Speaker:

It's not set it and forget

it. We continue to work at it.

Speaker:

We continue to try different things

and really push the envelope.

Speaker:

I think that's one of the reasons why

we've been successful on the performance

Speaker:

marketing side.

Speaker:

Well, hello and welcome to another edition

of the E-Commerce Evolution podcast.

Speaker:

I'm your host, Brett

Curry, CEO of OMG Commerce,

Speaker:

and today we are talking to a

really remarkable founder of an

Speaker:

amazing brand with an amazing story.

Speaker:

Talking to Russell Breuer from

Spot and Tango. Listen to this,

Speaker:

a hundred million in revenue, profitable,

Speaker:

almost exclusively DTC subscription only.

Speaker:

Amazing value prop in the marketplace

are doing some amazing things.

Speaker:

They're vertically integrated,

Speaker:

which in a world of tariffs and no

tariffs or uncertainty and all that

Speaker:

craziness, that is a brilliant

play. And so lots to unpack,

Speaker:

lots to discuss, lots to learn from. So

excited that you're here. And with that,

Speaker:

welcome to the show,

Russell. How's it going man?

Speaker:

And thanks for taking the time.

Speaker:

Awesome, thanks Brett. You

hit some key highlights.

Speaker:

We're excited to be here

seven years into the journey.

Speaker:

Still a lot of wood to chop,

Speaker:

but it's been very rewarding and happy

to share some of my experiences today.

Speaker:

Love that. A lot of wood to chop,

man, that is the game, right?

Speaker:

The game is always,

Speaker:

I'm going to do this thing and then I'm

going to go build this mode and then

Speaker:

competitors catch up. I got to

keep going. Things like that.

Speaker:

It's a never ending game, but hey,

Speaker:

that's what we signed up

for as entrepreneurs and

so we just got to enjoy it.

Speaker:

What I'd love to do, Russell first,

because as with any great product,

Speaker:

any profitable company,

Speaker:

it starts with meeting and

need and being different.

Speaker:

And so how did you kind of come to the

value prop and explain it to people,

Speaker:

what you sell and why it's

so special in the market?

Speaker:

Sure. So Spot and Tango is a pet

health and wellness brand. In short,

Speaker:

we make incredible food for dogs.

It's a mission-driven brand.

Speaker:

All of our products use fresh

human grade, whole ingredients.

Speaker:

We exclude anything artificial,

no synthetics, no food colognes,

Speaker:

no fillers. Really.

Speaker:

The founding story hearkens back to

a studio apartment in New York City,

Speaker:

which is cliche but true.

Speaker:

My wife was cooking fresh meals

for our Golden doodle jack.

Speaker:

In fact, her mother was cooking fresh

human grade meals for her dog, George.

Speaker:

So there's a family history here

and of course aspirations to be an

Speaker:

operator and entrepreneur.

Speaker:

I was head scratching why and

explored the space and looked into the

Speaker:

category and our belief is that

health and wellness as a right,

Speaker:

not a luxury. And what started

as really a bootstrapped,

Speaker:

incubated concept,

Speaker:

we found vets and nutritionists to

develop recipes that meet the nutritional

Speaker:

needs of dogs for all life stages.

And it's really

Speaker:

studio to incubate our kitchen to a

hundred million dollars plus business

Speaker:

in seven. It's amazing. It's

amazing. It's been a big wave,

Speaker:

but the mission remains true.

Again, everything that we produce,

Speaker:

all products, all ancillaries, treats,

supplements, our fresh line Unkibble,

Speaker:

which we can talk about,

Speaker:

it's all whole fresh human grade

ingredients and that's what we do.

Speaker:

It's all delivered online. So

we are a subscription model.

Speaker:

It's all personalized. We learn a

lot about your dogs age, weight,

Speaker:

and activity level to really inform the

portion, the caloric portion per meal,

Speaker:

per day per dog. So personalization's

a big point, but we're digital junkies.

Speaker:

It's what we do. It's all online.

The value prop, it's convenience.

Speaker:

Skip the trip to the pet

store and Pon Tango shows up.

Speaker:

That's the high level.

Speaker:

That, dude, you're speaking my

language. And as we were prepping,

Speaker:

you were talking about performance

driven, conversion focused marketing,

Speaker:

which that's been my world since

the beginning of my career,

Speaker:

and so love hearing that as well.

Speaker:

But let's talk about Unkibble just a

little bit because you and I we're also

Speaker:

talking before we hit record.

Speaker:

There's some other food products

on the market that are fresh food,

Speaker:

but they come cold and you got to put

'em in your refrigerator next to your

Speaker:

food, which I love Our dogs, my

family, especially my wife and my kids,

Speaker:

huge animal lovers. So

we take care of our pets.

Speaker:

I don't really want my food next to my

dog's food, just my personal opinion.

Speaker:

But what is Unkibble and how are

you differentiated in that regard?

Speaker:

Yeah, so Unkibble offers the benefits of

fresh and the convenience of Unkibble.

Speaker:

Back in 2019, again, the original

recipes were fresh, fresh,

Speaker:

frozen. And to your point, it's

expensive and it's inconvenient.

Speaker:

For an example, urban City Center,

the freezer, Aviva German Shepherd,

Speaker:

you're choosing either dog's, food

and freezer or your own, okay,

Speaker:

park the Bengal Bites on the counter.

