687: I Broke Every DTC Rule and Built a $1 Billion Brand From My Garage

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It's head to omnisand.com/founder and that's found without the e to get started. All right, now let's jump in the shot. The DTC Playbook says, "Outsource your fulfillment, buy every custom with ads and burn cash until you're big enough to exit." Sandra O'Linn broke all those three rules and shipped over a billion dollars from a business she started in her garage. Today's guess is the founder and CEO of KiwiCoat. The kid subscription brand that shipped over 50 million crates, profitable since 2016 with a team of under 150 and zero pressure to ever sell. Every lesson in this episode is a rule broken. The two word answer that is buried in her churned surveys that unlocked profitability, while running her own warehouse for 14 years lets her crush every competitor at Christmas time. And the acquisition mix where 70% of her traffic costs almost nothing. So if you've only ever heard one way to build a brand, this is the other way so let's get to it. Here are the stories. Learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the founder podcast with Nathan Chan. Hey, have a quick ask. If you're loving these episodes, leaving a quick review is honestly the best way to support us. It helps the show grow and means we can keep bringing you the founder stories and insights you tune in for. Please share it with a friend. Thank you so much. Now let's get into it. Sandra, you walked away from leading eBay's fashion business in 2011. You're leading a senior, you're a senior exec at eBay. It was one of the biggest e-commerce companies in the world still is to start packing craft boxes in your garage in 2011. What was the inflection point that convinced you this personal need for hands-on-kids projects could scale into a mass market business? Those were actually decisions that were made somewhat independently. So I had been at eBay Inc for about seven and a half years. I'd been at PayPal and then moved on to eBay, whereas you'd mentioned I was running the fashion business. And I decided to leave. And I decided that I wanted to join a smaller company without the intention of starting my own company as I had announced that I was leaving. One of somebody who I knew actually approached me and asked about founding and starting a fashion startup. And so I actually explored starting this fashion startup as I was leading eBay, which was very, very relevant to my experience right before. And ended up not doing that, but as I was looking into it, I was learning the ropes around potentially fun raising, learning about Santa, etc. A new part of Silicon Valley, a part that I was not as familiar with. I started to do hands-on projects with my kids more and more. So my kids at the time were, we were older, so we were two and four. And I had grown up doing hands-on activities with my mom growing up. I really wanted my kids to feel like they had agency to create and make. And so we started doing these hands-on projects. And I was like, this is taking way too much time and energy. Like I need to advertise this so I invited my friends and their kids over. And one of the moms was like, Sandra, you should start a business around this. And so that's what really prompted me to say, gosh, is there something here? This certainly would not be a viable business around encouraging kids to get hands-on, to make, to create if it was an N equals one problem just for me. But fortunately, come to find out at this point we've shipped out over 50 million crates. And so this is something that really resonates with more than just my family. Yeah. So you've built an incredibly large company, billion dollars in lifetime revenue, nine-figure business. So I'm curious, how did you bring this product to life? Talk to me about the early stages because it's not just one hero product, like many of the founders that we usually interview. It's a series of products brought together. It's not an easy product to bring to life. That's correct. When we concepted kind of the idea of bringing hands-on projects to kids, one of the things we were curious about was the need by families and how we could actually fulfill what we wanted to bring to life. And what we discovered is parents in particular really liked the idea of something that just came to their doorstep. They didn't have to think about. And for kids, it was something that was delightful. So we landed on the idea of doing subscription commerce, right? So every month this child is getting a brand new experience to the doorstep. And as we were launching, there was a lot that had to go into thinking about, okay, if that is something that we need to do, how is it that we are defining what that product and what that experience actually is so that it's something consistent? And if you think about it, someone is going to be signing up for a subscription without even knowing what they're going to get, right? So we had to be able to define at least at some level for the customer kind of what that promise actually was and making sure that we were able to fulfill that. Because I mean, there is this kind of sense of trust as well as the sense of when you have a subscription, you need to be able to replicate that. So people stay on, right? You need that retention for the overall subscription equation to work from business perspective. And so a lot went into thinking about what was the equation, like what is the equation actually of what it is that goes into a box? What is it that a kid is going to experience? And so we landed on certain things. And we wanted to make sure