Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, blah, blah, blah.
Listen, I guess it was a couple of years ago where I read this post about a guy who was really struggling with his company. Because I do Mixergy, I care about entrepreneurs and I care about their struggles. So I said, “Who is this guy?” But he was anonymous. So I couldn’t figure out who he was. I couldn’t call him up and help him. But I’m a researcher because I do these interviews and I used all the tools that I use to research guests for the interviews to figure out who this anonymous guy was.
I found him and then I emailed his investor because I knew his investor and I said, “This guy is under your protection, so to speak. Help him out.” The investor emailed me back and said, “You’re wrong.” But I wasn’t wrong. I got to know the guy and I got to talk. I got to build a relationship with him and watch him as he turned things around for himself.
When he recently wrote a blog post, this time under his real name, when he talked about how much revenue he was making with this little idea that is so much simpler than his previous one that got investor funding, I said, “You’ve got to come on and talk about it. You have to talk about how you got here and what this business is.”
So, if you look up on your screen, you’re going to see Dana Severson. He is the cofounder of Stick in a Box, which is a jerky subscription service. I usually like to explain things in a little bit more detailed than that, but really, jerky subscription–I think you guys got it.
Dana, the thing that I didn’t get is cofounder. Are you the cofounder? There’s someone else who’s building this with you?
Dana: No. I’m just the founder.
Andrew: Just the founder. Yeah. My researcher added a “co” in there by accident. Do you remember that day when you sat down to write the blog post, the anonymous one that I’m talking about?
Dana: Yes. I remember it very well. I was sitting in my home office. It just hit me as the right thing to do at the right time, and all it really was, was therapy for me, getting out what I was feeling at that exact moment.
Andrew: What were you feeling at that moment?
Dana: Well, I had just gotten back from a trip from Austin where my cofounder and I had decided at that exact time that we were no longer going to pursue the business. We were in the midst of raising. We had just come out of an accelerator. Apparently what you’re supposed to get out of an accelerator is additional life, additional runway. That didn’t work out for us. So we had to finally make the decision to either continue down this path or to shut it down. And quite frankly there was some passion lost as I look back, but yeah, it wasn’t an easy decision.
Andrew: What about your family? One of the things I remember sticking out is you talking about your finances personally.
Andrew: What was going on?
Dana: Well, I hadn’t told my wife yet. So she wasn’t aware that I wasn’t going to be getting a paycheck. Just being a founder, being an entrepreneur, it has a lot of ups and downs. For the last two and a half years, it had been very consistent. I had been getting a paycheck every week. I have a family with three kids. We needed health insurance. We got health insurance through the startup. That was one of the promises that I made to my wife. So she had no reason to believe that we wouldn’t be able to raise funding.
So having to go back to her and tell her that we couldn’t raise funding from this point on and that I wasn’t going to be getting a paycheck, which she thought we were going to be getting was one of the harder things for me to do. That is the ultimate sort of defeat. That’s like waving the white flag and saying, “Look, I gave up.”
Andrew: And you were sitting there, you were thinking about your wife. But I don’t think you said anything about your kids. How did you feel at that point about them and what was about to happen for them?
Dana: Well, my kids are young. So they don’t understand this. I think maybe if they’re a little bit older and they understand the idea of failure, that might register with me a little bit.
Andrew: I don’t mean that. I mean like health insurance. So last week you and I were supposed to record an interview and my son needed to go to the doctor just to get something checked out. We came back from the doctor, went to the pharmacy. The pharmacy said, “Do you have insurance?” I said, “Yeah.” She didn’t have it on file. I pulled up Evernote with my insurance card. I said, “Wow, that’s it.” She saw it and I get this medication for free, no wait, no nothing. And I felt like a provider for my son. I also felt like, “Wow, if this ever goes away, this kind of protection…” So, the fact that they’re younger makes it harder.
Dana: Yeah. I guess that is the scary part. But if I’m being totally honest here, part of the scary part is actually knowing that I could get a job and I could get health insurance, but that’s the path that I would have to take. In fact, I even wrote that in the post.
It’s the one thing that people came back at me and said, “Suck it up, get a job, do what’s right by your family.” And they’re right. But that’s also very scary for somebody that’s an entrepreneur. It’s basically lying to yourself. It’s telling yourself it’s okay to go and do something that you’re not meant to do. But when it comes to protecting the family, you have to do what’s necessary.
Andrew: And so you were ready to take that on?
Dana: Yeah. I guess at the time that I wrote that, if I’m thinking back to that moment, my bigger fear wasn’t being able to provide for my family, it was that I was going to have to get a job to provide my family.
Andrew: Do you remember when you told your wife?
Dana: Yeah. I sat down at the table. I felt like I was about to tell her I was cheating on her because I said, “We need to talk.”
Andrew: How did she take it?
Dana: “We need to talk,” that was what I started with. She took it great. She was very supportive. Hey, look, I’m one of those guys that has a lot of ideas. I’ve always had a ton of ideas.
Andrew: I know. I see your Skype name. You clearly do have a lot of ideas. It refers to you having tons of ideas.
Dana: For a long time, I would be the guy that talked about ideas and never did anything with them. Wahooly was really the first time I actually said, “All right, forget this. I’m going to stop being that guy and start actually implementing things.” Because I was sick and tired of it and quite frankly, my wife had no faith in me whatsoever.
Dana: Yeah. I would tell her a new idea every single week. She would come back, “Yeah, that’s an awesome idea. You should do it.” But she never truly meant it. She never believed that I was going to take that next step and actually do the thing and bring in money and support us as a family and do all those things. So, I had to prove that to her. So, by the time that two and a half years ended and that company ultimately failed, she had faith in me finally.
Andrew: And now you lost it. Did you feel that?
Andrew: You didn’t. All right. You just felt, “I still have it. Once she saw that I could do it, we were both on board this train going into Startupville for the rest of my life.”
Dana: No. Not that far. But at that moment, I felt that she had faith in me and she knew that everything was going to be fine.
Dana: And I needed that. And she knew that I needed that. She knew that I needed to hear that from her in order to feel good.
Andrew: I get that.
Dana: And still to this day, that still reassures me when she has faith in me. That’s really important.
Andrew: Is she on Skype? Can we get her on the call right now?
Dana: No. She’s home with the kids. She’s with the kids.
Andrew: Oh, that’s too bad. I should have done the interview with both of you. Wahooly was what?
Dana: Wahooly was a company that gave the average person the opportunity to invest in startups using social capital. So basically, as it’s been referred to as the lowest common denominator, which is tweeting in for equity. But essentially I saw this gap in the marketplace where people were not able to invest in startups with the SEC rules, the guidelines that exist still to this day. Only about one percent of the population is able to actually invest in startups. I kind of said, “Screw that. I want to invest in startups. There have got to be other thing available.”
And at the time I was doing interviews with startups and I found out one of the biggest needs beyond money is traction. A lot of startups were struggling with traction. So I’m like, “Hey, look, what if we could bring together this group of individuals that have a high level of influence and these startups that need traction and make them early adopters. In exchange, we’ll give them a share of the upside potential.”
So that’s what Wahooly was. It was pre-crowdfunding. So it was kind of a hot thing at the time. It was completely illegal, what we were doing.
Andrew: Was it?
Dana: Oh yeah.
Andrew: I thought maybe you found a way around it by not exactly–you know like if you want to give your employees shares in the company but it’s too much of a pain to give them actual shares, you give them phantom shares. So I thought maybe you did something like that, but you didn’t.
Dana: We did in a sense. Basically, we were the only shareholder between the startup. So we avoided the shareholder number issue, which was the like Facebook rule of 500. We divvied up points instead of shares. So there was a pool of points. The pie was divided based upon how many people were part of that. Each person within that pie had the opportunity to expand the piece of their pie by doing more tweeting, by helping more.
So everybody had an opportunity to earn a higher percentage of that pie. But that was looked at as a derivative of security by the SEC. So, we were basically creating a secondary marketplace.
Andrew: I see. Is that what you changed over to Chasm?
Dana: No. We spent a year and a half working on Wahooly. One of our biggest issues was engagement. So, getting people to re-talk about companies on a continually basis. When you’re an investor, it’s easy enough. You give them money. That money lasts x-number of months. You don’t hear from that startup again.