Speaker:

So really is in response to customer

feedback. And the question was,

Speaker:

is there another way of the mountain?

Speaker:

Is there a version mission-driven that's

shelf stable that delivers pound for

Speaker:

pound the same ingredient integrity?

And the answer is un Unkibble.

Speaker:

We call it fresh dry again.

Speaker:

So we use all the same fresh

she in grade ingredients,

Speaker:

but we take out the water through

a very novel, fresh, dry process.

Speaker:

No water removes the need to

freeze, it removes the dry ice,

Speaker:

it removes the installation in the box.

Speaker:

Those savings get passed

along to the consumer.

Speaker:

So what we're offering is

affordable health and wellness.

Speaker:

And from a pricing perspective,

on average we're 30 to 40% less.

Speaker:

It's amazing.

Speaker:

And other fresh brands

you may have heard about.

Speaker:

And so we're occupying a unique white

space from a pricing perspective where

Speaker:

we're attracting a lot of

aspirational consumers,

Speaker:

Unkibble consumers who want to

feed their health and wellness,

Speaker:

but they want the convenience, it's scoop

and serve in the pantry personalized.

Speaker:

And they don't want to deal

with the headache of, oops,

Speaker:

I forgot to defrost my

frozen food overnight. Right?

Speaker:

Right now my dog's eating ice cubes.

Speaker:

So we're in a very different business

and we've been doing that since we

Speaker:

launched Unkibble in April of 2020.

Speaker:

It's brilliant. I think it

strikes the perfect cord,

Speaker:

kind of threads the needle

of exactly what people want.

Speaker:

We don't want to feed our dogs

junk, and that's become very,

Speaker:

very clear that most of what

we'd be feeding our dogs is junk,

Speaker:

but we also don't want the inconvenience

sharing freezer or fridge space or

Speaker:

whatever. And so love what

you guys have done there.

Speaker:

I know a big part of that is your vertical

integration and your manufacturing

Speaker:

facility in Allentown, pa. And

as we talked about in the intro,

Speaker:

in a world of tariffs on and

off and all kinds of craziness,

Speaker:

you guys look like absolute geniuses

having your own facilities here.

Speaker:

So talk about that decision.

Speaker:

Why did you do that and what does that

unlock for you and for your customers?

Speaker:

Great question.

Speaker:

It's been an incredible journey for

the vertical integration build your own

Speaker:

factory piece. Yes. In hindsight, it looks

like we had the perfect crystal ball.

Speaker:

I can assure you at the time we

were focused on the supply side,

Speaker:

we launched Unkibble in April, 2020.

Speaker:

We tell this story that our first purchase

order we thought would last six plus

Speaker:

months. We sold out in four days

Speaker:

in very short order,

Speaker:

one co manufacturer turned into six

co-manufacturers and they couldn't keep up

Speaker:

with demand.

Speaker:

There's questions on

costs of goods margin.

Speaker:

You're shipping freight all over the

country between comans to logistics

Speaker:

centers, product consistency,

there's a number of.

Speaker:

Questions. Quality control. Yeah,

consistency. When you got six different.

Speaker:

All over the co, if you asked six

people to make a chocolate chip cookie,

Speaker:

the cookie is going to look

a little bit different.

Speaker:

We took that to heart and we

decided shortly after launch,

Speaker:

having Unkibble that building our own

factory and owning our own supply chain

Speaker:

was very important.

Speaker:

We have now constructed a 70,000

square foot facility in Allentown,

Speaker:

Pennsylvania. It's about

two hours west of New York.

Speaker:

We have a hundred people on site. It's

been a huge win for us. It's amazing.

Speaker:

We push all the volume through

that facility. It's unlocked,

Speaker:

tremendous margin wins,

it's boosted inventory,

Speaker:

it's hedged against stockouts.

We we're rapid innovators.

Speaker:

And I think the most

important point for us,

Speaker:

when you think about the food

landscape within the pet category,

Speaker:

most brands don't manufacture

their own products.

Speaker:

They.

Speaker:

Don't know where the ingredients come

from. They're not involved procurements,

Speaker:

they don't understand food safety plans.

They don't understand quality control.

Speaker:

They don't understand packaging,

shipping or logistics.

Speaker:

They are marketeers selling somebody

else's product as their own,

Speaker:

which is a reality that's existed

since the beginning of time.

Speaker:

Sure.

Speaker:

Which is fine for us.

Speaker:

We take ingredient integrity very

seriously and delivering an exceptional

Speaker:

customer experience. And our

Allentown facility has been the tool,

Speaker:

the enabler of that since we

own every facet of supply chain,

Speaker:

that for us has been an incredible

differentiator in this space as we are the

Speaker:

leaders in fresh dry,

Speaker:

in a fantastic moat and something frankly

that most people just aren't doing.

Speaker:

And then to your point, yes,

the phone rings now and gosh,

Speaker:

you guys tariff proof, resilient. You

know what the answer to that question is?

Speaker:

Yes. Did we know? So at the time, no.

Speaker:

It was a bit of a false send and here

we are and we're reaping the rewards.

Speaker:

I love it, man. I love it.

Speaker:

I know this isn't the path for

everybody for a variety of reasons,

Speaker:

but what did you learn in that

process of going vertically integrated

Speaker:

and what advice would you give?

Speaker:

When do you think other

DTC brands might consider

Speaker:

taking the path that you took?

Speaker:

Sure.

