Andrew: Before we get started, this interview is sponsored by Freshdesk. That inhale, exhale thing is my way of trying to get you to remember that it’s Freshdesk. What is Freshdesk? Well, if you’re at a place where you’re starting to get so much email and so many tweets and so many Facebook messages from your customers that you can’t really handle it, do something about it now. Don’t get to a place where you hate your customers because they’re bombarding you with too many messages. Create a system that allows you to respond to them with sanity. That’s why I love, and recommend that you try out Freshdesk. In fact, I’m going to give you 30 days for free with Freshdesk.
What’s great about Freshdesk? Well, let me show you a few features starting with this one. This self-help center, this will help you answer your customers questions, you know the ones, the ones that keep coming to you over and over again. This allows you to handle those questions before they ever get to you so your customers can get their answers instantly and you can have a little more free time.
Here’s another thing that I like. They have multi-channel support so if people are messaging you on Facebook, on Twitter, on email, on all of these different places, Freshdesk will consolidate them into one place for you to respond to them. When you’re ready to hire people or if you already have people, Freshdesk will allow them to work together really smoothly and it even has this cool gamification feature that lets them compete with each other to see how well that they do and keeps it interesting for people who are responding to emails all day long.
Finally, it has a mobile app, and frankly, I shouldn’t even say finally, they have tons of other features. I urge you to check them out by going to Mixergy.com/freshdesk. You’re going to get 30 days for free, and you’re going to get to really explore how much better it is to respond to customers from an organized environment. Check out Mixergy.com/freshdesk. And here’s the interview.
Hey there freedom fighters. My name is Andrew and I am the very lavender founder of Mixergy.com, home of the ambitious upstart. Hey Morgan. Hey, is this lavender? I actually don’t know what the color lavender is, it just doesn’t feel like pink, this t-shirt.
Morgan: I’m not really sure, it looks great though.
Andrew: Thank you, I appreciate it. A few weeks ago I had a new member sign up to Mixergy Premium and he and I started chatting about what he was up to. And it turns out, he’s working on honey that’s spicy, that’s got a pepper in it. We were chatting about it, about how strong the business was, and it turns out they did really well their first year. I said, “Honey can do that well?” He said, “Yeah, we got this interesting project.”
So I emailed him back and I said, “Let’s stop chatting here, come do an interview with me about how you formed this company.” And he said, “No.” He said, “I want you to talk to our co-founder, his name is Morgan Newman and I want you to have him on because he can articulate our vision, he can articulate the business model so much better than I ever could.” So I agreed. And he also told me that Morgan Newman is the co-founder of IdeaPaint. So bonus. I got to have a guy on that’s founded two interesting companies.
So joining me which you can see on your screen right now is Morgan Newman. He is the co-founder of Mixed Made, which is a company that makes Bees Knees. Here let me hold it up to the camera. There. It’s honey that has… can you see that on camera? Probably. It’s got a pepper in it. Bees Knees Spicy Honey, handmade in Brooklyn. And they also more recently created Trees Knees, spicy syrup. The company that he founded previously is called IdeaPaint. They allowed you to paint your walls and turn them into whiteboards. Morgan, welcome.
Morgan: Thanks for having me.
Andrew: Dude, I’m looking up IdeaPaint on Crunch Base. I see that you guys raised $13.3 million. Incredible success story. In fact, you were telling me about how our mutual friend Ethan Bloch once had a conversation with you about it. Do you remember what you were telling me?
Morgan: We were looking for some customer case studies and being a Boston-based company, we wanted some case studies in the heart of Silicon Valley. I called Ethan and said, “Have you seen IdeaPaint around the Valley, around San Francisco?” And he said, “Dude, of course I have. You can’t walk into any office in San Francisco without seeing IdeaPaint. If you don’t have IdeaPaint, you’re not a cool startup.
Andrew: It’s part of the tool set. People paint those walls so that it’s very easy for them to draw on those walls and wipe them down and draw again and just think out loud with a room full of people. So with that kind of recognition, with $13.3 million raised, with such a high-profile, why are you going to create this farmer’s market style honey?
Morgan: Right. I think there are a few things. I’ve been at IdeaPaint for over seven years. The company was finally strategically aligned with what Jeff, one of the co-founders, and I had been working on for years. I was fully vested, I was itching to work on some new ideas, the company was heading in the right direction. It seemed like if I don’t make this move now, there’s never going to be a better time.
Andrew: Vesting is really a huge moment in your life. Do you remember the day that you vested?
Morgan: Well, it was long before I left, so I don’t remember it definitively. But it was something that I think you suddenly realize, like, “Oh yeah, there’s not much more new coming in.” At that point it’s much more about the value you are creating for the company and the shareholders.
Andrew: At that point, you own all the shares that you were promised and if you leave, you still get to keep those shares. What you don’t have is as much influence on the company because if you’re there, you get to work hard and improve it. At the same time, if you’re there and you get to work hard to improve it, you are basically an employee.
Morgan: I think for me leaving was making an active decision of, “Do I feel the company is in a good enough spot to where I’m willing to give up my right to influence it’s future trajectory anymore?”
Andrew: I think that company is really interesting and it did really well. It’s still doing well. But the reason I wanted to talk to you about Bee’s Knees Spicy Honey and the company behind it is that this is more of a bootstrap operation. This is much more of a simple, “We’re going to do it at home with a pot and a big jug of honey,” and so on.
But before we even get into how you did it, which I think is interesting to an audience of entrepreneurs who want to learn from you, but before we get into it, why? Take me back. It’s not enough that you were vesting. You vested, fine. You could’ve gone and created a funded company.
Morgan: So I think I talked to a number of friends and advisers and I realized that before I dove into any new project, like everyone, I have a long list of ideas, but I just wanted to learn. I was going to allow myself an undefined period of time to read and follow a trail of links. What I realized is that the world had really changed since we launched IdeaPaint.
In 2008, if you wanted a website, you either needed to know how to code or you needed to pay someone $20,000 to $100,000 to build it for you. It struck me that if we have a great idea on this call, we can tonight start a website and be selling a product tomorrow morning on a beautiful looking website and neither one of us need to have any design or coding experience.
Andrew: Who would design for us?