But when you’re an advocate, your expectations are a little bit different. You’re saying, “I’m giving you a percentage of equity. I want you to be a true advocate. I want you to come back day in and day out.” There’s only so much you can say about a company. There’s only so much help you can provide. So engagement started to fall off and we needed to solve that. So we went into the accelerator world because of two things. One, we were running out of our initial seed round.
Andrew: Wait, how did you get the seed round?
Dana: Hype, a lot of hype. So in 2012–we launched in the fall of 2011 and I was working full time when I started it and I was doing all this stuff behind the scenes. We literally had a signup page and a how it works page. That’s it. There was no code behind the curtain. We didn’t even have a coder. We had a front end developer and a designer. I convinced those two guys that they wouldn’t have to lift another finger until I got us 25,000 users.
Andrew: They just have to get it up and running and then your job is to get the users.
Dana: Just a signup page and a how it works page. And in that span of three months from September to December–this is in 2011–I did everything I could in terms of generating press. I hounded everyone. Finally, Thrillist took a chance on me, Thrillist, the local edition in Minneapolis. They said, “Yeah, we’ll write about it.” So, they did and I leveraged that.
I took that Thrillist piece and I went to Business Insider and I said, “Business Insider, you’ll be the first ones to cover this nationally. This is an exclusive just for you.” It was a terribly written piece. It was like full of grammatical errors. It wasn’t even half accurate in terms of what we did, but quite frankly, there wasn’t a product yet.
But as a result of that, Joe Fernandez, who was the CEO of Klout at the time had saw that article and reached out to me and said, “I love what you’re doing. I want to be a part of this.” At the time, Klout was at its height of popularity. So, basically what we did at the time was–this was November–we said, “Anybody that has a Klout score of x or higher,” which is basically the top ten percent of Klout users, “Can join Wahooly as an exclusive member. Anybody that has anything lower than that is out. You cannot participate.”
Andrew: I see. And Klout loved it because for them–the whole idea behind Klout was they were going to give everyone a number that represented how socially connected they were. Now, you were another way for Klout to show the world that having a higher Klout score meant that you have access to more stuff.
Andrew: And in this case more stuff meaning you get equity in a business. All you have to do is use your Klout to support that business.
Andrew: Super. So he was on board. Did he give you seed or did he introduce you?
Dana: No, no, no. He didn’t give us seed. He gave us the opportunity to be part of the network, be part of the elite group. Being associated with Klout at the time meant that we were God. I didn’t know that. I had no idea the impact that that would have. But that single handedly drove us to 26,000 new signups by the time mid-December rolled around. We had people knocking on the door to get in. It was amazing. As a result of that, we got a ton of new press. Mashable covered us. TechCrunch covered us.
Meanwhile–and I’ll just keep this in mind for all the listeners that think that they need to have this phenomenal product to lead to whatever–we didn’t have a single line of code. In fact, when our promotion went live on Klout, it was all front end development. There was no back end. So basically, it was all fake doors. It looked like a profile page. It looked pretty, all that stuff. It allowed people to sign up, but nothing else.
So our launch date was going to be like 2012, January 30th or something like that. And so by the time that January timeframe rolled around, we were having a lot of inbound interest from investors. We had a ton of people that were calling us. In fact, there’s a story that I wrote about a 14-year old that invested in us. You can find it on my LinkedIn profile. It’s a fascinating story if anybody wants to read that. So we had a lot of inbound interest and it was a really easy round to raise because there was so much hype.
Andrew: I see. So you already had seed investment. You had all that hype and then you decided, “I’m going to go to one of these accelerators,” and you had a couple that you were thinking about. You chose AngelPad.
Dana: I did.
Andrew: Why an accelerator at that point? I thought accelerators were for people who are a little further behind?
Dana: We did too. We tried to raise another round. Companies find themselves right now in that middle ground, which is like we raised a seed round. We’re not quite ready with an A because we don’t have the metrics to line up there. What do you do? Do you run out of money and just bootstrap it? That’s one approach. Or you find people that are willing to invest in you and give you some additional runway.
So our path at that point–and it seemed like a good path because we needed to fix some of the issues that were going on with the site. So, we thought it might be a good time to just step back, reset everything and figure out what it is that we want to do moving forward, how are we going to fix the issues with a little bit of runway built in.
Andrew: How much money did they put in?
Dana: Well, okay, so, AngelPad itself puts in I think $60,000 or maybe $50,000, but then also we were the first class to actually do an AngelPad syndicate on AngelList. So, now all these graduating classes get this little extra bulk of money that comes from a whole group of different investors. So, we were the first group to pilot that. So, I think in the end we got another $100,000 or something like that, somewhere close to that. So, maybe like $150,000, $120,000, I don’t know.
Andrew: Okay. $120,000, that’s a pretty good amount of money.
Andrew: That was the end of it for you. That’s all you were able to raise.
Dana: That is.
Andrew: And at what point did you find out that this is illegal and you can’t make it work as is? You just knew from the start. I lost you for a moment.
Dana: Oh, okay. Yeah. The very start. We had a lot of attorneys that we hired because we thought that was the right approach. We did it all on deferment. So as soon as we got that first investor check, a lot of that went to the attorneys, the SEC attorneys. SEC attorneys are not cheap. So, basically we went through a lot of them because they were all telling us why we can’t do it instead of coming up with ways of how we can do it.
Andrew: And you were never able to come up with a lawyer who could come up with a way to do it?
Dana: No, because nobody wanted to attach their name to that.
Andrew: I see. Was that one of the reasons why you switched over to Chasm?
Andrew: You said, “I’m willing to take this issue. I’m willing to take on the legal risk here of doing something that the SEC may not be crazy about.” What you couldn’t figure out is how to get engagement going after that initial launch.
Andrew: And that’s why you changed to Chasm. From what I remember, Chasm was just tweet sharing.
Dana: Kind of, yeah. It was like a social backscratcher. We called it a social circle jerk.
Andrew: Like publicly you said that on your website?
Dana: No. That was out VC pitch.
Dana: No. Yeah. If you remember the link exchanges back from the late ’90s, early 2000s.
Andrew: Tony Hsieh had one of those essentially.
Andrew: Everyone knows him from Zappos. He made his first millions by doing one of these link exchanges. The idea was you would put a banner on your site for somebody else. Someone else would put a banner on your site in exchange. It wasn’t a one for one transaction. It was something like you give up two spots on your site and you get one on someone else’s and then Tony would get one extra spot and he would sell that. That’s the business that he built and then he turned it into something that he sold to Microsoft.
I don’t know if it worked for Tony. Tony had to transition to something like BizCentral. What about you? Why didn’t Chasm work?
Dana: Well, I think a couple of reasons. I’ll tell you the biggest reason in a second. But I think the first reason is social is a tough sell to investors. There isn’t a lot of social proof out there to suggest that there’s going to be a big social win, especially when it comes to influencer marketing. There are plenty of companies that are doing okay, but nothing that’s like a ballpark homerun.
So Klout, you could argue, is probably the first company that’s come out that’s done more than a couple hundred million in terms of an exit, but by SV standards, Klout was a failure, which is really sick if you think about it. But it’s true. And I’ve heard from plenty of investors that said, “Look, if I don’t believe that you have the potential to be a billion-dollar company, I can’t in my right mind choose to invest in you.”
Andrew: I see.
Dana: Which is crazy, right? I think one of the reasons that we had trouble was that. I think the second reason we had trouble is because we had raised a seed round previously and we had been at this for a year and a half, which you’d think is like the longevity. We’ve been together as a team. We’ve been through a lot. But again, there’s this philosophy that pivots don’t work and that companies that pivot historically just end up dying. So, I think we had that going against us.
The biggest problem for me though was my loss of passion and I think it came through. I loved Wahooly. I loved everything about it. To this day, I still talk about it any opportunity I get.
Andrew: But Chasm less?
Dana: Chasm less.
Andrew: And once you shifted to that, you’re no longer doing something you’re especially passionate about and you’ve been doing this for a long time and it’s hard.
Dana: I don’t think I could admit at the time or even really recognize it at the time, but I know that it translated into my pitches, into my emails, into everything that I did. The passion didn’t come through.
Andrew: I see.
