Customer-Centric Branding with Bryan Alston - 86

In this episode of the D2Z Podcast, Brandon Amoroso explores the world of eCommerce and brand building with Bryan Alston, co-founder and managing partner at Brand Castle Growth Partners. With 12 years of experience in launching and scaling eCommerce startups, Bryan shares valuable insights into successful brand development. He emphasizes the shift towards prioritizing customer relationships over platform optimization and the growing importance of personalized marketing.

The conversation delves into budget allocation for top-of-funnel marketing efforts, with Bryan highlighting the significance of understanding your customer base and tailoring strategies accordingly. They discuss the evolving eCommerce landscape, the impact of privacy updates on attribution, and the resurgence of physical retail stores.

Bryan also offers tips for brands preparing for 2024, including exploring Reddit as an advertising channel and considering alternative channels for brick-and-mortar expansion. The discussion touches on the importance of starting locally, building a community, and pursuing slow and sustainable growth over "growth at all costs."

Tune in for a wealth of knowledge on growing and scaling your business, Gen Z style, and gain insights into the changing dynamics of the eCommerce industry.

Timestamps:

🎙️ 00:00:36 - Introduction and Background of Bryan Alston (00:00:00)

⚠️ 00:07:03 - Pitfalls in Growing and Scaling Brands

🤝 00:09:26 - Prioritizing Customer Relationships Over Platform Optimization

🏢 00:11:57 - The Role of E-commerce in Brick-and-Mortar Success

🌐 00:12:54 - Benefits of Having an Online Community

📊 00:13:58 - Leveraging E-commerce for Data and Insights

🚶‍♂️ 00:15:04 - Driving Foot Traffic to In-Store Products

💰 00:15:22 - Budget Allocation for Top-of-Funnel Marketing

📊 00:15:55 - Understanding Customer Demographics

👥 00:17:40 - Targeting Key Influencers

🔄 00:23:25 - Shifting E-commerce Landscape

🔄 00:24:18 - Focus on Customer Retention

💼 00:26:20 - Marketing as a Revenue-Generating Channel

📅 00:29:52 - Preparing for 2024

🌐 00:30:20 - Exploring Reddit as a Potential Advertising Channel

🏢 00:31:43 - Considering Alternative Channels for Brick-and-Mortar Expansion

🏘️ 00:36:27 - Starting Locally and Building a Community

🌱 00:37:02 - Slow and Sustainable Growth Versus "Growth at All Costs"

💼 00:39:50 - The Importance of Proper Capital Structure

📉 00:41:37 - Investments Driven by Hype and Their Consequences

🎤 00:42:21 - Conclusion and Where to Find Bryan Online

Bryan Alston

LinkedIn - https://www.linkedin.com/in/bralston/

Website - https://www.brandcastle.co/

Brandon Amoroso:

LinkedIn - https://www.linkedin.com/in/brandonamoroso/

Web - https://brandonamoroso.com/

Instagram - https://www.instagram.com/bamoroso11/

X - https://twitter.com/AmorosoBrandon

Transcript

Speaker 1: 0:00

I'm Brandon Amaroso and this is the D2Z podcast Building and growing your business from a Gen Z perspective. Hey, everyone, thanks for tuning in to D2Z, a podcast about using the Gen Z mindset to grow your business. I'm Gen Z entrepreneur Brandon Amaroso, founder and president of Retention as a Service Agency, electric. Today I'm talking with Brian Alston, the co-founder and managing partner at Brand Castle Growth Partners, a marketing focused venture studio and growth consultancy, and he also has a lot of experience in this space, so I'm very excited to have you on. Thanks for joining us.

Speaker 2: 0:39

Yeah, thank you so much for having me.

Speaker 1: 0:42

So before we dive into some of the topics we want to cover today, can you give everybody just a quick background and brief intro on yourself?

Speaker 2: 0:50

Yeah, sure I guess the quick lift notes version of my background is I've spent the past 12 years by mostly launching and scaling e-commerce startups.

