Intentional Startup Growth with Ethan Song, Founder of RareCircles

Speaker A: Uh, this is Startup Renegades, a raw conversation with founders, entrepreneurs, and the unicorns among us who have taken their idea and turned it into a thriving, profitable brand. I'm, um, your host, Shawna Armitage, and my work as a fractional marketing director has led me to connect with dozens and dozens of founders in all stages of their startup journeys. Whether they're bootstrapping or fundraising or have capital on hand, there's one big question founders always ask. How do I grow this thing? On startup running, Renegades will explore how they did it, and you'll walk away with actionable steps you can take on your own journey to scalable growth. Hey, Renegades, welcome back. Today I have a really fun episode for you. I want to introduce you to Ethan Song. He is forever an optimist. Ethan was born in China, but has spent most of his life in Canada. Previously, Ethan was the founder and CEO of Frank and Oak, which aimed to reshape the fashion industry by making it more personal and sustainable. Franken Oak was named most innovative company in retail by Fast Company and was number one on the Deloitte Fast 50 list. Now, Ethan learned a lot from that experience, and he learned a lot about up and coming companies and the space and just democratizing things for other humans. That's when he had an M idea. Now today, Ethan is CEO of Rare Circles, where he helps creators and brands build Communities in the Web 3 economy. Now we're going to talk all about Rare Circles today. How Ethan launched it, what he did to get his earliest customers, the approach they took to growth, and where the company is today. I love this episode. I know you will too. So let's dive right in. Hey, Ethan, welcome to the show today.

Speaker B: Hey, thanks for having me. Appreciate it.

Speaker A: Absolutely. Let's dive right in. I want to know where you really, really got started. What did you want to be when you grew up?

Speaker B: Yeah, it's interesting. When I was a, uh, teenager, my dream was actually to be a film director. So I guess I didn't really achieve my dream, at least not yet. But I ended up going to school in engineering because I thought that technology was going to be the big differentiator in our generation. And so I went to school at UBC in Vancouver. Out of school, I ended up working for a brief amount of time at Deloitte. And I quickly realized that, you know, being a founder, being an entrepreneur is what I wanted to do. And, um, what really got me interested was really around the E commerce space. I felt that that was a place where I could combine My passion for storytelling and building communities with actually having a product to sell. I started in the software space and, you know, over about two years of, uh, testing and pivoting, I ended up founding a company called Frankenok back in 2012, which was a men's subscription commerce company based out in Canada, and started that company basically in 2012 with a team of, well, my best friend from high school and a small team of four or five other, uh, founding team members. And I would say that the company had a lot of success right off the bat. You know, we did over $4 million in sales in our first year, quickly got to 20 million, and ultimately, you know, had a company with over 200 employees, you know, which I exited and left basically in late 2019, early 2020.

Speaker A: Wow. You have just in like a minute and a half, answered all of my questions for like the first 10 minutes of the interview. Well done, you. That's all brilliant. Thank you so much for sharing that and what a journey you've had. So now that you've exited the company, what were you doing with yourself? Were you taking some time off? Were you searching for other problems to solve?

Speaker B: Yeah, it's interesting. So I think, you know, going back a little bit to that time when I was running Franken Oak for about eight years when I started in 2012, those were days when, you know, some other direct to consumer online brands like Warby Parker Glossier that were very successful were launched. And I think, you know, now it seems pretty standard to go the EE Commerce and DTC route, but back then it was still very new. And even like a tool like Shopify wasn't very mature. Obviously it was already around, but, you know, few people were using it and it was not very well known. And so I basically saw how the advent of direct to consumer commerce and how tools made that easier, effectively made building a brand more democratic. It was easier, it was cheaper to get started. And I think that a lot of people that never thought they were going to start, you know, a CPG company or a fashion brand or anything like that did because they could effectively start in their basement. And so I would say one of my big takeaway while I was running Frankenok was really the fact that the Internet and the tools that comes with it are creating new, you know, work opportunities that have nothing to do with career choices, have everything to do with jumping on into, you know, a shift in consumer behavior and building something. So, long story short, after I left Franken Oak, I wasn't working for a bit and you know, I spent some time and like Covid kind of hit around that time and I basically spent some time in Costa Rica and I was effectively just studying. You know, when you're running a company that has over 200 employees, you're basically just managing the day to day. And I hadn't spent time reading and just learning over a couple years. And so I just wanted to effectively I was still working except I was just learning all day and just kind of understanding, you know, both business and non, um, business topic and seeing where I thought the world was going. And it was obviously an interesting time with, you know, Covid and the impact of that on our world. And so what I was effectively looking for is what are the tools? What are the. Now that we're in 2022, which is effectively 10 years after when I started Franken, uh, Oak, what are the tools? What are the new paradigm shifts, whether culturally, whether from a technology standpoint that we're going to drive the next wave of entrepreneurs. And so did that, did some like, personal investment as well, you know, to engage with variety of founders and companies. I always like the mentorship and collaboration aspect of that. And over time, myself and my co founder Nick, we basically decided to settle on Web three as a space we wanted to explore further. But for us specifically in the context of, uh, consumer and fan engagement, where we thought the technology had a lot of potential.

