Today, Forbes.com has released their profile on Symphony President and Co-Founder Henry Kim. Following Henry’s journey from investment banking, to managing an Orange Julius, to paving the way for democratized commerce for all, Forbes’ Chief Insights Officer Bruce Rogers helps shed light on Henry’s achievements and ambitions to make growth and success accessible for brands of all shapes and sizes.
As the demands of online brands evolve, Symphony Commerce will continue to follow our founders’ determination to remove the critical barriers to success so that brands can scale and grow on the merits of their core business.
Learn more about Henry’s story and how brands can learn how to compete in today’s commerce landscape.
The interview was originally broadcast Sirius XM111 Business Radio from the Wharton School on November 3, 2014 with Dave Reibstein and Bruce Brownstein.
Dave Reibstein (DR): Welcome to Measured Thoughts on Sirius XM111 Business Radio from the Wharton School. I’m Dave Reibstein and I’m here with Bruce Brownstein and today’s guest, Harish Abbott, CEO and Co-Founder of Symphony Commerce.
Harish, what type of data and analytics does Symphony Commerce provide to its clients, and from their perspective, what is the most essential part?
Harish Abbott (HA): It really boils down to two fundamental metrics for a commerce business.
The first one is the customer acquisition cost (CAC).
Businesses spend money across many different channels, whether that is Facebook or Twitter or Google or search engine marketing or remarketing or emails or promotions. Great businesses have a handle on what the CAC is across these channels. If you spend a $1000, and you acquire 100 customers, then your CAC is $10. It is total spend divided by total customers.
DR: Sure. How do we know what caused that acquisition?
HA: I think that is what distinguishes good platforms. Good platforms and applications are able to do multi-level attribution analysis to a customer journey or prospect journey to become a customer.
So typically speaking, a person would have many touch points with a brand and web site before they buy something. They may see an ad on Google to come check out the product, then they get a retargeted ad somewhere on the web, they click on a promotion that is appealing to them on the website (but only enter their email), then we may send them an email at the right time and convert them into a customer.
And the ability to say: this user’s path was across these three touch points, and for these three touch points, we spent this many dollars, and be able to aggregate that is very, very, powerful.
DR: You’re talking about attribution. Do you end up assigning equal weight to each one of those channels? What’s your rule?
HA: We try to do the last 30 days attribution, and assign equal weight on that.
Some businesses only give weight to the last click, and attribute everything to that. We have the philosophy that it is not the last click; it is the series of touch points that help you acquire a customer. You pick an arbitrary time, and if that is 30 days, you can attribute everything equally during the last 30 days.
DR: So you’re tracking the information, so you can give the brands that estimate for the cost of acquisition. What’s the second metric?
HA: The second key metric is lifetime value (LTV) of a customer.
Once you’ve acquired the customer, the customer may be active for 1 – 2 years (depending on your business). During the time they stay with you, what is the net profit that the customer generates for the business?
Obviously, you want the LTV to be higher than the CAC for a healthy business. But how much higher, and how fast can you recover your cost of acquisition is very, very important for cash flow reasons for businesses.
DR: Do you look at the LTV by channel of acquisition?
HA: Yes, and that is one of the things that I want to highlight. LTV is a predictive measure. You’re getting better in your prediction as the business ages and you’re getting better with the age and experience of your spend in each channel.
DR: Are you getting better because you have more data and you can estimate it more?
DR: But I suspect that that changes over time. If you have an abundance of data, some of it is no longer relevant over time.
HA: That’s true. So the way to counter changes in channels is to weight average the most recent data more heavily, and the older data less heavily. This gives you a progressive view of the LTV of the customer.
Platforms like Facebook are a big marketing channel for a lot of our brands and partners. These platforms change over time. Sometimes they make it really easy to target people. Sometimes they make it very easy to get organic traffic. Depending on the platform and the changes, the value of the same customer on Facebook changes over time.
It’s actually important to know that if Facebook worked for you 3 months ago, it may not work for you today. You continually have to monitor these numbers and change them.
Bruce Brownstein (BB): Harish, you talked about the importance of sending the email at the right time during the customer acquisition. That’s true post sale if you are looking at the LTV of a customer?
HA: It is incredibly important, and I’ll give you some examples.
Our view on marketing, and the way we advise our clients, is that only half of marketing is acquiring the customer.
The best and greatest companies then actually use their customers to bring in new customers. These brands deliver an amazing experience to their customers across the entire lifecycle, so the customer ends up referring more customers. That is the most powerful way to grow a brand, and it is also why the most cost effective way to grow a brand is to service your existing customers.
At Symphony, we believe that happens through different touch points. All the way from delivery of the product on time, to getting feedback on the product you just delivered.
A very simple email actually goes a long way.
We found that if you map when a product is delivered to when the product is used or consumed, you can send very targeted emails. For example, if the usage of the product takes 7 days to get familiar with it, on the 7th day we send an email asking the customer for their feedback. The focused timing of this email actually makes the customer more likely to purchase another product.
DR: Why 7 days?
HA: 7 days is arbitrary. It depends on the product.
For a candle, it may be 2 days, because they can start using it right away and experience the scent and get a sense of how good the candle is. For a bed sheet, it may take 7 days for them to have the information to comment on the product.
When you reach out to a customer to get feedback needs to be customized on a product by product basis.
