Turning Black Friday Shoppers Into Customers Who Stay

[00:00:00] Taylor: Welcome back to another live edition of the Ecommerce Playbook podcast. We are here at Commerce Roundtable. This is not AI. He's not AI. This is real. That's the skyline of San Diego, and we are here for the second in this series of what are you gonna do in Q4, featuring some of the amazing, awesome humans that we get to interact with here.

[00:00:19] Taylor: And this episode's special for me. Like, I know you guys think I'm an OG, that I'm old, but this is actually one of the individuals that I learned from in the very early days of e-com who has been at it longer than I have. And I remember he was like... Again, I told this story about Nick when he came in and taught me about Facebook Ads Manager.

[00:00:39] Taylor: Justin Palmer here is the founder, CEO of Home Life Brands, and

[00:00:43] Taylor: They were gathering up, they, they owned German, at German shepherds and at everything you can imagine. And so this was like the first examples I've seen whitelisting ads that he would teach me about, and then how his team would do measurement. Like, there were so many things that Justin... And our kids go way, I just, I haven't seen probably our kids, we hung out a lot pre-COVID.

[00:01:03] Taylor: It was just like, and I just found out his daughter just passed their driving test today. Their, their son's 13, and I'm like, "My mind is blown." There were little kids running around us when we hung out. I think you, there was an episode of Justin that Co- or Corey you're gonna have to dig up that's from a decade ago of coming on the pod.

[00:01:17] Taylor: So I just spent a bunch of pi- time telling people how old you are. So why don't you give us the lowdown, though, onto what is Home Life Brands today?

[00:01:24] Justin: Yeah. Yeah. So, uh, Home Life Brands is, uh, we- we've been around for about 12 years. And, um, like Taylor said, we, we focus on pets. And this really was all born out of the very beginning days of fa- of Facebook, right?

[00:01:34] Justin: So I, you know, I had a, a, a rescue dog, a, uh, a four-year-old, uh, Siberian Husky at the time, and I just was kind of inspired, like, okay, Facebook's kind of becoming a thing. I'm seeing these Facebook pages grow and take off and get virality. Yeah. So I created a page called I Love Dogs, and, um, one thing led to another.

[00:01:50] Justin: The audience grew pretty quickly. We, you know, it was, it was a lot of just posting memes and viral stuff, and, and I, I didn't really have a monetization, you know, plan at that time. But one thing kind of led to another, and we started one breed, and then we started another breed, and then it kind of grew from there.

[00:02:03] Justin: And, um, that was kind of the beginning, is just, like, kind of riding that organic wave of, of Facebook pages and Facebook growth.

[00:02:09] Taylor: So there's two things that, um, Justin taught me that, like, really changed a lot of even how I think about my business today. The first was you guys always saw yourself as part media company, and you had revenue as a media business inside of a commerce business.

[00:02:21] Justin: Yeah.

[00:02:22] Taylor: So you would sell sponsorships to your pages and to your newsletters and things like that, and that's become- Mm-hmm ... a huge part of CTC. And what differentiates us is I actually think about us as a media property as well. And so I owe that to you for sure. The other thing you used to talk about was this idea that, like, people, um, if you really wanna create great ads, you should think about the overlap of three interests.

[00:02:43] Taylor: So you would say, like, "Don't just think about dogs." Most people think, like, oh, pet owners. That's one. Or pet owners that are in the military. But you would go like, "No, no, take three. Pet, wine, military." And at the center of those, there are people. And when you f- they really feel seen and known when you find- Yeah

[00:02:57] Taylor: the overlap of these three passions that they really care about. And that was an insight I've always thought about from developing creative strategy, is like it's easy to do the one interest and go, "Oh, that's my customer," but when you can find these people, then they really uniquely feel known or seen.

[00:03:12] Taylor: And you were even telling me you have a brand most recently that I think kind of plays on that idea. Yeah.

[00:03:15] Justin: Yeah. What is it? So yeah, a hero company actually launched out of our, our main brand, which was I Heart Dogs. And, you know, we sell mostly to women in I Heart Dogs, but this was a product that we actually created for men.

[00:03:24] Justin: For men it was a, it was a, like, a paracord survival style bracelet with a cool American flag on it. And we launched it, and all of a sudden we had a problem because we had all these women buyers, and we ended up, uh, uh, having all these men buyers that are coming to the site buying this product. And, you know, so we realized that we had something here, and we realized there was, like, this intersection of patriotism- dogs and faith.

[00:03:44] Justin: And that's really what kind of, you know, created the Hero company. And, and what we do is it's a men's apparel and jewelry brand, and we raise the money to provide, uh, veterans who are battling PTSD with, uh, service dogs. That's cool. So, uh, yeah, it's real- it's really passionate. And my partner Marshall, he's a army veteran, and, um, he's st- you know, seen firsthand the effects of men and women coming out of the service, and just the, the emotional scars that, um...

[00:04:05] Justin: Anybody who's, who's had a dog, you just know how much joy and healing that a dog brings to you, and that's, that's what we're able to fund. So we've been f- you know, fortunate to, uh, to o- to fund over about $2 million in, um, donations to organizations that match veterans with service dogs. So we have a line of jewelry and apparel, and that's, that's gr- And I, I didn't even think about it 'cause you, I, I don't even remember telling you the three in-intersection thing.

[00:04:26] Justin: Yeah. But, but that's actually the, the genesis of that brand, is kind of over- overlapping those three interests and just really building on that.