Speaker A: Awesome. So you're talking to me a little bit about that problem, the community and the fan engagement. Why did you settle on this as the right solution?

Speaker B: Yeah. So if you've been in the E commerce space or I've actually been in any online business, whether E commerce, whether an online course, uh, whether a social media community or a media platform, you realize that once the world shifted to online, a big part of a business success is not in the supply chain anymore, is not in the product that you're selling anymore. It's really in the audience. How do you build an audience? How do you keep your audience engaged? How do you obviously grow your audience? And that's why the better the larger businesses we're seeing now are often businesses that have a clear, you know, niche audience, that are catering to their core, to that audience and are building products from that audience. And so what I realized was that whether it's social media marketing, you know, as we all know, well, we might not all know that, but, you know, as I've seen, uh, as a bit of an industry, uh, insider, is that, you know, ads are not as efficient as they were 10 years ago, the cost of advertising on Google and Facebook has risen. You know, it's not affordable anymore. If you look at email marketing or even SMS as like, you know, customer engagement channels, the open rates are dropping, the unsubscribe rate is increasing. People are not as interested in engaging with newsletters anymore. And so you're seeing this sort of situation where community and audience building and engagement is more important than ever, while the channels through which you've been able to build your business or looked at building a business over the last 10 years are getting less efficient. And so therefore we thought that, hey, what is going to happen, you know, how are businesses going to build the audience in the future? And we thought that Web3 as a technology could solve some of these points. And whenever you're looking for a new opportunity as a builder, you want to kind of take a bet on the next paradigm shift. And obviously we know that we're still very early in the space, but I think there's a few things from Web3 that I think can really truly transform audience and community building. Now let me go through them quickly. I'm going to ask myself that question, which is, what does Web3 bring to growing your audience, engaging community? I think there's a few things. I think first of all, you don't

Speaker A: even need me here. You got this interview, you got answering all the big questions on your own. Go ahead, tell me all about it.

Speaker B: I think the first thing is the cultural shift. I think one of the things that, uh, even I didn't realize and only realized over time while exploring the space is that there is both a technology paradigm shift, which is the blockchain, right? Uh, decentralization and all the things that come with the blockchain. And like this talk is not really about blockchain and crypto. So I'm not going to go too deep into that. But the cultural revolution that's happening is really around a revolution of I want to own my data, I want to be a participant in this community. I don't just want to follow and watch, I want to engage. If the last 10 years you spend your time, uh, watching Netflix and effectively having a one way relationship, which is you just consume the content you receive. Now as a participant, I want to be part of the community, I want to be heard as part of that community, I want to engage with that community. And Web3 enables that. So the idea of like community participation, community ownership is one thing that Web3 enables. The second piece is obviously incentivization, is that now you can actually Play the power lot. If you're a subscriber to a piece of content, a podcast, everyone paying the same price. Right. So how do you reward, how do you not just reward but also monetize your top fans? It's very hard to do that. And with basically Web3, the ability to actually, you know, both monetize and reward the parla of user engagement, which is that, you know, the classic like the top 20% generates 80% of the revenue and engagement, I would actually argue that the top 3% that does that. And so how do you reward and engage those Fans? Once again, Web3 can play into that space. The last piece of why Web3 can also, and that has to do with the blockchain, is the fact that a lot of people are unfortunately tired of centralized social media platforms, you know, from Facebook to Twitter, where policies are always changing, where they feel that, you know, they're being spied on. They feel like the leaders, some of those companies are not responsible with their data when their core decisions or they were not implicated. So I think we're kind of coming to the tail end of the social media revolution, which started truthfully with probably Facebook in the mid-2000s. And now we're entering a new era where most people are going to have smaller following, deeper engagement, more private communities. And I think that's another reason why I believe that Web 3.0 will play into how it will basically impact people's lives.

