Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. I’m especially excited to have today’s guest on because of an incident that happened in my house. I’ve talked about this at conferences before. I think it’s worth bringing up here.
We ran out of dishwasher soap in our kitchen. So I do what I always do. I went to Amazon Fresh to get new soap and the soap that we happened to use, Method, was not there. So I said, “You know what, Olivia, I’m just going to get something else until they come back with Method because I like Amazon Fresh, and I don’t want to wait for Amazon regular because Amazon Fresh will come tomorrow.” She said, “No.” I said, “I’m just going to do this and then we’ll get the one we like later.”
She said, “No, don’t you like how it looks on our counter that it has the Method thing, the shape of it? It looks like a beaker?” I said, “Yeah, I do. We can just take the new stuff, put it in the old pump and we’re fine.” She said, “No.” I said, “What do you mean no? Who gives a fuck?” She goes, “What we want is the thing that’s good for the environment. I don’t know what it’s going to do but it’s also better for our health.” I said, “Baby, you know we’re just talking about fucking soap, right?” She goes, “Yeah, but it’s good. Just wait. We’ll put the dishes in the dishwasher. You don’t have to do anything.” I said, “All right, fine, I don’t give a rat’s ass that much about the stuff.”
I filed it away. We eventually got it from Amazon regular, which takes two days instead of one day. It was fine. Then my wife took me to something called Conscious Capitalism, an event here in San Francisco. I said, “I’m on a date with you. We’re going to go see it.” One of the cofounders of Method is there. I go, “What is this thing with this freaking soap company that you’re so into?”
She told me, “Look, this is the future. These companies really care about the environment. They care about your health. They care about design. Don’t you like design?” I said, “Yeah, I do care about design. I don’t care that much about my health. I don’t care that much about the environment. I care about the design. Great.” I was in there. These people, Eric, they love your freaking company. It’s soap, and they love it.
I’m sitting there not paying attention to their love of your company. I go, “This is what I always wanted for my company. I wanted to create something that people love this much that they’re coming to watch a guy who created something that they’re buying and putting on their counter that 10 years ago they never would have paid attention to their competitor, now they’re buying it.
So today I’ve got the cofounder of this company here with me. I have been fascinated by how he’s done this. His name is Eric Ryan. He’s the cofounder of Method. They offer earth-friendly cleaning products that look really good in your house. I want to find out how he did this, why he decided to get into soap, why he’s getting or how he got soap to change the way we buy, to change our buying habits.
This interview is sponsored by two great companies. The first will help you do email marketing right. It’s called ActiveCampaign. The second will help you hire your next great developer or designer. It’s called Toptal. First, Eric, welcome.
Eric: Thanks for having me. Great intro. First of all, why was Amazon out of stock?
Andrew: You know what? They randomly do that with Fresh. Rice cakes too they run out. Right, maybe that’s something for you guys to worry about more.
Eric: Clearly we’re not doing our job.
Andrew: It must feel good though to be in there. I know your story. I know how hard it was to get into these different retailers, how you did it a lot personally. The story, I was looking at your face to see if this sounded like a weird story or something familiar. I thought I was picking up with some familiarity with the story. Is that right?
Eric: Yeah, absolutely. First of all, thank your wife. I don’t know her, but she’s amazing, clearly. You’re very, very lucky.
Andrew: Thanks. Yeah. Let’s go back and understand your family. Your grandfather worked for Henry Ford. What did he do for Henry Ford? Or was it great-grandfather?
Eric: Yeah, great-grandfather dropped out of pharmacy school in Iowa, packed up and moved to Detroit to work for Henry. At the time, they were paying $5 a day. Ultimately, he and my great-grandfather saved up enough money that when my grandfather was in college, he dropped out and they started a machine and stamping company. Have you ever seen like Eminem in “8-Mile,” like those giant presses that come down, that’s essentially what they did. They ran that into the ’80s when unfortunately it was no longer competitive to make these types of parts in a lot of parts of the states.
Andrew: How did that influence your thinking about manufacturing and products?
Eric: For me, as a kid, my favorite thing to do if I didn’t have school, I was so dorky, but I loved to go to work with my dad. I would dress like him in the office, and we’d walk the plant together. So much of that was grounded in my heritage. I loved seeing physical things being made. So, for us, when we opened up our plant in Chicago a few years ago and my family was there, it was really emotional for us that we were back in the manufacturing business of making physical things.
Andrew: So, for me, it would be scary to manufacture and partially it’s because my dad used to manufacture women’s clothing. The headaches involved in that and the sorting and the manual labor turned me off. Why weren’t you turned off of that? What was it about the creation process that drew you?
Eric: That’s a great question. I hear this from people who are in tech or software, the idea of making a physical product seems so much more complicated than writing code. I don’t know, maybe I’m just a maker at heart. I always found the idea of making something not scary because it is so tangible, and you have this finished product that you can touch and feel and look at and pass to other people. You know at the end of the day like I made a great product or not.
Andrew: People who are listening, and most people do listen, don’t know you’re sitting in a teepee inside your office. Sitting on what kind of a chair?
Eric: Swinging chair.
Andrew: A swinging chair. Your hair looks interesting and ruffled. Your glasses look like something that would catch my attention. I feel like this creativity comes out of you even apart from work. Did you sense that growing up? Did you sense that before you started Method?
Eric: No. I wanted to be an accounting major at one time, and I worked for a CPA in high school. So I’ve always been a little left-brain, right-brain and I think the creative side of what I do is something I got more comfortable with in my career as time has come on. Personally, I cannot create anything to save my life, so I surround myself with the most creative people I can find and try to create an environment where their work can really flourish, and at the end of the day, I get credit for their amazing work.
Andrew: I see. So this is not you. What about the hair? What about the look? Is this something you pay a stylist to help you come up with?
Eric: I’ve got three kids. This is me just getting out the door in the morning.
Andrew: I’m laughing at it and I don’t buy it. You’ve got like this interesting haircut even in the photos. But you’re saying it comes naturally. You don’t feel like it’s especially worked on or looks good.
Eric: I guess I like to look a little disheveled. My daughter gives me a hard time for not owning a comb or a brush.