Morgan: 99 designs or any one of these tools. And although the tools will change, 10 years from now the tools will be different than they are today, I felt like if I didn’t get my hands really dirty and understand how to assemble a suite of tools that I would end up like those people I worked with in the past who are 50 years old and they don’t know how to use PowerPoint or Excel. So I just wanted to… this started as purely a learning project. Let me get my hands dirty and put some tools together and see if that alone can be part of building the company.
Andrew: Got it. So did you pick the Spicy Honey idea because it was so simple?
Morgan: Exactly. I wanted something that was so simple that the building of the company and that part of the learning wasn’t really about the product, it was more about the assembly of the tools. I decided to do something simultaneously. I was a little bit tired of going to the family party or the non-business related function and having someone come up to me and say, “You’ve been part of starting a company before, I’ve had this great idea forever but I don’t know what to do with it. It’s never gone anywhere.” And when I’d ask some questions, inevitably, “What have you done so far?” The answer was almost always, “nothing.”
And I realized there was this huge fear of trying anything. I think there’s this real mystery and this shroud of mystery around entrepreneurship, and people who haven’t been there before think there’s a secret skill. They don’t realize that it’s just doing something, doing something is half the battle. So I wanted to create a transparent account for these people to hopefully inspire them to take the first step.
Andrew: By transparent account, you mean you started blogging your first 30 days and showed every part of the process from getting your first sales to building or creating the product and so on.
Morgan: Yeah, so we figured let’s take the simplest product possible so no one is scared about the product. Everyone can make spicy honey. Put chilies in pepper, put it on the stove top. Put chilies in honey, put the pot on your stovetop and it will be spicy honey at the end of the day. Then we decided, if these tools that we’re looking at are really so good, let’s assemble them and see how fast they allow us to go. So we decided “Let’s try to launch this company in 30 days,” ship product to a customer in 30 days.
Andrew: The first thing you did was sell before you even built the website using all these simple tools that we have out there, right?
Morgan: Yeah. So we started talking to the obvious network of friends and family. The goal was to start selling product before the product existed. So we had a friend, a neighbor actually in Brooklyn, who is a designer who created some renderings for us of what the product could look like. The second we had those renderings, we put them on a really rough terrible looking website and started pre-selling.
Andrew: How did you start pre-sell… Sorry, I was hunting down some information about your business as you were talking about it. So you just started emailing people and saying, “Would you buy this?” How did you get them to pay you?
Morgan: So we did set up a Shopify site before, that was how we took our first sale. But the site was barely functional and not really meant to be polished. Everything was meant to be just good enough to possibly work.
Andrew: Did you have a name yet?
Morgan: We did. We picked the name pretty early on. I think we spent two hours brainstorming names. We wanted something that could grow with us, so if this happened to work and it turned into a suite of related products someday in the future that the name was wide enough that it could accommodate it.
Andrew: You mean Mixed Made. That allows you to turn into a syrup company, honey company and anything from there.
Morgan: Anything that might combine things to make things more interesting.
Andrew: You probably can take on Mixergy with that name. You can start doing interviews with a mix of entrepreneurs. I get it. All right. What was the url of your Shopify store?
Morgan: MixedMade.com.
Andrew: I see. You didn’t even put it on your own domain.
Morgan: Well, we…
Andrew: Oh, I’m sorry, MixedMade.com. I was expecting you to say MixedMade.shopify.com.
Morgan: So we put it on our domain. Again, it’s so easy. Shopify has the instructions or GoDaddy has the instructions. So we had it on our own domain within 15 minutes after we came up with the name Mixed Made.
Andrew: And I had it here on my screen here somewhere. Let me see if I can bring it up. It was pretty basic actually. I couldn’t even tell that it was a Shopify Store it was so basic. And you had a list of things that you like to put this honey on, and you had a list of things that your co-founder likes to put this honey on.
Morgan: That’s right, yeah. The site was meant to be highly transactional, so again, the goal was to illustrate the basics of what the product was and allow people to purchase it.
Andrew: What does that mean, highly transactional? That it’s all about buying, that you’re not there to linger and enjoy the beauty of the bottles.
Morgan: Yep. On day one it was meant to be really obvious, show them an image of what the product hopefully would look like once we finally made it, give them a “Buy Now” button and make the transaction.
Andrew: Who designed the bottle? The bottle looks good right from the start.
Morgan: Yeah, we have our neighbor in Brooklyn who’s a designer for Quickie, which sold to Yahoo. He’s a really talented Swedish designer and since he’s always designing software, he thought that it would be really fun to design something simple that people would be using.
Andrew: You just asked your neighbor to do it as a favor.
Morgan: Yeah, we gave him beer and pizza and he was psyched.
Andrew: So he designed the bottle, you designed the website on Shopify, and you started emailing your friends, telling them to go and buy. How many sales did you make, or how much revenue did you make before you launched?
Morgan: We had about $525 in sales before we had ever made a bottle of the product.
Andrew: So how do you know if that’s good or bad. Frankly, between you and me, that seems pretty freaking low.
Morgan: It does, but we knew that this was going to be a bit of an uphill battle. There’s zero search volume for spicy honey. It’s going to be an awareness game, so people need to know about it first. Our thought was this, we’re going to start by making 10 bottles of this stuff. If we can sell them, we’ll make 100. If we can sell those, we’ll make 1000. If not, we’ll have good friends and family Christmas gifts at the end of the year.
Andrew: I see. So now you had, let me see how much you were selling them for, $14 bucks. So if I do $500 divided by 14, 35 bottles sold, roughly.
Morgan: Yep.
Andrew: So now you have to go and make those 35 bottles. Get the bottles to look as nice as your designer friend made it, get the spicy honey in there, right? What do you do next?
Morgan: So that turned out to be a problem. I figured that our designer friend sourced the bottle image that he used from a manufacturer’s website. I searched high and low and couldn’t find this beautiful, round sculpted bottle. I called him at work and I said, “Can you please help me, we’re coming down to the wire here and I can’t find this bottle.” And he said, “Oh no, I made that bottle on PhotoShop.” So on went the hunt for the bottle that was similar. We fortunately found one that was almost identical.
Andrew: Yeah. I just assumed it was the exact same one.
Morgan: No, everything we… it just turned out that 20 days later when we finally had real product, the rendering was nearly identical to what we were able to come up with.
