January 21, 2019 • 55 mins
Who doesn’t love cupcakes?? But with so many places to get cupcakes, you may wonder what separates one from the rest. To answer that question, Jesse and Ben talk to Melissa Ben-Ishay of “Baked By Melissa”. She lets us in on how she sets herself apart from the other cupcake bakeries, and we hear how she grew from baking cupcakes for her friends to running a multi million dollar business.
Jesse offers her advice on how to invest in a company with perishable product, and the effectiveness of “influencer marketing”.
And Ben just made a very risky and life changing move, and desperately needs Jesse’s advice.
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Episode Transcript
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Speaker 1 (00:00):
Lady Bosses and then an I Heart Radio podcast, Welcome
to Lady Bosses. We've got Jesse Draper. I'm Ben Higgins.
Episode four of Lady Bosses. Jesse. This week something popped up?
What popped up? I have a management team, obviously, I've
I've made an income on social media. A lot of
(00:22):
people coming off reality television do uh. It's been a
focus now for a while where uh companies are investing
into people like myself or you know, influencers to promote
their products. This week, I was sitting at dinner with
a friend who was also on the same show as me.
I'm not gonna call him out because he doesn't make
a living doing this as well. And he signed a
massive contract with a company with a brand. It was
(00:44):
a great campaign, but this week he got news that
he didn't sell one single product from his social media.
For me, that's concerning obviously. I mean it's how I
make an income outside of these shows. Jesse. I want
to hear from you what is the future of advertising
and will social media being? Will it exist? Have we
(01:05):
figured it out? Would you want you want of your
brands to promote through influencers like myself? Be careful with that, Ben, Ben,
it's such a good question. Actually, UM, you know, this
is something that we as a venture capital funders super
focused on. UM. You know, traditional advertising hasn't been working
for a really long time, and so we've been digging
(01:26):
into influencer marketing and what works and what doesn't. We
have companies that know what works. We have companies that
have We have like Carbon thirty eight. They were fantastic
and grew to this enormous size because they didn't use um,
you know, influencers with million plus followers. They used organic,
(01:48):
authentic influencers to their brand. And what I mean by
that would be like ten you know, someone with ten
thousand followers who is a yoga teacher, UM, and they
would send them product and they would wear it. And
what they've realized is these micro influencers, as we call them,
are performing much better than some of the people with
(02:09):
fourteen million followers. And so what it's all about is
knowing your audience and your demographic and how much they
would spend and who they are. Are they moms? Are
they women between twenty five and thirty five? UM. The
more you know about your audience and what their general
income is and how much they'll spend in one purchase,
(02:33):
the better I think for you as an influencer. And
then also the brands need to see that you're performing. Obviously,
we have one company called Inked Brands that actually scrapes
data and has learned very similarly to your friend that
it doesn't matter how many followers you have. Sometimes someone
with seven hundred thousand followers can sell millions of dollars
(02:53):
worth of product because it's a very high end audience
versus the person with four million subscribers on YouTube who
couldn't send, you know, sell ten dollars worth of product.
And we actually saw an interesting company the other day
UM that is helping scrape Instagram data UM to figure
(03:15):
out how many fake followers you have, because that's the
whole thing, and some people have quite a few fake followers. Yeah,
but the whole world is you know, in that as
interesting because I know from my personal experience there's influencers
out there who can purchase followers. So, like you said,
you have fake followers. So somewhere somebody that you know,
maybe has a hundred thousand followers on Instagram gets you know,
(03:37):
a hundred and twenty thousand likes. You know, something weird
is happening. You can purchase these fake followers, so that
we haven't quite figured it out. Jesse, I think what
you're saying, and tell me if I'm completely wrong, is
that maybe the face to face is the still the
best way to market. So if you have these yoga
teachers who are wearing the brands and who are promoting
the brands, and they sell it to the fifty people
(03:58):
that come through each class that they're teaching, or they
tell you know, if there's a thirty five sales rate
on each class, those are the people who are making
the biggest impact. And the people that have you know,
two million, three million followers who are getting face to
face with people that people aren't trusting it. Yeah, it's
about real people. And it's not even necessarily about the
yoga teachers being in person, but it's about the fact
(04:21):
that they are regularly interacting with yogis and have that
organic following. And so if you follow one yoga teacher, uh,
you might follow another and then you realize, I love
my yoga teacher, I love what they're wearing. I wanna,
you know, sort of be zen like them, and I'll
buy it and you know, then they can post carbon
(04:43):
thirty eight and sell it through their site. And so
that has converted a lot more than traditional advertising these days.
It's a really well And then you brought up these
fake followers and yeah, you can purchase them, um, and
they're these bots. They there's business is now around creating
all of these fake boughts and they try to make
them even look real by having them like you know
(05:08):
Kylie Jenner's um, you know, pay Instagram page a whole
bunch and write little comments. And now there's things that
people look for and so it's not you know, you
don't want fake people following you. I think it's all
about real people. I mean, you know all about this. Yeah,
so Generous this year grew tremendously based on one idea
(05:32):
and I think this is the best thing that we
chose to do this year is we built an ambassador program.
This ambassador program reached out to anybody that wanted to.
We we sent out on social media and we sent
out emails to current customers and we said, do you
want to be an ambassador for Generous because you've seen
the impact, you've tried the coffee, you've wore the T shirts,
whatever that is, you believe in the mission, do you
want to help us promote it? And if so, you
(05:54):
get you know, free bag of coffee, a free T shirt,
you know X amount person off, and we'll give you
first DIBs on any trip we take. So we just
kind of implemented these benefits for anybody that was a
real person who had already invested into the brand, and
it helped us grow tremendously. We have these people with
a hundred followers talking about Generous, Well, if we get
(06:14):
fifty more people to buy a bag of coffee, that's
a massive, a massive deal to Generous, especially as a
brand that's growing. And so I believe I believe that
the ambassador programs. I believe that these grassroots efforts, these
you know this, real people promoting real things that they
really believe in, is the future to marketing. Yeah, I
(06:35):
I completely agree, and I think people are trying to
figure it out. And the funny thing about influencer marketing
is your there's more and more popping up, more of
these influencers popping up left and right, and you know
who will win and what will be like the ultimate
influencer category and um, you know, my my cousin, what's
(06:59):
your cousin's wife? Like, what is that? She's my cousin's wife,
now wife? Okay, anyway, she's a big influencer in fashion
and um, she it blows my mind. She has like
millions of followers and she just posts um different fashion
brands all the time. She's not really exclusive to anyone,
and she makes a really really nice living doing that.
(07:22):
And it it's just, you know, that's what she does
on a regular basis. I wonder if that gets exhausting you, Like,
what do you think does it get exhausting when you're
just constantly like does it? You know, you feel like
you are doing regular things all the time and you
have to take a picture of it. Well, what I
do know is that it gets exhausted if you're not
promoting what you believe in Jesse, Before we change gears
(07:43):
here and we move in to our very first guest,
who is the CEO of Big by Melissa, a brand
that definitely grew from grassroots efforts. I want to ask
you because it does get exhausting for people like me
or in this new world of social media, we're marketing
and ads and brands come across it all the time.
How can somebody like me continue to use my platform
(08:06):
to make the biggest impact for these brands and so
that I can still make that living because you know what,
it is a burden that I carry and I don't
want that to go away. How can myself as an
influencer be the biggest benefit to these brands that reach
out to me. I think just knowing your audience and
what works and what you can sell. So you know,
(08:26):
I would guess your audience is very female because you're
single and you were on the Bachelor, and I know
the Bachelor audience is very female. And so if you
learn you know what those females buy and what those
females like to do. UM, those are the brands you
(08:47):
should probably work with that you'll have the most success with.
But then you know, I know that your fans and
followers and friends are all behind you too, doing generous
coffee and want to buy I your product because they
believe in you. But I think it's just about being
authentic to who you are and UM, and then also
kind of combining it with the data behind your following.
(09:11):
Speaking to somebody that built a brand on themselves literally
you're talking about somebody being themselves being you. Melissa been
a shy, has built a brand Baked by Melissa Baking
Cupcakes in New York City. Melissa, are you out there?
I am here. Thanks for having me. Guys, We Jesse
(09:31):
and I are just really thankfully he came on Melissa
to dive in here. What makes your cupcakes stand out
to everybody else out there? Oh my gosh. Well, first
of all, they're just a bite, and they're made with
so much love. I can't even tell you. Everything's made
entirely by hand. We have a variety of flavor, if
that's always changing, and if I must say so myself,
(09:53):
they are the most delicious cupcakes you'll ever have, and
you can fly every flavor but feeling bad about it,
and I hate to use this word, but they're so moist,
and malicious moist is exactly do we Actually, we're right
now in studio. We have a box of the cupcakes
sitting here and everybody is just choweing them down and
(10:16):
everybody does agree. Actually, right before you came on, they said,
and I don't know why they hit it from you,
they said, these are the best cupcakes they ever had.
Let's let's backtrack for a second. How in the world
do you even get into the cupcake industry? Well, I
really love cake and dessert. I'm just a sacril at heart,
and it's my passion food, but more importantly dessert. I
(10:40):
was working in advertising as an It's a media planner
in two thousand and eight and I was fired from
my job because I wasn't passionate about the work I
was doing. I come from a very entrepreneurial family. My
brother is an entrepreneur. We always wanted to start a
business together. So the day I was fired, you said,
go and make your cupcake. We'll start business together. At
(11:01):
the time, I was taking tidy cup cakes for everyone
and anyone if it was your birthday, and I loved
you had tay cup cakes. Um. I I love to
work my butt off. Physical labor is my jam, and
I just wanted to find when they can do every
day that made me tired, and baking became that. So
literally a week after being fired, I was doing my
(11:23):
first event as Melissa of Speaks by Melissa at this
like really trendsy event and so how in Manhattan, Um,
this is really unbelievable. Looking back on the path that
you're sitting here today. I mean, when this all started,
what year was it, two thousand eight? Baked by Melissa's
starting two thousand, two thousand eight. Since then, you've been
(11:45):
seeing on people the kitchen, CNBC, Make It, uh, NBC
New York, Forbes, and Pop Sugar Off from Cupcakes. I'm
gonna be honest, Melissa, I'm I'm shocked. I was asked
two months ago to invest in two and I don't
know if they're same and tell me if they're not
a donut company. I was trying to franchise a doughnut
(12:06):
that they have and I didn't invest into it, mostly
because I'm concerned with the dessert market. Are people consuming
desserts like they used to? So hekay, I think you
made the right decisions. Donuts they're much more challenging, But
I don't um you have to eat it right away,
like when it's hot. That's the best way to experience
the doughnut. In my humble opinion, I think Bike by Melissa.
