Marke oder nur Preis-Arbitrage? Der Unterschied

0:00I run a DTC uh skincare brand e-commerce. >> Oh, yeah. You do like 12 million topline and you have like a bunch of different brands that you have, but they're all white labelled, right? >> Yeah. Yeah. So, we do actually 10 million. >> Yeah. And you want to get to 100, right? >> We want to get to 100. >> Yeah. >> Uh the key constraint right now is margins, right? So, 15% margins. >> Yeah. >> Um >> you know why your margins are low? >> I think we >> want me to tell you why your margins are low.

0:27>> Yes. >> You don't have a brand. So we we just to to give you some numbers likeund >> we might have scaled too fast >> or like scaled too much >> to uh because here's the thing the more we scale the higher the CPA, right? The >> you're a performance marketer, right? >> Yes. >> You have to learn brand. >> Yes. >> You're not going to arbitrage your way out of it.

0:53>> You're falling into the trap that I did and I was stuck there for three and a half years. All right. So you can stay for three and a half years or you can take three and a half minutes. All right. So what happens is you're going to keep scaling spend, right? And revenue is going to keep going up, but your margin is going to compress. >> Yes. >> Which you're already seeing, right? And that makes sense because you go to less profitable audiences, you continue to scale, right? And so I think I like my visual for this is like in each rung we have like the same number of sales that are going to happen, but I only have to buy this much traffic to get the same number of sales versus this much versus this much versus this much. And so for you to scale long term, you need to get to the point where 70% of your advertising is brand driven, not direct to direct to buy, but it's building founder story. It's building narrative, unique differentiation, things like that that are top offunnel awareness, like associations with things that your ideal avatar would find interesting so that you cannot just be a media arbitrage white label thing because you're just always going to be

2:02>> beholden to like the newest hack, the newest bidding strategy, the platforms where you can get the cheapest clicks, and you'll never build something that's actually like sellable in the long haul. I'm assuming that's what you want to do. >> Yeah. So, we want to build for an exit, >> right? You have to build a brand. No one wants to buy these arbitrage businesses. >> A few investments that we made right now is first of all rebranding like with a branding agency. Uh second is >> you need to master it. >> Sorry.

2:27>> Like as a physical product e-commerce owner like your core most important skill is the brand. Like you can't outsource that. It's the most important thing. >> Got it? >> Like so you need to learn the skill of branding. branding >> which is fundamentally making associations with things that people in your audience find positive. >> Got it. Do you think we have a model problem as well because for example right now

2:53>> you run ads, you sell stuff, you ship it, right? >> Yeah. >> No, I don't think >> because I I was thinking about changing to a subscription model because we're not doing that yet. >> You can have a percentage. What is the what's for all of them or for are they consumables? Uh so we sell gadgets like skincare gadgets and then we also sell consumables. Uh we usually do bundles. >> Well the gadgets are going to be really tough for subscription. >> Yeah. Yeah of course we want to like we just um manufacturing a new serum in the US. Um and the idea would be

3:24>> like hair or like supplement >> uh skincare like topical topical. Uh >> lotions and potions. Yep. >> Yes. And the idea would be to slowly be shifting towards subscription because >> and that that's fine to me. That's again that's you still thinking with your performance marketer hat. >> You're just trying to like how do I increase cart value? How to increase LTV? >> Yes. >> Like Yeah. And that's fine. There's nothing wrong with that. I think like

3:50>> so think about think okay so think about conversion optimization overall as steroids which is like you can use them once and then that's it. You get a onetime pop and then that's your new baseline. And so like whatever you're doing, you can get a double, sometimes a triple from CRO improvements, but after that, you still need to solve the big gaping hole in the front end, which is like, how do I get more traffic? How do I get more repeat buyers? How do I how do I command a premium? Because the only way that you can outspend competition in the long haul who are just as good as you are at performance marketing, because again, it's not even you versus them, it's your employees versus their employees. And if you have access to the same talent and you have the same undifferiated products, you're running on the same margins. So you're just going to be a completely commoditized business functionally in terms of how much you make versus how much you spend.

4:36And so the only way to decommoditize this is that you have to build the associations that allow you to command a premium price that get people to be more loyal to you. So you can attract better talent as well because they actually believe in what you're what you're what you're about, right? Like you have for sure spreadsheeted your life in terms of how you thought about your business. >> Yes. >> Yeah. For sure. I get it. Yeah, >> but like you actually have to put a different hat on if you want to go to the next level. >> Got it. >> So you actually have to stop thinking as quant and start thinking in terms of psychology of customers and not like oh this specific type of ad convert. It's not like that. You have to expand out your window in terms of attribution of how long it takes to make a sale. You should start looking at how many people actually follow the account. Um like uh there's a great there's a great article um I think it was the CMO of Chubbies wrote this. I want to say it was Chubbies. Um, but he talked about the uh the rorowaz doom loop or the direct response doom loop and you're in that now.

5:28>> Yes. >> Which is that you just keep spending more to make less and then you're like I'll just spend more and you make less and it just gets until eventually you're like I'm just putting money in and getting it back out and I'm just like I have a number but I don't make anything. Right. So it's a very vicious loop and cash flow sucks for the business. >> Yeah. >> Yeah. I get it. And so the only way out of that is you have to rethink. It's a strategic change. Uh you have to rethink how you're advertising. >> Got it. And in terms of branding, what do you mean by branding? Because sometimes for me branding looks like woo woo, you know?

5:58>> Totally. I thought the same thing. And then I built like multiple billion dollar companies off of it. So like like I get it, >> but well like like the if you can put it in a framework. >> Yeah. >> What would be like the key levers of branding for you? >> You can charge more money, people buy more times. >> Do I need to go more or that's good enough? you get higher CTRs, higher conversion rates, all of that.

6:23>> Yeah, but I mean in terms of like building a brand, >> you post your stuff next to that people like so they think it's cool. >> Okay? >> And then eventually you take the cool thing away and then your thing's still cool. And so then they pay a cool premium to buy your thing versus the other guy's thing that's not cool. And they keep buying your thing because they feel cool when they buy it.

6:51>> Got it. >> So, do you know Gym Shark? >> Yes. >> Why would they pay Sam Sulk to become an ambassador? Why would they pay him money when he can't directly drive rorowass? Branding is higher return on spend than direct response does over a longer time horizon. See the thing is your problem is you have a 30-day window for everything you're looking at maybe 60. If you look at brands you have to extend a six to 12 months. But when you do that you actually start getting insane returns on capital but you have to start thinking like a capital allocator rather than just a direct response performance marketer.

7:33>> I could talk to you more about it but like I want to I don't want to go too deep in it but that's that's fundamentally that's the frame shift you need. And you having many businesses I don't think helps you. There's probably one of them that's your flagship one that's probably the best one that has the most potential. >> No, I just have one business. >> I thought you had multiple brands under there. >> No, no, no, no, no. I mean, it's we just have one gadgets and widgets and then you have >> No, no, no. Gadgets is like skinare gadgets. >> So, skincare devices. Yeah, exactly. And then

8:00>> but it's one one >> just one brand, nothing else. >> I feel a little better. >> Okay. >> A little better. >> But I stick by what I said. You have to have a frame shift. Otherwise, you're not going to get past where you're at. >> Okay. Thank you. If you're a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling roadmap, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly where they got stuck and how they got past it. And so we broke it in these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of the functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so no matter what you're struggling with, someone else has already struggled with it and solved it. And so I'd like to give you this thing absolutely free.

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