Speaker:

I think the business case

needs to be very strong

Speaker:

product market fit firstly,

and depending on growth rate.

Speaker:

And look,

Speaker:

ultimately there are thousands and tens

of thousands of brands that outsource

Speaker:

production A okay, my point

was more within the pet space,

Speaker:

and so that's fine, but for us, demand,

outstripped supply significantly.

Speaker:

So there was a need. So rapid

product market fits is one two,

Speaker:

unity economics is the

second consideration.

Speaker:

Are you better outsourcing or

insourcing? And in many cases,

Speaker:

depending on the category, it's

better to have someone else.

Speaker:

If it's a commoditized trade, it's

better to have someone else do it.

Speaker:

And you focused on what you do

best, whether that's marketing or.

Speaker:

Marketing, sales, whatever. Yeah.

Speaker:

Exactly. And then ultimately when it

comes to actually building a facility,

Speaker:

give yourself a long lead time.

Like two years. Okay. This.

Speaker:

Is not overnight notes. We're not

spinning this up in six months.

Speaker:

This is not our tariff for leaf plan.

This is like I'd say thoughtful,

Speaker:

intentional, strategic. Yeah.

Speaker:

Exactly right. Brett, I think at a

sprint it's 18 months if not two years.

Speaker:

Identifying a site, obviously

there's a bill design firm involved,

Speaker:

there's CapEx, there's equipment,

there's staging capital, there's equity,

Speaker:

there's debt,

Speaker:

there's a lot of pieces involved

and team to bring that to

Speaker:

life. And of course operating a facility

brings a number of other challenges

Speaker:

that we've managed and

managed well. But nonetheless,

Speaker:

there's an early consideration set.

Speaker:

But I would say that having your own

assets, having your own manufacturing

Speaker:

unlocks significant intrinsic

value for any company in any more.

Speaker:

I think a lot of brands that are winning

do own those types of assets and the

Speaker:

strategic landscape looks at

and says, these are different.

Speaker:

Haven't seen that playbook.

Speaker:

Yeah, love that. Totally

agree with that for sure.

Speaker:

So you guys are subscription only.

Speaker:

Was that the plan from the beginning

or was that a pivot over time?

Speaker:

Why did you guys land on that and what

have been the pros and cons of going that

Speaker:

route?

Speaker:

Great question. So day one, yes. At the

person personalized product firstly.

Speaker:

So we have kind of an

onboarding questionnaire.

Speaker:

We learn about your dog's weight activity

level to really inform portion or

Speaker:

calories consumed per

day subscription is fit

Speaker:

for the pet category. Why is that dogs

need, it's not a want, it's a need.

Speaker:

Subscription is a convenience,

it's a value prop.

Speaker:

You don't need to go to the pet food

store. It shows up on a regular cadence.

Speaker:

On average, for us it's every

four weeks. Customers love it.

Speaker:

We're building out broader product

platform with treats and supplements and

Speaker:

other food products as well. Dental

care, which we're launching soon,

Speaker:

which we can talk about. But

because that need exists,

Speaker:

people need the box every

four weeks. And so for us,

Speaker:

it's always been that way from a

reoccurring revenue perspective,

Speaker:

commercially speaking, that's certainly

a way to scale business. Brilliant.

Speaker:

And I think the other point here

is within the pet landscape,

Speaker:

dogs do need consistency of diet.

Speaker:

We don't advocate the dogs

to change proteins every day.

Speaker:

This is not Turkey on a Monday, beef

on a Tuesday, lamb on a Wednesday.

Speaker:

That can be a disaster for the

Persian rug digestion important.

Speaker:

So consistency of diet is also very

important and that also leans towards a

Speaker:

subscription model. So it's very

fit for purpose for the category.

Speaker:

Totally makes sense.

Speaker:

It fits the value prop for

the consumer in terms of the

Speaker:

pet owner, but also for the

pet and also for you guys.

Speaker:

So perfect alignment there

across the board. Curious,

Speaker:

what have you guys learned? What

have you done to make that Yes,

Speaker:

easier for shoppers?

Speaker:

Because I know a lot of people will

probably hear the story and hear the value

Speaker:

prop and think, I want that for

my dog, but what if they hate it?

Speaker:

What if I hate it? What

if something like that.

Speaker:

So how do you get someone

to take that initial leap?

Speaker:

They've never seen the food,

they've never held the bag,

Speaker:

they haven't seen it in store. To

immediately go yes to a subscription.

Speaker:

How have you made that an easier yes.

Speaker:

Right. So firstly, it's

a considered purchase.

Speaker:

So we're not selling tennis

shoes or to your point,

Speaker:

what is this thing?

Speaker:

I've been feeding my dog Unkibble

since the beginning of time.

Speaker:

Why are you using fresh human grid

ingredients? There's a lot of education.

Speaker:

Firstly,

Speaker:

I'd say we use a lot of email marketing

and funnels on SMS to continue

Speaker:

that education. The pros,

Speaker:

the benefits of these types of recipes.

Speaker:

We use a trial also, so there's a 14 day

trial, there's a happy pup guarantee.

Speaker:

These are our tools to give

consumers comfort, that.

Speaker:

Risk reversal guarantees type of thing.

Speaker:

All of the above. And I

think it gives people, look,

Speaker:

I think the landscape's changed.

