CC048: Mike Duda of Bullish // the strategic creative and capital partner behind brands like Casper, Birchbox, Peloton, and more

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Mike Duda 0:00
We want to see brands as early as possible not be so performance marketing driven because it’s tough to wean off it. Your CAC rarely goes down over time, very rarely.

Jay Clouse 0:10
The startup investment landscape is changing, and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them. Welcome to upside. Hello, hello, hello, and welcome to the upside podcast, the first podcast finding upside outside of Silicon Valley. I’m Jay Clouse, and I’m accompanied by my co host, Mr. Book Recommendations himself, Eric Hornung.

Eric Hornung 0:50
I’ve been so bad about reading this year. Jay. This will come out in 2020. But 2019 is the first year in I guess the last five or so that I’ve read under 30 bucks. Big colossal failure for me. But I did read a really good book and recommend it to you.

Jay Clouse 1:08
What was the book? Tell me about it. Actually give me some context now.

Eric Hornung 1:12
I’ve just sent you the title of the book like three times I think at this point. I haven’t actually told you anything about it.

Jay Clouse 1:18
Who is somebody somebody?

Eric Hornung 1:20
Right, “Who Is Michael Ovitz?” It’s a book about the–well, he wrote it, I believe. So it’s his autobiography. And it’s about the founder and CEO of Creative Arts Agency, which is a talent agency in Hollywood that kind of revolutionized the way that talent agencing was done and became a powerhouse. He went on to then back in Marc Andreessen and Ben Horowitz, and he’s been very tied in with a16z in the way that they’re kind of revolutionising the services space within VC. Just a really fascinating guy. I could see how he got a bad reputation and he was definitely a huge prick. And he’s a self proclaimed huge prick. But overall, definitely recommend the book.

Jay Clouse 2:10
Interesting that you say that he’s a self proclaimed huge prick given that you said It’s eerie how much I feel like this guy.”

Eric Hornung 2:17
I did not say I feel like this guy. I said, we have similar philosophies to things. I’m sure you feel it all the time here on upside when I come up with a new idea and say like, here’s how we could do it, and here’s all the ways to do it, and here’s how I’m thinking about it and all this stuff. And you’re just like, that’s not on our focus area. But it’s something that I think is interesting.

Jay Clouse 2:35
Well, book recommendations, new ideas, very on brand for you, Eric. And speaking of brand, today, we are speaking with Michael Duda, the Managing Partner of Bullish. Bullish is a marketing operating partner focused on being in the growth business. They are one part creative agency, one part consumer investment firm, and they deploy capabilities from both worlds to help brands speed the transformation of opportunities into outcomes. Eric, we first came across Bullish–or at least I first came across Bullish–as a guest on Invest Like the Best, one of my favorite episodes of Invest Like the Best. And then I had the good fortune of going to capital camp last year, as you know, because I don’t want you forget. And at one point, I’m sitting there on the last day just talking with this guy, and we’re talking about opportunities in different areas of the country. And he was saying, Yeah, I really want to get into different areas of country, but I just don’t know how to do it. And it became apparent through the conversation and I was like, are you Mike Duda? And he was like, yeah, I am. I said, you got to be on the podcast. Several months later, here we are.

Eric Hornung 3:38
Look at that, Jay. You follow a podcast, you meet someone in person, they come on your podcast. This is like podcast inception.

Jay Clouse 3:45
Podcastception. Bullish has been capital investors in Harry’s, Casper, Warby Parker, Peloton, Chloe and Isabel, KiwiCrate, Aloha, Birchbox. I’m sure you recognize some of those names because that is the business that Bullish is in: helping you recognize direct to consumer brands. They’ve also done brand agency campaigns for Anheuser Busch, GNC, GoDaddy, Pepsi and Nike. So some big names here, Eric. Really going to dig into the weeds of branding and marketing, as well as finance. It seems like they’re doing a lot of things really well, where most firms would focus on one of those things and do them really well. So I’m not sure how they do it. Hopefully we get some insight into that in this interview. Bullish was founded in 2015, based in New York City. And if you guys have any thoughts on this interview as we go through, you can tweet at us @upsidefm or email us, and we’ll get to the interview with Mike right after this.

Eric Hornung 4:43
Jay, come with me on a quest. Come with me on an adventure. Are you in?

Jay Clouse 4:46
I’m in.

Eric Hornung 4:47
Alright, I want you to start a high growth startup right now. What’s its name?

Jay Clouse 4:52
The Haberdashery.

Eric Hornung 4:53
The haberdashery. It’s a very traditional startup name. Google Zenga. The Haberdashery. All right.

Jay Clouse 5:01
Tip of the hat to that name.

Eric Hornung 5:02
That’s ih, yeah, that’s that’s a nice one. So let’s say that you go out and you want to hire some great engineering talent to get this thing off the ground. What are you gonna do? Where you gonna go?

Jay Clouse 5:12
Well, I would probably first go to my own network and realize quickly that I don’t know enough engineers.

Eric Hornung 5:17
Right, ad with a name like the haberdashery you’re gonna have a tough time recruiting.

Jay Clouse 5:20
Tough time. Tough time. I might need some outside help, Eric.

Eric Hornung 5:23
Yeah, I think if I were you, I would go to our friends over at Integrity Power Search. I mean, they’re the number one, full stack, high growth startup recruiting firm between the coasts. They partner with venture capitalists, private equity groups, and hypothetical CEOs like you, Jay, to build amazing teams for the world’s most disruptive companies. Since 2012, they’ve successfully executed over 600 searches. So that sounds like you’re starting engineers, Jay, we could get those right. We can get those with IPS. And they are on track for over 200 in 2019. Their clients have collectively raised over 2.5 billion with a B in venture funding and, hey, maybe what the haberdashery, will be counting,

Jay Clouse 6:04
If they can help the haberdashery. they can help you. Learn more about Integrity Power Search, and they may just be able to help you find your first engineers. Mike, welcome to the show.

Mike Duda 6:21
How’s it going guys?

Eric Hornung 6:22
Doing well, how are you?

Mike Duda 6:25
I’m fantastic.

Eric Hornung 6:26
Good. I have a question for you that seems to be on the minds of Twitter recently, especially for New Yorkers who care about brands. How do you feel about subway advertisements?

Mike Duda 6:39
Subway advertising. Still is very effective. I think we’ve lost the plot a little bit. If you go back to pre-2013, subway ads were dominated by lovely things like bail bonds and obscure schools you’ve never heard of an 800 numbers and Dr. Z if you have skin problems. Then this wonderful company called Casper came along and kind of brought a new kind of energy to the Subway that since then has been replicated. So it’s almost now in some sort of unwritten DTC Bible. If you are New York City consumer company, you must as a rite of passage advertise on the subway.

Jay Clouse 7:15
Yeah, I see, I see so much more on New York, like so much more relevant, interesting advertisements on subways than I do in airports or buses. But you know, it’s all public transportation. So what’s the difference?

Mike Duda 7:26
Yeah, airport dioramas are called, it’s like out of a home advertisement, they tend to be like I say, chest pounding things. So when you find a Syracuse, New York, you have Skinny Atlas Jewelers or some company I’ve never heard of, and it’s a pride piece, or like Cornell or Serkis University, it’s, it’s more like marking their territory. Turf. We work here we live here. It can be great. Again, it’s corporate responsibility advertising or like recruitment. And that’s one of the things I would say that New York City subway does, brings awareness, and there’s different ways of doing it. It also is not the most efficient medium in terms of like, cost and expense, to put it that way. But like anything, every medium or media has has strengths and weaknesses. Just using one in total capacity probably isn’t the smartest thing. But yeah, out of them now, and if you look at the subways in New York City, it’s like there’s a lot of DTC brands. I mean, the Metro North has gotten and the subway system getting smart about where the money is. But it’s like maybe time for another refresh on that stuff. But there’s still some creative ways of doing it.

Eric Hornung 8:26
How much more expensive has it gotten since you were first involved with Casper and they kind of innovated on this idea? Like, has it gotten like 10x, like how much, how expensive is a subway ad now versus back then?