that it was incredibly fun. We knew that engagement from a child is going to be incredibly important. We also knew from a parent perspective, it had to be of value to that. It couldn't be a craft box with things that they could buy off the shelf with some pom-poms and some felt and that type of thing. It had to feel unique and of something that somebody would actually want to pay for too. And so it was a pretty unique challenge, especially early on, because early on you don't have the scale to be able to create something really unique. You can't create, for example, a custom mold to create a piece. You're really having to deal with things that are off the shelf and yet you want to provide something that's valuable from an experienced standpoint. And so we did quite a bit of, I would say, concepting and testing. We would put different types of ideas around what would go into a box in front of parents through SurveyMonkey, really, and really put it out there into the world. And then the other thing that we did is we would have kids descend to my garage to actually engage with the projects, too, to make sure we're hitting it. So many playdates. And how many playdates do you think you would have had to conceptualize, I guess, your first batch of crates? That's a great question. We had a lot of playdates because that first batch, we knew we had to get it just right. So different from, you know, my background has been in e-commerce and software as well as physical products. So I'd start my career parking gamble, I'd been at PayPal, and I'd been at eBay. When you're dealing with a digital product, you can kind of throw something into the world and you can iterate on it pretty quickly. When you're dealing with a physical product, my career dealing with, it's not as easy. And so there was a lot of iteration and time that went into the development of the product because we knew we had this one opportunity to get it right during launch. And then thereafter, you had something you had just done out every month. So it was something that we had to really define. So I'd say in terms of the number of testing sessions for a given crate, for the first three crates, each one probably had at least 15 testing sessions. And it ranged from concept all the way through to things like one of our initial crates had to clay in there. And we found that certain clays were simply not malleable enough for little hands to be able to manipulate and things like that. Right. So it's like the things that we discovered and they were like, oh, then another testing session is something that we would have to do afterwards. Yeah. So this is interesting because usually how the process works is you design it. Like you said, get a mold, break mold or white label of product and change it tweak it slightly. And then you go through the sampling process. For you, you would have brought together many different products. So How much would it, like, can you, it's a long time ago, I know, but how much would have you spent and how not, like in terms of money and time around going through that iterative process before you knew that you were onto something to get ready for even to launch, or this is going to be a business? Yeah. When we estimate the amount of time that we spend and to be fair, this is maybe a little bit more recent, but the amount of time that we spend on any given create, which is kind of the unit that we deliver to a family, it's about a thousand hours per crate. And I think what's interesting about kind of the subscription product development design process is the idea of kind of, as you're describing product design development, you have kind of three different things that you're often kind of weighing, right? So you're dealing with time, you're dealing with cost, and you're dealing with quality, right? And when you're launching a particular product, a lot of times you can let something slip, right? You can be like, I'm going to keep it this quality, try and get this price point, or launch date might slip. We're going to launch it a month later, two months later. Or you can say, you know what, this is actually our cost profile is going up. We're going to raise the price around this. For what we were delivering, the price is set. We had a certain quality bar that we needed to meet kind of month after month. And the timeline was also set. We had to send a crate out every single month. And so I think one thing that is really remarkable is that our team was able to do that consistently, and we continue to do that consistently as well. And so as we are coming up with new subscription lines. And so that's something that I think we have, you know, as much as we say that we're encouraging creativity in kids, like our team has had to be very creative as well as very disciplined to be able to impose requirements. Yeah. So once you jumped on that hamster wheel and launched, how many crates did you have worked out before you launched? He had about four. Yep. Okay. And so that meant, and you would have had a small team. So you raised money as well before even going live, right? We did raise money before going live. So we raised on the concept as well as the team. We raised in that summer. We launched a October of 2011. We had four or five people at the time. So a primary product designer was yours truly. So I was the product designer basically. And it's funny now, right? I mean, we have a product design team, mostly mechanical engineers and industrial designers, etc. And like I would never be hired as a product designer now, which is a good thing. But that's the way that things kind of change and evolve. So what were the