Speaker:

I think obviously e-commerce is playing

a greater role in purchase decisions and

Speaker:

people have greater comfort online

disclosing their credit card details,

Speaker:

receiving a box in the mail when they

haven't maybe heard of these brands

Speaker:

previously. Our job is to educate,

Speaker:

give people comfort that

we're here to support them.

Speaker:

And then we have an incredible customer

service team. We're available on SMS,

Speaker:

email chat, voice messages,

Speaker:

don't go unnoticed for

days. They are responding.

Speaker:

It's amazing lesson.

Speaker:

So it's those multiple touch points

that I think builds a relationship and

Speaker:

that's unique to direct to consumer.

Speaker:

We have a direct relationship

with our customers.

Speaker:

They tell us what's working well,

Speaker:

they tell us things that

we can fix or improve upon.

Speaker:

They inform new product innovation

and it's an amazing first party.

Speaker:

Data is an amazing dynamic and

again, our job to serve the customer,

Speaker:

but those are some of the tools that we

use initially to help give people the

Speaker:

idea that we're here for them, give 'em

comfort to make that purchase decision.

Speaker:

It's amazing. As with most things,

Speaker:

when you're building a great business

and running great marketing or building

Speaker:

great offers,

Speaker:

it's not just one thing that you

do that kind of creates the unlock.

Speaker:

It's lots of little things,

Speaker:

stacking lots of little things to

create a delightful experience.

Speaker:

But what would you say

are the biggest levers,

Speaker:

the biggest levers or the biggest

lessons in increasing conversion

Speaker:

rate? Increasing the number of people

that take you up on subscriptions.

Speaker:

Yeah, I think when you think

about the marketing funnel,

Speaker:

and we're very much focused on

direct response, lower funnel,

Speaker:

I'd say consistency of call to action.

Speaker:

What you're advertising in

terms of product image and copy,

Speaker:

is that experience replicated on site,

Speaker:

on homepage or landing page is

the consistent checkout Is pricing

Speaker:

consistent? It's the no surprise rule.

Speaker:

What we promise we deliver through

the funnel through checkouts following

Speaker:

through post conversion

as far as onboarding with

Speaker:

email or otherwise. So I think that's

really important. Supply chains.

Speaker:

Also, one thing I'll kind of interject

there because it's such a great point,

Speaker:

Russell,

Speaker:

is we talk about you don't want to create

whiplash where it's like I see an ad,

Speaker:

I see an offer that looks great, I click

on it and then I'm like, wait a minute,

Speaker:

where am I now? And what is this.

Speaker:

Exactly?

Speaker:

And if it creates a disconnect

or whiplash almost, man,

Speaker:

it's hard to overstate how

impactful that is negatively. So.

Speaker:

That's right.

Speaker:

Really let call that up.

Speaker:

I completely agree.

Speaker:

I think rapid AB testing informs that

consumer feedback informs that. And look,

Speaker:

everyone's busy. There's

many distractions online.

Speaker:

People always ask who are your

competitors? And look, e-commerce,

Speaker:

we're all competing for clicks, right?

Speaker:

We're all competing for

your attention online.

Speaker:

And so totally in terms of the

marketing funnel, that's one point.

Speaker:

And then look on the supply chain

side, maybe Amazon ruined the party,

Speaker:

but people expect product to

be delivered soon thereafter.

Speaker:

Once you check out, they want

that box within one, two days max.

Speaker:

And so we've spent a great deal of

time ensuring that we can do that.

Speaker:

We work with four distribution centrals

across the country for business.

Speaker:

And so monitoring that

one to two day shipping,

Speaker:

radius delivery accuracy, all of

the above, that's really important.

Speaker:

That's important for retention. And again,

Speaker:

to my point about food

being a need versus a want,

Speaker:

food can't be late, right? And

it's late three or four days.

Speaker:

Again, maybe you can.

Speaker:

Wait, looks like you're fasting for the

next couple of days. Fido doesn't work,

Speaker:

doesn't work, yeah.

Speaker:

It doesn't work. Maybe your tennis

shoes can be delayed but not your food.

Speaker:

And so that's another

really important point here.

Speaker:

And then expectation management with

our customer service folks have a lot of

Speaker:

questions about, again,

back to the benefits.

Speaker:

How do I transition to this new

diet? How often should I expect this?

Speaker:

I want to try a new recipe. I have

multiple dogs, all of the above.

Speaker:

There's a lot of education handholding.

Speaker:

And so we've invested

significant resources in our

customer service team and our

Speaker:

kind of customer data tech to ensure

that we are in rapid response mode in

Speaker:

education mode at all times.

Speaker:

That's amazing. Let's talk a little

bit about the education piece.

Speaker:

So you've kind of broken it down.

Speaker:

It sounds like there's definitely

an education piece upfront.

Speaker:

So you're competing for that click,

getting someone to the website,

Speaker:

maybe they're signing for your email list,

Speaker:

you're educating them on why

Unkibble, why this process?

Speaker:

How is this going to work? So

there's some upfront education,

Speaker:

there's then education after

someone becomes a customer.

Speaker:

Can you talk through that?

Speaker:

What have been some of the big lessons

you've learned there and some unique

Speaker:

things you do in terms of education?

Speaker:

The most important consideration

upon purchase is ingredients.

Speaker:

And we've learned that through

Hotjar. Heat maps on websites,

Speaker:

iterate surveys, talking

to our customers directly,

Speaker:

voice of customer people have

always said the first consideration

Speaker:

when considering a new diet or

new food is what's in it, right?