Speaker 2: 1:00

Most of that time was spent in the agency world, where I got to work with brands like Magic Spoon and Hour Place from pre-launch all the way through their first 12 months just like really overseeing their entire digital marketing strategy and execution and most recently was the chief marketing officer for this company called Greater Than, which, when I began with them as a client, they were a sports drink primarily aimed at CrossFit men and, through leveraging marketing data and social listening and a lot of research, uncovered that it was actually pregnant and breastfeeding moms that were the core audience for that product, so went in-house and pivoted that brand towards that new audience to great success, but decided to leave about six months ago to start Brandcastle, which is essentially a consultancy that's focused on helping e-commerce brands scale into Omni Channel, like both on Amazon but also in stores, and, unlike other retail brokerages, we actually make sure that they are set up for success when they're on shelf, so helping them with the marketing, with the demand generation, with the brand building, so that way, if they're in a thousand doors, they're actually going to get the unit sales needed to stay there and just like rise and beyond.

Speaker 2: 2:25

So yeah, that's sort of the quick overview of my career and I'm more than happy to share as much insight as I can to the audience about how they can succeed.

Speaker 1: 2:38

Is this your first foray into starting your own business?

Speaker 2: 2:45

It is. I dabbled in it briefly about 10 years ago, but this is the first on like serious time. Like 10 years ago, I was going to start a mobile app development shop specifically for launching just like community building apps for niche communities. That's actually what brought me to LA and unfortunately, we just ran into some engineering issues that we couldn't afford to fix and I was able to take that experience and sort of the frustrations I had and springboard that into like my role at Hawk Media, the agency, where we got to launch and scale e-commerce startups and help other entrepreneurs. And now, 10 years later, I feel that I have the skills to actually like strike out as a founder and, more importantly, help as many e-commerce and retail businesses as possible to avoid that same fate that we had a decade ago.

Speaker 1: 3:46

The reason why I asked that is it was just curious, you know, since you're six months into it now have like, what are some things that have come up that you maybe didn't necessarily expect, and like, or maybe what has gone better than you expected or what has gone worse than you expected, because I know there was a whole host of things for me when I started Electric that you know I really had no idea about. Because you can't until you are actually doing it, it's impossible to you know, learn or cover everything that might come up.

Speaker 2: 4:17

That's a great question. I would say that, being on the other side of the table now, it's going to be realized how important it is to pivot. Like my co-founder, he is the former chief sales officer for Quest Nutrition, so his whole background has primarily been more in that brick and mortar expansion space. And we figured, you know, on day one you know it's like six months ago like hey, it should be pretty easy for us to just like join forces and it'll all work. But what we've learned over the past six months, especially after like working with our clients, after going through this process, is, you know, there's very specific like values that we've been able to provide, that we're like, hey, we should just focus solely on this.

Speaker 2: 5:02

So I feel like we started off with this much longer menu of services and sort of like things that we can offer, like we were thinking about doing. I'm like more like focus on branding, more focus on like performance marketing, more focus on this or that, and what we really found was the sweet spot was really the facilitation of helping brands scale into Omni channel and then doing the marketing before and after that's required to, one, help them negotiate better terms with the retailers and then, two also to get the unit sales they need to succeed in retail. So, yeah, it's really just sort of like. Just like paring down, you know, our list of services to what like one work best at, but also what the market demands.

Speaker 1: 5:54

Yeah, that was something that when we started we did everything for everyone, yeah, and then sort of stopped doing that relatively quickly. But I also thought, I mean it was good in one sense because we really didn't know. We really didn't know what we were truly good at yet, I think, because we we also didn't. I didn't have any traditional background or experience, so it took some of that, you know, testing and and dabbling Before we could really say I know we're going to go all in on this particular area. But then, once we figured it out, the messaging and the sales process, but also the work product, became, you know, a lot easier and a lot better as well, 100%. So what are some?