[00:04:32] Taylor: Yeah. 'Cause I, I think about this, um, I listened to Jonah Peretti, who started BuzzFeed Um, and he talked about how the way they built BuzzFeed was this idea that if you could create a piece of ke- content that someone would see and they'd immediately go, "That's me."

[00:04:47] Taylor: And so you think about all the quizzes they used to build, like things only kids from the '80s would understand. Like, if you were born in the '80s, all of a sudden you self-identify into that content in a way that makes it feel very personal, even though that headline is really applies to literally hundreds- Yeah

[00:05:02] Taylor: of millions of people, but yet it feels so personal. And so I always thought that you sort of tapped into a similar idea, which is that if I'm somebody who is former military, who has a dog, and is, has a faith, like when I see that ki- that specificity of content, it's like, for me, like when I see people do baseball and e-com, I'm like, "Oh-

[00:05:20] Justin: Yeah

[00:05:20] Taylor: that's like uniquely me." Yeah. And it, so it increases your connection to the thing in this way that is really powerful, despite those being really large demographics. Yeah. Like, there's a lot of people that actually can fit into some of those circles, but when you overlap them, then it suddenly feels very personal.

[00:05:35] Taylor: Absolutely. And so even ad creative, it's something I still think about th- to this day, which is that- Mm-hmm ... um, like there's this, there's this exercise you can do with creative that's like rewrite an ad five times more specific every time. And so I would teach our people to use this idea, which is like, okay, you wrote, uh, a, it's a testimonial and it says, uh, "1,000 customers love this product."

[00:05:55] Taylor: It's like, write it again. And it's like, "1,000 women love this product." Okay, write it again. "1,000 moms over 40 love this product." Okay, write it again. "1,000 moms with do-" Like, you can take that same idea, which is find that overlap of three concentric interests that makes someone self-identify into it in this personal way.

[00:06:11] Taylor: Like, a great headline chooses its audience, and I think that's- Yeah. .. something that I owe to you, man. Thanks for all the, uh, the wisdom over the years, you know? Um, but so talk about the brands though, and like, 'cause it's not... So you have that one, which is this, like you said, the overlap of pets, patriotism, and faith.

[00:06:26] Taylor: But talk about some of the other ways that I Heart Dogs plays on this idea or some of the other products that you guys sell.

[00:06:30] Justin: Yeah. So, um, w- we kind of think of ourselves as we sell everything that, uh, you can't find at a Petco or a PetSmart. So, um, you know, we're, we're, we're big on actually lifestyle products that kind of represent who you are and, and like you said, kind of make you feel seen.

[00:06:43] Justin: Yeah. So maybe it's a specific dog breed that you associate with, that you're very passionate about, that you've rescued, uh, that means a lot to you. So we'll have, you know, we have a lot of breed-specific products. Um, we have a lot of, uh, we sell supplements as well. That is probably the one kind of problem solution area that we're in.

[00:06:57] Justin: But most products are actually lifestyle-based, um, apparel, you know, mugs, uh, home decor. We do a lot of seasonal products- Yeah ... like a lot of, of, of, of, you know, kind of riding the holidays. And you talk a lot about, like, peak moments. Yeah. That's something we, we, we paid a lot of attention to and really kind of lean into seasons in a way that you're not gonna find at a typical pet store that sells a garden flag or, or home, you know, decoration that's for, for a dog lover.

[00:07:19] Taylor: Super interesting. And then you were telling me before we got on that you've pivoted to a thing which I think is kind of this pursuit, 'cause I know one of the things that was true about your business is that there wasn't naturally, maybe in German Shepherd wine glasses, this really high LTV in the products themselves.

[00:07:33] Taylor: Yeah. And so that's why you got into the supplements a little bit. But then also, there was always this sense that like, oh, we have this community that's really engaged with us, but the products don't lend themselves to monetization on a repeated schedule. And so there's... It felt like there was always this tension of how do we get more value out of this thing?

[00:07:48] Justin: Yeah.

[00:07:48] Taylor: And so you guys have created memberships.

[00:07:50] Justin: Yes.

[00:07:51] Taylor: Yeah. So tell us a little bit about that product and what that's done for your business.

[00:07:53] Justin: Yeah. So about, about two years ago, we really started leaning into memberships. And memberships, we... There's kind of two benefits. So, and this is something that we upsell at checkout.

[00:08:00] Justin: Um, we sell other ways too, but typically most people are, are signing up at checkout. And what we do is it, it's a, it's, one, it's a discount program. Um, you also get early access to products, you know, uh, drops around Christmas time, things like that. And, and it's pretty substantial discounts. It's not 10% off.

[00:08:13] Justin: Like it's actually a real discount on the product. But more importantly, like the second part of the membership is it's a charity, a give back program. And what we do is we actually keep a scorecard of people's metrics. So when you buy a product at I Heart Dogs, you're funding a specific number of meals that we donate to a, to an animal shelter- Mm

[00:08:29] Justin: in, in honor of your purchase, and we actually show you a dashboard of that. You can see how many meals you've, you've funded over the life of your, your, uh, uh, customer journey. Yeah. And, you know, some people go back 12 years. So, and we also have other programs too where we, we actually charter a plane and we fly f- uh, pets out of areas in the, in the country that are basically high-kill.