Andrew: That’s the way to live, my friend. All right. Then you end up working at an ad agency in London. You start working with packaged good companies and something strikes you about it. What is it about packaged goods that excites you?
Eric: I think any career journey, there’s a lot of luck and serendipity. I started falling in love with the idea of marketing. I got an internship with an advertising agency. They had a lot of American clients that tended to be physical products. There was something that just struck me about how a physical product, particularly like fast moving consumer goods just transcend society.
There was this great photo I saw of Bill Clinton drinking a Diet Coke in the ’90s. I thought it was so cool that anybody can drink the same beverage in the United States of America. That’s the power of these essentials. I was also a huge fan of Richard Branson, particularly living in London. I loved how he would go in and sex up these really boring categories. That started to form the model of how I thought about being an entrepreneur.
Andrew: I see. You thought he’s—actually, what’s a category that he sexed up. I’m trying to think of one that was kind of boring before.
Eric: The airlines you can argue he applied the entertainment model. Especially if you’re living in the UK in the ’90s, the brand was everywhere. There was Virgin Cola, Virgin Water, Virgin Trains. He had a model of applying this entertainment brand to places where you wouldn’t expect to find it. I found that really compelling, as well as his lifestyle, how he lives the brand I think for any entrepreneur is something that is very motivating.
Andrew: I see. So you said what are some boring brands that nobody has sexed up, that nobody has paid attention to. I can see how soap would be one of them. What’s another one that you considered but you didn’t get into?
Eric: I’ve been fascinated with pizza.
Andrew: Pizza?
Eric: Pizza is a great margin product, especially if you cut it into slices. Again, it’s something that transcends every element of society. It’s a social lubricant how it brings people together. That one has always been on my hit list of how do you reinvent the entire pizza experience? I haven’t figured it out yet.
Andrew: That’s interesting. So now you’ve given me a new way to look at the world. As I’m walking around later today or this week, I can totally find myself saying, “What here have I not been paying attention to because it’s boring and not interesting?” not that I’m getting into physical products, but I want to see the world the way you see it and now I’ve understood it.
Eric: Yeah. Coming in as a marketer, I looked at everything through a brand lens and started to fall in love with the idea that there’s no such thing as a boring category. There’s just boring brands. I started to develop this model of a really simple idea, find a really tired category, figure out the cultural shift that category missed and in between was the business opportunity.
That’s so much where Method came from, where Adam and I figured out both lifestyling of the home and sustainability, these were massive cultural shifts that this industry was missing. You had these products that were so ugly you hid it underneath the sink, out of sight, out of mind. Then you polluted when you clean or use poison to make your home healthier. We were living kitty corner in San Francisco from a Whole Foods. So you could really see these macro trends coming from a mile away. What we were doing we thought was painfully obvious.
Andrew: What’s the cultural shift you noticed?
Eric: For me it started with lifestyling of the home. This was back in ’99, 2000 when I started playing with this idea that nobody thought about these products as accessories to your home. You look at a dish soap more than you ever use it. So why shouldn’t it feel more like a housewares product? At the end of the day, the fragrance is going to be so meaningful to the overall experience. So why doesn’t it smell like a personal care product versus at the time lemon-dominated? So we thought of lots of different ways that we could mix up that whole experience.
Andrew: What do you think about the reverse? TMI, but it’s applicable. I’m wearing Y Athletics underwear that was given to me by a past interviewee who said, “Clothing is too complicated. It’s too much about design. I’m going to make it more simplistic and maybe more boring by giving you one kind of underwear to wear, one kind of t-shirt, one kind of running short.” What do you think of that? Do you think the opposite also could apply?
Eric: Totally. First of all, my brother started a brand called Mr. Muse Underwear which we need to send to you.
Andrew: Okay.
Eric: Secondly, I think it’s all about finding attention and solving a paradox for the consumer. So, in that case, you’re right, it’s an area where you want to think less about, but I would argue what they’re solving for you is they’re allowing you to think less about it and simplifying it, which in the end is a better experience, but it’s a better experience probably because it’s a much better product.
Andrew: I do like that there’s improvements in underwear. I feel like for a long time, male underwear were just boxers, which were uncomfortable, or briefs, which were not comfortable either. I like that we’re rethinking it for men. So what you’re saying is I noticed the cultural shift. People were starting to have this emotional connection to their home and things in their home, it wasn’t just like a functional thing.
Also in the culture, you’re seeing that people care more about health and sustainability. I’ve noticed that too, of course, where companies won’t hand out bottle water because it’s bad for the environment. They’re saying, “Use these cups and go to our water cooler,” kind of going back in time with that. You said, “This is where I can come in.” What do you do to actually take it and make it into a business?
Eric: I love coaching entrepreneurs. The first thing I always recommend—I was having a conversation with somebody last night who was working on ideas. I said first, don’t worry about creating a company. Your first thought is to come up with a great idea. Prove to yourself it’s a great idea, fall in love with it. Then figure out, “Can I get other people to fall in love whether this idea?”
So what I did for Method and with Olly is I wrote what I called the concept book, which just brought the idea to life. Then I gave it to the 20 smartest people I knew from a diverse set of backgrounds. I didn’t tell them like, “Tell me that’s good or tell me that’s bad.” I said, “Shoot holes in this. Come back and tell me all the reasons this will fail,” and really giving them permission to find a reason not to move forward.
Then when people came back and they couldn’t really find a viable reason not to move forward, that gave the confidence to go, “Okay, still we’re not starting a company, but now we’re going to take this idea and we’re going to figure out do consumers or do retailers feel the same about it.”
Andrew: So you took your book to them and said, “What do you think about this? Can you shoot holes in it?”
Eric: So it’s all about—I think being an entrepreneur is just a journey of self-confidence and building up your confidence each step and breaking it down with these little bite-size steps. Then it’s less scary. In the beginning, it’s not about starting a company. It’s about proving to yourself and to other people, “You have a great idea.” Then it’s about making that idea tangible. So whether it’s creating a prototype or getting into a test market, finding a way to get a proof of concept as cheap as possible.
Andrew: Okay.
Eric: Then once you’ve done that, before you know it, you’re starting to create a company. So that’s always my recommendation in the beginning, don’t worry about starting a company, just worry about creating a really great idea and finding a way to commercialize it into company gets a lot easier.