Speaker 1: 6:38

What are some of like the pitfalls that you've noticed brands have run into when, when trying to, you know, grow and scale their business and then, sort of as a follow on to that, you're working with brands that to do? We have like a retail and an e-com presence where, where do you prioritize? Because, at least for me, retail is something that I don't have a lot of experience with. It seems like it's slower moving, it seems like there's not as much visibility, but it's needed and you see the largest brands having like a significant, you know, retail footprint and dominating in that category as well. But I guess, first, what are some of the pitfalls and then, second, how do you go about, you know, allocating investment on those two channels?

Speaker 2: 7:23

Yeah, totally. So if I have to look back at my entire career and like the most common mistake I've seen brands make as well as hey here are the most successful brands I've encountered and worked with like what helps them succeed? It really does come down to the customer, and I say that because I think that over the past decade, especially as there's been more data available, as there's been more of a focus on treating e-commerce like a tech play, I think that there's been more focus on optimizing your marketing for platforms versus people, and I think the problem with that is, say, for example, you are like hey, we have a perfect funnel for optimizing Facebook ads and it's going to hit these metrics and these KPIs and with this landing page, we're going to 2x our conversion rate. I think that's good tactically, but it is a very incomplete picture of the type of marketing that's needed to actually win in this next era, when it's not as cheap or easy to just like run Facebook ads anymore and when you do have to have more of that intimate and robust understanding of who your customer actually is and what their desires are. Like, what are the other products they're purchasing outside of you? Like, where are they clustered online, etc. Etc. In order for you to build the type of integrated marketing funnel to bring those people into your network. So, overall, I would say like this next era is going to be, I think, more focused on who are the exact people that can benefit from this product and how can we build an authentic relationship with them on and offline, versus how do we just optimize each platform individually and then, when you zoom out from that, you end up with a very disjointed marketing strategy and you also tend to just run out of eyeballs.

Speaker 2: 9:31

One other thing that I've noticed has happened, especially with a lot of these attribution tools. You know that say like hey, use this tool and it's going to tell you exactly how to best allocate your marketing. I've noticed that the companies who over rely on those tools tend to under invest dramatically in top of funnel marketing. And I say this because I used to be guilty of this myself. You know, back when I was one of the performance marketers who was solely focused on hey, if it's not trackable, it doesn't matter. If it's hey like who cares about branding, it doesn't like really mean anything. And what I noticed back when I was of that mindset is we would have an extremely well optimized bottom and middle of funnel. That in theory, should mean, hey, we can just keep scaling this up and we should be able to get the same results, and we kept running into a ceiling where, it didn't matter what we did, we weren't able to grow our number of new customers, and I think that was because we were under investing in top of funnel marketing.

Speaker 2: 10:41

That might not be ads that people click on. It might be, depending on the product you're selling. It might be a few weeks or even months of consideration between when someone is first exposed to the brand and when they actually purchase, and that sort of relationship isn't something that is going to necessarily be fully trackable, nor will it show up in a lot of these tools. But it's critical for you to be constantly in the minds of your potential customers so that way, when they are in market and when they are ready to purchase, you're going to have a big pool of those people who have already been exposed to your brand. So yeah, overall, I would say those are some of the biggest takeaways, and of course, there's probably a bunch of other ones that I can double click on.

Speaker 2: 11:32

And then, in terms of the brick and mortar piece. So one of the things that I've learned with this whole brand castle era is, again, my background has primarily been in e-commerce, so it's been very interesting partnering with my co-founder, emanie, on the brick and mortar piece, and what he's noticed is that the brands he's seen make the transition from e-commerce to brick and mortar the best, including Quest Nutrition are ones who already had a really robust community online before they even approached stores and because of that they were able to negotiate fewer or no-slotting fees. They were able to already go to the buyer, let's say, of Target or Whole Foods or whoever it is, and say, hey look, we have a 100,000 person email list, we have these social followers, we have this conversation that's already happening online, which indicates not only do we have a hot product that is worthy of the real estate investment on your shelf, but we also feel confident that we can use digital and use e-commerce to drive some of that foot traffic that's needed for the product to stand out on shelf. And I say that because a lot of brands, especially over the past I think, 18 to 24 months since, frankly, e-commerce has been sort of a bad word I feel like people are like, hey, let's just ignore e-commerce, even though it's still approaching 20% of total retail revenue and it's not going away.