Andrew: So where do you find a bottle? Where do you go to look for it?
Morgan: It was probably a full days’ worth of painful Google searching. A lot of Google image searching and then trying to find the link that this had come from.
Andrew: Google image searching is a hidden treasure within Google search. It’s so good. So you just uploaded a photo that he created for you and then you saw if there were any bottles that looked like it. Then you went to hunt down who made those bottles. And did you have these bottles shipped to you from China?
Morgan: No, everything was U.S. sourced.
Andrew: So now you have a whole bunch of bottles coming over to your house. How do you get it printed?
Morgan: We wanted to screen print them as the bottle you have in front of you is.
Andrew: Yeah, you don’t want a label on top of it, you want the letters directly on the bottle itself.
Morgan: Exactly. We had identified a screen printer that was willing to work with us with plastic bottles, which is tough to find. But we just didn’t have time. So we wanted to ship bottles within that 30 day window, so we went to a local printer in Brooklyn who made clear labels for us. Again, we said that the first, as you said, 35 bottles, the first 100 bottles that go out, are going to people who at least loosely know us. They’re going to be willing to accept a slightly sub-par experience.
Andrew: Frankly, I don’t know that most people know the difference. They feel that there is an elevated experience when the letters are printed directly on the bottle, but when they’re not, it doesn’t feel… I don’t know that they notice what’s different.
Morgan: No, I think we’re used to half of the beer bottles that have stickers.
Andrew: Okay, so you had that made for you. Did you make a profit on the first order?
Morgan: No, I think we thought we did. In retrospect certainly not if you include even just Casey’s labor in filling the bottles.
Andrew: Yeah, so you had to fill the bottles at home. I saw a photo of it. You guys were documenting the whole experience on your blog. There was this big, big tub that filled up a pot that would go on the stove, and then you would actually put it on the stove with peppers and heat it up?
Morgan: Yeah, we’d infuse it with peppers on the hot stove, filter the chilies back out, and then basically create an entire mess in Casey’s kitchen by pouring honey from the pot into these small plastic bottles.
Andrew: Yeah, honey is very sticky. It’s not an easy substance to work with.
Morgan: We did not pick the cleanest products to work with.
Andrew: Where did you get honey? Did you go to the supermarket or something?
Morgan: No. Being in Brooklyn, you’re not far from… you’re at the base of the Hudson Valley which is one of the best, last unspoiled agriculture regions in the U.S. So we took a day trip. We got in the car and we went up and we visited places on the side of the road that said, “We sell local honey” or “Homemade Honey” and we ended up finding a spot, a bee supply store, Hudson Valley Bee Supply. And the owners of that are just passionate beekeepers and they were incredible. They called all of their friends who had more commercial operations and helped us figure out how to handle the honey and pour it from one bucket to another and gave us all the tricks and tips.
Andrew: At this point, I would just be exhausted from this product. If you set out to learn about how to learn a business, why do you care about how honey gets poured. Why do you care about who makes bottles. It feels like that should just be something you’ve graduated from, or never even touched.
Morgan: I think there is something fun about building no matter what scale or size it’s at. But in truth, a lot of what I wanted to learn about as well was assembling the suite of tools and getting my hands dirty. If we didn’t have a product that we could sell, then my learning game was going to be cut pretty short.
Andrew: But couldn’t you say, “Hey, look, Casey. I’m the guy that’s going to do the business side of things. I’ll be working on the Shopify store, or working on our new websites and improving conversions. Can you take a trip out and go figure this out. Can you go call around and look for bottles?
Morgan: Yeah, and we did really divide and conquer. I don’t think we would’ve pulled off the 30 days if not. So I probably didn’t taste even a sample of one of the potential products that Casey was making until day 15 or 18. Meanwhile, I was figuring out what systems and tools we needed to make it all work. So I was syncing Shopify with Zero and figuring of a review system and shipping platform and all that.
Andrew: So you were spending more time inside, but there were some fun trips out to learn about honey.
Morgan: Exactly.
Andrew: How does Zero and Shopify work together? Zero is the accounting program and Shopify, of course, is the e-commerce platform
Morgan: So pretty seamlessly. For a while, we were using a third party app to bring individual order data into Zero. That seemed like a really good idea to capture every customer’s order data until we much later hit a growth spurt and all of a sudden you’re basically rectifying against thousands of individual orders instead of a lump sum payment.
Andrew: Yeah, I know what you mean. I like that too, getting to see every single order in there, but it’s much cleaner to do bulk. I do it in… I use inDinero and I do actually have every single order go in there because that’s the way they work. Thankfully, they have a way to sum it up so I don’t have to see it all every time. Otherwise, it’s thousands of transactions when you’re just trying to figure out how much I spent for coffee yesterday, and did they account for it.
Morgan: I want what the product cost me and how much money came in.
Andrew: Right, right. Okay. So now you’re working on that, you’ve got your bees. Everything is set up. What’s the first day that you start to ship?
Morgan: So we started shipping right on day 30. We sent product out and you wait. You’re hoping that people think that it’s, at least, decent. We started to get a great reaction.
Andrew: What do you mean? Your friends would put it on food and say, “This is delicious?”
Morgan: Yeah. We had people born and raised in New York telling us they can’t believe they’ve eaten pizza without this for 40 years. It is a product that has an element of surprise with it. One of our favorite things is watching people’s faces when they taste it for the first time. Your jaw wiggles and cramps a little, and your taste buds explode. So we started to spread the word a little bit more. I posted on Facebook, “Hey friends, working on a project. Check it out.” Casey sent an email to his group of friends and we did $1500 in sales in the next two weeks.
Andrew: Let me ask you something. What does it say about my personality that if I were in your shoes I would go, “What the hell am I doing?” I’ve got $500 in sales, and now $1500 in sales. Yes, my friends are enjoying it, but I was doing IdeaPaint. Silicon Valley painted their walls with my stuff. They built their ideas on my paint. Why am I futzing around with a few hundred dollars worth of this stuff. I get in my head about that stuff. Do you ever do that?
Morgan: Yeah, for sure. I think, for me, it was a little bit more of an ego thing. Like, do I want people out there, investors or people who perceive me to be successful to see what I’m working on. Will they think that I…
Andrew: So how did you get past that, because frankly if you allow that to be a limiting belief, you’re never going to get anywhere in life because you’re always going to start somewhere. You’re always going to start at step one. So how did you deal with it?