Andrew: Did anyone shoot down your idea with something useful?
Eric: You know, on Method we heard the same thing over and over, like if this seems so obvious, why has nobody else done it? Some of the largest multinationals in the world are in this category. That was always the scary proposition, same thing with Olly. In a lot of ways, it seemed a little too obvious that someone else would have done it. So just getting over that sense of self-confidence that no, you found a way to frame the category that no one else has and the best ideas are the most obvious ideas, right? They catch on quickly with consumers.
Andrew: What about the idea that you could come up with this, it would make sense and then anyone else can jump into your space?
Eric: Yeah. I think that’s such a common response from VCs and private equity, like is it defendable. Ideas are easy. Execution is hard. There’s always a risk of that. You see it too in this age where capital is easier to raise. I always tell people to watch out for the brand sandwich where you start to build something that feels viable, you get squeezed from the legacy players that copy you from the top, and then you get squeezed from the other startups that get funded from below.
So it really comes back to a great idea is going to get copied. If it’s not a good idea, it won’t get copied. You’ve got to face the reality it will get copied, and that comes down to really great execution and pacing your growth the right way, but also taking every opportunity to create as much differentiation as possible to make it hard to copy you.
So on both Method and Olly, we didn’t want to create things that someone could do a line extension to get to us. The only way you’re going to copy us if you have to create an entire brand from scratch because both of these were bigger than product ideas. They were brand philosophies and a product expression that was very unique to the whole category.
Andrew: I see. So if Palmolive at the time would have seen that you came out with this new design and sustainable approach to creation, they would have to create a new design, which would confuse their customers and their new people wouldn’t necessarily buy it. It wouldn’t feel authentic, and they would have to communicate that they are creating something that’s good for the environment, good for the person using it. Again, that’s a hard sell and it counters what they’re doing already, so they have to create a brand new product to communicate that philosophy.
Eric: Yeah. If you create a brand off of only a product idea, it’s really easy to copy. If you create it off a broader brand philosophy, it’s hard. Consumers will give you permission for knocking off products. They won’t give you permission for knocking off brands.
Andrew: Wait, they won’t give you—oh, really? If Colgate decide we’re going to—Colgate-Palmolive owns some of your competitors. If they decided, “We’re going to copy Method and duplicate their design and duplicate their philosophy,” consumers will say no. Why do you think they’ll say, “No, I don’t want that?”
Eric: Because it really flies in the face of authenticity. Probably a really simple example would be like Jeep. Consumers will ask car companies when are you coming out with your SUV or your 4 x 4? But if you started behaving the way the Jeep brand behaved, consumers would reject that.
Andrew: I see.
Eric: It’s almost an uncanny valley of authenticity. Or when everybody copied Ben & Jerry’s creating pint ice cream—Ben & Jerry’s was the first to do it because they couldn’t afford to sell you a full brick—everybody copied the pint as a product idea. But if you came out with ice cream that was based off of hippie values, consumers would have rejected that.
Andrew: They would have thought you were faking it, and that goes against what they’re lured in to Ben & Jerry’s ice cream for. I get it. I didn’t know. By the way, you’ve been mentioning the brand name Olly. This is your new supplement and vitamins business, right?
Eric: Yeah. What Method is to the home, this is to the body in the form of nutrition.
Andrew: All right. Let me take a moment to talk about my sponsor. It’s a company called ActiveCampaign. I’m going to be honest. You guys use a competitor of ActiveCampaign and even though they didn’t pay me, I’m going to say the name of the competitor. You guys use Sailthru. Do you know Sailthru? I’m imagining this is not a part of the business you pay much attention to.
Eric: I do not.
Andrew: What Sailthru that you guys use does is behaviorally targeted emails. That’s what ActiveCampaign does. What ActiveCampaign does is say if somebody’s coming to my site—in fact, if you used ActiveCampaign, you’d be able to say, “Hey, there’s some people who all they care about is Olly. Why are we telling them about a dish soap? Maybe they don’t even have dishes in their homes. They just care about their health. We’re noticing that’s what they click on emails. We’re noticing that’s where they are on their website. That’s what we’re going to tell them about, the Olly story, the Olly discounts, the Olly experience. If they care only about soap, then maybe you spend more time on soap and lightly transition them into Olly.”
That’s what smart email marketing does today. Now, you guys use Sailthru to do that. I looked up Sailthru because I’ve never heard of them. The fact is, they have a lot of features that are fantastic. But it’s relatively hard to use, I’m going to say. I’m looking here at a review that says that it’s a tough product, which is fine because you’re not using it yourself, Eric. You probably have a team of people at this point. You’re a huge company.
The thing is that anyone who’s listening to me who wants that kind of power needs software that they could use or their virtual assistant can use or their marketing team could use and easily take advantage of all the features and easily transition it to a new person on the team who needs to take hold of marketing automation, otherwise it never gets used.
So that’s what ActiveCampaign said. They said we’re going to take this power that the big guys have and we’re going to reduce the cost. I saw Sailthru isn’t even listing how much it costs online. You have to talk to them to get the price because high-end product, they’re going to reduce the cost, make it accessible, make it available to entrepreneurs so that you do not have to run Method in order to use this kind of marketing automation power, anyone can.
I urge you guys to go check the out and try them for yourself. You will see your audience, your readers are going to love that you are addressing them based on what you know about them instead of sending them the same generic newsletter that you send everyone else. All you have to do is go to this one URL. When you go there, you’re going to see a simple flow chart that will tell you in one image exactly how you can target people properly based on what they’ve done. One image tells you exactly what you should do with marketing automation. It’s at the bottom right side of the page that I’m about to give you.
That page is ActiveCampaign.com/Mixergy. When you go there, they’re going to give you a free trial, they’re going to make your second month free. They’re going to give you two free one-on-ones with their consultants so you can see exactly how to implement this philosophy, this technique in your business, two of those, so you talk to one person, learn, implement, you come back and talk again to make sure you’re checking it in and you’re using it all properly and if you’re using a different email software, they’ll migrate you for free—ActiveCampaign.com/Mixergy.