Mike Duda 8:38
It hasn’t gone 10x. If you want to get in between it, so we’ll take New York City and pretend it’s its own world for a minute. One of the things we advise is like not all subways are created equal. So depending on the kind of like who your target audience is, it might be, let’s advertise on the four five six line, which is predominant on the east side and goes on the Upper East Side, although all the way down to Wall Street. And if our target audience has a persona like the up and coming Wall Street person, it’s like we want to be there. If it’s something that might be more for kids and moms of kids, it might be let’s target the Upper West Side because of what people look like in that area in terms of demographics and some psychographics. The most popular subway line continues to be like the shuttle, which gets a mass amount of traffic. So you have these things called station dominations or takeover. And there are literally a waiting list for months on end to get it. So in some ways, it’s like it’s it’s less of a 10x. Availability has gone down. You know, it’s very interesting. It’s like we talk about how digital does like geo-targeting. In many ways, you could use the subway in terms of like, target by zip codes, targeting by those elements as well too. So it’s, there’s even strategy inside what you see in subway advertising. But station dominations between Penn Station, Grand Central have gone up, and the S train is probably the most coveted train. You’re looking at 100s of thousands a month just to do that one train alone.

Jay Clouse 10:00
That’s interesting. It means it necessitates some level of scale or just success to even exist long enough to get off the waitlist for this shuttle to advertise.

Mike Duda 10:10
Yeah, and it’s also if you have relationships, certain things can fit in there whatever, and those things can last for as little as three to four weeks and last as long as three months. But there’s, there’s consumer facing opportunities to do it, and then there’s also Wall Street ones to do it. So there’s, there’s many ways to use it effectively. But certainly in Casper I think owns–owes the out of home association or the the Transportation Advertising Services of America, if that thing existed, should give some sort of like Lifetime Achievement or to Casper.

Eric Hornung 10:39
I think that’s what the IPO is.

Jay Clouse 10:40
This is interesting. I kind of want to keep going down this path of advertising because DTC, as it’s gotten kind of into my zeitgeist and into my feeds, it’s a lot of consumer brands that I do see advertising on things like Instagram and Facebook. And now I’m starting to see Peloton ads on Hulu every night. So how core to most DTC brands do you see advertising being, and do people kind of get started in that space too early?

Mike Duda 11:08
That’s–I love the way you phrased that question. Do they get involved too early? Let’s go with stereotypes, I’ll say yes. And it’s funny. We’re consumer, early stage consumer investment firm and mostly have a pedigree in marketing advertising. We want to help early stage consumer brands spend less money on marketing advertising, because if you have something remarkable and different, word of mouth should take over on it. What we find is since a lot of these found, a lot of founders tend to be like coming from Harvard Business School or Wharton or that, and, and they might know how to build a product or whatever, brand can be a warm, fuzzy thing. It’s a bit irrational. And so what we see a lot of early stage companies do is try and put finite black and white next to it. So it’s like performance marketing. So let’s spend on Facebook because then I can see CAC. And digital is so cheap, but I don’t know of any consumer that spends 100% of his or her life on digital. And different–we look at consumer journies. About depending on the product of services and who we’re going after, and it’s not an adult 24 to 44. I’ve never met a 24 to 44 year old. It’s a persona. It could be a mother of two in Columbus, Ohio, that subscribes to the New Yorker, what is she like? She might over index on going to the gym, she might over index on Starbucks. So how do we participate in what she’s doing and that everyday movement and hit the right message at the right time? From an awareness perspective, from a trial perspective, as you get closer to the pin into the store, obviously, it’s like more of a quote unquote buy now message versus a brand Halo. But we see too many people spending too much advertising too early. And I love advertising, but we think there’s a better way of doing it as a whole.

Eric Hornung 12:46
I think Jay might be the closest thing you’ve ever found a 22 to 44 year old because his actual age is 27, but according to all the machines that CEF, his effective age is like 47. So you didn’t think coming on upside, you would find that mystical magical unicorn that spans two generations.

Mike Duda 13:05
I’m gonna do a slow clap.

Jay Clouse 13:06
Classic. The beard adds seven years or so though. So you talked about a remarkable product should be able to get word of mouth that will save you money on adspend. What makes a remarkable product, and what are you looking for from Bullish when someone comes in and says I have a remarkable product?

Mike Duda 13:23
Yeah, so I’m going to speak to this as an investor with a, with a, with a marketing lens but investor purse. What we look at for an investment is a few things. One, is this a category that just needs new energy or new heat? So we’ll look for it at low NPS categories and some other things. Two is like what journey inefficiency or product problem is solving? So back in the day like Harry’s razors, why is Gillette so expensive? Why do I, when I go to Walgreens or CVS, do I have to get the guy with a lock and key to get a frickin razor? Three, is there some remarkability built inside this thing that is a better mousetrap? Look how Casper was delivered, Peloton terms it was just damn sexy bike that you wouldn’t mind seeing in your living room in a world of 1980s-looking to lifecycle machines that looked like Commodore 64, and then a chip on the shoulder founder to do things in different way. And so we’ve seen an evolution of those things where remarkability could be the product itself. Doesn’t have to be price, it could be customization. It could be like, great customer service, 100 day money back guarantee. Behaviors that the incumbents haven’t exhibited or there’s a new consumer behavior that it’s ready to tap into. And so if you do something like that, and you know who you’re for, let’s go find them. And we’re not anti-advertising for several reasons. It’s just to overly rely on Facebook and Google, and then when it comes to gets to 20, 30, 40 million, it’s like, oh, they’ve raised their rates for no reason, we’re at the mercy of it. Well, I would argue you have a strong performance marketing business, but maybe not a strong business. And there’s different ways around it. And listen, we’ve invested in companies have spent a lot of money in marketing and advertising. So there’s not one foolproof way of doing it. But, but in general, showing proof of concept and like recruiting for a certain prototype, a certain kind of archetype or persona is a great way to go to learn. And quite frankly, I think the new marketing and advertising is going to be third party retail or physical retail. Look at Warby Parker. When they went to physical retail was shocking. They found out that their most profitable customers shop online and in their stores. We have Ray Wellness out of Minneapolis. They launched the DTC brand in October. Three months later, they’re recruited into 2000 targets across the US. So go to where your consumer needs you. And there’s certain things you can do from a product, partnership, customer service, and just the offering that could capture consumers not just advertising at them.

Eric Hornung 15:40
What’s a low NPS category and why is that important? You kind of lead into that answer with find a low NPS category.

Mike Duda 15:49
Yeah, so now I’ll switch to my marketing side. Marketing people love to do buzzwords and acronyms. So we almost we speak a different language to fool people. NPS is a net promoter score, net promoter system. It’s the likelihood or lack thereof for someone to recommend your product or service. So the top score could be 100. If everyone in the world says like, Oh my god, I would go be a fuse about XYZ. The bottom score is not zero, it’s actually negative 100. And so the companies in those things are your local utility company, banks. Banks have a negative like Bank of America, it’s something like a negative 24. We like to complain about things. They’re like, Oh, my God, my utility company is great. Who’s gonna say that? So we look at that as an opportunity to invest in is like, if there’s a new math, like a new proposition that might give you a new kind of energy, might give you your energy and utility, but there might be different behaviors like, you know what, I hate paying the utility bill, but like, my company is great because they send me a text when there’s an outage or something. So we look for things in that that people might more naturally want to recommend to their friends. Word of mouth is the most powerful form of marketing and advertising and brand loyalty. It’s also the hardest to get. Not everything goes viral like that as much as we all want it to be.

Jay Clouse 16:58
If you’re outside of accompany like the utility company itself. Is there any way to find or approximate the NPS scores of some of these incumbents?

Mike Duda 17:07
Oh, the NPS, they’re scoring systems to that. And so like all these different companies and sectors have like NPS ratings. Like, if you look at Kind bar, like the better for you bar, I think they’re their NPS scores in the low to mid 50s. That doesn’t sound great, but like everyone else in the category was below 20. No one was saying, Oh my god, you’ve got to try this Clif Bar or whatever. It just isn’t. But Kind of was exhibiting behaviors above and beyond what the product was. It’s just like, the Kind of thing to do. They were giving out flowers in the Midwest to people to just have a great day and everything. So brands that exhibit generosity, which can be done early on–and not all of its scalable–but showing around will, can earn a different kind of like newsworthiness and buy-into from a consumer. As much as we all think we’re rational beasts, consumers are very irrational bunch, from the car, they drive to the GM they choose. So we, there might be certain things we don’t care about. And that’s why you’ll see certain consumers, the same consumer might shop at Tiffany’s and then go grocery shopping at Costco. It’s like, people will prioritize things in a different way. And so an NPS score, certain categories aren’t gonna ever have like awesome NPS scores, like utility companies, I think being one. Banks, there’s probably different financial services brands that can have it, but banks, legacy banks is tough to achieve.

