Going From $50M to $100M: How We Use Partnerships As Our Biggest Growth Levers at Hulken

Speaker A: We often talk about this, like, how do we get from 50 million a year to 100 million a year? It's expanding our channels and expanding our revenue opportunity. This week on Unfinished Business, we talk about the intricacies of collabs. What works, what doesn't, including dropshipping and everything in between.

Speaker B: To grow the brand, we might need to kind of go in an area that we've never gone in, because that's an area for growth. Consider who you want to collab with. You shouldn't say yes to every single brand reaching out to you. Be very cautious of who you collab with, because it can also bring you down if you do the wrong collab with the wrong brand. You have to align on the economics. You have to align on the partnership deal. You also need to align. Okay, what happens when a retailer reach out? Do you drop ship? Do you not drop ship? Because we've been anti dropshipping all these

Speaker A: years, Retailers will often say, like, hey, let's drop ship your products. And there's no skin off their back because they're not taking on inventory. They're not taking on any of the pain points.

Speaker B: And that's why it's kind of a trap, right?

Speaker A: If a retailer is not going to take the risk of buying your inventory up front.

Speaker B: No, thank you. Or, uh. Not now.

Speaker A: Not now.

Speaker B: Hi, we're back.

Speaker A: We're back.

Speaker B: And it's a special week because tomorrow we're launching our very first collab of the year with posh peanuts. You see the bags right here?

Speaker A: They look so good.

Speaker B: They look so good.

Speaker A: No, they actually look so good. This is the first time we've ever done a pattern.

Speaker B: A pattern. A new type of fabric, new colored handles. And this looks easy on the shelf right here. But let me tell you, this was not, uh, easy.

Speaker A: It wasn't easy.

Speaker B: It wasn't easy because we had to change our entire product. Sourcing, product development, new type of fabric, new type of handles, new type of zippers. All these different things, like, make a massive difference and really disrupted the way that we were developing the product.

Speaker A: Okay. I'm very excited about this collab and the collabs we are launching this year. But, like, just while you're listing all the things we had to go through to get this collab to a place where we're launching it tomorrow. Just like, I wonder if we would have taken on as many collabs this year if we knew.

Speaker B: If we knew.

Speaker A: Right? No, but it's one of those things. It's like, I don't Know, we have so many opportunities coming our way, it's almost, like, impossible to say no to some of these amazing collabs at the same time. I'm just curious, like, how you think about it now that we got our first collab out the door. How does it make you rethink how we'll do collabs in the future?

Speaker B: I think, first of all, we saw the power of collabs when we launched the beautyblender collab bag, which was our first, you know, toe in the water. We saw that collaborating with a great brand, with a great social presence, a great gravitas with their audience had a dramatic impact on our growth.

Speaker A: Okay, I want to stop you there. So beautyblender was incredible. Like, you said, like, it allowed us to, like, penetrate this audience of makeup artists, like, this.

Speaker B: This community that is passionate, niche community of makeup artists.

Speaker A: We got to go to the Grammys, right? Because of them.

Speaker B: We got to go to the Grammys.

Speaker A: Oscars.

Speaker B: We were backstage at every major glam event you can think of.

Speaker A: When we say we, we mean the bag, not us.

Speaker B: Unfortunately, we are not backstage at the Oscars. I wish, but.

Speaker A: But what did you learn? Like, no, but it was interesting.

Speaker B: I think our first collab kind of happened organically because Beauty Blender is a brand that had purchased Hulken for their events and their makeup artists in their community. So it happened organically. But we knew very quickly that there was a lot of synergy there. Right. And this was kind of a simple collab in the sense that we just created a new color. But this was a first way to kind of test the assumption that collabs are powerful. Collabs are ways to get your product in front. In front of a new audience that you do not have access to. And it makes your brand elevate itself to a new level because you collaborate with brands that also have this huge allure that you want to bring to your own brand.

Speaker A: But I'm just singing with beautyblender, things that we didn't even know to think about that were questions that came about later on. It's like, okay, what do we do when a retailer wants to have this bag? And how we actually thought about the economics of this collab. Right. We never thought about a, uh, retail channel. We had only thought about.