(12:30):
One of the things that makes this different from anyone
else is that we're just a bit so. Everything is
less than fifty calories, which is pretty freaking special and
I'm of everything in moderation type person, so I actually
believe they're not. I eat very healthy. Plants and vegetables
are my favorite types of food, but I always need
a fight of something big time. Melissa allows you to
(12:50):
have that. We definitely live in a more health conscious
society today than ever before. People want to know where
their food is coming from. Everybody's like watching free fight
and that's why three five Melissa's so freaking awesome because
we're fight and you can't live without a sirt. I
don't care who you are. I feel like I know,
like you know, people try no tiger or whatever. Five
(13:12):
It's true, it never lasts. You can't live a life
without dessert. If you do, I'm sorry. You know we
all need something. It's so true. I try to be healthy,
but you can only do it for so long. And um,
you know, recently I was at JFK and you guys
have a shop there, So I'm curious how that has
(13:33):
changed your business, Like being at such an international airport
versus like the typical you know, cupcake shops that you
have around town. I'd be curious what the difference is. Well,
So at base we ship about product nation right. If
you go to bakes by Melissa dot com, you purchase
cupcakes and perceive it the next day anywhere in the country. Okay,
(13:53):
it's very much like that model. Um, people who are
traveling all over the world are stopping at our our
purchasing cupcakes and bringing them. We know that many of
our customers at that location are actually purchasing birthday boxes
and celebration kids. We have this like birthday in a
box type thing, and the highest purchase rate is out
(14:14):
of that location. Um, it's like being a phil Olympics.
People are coming from all over the world and that's
drawing our products and that is very very good for
trans awareness. And you know, we know that our products
sells itself, so it's our best marketing tool. Jesse, for
a second, if you know Baked by Melissa or Melissa
(14:35):
came into uh do a presentation to you looking for funds?
What would make a company like this, you know, kind
of differentiate themselves compared to every other cupcake company? What
are you looking for when you invest in kind of
the dessert industry? So, Melissa, I know we've just met,
but I am a venture capitalist, so I invest in
companies and and so you know, I think what I
(14:58):
would be curious about out is UM. You know, typically
when I invest in a company UM that is retail oriented,
I'm slightly more terrified because you have to have these
physical locations, and we know how expensive real estate is
these days. So how do you how does that work
for you? And how do you make sure that UM,
(15:21):
you know you're not going under because of the rent
you're paying. Sure, So I could actually tell you what
you're looking for as a enter capitalists. First off, we
are in the retail business. We have fourteen creaking mortar
locations in the New York area and here over a
year we're still growing, which in this market is freaking
in the state because retail it stucks right now for
everyone else. We also have an extremely quickly growing e
(15:44):
commerce business that's up thirty percent year over yere, which
is like unheard of UM. And I think for Paris
that's even more unique because be able to ship food
and have it arrived in perfect condition pressure than even
if you purchase it in the store is remarkable and
those all of those things together make us extremely appealing
(16:07):
to to anyone. Yeah, and I'm curious also about shipping
you know. I'm an investor in Sugar Feena and UM,
they had this issue a while back that in the summertime,
shipping is much more expensive because if you order something
chocolate online, UM, you have to ship it with an
ice pack, and it made shipping sometimes more expensive than
(16:30):
what you were ordering. UM. How do you deal with
that and keep them fresh? Especially if you're shipping across
the country. Do you have warehouses across the country like
where your prime locations and us, we have one bakery
and we do all of our baking there and we
also ship out of that location. UM. We actually pay
very close attention to our shipping configuration and we change
(16:51):
it for the season because of what we said, and
we do a ton of tustoms. So we actually test
the temperature of the products when it arrived in California
and climates both in the summer and the winter to
make sure we're using correct packaging. Our packaging is different
in the summer than the winter. UM. And we know
that the weight of the package affects the cost, and
(17:13):
we're just very conscious of that. We I have just
been alerted that the ones that I've been sitting here
jowing down, UM, I love the peanut butter and jelly one,
by the way, But these were shipped and they're delicious
and they taste like you baked them today. I do
want to dig into that question a little bit though,
because it's generous. So, Melissa, I own a coffee company
and we ship our coffee all across the country. Shipping
(17:34):
is our biggest issue. It has been. We pay, you know,
anywhere from five dollars to nine dollars for twelve ounces
back of coffee, and so the company eats a lot
of those shipping costs. We offer a couple of discounts.
How do you work around that? Is it just building
out your distribution channels? Uh? Is it just worrying about
the weight of the box and then what does the
(17:54):
future look like for you? And that UM shipping is
expensive hundred percent and and we you know, we don't
make money off of our shipping costs. For sure, We're
doing everything we can to lower the costs for our customer.
We live in an age of people that were to
put for different I think it's a testament to our
products that our customers do pass something UM. And again,
(18:17):
it's just pat in close attention to it in every
meeting that we have to go over a budget and everything.
We're looking at the shipping costs, what we can do
to lower them, and really as part of why we
want to grow our business, and we come over our
ships and costs. But you know, there are always challenges
and that is one I think for everyone in our industry.
And you know, the cupcake world is obviously incredibly competitive
(18:41):
right now. Um, what would you say, are like the
three things that make you stand out? It's so funny,
you know. I get asked all the time where our
composition is, and I say it's a little like whatever.
I'm a very humble person, But we don't have composition.
We still bite sipe cupcakes. I see the cupcake is
my vessel for flavor I've made literally like okay, I
(19:03):
have a rainbow coast paper that's like an Italian rainbow cookie.
It's not a cupcake. I have a sugar pusteto cupcake
that's made with sugar pusty dough. I have cookie dough.
I have a doughnut flavor that when you eat it,
you think you're eating a doughnuts, but it's in a
stake of a cupcake. So I think that makes us
different of course, that we're just a bite. We've figured
out how to get our products in the hands of
people all over the country in a way that not
(19:25):
only keeps them looking perfect, but tasting just as fresh
as they actually are. And that is truly. We don't
have paper around our products, so we can't take it.
You know, like if you're going to a bagree in
any hometown, you're gonna get a cupcake where you peel
out the paper the top of sale already because it
was big three days ago. Well, we can't do that.
(19:46):
We don't have to brown our cupcakes. Therefore, we can
only give you the freshest products. And and I'm Melissa.
The company is called Big Fine Melissa. When I walk
onto the floor of the bakery, all of my teammates
to stuff ice and off those cupcakes get a little
nervous and they say stuckled because they know I'm going
to give them all feedback because the quality of our
(20:07):
products is why people come back, and it's just that's
what makes those different. I think I wanna go back
to your story a little bit. Um. You know, what
was the moment that you realized this was a business
and you weren't just baking cupcakes for your friends. Like,
what was the moment that it really took off and
you were like, oh my god, my life's about to change.
(20:31):
There were a few of those moments, I guess. So
we I take out my apartment in Murray Hall, Manhattan
for seven months, and then I moved into this Carbool
kitchen and soho on Fring Street, which was actually the
basement of a cafe called Cafe Values. It's no longer
there now it's Nike Found the Hospital thing. But we
(20:51):
signed our first like we also our very first tell
location on Spring Street. I'm Broadway, where I was doing
the baking attached by cafe was up window and people
lined up around the corner. My parents should drive into
the city from New Jersey, where I grew up. Every weekend,
my mom would assemblage three boxes and my dad would
run cupcakes from down the stairs and to flippen together
(21:13):
as a family, people flown away. My dad and I
would sink our heads out the window while we were
serving customers, and the pole lined up around the corner
for cupcakes, and like the lives ever went away. And
that was a real moment for me, but also I guess.
You know, as a founder it's super important to do
whatever necessary to get the job done. So my role
(21:36):
has evolved as just throw in the company and and
you know, changing what I focus on every single day
in order to continue to grow the company is another,
you know, way to say, like, it's not about what
I love, It's about continuing to grow this business and
do something amazing with like minds and hard working past
next people. I have the most unbelievable teme with people
(21:59):
in here at this time, LSSA. We love what we
do and at this point that's the best part of
my job. It's like, yes, we have this unbelievable products,
but it is a job. It's a responsibility to our
customers and to my team to continue to work our
butts up and give everyone the ultimate experience. And dessert, Melissa,
(22:22):
you've got great cupcakes. We're chowing down in the studio now.
They're absolutely delicious. Uh, before you go, you also released
a cookbook, Cakes by Melissa. And then how can all
of our listeners find your cupcakes? If they're interested in
these fifty calorie bite size cupcakes all across the country,
(22:43):
go to Big Spy Melissa dot com. You'll see all
of our delicious bite sized cupcakes. We have gluten free,
we have double stuffed macarons, we have like three tie
dive flavors right now. They make the perfect gift of
Valentine's Day, it's coming up. If you have someone you
love who likes to eat, you cannot go wrong. Is
(23:06):
a huge stat of fake by Melissa. We've never paid
her a dollar. Go see what you've been talking about. Okay,
I have one more question about these cupcakes. Um, which
one would you consider, like the Lady Boss cupcakes, My guys,
the most popular flavor, our signature flavor, and the flavor
that started at all? Okay, go get that one, Melissa,
(23:30):
Thank you so much. Thank you guys, Thank you bye bye.
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will dot com. Leaving uh Baked by Melissa, I'm really
concerned about the dessert space you've Jesse. You said it
to Melissa that you think that people can't live without desserts,
(24:34):
and then I definitely don't think they can. So you
would invest into something like a cupcake that's bite size
because what it does do it does? She said, The
word that really interrusted me is moderation. So she's taken this,
this dessert or this thing that we all love, and
she's kind of slimmed it down so that we can
sell the taste in the flavor. But four of those
(24:56):
cupcakes probably doesn't equal one massive cupcake that you get
in a normal baker. Yeah, which is why her margins
will be higher, probably because she's selling more cupcakes. Um,
I think that's why. I mean I would personally, I
love cupcakes. I love the dessert industry. I'm terrified of
investing in food. The only two food food businesses that
(25:17):
I've invested in our Sugar Fino, which is candy, so
it is dessert. So clearly I believe in dessert. But
it's less perishable. And then the other one is t
also less perishable because I think about the shelf life
and like, what happens if, you know, one cupcake gets
like Salomonila somehow I don't know. I think about, like,
then you have to throw out this whole bunch where
(25:40):
we invest in consumer businesses with products, but like, I
don't want to have to throw away any of the products.
You know, Well, I'm with you. I agree the cool
part though, and we're not We're not joking with anybody.
These cupcakes are great and they're really good, and you're
in California, like ship from New York to California across
the country, and they day good. The story with Melissa's
(26:03):
interested in me because she gets fired from a job.
We didn't hit on this as much as maybe we
should have. She gets fired from a job and then
just goes, what's my passion? Like what do I like
to do? When her brother goes start baking and she
starts baking, and now you know what is it? Eleven
years later fourteen locations and continue to grow online year
(26:24):
over year over year. Oh with baking, like just a
normal person that loves baking. And if I was going
to guess how big the business is, I would have
asked her, but typically they won't, you know, share their numbers.
Probably on this um, I think that she's probably it's
probably like at least a fifty million dollar company, So
like that's they're killing it. I mean, if they have
(26:45):
fourteen shops, they bring in a couple of million dollars
per year probably in each shop, i'd hope with cupcakes,
I think, I mean they're probably yeah, I think they're
probably doing somewhere between twenty five and fifty million dollars.