Speaker:

And I think ultimately the consumer is

much more educated than maybe they used

Speaker:

to be. We have very simple

ingredients. It's very straightforward.

Speaker:

There's no confusion. If you look at

a pet food label, if you have a dog,

Speaker:

it's confusing. We're that.

Speaker:

That's one point. And so that education

piece is like, here's what it is.

Speaker:

I think two reinforcing vertical supply

chain story about this is where it's

Speaker:

made, this is how it's made. Again,

that builds confidence in our brand.

Speaker:

And then Ultimately there's a lot of touch

points after purchase in terms of the

Speaker:

inbox experience with

feeding guides or brochures,

Speaker:

continual education,

Speaker:

whether it's in regards to new product

launches or breed specific data.

Speaker:

We have content marketing, a blog

if you will, called what the Pup,

Speaker:

which is really talking about love

that parenting and pet issues.

Speaker:

Is it okay for your dog

to sleep in the bed?

Speaker:

I'd rather spend more time with my

dog than my spouse talking about

Speaker:

breed specific information or what

diets would work or what to do with your

Speaker:

dog's paws in the winter

or in the summer. So again,

Speaker:

it's this kind of ongoing

relationship. And honestly,

Speaker:

it's not all about selling product,

it's about building a relationship.

Speaker:

Pet parents too.

Speaker:

And I still have a ton of questions and

I've been doing this for a long while.

Speaker:

I've 80 pound English golden retriever

named Sully who takes up half

Speaker:

house's, my fourth child, and I ask

her that questions often. So again,

Speaker:

we want to be a resource. So

it's not only providing food,

Speaker:

it's being a resource and

supporting the pet parent too.

Speaker:

It's so important and that

education piece upfront,

Speaker:

but also understanding the

education doesn't really stop.

Speaker:

I had a great experience recently with

these amino acids that I purchased for

Speaker:

myself, trying to follow a pretty strict

workout program and have for years,

Speaker:

but I'm 45 now. It's like building

and keeping muscle masses hard.

Speaker:

So I bought these amino acids based

on an influencer's recommendation,

Speaker:

but then I got this great guide to

amino acids in email after the purchase.

Speaker:

It was talking about, Hey, how you should

use this 30 minutes before workout,

Speaker:

take it immediately after workout.

Here's how you can take it,

Speaker:

how it differs from protein and

creatine and all these other things.

Speaker:

And I'm like super helpful.

Speaker:

I feel like I understand

fitness decently well.

Speaker:

But.

Speaker:

I felt more empowered. I'm

taking more of the product,

Speaker:

I feel better as well.

I started ordering more.

Speaker:

And so it's just one of those things where

I think we underestimate the value of

Speaker:

education post-purchase because that's

going to create sticky relationships,

Speaker:

more referrals, more

all the things we want,

Speaker:

plus happier pets and happier pet owners.

Speaker:

That's it. And that speaks to

channel as well, right? Yeah,

Speaker:

so any direct to consumer brand,

whether you're in pet wallet,

Speaker:

razors meal kit or otherwise,

Speaker:

there's an opportunity to

educate versus on shelf.

Speaker:

So on shelf it's unpacked, but once

that purchase decisions takes place,

Speaker:

a person leaves store, that

relationship doesn't exist.

Speaker:

And so that's part of the power we

have from this channel of acquisition.

Speaker:

It's amazing. Yep, totally,

totally agree. Okay,

Speaker:

so you'd said something when

we were prepping very unique.

Speaker:

I've been in this m and a space and I

have some friends in private equity and

Speaker:

we're looking at acquiring a couple

agencies and things like that.

Speaker:

So you mentioned return

on invested capital.

Speaker:

That is not a term that I hear

marketers use a whole lot.

Speaker:

Not a term that's really come

up on this podcast a whole lot.

Speaker:

So how do you guys look at

return on invested capital to

Speaker:

measure and manage your growth

and related to marketing?

Speaker:

And I will say just

another bit of context,

Speaker:

I think I'm really delighted that

there's this trend towards marketing

Speaker:

and finance becoming friends and how,

Speaker:

and I know you're a direct

response guy, I've been doing,

Speaker:

I started doing DRT V in the early two

thousands and so direct response tv.

Speaker:

And so I've always lived in this world,

Speaker:

but it's really a trend

in e-commerce of hey,

Speaker:

let's get finance and

marketing communicating and

let's make sure we're getting

Speaker:

good return on our marketing

dollars. But even then,

Speaker:

I don't hear people talk about

return on invested capital.

Speaker:

So why is that a metric for you? What

kind of insights does that unlock?

Speaker:

Unpack that a bit for us.

Speaker:

It's our north star, our ops,

our finance, our marketing,

Speaker:

the entire organization speaks this

language. A lot of direct to consumer.

Speaker:

Brands have learned hard lessons.

Speaker:

Growing top line and hypergrowth

with product market fit is possible

Speaker:

for many businesses. If you understand

performance marketing, meta search,

Speaker:

TikTok, direct mail,

Speaker:

you can generate outsized

returns on the growth side.

Speaker:

But oftentimes brands forget

about the unique economics.

Speaker:

They forget about things like

net income, cashflow, ebitda,

Speaker:

and they've learned hard lessons years

later when they look to exit or go public

Speaker:

and third parties deeply

discount valuation or otherwise.