Speaker B: I think you can keep it very simple. Of course, there are things that come up, but I think having a very strong deal memo with very simple terms but very clear terms make all the difference. I mean, obviously, you have to align on the economics. You have to Align on the partnership deal, but you also need to align. Okay, what happens when a retailer reach out? What happens? Do you drop ship? Do you not drop ship? Is it something that will appear on both websites or not? And also, obviously, the bigger chunk of that is the marketing. Right. Uh, how are you going to market this? Is it going to be a joint market? Well, I think it depends on every brand and the reach that they have. Right. But for us, kind of the point of a collab is to be able to tap into their audience and vice versa. So you want to be generous with your. The brand you're collaborating with to make sure that you provide your audience and that you create quality content that both brands can proudly show on their social media, on their website, in their newsletter. And through that, you're able to tap into each other's audiences, create a really powerful online moment, and that elevates both brands.

Speaker A: So it's really like, I think about when. When we think about collabs, a lot of time it's not even like generating revenue, it's generating a brand moment. Yeah, like a brand moment, a new audience. And I guess, like, if you, if you're talking to someone right now who's listening, who has a brand, it's a strong brand, they have a strong audience, but they're thinking about taking on their first collaboration. What are the three things you think they need to keep in mind that they might not obviously know? Like, what is something that we didn't know when taking on? Whether it's the beauty blender collab or what we learned through this posh peanut collab that would have just been helpful to have had insight into in advance.

Speaker B: So for any brand looking into collabs and thinking about who is the best partner out there and how to run it, there are three really critical things in my opinion. One, have a very clear deal memo. Understand what are the economic terms that you want to follow through? How much for how long? That's really important because M. For how long?

Speaker A: The collab.

Speaker B: For a long time, we're like just rolling this collab, not thinking, okay, do we need to put an end to it? Actually creating some sort of scarcity around it is really important because that contributes M to the success of this collapse so much. Having an end point to it and either an end number or an end date.

Speaker A: So, like either number of units or like actual date that the collab no longer runs.

Speaker B: Okay, absolutely. Second thing is, you know, consider who you want to collab with. You shouldn't say yes to every single Brand reaching out to you. Like, we have brands reaching out to us all the time. But why do we pick Beauty Blender? What do we pick? Posh Peanut that we're launching tomorrow? These are brands that we feel add so much value to Halken because either they add to our audience or they mesh really well with our current audience. And it's like a match made in heaven. So be very cautious of who you collab with because it can also bring you down if you do the wrong collab with the wrong brand. And the third thing, just align on more marketing. Share your vision. Have a very clear schedule of what and when and how a lot of things can get lost in in the cracks, right? Like what kind of shoot are we doing? Who's covering the cost of that shoot? Who's taking the lead on that shoot?

Speaker A: How many times does that does your collab brand have to incorporate this product within their own marketing channels? Like, how do we even think about that?

Speaker B: I think it really varies. Again, some brands are very cautious to not have too many posts in grid. Some other brands are very gener with having, you know, 10 posts in Grid within the same week. So it's a, uh, case by case. We don't have, like a perfect secret sauce for this. But the best collabs are those where the teams are just amazing. Right? We've seen it with Beauty Blender and Posh Peanut. Like incredible marketing partners. We're on the same wavelength. It makes things so much easier.

Speaker A: Yeah, it really does. Oh, sorry. I just look so good.

Speaker B: It looks so good. But you guys, let me tell you, this was not an easy thing. I think if we can prove one thing at Halken is that we can take on any challenge. Remember how we launched in Target within five months without any prior knowledge, packaging or anything? This required so much work and understanding the nitty gritty of, like, how to make this the perfect bag. Not only that, it's not an isolated bag. I think that's really important to note. They're launching an entire collection of clothing with the exact same pattern. So we need to make sure the pantones and the tone of the pink and all these different things were perfectly matching to their existing collection, which is really unique to any other collab we've done.

Speaker A: And speaking of that, it's actually the first time we're ever going to be doing drop shipping with this collab because we're actually doing a collab as a part of a larger collection. It's the first time that we are even going to be experimenting with what drop shipping can look like.

Speaker B: And talk to us about that, Lee, because we've been anti dropshipping all these years. Like, a lot of brands grow through dropshipping. And like, why haven't we done drop shipping up until now?

Speaker A: For starters, it's just like an additional ops headache that we haven't necessarily had to take on. Right. And I think one of the things right now, in order for us to go, and we often talk about this, like, how do we get from 50 million a year to a hundred million a year? It's expanding our channels, um, and expanding our revenue opportunity. So even though, for instance, with this drop shipping that we'll be doing with Posh Peanut, um, it's not like we're going to be making so much money from the, the PGA's that were drop shipping for them, but it's incremental. Right. And right now we are having to focus on how do we increase our aov. Right.