Eric Hornung 18:22
Why is that?

Mike Duda 18:23
Just think historical. It’s like you know, pre iPhone, pre internet, I would say this role categories, it just the game had to come to you. So banks would say, we are only open till like three o’clock, we will only do this, you must come to the branch to do it. Now in a society where like, basically, companies can be formed around the needs of consumers, while legacy companies are just slower to adapt, because when you have thousands of branches, you just can’t snap your fingers and voila, make billions of dollars worth of capx changes needed to make the service better. So we might complain about it. But what are we gonna do, switch banks all the time? No. So there’s certain things like Chase Bank, JPMorgan Chase, which has a Bank One was bought out of Ohio, their app is sensational. I can now cash checks online without going to a branch. So there’s different things they can do to make my life better or easier. But basically, the old days of, you must succumb to our hours and our timeframe, the internet’s opened a lot of things up to competition and behavior changes. And so there’s a play for great, for banks, but the legacy one, it’s just hard to rise back up just because of decades and decades of the old way of doing things.

Eric Hornung 19:32
So it’s almost like you want a low NPS score, but you don’t want one that’s too low as an industry, because if someone came into you and said, Hey, I have this startup idea, we’re going to sell gas and electric to people in a city, but we’re going to do it in a way that’s super generous, and we’re going to have this great NPS score, that’s, you’re kind of fighting the wave. Am I reading into that correctly?

Mike Duda 19:51
Direction, yeah, and it’s kind of things you can’t wish for a high NPS score because at the end of the day, the consumers will be the judge on that. But it could be like this is a low NPS category, and here’s the reason why. And it could be for some of the reasons I stated. Here’s our thing, we’re not going to sell things cheaper, but we’re going to do things that works around people and do it, for instance, blink. Now let’s look at some other categories. Have you said great things about your dentist? No. But if you look at like from a, from a dental world, its Smile Direct Club is going way up in valuation. Tend, which is launched in New York City is reimagining the dental experience. So what’s great now, where we are in 2020, is that you have a lot of smart people rethinking wonderful, like rethinking problems, and why is it that way? And it’s not just like the tech hub in the 650, 415 area code around Stanford or New York City. It’s just like, smart people are attacking the 220 plus consumer categories out there and say, why is it done this way? Maybe there’s a better mousetrap. And that why it’s such a great time right now.

Jay Clouse 20:49
How do you parse between somebody who’s genuinely identified a bad user experience and they’ve made a better mousetrap that consumers really love versus somebody who just says, it seems like people are making new products around every skew, what if I just make a good looking brand around this skew? Like some better mousetrap is used kind of as a derogatory term sometimes.

Mike Duda 21:10
It can be. A better mousetrap does is abuse and I’d be a holder. It’s like I’m just gonna get a slightly better product and maybe charge cheaper. That could be a great performance marketing business, and it could throw off cash. For this stuff we look at, it’s something more seminal to that, like how does this add value or what is the value to that consumer’s life that has staying power? So if you have to rely on something that’s just cheaper, faster, whatever, those are attributes that can be ripped off in three to six months. I love Casper. We were an early investor in it. Casper changed the mattress industry for, for good. Look what happened two years later. The ankle biters came in competition came in basically taking their playbook and beating up the Sleepies and The Matress Kkings of the world. So it’s just like other ‘me too’s come in. And it’s like, so what is their, what is their way that they’re gonna compete? Cheaper? Better? Whatever. It’s like we look for those irrational attributes that transcend what values and what does the brand stand for. Because if a brand does it right, and they’re truly consumer and customer centric, they’ll keep innovating around the customer. One of the things we love about a direct to consumer, sure it could be cheaper, cuts out the middleman. That’s kinda like a DTC 2.0 of five to ten years ago. But basically, people are giving you money and you get data and how they think and act. You can interrelate with them. Yu know, go back to Casper they were getting requests from owners like you know what, dog beds aren’t any good we’d love something for a dog bed. And they took the literally the, the these, you know, one of the founders of Casper is actually NASA and had three patents. It’s just like, wow, Dog beds are shaped weird in the corner and dogs actually like to be in the corner under darkness. So let’s rethink the dog bed. Was it the biggest thing in the world? No, but pets who we consider as members of the family, that was a huge loyalty thing for that Casper user. So some of things you do, which is if you listen to your customers who are giving you money, it’s amazing what that kind of loyalty can bring back. Can’t go to far because we’d be all irrational but it’s like, it is a great feedback loop. And if you’re selling, unless you had your own physical retail and you’re selling to third party, it’s just been traditionally hard to have that feedback loop.

Jay Clouse 23:08
So when somebody comes to you, that is a Casper that has this genuinely better product, do you go and search up NPS scores that you can find for industry averages to confirm their thoughts and your thoughts? Or do you just notice it when somebody comes in that they know their stuff, and you can you can trust them?

Mike Duda 23:26
We don’t trust them off the bat. But we’re looking, we tend to be rooting for, you know, being an entrepreneur is super hard. So I won’t go down that rabbit hole. But it’s like usually, that’s something that’s factored in, because more people know what we’re looking for is like, this category has been underserved for years, here’s what we’re going to do. So we’ll look at the NPS scores in terms of other cares. We’re not at the mercy of it, but it’s a key area, like what’s the new news here on it?

Eric Hornung 23:48
When is a product good enough to start like really marketing it at an advertising?

Mike Duda 23:54
That’s a great question, because there’s not a right or wrong answer that. I will say I definitely live by the adage, good advertising, good marketing can kill a bad product, because if you bring all this awareness and it fails, it’s like you’re done. Now, what we didn’t have like five or ten years ago was star ratings. So if it’s all of a sudden you see something on Instagram feed and you go there onto Amazon, for instance, we’ll say go to Amazon, it’s like you see two stars, Ooh, that’s not good. Advertising, marketing can bring awareness, but if part of this is like, you don’t have a strong product, it will also bring failure pretty quickly, too, because more people talk about it and say, stay away. So NPS works that way too. It’s just like I tried this, it stinks. It’s amazing how there is like, there’s, there’s ways to game the system a bit, and Amazon’s become smarter about it. And I don’t know about you, but I don’t know if I fully trust when I go to a direct to consumer site and everyone has five star reviews. It’s like, really? I think there’s the level of courage and bravery when you show people that have given it less than five star. I believe more that and I think that’s actually fair. But there’s no right or wrong to it. It’s like usually, and you do have to find more customers on that. So listen, Hims went out the gate like gangbusters and used national television advertising to advertise. Others like Row and Keeps kind of was looking for proof of concept of telling who their customer is and went that way. Most VCs thought, Oh, looks like Hims has won the war because they carpet bomb and blanketed stuff and spent more money. But Keeps’ enrollment, Keeps and Rows seem to have very viable businesses. So there’s no one right way, but it’s like knowing what your playbook is and being, you know, following it. Change, certainly you have to change before you have to but there’s no, unfortunately there’s no rule that I know of that says like, here’s when you do it, bang.

Jay Clouse 25:36
You said good advertising can kill a bad product. What about the inverse? We’re sitting a month or two after Peloton’s campaign that got a ton of blowback. And some way look at that and say like that was bad advertising, but there’s also a school of thought of, you know, all press is good press. So from where you’re sitting, how would bad advertising play a role for a good product? Or is there such thing as bad advertising?