first bottlenecks to prevent like operational collapse in those early days, even with that small team? Some of the really interesting challenge that we had operationally were around kind of fulfillment related and then supply chain related. So as much as, you know, I had worked on physical product. It was really an R&D. And then as, which is I worked on e-commerce, it was places that had no inventory. Or you're like, like eBay or PayPal. So this is like all new learning for me. And so I would say that, you know, from the very beginning, when we had ordered our first set of just boxes, right, just the crates themselves, just printed out and stacked up, I did not realize how big of a footprint that would actually take up, right? So in terms of space planning, there was some really interesting initial lessons there. When we sent out our first alpha shipment, it was around, I think like 19 crates. It took us all day for about five people and we were like, oh my goodness, how are we going to actually scale this? And so I think getting those systems, getting those processes in place and part of it is really saying, this is something that I'm not an expert in. How do I bring people in who are experts? And so pretty early on, I ended up getting an advisor. So Mike Smith, who is the CEO of Walmart, who went on to be a CEO of Stitch Fix, actually came on board to kind of be kind of an advisor to us when I came to like the shipping of the filament operations side of things. And I think we did that. We're in when we had to really try to bring in people who could help us out and help us understand where the potential pitfalls could be to. So 19 crates, it took one day to assemble, pick and pack and get them ready to send out. Yeah, kind of a disaster, do you think about trying to do that skill? That was the pace. Yep, that's crazy. So you did go in, you did not Wendy, like so you didn't touch 3PL, you hand picked and put together the product half or how long and yeah. We still do everything in house. So we do not actually 3PL, our fulfillment. And so we run our own warehouse, it looks a little different than it did out of my garage. But when we so initially were in my garage, we moved as we launched into a warehouse and office location very intentionally because we really want to understand what it would take to fulfill these crates. Because to your point, we had this kind of sub assembly process with little bits and pieces. We had the assembly of the entire crate and then it going out the door and we really, really wanted to understand that and be nimble around it. And I remember the first few holiday seasons. We saw some other folks crop up, some other competitors crop up and there were 3PL in the business and their holiday shipping date kind of the last day to ship was pretty early in December. But because we were controlling our own fulfillment, we shipped all the way to the very, very last day. And you can imagine that as a kids kind of business that was had really, really kind of holidays were very, very important time for us. Being able to fulfill all that demand was really, really important. And so I think it's really allowed us to take advantage of those types of opportunities. And to this day, then we actually do operate our own warehouse. It's not to say that we want 3PL or we're opposed to 3PLing the business. It has made the most sense for us on a number of different dimensions. We always are evaluated and analyzing what the best thing is and it turns out that that has been the best so far. Are you able to share how much you raised for your seed? For seed rent, it was 2 million. Okay. So you raised 2 million. Yeah, a small team. You're going for this iterative process. How many, like, what was the M.O.Q for your first batch before you launched and like, what did that look like? Initially, I would say the first month when we shipped out creates the total number of units that we shipped out was around 500. Yep. Okay. All right. So 500. Okay. So you started small with your manufacturers and then obviously scaled up. The interesting thing is that we didn't have manufacturers when we started. And so it was literally things that were off the shelf that we were then bringing together. Right. And so the first crate that we sent out was a crate called colorful inspiration. And if you think about colors and this is for kind of the preschool early elementary school age, kids learn about colors in a lot of different ways. It was not something where we could say take a red pot of paint and a yellow pot of paint and put it together and you make orange because people would be like, we do that in preschool already. And so what we ended up doing is we gave them a mat. We gave them contact paper, which is like sticky paper. We gave them pieces of tissue paper to create a stained glass window and do color mixing that way. We would in tops with paper that you could color in a yellow fraction, a red fraction, a yellow fraction. And so you could spend the top, you would do color mixing that way. And then we gave them a canvas bag. So using the same tissue paper, which bled if the kids wet the bag and then covered it with tissue paper, it would bleed the colors would mix. And they would have this little tote bag that they would bring to the library with them. So you can see that it was a different way of doing color mixing, but using kind of materials that were out there. So again, required real creativity, I think on our part to come up with that. So that was something that people would want to actually buy as well. And they felt like would be fun and there would be educational for their kids. Yes. Okay. Awesome. All right. So then let's talk about the marketing. How did you like Shopify would have just launched? It was, so Shopify was around 2009, right? 