Morgan: For me, it was easy. This was a learning project. So if I got insecure in a conversation with someone, I could say, “I’m working on this learning project.” And I think it was funny because the reaction for most people, even some that I thought might judge how small this was at first, the reaction was, “This is brilliant.” People who are C-levels at public companies are saying that they’re staying up at night reading our blog entries because they love how transparent and real it is.
Andrew: I see. And that’s part of the way that you kept it as a business experience. You were blogging everything. You were blogging finding the honey, you were blogging, at one point, hooking up on a plane with an app.
Morgan: I read a funny blurb that morning about some new app that was basically going to be the Tinder for while you were on a flight.
Andrew: I remember that.
Morgan: And it was right at the time when I had finally done all the research and I felt like we had a decent stack of apps and tools that were helping us operate efficiently. It just seemed like a great title. I guess the point is if there’s an app for hooking up on a plane, there’s definitely an app that will make it easy to ship your product, or easy to account for your inventory.
Andrew: I see. So you’re point with that, this was on Day 26 of your experiment, your point with that was to say, “Look. If there’s an app for this, there’s an app for anything that we need to sell online. There are no limitations. We can sell and get our stuff out in 30 days. If you’re reading this and you think that there’s some limitation, it doesn’t exist.
Morgan: That’s right. It’s just a matter of you finding it.
Andrew: And the cool thing about that post again from Day 26 is you put a screen shot of your text message conversation with Casey. Casey is messaging you and saying, “We have $104 in sales so far.” And you’re responding, “Yes, I logged in yesterday and I saw all the sales figure stuff.” And you’re saying the same thing that I asked you about, which was “How can I be this excited about small orders when at IdeaPaint, I would get a single order in the hundreds of thousands of dollars?”
Morgan: That’s right. I remember towards the end of my time at IdeaPaint, I closed the biggest deal in the history of IdeaPaint and I think even over… well, it was a big deal. And now I’m closing something with many less zeroes. But again, I was learning. So for me it was the mission was being accomplished, regardless of how small the numbers were. And it was really fun. We were getting quick reactions from potential first-time entrepreneurs saying that they were being inspired and Casey was having a fun ride. It was good.
Andrew: And you even blogged all the tools that you were using. You said, “I’m not using this airplane app, but here’s what I’m using. Zero for accounting, ShippingEasy for Shipping.” This is the company that would do your shipping?
Morgan: Basically, they’ll automatically take your order data from Shopify, set it up, and basically, one button press later and all the shipping labels are shooting out, ready to go for you.
Andrew: You got it from your printer and that’s ShippingEasy.com. Stitch Labs for inventory management, MailChimp for customer email and your prospect list, and the Hemingway app you loved for editing.
Morgan: Yeah. I’m not a great writer, but we’ve been doing a lot of writing. Hemingway is pretty cool. You copy and paste into it and it tells you why you’re a crappy writer.
Andrew: All right. So now we’ve got roughly $2000 in sales. And we’ll reveal… you’re fine, right? Of course you’re fine with me saying how much revenue you guys have today. By the way, who is Ted?
Morgan: Ted and I went to college together.
Andrew: Okay.
Morgan: He’s always been someone who’s been on the edge of taking that entrepreneurial leap.
Andrew: I see.
Morgan: We’ve always checked in every three or four months together, so we knew what we were doing here. He’s a foodie, he loves to geek out on data, he’s a hard worker. Knowing that Mixed Made was not meant to be my next thing, I didn’t intend to be operational in it forever. I wanted someone to come in and be the business side, commit full-time to it. It just seemed like this perfect fit. I had no question Ted would do good work.
I really wanted to eventually create a real predictable business and turn Mixed Made into something where we knew exactly what was going to come out the other end. I thought that Ted would be someone who would get excited about that and I was right.
Andrew: All right. So he’s the business side guy. Are you still working day-to-day at the business?
Morgan: I am, but definitely in a limited role. I put in a couple of hours a day and I say that on the strategic level and things that I want to continue learning about or stay involved in.
Andrew: Okay, all right. So now everything is good. We need to grow sales. What’s the first thing you did to take sales up?
Morgan: Our plan was more hopeful, but we figured there was a press story somewhere in here. Maybe that we were being transparent. Of course, that was a bit of a differentiator. And also that we had a product that was sexy. It was unique. There’s not much spicy honey out there. The packaging looks great.
So we started to float it in any direction possible, and this is Casey pushing a lot to his contacts and just going the extra mile. So I remember towards the end of the year, he finally was able to get a reply from the team at Esquire, and he went and hand delivered bottles. He went to the office and insisted on walking and hand-delivered them. He built a relationship while he was delivering them and we ended up on the front page of Esquire’s gift guide as a result.
Andrew: So what was his process? I know that Casey was really focused on this and he was incredibly persistent, and that’s why you got Esquire and we’ll talk about some of the others. You guys went even bigger than Esquire with this. But what was his system? You’re a very systems-based guy.
Morgan: Yeah, Casey is not as systems based. We laugh about that because for a long time, we’ve been trying to get Casey to put his press list into some sort of spreadsheet or system. But yeah, I think Casey knows the food world really well because he is a homemade gourmet himself, so he knew the right places to reach out to.
I think we’ve had a view from day one that when we reach out, we’re not asking for coverage. We’re talking about ideas with how we can help each other out. If you think of these journalists or these press outlets, they’ve got jobs to do. And their jobs to do is not to feature your product, their job is to present something interesting to their customer base or their reader base.
So we’ve gone… Casey’s approach has almost always been to present some unique recipes or photo shoots or ideas, content that we create for them that might be interesting to their readers. And he is incredibly persistent in following up until he gets a good reply.
Andrew: So he doesn’t have a system, but he does say, “You know what? I think we’d be great in Esquire. How do I show Esquire how we fit into their world, with their publishing schedule?”
Morgan: That’s right. So a good example is we thought we would be a good feature for Huckberry. They have a huge email list of people who have some good disposable income and instead of saying, “Do you want to sell our product?” We went to Huckberry and said, “Here are five ideas of some editorials we can create for you along with rich photos and food porn. Are any of these interesting?” And they came back and said, “Well, two of these would be amazing, our readers love them” and it led to a great feature by Huckberry.