[00:08:46] Justin: Oh, wow. So a lot of areas like Texas right now, there's a lot of abandonment. Oh, wow. So, um, you know, and, and then you go up in like Washington, New Jersey, there's basically more demand for pets than there is supply.

[00:08:55] Taylor: Really?

[00:08:55] Justin: So by putting these pets on a plane- Oh ... you're literally pulling them out of a s- situation where they would be euthanized at that shelter.

[00:09:01] Justin: So, you know, we really take people, uh, along for that journey. So it's like, and you know, this is also from, you know, the whole creating a peak moment. Yeah. It's like we do this every month is we do a flight. Oh, wow. And, and yeah, so it's, it's, it's almost like you look at the, the backend of our company and we're all kind of almost more wired like a charity than a, than a retail company- Yeah

[00:09:17] Justin: because of all these operations that we're doing. So you literally

[00:09:19] Taylor: charter the, like are you working with organizations that- We're

[00:09:21] Justin: working, we're working the nonprofit. Okay. But, but we kinda get to direct some of the, the marketing and whatnot. Great. And we're also choosing the pets and the stories that go on the flight.

[00:09:29] Justin: So- That's great ... um, we will actually bring, you know, at least five photos of these pets to our customers, and we'll show them the stories and we'll, we'll say what, you know, what, what the history of this dog. Interesting. And hey, they're gonna be on the plane on this day and, and here's our goal. We're trying to fundraise for this.

[00:09:41] Justin: And we have, you know, products around that, like T-shirts, mugs, whatever. Yeah. Um, a lot of people just donate, and we just pass that through to the charity.

[00:09:46] Taylor: Yep.

[00:09:47] Justin: But um, we're also a marketing partner for these nonprofits- Yeah ... because they're looking for, you know, donors year-round, and we're able to provide that flow for them of our, of our customer base.

[00:09:55] Taylor: That's great. So if I'm a member, do I have a dis- a portion of my membership or, or a disproportionate amount of my purchases go towards the charity or how does the-

[00:10:03] Justin: Yeah.

[00:10:04] Taylor: Okay.

[00:10:04] Justin: Yeah. So, so ba- basically it keeps track. So there's, we have several different tiers. It goes anywhere from five bucks a month to 25 a month.

[00:10:10] Taylor: Cool.

[00:10:10] Justin: And whatever you choose, there's a certain metric of how many meals that are funded, how many miles of transport that are funded. Oh, nice. And then you get all the discounts and stuff as well. So yeah, and people love seeing the dashboard. Yeah. They love seeing the update. It's basically like a monthly statement they get in their email that kind of shows their impact.

[00:10:24] Taylor: I was gonna say that's a, that's a great... I think sometimes brands really suffer from, "I don't really have a good reason to talk to you right now."

[00:10:30] Justin: Yeah.

[00:10:31] Taylor: And so what is the reason I'm sending you three emails a week? You know? Yeah. Like, they need that, and that's... There's so many built-in stories there because, yeah, you gotta have, like, minimal churn rate on your email list and things for stuff, that kind of stuff.

[00:10:42] Justin: Yeah. Yeah, for sure

[00:10:44] Taylor: Super interesting. So how, how now, how much of a percentage of the business has that become, and how do you think about that going forward? Is it just keep enriching the value of the membership? Like, how do you think about that as a platform for the business going forward?

[00:10:54] Justin: Yeah, yeah. I mean, it really provides the stability- Yeah

[00:10:56] Justin: 'cause, you know, mo- most retail companies, it's, it's tough to make money from January to, you know, October. So, like, there's more stability in that, and we're able to fund more charitable, you know, operations and whatnot. Um, and then, yeah, it's really just... You know, it's about a quarter of our revenue right now- Cool

[00:11:09] Justin: so it's not, you know, it's not, uh... it has not displaced everything. You know, w- we, we still have to have good product. Yeah. You can't just have a cause-

[00:11:16] Taylor: Right ...

[00:11:16] Justin: and have crappy product. Like, the designs have to be good, and there has to be a reason to buy. But, but having that story to tell and that arc- Yeah

[00:11:22] Justin: and the narrative to kind of bring them back to why they bought, and here's actually the, the fruits of your purchase, that's something that, like, it's much harder to replicate. Yeah. Like, people can honestly replicate our products, but that, that, that whole experience is much harder to replicate that we're bringing to customers.

[00:11:35] Justin: Yeah.

[00:11:36] Taylor: Super interesting. How many products are you guys releasing a year now? I know it was a lot.

[00:11:40] Justin: Yeah. Well, so because a lot of the products are made to order, I mean, we're talking- Okay ... in the thousands. Yeah. But, um, the physical products that we manufacture, you know, probably talking one to 150 items a year that we, that we, you know, physically make and warehouse in our, in our warehouse and, and ship out.

[00:11:53] Taylor: Wasn't there a while where... 'Cause I think I remember back, like, part of the mechanism was, like, perpetual ad design by just basically automating designs onto those templates and then just having those kind of constantly pumped out, figuring out what scale to adjust them. Like, is that still a lot of the system for the- It is- And

[00:12:11] Justin: how, like- AI has really- Yeah, I was gonna say

[00:12:12] Justin: really, really changed that. I mean-

[00:12:13] Taylor: Okay. What do you guys

[00:12:14] Justin: do- The degree of automation. Yeah, I mean, we, we built custom tools that basically, you know, takes a URL, takes our PDP, it runs it into the tool, and it creates just an overwhelming amount of static ads- Yeah ... you know, instantly. And of course we're QC-ing and make, making sure those make sense.