Speaker 2: 13:14

Yes, maybe it's pulled back a little bit from where we were in 2020, for obvious reasons, but e-commerce is still something that is very, very important to have in your portfolio as a brand owner for numerous reasons. It's where your best customers tend to be clustered, so you can actually extract a lot of profits from them, both as subscribers and also from doing online exclusive product extensions. It's a great way to again get data to make the kinds of discoveries like I did with Greater Than where, if we were only on shelf in a store, we never would have known that pregnant and breastfeeding moms are actually the core customer for this product. But with e-commerce, you can test all of those things and go into these buyer meetings with far more of that data to not only inform them about the expected demand, but also hey, perhaps there's a certain part of the store where this product might be better merchandised.

Speaker 2: 14:17

So overall, I feel like e-commerce has a tremendous amount of value in terms of helping you negotiate your way into stores and then again, after you're already on shelf, a lot of brands I've worked with have not really thought about how they're going to sell the product. For them it's like, hey, we got 2,000 doors, hooray, that's great. But in order to actually succeed in store, where you don't have the benefits of a website or a ton of ads like on Facebook or TikTok to drive traffic, you really have to do a lot of that work online, like through your social media, through encouraging word of mouth, through brand partnerships, etc. So that way you can drive that foot traffic if needed, and as people are just walking by your product in the store, they're more likely to pick it up because they've recognized you all over the internet.

Speaker 1: 15:22

And then hopping back to your first comment about having to invest in top of funnel marketing. I'm sure a lot of people listening to this are. They've heard that before, but they get scared by it because it's hard to attribute ROI to it. But so is it? 10% of revenues should be spent on top of funnel marketing. Is it 30%, like? How do they even go about thinking what budget they should be allocating towards those top of funnel marketing efforts? It's a great question.

Speaker 2: 15:56

And that's one that completely depends on their product category as well as the people that they're trying to target. Like, for example, if you have a product that has a really long consideration phase, it might be a month or two on average for someone to buy the bullet and purchase it Like, let's say, it's a mattress or something a little bit more expensive. You know, your top of funnel marketing budget might need to be On the higher side, maybe 20% or so, so that way, again, you constantly have that pool of potential customers sort of marinating in the background and that way, when they are in market to purchase, they're far more likely to choose you. But if you're a smaller brand who is a little bit more cash draft or more concerned, I would say 10% might be a really good sort of starting point. It's big enough to where you can still get the impressions, but it's not going to be such a massive chunk of your budget to where it's going to hopefully not lead to any negative financial repercussions for the business, I guess.

Speaker 2: 17:04

The other thing I guess to answer internally as the company is, again, do you really really know who your customers are? Because, again, a lot of brands I've worked with have who they want their customer to be. Like, hey, we want our customer to be an urban dwelling high income tech worker, for example. But almost every brand wants that Like when, in reality, the people who are paying them or keeping the lights on might be a totally different customer base. There's this one brand I've worked with where they are core customer. The people who are actually buying their product were mostly moms from the Midwest, not people who were the 25-year-old millennial in Brooklyn, which is who they wanted their customer to be. So, again, if your customer is someone who perhaps is a different demographic than you expect, it's very important to not ignore that.

Speaker 2: 18:05

I think it's important to investigate that and see, like hey, where are these people clustered online? Like, what are the conversations that are happening amongst them about your product or about your competitors? So that way, you can see if there's an opportunity for you to target those people efficiently. And there's a ton of brands who I've worked with where, hey, a core customer for us is grandmothers. They have a big influence on the household.