Feel free to compare it, by the way, to Sailthru if you want to. I’m very proud of my sponsor and I’m happy to talk about anyone else because I know that if you compare, you’re going to be happy with ActiveCampaign.
Eric, how was that?
Eric: Sounds good. Sounds like I need to check it out.
Andrew: I was looking around, “Maybe he’s using this, maybe he’s not.” Now that I looked at it, I’m not going to pretend I don’t know what he’s doing. Okay. What’s in a concept book? I’ve never seen a concept book. I’ve never put one together. What is in it, this thing you showed everyone?
Eric: I think it’s unique. My classical training was as a marketer and strategy, and I look at everything as a brand first and a business second. So the way I write up concept books is I’d write up first of all the opportunity, like here’s a sandbox, here’s why we think this category is attractive. Here’s how the insight of the cultural shift that we think is the opportunity to disrupt this category and then laying out here’s how we would execute against it. So pretty simple thesis. It’s kind of the first test if you can get it down to that level of clarity of opportunity, insight and execution. When you’re done writing the concept book, if you’re not super fired up yourself to go do it, that’s kind of the first test.
Andrew: What’s the first product that you decided to come out with our collection of products?
Eric: For Method, it was our surface cleaners. So we went after like an all purpose cleaner, glass, shower. We had a suite of four products that we originally launched, which are still on the market today, I’m proud to say.
Andrew: Why not a hand soap, which is more personal and people might be willing to experiment more with?
Eric: So the hand soap came third after the dish soap. I think originally we didn’t see as much whitespace there because we were looking at a really boring cleaning category. There was actually a buyer at Target who saw what we did with the surface cleaners. We’d just launched this, and she came to us and pitched the idea, she’s like, “I think there’s an opportunity here,” and went and sat down in a café way, sketched the tear drop, six months later, we were in stores and it became an instant hit.
Andrew: Yeah, because it looks nice. I like the foaming soap. I believe that foaming is the only way to go. I hate to be dogmatic about it, but I believe it’s the only way to go because with foaming, you cover your hand much faster.
Eric: And the thing people don’t realize is you don’t have to put water on your hands before you wash.
Andrew: I don’t think of that. I thought I was doing it wrong by doing that.
Eric: For kids it’s great. We tend to get a lot of credit for inventing foaming. We didn’t. I think we were the first to make it acceptable for adults. It was a kids’ product before us.
Andrew: Okay. You say, “I’m going to do surface products. This is where I think there’s whitespace. This is the boring area that I’m going to jazz up. You decided not to call it surface cleaners. Why not? Why is that an important distinction?
Eric: We wanted to simplify everything. If you buy your kitchen cleaner, here’s kitchen, here’s bathroom, really setting it up. Kind of going back to the underwear example, just taking the friction out of it. These are low involvement categories. You don’t want to think more. We want you to fall in love and have an emotional connection to our products, but we don’t want you to also have to think too hard on how to use them. So wherever we can simplify it and make it intuitive, we did.
Andrew: The design came from where?
Eric: The original design, we worked with a local designer here, Michael Rutchik. We didn’t have much money. So Adam, my cofounder, would be folding a sink from Home Depot that we’d then quickly return the sink afterwards to save the money. We used ourselves as models in the first product. Again, it was just in the spirit of creating something, get it on the shelf, test, learn, test, learn. Then from there, we raised our Series A, and we hired Karim Rashid to help us with the industrial design and really try to bring more of that element.
It goes back to what we were saying of being copied. Our belief was if we had a design that was more graphically led, it would be a lot easier to knock us off. But industrial design, you’ve got to actually cut steel, build a mold. That is much more cost prohibitive. It was true. It was really hard for any other startup to copy us because of that.
Andrew: Did one of the first products come basically as a copy of some camping water bottle you saw?
Eric: Yeah. Typically when you start packaged goods, you do what’s called stock packaging. There’s companies out there with huge catalogues of generic packaging. It’s what most people do. You buy that, and then you graphically label it to look like your product. We looked through the catalogue, and I was very particular about design and I couldn’t find anything I thought really felt right. We couldn’t afford any industrial designer at the time. I found this bottle in Norway. We used that as the role model for our first spray cleaner. Now it’s been redesigned in-house, and it’s a different bottle.
Andrew: I remember talking with Tom from TerraCycle like eight, nine—do you know them?
Eric: Oh yeah, Tom’s great. Worm poop, that’s the best story.
Andrew: What’s the worm poop story?
Eric: Fertilizer.
Andrew: That’s what he was selling? I forgot that. You know what I think of him for? The bags that are basically upcycled products. You can see the products they were made from.
Eric: Yeah. We partnered with them, but his first product was worm poop that was fertilizer.
Andrew: I forgot about that. It has been a long time. One of the things that I remember stood out for me was he said when you create something that’s good, you think people are going to buy it because it’s good for the world and nobody cares. It has to be good for them and good for the world. At times, people think that they’re in conflict, that if I’m buying something that’s good for the world, it’s going to be crappy for me. If I’m buying something that’s crappy for me, it’s going to be good for the world. You’ve noticed that same thing too when you guys started, didn’t you?
Eric: We did. We had a problem, which was imagine you’re writing a business plan and you’re saying we’re going to take on the likes of Unilever and Clorox and P&G, who I like to call P and the mother fucking G, and these guys have got a 150-year head start. They’re some of the largest multinationals in the world, and two guys in a dirty flat in San Francisco are going to take that on. That’s not a very compelling business plan.
Then you say, “We’re going to do it in the category of green cleaners,” which was a pimple of a pimple of the industry. So we had to solve a problem, which was the only way your business plan made sense is we had to grow the green category, which means we had to get people into a natural product who didn’t care to get into a natural product.
The way we did that was we tried to make it really selfish. We wanted to give you a very narcissist reason for buying it. That’s the role of design and the fragrance and the branding and the fun of it. So we would have people who essentially what would happen is they would see it on shelf because of the design, they would buy it, they would smell it in stores, they’d buy it because of the fragrance, they would get home, use it, see that it works, eventually turn the bottle around and see that it’s good for them, good for the planet. That’s what helped kind of create this cult following, and that’s what drove a lot of the loyalty.