[00:12:27] Justin: But I mean, our, our ability to output ads, um, has actually caused us to increase our product development, right? Mm-hmm. Because it's, there's a bottleneck somewhere, so the, the bottleneck used to be on the ad side. Now it's like we've leaned into product development even more. Interesting. And you're just finding those little niches of, like, okay, the, the dog person- There's another one here

[00:12:42] Justin: also loves this subtopic- Yeah ... right? Um, and you know, those are, uh, those are great, and sometimes Facebook latches onto those and sometimes a little bit too much. Yeah. Where you're like, "Wow, this is going a weird direction with Andromeda," and, like, whatever niche it, sub-niche it found. Yeah. And sometimes you have to kind of pull it back.

[00:12:56] Justin: But it still works, and we s- we, we definitely, um... I mean, AI, AI has changed a lot.

[00:13:00] Taylor: Have you guys done anything with TikTok Shops?

[00:13:03] Justin: We have, yeah. It's, it's, uh, I mean, it's like 2% of revenue right now- Yeah ... but it is something that we're focused on, and I think the primary reason there is just for the creative that comes out of it.

[00:13:10] Justin: I mean, the profitability isn't there- It's challenging, yeah ... at this point, but there's definitely a halo effect. Um, we, we're on Amazon as well, so we see the halo maybe- Interesting ... more over there-

[00:13:18] Taylor: Yeah ... than

[00:13:18] Justin: on D2C.

[00:13:19] Taylor: Yeah, I'd imagine. All right. Well, the point of this pod is to talk about Q4 and holiday. And you talked about building peaks.

[00:13:25] Taylor: What does... It seems like a lot of your products are oriented around gifting, that there could be a huge opportunity for that to play out. Tell us a little bit about how you guys approach handling Black Friday, Cyber Monday, and Q4.

[00:13:38] Justin: Yeah. Yeah. So, um, yeah, so you know, we definitely approach September and October pretty aggressively, 'cause that's the cohort of customers that tend to rebuy in November and December.

[00:13:47] Justin: And, you know, the, actually the people that get acquired in November and December tend to be pretty low quality and just one-time gift givers, right? Yeah. So, but again, we're trying to get as many people as we can onto the membership because, like- Of course ... we do have a gift, a gifting product. It's relatively low LTV with the exception of, you know, supplements.

[00:14:01] Justin: So it is this exercise of trying to... Like, they don't need a T-shirt every month, but, but actually do care about animals, so we can kind of move them into this membership. And so everything's really kind of oriented around that. So we tend to-- First thing we do is like we, when we build the product, we're using this model where we, we create AI concepts.

[00:14:18] Justin: We put them out in a survey that we, we have a very structured survey that we've done the same for years, and we're basically showing almost what looks like a finished good, because AI is that good now. And we're asking them a very, you know, in a very specific way if they would make that purchase, and we give the price that we anticipate selling for.

[00:14:33] Justin: Good. Via email? Via email, but we actually run ads to it too, 'cause what we don't want is we don't want somebody- You run ads

[00:14:37] Taylor: to the survey?

[00:14:37] Justin: We run ads to the survey, yes. Sure. So we get cold audiences to the survey 'cause we don't want just, you know, surveying the choir. Yeah. Like we want people who have actually never seen us before and just like, "Would you buy this cute Christmas decoration?"

[00:14:48] Justin: You know? So, um, we do a lot of that, so because of that, we, we, we tend to, um, be more confident in those order quantities that we, you know, w- when we, um, place those orders. So, but we're off sometimes and, you know, it's always this adjustment of, you know... We have a daily projection model where it's like, okay, here's the inventory that we need to s- we need to get down to zero by our shipping cutoff.

[00:15:06] Taylor: Yeah.

[00:15:07] Justin: And we're running that against Facebook ad spend, and we're saying what needs to be ramped. We actually tend to start pricing pretty low, and that goes to members first, right? So we, we actually start kind of inverted with lower pricing, and as the supply goes down on the, you know, the best items, the pricing will go up a little bit.

[00:15:21] Justin: And, um, we pull back on ad spend to get more organic sales.

[00:15:24] Taylor: I saw a research, and I'd be curious if you ever thought about doing this, is that- There was a group out of, I don't wanna say, maybe Boston University somewhere, that took, um, a bunch of ad creative, um, and tried to build basically a, a machine learning AI simulation around whether or not the ad creative would perform.

[00:15:47] Taylor: So I've been wondering on the survey results, like if you could actually create a set of agents that review the ad creative prior to publish- Yeah ... train it on all the results that you have of the ads that have worked, and if they could predict the outcome prior to the ad dollars. I've always, I've always felt like there's, there's a, there's a product out there that is like, like prior to publishing your ad creative.

[00:16:06] Taylor: Like, the idea that testing ad creative is like in the real environment, it's like the, the Shopify Sim Gym that they tried to create. Did you see that?

[00:16:13] Justin: Yeah.

[00:16:13] Taylor: It was like they created a, an ability like to do CRO where you could create a simulation of your website that it would have agents run through, and it would tell you whether or not it would improve the conversion rate prior to publishing live.

[00:16:24] Justin: Interesting.

[00:16:24] Taylor: Uh, so that you didn't actually affect, you know, you didn't have to learn through the test from it failing or affecting revenue negatively. But super interesting. Um, do you, do you feel like you are good at predicting which one will work?