As we talked about the beginning of the episode, Jesse,
you know, there's this new trend, uh that cities and
(27:07):
municipalities are entering into to build these marketplaces, and these
marketplaces are you know, kind of share the burden of
overhead when it comes to real estate a baked by
Melissa seems like the perfect fit into that kind of concept.
Oh yeah, I mean that was like the one I
saw actually in JFK. Which imagine what great branding that
(27:28):
is because it's like this little shop, but you have
an international audience. There's always people walking by, and it's
just this sort of automatic international branding. But yeah, the marketplaces,
you know, traditional retail is shutting down. You look at
Macy's is shutting down a whole bunch of stores. Like
(27:50):
it's just real estate is way too expensive. So even
traditional retailers that we're all familiar with are changing their
entire uh business, you know, Jesse, I want to hear
from you then on this growing up as a child.
Our next guest is a child expert, we should say,
and then we'll bring her on a second grom. As
(28:11):
a kid, some of my best memories really are with
my mom going to the mall, walking around in these stores,
exploring all the different options and eating at the food
court and then leaving and going home. It was it
was what we would do and she needed a shop.
Does do you have in the any emotional sentiment, especially
as a lady boss yourself and knowing that the retail
(28:32):
world is disappearing. I mean, these malls no longer will exist.
You have massive malls with the J. C. Pennies and
the Macy's that were the staple shops and stores of
these malls no longer they're they're empty. Let's talk first
about the emotional side of that, because for me that
hurts a little bit. I enjoyed those experiences. And then
let's talk about the business side and where that's going. Yeah,
(28:54):
I completely agree. It's devastating. I mean to think that
all these malls, you know, you walk through everything from um,
what is it, the big Art Center in Los Angeles,
and they have all these empty windows all the way
to uh, you know, Third Street promenade promenade, and like
you're starting to see more empty windows. But also, um,
(29:17):
what's happening is basically it's sort of like brands are
being democratized. So everyone's coming out with this new brand
of toothpaste, diodorant razors. You know, you look at Dollar
Shave Club, and so they don't need these stores anymore.
But what's happening is some of them are getting little
shops for branding. So now when you walk around soho
(29:40):
in New York. Instead of seeing these independent stores, you're
seeing like, um, oh my gosh, what are they called?
All Birds, the the tennis shoes, and those are a
direct to consumer brands, so they don't actually need stores.
But then you're also seeing Nordstrom Uh, you know invest
(30:00):
in companies like sugar Fina and then they put sugar
Fina as a pop up shop in all of their Nordstrom's.
We actually have a company called Bulletin, and their whole
thing is they they create, they find retail space that's
really like prime locations, and they bring in a whole
bunch of independent brands with social media followings to sell
(30:23):
their one or five products there, and the social media
drives foot traffic into these stores. They're all over New
York City now. Um and so I think you see
the model changing significantly. I think it will all work out.
Like I'm seeing we works now go into these malls
because it helps the foot traffic in malls, so you
(30:45):
can work out of the mall and then you have
to walk through all the shops. You know. There's one
on Third Street Promenade in Santa Monica. There's one, uh
in the the big mall in San Francisco. I'm seeing
that happen more so I think people are solving this problem.
It's just chain up a little. And what you should
think about is where will people always go? Like what
(31:06):
shops won't shut down? And when I think about that,
I think of pharmacies and uh, food people. You know,
there's so much going on around food, and you know,
maybe you should start to sell products in you know,
kind of like stop in restaurants or coffee shops. Like
there's this whole new culture around fancy coffee. Even Starbucks
(31:29):
like has opened fancier coffee. You know, I know all
about that. I love coffee, so do I Sorry I
brought up Starbucks. Is that like, is that like the
anti Oh no, we're taking Starbucks down? Um, you know,
you're right. And I think that's a really interesting thing
that I've never thought of, is the we works and
(31:50):
those shared work spaces kind of going into those larger
retail spaces that people can to kind of have the
shopping experience, the eating experience, and the work experience all
in one. That to me is really interesting. Again, before
we bring on our next guest, who's the CEO of
Bouginhead Jesse do you think the change up? Because you know,
I am the president of a small business, a startup
(32:13):
that that I found with two of my friends. I
know that our capital uh was short when we tried
to open up our first coffee shop. A revenue share
idea was the best way we could do it because
we didn't maybe have the cash on hand. Is this
new kind of trend in retail space better for the
small business or is it worse because larger companies, honestly,
(32:34):
like Baked by Melissa, have the ability to kind of
scale a lot faster than maybe a generous would. I
don't know if it's better or worse yet, I'd be
curious how your revenue share works, so maybe you should
dig into that. But also, I think we're going to
just see a lot more brands pop up, and that's
a really positive thing. It means more people are running
(32:57):
these small businesses and we'll see which ones win. But
I don't think we'll have these like Uni Lever type
conglomerates anymore down the road. Um or maybe we will.
I mean, I'm just sort of thinking Unilever bought up
Dollar Shave Club. They're buying up all these independent brands.
But I think as more and more independent brands pop
(33:18):
up in different verticals, what does that look like, because
they they won't buy them all. I think it'll I
think it really democratizes uh, consumer businesses. You know, Jesse,
I can't disagree with you, but I want to say
for that anybody out there listening that might be a
little confused right now, um, including myself, what do you
mean by a vertical or democratizing business? So a vertical
(33:38):
would be, um, you know, you look at Dollar Shave
Club would be in the sort of self care vertical
of um, you know, with razors and shaving cream, and
that would be one vertical. Um. And then there might
be within that vertical hair vertical, you know, within the
self care vertical there's chimps and all of that. So
(34:01):
when I say vertical, that's that's what I mean. And
then democratizing business just means to me that we're seeing
a lot more individual brands like what Dollar Shave Clubs
started out as, and now we're seeing all birds. The
direct to consumer shoe company Rothy is direct to consumer
(34:22):
shoe company, Teaks direct to consumer shoe company, and we're
seeing more and more of these and it's democratizing these
individual brands versus you know, norths from getting all of
the foot traffic. What's happening is everyone's going onto these
many many shoe websites, uh, individually and they're getting all
(34:46):
of the traffic. You know, just the clear up anything.
If if Jesse and I ever kind of used the
verbiage like B two S or B two B that
means you know, direct to business to consumer or business
to business. Um, so it kind of hopefully clears that
up and when you look at you know, how you're
distributing and who you're selling to. Our lady Boss of
(35:08):
the Week is Sarai Davidson, the owner, founder, and CEO
of Boogan Heead Sarah, thanks for coming to the podcast.
Thank you so much for having me. Hey, Sarry, I'm
so excited about to hear about everything you're doing. I
actually use your Boogan head pacifier things. Oh my god,
that's amazing. I like the best news ever. They're a
(35:30):
you know we've heard before we dive in. You've obviously
entered into an industry in a sector that is always
going to be around as long as babies are. But Sary, Uh,
that's Jesse's world operated and talking about your business. My
world operated is hearing about you and how this all
got started. Can you give us a little background? Sure?
(35:51):
So in five I was a young mom. My son
who is now fourteen, UM was almost a year old,
and was trying to learn how to use a Siffy
cup and it kept falling to the floor and then
he realized it was this fun game where he could
just kept keep throwing it and I would pick it up.
And I thought, you know, there's gotta be something out
(36:11):
there that solves this problem. And I went on the internet,
I went to all the major retailers, and there wasn't
and so I literally went to Target and bought an
eighty dollar sewing machine and sat down at my kitchen
table and started sewing and um. And it was through
lots of iterations and passing it out to sort of
mom group friends and things like that, that the Siffy Grip,
which was my very first product, was born. And essentially
(36:34):
it's very it's a very simple product that's still um
it's actually in Target today, and it is essentially a
leash for a couple, a bottle or a toy. And
when I first came up with the idea. I you know,
I sort of played with it a little bit online,
but didn't really do that much with it. I was
in California at the time, and I was recruited by
(36:54):
Microsoft to go and work in their entertainment group, and
so I moved my family to Seattle and sort of
put it on holes. And then about a year later,
the itch of the entrepreneurial it's just started going again,
and I decided in two thousand and seven that I
was really going to go for it and launched a
company around this product. And so that's the really very
(37:15):
high level, simple version of how boggan Head got started.
What did you think this? I mean, for you say this,
you weren't. Uh, this is your very first venture. It's
the very first time starting company. You had an idea
and you saw an issue and you pursued it. What
was your thoughts when boogahead started? So to back up
a little bit, um, I actually had a recruiting company
(37:37):
prior to that. My entire career prior to doing this
is in recruiting and human resources. And I grew up
in a households where my mom had her own business
that she started when I was fourteen and she worked
seven days a week, I mean, up at five am
on Saturdays. And my dad's successful in his own right.
You know, it's really my mom that put me through
(37:57):
college in a sense. And so I grew up with
my parents always saying to me a couple of things.
One never rely on a man to support you. And
you will always make more money working for yourself than
that you will for someone else. And and everybody in
my family, including my father and my brother, they we
are we have all gone down the entrepreneurial path at
one point or another. So it wasn't a foreign concept
(38:21):
for me. And so when I first came up with
the idea, and honestly never even occurred to me that
it wasn't something that I was going to try and
do by myself. It's I had no I had no
background and consumer products or in marketing or anything like that.
And in some ways, ignorance truly was bliss, because if
I had known then what I know now about all
(38:41):
the struggles I've been through and the stress and all
of the negative pieces of it, I'm not sure I
would have had the stomach to sort of go for it.
But it was sort of this blindly I'm just going
to dive in and see what happened. And I had
a big safety net because I was working at Microsoft
for the first three years that I was building Bookenhead.
I would do Microsoft during the day and I would
(39:03):
do Bookenhead at night. And when my company got to
a million in sales is when I left Microsoft and
went off on my own to concentrate on book Aheads
full time. What are some of those struggles and pains
and just dirtiness that happens when you start company. So I, um,
(39:24):
I own a company hunterd percent. I have never had
any investors. Oh my gosh. Yeah, and I read that
you're a million dollar or you're well past a million
dollar business. Yeah, we're about the dream right now. And
so um, you know part of the struggle is and
I mean honestly, at the time, I wouldn't even have
(39:44):
known how to go out and raise capital. I mean
that was a completely foreign concept to me. Um. But
when you and I. By the way, I love this podcast.
I've listened to all your episodes. I was literally at
my warehouse all day yesterday re stickering bibs that are
going into Walmart, and all he did was listening to
the podcast and then just a little anecdote part of this,
(40:07):
not to get too off track, but then a massive
Bachelor Nation fan. I mean, and and my son Jake
is like the fitting image of you, what I think
you look like when you were his age. And so
Jake and I there are two shows we watched together.
We watched Bachelor bachel and Nation shows and we watched
The Shark Tank and we pause and we discussed throughout
(40:29):
all of it. So it's this is like for me,
I feel like, I'm so excited to be podcast. But
grass I digress, tell me the question again, I'll get up.