When you talk to Method customers, you’ll find two different camps. You’ll find people who could care less about the environmental credentials of it, they just love the whole design experience of it. Then you find people who really don’t care too much about the design, but the love the fact of our commitment to sustainability and human health. That’s rare to find in a single product.
I think Todd Waterbury, who’s the Creative Director of Target, says it really well, it’s that intersection between narcissism and altruism and giving people a reason to buy it for themselves, but it also has this halo that it’s good for society as a whole. That’s a beautiful formula when you can get it right.
Andrew: I’m looking at early versions of your cleaners. The company started 2001. The first things that you had were bathroom, kitchen, glass and shower. You’re showing a sink in there. The design is nice, but it’s still on the nose, where now it’s more a part of your house and you don’t have to see a picture that tells you where to put it in the house. The other thing that stands out is you guys used to have a period before your company name.
Eric: We did. In our original naming structure, our thought is everything would be .Method. It was a little .com inspired. The only other brand that really does this is For Dummies. So our thought was there would be Kitchen.Method, Bathroom.Method, Dish.Method, Hand.Method. What happened was it just looked too clunky on a label because Method itself when isolated was such a great word and more powerful mark. Then we kept the dot as a little visual distinction. That’s part of our history still.
Andrew: I see. That’s why it’s there. It seems like the next thing that came out was dish soap. I’m just following along on Internet Archive to see what you guys added to your site. Is that right?
Eric: Yeah. Dish was our next product. We did what we call the bowling pin.
Andrew: Yeah. It looks like a bowling pin. I see a picture. You guys did a great job explaining what this looks like on your website. How did that do when you launched it?
Eric: It was not a commercial success, but if we could go back in a time machine, we would do it all over again.
Andrew: Why?
Eric: I don’t think the company would have been there without it. For those of you that haven’t seen it, our insight was when you’d go to use dish soap, you’d flip it over. So what we wanted to do was take away that motion, where it dispenses from the bottom. So this was the first product that we’d ever seen that was a mass product that had bottom dispensing. Now those ketchups and other products that do it, but we were the very first.
So what happened was we put it on shelves. The fragrances were really unique in their day. So consumers would go to smell it and they would rip off the bottom in a way it wasn’t really intended to come off and then they would go to put it back on it and it really didn’t snap back on well. So we’d walk in and this was during our Target test for national distribution, we had to pass this test and I would just find these end caps, where it was just raining dish soap down. So that was a problem. We fixed that over time. It was a very expensive bottle to make and to fill. So it was retailing for $5 at a very poor margin.
So, commercially, it was never a success. What it did, which was our intention, is we wanted to signal to retailers, to consumers, to the press, to investors, our seriousness of disrupting this category. It made such a design statement that it really put us on the map and it got people to take us more seriously than I think they would have otherwise. Also just the press from it was really remarkable, and we should eventually bring back an anniversary edition for it because we wouldn’t be here today if it weren’t for that product.
Andrew: I just did a search for it. I’m seeing tons of articles for it and patents from Google’s patent search on it. You guys got a patent on it, I’m assuming?
Eric: We did. We have a couple patents, but that’s one of them.
Andrew: I see links to books that talk about it. So now you guys have a more standard pump. Here’s my one problem with you guys. The pump points towards the person using the soap. If there’s a little bit of soap there or someone screwed up your press too hard, it squirts on your shirt instead of pointing down the way that most do. I hardly ever do the dishes, but when I do, I want it pointing into the sponge. You’ve seen this before. You’re smiling, am I right?
Eric: So I sat through a lot of long meetings as we were trying to dial this in and get it right. We do all of our products in-house, and we have an amazing team of formularies and packing engineers and designers. So we scrutinize every little detail about our products, which is why I’m laughing. We were stuck with this dilemma. If the velocity came out too soft, then it wasn’t as good of an example because it could just drip over, but if it came out too strong, then it would shoot across the room.
Our first version did come out stronger than today and we got dialed in. But because it was designed to pick up and squirt—most people what they do, they pick up, they squirt into a sponge or a pan or a dish or a sink. They’re holding it when they squirt it. That’s when it’s really designed to work best. What we found is people who do the dishes a bit more than you do, after they’ve done it a few times, they quickly figure out how to operate it the best way.
Andrew: I just have to remember I put it right up like I’m smothering the thing. All right. I always wanted to tell you that as a guy who’s using it. I’ve got to confront the founder and bring this thing up, point it down. I get now why you do it. I also never lift it up. What I’ll do is pull it towards the edge of the sink and then press down as a way of avoiding that. You started talking a little bit about Target. Let’s talk about distribution and build up to Target. The first set of stores that got it, was it you going in knocking door to door saying, “I made this new thing? It’s for your kitchen, it’s for your bathroom.” Is that what it was?
Eric: Yeah. Kind of going back to that thesis that it’s all about de-risking along the way and getting proof of concept, so we followed the concept entrepreneurial story, which was once we created prototypes that we felt we were excited about, we could see through some research people were excited about, we went door to door to get distribution. So there were about 30 Bay Area stores in San Francisco, you would know then as Mollie Stone’s, Andronico’s, where a manager can make the buying decision.
You have to go in at 6:00 in the morning where they’re setting up for the day. You find this really grumpy store manager. You’ve got his attention span for 15 seconds to pitch your idea. Essentially, they agree to take it only because they know you’re going to keep showing up asking. We built up our little paper route. So we had 30 stores and then we used that to measure how it was performing.
Once we had proof of concept, then we went to the regional grocery store, so that would be like Safeway, NorCal, Albertson’s, Phoenix region. We built that up regionally. It’s about 800 stores. Then we went to Target to sell it into them nationally. So, each step, we kept building it up and de-risking along the way.
Andrew: Is it you doing it? Is it you personally, Eric, going in? It is?
Eric: Yeah. Adam and I did it, both of us did it.
Andrew: I know Mollie Stone’s. It’s this little place in the Castro, and I know they’ve got other locations. They would just take your stuff put it on the shelf and if you saw that it wasn’t selling well, would you walk up to someone and say, “I noticed you just passed up my soap. Why? No problem.” Did you do anything like that?