Speaker:

Totally, totally.

Speaker:

So I think that's a starting point

for a mind shift in terms of how we've

Speaker:

operated this business. We

are very prudent operators.

Speaker:

And what I mean by that is prudent growth.

Speaker:

So return on invested capital really

is a measure of our marketing spend

Speaker:

and it combines three key

metrics, lifetime value,

Speaker:

contribution, margin, and customer

acquisition cost. Okay, it's beautiful.

Speaker:

It's beautiful. When we spend our dollars

on any channel, let's say we spend,

Speaker:

I'll give you a very rough example.

Speaker:

Let's say we spend a million

dollars on marketing today.

Speaker:

I'm now minus a million dollars.

Speaker:

The question is how soon do I repay

that a million dollars and get to zero?

Speaker:

That's one x return on invested capital.

Speaker:

And then how long does it take to

generate a million dollars of profit?

Speaker:

And so we look at the lifetime value

of our customers. In other words,

Speaker:

how much do our customers spend on

average per year? That's my numerator.

Speaker:

Multiply that by the fully loaded

contribution margin in the business.

Speaker:

So what is my average profit

per customer per year?

Speaker:

And then I divide that by the customer

acquisition cost and that informs the

Speaker:

timeline to repay my

investment in marketing.

Speaker:

We use that paradigm to

inform everything that we do,

Speaker:

such that there are caps in terms of

how much we are willing to invest in

Speaker:

marketing in terms of

customer acquisition cost.

Speaker:

Of course if our LTV or our average

revenue per customer increases over

Speaker:

time and our margin increases,

Speaker:

we can spend more dollars at

a higher acquisition cost.

Speaker:

But we use that framework

and route everything we do

in that framework and that

Speaker:

ensures that our operations team, our

customer service team, product innovation,

Speaker:

they're thinking about we need to boost

retention, we need to find margin wins,

Speaker:

we need to figure out higher LTV,

Speaker:

we need to figure out channels of

acquisition that are more efficient.

Speaker:

We need to rapidly AB test. Is

our creative strategy working?

Speaker:

How do we actually get CAC

lower on that or search?

Speaker:

And so when you combine those elements,

Speaker:

that has enabled us to be a nine

figure business and be profitable.

Speaker:

And we've had that mentality

really since inception.

Speaker:

And I think ultimately that

the other reality is data.

Speaker:

You've got to understand

From day one,

Speaker:

if you're spending a dollar on market

and you've got to know attribution,

Speaker:

how do you allocate your money

and does that dollar go far?

Speaker:

Are you acquiring a customer

in a subscription business?

Speaker:

If you acquire a customer

and they churn 10 days later,

Speaker:

that's not good for business.

Speaker:

What percent of your customers are

churning in second order or third order?

Speaker:

So the sooner you are aware and

understand the data that will inform and

Speaker:

can lead to this type of ROYC equation

and that really drives decision

Speaker:

making.

Speaker:

Yeah, it's so good man. And it's

one of those things where, yeah,

Speaker:

looking at lifetime value,

looking at contribution margin,

Speaker:

looking at customer acquisition cost,

Speaker:

creating these KPIs where your

entire team is seeing it and

Speaker:

managing against it, it's what

matters. It's what matters most.

Speaker:

And so you've got alignment

across the team on it.

Speaker:

And I'm going through the

book right now, Moneyball,

Speaker:

I dunno if you've seen the movie

or the book, but it's so good.

Speaker:

And it's one of those things where

they're kind unpacking this guy,

Speaker:

bill James who kind of

revolutionized baseball metrics.

Speaker:

He created Saber Metrics is the title

that he gave it. But he's like, Hey,

Speaker:

looking at rbis and

looking at batting average,

Speaker:

that just tells a really

weird part of the story.

Speaker:

But what matters is on base percentage

and slugging percentage without

Speaker:

getting inside baseball, he

unpacks why that matters.

Speaker:

It's like that's how you manufacture

runs and that's how you manufacture wins.

Speaker:

Those are the numbers that matter and

there's some other things they measure

Speaker:

too, but getting that kind of clarity

and getting that clarity across the team,

Speaker:

man, it's valuable. So kudos to

you guys for getting that clear.

Speaker:

It's part of our onboarding.

Speaker:

We talk about it incessantly

throughout the organization and again,

Speaker:

I would advocate any brand really

uses those types of metrics.

Speaker:

Yeah, yeah, it's really, really

great. So that's awesome.

Speaker:

Let's talk growth levers for a little bit.

Speaker:

So I mean you guys have experienced some

great growth and it's all within the

Speaker:

constraints or with the guardrails

of your return on invested capital,

Speaker:

but what have been your best

growth levers over the years?

Speaker:

What's really allowed you to scale?

Speaker:

So we have a balanced playbook

between meta search or Google

Speaker:

TikTok affiliates, influencer direct mail.

Speaker:

We've been experimenting with OTT over

the top and also linear television.

Speaker:

You could argue some of these are

very lower direct response channels,

Speaker:

other are more mid funnel.

Speaker:

We haven't spent and invest as

much in top of funnel things like

Speaker:

billboards or subway cars or

wild pasting or otherwise.

Speaker:

I think that's intentional

because ultimately our

belief is that in impressions

Speaker:

and an impression,

Speaker:

and you may be spending dollars on

meta and getting a million impressions

Speaker:

and fewer conversions, but nonetheless

you're still getting brand awareness.