2010. And so you guys were 2011. Were you on Shopify? No. Were commas? Magento? Magento? Yeah. Wow. So magento and then still mostly, mostly customized at this point. Kind of E-commerce platform. And so yeah, I mean, it's a little different now, I would say, in terms of being able to launch an E-commerce business. Yeah, you're old school. I don't know anyone that does magento unless it's deep customization deep SEO demands But that's awesome. Okay. All right, so So magento you obviously had a developer that was coding up the site You know know off the shelf templates. He can just rock and roll with no you know recart subscription plugins to do subscription management Okay, great and so all customized custom built that probably cost you an arm and a lake To build that just as a little bit of an aside is We started to develop the site and I had been a product manager nod super technical It went poorly like it was you know, we had outsourced it. It was going poorly This whole idea bring out advisors So I had brought on a technical advisor because I was like I need someone to make sure this thing is actually robust and it's gonna work So I brought a guy on board who was a co-founder of PayPal first engineer at YouTube his name is you pan And I was like, please help like please figure out what's going on here. It seems to be going horribly wrong And so he got in he got his hands dirty and then I convinced him to become a co-founder So that is one way you can Bring a co-founder on board have something to go horribly wrong And then Have them hold fix it So yeah, so that was kind of an aside there around around building the site. Yeah, okay. All right So I want to talk about your unfair advantage because you clearly have an unfair advantage with your network and just the cluster Being in Silicon Valley the you know the the wealth of expertise around you to to help build these incredible businesses like you have with Kiwi co so How did launch go talk me through what did you do to get your guys first batch of subscribers customers because you launched out the gate with a subscription You said you had four boxes ready to go no one knew you guys no one heard of you guys um It's you know selling subscription cold is is not easy and you know this is a at the time a very novel concept Buying products online signing up to a subscription You know, this is 15 no 20 yeah long long time ago 2011. Yeah, it was the end of 2011 so The things that we did Um to get ready for our launch are things that absolutely Do not scale but made a lot of sense for for the time So to begin with we started basically to build an email list we went to An event called maker fair here in the Bay Area There's still some maker fairs. It looks a little bit different now But it's very much kind of the type of audience that we thought would find what we're doing to be interesting and attractive So we went to make our fair we explain what we're doing we collected email addresses several months before we launch We went to the Paul Waldo art and wine festival Again collecting email addresses We did a pretty decent-sized press push So we did that kind of internally we our team went out Um to do a press push so we got coverage in places like TechCrunch etc when we launched um And then a lot of it was kind of through investors and friends and family to start to get the word out So it's say kind of those were some of the preliminary channels um that we began with and then From there, I mean it's it's evolved a lot. So I'd say still to this day like things like CRM are still incredibly important like low cost no cost channels of acquisition um direct And low cost channels still make up up to 70% Of our traffic and so that's very important because if you look at the blended cost of acquisition You still want a healthy amount that is coming from those types of channels on the paid side that is evolved immensely So when we had initially started and we were trying to do for example SEM Did not work at all like nobody was looking for a subscription kids None of that that market did not exist right and that has really changed now SMM with meta has changed significantly and that's really important to us And then we are constantly optimizing and utilizing other channels too. So we have affiliate we have podcast We have drtv we even do a snail mail catalog during the holidays For example, and so it really is a mix and the other thing that we find is our marketing efficiency per channel Sometimes differs depending on the time of year too. So the holiday times versus non-holiday times We're also sometimes targeting different audiences Depending on you know if it's holiday time or not too um, and so we've definitely learned and iterated and sometimes the channel will work at one point and not work another point so it's It's kind of on us to continue to test and and iterate and and try new channels I mean most recently of course looking at AI optimization Um, and that type of thing so trying to try to always like get ahead of the curve is important too You said a large proportion is is from your Mias spread is um No cost what what what exact channels are they? So I would say those would be For example, we would include serum So we include our email channel as a low cost kind of no cost channel A significant part of it is people coming through what we think is word of mouth or each individual kind of family a lot of times mom being a micro influencer Themselves right and talking