That's amazing. Um, well, actually I'd love to dig in
with what you So you bootstrapped this entire company you
were talking about that. Yeah, So basically what I did
(40:51):
and the reason why I stayed my Microsoft so long.
And I was the soul um and only breadwinner in
my family um at the time, and so I basically
lived off of my Microsoft salary and anything that I
made in the business I put back in. I had
no employees, So you have to understand I was on
maternity leave with my second son when I found out.
(41:14):
I got into baby's RS and I mean, I was like,
I didn't even know where I was going to get
money from to actually manufacture to put the products in
the store. UM, and I just you know, I'm I'm
a very very conservative with money as it is, and
so I I just found away in every penny I made,
I put back in. And you know, it's that's not
(41:36):
super scalable long term if you're actually truly going to
grow a business. But when you are selling items and
you know Ben with generous coffee, I think you'll sort
of relate to this, and you're selling an item that
is five dollars, you know, it takes you know, we're
now an over four million dollar company. Takes a lot
of widgets to get to four millions. And when you
are manufacturing a consumer product oversee is you're talking about
(42:01):
a good six to eight monthly time until you're going
to get paid on the product that you're manufacturing. And
so part of my strategy is that I did not
manufacture something that was not already sold into a major retailer.
So we like, for example, in UM next month, we'll
go to our Walmart line reviews, We'll go to our
(42:22):
target line review and we'll show them all of these
new products that we've created. If they don't look at
it and say we're going to take it next year,
we do not go into production with it. So for me,
I decided to grow very organically rather than taking really wild,
big risks and putting a lot of money out there
and hoping that if you build it, they will come.
(42:43):
My strategy is it's already been sold. I just have
to find the money to stop gaps, get me from
manufacturing to payments. Jes what do you think of that?
You know what you did the right things? Like I
understand what you're saying, Sari, that you know you feel
like in order to scale a real business you need
(43:04):
to raise capital and grow really fast. But you've still
grown and the dream is to own I always use
this like Instagram analogy, but it's like, wouldn't you rather
own of Instagram than a small piece when they sold
for a billion dollars? Right? I feel like that's what
we've done. Yes, you can go anither way, because there
(43:26):
have been times I really like I have a deck
that I um I have that I'm consistently updating. That's
my pitch deck. And there have been times that I
really have thought Okay, it's getting down to the wire.
I need to go raise from capital. You know, we
work with a bank and we have a line of
credit and that really helps with all the manufacturing costs.
But when you get picked up by Walmart and you're
(43:49):
told you're going to be in every single store, I mean,
your your head flies off because you're like, I don't
even know. And then on the other piece of that,
in terms of you know, when you would ask about
struggles when you this company a hundred percent um you know,
and I know that the gals from the um blow
dry Bar had sort of talked about her first store.
They had a personally guarantee. I'm still personally guaranteeing everything.
(44:11):
That's the way it worked with me and the bank,
because you know, we have a massive amount of inventory
that we have to carry and there's a lot of
provisions on that. And so when you are single, I'm
single mom with two kids, and you know, food is
not going to get out on the table unless I
make it every penny that I spend, every mistake that
(44:34):
I made, and I've made a lot of financial mistakes. Um,
all of those things that stress that I say is
sort of I now have seven employees. They rely on
me for their livelihood, so sort of having that responsibility
in terms of waking up in the middle of night
in a cold sweat. But there are some massive highs.
I'm so proud of what I've done. And we thought
(44:57):
a year and a half ago, I bought a building.
The It is in downtown of where we live. It's
just a great little area. We totally redid it. It's
got our branding and the field chip lass everywhere. You know,
it's a place I want to be every day. And
to have that and to have my boys see me.
They're now getting to an age where they understand what
(45:18):
mom does. And Jake comes to the warehouse with me
and he gets ten dollars an hour to pack boxes.
I mean that that piece is just you can't replace that.
That's amazing. You sound like an incredible mom. And um
you know so as an investor, if I were to investment,
it sounds like you don't need that. Well, you know
(45:39):
what I've I've listen. I've done my research on you
guys here. I am more than happy to have a
conversation because I disagree is because I would I often
thought I would rather have you know, let's just say
fifty of a fifty million dollar companies and a percent
(46:03):
of a four million dollar company. So there are there are,
There are so many times I've had what more could
There's so much more I could do if I had,
you know, all this money to work with. So I
really think that there's not a right path. I have
many many entrepreneur fronts that have both their businesses by
raising capital, and um, you know, I think everybody sort
(46:23):
of looked at the other side and says the grass
screener Jesse. For you, if you look at bouginhead right now,
is as an investor, let's simplify investing to investing one
on one obviously doing this, make it happen, make it happen,
Let's do a deal. Yeah, that's the next section of
(46:44):
this Lady Boss's podcast. All of a sudden, we're gonna
stop in between and say, Jesse, A you in are
you out right? Um no, I mean, let's simplify it
to just completely break it down. Because of the work
and effort the series put into the beginning of this
to prove sales, to to to build a proven distribution channel,
You're obviously looking at this and saying it's a proven
(47:04):
brand at this point, right, and so your investment is
going to be a lot higher than if this was
an idea, even a half million dollars in sales in
year one, totally. But I also get less ownership because
so we do early stage investing, so I like to
get it really really early. But UM, you know, it's
there is something to be said about getting into a
(47:26):
company with traction. It's you've proved it out and so UM,
you know, we might write a bigger check or something
to maintain the ownership we want. UM. But what I
would ask about as far as an investment here, Um
and Ben you know, that's a really good question actually,
because we we do look for some kind of traction.
So I love to see a million in revenue. I
love to see like a hundred thousand, you know, email lists,
(47:49):
just some kind of traction that you can prove to
me there is a need. Um. So the one thing
I would be concerned in a business like this is
um defensibility. And what I mean by that is just
you know, you are making these very incredible, unique products
that I use for my children. As I've told you,
(48:13):
UM to hold on to pacifiers to hold on to
UM sippy cups? How do you defend that? Though? Can
anyone do it? Right? We call that a barrier to entry,
like can you uh, you know, it feels like a
low barriered entry. Do you have patents? Do you have
I P what you know? What do you have that
(48:34):
will defend this? Right? Well, I'd love to turn this
into a something that I often give advice for for entrepreneurs.
And one of the things I'm actually really passionate about
is about sort of paying it forward to UM women
entrepreneurs getting started. There were many people when I started
(48:55):
and still now that gives up to me in that
way from a mentorship stampoint UM and so UM. To
answer your question, yes, we have items that have patents,
that we have items that don't UM. You know. The
bottom line is in my what I have learned in
my business is that UM first to market and peg
(49:17):
on the shelf is gold UM and so we were
really the only sort of UM big in town when
it came. We were the first to market with a
universal pacifire holder. That product is what built my business.
We sell well over a million and a half a
year unit of that item in massive retail chains, and
when we go to our buyers at its Target or
(49:39):
Walmart or what have you, I asked that question, why
are you still choosing me and my product over the
lots of the other knockoffs and competitors, some of which
are major major brands that we sit on the shelf
next to. And their answer to me is very consistent,
because you always come to me with something fresh and new,
and that's other than just showing me the same old thing.
(50:02):
And the motto I have was in my company, which
I borrowed from an executive at Microsoft in their hardware department,
is you innovate or you die. And so for us,
whether it is like, for example, this year, we're coming
out with a completely refreshed line of all the pasty grips,
fifty grips, all of that sort of thing. And every
year we come out with new products that go within
(50:26):
the same line. But that stretched us in terms of
our shelf space, and so we actually one of our
products that Target got picked up there are a million
other competitors Fiffy grips um because it looked good on
the shelf next to the other products. Because are are packaging,
our branding and so um, getting if you are if you,
for example, if you're in the baby business, thing you like,
(50:47):
oh I want to do pass fire holder, and it's
two thousand and eighteen and you're just starting out. Honestly,
your ability to get into a major retailer is pretty slim.
But if you already have traction with that retailer and
you have a a relationship with those buyers, if you
go to them with something that is now a competitor
or something they already have on the shelf, if you've
(51:08):
got a fresher look at it, a better price, and
a great relationship, then you absolutely have a chance. And
so um, that's what we do every year now from
here on out. When I designed something, or when we
designed something, I should say I have got to have
intellectual property attached to it. I mean that is just
like base level I design, even if it's just a
(51:29):
design pattern, I need that. Um. But um, but you know,
my past secret will fill out sell any other competitors
on the shelf. And and um and because we are
constantly being fresh, Yes, we're innovating. We're innovating. That's fantastic.
That's really good advice too for anyone out there. Who
(51:50):
has an idea and is creating something. Um. I mean
I I just think this is great. Tell us about
some of your what's your newest product? UM? Well, I
can't tell you about what the development tell you, yes,
but what I can tell you is because we have
(52:10):
been so so successful with our Pasty Grip and it's
basically it has a loop on the end, which is
why it makes it universal. We you know, a couple
of years ago, when we were getting knocked off a
lot and what have you, I basically said, you know what,
you guys, We're going to be the Pasty Grip company.
We this is a niche, we do it well, we're
really successful at it. Rather than trying to go off
(52:32):
the reservation and do like a diaper pail or you
know something like that, let's own it. Let's be the
Pasty Grip people. And so now we have um, we
have plush items that the kids hold that have you know,
the loop at the end to put their past fire around.
We have blankets um with teethers and the loop. We
have bibbs. UM. So we you know, we really sort
(52:56):
of what I'm trying to do is we're trying to
take vertical categories like, for example, a teether and incorporate
that into something that's already an existing sell for us
and create a new product around that so it can
sit and sort of multiple categories. And that's I'm sort
of trying to stretch the boundaries of the shelf space. UM.
(53:18):
I learned a long time ago that if you just
create products that don't sit together on the shelf, the
buyer can't do anything with it. But if you can
create a brand that can all that can sit together,
but you just keep sort of example, expanding the boundaries
of that brand, then that is something UM that has
really worked for us. So if you go to our
(53:39):
site we can Head dot com, you know, you can
see everything we're doing and a lot of our new
products are currently UM at the very final stages of
product development, will probably come out UM in seconds early
third quarter of UM of this year. So we're really
excited about it. And so Sarah, before really go here,
(54:00):
if anybody's out there listening and I have to have
these products, you're saying, you're in Walmart, you're online at
Buglehead dot com. Where else can people find you? So
we're in every Walmart store. Weren't every Target store. Weren't
every Rite eight store. We'll be launching an a TV,
which is a massive chain in the Texas area. UM,
we are at all by by Daby stores. We are
(54:20):
pretty much. Our entire catalog is online on Amazon. UM.
Something that your viewers should know is that we are
doing a discount code on our site. UM. The discount
code is Lady Boss. You can go on. Their entire
catalog is on there, and UM love to give a
discount to those folks. But we're pretty much, you know,
in every area of the country and internationally, so UM,
(54:44):
they can find us. Sarah and Jesse, I know you've
got kids that you've got to get back to. Uh,
so we're gonna call this another episode of Lady Bosses.