Speaker:

So you could argue that lower funnel

is both lower and top and mid, correct.

Speaker:

There are different both

at the same time. Exactly.

Speaker:

And I think that's oftentimes it falls

on deaf ears because more traditional

Speaker:

brand marketers think they

need a billboard in Times

Square to justify proper

Speaker:

funnel investment.

Speaker:

We see lower funnels as kind of

serving both purposes. But look,

Speaker:

we've got a performance marketing

playbook. I think for us,

Speaker:

two big differentiators.

Speaker:

One we focused on building

on incredible team internally

Speaker:

that focus,

Speaker:

we have channel specific buyers focused

that are pulling lever in-house,

Speaker:

that's really important.

And then two creative.

Speaker:

We are in the entertainment

Business at the end of the day.

Speaker:

Totally.

Speaker:

Busy on the go parents, they're

getting solicited for clothing,

Speaker:

food, SaaS services. There's

a lot of distractions.

Speaker:

And so

Creative is key and it's all about feeding

Speaker:

all of these channels, whether it's

meta or otherwise with a lot of options.

Speaker:

AB test created and maybe iteration,

a slight iteration on creative.

Speaker:

It may be woman with dog with then

Unkibble in park and then it's

Speaker:

copy test A and you can run the same

image, but copy test B, copy test C.

Speaker:

In fact, some of our

best performing creative,

Speaker:

we took a grainy photo of Unkibble

on shelf in our office with a

Speaker:

post-it note sale that we ran

and we tested that versus studio

Speaker:

produced assets, gifs, you name it,

Speaker:

and the grainy photo because

it looked realistic. It is.

Speaker:

Looked authentic. It was authentic. Yeah.

Speaker:

People identify with that.

Speaker:

That's why GC user generated

content plays quite well,

Speaker:

but ultimately it's not set it and

forget it. We continue to work at it.

Speaker:

We continue to try different things

and really push the envelope.

Speaker:

I think that's one of the reasons why

we've been successful on the performance

Speaker:

marketing side.

Speaker:

I love it, man.

Speaker:

And one of the best pieces of advice I

ever heard was any business should view

Speaker:

themselves as in the business

they're in plus their media company.

Speaker:

Plus you're in the business

of getting, keeping attention,

Speaker:

driving some sort of action.

Speaker:

And at the core of that

really is creative testing.

Speaker:

I've always been a media guy and

a strategy guy. I love that stuff,

Speaker:

but I love creative too.

Speaker:

And really creative is the biggest lever

that we have now and into the future.

Speaker:

And certainly AI and other things are

going to enable more rapid testing and

Speaker:

more rapid expansion, things like

that. While we're on the topic,

Speaker:

we didn't really plan on this,

Speaker:

but any insights or any

perspectives on how AI is going to

Speaker:

change performance marketing or

e-commerce in general or your

Speaker:

business? Any POVs on ai?

Speaker:

Absolutely. No, we are all exposed to it.

Speaker:

It's topical innovations here.

I think it's a wonderful,

Speaker:

we're looking at AI from both

workflow automation on the ops

Speaker:

side. We're working with it

on the performance marketing

side in terms of either

Speaker:

creative ideas or creative

iterations and helping AI to

Speaker:

inform how rapidly creative gets tested

in platform and helping us make some of

Speaker:

those decisions. We're

using it on the coding side.

Speaker:

I won't mention all the vendors

we're working with. But nonetheless,

Speaker:

even on the coding side,

Speaker:

there's suggestive code to help our

engineers actually iterate faster when

Speaker:

they're in the development cycle.

And so customer service as well,

Speaker:

there are tons of opportunities where

you can start to not automate everything.

Speaker:

We're still a very high touch

business, but nonetheless,

Speaker:

there are some very standardized

questions that are better served through

Speaker:

automation, not FAQs,

but where is my order?

Speaker:

Totally, totally.

Speaker:

Necessarily to give a tracking number

or provide guidance to where boxes.

Speaker:

So we're looking at AI across all

functions of our business really to

Speaker:

improve efficiency and ultimately

compliance in many ways and

Speaker:

push the envelope.

Speaker:

I would argue AI is not going to replace

everybody ultimately in a hightest,

Speaker:

totally.

Speaker:

Totally.

Speaker:

Humanity will rule, right?

Speaker:

People do like having conversations

and asking questions and there's

Speaker:

TLC that customers expect when we're

talking about their dogs in particular.

Speaker:

But look,

Speaker:

AI is here and I think there's a steep

learning curve for a lot of brands,

Speaker:

but there's a lot of folks out

there having the conversation.

Speaker:

I think ultimately it's going

to be beneficial for all of us.

Speaker:

Yeah, I 100% agree. That's what we

view it. And I've got a very run,

Speaker:

very people driven business.

Our greatest expense is people.

Speaker:

We can't scale without people. And

I have the same view where one,

Speaker:

I think at a base level,

Speaker:

AI is allowing us to do the things

we just have not ever had time to do.

Speaker:

So that's part of it's allowing us to

do some of these things we would love to

Speaker:

have done but just haven't been

able to. So that's one layer,

Speaker:

but then it just supercharges your

best people and becomes personal

Speaker:

assistant, personal strategist,

Speaker:

executioner to make people more

productive and better. And so yeah,

Speaker:

we're very bullish on ai. We're testing

it in lots of different ways. So yeah,

Speaker:

I think that's a great

perspective. As we wrap up,

Speaker:

we'd love to hear what's

next for Spot and tangle.