[00:16:35] Justin: Yeah. So this is interesting. I, I feel like five years ago I was really good at predicting winners.

[00:16:39] Justin: Really? I do not feel like I can predict... I feel like I can predict winners at the offer level. Interesting. Like, is this product at this price with this story-

[00:16:46] Taylor: Yeah ...

[00:16:47] Justin: going to work? I don't f- I don't feel like I'm very good at predicting ad creative anymore. I feel like there's a degree of randomness-

[00:16:52] Taylor: Interesting

[00:16:53] Justin: in this new Andromeda thing or whatever. And I, I... Sometimes I feel like Facebook latches onto something way too early and just runs with it.

[00:16:59] Taylor: Yeah.

[00:16:59] Justin: And I'm basing that on, like, how that product might sell on another channel or via email. But like, yeah, I, I feel like I've actually gotten worse at it. But I think the solution, the solution is just- The game has passed us by

[00:17:10] Justin: like we talked about today, is low cost creative, right? Yeah. 'Cause it's, if you can bring down that cost to create, create that, then it, it doesn't matter if your batting average is really low.

[00:17:16] Taylor: Yeah, that's right. Um, yeah, that's, that I, I feel very similarly. It's like I'm constantly just blown away at whatever, uh, that comes out the other end of the machine.

[00:17:27] Taylor: Um, so when you guys get to actual Black Friday, Cyber Monday, is the goal then do you dis- do you give like first month membership free? Like, is the goal to provide the discounted value around trying to get people to opt into the membership? Or is it bigger discounts for members? Like how do you think about the offer design?

[00:17:44] Taylor: Is it both? Like what do you actually do?

[00:17:46] Justin: Yeah. So, so by, by this, by Black Friday, you know, we, we would've already dropped product at a very discounted price to members. So sometimes the pricing is gonna be, you know, a little lower at

[00:17:53] Taylor: that time. So you're sequencing it. Do the members get early access to discounting?

[00:17:56] Taylor: Is that the idea?

[00:17:56] Justin: Yes. Yes. Okay. Early access plus, plus the discount. Okay. And by the way, you can become a member at any moment and get that discounted price, as you're gonna see the two prices. So you'll save money

[00:18:05] Taylor: right away usually.

[00:18:06] Justin: Yeah. Exactly. Yeah. And some people sign up just for the discount and cancel, and that's fine.

[00:18:09] Justin: We're gonna, you know- Yeah ... we're gonna make it easy. We're not gonna keep you on there. Yeah. It's, it's not something you can't cancel. Most people- It's

[00:18:13] Taylor: very classic retail, like sign up for the credit card today and it's, you know- Yes ... your flight's free or

[00:18:17] Justin: whatever

[00:18:17] Taylor: it may be.

[00:18:18] Justin: Yeah. Yeah. But ultimately, we want people who are staying more for the cause.

[00:18:21] Justin: Yeah. Like, they wanna see, like, their impact every month. So we find that the people who stay are gonna be more from that angle.

[00:18:26] Taylor: Yeah. Interesting. So the- Primary driver of the membership value is the perceived value of the charity. That's the highest LTV? Like

[00:18:36] Justin: I think it is long term. Yeah. But I mean, you definitely, you definitely sign up for-- You get free shipping on your first order and you get a, you know, sometimes 20%, sometimes 30% discount- Yeah

[00:18:43] Justin: on that item, so.

[00:18:44] Taylor: Is the payback, do you think of it as like you're willing to subsidize that for a period of time for the payback? Or do you try and be first order or first month membership positive?

[00:18:53] Justin: Or like a metric there. Yeah, yeah. No, we try to be first order, first, uh, you know, order positive. Right. I, I think, you know, we may get a little more aggressive in, in September or October.

[00:18:59] Justin: Yeah. We may be a little bit in the red just because, like, we see the payback- Yeah ... in the next two months. But like, you know, we're still ultimately a product... a, a company that sells products that don't have-- The DNA of these products is not high LTV.

[00:19:11] Taylor: So- Do you still-- I remember one of the things that you did is that you, like, paid and comped all of your media buyers on last click GA revenue.

[00:19:19] Justin: Yeah.

[00:19:19] Taylor: Do you still-- Is that still your preferred measurement

[00:19:21] Justin: system? No, we, we do-- We don't do that anymore. So we do, we do have a comp model that is based on the CM.

[00:19:26] Taylor: Okay.

[00:19:26] Justin: And then it's basically, it's carved up amongst the media buyer pool based on that. But it's, it's no longer... I mean, it is somewhat last click, but it's, it's more driven by the entire CM that's pr- that's provided by the business.

[00:19:37] Justin: So-

[00:19:37] Taylor: I always-- 'cause it's funny, I, I remember so many of our conversations, like, because I th- I don't think it was ever that you didn't disagree that it was understated, but it was that it had this long continuity of, like, it's a data point that exists. Uh, it's still indicative relationally over time- Yeah

[00:19:54] Taylor: to the value. Yeah. It's conservative and protects you- Yes ... as a business.

[00:19:58] Justin: Yeah.

[00:19:58] Taylor: Um, and I always, like, would go back to this in my head of like, yeah, there is something about the persistence of that, that you can look at over time, and it's not an attempt to answer the question of like, is this all of the value attributed?

[00:20:10] Taylor: But it's that it's a signal-

[00:20:12] Justin: Yeah ...