This is what I mean by the entire lifecycle of the customer. The marketing does not stop when you got a click, and the customer made the first purchase. We actually believe the marketing campaign starts at that point. The customer’s offsite experiences have to match the onsite promises your brand made – all the way to the delivery of the product. That’s what makes a good marketing campaign.
DR: One of the components of customer LTV is customer retention. I assume you’re tracking customer retention for your clients and looking at those components that contribute the most to customer retention.
HA: Yes. That is very, very important across the board. As an example, Symphony offers subscription infrastructure, so brands who have consumable products, like coffee, can use our infrastructure to sell subscriptions.
One of the important attributes of subscriptions is: when does the person churn?
In the beginning, the customer has committed to get the product for 12 months. However, after a few deliveries, if the customer doesn’t feel good about the price or the product, they are likely to churn.
You’re better off knowing that the customer is more likely to churn after the third delivery and fix that to increase your LTV, as opposed to just running a machine that requires more customers to buy subscriptions.
DR: That makes sense. It’s a little easier when you have a subscription model, compared to infrequent purchases where you don’t know when a customer drops off, like the candle example.
HA: You don’t know when they’ve dropped off, but you start to get a sense because they stopped opening your emails. We track all those events. I sent a promotional email and they didn’t open it. They didn’t open my last three emails. That means they are losing interest.
DR: We’ve been talking about the metrics that are important to your clients. What metrics do you use to measure if your work is doing well and Symphony is doing well with its clients?
HA: We use very similar metrics.
We use CAC. Our cost of acquisition is very lengthy, given that brands have to trust us to run their entire business on our platform. You have to track the total spend whether that is going to trade shows or creating a lot of content around the topical problems commerce companies have. You have to build trust from people reading that content on blogs or case studies or whitepapers. And then nurture them with email campaigns so they start to build trust with Symphony as a brand before they start to use any one of our commerce services. Aggregating all of that spend and figuring out what is our CAC is super important for us.
DR: I love the answer that you use the same metrics as your clients. I assume you are also looking at the LTV of your customers.
HA: We look at the LTV and retention rates. It is very clear if some of our brands stop logging into our tools: it means they are not getting the value that we expect them to get. There must be a mismatch between their expectations and what our commerce infrastructure platform delivers to them.
We need to get on top of that immediately. We assign a dedicated client success manager to each of our clients. One of the core responsibilities of the client success team is to make sure that the clients are getting the benefits of the platform. If we see metrics that the clients are not logging into our tools and our admin, we would call our clients immediately to understand why.
BB: When Charles River Ventures invested in you, did they look at the same metrics?
HA: Yes, they did. And it is really CAC and LTV.
The other metric that some investors look at is customer happiness. For us, as an early stage startup with less than two years under our belt, customer happiness may or may not get fully reflected in the numbers right now. This is true because clients may only have a few months on the platform.
So the investors call the clients to find out if we are solving the right pain points. Are they happy with our performance? Ultimately, the investors are getting to the same metric through different means. When the data is not available, then the investors call to get anecdotal evidence that those numbers will pan out the way they expect them to.
Get more insights from Harish Abbott in Commerce as a Service: An Interview with CEO and Co-Founder, Harish Abbott.
This interview originally broadcast on Sirius XM111 Business Radio from the Wharton School on November 3, 2014.
Dave Reibstein (DR): Welcome to Measured Thoughts on Sirius XM111 Business Radio from the Wharton School. I’m Dave Reibstein and I’m here with Bruce Brownstein and today’s guest, Harish Abbott, CEO and Co-Founder of Symphony Commerce.
Harish, tell me a little about your background.
Harish Abbott (HA): Thanks for having me, Dave.
My background is in commerce. I was at Amazon from the very early days when we only shipped books. I helped build a lot of the fulfillment and storefront capabilities of Amazon. I was instrumental in getting the first Harry Potter book out to millions of users before it showed up on B&N stores. And I have been an entrepreneur. This is my second business – I also started a company around recommendation engines.
DR: Where did the idea for Symphony come from?
HA: Symphony Commerce is a “Commerce as a Service” platform. The idea really came from one of my last businesses where we worked with a lot of small and growing brands. We discovered that the majority of these brands were spending a lot of their time on commerce infrastructure: like how to get the site up, how to power a cart, how to fight fraud, how to ship things out on time, how to offer 2 day delivery, how to pull data so they can market more effectively.
That was time consuming and distracting, so the brands were spending less time on their core business: the product, the marketing, the branding. In our opinion, this is what controls the destiny of the business.
Critical aspects of the business, like infrastructure, needs to be done – and done well – but by itself doesn’t make you successful as a commerce company.
Symphony was started so we that could partner with brands who are growing and allow them the freedom they need to focus on their core business while Symphony’s Commerce as a Service platform handles all the critical stuff that brands need to run their commerce business across wholesale and retail.
DR: I could probably do all of my own tax forms, but I hire an accountant because I can outsource it. What I find is that a large number of companies end up outsourcing their accounting, so they can focus on the things that are really important to their business. I guess it’s with that same spirit, right?
HA: It is.
DR: OK. How big is Symphony Commerce?
HA: We are at 75 people. The company was started about 2 years ago, and we now power now hundreds of millions of dollars through the platform.
DR: Describe for us what Symphony really does: I heard you say all the things small and medium and growing brands have to struggle through. What parts of that do you pick up, and what are the responsibilities that you assume from your clients?
HA: Let’s say you are a jeans company. So the core for you is the jeans, the product, the branding.