Dana: I’m certain of it. I think that was a big reason why I was okay with just giving up at the end there.
Andrew: Did you feel great once you made that announcement and just moved on?
Dana: No. In fact, I still feel an obligation to the investors that we have on there, at least our initial investors. I still communicate with them.
Andrew: Who’s one person who in your head you feel such a regret for, that you’d want to make it up?
Dana: Joe Kalfa is one of the guys. He was probably our biggest investor. He became a really good friend. Yeah. Jamie, he’s another guy. There are just a lot of really early-stage sort of angel investors. They’re not institutional investors. They really loved and believed in the idea and they put a lot of faith in me and my vision.
Andrew: When you cried about losing it, did you cry more about the way you felt for the investors or for your wife?
Dana: Well, for my wife.
Andrew: For your wife, okay. Do you remember crying about it, like when you were thinking about it with your wife?
Dana: The first time that I cried about the business was actually when we first launched the business because it was an absolute disaster.
Andrew: What do you mean?
Dana: Well, in January of 2012, we had set a date to launch, which was a huge mistake. We were telling people–and this was in December–that we were going to launch at the end of January. We still didn’t have a developer. We had just found one. That was the first time that we found one. We were trying to build this huge product inside of 30 days. And we said we were going to launch in January. So, I felt like we had to commit to that. Remember that our users were “the most influential people in the market.” They were the highest Klout scores out there. So we had a lot of people that were asking us to get in.
So the day before we were supposed to launch, the developer said that we were not ready. So this is 24 hours beforehand. Now, there’s a lot of fault in there because we weren’t doing testing weeks beforehand. There are a lot of things that we could have been doing to prepare ourselves before 24 hours. But I had TechCrunch set to put a post live at 3:00 p.m. the next day, like the day that we were supposed to go live, and all of our emails were going to go out.
Google+ was big at the time. So I was using it as my blogging platform and communicating with a lot of our users. So I used that as a tool to communicate that we were going to have to wait another 24 hours. So I bought us 24 hours. So then I had this brilliant idea–looking back at the time, it was brilliant–to put a countdown on our site. I said, “All right, we’re going to put a 24 hour countdown here on the site. When it hits zero, everybody is going to get their email. Everybody’s going to get in. Everybody’s going to be happy.”
So that clock went down to zero. Our DNS hadn’t finished propagating. The site wasn’t live yet. Only about half the emails went to the users that they were supposed to. Hardly anybody could get in the site. It was riddled with problems. Pando the next day wrote a piece called “Failure to Launch” and it was this picture of Matthew McConaughey leaning up against Sarah Jessica Parker and it was the story of the crash and burn of Wahooly.
So that was the first moment that I cried. I cried for seven days straight. I remember it.
Andrew: You literally cried?
Dana: Yes. I would drop my kids off at preschool and I would start crying.
Andrew: Because you felt what?
Dana: Because everything that we had been working towards, this dream–we hadn’t finished raising the money yet. I thought that was done. I thought all these users would have lost faith in us. I thought that was done. And I was still working full time at a job. I wanted to desperately get out of that because I love this vision. I thought it all came crashing down because of that one instance. So for seven days straight–it wasn’t constant.
Andrew: But you’d cry every single day.
Dana: I would cry every single day. You wake up with that gut-wrenching feeling. It’s devastating.
Andrew: Pando really nailed your story, it seems like. They were the harshest people. You write for Pando. You have written for them, right? Haven’t they been the harshest? Didn’t they write something like, “Is Influencer Marketing Over? Here’s Another Pivot. This Time it’s from Wahooly.” So, when you pivoted, they were basically saying, “Here’s another example of how this whole market is stupid.”
Dana: Isn’t that ironic that the ones that devastated us the ones are the ones that I write for now?
Andrew: I feel like it’s because you think there’s some truth to what they said and you feel like they were perceptive about you.
Dana: I definitely think. I think Pando is really good about talking about the truth. People don’t always like to hear it. People have different opinions. But the one thing you cannot fault Pando for is just stating it like it is, except for when they wrote about my jerky business.
Andrew: What did they say about your jerky business?
Dana: And this is when I was writing for them. They said it was the worst company next to Color. We’ll have to pull it up while we’re talking about the jerky business.
Andrew: “Beef Jerky Startup Stick in a Box is the Most Disappointing Company since Color.”
Dana: That’s it.
Andrew: “Digg seems to serve…” We’ll get into Digg in a moment. I want to find out how you turned things around with this business.
Andrew: But I should say this. I’ve got a sponsor and it’s really important for me to talk about the sponsor now because it ties into what you just said. You raised money and got over 25,000 people to join your site when all you had was essentially two pages, no development work. You couldn’t do anything. It doesn’t take that much. Frankly, sometimes just creating two pages lets the world know what you have in mind so much better than, “Here’s a napkin,” or, “Here’s another idea.” Put the two pages online. See what happens.
If you want to put two pages up online or even many more than that, but if you want to start out with just two, there’s an easy way to do it–inexpensive, works really well. I highly recommend you go to HostGator.com/Mixergy. When you do, you can put your two pages up in a couple of hours. You can show it to the world, see if anyone bites, see if anyone’s into it. If they are, you can build it out. If they’re not, well you can pivot before you fully launch the site. HostGator.com/Mixergy.
I tried this in a past interview and my guest really turned me on to a new idea that I want to try again right now. If you do it as a result of this interview in the next, say, 30 days, I want to celebrate your win. Just put it in the comments here, a link to the site that you put up. If you have any challenges with getting plugins up and running if you decide to use WordPress or anything else, in the comments, come in and we will help you here at Mixergy.
But I want you to not just be a wannabe watcher. I want you to get out of the audience of life and get into the game. The best way to get in the game is to just start building a webpage. I know a lot of people out there already have webpages, already have big established businesses, but I also know that you have an idea in the back of your head for something that you just want to see up.
It doesn’t take much to do. You just go to HostGator, you install WordPress, you get nice themese. They’re available. There are tons all over the internet. Adjust it. Turn it into a landing page and see how it feels. See if anyone uses it to register for your site. If they give you their email address, if they fil out the form, then it’s a good indication that your idea has some legs.
All you have to do is go to HostGator.com/Mixergy and if you do it within 30 days, I will help promote it, just put in the comments. If you have any challenges with getting something up and running, let me know and our tech guy here at Mixergy will help out. What’s the URL? HostGator.com/Mixergy. I should have actually said this at the top of the interview, but if you’re listening this far then you’re the action taker and I’d love to see you do this.
What did you think, Dana, of that? I’m watching you and I’m seeing a little smile on your face. I’m seeing you react to this and I’m trying to read your expression and read my intro at the same time and it’s not easy. Be open with me.
Dana: I feel like this is a different perspective because you’re looking right at me. My first thought was, “Are you saying this directly to me? Are we having a conversation still?”
Andrew: Am I talking to Dana or am I talking to the audience? I don’t know. I’m not sure about that either. I see. It’s like, “Is he talking to me? Am I just supposed to stare here?” That is a good question.
Dana: It’s always impressive. I love the way that you incorporate your ads into the program because it doesn’t feel forced. I’ve listened to the show for quite some time. I used to run, but this is kind of what failure does to you.
Andrew: Let me stop here. I like the compliment and I should actually allow you to say that you heard Shopify on Mixergy and that’s what you used to build your site. But you’re mentioning you used to run. Do you feel open talking about the difference between how you look now and how you look in your photo?
Dana: Oh, sure.
Andrew: What’s up?
Dana: That photo that I took, which has thankfully become my brand because I use it everywhere–
Andrew: It’s a great photo. You look very handsome. If I was gay, I would be in love with you in that photo.
Dana: That’s so sweet.
Andrew: Forget what my wife would say. She would have to accept it. It looks really good.
Dana: So, that was the summer that Wahooly started. I was running, I don’t know, five miles every two days. I was in great shape. I felt great, very energetic. And then slowly, I lost that. So I picked it back up a little bit last summer and I’ve kind of reverted back to my old habits and ways.
Andrew: Why? I know when I’m feeling pretty bad about myself, I’m much more likely to go downstairs and get a bag of potato chips from the corner grocery store.
Andrew: But you’re not anymore. Now you’re in a good place, aren’t you?