Speaker A: Hey, Shana, here. I want to take a quick break from this amazing episode to send a free resource your way. Starting up is hard with your bootstrapping or you've got some funding behind you, you don't always know exactly where to start. I want to fix that. You head to startuprenagades.com right now, you can claim your free business benchmark blueprint. That's a mouthful. It's going to help you set a plan in place so you can create your foundation for growth. And it's free. So why not head to startuprenagades.com right now and grab yours? Yeah, absolutely. So tell me specifically how you're doing it because what I really want to get down to understanding is, you know, the first steps you took to build this specific business and how you acquired those very first customers.

Speaker B: Yeah, so I mean in terms of like, we effectively build a business with our customers. So I think one of the benefit of, you know, being someone who's been a multi time repeat founder, I don't say that as something that's necessarily good, but I think there are Some benefits to that is that, you know, I was able to effectively call a, uh, few brands and potential clients with whom we could workshop the product together versus just like you know, building a product and then showing it to someone. So I found this idea of like co creation is really something that's interesting today and it definitely helps accelerate product to market fit. So that's how we found our first clients. I would say that, you know, our product is structured in two pieces and I should probably explain and also understand what is that I'm talking about. There's one piece which is called Access, which is the ability to effectively create digital uh, access pass on chain that then a creator, a brand, a uh, sports team can use for events. They can also use that for private communities, private discords and so effectively a digital access pass that is certified by the blockchain. So that is one of our product. The second product that we offer is called Portal and it's directly connected to the Access pass. And it basically enables you to engage your fan base with video content, voting and polling, a community dashboard, as well as other features that are included in there. So if you think about it this way, if you, let's say for your podcast, wanted to create your own kind of decentralized Web3 community, you could effectively issue an access pass. Whether you want to give it away for free, whether you want to sell it and actually generate revenues from it, your fans could basically buy into it and set up their community.

Speaker A: Okay, awesome. So you said that part of getting your first customers, like you built it with your customers benefit of um, founding other companies. But what did that really look like? Was it like 10 founders that were your friends from previous ventures? Was it, you know, your mom and your cousin? Were you reaching out into like Reddit communities to get people on board? What was the nitty gritty of that?

Speaker B: I mean, to be honest, like you know, apply this to anyone else's situation, it could be your mom, it really could be anyone. Because the point is to have immediate feedback. In our case, because we were targeting in the beginning brands specifically we reach out to brands that we thought this would be interesting to. Some of them I knew before, some of them I didn't know before and effectively presented this idea and like, you know, more in practical terms. I think it started with some work sessions, some surveying, some like, you know, Q&As and answers of questions of like, what are your challenges? What are you trying to solve? What are the ways in which you're solving right now and how is that working? Out for you, Understanding also the demographic of these brands and effectively almost for us as a solutions provider, sitting in a seat of our clients, understanding their fan base and their challenges. And after that, you know, we started mocking up some products, leveraging a lot of the tools that currently exist, like Figma, uh, having, you know, our fans, not, uh, our fans, our merchants basically play with them, click through them. And we did that over a period of time and we're still doing that. The space is early and so a lot of it is still very experimental. But what that allowed us to do is to get immediate feedback and also get initial set of customers versus kind of working toying in the dark and then presenting them something like two years later.

Speaker A: Yeah, that makes a lot of sense. So let's talk about scale and growth. I love what you shared about getting your first customers. But now whether you're just hitting the next phase or you're going for funding, you have to be able to show that you can really grow this thing. So what did you have in terms of marketing? What were you doing for growth strategy to take this thing to the next level?