So I'm your resident Lady Boss Jesse Draper and I'm
just been follow Lady Bosses and Ben on I Heart
Radio or wherever you listen to podcasts. Hi Hide Radio.
(55:09):
H
Lady Bosses and then an I Heart Radio podcast, Welcome
to Lady Bosses. We've got Jesse Draper. I'm Ben Higgins.
Episode four of Lady Bosses. Jesse. This week something popped up?
What popped up? I have a management team, obviously, I've
I've made an income on social media. A lot of
(00:22):
people coming off reality television do uh. It's been a
focus now for a while where uh companies are investing
into people like myself or you know, influencers to promote
their products. This week, I was sitting at dinner with
a friend who was also on the same show as me.
I'm not gonna call him out because he doesn't make
a living doing this as well. And he signed a
massive contract with a company with a brand. It was
(00:44):
a great campaign, but this week he got news that
he didn't sell one single product from his social media.
For me, that's concerning obviously. I mean it's how I
make an income outside of these shows. Jesse. I want
to hear from you what is the future of advertising
and will social media being? Will it exist? Have we
(01:05):
figured it out? Would you want you want of your
brands to promote through influencers like myself? Be careful with that, Ben, Ben,
it's such a good question. Actually, UM, you know, this
is something that we as a venture capital funders super
focused on. UM. You know, traditional advertising hasn't been working
for a really long time, and so we've been digging
(01:26):
into influencer marketing and what works and what doesn't. We
have companies that know what works. We have companies that
have We have like Carbon thirty eight. They were fantastic
and grew to this enormous size because they didn't use um,
you know, influencers with million plus followers. They used organic,
(01:48):
authentic influencers to their brand. And what I mean by
that would be like ten you know, someone with ten
thousand followers who is a yoga teacher, UM, and they
would send them product and they would wear it. And
what they've realized is these micro influencers, as we call them,
are performing much better than some of the people with
(02:09):
fourteen million followers. And so what it's all about is
knowing your audience and your demographic and how much they
would spend and who they are. Are they moms? Are
they women between twenty five and thirty five? UM. The
more you know about your audience and what their general
income is and how much they'll spend in one purchase,
(02:33):
the better I think for you as an influencer. And
then also the brands need to see that you're performing. Obviously,
we have one company called Inked Brands that actually scrapes
data and has learned very similarly to your friend that
it doesn't matter how many followers you have. Sometimes someone
with seven hundred thousand followers can sell millions of dollars
(02:53):
worth of product because it's a very high end audience
versus the person with four million subscribers on YouTube who
couldn't send, you know, sell ten dollars worth of product.
And we actually saw an interesting company the other day
UM that is helping scrape Instagram data UM to figure
(03:15):
out how many fake followers you have, because that's the
whole thing, and some people have quite a few fake followers. Yeah,
but the whole world is you know, in that as
interesting because I know from my personal experience there's influencers
out there who can purchase followers. So, like you said,
you have fake followers. So somewhere somebody that you know,
maybe has a hundred thousand followers on Instagram gets you know,
(03:37):
a hundred and twenty thousand likes. You know, something weird
is happening. You can purchase these fake followers, so that
we haven't quite figured it out. Jesse, I think what
you're saying, and tell me if I'm completely wrong, is
that maybe the face to face is the still the
best way to market. So if you have these yoga
teachers who are wearing the brands and who are promoting
the brands, and they sell it to the fifty people
(03:58):
that come through each class that they're teaching, or they
tell you know, if there's a thirty five sales rate
on each class, those are the people who are making
the biggest impact. And the people that have you know,
two million, three million followers who are getting face to
face with people that people aren't trusting it. Yeah, it's
about real people. And it's not even necessarily about the
yoga teachers being in person, but it's about the fact
(04:21):
that they are regularly interacting with yogis and have that
organic following. And so if you follow one yoga teacher, uh,
you might follow another and then you realize, I love
my yoga teacher, I love what they're wearing. I wanna,
you know, sort of be zen like them, and I'll
buy it and you know, then they can post carbon
(04:43):
thirty eight and sell it through their site. And so
that has converted a lot more than traditional advertising these days.
It's a really well And then you brought up these
fake followers and yeah, you can purchase them, um, and
they're these bots. They there's business is now around creating
all of these fake boughts and they try to make
them even look real by having them like you know
(05:08):
Kylie Jenner's um, you know, pay Instagram page a whole
bunch and write little comments. And now there's things that
people look for and so it's not you know, you
don't want fake people following you. I think it's all
about real people. I mean, you know all about this. Yeah,
so Generous this year grew tremendously based on one idea
(05:32):
and I think this is the best thing that we
chose to do this year is we built an ambassador program.
This ambassador program reached out to anybody that wanted to.
We we sent out on social media and we sent
out emails to current customers and we said, do you
want to be an ambassador for Generous because you've seen
the impact, you've tried the coffee, you've wore the T shirts,
whatever that is, you believe in the mission, do you
want to help us promote it? And if so, you
(05:54):
get you know, free bag of coffee, a free T shirt,
you know X amount person off, and we'll give you
first DIBs on any trip we take. So we just
kind of implemented these benefits for anybody that was a
real person who had already invested into the brand, and
it helped us grow tremendously. We have these people with
a hundred followers talking about Generous, Well, if we get
(06:14):
fifty more people to buy a bag of coffee, that's
a massive, a massive deal to Generous, especially as a
brand that's growing. And so I believe I believe that
the ambassador programs. I believe that these grassroots efforts, these
you know this, real people promoting real things that they
really believe in, is the future to marketing. Yeah, I
(06:35):
I completely agree, and I think people are trying to
figure it out. And the funny thing about influencer marketing
is your there's more and more popping up, more of
these influencers popping up left and right, and you know
who will win and what will be like the ultimate
influencer category and um, you know, my my cousin, what's
(06:59):
your cousin's wife? Like, what is that? She's my cousin's wife,
now wife? Okay, anyway, she's a big influencer in fashion
and um, she it blows my mind. She has like
millions of followers and she just posts um different fashion
brands all the time. She's not really exclusive to anyone,
and she makes a really really nice living doing that.
(07:22):
And it it's just, you know, that's what she does
on a regular basis. I wonder if that gets exhausting you, Like,
what do you think does it get exhausting when you're
just constantly like does it? You know, you feel like
you are doing regular things all the time and you
have to take a picture of it. Well, what I
do know is that it gets exhausted if you're not
promoting what you believe in Jesse, Before we change gears
(07:43):
here and we move in to our very first guest,
who is the CEO of Big by Melissa, a brand
that definitely grew from grassroots efforts. I want to ask
you because it does get exhausting for people like me
or in this new world of social media, we're marketing
and ads and brands come across it all the time.
How can somebody like me continue to use my platform
(08:06):
to make the biggest impact for these brands and so
that I can still make that living because you know what,
it is a burden that I carry and I don't
want that to go away. How can myself as an
influencer be the biggest benefit to these brands that reach
out to me. I think just knowing your audience and
what works and what you can sell. So you know,
(08:26):
I would guess your audience is very female because you're
single and you were on the Bachelor, and I know
the Bachelor audience is very female. And so if you
learn you know what those females buy and what those
females like to do. UM, those are the brands you
(08:47):
should probably work with that you'll have the most success with.
But then you know, I know that your fans and
followers and friends are all behind you too, doing generous
coffee and want to buy I your product because they
believe in you. But I think it's just about being
authentic to who you are and UM, and then also
kind of combining it with the data behind your following.
(09:11):
Speaking to somebody that built a brand on themselves literally
you're talking about somebody being themselves being you. Melissa been
a shy, has built a brand Baked by Melissa Baking
Cupcakes in New York City. Melissa, are you out there?
I am here. Thanks for having me. Guys, We Jesse
(09:31):
and I are just really thankfully he came on Melissa
to dive in here. What makes your cupcakes stand out
to everybody else out there? Oh my gosh. Well, first
of all, they're just a bite, and they're made with
so much love. I can't even tell you. Everything's made
entirely by hand. We have a variety of flavor, if
that's always changing, and if I must say so myself,
(09:53):
they are the most delicious cupcakes you'll ever have, and
you can fly every flavor but feeling bad about it,
and I hate to use this word, but they're so moist,
and malicious moist is exactly do we Actually, we're right
now in studio. We have a box of the cupcakes
sitting here and everybody is just choweing them down and
(10:16):
everybody does agree. Actually, right before you came on, they said,
and I don't know why they hit it from you,
they said, these are the best cupcakes they ever had.
Let's let's backtrack for a second. How in the world
do you even get into the cupcake industry? Well, I
really love cake and dessert. I'm just a sacril at heart,
and it's my passion food, but more importantly dessert. I
(10:40):
was working in advertising as an It's a media planner
in two thousand and eight and I was fired from
my job because I wasn't passionate about the work I
was doing. I come from a very entrepreneurial family. My
brother is an entrepreneur. We always wanted to start a
business together. So the day I was fired, you said,
go and make your cupcake. We'll start business together. At
(11:01):
the time, I was taking tidy cup cakes for everyone
and anyone if it was your birthday, and I loved
you had tay cup cakes. Um. I I love to
work my butt off. Physical labor is my jam, and
I just wanted to find when they can do every
day that made me tired, and baking became that. So
literally a week after being fired, I was doing my
(11:23):
first event as Melissa of Speaks by Melissa at this
like really trendsy event and so how in Manhattan, Um,
this is really unbelievable. Looking back on the path that
you're sitting here today. I mean, when this all started,
what year was it, two thousand eight? Baked by Melissa's
starting two thousand, two thousand eight. Since then, you've been
(11:45):
seeing on people the kitchen, CNBC, Make It, uh, NBC
New York, Forbes, and Pop Sugar Off from Cupcakes. I'm
gonna be honest, Melissa, I'm I'm shocked. I was asked
two months ago to invest in two and I don't
know if they're same and tell me if they're not
a donut company. I was trying to franchise a doughnut
(12:06):
that they have and I didn't invest into it, mostly
because I'm concerned with the dessert market. Are people consuming
desserts like they used to? So hekay, I think you
made the right decisions. Donuts they're much more challenging, But
I don't um you have to eat it right away,
like when it's hot. That's the best way to experience
the doughnut. In my humble opinion, I think Bike by Melissa.