[00:20:12] Taylor: that moves and points in one way, that if you were to pay people off of it, would... you'd never overpay them. Yeah. Which is, like, dangerous to the business. Yeah. Um, so I've always... I, I go back to that very, very often. Um- Okay. What do you, um, if a brand... What do you think needs to be true?

[00:20:29] Taylor: Because I think membership is one of those things that, at its worst, is just, like, exploitive of the customer for the sake of hoping they forget to cancel it- Mm-hmm ... and you can extract extra dollars when they're not ordering. I've also seen people, like, make the mistake of they start accruing all these, like, um, like credits basically as part of the me- Yeah

[00:20:48] Taylor: and all of a sudden that's on your balance sheet- Yeah ... and you're like, "Oh shit, I actually... This person has an outstanding- Right ... $75 that I owe them." Right, right. But they have to like... And it creates this, like, immense complexity and all these different things. We, we went down this path at Bamboo Ridge for a while, and then it was like the end of it we're like, "Was this incremental at all?"

[00:21:02] Taylor: Yeah. "Did we just move dollars from revenue to memberships?" Like, what happened? Like, how do you think about trying to assess the value of those dollars versus the revenue dollars and not conflate them?

[00:21:14] Justin: Yeah. Yeah. It's already... I mean, I, I know what you're talking about with the sort of credit model and we- Yeah

[00:21:18] Justin: we went a different direction, which is just, it's just discounts. Yeah. And you really don't know what your discount is gonna be until that product appears and then, you know, you get that. So, but I mean, to be honest, I don't think our membership model would work without that experience that, that customers have, which is like watching the journey of dogs being fed- Yeah.

[00:21:34] Justin: That's a great point ... from their purchases, watching the metric, you know? Yes, they, they love the product and they love the discount- Yeah ... but I think that it's that whole package. So I, I think that it's, if you have a, if you have a consumable and you start a membership program, I think that's where you gotta ask how much- What am I doing?

[00:21:48] Justin: Yeah ... how, what is the incrementality here? Because it's like the nature is already to consume it. They're coming back. But you don't

[00:21:52] Taylor: have that at all.

[00:21:53] Justin: Yeah.

[00:21:53] Taylor: Yeah.

[00:21:54] Justin: Right.

[00:21:54] Taylor: Super. Yeah. 'Cause it almost feels like the frame is like, I think about like if I'm Charity Water and I sign somebody up for a $10 monthly donation, their job then is to, in line with the donation, also add community and value, these other things.

[00:22:06] Taylor: But in some ways that it seems like that, like you're almost- Yeah ... getting them a schedule of... And in their heads they're going, "Okay, I'm doing this recurring donation to this program- Yeah ... and I'm getting this net benefit- Right ... of all these things." Right. So, like, do you think... Can you think of other brands?

[00:22:22] Taylor: Do you pay for any memberships?

[00:22:26] Justin: Not like this. Yeah I mean, you know, gym memberships and

[00:22:28] Taylor: things like that. Yeah.

[00:22:29] Justin: I'm just trying to think

[00:22:29] Taylor: of like what, what would a brand have to offer me- Yeah ...

[00:22:33] Justin: to provide- I think the, uh, the interesting thing for us is we're not a charity. Right But I think that in a lot of ways we do a- Are you a B corp?

[00:22:38] Justin: No. No. Okay. W- uh, I think in a lot of ways we do a better job than, than the ch- than- Yeah ... a lot of charity partners at actually showing the impact. Right. I think that's why people stay- Interesting ... is like they're coming along and it's more of like a club and an experience of like they're following the journey of these animals, and there happens to be product.

[00:22:52] Justin: Mm. You know, I think of like our product as like, it's like a souvenir of a, of a giving experience. So it's like when you go on vacation, you're not buying a T-shirt 'cause you need another T-shirt, right? You're buying it as a symbol to, to remember- Totally ... something like an amazing memory. Yeah. And I think that people-

[00:23:06] Taylor: Ornaments, mugs, all those things are-

[00:23:07] Justin: Absolutely.

[00:23:07] Justin: You don't need any of it. No. It, it's discretionary purchases. So, but you will buy it to symbolize something that you believe and something that you did- Yeah ... and that you're proud of.

[00:23:16] Taylor: Yeah. Yeah, super interesting, um, 'cause I think there's so many brands, even like the ones I was both... That they're just... We just had somebody on and I asked them this question of like, "If you, if you look out to 2030 and you were to look at your existing product mix and you were to say, 'Okay, fo- four years, just four years, what percentage of your revenue in 2030 comes from the products you have today?'"

[00:23:40] Taylor: And he's like, "Maybe 40%." And think, what's so hard about e-commerce is that our future revenues are so predicated on ideas that don't exist yet, that we have to come up and solve for. There's nothing about the revenue that is truly durable- Yeah ... that's really residual, and it makes the business model really hard.

[00:23:57] Taylor: There's no network effect. There's no thing where you can look out and go, "Because I have this revenue today, that means I'm gonna have this revenue tomorrow." Yeah. And it's just, it's really fleeting in that way. That's challenging. And so I think there's this desire to find... I saw, watched what you guys do with media, like this way in which you don't have to...

[00:24:14] Taylor: You... When you, when you do the hard work of selling a customer into your community, that there's some way that the relationship has some longevity to it.

[00:24:22] Justin: Yeah.