Speaker 2: 18:40

Perhaps the people who are going to be buying or using the product might be their daughter or their grandchildren, but by us using our top of funnel marketing budget to go after the grandmother, who has far fewer brands advertising to her, so the CPMs are much cheaper. They tend to be clustered on Facebook, so that's actually a much easier platform to optimize and, again, because she's a key influencer not only in her family but also in her community, it's actually sort of a more viral group. Those are the types of things I think brands should think about as they are thinking about what their top of funnel strategy should be, which is what is the cheapest, most effective way for me to get my brand in front of the key if not key purchasers, the key influencers of the purchasers, who could eventually be a really profitable cohort for us to scale with Democratic any of that made sense.

Speaker 1: 19:42

No, yeah, I think it goes to show that a lot of these things are going to be brand specific, which I also think lends itself well to being able to work with somebody like you to help navigate the various potential pitfalls, but also opportunities, and since you've been able to work with a wide variety of brands in different verticals, that you'll have seen some things before that can help provide guidance or strategy based off of what the type of company is that you're working with at that time, and I think there's always a lot of overlap or a lot of shared insights that are valuable when you do have the experience working with a variety of different companies.

Speaker 2: 20:32

Yeah, totally. And again, this goes back to what I was saying before about people over platforms, because I think the problem again and I'm sure you know this it's like things with TikTok change all the time. Things with all these platforms are constantly changing that if your entire marketing strategy is really focused on tactics to hack those platforms, at the end of the day it's not going to scale as well as you having a really really solid understanding of your customer and their dynamics and their behaviors, which are going to be a little bit more set and stoned or slower to change versus what the TikTok algorithm likes this week. And I think that that's really going to lead you to do, eventually, the right kind of retention marketing, which is, if you can bring in, if you can acquire the right people that are retainable, it's going to make the financial healthier business far better than, again, we're just going to hack these platforms to get the lowest acquisition cost possible and then treat retention as sort of a totally separate thing or an afterthought or another set of hacks that need to be done after.

Speaker 2: 21:51

I think that thinking about the entire customer lifecycle is one ecosystem, if that makes sense. That is really what is missing from e-commerce right now, and I think that that is what really really sets the brands like the Magic Spoon to leave our places, apart from some of the other brands I've encountered Because from day one, that was something that was a clear focus. It was thinking about how can we keep our customer in mind at all times and again, build the entire business around their delight and around really the community that they have that we want to plug into versus OK, how do we just get the cheapest acquisition cost to then move on to the next group?

Speaker 1: 22:46

Does that make sense. Yeah, yeah, no, I'm tracking with that. I think, as all these privacy updates start to roll out more and more as well, too, the attribution world is getting hairier and hairier and more challenging for brands to be able to navigate. And as that continues, I think retail and some of the things that four years ago got pushed to the wayside in lieu of E-com, where you could get a little bit more granular and specific with where returns are coming from as that pulls back and I'm sitting on a lot of calls now talking about E-com performance and there's a lot of hands in the air sort of head shaking, not quite too sure the not only channels, but also physical pop-up shops, retail stores a lot of these things are making a comeback because of the fact that the efficacy that we were seeing in E-com in 2018, 2019, 2020 is no longer here, because a variety of reasons, but one of them is the issues that have arose from the privacy updates that have gotten rolled out, which I think is actually almost for the better long term, not even from a privacy standpoint.

Speaker 1: 24:11

I just think a lot of brands we're getting away with cutting corners when it comes to the product itself, product quality. You could start in scale of business pretty successfully with some pretty terrible retention metrics if you were very good at top of funnel acquisition, and I'm not seeing that anymore, though, and I'm still seeing some of the brands who were that aforementioned brand that was really great at getting a super cheap CPA, so they never really cared. Why is the retention rate only 20%? Now, that's all the focus, and it's like a ticking time bomb to get those numbers to a healthy place, because the days of getting to spend that much money on Facebook without caring about whether or not those customers were actually good customers for your brand long term or that your product was actually even addressing a need that they want or that they have, that is paramount now, and so there's sort of been a mad dash in that direction at this point, 100%.