(12:30):
One of the things that makes this different from anyone
else is that we're just a bit so. Everything is
less than fifty calories, which is pretty freaking special and
I'm of everything in moderation type person, so I actually
believe they're not. I eat very healthy. Plants and vegetables
are my favorite types of food, but I always need
a fight of something big time. Melissa allows you to
(12:50):
have that. We definitely live in a more health conscious
society today than ever before. People want to know where
their food is coming from. Everybody's like watching free fight
and that's why three five Melissa's so freaking awesome because
we're fight and you can't live without a sirt. I
don't care who you are. I feel like I know,
like you know, people try no tiger or whatever. Five
(13:12):
It's true, it never lasts. You can't live a life
without dessert. If you do, I'm sorry. You know we
all need something. It's so true. I try to be healthy,
but you can only do it for so long. And um,
you know, recently I was at JFK and you guys
have a shop there, So I'm curious how that has
(13:33):
changed your business, Like being at such an international airport
versus like the typical you know, cupcake shops that you
have around town. I'd be curious what the difference is. Well,
So at base we ship about product nation right. If
you go to bakes by Melissa dot com, you purchase
cupcakes and perceive it the next day anywhere in the country. Okay,
(13:53):
it's very much like that model. Um, people who are
traveling all over the world are stopping at our our
purchasing cupcakes and bringing them. We know that many of
our customers at that location are actually purchasing birthday boxes
and celebration kids. We have this like birthday in a
box type thing, and the highest purchase rate is out
(14:14):
of that location. Um, it's like being a phil Olympics.
People are coming from all over the world and that's
drawing our products and that is very very good for
trans awareness. And you know, we know that our products
sells itself, so it's our best marketing tool. Jesse, for
a second, if you know Baked by Melissa or Melissa
(14:35):
came into uh do a presentation to you looking for funds?
What would make a company like this, you know, kind
of differentiate themselves compared to every other cupcake company? What
are you looking for when you invest in kind of
the dessert industry? So, Melissa, I know we've just met,
but I am a venture capitalist, so I invest in
companies and and so you know, I think what I
(14:58):
would be curious about out is UM. You know, typically
when I invest in a company UM that is retail oriented,
I'm slightly more terrified because you have to have these
physical locations, and we know how expensive real estate is
these days. So how do you how does that work
for you? And how do you make sure that UM,
(15:21):
you know you're not going under because of the rent
you're paying. Sure, So I could actually tell you what
you're looking for as a enter capitalists. First off, we
are in the retail business. We have fourteen creaking mortar
locations in the New York area and here over a
year we're still growing, which in this market is freaking
in the state because retail it stucks right now for
everyone else. We also have an extremely quickly growing e
(15:44):
commerce business that's up thirty percent year over yere, which
is like unheard of UM. And I think for Paris
that's even more unique because be able to ship food
and have it arrived in perfect condition pressure than even
if you purchase it in the store is remarkable and
those all of those things together make us extremely appealing
(16:07):
to to anyone. Yeah, and I'm curious also about shipping
you know. I'm an investor in Sugar Feena and UM,
they had this issue a while back that in the summertime,
shipping is much more expensive because if you order something
chocolate online, UM, you have to ship it with an
ice pack, and it made shipping sometimes more expensive than
(16:30):
what you were ordering. UM. How do you deal with
that and keep them fresh? Especially if you're shipping across
the country. Do you have warehouses across the country like
where your prime locations and us, we have one bakery
and we do all of our baking there and we
also ship out of that location. UM. We actually pay
very close attention to our shipping configuration and we change
(16:51):
it for the season because of what we said, and
we do a ton of tustoms. So we actually test
the temperature of the products when it arrived in California
and climates both in the summer and the winter to
make sure we're using correct packaging. Our packaging is different
in the summer than the winter. UM. And we know
that the weight of the package affects the cost, and
(17:13):
we're just very conscious of that. We I have just
been alerted that the ones that I've been sitting here
jowing down, UM, I love the peanut butter and jelly one,
by the way, But these were shipped and they're delicious
and they taste like you baked them today. I do
want to dig into that question a little bit though,
because it's generous. So, Melissa, I own a coffee company
and we ship our coffee all across the country. Shipping
(17:34):
is our biggest issue. It has been. We pay, you know,
anywhere from five dollars to nine dollars for twelve ounces
back of coffee, and so the company eats a lot
of those shipping costs. We offer a couple of discounts.
How do you work around that? Is it just building
out your distribution channels? Uh? Is it just worrying about
the weight of the box and then what does the
(17:54):
future look like for you? And that UM shipping is
expensive hundred percent and and we you know, we don't
make money off of our shipping costs. For sure, We're
doing everything we can to lower the costs for our customer.
We live in an age of people that were to
put for different I think it's a testament to our
products that our customers do pass something UM. And again,
(18:17):
it's just pat in close attention to it in every
meeting that we have to go over a budget and everything.
We're looking at the shipping costs, what we can do
to lower them, and really as part of why we
want to grow our business, and we come over our
ships and costs. But you know, there are always challenges
and that is one I think for everyone in our industry.
And you know, the cupcake world is obviously incredibly competitive
(18:41):
right now. Um, what would you say, are like the
three things that make you stand out? It's so funny,
you know. I get asked all the time where our
composition is, and I say it's a little like whatever.
I'm a very humble person, But we don't have composition.
We still bite sipe cupcakes. I see the cupcake is
my vessel for flavor I've made literally like okay, I
(19:03):
have a rainbow coast paper that's like an Italian rainbow cookie.
It's not a cupcake. I have a sugar pusteto cupcake
that's made with sugar pusty dough. I have cookie dough.
I have a doughnut flavor that when you eat it,
you think you're eating a doughnuts, but it's in a
stake of a cupcake. So I think that makes us
different of course, that we're just a bite. We've figured
out how to get our products in the hands of
people all over the country in a way that not
(19:25):
only keeps them looking perfect, but tasting just as fresh
as they actually are. And that is truly. We don't
have paper around our products, so we can't take it.
You know, like if you're going to a bagree in
any hometown, you're gonna get a cupcake where you peel
out the paper the top of sale already because it
was big three days ago. Well, we can't do that.
(19:46):
We don't have to brown our cupcakes. Therefore, we can
only give you the freshest products. And and I'm Melissa.
The company is called Big Fine Melissa. When I walk
onto the floor of the bakery, all of my teammates
to stuff ice and off those cupcakes get a little
nervous and they say stuckled because they know I'm going
to give them all feedback because the quality of our
(20:07):
products is why people come back, and it's just that's
what makes those different. I think I wanna go back
to your story a little bit. Um. You know, what
was the moment that you realized this was a business
and you weren't just baking cupcakes for your friends. Like,
what was the moment that it really took off and
you were like, oh my god, my life's about to change.
(20:31):
There were a few of those moments, I guess. So
we I take out my apartment in Murray Hall, Manhattan
for seven months, and then I moved into this Carbool
kitchen and soho on Fring Street, which was actually the
basement of a cafe called Cafe Values. It's no longer
there now it's Nike Found the Hospital thing. But we
(20:51):
signed our first like we also our very first tell
location on Spring Street. I'm Broadway, where I was doing
the baking attached by cafe was up window and people
lined up around the corner. My parents should drive into
the city from New Jersey, where I grew up. Every weekend,
my mom would assemblage three boxes and my dad would
run cupcakes from down the stairs and to flippen together
(21:13):
as a family, people flown away. My dad and I
would sink our heads out the window while we were
serving customers, and the pole lined up around the corner
for cupcakes, and like the lives ever went away. And
that was a real moment for me, but also I guess.
You know, as a founder it's super important to do
whatever necessary to get the job done. So my role
(21:36):
has evolved as just throw in the company and and
you know, changing what I focus on every single day
in order to continue to grow the company is another,
you know, way to say, like, it's not about what
I love, It's about continuing to grow this business and
do something amazing with like minds and hard working past
next people. I have the most unbelievable teme with people
(21:59):
in here at this time, LSSA. We love what we
do and at this point that's the best part of
my job. It's like, yes, we have this unbelievable products,
but it is a job. It's a responsibility to our
customers and to my team to continue to work our
butts up and give everyone the ultimate experience. And dessert, Melissa,
(22:22):
you've got great cupcakes. We're chowing down in the studio now.
They're absolutely delicious. Uh, before you go, you also released
a cookbook, Cakes by Melissa. And then how can all
of our listeners find your cupcakes? If they're interested in
these fifty calorie bite size cupcakes all across the country,
(22:43):
go to Big Spy Melissa dot com. You'll see all
of our delicious bite sized cupcakes. We have gluten free,
we have double stuffed macarons, we have like three tie
dive flavors right now. They make the perfect gift of
Valentine's Day, it's coming up. If you have someone you
love who likes to eat, you cannot go wrong. Is
(23:06):
a huge stat of fake by Melissa. We've never paid
her a dollar. Go see what you've been talking about. Okay,
I have one more question about these cupcakes. Um, which
one would you consider, like the Lady Boss cupcakes, My guys,
the most popular flavor, our signature flavor, and the flavor
that started at all? Okay, go get that one, Melissa,
(23:30):
Thank you so much. Thank you guys, Thank you bye bye.
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will dot com. Leaving uh Baked by Melissa, I'm really
concerned about the dessert space you've Jesse. You said it
to Melissa that you think that people can't live without desserts,
(24:34):
and then I definitely don't think they can. So you
would invest into something like a cupcake that's bite size
because what it does do it does? She said, The
word that really interrusted me is moderation. So she's taken this,
this dessert or this thing that we all love, and
she's kind of slimmed it down so that we can
sell the taste in the flavor. But four of those
(24:56):
cupcakes probably doesn't equal one massive cupcake that you get
in a normal baker. Yeah, which is why her margins
will be higher, probably because she's selling more cupcakes. Um,
I think that's why. I mean I would personally, I
love cupcakes. I love the dessert industry. I'm terrified of
investing in food. The only two food food businesses that
(25:17):
I've invested in our Sugar Fino, which is candy, so
it is dessert. So clearly I believe in dessert. But
it's less perishable. And then the other one is t
also less perishable because I think about the shelf life
and like, what happens if, you know, one cupcake gets
like Salomonila somehow I don't know. I think about, like,
then you have to throw out this whole bunch where
(25:40):
we invest in consumer businesses with products, but like, I
don't want to have to throw away any of the products.
You know, Well, I'm with you. I agree the cool
part though, and we're not We're not joking with anybody.
These cupcakes are great and they're really good, and you're
in California, like ship from New York to California across
the country, and they day good. The story with Melissa's
(26:03):
interested in me because she gets fired from a job.
We didn't hit on this as much as maybe we
should have. She gets fired from a job and then
just goes, what's my passion? Like what do I like
to do? When her brother goes start baking and she
starts baking, and now you know what is it? Eleven
years later fourteen locations and continue to grow online year
(26:24):
over year over year. Oh with baking, like just a
normal person that loves baking. And if I was going
to guess how big the business is, I would have
asked her, but typically they won't, you know, share their numbers.
Probably on this um, I think that she's probably it's
probably like at least a fifty million dollar company, So
like that's they're killing it. I mean, if they have
(26:45):
fourteen shops, they bring in a couple of million dollars
per year probably in each shop, i'd hope with cupcakes,
I think, I mean they're probably yeah, I think they're
probably doing somewhere between twenty five and fifty million dollars.
As we talked about the beginning of the episode, Jesse,
you know, there's this new trend, uh that cities and
(27:07):
municipalities are entering into to build these marketplaces, and these
marketplaces are you know, kind of share the burden of
overhead when it comes to real estate a baked by
Melissa seems like the perfect fit into that kind of concept.
