Without This Number, Your DTC Brand Is Running on Hope

Welcome back to another episode of Operators Build. Today's episode is all about the financial model, the profit model. Mike Beckham, who's one of the co-founders in the business, one of the co-founders of Simple Modern, of Trevi, has a ton of experience here. I would call this Mike's sort of zone of genius, and he is going to kind of school, Cody, myself, and Curtis, and we're going to ask him questions. And you'll just sort of hear us beat up the business model, not just Winks, but in general like consumables as a category, right? So subscription, non-subscription, but like overall consumables. This is very much like we showed up to learn episode. And I think you're going to enjoy the conversation. Mike drops a lot of wisdom and knowledge about how these companies work at a very numbers financial level. If you are new to this channel, or if you don't subscribe, please hit the like, hit the subscribe button, whatever you're on. On Spotify or on YouTube, you're on Apple Podcasts. We're on everything. Please subscribe to the Operator's channel. We love it when you do comment on these episodes. We want to know what you want to hear more of from us. We're willing to talk about pretty much everything as we go through this process. Let us know how we're doing and what you'd like to hear more of. Let's get into this episode. You're going to like it. Simple modern, when we started it, it was, we were bootstrapped, and it's adorable. We didn't have any funding. And so we just had no option from go. We have got to be first order profitable. We had to be profitable as a company from go. We had to be first order profitable because when you're selling water bottles, it's funny. I'll be on vacation sometimes. And I'll see somebody with a bottle. We haven't sold seven, eight years. And it's both cool and also like discouraging. You know, because you're like, man, I like made $3 selling them that bottle and they're still using it eight years later. So I make like literally pennies a day off of my customers sometime. But that was my experience up until we launched Trevvy. Was I saw everything through this lens of selling durables, which is where you've got to make the money right then right up front. I know that you guys have more experience in models where you're thinking about users that have a user value that you acquire over time. And that's what we're going to really talk about. I think in today's episode is when you're running a business where you get that user value over a period of time as opposed to a lot of it up front or maybe the vast majority of it up front. This is both why consumable businesses. I think the finance piece of it is really important and requires a lot of thought to do it well. But it's also why they can be so valuable. This is why consumable businesses can get five-time sales as a valuation metric because you can really have customers that can come back and buy from you over and over and over again. And I think about what is my lifetime value to Coca-Cola? I don't know, but I drink a ton of Coke Zero. And I might be drinking Coke Zero 25 years from now. So this is the nature why consumable companies are awesome and can get great valuations. So with Wynx, what we wanted to do is we wanted to get into a consumable category. Some of the reason why I was bullish about it is we had just done Trevi. We started Trevi in December of 2024. So we're almost two years in on that. And along the way with Trevi, I've gotten a chance to play with all the models and learn about all this stuff. And that's what we're going to talk about today is how do you conceptually think about these things when you're trying to put a business plan, not a business plan, but we're trying to run a business. How do you put these things together in order to know how much you should be spending to pay for customers, how many customers do you even need to get in a day in order to make it all work? That kind of stuff. - Yeah, it's interesting. I was just pulling up Iris just to see where Wynx current numbers are. And I was looking at cohorts, Mike. And like we've put no effort at all into retention. Like none of that. Like Cody and I spend zero time there. Everything has been acquisition, acquisition, acquisition. And it shows too, like Cody, I was just looking like our current October cohort. Like we're recording this on October 30th. For people listening or watching, this our lowest cap month yet. Like we've officially dropped below $100. Is it looks like we're under $100 cap on a acquired customer. And I would still say like nowhere near full stack mic in like what good marketing would look like in D to C. Cody, would you agree with that? Like we're better than when we launch, but like we're still nowhere near. - Absolutely, absolutely. - And we've put no effort into retention. But we absolutely have like people returning. We have like we have, you know, subscription revenue coming in. So like what you're saying Mike to me rings true. It's like this is a business model. That's like you earn your money over time, right? Like we're not first started profitable, not even close. But we've made headway there. I could see how we have a few moves where we could get to like a probably like a first order break even or pretty close on a gross margin, like our contribution margin basis. But I don't even know if that's the right thing to optimize for. Like I think that that's the thing. Like I hear all these like consumables guys are nowhere near first order break even. Like not even close, you know? - You can't be. - I've seen some data just like blows my mind. Because most people are not running at a one row as inconsumable. And so just by definition, if you think about it, a one row as means for every dollar in revenue, I have a dollar in ads men. So if your margins were 100%, which is not possible unless you're like a UAE drop shipper. Like the, you know, that's just access. - Not a notion. - Not a notion now. - That's right. - So unless you're a no ship, bro, then there's no way to obviously to be covering your costs even at a one row as, and it is really not uncommon to see people trying to scale things at sub one row as, you know, at point eight row as, at point seven row as, which seems impossible. To me, it seemed impossible at first. I'm like, how does anybody make those numbers work? Because I was coming from a, like a durable hard goods perspective. But now I can understand how you get there. A lot of it has to do with how much people come back. And so I'm going to introduce like really the, well, I'm going to, I'm going to introduce the four pieces. I think that are important when you're trying to think through how your business has to handle acquisition and make the finances work. Number one, when customers buy from you, how frequently do they come back? How many times on average do they buy in a year or in three years? And so purchasing is really all about retention. We'll talk about purchasing retention. Number two, when people buy from you, what percentage of that revenue is actually going to be profit. And that's really about margins. And this is going to be something about scale. I think is what we're going to be talking about. We're going to be talking about scale. Third, when people buy from you, how much can you get them to buy from you? And can you expand that over time? And I think that this is really about offering and about upsell. And then the final piece is how many purchasers do you need in order to make the numbers on your profit and loss statement work? To do things like covering your overhead and to get to a profit number that's big enough that it makes sense to even be spending your time on this stuff. And that's going to be about like quantity of acquisition. How many people are you adding as customers every single day? So those are the four big pieces that we're going to talk about. And we'll spend some time talking about how do you measure each and then how do you try and grow each of those things. Let's do it. Every brand I talk to has the same problem right now. You need way more ads and you need better ads. We have agencies, creators and AI that all help with the volume. But then there can be a week of back and forth. There's a lot of logistics and a lot of people in the way before any of it is even ready to launch. At Winx, we skip all of that. We have runeth that's helping with everything. Runeth makes almost all of our statics directly in Slack. They come out launched pretty much one-shot it, uploads them, analyzes them, does all of it. Runeth also helps with our tribe. We're getting so many videos, but we want to make sure that they are appropriate and hitting the right things. Runeth has been trained on all of the feedback and comments that I've given to tribe creators. So it is briefing them, it is QAing, all of them, and it's messaging them feedback based on what's working in our ad account. Runeth has started building all of our landing pages for us. A lot of people are talking about having ad and landing page compliance together. Runeth has made that possible by allowing us to ship really good landing pages very quickly. Runeth has a homework. It has all of the context of Winx and our performance. If you want to check it out, go to runeth.com and start your 14-day trial. Tell them Cody sent you so I can hook you up. Number one, we are going to talk about purchasing and how frequently people buy from you. And when you start a company that has repeat purchasing, obviously the dream is that everybody shows up. Everybody's going to try it. And they're going to be like, I got to try. I got to have this every night. My kids have to have it every night. My spouse has to have it. My dog has to have it every night. I'm going to be coming back and I'm going to get on a subscription. My family on a subscription. Obviously, this is-- not how it actually happens, but nobody really knows. Like when we started Wynx, we had no idea. What is the retention on this going to be like? People could hypothetically drink it every night before they sleep. They could give it to their family members, but how much are we going to retain people? And because we're early on in the process, I think we're still learning that. And the product is still evolving, right? We're still talking about flavors and different things. So one of the things that you can do with your product is you can look at all of the vectors that might be preventing people from repurchasing. And you can spend some real time on those. And a lot of times this is expanding your offering or this is working on product quality things where people are