Speaker:

It sounds like you got a big

product release coming up,

Speaker:

or actually at the time of this

release, we'll just come out,

Speaker:

but talk about that product release,

talk about what's next for the brand.

Speaker:

Great. We are very excited. We

are building product platform.

Speaker:

So we have our food, we have UNC

Unkibble, we have our fresh recipes.

Speaker:

We sell treats and supplements. Again,

Speaker:

addressing all the needs

states of the consumer.

Speaker:

We know a lot of our consumers

feed supplements or treats,

Speaker:

even a third feed supplements.

Speaker:

So there's ways and we've used

that input to launch new products.

Speaker:

The human grid version

of that product for pets,

Speaker:

the dental care solution is the

game change. It comes out next week,

Speaker:

you'll hear more about it nonetheless.

Speaker:

It is a scientifically

proven two years in r and d.

Speaker:

The big game change here is a lot of

the existing dental care products in the

Speaker:

marketplace are really physical in nature.

Speaker:

There's a physical mechanic that scrubs

the dog's teeth, periodontal disease,

Speaker:

it's a problem for dog penetration with

dental care products within the pet food

Speaker:

landscape or pet category is very low.

I think there's a lot of education

Speaker:

required.

Speaker:

The worst case scenario is your dog gets

periodontal disease and ends up at the

Speaker:

vet and spends $2,000 for a cleaning

or teeth removal or otherwise.

Speaker:

This product does two things.

There's a very novel ingredient,

Speaker:

a novel fermentate that

reduces oral biofilms.

Speaker:

What does a biofilm is bacteria that

leads to plaque on a dog's teeth,

Speaker:

plaque leads to bad odor. This product

actually removes those biofilms.

Speaker:

So there is a scientifically

proven mechanism to do that in

Speaker:

addition to the brushing.

So it's health and wellness,

Speaker:

it reduces plaque, it reduces bad

odor, it fights periodontal disease.

Speaker:

It's a big game change. We're excited.

We think it's another tiger by the toe,

Speaker:

if you will.

Speaker:

And Unkibble has been a hero product

and we think this product will be one as

Speaker:

well. Yeah.

Speaker:

So we've been scaring away behind the

scenes and it goes live next Monday,

Speaker:

June 2nd.

Speaker:

It's amazing.

Speaker:

And it's one of those things where I

think that's so well aligned with who your

Speaker:

target buyer is and what

they care about. And yeah,

Speaker:

just a huge tam there for you to tap into.

Speaker:

And so that's really exciting. And then

one thing I was curious about there,

Speaker:

I know that there's been really some

education over the last few years on human

Speaker:

health and how really oral

health for humans impacts

Speaker:

so much of the rest of your health, right?

Speaker:

You could be healthy in a lot of ways,

but don't take care of your mouth.

Speaker:

And that has an impact on

potentially the rest of your body.

Speaker:

I'm assuming it's got to be the

same to some degree with pets.

Speaker:

Exactly. It's all connected.

Speaker:

And this is holistic health and wellness.

Speaker:

It's not just here's a single

ingredient treat or here's a supplement.

Speaker:

It even comes, it.

Speaker:

Sounds a breath mint it

serving a real health purpose.

Speaker:

And to your earlier point about being

really health conscious and focused on

Speaker:

exercise, it's the same with your dog.

Healthy exercise, going for a walk.

Speaker:

It's really a mentality.

Speaker:

It's not just scoop and serve

and it fixes all problems.

Speaker:

You need to really embrace that. An

active lifestyle is really important.

Speaker:

You need to think about all aspects,

Speaker:

all moments of consumption and

dental care is no exception to that.

Speaker:

It's awesome. It's awesome. Well, Russell,

this has been an absolute pleasure.

Speaker:

Kudos to you guys on building

a great brand, a great product,

Speaker:

a great offering is loyal

following people love you,

Speaker:

pets and owners alike.

Speaker:

And so I'm excited to see where

you guys go and grow from here.

Speaker:

I'm definitely a fan. And so for those

that are listening, they're like, man,

Speaker:

I got to get on this Unkibble Train and

I got to check out what Spot and Tango

Speaker:

is up to. How can they learn more? How

can they figure out what their pet needs?

Speaker:

Spot and tango.com, all

information's there,

Speaker:

whether it's Un Unkibble or our treats

or supplements in this new dental care

Speaker:

product. Spots and tango.com,

we offer discounts on trial.

Speaker:

It's a 14 day trial with

a happy pup guarantee.

Speaker:

So there's no reason not to give us

a try. And Brett, thank you so much.

Speaker:

Amazing, fantastic opportunity. Really

enjoyed the conversation. Again,

Speaker:

thanks for the opportunity here.

Speaker:

Absolutely. Russell Breuer,

ladies and gentlemen, Russell,

Speaker:

good luck to you and Spot and Tango

and look forward to watching the future

Speaker:

success. Super exciting. And as

always, we'd love to hear from you.

Speaker:

So I'd love to hear feedback.

Speaker:

What would you like to hear

more of on the podcast?

Speaker:

If you found this episode inspiring,

please share it with somebody else.

Speaker:

And with that, until next

time, thank you for listening.