Mike Duda 25:59
Yeah, there’s bad advertising and I’d say in the case of peloton it was clearly polarizing advertising because I think the scores–and forgive me I forget the source, like 65% of people liked the ad. That’s a little bit below the norms. Usually it’s like you want to see 70, 75% plus. But what was amazing about the ad referring to like the Peloton wife or Peloton girl is you also had some groups stand up and say no, no, that was good. Like there’s a potent community on Facebook. Peloton moms on Facebook that said, No, no, that was like that totally resonates with us in terms of why we got it. And so you had some of those people go on and, and actually tack some of the naysayers. So one of the best things you have is like when something like that happened with Peloton and your customers come to your rescue on that side. I’ll let others decide whether it was a good or bad ad. I think there was a lot learned from that is my perspective on it, but will be really interesting is when the numbers come out should be coming out soon, is like did that affect sales? Did it affect loyalty, didpeople canceled? Yeah, we live in a canceled culture and social media. But you know, Bloomberg did a great piece in December how very few people actually follow up with that. We scream on Twitter like cancel and all these things. Very few people actually take the action, but they want to be heard, they want to shout because there’s no ramifications to them. But yeah, good advertise, bad advertising. Listen If it’s so bad, it’s good. Like Mentos, the 1980s and 90s had such horrible advertising that it was like actually revered. Or even things like squatty potty, which I think was brilliant, but some people didn’t get it when they launched. It was like polarizing advertising. I don’t think any news is good news, you know, in today’s cycle, but it does help with awareness. It just like be more damning than anything else. If you your first, if you’re hearing about a brand for the first time in a negative context, that, that is probably not a good thing.

Eric Hornung 27:46
So when, on one end, there’s the Budweiser puppy commercial that everyone loves. It’s got 95% people are like man, puppies, Budweiser, America, that’s awesome. On the other end, you got squatty potty, half the people don’t get, it half the people love it. And that’s polarizing. But what’s ineffective advertising?

Mike Duda 28:02
Ineffective advertising is when you’re not advertising your marketing to people who really want your product when you’re just buying cheap remnant stuff. You know the squatty, I love your examples of how you used squatty potty there. I don’t know many products that 100% of like Americans are your target audience. Maybe like if I sold air or oxygen, we all kind of need, or Google charged a monthly service. Maybe you need that. But it’s like, you know, great brands have like binary values and everything the same way. Like if we talked about sports teams, the Boston Red Sox, what makes a Boston Red Sox brand to the New York Yankees? New York Yankees and most hated and love baseball team, I believe. New England Patriots in football or Dallas Cowboys. America’s team most loved and hated based on that stuff. So it’s okay to not, you’re not for everybody. But that’s why, like brands that succeed tend know who their core audience is and model to them. And that doesn’t mean they get the proverbial Heisman and say like, we don’t want you, that’s not good business. But just like you’re not for everybody. The same way like an Audi or Lexus or car were not prepared to sell aspiration. You know what, Lexus has a 29,000 dollar car. So they have a gateway drug in so they’re trying to recruit people into the franchise. So I think it’s okay. I think it’s not only Okay, it’s preferred, like, we’re brand says, We’re going after this person and not these other people, where can we find her or him? And what kind of behaviors do they do? It’s kinda like the political system. People are, you don’t see too many people, well I’m a Democrat and Republican. Wait what? Like, great brands have some very binary features. And some of the things we’ve seen researches, oh, this brand is more liberal than its counterparts. How do you play into that? That doesn’t mean you get so political but that, that says something about the values and the, the line of sight in terms of the consumer that you’re going after. In marketing advertising, there’s so much research around what consumers are, and that’s why we, we spend a lot of time on what that consumer journey is and to understand him or her as much as possible. And that influence done well, that not only influences the right marketing, but that could be a great product or service innovation to how you can be helpful.

Eric Hornung 30:04
How do you do that?

Mike Duda 30:06
God, you guys get to do this all day? This is fun.

Eric Hornung 30:08
It’s fun. We just do this all the time. Just ask questions. And…

Jay Clouse 30:11
The hardest part is every time I want to ask a question, Eric asked a question.

Mike Duda 30:14

Eric Hornung 30:14
Do you want to ask the question? I’ll jump in here if you don’t want to,

Jay Clouse 30:17
I think it’s gonna be similar. So I’m going to ask it. You seem to be alluding to the the concept of like personas for a brand. You know, we’re selling to this specific type of person. Is it practical for a brand to have multiple personas as customers and what is the upper limit to that?

Mike Duda 30:34
Yeah, that’s a great question. Yeah, absolutely. You know, there’s usually not one. So for instance, I think the date is expired. We work for general nutrition centers, GNC, vitamin retailer and maker. For them. We basically had two core personas. It was the 26 year old guy, his name was Finn, and he worked out, he was like, early in his career, h epaid a lot of attention to protein and things like that, and there’s some more than vain elements of what looks look like.

Eric Hornung 31:01
I know Finn. I know Finn. That’s my buddy.

Mike Duda 31:03
Yeah, there you go. And there’s some other things in there, which I’ll get to. The other persona was a woman named Petra. She’s 53. She needs GNC because she needs things like fish oil that are helpful for your, your bones and your joints. And she over indexes on watching CBS morning on Sundays and stuff. Her main thing is she wants to be able to lift her grandchild up and that. So that’s a way like those are two different kind of archetypes and personas that GNC could be helpful for. How do we find those people and invite them in? For Harry’s, early on the first persona we had for Harry’s was a 27 year old male who lived in Brooklyn, did the treadmill in the morning but was reading the Wall Street Journal on an iPad and didn’t feel the need to shave every day, and had a very progressive view on politics and other things. And so there’s depth underneath that. But you start to realize like okay, who is that person and what are they index do, what do they read, what do they do what behaviors along those signs? And to the point, great, strong brands can almost doing, like if I start describing a person, you can almost guess, does this person drink this or this? So I’ll do that. New Jersey, Mercedes, tennis, Ralph Lauren, is that person drink Heineken or Sam Adams beer? You’re probably gonna say Heineken. If I said LL Bean, Visa, Volkswagen, you start feeling more of a Sam Adams. And so great brands have that personality and it’s not necessarily exclusive, but you start fitting, fitting it into that way. The same way I’ll ask Wall Street people, what’s, what’s a better car, Kia or Mercedes. A Mercedes. Why, what’s a better car? Well, how do you know that? So both companies launch a car, the likelihood is you’re going to think like Mercedes must be a better car because of its brand and its heritage on that. So, and Kia has actually made some very good cars. They’ve struggled to do cars that have like an $800 month price point. And there’s some like great technology in there. So there’s more to that, but that, that’s a kind descriptor of how we, how we view the world, if you will.

Jay Clouse 32:58
Let’s say that I’m in GNC or a startup version of GNC, and I have one persona and his name is also Finn. And I’m seeing somebody, I’m seeing a bunch of Finns buy my product and then I start to see this other persona that’s looking not quite like Finn, but they seem consistent themselves. When, when should I as a brand start thinking, Okay, let’s add to the personas we’re focusing on versus saying, nope, we’re here for Finn, and if other people want to opt in, that’s fine, but we’re focused on Finn.

Mike Duda 33:24
That’s a great question. And that’s the beauty of DTC right there. And we have that, because we were no longer GNC, we’ve invested in a company called Karev. And Karev, we thought they had a massive like, great, empathetic view because they customized vitamin supplements around your needs. I think they’re probably most quote unquote famous for the quiz. They asked you 31 questions about your lifestyle before they recommended here’s what you should take and why. So, and it was non judgmental. Like it’s like, how much do you drink a week? Zero, like 12 to 15? We’re not to say you shouldn’t drink, it’s like you need milk thistle because it helps your liver on that. And so one of the things that, that Karev, and Karev has been off the charts. We’re so proud of it. We’re lucky and proud investor and we’ve helped a little bit. They’re realizing like, wow, we’re a lot of our customers are this, and they’re asking questions about protein. And they didn’t have a separate protein mix. And then they realized instead of like, protein is very much bro-ed out, like protein build muscle, bring this. Protein is actually a life staple that you need for energy and brain development, among other things. And so they rolled out a protein powder that was actually on the Karev kind of brand purpose mission, and it was it was customized based on a few things, less than the vitamin pack. But it was it was catered to who that core audience was that was less like the, the alpha cross trainer but more like the everyday like mom that just needs to, like keep up with three kids and be on the go and where protein was a life staple. So that was their version of it. And so that was one where they saw an opportunity based on some of the inquiries they weree getting from their customer base. It’s a great question and that’s, that’s an example of an answer.

