Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I do interviews with entrepreneurs about how they built their businesses.
And you know by now my favorite interviews are interviews with people who listened to my past interviews, built up their companies and now say, “Hey, Andrew, I’m ready. I want to come back and tell you what I’ve done with what I’ve learned listening to you and other places.” That’s what we’ve got here today. I’m so excited to have him on here.
Today’s guest sent me an email. He said, “Andrew, it is time. I am ready. Let’s get this interview going because I’ve built something and I can’t wait to tell my story the way that other people told their stories to me.” His name is Peter Friis. He is the founder of Essio, which makes the world’s first aromatherapy diffuser for the shower. We’re going to talk about what that means specifically, and we’re going to talk about what he did to actually grow sales at this company. It had to do with this landing page he created. I’ll let him tell the story.
This interview is sponsored by two great companies. The first, if you look at my iTunes cover art right now or cover art for the podcast, you’re going to see that it finally looks good. DesignCrowd did it. I’ll tell you why and how and how they can help you. The second, if you like the search on my site, I should tell you why Toptal is the company I turned to, to do it. But I’ll tell you about all those later. First, Peter, good to have you here, man.
Peter: It’s great to be here, Andrew. Thanks for having me.
Andrew: I actually made sure you really were a fan, not just blowing smoke, but you are. You actually even bought Mixergy Premium at one point.
Peter: Yeah. I’ve listened to many, many episodes. I love it and love what you do, huge fan.
Andrew: Thank you. How big have you built this business? You know I’m going to talk about sales. What was your revenue?
Peter: Last year we did just about $1 million in sales.
Andrew: $1 million in sales?
Andrew: From that one thing?
Peter: Yeah. Well, one thing plus all the refills that people buy, so there’s a whole kind of follow-on sequence people get. So we have the system, which sets up in your shower, hooks onto your shower and creates aromatherapy in the shower. And then we have refills that you can buy that plug in. So it’s the kind of continuity model that really drives the whole thing forward.
Andrew: What percentage of your revenue comes from that arm that holds the–what is that called, the aromatherapy . . .?
Peter: We call them pods.
Andrew: The aromatherapy pods–how much from that initial cost and how much from subscriptions?
Peter: It’s about half and half.
Andrew: Wow, dude.
Andrew: Wow. What were you doing before?
Peter: When we first started off, we didn’t have nearly that size of continuity. It took a lot of thinking about how to grow that side of the business, certain things that we did in terms of retention marketing, email marketing, Facebook marketing to really grow the number of people that came back and repurchased.
Another thing was just improving the product as well over time. When we first started out, we had a lot of problems with the product, and when people went to buy it and they experienced it the first time, their first reaction was not necessarily, “I want to buy more of this.” So getting the product right was a big part of it, but then also building out all those touch points to sort of remind people that, “Hey, you’re running out. It’s time to get some more.”
Andrew: You’re a guy who used to work for Amazon, right?
Peter: I did.
Andrew: What did you do for Amazon?
Peter: I worked in marketing and product development on their digital side. So I was doing kind of marketing for the video business. So if you’ve ever watched a video on Amazon Prime, that was something that I worked on. I worked on integrating that into connected devices, a lot of the PR launches for that service, some of the rebranding stuff.
Andrew: What did you learn from doing that?
Peter: Gosh, I learned a lot, but I think the primary thing that I learned was that I didn’t want to be in a huge company all my life.
Peter: I really felt that–I felt a little bit like I didn’t have control over what I was doing, like all the orders were coming down from high up. I was a good lieutenant and I was good at executing what was being given to me, but at the end of the day, I felt like my creativity was not being fully exercised and that’s really what I enjoy about being an entrepreneur is being able to take action on something that I find to be the best way to do something and that I want to test and I want to do.
Andrew: What did you execute on that you’re especially proud of?
Peter: At Amazon?
Peter: The best thing that I did I think there was I built a program there called Tweet and Save. This is really kind of the early days on Twitter.
Andrew: Tweet and Save?
Peter: Yeah, they still have an element of this there. Basically what it was, if you went on to the @AmazonVOD handle and tweeted on behalf of Amazon, we would give you a coupon code to go use for a video rental on the site. We got the follower count from 15,000 to like 120,000 over the course of like a week or two. We actually measured out the lifetime value of those customers and found the value of those customers well exceeded the initial coupon code we gave them to do their first rental.
So it was a great customer acquisition tactic, because every time they were tweeting out, they were saying, “Hey, I just got a free coupon from Amazon. Click here to get yours.” So it had a viral nature built into it. The reason that I picked that is because Amazon was very–at least in the early days, very apprehensive about social and social media, and they were very standoffish about it. So I had to win over a bunch of people to say, “We should do this. We should try this.” I felt very validated by the fact that it worked.
Andrew: I get it. That’s phenomenal. It’s also a good company to come from. It gives you a ton of credibility. It’s the kind of company that even here in San Francisco I see everyone is a badass, but if you worked for Amazon, it means you really worked yourself to death and you could do it. It’s the Marines.
Peter: That is absolutely true. Amazon, if you get through a couple of years at Amazon, you have a badge on your shirt, for sure, because there’s actually a funny story. At Amazon they had this thing called the Old Fart Tool. It’s on their Wiki. You could plug in when you started at Amazon. When I left, I’d been there about four years, and I was in the 98th or 99th percentile of longevity. The vast majority of people that go to Amazon don’t last more than a year.
Andrew: Oh wow. Because what? Do you have a memory of something that was especially tough there?
Peter: I saw people cry in meetings.
Andrew: You did? What would make someone cry?
Peter: You sit down in meetings. There’s a point person that usually comes in with a memo of what they’ve been working on, they’re presenting to the rest of the team. The leadership can be super harsh. They can be really hard on whoever’s presenting, sometimes I think taking it to an extreme. I saw it a couple times where someone came in maybe not fully prepared and didn’t have all the answers on hand and got torn to shreds.
Andrew: Did that ever happen to you?
Peter: I got torn to shreds, but I never broke down. Internally probably I was pissed, but I never really . . .
Andrew: Is it useful–I remember working for Dale Carnegie, the “How to Win Friends and Influence People,” and I remember saying look, I read the Dale Carnegie book. I understand it. I buy into his philosophy, but I still hear that assholes do well in business because they’re pushing you to an extreme and people want to be pushed.
Peter: I got a good story for you though.
Andrew: Hit me.
Peter: So one of the guys that broke down in a meeting once, he left Amazon and moved here in to Southern California. He’s a good friend of mine, actually. He then started–he created a startup and within a year, he sold it for $25 million. He also felt quite validated, and the guy that had kind of pushed his boundaries in that meeting got an email from him saying, “Hey, I just sold my company for $25 million. How are you doing?” Yeah.
In a culture like that, sometimes the a-hole does rise in the ranks a bit, but there’s a limit to how far someone like that can go, I think, because they’re not inspiring people around them. There’s a ceiling on how far someone like that can go, I think.
Andrew: I see. It creates resentment that can even outlast the company. Someone can be doing well and still think about, “Hey, I got . . .”
Peter: Yeah, exactly.
Andrew: Interesting. All right. So I see why you would leave. I’m wondering where the idea came from for Essio.
Peter: Yeah. So the idea actually came while I was still at Amazon. My parents came up with this idea. I didn’t come up with the idea. My mom is a huge fan of aromatherapy, of the spa. She’s always been someone on the go, busy saleswoman, three kids. She never had time really to unwind and relax on her own, not to mention that spas are expensive.
So she had this problem herself, which was she was just always stressed and never had time to relax and she was literally in the shower one day and said, “Gosh, wouldn’t it be great if I could have the spa right here?” For her, the aromatherapy was synonymous with the spa, like having that scent of lavender or eucalyptus or peppermint or whatever it was in the steam of the shower. To her, that was the idea of being at the spa.
So she had this idea and she tells my dad. My dad is kind of the nerd engineer of the family. He’s also someone that if you’re at a party, someone will come up to him with an idea because he’s a tinkerer. He’ll know pretty quickly whether something is viable or not. My mom tells my dad this idea. He thinks about it for a second and he’s like, “That’s really interesting. There’s nothing else like that on the market.” He had just retired from his corporate career. He had a little bit of time to tinker around. He turns my sister’s bathroom into a lab. Within a couple of months, he had a prototype going. So that was kind of the genesis of the idea.
Andrew: I see. Did working at Amazon tell you anything about whether it would work or not, whether you could sell it?
Peter: A couple things–I was working in digital at Amazon, so working with a digital and a physical product I quickly learned were very different beasts because a digital product can be quickly tweaked and enhanced and any problems can be repaired very quickly, whereas with a physical product, you’ve got to get it right the first time or you’re going to have to go back and retool, and it’s expensive and you can’t iterate as quickly.