about kiwi coach in their network or maybe posting something to their organic social Um and people finding it out about it that way too So a lot of those organic I mean, I think there is to be fair some interplay right so if you think about people coming to kiwi co.com Inevitably some of that you can think about that as like there's a funnel so there may be some kind of a paid touch point Along the way But I think what's great overall is that the equation works for us because We do have a lot of people just coming to kiwi co talk now you said that you guys Fast forward to now we're uh playing with new channels especially AI what are you guys doing then um so we're spending quite a bit of time thinking about kind of optimization right kind of the AI Oh, I mean, it's like the the letters that people use differ depending on you Yeah, yeah exactly so there's certainly that piece um we have actually We're early early adopters in trying out ads yep, which has a pt. A chagg pt. Yep Uh, I mean, I think we find it to be really interesting and promising But I think that there's it's it's it's evolving very quickly right and I would say kind of our initial Foray into it maybe the targeting etc was not quite Um, what I needed to be uh, but it's something that we're gonna continue to experiment with and look at um ongoing uh, and so I think the other places where we're leveraging it from a marketing perspective is certainly on the creative side of things too um, and that goes on the marketing side all the way through to if you think about what we do We are creating a lot of product as well as content And so the content creation is not only on the marketing side from a paid or organic perspective, but also kind of the experience that we're providing To consumers um kind of in-create as well. Yeah, and I guess um one thing that you guys have done exceptionally well is you're in the repeat customer business and that is I think the ultimate business in many ways there's many other business models, but When you get that right like you said and you have a healthy retention profile Depending on scale velocity all these different you know, where where you're trying to go You could Hypothetically turn off all your marketing if if the business is in a good spot And you would not need one new customer in the month to still be profitable If if is it all lines up right so so while new acquisition all these different things we're talking about is sexy It's fun and many e-con brands rely on that You've built a model where hypothetically Hypothetically, I don't know your numbers and all these different things but I'm going to assume you could structure the business that You could turn off new marketing you could turn off everything and not get one new customer for the month and still be profitable correct Yeah, so let's talk about that model. I'd love to explore that a little more because um Very foreign when you launched subscription and You know you took a major operational risk by expanding into multiple new age based subscription lines in 2014 So that was not much longer after you launched, but this has been a genius move because you're able to effectively expand the customer journey's age and longevity with you because you otherwise you would face the incremental turn of somebody growing up. And so you've been able to combat that. So talk me through the debate behind launching several at once rather than sequentially and how you conceptualize that and how it all works. At the time after we had launched the business, we were growing at an okay clip as the way that I would describe it. And we knew that we wanted to see more from the business and as a result, we actually experimented with a number of different other things too. So we had toyed with an idea around doing something with content and then selling materials or doing something in kind of the grown up crafting space or doing something. So we were kind of looking at a number of different ideas and then we went kind of back to what was KiwiCrate at the time. Kind of our first subscription line and we started to look at it more carefully and we saw, okay, we collected churn reasons because one of the things that I think we did from the very beginning is collected data from our customers. So very first crate we sent out and this is one of the benefits of a D to C business is having that direct relationship with the customer. We got survey feedback from the very, very first crate. And so as we were looking at some of that data, one of the things that came back was kind of like churn reasons and one of the big churn reasons was too young and too old. And so like, okay, what does that mean then and what should we do about it and maybe there's something there that could be an unlock. And so what we ended up doing is we decided we're going to launch three additional subscription lines then, right? We had one, we're going to launch three more same team say resources, we're going to launch three more subscription lines. One that was younger so very dedicated to preschool KiwiCrate would remain kind of this early elementary school. And then we launched two older ones for older elementary school with different interests. So one that was more arts and design, one that was more STEM, very like science and engineering based. And the idea was if one of these takes off, we will double down on that subscription line. We launched at the tail end of 2014 during the holidays, all three of them basically sold out. And so we're like, okay, we're going to try to go after all of these. And what was interesting about it is, you know, obviously we had certain hypotheses