Symphony handles your store creation: your website, your website for (possibly) wholesalers, and gives you the tools to both manage and maintain the website in a very easy way.
DR: So wait. Do you manage the website, or do you give them the tools to manage the website?
HA: We give the brands tools which are very easy to manage the website. The website runs on our servers, so we handle the traffic spikes, the load, we maintain responsiveness of the website across different form factors. We give brands the tools (if they need to change the home page image, for example), so they can log in and change it themselves.
DR: So when you say, “you manage the website,” what does that mean?
HA: There are different website components. You have the branding aspect, which is the color, the images, the merchandising, which we believe the brand knows best.
Then there are all of the technical aspects: how many servers is it running? Is it secure from attack? Is fraud prevention on? When Cyber Monday hits and you need ten times the bandwidth, do you need to be worrying about your servers?
We manage all those aspects, so brands don’t need to worry about these things when working with us. That’s why we call ourselves Commerce as a Service, you’re truly getting a service no matter what day it is. Your site is up 24/7, the response times are super fast, and our engineering, product and client success teams are behind the scenes making all that happen for the brand. On top of that, we are making incredibly easy tools, which run on mobile, tablets and web, to make it easy for you to manage and maintain your site.
DR: Do you help them structure that website? Every website has an “about us,” a “product” tab, a “contact us”: do you help them with that or do you leave that up to them?
HA: No, we help them structure their shopping experience based on the best practices we have learned over time helping hundreds of brands.
DR: OK that’s great. Obviously you are managing the website, and it sounds like you’re doing the infrastructure, too.
HA: We provide the core infrastructure for Commerce as a Service.
After the website – which is only a small part of running commerce – the next piece is: How do you manage your promotions? How do you manage your pricing across different channels? What kind of tools and data do you need to set your margins or your shipping policies?
So we give brands the infrastructure so businesses can manage that across retail as well as wholesale channels.
The final piece that we do is fulfillment. Once you have the website up and running, and your pricing is under control, then you need a single view of all your orders coming in. Plus, you need a single view of inventory across all of your warehouses, so you can manage your orders – as well as your inventory – in the most optimal way. So we provide the infrastructure for businesses to be able to do that.
Our system also comes pre-integrated with about 15 warehouses in the country, so if brands choose to use any of our pre-integrated warehouses, they can get the entire commerce solution on an almost turnkey basis with the tools to manage it.
DR: So is the warehouse a Symphony warehouse or, in the example, a jeans warehouse?
HA: If the brand chooses to use our warehouses then they can get the entire turnkey solution. They have the option to use their own warehouse, but the majority of small and growing brands do not want to invest in the CapEx needed for physical infrastructure.
All of our customers use our network of warehouses: the jeans are delivered from our warehouse.
DR: Are those 15 warehouses all located in downtown Palo Alto?
HA: Haha. No – they are all over the country from South Dakota to Ohio to Los Angeles, Reno, etc. They are spread around the country so we can give massive distribution to the brands, so they can reach customers very fast.
DR: The Palo Alto warehouse is running out of inventory. Do you ship from South Dakota to Northern California?
HA: Yes. Those are the services that we provide where we will do multi-warehouse optimization on every order that comes in.
So we’ll try to ship it from the nearest location, but if that is not available we’ll go to the next best, and the next best and so on. That is where our expertise comes in: Do we split an order? Where do we ship it from? What’s the best way to save money for the brand and meet customer expectations?
DR: Does Symphony coordinate with brick and mortar? Do any of your clients have brick and mortar stores?
HA: Yes, we help with the coordination. For our clients that have orders coming in from Macy’s or Barnes and Noble or Bloomingdales, we are able to take their EDI orders and combine them with the rest of the orders.
DR: Ok, the holidays are coming up, and I want to get a pair of jeans for my good friend Bruce – but they don’t arrive in time. Am I talking with Symphony or the jeans company?
HA: Your customer service is with the jeans company, but they have the tools we provided to give them end-to-end visibility on what happened during the entire commerce journey. The jeans company will decide to refund the customer, or cancel the order, or comp the customer for another pair of jeans. We provide the tools to help brands run their customer service more efficiently and profitably.
And the jean company will hold us accountable if Symphony has not met our service level agreement (SLA).
DR: In 99% of the time I’m sure the product arrives on time. But for that 1% of the time, how do I ask for a refund? How do I negotiate that between Symphony and the brand?
HA: We have our SLA published with the brand, and if we miss our SLA it is our fault. And we actually go and refund the brand on the damages.
But if we met our SLA, then the brand has to take care of it. For example, they sent some jeans to the warehouse. But some of the jeans were torn, so we couldn’t ship them out. That’s not really Symphony’s fault: it was a supplier mistake.
We track every single piece of data, so we can attribute any cause and action to each other. We can get to that level of granularity on an order-by-order basis.
DR: Who does the forecasting? Does the business do all that, or does Symphony take some of that on?
HA: The brands do the forecasting.
Our platform provides the data to make informed decisions, such as understanding the velocity or the seasonally adjusted sales volume over the last 12 months. Based on that, they have to make the call on what they expect to sell.
We think about it this way. There are core aspects to the business: Who is my customer? What are my products? What is my new product line? We believe that the brand knows this best.
The infrastructure that you need to run your business around commerce is where Symphony comes in as a partner so the brands are not reinventing the wheel. Also, Symphony brands get access to an enterprise level infrastructure. This means they can solve forecasting level problems very well with the right amount of data with easy to use tools.