Eric: We didn’t have any marketing support, so we promised what’s called store demos. That’s when you’re in a grocery store or Costco and somebody’s doing tastings, that’s a demo. I would do the demos myself, and I would use it as a form of research to get real-time feedback. I could watch how somebody—I came from advertising. I did research. So I could see body language and understand how people were reacting to the product. We would go sell it in and hand deliver it each week.
So Adam and I would take turns, drive it to the store, go in, count how many are sold, replace them on the shelf, write up an invoice, give it to the manager. We knew nothing about—Adam was a chemist. I was an ad geek. We knew nothing about how do you make and sell a product. It was a great way for us to really understand how retail operates by learning it from the ground up.
Andrew: You told our producer, “I would get there at 6:00 a.m. before the store opened, and I would do my 30-second pitch to try to get it in there.” I’m wondering—I get how your pitch would improve because you’re watching them, because you’re saying, “I’m not going to leave until I get this,” or they know that because they see the determination. How would you improve based on what you saw people doing with your product in the store? It’s not like software where you could come in and tweak the colors or the features. What would you do to improve based on the research you were collecting?
Eric: You’re right. There was not much we could do. We could make adjustments to the label. It was more about how we told the story. We realized that we needed to continue to play up. In the beginning, we had to really play up the fragrance. At the time in 2001, if you dropped in to even Andronico’s and you asked most people, “Do you believe green cleaners work?” A majority of consumers out there saw that as a barrier, like, “If it’s green or it’s natural, it’s not going to work. I need scorched earth to clean my house.”
Andrew: Yeah.
Eric: That world view has shifted dramatically to the belief that clean is not only what it removes from your surfaces, but what you’re actually putting on your surfaces by what chemicals are in this product. Over time, we were able to start taking our green credentials and putting it on the front of the bottle, but in the beginning, we realized we’ve got to keep those in the back of the bottle.
Andrew: Just watching people helped you understand that.
Eric: Yes, exactly.
Andrew: You know what? That is true. Our cleaning people accidentally left their bleach, the Clorox bleach spray. I used it a couple times, and I watch the look on people’s faces when I used it to clean up the thing the baby eats off of, the tray. People look like I’m child abusing the kid in front of them. At what point did that change and was it that you picked up on a cultural change and you were going to drive that or were you part of it? Can you influence it or do you have to watch it and jump on it properly?
Eric: You know that phrase timing is everything? It’s just that. The way I think about it, a major macro trend like that, it’s a wave coming into the beach and you’ve got to ride that surf just right. If you’re too far ahead, you get rolled over. If you’re too far back, you get left behind. We were really conscious to really try to ride that wave the best we could. I think 2008, you saw the “Inconvenient Truth” coming out. You started to see more of a tipping point, but it’s still a trend line that’s got huge legs and is going to continue to evolve for quite some time.
Andrew: All right. Let me take a moment to talk about my sponsor and then come back and talk about Target, because that’s where you were put on my radar. Target basically did a whole song and dance to show how they were the design company and the reason they were is because they had Method, and that’s when I started to see Method in my life a lot. This must have been before I married Olivia. Once I married Olivia, all this stuff gets beaten into me, gentle, she’s a gentle hippie, but she has to make her point of view very clear.
The sponsor is a company called Toptal. Toptal, for anyone who’s out there who hasn’t hear me talk about this—first of all, I’d be surprised—it’s a company where when we wanted a good developer, I realized there’s a reason why Google goes through all these different hiring processes to get the best developer. What they want is somebody who won’t just say, “Tell me what to do and I’ll go do it,” which is what you find in these cheaper freelance sites, but someone who can take a problem and figure out how that problem exists in the world, how they can solve the problem and think for themselves.
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They went to Toptal. They got two developers. They could have hired either one. They picked the one they actually jived with. They said, “This guy is so good. He could have been the CTO. He’s that quality of a person, thinks for themselves, helps grow the business. Today they’ve hired multiple people from Toptal. That’s a story I’d hear over and over again.
So, if you’re out there and you’re looking to hire the best of the best developer, I urge you to go check out Toptal. Don’t go to their website, not the homepage, go to this special URL where they’re going to give Mixergy listeners 80 hours of Toptal developer credit when you pay for your first 80 hours and that’s in addition to a no risk trial period of up to two weeks. That URL is Toptal.com/Mixergy, top as in top of your head, tal as in talent, Toptal.com/Mixergy.
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Eric, how’d you get into Target?
Eric: Target is such a great story. This is back in 2002. It was unheard of for an early stage company to get national distribution with a major retailer like that. My initial pitch to Target was this idea of bringing designer commodities, looking at what they were doing in the soft lines of apparel and housewares and how can you bring that over. We had a very senior meeting with the DMM at the time.
In the meeting, he started talking about, “I’m struggling with the brand name. I’m not sure about the colors. The size of the bottle is wrong.” He looks at us and he’s like, “Guys, I kind of hate to say it, but it’s a bit of a snowball’s chance in hell.” So we’re like “Dumb & Dumber.” “So you’re saying there’s a chance.” We had just raised our Series A and our entire business model was dependent on getting Target. Grocery is a hard place to make money. It’s highly fragmented. We needed economies of scale, and so we needed a national player. Kmart was a train wreck and still is. Walmart is not necessarily the best place to launch a premium brand. We really needed Target to work.
As you guys know as an entrepreneur, often the road forward looks a lot less scary than the road backwards, particularly when you’ve taken money from big scary people who you don’t want to let down. Coming from marketing, I had some relationships on the marketing side. I knew they had some interest in working with Karim because they just did the Philippe Starck line and this was during one of their big design for all campaigns. So we spent our last few dollars with Karim to model out the entire line. I used Karim as a carrot to get a meeting with marketing who then invited the buyers. Rule number one of retail, never go over the buyer’s head. This is a total Hail Mary.
Karim shows up in his full silver suit. We do our big dog and pony show. The dish soap we were talking about, it showed up in FedEx the first sample that morning. I had just enough time to fill it with dish soap, didn’t even have a moment to test it. We start the meeting, I bring that part out. It was like an episode of “Shark Tank.” It gets passed around. The main squeezes it, goes, “Wow, even I would use this.” That was the moment I knew we were saved.