[00:24:22] Taylor: Yeah. Versus so- being so transactional all the time. It's hard. Um, is there anybody that you take inspiration from if you look out and that... Like, where did you come up with the ideas?

[00:24:33] Taylor: Like, where do you get inspiration for thinking about how you do what you're doing?

[00:24:36] Justin: Yeah, that's a good question. I mean, um, not particularly. I mean, I, I, I definitely follow a lot of brands that, that have charity components- Yeah ... you know, and, and, um,

[00:24:44] Taylor: but- It feels like it was such a big thing for a while

[00:24:46] Justin: It does, and it, it feels like it, it was trendy for a while, right?

[00:24:49] Justin: And, um, I think that, yeah, I think that, you know, a lot of it is... Like, it's really hard to actually plug your company into a, you know, charitable, uh, experience- Yeah ... and sort of like do the hard work. I mean, like, literally our warehouse is doing distribution of care packs to shelters. It's like- Yeah ... oh, you think we just ship orders, but no, we're actually doing logistics to bring- Yeah

[00:25:08] Justin: you know, food and treats and, and toys to shelter dogs- Yeah ... and then we bring the pictures back to people. So, um, it's really kind of our competitive adva- advantage in, in doing that, is that, um, you know, it's just the, the... Like, that's an experience that we're willing to invest in. And, you know, not to s- I think anybody who gives any percentage of their sales, it's a good thing.

[00:25:25] Justin: Right. But I think that sometimes it just feels like it's just kinda slapped on top of it- Right ... rather than embedded in the DNA of the company.

[00:25:31] Taylor: Yeah. I think with brands... I was having a... I forget where I was having the conversation, but a lot of times early on there's this desire. Everyone... The community is such this word that everyone wants around their brand, this idea that there's persistent engagement.

[00:25:46] Taylor: And I think what's easier to do or where there's more potential, if you're genuine about it, is to embed yourself into a place where it exists. And I think- Yeah ... the one thing charities are often forced to do because their lifeblood is community engagement, is they- Yeah ... do build that way. Yeah. And so if...

[00:26:02] Taylor: And, and if you are seen as like... I remember when we did this with Kayla, so we saw the CrossFit community as this place that we could engage, but we, like, we weren't gonna build... We weren't r- authentically part of this community. You know, we would go to the gym or whatever. But there was, um, um, a charity called Barbells for Boobs that, like, uh, had... So, like, were really endemic to the community.

[00:26:22] Taylor: And what we saw is, like, Z, who was running it, we ended up sharing office space. We were really close with them personally. And by saying like, "Hey, we want to, like, take the thing that you're doing and support the effort towards it," what it signals to the actual community is, "Oh, these people are here to give, not to just exploit."

[00:26:38] Taylor: Like, and I think a lot of times the easy thing is to walk into communities and go like, "Oh, how can they... How, how can we use them to sell our product or whatever?" Yeah. And so there's this, like, if you can actually genuinely be present, and my partner, uh, used to call it being palms down. Like, come in and say like, "What do we have to give in this space such that we could become contributing to it?"

[00:26:55] Taylor: Then, and in your case, like literally developing systems to help support the logistics of their operation, like you do endear yourself authentically to a community in a way that you will benefit.

[00:27:05] Justin: Yeah.

[00:27:05] Taylor: Absolutely. Um, all right. Anything else? What do you think about, uh, do you guys... Is Meta still your primary growth engine?

[00:27:13] Justin: Oh, yeah. By far.

[00:27:14] Taylor: Yeah. By far. Nothing has come close?

[00:27:15] Justin: Nothing's come close. I mean, we're, we're on, we're on Amazon, but Amazon tends to be more transactional. These people are not... They don't even have the option to- Yeah ... sign up as a member, right? So, you know, TikTok Shops is best, is definitely kind of a top of the funnel that we're, we're doing a little bit of.

[00:27:26] Justin: Do you guys play on

[00:27:26] Taylor: App Eleven?

[00:27:27] Justin: We are on App Eleven, but yeah, it's, we haven't scaled it too much. Yeah. But we honestly haven't given it probably enough attention. '

[00:27:32] Taylor: Cause it seems like demographically it could be interesting- It could

[00:27:34] Justin: be, yeah ... in a

[00:27:34] Taylor: way.

[00:27:34] Justin: Yes.

[00:27:35] Taylor: That would be, would be good for you guys.

[00:27:36] Justin: Absolutely.

[00:27:37] Taylor: Anything else interesting? You've, you've always got some weird idea and you're trying. What, what, what else are you guys up to these days?

[00:27:42] Justin: Oh gosh. Um- Yeah. Which-

[00:27:45] Taylor: What are you doing with AI? Like you said Marshall's doing crazy stuff. Marshall's his business partner. Um, like what are you, you guys- Yeah

[00:27:50] Taylor: how many employees do you have now? 'Cause that, that's a- another thing I feel like you toggled up and down a lot.

[00:27:54] Justin: Yeah. You know, it's, it's roughly around the same, probably last time we talked around 60 people. Okay. You know, probably about half of them based in the US, and half of them, you know, are remote.

[00:28:01] Justin: Yeah. And, um, yeah, you know, with, with AI I think, you know, our first kind of major, I think, use case of AI, besides improving systems and stuff internally- Yeah ... and making things faster, but like I think was obviously just deploying ad creative quickly, right? It just like, because we make so many products we want to deploy qui- uh, quickly.