like, man, if it just tasted a little bit better, helps me sleep if it tasted better, I would come back and buy it more. So one of the things that we do a lot internally with our businesses is this is where we look at reviews a lot. Because unhappy customers don't come back and buy again. I did a really big data project once where I looked at the reviews that people left and their retention, how frequently they came back to purchase more incredibly highly correlated, not surprisingly. But once you have some kind of data set, you're going to want to get an idea of how frequently your people coming back so that then we can know if we're helping them to come back more and what's the overall skeleton or backbone of our numbers. And I'm going to show you guys what that looks like with a company like Trevi. - I think also while you bring that up is positioning. We're in a unique spot that we're helping people solve sleep. And so from a retention perspective, how do we position the brand and the product so that it's actually a nightly supplement that people understand the value of it over time versus actually thinking that it should solve their sleep issues and then they stop buying. It's a unique product that way. - Yeah, that's actually an interesting point, Curtis. The product behavior is like, you start taking it, you get the result you want and you stop taking it. - Yeah, you're like, I don't need to do this anymore. Sleeps fix. - Well, the classic example of this is a dating app that the biggest problem with dating apps is that if it's successful, then you don't need it anymore. (laughing) And so as now where I thought you were going with that, I'm like, Mr. like, you know, family man. - Don't be true though. - Tell me about your study of dating apps. - Well, I don't need dating apps. I have a very low LTV when it comes to dating apps. But yeah, that's totally right. Is that sometimes products, what works against their LTV is that they work really well is kind of what you're saying, Curtis. And that's my problem with Drinks Bar. It's that we can sell you something and it can just last for years. And so that actually it's great in terms of getting people to make the first purchase, but it's really bad for getting them to come back and make more purchases unless they're filling up their cabinets or buying for other people. - And I think that's a learning that we've had so far. Like, you know, we've designed a formula and an ingredient to actually think about like a daily evening protocol, but we're actually talking a lot about solving sleep issues. And so it's like, how do we actually position the product and informing and educating the, you know, the market that Wings is designed to actually do on a, you know, have on a daily basis that enhances not only your sleep, but your recovery and everything else that's going on in the evening. So you can wake up refreshed and feeling good versus just solving the sleep issue, right? Because technically, if you solve it, you shouldn't be, you don't need to subscribe going forward. - I think I get what you're saying, Curtis. But I think that this is like a challenge with broadly with any kind of supplement. Like most supplements, you have no idea if they're actually working. Like, would you guys agree with that? Like 90, like in the 90s percent, like I don't know if it's doing its thing. - Yeah, but I think it is. - Yeah, right. - I think I feel better. - Yeah, but if you took all in one in the morning and you know that that's just gonna hopefully enhance your experience, they're not trying to solve anything other than the fact of just like filling yourself with a bunch of good ingredients and, you know, hopefully supplement everything that you're not getting through the day, right? So I think you would be more inclined to take that on a regular basis versus if you're trying to solve it, you know, a clear issue and we do a good job, then there, you know, what's the motivation to keep on doing it every single day if you have a good sleep? - I mean, I think it's a fair point, right? But I think that that goes into the bucket that Mike's talking about, which is like, all things product is absolutely going to drive how much somebody comes back. So like, do they stay with their subscription or do they come and repurchase? And Mike, I'm curious to see how you think about this too with Trevvy, because Trevvy, correct me if I'm wrong, very much an Amazon brand, right? Like it is. - Our initial kind of get it scaled up as Amazon and I think every brand, we have a different brand right now that Brian's working on where we haven't really picked a horse, we're scaling Amazon and D to C kind of concurrently and I think that you have to pick your first channel because every channel is going to want you to optimize the brand in a different way. And so you just have to find kind of like, hey, what is the war horse that we're going to kind of ride and then we're going to make everything else work around that? - So with Trevvy, we were pretty clear that D to C would be just tough. You know, like there's a lot of people doing electrolytes D to C. They're doing it at price points and they're willing to run it row as is that are just, it was just going to be a really difficult value proposition. And then there was also like, we had this longer term aspiration of like, we want to be able to go into mass retail, we want to be able to do these other things, we want to be on any channel. So Amazon was the right choice for us. But I think the most important thing is, when you're starting a brand that you just say, hey, we know that we need to have one channel that really works first and once we get that, then we can figure out how they all do their channels kind of play into that or don't. What I'm going to show you guys, we're talking about purchasing, is I'm going to show you an example of a user waterfall. On my screen, this is, it's old trivia data, but it'll help to understand what's going on here. So a user waterfall basically says on day zero. So in this case, just to make it simple, we'll say January 1st. On day zero, January 1st, we had how many people that came in and for their very first time in this channel, bought our product. So I'm going to pause here and just make an observation about what makes this tricky, as you get on the channel, is that everything is kind of a world garden when it comes to data. Walmart has data, they'll sell you some of that data, but you're not going to be able to tie individual customers from Walmart to Amazon. Amazon has a lot of data and they have a lot of customer data, but there's this thing called PII, which is basically like private information. And so they're not going to tell you everything about that customer, they've actually over time restricted more and more of what they share with you. So you can't really tie your customers on Amazon to your customer on your website. And like you can tie maybe your customers on your website, to your customers on TikTok, for example, but other than that, you really can't tell when a customer is truly new or returning when you're in a bunch of different channels, you have to just kind of make some guesses. So one of the things that's nice about when you're just one channel is it's like, well, these are our customers. And if this is the first time they bought, they're a new customer. But so what we're going to do is we're just going to talk about this, like we're on Amazon, January 1st, how many people showed up and bought from us from the first time. And it turns out that in 2026, you know, with Trevi, that answer was 586. We had 586 people that showed up on January 1st. And for the very first time, they bought Trevi from us. So that is like the clock starts. And then what you're almost immediately trying to do, is you're trying to get a feel for how frequently those customers are going to come back. What you'll see is in the first one, two, three, even a couple of weeks after a consumable customer buys, they are not very likely to come back immediately because they just bought stuff, right? They've got, it's got to get to their house, they've got to try it, they've got to decide if they like it, they've got to go through in our case, we're selling 206, 286. So they've got to decide like, hey, do I like this? Have I run out of it? Do I want more? And there's a natural point when they start to get, I don't know, 14, 20 days in, where they start to be at more of a natural reward or point, and that you really start to understand like, okay, is this person going to come back and purchase from me very often? And what you're really looking for, is you're looking for what percentage of people are coming back every single day. And what you're able to do with all of that is build a retention curve. And the most simple, I'm going to show one on the screen here in a second, but what a retention curve does is it just shows you how in are your purchasers, how addictive is your product in a good way, like how sticky, that's probably a better word than addictive, how sticky is your product? Is this something that they're going to be coming back over and over and over again to buy? And what's interesting is that once you start to see a retention curve at say day 14, day 21, day 28, you can infer a lot of things about your retention curve at day 250, at day 500, because there's going to be a very natural attrition to customers that buy from you. So think about this way, a bunch of people, a hundred people show up on January 1st, and they buy from you. you than by January 15th January 21st, people are starting to trickle back in, you're starting to see people come back for their second purchase, maybe even some people for their third purchase. And even the people that like you, some of them are going to gradually fall off. Some of them might buy from you again at the end of January and then they buy again in March and then they just don't buy in June. And the reason for that is you're in a marketplace where there's a lot of different products that are competing for their attention. So people, maybe another electrolyte brand convinced that their electrolyte was better. Maybe they just went back to drinking soft drinks. Maybe they died. Maybe they moved to Bolivia. Who knows? But there are this natural kind of attrition that any cohort is going to have even among the users that really like your product. So what you're trying to do is you're trying to take all that and build this curve where what percentage of my first purchase users are going to come back on every given day into the future. And as you get larger data sets, you start to be able to actually really predictively