Advice Line with Troy Carter of Atom Factory

Former manager of Lady Gaga and Atom Factory founder Troy Carter joins Guy on the Advice Line, where they answer questions from three early-stage entrepreneurs. Plus, Troy’s advice for reaching new audiences when digital ads struggle to perform. First we meet Madelyn in Arizona, who’s trying to grow her postpartum frozen meal delivery service while preserving its focus on her local community. Then Tyler in Oregon, who wants to strengthen connections with influencers endorsing his water purification systems. And Gina in Minnesota, who’s looking to better market her matching dog and human clothing sets. Thank you to the founders of The Nest Prep, Guzzle H2O, and Good Thomas for being a part of our show. If you’d like to be featured on a future Advice Line episode, leave us a one-minute message that tells us about your business and a specific question you’d like answered. Send a voice memo to [email protected] mailto:[email protected] or call 1-800-433-1298. And be sure to listen to Atom Factory’s founding story https://art19.com/shows/831bd173-0992-41b7-b1eb-112db904d947/episodes/1c3a417d-3d77-4663-b2da-d8f969a0dd95/embed as told by Troy on the show in 2017. This episode was produced by Sam Paulson with music by Ramtin Arablouei. It was edited by Andrea Bruce. Our audio engineer was Neal Rauch. You can follow HIBT on X https://x.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis/ and sign up for Guy’s free newsletter at guyraz.com http://guyraz.com/ or on Substack https://guyraz.substack.com/. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 5:20Guy Raz?

  Hello and welcome to The Advice Line on How I Built This Lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show, who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Send us a one-minute message that tells us about your business and the issues or questions that you'd like help with. You can also send us a voice memo at hibt. at id.wondery.com and make sure to tell us how to reach you. And also, don't forget to sign up for my newsletter.

• 6:04Guy Raz?

  It's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for free at guyraz.com. And we'll put all this info in the podcast description. All right, let's get to it. Joining me today is Troy Carter, founder of Atom Factory, which managed stars like Lady Gaga and John Legend. Troy, welcome back to the show. It's great to have you on.

• 6:27Speaker 01

  Thank you for having me. Love being here.

• 6:29Guy Raz?

  We love having you. You were first on the show, Troy was first on the show back in 2018. He told us about how he went from West Philadelphia to the heights of the music business in LA. It's an amazing story. In LA, he discovered and started managing the rapper Eve, but then it all came crashing down. She left Troy as a client. His house was foreclosed on, his car was repossessed. And at the lowest point, Troy, you were introduced to a then unknown singer songwriter called Lady Gaga. And of course, you helped build her brand and her career. And it's just an amazing story. And if you guys have not heard that episode with Troy Carter, we'll put a link to it in the podcast description. It is so awesome. It's just amazing. Anyway, after that, Troy, you became an investor.

• 7:14Guy Raz?

  You got in early on companies like Uber and Lyft and Spotify. And you also had a stint at Spotify for a while. And now you are in the music distribution business. So you are still working with artists and creatives. Give me, give us a quick update on what's going on in your life right now.

• 7:29Speaker 01

  Yeah, you know, when I, when I left Spotify, I decided that there was this opportunity in the independent music space to really help out independent music artists with distribution and services and technology. So basically took, you know, my experience as a manager, my experience of working with artists and technology at Spotify, and now we're distributing independent artists.

• 7:53Guy Raz?

  That's awesome. And, you know, it's interesting because you hear a lot of sort of conversations around, you know, Spotify and how it compensates people. And the reality is like, If you are an independent artist and you own the rights and your recordings and everything, like you get all the money, right? It's that, but it's the way the money is distributed. Because if you are an artist and there's writers and there's composers and there's, you know, all kinds of people involved, that, you know, that dollar gets split, you know, 20 different, 50 different ways.

• 8:26Speaker 01

  Yeah, and for us, you know, we like to work with artists who own all of their music. We encourage them to keep, to hold on to their rights. And, you know, if the music does well, they do incredibly well.

• 8:37Guy Raz?

  Yeah. You, when, I remember on the show still, you'd be on the show since then a few times, but your first episode, the story of your life, and just, I still think about it sometimes, going up and down California in a van, you know, with Lady Gaga before she was Lady Gaga. You guys also at the time used social media, YouTube, to kind of help launch your career. And back then, and even until recently, that kind of digital discovery was new, right? And it's a different world now. I mean, social media platforms are, you know, they're saturated, right? Digital ads, we're hearing from a lot of startup founders that, and even established companies, digital ads are not performing as well, right? And as they used to.

• 9:17Guy Raz?

  So what are some ways that you're hearing about how entrepreneurs, creators, other people that you work with are building their brands and reaching audiences despite those challenges?

• 9:29Speaker 01

  Yeah, you know, we're having these conversations in real time. You know, I was just talking to my team a few weeks ago about, you know, even with my own habits, when I use search now, which I rarely do, but when I do, I'm basically reading the AI summary and not even sort of clicking through or whatever on whatever else. So discovery is definitely shifting now. The reality is... You've just got to be really, really, really great at what you do and have a really great product, you know, because in music, we've always been like the canary in the coal

• 10:10Speaker 01

  mine. So probably a decade ago, when the barriers to entry to music went away because of technology and all of a sudden you have hundreds of thousands of artists releasing music, you know, we figured out ways to be able to cut through the noise. But part of it was you got to take a really patient, long-term approach and not expect things to happen overnight and not fall for the traps that happen and taking shortcuts to sort of accelerate things. So, you know, I just think continuing to focus on product, on exceptional service, and to me, it's a bit of a longer route, but it works. But

• 10:54Speaker 01

  the shortcuts and the growth hacks, you know, is going to be a little bit tougher right now.

• 10:59Guy Raz?

  Before we get to our callers, one last question for you. I mean, a lot of people, a lot of founders, startup founders today, and we may get this question today, too, ask me about working with influencers and celebrities, right? Because now you're seeing just an explosion of celebrity products. Not all of them work, right? We only hear about the occasional, you know, billion-dollar deals of the Hailey Beavers of the world. But most of the time, they don't really pan out. What kind of advice would you give to entrepreneurs, thinking about whether to work with celebrities or creators, even giving them equity in their product to, in their brand, to, you know, boost it?

• 11:39Speaker 01

  You know, making sure that it's not transactional. You know, if it was me sitting in that seat, I would want somebody who's in love with my product and mission-aligned with the vision of the company. And if you didn't have to pay them, that they still would promote your product.

• 11:57Guy Raz?

  Yeah.

• 11:57Speaker 01

  You know, and that's the type of relationship you need to have. If it's transactional, it usually doesn't work.

• 12:03Guy Raz?

  Yeah, makes a lot of sense. All right, let's bring in our first caller. Welcome to the advice line. You're on with me and Troy Carter. Tell us your name and where you're calling from, and just one line about your business, please.

• 12:14Speaker 02

  Hello Guy, Troy. Thank you so much for having me. It's truly an honor. My name's Madeline Nausic Ellis. I am in Phoenix, Arizona, and my business is The Nest Prep. We produce and deliver custom postpartum meals and snacks to new families that have just had a baby and extending into toddlerhood, families that just need to feed everybody around them.

• 12:33Guy Raz?

  Nice. Awesome. Welcome to the show, Madeline. So you make fresh meals. Are they frozen or fresh?

• 12:39Speaker 02

  Yes, they're freezer friendly, so everything that we make is intended to be stored in the freezer so that you can stock up before the baby is born. That's the primary model that we have. So we deliver frozen.

• 12:50Guy Raz?

  And this is designed, you designed this for people who postpartum. So a lot of times, I'm sure people listening have had like a meal train sent to you. "Oh, our friend had a baby. Let's do a meal train."

• 13:01Speaker 02

  Yes.

• 13:01Guy Raz?

  So something like this is probably perfect. They can just order food and then the food is delivered to their front door and they've got it ready to go. Tell me how you came up with this idea? Or how did you decide to launch this business?

• 13:13Speaker 02

  Exactly. Yeah, so I have always just loved feeding people. I mean, since I was a kid, I can remember wanting to feed people and cook. So I worked in food service management, really my whole career, and I just, I love it. Through that career, I started having babies of my own and that would kind of be my postpartum gift to my friends, you know, and especially once having their second or third babies, they don't really need a lot more stuff.

• 13:36Guy Raz?

  You'd pack up meals for them?

• 13:37Speaker 02

  Exactly.

• 13:38Guy Raz?

  And bring them to their door?

• 13:39Speaker 02

  Yep. Yeah, I would make things for them at home, at my home, and then pack it up for them, bring it and, you know, help them reorganize the freezer a little bit, ask them what kind of things that they were into and liked. And I just, I loved it. And I remember doing it for myself when I was pregnant with my first baby and I just had this daydream about how amazing it would be to do this for other people as a job. And it took me, you know, having a couple more babies to actually make it happen. But once I decided it was time, I just designed the website and went all in.

• 14:12Guy Raz?

  And who is doing all the cooking?

• 14:14Speaker 02

  So we have a team of four. The kitchen team is really two or three of us. And it's, we have a beautiful commercial kitchen. We produce everything in the span of like two or three days, depending on our amount of orders, which have just increased every week. So we have three of us on the team with nutrition and culinary backgrounds, and then one who is more in like operations management.

• 14:39Guy Raz?

  Right, so there's, this is a, but it's a labor-intensive business right now.

• 14:44Speaker 02

  Yes.

• 14:44Guy Raz?

  As your small team.

• 14:45Speaker 02

  Yes.

• 14:45Guy Raz?

  Yeah, all right. Before we dig in more, tell us your question.

• 14:49Speaker 02

  Yeah, so right now, we serve the Phoenix area. And every one of our customers, everyone that we talk to, expresses what a need this is. You know, the need to feed your family is not exclusive. So my question is, when you have a business model like ours that not only takes pride in, but really focuses on utilizing the resources of like a local community, what's the first step to scaling that into other cities or nationally?

• 15:16Guy Raz?

  All right, Troy, you know this well, Troy, because you've invested in companies that have started in one place and had to expand all over the country. Food delivery service designed for postpartum parents. Looks like a cool business. It's in Phoenix right now, but down the road, maybe get it to Tucson and to Los Angeles and San Diego. And then how does she start thinking about this?

• 15:37Speaker 01

  I guess what's the, what's the current distribution?

• 15:42Speaker 02

  So weekly, we have, you know, we have a couple hundred customers right now. We also have a retail partnership with a local mom and baby sort of boutique workout class. They're sort of an all-encompassing location where they've agreed to have a branded freezer of ours on site, and we actually stock that every week as well. People can go in and buy it on site.

• 16:04Speaker 01

  And what's the, what's the shelf life on the, on the product?

• 16:10Speaker 02

  So we say on our labels, anywhere from three to four months. Technically, it's really more like six to 12, just because everything is designed to be frozen. Once you take it out and prepare it for consumption, obviously, the shelf life changes a little bit, but we have that on our labels. So, you know, you can stock up, but we have several families that order every week. So it's become a part of their weekly grocery delivery.

• 16:35Speaker 01

  What's the price point?

• 16:37Speaker 02

  So the price range on our website, the snacks are anywhere from like the fifteen to eighteen dollar range and then our meals are thirty to forty-five dollars. They usually feed four. So a typical average order for us is around two hundred dollars.

• 16:54Speaker 01

  Got it. So is there a possibility of doing like a pilot program with a target or somebody along those lines?

• 17:03Speaker 02

  I've looked into Sprouts. That would kind of be, that's kind of our local, you know, west coast health grocery store. They have a pilot program available for people who are trying to get their products on shelves. That is sort of a, it's one route that I see possibly happening, kind of taking that retail route. But we really have found that this delivery model is very well received by our customers.

• 17:33Speaker 01

  And but so I guess explain how the delivery model works.

• 17:38Speaker 02

  Yeah, so we, our order cutoff is Thursday every week and then we use that Thursday to Monday timeframe to prepare the meals. Monday is our delivery day around Phoenix right now. So we have a team that shows up to the kitchen Monday morning where we produce it all, grabs the bags with their labels and then they have a route on their phone. We've got a delivery driver app where they will take that to everyone's home that's ordered for that week. So we do it week after week, deliveries every Monday.

• 18:04Speaker 01

  I would pilot a small market nearby and just to make sure that you can replicate what people already love about your brand. So, you know, don't feel the pressure right away on scaling because I think that the experience is way more important than scale and especially since you have a small team at the moment because once, once you start scaling, as the CEO, your job changes now. You know, you, you, you leave the kitchen to manage people. And so, and, and you don't want to lose the magic of your brand within

• 18:49Speaker 01

  that transition. So I think being able to, you know, do a, a small pilot nearby might be the sort of way to sort of test it out to see whether or not it's, it, it changes the experience for the, for, for your customers.

• 19:04Guy Raz?

  Yeah, I think that's right. I mean, I think that right now, you know, thinking about ways to scale it, you should do it very slowly and methodically. I mean, there are a couple of things here. Your price point is higher than, you know, than, than what some frozen meal would be. Obviously, the quality is better and it's, you know, prepared by chefs, so that makes a lot of sense. But there are meal delivery services in cities all across the country. So the question is, what is, what is that thing you're offering, right? What is the, the value prop here? Is it the branding? Is it the idea that this is for postpartum, you know, families, et cetera? And that could be an interesting, you know, way to position it. I think that, that, that you might want

• 19:47Guy Raz?

  to start going to, just literally to Tucson, or, or I don't know if you've reached Prescott, Arizona, but, but a smaller, closer place that you can reach in, you know, a couple hours, where you don't have to hire too many more people. Because if you're doing it in Tucson, and you, and then eventually you've got a kitchen in Tucson, and you're going to need a staff there, a team there. But it could be a great model for how to think about expanding out of state. I would really try and focus on Arizona first, and the, you know, the market's there, and then see whether it's worth trying, you know, going into Las Vegas, or, you know. But I also, the other thing I would do is, I would literally just do research on what cities, what parts of the country are seeing the,

• 20:32Guy Raz?

  you know, the highest number of births. I mean, literally, I would like go in, and, is it Columbus, Ohio? Is it, you know, in proportion to population? Where are you seeing the highest number of births in proportion to population? And, and then also, you know, you want to cross-reference that with affluence.

• 20:49Speaker 01

  That's, that's what I was going to say. Because it's probably not a direct correlation, you know, but you think higher births, and, um, higher births usually equals lower education level. If you look at all of the data, in terms of, um, high birth rates and, and education level. And education usually equates directly to income.

• 21:12Guy Raz?

  Yeah.

• 21:13Speaker 01

  What's the current size of the business?

• 21:16Speaker 02

  We're approaching the six-figure mark.

• 21:18Speaker 01

  I would really focus on penetrating your own market first. Because you can grow the business there substantially. But it gives you the opportunity to really work out any kinks that you may need to work out before you scale.

• 21:40Guy Raz?

  Yeah, I agree. You're too small right now to work with Sprouts or any kind of national chain. But you're not too small to work with a local co-op. I mean, that could be an interesting way to try and test out how this might work in retail.

• 21:56Speaker 02

  I am all for that. I would love to be able to saturate it here and really work out the kinks, like you said. I mean, food service is high overhead, high labor. And the goal is to be able to have the service in other cities, but definitely not in some sort of rash decision or something that's not going to sustain itself.

• 22:16Guy Raz?

  Yeah. All right, Madeline Nosick. The brand is called The Nest Prep. Good luck. Congrats. Thanks for calling in.

• 22:23Speaker 01

  Congratulations.

• 22:24Speaker 02

  Thank you both.

• 22:27Guy Raz?

  All right, we're going to take a quick break, but we'll be right back with another caller and another round of advice. Stay with us. I'm Guy Raz, and you're listening to the Advice Line right here on How I Built This Lab.

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• 26:22Guy Raz?

  Welcome back to The Advice Line on How I Built This Lab. I'm Guy Raz and my guest today is Troy Carter, founder of Atom Factory and former manager of Lady Gaga, among others. And we are taking your calls, so let's bring in our next caller. Tell us your name, where you're calling from, and just one line about your business, please.

• 26:37Speaker 03

  Hi Troy, hi Guy. My name is Tyler Beck. I'm calling from Hutter River, Oregon. Name of the company is Guzzle H2O, and we build portable water purification equipment.

• 26:49Guy Raz?

  Cool. Portable for like RVs and like that kind of thing?

• 26:53Speaker 03

  Yeah, so our flagship product is like a box that's got a carbon filter, a UV sterilizer, a pump and a battery. And so it will pump, filter and purify 35 gallons of water on a battery charge, and it will fill up like a five gallon jerry can in about seven minutes. So.

• 27:12Guy Raz?

  Wow. So you can you can just like park your RV next to a river or like a lake and just get that water purified?

• 27:19Speaker 03

  Fill up your onboard tanks with clean drinking water. Yeah, so we've got.

• 27:23Guy Raz?

  Wow.

• 27:24Speaker 03

  A lot of customers that with RVs, the van size RVs are really popular these days. A lot of people just doing. You know, car camping and adventure travel, you know, in vehicles where they need to source water. And then, you know, all kinds of people with off-grid residences and like hunting camps and that kind of thing that would use a product like ours. And then we also have point of use systems that you can install in an adventure vehicle or an RV that treats the water coming out of your tank and cleans it as you use it. Cause most people with an RV don't want to drink the water that's coming out of the out of the onboard tank because it either tastes like plastic or, you know, they're worried that it's got mildew or bacteria in it. So the UV

• 28:10Speaker 03

  ensures that it's safe.

• 28:12Guy Raz?

  So that's just so you can really literally go up to any body of water, not the ocean, obviously, that's desalination, but pretty much most relatively clean bodies of water. And you can get clean drinking water from this product.

• 28:23Speaker 03

  Any, any freshwater source. Yeah.

• 28:25Guy Raz?

  That's awesome. Well, tell me how you came, came to this. Were you, are you an engineer? Is this your background? What, how'd you start this business?

• 28:32Speaker 03

  Yeah. So my business partner is actually a professional sailor and he, you know, put up a Facebook rant, you know, five or six years ago. Um, he was traveling with his sailing team and they would be, you know, at some international waterfront and there's water on tap, but to support the team, they would go buy bottled water. And so they'd get to the end of the event and the dumpster is full of single-use plastic bottles. And so he was like, wait a minute, we are, you know, sailing on the ocean. All the plastic trash ends up in the ocean. You know, we can't keep doing this. Um, so I picked up on it and I've known Sean for a while. So.

• 29:11Guy Raz?

  Sean is a sailor.

• 29:12Speaker 03

  Sean Cuvero. Yeah. And, um, yeah. So we just started like the first project was to see if we could put a drinking water treatment system in a case that they could travel around the world with. And so.

• 29:25Guy Raz?

  Wow.

• 29:25Speaker 03

  Uh, yeah.

• 29:26Guy Raz?

  And that's how it started. So, all right. So now you guys have this business going. Tell me a little bit about. Your sales, like what, what, how did you guys do last year?

• 29:35Speaker 03

  Yeah, so we did about $800,000 last year. Yeah.

• 29:39Speaker 01

  What's the price point and like, how many units is that?

• 29:42Speaker 03

  Yeah, so we've got products that range from $200 up to $1,000 is like the flagship system.

• 29:49Guy Raz?

  Got it. All right. And before we, before we dig in deeper, what's your question for us?

• 29:53Speaker 03

  I guess as a small brand trying to grow awareness, uh, how should we think about working with micro influencers particularly? Like we have a lot of people that, um, you know, YouTubers and people on Instagram that are doing, like we have people that drive from the north side of Alaska to the tip of South America. And so they'll bring our equipment. And so we have great relationships with them, but we'd like to give these relationships some longevity. And, um, we've basically found that, you know, as we call bigger influencers, they don't call us back. So we're sort of, you know, thinking if we had more structure to our program with working with these people, um, you know, we might have a little more success. Not that we're not having success, but it seems like it could

• 30:38Speaker 03

  work a little smoother and with a little more clarity for everybody involved. So.

• 30:41Guy Raz?

  Before I bring in Troy, just really quickly, how, I mean, what has it, what's been the return like on working with micro influencers? Are you actually seeing a significant boost in sales or is it a mixed bag?

• 30:51Speaker 03

  It's a mixed bag and you know, that is another reason I'm asking the question. Um, I would say, you know, it kind of ranges from you end up with a whole community that adopts your product because you picked the person that is talking to that community and it's super successful and you'll even end up with, you know, we'll end up with deals with, uh, RV manufacturers to sell OEM equipment to them. Like that would be the most successful and then sort of the least successful is you just sort of never hear from them again. So, yeah.

• 31:23Guy Raz?

  All right. Troy Carter, I want to bring you in. This is very unusual because this is not like a, a simple kind of consumer product. I mean, this is for people who are traveling RVs, boats, right? Recreational and, and that's off grid and that's, there are a lot of people like that.

• 31:37Speaker 01

  Yeah, like these, these are the kind of categories that I actually like. And what I mean by that is the types of influencers in this space carry a lot of weight.

• 31:51Speaker 01

  You know, so when you find the right people, they have the YouTube following or TikTok following or whatever else, you want to know what type of gear that they're using. You know, you you're sort of following a story, you know, and that and that's what's great about it. What I would say from a structure standpoint, figuring out some sort of equity pool with advisory shares. When I look at advisory deals that that work really well, if somebody who loves loves your product, you know, and that that part, you'll hear me repeat a million times because if it's not authentic, it's not worth it.

• 32:32Speaker 01

  But being able to call on that person a few times a year for feedback on product, helping you develop product, you know, hey, this is our next iteration. I want you to give us some feedback on how you're thinking about it. And and then the other piece too, is making sure that in some of the content that you do, that there's some sort of call to action. Because I think that's how you can really test, you know, conversion to, you know, sort of directly, but just making sure that is a is a clear call to action as well.

• 33:13Speaker 03

  Yeah.

• 33:14Speaker 01

  Yeah.

• 33:15Speaker 03

  Yeah, that's that's interesting. Those are those are great ideas. Typically, we don't even set up an agreement with these people like it's, you know, we'll have exchange emails and like, this is what we'd like to get. And I can see I'm thinking the deliverables through a little bit more and building in some things like product development and event appearances could be great. Yeah.

• 33:39Speaker 01

  So, yeah, look, you know, even with my business, we set aside advisory shares, you know, so it's it's certain artists I call, some product people I call, and they're just incredibly helpful, you know, and so and sometimes you may need somebody to do something forward facing, but a lot of times it's just the behind the scene things that actually move the needle the most. Yeah.

• 34:06Speaker 03

  Yeah, it's interesting.

• 34:07Guy Raz?

  You know, we did an episode on Solo Stove a couple of years ago on the show. It's worth listening to because the founders of that brand, they really were, they're not, I mean, they were campers, but they were not like necessarily, you know, that was their passion, but they were looking for a category and a product that they thought could do really well. And they found that campers had a really hard time just, you know, quickly building a fire in a safe way. And that's how they came up with Solo Stove. They really kind of researched the space and they came up with it. And it turned out to be an amazing product and a hugely successful brand. And I think that there are some insights in there that might be helpful for you. I mean, you're dealing with people who are outdoors, building tents, right? They're RVs, they're traveling.

• 34:48Speaker 03

  Yeah.

• 34:49Guy Raz?

  And to have a great access to great, clean, potable water, you know, is, that's simple, is a bonus.

• 34:57Speaker 03

  There's also, yeah, people that are just interested in preparedness and, you know, having, like, we've got a home product as well.

• 35:04Guy Raz?

  Yeah.

• 35:04Speaker 03

  So people just want higher quality water in their home.

• 35:06Guy Raz?

  Right, right. When apocalypse happens.

• 35:09Speaker 01

  And, you know, we've, we did, we've done a lot of work with, I'm not sure if you're familiar with Charity Water, but I've been to Ethiopia quite a few times with them on trips. And when I think about the problem you're solving is a huge market, you know, sort of outside of campers as well. So I think it's a, it's a big opportunity that sort of extends out of, you know, just the core market you're focused on, too. Sounds like a great, great business.

• 35:40Guy Raz?

  It's a cool product. The brand is called Guzzle H2O. Tyler Beck, thanks for calling in. Appreciate it.

• 35:44Speaker 03

  Thanks, guys.

• 35:45Speaker 01

  You have a new, you have a new customer. I'm, I'm gonna order one.

• 35:48Guy Raz?

  Yeah.

• 35:49Speaker 03

  All right. Sounds good.

• 35:50Guy Raz?

  Awesome. All right. Thanks for calling in.

• 35:52Speaker 03

  Bye bye.

• 35:54Guy Raz?

  Yeah, I mean, listen, judging by what's happening in the world today and, you know, all the changes in politics in our country, who knows? Armageddon might be close at hand.

• 36:04Speaker 01

  I'm a, I'm a prepper guy. You never know.

• 36:10Guy Raz?

  All right, we're gonna take another quick break, but we'll be right back with another caller. Stay with us. I'm Guy Raz and you're listening to the Advice Line right here on How I Built This Lab.

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• 38:07Guy Raz?

  Welcome back to the Advice Line on How I Built This Lab. I'm Guy Raz and today I'm taking calls with Troy Carter. So let's bring on our next call. Hello, welcome caller.

• 38:17Speaker 07

  Hi Guy, hi Troy. Thank you for having me. I'm very excited to be here. My name is Gina Davis and I am calling in from Minneapolis, Minnesota and our company is Good Thomas. We are an e-commerce gift shop for dog lovers, best known for our matching outfits seen on Shark Tank and playful gifts like the Dog Father embroidered hat.

• 38:38Guy Raz?

  All right. Welcome to the show Gina. So matching outfits, let's dive into this. You sell matching outfits for humans and dogs?

• 38:45Speaker 07

  We do, yes.

• 38:46Guy Raz?

  So your dog, I love my dog Kiki very much, but she's very little. So you could basically a dog shirt on Kiki and a dog shirt on me and we would walk down the street, we'd be matching.

• 38:56Speaker 07

  That's it. Yep. And kids too.

• 38:58Guy Raz?

  And you also make like dog accessories, like tell me a little bit more about what else you sell.

• 39:05Speaker 07

  Yeah. So we have fun little poop bags that say fresh as daisies on them. We have playful hats like the Dog Father, DeMille, not for everyone, but certain people love it. Dog mommy, things like that. So, but we, our main bread and butter is definitely the matching outfits and clothing for.

• 39:22Guy Raz?

  And you mentioned you were on Shark Tank at one point back in, because you said, when did you start the company?

• 39:28Speaker 07

  We started in 2014, actually. We were on Shark Tank in 2019.

• 39:32Guy Raz?

  And how did Shark, Shark Tank must've been huge, right? It must've boosted sales.

• 39:36Speaker 07

  It was. It was amazing. I mean, I was a big fan of the show and my husband and I went on and it actually aired in November, which is our, the biggest.

• 39:47Guy Raz?

  For Christmas, yeah.

• 39:47Speaker 07

  Yeah. Q4 is massive for us. So it was, it was great. And we made an on-air deal with Cubans. So we were very happy.

• 39:54Guy Raz?

  Amazing. You made the right person. He's been on the show. He's awesome. So, so now I'm sure you did very well then after that, but how, how have sales been since then? Have you sustained those sales or has it been, been a bit tough?

• 40:07Speaker 07

  Highs and lows, of course, like most businesses. We, that was great for our business. And then 2020 was, you know, following that and pandemic hit and we actually were lucky, one of those businesses that did good during the pandemic. So we saw continuous growth. So we decided to spend the year looking at if we really wanted to raise this outside capital through friends and family, et cetera. And we decided that the best way for us to scale was through digital advertising. We're seeing around 10x return on ad spend. So it seemed, you know, like the best way to go. Eighty-six percent of millennials said that they would dress their dogs in clothing. So the market potential was huge. So we raised that outside capital in 2021.

• 40:51Speaker 07

  And then in the summer of 2022, the Apple Privacy Act happened and our digital ad spend or return on ads went from 10x to 8x to 5x. And now we are lucky to hit 3x.

• 41:05Guy Raz?

  Wow. Well, how much did you guys spend on ads?

• 41:08Speaker 07

  That first year, it was around $100,000.

• 41:12Guy Raz?

  That was the money you raised in 2022?

• 41:15Speaker 07

  We raised 150 and 50 went to inventory.

• 41:20Guy Raz?

  Before we dive into this more, what's your question for us?

• 41:23Speaker 07

  So our question is just related to that. My question is that, you know, ads used to perform really well for us. And ever since that change with Apple Privacy, the return on ad spend has declined. And so how can we scale effectively and authentically as an e-commerce brand and, you know, make the return back that we need?

• 41:46Guy Raz?

  All right. So a lot going on here. Troy, we talked about this a little bit, ad spend, digital marketing. I mean, people are getting hammered. I mean, I, so many brands on How I Built This basically built their brands off Facebook ads, you know? They, it was like, it was like shooting fish in a barrel, right? People literally said that and it's completely changed now. You know, you spend money on an ad on Facebook or on Instagram or wherever and it just does not convert. So let's dive into it.

• 42:18Speaker 01

  Tell me a little bit about your, your, this, your social footprint and, and your social strategy.

• 42:25Speaker 07

  Yeah, so we, um, when we launched the brand, Instagram was just starting to take off and that's kind of how we grew the business so organically. Not everyone wants to take a picture of themselves in a shirt that they love, but almost everyone wants to take a picture of their dog and post it in a shirt. And so the word spread, we couldn't get inventory and stock and so did our social media following. So we have around a hundred thousand followers. Um, which is great, but also Instagram has changed meta drastically, you know, in recent years. And now we can hardly even reach our hundred thousand followers through organic posts. So they almost have to be paid to reach them. Um, so our business has just changed completely and we continue to post. Um, we work with some influencers, but it's not our main focus anymore.

• 43:09Speaker 07

  And we're just trying to figure out how to reach, you know, the massive audience set of people that would love our product.

• 43:16Speaker 01

  Yeah. And what's the, um, I guess outside of ads, is there a brand strategy that lives outside of ads?

• 43:26Speaker 07

  So we do some local markets, but it's pretty, um, you know, the, the return is pretty small there. And also our audience, I'm in Minneapolis now. I went to school in LA. Um, but our, our customer is not huge here. It's mostly LA, New York and bigger cities. Um, we've also done some trade shows to try to focus on wholesale, but we have found that the return is best spent on online, just because when we've been in retail, you see our products hanging up on a hanger and it just doesn't do it justice. People don't even know what it is. You really need to see a photo like on our website of a dog and their, you know, human matching.

• 44:05Speaker 01

  That, and that's what, that's why, what I was thinking like, you know, and that's why I was asking about the social footprint. Because this is a brand that's.

• 44:14Speaker 01

  Born for social, you know, for Instagram and TikTok. And it's almost like a marketer's dream in terms of being able to have.

• 44:25Guy Raz?

  Dog and man.

• 44:26Speaker 01

  Yes, it's like.

• 44:27Guy Raz?

  In the same outfit.

• 44:29Speaker 01

  It's like, it's a marketer's dream and then you can have a lot of fun with it. And I feel like you could get a lot of earned media versus paid media sort of based off of uh, event-based marketing. And what I mean by that, it's like, you know, fashion shows, pop-ups, you know, you know, things that you can do that that's gonna get more word of mouth than anything else. Because I just feel like you're never gonna get that return back from ads. What it is, that, that era's over with, you know? So, so I feel like the storytelling piece of it is the way you could sort of get the attention you need around it.

• 45:12Guy Raz?

  I mean, your website is great and you've got great photos on it. You've done a great job with it, really, really. And, and the pictures of, you know, people with their dogs are funny. The guy, you know, with the cucumbers on his eyes and a bathrobe and the dog with a cucumber on, on his eyes. It's very funny and it's good stuff. And I think that makes sense, Troy. How, how do they get sort of these images, you know, out there in a way that, as you say, is organic?

• 45:39Speaker 01

  So it's storytelling. So we went through, we went through a similar problem, right? And one of the things that we talked about was we have to make our social profiles valuable to artists, whether they're artists that's with Venice or whether they're with somebody else. And what we started doing was, we, we started doing case studies on artists who broke out. So whether it was Chaperone, whether it's Billie Eilish, whether, you know, whatever these new breakout artists were, we basically spent.

• 46:15Speaker 01

  A month studying how they broke and then breaking that down and then telling artists, these are the steps that this artist took and this is how you can do it as an independent artist. And it became incredibly valuable and it started traveling essentially. So, and so a lot of our customers who have come in have actually come in through our case studies. The thing is, you, you own a relationship, you know, like people's relationships with their pets are sacred. And so you finding ways to add value to that relationship,

• 46:56Speaker 01

  that's, that creates stickiness and that stickiness creates trust and trust then creates conversion. So I, I just would sort of really focus around the, the, the storytelling and probably less on ad strategy. Yeah. Are you familiar with the brand Melbourne, the golf, the golf brand? No, I am not. They're, they're an incredible case study. They've done incredible work in terms of partnerships. So they basically took a, a supreme model where they found, okay, what type of partnerships can we form that keep people coming back? So whether it's

• 47:39Speaker 01

  with a Nike or whether it's with Wu-Tang Clan or whether it's like they find these really interesting partnerships and their customer keeps coming back buying a new version of something that they bought already based off of this new type of partnership. And so if you can make it a fashion or cultural thing that sort of sits outside of just your brand.

• 48:10Speaker 01

  Is that a way to be able to get the repeat customers and sort of the the cultural impact around it as well? You know, so if it's, I'm making it up. If it's a Louis Vuitton or something that you partner with, you know, with a dog and, and human outfit, or whether it's a, you know, a Supreme, like whoever it might be.

• 48:33Speaker 07

  Right.

• 48:33Speaker 01

  But something that you, and you know, your customer better than I would ever know your customer, but just thinking about these sort of partnerships that could keep it interesting. But Melbourne, you should study that brand. Like they, they've taken the golf world by, by storm. It was a boring category. They've taken it by storm.

• 48:54Speaker 07

  That's a great idea. Thank you.

• 48:57Guy Raz?

  The brand is called Good Thomas. Gina Davis, thanks for calling in.

• 49:00Speaker 07

  Thank you for having me. Honestly, it's, it's such a pleasure and I do feel like being an entrepreneur can be kind of a lonely thing, especially when you don't have other friends that are in the same game as you. And so listening to this podcast has been truly life changing, making me feel like I'm not alone and part of a community.

• 49:18Guy Raz?

  So that's why we do it, Gina. Thanks for calling in. Thank you so much. Troy, great advice. Wow. You, I mean, not wow, I know you're a superstar. Great advice, really great advice. Cause you, you understand that it's not, you know, there's no quick, quick switch here, but I mean, you understand how quickly the dynamics are changing in the marketplace.

• 49:41Speaker 01

  It is, and you know, I, I've kind of felt bad, you know, what, cause as we're talking about ads, it's no, nobody has the answer. But I feel like entrepreneurs who, like who we just spoke with, they have stories that, that, that they can tell. And so I think being able to, you know, tell the stories, I think it builds a, a stronger, less transactional connection anyway.

• 50:07Guy Raz?

  Troy, I still remember so visually, and you guys have to hear this story, it's so good. Troy's story is amazing. You know, you were talking about when you were young, and you know, you met like, The Fresh Prince, and then you were, you got involved in like, booking shows, and it was like cash, you had to like, bring paper bags full of cash, right, in like, West Philadelphia, to pay the venues, or to collect the tickets, and you had to like, be really careful that you wouldn't get robbed. When you think about you, who you were back then, and, and what you knew and didn't know, really, because you didn't know what you know now, if you could go back to him now, with everything you know, and all your perspective, what, what do you think would have been helpful for him to know, back then?

• 50:48Speaker 01

  Not to panic. You know, when, when things hit the fan, you start feeling uncomfortable, don't panic. You know, and I, and I think the years of experience, I probably would have saved myself a lot of strife, if I knew how to take slower breaths, and just not react so quickly, or so rashly, you know, and, but the other big piece, that I think is probably even more important than that, is showing myself grace. I, I think I was really tough on myself, a lot of times, when things went, didn't go so well, but being able to give myself, you know, a little bit more grace.

• 51:31Guy Raz?

  Troy, thanks so much for coming back on the show, it's great having you.

• 51:33Speaker 01

  Thanks for having me, guy, I missed you.

• 51:35Guy Raz?

  Yeah, you too. And by the way, if you guys haven't heard the Adam Factory episode, go back and check it out, it's truly, it's so good. We'll put a link to it in the podcast, and the, in the show notes, on your podcast app, so check it out. And here's one of my favorite moments from that episode. So, what happened to the business?

• 51:53Speaker 01

  It was, it was over. You know, I didn't have the cash flow, and the phone started ringing, and it was the landlord of that building, saying, you know what, rent hasn't been paid, you know, all, all of my vendors, you know, started calling me. My house was under foreclosure, and my wife and my mother-in-law, ended up pawned their wedding rings, to, you know, to, to save the house.

• 52:18Guy Raz?

  Wow.

• 52:19Speaker 01

  You know, and with me, I, you know, I never, you know, considered suicide, but I know why people do.

• 52:27Guy Raz?

  Hey, thanks so much for listening to the show this week. And by the way, please make sure to check out my newsletter. You can sign up for it for free at guyraz.com or on Substack. And of course, if you're working on a business and you'd like to be on this show, send us a one-minute message that tells us a little bit about your business and the questions or issues you are currently facing, because we would love to try and help you solve them. You can send us a voice memo at [email protected] or call us at 1-800-433-1298. You can leave a message there and make sure to tell us how to reach you. And by the way, we'll put all of this in the podcast description as well. This episode was produced by Sam Paulson with music composed by Ramtin Arablouei.

• 53:11Guy Raz?

  It was edited by Andrea Bruce, and our audio engineer was Neil Rouch. Our production team at How I Built This also includes Alex Chung, Carla Estevez, Casey Herman, Elaine Coats, J.C. Howard, Katherine Seifer, Kerry Thompson, and Neva Grant. I'm Guy Raz, and you've been listening to The Advice Line on How I Built This Lab.