But I think that the experience at Amazon taught me to understand data and evaluate data and to think about things from that perspective and also from a customer acquisition standpoint. I did a lot of customer acquisition marketing at Amazon. So I went into this thing knowing like okay, how much money is it going to cost to acquire a customer, and are we going to be able to, with the amount it costs to make the product and the amount it costs to advertise, are we going to be able to break even? Thinking about also the lifetime value of that customer. So I had that framework already built in to me because I worked at Amazon and I had been doing that there.
Peter: But in terms of validating the product idea, what we did for that was we actually did a focus group. We just found people off of Craigslist and brought them together, paid them like $20 each, gave them a product, had them go and experience it and then brought them back into a room and started asking them questions basically about how they enjoyed it, what their experience was. We hired a moderator to do that.
That was really the first kind of validation of whether this product would work. We also did like a survey, random survey of like 500 or 600 people in the U.S. and asked them some questions about their willingness to purchase the product. At that time, there wasn’t even a product. It was just a drawing we had. We got enough interest there that we felt we may be on to something.
Andrew: You know something, if you see me looking around, it’s because I’m cyberstalking you as we’re talking. Your dad is Nils Friis?
Andrew: I see. And the company that he was president of, was it Aromatec Systems?
Peter: Aromatec Inc. is the parent company, the company that Essio is under. So Aromatec is the name.
Andrew: Aromatec, I see. I get the connection then. Aromatec sells a lot of different diffusers, car diffusers, household diffusers, right?
Peter: Not our company.
Andrew: Maybe there’s–
Peter: That could be a different one.
Andrew: Okay. That explains why. When I did a Google search, I came up with two different results. The first result was aromatherapy diffuser for the shower, which is you, and then Aromatec Systems, which just sells everything. I see. What was he doing before?
Peter: My dad, his background is chemical engineering. He worked at a couple of different companies in his career. He worked at Union Carbide. He worked at W.R. Grace. He actually has five patents to his name. I think in combination they’re in excess of $1 billion in royalty income, not of course to our family, but the companies he worked for.
Andrew: Got it. That’s where you can get a little bit of help from your dad.
Andrew: Who manufactured it for you then considering his background?
Peter: My dad kind of came up with the initial prototype. Then we took that prototype to an industrial designer in Boston. They came up with the first aesthetic look and feel of the product, and then we found through that company a factory in China that they had recommended and they built the first round of product for us.
Andrew: I see. So you get this thing up and running. How do you do your first sales?
Peter: Our first sales literally were me going and pitching to investors and people buying it on the spot. When I was pitching to investors, they were still interested–
Andrew: Why would investors care about this?
Peter: Well, actually it was difficult because most investors didn’t necessarily care about it from an investment standpoint, but they thought it was an interesting unique product and they wanted to try it. That often was the experience that we had, not just with investors, but also we tried trade shows. So we tried going to trade shows, like spa shows and gift shows. We tried to sell the product there, and often we had trouble like closing an account, but the people that worked for the spa wanted to buy it for themselves.
Andrew: I see. Why? What is it about aromatherapy? We always call it aromatherapy, but I wonder what’s the therapy involved in it, right? If I go to physical therapy, they better make my leg work better. If I take aromatherapy, what’s going to happen that’s better in my life?
Peter: A lot.
Andrew: I like that you weren’t even smiling as I ask that question, you’re like, “Dude, shut the fuck up. I’m going to educate you.” I saw that in your face.
Peter: I educated myself over the course of this business. I didn’t know anything about aromatherapy. It’s actually quite fascinating. But essential oils are basically derived from plants. So you have lavender, peppermint, eucalyptus and each one has a different set of benefits that they have.
So, for example, when you breathe in peppermint, that sends a message from your nose into the limbic system in your brain where your emotions and feelings are stored and it actually stimulates noradrenaline in the brain. They’ve scientifically shown this. Noradrenaline is what is produced when you’re in a fight or flight situation. So just breathing in peppermint will energize you because of this. Your noradrenaline is being stimulated.
Peter: Different essential oils do different things. If you breathe in lavender, you’re going to have the complete opposite effect. It’s going to be kind of sedative, calming relaxing. People that are depressed, if they breathe, it’s been clinically shown that if you breathe in lavender or you apply lavender that you can actually alleviate the symptoms of depression.
The term aromatherapy actually was coined by a Frenchman named René Gattefossé. He was kind of like a chemist, like my dad in a way, and he was messing around with essential oils. He actually had an experiment in his lab where he burned himself. He wasn’t anywhere near like a hospital or anything. He was thinking outside the box and thought, “I’m going to put some lavender on the burn.” He pretty much completely healed the burn just by applying lavender to his skin.
The essential oils have incredible properties. In many cases, they’re healing. In many cases, they can stimulate energy or relax you. That’s why a lot of people like them because they’re totally natural, they come from nature. It’s not something artificial or synthetically produced. If you look at other countries around the world, you look at Europe, parts of Asia, essential oils and aromatherapy are very respected from a medicinal standpoint. In the United States, the FDA doesn’t really regulate it, doesn’t really consider it a real drug of any kind. But if you go in France or England or Germany, it’s very commonly used.
Andrew: So you know my audience. If they wanted to start their day with a particular scent, what would you recommend for them?
Peter: Right. So we have our Breathe Blend–I’m going to recommend ours–which is the Breathe Blend, which has peppermint, eucalyptus, cedar wood, and lemon. But really, eucalyptus and peppermint, those are energizers and those are stimulators.
Andrew: So I put that in my shower. And as the water comes down my shower, I end up getting this aromatherapy?
Peter: Right. So what happens is there’s a little filter on the tip of the pod and that interacts with the water and the water then diffuses those little micro particles of essential oils. So you think of that little filter like a felt-tip pen of a marker, and it’s just kind of continuously wet with a little amount of essential oil and the water then just disperses those particles into the steam.
Andrew: And then I wake up because of that. I get that benefit.
Peter: You feel a boost, for sure.
Andrew: Because I take long showers, I can take that arm that it’s connected to and move it out of the shower when I’m five minutes into it.
Peter: Anytime, yeah. The way it’s designed is it’s designed to be flexible so you can turn it on and off at any moment. That’s nice too because a lot of our customers are families and maybe the wife loves aromatherapy and the husband doesn’t. There are some other products on the market that try to do what we’re doing, and they have it built into an actual showerhead and you’re kind of baked in at that point, you can’t really turn it on.
Andrew: Everyone has to do it.
Peter: Yeah, everyone has to have it.
Andrew: So did you get funding? I don’t have that info here.
Peter: We did. So what happened was I left Amazon. I actually went to business school. Business school, I was kind of like a fish out of water in business school.
Andrew: This is Anderson in SoCal. Yeah.
Peter: Yeah. We already had the idea for SEO at the time. Just as I started business school, we got patents granted. So all of a sudden we had something where a focus group said it was good. We had intellectual property. I’m in business school, and I’m like, “I’m going to give this thing a go because I’ve got all this free time,” not that you’re not doing anything else in business school, but I had more free time than I had when I was at Amazon.
I also knew that when I graduated from business school, I was going to have all this debt and if I didn’t raise some money to get this into a real thing and get some sales and all this stuff, then it was going to be back to Amazon or something like that.
I entered into a bunch of business plan competitions, and I won a fellowship for $15,000 at UCLA. It’s called the Larry Wolfen Entrepreneurial Spirit Award. We used that money to actually do our first production and get sales. And then from there, based on that just little amount of traction, I was able to take that proof of concept and patents and all that and do an angel round of about $300,000.
Andrew: I see. Okay. I don’t recognize any of your investors, the Wakaya Group, Seraph Capital.
Peter: Seraph Capital, yeah
Andrew: Seraph, okay.
Peter: They’re in Seattle. It was mostly from individual angels. It wasn’t institutional or anything like that. So we mostly had angel investors investing in us.
Andrew: At a $1.8 million valuation?
Peter: Wow, you’re finding all this information.
Andrew: I’m looking it up. I’m looking up Candace Friis, the whole thing.
Peter: That’s my mom.
Andrew: Yeah. Is she at Corcoran, or is that a different–
Peter: She’s at a Corcoran, yeah. She still works at Cocoran. But she was the genesis of this whole thing. So she gets a lot of the credit because she came up with the idea. But my dad and I kind of manage the business on a day-to-day basis, and we built a team as well that has helped us grow this thing and scale it.
Andrew: I thought this was going to be a 45 minute interview. We might actually end up having to get that room for a little bit longer.
Peter: I can switch rooms. It’s not a big deal.
Andrew: Okay. Great. Let me keep going then. First I’ve got to tell people about my sponsor, DesignCrowd. As a listener, did you ever notice how crappy my designs were? You can be honest. Sorry, Peter, did you ever notice it? As a listener, did you notice how crappy my designs were, like the iTunes cover art?