Speaker 2: 25:21

Yeah, I mean you're spot on with that and I mean, to be honest, like I think in the long run you're right, it is going to be a net positive for the industry for brands to have to care about this stuff. Like you have to have an excellent product, you have to build a relationship with your customers, you have to actually think about retention as you're acquiring people. Like there's been numerous times where it's actually better to have a slightly higher acquisition cost if the cohort is going to have a 10-point higher retention rate than if you just go after the cheapest cat. Or there's times where, again, like marketing's been treated as sort of like a separate sort of department from like finance, which I think is perhaps another podcast episode about how they can't be separated anymore. And I think the best marketing campaigns are ones that have some visibility into the bottom line performance of the company, like if you can build a marketing funnel that actually, like, generates net income and positive cash flows for the company. That's incredible. Very few companies, especially earlier stage startups, have that kind of visibility or even thinking about that, because again, they're seeing marketing as like well, these are three KPIs we need to hit. We need to focus on our conversion rate, our acquisition cost, our retention rate, when in reality that's incomplete, because you can hit all of those metrics. But if your company is losing money and you're burning through more cash every month than you're bringing in and the fundraising environment is dried up, that equation doesn't pencil. So again, I think that as marketers we need to not think about ourselves as like, well, we're just going to focus on these few homework assignments like getting the highest conversion rate and having that be enough. I think that marketing needs to be sort of seen as like a revenue generating channel and as an asset creation vehicle for the business. And I think that is completely possible if, again, you have that visibility into the financial realities of the business and how marketing impacts that, and if you build that really, really strong relationship with your customer base. So that way again, you just have more insights about the levers you can pull as a marketer to appeal to that group. I think it's just a very different way of thinking about things. That needs to sort of be what we just get back to.

Speaker 2: 28:15

I tell people this like I watched Mad Men for the first time over the pandemic, because I didn't watch it when I was in the agency world, I think I had a little bit too much PTSD and I was like, oh, this is too close to home. But when I watched Mad Men, which again took place 60 years ago, there were so many amazing marketing techniques and ideas you can get from how they were able to market Again, how they were able to build top of funnel, because that's pretty much all they had. There was no idea of, like, what is our bottom of funnel marketing other than coupons in the store. So I feel like thinking about how marketing was you know prior to, you know like Facebook ads, and just like studying that, which I'm sure chatGPT is very helpful with, sort of giving you a little cheat sheet.

Speaker 2: 29:02

Those are the types of things I think are totally worth the time of any marketer, like nowadays, because unfortunately it was a skill set that we didn't really need to have for a long time. Yeah, like I said, I'm speaking from experience. I was guilty of this in the early days of my agency career and I think that in hindsight it was a mistake and there are so many businesses that I can look back on where I'm like if we had invested in top of funnel marketing, they might have been able to generate enough revenue to get to that series A that they needed or to make it onto shelf in stores before you know if he piggy bank ran out. I'm just one of those things that's always stuck with me that I would love to Encourage other marketers to hop on board with as soon as possible.

Speaker 1: 29:52

No, that makes a lot of sense. So what's one, like you know, one suggestion or one tip that you'd give for every brand right now that they, you know, need to do going into next year, as the black Friday, cyber Monday craze start to sort, starts to slow down, shipping deadlines are here for you know, getting your orders and time for the holidays what's something they should be thinking about for for 2024, or what's something you're thinking about as well at the agency for your brands for 2024?

Speaker 2: 30:20

Yeah, totally so. I would say that there's probably two main things that I think are Opportunities and again this completely depends on the individual business. But one is really exploring reddit as a potential advertising channel. I've been doing some tests with them over the past few months and have actually seen some pretty promising results. As a top of funnel vehicle One, I mean, it's it's a surely top of funnel channel. It's a place where a lot of redditors, just based off of their behaviors, don't like to click on ads.

Speaker 2: 30:51

But what I like about reddit is you can find extremely niche communities for almost anything there, and these are real people as far as we know.