Andrew: I see. Can I tell you something? Can I give you constructive criticism on your blog?
Morgan: Please.
Andrew: I feel what you guys could use on your blog is a name of an author and a date when it was published because so much of it depends on how far along you are in your journey. So for example, I see this post where Ted said, “Why I joined Casey and Morgan at Mixed Made.” I’d love to see when he did it, but there’s no date on it. Then, I see another post that says, “And… I quit.” And I’m trying to see who quit. Is that Ted quitting his job and starting to work with you guys.
Morgan: That’s Casey.
Andrew: Casey quitting his job and saying, “I’m going to work with Morgan.” And I can’t tell when that is, but my guess is that was about six months ago. That’s when he quit and worked full time.
Morgan: Even longer. Casey quit mid-way through last year.
Andrew: There we go, a year ago. What I was doing was going through, scrolling through the discuss comments to see which was the oldest one. All right. How did you and Casey hook up?
Morgan: We had mutual friends. Casey was known in our loose group of friends as the amazing homemade cook. He would show up to a party with two loaves of bread he’d been perfecting, and made hot sauce and something else. What I wanted to start was a really simple, fast company and what I decided was that spicy honey would be a good option. A friend said, “Well, Casey makes his own hot sauce, you guys would be perfect together.
Andrew: Okay. So Casey started to go after press. Did Esquire come first, or did Grub Street and Uncrate come first?
Morgan: Grub Street and Uncrate came first. Grub Street was great because it was very relevant. The readers of that are people who enjoy an interesting story about something food related.
Andrew: It’s also a website which means that it’s a lot easier to get into. You don’t have to wait months for them to publish their year end edition.
Morgan: Yeah, print is really powerful, but it’s limited. It’s dead a week later where a website is live forever and it creates some good SEO value as well.
Andrew: So I see here 2000, I think you guys got in there. Oh, you know what actually? They were covering a different spicy honey in 2014. I didn’t know there was another spicy honey.
Morgan: There is. There are a couple.
Andrew: All right. So you guys get in there. Was it helpful for getting orders?
Morgan: Yeah, it was incredible. As I said, there’s no real search volume for spicy honey. It’s a very limited category so far. So it’s totally an awareness game, so every time there’s any publication of spicy honey or our brand or product images, sales shoot up. So Grub Street was amazing and then Uncrate is just a sales machine. You talk to anyone who’s had a product on Uncrate and it’s just like this magical gift that keeps on giving because for one, it seems like you really can’t influence when you’re featured on Uncrate. Even since being featured, we’ve never had any contact with anyone at Uncrate. But if they’re listening, thank you, it’s very helpful. Also, Uncrate readers have their wallets open, so we’ve seen sales coming in from Uncrate still today.
Andrew: I’ve always wondered about that because I know that Uncrate has beautiful stuff and some of it is stuff no one would buy. I’m looking at it right now, and a TL3 racing simulator. It looks like a giant helmet that you put I don’t know where. I was going to say your living room, but probably not. It costs $55,000. So I just assume people are gawkers on this site, and they’re not. You’re saying they’re really customers.
Morgan: Oh yeah.
Andrew: So Uncrate contacts you, or Uncrate starts publishing about you or you contact them.
Morgan: Our phones start pinging with Shopify notifications of orders flying in.
Andrew: That’s it. They just hear about you and they decide they’re going to write.
Morgan: That’s it.
Andrew: So they get you. You start to get some traffic. Is there any way to keep these customers or to keep these… actually, do you have a sales funnel, or is it just someone comes in and either orders or they leave?
Morgan: We do. So that was a big shift in thinking. One of the things I wanted to learn to see if we could really control, was turning Mixed Made into a predictable business. For most of last year, it was online direct sales. I was introduced, it’s a bit obvious, but I was introduced to the concept of segmentation by Drew Sanocki.
Basically it’s pretty simple, but the idea is that you should think about your customers and think about and treat your customers differently depending on where they come from and what stage they’re at. So for us, as we started to get this great press, we’re getting a lot of people coming to the site, and of course a lot of them aren’t buying and they leave forever and they’re gone. So the first thing we do is figure, let’s try to collect their email address, incentivize them to do that.
Andrew: You give them a 10% discount if they give you their email address?
Morgan: That’s right.
Andrew: So that actually, I can see that being effective. Is that your most effective way of collecting email addresses?
Morgan: Yes, it is.
Andrew: So how do you segment. I understand how Mixergy can segment because we have a variety of people listening. People who are just starting business and others who are further along, for example. What do you do?
Morgan: For us, it’s all about order activity. The obvious one would be somebody who’s ordered once but not yet purchased again. Then you have a repeat customer who is not yet a power customer. Then you have someone who is a multiple-time, repeat customer placing larger and larger orders and they’re your MVP power customer. Then you have people who are a past customer but haven’t reordered in a long time and it looks like they’re about to fall off.
Andrew: So it’s based on how much they bought only, or what else do you do?
Morgan: It’s about timing also. So we had this huge, I’m sure we’ll talk about our huge swing in sales for the holidays. We have onward of thousands and thousands of customers, and while many of them haven’t ordered since, it’s not that any of them won’t order again, it’s very likely that they’re gifting customers. So they go into a segment that we probably shouldn’t bother too many times a year besides when there’s a major gifting opportunity.
Andrew: I see. That makes sense. I didn’t know you could do all of that with MailChimp.
Morgan: Yeah, you can create really easy automation to keep people engaged or try to bring them back in.
Andrew: Interesting. I see. Who is it that taught you, Drew who?
Morgan: Sanocki.
Andrew: Sanocki.
Morgan: I think Drew is famous for building data-centric e-commerce before it was a thing.
Andrew: Here it is. Drew S-A-N-O-C-K-I. Growth Hacks for Ecommerce Executives. Interesting. I guess, did you take his course, is that what you did? Or the Ecom Mastermind?
Morgan: I didn’t actually take it, but we had mutual friends and started chatting. He offers up the basics pretty easily.
Andrew: All right, let me bookmark the website. It looks really interesting. Boom. Then, as you said, Christmas comes around. Casey at that point had already decided he was going to go after the holiday gift guides, that’s where he was going to get a bulk of his press. How did he do it?