say that you're able to say, Hey, about 28 days into a user's lifetime, they're about 0.65 percent of my acquired users are going to come back on that particular day and they're going to rebuy. The reason why all this is so important is that it becomes the backbone of trying to predict what a user is worth. And until you have this, you really don't have anything. You really just have hope. And this is one of the hardest parts in my opinion of building a consumable business is that when you first start selling it, you just have no idea how frequently people are going to come back. You just kind of have to believe that they will. You have to believe, you have to have, and you know, Curtis, I think you've been really good in this area of just like we have to have conviction about product because if you don't have conviction about product, you shouldn't even ever get into consumables because you're not going to know for a while how many people are coming back, how frequently they're coming back. You're going to set some money on fire before you ever get to flip these cards over. And so you need to believe that, Hey, what we've got is special. It's a really good product and people are going to be coming back. I'm getting back into the weeds. One of the things I'm probably the rustiest on is emails. I'm super excited to be using on the sand. They're using them on links where AI Pilled. We are using it to do everything. I'm running most of our email program from Claude and Codex using the MCP and it's awesome. We also have email, SMS and pop-ups all in one place. We have all of our flows. Welcome series. It's all talking to each other. I love the platform. The analytics are really good. I highly recommend it, especially if you're in position, the wings is in new brand starting out. But if you're on different platform and you're paying too much and you want to switch, they will do the migration completely for you. No loss data. No loss list. It takes only five days start to finish. And they are giving our listeners 30% off the first three months. Go to omnesend.com/nine operators to try it out for yourself. This is what I struggle with is like this conviction that the product will just work out and that people will just keep taking it. And I don't know if it's just like a mindset thing. And I just don't have the experience and consumable. It is absolutely the thing, Mike, for me. It's like how many people, and I also, I don't know, Cody had this contrast with Jones Road and the repeat purchasing cycles in those categories. But I'm not a consistent supplement taker. I take a bunch of them. I'm fairly consistent, but I'm not daily consistent. My wife is. She's got her stack every day. That's like super consistent. But because of that, my own bias, my own behavior, I sort of worry that most people are like me and that I wouldn't go on a subscription. I'd probably buy more ad hoc. And I'm curious, Cody, just how did you guys model us out in the category you're coming from? Because you weren't supplement or food consumable, but you're still consumable. Jones Road is absolutely consumable. Yeah. So we would go cohort everything, like that's how we forecasted the business and did it. But it's just your, I would say like you probably have, let me think of I could find like a good analogy. It's probably like the ceiling in the floor. Like your ceiling is probably the category, right? Like no matter how good your product is of a simple modern or something like that, there's obviously going to be no appetite for that. You know, everyone uses like a mattress for an example, but you just don't need another mattress again, no matter how good the product is. And so I think that gives you your like your opportunity and the ranges of them. And then I think you probably have product quality, but also you like, there are a lot of tactics that you can do as well, right? Like even just offering sub versus not offering sub or like forcing sub. Yeah. Those can very meaningfully change things. Even like, you know, I've talked to some of the bigger brands, but like there are a lot and whether you come gray hat or whatever, like there are a lot of things that you can do that materially affect retention. Now it's not going to take a bad product and make it, you know, bad LTV and make it into a good one, but like cancellation flows, you know, pot like there are a lot of growth marketing hacks that you can do. I don't even want to call them hacks. But it's got to be that just tactics like they are tactics, right? And they can push the deal. So what we do, like we did not offer subscription. It's just not how people want it to buy, right? So it's like, there's no point of that. And just knowing like you're going to get retention, but there's a different standard for beauty, right? Like for a supplement, you're looking at 70% of people to come back in 30 days and beauty 15% and you're happy with it. You know? And so it's just it's just a very different standard. And I think that's why the businesses get under and differently, right? And obviously if you're an investor and you're underwriting a supplement business, like you're going to do it with that, um, with that LTV in mind. And that's, and that's why almost all of them are raising money because you have to play that game and play that LTV game in beauty. You can be first order profitable. Now granted it's hard, but the margins are great. And you can be. And so like, even for us, like the lowest, I was willing to take it as like first order break even because I know that there is retention there, but it's not quite the level of something like that. But yeah, I think if you're trying, if you're trying to be first order break even in, in supplements, I think you can do that and you can be a really great DR marketer and bootstrap that to a certain level, but you're never going to get to kind of like that hyper scale level unless you're willing to play this, this longer term, KKLTV game. We should really talk about subscriptions because I think this is the mechanism. You're actually trading off some with subscriptions. You're trading off some and how much people buy to get them to try and buy more frequently. And we should talk about that. And we should also talk about agents and how agents may disrupt that in the future. 100%. I think another thing that Cody mentioned that's really good is different teams have different strengths. And you don't have to be a finance genius if you're running first order break even or better, right? You don't really have to understand all this stuff if you use that as a discipline because you know you can't be losing money. You know, you can't be making too bad of a decision. And it's only when you start saying, hey, I want to pay people back over two months or six months or whatever that you can get in trouble. And then this is also kind of like what we can talk about this near the end, but this idea of LTV to CAC and yeah, much you should pay. We should get into that. But I think we're we're on a really good path here. Yeah. And I got some like from like the meta side, I got some like subscription versus one time data. Actually, we can talk about too. Yeah, let's talk about subscriptions because what we're focused on right now is how frequently do people come back and buy? And the reason why you have a lot of companies that sometimes are actually even making it subscription only basically. I mean, or they're they're forcing it. Yeah, they're either forcing it or they're they're hiding it and obfuscating one time purchasing or they're they're making it so much more attractive to subscribe. Why would they do that? And the reason is because they're convinced you're going to get more usage and why would you get more usage? The answer is just if people are on an automatic rebuild automatic shipment type offer, then they're more likely to rebuy is I think kind of the perspective. The path of least resistance starts to become them getting the next shipment instead of they have to kind of affirmatively make an action to go and buy it again. My opinion on this is that at the end of the day, people rebuy when they want your product and that when they don't want your product, but they get more your product, they tend to be not happy about that. And one of the things that I think is the most interesting, somebody said this on X and I think it's a great point that a lot of the current things that we're seeing and supplements a lot of the current subscription businesses, they just may not work at all in an agent-based world. Like the part of the idea a lot of businesses has been, hey, if once we get you on this subscription, there's a lot of friction of getting off that subscription, but what if with agents, that's not the case anymore? What if I have an agent that's constantly saying, hey, you know, you're not using this? Like you got a bunch of this in your cabinet, you should not take this next shipment. What would that look like? So I think that might be one of the like pieces of conventional wisdom right now. Like yeah, everybody's got to subscribe, you got to push in the subscription. I'm just not convinced that that's going to hold up over the next year or two. Yeah, I think over the next year, it probably does like just because of diffusion, you know, like it's like how many people are genuinely using muse or an instinct or or like a dot like one of these agents and and then of the people using them, how many of them are setting it loose on their own personal finances and subscription. Like I think that that takes some time to get to a place where like everybody does it. So to me, there's like I saw this conversation on X. Am I immediate thought was like, is this just another X bubble, right? Like if you went and stopped a hundred people on the street, like how many people have a muse agent looking at their subscriptions, right? Or any recurring billing, like, hey, just go save me money. Like, or is this just like an X and tech bubble thing? So, but I'm with you that like long term, you are, that is 100% true. Like there is no world in which we don't have an agent that's helping us manage our money better and are spending better. Like no frickin' way that that's not true. (air whooshing) Most AI tools right now are all promise and no delivery. You know exactly what I am talking about. Super fancy launch videos. This is why I'm in loving what Rich panel is doing. They have AI and support smashed together, made it practical, made it useful, made it valuable to brands today, not on some future promise. And instead of asking you to spend weeks writing prompts and uploading help docs and babysitting, they flipped the