Eric Hornung 34:57
So a lot of times these companies also already exist, and they’re finding this persona in market. So Mercedes and Kia,they exist, right? They launch a new car, they know what that’s going to feel like, what that’s going to look like, who drives it, etc. But if I’m sitting there and I’m launching a new product, am I thinking through, Oh, this person lives in Brooklyn, they’re 27 years old, they’re on the treadmill, and they’re reading…what are they reading the Wall Street Journal or the New York Times? And does that matter? And I guess just kind of walk through when persona becomes a function of the business?

Mike Duda 35:31
Yeah, our answer is less in function of business but in terms of like, why your business in the first place? If you’re launching a company, what we want to see as an investor–and again, not everyone has to view the world we do, i fact, most don’t. What want to see as investor is like, how’s the customer getting screwed now? What is the consumer not getting? Where’s an opportunity to provide a better solution in some way, shape or form? a better solution could be cheaper, a better solution could be more customized. It could be something else. So when you know who you’re doing it for, you’re probably better able to understand where those pain points are. And one of the secrets within the what we love on the entrepreneur side is entrepreneurs we’ve done very well with obsess over customer service. They’re paranoid. They worry like a bad brand experience is like you can tell a lot more than 11 friends. And so, if you obsess over customer service, you probably know who your customers are. So we would say like, you know, whether they read the Wall Street Journal or New York Times, it might be a little bit arbitrary down the road, but it’s like, we know what role this plays in your life and we are going to make it right. And so it, that usually you…whether you frame it that way or not, most of our startups even early have a good sense of who that persona is and what part of it’s in their life on that, in that regard.

Eric Hornung 36:41
What’s the next frontier of advertising? Sorry, we’re changing it up a little bit.

Mike Duda 36:45
It’s funny. Advertising in the United States alone is supposed to be a $390 billion industry in 2020. And that’s insane. And you and I and others are exposed to somewhere between 2,000 and 4,000 media messages a day whether you realize or not. Technologically people are hot on like Tick Tock right now and those things. I think the big frontier in advertising is those who can measure it. I think measurement is so so critical to it. And that’s why digital was looked at as a great like, hope. Like you can measure everything in clicks, and now there’s robots that do all those things. So I think the frontier for advertising is what it should have been, it should be all along, is like, how do you measure its effectiveness? Folklore from like the 1920s or 30s, John Wanamaker said, I’ll waste half my money in advertising and I don’t know which half. That should not be the case anymore. But it’s also reason why when, when we recommend doing a brand campaign, there’s a lot of people that get like, ooh, we don’t know if it’s gonna work or not. And that’s where we go back to, there’s a marketing mix that should come into play. Like a brand could create, like certainly awareness, certain trust factors. It could also help with recruiting in a world that has currently three and a half percent unemployment/ But that could help start loyalizing bulletproofing your current customers but also recruit new ones. So there’s no one like magic bullet, like, if you only go on Instagram, you’re gonna be great. That could play a certain role. But it’s like, if you know who you’re targeting and who your audience is, you can message to them appropriately at different moments in time. We’re not anti digital, we’re not anti Facebook or Google; we just think there’s like an opioid crisis of sorts. And I’m not treating life and death as dismissively as that sounds, but like there is a drug that is like overly relied on those. And we want to see brands as early as possible not be so performance marketing driven, because it’s tough to wean off it. Your CAC rarely goes down over time. Very rarely.

Eric Hornung 38:38
If that’s the case that the future of advertising is measurement based, why are billboards on such a hot trend right now? That’s like the least measurable thing?

Mike Duda 38:49
Not necessarily. I’ll take a mature company like McDonald’s. McDonald’s might do a lot of out of home because you might be driving on a route 95 or something. McDonald’s next stop. The ROI and that could be great because I’m hungry right now and willing to do that. It could be around a special area. You can make out of home newsworthy on that. So it’s just, you know, is one that relied heavily on out of home. I don’t know how effective it was, but out of home could bring like awareness. It could also bring the validation. It could also point to a physical location. So if I’m a snack good, and I do an out of home near like a Kroger’s, I might want to do out of home advertising within a two mile radius of Kroger’s because the propensity people index high taking that route to go to Kroger’s. And so if I see a billboard, I might be more top of mind to buy like Jay’s carrot sticks or something.

Eric Hornung 39:37
Yes, Jay’s carrot stick.

Jay Clouse 39:38
Carrot stick?

Mike Duda 39:40
Why that example came to mind, I don’t know. But like, but maybe in addition to that billboard, I’m doing geo-targeting around Kroger’s that is like if I know you pass by that billboard, you might get a digital message that you’re scrolling on Instagram in the store to say Jay’s carrot sticks. So it’s like, out of home can play a role. Is a singular, just the only thing? Not so sure of. But could do things like, hey, McDonald’s two miles away, so maybe I don’t stop at the gas store to get like, you know, a Snickers bar or something. I go to McDonald’s down to, it is part of something I do in my everyday trip when I go shopping, or when I go shopping at Kroger’s on Tuesday, and I might want Jay’s carrot sticks.

Eric Hornung 40:17
If I was going to do a persona of Jay, carrot sticks would be for this thing away. So that’s amazing.

Mike Duda 40:23
Yeah, it’s uh, yeah, we’ll go back. I should then look at Doritos.

Jay Clouse 40:28
I like beige and fried foods.

Mike Duda 40:30
Yeah, there you go. That’s the thing . There’s obviously privacy concerns are up and coming. And then there’s a certain segment that doesn’t care about privacy because there’s a fair exchange. But again, the more you know about your customer and your consumer with your, your current or target, you should be able to model messaging and, and be a part of that conversation appropriately. And out of home can play a role.

Jay Clouse 40:49
There are consumers literally everywhere in the world. Are their consumer brands being built in places that aren’t coastal right now?

Mike Duda 40:58
Yeah. And that’s where we think the opportunity is. This is a podcast that probably indexes high on venture and early stage. And there’s some unwritten Bible of like, well, early stage was invented in Silicon Valley, and then Boston and New York and it’s just, the last I check if you look at the number of Americans that don’t live in those DMA’s that’s more. And because I think the startup…Has become culture in a greater way–thank you Shark Tank or, ugh, Shark Tank on that side of it. More and more everything problems are gonna be solved by people in Columbus, Boulder, Pittsburgh, Austin, Raleigh, Minneapolis than just New York and San Francisco, because it just, New York and San Francisco is not the rest of the world. And so you’ll five or less seven investments came from non-New York San Francisco markets, Sunday’s a lawn care company that like got America’s third largest crop is grass. And so Scott’s in Monsanto is like literally killing us when you look at so many things. We love that. I don’t know if that’s something that could have been invented in New York City or San Francisco. And they initially had issues recruiting investors because VCs didn’t have lawns. Right? But it was a compelling story. And you’re going to see a lot of Sunday this year, and so stay tuned on that. So, and the last I checked, great talent doesn’t have to live there. We think especially college towns or areas where you have like strong businesses. Columbus is a fertile market right now, ad I’m not doing to be pandering to this podcast–doesn’t hurt. You have like a major college and university there. So you have like a pipeline of like young talent. You have successful corporate America, there might be people like you know, I’m sick and tired of this. Or you might have those people from San Francisco that you know, I grew up in Akron or Columbus I want to move back home. And we’re seeing that and, like I’m from Syracuse, New York. You know, downtown is is like growing big time right now. And people think of Syracuse, they think of the Carrier Dome, they think of the basketball team and snow. But there is some great stuff going on there. When you look at like Terakeet, when you look at some of the great digital things going on there. Why shouldn’t that be taking place in Madison, Wisconsin? Austin, Texas kills me. Austin, Texas has South by Southwest. You don’t have a lot of venture funds down there. You’ve had a lot of innovation. You’ve had 3M and Motorola and Whole Foods there. I think you’re going to see a huge pop in Austin as a space. Minneapolis is a great area, because you have targeted Best Buys and retailers, but you also have University of Minnesota, and you have more of a creative class of people there that that exists. So I think what happens between the coasts is going to be far more important. And it always has been. Peloton, Casper, Harry’s don’t get to be those brands without winning the non-coastal. And that means being relevant. So when we invest in companies, it’s not like, ooh, is this going to be matter to someone in the 212 and 415 area code? Yes, we want those people. But quite frankly, it’s just like, we’re targeting people, will this succeed with people that are driving past an Applebee’s every day? Will this succeed in Des Moines? Will people buy a $12 juice in Enid, Oklahoma? Not so sure. And again, going back, you don’t have to win over every single DMA or say in the world, but, but to reach like some level of ubiquity and mass, you need to become relevant to consumers, not just consumers that are in the top five metros. You know, one of our challenges is like how do we find all these companies when we’re resourced the way we are. We can’t be in every market. But in the last four months, I’ve been in Winston Salem, Raleigh, Philadelphia, Minneapolis, Austin, Pittsburgh, Boulder, Denver, Sacramento, Portland. So we’re going to these, like Boise. But it’s nice. So one of the things that we have, it’s like, how do we find these areas where these ecosystems–my least favorite word–don’t exist in some of these areas just need like, there’s not necessarily like VCs, but there’s angels that might have made their money in a family business, and they’re investing some money here and there. It’s like, what we’re trying to do, and the reason why I was excited to be invited on this podcast is like, how can we be helpful? And I think what JD Vance is doing posterized the rest, he’s got his own fund is more proof of concept. I think he’s dead on right. And I think we’re gonna see more and more of that, because it just makes a lot of sense.