Dana: I am in a pretty good place. But now I’ve gotten so far that I–I know you’re a runner. But when put weight back on, to get started back into running, it takes these little small steps. I can’t just go out and run three miles and be okay.
Andrew: Oh, I get it. You know how I know? If I put on another five pounds, my inner thighs scratch against each other and bleed. It’s like five pounds is dramatic for me. And that’s just five. Imagine if I had another ten or fifteen. So you’re saying it does become harder.
Dana: Yeah. It does become harder.
Andrew: Also it seems like–well, Stick in a Box is doing well, but it doesn’t yet make as much money as you did if you had a full time job, if you took your friends advice, right?
Dana: Right. It doesn’t.
Andrew: But it makes for a great headline. The headline we were going to use for this interview is, “How Dana Built a $100,000 in Six Months for Less Than $100.” That’s technically true, but $100,000 in sales doesn’t mean you end up with $100,000 in profit.
Andrew: So I don’t want to give people the impression that you’ve now made it, you’re sitting on a beach somewhere and life is easy. You’re still in the hunt for bigger business. But you did find something that makes sense. Where did this idea come from for Stick in a Box?
Dana: So, one of my previous investors in Wahooly had hired me to do some research for him on a potential marketplace here in the US. He’s based in Israel. He basically hired me as a contractor do some research.
Andrew: Which investor?
Dana: Joe Kalfa, the guy that I mentioned previously. So part of that research led me to this tradeshow in Chicago which was like a sweets and nuts snacks expo. One of the vendors there was this beef jerky company. Up until that point, my idea of beef jerky was Jack Links, Oberto, the stuff that you find at the convenience store. So I tried this stuff just as I was passing by and I absolutely fell in love with it that I circled back, tried it again and I did that probably ten, eleven times during that show, finally asking them, “Tell me more about this. I have to know more.”
So that jerky, as it turns out, was only available in one market, which I think was like Michigan or something like that. They were looking for distribution, but they didn’t have it yet. It just seemed odd to me that such a good product that was far superior than whatever else was on the market would not have the same distribution as something like Jack Links, right?
Andrew: I get it.
Dana: At that time, it really didn’t dawn on me that there was an opportunity there. It wasn’t until another couple weeks later. I was having a conversation with somebody. Jerky came up. I was talking about this jerky again and it just made me crave the jerky yet again. So I went online, did a little bit more research on them to see specifically where they are. You can buy it online, but it’s not as convenient as a store.
So I just decided, “Look, I’m going to go on Twitter and see what’s happening. What are people talking about, about beef jerky.”
Andrew: You just went to–I’ll do it right now. Search.Twitter.com and you typed in jerky or beef jerky?
Dana: Beef jerky.
Andrew: Beef jerky. Let me do that. I became a pescetarian after living in Argentina with all the beef. One of the hard things about doing this interview is I’m suddenly craving beef jerky in the worst way. Oh, here we go. So you saw things like, “We’re in a beef jerky renaissance.” This guy’s tweet was favorited 342 times. Here’s another person, “Just chillin’ here with my beef jerky.” “As much as I’d love to be a vegetarian, I don’t know if I could ever give up beef jerky,” says Holly Elaina.
Interesting. So that’s the kind of love that you saw for beef jerky and you said, “There might be something here.’
Dana: I did. It seemed to me like this was a category in which it’s akin to chocolate lovers or bacon lovers or name your product that you put in there, Harley Davidson lovers. It was a category that had a huge gap in the marketplace. What I found out later was that about 90% of what’s made throughout the U.S. is not even available within stores. You only get about ten percent of what’s made.
Andrew: So, where does the 90% of beef jerky disappear to?
Dana: It’s in local farmer markets. People sell them. People sell them in local convenient store.
Andrew: Really? Most beef jerky is sold in those small time outlets?
Dana: A lot of them are sold in these small time outlets or just online or they have some like regional distribution through some sort of specialty retail outlet, but they’re not getting mass distribution like the big players are with the Targets and the Walmarts and all the things like that. And it turns out that I did this because I wanted to get some samples at first, was to say, “I want to try this out. I’m going to send it to a few people, see what they think.” I wanted to see if it was all like the other stuff that I had. I’m not a beef jerky expert by any means.
So, yeah, the quality is far superior. If you really find out what Slim Jim, I’ll just say, it’s processed, pulled apart chicken.
Andrew: I don’t understand how anyone who really likes beef jerky would eat Slim Jim.
Dana: Well, that’s because that’s what’s available, right? That’s what’s convenient. Nothing against Brazil, but Jack Links is made in Brazil. It’s not made here in the US.
Andrew: I don’t have a problem with it made outside the country. I do have a problem with what some of the stuff looks like. Slim Jim just looks awful. It doesn’t look like real beef.
Dana: The problem I have with it being made outside the US is freshness. How can it be that fresh if it’s being produced and made way on the other side of the world.
Andrew: All right. So you had this idea. Why turn it into a subscription? Why not say, “I’m going to create a Shopify store where anyone can come into my site and buy all the beef jerky they want or sell it on Amazon?” Why decided to make it a subscription?
Dana: Because I didn’t have any money.
Andrew: Why? Why does the lack of money lead to subscription?
Dana: Because there’s no overhead. I don’t have to buy inventory in advance. I don’t have to guess it as to what people are going to want to buy or have. I don’t have to worry about drop shipping. People are small batch manufacturers. They don’t have huge infrastructures and can handle all these direct shipments and things like that. It seemed like a model that worked for me when I started exploring different ways to go about selling this.
Andrew: Speaking of exploring, you called up other people who had done this before, people like…
Dana: Well, I guess Pijon Box was one of them. Pijon Box was like a college-based box. Wet Shave Club was another big one, very helpful group.
Andrew: Birchbox, Conscious Box?
Dana: No. Well, I did talk to Conscious Box. But I was asking if I could speak with the founder so they could give me some information. So I did contact them. However, what I found was that the people that were like me, the ones that were just setting up, the ones that had been in it for a few months, the ones that were still struggling, they were still packing their own boxes–they were the crafty ones. They were the ones that knew the inside tricks to doing things cheap and the best place to buy boxes or the best way to handle shipping or the best product, the best software to use to build your company.
So basically, I reached out to a handful of these people that were noncompetitive with me and I said, “Look, let’s start a closed Facebook group and let’s share ideas, like what are the best strategies for marketing?”
Andrew: Who’s in the Facebook group?
Dana: Do you want me to pull it up?
Andrew: Yeah. Go for it. I know that I ask every guest including you to not launch a browser just in case, but go for it. But that’s a really smart idea. I want to underline that. You said, “I’m going to get into this business. There are already people doing it. They’re not competitive with me. They’re not creating Stick in a Box-like businesses where they’re selling beef jerky on a monthly subscription, but they’re doing the same exact type of model. I should get together with them in a Facebook group so we can help each other out and trade ideas.” That’s such a brilliant, simple move.
Dana: I didn’t think it was all that brilliant. I still don’t really take that much credit for it. But it’s what I needed. Entrepreneurs by nature are curious. They’re just curious beings. They always want to know how somebody else is doing something so they can improve their own process. So I think just by nature you want other people to help you figure things out. And in turn, I think entrepreneurs are also very generous and they’re willing to tell people how to help people with other things.
Andrew: What’s one thing you learned from being in this group?
Dana: Everything pretty much. Like boxes, for example, it’s a really simple thing. I can go to Uline and buy my boxes in bulk and what I think is pretty good in terms of pricing, which is like paying $0.40 per box. But I didn’t realize that there’s small printing manufacturer out of Chicago called Salazar that specializes in subscription boxes. How do you find that stuff out? It’s not like they promote that on their website. It’s this non-discreet type–uh-oh.
Andrew: This is why we don’t the browser up, because it causes issues like this.
Dana: And I don’t see which window it is. Okay. There we go. Sorry about that.
Andrew: No problem.
Dana: Okay. My windows are pulling up, which is about 15,000 of them. So I’m just going to let that pull up in the background while we keep chatting.
Andrew: What about this thing on the right? I see a little tab on the right side that is called discount, looks like it’s got a little scissor icon on it. If I click it, here’s what it says. It says, “We want to buy your friendship and we’re not ashamed. Give me your email address and I’ll give you a discount code.” That’s from StoreYa. Where’d you hear about them?