whole script. There AI builds your support team for you and everything it needs. I've watched it. It works. It's frickin' amazing. Rich panel even guarantees 50% of your support volume will be automated by AI within 30 days or your money back. I call that a no-brainer offer. If you are interested, go to richpanel.com/demo, not for some generic demo, but to actually book a call and watch them build your actual support team. (air whooshing) Conversive that is that I think really great products you might actually see better retention. Because some of the churn is just forgiveness. Have you ever had this experience? You bought something, you really liked it. You bought it for a few months. For whatever reason you ran out of it and you just forgot to buy more. And then like three or four months later, you're like, wait, why have I not been buying X? I love X. And so like I think that it probably cuts both ways, but this entire topic is really about how much do people love your product? And I'm very much in the camp of consumer is all about do you have a great product that people love? That is like number one. And then it's a huge gap to number two. Because if you have a great product that people love, it's a lot easier to make everything work and to figure out all the numbers. And if you don't, I think it's ultimately not sustainable. So now I'm gonna show you guys four views. These are all, this is interesting. This is an example of how somebody like me would approach looking at this stuff. This is a good example of a thing that you could be doing with Hermes. For example, you can write a skill to like look at this. This is also something where using the models is incredibly helpful because you can get into a lot of math really quickly. So there was a long time where I would build this stuff in Excel and I just don't anymore. It's all machine driven. So this is Trevvy, for example. What I'm showing you is I'm showing you a retention curve. And in this particular view, you can see all three channels that we're selling on currently. You can see TikTok, you can see Shopify, and you can see Amazon. And then what I'm gonna do is I'm gonna actually walk through each channel with you guys. But this is an interesting view because you're going to see some of the relationships between the channels going on in this view right here. So let's look at an individual and then we'll come back to the combined view. This is Amazon and this is a really robust data set. This is hundreds of thousands of users. So what you can see in this is you can see how the very first day that people buy actually, you have your highest repeat rate ever. And that's because some people buy and then immediately like, you know what? I think I want more. So actually about 1% of our users, even on the first day they buy, they're like, "Hey, I actually want, I want to buy more of that." And then starting in day one, day one, you have this huge crater because everybody just bought it yesterday, they're not coming back. And you can see exactly what I was talking about. So as you get to day 14, you're still like, you're climbing back up, right? All the way until you get to about 21. So there's this day, day zero people buy, a few people rebuy, then there's this huge fall off, and then gradually you can see people eating through what they've bought. And then the curve begins. And you can see the curve really easily here that there's this very natural kind of like sloping, almost swoosh curve. And this is what every brand looks like, unless your brand's really terrible, and there's no repurchasing, this is what every brand looks like. And that the thing that matters is what are the percentages associated with your curve? So what this shows is like, hey, day 21 on Amazon, almost 1% of the people who bought on day zero have come back on that day and buy more. So almost one out of every 100 people that bought on day zero is rebying on day 21, that actual particular day. So it's not a cumulative curve. This is like a daily curve. And then on day 22, day 23, you see how like, there's a lot of people coming back, but it's dropping a little bit. So what I would say is like this ramp up that happens for Trevi from day zero to day 21. And this is just people eating through the stuff they've gotten to signing if they like it. And then you start to really understand the retention curve at day 21. And what is happening in here is that you will have some people that will come back and they'll just buy one more time. But by the time, notice how the curve starts to flatten out. And even by the time you get to like day 200, the difference between day 200 and day 300 starts to be not very big. So another way of consumable, right? Like they just, this is what happens. - Yeah, the way that I would describe it, Matt, is that people are not fully in the boat by their second purchase. It's really at their third or fourth purchase that they're really in the boat, that the habit is really established. And so there's still a trition going on here, right? There's still people that bought twice, but not three times, and bought three times, but not four times. And those people are kind of falling out of your cohort. With Trevi, you can see them kind of falling out of the cohort over really the first almost half year. First 180 days, first 120 days. I mean, if you have a really exceptional brand, how quickly does your curve become flat? It's like a question, right? And you want it to become flat because flat means you're not having any attrition anymore. I mean, you'd love it if it did the opposite, if it kind of inverted and it went back upward, there's almost no product that actually does that. But in general, you're going to have this gentle decreasing, and then you're going to get to a point where the decreasing really becomes very, very, very small every day. And you have something closer to like a steady state. And this is why you get the big bucks with consumables. Is it's like, that's a habit. That's people that are like, I'm in. I could do this for a long time. I could be drinking Trevi for a long time. So this is a look at our Amazon curve, and this is to be clear what a curve of a very successful looking consumable looks like. This is one that's getting four, six, four, seven, four, eight as it's reviews on Amazon, and where you're getting a lot of purchasing volume, millions and millions, but so it's also worth remembering. And we're going to look at some of these numbers when it comes to Trevi in particular. But it's also worth remembering that when Y Combinator has famously said that, you know, what you really want is super fans. You don't want people to just like your product. You want super fans consumables. This is so true. There's a lot of things I've tried in my life. I'm like, that's pretty good. I'm not going to rebuy it. You know, I'm not going to like go out of my way to get it, but that's pretty good. With consumables, you have to have something that people are like. I love it. I love it. And I want more of it. And I could just keep using it for a long period of time because that's where all the money is. And this is kind of like what a curve might look like there. This one, the second one, is interesting because this is more what links would probably look like. This is what more of your typical D to C consumables will look like. This curve is a curve that looks almost like an EKG. So you can see how it's like beep, beep, beep, beep, beep. Anybody want to guess what that is? That's your ring bill day, right? That's right. That's the day the subset. You can see here, it's like boom, day 28. Big purchasing day, boom, day 56. Big repurchasing day. Boom. So they're these like heartbeat days where you're people are hitting. Because remember, you're relativizing all your cohorts. This is day zero, the first day they purchased. This is day 28 after they purchased. So day 28 happens different days for different cohorts. But it's the same behavior, right? And you can see these mini peaks on some people that get on like biweekly. See the mini heartbeat's at day 14. And this is what you'll typically see with D to C businesses. Now notice the same thing, right? The amount of people that are coming back for this first one, this first subscription offer on our Shopify site, it's about a percent. But by the time you get to, you know, whatever, day 168, it's only 0.72%. So about a fourth of our subs have fallen out a half a year in. And you can see that as you get close to a year in, about half of our subs have fallen out with Trevi. So we've lost about a fourth, you know, maybe a third of the year in, and by the end of the year, maybe you've lost about a half. This is, again, it's just the math of like, what is your retention, what is your attrition, right? But this is what it looks like. Down here is what TikTok looks like. I have no idea what this big spike is, honestly. Is that a big like, that must be a blitz. Like an actual Blitz campaign, Mike, that's the only thing that makes sense to me. You have been listening to us talk for years about building nine figured durable goods brands, hex-clad, Ridge, simple modern Pila. When we sat down to build Winks, there was never a question it had to be a subscription brand. And being the veterans we are, we could work with anyone, but we decided to work with Ski-O to build Winks. Working with the team over at Ski-O has been awesome. We get to see all of the stuff that the fastest growing CPG brands are actually doing to acquire more subscribers and keep them longer. My favorite example of this has been incentivizing new customers to go from a monthly subscription to a quarterly subscription right after their first purchase, but before they get their first order. The team at Ski-O has been sharing insights on how much in portal flexibility to give subscribers when to change frequency, when to offer product swaps, when to do gifting, what rewards should look like? What is cancel flow optimization? The list is fricking endless and they have shared it all. They have been incredible to work with. They are bringing so much value to this partnership. Almost feels a little unfair. If you run a subscription brand, you should be talking with the team over at Ski-O. They know their stuff. You know what's really weird about this? Guys, this is where numbers are really fun. So, you know what I'm seeing here that is really weird? Is that TikTok has a really weird spike at day 90 and day 180? If they were just random days, I would say noise. Although it is a big data set. I mean, again, this is tens of thousands of people. You should not see things like this, but when you see it on days like