Peter: I don’t want to be mean, but it wasn’t the best.
Andrew: Yeah. I just never had any skill in it and I also never felt comfortable like asking for it because I’ve heard designers say this is the way the clients tell us what they’re looking for and look at these idiot clients. I thought, “I’m going to be that idiot client. I just want it to look good, make it stand out. Look at these guys, copy something.
Andrew: So I never bothered with it. Then I went to DesignCrowd and they had this one input box where I could describe what I’m looking for, very small, not intimidating. I hit submit on that. Then it turned out that wasn’t the end of it. They kind of sucked me into a couple of other boxes that were also equally easy to fill out, but I think if I would have seen them all at once, I would have been scared and not done it.
I filled it out. I hit submit. Then they said here’s what it costs. $100 off because I used the Mixergy which I’m about to give the audience. I thought, “Great, let’s do it.” I pulled out a credit card. That’s a no-brainer for me. I forget all about it.
Come Monday, I go through my email with my assistant. I hate email. My assistant literally looks at my screen as I go through email because I need her to keep my on track and take things off my plate if I can’t do them while I’m going through email. I suddenly see DesignCrowd, I thought, “They’re sponsoring again, that’s great.”
Then I realize, “No, wait, I bought something from DesignCrowd Friday night. Let’s see what they gave me.” I thought it was going to be another form asking for more data. No. It wasn’t one design. It was like a dozen, maybe two dozen different designs from two dozen different designers around the world. It was beautiful. They took like–I wanted to take the color green–frankly, I’ll be honest with you–
Peter: Then you can choose which one you wanted which is the best one, right?
Andrew: So here’s the thing. You have to give them feedback, which intimidated the hell out of me. I did not want to give them feedback. How do I tell them this sucks or here’s what sucks.
Andrew: So I didn’t do that. Then I thought, “You know what I can do is I can rate it. I’ll just hit the stars on each one so everyone will at least know what it is that I’m thinking.”
Andrew: I thought screw it. Who are these people? What are they going to do to me? I’m going to tell them this thing sucks. Forget Dale Carnegie for the moment. I told you to make my logo small. You made it really big. I don’t need this photo. I had a couple of opinions. I did it I thought in a good way because the next day, I got more designs based on my feedback. I thought, “This is great.” I started posting it on Facebook, get a conversation going.
Anyway, I picked the one that I loved in the end. I really liked the guy. He actually made some changes based on ideas that I’d seen other people create, actually one idea. Someone said, “I know you want green. I think yellow looks better.” I thought about it and I thought, “Yellow might stand out better.” Boom, I went to the guy I liked who gave me green. I said, “Can you do the same thing in yellow?” The next day he gave it to me in yellow, so I paid for it. Boom. Submitted.
If you’re looking at my podcast and whatever app you’re using, you’re going to see a nicer design because of DesignCrowd. It’s not just Andrew. They’ll do this for anyone. You come to them with your design need–website, brochure, logo, anything. They’re super inexpensive, which don’t let that scare you off. You go in, you tell them what you’re looking for very simply and then they get you a bunch of different designs from a bunch of different designers, people who think in ways you couldn’t even come up with to describe what you’re looking for, right?
They come at it from lots of different experiences and backgrounds. And then you give some feedback. It’s not very hard. Then you get another round and another round and another round. Boom. You’re just so overwhelmed by good stuff. You actually feel inspired and all these people care about your work to do that. I picked the one I liked and I only paid for that one. It’s guaranteed.
If you’re listening to me and you haven’t tried DesignCrowd, find something that you don’t like in your life that you think needs to be designed a little bit better. Maybe be a little upset as I should have been about your design of a website or design of cover art or whatever. Go to DesignCrowd. I’m going to give you a special URL. They’re going to give you $100 off any design up to $100 off because I think some of their designs are so cheap that if they give you $100 off it’s going to basically mean they’re going to pay you money. It’s really inexpensive.
Go to DesignCrowd.com/Mixergy. Inexpensive, but so beautiful and such a pleasure to go through their process–DesignCrowd.com/Mixergy. Look at what they did also on that page, we’re going to talk about landing pages. I love how they did this landing page. I love the little touches they did that only Mixergy people will appreciate–DesignCrowd.com/Mixergy.
Peter: I’m going to check that out.
Andrew: It really is so good. It’s so worth it. All right. You get your money. Do you put the money in product creation or somewhere else?
Peter: So we put it basically in tooling and in doing our first kind of production run. One thing we didn’t really have a great understanding of early one was all the kind of cash flow management and we’re much better at that now. So we took a lot of the money, and we put it into manufacturing. We actually didn’t have great terms from the factory. So we had to do 50% up front and 50% on completion. That would be shipped over to the United States. Then we had other parts of the supply chain that still weren’t done.
A lot of the problems we faced early on were it took so much investment up front to manufacture product and it took a long time before we were able to then turn that in to sales. We’ve gotten better at that in terms of managing that entire cash flow cycle now. At the initial stage, we took that money, we invested a good amount of it in just creating product and then we put a bunch of it into building a website and then more than I would–
Andrew: Why? What’s so expensive about building a website?
Peter: At the beginning, I really wanted to–I had a vision for how I wanted it to look and feel. We put a lot into building a custom Shopify site, where we probably could have just taken a theme that existed and iterated upon that. So that was kind of a lesson learned. There was that expense. Just in general, we had a lot of marketing expenses at the beginning because we were trying out a bunch of different channels for how to sell this thing. That was one of the key challenges at the beginning was figuring out how to bring awareness to this because it was a really unique product, it is a really unique product, but there was no path that had already been defined for how to sell it.
What would be the best channel? Should we sell it in spas? Should we sell it in gift shops? Should we sell it in retail? Should we sell it online? When you’re small and have very limited resources, it’s very hard to do all those things at once successfully. That was a big learning as well. We had to hone in on what the right channel to sell on. What would be the fastest way for us to become profitable and to scale?
Andrew: As an online guy you didn’t just immediately say it’s got to be online?
Peter: I didn’t. I didn’t because I didn’t realize the direct response potential right away. I thought the best way to find people that would want to use the product would be putting it in spas or putting it in hotels, especially spas where people were familiar with aromatherapy already. I didn’t realize at the time when we launched this, I didn’t realize how easy it was to find those people online as well. We learned that later.
Andrew: We’re going to get into that. You know what, by the way? I think you undersold yourself in your email to me.
Andrew: Yeah, which is why I didn’t go through the usual channel of doing a pre-interview and I pushed you to give me points about what grew your sales, which I think are so helpful. We’re actually going to use it to guide this conversation. You did so much. I didn’t expect that this is how big you got. I’m looking at the original email. It’s like, “Here’s what we did to get $200,000 in stales within three months.” You did way more than that.
Peter: Yeah. I think one of the stories I was trying to tell you was how we were able to solve–I think a lot of companies go through this problem of running out of stock, what do you do now? For us, that was a particularly acute problem. We have just 13 SKUs. We have one entry point product. So, when we run out of that, we have nothing left to sell. So, that was a huge challenge for us. And the other thing was figuring out the combination of marketing on Facebook with landing pages was really the bread and butter.
Andrew: I see. You focused on that.
Peter: Yeah. I thought that was the big win that we had.
Andrew: I think it is. You know what else I want to get into? You said you ran out of product, but you eventually figured out how not to do that again, how to deal with inventory management. How do you deal with that? What do you do? It’s really hard to predict what your sales are going to be and to keep enough inventory. You buy too much inventory and you end up spending too much of your capital there and you can’t use that money for ads. What’s the solution there?
Peter: Yeah. That’s still a problem even today. We’ve gotten better at it. At the beginning, your sales curve is very volatile. So there’s very little data to do the stuff you would maybe do if you’re at Amazon because they have so much sales history to be able to run all kinds of algorithms and figure out exactly how much you should buy of each thing. But when you’re a startup, it’s somewhat guess work.
When we started getting better at it was when we started getting predictable traffic and we knew exactly okay, if we spend this much on Facebook ads or whatever ad platform you’re focused on, but if you spend this much and you know what your return on ad spend is and you know your average order value, you can start to predict, “Okay, if we spend that much, we’re going to sell x-amount and then you forecast over maybe a three or four-month period how much you’re going to sell.”
You start figuring out okay, we need to order x-amount to keep us in stock for the next four months. Then halfway through that, we need to start the next order so that by the time that initial stock that we’ve been selling runs out, the new supply comes in.
Andrew: And you did all that yourself? You had to figure it out on spreadsheet?
Peter: Figure it out on spreadsheet. There’s a couple services we’re now looking at. There’s one called Lokad, Lokad.com. They do this thing called quantile forecasting. They’ll actually take your sales history, even if it’s a pretty limited amount of history and they’ll start figuring out how much you need to buy. So, it’s pretty cool.