Dana: That was through Shopify. They had a bunch of widgets to help with marketing.
Dana: That’s one nice thing about Shopify, being able to pull tools like that. So, there wasn’t anything magical about that.
Andrew: But that’s still actually worth noticing. The benefit of using a platform like Shopify is that you do get tools like that. You do get introduced to tips and partners that will help you do it. The downside of Shopify for a business like this is that they’re not made for subscriptions. In fact, we talked before we started about how they don’t have a subscription system. You need one of their plugins in order to turn it into a subscription.
Dana: Yeah. Natively they don’t have it built in but there are a lot of tools that lay on top of it.
Andrew: So you just reached out to other people who are smaller than Dollar Shave Club, smaller than Birchbox and you said, “We’re all entrepreneurs. We’re all hustling here. Let’s get together in this Facebook group and we’re going to help each other out.”
Dana: Yeah. I asked them if they wanted to participate. What I said was that they’re going to be noncompetitive boxes. I’m not against another jerky box. There is one that exists.
Andrew: Right. How many people in the group?
Dana: I’m going to tell you in just a minute here.
Dana: It has been a while since I’ve been in here, which is why stuff isn’t coming top of mind to me.
Andrew: While you do that, what did you do to encourage participation in that group considering it was such a small group?
Dana: Nothing, really. I asked everybody to introduce themselves when they came to the group and share one idea when it came to marketing. But that was it. That was like the start of it. One quick second, here it is.
Andrew: Take your time. This would have been a good time to talk about my sponsor.
Dana: Okay. So right now we have 31 members in the group. That doesn’t mean there are 31 companies because there aren’t 31 companies. I would have to take a hard count to see how many companies there are, but there are multiple founders in some. So, we have Mustache Coffee Club is one of them. They’re on a Bishbashbox is what the name of the software is. They do that themselves.
21 Bundles, which is a non-toxic products for pregnant and new mamas. Agent Ribbit, which is what I had told you about before, which is a subscription for science projects, which is really kind of cool for parents and they’re kids. Bonjour Jolie, pampering gift boxes for that time of the month for women.
Andrew: Okay. Let’s leave it there. I think I’ve got a sense of the kinds of people who you’ve got in. I do think it’s a really smart move and I do still stand by the value of what you did. All right. How did you get your first customers there now? You got Shopify to host your stuff. You got jerky from the expo where you met someone on the floor, right?
Andrew: It’s time to get customers. Your website you can build yourself. You know what? You said that Wahooly was the first one you built. I saw that you built a design company at some point, right?
Dana: No, it was the first substantial one that I built, where I actually took the time to like do things the right way and make a life out of it.
Andrew: So you had design skills. So you designed your own site. It still, to this day, looks beautiful, Stick in a Box.
Dana: Really? Oh, thank you so much.
Andrew: Yeah. Absolutely. You know what? Here’s the thing. What I like about it is I don’t I would use the word pretty. What I think I would use is that it has a sensibility. It has a sensibility that carries from the website to the logo to the boxes that you send people to the jerky that you pick, right? The feeling is old time, kind of stamped on, kind of manly, that kind of feel. And that’s what I like about your design. Am I misreading it?
Dana: No. Not at all. I’m probably overly critical because I’m so close to it. But I actually think it’s not all that well-optimized. We talked about Cratejoy just before our call. But Cratejoy has optimized an experience that gets people to click the button right above the fold. Mine is just not optimized for that yet.
Andrew: I see. You’ve got the old carousel that I think is not helping anymore.
Andrew: If you paused it on just the, “Man has evolved. Get your meat in a box like a king. We want meat,” that button, that would be enough. You don’t need the carousel that moves on to, “The hottest jerky in the world. Bring it on, boy,” or maybe even that one.
Andrew: Is this a jerky thing for me to say to you, this main element of your homepage is a pain?
Dana: No. I agree with you. I’ve heard it not just from you. So I know that that’s true.
Andrew: Okay. All right. So, you had the site. Let’s get to how you got customers. How do you get people to walk in the door and say, “I like you enough that I’m going to buy?”
Dana: Just like you do with anything at first, which is to reach out to the people that you know.” So, I did that in a couple of different ways. I did it with my own friends. I did it through Facebook, letting people know that I just launched this beef jerky box. Please come and check it out and subscribe or tell anybody that you know to subscribe. But then I also have a network now with AngelPad. So that was really helpful to be able to go and reach out to this group of people that says, “Look, I started a new startup. Come check it out please. I want you guys to subscribe.”
Andrew: How are you guys staying connected, you and all the other AngelPad entrepreneurs?
Dana: It’s through Google Groups.
Andrew: So all you had there is a Google Group of other entrepreneurs who have been backed by AngelPad and that’s a very valuable network for you.
Dana: It is. You ask a lot of questions. If you have a key hire, if anybody has an opportunity if I wanted to find a job, that would be probably the first place that I go if I’m looking for work.
Andrew: I see.
Dana: It’s a fraternity. It’s a brotherhood. There are females founders in there as well in the sense that it’s a unity.
Andrew: I’m not in any of these bonding groups. I’m very good at connecting with people, but I’m not good at bonding in groups.
Dana: I’ll start up a private Facebook group with you.
Andrew: People Bond with Andrew.
Dana: Yeah. We can start our own little network.
Andrew: I’m very good at one-on-one. I think at some point I’m ready to move on. That’s my problem. I don’t know. Maybe I’m also–this can’t be a therapy session for me. I like how as I watch people get to know each other and build these relationships, I like how much value I see that they get out of it. That’s meaningful to me.
I was just talking to someone who works at inDinero, a company I invested in that came out of Y Combinator. I said, “Is it helpful to be part of Y Combinator now as an alumni?” And they said, “Yeah, we get so many clients from this network of people.” All these startups, they need somebody to do their books, they get inDinero in.
Andrew: All right. I need to bond like that.
Dana: Let’s be honest. With YC, YC is a pretty big stamp of approval, not just for funding, but also for customers.
Andrew: But it’s also a network. I’ve got to talk to Jessica who founded that inDinero and see how she’s staying connected to that community.
Andrew: But let me move on here. You reached out to them and you got a grand total of how many sales the first time?
Dana: Yeah. That was my first month, 14 sales.
Andrew: I would have thought more people would buy from you. You’re reaching out one-on-one. No, you weren’t. You never emailed one person and said, “Hey, Andrew, I started this. Can I sign you up?” You instead would email and say, “Hey, do you guys know anyone?” You didn’t come out and ask an individual person.
Dana: I didn’t. No.
Andrew: You didn’t. If you would have emailed me, even though I don’t eat beef, I think because of our relationship I would have had to buy a subscription.
Dana: Maybe. Well, are you interested in a subscription now?
Andrew: I can’t eat beef. I’m so glad that you didn’t send me a sample because then I would have probably given up on my whole no meat thing.
Dana: Maybe I should have sent you a sample. Was that your way of saying that most people send samples beforehand?
Andrew: Some people do. Some people don’t. I don’t need samples. I don’t want to be drowned in samples. But in this case, I like the jerky. I see the problem. But why didn’t you email people individually and say, “Hey guys,” or, “Hey, Andrew,” “Hey, Steve, sign up?” Were you a little shy?
Dana: I guess maybe.
Andrew: I would be.
Dana: I didn’t think about it as being a little shy. I’m usually not. I don’t like to be super pushy. But I guess I don’t think that was a hesitation for me. I just accepted the fact that 14 was my number and that was what I was going to work with. I didn’t have any expectations going in saying that I need x-number of people this month in order for this to work. I had already gotten samples from a lot of different companies. So I basically was just using the samples that I got to stuff the boxes and I had enough product for that. So, I guess I was okay with that first month being that.
Now, I will say though that my vision was that I would have 1,000 subscribers within three months” time. Now, I was way off on that.
Andrew: How many did you have within three months?
Dana: Boy, I knew you were going to ask me specifics on this stuff.
Dana: Maybe 100.
Andrew: 100. Okay.
Dana: I’m going to say 100. That could be off.
Andrew: So 14. You actually handwrote each label yourself.