that, that's not coincidence. That is something going on. And I don't know what it is. And probably if I had to guess, it's something algorithmic. That there's something in TikTok's algorithm that's just saying, hey, when somebody has bought from a brand with TikTok shops, show it to him again. Exactly three months later. Show it to him again, exactly six months later. And that interesting. So, put it all together. This chart, although there's a lot going on here, and it's a little bit harder to read, I think if you're looking at this chart, and we'll try and do a good job in this episode of blowing some of these up, because I think it's really interesting data, and we've never gotten this practical on this stuff. What's going on here is you can see the three different channels, and they're kind of string some weaknesses, kind of overlayed against each other. Amazon is the blue. When it comes to consistent everyday purchasing, there's just nothing that can compete with Amazon. TikTok is your magenta. And you can see that TikTok is very similar, kind of in the nature of the curve with Amazon. Like we said, there's this really weird thing going on day 90 and a little pop on day 180, where it's actually outperforming Amazon, but on basically every other data point, TikTok is worse than Amazon. Another way of putting that is that TikTok customers are going to behave like Amazon customers, they're just gonna be like 70% of an Amazon customer, or 60% or something like that. What we're looking at here is just purchasing, and what we would see if we added the element of revenue, is we would see that TikTok customers are just not spending as much. They're not as profitable, they're not spending as much when they do show up. So they're less likely to re-buy, when they do re-buy, they're buying less, there's less profit generated. So TikTok shops, it can be great, but like it's never going to be as close to as good as acquiring a customer on Amazon. And then this yellow, as we talked about, is most of the time Shopify is getting its retention, but kicked by TikTok and Amazon. But then on subscription days, you have these pops, where it's outperforming both of them. And I think that that's a pretty good representation. Now, I think it's trevvy because we're so strong on Amazon, our yellow line, our Shopify line, is kind of probably a little bit mutated, a little bit kind of abnormal in that, on an everyday basis, if you're not on a sub, we Shopify with us, you're probably just buying on Amazon, because you can get it the next day, and it's at a great price, it's at a similar price. So this would probably look different if we weren't trying to go into Amazon. But I think if you're really trying to understand, like, hey, what do these different channels look like, and what are the trade-offs, it looks something like this. Mike, do you have a strong, I'm just wondering, or if anybody does for wings, I've been really thinking through the whole subscription, do you just do subscription? Do you allow people to purchase one time? Do you optimize more for like, sell them as much as possible on day one, or try to push them into more of a subscription? Does anybody, I don't know, Cody, if you have a strong take here, like which one is more directionally correct? As a coach. - Yeah, I got some data. I don't know that there is a right. I believe firmly that the offer that you have to start your business is probably not going to be the one that you do, and there's a ton of testing obviously, and offers a giant lever, and financial engineering of it that you have to do. And so I can share where we started, but I think we had to believe at least I did, is like for this to work, this has to be a subscription brand, right? And it's like why even test non-sub because we know that that's not gonna work for like the numbers that we need. And I don't know, I don't know where I stand with that. And I do think that there's a lot of value in going less subscription over time. First of all, you have less cash in the beginning, right? So it's harder to to invest, but also you have less credibility, less social proof, you're not as good at understanding what converts what your messaging is. And so trying to acquire customers on sub is just playing it on hard mode. And yeah, there's things you can do to obfuscate it and make it harder to see. But I've been testing, just like on some funnels, and Matt, I know I told you last week that I was expecting. So, and I've heard a lot of people say this, maybe it's a conversion right thing, maybe it's a meta scanning things. I've heard a lot of people say that like, your cat is probably going to be way worse on subscription. Obviously it makes sense. - Yeah. - So we tested it. And at first, no difference. But now I will say in a week it changed. Our top ad right now is going to no sub. And it's like, it's not profitable, but it's almost, it's like much better. So I'm starting to reconsider. And then again, that's even without a ton of testing. But I do believe they're, I don't know. I think it's worth testing. I don't know if I have like a fully fleshed out like, theory or hypothesis, but especially for a newer brand like, it should be tested. And then there's nothing to say we can't like, get our cat in a good spot, get us close to my goal. I think here it's get us close to break even or profitable as possible. And then we can turn on sub. But A, we're getting a lot more data flowing through. We're getting more customers. Like there is a value of that in the beginning versus just trying to play this LTV game. And some of these brands like, like a Mars man or something like that, like, I don't think they started with as heavy of a subscription focus. So I didn't actually, I think Zach has said that. He started out with no sub. And then it was Jordan, Monard that like, eventually saw the data and I didn't think they were talking. I mean, they can correct me if I'm wrong. But, and he was the one who's like, Zach, just let it fly, dude. Like you got numbers like that this works, right? I think, yeah, I come at it from two angles, Cody. I think there's one, which is just like, what does meta, meta like to see? So like, is there a bias to sub or non-sub? It makes sense to me that meta would basically like, put a subscription offer in a more expensive auction. Like that's a customer that's like, likely more expensive to acquire. That sort of feels correct to me. So that like a non-sub, land or non-sub funnel would probably be like a cheaper auction. Like there's just more people who will try something than there is people who will subscribe to something. Like if we just say like, that's, that's how it works. And it knows brands are willing to pay more for a sub. If you're a DTC brand not taking TikTok shop seriously yet, then you need to be. That's where T-Bar partners comes in. They're the actual operators behind some of the biggest TikTok shop brands right now. Ridge, Hexclad, Grooons, most importantly, Asset Winks and more. T-Bar built the system behind all of them, creator sourcing, sampling strategy, discord management. They help building a real loyal TikTok shop community and a huge bonus as they give brands a ton of high performing UGC content that crushes it on Meta. So if you're looking to scale up TikTok shop, visit T-Bar Partners.com. That's the other end of it. It's like there's the consumer behavior and then there's like Meta's a business. And if you're a, if you're a subscription business, you're willing to pay more for a thing. And then the third variable here to me is like, what does the customer want? Like what is best for the customer? And I think this comes back to the whole brand and like what kind of business are you building? And like Mike, you're showing us different curves for different channels. And all I was thinking was people have choice if you're in multiple channels. Like they can go to Amazon, they can buy it whenever they want. They can subscribe on Amazon. They can go to your DDC and subscribe. They can go to Walmart and just take it off the shelf. And I think that's all like just speaking to serve the customer, which is a way to customer wants. Yeah, I think one other thing we'll go back to the Marsman example is that when you're taking a supplement for like your testosterone or in a general health, I think that everybody kind of understands, hey, I'm supposed to take this every day and it just kind of cumulatively, hopefully, is working. And so it's not a cute, it's not like I'm feeling, parts right now. I need to drink something. It's not like I can't get to sleep. I need to drink something right now to get to sleep. And so it's a lot easier to sell the idea of a subscription or it's like, hey, once you're sold on, you need to take this every day. Why not get on a subscription? I would, it would be insane for me to be on a subscription of Coke Zero. I drink Coke Zero almost every day. But like, right? It's like just an absurd idea because it's like, well, some days I want one and some days I want zero and some days I want six, you know, like, it just kind of depends. And like, so I think that the more that you're in this kind of behind the scenes, health, you just, it should be part of your routine. I think these are it is to sell people on subscription. It's kind of the same thing with makeup, Cody. It's like, I know when I need more blush, right? And like, my experience personally as a customer is that I never can get subscriptions right on things where I have variable consumption. No, me neither. You know, whether it's trash bags or milk or any, you know, it's like, I just can never, you know, like laundry detergent. I can just never get it right. And so I just don't even try anymore. And I think that's the way that most consumers are. Yeah, I'm curious about you guys, you know, your experience. This is my domain. You know, how many people upleveled to a subscription after their first experience? Because, you know, I'm not going to subscribe to something if I haven't tried it. Typically, typically, especially if it's a health product, you name it. Unless I'm convicted that it's going to be, I'm going to be reminded that I can cancel that subscription really easily. Or, you know, it's like, I, you know, I want to go in and I want to try something first. And if you're only in market, if you're not in market in any other form other than online orders, like, I want to try it first. And then if I like it and I think I'm going to use it all up level to a subscription this second time, anything where there's taste involved. The idea of first-purchase subscription is insane. That's what I'm saying. I just, I can't like, who is this