Speaker B: I mean, for this business, it was very different than my previous business. Frankenok was a consumer brand. And so in that case it was a lot around effectively building community, which is what we're talking about now. But you know, social media marketing, you know, community marketing, some influencer marketing with a mix of paid ads. That's kind of what enabled us to grow that business within this business is different because we're a B2B company. And so our goal is not to get millions of users, but rather the right clients that we think can be successful and have a sustainable business. And so we were a lot more selective. I would say the way that we worked is we effectively made a list of like our dream clients and then worked, uh, internally to reach out to these clients directly through LinkedIn or other channels to set up time and conversations to build those relationships. Now obviously some clients jumped on board, some clients are still learning about the space and we're perfectly okay with that. You know, ultimately we're building a long term relationship. Now on the marketing side, while we're doing that, I think it's important to be active. And so we also participated in some Twitter spaces, you know, other kind of communities, uh, to talk about what we were building. And even like today, you know, being part of your podcast, part of it is discussing sort of what we're building. That was effectively the methodology there. I think the one thing that to me is similar between B2B and B2C is the fact that you want to go after the early adopters and so who will effectively jump in because they're excited about the ideas, they're excited to be involved with you, and they're also open and want to provide feedback and be heard. Finding those early adopters, those early supporters, I think is a big part of, um, not just accelerating growth, but actually building a solid foundation of customers that are highly engaged in your success and your product. And so I think in both businesses we've aimed to do that.

Speaker A: That's really powerful. I think a lot of the times with startup, we really think, you know, growth at all costs and how much is your customer acquisition cost and how many customers is going to prove that you've got your minimum product or that you can really scale this thing. But slowing down and being intentional about those first customers is so important, and I'm not sure that everybody does it that way. I'm so glad that you shared that. So can you tell me what is going on with the business right now?

Speaker B: Yeah, I mean, we're at the moment basically continue to innovate on the product. You know, obviously it's interesting because, you know, right now with the market, we are in the middle of, you know, what some are calling a new kind of crypto winter. I think for us, because we're in a community side, everything that's happening on, like the trading or the crypto, the value of assets is not really relevant to what we do, but there is definitely an impact. And so we're being thoughtful, I think, just studying where the market is going, but really in the end, removing the noise and focusing on what our customers and their fans want. So product development, uh, we're scaling the number of customers that we have and effectively just really aiming to deliver an exceptional product. And I think part of that just comes with a mindset of like, trial and error, which is what we're currently focused on. The other thing that we're looking to do, obviously, is we realize that because we're new in this space, is to also create content and educational materials effectively that, uh, we can add value and not just be there, you know, trying to sell our software, but rather be a, uh, contributor to this space. And so we're doing that in the form of creation of content, master classes, courses and other material that people can use like that.

Speaker A: That's awesome. Thank you so much for sharing. Now, Ethan, it's the time for the big question. Can you tell me what being a startup renegade Means to you?

Speaker B: Yeah, it's a great question to me. You know, the thing about being, um, Startup Renegade is the fact that it's almost not about the company, but about your own personal choice in life. And I think it's choosing to that famous quote to be the man or the woman in the arena, and the idea of, like, just being willing to take chances, try new things, and being laughed at, honestly, in some instances for believing in the future and having the courage to try, and you're willing to fail and fail and fail again, and that the goal is actually not to win. The goal is to try and do. And that's what I found about being a startup, is that, you know, with all my friends, like, that have been the startup space for, like, 15, 20 years. You know, you see various levels of success, right? You see some people that have made a lot of money, some people that, you know, gone bankrupt, some people that have some mild, uh, successes, and all of that is somewhat out of your control. I think what matters the most is that you try, that you overcome challenges and you learn, and within that, you stay with strong values and you have strong ethics. But ultimately, you win by doing. And that's the part that I love the most about the startup world, is that just by doing. You should be grateful for that.

Speaker A: Yes. I could not have explained it better. Thank you so much for being here today, Ethan. Can you tell everybody where they can find you online?

Speaker B: Yeah. If you want to learn more about what I'm working on, you can find me on Twitter, rhansong. Uh, you could also take a look at our company, Red Circles. It's Red Circles on Twitter. And, uh, stay up to date on what we're working on.

Speaker A: We'll have to do that. Thanks, Ethan.

Speaker B: All right, thank you so much.

Speaker A: That was this week's episode of Startup Renegades. Thank you so much for joining me and soaking up all that brilliant entrepreneurial knowledge from today's guest. If you want to suggest a founder for a future episode or just want to connect, you can find me on Instagram at Shawna Armitage. That's S H A u n a.arn m I tage and just a little reminder, if you liked what you heard today, be sure to subscribe and leave a review wherever you listen. It makes a huge difference, and it's so important for helping the show thrive. I'll be here same time next Tuesday for a raw, honest conversation with another startup renegade.