going into it, right? Like I mentioned the churn reasons. And so very obviously we're expanding kind of the market opportunity, right? If you think about the TAM, it's like if you have kids this age, you're expanding it to other kids. But there are other unlocks that we didn't quite anticipate. So for example, our marketing efficiency got better because we were able to talk about different kind of value propositions. So for example, the STEM one really resonated. And a parent of a preschooler might see the STEM ad, but they would come to our site and then self select into our preschool line, which is called quality rate. And so they would select all the great then. So our marketing efficiency actually was better. And then the other unlock was in US households with children, over 50% of them have more than one child. And so what we started to see is people were buying multiple subscription lines then, which we could put into one box and amortize the shipping costs because we call that free shipping for the customer, obviously not free shipping to us. And so the unit economics ended up starting to work better too. So that particular launch at the tail end of 2014, if you draw a line from that to our first month of profitability, which was January 2016, it can draw a line between those two things. So that launch really ended up yielding a sustainable profitable cash flow business for us. And so starting from 2016 on up until this point, we have been profitable, cash flow positive, the amount of capital that we raised, I mentioned the $2 million seed round of financing, we also raised a series A. So all in less than $11 million of equity financing in the business. And so we've been able to grow it since then kind of with our own their own money. Yeah, that's impressive. So I'd love to kind of dive a little bit deeper into the numbers. So when you said you launched and it was okay, like you know, you're kind of growing, but it was what you considered okay in your world, what was okay? Can you give us context? I think the just of it is when you take venture financing, right? And you launch there's certain types of expectations that are in place as well as different types of kind of milestones that you're trying to hit, right? In terms of like the type of growth that's actually expected from the business. And I think to a certain extent that is a level of like hockey stick like growth. And we were nowhere close to that. We were growing, let's say in the, you know, it's reasonably good growth, but for a small business to write for something that was a dead just launch, I would say like 30%, etc. Right? Rather than something that ideally would have been frankly like 100% growth year over year, right? And so it was, it was okay. And it was not at a place where given we were not profitable and cash all positive at the point that it was something that would not have been sustainable too. So that's why I say like, like okay, but we really needed to do something, right? And so that's why I think we saw the need to think about other potential areas that we could pivot into and we were very fortunate that we were able to launch these three additional lines and really see the business start working. Yeah. And I think it was a genius move because developmental churn that is something that you can't, like if you just kept on your current pathway, that would be something that you can't fight. Eventually the kids would grow out of that particular product line. So how do you transition a customer from one crate to the next without losing them in the friction of upgrading? It's actually pretty easy. So you know, if you think about kind of from our perspective, our system and the way that what we're doing on the back end for matching a given customer to a given crate experience, that happens very seamlessly to a customer. And so what happens is that we are constantly looking at the experience that a customer is having and trying to optimize that with that data that I'd mentioned, right? Because we know kind of the different crate scores for the given crates. We also know which crates the customer is received to, right? So there's a universe of crates that they can get. At some point they exhaust that universe of crates. So then we're matching to kind of the next subscription line. And in a way, we make it as delightful as we can to the customer then. So the kid gets a new crate color and they get a graduation certificate. And it's basically like congratulations. You have now moved out. It's like you've leveled up in a video game, right? And so there's actually a sense of accomplishment there. And it's really something that should be seamless to the customer. You guys also have launched into retail. Talk me through the thinking there. Why not just a D to C focused, controlling the customer experience. Talk me through that, the subscription, like all of that. Yeah. Absolutely. So we have our subscription business, which remains our bread and butter years ago. We actually started to individual products as well. So the way you and I typically shop online on KiwiCo.com. So we do have individual products too. Because if you think about subscription, as we've talked about, it is great when it works well. It's also very blunt. If you think about it from a customer perspective, you're getting one thing a certain format every month. What we found with the individual products is that we were able to do things at different price points from $10 up to $160. Different types of product formats to. So we're known for kind of a you are building something and then playing with it. But with our store products