person? Or a person. Or who's a person? On this too. Like, if I'm taking testosterone, I want to see if it works the first 30 days before I subscribe to the whole year. Like, I'm not going to spend the money on doing that. You know, and so I'm curious. That's always been my take Curtis is I don't understand the idea of first-purchase subscription that like sight unseen. I'm like, yes, I want this in my life indefinitely. Like, I don't think anybody thinks that way. Is it, is it easier to up level a subscription after the first purchase? Yeah, direct experience. But from everybody I've talked to, it's like, what you guys are saying makes a ton of rational sense, right? It's kind of like not how it works. Yeah. It's kind of like, right? Like, if you've looked at a bunch of consumer brands, like, people are usually most likely to rebuy within seven days. That's like the best time to upsell, right? And I think that's that kind of goes against normal wisdom, where it's like, hey, I have so much, why would I buy again, right? And so I think that this is probably one of those similar things. Like, what you guys are saying makes total sense. But from brands I've talked to and a little data I've seen, like, you're kind of a subscription buyer or not. And it's kind of like very hard to to upsell somebody onto it. Like, and yes, some people will, but often it's a very different customer that's going to. And so it's not that effective. My take is that you do the subscription to show a big, safe story. And you know that most of most people are just going to use that as a way to do first purchase at a discount, but that not everybody will. That a certain percentage of those people are going to like it. And they're just going to be like, I guess I'll stay on it. That I think almost 100% of people that buy subs on a first purchase or thinking, I'm doing this because I get the discount. I'll just cancel it. And it turns out we've got a lot of like with Amazon subscribe and save data. We have a lot of data that says that's exactly true. That there are a lot of people that are just like, hey, I can get 15% off by doing the subscription. I'll do it. And I'll just cancel it. But then what you find is a certain percentage, 15, 20, whatever percent of your people try it. And they're like, oh, actually, I do like it. I guess I'll stay subscribed. And a lot of people, we can even see when people on subscribe on Amazon. And a lot of people, I mean, it's within 24 hours. Yeah. So it's it's an obvious, like I just did this to get the thing. And then I'm immediately undoing it. My initial thought Cody, when you start to talk, because like I've seen some of the data from some of these companies, and I've talked to some of the founders that like you absolute, their math says you absolutely want people on subscription that those people spend like 50% more than a person who's not in subscription in a year, something like that. But I wonder how much that data is skewed by the like often very high incentives to subscribe on first purchase. Is that actual consumer behavior or is the initial offer to subscribe so good that people go into it saying I'm going to take the subscription because it's just so good to take the day zero offer. And that then they either forget that they're on subscription or it's very, very hard to cancel a lot of these brands. Jim membership. Jim membership. Yeah. Yeah. But it's like in deed to see right now, like that's definitely a thing. So I just don't know how much the data is like a true representation of consumer Cody. Like your statement of like some people are just subscribers and some people aren't. I don't know how much I believe that. I think that the a lot of the subscription offers I see are like you're obviously going to take the subscription. Like obviously it's so much better. But I don't know if that makes you a subscription buyer that just makes you like probably a rational buyer. It's kind of a cat and mouse game. You know, the customers think and I'm probably going to cancel this. I'm going to take the discount and the brand's thinking like I'm going to make it harder for you to cancel than you think it is. And we'll see which one's out. And like I mean some of these flows guys and D to C it's really freaking hard to cancel. This episode is brought to you by our friends at after sale. Let me start by saying there is something that all of the best operators have figured out. And that is a new customer is expensive as hell to acquire. So every extra dollar you can get out of that new customer. Well, that's just basically free money. Red uses after sell simple modern uses after sell Jones road uses after sell Pilly uses it upsells downsells in the cart checkout after purchase plus rocked. So at the moments right after someone buys make you money instead of doing nothing. Same traffic more revenue sounds kind of obvious. We're building wings right now. That's why you're listening to this show. And after sell went into the stack on day one, not a bolt on for later when we decided we wanted to finally get smarter. Look black Friday is coming. You know it. I know it. Your traffic's going to go up your ad costs go up even more. Every single visit is worth more than it was last month. You do it right. So don't just spend more to buy more customers. Make every visitor worth more. That's why we partnered with after sell. I think a lot of this is true. I think it is harder to like even if you like the product right. If I get you know if I get element or something like that or instant hydration like I still even if I like the product if I do a one-time purchase. I still have to go and do it and I got work and kids and all this other stuff and you might just forget right. And like there's always an element of drop off not not even because I don't like the product. But I think the subscription helps for that. So I think there's so many different ways to look at I think you can make it hard to cancel. I 100% agree a lot of people that are on subscription. Especially a lot of D to C buyers are going to be more affluent buyers. We have a lot of stuff. My wife will buy gummies and I've definitely got multiple months of groons and stuff like that that I just forgot to cancel. And it's it's it's it's hard to get a refund after that right. And then you go and cancel after it but sometimes for a you know a somebody who has a decent salary like that 70 bucks that they kind of like wasted like it's almost not worth their time to go to now now maybe this is my to your point where agents are going to make it easier like I have had muse canceled multiple things for me that where I was just like was a pain and do so I think there's there's all elements but I think it's just that like friction and it's almost it's harder to get the friction again of that second purchase versus it's a little easier to keep them subscribed and then know some people will take the friction because the hardest thing to get a consumer to do is take any action. And so if you get it on subscription the default is no action and you got to purchase this is this is actually exactly why agents are so powerful is that the brands often are making and this isn't just true of D to C this has been true of whether it's phone companies cable companies you know a bunch of people do this where it's like they just make it hard done subscribe because they're saying well what's an hour of your time worth you know and we're gonna make it cost you an hour of your time to get out of this with 30 minutes of your time and if you're more fluent it might be like you know $70 I mean for me $70 is not worth 30 minutes of my time right so I just I just kind of take it but in a world where agents I have agents and I can kind of spin up you know more time so it's funny I had a situation where I flew to Cabo and back in the last week and when I was going out we had five bags to check on the plane and so when checking in they're like okay how many bags do you want to do and so I do two for my wife I do three for me well their policy is it's $50 a bag for the first bag and first two bags and then it's $200 for the third bag they just absolutely they're like we got you you know and so I get through that and I pay for this absurd you know whatever it is $400 to check these five bags and then it's like hey by the way we're for this flight we're offering free checking of you know carry on bags and I'm like well I think I want to take that and put that back towards the the bag I just paid you know $100 for so I'm like yeah I'll take both those and I go to the counter I'm like I've got seven tags I only need five of them and they're like okay we'll cancel these two and literally I just kind of I just I got on my phone I in this case I used my codex agent I just said hey I paid for a couple of these I don't need to pay for deal with it and and sure enough it did And then flying back, I had the same thing happen again. And again, so twice, $500 in refunds that I did with no work. It was the real like, I had an interaction with the counter. I set a couple things on my phone, boom done. - I'm curious if your agent actually gave you feedback that you had three bags in your Wi-Fi too. - Well, guys, I'm not saying I had three bags. I'm saying we had five bags and three were put under my name. And I will not clarify anymore about whose bags they were. But anyway, this idea is going to break down. This idea of this arbitrage of your time is worth enough to you that it's not going to be worth the friction and the hassle. - For sure. - Brands have leveraged that, not just in consumer, but in a lot of places. And that's going away. Everybody's trying to figure out how is the economy going to change. This is a very practical way that it's going to change. Is that there has been this arbitrage around people's time and around inconvenience. And that is going to go away because we're going to have digital agents that are working on our behalf and are just not going to deal with it. They're just not going to put up with it. - Let me ask you guys this, then, as we look forward, so we launched it at the end of August, the brand. I've not been using August cohort data that much, Cody. I don't know if I told you this, just because there were so many like DDC bros who just bought that probably are not good indication of this is the kind of customer we want to acquire with ads. So I have been looking at our September cohort, right? So like the people who subscribed in September, what does retention look like so far? What are reasons that they're canceling? And it's definitely got me asking questions around like, well, going forward, do we want to be like