Oh yeah, I mean that was like the one I
saw actually in JFK. Which imagine what great branding that
(27:28):
is because it's like this little shop, but you have
an international audience. There's always people walking by, and it's
just this sort of automatic international branding. But yeah, the marketplaces,
you know, traditional retail is shutting down. You look at
Macy's is shutting down a whole bunch of stores. Like
(27:50):
it's just real estate is way too expensive. So even
traditional retailers that we're all familiar with are changing their
entire uh business, you know, Jesse, I want to hear
from you then on this growing up as a child.
Our next guest is a child expert, we should say,
and then we'll bring her on a second grom. As
(28:11):
a kid, some of my best memories really are with
my mom going to the mall, walking around in these stores,
exploring all the different options and eating at the food
court and then leaving and going home. It was it
was what we would do and she needed a shop.
Does do you have in the any emotional sentiment, especially
as a lady boss yourself and knowing that the retail
(28:32):
world is disappearing. I mean, these malls no longer will exist.
You have massive malls with the J. C. Pennies and
the Macy's that were the staple shops and stores of
these malls no longer they're they're empty. Let's talk first
about the emotional side of that, because for me that
hurts a little bit. I enjoyed those experiences. And then
let's talk about the business side and where that's going. Yeah,
(28:54):
I completely agree. It's devastating. I mean to think that
all these malls, you know, you walk through everything from um,
what is it, the big Art Center in Los Angeles,
and they have all these empty windows all the way
to uh, you know, Third Street promenade promenade, and like
you're starting to see more empty windows. But also, um,
(29:17):
what's happening is basically it's sort of like brands are
being democratized. So everyone's coming out with this new brand
of toothpaste, diodorant razors. You know, you look at Dollar
Shave Club, and so they don't need these stores anymore.
But what's happening is some of them are getting little
shops for branding. So now when you walk around soho
(29:40):
in New York. Instead of seeing these independent stores, you're
seeing like, um, oh my gosh, what are they called?
All Birds, the the tennis shoes, and those are a
direct to consumer brands, so they don't actually need stores.
But then you're also seeing Nordstrom Uh, you know invest
(30:00):
in companies like sugar Fina and then they put sugar
Fina as a pop up shop in all of their Nordstrom's.
We actually have a company called Bulletin, and their whole
thing is they they create, they find retail space that's
really like prime locations, and they bring in a whole
bunch of independent brands with social media followings to sell
(30:23):
their one or five products there, and the social media
drives foot traffic into these stores. They're all over New
York City now. Um and so I think you see
the model changing significantly. I think it will all work out.
Like I'm seeing we works now go into these malls
because it helps the foot traffic in malls, so you
(30:45):
can work out of the mall and then you have
to walk through all the shops. You know. There's one
on Third Street Promenade in Santa Monica. There's one, uh
in the the big mall in San Francisco. I'm seeing
that happen more so I think people are solving this problem.
It's just chain up a little. And what you should
think about is where will people always go? Like what
(31:06):
shops won't shut down? And when I think about that,
I think of pharmacies and uh, food people. You know,
there's so much going on around food, and you know,
maybe you should start to sell products in you know,
kind of like stop in restaurants or coffee shops. Like
there's this whole new culture around fancy coffee. Even Starbucks
(31:29):
like has opened fancier coffee. You know, I know all
about that. I love coffee, so do I Sorry I
brought up Starbucks. Is that like, is that like the
anti Oh no, we're taking Starbucks down? Um, you know,
you're right. And I think that's a really interesting thing
that I've never thought of, is the we works and
(31:50):
those shared work spaces kind of going into those larger
retail spaces that people can to kind of have the
shopping experience, the eating experience, and the work experience all
in one. That to me is really interesting. Again, before
we bring on our next guest, who's the CEO of
Bouginhead Jesse do you think the change up? Because you know,
I am the president of a small business, a startup
(32:13):
that that I found with two of my friends. I
know that our capital uh was short when we tried
to open up our first coffee shop. A revenue share
idea was the best way we could do it because
we didn't maybe have the cash on hand. Is this
new kind of trend in retail space better for the
small business or is it worse because larger companies, honestly,
(32:34):
like Baked by Melissa, have the ability to kind of
scale a lot faster than maybe a generous would. I
don't know if it's better or worse yet, I'd be
curious how your revenue share works, so maybe you should
dig into that. But also, I think we're going to
just see a lot more brands pop up, and that's
a really positive thing. It means more people are running
(32:57):
these small businesses and we'll see which ones win. But
I don't think we'll have these like Uni Lever type
conglomerates anymore down the road. Um or maybe we will.
I mean, I'm just sort of thinking Unilever bought up
Dollar Shave Club. They're buying up all these independent brands.
But I think as more and more independent brands pop
(33:18):
up in different verticals, what does that look like, because
they they won't buy them all. I think it'll I
think it really democratizes uh, consumer businesses. You know, Jesse,
I can't disagree with you, but I want to say
for that anybody out there listening that might be a
little confused right now, um, including myself, what do you
mean by a vertical or democratizing business? So a vertical
(33:38):
would be, um, you know, you look at Dollar Shave
Club would be in the sort of self care vertical
of um, you know, with razors and shaving cream, and
that would be one vertical. Um. And then there might
be within that vertical hair vertical, you know, within the
self care vertical there's chimps and all of that. So
(34:01):
when I say vertical, that's that's what I mean. And
then democratizing business just means to me that we're seeing
a lot more individual brands like what Dollar Shave Clubs
started out as, and now we're seeing all birds. The
direct to consumer shoe company Rothy is direct to consumer
(34:22):
shoe company, Teaks direct to consumer shoe company, and we're
seeing more and more of these and it's democratizing these
individual brands versus you know, norths from getting all of
the foot traffic. What's happening is everyone's going onto these
many many shoe websites, uh, individually and they're getting all
(34:46):
of the traffic. You know, just the clear up anything.
If if Jesse and I ever kind of used the
verbiage like B two S or B two B that
means you know, direct to business to consumer or business
to business. Um, so it kind of hopefully clears that
up and when you look at you know, how you're
distributing and who you're selling to. Our lady Boss of
(35:08):
the Week is Sarai Davidson, the owner, founder, and CEO
of Boogan Heead Sarah, thanks for coming to the podcast.
Thank you so much for having me. Hey, Sarry, I'm
so excited about to hear about everything you're doing. I
actually use your Boogan head pacifier things. Oh my god,
that's amazing. I like the best news ever. They're a
(35:30):
you know we've heard before we dive in. You've obviously
entered into an industry in a sector that is always
going to be around as long as babies are. But Sary, Uh,
that's Jesse's world operated and talking about your business. My
world operated is hearing about you and how this all
got started. Can you give us a little background? Sure?
(35:51):
So in five I was a young mom. My son
who is now fourteen, UM was almost a year old,
and was trying to learn how to use a Siffy
cup and it kept falling to the floor and then
he realized it was this fun game where he could
just kept keep throwing it and I would pick it up.
And I thought, you know, there's gotta be something out
(36:11):
there that solves this problem. And I went on the internet,
I went to all the major retailers, and there wasn't
and so I literally went to Target and bought an
eighty dollar sewing machine and sat down at my kitchen
table and started sewing and um. And it was through
lots of iterations and passing it out to sort of
mom group friends and things like that, that the Siffy Grip,
which was my very first product, was born. And essentially
(36:34):
it's very it's a very simple product that's still um
it's actually in Target today, and it is essentially a
leash for a couple, a bottle or a toy. And
when I first came up with the idea. I you know,
I sort of played with it a little bit online,
but didn't really do that much with it. I was
in California at the time, and I was recruited by
(36:54):
Microsoft to go and work in their entertainment group, and
so I moved my family to Seattle and sort of
put it on holes. And then about a year later,
the itch of the entrepreneurial it's just started going again,
and I decided in two thousand and seven that I
was really going to go for it and launched a
company around this product. And so that's the really very
(37:15):
high level, simple version of how boggan Head got started.
What did you think this? I mean, for you say this,
you weren't. Uh, this is your very first venture. It's
the very first time starting company. You had an idea
and you saw an issue and you pursued it. What
was your thoughts when boogahead started? So to back up
a little bit, um, I actually had a recruiting company
(37:37):
prior to that. My entire career prior to doing this
is in recruiting and human resources. And I grew up
in a households where my mom had her own business
that she started when I was fourteen and she worked
seven days a week, I mean, up at five am
on Saturdays. And my dad's successful in his own right.
You know, it's really my mom that put me through
(37:57):
college in a sense. And so I grew up with
my parents always saying to me a couple of things.
One never rely on a man to support you. And
you will always make more money working for yourself than
that you will for someone else. And and everybody in
my family, including my father and my brother, they we
are we have all gone down the entrepreneurial path at
one point or another. So it wasn't a foreign concept
(38:21):
for me. And so when I first came up with
the idea, and honestly never even occurred to me that
it wasn't something that I was going to try and
do by myself. It's I had no I had no
background and consumer products or in marketing or anything like that.
And in some ways, ignorance truly was bliss, because if
I had known then what I know now about all
(38:41):
the struggles I've been through and the stress and all
of the negative pieces of it, I'm not sure I
would have had the stomach to sort of go for it.
But it was sort of this blindly I'm just going
to dive in and see what happened. And I had
a big safety net because I was working at Microsoft
for the first three years that I was building Bookenhead.
I would do Microsoft during the day and I would
(39:03):
do Bookenhead at night. And when my company got to
a million in sales is when I left Microsoft and
went off on my own to concentrate on book Aheads
full time. What are some of those struggles and pains
and just dirtiness that happens when you start company. So I, um,
(39:24):
I own a company hunterd percent. I have never had
any investors. Oh my gosh. Yeah, and I read that
you're a million dollar or you're well past a million
dollar business. Yeah, we're about the dream right now. And
so um, you know part of the struggle is and
I mean honestly, at the time, I wouldn't even have
(39:44):
known how to go out and raise capital. I mean
that was a completely foreign concept to me. Um. But
when you and I. By the way, I love this podcast.
I've listened to all your episodes. I was literally at
my warehouse all day yesterday re stickering bibs that are
going into Walmart, and all he did was listening to
the podcast and then just a little anecdote part of this,
(40:07):
not to get too off track, but then a massive
Bachelor Nation fan. I mean, and and my son Jake
is like the fitting image of you, what I think
you look like when you were his age. And so
Jake and I there are two shows we watched together.
We watched Bachelor bachel and Nation shows and we watched
The Shark Tank and we pause and we discussed throughout
(40:29):
all of it. So it's this is like for me,
I feel like, I'm so excited to be podcast. But
grass I digress, tell me the question again, I'll get up.
That's amazing. Um, well, actually I'd love to dig in
with what you So you bootstrapped this entire company you
were talking about that. Yeah, So basically what I did
(40:51):
and the reason why I stayed my Microsoft so long.