now, we have finished goods. We have stuffed animals. We have a dissectable frog stuffy, for example. So it's still very KiwiCo, like fun and enriching. And we could address different use cases. So holiday, like our advent calendar, where you build, for example, an ornament every day, leading up to Christmas is a big product for us. We're never going to guess that you celebrate Christmas in a subscription, right? So it really opens up the world to us. And so we have a number of one off products too. And as we were thinking about kind of strategically where we wanted to go and how we wanted to go to the business, we are continuing to innovate on the subscription part of our business. So we now have eight different subscription lines. At the end of 2024, we actually completely revamped four of the subscription lines. So innovated on ourselves and completely revamped for those subscription lines. And that's worked amazingly well, which we're very happy about. But in addition, you know, we are thinking about how can we serve more kids, how can we serve more families and what makes sense for us. And so retail has always been out there. But we felt that we were actually ready to do it. Then like we had the assortment operationally, we could actually be a good partner to a target or to a Barnes and Noble or to a specialty retailer. Because you know, they have certain requirements when it comes to working with them. And so we felt like we were ready to do that and to do that well. And to be able to do things for that given customer, that given guests to because if you think about the retail environment, as much as we understand how to serve the D to C customer, whether through subscription or store, we had to really think about the product that would actually kind of really be something that a kid. A lot of times we'd want to grab off the shelf. We had to think about the packaging very carefully and the different use cases, right. And the fact of the matter is there are a lot of incremental use cases in retail stores. So as much as we love KiwiCo.com, you're not coming to KiwiCo.com in a Saturday morning before a birthday party. Hoping that you're going to get something right. You're going to go to the store for that. And so we really appreciate kind of what that channel then brings to the business as well as to customers. Yeah, I think that's really smart. And so I have to ask you before we round out the subscription component around everything you guys have accomplished. What advice would you give to D to C founders launching a subscription arm of their brand or making it a decent product line for them? What advice would you give? I think it comes back to kind of what we touched on, which is subscription can be amazing, but the equation has to work. Right. And so what I mean by that is really paying careful attention to, I mean, there's always experimentation when you launch something, but paying attention to what your customer acquisition cost is, right. And knowing, okay, at this particular, if we're trying these different channels, if this is what our cost of acquisition is, this is what we actually need to see from a customer lifetime value perspective and see if your numbers are actually adding help to that. Or else you're going to get into trouble and you're going to get churned upside down and that is not a good position to be in in a subscription business. But sometimes you need a little bit of that time to see how it plays out. But once you see that play out, what's great about it is you know, you know, like when we look at our business and we're forecasting for the year. We have pretty good confidence. Oh, what's that happen? And so I think that's that's a really good benefit. But as you're unlocking that model, I think it's a matter of being disciplined knowing what levers you're pulling and then measuring along the way. Yeah. And when you said the equation, I assume you're referring to the CAC to LTV ratio. What is your world, the right equation or something that you're like, yeah, we're onto something. Is it a three to one? This one will usually say, well, for you guys from subscription world, it's like at the scale that you guys are running at, you know, billion. Yeah, I think I think that's a very kind of like rule of thumb. I think that's very reasonable to put out there. I mean, I think as as a business is growing in as a business is evolving to I, you know, one thing that just came to mind as I was thinking about that, right? Like the the CAC to LTV equation is is how we've thought about extending that LTV and we touched a bit on that graduation and that type of thing. But we have a number of other things that we have kind of in our in our tool chest to so we do, for example, we have deluxe subscriptions. We have plus subscriptions. So we have a book add on we send out over half a million books per year tickets and families. We have a product add on as well. That we do for subscribers. And then we do a lot of cross sell upsell between our subscription service and our store. The within the visual products to so the short answer is yes. Like I think really looking at that CAC to LTV equation. Yep. Okay. And three to ones a good rule of thumb. But in your world, obviously, hi, right? Always trying to optimize that and always trying to drive greater efficiency. I think what was really neat for us is when we innovated on ourselves. It was. It was a pretty big bet because it was a huge investment when we were taking kind of four of our core lines. And we actually were trying to kind of up the value up the fun. And we actually raised prices to and so there's a question of