Speaker 2: 31:00

I'm not sure if you're like me, but when I, like I'm searching for something specific, I'll always type in the search query on Google and put reddit at the end, because I want to read, like, what actual people are saying about things, versus an SEO optimized like listicle that they might not even answer my question but Shows up at the top of the Google search, and a lot of people have started to do that same thing.

Speaker 2: 31:24

So I feel like reddit is a really interesting channel for again Going to where the community is Already at and where they're clustered, and then through their advertising, which is extremely cheap, like the CPMs are like a tenth of the CPM of Facebook on average you can See if there's a way to match, make your product with the needs of that community and even if it doesn't lead to a ton of like revenue immediately, because, again, it's a top of funnel channel, I found it to be very helpful for doing the AB testing on different types of messaging and different value props and different types of I guess like market research if you will like if I'm selling something to this one specific group and there's 500,000 of those people on reddit and I'm testing a bunch of different images and videos and you know headlines and copy variants and all of that, and I start to see like, hey, when we sort of use this type of Message with this type of video, etc.

Speaker 2: 32:28

This is the kind of result that we get. It just gives me a little bit more confidence that that can be something that we could scale elsewhere. And With reddit, depending on the size of the channel, you can spend 15 to 30 bucks a day and get Tens of thousands of impressions, which is unheard of on meta.

Speaker 2: 32:48

So yeah, I would say like, that's a platform that I think is really interesting to explore. And then again, you know, really with the you know be brick and mortar expansion piece, I like what you said about thinking about alternative Channels beyond just the usual suspects like Target or Whole Foods or some of those like. There are some brands that are doing extremely well in like that. They're called shoppies, which I just heard of a few months ago. It's basically like sort of like a, a small gift shop that has like a lot of like more Interesting up-and-coming brands, including a lot of like direct-to-consumer brands, you know, but that's another channel that's growing a Lot, you know. Of course there's always like more like local, just like smaller distributors and like smaller brick-and-mortar stores that again might not have the same slotting fees or the same Advertising requirements etc as going straight to Target or going like straight to Kroger. And there's nothing wrong with that, with like starting in a more regional retailer and then using that to again get the data that's required for you to actually get on shelf at the Target and succeed there. And especially if you know the retailer that you're starting with. If they don't, you know, report, like, spins data that just shows sort of like the like how quickly you're selling your inventory and all of that If they don't report to any of those like bigger On the analytics tools, that might actually be a benefit to you, be a safer example.

Speaker 2: 34:25

You're doing very well online and then you go into, let's say, a Kroger and then you aren't selling at all and those low-unit sales do get reported to spins or they do get reported to some of these other Platforms that track all of that.

Speaker 2: 34:43

If you're trying to go into Target and Walmart or some of the bigger retailers, they're gonna know that you are not hot product and then you aren't gonna get merchandise. Versus if you started a small retailer and again you're able to use your e-commerce brand and your e-commerce email and SMS list and the retargeting pull that you've built up and all of that to prove that you can use that to push the unit sales at those smaller or more regional retailers, that's gonna give you a massive amount of poker chips To go to Target or go to Whole Foods or whoever it is and Negotiate far better terms with them and you're gonna be far more likely to actually close the deal with them. So, yeah, it's just really sort of you know, thinking about Again, where are your customers clustered? Where are they shopping, and are there any Smaller retailers that maybe could be a good place to start Before going? You know, you know for the kill with, like some of the bigger ones.

Speaker 1: 35:55

Yeah, I think, like one of my friends is starting a brand down in Miami and I think you know for if I was in his shoes I would go as local as possible yeah, so most likely going into a place they plan to turn in and then they go to Target. That will helped them with terrible algebra when it's close to you as well. But I feel like people shop more and more from personalities that they can connect and relate to, unless from the brand itself, and so him being there, being the face of the brand, having the backstory as to the why I think that's super important and is going to help him grow long term, and also slow and sustainable growth is being rewarded now, more than will the growth at all costs, which I think is a better place to be if you're an entrepreneur 100%, and I mean I love that you brought up that last point, because I think another big reason that we've reached this state is, I mean frankly, how the financial incentives of e-commerce businesses were Aligned over the past decade.

