, go on, give us a, give us a look and um, you know, for any uh, you know, would be entrepreneurs, I'd be happy within time frame to take any questions because not that I know that much but I learned a lot by, by failing.

Speaker A: So you know, we appreciate it. Thanks so much Scott.

Speaker C: Thanks. Take care buddy.

Speaker B: Bye.

Speaker A: Uh, bye.

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