We’re looking at stuff like that going forward. You just have to kind of know your ad channels. If you can get a predictable revenue stream going and know much it costs to acquire a customer, then you can set a budget and you’ll get a pretty good feel of how much you’re going to sell over x-amount of time and then know your lead time to get a new inventory and kind of build a model around that.
Andrew: What worked for you when you were starting out? That actually is a pretty good problem to have that you’ve run out of inventory and then we’re going to talk about how you solved it and still maintained sales. What worked that suddenly you ran out of inventory?
Peter: We had a big breakthrough last year in terms of some of the pieces we were playing around with came together. I told you at the beginning we had this problem of demand generation. How do we get people aware of this product? What originally happened was we got really good at PR. PR started becoming our bread and butter in terms of getting traffic to the site. It was also very unpredictable.
I kind of built some systems internally in terms of getting and generating PR, just kind of hacking together systems and got us on the Huffington Post, People Magazine, New York Times, all this stuff. The big breakthrough for us was Good Morning America. We got on Good Morning America. We did I think $120,000 in sales in a single day.
Peter: So all of a sudden we were like, “Okay, if people see this thing in action, they understand it.” So we started getting really good at PR. We started getting traffic into the site, especially with Good Morning America. The realization was okay, we can’t be on Good Morning America every day. We need something that’s consistent that drives people into our site.
That’s when we really started looking at Facebook and Facebook advertising. One of our advisors had done some really effective marketing for a long period of time with Facebook and really pushed us in that direction. Just the targeting capabilities, the fact that we could go and take that list of all those people that had bought from Good Morning America, load that into Facebook, Facebook would then find not only those people but similar people and then a lot of the interest and demographic targeting we could do.
All of a sudden, we had our little GMA audience built up ourselves. So we started running ads, sending the people from Facebook into our website.
Andrew: Let me spend time–I want to dig into every part of what you just said. The first thing you said was we did some PR and it worked. Then you expanded on to Good Morning America and you said, “We can’t depend on this. We need to build our own stuff.” What’s the first bit of PR that worked for you?
Peter: We got featured on–it’s kind of PR, kind of not, but we were on The Grommet. I don’t know if you know The Grommet. But it’s a website, I think they’re still around, but they feature unique, innovative products and they do a video for you. There was that. Then we were in the LA Business Journal. So we got some local press at first.
Andrew: How’d you get that, the LA Business Journal and Grommet? I’m on their site. I think it’s TheGrommet.com.
Peter: The LA Business Journal one came really early on. That was when I was pitching for this business plan competition. Someone from the LA Business Journal was in the audience and came up to me afterwards and said, “I’d love to do a story on this whole thing.” It’s a very unique story. The product is innovative and unique, but the story behind it is innovative and unique.
We had those two advantages when going to journalists. We said, “Hey, this is a super unique innovative product,” but also this story behind it, how my mother came up with the idea, my dad is the inventor and I’m selling it, the package of that was considered very PR worthy. It wasn’t difficult for us to sell it as a story for editors to cover.
Andrew: I see. I get the first one kind of came to you because you were presenting. Tell me about the process you developed that allowed you to get the others.
Peter: This is key. What I learned was agencies basically use this thing called Cision. It’s just the dark and dirty secret of PR agencies. What it is, editors and journalists all have their contact information on there. You can go find pretty much any editor, New York Times, Washington Post or Good Morning America, you can find their information and actually build lists.
So what we started doing was building lists, different types of lists. We would have a health and wellness list, beauty list, home goods list, holiday gift guide list. We would start creating pitches that were targeted towards these different lists. That was one of the keys was don’t just send everybody the same pitch. Send a pitch that’s relevant to what the editor is interested in. Then we also personalized the pitches by using their first name, the outlet and we used a tool called Streak CRM for that. We just load these lists into Streak and basically send them out.
Andrew: I know Streak CRM. My kid and his kid play together sometimes. It’s a CRM built into Gmail, isn’t it?
Andrew: What else is it? Beyond the fact that it’s built into Gmail, what is it about Streak that you like?
Peter: The pipeline element of it. We’d load the contacts in and then we’d send them all out and of course, with Streak, you can also personalize it with the different variables so we could customize the first name. You could do the mass mail merge. You can send a bunch of these out at one time fully personalized to the editor. Then you would start getting responses and you could say, “Okay, we sent out a thousand pitches, 150 people replied.” You can move them into another category. “They’ve replied, now what do we need to do? We need to follow up with them.” We built this whole sequence of how to get the editor from A to Z to cover our story.
Andrew: What’s your process? What are the steps?
Peter: We’ve iterated on this with PR Volt, but what it was back then was basically load in the editor list, send out the campaign, if someone replies–first thing in the pitch, one of the key things we did was always dangle something. So would you like to try a sample? Would you like to get a copy of our press kit our press release? That creates a dialogue.
Andrew: Something that they need to ask for that you’re offering.
Andrew: Interesting. Okay.
Peter: That starts the dialogue. You might pitch to an editor. They might be interested and they might just be like, “I’m interested,” but they never will express that interest. You want them to express the interest so that you can then follow up with them. The rest of the game is the follow up sequence.
Andrew: Isn’t it enough to just say, “Do you want to hear more about this?” No? Why not?
Peter: You could do that, but I think if you have something else extra, a little bit more valuable, like a sample or a press kit that was developed specifically for you, it’s more tangible. It’s something they will–
Andrew: I feel like a physical thing is really powerful, from what I’ve heard.
Peter: Even better, yeah.
Andrew: I’m going to give you something for free that you can hold in your hands as opposed to free access to my app.
Andrew: That was a big one.
Peter: We would actually offer the free sample. But what happened was a lot of people would ask for samples and then we found out they were necessarily sample worthy. So we got into this whole game of who should we sand samples to. It gets expensive sending out samples to everybody. So we developed a rubric in terms of like what they’re Alexa score was and what their authority rank was.
Andrew: That kind of comes back to this thing you were telling me about before we started with the Zapier, Streak, Cision, HARO. Talk about how Zapier helped with that.
Peter: I love Zapier.
Andrew: Me too.
Peter: It’s like my favorite, favorite thing. Zapier helps in so many ways. Most of our workflows we have different apps triggering different apps. So, for example, if an editor replies, you can build a zap off of that or you could build a zap off of they ask for a sample, so then let me put them into our sample pipeline and streak, then as soon as it goes in the sample pipeline, that triggers a task in Asana for someone to go and send a sample to the editor. You can build a whole workflow off of connecting apps with Zapier.
Andrew: Yeah. I freaking love Zapier so much.
Peter: We’re using that for PR Volt.
Andrew: You mentioned the phrase PR Volt a couple of times, but we didn’t explain what it is. What is it?
Peter: So PR Volt is taking some of those systems that I developed for SEO and applying them, creating a service essentially out of what those systems were and applying that to other startups, other small businesses who have the same problem, which is PR is super expensive but it’s an important part of a marketer’s arsenal and just because you’re a small business or a startup doesn’t mean you shouldn’t be doing PR. We’re trying to make it easier for startups to be able to pitch their story to the press.
Andrew: What does it cost?
Peter: It costs anywhere between $300 and $750 a month.
Andrew: So I pay you $750, you give me press?
Andrew: Not Good Morning America-level press, right?
Peter: It could be. We don’t know. That’s the thing. A lot of it depends on the product itself, how good your product is, how good your story is. We’ve seen variance. We’re just in beta now, but we have about 15 clients.
Andrew: You think I should use you guys?
Peter: Why not?
Andrew: What kind of press would you get me?
Peter: What kind of press do you want?
Andrew: I’m looking for more attention–I guess it’s a lot I want, but I guess podcast attention would be interesting now.
Peter: Yeah. We could do that. We’d have to build a list of podcast people like yourself. We build that list for you and then we build out your pitch and then we’d have to come up with what that pitch would be.
Andrew: Do I need to go and do podcasts? I would like press for my podcast.
Peter: Oh, I see. I see. But what kind of press do you want? Do you want to be in a magazine?
Andrew: Wherever entrepreneurs are, startup entrepreneurs.
Peter: We could do that, for sure.
Andrew: $750, you guys work on it, you don’t need much attention from me, you do it.
Peter: We basically do it. The only attention we need from you is with our clients, we basically have like a 20 to 30-minute consultation essentially where we talk to you, we learn about what your brand or service or product is, how you want to frame your pitch and then our people will go build your media list, they’ll build your pitches. We’ll come back to you one more time and say, “Here’s what we’re going to pitch. Here’s what we’re going to send,” just so we don’t send something you absolutely hate. You have the ability to say, “I don’t like that. I like that.” Then we queue it up. We’re not using Streak anymore.
Andrew: You’re using your own system?
Peter: We’re using our own system, yeah.
Andrew: Will you help me figure out what the message is?
Peter: Yeah. We craft that for you.