DR: One of your clients, Diamond Candles, grew from $4.5M in revenue to a $16M run rate after a year on Symphony’s platform. How did that happen, and what part of that can you take credit for?
HA: It happened because the company had a good product and understood the customers who wanted to buy the product. Diamond Candles spent their attention on the right marketing channels to attract the right customers. A lot of the credit goes to the brand because the product, the brand, and the ability to go and market to those people, was executed by the brand.
Where we come in is when the business grows 400%. We are able to deliver infrastructure that scales with them. What this means is that they are not distracted by spending time and energy in scaling infrastructure while their business is growing.
The second area we can take credit is that we are able to deliver an enterprise level commerce to a $4M business. With Symphony, the infrastructure was supporting them to scale instead of creating obstacles, which is what we see in a lot of small businesses. Their “cobbled together” infrastructure gets in the way of their growth. We are really a behind the scenes infrastructure company. We can take credit for being a good partner to help them grow so quickly.
Editor’s note: Read more about Diamond Candles case study and CEO, Justin Winter’s Interview, Secrets of a Break Out Brand.
Read more from Harish Abbott in , read The Most Important Commerce Metrics.
An Interview with Marley Marotta, Co-Founder, Spirithoods
How did you come up with such an innovative and profitable product idea?
All of the owners/founders were searching for something to do; something we could call our own. The idea for the business that became “SpiritHoods” kinda fell in our lap.
In 2010, Alex Mendeluk and I were making animal hoods to wear at Burning Man, and for fun we would wear them around. Alex was a little more outgoing than I was back in those days, and he would wear them out and around in Los Angeles. People freaked out about the hoods. We realized by the reaction from people on the streets that it was something that people really wanted. We weren’t thinking about creating a business yet: we were just wearing them for fun.
As I said, we were already searching for something to build into a business, and the hoods seemed as good as anything to do. It’s unique, it’s never been done before, and it’s not going to have any competitors (well, at least for the first year and a half).
We did start a pretty unique trend. Eventually, people did come into our space: they created knock offs and began competing really aggressively. In a way, it was flattering that we started this thing that was so cool, everyone wanted to get a piece of it.
How did you make the transition from cool product to start up business?
The transition was really interesting, and it was really fast, actually. There was this idea that we could either take some time, hibernate with the idea, get our stuff together, and really understand fully what we were doing before we did it. Instead, we took a different route. We were just like, “Let’s go.” We basically decided to go full tilt, as hard as we can, as fast as we can, and figure out everything on the fly.
When we started having those reactions on the street, we basically sat down with a bottle of tequila and talked about what this business would be for about 6 – 8 hours and wrote a basic business outline.
Then, the next week after that, one of our business partners (my brother) went to Guatemala. While he was gone, Alex and I started getting prototypes together. We found a seamstress, made our prototypes, shot them, and put together a basic line of 10 hoods, and applied for a fashion trade show called “Magic” in Las Vegas. It’s the fashion industry’s biggest trade show.
The trade show folks were like, “Yeah, I guess we still have an opening, but we’re going to need X, Y, and Z from you.” And we’re like, “What is X, Y, and Z?” We had never put together a line sheet in our lives! We put together all of this stuff last minute and got in there and we didn’t even have production handled. We only had prototypes.
The Magic show was a wild success. Everybody loved it. Still to this day, it’s the best trade show we’ve ever done, and it produced the highest sales. From there, we had orders, so we had to fulfill them. We went back to LA and just figured it out. We found a local manufacturer. It wasn’t easy, but when you have orders you have to fulfill, you make it happen.
Does SpiritHoods still manufacture in LA?
Yes, it’s really important to us. We love to manufacture in Los Angeles and keep the jobs in America. It is a high cost, but it’s totally worth it to have the quality that we have and that our customers expect from us. You can go out and spot a knock off immediately—they’re not as fluffy, they’re not as soft, and they don’t last as long. These people are trying to do what we are doing, and they just don’t quite hit the mark. You can instantly tell it’s a knock off. We’re definitely going to maintain that really high quality, and I know that manufacturing in LA is part of that.
How did PR fit into your growth strategy?
Due to the nature of our product, it had a coolness factor that has always been one of the things that stands out. Because of that, it kinda got pulled into the music scene culture, so a lot of musicians were wearing the product. A lot of actresses were wearing the product. Bruno Mars, Snoop Dogg, Keisha, the Kardashians, Justin Bieber. This was stuff we weren’t even paying for. It was just word of mouth.
People were taking notice, especially within the LA Scene. People know who we are, more so in the LA scene than anywhere else. I think that worked down here to our advantage to get our product on the right people for free. It immensely added to our growth. Within that market, that free natural marketing was the best we ever had. I mean, Vanessa Hudgens gave Conan O’Brien a grey wolf SpiritHood on air! No one gave her a hood to go on Conan. Next thing we know, we get 20,000 people to our website the next day. We’re just amazed by that.
When did the business start to really take off?
We had a pretty explosive growth in our second year, where we grew almost 500% and jumped from $1MM to $4.5MM. We thought the next year was going to keep growing, and we were going to continue to knock it out of the park.