Morgan: So I think he sent a lot of imagery and what we call food porn to make sure they know that our product looks great. If they’re publishing gift guides, they need to look good in addition to being an interesting product. We were fortunate that our designer was great from day one. People like looking at our packaging. It’s a comment that we continue to get. So he was really persistent with sending out imagery and examples of how the product is used so people get the scope of…
Andrew: Yeah, your photos are fantastic on the website. For example, I wouldn’t have known that I could use this on pizza, but there’s a photo of you guys using it on pizza on your home page. But where is the other one? Oh, with cheese and crackers. That makes sense. But the one out in the woods, where you’ve got a stove and you’re putting it on top of potatoes? That looks delicious. That needs a whole photo shoot.
Morgan: It does. And I think that was part of the photo shoot for Huckberry. We pitched the whole camping weekend. But part of our job is to continue educating our existing and potential customers on how they can use the product. If you know 10 more ways you can use it, you’ll use a bottle faster and be more likely to be impressed with it.
Andrew: All right. So you do photo shoots on a regular basis, it seems like.
Morgan: We do. These days, with an iPhone and a good eye, which is Casey, not me.
Andrew: That’s all it is?
Morgan: Yeah. The majority of the time.
Andrew: I thought you guys were hiring photographers and going out. I can’t believe this bottle only costs $13. Why aren’t you selling it for more?
Morgan: We’re testing pricing right now. So we were at $15 for a few months earlier in the year. We are at $13 now and we’re going to settle into $14 and see what kind of numbers we get off of that.
Andrew: How did you come up with your first number, the first price?
Morgan: We took a guess.
Andrew: You just said, “Hey, we think this is going to be worth…,” I forget what you charged.
Morgan: We started out with $14. It should be premium. It’s a premium product, it should be positioned that way, but $15 starts to feel a little heavy and $14 is pretty close to it.
Andrew: I remember reading about Grey Poupon in the Wall Street Journal where they said that one of their problems was they had such an elevated brand that people didn’t want to use it day-to-day and they would only save it for special occasions. As a result, they weren’t going through those bottles as often and they had to take down some of the tone.
Morgan: That has been a challenge for us is getting people to rip through bottles faster.
Andrew: So he gets… did we talk about what his process was for getting into the holiday guides?
Morgan: Yeah, so I think it was, again, making sure there was great imagery and being very persistent. So we start getting some press. We knew Casey was going to be featured on CNBC TV show. They told us basically to expect for your website will crash, to expect for that volume of traffic.
Andrew: But if you’re hosting on Shopify, there’s no crashing it.
Morgan: No problem. I talked to their… and that’s one thing that’s been great with them. I called, talked to somebody in person, said, “We’ll pass it to engineering, make sure there’s no problem, but there shouldn’t be a problem anyway.”
Andrew: I can’t believe they would even need to pass it to engineering. Shopify, that’s one of the reasons why I use Shopify. Frankly, it’s not just Shopify. There are several hosts who are just so rock solid that you know they can handle it, and others who are going to go down fast.
Morgan: Agreed. You’d much rather be with one of the good ones for the days when sales come in.
Andrew: I was with one of the bad ones once. It’s so bad when the site goes down at the best day. All right, so how did that segment go for you guys?
Morgan: It was amazing. We got, again, I think a lot of people watching CNBC during the day, it’s bankers and people who where a $20 e-commerce order is easy disposable income. So we got a lot of… it was a really good day. It was our second highest day to date after Uncrate. I think we brought in maybe $7500 that day.
Andrew: Wow, and does that continue, or is it a one-time hit and then the show is off the air and you’re done.
Morgan: TV is quick. It burns bright and fast.
Andrew: Meanwhile though, I see that you’re still getting traffic from Grub Street for example.
Morgan: Exactly, and so we started to get some more press. It was almost like when it rains it pours. So basically from near Thanksgiving onwards, it seemed like almost every other day, there was a new gift guide that would feature us or something like that. It was really great. Sales were rolling in and I’ve been through this little bit before with IdeaPaint where it feels like everything is collapsing around you. But I know that you get through it. It’s stressful, it’s terrible, but you always find the light on the other side. I think for Casey and Ted, it was the first time that they got to experience it.
Andrew: Meaning, so many sales that you could have a hard time keeping up with it. And you had other issues too. Bottles suddenly became unavailable at one point.
Morgan: Our bottle supplier short-shipped and back-ordered us without notifying us.
Andrew: So what do you do when these beautiful bottles are part of the reason why people want to give out the gift?
Morgan: So I called in favors. We weren’t ordering enough volume at that point to work with any of the bigger suppliers. And I called a couple of them and one was sympathetic enough to piggyback us on one of his other customers orders, split it up in the warehouse and get us 5000 bottles last minute.
So it was just scrambling. We ran out of… we didn’t realize that our key, it was a silly oversight in retrospect but, our number two ingredient, one of our chilies, our primary chili was out of season. So we had nothing to infuse the product with. So we’re running around New England in December trying to find 40 cases of chili peppers.
Andrew: So what do you do? How do you find it?
Morgan: You know it’s just getting scrappy. It’s phone calls to every small and medium produce supplier in the Northeast, even the biggest ones, and going to the grocery stores and asking them who the produce buyer would call if you really needed a case of [inaudible 00:46:16] peppers.
Andrew: And this is you going out and doing it?
Morgan: This is Ted, Casey, and me. Anything possible. But the real whammy came when, this was, I think we chalked up to a lesson in communication, but Casey emailed Ted and I and said, “Good news, just heard back from the Today Show. I think we’re on.” We didn’t know anything about the Today Show, or I didn’t.
Andrew: How did he do it?
Morgan: Well, the email coming from the producer that he forwarded to us was, “My god, you are incredibly persistent. You’re lucky your product is so good.” He was relentless.
Andrew: It was just him constantly saying, “Well, we could fit in here. Did you see this photo? Can I send you another box.”
Morgan: “Last year you did gifts under $20. I saw that one time you did, ‘Interesting Stocking Stuffers,'” and he just wouldn’t let them off the hook until they’d give us a chance.
Andrew: Wow. How do you not have a beard, by the way? I know this sounds kind of out in left field, but one of the reasons why Casey fits so well in the business is because he’s got that beard, right?