Peter: What we don’t do right now is once an editor replies and indicates an interest, we forward that along to you and your team to handle. That’s something we’re building out in the future is more like a white glove service, but right now it’s more like a lead gen for press.
Andrew: This reporter wants to write about you, Andrew. Go handle it now.
Andrew: Got it. I see. You know what? Let me come back and talk about that in a moment, but first I’ve got to tell people about this thing that I never talk about when it comes to Toptal. You know how you mentioned, by the way, that when you want to figure out how much of your product to make six months from now, you’ve got a whole spreadsheet that you created yourself. I feel like part of the reason you can create it is because you’re an MBA. Am I reading too much into it?
Peter: That’s definitely an MBA skill.
Andrew: Right? You walk into UCLA Anderson. You learn that kind of stuff. One of the things that Toptal did recently is they acquired a company that just had MBAs in their network that companies could then turn to and say, “I need an MBA to go put this thing together for me.” That is exactly the kind of project they do. Isn’t that incredible?
Peter: Yeah. What is it?
Andrew: It’s Toptal. They’re the company that does it.
Peter: I thought they were mostly devs.
Peter: I thought it was mostly engineers.
Andrew: They were. It started out as just developers, nothing but the best developers. They obsessed on that for a long time. Then they said, “We can take our same model and work with designers.” So, now people who need developers also need designers. They go to one place, they get these great designers. We’ve hired both. Then they said, “There’s this company that’s doing Toptal for MBAs, let’s just go buy them.”
So now they have this network of MBAs and some people like you need it for that. There’s a company who I interviewed–why can’t I remember the guy’s name. He runs a company–it will come to me later. He said, “I’m doing millions in sales. I’ve got a real business here. I have to raise more money to go to the next round and I have to sit down and do these freaking spreadsheets for the investors because now when you go to this next round, you need a lot more data.” It’s not just a PowerPoint anymore.
He said, “I have no patience for this. That’s partly why it took so long for me to get into it.” So, he finally sat down and did it. I wished Toptal existed at the time so I could say, “Go to Toptal. A lot of people who are looking to raise the next round of funding who need a bunch of MBAs go to Toptal and get it.” A lot of major companies, big companies, who have MBAs, of course, in their businesses say, “We as a company have MBAs. I need to hire someone internally for like a two-week project. I’ll go to Toptal and I’ll hire that person.”
Peter: Even if you’re a startup, it’s useful. Even if you have an MBA like I do, I don’t want to always do all that work. I need to outsource certain things.
Andrew: You’ve got an MBA that’s obsessed with that stuff. You pass the work onto them. The nice thing about Toptal is they understand your problem and they hook you up with the right person, kind of like a matchmaker for a relationship. They’re also there–I like that they’re sitting in the middle, that if the person is not doing the right job, you have someone you can go and complain to. If the person is not doing the right job, there’s somebody there that can help find somebody else and will feel a sense of guilt for having introduced you to the wrong person.
So, for anyone out there who’s looking to hire an MBA or a designer or a developer, you’ve got to go check out Toptal, but don’t use their standard URL because they’re giving us something they are also long-time Mixergy fans. They’re giving us 80 hours of Toptal developer credit when they pay for their first 80 hours. That’s in addition to a no risk trial period of up to two weeks, a no risk trial period for two weeks. Here’s the URL–go to Toptal.com/Mixergy, top as in top of the mountain, tal as in talent, Toptal.com/Mixergy.
How’d you get Good Morning America?
Peter: So Good Morning America was a combination of the PR hacks that I was telling you about before, like the Streak CRM and the list building. It’s a combination of that and just luck.
Andrew: What’s the luck element?
Peter: So we were at a tradeshow in Atlanta. This was at a point where we still hadn’t figured out how to position this company, how to position this product and what the path was. We were at this tradeshow because we thought maybe gift shows or gift stores would be a great place to sell the product. We’re there and we’re kind of down on our luck because we hadn’t sold that much and it’s expensive to go to a tradeshow for the booth and everything. Just sitting there in the booth, who else walks by but Tory Johnson from Deals and Steals.
I pay attention to the name cards of people walking by, so I’m like, “I better get into gear here.” Bring her into the booth and she looks at the display and she’s like, “I’ve seen this before.” I’m like, “Oh really, that’s amazing. How have you seen it?” I kind of had forgotten that she was part of my pitches. She was like, “Your PR agency pitched this to me.” So I guess I’m good enough that she considered the agency.
Then I kind of remembered okay, she saw it because she was part of our pitches. So it was a combination of being at the show, but the fact that she had seen it before helped a lot. It wasn’t the first time she had seen it. It had some level of credibility for her. We had a nice chat there and then a few days later, her and her assistant came back again and said, “Can you be ready by next Thursday to do Deals and Steals on Good Morning America?” I was like shitting my pants, but I’m like, “Yes.”
Andrew: Wow. I can’t believe it. I never heard of her before. I don’t have a TV, but now that I’ve looked her up, I can see she’s a real big deal. She does this show within a show, within Good Morning America.
Peter: Yeah. They don’t charge you anything to be on there. It’s free promotion and so many eyeballs and it’s just a great kind of awareness generator.
Andrew: B2B didn’t go so well, you told me before the interview. You said, “We did about $50,000 in sales from all these tradeshows,” right?
Peter: Yeah. B2B I still think at some point in the future can be a viable path for us, but the learning was where we were, the stage of our company, that wasn’t the right path, the right channel to attack because it’s expensive and you need a sales force. Especially the market we were tackling, which is the spa market, it’s super-fragmented. It was very difficult to scale in that channel at a low cost of entry, whereas online marketing or even PR, but these other elements, with very little cost, you can scale things up pretty quickly and you can do a lot of testing and a lot of iterating. It wasn’t the right channel for us at the time. Some point in the future it might be.
Andrew: All right. I was a jerk before. You wanted to keep going with your story. I said, “Hang on a second. Let’s get into the details of each step.” I’m glad I interrupted because I wanted the details. Now let’s get back to something else you said, which is we realize we couldn’t keep getting another Good Morning America every week. If we wanted to grow, we needed to find another way. You were starting to say what you did with lookalike audiences on Facebook. What worked for you? What did you do at first and then what works?
Peter: What we did at first, the thing we did right at first was loading in our customers as a custom audience and then creating lookalike audiences off of that and doing some interest targeting and some demographic targeting that really honed in on who we felt our customer was. That was all the right thing to do. Then at the beginning, we used image ads. We’d have an image of the pods or an image of the product and then we would drive people into the website.
With that, we kind of were like breaking even, maybe a little better than breaking even, but it wasn’t a huge stream of customers coming in that really wanted. We weren’t getting a huge return on our spend. So what we changed was we basically started trying to do video advertising. We started with this video that we have on our website, which is like a two-minute and 30-second video and we loaded that into Facebook.
The problem was it has a talking head in it and it takes about a minute, minute and a half to actually get to the product and Facebook, at least at the time, the ads were on auto play silent by default. So it took a little while to realize people were probably not understanding what he woman is talking about and waiting a minute and 20 seconds for the product. Then we cut it down to about 60 seconds, got rid of the talking head, put some subtitles in there and started doing better. By the time we got it down to about 20 to 25 seconds, we realize we could cut it down to about 20 to 25 seconds and still tell the same story, essentially, that really started to make a difference.
Then when we paired that with instead of sending the traffic into our website, what about sending it in to a dedicated landing page which was all about this product and this one-time sale people could take advantage of. That was the real game-changer. It was the combination of video advertising and a landing page.
The reason video worked so well, especially for us, is our product requires a little bit of explanation. So, with a video, a 20-second video, people understand what it is, so the traffic that’s coming in terms of our site all of a sudden is super qualified. They know what it is, they know what they’re getting in for, whereas with an image before, some people would be like, “That’s interesting. I wonder what that is.” Then they’d get in and be like, “I’m not interested in this.”
Andrew: Got it. They click. They see it. Their curiosity is satisfied but that’s it. By the way, you were looking over your shoulder. Do you have more time in this conference room?
Peter: So far there’s nobody here.
Andrew: If someone wants to come in, let me know.
Peter: We’re good.
Andrew: Awesome. So let’s talk about Unbounce, because that’s what you use for a landing page. You spent all this money to create a Shopify site, which actually is not the site you have right now. I’ve looked at it from 2012.
Peter: We rebranded the site too. That was another exercise–not an exercise in futility because the branding I do feel is important we got the branding right. We thought that redesigning the site and sending the traffic into a redesigned site would improve things tremendously and it didn’t. The learning was with paid traffic, you have kind of one shot at this person you’re sending into your site. Don’t send them into your website because if you send them into your website, they’re in a playground essentially. There are all kinds of bells and whistles.
Andrew: I see it. The original site was like what is Essio, startup kid, pod blends. I want to see what the pod blends are, about us, who the hell created us and now I’m going through the whole thing and not doing what you want me to do, which is get this thing.