We hit the point where we definitely thought we should take on a whole bunch of employees. I don’t know if it was the best choice. We planned for another 200% – 400% growth, and had it kept going, we would have been prepared for that. But sales actually declined a little bit with all the competitors that were entering the market with cheap knockoffs. Not to mention we were having all kinds of scaling problems from ecommerce (which is why we actually switched to Symphony Commerce), to sales team problems. It was a perfect little storm.
We weathered it well, but if I had to do it over again, I definitely would have kept it a little more lean. Just because you have money, doesn’t mean you need to spend it. But it was definitely a good lesson to learn.
There’s a lot of different ways that we can continue to grow the company. When you have an item like ours, it’s going to get sucked up into pop culture and you have a little wave, and then you come out on the other side, and it evens out. You can stack all those different revenue streams back up, and start to re-build it, and find different things like the sports market, or open up new territories, to find new revenue streams. We had a very interesting curve there.
That was another one of those things. After our first year, we had originally applied for a spot on Shark Tank. But back in those days, you had to sign a contract that basically took 3% or 5% of your company for the company’s life just for the opportunity to appear on the show. I think that because of the runaway success that we had as a company and as a loud, boisterous, expressive brand, Shark Tank wanted us on the show because we would be “good TV.” We have a product that people find interesting, and if nothing else, it’s a good conversation starter and it’s good entertainment. They invited us to come and tape, but the high fee wasn’t worth it to us, and we backed out of it.
Skip three years later to 2013, and now Shark Tank doesn’t take a percentage of your company when you appear on the show. We wanted some mentors, we wanted some people in the industry, and we thought that Mark Cuban and Daymond John could possibly be good fits for our brand.
We called Shark Tank last minute. I think we were the last ones to apply for the taping of that season. We managed to get all of our stuff in within a week, and I was actually in Santorini [Greece] filling out the paper work. We got back and barely had two weeks to prep all the information, memorize all the facts that we needed, and get on the show. And it was a really good experience. I think it was nice to hear the advice. And it was good to challenge ourselves to go out there and seek some advice on national TV. It’s not something you can do every day.
We wanted to see a partnership. But if it wasn’t going to be a good partnership, we wanted to make sure we had good TV, so they would want to air it. We went above and beyond: we had a choreographed dance. We tried to really make it entertaining.
When you tape, they don’t give you any promises that you will appear on the show. You’re taping with a number of people, and after they tape the show, they decide whether it is “good TV.” There are a lot of people they tape, but they don’t actually air all of the contestants. Originally, the crew told us that if our segment aired, it would probably be in February. So when we got the call in December, right before Christmas, it was perfect timing for us. It was like a having a second Black Friday.
(Editor’s note: you can read more about the Shark Tank results in the SpiritHoods Case Study).
Can you describe what it means to be a socially conscious brand?
Giving back to the community is part of our core values as a company. We exist to encourage people to be authentic, give back, and to be free.
Over the lifetime of the company, we took some pretty big losses. Still, we have donated about $150,000 to our nonprofit partners to date. Not to mention, we give away tons of product for charity auctions, and we also work with different nonprofits to try to be in a state of giving and collaboration as much as possible.
For example, we had the Ronan Thompson collaboration, which is to fight childhood cancer. It’s not donating back to endangered animals, but it is something that is very dear to us. It’s something that we’re very passionate about, and someone we had a personal relationship with. We made a hood for Ronan Thompson, who is a young boy that died at a young age from cancer. His mom called him “a spicy monkey,” so we made a hood called the Spicy Monkey. 100% of the profit from those sales went to the Ronan Thompson foundation to fight childhood cancer. And I think the total for that was about $20,000, which we were very proud of.
What’s the biggest challenge for the company to bust out and have another 500% growth year?
I think it is going to come down to marketing. We’re trying to think smarter with our resources. Originally, we thought if we got a ton more resources then we could make it happen faster. Now, with all of the experience we have under our belts over the last few years, we’re more confident in knowing what we need to do.
The better we leverage our product innovation into marketing, then that product innovation is going to pay off. We have a number of very strategic alliances and collaborations with major companies lined up that fit well with SpiritHoods brand. We’re very, very, very excited about them. These are companies that are experienced and well positioned in the market and already smashing it out of the park. We can learn a lot from them. And we’re also really excited to co-brand and do some amazing innovative new stuff with them, which is a big part of our marketing planning going into next season.
What’s next for SpiritHoods?
We’re really focusing on product innovation right now within our line. We feel that that’s the best place. We’ve tried to innovate before. We’ve brought in new things, but we’ve learned that we don’t want to get too far outside of what we do. So the next greatest thing that we’re doing this year is that we’re coming out with a jacket line that is going to be 4 or 5 styles and it’s all faux fur jackets with ears.
We’re hoping that’s going to be big. We’ve got a lot of new business development partners we’re working with to get us in the right places, and open up a new little trend of faux fur jackets. There’s a not a lot of faux fur jackets out, and we really feel like that’s a big place for us to open up and expand our market and get some new users. Grow the tribe.
What was your biggest lesson as an entrepreneur?
Be more present in the moment. Not to take what’s happening for granted. I think that we have a unique story in that it almost happened too easily. Everything was aligning for us. We had an idea, and the stars aligned and it fell in our lap in a way.
Not that we didn’t work hard – we were working really hard. But it happened so quickly. And I think learning to savor that, and not let that go to your head. Continue to operate from the standpoint of a lean start up, and don’t just think that your resources are only going one direction – up.