very heavy? Like almost like how close to subscription only do we want to be? And how much room do we want to allow people to like try it with what Curtis is saying? And I think that that's an important question because what Mike is showing us is like, this very much drives like the profit model of the business. - I think we've got to let the numbers guide us Matt, is I mean, I really, you do have to let the numbers guide you. And I think that we will see it. I want to give you guys the rest of the picture. We've talked about like one aspect of the picture. - Yeah. - I want to show you how the other peeps has come together real quick. - Sure. - There might even be a fall-up episode because like we can talk for a long time about this, but I hope that the people listening to this are getting some count of it. Let me show you how this comes together. So once you have a curve, you can start to say, hey, on any given day, I think this many people are going to show up. And then once you have an assumption about how much they're going to spend and what the margins are going to be like, then you can kind of say, what are they going to be worth? What are they going to be worth in three months? What are they going to be worth in six months? I'm going to show you something proprietary. I built internally that I think is interesting and will at least give you the idea of like the way that I think about this for our business. So here is a internal admin that I built that right here, we're looking at Trevi, one of our brands. And this is my kind of customer value hub. I can look at this by channel or blended. I'm going to, I have these three different ideas of how I look at LTV. And we're going to talk about them. LTV, net LTV, a nominal LTV. And then I can like look at different horizons. I can group them by weeks and different things. And I can look at the data on a cohort by cohort basis where I can look at it kind of graphically like this. So I'm going to introduce three ideas if you're listening to this that I think are important and interesting. The first is LTV. LTV in the way that I've done it here, you can define different things different ways. But like I think these three ideas are important regardless of what you call them. Here LTV is how many times in a period of time, a year, six months, whatever is this person coming back and buying and what is the profit that I made from the average customer coming back and buying over their first X period of time. So in this case, you can see, I'm saying, I want to look at the LTV for Amazon. I want to look at the last six months. I want to group it by weeks. And this is kind of a view. And you can see that it looks like right now, we make somewhere between our LTVs are not very big because our pricing is sharp. We're going for a lot of customers. The LTV might be whatever. Might be around $10 over the first six months, which is not a huge LTV. It does illustrate by the way that if you're paying $100 CPA, there's just not actually a lot of brands that have $100 LTVs in the first six months. That's a really big number just to put it in perspective. You might see that in makeup and you'll see that in some things. But most consumer products don't work that way. It's like volume. You're doing volume and you're making smaller LTVs over lots of people. But anyway, in this case, I'm showing you, I'm actually showing you what our number might look like. So nobody's going to write me an email and say, wow, your LTV is so big. But that's what our LTV looks like. And there's a second number which is, it doesn't really matter how much profit you make off of every customer. It matters. How much profit did you make off of that customer over that time period after their marketing? Because you have to pay to acquire them. So if I'm paying $100 a customer to acquire these people, then I'm negative $90 six months. And that's not going to work. But with our brand, because we've taken a different approach, my net LTV, and you guys will see this here, my net LTV is, it's around $5 right now, that I am positive $5 per new purchaser on Trebi six months in, right? So if, sometimes you can have a smaller LTV, but if your cost per acquisition is really low, that can be great, right? You're profitable. And so like in this particular case, so you can see even three months, I've got a positive spread. You have to have a positive spread. Brands will sometimes play the game of being like, well, I'm going to pay myself off in nine months or 12 months. It's too long. Don't do it. There's so many people that have gone bankrupt doing that. So this is kind of your LTV to cack kind of comparison. You need to be positive six months in. I think that that's just at this point kind of canon. But the final piece is actually the most important piece. And I call this nominal LTV. Nominal LTV is, what is my net LTV? How much did I make per customer? Minus the amount to acquire them times the total number of customers that I acquired. Because at the end of the day, the way that you run your business, the way that you make money, the way that you take a salary, is by not just doing this once or twice, but doing this with a lot of people. And you'll see here, this is where you can see that Trebi is having days where it's probably generating over a six month period is probably generating $30, $40,000, $50,000 of value from the number of customers. So maybe small number per customer, right? Maybe you're only going to get $5 or $10 per customer of net LTV over the source few months. But if you're doing that over a really big number of customers, you can start to get to some really big numbers. And that's kind of the game. Is that these three ideas. How much profit do I make off a customer over their first three or six months? What is that positive after I take out my customer acquisition cost and then how many people can I do that with? Because all of these things pull against each other. The cheaper I try and get my customer acquisition cost, the lower quality customer I get. And that pulls down on my LTV. And also the cheaper I try and get my acquisition cost, the fewer customers I get. The more customers I get, it tends to pull down on how frequently they come back. It comes back on my customer quality. And a lot of times can help me pull down costs. But if I try, oh, sorry, if I try and get more, it pulls up on my cost and it pulls down on my customer quality. So these three things are all related. And what you really have to do is find what is the right combination of customer quality, quantity of customers, cost acquire the customer. That's actually how profitable consumable businesses are made when you find the right intersection of those three things. - Very cool. I mean, I think we're gonna see this with Wanks is that as Cat comes down and day 1 AOV goes up, Cody, that we'll find that our cohorts just get more profitable. Because like, and we just have to solve the retention piece. Like our cohort retention is not terrible right now, not at all. Like given we put zero effort into it, it's actually like better than I thought it would be. Like I could see how what you're showing is like, there's a contribution profit per customer, per cohort, at some point, some months in, where we flip, those cohorts are profitable. - Our problem, I think even more than like, whether or not our retention there, our problem is really simple. We're not acquiring enough. And this is why I showed the last one, is that it really helps you to understand that like, nominally, there's just a certain number of users are going to have to be able to bring in the door every day. So like, let's say for example, that you were able to make $50 in net LTV, that all the profit they produce, minus their acquisition costs. Like that sounds wildly optimistic, but let's just say that for example. How many of those people would we need to get every day to make the business really make sense? - Sure, yeah. Yeah, exactly. And so, this is really the issue is that what I've found with Trevi has been the really like challenging, stimulating, fun, hard, you know, makes you want to cry part at times, is that all of these things kind of like when you move one, it moves the others, and you're just trying to find the magic triangulation of those three things where it really works, where all the numbers work. And it takes a lot of testing is more or less been my you have to have an exceptional product, but then even then you have to do a lot of testing. At some point we should do a breakdown episode of exactly the steps we went through with Trevi, but the thing that is so fascinating to me is we clearly had the right product and we've clearly been able to make it work. But for us, offer was such a big deal. Like we spent a year doing it where we didn't have the right offer, and the numbers weren't working at all. And then when we changed the offer, it suddenly did. So like the first gate is like, yeah, do you have a great product? Are people going to want to buy it? Are people going to want to use it and come back? But it turns out that wasn't even enough for us. Then we had to have offer correct because we weren't acquiring enough customers. That was our real problem is that we weren't acquiring enough customers at the price point that we were at. And so we had to come down on price point to get the number of customers up to really end to get the CPA down to really make it all work. Yeah, I think I think there's other reasons we're not scaling up volume right now that we will tell people in a future episode. But yes, there's that obviously like volume total volume total dollars is what matters most like that's literally how a PNL works like you and cash flow like you have like you have total expenses and you just need like an amount that gets you there. What is the other parts of this mic that you wanted to run us through? Well, there's a lot of other things that I that I could show you guys and like I'll show you guys one more thing. This is interesting. It's kind of in the same vein. And this is we talked about retention. This is a look that I have of how many people are actually kind of getting engaged with your brand. So again, we've got really good reviews with Trevi. We've got a product you can use every day. It's an interesting kind of look at things. And what I'm doing here is I'm breaking it out by cohorts now. And I'm looking at I'm looking at these like kind of chunks of acquisition people. And I'm looking at breaking them into desiles. So here, I've got a group of 20,000 users that I'm breaking into desiles. And it's just interesting because it'll it'll give you a feel for some of the things