[00:28:17] Justin: I think what we're trying to do now is like bring it up to the offer level. So right now it's like somebody gets an idea for a, a price discount. It's like it has to go to our product team, it has to duplicate a product page, it's got to set up a discount, it's got to set up a code, somebody has to build a landing page.

[00:28:30] Justin: So we're trying to like go all the way up to the offer level, have an AI system basically create a landing page, an offer in the backend, um, and ad creative, and publish it, right? Yeah. So it's kind of all the way up- Yeah ... is, is kind of where we're focused on, and I think that that's gonna, you know, I, I think innovating on the offer level is always more important than innovating on the- Yeah

[00:28:47] Justin: the creative level, you know what I mean? Than the ad level. So I think that like the ability to iterate faster there is what we're looking at right now.

[00:28:52] Taylor: And for you guys, like there's so much opportunity there because you're not precious about what the end price of that system would be. Like, like if it worked and the economics of the CAC against the realization of value was at $13 or $38 or $22, you probably wouldn't care, right?

[00:29:06] Taylor: Yeah. Right.

[00:29:06] Justin: Right. Yeah. Either way it's gonna be cheaper than, than having humans do it all the way- Yeah ... through the value chain.

[00:29:10] Taylor: Yeah. I, I think we're headed to a world where, yeah, like that whole end-to-end deployment is like seamless.

[00:29:17] Justin: Yeah. I mean, it's like w- the, the, the, the physical things are gonna be left, right?

[00:29:20] Justin: It's like product development. Totally. So I have to, you know, that's... Th- even though we use AI in the concept there- Right. Right ... there's still a physical product.

[00:29:25] Taylor: The, the actual production until the robots can do it.

[00:29:27] Justin: Yeah. Yeah. You know, we're not big fans of pure, you know... We're, we don't do AI influencers or things like that- Yeah

[00:29:31] Justin: but there's, there's, there's amazing ways to make AI creative that doesn't look tacky- Totally ... that isn't manipulating people, and, um, really shows the product in the way you'd never be able to do if you were taking those pictures yourself so.

[00:29:41] Taylor: Um, you still have never... You're still pretty private. You don't- I hide in the shadows, yeah

[00:29:47] Taylor: go out. You leave that to Marshall. Yeah, yeah. Uh, are you on any of the socials these days? Are you writing? Like, you're g- you're, we're... You're getting to your old man phase like me, bro- ... where you need to reflect your wisdom back to the world.

[00:29:57] Justin: You know what's funny is probably like 15 years ago I had a, I had a blog and I published on, on Twitter.

[00:30:01] Taylor: Yeah.

[00:30:01] Justin: And this was, uh, before I knew you, and I just got over it. I just like, "Ah, I don't, I don't, I don't know." I just like to hide now.

[00:30:06] Taylor: You could probably

[00:30:07] Justin: just regurgitate on there. I probably, probably should. I think that writing clarifies your thinking, and- I agree. Yeah ... I, I need to do more of that, but

[00:30:13] Taylor: Um, what's new with your kid?

[00:30:14] Taylor: What's, what's it like having a high schooler driving?

[00:30:17] Justin: Yeah. Uh, well, that, that just happened today. She passed her driving test, so here we go.

[00:30:20] Taylor: Was she excited to get her license? 'Cause I heard the kids these days don't even want them.

[00:30:23] Justin: She was, yeah. She's very responsible. Yeah. Daughter, you know, she's gonna be taking the kids to school.

[00:30:27] Taylor: Oh, really?

[00:30:28] Justin: Yeah, she's... Yeah, so.

[00:30:29] Taylor: Did you, uh, get a car? Like, has

[00:30:30] Justin: she had a car? We did, yeah. She- we gave her a car for her birthday. Nice. And, yeah, surprised her with that, so she's- Amazing ... she's stoked.

[00:30:35] Taylor: Where are they going to school?

[00:30:36] Justin: Uh, they go to, uh, um- I won't- Ally, my oldest, goes to- ... you can cut this if

[00:30:38] Taylor: you don't wanna say this out loud.

[00:30:39] Justin: Oh, no. She goes to Orange Lutheran. Okay. And, um, then the, the rest of them go to St. Paul's in Orange.

[00:30:43] Taylor: Nice. It's wild. We're, uh, watching... Like, I literally have pictures in my head right now of our little kids just running around. Um, but man, you've been at, you've been at this a long time. Appreciate you stopping by.

[00:30:54] Taylor: And, uh, everybody go get yourself some military patriotic wine mugs- ... for dogs- That's right ... over 40 pounds- That's right ... that are from Algeria or something. We've got something

[00:31:05] Justin: for

[00:31:05] Taylor: everybody. Yeah, whatever your breed is. Oh, it's funny 'cause... Well, here's another funny story. So I was... I'm not gonna say I was anti-dog, but I was like, I never had a dog for the longest time mainly because I j- I didn't think I, uh...

[00:31:18] Taylor: I think I saw them as an emotional cost, and I was tired 'cause I had little children. But now I've realized that, like, my dog is like my emotional... It tr- emotional support is real. Like, the only person who's ever excited to see me when I come home is my dog. We actually have a bathroom in our house that is literally only, the only decoration is a painting of the dog, a candle of the dog. So we're, we're all- It's awesome. We're all in. That's right.

[00:31:39] Taylor: So Justin, I appreciate you, bro. Thanks for being a mentor to me and giving me lessons that have lasted a, a long time. Appreciate you. Same

[00:31:45] Justin: to you.