Andrew: You shrink-wrapped them. How do you shrink-wrap?
Dana: Office Depot. I brought every single box with me to Office Depot and yeah, they didn’t have a system for doing mass emails or mass mails, I should say. So I had to handwrite every label.
Andrew: And then you pay them and they shrink-wrap it and send it out.
Andrew: What boxes did you use at first?
Dana: What boxes?
Andrew: Before you found the box connection.
Dana: Oh, Salazar? Uline–I bought all my boxes through Uline. They ship next day.
Andrew: Okay. And you started just shipping out free samples that you got. That was your first product.
Dana: Yeah. And I was going to continue down this path until I met a guy from Conscious Box.
Andrew: Wait, continue down the path of–and this makes sense–saying, “I’m going to go to these beef jerky guys and say, ‘Can you give me samples that I can give to my customers? Some of these customers might end up being subscribers of beef jerky. It’s a good way to introduce your stuff to them.'”
Andrew: And that was your model at first.
Andrew: Okay. So it wasn’t like you just got some free samples at a conference and you decided that was what you were going to sell.
Dana: No, no, no. I didn’t bring any samples back from that conference. This was all people that I went out online and looked for other beef jerky manufacturers, asked for samples, told them what I was doing.
Andrew: So why didn’t you stick with that? It seems like a really good model. Your expenses are much smaller with that.
Dana: Yeah. It’s the perfect model. Think of the margin on that. Your only cost is your boxes and your shipping. That is the perfect model. That model works for Birchbox because Birchbox is what it is. They were one of the first to start it. They have such a huge subscriber base. And the clients that they’re dealing with, the products that they’re dealing with are these cosmetic manufacturers and the beauty manufacturers where their cost for development and manufacturing is so low. They can work with these huge manufacturers.
On the flip side, I’m working with small-batch manufacturers. This is like Joe’s uncle Tim who lives on the side of the hills and he shoots his own meat and then he goes and carves it himself and dehydrates it. That’s extreme. That’s not really how it goes. But for an example, that’s kind of how this works. These aren’t Jack Links. These aren’t Obertos that have a lot of marketing budget.
Andrew: They don’t have a lot of money to give you free merchandise hoping that people are going to buy a bunch.
Dana: So I knew this wasn’t going to last. I don’t remember what the tipping point was, the number of subscribers, but at one point there was, “Hey, look, I can’t send you that many.” I think it was around 30 if I think back where people were saying, “I can’t send you 30 samples of this.” I knew at that point that I was going to have to start buying product, which is where the group comes in handy because it’s like, “How many of you guys are actually paying for the products that you send in the box?” And you get answers from people that are saying.
Then the question is how much do you spend of the money that you make on a given box so you know that the quality or the value is there for the subscriber.
Andrew: Yeah. I guess I understand why you’re discounting the importance of it. It just seems so easy, of course you’re going to chat with other people. I don’t think there’s a natural, instinctive thing for most people to do. Most people would just say, “I’m doing this alone. I wish I had other people around me,” or not even come to that conclusion. They wouldn’t take the step of then doing it.
All right. So you’re doing it yourself. You’re then realizing through all these other people you should be buying the beef jerky too. Let’s continue then with how you got more people to sign up. One thing you did was–I’m looking at a Product Hunt post from about a year ago. You listed yourself on Product Hunt, right?
Dana: Yeah. I did.
Andrew: Product Hunt is a website where people talk about new products. I wouldn’t have thought that a beef jerky site would be on there. Frankly, it didn’t do that well. It got only 16 up votes. But a year ago that was decent.
Dana: It really wasn’t. But it did drive a few thousand people.
Andrew: It did.
Dana: So I did get some subscribers out of that because I also did a promo code through that product hunt. Of course, I was hoping that that would do better than it did. The reason I thought it might do okay is because there was a subscription box prior to that, I think it was even the same week that had done really well. It was Agent Ribbit, which was the science project one. They seemed to have done really well. So, I thought, “This probably could work.” I had Startups Anonymous that was on there previously and that did extremely well.
So I was excited to introduce it to the community. Startup people are my group. They’re my people. So I felt like if anybody is going to be supportive of this, it’s going to be them. Now, at the same time, startup people are generally broke. So it’s harder to get them to part with that kind of money.
Andrew: Yeah. They are.
Dana: But a good thing came as a result of that.
Andrew: What’s that?
Dana: I found out about Digg doing–and I don’t know if you were going to talk about this next, but Digg was going to do Digg in a Box. So, I was able to reach out to Digg and make an arrangement with them. Basically, I was going to be part of their box, their inaugural Digg in a Box where they source products from Digg and then put it in there. They thought it was a perfect alignment because of our name and their name.
So, the arrangement that we made was that I wouldn’t pay for that. I would just supply them with product, which 350 pieces of beef jerky is not exactly cheap, especially when I don’t have any budget whatsoever.
Andrew: Yeah. We’re talking about $3,000 to $4,000.
Dana: Yeah. So basically, what I did is I went out to the manufacturer and I said, “Look, they’re going to give us front page placement on Digg.com,” and this guy has no idea what Digg is. He’s like, “Okay. Is that good?” I’m like, “Yes, it’s good.” So, basically I got them to contribute the product. In exchange, I would co-brand this with them. So, yeah, I ended up being able to get this placement for free, basically.
Andrew: That’s pretty cool. And then the other thing that they did was you gave them the jerky. They then told all of their customers about Stick in a Box and they introduced them to this jerky. In addition, they gave you a free ad on Digg.com.
Dana: Which was the real value.
Andrew: Which is what you really wanted. And that ad was for Stick in a Box. And what did it get called, like, “Jerky we Digg.”
Dana: Yeah, “Jerky we Digg.”
Andrew: So, that’s good placement. How many customers did you get from that?
Dana: Okay. I had this written down.
Andrew: I’ve got it here actually. A lot of this is me teeing up questions and then digging in deeper. The answer is–this is why we do pre-interviews, by the way, for the audience to know–250 subscribers in one day.
Dana: It was by far the best thing that we had done to date.
Andrew: And that’s what they usually would sell for what, $10,000?
Dana: I think so. That’s what she said. She said it was worth $10,000.
Andrew: You negotiate or something, right?
Dana: Yeah. But $10,000 was the price they put on that.
Andrew: All right. And did those customers stick around?
Dana: They did. I sell monthly subscriptions. I sell six-month subscriptions and I sell twelve-month subscriptions. I would say 50% of what came in was a longer term subscriptions because of the discount up front. So, I offered a discount.
Andrew: Okay. And we should talk about discounts. Actually, let’s talk about discounting now. You talked about a discount on Product Hunt. And Ryan Hoover, the founder of Product Hunt, thanked you for doing that. By the way, he said that your website was distasteful in the comments, but he thanked you for the discount code. Do you remember what it was about your site that was distasteful?
Dana: Well, if you look at the FAQ–so, I describe our business as a gourmet beef jerky subscription box with an attitude. So, the decision I made out of the gate was that if I’m not going to have a big budget for marketing, I’m not going to go raise venture funding, I’m not going to pursue that path, I have to stand out. And the only way, in my opinion, to stand out is to do something fun, do a fun brand. And you know, with Stick in a Box, obviously that already has its own–
Andrew: Yeah. It refers to the SNL bit about…
Dana: Yeah, “Dick in a Box.”
Andrew: I don’t know why I hesitated to say it. I shouldn’t not say something here.
Dana: It was on NBC.
Andrew: It wasn’t. I think they just put it online.
Dana: Oh, whoops.
Andrew: It doesn’t matter. Who cares what NBC does? I shouldn’t rule myself based on them. So, what else?
Dana: I was going to say our next box that we’re in the process of having made right now actually has a hole cut out in it for meat access.
Dana: It’s perforated. It’s a perforated hole. It’s a meat access hole. So everything that we do is tongue in cheek. In an email that I sent out last month, the subject line was Go to Hell and it was in reference to our Death by Jerky.
Andrew: The hottest jerky.
Dana: Yeah, the hottest jerky in the world. So I toe the line in everything. The Father’s Day promotion was Dad Wants Our Meat and We Want to Give it to Him. So, everything we do is just right on the edge of being inappropriate. But those are the kind of subscribers that I want as well. Those people are the ones coming back. They’re like, “I want your meat. Give it to me.” It’s fun. I get to live my own sort of life, like this fantasy of being the guy’s guy.