what is going to happen here with a launch. I think the fantastic thing is that we are seeing higher retention lower acquisition cost. Which is kind of like exactly what you would want to see. And so we feel very, very fortunate around that. Or we're constantly trying to make that even better. Okay. I'd love to switch gears before we work towards wrapping up. This is around leadership and people. So you guys relatively small team in terms of revenue size 150 people. I want to talk about the motivation spreadsheet. So to manage what actually drives each team member within Kiwi Co. You. You have people distribute 100 points across factors like title scope, work life balance in a motivation spreadsheet. Can you tell me how that tool has changed your approach to project assignments talent retention leadership customer company culture. So certainly around some of the things that you touched on. So thinking about projects that people should be involved in or also thinking about just tactically when we do our annual adjustments for the team. Sometimes there might be a certain type of trade off between someone who cares more about ownership and equity than they might have around cash compensation. Right. So there's our things that can come into play. I think one of the most important things around that though is it makes the employee makes the team make feel heard. And I think as managers, we can sometimes get on our own heads and think like, well, everybody should be motivated by the same things that I'm motivated by. And I think what this actually does is it's a real tool to be able to have open conversations and honest conversations around what motivates the people on your team. So you can actually hear them. And then respond to that. So I would say that that's been kind of one of the biggest benefits. You know, and so as it relates to retention. Yes, absolutely. If you're able to align with the things on that spreadsheet, but also the idea of being heard. And having those types of conversations with your manager, I think that is in and of itself is a retention mechanism to we talk about team. You guys are very lean for the size of business. You know, you have a team of under 150 people. How do you maintain the level of output product quality without drastically bloating your headcount? I think just culturally, we are very, very disciplined. You know, it's not we've we're not a company that has gotten out over our skis. And I think that's with intention. I think that I think from the very beginning, we never expected to see another check kind of thing, right? And so as a result, you end up managing the business in a certain way. And so I think that that is really kind of what it comes down to. And so we are very judicious about our hiring. And we try not to over extend ourselves. And we kind of, you know, one of our one of our kind of values from a culture perspective is being relentlessly resourceful. And so it's kind of kind of who we are and what we expect from everyone. And we are measured against the values as well as our output. And so I think that's another part of it is that it's the part of kind of overall performance. And talking about the end game, like you guys have built a highly sustainable, profitable business, no forced venture exit, which means you get to define success on your own terms. You've done over a billion dollars in lifetime revenue, nine figure brand. So what's the ultimate end game for Kiwi Co. And what revenue or impact milestone are you targeting next? I remember when we raised our seed round of financing, it was led by Josh Kaupelman at first round capital. And as we secured that financing. It's definitely kind of like a celebratory moment in time and I got on the phone with Josh and Josh was like Congratulations, like I'm really curious like how how are you how do you define success? right and and I think people can divine in a lot of different ways obviously like great exit etc and what I said to is I want to build a really trusted brand and great company and I feel like we're still on that journey like what we intend to do is to encourage kids to see themselves as these creators and innovators and and problem solvers and I think that we're still doing that and we're trying to figure out how to do that through different channels and different ways of touching more kids and families so one thing that you'll see us do this year is we're actually we're pretty US-centric actually and so you'll see us going international to other countries so we're gonna be launching and several new countries localized Later this year. I think you'll see us do even more with retail as well With that intent to continue to bring this to more families. Thank you so much for your time You've been super generous with your wealth of experience building this amazing brand congratulations on all of your success thus far And I look forward to hopefully you guys expanding to Australia and when I have kids. I'll be sure to sign up That sounds amazing. Thanks so much. Hey founder fam. Thank you so much for tuning in today And if you enjoyed this episode, please take the time to leave us a review and let us know what you think This podcast is a hundred percent free. We work so hard to go out and find the most successful founders and Entrepreneurs all around the globe. So your feedback helps us grow, improve and even bring on more Incredible guests and insights. So if you have a second, please take a moment and leave us a review It really means a lot to me and the founder team and makes so much of a difference. Thank you again for listening and I'll catch you on the next episode