“Be more tentative in your decisions, even though you have great success,” is definitely a lesson that I will take with me. I don’t regret it because of the lessons that I learned. We lost a lot of money, and it was a very expensive education. But on the other hand, I feel we are much better businessmen and entrepreneurs going into any other business that we choose to do in the future. So it was a lesson well learned.
What does being successful mean to you?
Being happy and making those around you happy is the ultimate success in my world. Learning how to create spaces where you and the people around you can thrive is something that is so important. It’s a journey but it’s so rewarding when you push through and start to glimpse the other side. So success to me is happiness. Absolutely.
An Interview with Jerrad Green, Vintage Marquee Lights
Last year, Vintage Marquee Lights grew over 250%. How did you come up with such a great idea and turn it into a successful business?
Anybody would give luck and timing a lot of credit. But we did work our butts off and made a lot of good things happen for us.
We like to think we combined the craze of the American Pickers show and Pawn Stars. These are huge TV shows that people really like because of the “nostalgia” aspect of the items they find/sell. People LOVE old stuff! We’re plugging in to that craze with our rusty marquee lights that have a vintage Vegas/Broadway/antique flare to them: I think people just like to see their names in lights! It just caught on.
Our journey really started with custom handbags, of all things. In going to market for the handbags, we stumbled across the idea for alphabet photography. You take pictures of nature and architecture that look like letters and then you put them all together to spell something out. We developed a unique product for that and that’s how we learned how to make money on our hobbies and interests. We started selling to stores wherever we could.
Interestingly, we wanted to come up with a great booth that would get a lot of attention at market. We had some wooden letters that I drilled holes in and put some Christmas lights in them. They looked awesome! It spelled the word “Art.”
Literally, it was like a light bulb went off over our head when every person that went by asked, “How much are those letters?”
We came home from the show season and I immediately started producing them. Then we hit the road and started selling them at shows all over. We did a year of shows, sold out like crazy at every show, and then decided that this was our future.
I think it’s such a trendy product. We hit it at the right time. People are searching for it, seeing it on TV, seeing it in magazines, and they are seeing it in photo shoots. Most of what they’re seeing is ours!
How did you build out such a robust distribution network?
At first, it was doing all the trade shows. We picked up a lot of wholesale customers that way. A lot of them transitioned from our alphabet photography to our marquee lights – that was kind of a built in transition.
From there, we began advertising in wholesale/trade magazines, and we were able to pick up additional wholesalers. Now, wholesalers can sign up directly on our website. We’re in over 600 retailers right now. We do a lot of volume from Internet resellers, as well as brick-and-mortar stores that are carrying our products. I know many retailers use the lights for window displays because they are really attractive. Since we can drop ship, a customer can walk in and say, “I want to buy that!” and the storeowner can say, “Well, we have every letter – what letter do you want?”
What other marketing successes have you had?
Getting into Facebook marketing was big for us. I think we still have a few years of huge Facebook growth. I lot of people think Facebook’s played out and on the way out, but we’re still seeing great results from social media in general. Facebook has a great advertising platform for entrepreneurs like me. Instagram, Twitter, and Pinterest don’t really have the same advertising platform, but we try to do as much as we can with them and then just blow out Facebook.
I teamed up with a great Facebook marketing company called Admixt, and they’re targeting the people that would like us and that would buy from us. I also teamed up with a great Google ad agency too, PurePPC. Finding great partners allowed me to turn over my advertising, my Facebook, my Google advertising to people who really know how to do it.
What is the biggest lesson you learned as an entrepreneur?
The biggest thing I learned in the last year is hire people to do things that they are trained to do. It’s easy to get in the mindset of “I need to save money and do it all myself. I can do my own advertising. I can do my own website. I can do my own social media marketing. I can do my own photos. I can do my own customer service. I can do my own bookkeeping. I can do my own taxes. And so on….”
But after realizing I’m spending ALL of my time on those things, I finally realized I’m an entrepreneur. I need to know a little bit about everything, but I should not be spending my time on that stuff. I should hire people who know how to do it to help me grow my business. That’s what they do. That’s what they’re in business for: to make my life easier. And it’s the ONLY way to grow and scale this to a big business. Once I came to the realization that it’s okay to spend money on these things, my life and business were transformed. That’s the biggest thing I learned over the past year.
A year ago, I was running my own warehouse. I had one employee and he’d ship stuff all day. It was still pretty small beans in the whole scheme of things. I was trying to run my own website, I was trying to run all my own advertising, I was trying to utilize Facebook to my advantage. I thought I was doing well with all that stuff.
We were at the tipping point. We needed to go big or go home.
Thank goodness for my decision to sign up with Symphony Commerce. The Symphony team was really big about managing all of the tedious stuff that bogged me down like website maintenance, inventory and fulfillment, and customer service so I could go out and grow my business. I think that is a big reason for the growth.
Last year was kind of a struggle: I had a lot of letting go of control issues with inventory, shipments and stuff like that, but it’s much better now. The fact that I hooked up with Symphony was a huge reason for the triple digit growth. It allowed me to release a lot of back office/admin stuff that was suppressing my ability to make more sales, and it freed me up to get excited about getting in touch with new channels to sell our products. Not to mention, new product design!
What does the American Dream mean to you?
My wife and I lost our jobs on the same day on 2011. We both worked in show business and were performers in the same show. We have always been entrepreneurial, and tried to find something that we could do and be passionate about and be our own boss. We always had a little something going on the side, but we had a full time job with a paycheck and benefits so we could never fully immerse ourselves in our business.