So they gave us out of it a 90-store test. They told us, “You’ve got to hit this number.” Like all right, “We can do this.” We get it out there on end caps. This is where it starts leaking. We’re missing the number, passing out coupons. We keep missing the number. With any success story, there are so many points of good luck. One of them was that a new buyer came on the desk. She loved how differentiated it was. Oh, by the way, the number they told us to hit was what Tide does on end cap on sale. It was not possible to hit that number. They gave us national distribution and we’ll do over $100 million of sales at Target this year just on Target alone.
Andrew: $100 million now. That’s now your overall company revenue? That’s just your Target revenue from Target?
Eric: Retail sales at Target will be over $100 million.
Andrew: I see because they’re paying less than that. What’s your overall revenue today?
Eric: We’re a private company, so we do not share it out.
Andrew: Can you ballpark it? You did at one point. You used to tell Inc. Magazine, didn’t you?
Eric: We used to and we decided to, as the numbers have been going up, we’re past the point of credibility, so internally we decided to—
Andrew: What was the height that you told Inc. I forget?
Eric: We talked about it when we crossed $100 million sales. Our sales retailers, when we crossed that $100 million, we shared and celebrated that.
Andrew: What year was that?
Eric: That was back four or five years ago.
Andrew: One of the hard parts about researching you is the name Method, the word “method” comes up all the time. I could do Method Inc. Magazine. But the official company name is what?
Eric: People Against Dirty.
Andrew: People Getting Started?
Eric: People Against Dirty.
Andrew: Oh, People Against Dirty. How did you come up with that?
Eric: It was an original tagline that Crispin Porter came up with. We loved the double meaning of dirty. Dirty could be the grease and grime on your counters, but also dirty chemicals, dirty business practices, dirty politics. We love the idea that who we are, we’re People Against Dirty and who we create for are consumers of People Against Dirty. We love that intersection. One of the things we’re most proud of, we build out first plant a couple years ago in the south side of Chicago. The entire plant is about being branded People Against Dirty.
Andrew: I see. Then the company on the site, it says copyright Method Products PBC.
Eric: Yeah, public benefit corporation.
Andrew: You guys became one of the early B-corps?
Eric: Yeah. We’re a founding B-corp memory. It’s something we’ve really helped try to champion, but we’re a big believer in the triple bottom line and setting up corporate governance the right way.
Andrew: What it means is you’re a B-corp.
Eric: Essentially the way a traditional corporation is set up is it’s about serving the shareholders. If you make a decision theoretically that is not in the best interest of the shareholders, so you do something for society as a whole or government, you could be sued by your shareholders. What a B-corp does is it says you are actually required to take care of all shareholders, which are not only your financial shareholders, but the environment and society as a whole. It’s the triple bottom line idea.
Andrew: I know there are some people who don’t—I won’t say some people. Fred Wilson, the venture capitalist, he’s written about how this doesn’t make sense. It makes it harder to go public, right? That’s the challenge?
Eric: Not necessarily. We don’t see that at all. My lunch is being delivered.
Andrew: Somebody needs to use the teepee.
Eric: They know I’m doing an interview. Kevin Leary, too, we’ve had some fun exchanges on this. He’s a big believer that an opportunity organization should be giving profits back to its investors and then those investors should decide how they ultimately give those up to society. We disagree with it. If you look at what we’re doing in Chicago with our plant, we’re about creating a ripple effect in our industry.
When we went to go build our plant, we wanted to be nothing more than an expression of our mission and our values. So where it is, what we make, how we make it and who we make it with. All of it is around that. So we built the first plant in the inner city of Chicago to be built in 35 years. We put it where the jobs were needed, where we could hire from the local community. Then we created the most environment facility created today as certified by LEED. So it’s got its own wind turbine, solar trees. Then that area is a food desert, so we partnered with Gotham Greens and we have the world’s largest rooftop greenhouse.
What’s most remarkable when you come into the plant, it’s not only an expression of the brand and you see men driving pink forklifts, but when you walk in, it’s the people that really make the difference. I’ve never seen a plant where people hug each other so much. We’re big believers in culture, and you’ll have a culture in most companies where the front office and the factory floor are very different cultures. At Method, it is just one culture, and that’s probably the thing we’re most proud of.
Andrew: You strike me as someone who’s really confident. You’re going against the trend of companies needing to take care of your shareholders first. You’re going against these major companies like P&G. You have talked about self-doubt being a challenge to keep up the self-confidence. When is it that it’s most challenging for you and then what do you do to bring yourself back from doubt and to bring back your self-confidence?
Eric: That’s such a great question. Being an entrepreneur is such a head game. You have to really find this mindset where you believe in what you’re doing, because your job as an entrepreneur is to get other people to believe in your vision. That is job number one. So, to do that, you have to have confidence in it.
But at the same time, creating a successful business is successful because nobody’s done it before, which means your learning curve is going to be steep, which means you’re going to make tons of mistakes, which means you’ve got to be in a mindset that you can quickly learn from your mistakes and the ability to hire people that are better than you, smarter and with areas of expertise you don’t have and do empower them. My job as CEO is I set up the assists, they score the goals. It’s this yin and yang of being able to do both at the same time. It’s a balancing act.
So, when I find myself lacking confidence, I think I really solve it through the work. I’m not somebody who spends a lot of time thinking about work. I like rolling up my sleeves and doing the work and solving the work. We’re working on a new product line that’s going to launch next year. I can’t say what it is, but it’s something we’ve never done before. I just had a board call this morning, and they were challenging us on some parts of it. I said, “Look, guys, we haven’t done this before.
When we get into this business next year, we’re going to quickly launch, learn, adjust.” I think that’s the magic, being willing to—I love that Steve would always say real art is ship, be willing to ship a product, get it out there, but then be humble enough to know you’re not going to get it right and you’re going to quickly learn and adjust and it’s that fluidity that makes the difference between startups and big companies and how they truly innovate.
Andrew: Did you do that with Olly, the nutrition company?
Eric: Yeah. Follow the same—where Olly came from was I was helping Target create their Made to Matter program, and we were identifying brands that we thought were ripe for these different categories. We couldn’t find the nutrition aisle. I went and walked the aisle like, people are literally stressing out trying to choose something healthy for them. That was the clue, “Dig here.” It’s a huge multi-billion dollar category. No one was applying lifestyle in the way it’s being applied in all of these other areas, from fitness to food.