Andrew: All right. So what were we going to talk about? We were going to talk about discount codes. That’s why I brought up Ryan Hoover. He liked the discount code. You’ve said that you in retrospect shouldn’t be doing discount codes. But I see discount codes all over the place.
Dana: Yeah. I think in the pre-interview I mentioned this. One of my initial strategies, what I thought was going to be the big winner for me was I was going to go out to daily deal sites and I was going to jack up the prices on my site. So they were going to be twice as much as what I actually needed to get and then I was going to discount it by 50% on the sites and sell it that way.
So I thought that was the right approach and right strategy. Well, it turns out that it was really difficult to get in, in a short period of time to any of these daily deal sites. So, meanwhile, my prices were really high on my site and I wasn’t getting any subscribes.
So, I decided, “All right, I’m going to forget that path and I’m just going to put the prices to where I need them to be and I’m going to start selling that way, which basically means I’m giving up on the daily deal sites.”
Andrew: I see. Okay. That makes sense. But you do still have discounts.
Dana: I still have discounts. I still have margins built in. I know where I need to be in terms of–I hope you don’t ask me that question because I don’t want to give away everything in terms of my margins. There are some competitive sites out there.
Andrew: What are your margins?
Dana: I knew it. No.
Andrew: Is it more than 50% gross margin?
Andrew: Less than 50% gross?
Andrew: Gross meaning just the price that people pay–the revenue you bring in minus the cost of goods sold.
Dana: Oh yeah. It’s a little bit less than 50%.
Andrew: Okay. All right.
Dana: Depending on what price point people come in at. So I have to average that out.
Andrew: Right, because like you said you do one month or six months, etc. and there are different prices per box based on that.
Dana: There is.
Andrew: Okay. So we got into that. You decided you’re going to charge $25 or so a month. Let me see… At month five–oh, here’s an issue–people start cancelling, right?
Andrew: Churn is an issue with any subscription-based business including, go figure, Mixergy. We all have churn. I don’t understand why even one person would cancel.
Dana: I know. I still take it offensively.
Andrew: I learned from one of my past interviews–I won’t say it publicly. You have to watch one of my past interviews who taught me how to deal with this.
Dana: Oh, on a personal level?
Andrew: No, in the interview. She said, “Here’s how you deal with churn.” It was so good.
Dana: Oh, that’s good.
Andrew: But I do need a way to talk about it without blabbing here. We’ll find a way. I want my audience to learn from it. Go ahead. What did you do?
Dana: So I knew that I missed the mark. I knew I was going to miss the mark as I was packing the boxes because it felt light. There’s this real–with beef jerky, beef prices are so high. So the value of the box is usually about the same of what somebody pays for it. But that is taking into consideration that I’m paying for their postage. I’m going out and I’m sourcing it. They’re not buying it online. They wouldn’t know that this existed. So it was all about discovery. That’s what I’m sold on. It’s not a bulk sort of box. So sometimes it feels a little light. I think that value is based upon the weight of a box sometimes.
So I knew going into that month after I had already purchased the product and I was packing them, it was too late at that point to add anything else. It was time-sensitive. I’d have some issues. Sure enough, I did. I think it’s over ten percent churn on that month, which is extremely high, at least in my world. I don’t know how it exists elsewhere. But in my world, that’s extremely high.
So what I did is I said, “All right. Nobody is giving me feedback here. I don’t know how I’m doing on a month to month basis.” Nobody is tweeting and saying, “This box is so great.” Nobody’s emailing me and saying how wonderful it is.
Andrew: Or how bad it is and giving you a head’s up.
Dana: The only measurement is people unsubscribing, right? People that are subscribing, that doesn’t tell me anything either. That tells me that someone else told them or they found it. So what I decided to do is I reached out to every single person that unsubscribed that month and I made what I call the Beta Program. I told them that in exchange for their feedback on a monthly basis and if they liked what I was giving them that they would promote me and tell their friends about me, I would offer them a unique price that nobody else was going to get.
Andrew: This was not for people who cancelled. This was for a small group of people who became your beta customers.
Dana: Yes. But I started with the people who cancelled.
Andrew: Oh, that’s so smart. So you go back to the people who cancelled and say, “Look, I’ve got this program. It’s a little bit cheaper. All I need from you is some feedback and you’re going to get a lot of insight from me too.”
Dana: Also being willing to share if I hit it out of the park.
Andrew: Got it. So, “If I’m good, share it. If I’m bad, give me feedback.”
Andrew: Cool. I see. All right. And how helpful was that?
Dana: It was extremely helpful.
Andrew: What did you learn?
Dana: I learned that I got about 70% of those people back, the ones that unsubscribed. So the first step was look, this was a helpful way. Now, that said, those individuals, I’m not making any margin on those individuals. But that was the price I was willing to pay. If they’re willing to pay me, which is basically cost, then in exchange I’m going to ask you for information. So that’s been extremely helpful in a lot of ways in terms of understanding that I need to shoot down the middle and not go extreme on any one side.
So in the world of beef jerky, you have like extremely sweet jerkies, you have extremely hot jerkies and then you have stuff like right down the middle. So I knew that my path had to be right down the middle. People were telling me I can’t make everybody happy every single month. It’s impossible. Some people are saying it’s too sweet, some people are saying it’s too salty, so on and so forth. Like I can’t win. I don’t have enough beef sticks. I have too many beef sticks.
So it’s been in the zone. Most beef jerky manufacturers make an original and then they make something on the sweet side and something on the hot side. So I generally stay now right in the middle. It usually makes everybody pretty happy. And they get the general taste of what the product is.
Andrew: And that’s the feedback you got from people because they were starting to tell you, “This is too outrageous for me.”
Dana: It is, too much sugar, too salty.
Andrew: What’s the deal with August, 2014? I’m seeing Oberto in there. What the hell are you doing with Oberto?
Dana: In a box?
Andrew: In a box.
Dana: Well, I hadn’t decided what my unique strategy and proposition was going to be at that point in time.
Andrew: Because that’s like supermarket brand.
Dana: You remember, I was getting product for free at that point in time, so that was month two.
Andrew: Am I being a jerk here for insulting your box?
Dana: No, no, no. That’s what that article was based off that I told you about, that I was the most disappointing site since Color.
Andrew: I see. I didn’t read that. Okay. I should have.
Dana: Basically, what that author did–
Andrew: I see the author right here. This is Nathan Mott. Him.
Andrew: I’m not calling him out in a bad way. Apparently he nailed it again.
Dana: No, he didn’t subscribe. He never tried the box. He didn’t ask me any questions. He didn’t try the box, nor did he know that I was the guy who was writing alongside him on Pando was the same guy who started this company. He had saw the box through the Digg link and decided to write a story in the middle of the night. So that lives on, I guess.
Andrew: Here’s his last line. He’s just talking, talking, talking about what it is and how it compares and then suddenly it’s, “So, there’s NatureBox, there’s Blue Apron, etc. but this, it’s like signing up for a monthly pays to delivery with the hope of getting something new and exciting only to find out that the box is filled with Twinkies and fudge rounds. Those are fine if you’re into eating the world’s worth snacks, but there’s no reason to get them delivered when they’re available in practically every grocery store, gas station and every shop around.” I see you’re wincing as you hear this.
Dana: Yeah. It was a fair assessment based upon the logos that are on my site and the photos that we were sharing. So, yeah, I guess you’re safe to assume that. But it would have been nice had he just sent an email and asked me a question, maybe subscribed before he wrote the post or asked for a box, a sample box. I don’t know. Whatever. I’m a press whore. So I like to go after as much–I got the bug once I started Wahooly and I saw what hype could do for a company. So I am a general fan of getting any publicity whatsoever. And even our failure posts tend to drive new traffic.
Andrew: Did you get customers from that?
Dana: The Pando article?
Dana: I don’t know. I don’t have really good tracking to tell you whether I did or not.
Andrew: Oh, you know what? Watch your mic against your shirt. I just realized that it was making some noise. I hope it wasn’t throughout. I think we’re good.