Speaker B: Yeah.

Speaker A: So that, like, for those that don't know what AOV is, it's basically the order size. Right. Um, and one way to do that is instead of them just buying a Posh Peanut collab bag, they can also get it with matching PJs. I know that I'm going to be.

Speaker B: I'm excited to shove with my matching pj.

Speaker A: Okay. So I think so it's actually really interesting, like, even going beyond just talking about how are we doing dropshipping with this collab, you know, for the first time, we're exploring how do we drop ship with some, um, retail partners. So no matter what.

Speaker B: Let me, let me, uh, pause you on this. So in the case of Posh Peanut, we're actually, for the first time, we're drop shipping their products and they're drop shipping ours.

Speaker A: Yeah, no, it's.

Speaker B: Which is amazing. Which means for the audience who doesn't know, which means if you go on poshpeanit.com, you'll be able to shop our Halkin bag, but it will be fulfilled by us. By us, and vice versa. Meaning you can go on halkin.com and buy a matching PJ to your Hulken, but we're not doing any of the fulfillment. We're just a front end that will then allow people to buy. But it's fulfilled by the Posh Peanut team.

Speaker A: Yeah. And I actually think, like, the team has had like, historical, like ptsd when you'd even mention dropshipping. Because I know in the very earliest days Johnny had tried it. Johnny's our CEO and he's the only guy on our team, and we love him so much because he puts up with all of us women who are like, Johnny, Johnny, Johnny, like, yapping in his ear, kind of the voice of reason. He's, like, the only voice of reason on our team. And. But he never even has the opportunity to say anything because we're, like, yelling over him and at him.

Speaker B: He will come on the podcast.

Speaker A: He has to come on the podcast. But point being is, like, so when Johnny first did drop shipping, it was in the earliest days of Hulan. And I think sometimes why drop shipping gets a bad rep is brands are almost, like, cornered into saying yes to drop shipping from a place of weakness as opposed to a place of power.

Speaker B: Yeah.

Speaker A: And so retailers will often say, like, hey, let's drop ship your products. And there's no skin off their back because they're not taking on inventory. They're not taking on any of.

Speaker B: And that's why it's kind of a trap. Right. Like, I think a lot of brands will be like, oh, it's simple. We just open that dropshipping app.

Speaker A: No. Totally easy. And so we say no to that. So if a retailer is coming to us and saying, hey, we want to sell your products, it's going to be in our marketplace. And then I'm like, okay, how does that work? Are you taking on our inventory? No, we're going to do drop shipping. I'll be like, bye.

Speaker B: But.

Speaker A: So that we are not going to say yes to. But what we are now saying yes to is once a retailer takes on our inventory, is holding our stock, but then they want to basically dip their toe in a new product that we're offering or a new color.

Speaker B: Right.

Speaker A: We are totally willing.

Speaker B: So kind of a testing ground for, like, a new line that they're introducing.

Speaker A: Yeah, exactly. New line that we're introducing. So, for instance, like, if we're saying, like, hey, Container Store, like, you have been such an incredible partner. You hold so much of our inventory. Today, we are one of the number four bestselling products at the Container Store on Fifth Avenue. Right. You want to try our new tidy and chill? We love them. We have confidence you will love them. But you know what? Why don't we test it out first with having you drop ship and offer this on your website.

Speaker B: Dropship online. No retail purchases.

Speaker A: Exactly. Uh, and then it's great because then they can see, like, hey, like, how much should we buy of, um, this product? There's a lot of demand there. So that we're totally on board with and that for the first time we are on board with doing that. But again, it comes with a place of power. How does it become a place of power? Because they have to take on our inventory first. They have to prove they're great partners and then we're like, okay, yes, of course we'll drop ship. But another thing is we're now also in a fulfillment, uh, using a 3PL that we feel really confident can handle drop shipping.

Speaker B: Right.

Speaker A: And we have Ali, who's our new ops, like head of ops, who with her. Right. We know we can do drop shipping. So there's a lot of things. But I think if you're a brand that's new. Mhm. Exploring this, be careful because the minute you like, you tell a retailer from the get go that he'll drop ship, then I think it's much harder for them to take on your inventory.