So it was kind of the big idea, and then we broke it out. But it was develop a concept, share it with people, share it with Target as a couple PowerPoint slides, high concept. You could see it resonated and got behind it. We launched just at Target initially, so we had the space to figure out what worked, what didn’t work, make the adjustment before we start scaling it further.
Andrew: So, when you say make adjustments, what did you adjust and how fast can you adjust when it’s a product like that?
Eric: If you’re writing code, it’s so much easier to quickly do that. So, for us, we had a thesis about what we thought would resonate, and it did play out, but we wanted to put a broad enough line out there that we’d have lots of opportunities to learn. One of the things we learned is anything that was more focused on prevention, so we had a heart product, joint product, those really didn’t resonate with a more lifestyle with acute benefits, sleep, stress, that really worked well. We had gummies and capsules. Gummies took off, the capsules didn’t.
We learned that we were so worried about getting that intersection of being differentiated and relevant and by relevant, people would believe it would work. That was a tough intersection. The first day we sat in stores, we already had consumers walking through doing store walks with us to understand how they were responding to it in a retail environment. We learned we could be a lot more expressive. You can see our labels, we’ve dialed up the fun more and more on our labels going forward, So lots of little things like that.
Andrew: You’re walking through with a customer saying, “Walk through the store, talk out loud, I’m going to watch you as you do it,” is that what it is?
Eric: Yeah. We hire a research company because we don’t want to be doing it ourselves. We want a third party. You recruit people you see as your audience and you interview them walking through the store, so you understand how they would react to it in that environment.
Andrew: I’ve never heard of that. That makes sense. Didn’t it exist—I’m looking at amping up innovation, Made to Matter, handpicked by Target. They had a couple of companies. They had The Honest Company in their launch, didn’t they? Doesn’t The Honest Company make nutritional products?
Eric: They did. When they launched. They didn’t have the nutritional products at the time. We did Made to Matter year one. Then a year later, Olly launched on Made to Matter as a platform, which was really exciting to kind of see that, how quickly it all came together. But our belief was Made to Matter would be an entrepreneurial platform to accelerate early stage brands to target driving innovation for the guests.
Andrew: Let me close out with this. One of the things I notice as I look at newer articles about this space is the older companies are recognizing it. I’m looking at an article on The Morning Call that says “P&G Under Pressure as Eco-Friendly Products Surge.” P&G makes Tide? Yeah. You’re smiling. You see this a lot. They’re jumping into this. There’s a reference to Seventh Generation being bought out by one of your competitors. The Honest Company is in here. What do you do when this thing that made you so different is part of the industry?
Eric: It’s what we wanted. The way Adam and I thought about it was we wanted to be change agents and we wanted to create a ripple effect. Our belief was if our mission was about getting as many bad chemicals out of the consumers distribution, we’d be hypocrites if we didn’t want people to follow our lead.
I think what it really comes back to is creating a culture of innovation. You can copy our products. You can copy our ads, copy our copy. What you can’t copy is our people and our culture and creating that culture of innovation is what essentially creates this very sustainable business. Very early on at Method and even here at Olly, we put a lot of thought into bringing together the best possible talent and creating a culture where they can thrive and keep us ahead of competition. That’s at the heart of everything we do.
Andrew: These are two different companies? I’m looking Olly’s website, Olly.com. It says Olly Public Benefit Corporation. It’s its own corporation?
Eric: It is. We’ve got board members who sit on both boards. We’ve got some ownership that goes back and forth. But they are two completely separate companies.
Andrew: Completely separate companies. Are you a bigger investor than Adam? Do you spend more of your time now at Olly?
Eric: Yes. Adam has its own startup called Ripple, which is an alternative to dairy-based milk. Check it out. It’s a pretty cool product. Adam and I both—we got to the point a few years ago where I think it’s important as an entrepreneur to be scared at work and I love to be challenged. Method wasn’t scary anymore because we have such a talented team. It’s grown into a much bigger business. I love being part of it and cheering it on and helping out where I can.
But I needed to get to a blank sheet of paper and just be scared. That was why I decided to take on the challenge of a new startup, and Adam felt the same way with Ripple. We both worked together on Method, and we both have our new startups we go to work every day a little bit more scared.
Andrew: And this new business is going to be part of Method, Olly, or on its own?
Eric: Ripple is a completely standalone business as well.
Andrew: No, I mean the new one you’re going to launch next year that you didn’t want to tell me what it is yet.
Eric: That’s a new product line inside of Olly.
Andrew: I see. So you’re freaking out? You don’t look like a guy who’s freaking out. You look like a guy who’s happy. You’re swinging in this new office space you just got a few days ago.
Eric: Yeah. We’re in the Presidio here for people who know San Francisco. We wanted to be in a—we get to work in a national park, something that represented the lifestyle of what we’re building and the culture we’re trying to bring to life.
Andrew: I’m on Olly’s website. The stuff looks really gorgeous, even the boxes you ship stuff in look good. You show it off on your homepage or shopping page. My mouth is watering because I didn’t have lunch yet. I like that the protein drink is vegetarian. I don’t eat meat. It’s nice to have a vegetarian option I could try. Thanks so much for doing this interview.
Eric: My pleasure. Thanks for having me.
Andrew: Cool. The website, of course is—I was going to say, Olly is an of course, Olly.com, but for Method, the website is MethodHome.com, right? Not MethodProducts?
Eric: There was MethodDesign—Method Interactive launched before us and they survived and thrived through the great dotcom boom and bust. They have that URL and we have MethodHome.
Andrew: You guys have a beautiful design on everything. I’ve got to put your sites away when I look. The first thing that gets me is this beautiful video of a dog you somehow captured in slow motion on MethodProducts.com flinging off dirt. Every bit of what you guys touch looks so freaking good. And the two sponsors are Toptal for hiring developers, check them out at Toptal.com and if you want email marketing automation done right, go check out ActiveCampaign.com/Mixergy. Eric, thanks so much.
Eric: Thank you, appreciate it.
Andrew: Bye, everyone.