Andrew: Yeah. There. Wow. I hope I didn’t let that go on throughout. I just caught it now. Okay. So, what else did you do to get customers? So being a press whore apparently helped. Even negative press leads to some customers. Making deals with Digg seemed like a huge thing for you, going in and trying to get your stuff in their box and in return getting some advertising.
Andrew: What else? What’s the number one thing that worked for getting new customers?
Dana: Well, I think this article did really well.
Andrew: Which one?
Dana: The post that I just wrote that led to this interview.
Andrew: Ah, this is the Business Insider article, right? No one writes directly for Business Insider.
Dana: No. It was a syndicated post. I write for Inc. So, I wrote on a weekly basis for Inc. So, this post was picked up from Inc. I also cross-promote on LinkedIn. So, I ended up kind of getting a triple whammy on that one.
Andrew: And we got the Business Insider article because they write the best headlines even if they don’t write original content. Was that the original headline? What was the original headline? Let me find it.
Dana: Yeah. The original headline was along the same lines. I wrote, “$100,000 Jerky Business.” They left out jerky, which I guess whatever, it doesn’t matter. But yeah, they do a good job with the links.
Andrew: Here it is, “How I Built a $100,000 Business,” oh this is their headline, not ours. We should not steal this. We have to be careful. “How I Built a $100,000 Business in Six Months for Less than $100.”
Andrew: That’s it.
Dana: That’s it.
Andrew: And you got customers from that?
Dana: Yeah. I got a lot of customers form that. I should have come prepared with actual numbers, like hard numbers. But I don’t know. I’m going to guess here. It’s probably 300.
Dana: If you look at LinkedIn, you can see how much traffic that one drove. The Inc. article didn’t do as well as the Business Insider article. But I think Business Insider was up to like 30,000 views.
Andrew: Yeah, 39,000, almost 40,000.
Dana: And on LinkedIn I had 28,000, I believe, something like that. That’s a lot of eyeballs. But I only ship in the US. If I was to ship internationally, I’m sure a lot of those readers came internationally as well.
Andrew: Your frequently asked questions addresses that pretty beautifully.
Dana: I’ll tell you one other thing.
Andrew: So how much time do you spend on content marketing like this?
Dana: Probably more than I should. I do get paid by Inc. to write. So I spend enough time writing on Inc. just enough to get paid on a monthly basis, which is about six times per month. So it isn’t all that often.
Andrew: Does it help you get more customers on a regular basis?
Dana: I think so. I should track it better. That article it was easy enough to track. In my general footer, I have links to my stuff. And so, I know that I get an uptick any time I publish on LinkedIn and on Inc. I get an uptick a little bit here and there. I don’t always get syndicate deals on Business Insider. Pando, it’s been a little while since I contributed. But that’s really primarily for Startups Anonymous.
Andrew: Startups Anonymous being the blog that I first read your story about how things were going south for you.
Andrew: So it seems like your main source of traffic is content marketing on other people’s sites. It seems like you get hits sometimes, but it’s a feast or famine business, isn’t it?
Dana: It is. It’s a feast or famine. I’ll tell you one other thing that I didn’t mention in the pre-interview. I always wanted to create this idea of the restaurants, the ones that tend to have this sort of allure are the ones that do these food challenges, like eat this huge 30-inch pizza and you get it for free along with a t-shirt, right?
Dana: So I wanted to recreate that online. So, I went out and searched, “What’s the hottest jerky in the world?” That’s where you get this Death by Jerky thing. So now I offer three different types of jerkies. I offer the scorpion pepper, the ghost pepper jerky and then the hottest one, which is the Carolina reaper jerky, which is the hottest pepper in the world. So by definition, it’s the world’s hottest beef jerky. So, I made that into a challenge. I’m like, “Take the challenge and you’ll become part of our Wall of Flame.” Take a video of yourself eating this jerky and we’ll post you on here. Now the Wall of Flame doesn’t exist yet.
So I’ve just been posting here and there if somebody sends me a video. But one of the things I did with that is I basically Googled names I knew along with the word jerky to see if they’d ever spoken about jerky in their life. So, like for example, Peter Shankman–you know who Peter Shankman is?
Andrew: Yeah. The founder of Help a Reporter Out. He’s really well-connected, has a lot of following.
Dana: He is. So I typed in Peter Shankman’s name and jerky to see if at any time that he’s written, he’s written about jerky, which he had. So, I reached out to Peter Shankman and said, “Hey, Peter, I want to send you this package of jerky. Would you do me a favor? When you get it, will you film yourself eating it?” And he’s like, “Yeah, for sure I’ll do that. Send it over.” So, it’s this extremely hot jerky. So, of course your face is going to get red. You’re going to go through all these phases. So I got Peter Shankman to create this video of him eating this jerky.
Andrew: I’m looking at it right now. Oh, content was removed by Warner/Chappell. He must have had some music on in the background.
Dana: Oh, that stinks.
Andrew: Peter, no music. Ah, that stinks. But it’s him eating one of these bags of jerky.
Dana: Yeah. I think it was the scorpion pepper, which was like the second hottest.
Andrew: And he links back to you from his site. Oh, that’s beautiful. Great idea.
Dana: Yeah. So, that was kind of a fun thing and it’s something we’ll continue to do. My next version of the site is going to be the Wall of Flame which actually will have the videos of people eating it. So a few people have done that and they have done the video. Plenty of people have bought it, but that’s just one little hopefully viral attempt to get some cheaper publicity.
Andrew: All right. I like how you’re doing all this. Out of $100,000, would you say you made $15,000 in profit?
Dana: More than that.
Andrew: More than $30,000?
Dana: Yeah. A little bit north of that.
Andrew: Oh wow. All right. So, you’re doing well. Do your kids have health insurance now?
Dana: They do have health insurance. And you know, not to get too far off-topic, but the end of Wahooly ended up working out.
Andrew: You sold to Loot.
Dana: We merged with Loot. So I do have a day job, so to speak.
Andrew: Oh, you’re working at Loot now?
Dana: Well, I’m running their sales and marketing sort of as the transition that Chasm/Wahooly became Loot. So as part of that arrangement, I’m working with them.
Andrew: I see. I see it on your LinkedIn profile, 2014-present VP Sales and Marketing at Loot.
Andrew: But your investors now have shares in Loot. They haven’t yet seen an exit.
Dana: No. But that was important. It was an important thing. I’ve written about this too. It’s one thing–you could give up. I think the tendency is when you call it quits to call it quits. I guess that’s just not my style either. I don’t like things to end like that. So it was important. That happened a whole, I think, year–it was a little over a year it took to actually make that happen.
Andrew: How many hours a day are you working now at Loot?
Dana: I don’t know. Do we count hours?
Andrew: Are we talking like 40 hours a week? Is it a full time thing?
Dana: Oh yeah. For sure. Yeah. Other than going home and having dinner and playing with the kids–
Andrew: And coming in to do this interview.
Dana: After the kids go to bed, it’s back on. It’s open enough where they know I’m working on Stick in a Box. We’re all okay.
Andrew: All right. Well, thank you so much for doing this interview and for being open on–I was going to say Alcoholics Anonymous, but it’s Startups Anonymous. The website is StickInABox.com. Will you help me promote this interview by asking the network at AngelPad to please tweet this out for Andrew? Say, “Andrew is asking me to ask you guys will you please tweet this out.”
Dana: Of course.
Andrew: Than you. I don’t have my own network. I have to steal other people’s networks. And I’m so curious about whether you get any customers from this. Will you tell us in the comments if you get any customers from this.
Dana: Sure. I will.
Andrew: So, the website is Stick in a Box. As soon as you go to Stick in a Box, click on the discount code on the right side and get a discount.
Dana: When it goes live, maybe I’ll post a promo code within the comments.
Andrew: I would love that too.
Dana: Then we can track every purchase.
Andrew: Dana, thank you so much for doing this. It’s been great getting to know you via email and finally talking to you one on one here.
Dana: Same here. Thank you for the opportunity.
Andrew: You bet. Thank you all for being a part of it. If you’ve got anything of value out of this interview, first of all, thank Dane and number two, be sure to subscribe to the podcast where you get every single episode directly sent to your phone or your watch or your whatever. All you need to do is go to Mixergy.com/Podcast.
Thank you for listening. Bye, everyone.