And I was the soul um and only breadwinner in
my family um at the time, and so I basically
lived off of my Microsoft salary and anything that I
made in the business I put back in. I had
no employees, So you have to understand I was on
maternity leave with my second son when I found out.
(41:14):
I got into baby's RS and I mean, I was like,
I didn't even know where I was going to get
money from to actually manufacture to put the products in
the store. UM, and I just you know, I'm I'm
a very very conservative with money as it is, and
so I I just found away in every penny I made,
I put back in. And you know, it's that's not
(41:36):
super scalable long term if you're actually truly going to
grow a business. But when you are selling items and
you know Ben with generous coffee, I think you'll sort
of relate to this, and you're selling an item that
is five dollars, you know, it takes you know, we're
now an over four million dollar company. Takes a lot
of widgets to get to four millions. And when you
are manufacturing a consumer product oversee is you're talking about
(42:01):
a good six to eight monthly time until you're going
to get paid on the product that you're manufacturing. And
so part of my strategy is that I did not
manufacture something that was not already sold into a major retailer.
So we like, for example, in UM next month, we'll
go to our Walmart line reviews, We'll go to our
(42:22):
target line review and we'll show them all of these
new products that we've created. If they don't look at
it and say we're going to take it next year,
we do not go into production with it. So for me,
I decided to grow very organically rather than taking really wild,
big risks and putting a lot of money out there
and hoping that if you build it, they will come.
(42:43):
My strategy is it's already been sold. I just have
to find the money to stop gaps, get me from
manufacturing to payments. Jes what do you think of that?
You know what you did the right things? Like I
understand what you're saying, Sari, that you know you feel
like in order to scale a real business you need
(43:04):
to raise capital and grow really fast. But you've still
grown and the dream is to own I always use
this like Instagram analogy, but it's like, wouldn't you rather
own of Instagram than a small piece when they sold
for a billion dollars? Right? I feel like that's what
we've done. Yes, you can go anither way, because there
(43:26):
have been times I really like I have a deck
that I um I have that I'm consistently updating. That's
my pitch deck. And there have been times that I
really have thought Okay, it's getting down to the wire.
I need to go raise from capital. You know, we
work with a bank and we have a line of
credit and that really helps with all the manufacturing costs.
But when you get picked up by Walmart and you're
(43:49):
told you're going to be in every single store, I mean,
your your head flies off because you're like, I don't
even know. And then on the other piece of that,
in terms of you know, when you would ask about
struggles when you this company a hundred percent um you know,
and I know that the gals from the um blow
dry Bar had sort of talked about her first store.
They had a personally guarantee. I'm still personally guaranteeing everything.
(44:11):
That's the way it worked with me and the bank,
because you know, we have a massive amount of inventory
that we have to carry and there's a lot of
provisions on that. And so when you are single, I'm
single mom with two kids, and you know, food is
not going to get out on the table unless I
make it every penny that I spend, every mistake that
(44:34):
I made, and I've made a lot of financial mistakes. Um,
all of those things that stress that I say is
sort of I now have seven employees. They rely on
me for their livelihood, so sort of having that responsibility
in terms of waking up in the middle of night
in a cold sweat. But there are some massive highs.
I'm so proud of what I've done. And we thought
(44:57):
a year and a half ago, I bought a building.
The It is in downtown of where we live. It's
just a great little area. We totally redid it. It's
got our branding and the field chip lass everywhere. You know,
it's a place I want to be every day. And
to have that and to have my boys see me.
They're now getting to an age where they understand what
(45:18):
mom does. And Jake comes to the warehouse with me
and he gets ten dollars an hour to pack boxes.
I mean that that piece is just you can't replace that.
That's amazing. You sound like an incredible mom. And um
you know so as an investor, if I were to investment,
it sounds like you don't need that. Well, you know
(45:39):
what I've I've listen. I've done my research on you
guys here. I am more than happy to have a
conversation because I disagree is because I would I often
thought I would rather have you know, let's just say
fifty of a fifty million dollar companies and a percent
(46:03):
of a four million dollar company. So there are there are,
There are so many times I've had what more could
There's so much more I could do if I had,
you know, all this money to work with. So I
really think that there's not a right path. I have
many many entrepreneur fronts that have both their businesses by
raising capital, and um, you know, I think everybody sort
(46:23):
of looked at the other side and says the grass
screener Jesse. For you, if you look at bouginhead right now,
is as an investor, let's simplify investing to investing one
on one obviously doing this, make it happen, make it happen,
Let's do a deal. Yeah, that's the next section of
(46:44):
this Lady Boss's podcast. All of a sudden, we're gonna
stop in between and say, Jesse, A you in are
you out right? Um no, I mean, let's simplify it
to just completely break it down. Because of the work
and effort the series put into the beginning of this
to prove sales, to to to build a proven distribution channel,
You're obviously looking at this and saying it's a proven
(47:04):
brand at this point, right, and so your investment is
going to be a lot higher than if this was
an idea, even a half million dollars in sales in
year one, totally. But I also get less ownership because
so we do early stage investing, so I like to
get it really really early. But UM, you know, it's
there is something to be said about getting into a
(47:26):
company with traction. It's you've proved it out and so UM,
you know, we might write a bigger check or something
to maintain the ownership we want. UM. But what I
would ask about as far as an investment here, Um
and Ben you know, that's a really good question actually,
because we we do look for some kind of traction.
So I love to see a million in revenue. I
love to see like a hundred thousand, you know, email lists,
(47:49):
just some kind of traction that you can prove to
me there is a need. Um. So the one thing
I would be concerned in a business like this is
um defensibility. And what I mean by that is just
you know, you are making these very incredible, unique products
that I use for my children. As I've told you,
(48:13):
UM to hold on to pacifiers to hold on to
UM sippy cups? How do you defend that? Though? Can
anyone do it? Right? We call that a barrier to entry,
like can you uh, you know, it feels like a
low barriered entry. Do you have patents? Do you have
I P what you know? What do you have that
(48:34):
will defend this? Right? Well, I'd love to turn this
into a something that I often give advice for for entrepreneurs.
And one of the things I'm actually really passionate about
is about sort of paying it forward to UM women
entrepreneurs getting started. There were many people when I started
(48:55):
and still now that gives up to me in that
way from a mentorship stampoint UM and so UM. To
answer your question, yes, we have items that have patents,
that we have items that don't UM. You know. The
bottom line is in my what I have learned in
my business is that UM first to market and peg
(49:17):
on the shelf is gold UM and so we were
really the only sort of UM big in town when
it came. We were the first to market with a
universal pacifire holder. That product is what built my business.
We sell well over a million and a half a
year unit of that item in massive retail chains, and
when we go to our buyers at its Target or
(49:39):
Walmart or what have you, I asked that question, why
are you still choosing me and my product over the
lots of the other knockoffs and competitors, some of which
are major major brands that we sit on the shelf
next to. And their answer to me is very consistent,
because you always come to me with something fresh and new,
and that's other than just showing me the same old thing.
(50:02):
And the motto I have was in my company, which
I borrowed from an executive at Microsoft in their hardware department,
is you innovate or you die. And so for us,
whether it is like, for example, this year, we're coming
out with a completely refreshed line of all the pasty grips,
fifty grips, all of that sort of thing. And every
year we come out with new products that go within
(50:26):
the same line. But that stretched us in terms of
our shelf space, and so we actually one of our
products that Target got picked up there are a million
other competitors Fiffy grips um because it looked good on
the shelf next to the other products. Because are are packaging,
our branding and so um, getting if you are if you,
for example, if you're in the baby business, thing you like,
(50:47):
oh I want to do pass fire holder, and it's
two thousand and eighteen and you're just starting out. Honestly,
your ability to get into a major retailer is pretty slim.
But if you already have traction with that retailer and
you have a a relationship with those buyers, if you
go to them with something that is now a competitor
or something they already have on the shelf, if you've
(51:08):
got a fresher look at it, a better price, and
a great relationship, then you absolutely have a chance. And
so um, that's what we do every year now from
here on out. When I designed something, or when we
designed something, I should say I have got to have
intellectual property attached to it. I mean that is just
like base level I design, even if it's just a
(51:29):
design pattern, I need that. Um. But um, but you know,
my past secret will fill out sell any other competitors
on the shelf. And and um and because we are
constantly being fresh, Yes, we're innovating. We're innovating. That's fantastic.
That's really good advice too for anyone out there. Who
(51:50):
has an idea and is creating something. Um. I mean
I I just think this is great. Tell us about
some of your what's your newest product? UM? Well, I
can't tell you about what the development tell you, yes,
but what I can tell you is because we have
(52:10):
been so so successful with our Pasty Grip and it's
basically it has a loop on the end, which is
why it makes it universal. We you know, a couple
of years ago, when we were getting knocked off a
lot and what have you, I basically said, you know what,
you guys, We're going to be the Pasty Grip company.
We this is a niche, we do it well, we're
really successful at it. Rather than trying to go off
(52:32):
the reservation and do like a diaper pail or you
know something like that, let's own it. Let's be the
Pasty Grip people. And so now we have um, we
have plush items that the kids hold that have you know,
the loop at the end to put their past fire around.
We have blankets um with teethers and the loop. We
have bibbs. UM. So we you know, we really sort
(52:56):
of what I'm trying to do is we're trying to
take vertical categories like, for example, a teether and incorporate
that into something that's already an existing sell for us
and create a new product around that so it can
sit and sort of multiple categories. And that's I'm sort
of trying to stretch the boundaries of the shelf space. UM.
(53:18):
I learned a long time ago that if you just
create products that don't sit together on the shelf, the
buyer can't do anything with it. But if you can
create a brand that can all that can sit together,
but you just keep sort of example, expanding the boundaries
of that brand, then that is something UM that has
really worked for us. So if you go to our
(53:39):
site we can Head dot com, you know, you can
see everything we're doing and a lot of our new
products are currently UM at the very final stages of
product development, will probably come out UM in seconds early
third quarter of UM of this year. So we're really
excited about it. And so Sarah, before really go here,
(54:00):
if anybody's out there listening and I have to have
these products, you're saying, you're in Walmart, you're online at
Buglehead dot com. Where else can people find you? So
we're in every Walmart store. Weren't every Target store. Weren't
every Rite eight store. We'll be launching an a TV,
which is a massive chain in the Texas area. UM,
we are at all by by Daby stores. We are
(54:20):
pretty much. Our entire catalog is online on Amazon. UM.
Something that your viewers should know is that we are
doing a discount code on our site. UM. The discount
code is Lady Boss. You can go on. Their entire
catalog is on there, and UM love to give a
discount to those folks. But we're pretty much, you know,
in every area of the country and internationally, so UM,
(54:44):
they can find us. Sarah and Jesse, I know you've
got kids that you've got to get back to. Uh,
so we're gonna call this another episode of Lady Bosses.
So I'm your resident Lady Boss Jesse Draper and I'm
just been follow Lady Bosses and Ben on I Heart
Radio or wherever you listen to podcasts. Hi Hide Radio.
(55:09):
H
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