We thought we were taking it seriously before, but when you don’t have another source of income, you really gotta figure out how to make this work. When we lost our jobs, we both knew we never wanted another “traditional” job. So the only option for us was, “Let’s make this thing big!”
It takes a lot of hard work. I literally worked 20-hour days. I go to bed excited about what I’m going to do tomorrow. I can’t wait to see who emails me, “Hey, let’s do business!” or “Hey, can you build this for me?” It’s a lot of persistence and hard work, and here we are today: I think we grew 250% over the last 9 months.
I’m just really thankful that we put together a team and found the right people to help us get where we want to go.
I’m really grateful to go from losing our jobs, to doing something that we love that is supporting our family. As a lifelong musician and a life long classically trained dancer, we’re very creative people. We don’t do either of those things very much anymore, but our passions morphed into this other creative side and we feel that we’re able to express our talents through it. And we’re living the life we want and creating jobs doing it!!!
To me that is the American dream: to do what you love and make a living doing it.
About Vintage Marquee Lights
Vintage Marquee Lights sales have grown over 250% since transitioning to the Symphony platform. Symphony’s negotiated shipping rates shaved 26% off the standard shipping rates VML was paying previously. VML was able pass the savings on to their customers in the form of tiered shipping rates, so customers enjoy transparent rates and lower order costs. VML’s wholesale distribution network has nearly tripled in size after launching with Symphony. VML can now be purchased in over 600 US boutiques, as well as from the web site.
Read the Vintage Marquee Lights Case Study.
Visit Vintage Marquee Lights.
An Interview with Justin Winter, Diamond Candles CEO
What online retail trends are you noticing?
You can draw some strong analogies in the early mid-90s with publishing content. Barriers to entry for content publishers started to wither away to nothing with something like Blogspot, where a “Mom blogger” in Iowa can share an opinion about something and that can show up on the front page of CNN.com the next day. Up until that time, media and opinions were controlled by a handful of major players across mass media: TV, radio, newspaper and print. Because of Blogspot and other publishing platforms, the number of people participating and getting something out there has exponentially increased the long tail. As a result, you can view this as a triangle. At the top are the guys controlling things, and the base is so much wider now. This affects the mid-section of the triangle because there are people at the bottom level who are popping up and reaching some level of popularity and getting “discovered.”
Think about all those brands owned by Procter & Gamble – they are still P&G, and that creates an artificial barrier to entry. The long tail of those products and services (the ones who aren’t backed by P&G) just aren’t able to get face time and be considered because the only way that people used to find products was to go to a Walmart or Target. With the Internet, a lot of those barriers are being broken down, so people have more and more choices. There is an increase in the small business end of the spectrum, and you’re starting to see more medium-sized companies like us emerge. In consumer-related verticals, the number of players controlling the top 80% of the pie is increasing simply because of what the Internet is doing fundamentally.
What does this mean for new and emerging brands?
When it comes to ecommerce, I think about the Shark Tank effect for entrepreneurs. I love Shark Tank: there are so many people who are able to create new products now. There are plenty of ecommerce platforms that allow entrepreneurs with virtually no technology skills to launch a website and sell something online. My previous store platform, Shopify, does a great job of addressing the needs of the beginner company just starting out, and because of that, a lot more people have a lot more options to be able to function at the entry level.
Obviously, increasing the volume of new entrants is also increasing the size and the scope of the mid-market because you’ve got more winners that are breaking out. With more people competing at the low end of the market, you’ll see more companies figuring out how to break into the million-dollar-plus mid-market tier. Inherently there will be additional development to try to help consumers to discover things at the low end, so that these brands will grow into the medium market, both in terms of size of retailer and number of brands. On the other hand, we will definitely have businesses peter out at the mid-market level because their vertical is actually really small (so there is just no upside), or they don’t have the ability to execute, perform and compete. They don’t develop the business expertise to go toe-to-toe with a P&G-type brand.
The differentiating factor for ecommerce is that there are so many more people who have a product (or the potential for a brand) to really move beyond the mid-market to compete with the prominent players.
What will it take for small and medium sized brands to become competitive players generating sales in excess of $5MM a year?
You can get to a couple million a year with a great product, but know absolutely nothing about business. You can tap into all these productivity and technology tools that will help you get started. But to get from a couple million a year to a hundred million a year – you can’t do that on a good product alone. That starts to require a higher level of execution, and a brand with a suite of products and offerings, which really does require a lot more than what the tools can give you.
A solution like my current platform, Symphony Commerce, will take a lot of that work off your hands, but it’s still going to require a higher level of business and operational execution. If someone doesn’t have any business background or experience then they are going to peter out.
The key for the mid-market is certainly having more time to focus on the important things and outsourcing the more commoditized things. That way, managers can focus on the core differentiators with their product and figure out how to grow traffic and/or how to sell more to their existing customers over the next year or two. That’s what I see going on. More companies emerging to address this newer need of the mid-market: more people are going to be winners.
How did Diamond Candles break out to become a successful, mid-market brand with triple digit growth year over year?