Speaker B: Retail is helpful because it gives you that shelf life space, uh, and it gives you that exposure offline that you don't get. But like, how is it helpful? To start there, we don't begin dropshipping.

Speaker A: And I think that's why Johnny was like, after doing dropshipping he was like, no drop shipping ever again. We're like, okay, Johnny, we hear you. And then we're like, johnny, we're gonna drop ship.

Speaker B: But um, also there's a time and place. I think there's a lot of things that we said earlier on in the journey, like, absolutely not. We're never gonna do this. And then we evolve and then we see that actually to grow the brand we might need to kind of go in an area that we've never gone in. Because that's an area for growth.

Speaker A: Exactly. But I think it's so. But we're going in there from a position of power. Of power. And I think that it makes all the difference. And it's like, yeah. I just think like if you start out drop shipping, it's not going to help your brand. It makes it so much harder to grow because you're actually competing with larger retailers. Even online when people search like, I don't know, I'd be very wary of doing drop shipping until you're in a position of power. And I actually think it's like kind of the same with collab. Like imagine if we had taken on this collab bag too early. Yeah. Too early.

Speaker B: Yeah. It would have been too much. We didn't have anyone handling products.

Speaker A: Yeah.

Speaker B: We didn't have anyone be able to

Speaker A: source these items, dilute the brand in a sense. Because it's like, right now it's like a perfect pairing because it's like Hulkin and Posh Peanut. But if we had done it too early, it would have been just Posh Peanut.

Speaker B: Yeah, yeah. And there's different types of collabs also. Like, uh, in the case of Posh Peanut and Beauty Blender, we took on the product development, we took on most of the design process. Uh, we're hosting it in our warehouse. But our partners like supreme, who launched our bag, that was a dedicated collab bag, but bought the inventory. And I think people get confused with these different business models. Right. There's different ways to collab with brands. In the case of supreme, they're pretty unique in that way. They will buy from you, uh, they will create the design for you. So we just basically executed and delivered. Right. Um, but that's also a wonderful type of collab because they buy the inventory up front. Again, going back to your point about retail, like, try to find partners that will buy inventory from you. Because if they get that inventory, it shows a commitment. They have to move the inventory. So there's like marketing willpower from the partner to move that inventory as opposed to, like, if you take all the risk as a brand, why would someone else take on any responsibility?

Speaker A: No, totally. And it's like when you're like a venture backed business, probably drop shipping, you're like, yeah, sure, because you don't care about the economics. But the economics.

Speaker B: Aren't you gonna hire an obstruction to, to just manage that?

Speaker A: Exactly.

Speaker B: It's not actually worth it.

Speaker A: No. Like, uh, see if you can grow your brand on your website in retail. Just your brand. Right. Doing it with them. Buying inventory upfront. If a retailer is not gonna take the risk of buying your inventory upfront. No thank you.

Speaker B: No, thank you. Bye bye. Or not now.

Speaker A: Not now. Like, no thank you right now. See you later. See you. Once you're like a big badass company, then you can talk dropshipping. But they have to make a commitment in buying your products up front. We will never say yes to a dropshipper right now unless they make a commitment that they're taking on risk. Like we're taking on risk. Right.

Speaker B: One more thing. We talked about, like partner partners that will buy inventory. We talked about partnerships where we create the product and sell. But there's also content partnerships. And that will be my last closing argument. But we did some amazing content partnerships. Like think of New York City Ballet. You would not think a brand like Halken can be associated within New York City Ballet. But we did this amazing photo, uh, shoot, video shoot where essentially we know ballet dancers use Hulken to schlep their things to the Lincoln Center. And we just captured that, right? A real authentic moment that elevated our brand. And we just did a partnership with BKMag. Again, a very organic, natural partnership because BK Mag is so native to Brooklyn and so is Hulken. And we're basically highlighting all these different schleppers of Brooklyn that use Hulken in their day to day. So lots of ways to do collabs, lots of ways to partner with amazing brands. Pick them. Well, think about all the details, from economics to marketing kind of deliverables.

Speaker A: From the beginning.

Speaker B: From the beginning. Uh, don't. Otherwise you're gonna have surprises that you're not expecting. Right. And make it happen.

Speaker A: Just execute it. Yes. And dream big.

Speaker B: Dream big.

Speaker A: Cool.

Speaker B: See you next time.