Morgan: I can’t really grow a beard, and next to Casey, I wouldn’t do it justice, so it’s not even worth trying.
Andrew: All right, so Casey gets you on there. He gets himself on there. He’s the one going out for all of these media events.
Morgan: Well, some of them but The Today Show was just the product being featured.
Andrew: Oh, so it must’ve been a CNBC one where I saw him with the bottle.
Morgan: That’s right. So we find out The Today Show is going to hit. I remember talking with my wife that morning and she said, “This is fun that this little learning project that you guys have been working on is actually turning into something real that you guys are pulling in some good revenue numbers. Do you think you’ll do $10,000 in sales?” I said, “No. If we didn’t do it with CNBC, that won’t happen. We won’t do another $10,000 day for a year or two.”
And then Today Show runs, and I think about $8000 comes in. I called Ted and I was really excited and Ted said, “I’m excited too, but I just realized that the Today Show runs in every time zone across the country.” So we were only a quarter of the way in.
Andrew: So a quarter of the way in, you get $8000. Actually, it’s three times I think they run a day.
Morgan: Okay, so maybe three then. So we were at $8000 a third of the way in, and we still had the rest of the gift guide traffic as well. So we ended that day with right around $30,000 in sales.
Andrew: Whoa. Unreal. So this is probably a personal question, but that’s why I’ve got to ask here, but how are you feeding yourself? Is the money coming from Mixed Made, or is it coming from IdeaPaint from before?
Morgan: It’s coming from a generous wife.
Andrew: So she’s working and that’s where the money is coming in.
Morgan: Yeah. She’s working and that’s the agreement that we had that we would make the lifestyle choices we needed to live off of one salary and let me explore this for a while and see what else happened.
Andrew: Do you feel guilty doing that, putting it on your wife? Living off of her?
Morgan: No. I don’t think so. It’s a mutual decision, there’s a discussion around it. It’s certainly not me saying, “This is going to happen.” But I think there are times in our relationship where I’ve sacrificed more for her, and now she’s sacrificing more for me. I anticipate that that will happen many times over our lifetime together.
Andrew: Hopefully it’s that cycle where you can help each other out. But, you know what, I’ve met several people since I moved to San Francisco who are in a situation where I’m in awe of the companies they built. I’m in awe of the wealth they’ve built in those companies, but they don’t have cash flow because you don’t get to take the stock into a grocery store. So then some of them will do some consulting services for a while, or they’ll help out their friends companies, which is fantastic because then their friends get these guys who are really sharp at marketing and really sharp at product creation who just need a little bit of money to keep going. But I had no idea that this was an issue.
Morgan: Yeah. I think I wanted to make sure that I drew a hard line. I think when you decide something, you should fully commit to it. And I decided that we were going to live off of my wife’s income for a while, and that this was a learning project and I was going to commit to it until I didn’t want to anymore. But up until that point, it was still a great ride.
Andrew: Are you a millionaire on paper now?
Morgan: Probably.
Andrew: Okay. Why do you say probably? You don’t know?
Morgan: I think it’s pretty variable, right? Until it’s real, that number can go in either direction very quickly.
Andrew: I see. So where are we now with annual sales?
Morgan: So we end 2014 at $170,000 in sales.
Andrew: Wow. And this year we’re about half way through it. How are you guys dong compared?
Morgan: We’re tracking for about $450,000.
Andrew: Wow, so already this year you beat last year?
Morgan: Yes.
Andrew: And the best month is coming up, December.
Morgan: December is still to come. But we made a big change. So as of last year, we ended the year with maybe 15 or 20 wholesale accounts. The press ride is great. We rode good press for a long time. At Mixed Made, we rode it real well in year one. But it doesn’t necessarily last forever and it’s certainly not a predictable business plan. We decided that of these 20 wholesale accounts we have, these boutique retail grocers or cheese shops, that we’ll bring in some decent income.
You know, of course, we were talking to Whole Foods and we’re now in a handful of Whole Foods locations. But Whole Foods can be binary, where either you eventually expand to all stores, or you don’t have a high enough velocity and they tell you to go away. We wanted something that we could really control. If you look at the small businesses out there, there are easily 10,000 different cheese shops and gourmet grocers and independents. And if we could apply the tech sales mentality to scaling and opening these doors, that we could create a really good predictable business and that’s what we’ve been working on.
Andrew: So what does that mean? I think I know what it means based on our conversation before we started here today and I love this kind of approach to business. But can you describe it here?
Morgan: Sure. So I’ll tell you that the net result is that we’ve been on-boarding for the past, it’s pretty recent, for the past 6 weeks we’ve been on-boarding at least 10 new accounts per week. Each of those new accounts takes, on average, two cases of products, so it’s about $240 per account. Then they order monthly, so they reorder that amount monthly. So you’re start to build this really great foundation.
Andrew: So what’s the process for getting these stores? It sounds like you have a system.
Morgan: Yeah, so first, the most obvious is walking in door-to-door. It’s not scalable, it’s not efficient, it’s not cost-effective. So the next closest we figured was the phone. But the phone is also not efficient and not scalable and it actually doesn’t work well because these small businesses, if they’re answering the phone, they want you to be placing an order for a sandwich, not pitching something.
So one thing we’ve done throughout this whole process is really lean, as much as we’ve leaned on tools and apps, we’ve also leaned on other people who have done it. So we’ve become friendly with the brothers at Tessemaes or a little startup called Mustard and Co. in Seattle. We share best practices. So basically we learned from the guys at Mustard and Co. Effectively what we do is look at complementary products. We look at where they’re being sold. We compile that data and we basically run mail merge campaigns and test and optimize a campaign funnel against that data and try to get better and better
Andrew: And you’re still in the process of creating that funnel?
Morgan: We’ve got one that’s working and it’s giving us great conversion, but we’re early in it. So I think it’s pretty easy to imagine that we start closing 20 accounts a week and the data is out there and publicly available.
Andrew: How? I see Mustard and Co. right now. I’m on their website. Their stuff looks beautiful too. They have labels on their jars, unlike you guys.
Morgan: So I think if you think about it, so let’s go to the gift guides where we got a lot of press. Really quickly, there are probably 100 other maker or boutique products on those gift guides. So we can go to each one of their websites, start looking at where they sell their products, and calling up those stores. There’s a good chance that if someone really likes Mustard and Co’s. top selling mustard, that they’re also going to be open to trying our spicy honey or spicy syrup.