Peter: Exactly. So with a dedicated landing page, we stripped out all the links. We improved the headline, the H1 to make it very, very clear what the benefit is. We use this expression “make every day a spa day.” Then we used testimonials. It’s almost like a sales letter format. We actually tested a shorter version of the page and that didn’t do nearly as well as the longer version, which kind of draws out the benefits, what essential oils are, why they’re important, how can you set this thing up in your shower, how easy it is.
Then with the testimonials is where we drive some of the social proof that’s really important and some of the anchor pricing. A lot of the feedback that we got from the traffic they were sending into our website initially was that the product felt too expensive. We didn’t necessarily want to lower the price, but we wanted to create a way that wouldn’t feel expensive. You’ll notice on that landing page, the first thing people see is someone saying, “I love the spa but I can’t afford $150 treatment at the spa. It’s too expensive.” That’s on the Unbounce page.
Andrew: What’s the URL for that?
Andrew: Promos. I was on the homepage.
Andrew: It’s a whole URL, actually.
Peter: Yeah. Do you want me to send it to you? Do you have it?
Andrew: I’ve got it here, actually. It just had another tab. “As a busy mom and family breadwinner I rarely have time to relax and unwind, let alone go spend $150 at a spa. With Essio, I turn on the shower and feel the stress just melt away,” Jill and I love how you have her last name there, [inaudible 00:52:48], Essio customer.
Peter: Yeah. So what that does–by the way, these are mostly real testimonials, some language tweaking to emphasize what we want to say. But these are all based off of real things.
Andrew: Is that really a photo of Jill?
Peter: That’s not a photo of Jill. But it’s a real customer that sent more or less that statement. We added in the $150 spa thing to add emphasis. So, all of a sudden, one of the first things you see on that page is, “I also love going to the spa, but I hate the $150 price tag.” That’s something that’s something that is in someone’s head. They scroll down the page. They finally get to our offers section and they see, “Okay, the everyday price for this thing is $79,” which we also kind of just invented because there’s no–
Andrew: There’s no every day price.
Peter: There’s no every day price for this thing.
Andrew: No retail price. There’s no retail present yet.
Peter: We came up with this thing so we can decide what the price is. Some spas do sell it for–we still have some spa customers. Some of them do sell it $60 to $70. So it’s not really totally misleading. Then we say, “But your price today is $39.97.” All of a sudden you’ve gone from a $150 psychological standpoint down to $39.97 and that had a big difference. All of a sudden the resistance to the pricing didn’t completely go away but a lot of it was taken away.
Andrew: And this whole thing says pre-order now.
Peter: That’s the new page. So that’s what we do when we’re waiting for–
Andrew: You’ve run out of inventory again.
Andrew: I see. Wow. No wonder you were paying attention to the Toptal ad. Maybe you can get an MBA in there.
Peter: I’ll tell you why we ran out of inventory this time, this time because we’re switching factories. We’re moving to a new factory. We literally don’t have a supplier at this point because we’ve redesigned and reengineered the product and we’re waiting on the new factory to come out with a new version of the product.
Andrew: Okay. Then you lead people directly to the Shopify checkout page, no branding really on this except like your name typed out at the top. I don’t see the upsell for subscription on this. Where do you do that?
Peter: We’re adding that in. We’ve tested that. There’s an app called CartHook, CartHook.com. We’re working with those guys to basically build a whole upsell sequence. The reason we go straight from the landing page into checkout is I don’t want any resistance points. I don’t want any friction at all. I want someone to buy that kit, and I don’t want to put any blockers in front of them. We originally tried sending them from that page into the cart page, which would go into the checkout and there was a tremendous dropout.
So we’re like, “Okay, forget it. If they want to buy this thing, let’s let them buy it and we’ll take care of all the upsell sequence.” So the upsell sequence is what we’re working on now, which is basically if you buy the starter kid, the next thing you see after you checkout is, “Hey, by the way, we also have a variety pack that comes with all the scents that don’t come in your starter kid. Would you like that too? And we’ll give you 50% off if you subscribe today.”
Andrew: Got it. Okay. And then they don’t have to enter their credit card information–that’s what CartHook does? I know CartHook. It’s created by Jordan Gal, a Mixergy fan.
Andrew: I interviewed him. I think it was about CartHook.
Peter: CartHook used to be a cart abandonment thing. They’re adding this other thing, which is the upsell funnel.
Andrew: Ecommerce checkout funnels too.
Andrew: They build it custom? I thought it was a product.
Peter: It is a product. We’re using that. What they’re working on right now–he tells me it’s almost complete–an integration with a ReCharge app. So ReCharge is one of the most popular subscription apps on Shopify because Shopify doesn’t natively support subscriptions.
Peter: Who the hell knows why? ReCharge does that. Jordan is integrating his upsell checkout thing with ReCharge and that’s what we’re working on and waiting for.
Andrew: I see.
Peter: That’s going to be the big–that’s our next evolution, like we’ve gotten really good at acquiring customers. Now let’s hyperactively get them onto subscriptions.
Andrew: What do you do today to get 50% of your revenue from continuity product?
Peter: We do a lot of retention marketing, a lot of email marketing. So, when people buy a starter kid, immediately after the starter kit–not immediately, but like three days after they get it, they an email saying, “Here’s a 50% off coupon to get onto a subscription.” Also in the box there’s a coupon for a subscription. That’s the most effective.
Andrew: The box.
Peter: But just that initial 50% off to get onto the subscription. That’s the most effective way.
Andrew: I guess once you have the thing in your house, you feel like a fool for having bought it, unless you keep using it.
Peter: Then you’re looking at it every day when you’re in the shower.
Peter: It’s just there every day and you’re like, “Yeah, I’m running out. It’s time to get some new ones.”
Andrew: By the way, I get scented shampoo. I’m kind of an oaf or a philistine. Here’s what I do. Do you know Every Body Shampoo?
Andrew: I freaking love it. I used to use a bar of soap on my body and my head because I don’t care that much and I don’t have that much hair. Then I had people stay over. Once we got a place in San Francisco, people would stay over a shit ton. I’m cursing a lot in this interview. I thought a bar of soap when people stay over is always getting ruined.
I started using a pump. I found this everyday pump. You get this massive amount of soap. It smells like something different every time because Amazon keeps shifting it on me or whatever is available at a low price. But I like that their philosophy is use it everywhere. It’s soap. Use it on your head. Use it on your body. I try mint. I try coconut. I try the rest.
Here’s what I’m coming back to. What about clashing scents? I get your aromatherapy clashing with my Every Body smell. Is that a problem?
Peter: I’ve never found it to be a problem. I use different scents as well. Most of the scents we have gel well with other fragrances in your shower. That’s why it’s nice you tilt it up and turn it off, essentially right now. The new version we’re coming up with actually has an on/off feature. We’re designing it so that you can use it–let’s say you want the first five minutes to relax and unwind in your shower, use Essio. Then turn it off when you want to do something else if you’re really worried about the conflicting scents.
Andrew: I see. Okay. Who would have thought I’d be such a dandy about it? First of all, I use a bar of soap on my head.
Peter: We’re going to get you a starter kit and you’re going to try it out and be our number one fan.
Andrew: I’m already a fan of the freaking business. I love the way you operate. You know what it is? It’s like one of those Russian dolls with you. I like it on the outside and then I open it up and go, “Look at that. Look at that. Oh, look at that. He’s using Zapier. Look at that. He’s using Shopify in an interesting way. Look at that, there’s Fomo popping up. Fomo is coming up on your site.” Thanks by the way, for the gift. I really appreciate it. I don’t want to stop, but I also want you to know it’s not just the gift. I really like the way you think.
Peter: Thank you. I appreciate that. One of my rules to myself is always learn, always be learning. I try to dedicate a significant part of my day to just learn something new and try to apply that to some part of the business because that’s the way you grow.
Andrew: So Fomo is one of the things. I can see that, that you keep experimenting with stuff. Fomo is the thing that pops up on your site and says someone in Chicago just bought a set.
Andrew: Someone in New York just bought–here, it says, “Elizabeth in East Longwood purchased aromatherapy shower kit.”
Andrew: And then it goes away. It gets this feeling that it’s like a busy story. You installed it?
Peter: Yeah. The other elements of the landing page other than a great H1 and testimonials is creating a sense–with paid traffic, you have to create a sense that like everyone is doing this, you’re missing out if you don’t do it and you’re missing out if you don’t do it right now. So that’s why we have on the page a countdown timer. You’ve got 15 minutes to take advantage of this, 50% off now, better go now or it’s going to disappear. You have the social proof of people are buying this right and left.