For Diamond Candles, first and foremost was the inherent uniqueness of the product with the word-of-mouth viral factor. Think of it this way: on a scale of 0.1, 0.2, 0.3, how different is your product or brand relevant to your market? For someone who buys regularly in this market, is this a 0.1, “Oh, that’s kinda interesting,“ or is it a 0.2, “Hey that’s really interesting!” or is it a 0.3, “Holy crap! That’s awesome!” That effect really interfaces with many different parts of the business when it comes to growth. Inherently, it will make PR much easier if you have the foundation of a buzzworthy product or service. It will make all paid traffic sources much easier and much more cost efficient because paid advertising is based on click through rates (CTR). In my advertising copy, am I able to communicate something so fundamentally different that I have five times the CTR of my competitors’ ads because they don’t have anything interesting to talk about?
It’s reasonable to say that Diamond Candles is on the far end of the spectrum of being really, really high word-of-mouth, so it makes all of the other channels easy for us. How can other entrepreneurs compete if their products are not so much more awesome than the competition? Where there isn’t a level of differentiation, focus on developing specialization, build a brand with a local or interesting story. So maybe you’re a 0.1 in terms of a multiplier, but it will still help to reduce the difficulty of other channels whether that is PR or paid traffic channels. I really think the answer is that word-of-mouth helps everything.
Second, I really think it comes down to basic business foundation understanding.
For example, when I sell something for $100, how much profit do I make after everything? Let’s say my profit is $50. Can I find a place somewhere online where I can get a new customer for $45? If I can do that, and make $5 today, then I just made a 10% return. Thinking about this like the stock market, if I can invest $1 million and make $100,000, then I just made a 10% return which is AWESOME.
For my business, I need to be able to invest that money. Depending on how much money I have left in the bank, I might need to make 10% in a 30-day period of time. Maybe my market is hyper-competitive, and it will take me 6 months to get a 10% return. Thus, I have to wait a while to make my money back. Understanding those basic acquisition numbers, but then paying a lot of attention to the value of a customer over a 12-month period, is critical to making the numbers work.
I’m not a finance guy at all, but conceptually understanding the basics of those acquisition numbers is the foundation of our marketing strategy. My job, particularly for scaling acquisition, is first off – where do I go to look for those places? Second, who can I have bring in their expertise to help me operate in those channels effectively and efficiently? For example, I’m not really familiar with Facebook ads, so let me find an expert who does. Then, let’s max that channel out for what I am able to pay. I know that I’m going to make $50 on the first sale, so I’ll pay $45. And, I know that everyone reorders within 6 months, so everything after that is just gravy. It’s free money.
I talk with million dollar brands all the time. You can do $1 – $2 million dollars just with some accidental SEO traffic, some PR hits here and there, coming out with some new products here and there, maybe you’re kinda doing something on Facebook. But to get to $10, $15, or $20 million, you have to really start to think like a business person, start to invest in the business, and understand your numbers.
You have to think more strategically about your time, and what you are doing and find the best experts in each of these areas that work in the most cost effective and cash flow efficient way. Like us, I’m going to guess that many small to mid-market brands do not have outside funding or access to all of the capital they want, so they need to be able to cover the electric bill between now and when they break even on any money they invest to buy a customer.
Let’s say that I have a business, and I have a product that people love. But, just naturally, only 10% of the consumers in my market (realistically, less than 10% of the market) are stumbling upon my site to find my product. Obviously, some people are finding it and saying, “This is awesome! I’m going to buy this!” But how do I reach 20% of the market? Or 30%? I need more channels where my brand is present, so consumers are aware of my product as an option. In the old days, it was shelf space at Target – so what’s the Target shelf of today? Well, I need to be doing PPC ads. I need to be doing Facebook ads. I need to be doing Twitter retargeting. I need to be doing email: 2-3 emails a week to get people to come back. The list goes on and on.
I need to maximize each channel, and once I’ve maxed it out, I need to find another channel and optimize or outsource the maintenance and ongoing growth of that channel. My job is to find more channels and to get more eyeballs in a cost effective way. So that’s really the scaling discussion.
What does being successful mean to you?
Well, I didn’t grow up saying, “Hey Mom, when I’m older, I want to sell candles.” That wasn’t my big goal in life; I kind of happened upon it. For me, I don’t necessarily want to sell candles for the rest of my life doing stuff with Diamond Candles. I am inherently entertained and challenged by the challenge of really maximizing the opportunity to do something different in such a way that people actually care. I think the report card of whether or not I’m doing something that people actually care about (and is actually a better solution) comes down to revenue, and how I m doing compared to my competitors. If Yankee Candles is doing $900 million, and I’m doing $800 million, and I believe my solution is better for 75% of the market, then my job is not done yet.
Being challenged by disrupting markets, taking a look at these markets, and creating better solutions for people (whether that is innovative products or an improved buying experience) is really what gets me out of bed in the morning. I really want to do something different and exciting, and hopefully the report card will tell me that we grew revenue 500% this year. If that’s true, then we must be doing something right, so let’s keep doing it. I want to make things better using technology, social media and new products.
For candles, how can we better help women transform their house into a home when it comes to fragrance? That’s our thing: helping her to get to the perfect option – quicker and easier with less hassle – and having more fun doing it.
Diamond Candles sales revenue grew from $4.5MM to $16MM in ten months. By partnering with Symphony Commerce to develop the web store and manage the ecommerce infrastructure, Diamond Candles was able to maintain their core focus on brand development. Before switching to Symphony, Diamond Candles introduced new products on a quarterly basis. Now the team is able to innovate and introduce new products every two weeks. Without the time and expense of hiring fulfillment and customer service reps, Diamond Candles was able to achieve exponential growth with the same number of employees: a 350% increase in revenue productivity per employee.