we're talking about. So in this group, the main thing to look at is this kind of repeat rate. And what you'll notice is like 50% of my people five of my desiles just don't come back basically. And and then, you know, out of my 50 to 60% group, you know, maybe a fourth of them are coming back. And all of my retention is up here at the top. And anytime you look at these kind of cohort based desile based things, what you really learn is that this thing is all about the 10 to 15% of people that really love your product. We've talked about this before. It's all 90, 10, 80, 20 kind of power laws. But every data set that I've ever looked at really, yeah, I mean, like look at this, like you've got your observed profit. This is these are desiles by observed profit at a certain gate of time. And you can just see, I mean, look at this. This is crazy. These groups, you could add up like my first eight desiles and they don't equal my 10% of best users. I get more from my 10% of best users than I do from 80% of the customers that come through the door. And that includes their first purchase. Like when you when you actually say, I want to see my non first purchase, there's a way where I look at this sometimes where I'm like, I actually want to look at the profit that comes after your first purchase. It's crazy. It's like your top desile is 80% of the profit you'll make after first purchase. It just comes from those 10% of people. And all of this just really reinforces that it goes back to you. Just got to have a product that people love because it's going to be the people that are like, I'm all in. I'm using a ton of it. It's every day. And this is also the reason why I don't really know that subscription matters that much because I think those type of people are going to revive. Cody, you were saying earlier, which I think really makes sense is where subscription might help you is the people that are kind of nominally in on your product that are kind of on the fence. They're kind of like I could go either way. But the problem is if your brand is trying to subsist on people that are kind of nominally committed, that they're hanging by this thread of convenience, then I think you're, that's pretty, it's a pretty weak, weak mode, you know, like you're going to get disrupted. What you want is people that are like, it doesn't matter if your products are hard to get to, like when they run out, they notice and they immediately pull out their phone and they're buying more. And that's why I just think in consumers, like it always starts with great product. But I do think that one of the ways that this can play out in terms of how you do product development and how you think about marketing is the entire game is that, you know, you get a thousand people to click and, you know, a hundred people really strongly consider and 50 people by and five of them. That's it. Like those five people at the bottom of the funnel, those three people at the bottom of the funnel, they have to pay for all thousand people that you exposed to things because that's, that's the only way that the numbers work. So it's, it's better to just be absolutely loved and adored by a few people than a bunch of people to be like, "Ah, it's pretty good. It works okay." So Mike, what you just showed, top of mind for me in Cody, I think you've seen data like this, or we've talked to enough brands, it totally tracks because if you, like I'm just thinking of all the consumable subscription, like even some, this is like never not supplements, at the end of their year, like net revenue retention at 12 months, they would consider great summer between 12 and 20%. Right? Well, so like basically all who's left is the like the diehards, the like this works, I love it, you know, like your numbers totally track, that like that's where most of their business sits is in this like 12 to 20% of people who are still here 12 months in. And, and those people are probably still there 24 months in, 36 months in, like those are probably those like super consumers that we're all chasing. It's just how do you make the math work to get them? Like I think that that's, it's all just math, these businesses are straight up just financial models. So I'm with you Mike, I think the data is going to speak for sure. And I guess one kind of clarification or thing that is that is we're saying here is that this is where ironically your entire consumable business can rest on single digit percentages. So just take what I just said, right? That it's like this is a power law and it's all what is happening at the extreme end, right? 10% of your first purchase customers are going to decide whether or not your top 10% are going to decide whether or not this rises or falls. In fact, probably your top 5% decide whether it rises or falls. And here's how thin the line is between something that can work and can scale something that can't brand day out of every 100 customers. Three people are super fans. Brand B it's six. Brand B scales to the moon brand day can't go anywhere. They don't have the economics. And you're like three people three percent. Yes. I mean, that's the difference. But another way of looking at it is brand B has twice the number of super fans. It's only three people out of every 100. But it's twice the number of super fans. And so it dramatically moves LTVs. It dramatically changes what they can bid in auction. And this is the story behind whether it's, you know, grooms or any of the really big winners is that I guarantee you, if you dove into their numbers, it's when you get into the super fans. They just had a really healthy percentage of super fans at the very, at the very end of their distribution of people. We have heard this directly from them, Mike, like from, from all of these people. Like we talk to them, we know the CMOs, we know the founders, like their numbers would shake out exactly what you're saying. These numbers, like here's the thing, they're, I've seen a lot of e-commerce data sets and PNLs. It, it always works this way. Like your brand's not different. All of this stuff is, is just a numbers game. The difference is really like where are the cutoffs? Like do 15% of people purchase from you are to 25, you know, or do 30 or, you know, how many, how many people become super fans? Is it 10%, 12%, 6%, you know, like, and these, and these things end up dictating, you're, you're in competitive auctions with meta, you're in a competitive marketplace with Amazon, with TikTok. And so you have to be better. Your percentages just have to be better than the other people in auction, or you're not going to get delivery. Matt and Cody, are we doing anything right now? Like we, we obviously can see when people unsubscribe and they're reason for unsubscribing. But are we measuring any kind of status action score or success or evaluating, you know, who's the fan and who's not? Well, I mean, we get, we ask for reviews, we ask them to like score the pro, yeah, for sure, right? Like rate your experience, rate your, rate the product. Um, and then obviously when we get like an unsub, we get the reason for the unsub. I slapped you guys a couple screenshots. I've had, I've got codex doing analysis for us, um, regularly. So I'm like, I'm looking at each cohort. And I'm looking at like whether it's a four week sub or 12 week. Uh, and I do think there's interest. Like there is, it's not a huge amount of data, but like there's still patterns. You know, like, and there's things that we can act on for sure. Um, like there's things with the products we can change, which we, which we know and we are. And then I think there's also just work on offer. Like I think Mike, like you calling that out with Trevi, super important for people listening and watching, like that offer matters, like probably more than anything, I would say, in like unlocking the business and making it really work. Um, like I'd put that at the very top, if not the top of the, like the top top top of the pile. Um, and in my mind, the reason my offer matters is that whatever product you have, it has an underlying kind of activation of super fans, percentage. And like that is not about offer. It is not matter where we price Trevi. Like the percentage of people that are going to be, you know, evangelistically into Trevi is not activated by offer. What offer is about is about getting more people to actually try the thing. So what it ends up being is like, Hey, 3% whatever the number is, 3% of people who try this are just going to love it. Well, how do you get more people that are buying it every day and loving it? You've got to get more people through the door. And that's what offer is is how do I get more people through the door? And then I know that 3% of them are going to activate into super fans. So like each of these different things we're talking about is it kind of addressing a different part of the funnel, the financial funnel to make this all work. Yep. Super helpful, dude. I'll try and just like summarize what we talked about today. What we talked about is you need to know how out of everybody who buys your product for the first time, how many people are coming back, how frequently are they coming back? And what do your super fans look like? And these are statistical things that you can figure out. You just have to watch people and you have to understand it. And that if you're not seeing the numbers you want, most of this is probably you got to go work on product. You got to you got to figure out how to get product to place where people are going to be really passionate about it. And then you need to look at when they are showing up, when they are returning, how much are they buying? What are the margins on that? We didn't really talk about this, but one of the things that comes with scale is you can start to get better efficiencies on your production. You can really start to think about how do we get our margin profile a little bit better and that plays out in your lifetime user values. And then you have to think about three aspects of lifetime user value. How much profit am I getting per customer three months in six months in? How much profit am I getting per customer three months in or six months in after I take out what I spent to acquire them? And then that final idea of how many customers do I have times that profit after acquisition cost? Because that's going to be the money that hopefully pays the bills and there has to be enough of that to go around. And that this becomes the kind of the structure that the pillars of the house that you're building and understanding how you're going to build a successful consumer. This is great. Amazing. I think I think that might be the part.