On the non-crowdfunding version, which you’re not looking at now because we’re in crowdfunding mode, but on the non-crowdfunding version, there’s actually a bar that’s a red bar that’s showing you how much is left. It gets all the way to the end and it’s like, “Oh my gosh, there are only a few left.” These persuasion elements are very, very effective. We’ve tested turning them off and the conversion rate suffers when you don’t have them.
Andrew: He does growth at your company or conversion? Who focuses on this? Is that you?
Peter: It was me for a long time. I have hired a very talented CRO person from Romania, and she basically handles ongoing coming up with hypothesis generation, coming up with ideas to test and then we’ll look at like almost on a maybe biweekly basis, we’ll look at all the test ideas. We’ll rank them based on the PIE score, potential impact effort, and we’ll then choose which one we want to focus on.
Andrew: How do you find someone like that? That’s a tough higher?
Peter: I built a system for that too.
Andrew: What’s your system?
Peter: I built a system essentially to basically in Streak, I’ll post a job, essentially, and I’ll say which platforms I want it to go post on. So we’ll use Upwork, OnlineJobs.ph, we’ll use Guru. There are a bunch of them. I got really tired of posting these jobs everywhere. I have an admin team, like a VA team. So when I post it on there once, then they’ll go on there and post it everywhere.
Then the problem is people, you’ll get all these applicants and it’s a pain in the ass to go to all these different sites, right? So I use Zapier to basically code the responses that were coming in and then anytime we got a response, the VA will go in and say, “Hey, thank you for responding to our ad post. Here’s a link to a survey. Please go fill this out.” So essentially I’m taking all these different job sites and getting them all essentially onto a Google sheet by giving them a survey to fill out.
Andrew: I see. That’s how you standardize all the responses you get.
Peter: Standardize all the responses. Then I can compare–there are some jobs where I’ve gotten 200 or 300 applicants. There’s an insane number of applicants. It’s free because you can just post. We recurrently post these things on these sites. That’s how I found my developers. That’s how I found our CRO. Our developers are unbelievable. It took me a little while to find the best, but I use that same approach.
Andrew: So what you’re doing is you’re saying I need this, and then is it a person who goes to all the different job boards and posts for you?
Peter: Yes, that right now is manual.
Andrew: Okay. And you have a system where you just put it into Gmail and Streak takes it and sends it out to that place.
Peter: Basically Streak is connected to Asana through Zapier and creates a task for one of our admins to go post it everywhere. When people apply, then we also get a task from Zapier to Asana essentially to go reply to the–
Andrew: I see. When the inbound email comes in, it also triggers something in Asana.
Peter: All these services will send you an email when someone applies to your job.
Andrew: Zapier is really good at even like ripping apart an email and pulling out the key elements.
Peter: The formatter by Zapier does really good with that. There’s another service for that which I forget now what it’s called.
Andrew: I do too. I love it. That’s also created by a Mixergy fan. I was using and the guy goes, “Hey, holy shit, it’s Andrew.”
Peter: I forget what it’s called.
Andrew: But here’s the thing. I’m wondering why you even need Streak for that initial trigger? This is a little too in the weeds, but why not just email into Asana and have the tasks go out? Why do you need it to be in Streak?
Peter: You could to it either way.
Andrew: Why do you choose to use Streak that way? I’m just curious about how you use it?
Peter: Because I like the pipeline element of it. So I can see, “Okay, we posted this job and now this job is deactivated.” Or I can take a deactivated job and put it back into now it’s an active post again. Basically it triggers–anytime a box moves into active, like go post the job. Whereas if you do it just at Gmail, I would have to write it again and again if I wanted to repost another job.
Andrew: I see. You were kind of using Streak not just as a CRM that manages your sales pipeline, but you’re also using it kind of like project management or to do to see what’s–
Peter: For some things, yeah. My new bell and whistle though is Airtable. That’s the one I really like now.
Andrew: I know the name. I saw it on like Hacker News. What is Airtable?
Peter: It’s kind of like Streak. It’s not built in Gmail. But it’s just like a database. You can create databases of everything. You create a table here. Maybe it’s like your HR table–
Andrew: It’s like a spreadsheet that’s intelligent.
Peter: Exactly. It’s also connected into Zapier too.
Andrew: I met the founder of that on the train. That’s what I love about San Francisco. We’re looking at him because he has this funky hair, and then he comes over to say hi and it turns out he’s the founder of Airtable.
Peter: Yeah. Airtable is a new one that–
Andrew: Yeah, tell me how you’re using it. I thought it was brilliant, but I don’t know what to do with it.
Peter: We’re using Airtable for PR Volt. We use it now for Essio too. One example I’ll give you is let’s say the conversion rate optimization stuff–we use Airtable for like prioritizing stuff. So let’s say we have an idea for a test idea. Maybe it’s a bad test idea, but change the button color, right? I would never probably do that right now. But change the button color and then you’ll give like–we’ll add that into Airtable and we’ll give it a PIE score. You can do formulas in Airtable as well.
So I can take the potential impact and effort score and then add them up into another column. I can add an image, stuff that you can’t do in Google sheets. I can add images. I can add comments. Then we’ll come together and use that sheet. You can also create stages just like you can in Streak and you can say, “This is in a stage of idea. This is an idea of stage of researching. This is in a stage of in progress. You can kind of use it for managing your test ideas.
Andrew: I’d love to just look over your shoulder as you use it. I see the potential in it. I just don’t see it fully there.
Peter: I’ll send you a screenshot and you can put it in the show notes.
Andrew: Okay. I’d love it. Wow. Man, all I want to do is just geek out on the software you use to run this company. How many people are working with you?
Peter: For SEO we have about 10 people, not all of them are full-time. We mostly are freelancers, full distributed. So I don’t have any direct employees. Then for PR Volt, we have about five people right now.
Andrew: Okay. Pinterest ads haven’t worked for you, but email sequences have. You told me before you started that Klaviyo is what you use for email, and I asked you why would you use Klaviyo and you had a really great response. Why Klaviyo?
Peter: Well, at the beginning Klaviyo was the next best thing after MailChimp that was recommended in all the Shopify forums. So that’s why we originally got on there, and then it has super-powerful logic that you can do in terms of where the customer is in their journey. So maybe they bought a starter kid from our Shopify site but they haven’t bought a refill. We can create a show flow or autoresponder sequence to try and get people to buy a refill.
But then what’s really cool, they launched I think towards the end of last year was that same logic that defines who should go in that sequence, like has bought starter kit, hasn’t bought refill can then be also loaded into Facebook as a custom audience automatically, not like I have to download the list of customers and then load it into Facebook, which is I what you used to have to do, you can automatically connect those two things.
Then I can run in tandem with my emails that are going out to the customer on Klaviyo, I can run ads on Facebook that dovetail exactly with the messaging they’re seeing in Klaviyo. At the end of the day, maybe 15%, 20%, 25% of people open their email. What about the rest of the people? A lot of them are on Facebook. So we can kind of do dual messaging of the same concept that way.
Andrew: Interesting that it’s only 15% to 25% that you’re getting.
Peter: I just made that up. I haven’t actually looked.
Peter: In general, I think open rates are probably in that 20% to 30% range for most companies.
Andrew: Okay. And then how do you keep track then of the cost per acquisition considering all the different ways that you’re reaching them?
Peter: Well, we track the customer cost per acquisition. We do it multiple ways. One is just in Facebook itself. So we have all the pixels setup so we can see how much we’re spending in Facebook, how much the customer buys. So we can get the actual revenue value into Facebook too. And then we’ll use like Google Analytics, just very simple. You can look in Google Analytics to see how much sales you got from email, how much sales you got from Facebook.
Andrew: I see. It doesn’t tie back to the original source, the original ad.
Peter: No. That’s why we usually do that in Facebook. There was a tool–what is it called? It did attribution like that. The majority of our spend right now is in Facebook. So I don’t really have a lot of other paid channels active. We’re testing around in Pinterest and I want to get more active in YouTube because I think that’s another hidden channel that not a lot of people take advantage of but there’s not a lot of ad inventory there. Until we have like three or four acquisition channels running, attribution isn’t a huge problem for us.
Andrew: Makes sense. Blogger outreach didn’t go so well. Why do you think?
Peter: Well, it didn’t not go well. We were able to get bloggers to write about our product and kind of write reviews and do video reviews in many cases. The challenges were it was more like the strategy. The strategy was like, “Okay, let’s get bloggers to review and we thought maybe we could get traffic from those to our site and get a bunch of a sales from that. What ended up happening is it’s very hard to tell which of these bloggers actually has–what we did is look at their Alexa score, how many comments they had. It was still very hit or miss to figure out which bloggers to actually send samples to.
Even though we tried to automate it as much as possible, it was pretty laborious to do all this blogger outreach. At the end of the day, our goal of getting a lot of traffic from it and the SEO value, maybe we got some SEO value from it, but it never was a huge driver of sales that we thought it would be. The strategy was like, “Let’s give them a sample. They’ll review it. They’ll put a link. We’ll give them some special coupon code, and then we’ll get traffic in aggregate form a lot of these different blogs to our site. We never saw a huge–
Andrew: You know what? I hate to say it, but blogging is basically dead.