Andrew: I see. You know what? I’ve now found the link on their site. It’s the “Where to Buy” link. I can see that in Seattle that a store called Central Co-op is carrying them. And they even have their address. So what do you do? Do you send them a piece of mail, or you say you can’t call them up because they don’t want to talk to you. They want to talk to someone who’s buying a sandwich.
Morgan: Right, so basically what we do is we compile the data of a list of these stories and get as much personal contact information as possible. Then we’ll run mail campaigns that feel personal. We want to make them feel as personal as possible.
Andrew: Sorry, paper mail campaigns?
Morgan: Email campaigns.
Andrew: Okay, so if we’re seeing Central Co-op for example, I click on that. That takes me to Central Coop.coop. Apparently co-op is a new top level domain. That’s cool. So now I want to keep looking around until I find… oh there’s an organization and staff. So I think if I keep scrolling, oh this is a beautiful site, but they didn’t say who the person is over here. I would have to keep clicking around until I find the buyer.
Morgan: So exactly. So you can dig a little bit. You can run different combinations of Google searches and try to find the buyer or someone personal.
Andrew: Okay, so your first step is, if you’re going to create a process for this, your first step would be find all the stores that these handmade companies are selling in, like Mustard and Co., and then you put those in a list. Then your next step is to find out who the buyer is there, and that requires a lot of search, but you can find that.
Morgan: It does, but again these are usually small independent businesses, so the buyer is the owner, is the one that controls the email accounts. So usually if you can get an email address, you’re already talking to the right person.
Andrew: So the next step is to get the buyer or the owner’s email address. Then, the next step after that is do you send them a personalized email?
Morgan: We try to make it feel personalized.
Andrew: You make it feel personalized so you can reach a lot of people. If you don’t hear back from them, do you do something else?
Morgan: Yes. They go into a sales funnel. Our product sells really well when people see it and taste it, so the goal is as quickly as possible to get someone to take a sample.
Andrew: So the first thing you do is not try to sell them, but say, “I created this beautiful and tasty spicy honey, can I send you a sample so you can try it?”
Morgan: That’s exactly right.
Andrew: And then, they say, “Yes,” and your system goes and sends them one of these?
Morgan: So then we manually manage some of it. If they say yes, we’ll bulk import them into our shipping program. If they get no response, then they get email number two next week. It goes on that way. So far, we’ve been immediately profitable on the samples we send. So within two weeks, we’ve covered our costs on sending the samples. And our conversion rate is only getting better. Like I said, we average 10 new accounts per week. I probably have not even come close to optimizing yet.
Andrew: Okay. And who finds the email addresses? Is it you or are you guys using a virtual assistant?
Morgan: So we’ve been doing it now, but I think part of the way to really scale and grow this would be to outsource each piece of it so that there’s almost nothing manual involved. So you can imagine how this little business that was doing $500 of sales in month one, it’s very easy to see it become a couple of million dollar business and that’s not including Whole Foods, or any of the bigger conversations that we’re having.
Andrew: All right. This is such an exciting way to learn and for me to learn as you guys are doing it. All right, I think I’ve hit on every single thing except for the story of your childhood where you used to sell golf balls. We’re at the end of the interview, but I’ve got to hear that story.
Morgan: Yeah, I grew up really close to a golf course. The golf course abutted our property. As a little kid, of course you’re digging through the woods all the time. What’s more fun than that, getting dirty? And you start to realize how many hundreds of golf balls are around the course, hidden in the woods, too deep in for the golfers to actually get.
Then you realize how expensive golf balls are and maybe you can sell these used ones at say, half the price of a new one, back to the golfer. My brother and I would go out and do a day of hunting, and we’d bring them home and scrub all the balls. And then we’d bring them out to the course and sell them back to the golfers as experienced golf balls.
Andrew: Experienced. I like that. Congratulations on the success of this business. I’ve actually had this jar here. I told you we couldn’t do the interview because you were in Europe for a long time and I’m on baby duty in the mornings now.
Morgan: Yeah, I heard that.
Andrew: I will not leave until the nanny comes and then I go home in time for the nanny, to let her go back home to her place. So we couldn’t do it, we couldn’t do it, we couldn’t do it, which meant that this has been sitting here in the office for a few weeks. My wife even stopped at the office and said, “Great. I didn’t know you had this. Let’s open it up.” And I said, “No, I can’t. I need the bottle to look right on camera.” Now that it looks right on camera and everyone sees it, I can’t wait to eat it.
Morgan: Tonight is the night.
Andrew: Tonight is the night. You know what I really want it, I don’t want it on anything special. I just want it on pizza. I want it on Arizmendi pizza from Valencia Street.
Morgan: I think that’s a great idea.
Andrew: I didn’t even know it would work on pizza. But we’ll find out. All right. Thank you so much for doing this interview Morgan. And thank you all for being a part of Mixergy. If you want to check out the website that we’ve been talking about, its MixedMade.com. Like it’s been mixed up and made dot-com. And if you want to subscribe to this podcast… you know what?
Yesterday after I recorded an interview, I said, “Is it helpful for me to keep telling people to subscribe to the podcast? Because it sounds like a douchey, help-me-out type of thing to do.” And I went out and sure enough, we were like in the Featured section of iTunes and our numbers had gone up. So I said, “All right.” As douchey as it is, I’m going to keep saying it guys.
If you’re not subscribed to Mixergy on your favorite podcast app, whatever that happens to be, even if its the piece of garbage that Apple includes with your iPhone, and not the better piece of software like Downcast and Overcast. Whatever it is, I want you to sign up to Mixergy because if you liked this interview, I keep doing this every single week, three new ones every single week and the best way to get them is directly delivered to you in your podcast player. And if you don’t get them, then you need to be a Premium member, like Morgan’s team is.
So go to Mixergy.com/podcast and get it or go to your favorite app and just look for Mixergy and sign up. And I’m looking forward to being in your ears for weeks and years to come, after you sign up. Morgan, thanks for doing this interview.
Morgan: Thanks a lot Andrew.
Andrew: You bet. Thank you all for being a part of Mixergy. Bye everyone.