Eric Hornung 45:02
So a lot of times when…

Mike Duda 45:03
Jay and Eric, God Bless it, if I didn’t say it before.

Eric Hornung 45:05
God bless America. So, a lot of times when we talk to people in the cities, they are really excited about tech jobs and the future that tech jobs can bring and bringing tech jobs to, to their city. And when we talk to VCs, a lot of times the question is, okay, yes, you can, you can start a great company here, but can you grow it? Can you can you get 450, 650 software engineers in Columbus, in Cincinnati to grow to a scale that you actually need to be at to run a billion dollar company? What is scale for a product company look like? Like what kind of talent do you need? And how is that different from maybe your traditional tech software company?

Mike Duda 45:50
Yeah, it’s probably not as much, but that, that’s a that’s a real issue. Listen, we’ve seen I think the most, there’s probably better examples but, top of mind, I look at Modcloth. Modcloth was born in Pittsburgh, and, you know, I think they reached a $600 million validation to get investors who didn’t want to fly to the 412 area code and do that. It’s like, you know, move to San Francisco. Moving to San Francisco, I mean, the way I understood the story, probably killed that company. At the end of the day, it’s reliant on all these things to succeed. You need some of your rational x, you need to be naive enough to not know what you can accomplish. Kevin Plank-ism. Under Armour built a great thing in Baltimore, Maryland. It’s $5 billion company. Nike in Beaverton, Oregon. So to me, you know, what we want to see an entrepreneur is like, you don’t need cap table validation, you need consumer vindication. And if you do it right, you’ll be able to recruit towards it and turn a negative into a positive. So Columbus, Ohio may not have like all the talent in the world, but like, you know what, it’s got a lot of talent. And how do you become and make that a destination and get creative with recruiting and lifestyle? Like sell Columbus for what it is. And you know, if memory serves me, right, I think there was an apparel company that might have been launched in Cincinnati and I believe they might moved from Cincinnati to Portland because well, that’s where Columbia is and everything. And I’m like, if you’re gonna be David taking on Goliath just stay to what you know, and don’t don’t hesitate to break the norm. VCs don’t know otherwise. We give recommendations but we’re not operators. And so it pains me. I’m proud 315 Syracuse, New York–I do way too much with rea codes, my apologies. When I see there’s been some part of it today, like, some success is raising a series A and moving to New York City. I get that there’s certain draws to that, and validation. But like, there’s absolutely no reason why successful businesses can’t happen in certain areas. And especially when VCs are saying move to New York or California, you’re talking about two of the worst tech states known to mankind. That is a real thing. And that’s been said before. And it’s tough. If you’re a seasoned entrepreneur saying like, if this prominent VC in Menlo Park or in New York City is saying you need to move or else, you might want to follow it because you feel that way. But part of it is so tough, we ask entrepreuneurs to do is like, be coachable and learn and pivot and fail fast–I hate that term–and be stubborn and keep your nose down because to beat the status quo, you have to do things differently. So I think more and more, it’s going to become invoked to say, No, I want to build it here, I want to build it that. And, and as I think there’ll be some backlash that, you know, we’re, we’re handing out ninth place trophies by the capital you raise and the artificial denomination of a unicorn. I think there’s something like 480 unicorns, and listen, we market to this. So I’m as guilty. What I’m saying is build this damn strong company that’s remarkable, you will have x potential and you’ll be able to grow accordingly. But I think whatever unofficial rulebook you have to be in these markets is gone by the wayside. And it’s funny, I’ll point to like Los Angeles, which is exploding in consumer. This wasn’t the case five years ago. The Los Angeles market was a lot of entertainment talent, a lot of Asia Pacific companies based there like automotive and healthcare. It has become a startup like Nirvana in many ways, and they’re calling Silicon Beach, which I hate. Just like celebrate what you’re good at. I don’t know why they can’t succeed in other communities, because the resources, specially where there’s major college towns. You look at Yeti. Yeti is in Texas. They’re killing it. Beyond Meat. So I think, you know, if you look at examples and like, yeah, there’s been more startups out of San Francisco, New York, but, you know, our job is to identify promising entrepreneurs who are doing consumer disruptions. There is no tether or tied to have to be in the traditional places anymore. And I think we’re gonna be celebrating that more and more. And there’s not a diss to the traditional places. Those are still, have a hard high ROI of like, just total opportunities, but more and more I think we’re gonna celebrate the concept of the rise of the rest. And I think it’s great for capitalism in this country.

Eric Hornung 49:46
Are you actually running, are you running for president What’s going on here?

Mike Duda 49:50
I got scorpions in my front yard, let alone my closet. So it’s like my, my getting the viewing and listening public is not to do anything of that sort. So, it’s like, I just love consumer impacting and marketing and trying to find great entrepreneurs. I mean, there’s not too many other…there really isn’t too many other professions where I might look smarter because of the hard work of everybody else.

Eric Hornung 50:11

Mike Duda 50:12
Podcasts and there you go. Your validation is like oh look who we found on the show, it’s the same thing, it’s like, our brand is built by third party validation, which is like, we’ve been so blessed by the, by the brands we’ve been able to invest in and help, or get out of the way. And we’re as good and as bad as that.o We’re not successful yet. We’re a great idea. We’re making strong returns in certain areas, but that doesn’t mean we’re gonna do that in the future. So we’re always out canvassing so if you’re an awesome entrepreneur, We don’t care how early you are in consumer. And even if you’re not looking for VC dollars, if we can be helpful in some way. Well, gosh, darn it, like we will. The great thing about VC for all I kind of slam it, and we contribute, is it is a very generous professional sport. People will pay it forward and do things, and people have done it for us. So that, that’s what’s fun about early stage. It’s let’s cut throad then, then maybe what Wall Street looks like or more mature businesses. But yeah, there’s playing to play… play to win, too. People playing to win, too. Say that 10 times fast. So it’s fun.

Jay Clouse 51:10
All right, so or Mike, if there’s any other way that folks want to get in touch with you or follow your work, should they go anywhere else?

Mike Duda 51:19
No. Use this thing called Google and it’ll, you know, probably pop up stuff that’s stuff we’ve done or been associated with by. But yeah, that that’s–as much of a marketer, I try and downplay the propaganda, which is ironic, but what do you guys think? What did I, what did I say today was good or bad or polarizing or anything? And what do you think VCs are doing that drives you nuts? I’m gonna I’m gonna flip the funnel. This is my podcast now.