Speaker 2: 37:21

I think that in the VC space, there was a lot of treatment of e-commerce as tech. Yes, there is tech associated with e-commerce You're building a website and there's a data stack and all of that but at the end of the day, it's not a tech company, it's a retail company, and sometimes retail companies take longer to scale. It takes longer to build those relationships with customers who are going to tell 10 of their friends. It takes longer to ship a physical product that has to be manufactured and brought to the US and shipped to someone, versus a SaaS product that can be scaled infinitely with just more engineering talent. So I would say that one of the other avenues that Brandcastle has dabbled in is we do have a private family office who is actively looking to invest in earlier stage consumer brands, and one of the things that we really bonded over is this exact topic you brought up, which is how do you have the right capital structure that incentivizes consumer brands to grow slow and steady and to build a business that will be around in five or 10 or 30 years and be cash flow positive and actually be a brand, versus how do you just get VC money and a really aggressive valuation. That is, of course, flattering if you are a business owner who's put everything on the line and someone's like, oh my God, my business is worth $20 million, I'll take it. But the problem with that is and again I can point to specific brands that I'm sure we've all heard of who had the same panic when they got the VC money which is they had to grow their top line revenue at unnatural rates or they will not get a single cent again and, if anything, they might have a down round where maybe their valuation was this but if they aren't able to grow their top line revenue at 30% every month, then they're going to have to give up more of their company on the next round in order to stay afloat.

Speaker 2: 39:42

So for us, with this family office where, again, it's not like our main competency, but I have probably reviewed over 50 startups and have gone through the due diligence process over the past six months with a bunch of them there's a few that we're approaching the final stages with in terms of actually investing, but I would say that I think that's the next phase here.

Speaker 2: 40:04

But in addition to brands sort of adapting to what we've talked about, which is being more customer centric and being more focused on building a sustainable cash flow neutral, if not positive business and using marketing to funnel people into being that, there's also a huge reckoning that needs to happen on the financial side of the industry, where the investment thesis needs to be less focused on top line growth at all costs. It doesn't matter if you're not profitable, it doesn't matter if you have no idea who your customer is. It doesn't matter if your product is even good. I think those days are over and unfortunately, a lot of really, really good companies who had excellent products and really passionate founders can't get funding right now because the industry has just been burned by so many of these e-commerce brands in this past era who were able to get a ton of funding and now they're gone because they didn't have those fundamental business questions answered.

Speaker 1: 41:15

If that makes sense. I think they're more so investing in hype than necessarily the actual underlying metrics. It worked out if you got in early enough and then exited during those crazy evaluations.

Speaker 1: 41:31

But if you're still in that existing business, you've already had to sort of write off that investment altogether or you're currently scrambling and trying to raise a down round. But I think moving forward it'll definitely be better for the industry. But it's painful as we sort of wrap things up from that little time period. But this was a super, super insightful conversation. I really appreciate all of your insight and sort of context that I think a lot of brands are going to be able to take away and be able to leverage that, especially when it comes to having that integrated experience but not getting too afraid of top of funnel marketing. But before we hop off, can you just let everybody know where they could find you online?

Speaker 2: 42:21

Yeah, sure, the best place to find me is on LinkedIn. I used to post every day. I've taken a little bit of a break over this holiday season, but it's Brian Alston, b-r-y-a-n-a-l-s-t-o-n. On LinkedIn. Starting in early January, I'll be posting more frequently, sharing more marketing and retail growth tips, as well as just more insights on this industry, which seems like it's changing and maturing every week. And then our website is brandcastleco. So, again, if you are an e-commerce brand that is looking to scale into retail, or an e-commerce brand that is looking for help and guidance with building and scaling an integrated marketing program to help you online and off, we're definitely the group that you should talk with.

Speaker 1: 43:20

Awesome. Well, thank you so much for coming on. For everybody that's listening, as always, this is Brandon Amoroso. You can find me at brandanamorosocom or electricmarketingcom, and we will see you next time.