Peter: Yeah, this is a few years ago, but yeah.
Andrew: But I just interviewed–do you know the guys from HiSmile? Have you heard of them?
Andrew: They’re doing killer stuff. The same thing you’re doing for PR and blogging, they apply to influencers on Instagram and YouTube. I feel like you should talk to them because they get people to just take a picture with HiSmile or try it on camera. A lot of the people who they get to take this HiSmile, this teeth whitening, take a picture are basically naked or in their underwear, which has nothing to do with HiSmile, but everything to do with Essio. I can imagine that you hearing their system, you’d be able to pick up on the details of how they structure it and be able to apply it here.
They would benefit from your Facebook ad buys because as good as they are at influencer marketing–and they got one of the Kardashians, I don’t know any of them, but they got one of the Kardashians even at this point to work with them and smaller people who have interesting followings on YouTube to try them, but I don’t think they do much on Facebook.
Peter: Yeah. I’d love to connect with them.
Andrew: Yeah. Let me reach out to them after this interview. Spas, did that work for you?
Peter: So the challenge with spas–I mentioned this a little bit before–very fragmented market. We had a couple different challenges that we ran into with spas. One was fragmented. So hard to reach all of them at once in some way. And then eventually we were able to get a rep, an independent rep to take our product to try and go and sell it into spas. We had one in like Florida, we had one in–we had a couple across the country.
The challenge for us was these reps, independent reps have multiple lines that they’re repping, and they tend to focus on first of all what’s already selling the most and what’s the kind of highest price point because they’re getting a percentage.
Peter: So our thing was kind of low price. We finally did get some sales into the spas, and then what happened was people didn’t know what it was. It was sitting there on the shelf and they’re like, “What is this thing? Aromatherapy shower, I’m not really sure how that works.” So we didn’t have the benefit of like a video explaining it. Eventually we designed a display unit that went in with the kits. That actually did quite well and improved things. But almost at that point we already decided this isn’t the right channel for us because we’re never going to see massive growth here, at least at this stage in our company.
Andrew: Yeah. I get it. There’s nothing like online direct marketing. I feel like it’s–for me, I love watching it. A lot of my friends, when they go through Facebook, all they see are like info marketer ads. I guess I’m not clicking on those or not interested so I don’t see them. All I see are these product videos that remind me of the old infomercials that I can’t stop watching. It’s kind of fun.
Peter: And they all have–I love clicking on them now too because you’ll see the funnels, the creativity people have of like taking people through the journey of what this product is. Then if you click and you watch one of them and go to the page, then you’ll see their whole retargeting sequence.
Andrew: How do you see their whole retargeting sequence?
Peter: If you click on the ad, exactly. If you click on the ad and go to the site, usually that will put in their–
Andrew: And then all you see is their ads for a week.
Peter: Yeah, exactly. There are tools also where you can spy on people’s ads too, which is fun.
Andrew: What are some of those tools?
Peter: One is called Which Ads Work, WhichAdsWork.com. You can basically filter by different types of verticals and different types of products and see different ads and how many shares and likes and everything they’re getting.
Andrew: Those don’t seem to work with Facebook. Am I right? They’re showing examples of Facebook.
Peter: There are ways to do it on Facebook without even using that software, like if you click on an ad in the upper right on the drop down and say like why am I seeing this, it will bring you to another thing that will show you why you’re seeing this and you can click on the different buckets and it will show you different ads from those buckets. So, there are ways to do it.
Andrew: I didn’t know it would show you different ads from those buckets. I know it showed me what I did to cause that ad to come up.
Peter: It will.
Andrew: Man, dude, this is so good. I feel like we should have done this in two interviews. I’d love for you to come back to do another one. As you keep coming up with different software, different techniques for growing your business, just keep it in mind and I’d love to have you come back and share the stuff that works.
Peter: I’d love to. As I said, I’ve long been a fan of your show. You give the best interview in town. You ask difficult questions, which is important because sometimes people just get softball questions. It doesn’t make people think. So I think that’s super important.
Andrew: Thanks. I didn’t get to ask you many tough questions. But I don’t try to force it.
Peter: You asked me a couple on the spot ones at the beginning about Amazon, which I hadn’t thought about in a while. So I had to think quickly.
Andrew: You know who I asked a tough question of is–do you know Shep Gordon, “Supermensch,” the documentary and book?
Andrew: The guy is so good. If you want a documentary to fire you up with creativity, you’ve got to check out “Supermensch.” Mike Meyers did it about this guy who promoted Emeril Lagasse, a chef who was a nobody, made him into a celebrity, Alice Cooper, tons of other people. He never mentioned his cofounder in the documentary and in the book, he only mentioned him in passing, so I tried to find the freaking cofounder and he wouldn’t talk to me.
I brought him up in the interview. I wasn’t trying to sandbag him. But I did want to understand what happened with this cofounder and where did he go. I could tell by looking at his eyes that’s kind of a tough issue. He explained it and said why it was a tough issue. I do like to ask the tough questions, but not to trap people, to understand them.
Peter: Yeah, to understand. It’s not even necessarily tough, but it’s like diving deep into things they might gloss over. It’s like let’s take a step back and talk about what you did there. That’s important.
Peter: Deep dive into something.
Andrew: I think it is too. All right. Thank you for doing this. Before I close out by giving people your URL–actually I’ll ask you to give both your URLs–I’ll tell them the two sponsors I had for this interview are the company that will help your next great developer or MBA or many others, who knows what else they’re going to have by the time this interview is up. It’s called Toptal.com/Mixergy. If you want a design like me and man, did I not want one but I needed one, if you need a design, go to DesignCrowd.com/Mixergy, really one of the best tools in my arsenal right now.
Finally, I’ve got to say a big thanks to a past interviewee and friend of the show and listener and fan, the founder of Swiftype. I’m really glad that he created Swiftype because we are using it as one of the tools on our site to improve search. Search really sucked. I tried Google search as a plugin. It sucked. Swiftype is the way to go and I’m really appreciative they make it and I’m glad they’re part of the site.
You’ve got Essio and the full URL is what?
Andrew: And that video is fantastic. I think people need to check that out. Second, this PR thing, PR Volt.
Andrew: Why get into it and what happens when we sign up?
Peter: Yeah. Why get into it? Because it’s a good opportunity, I think. It’s something that people need. I launched it just kind of to see if people would pay for it and would sign up and so far we’ve gotten about 15 customers, clients in our beta and we’ve done no advertising at all. It’s all been word of mouth. So that tells me maybe we’re on to something.
Right now we’re really focused on building out the product and service. And then we’ll go a little further and do a little bit of a marketing push and we’ll see how much more we can take, how much more validation we can get for it one step at a time.
But what we do essentially is you as the brand, the product or service will come to us, they’ll tell us, you’ll fill out a type form, you’ll tell us about who you are, what your product is, what makes it great, what’s the differentiation in the market, what type of press you’re looking to get, whether it’s online, TV, radio print, geography, what topics you’re looking to get coverage on.
We’ll take all that information in. We’ll have a consultation with you. We’ll learn about your PR goals. We’ll build your media list. We’ll write your pitches. We’ll set it all up in a CRM for you. We’ll send it all out and then you’re just going to get responses in your inbox from your editors. I believe that startups and small medium size businesses need to get PR, they want PR, but there’s a big barrier to entry.
There are two big barriers to entry. One is the price tag, $5,000, $10,000 a month is a lot for a small business, that’s one. The other is a lot of startups or founders don’t know how to do it. They have other things they’re working on. They need someone to help them with it. That’s why we’re doing it. I think there’s an opportunity to build something really valuable for people.
Andrew: How many months does somebody need to be a part of this before they start to see results?
Peter: Usually people will see the results in the first month.
Peter: Yeah. Sometimes it takes longer, but I mean you’re going to get some response in the first month, just by the design of the way we do it. We haven’t seen one client yet not get any results. But like I said, sometimes it takes editors seeing things a few months to really take action on it, like the GMA thing that experienced.
Peter: Don’t expect everything upfront. It might take some time. I’ve seen some where they sign up, we launch their campaign and they’ve gotten like 50 leads in the first month. It’s unreal and some really good ones.
Andrew: PR Volt.
Peter: Correct, like turbo charge it.
Andrew: Yeah. All right. Thanks so much for doing this, Peter.
Peter: My pleasure. It’s been real and I love Mixergy. So this is all my pleasure.
Andrew: Thanks. Me too. Thank you for doing this. Thank you all for building a part of Mixergy, and if you’re listening to this and building something great, when you’re ready, come email me. I’d love to have you on. Bye, everyone.