Jay Clouse 51:41
I think it was all good. I am personally interested, you know, I’m not deep into the world of DTC at all. But being friends with Webb and seeing his stuff on Twitter, you know, it seems like it seems like we’re hitting a point of people have put a lot of money into ad spend and now they’re seeing as you said that CAC does not continue to go down. And so there’s a lot of money that sounds like it’s tied up in brands that were built on performance ads that are no longer, no longer performing. And, you know, I went to LA, a few weeks ago, I guess, two months ago, and walked around Venice Beach and kind of a downtown area. And I had this thought of like, man, we are at peak consumerism here, like I walked into some buildings where they’re selling like, facial care products and moisturizers, but it’s this huge space, they’re using almost none of because everything else is just like decked out plain white and mirrors. And they want you to like, walk up and experience this soap that they’re charging $10 for. And sometimes I think, like, how much am I willing to pay for a brand versus the utility here? And I’m afraid that you know, as a consumer, my pocketbook is, is the one that’s getting eaten up by the cost of paying for a brand versus paying for the utility.

Mike Duda 52:51
That’s fair, and part of it goes to not knowing the brand. Did the founder build it for her or himself? Or do they really build it for someone in there, because it can solve a problem, but an early stage companies don’t have the scale to bring prices down and not know it. But it’s like, we’re on a mission to, like, cure bad skin, so we’re starting off with this, it’s a little bit more expensive. But over time, our goal is to do this. Like the JFK thing, we want a man on the moon by the end of the decade. People will buy into that Maybe they’ll want to pay 10 or 12 bucks for soap, they’re paying four bucks now. But you know, if that could help my skin get better, whatever that’s worth the extra six bucks and over time, so you start rooting for brands that way. But that is a great filter to have in there. And that, that’s why the less time we spend in New York City where we’re based out of, the better, quite frankly. That’s the way we look at it.

Jay Clouse 53:38
How often do you look at things that are like, must have, these are critical elements of the human experience versus nice to have and they seem to be attracting customers? You know what I mean, so like the skincare stuff, you know if it is a place of this is going to give you clear skin and I really value that as a human versus air air. No, but I mean, in the world of an economic downturn that may be coming is what I’m trying to drive to, which is Eric’s favorite, one of Eric’s favorite questions. How much staying power do brands have, what brands will survive, and what’s important to their survival?

Mike Duda 54:14
Woo. Were getting into the heavy stuff now. So your part of it is, I’ll do something from album one, which you’ve heard earlier, if you know your customer, well, you’re gonna keep serving him or her and you’ll become invaluable. The other thing is, and I fully admit, we, we don’t invest to save the world on that stuff, it’s like when you look at our most recognizable home runs, it’s an exercise bike, which has done great things. It’s a razor and blade company, it’s eyeglass company, and it’s a mattress company and others. But you know, quite frankly, it’s just the more you know about your customers that you’re serving that could do that. I’ll go more macro. I don’t think we’re headed into a recession in 2020. I think stuff will slow down, but you know, a recession is a consumer I don’t want to see, as a business person, it’ll wipe out some mediocre things that shouldn’t be in there. The wannabe startups and that side of it. So if you if you show a, your ability to add value in your life, into someone’s life as a consumer, whether that’s a snack bar that makes me feel healthier or matress for better sleep, people will will vote you in as they cut out other things in your life. If you’re a nice to have but not needed, that’s why like, it’s great, you have a subscription, as someone who has a subscription service, that’s a great thing VCs want to see, but that doesn’t mean that reoccurring revenue. You’ve got to earn that every month. So it’s like, what role is this going to play in your, in your life? So I don’t look at it as like oh, we’re heading into a recession, all expensive things, no one’s gonna want it, that is a factor, and because you’re cheap, that means like, you’re going to be okay. If like you don’t break through and you add something–and maybe being cheap is part of that, we’re seeing a lot of that in the dental business, which I’d mentioned before–why should you exist? So what a recession does is just kind of like, it’s a kind of game of musical chairs, and we thought the music was going to stop a little while ago. It’s only gotten faster and it’s gotten like, you know more, and they kee[ adding chairs. But it’s just like the music will to it and like not great businesses probably won’t do well. And not the rooting for that. But it’s just like, that’s bound to happen because history says it’s going to. So bull markets can protect businesses from going out of business anyways, as we’ve seen, or, or get recalibration on valuations, and I won’t, you know, I guess enter the WeWork plug here. So it goes down to if like, you know, here consumer bas is and you’re winning them over, you probably have a better chance of surviving and thriving in recession than like, Oh, woe is me, pack it in. Just because you’re an indulgent, and indulgence changes. And indulgence could be like, you know what, I’m not gonna go out and eat as much, but I’m gonna subscribe to hellofresh because I’m going to cook at home,even though I get it’s not cheaper,and have date night that way. Consumers are an interesting beast in terms of how they find it. I may not buy new home, but you know what, I’m gonna go spend more money on paint to refresh that other room in there which is cheaper, but I’m feeling doing something cocooning to make my home a better place to live. So there are these like kind of trade ins and trade outs based on consumer behaviors that, that a recession or negative times can unlock. But it’s… price isn’t the only thing that gets affected. So we don’t look at that binary.

Jay Clouse 57:07
I have one last hot take that I want to get because I feel like you might have insight into this and I’ve never met anyone that does. How does Mattress Firm exist and have so many physical locations?

Mike Duda 57:17
When was it started?

Eric Hornung 57:19
’60 something? ’80 something

Mike Duda 57:21
And you look at the time, how else do people procure mattresses? It was a specialization that started at time pre-internet and people need mattresses. Oh, might as well go there.

Jay Clouse 57:30

Mike Duda 57:31
1986. Boom economy under the Reagan era. Things are doing great. There probably wasn’t any specialty firms that get a mattress. I’m guessing you had to go to a Macy’s or something like that. And they could have been the authority on mattresses at the time. Now you fast forward today, and it’s like, should they be thriving? Well what’s interesting is Casper is going to open up more stores, like Warby Parker. So it’s, part of it is like, Okay, do you need all those physical locations, but also what are you doing to differentiate and be ther? Like if you know if you’re mattress company like setup in areas where maybe people are moving to, hello, Austin, near college areas like in Los Angeles, UCLA or USC, when people come into town, it’s like, I’m just gonna buy a mattress to live upside. So there’s different consumer behaviors in different categories. But you know, I’m not rooting against Matress… Yeah, I’m Casper. If ou don’t stay relevant towards it, like you will chapter 11, and maybe chapter 7.

Jay Clouse 58:21
Actually, I just, I just found they did file chapter 11 in October of 2018. I didn’t see that.

Mike Duda 58:27
Yeah. And if you look at what happened right before that, within the year of that, they did this tech campaign where they did this iPhone wannabe advertising campaign. They got Steve Wozniak to come to I believe, Houston, Texas, to speak to their firm. So like, let’s act like a tech firm. Like, I laugh at all these big companies that say, like, let’s, we’re an eight year old company that’s acting like a startup. Oh, I just want to shoot myself. Like no, you’re not. Again, go to who your customers and where you have more. But it’s hard. If your legacy company and I’ll move on. Be mattresses and you were selling through only Walmart and Kroger and Albertsons, your customers have been Walmart, Kroger and Albertsons. It hasn’t been the mom at home that’s cooking for kids. Direct to consumer world, there’s so much data so like you’d find out. So it’s like it is a new muscle memory, it’s muscle memory you got to break and a new one to import. And, you know, as much as I’d mocked them for years, Procter and Gamble is doing some very smart things now, and they had to go through a troubling period where Gillette at one point was 33% of their profits and 9% revenue. Harry’s and Dollar Shave Club came in and just wrecked that house pretty, pretty massively. You got to earn the consumer all over again. So it’s tough to be a big company on that. But there’s some big companies that are just either pivoting or using all that cash and balance sheet to buy some of these startups. So I think DTC and new consumer propositions don’t necessarily have to IPO to have a wonderful exit. I think there’s some willing homes, especially all those CPG companies sell ratings that are, that are active. And you’ve seen that with Unilever, you’ve seen it with SC Johnson, you’ve seen it with General Mills, even Walmart in a progressive way, and then Amazon keeps innovating. So it’s like, listen. 68% of the US gross domestic product is consumer. Consumer wins are changing faster than ever, we’re going to see more innovations. People have to keep, people have to keep up or get out of the way. And the the old adage, like brands, great brands endure forever, is not going to hold, serve anymore. Based on like the chapter, like, even when Twinkies looked like went out of business, people were like, Oh, my God, although no had eaten a Twinkie in the past 10 years. So if you don’t keep earning a place in the consumers shelf or wallet every day, you’re just gonna lose out. And with the proliferation of choice, because things can be done cheaper, faster, it’s like it’s, it’s not guaranteed you can win. And more and more, the insurgents who take money from the incumbents, the new incumbents aren’t gonna look as dominant as they were 20 years ago, or 10 years ago. But market share has its advantages. So it’s some level of corporate consumer Darwinism.

Jay Clouse 1:00:56
Well, Mike, we’ve kept you over here. Thanks for being generous with your time. If people want to find out more about us, we’ll send them to bullish. co and have them email But thanks for taking the time.

Mike Duda 1:01:06
And I love any feedback from any listeners or you guys. If there was any demand, we’re happy to set up an office hours just for people listening to this podcast to maybe schedule 15 minutes with myself and our team about some way we could helpful. Doesn’t matter if you could be the next Peloton or you just want to like start up your own thing if we could be helpful, love to schedule maybe something like a dedicated office hours to listeners of this podcast and keep up the great work that you’re doing. I’m a fan. So thank you.

Jay Clouse 1:01:33
Hey, listener, have you ever wanted to get a message in front of the upside audience but weren’t sure how to sponsor the show or weren’t able to do a long term sponsorship? Well, now you can just go to and let our audience know anything that’s going on in your world, whether it’s an event, an application, a special coupon or deal, or just letting them know who you are, what your company does. All you have to do is go to, and you can place an ad on this show. That’s

Eric Hornung 1:02:12
Alright, Jay, we just spoke with Mike from Bullish. I guess my first thought goes to something that’s the crux of this podcast, which is great companies can be started anywhere. And it feels like most of the companies in Bullish’s portfolio, and as I think more and more about it, most of the companies that have this big brand seem to be concentrated in New York or San Francisco. How come we don’t have any of those outside of those areas?

Jay Clouse 1:02:43
I don’t know how true that is. I’m sure there are a lot of brands we use that we might be surprised were elsewhere. You know, Kate Shillo Beardsley talked about Billy, don’t know where Billy is based, but given Kate and Upslope’s focus, I don’t think it’s New York. But here’s what I’m thiking. This direct to consumer craze and opportunity is relatively fresh. And as you and I were talking about earlier today, things that start especially in like the consumer media tech realm, the trends typically start in New York or San Francisco. And so since this is fresh, the companies that we’re hearing about now probably started five, six years ago. So it makes sense they we’re starting at kind of the tip of where a lot of them do start. But I don’t know, I think that, I think our sample size is too small.

Eric Hornung 1:03:35
Billy is headquartered in New York City.

Jay Clouse 1:03:37

Eric Hornung 1:03:37

Jay Clouse 1:03:39
Well, we had a conversation a few weeks ago, I was at a founder dinner, and Webb was their Webb Smith from 2pm. There was a guy talking about trying to hire someone really, really good at marketing and consumer in particular. And Webb was just like, stop trying to hire in Columbus. The person you’re looking for is everywhere in New York in an LA. Just go there and hire somebody there. I think that’s true. I think the concentration for that type of thing is there right now. You can find them in other places across the country. The density is much less, which means they’re higher in demand, harder to find, and more expensive for that area. But that skill set and that knowledge set is predominantly in New York because some of these things started in New York. You know, people that had experience with it are probably still in New York,

Eric Hornung 1:04:19
Just feel so weird to me that we kind of lost that in the middle of the country. When you have Procter and Gamble, which has however many brands you have General Mills, which has however many brands you have. So many of these CPG companies aren’t headquartered in New York or San Francisco. So many were started and founded in the middle of the country. And it feels like those were the first really like big boom of consumer branding. And it really, for some reason, just didn’t stay here. That innovation didn’t stay here.

Jay Clouse 1:04:48
But those companies, their consumers weren’t their customers, you know what I mean? Like they were selling to big box stores, they were selling to retail. They didn’t know who their consumers actually were, the end consumers, all the CPG companies with p&g, they’re selling to Target and Walmart and Kroger, you know. Now they’re starting to kind of reverse engineer and try to get into more direct to consumer. Walmart’s been fighting that battle against Amazon now for years. But I’m not super, super surprised about that because I think the DTC craze is more about understanding digital and how to reach an audience direct to the end consumer digitally. And that feels like a more native skillset to New York than the actual manufacturing, creating of the consumer packaged goods. Or even like the branding or the packaging itself, I see that being more than all the country, but I don’t know. I agree with you, it’s sad that like, you’re in Cincinnati, it’s sad that we didn’t keep better pace in those areas, and that they didn’t lead some of this digital innovation of how to get to the end consumer, but I’m just not as surprised.

Eric Hornung 1:05:51
That being said, those store channels are definitely still important. And we’ve heard our friend Webb talk about this. And we just heard it from Mike as well. I forget the stat exactly he quoted, but it was something like 80, 85% of purchases are still in store. So those aisles are important. And brands can’t just be thinking, just DTC.

Jay Clouse 1:06:11
I went into this interview thinking that what Bullish is doing, you know, you think about the names of Harry’s, Casper, Warby Parker, Peloton. Those are almost mythical brands in today’s zeiteist. And I went to this interview thinking Bullishmust be doing something magical. And I left thinking, what is the magic though? I feel like Mike was so humble. He didn’t like get into the weeds of where that magic comes from. He was just like, Listen, two ears, one mouth, we listen to consumers. Is it really that simple?

Eric Hornung 1:06:39
I guess if you are the youngest partner ever at a advertising agency, and you bring that skill set, 15 years or whatever he was there, you bring that skill set to venture capital, you’re going to be so much better than any venture capitalist who’s dabbled in brand building, that if you just listen and you use the experience, maybe you can’t formulate into words what exactly that experience is, but you kind of know it when you see it because you’ve been doing it for 80 hours a week for 15 years. I don’t know. It just seems like a competitive advantage that Bullish is going to have. And I wonder what other kind of competitive advantages people might have that have not been applied to VC yet?

Jay Clouse 1:07:24
Well, I enjoyed this. We ran a little bit long and I had a lot more questions about Bullish in particular, but I was so interested in Mike’s 13 year history at Deutsche and otherwise that ran out of time, Eric. So hopefully we have a part two here someday. In the meantime, we’d love to hear your thoughts on this episode. Tweet at us @upsidefm or email us Love to hear what we missed, if we do a part two, what we can ask to dig in even deeper. Of course, you can also tweet @MikeDuda on Twitter when you tweet at us and maybe he can answer you right there on Twitter. Otherwise, we’ll talk to you next week.

Interview starts: 6:20
Debrief starts: 1:02:12

Mike Duda is a Managing Partner at Bullish.

Bullish is a marketing operating partner focused on the growth business and has helped develop companies like Birchbox, Peloton, Casper, and Harry’s. Through both investment and creative services, Bullish helps early-stage companies progress in their market.

Mike has extensive experience in marketing and advertising, having served in numerous director positions at Deutsch. Our conversation today dives heavily into marketing and advertising strategies as well as some of the methods Bullish uses to currently help their partners.

We discuss:

  • Ad: Finding experienced employees for your new business with Integrity Power Search (4:43)
  • NYC subway ads (6:26)
  • Advertising too early in DTC (10:40)
  • NPS in marketing and staying relevant (15:49)
  • Identifying new and innovative products (20:49)
  • When to start marketing and advertising (23:48)
  • Peloton’s recent advertisement (25:36)
  • Next frontier in advertising (26:41)
  • Ineffective advertising (28:00)
  • Creating personas for brands (30:17)
  • Building and recruiting for consumer brands between the coasts (40:49)
  • Value vs. utility of a brand (51:42)
  • Survival of older vs. newer brands (57:07)

Learn more about Bullish:
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This episode is sponsored by Integrity Power Search, the #1 full stack high growth startup recruiting firm between the coasts. They partner with venture capitalists, private equity groups and CEOs to build amazing teams for the world’s most disrupting companies.

Learn more about or get in touch with Integrity Power Search: