Episode 42: Relaunching the Nerd Marketing Podcast—What to Expect

Relaunching the Nerd Marketing Podcast: What to Expect

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They're BACK. Drew Sanocki returns to the Nerd Marketing podcast with a co-host, Michael Epstein. They discuss what they learned running an ecommerce brand in the pandemic, the data marketing principles that apply almost anywhere, and the Nerd Marketing courses that flopped. Also, cowbells.

More About Drew Sanocki and Michael Epstein

Drew and Michael have successfully turned around three nine-figure brands, including Karmaloop, worth around $100 million. They now are the co-CEOs of PostPilot, #1 Direct Mail Shopify app. This season they’re sharing their expertise on how to grow your ecommerce store to profitability on the Nerd Marketing Podcast.

Read the Transcript ↓

My name is Drew Sanocki. Welcome to the Nerd Marketing Podcast. After five years, we're putting out another episode. I am joined today by my co-host, Michael Epstein. Michael, welcome. So the Nerd Marketing Podcast is relaunching. We've got a lot to cover. One of the things we want to talk about today is kind of what we've been up to for the last five years, what I've been up to and kind of how that informs the podcast going forward because I think the two are related. But before we get into that, Michael Epstein is my business partner for running on 10-15 years. I think I've talked about you on the podcast before, but you're also my business partner on PostPilot. And when we ran AutoAnything, you were the CMO. That was by way of introduction who the other guy is on the podcast. But Mike, I have something more important to ask you. Yeah. And that is what did you do this weekend?

What I'd love to talk about what we've been up to. The last podcast was in 2018. I started to talk more about private equity and less about data driven marketing. And that was for a reason. It was because we were we were doing this big deal at the time. As my career kind of went on, I started getting more into this operating partner, private equity role. And we acquired a brand called AutoAnything. We we which is a fund up in L.A. called Kingswood and I acquired it out of Auto Zone. Had bought it seven years prior. Didn't know what to do with it. Never really caught on at AutoZone and they wanted it off the books. So we rolled in. We acquired the property and I brought Mike in almost immediately. I became CEO. Mike was CMO. And I think that was the last podcast episode. We sort of like essentially like a five year cliffhanger. And so here it is. Five years later, the update.

And I just I wanted to sort of update everybody on what happened because I get the question a lot. It's like it just I think it provided us a good three or four years of content. Right. This was a business that was call it 100 million top line losing 10 or just approximate numbers. But it was it was a turnaround. Like this was a business that was losing money. And so I would say when I think about our AutoAnything experience, I really think about like three distinct phases. You know, there was the first year where the dictate was get this thing profitable, turn it around, solve growth. Right. And so we did in the first year we got we got the business profitable.

It was about team and culture and really changing to more of a culture of execution, bringing in people like Mike to run different groups and also figuring out who on the existing team were sort of like this diamond in the rough that could help us execute and really start cranking on DTC for this brand. Right. Because I think it got a little bit lazy when it was within AutoZone. Right. Like it was sort of I don't want to say fat, dumb and happy, but it was just there.

You know, as you would expect when it's owned by a public company, there was like really weird things going on where you had a massive finance and HR team. Really, a brand doesn't need that. Right. But it does if it's owned by a public company. So we got rid of the uniforms, got rid ofthe AutoZone cheers that took place at the beginning of every day and the beginning of every meeting. That was a little bit of a culture change there. It was one of the big accomplishments. And I think people are always surprised to hear. Of what happens when cultures don't fit right like AutoZone buys this and thinks of it as another retailer, as another brick and mortar retail presence. And so naturally, the whole staff should wear the same uniform that they wear in the stores. Right. So that was a big win taking the uniforms off and allowing people to wear regular clothes. So, yeah, first year team and culture.

Second year growth, I think we did figure out the top line growth at some point in that first year. But maybe over that next year, we came to the conclusion that acquisitions were a great way to grow. Right. So we identified two, maybe three Morris 4x4, which is a Jeep brand. We acquired that. It's probably doing ~30 million. Got it to 60, like within 90 days. 90 days, yeah. We acquired one called Leonard, which was a truck brand, one called Wheel Well. And each time it's like we had this sort of nerd marketing playbook, you know, strong lifecycle marketing, strong segmentation, but like strong way to operate a company that we put into affected AutoAnything. And then that's why we were able to to layer on these other assets in each time, achieve some pretty significant growth. I don't know what the top line got up to or even if I'm we're pacing over 200. Yeah.

So it was like in year two, we almost doubled this business. And I think certainly there's a lot we can elaborate on there. But the conversation around the office is like, all right, fellas, you know, is this IPO or SPAC? Like, which one? Let's start the road show. What's it going to be? Right. Yeah, exactly. We didn't consider door number three, which was global pandemic and supply chain crisis that that disproportionately hits automotive and really, really drives the business down and and takes all our products away. We didn't consider that. Sorry. Six million skews, 600 vendors. Supply chain is a major factor in that. Right. So it was IPO, SPAC or or that last door, which we which we did pick, I guess, that was chosen for us. And that was year three. It was really like you've lost half your products.

They're either in Asia somewhere or on the water and you can't get them into a port. Nothing is getting delivered on time. Nothing's getting shipped on time. You know, it was a conversation with the board like, what are we going to do with this? Are we going to, you know, should we strip it down and try to weather the storm and kind of live to fight another day or do we exit? And ultimately, the board decided we're going to exit because we're up from where we bought, where we acquired the asset.

So I would say those are the three distinct years. Year three was not the most fun, but certainly things we can dive into on all three of those. But I think, you know, looking back on the experience, it certainly gave me a good three years of kind of learning, learning about operations again and testing out a lot of the theory that we talk about on the podcast. And ultimately, I mean, we came out the other end and I feel like we're better and happier operators because of it. Yeah, absolutely. Great experience running teams of that size, 150 heads, 100, you know, hundreds of millions in revenue gave us real opportunity to test out a lot of this stuff and dial this in at a scale that allowed us to see the impact of these changes pretty rapidly and in a big way. And more than that. But I would say like luck goes both ways, right? Because we certainly couldn't  have predicted covid in the supply chain issues. And, you know, we got the we got the short end of the stick on that. But around the same time we acquired AutoAnything, we acquired this business Postpilot.

It wasn't called PostPilot at the time, but we always had this thesis around direct mail for Ecom. And I would say for a number of other reasons, that business took off at around the same time that AutoAnything was having trouble. You know, we had this thesis that it was an untapped channel. We acquired that in 2018. Yep. Untap channel for DTC. And I don't know that, it just kind of like it was slow growth really for from 2018 to 2021. We worked on the product. I mean, we put some money into it, but it was really ILS 14. And what was that fall of 2021 around when we were exiting AutoAnything that came out and really took Facebook away from a lot of DTC brands as a go to channel. And the end result for us was it made direct mail a much more competitive channel, more enticing, competitively priced, whatever. It just drove this interest in direct mail. And so you and I made the decision to go all in on PostPilot starting early 2022. And it's just been a rocket ship since then.

So that kind of brings us up to date. And certainly, for you, the listener, you're the person who's running the DTC brand, I think you might wonder what will you get out of this? Why do you care? I think there's a number of things in our AutoAnything experience that we can talk about. And also over on the the PostPilot side, we're at the point now where we have 4,000 or so Shopify brands on the platform. And what that does is give us a lot of just a pretty big data set to talk about and kind of what's working in e-commerce, right? By category, by size, not just in direct mail. I mean, just broadly speaking. So, yeah, that's kind of what we want to get into. Yeah.  

That brings us to today, the relaunch of the Nerd Marketing Podcast. And I think about kind of three things we learned from our auto anything experience that really will inform this podcast going forward. Essentially, like the three things we want this thing to be about that I think are more relevant today than ever. And the first is that the nerd marketing approach, call it nerdy marketing. It works like it worked at auto anything and it worked at the three brands we acquired. And just this general idea of focusing on customer lifetime value, segmenting your customers the correct way or any way. RFM, the idea of recency, frequency, looking at your customer base through those database lenses, right? Works. AutoAnything, you know, like we mentioned, we got that business that was losing 10 million a year, profitable, largely off of lifecycle marketing. Morris 4x4 went from 30 to 16 million, largely off of like lifecycle marketing.

And in Leonard 4x4, another success in a very short period of time on the top line because of our emphasis on segmentation. Automotive was a great playing ground for sort of our nerd marketing ideas. Because if you think about it, every year make model of a vehicle represents like a different customer type that you can really drill down on and build sequences around. I think we kind of pushed Klaviyo to its limit, right? And flipped a lot of success into SMS and direct mail.So that's kind of like our first takeaway is that it worked. Yeah, it just became the playbook that we ran. And each time we acquired those new brands, we ran the same playbook and we had really similar results. And it just really proved out these principles. The other thing I think we learned, Drew, is how to operate, with a PE, private equity mindset as opposed to the VC mindset, which was kind of growth at all costs. And in a lot of cases, unit economics didn't necessarily matter as long as you were still growing. And I think in the environment that we're in right now, it's just that much more important to have a little bit more of that private equity mindset of profits over revenue. And building a sustainable business with good unit economics.

You're not worried about just making it to your next financing round. You're growing in a much healthier way with control over your OPEX, your operating costs, control over your margins, and understanding of your business and the profitability of your business. And that's going to ensure that you're set up for success over the long term, regardless of the sort of economic environment that we're in now or in the future.I feel like we both kind of been beating this drum throughout our careers. My career in DTC started in 2000. I think you were of the same vintage, right? Yeah, it was always like run a business for profitability. There was no other way. There was no way. I mean, it was especially. Yeah, I mean, we started our businesses as, I guess they were called ultimate, at some point lifestyle businesses. But the idea is like, okay, you're taking profits out of this thing. And as we both got into private equity, we realized, okay, this is how that industry thinks about things, right?

It's cash flow. It's maximizing the discounted cash flows of a business. And so it's always been our mentality to run a business that way. And really, I feel like the market got frothy the last five years where DTC became this thing where you'd take venture money and kind of swing for the fences and you'd never generate any profits. And I'm not sure it worked out for many brands. I mean, we can all think of a handful that were able to achieve some success doing that.

But I think it's the exception more than the rule. Probably an interesting thing to dig into. I think of Moisette Native. I think what every D2C brand wants is that big exit to P&G or to something like that. We should get some data around that. Is that the exception to the rule or dollar shave? Is that going to happen? Something to depend on? Or should we run the business for profitability? And my gut says profitability wins, right? It increases your odds of success long term.Absolutely. And we see that now. I mean, the likelihood of that outcome in this current environment is extremely small. We know that investors are looking for profitable businesses, not necessarily businesses that are just burning for the sake of growth.I think everything we talk about on nerd marketing too is around ROMI, which is our own take on ROI. It's all about marketing. As a marketer, you're an asset allocator. You have to put your dollars on the programs that generate the highest return for the business. And the return is gauged not by ROAS or purely on revenue.

There's got to be some nuance there where you're looking at the profitability of each channel. And what's the best way to do that? Contribution margin. Yeah, exactly. Awesome. So number one, nerdy marketing worked at Auto Anything. Number two, there's a lot to be said for running for profits over growth. That's going to be a core focus of the podcast. And I would say number three, actionable matters. There's a lot of theory out there, but we're all operators. I'm an operator. Mike is. I'm sure most of the listeners to the podcast are operators. It's like, what does this mean for me and what can I execute on today? No ivory tower stuff. And certainly a lot of this stuff is rooted in theory. But when the rubber meets the road, it's like, what's going to help me grow my business, grow my profits in private equity? Working with three or four different big funds, they all speak the same language. They talk about 30, 60, 90 plans. Like when they acquire a company, they want their investors to see a win. And it's not like a win over the next five years. They have always wanted the 30, 60, 90 plan. Like what are you and your team going to do over the first quarter, the first 90 days to turn this business around or to start dropping cash to the bottom line? So in many ways, that 30, 60, 90 is built into my DNA of operating a company. It's like, okay, what are the wins that are going to happen now?

One of the tools in our playbook that we can certainly get into on a future podcast is how we tend to cut all projects that are sort of going to pay off beyond that 90 days. That's sort of like one way to get the cost down and also to focus the team. So I think we want that to extend to the podcast going forward. When we talk about something, we want it to be actionable. We want to leave you with something that you typically can execute on that week, if not that day. That's sort of the perfect podcast episode in my opinion and what we want to aim for with nerd marketing going forward. Yeah. And I think we'll talk about how we build that backlog of ideas and how we prioritize that backlog. Because I think one thing that sucks up a lot of operators' time is chasing those shiny objects, focusing on priorities that you might be able to get done in that 30, 60, 90 day period, but don't necessarily move the needle for the business. So understanding that matrix of ease of execution. Yep. Drew pulled it up for those that are watching live.

Ease of execution times level of effort gives you sort of a scoring system. It really helps you narrow down what you should be focusing on. We'll also talk about some of the frameworks that we've used successfully in the organizations that we've run, like OKRs and the traction, the EOS operating system, to ensure that the team is focused on the right priorities and not spreading themselves too thin and ultimately not able to accomplish any of these things because they're just taking on too much.This is sort of a teaser of kind of what we can get into. One thing we do, we have a very specific approach to a turnaround. So I would say we've probably done it three or four times now. For me, dating back to Karmaloop, if you guys remember me talking about Karmaloop in like 2015. But you get into the business and one of the first things we do is develop a sheet, a backlog like the one that I'm showing you here. And you're essentially ranking everything the business could be doing in various categories by ease of implementation and expected outcome. And the spreadsheet kind of calculates, you know, given those two scores, what are you going to focus on the next quarter? It's a great approach and it's a good way to focus the team. And we will, looks like a lot of people want this spreadsheet. We certainly can flip you some version of that. I think next podcast, next podcast we have, yeah, the top five things we do when we take over a company.

But we certainly could provide the spreadsheet in that one. Yeah, so that's it. Those are the three things that our AutoAnything experience sort of inform about this podcast going forward and things we want to bring to the table in each episode. You know, when we when we talked about relaunching this, I looked back on nerd and we did have nerd marketing being the blog that I that is related to this podcast. Nerdmarketing.com is where I've blogged in the past. We had a couple of courses there. I think we had like we had one about retention. We had one that ultimately I went I sold through CXL, PEPL, E-commerce, Masterclass, I guess. I did have five other courses that didn't do so well. We kind of failed over the years. So it'd be nice to kind of give you I guess the top five the top five courses that that.

Yeah, let's hear the top five courses. The top five nerd marketing courses that maybe never saw the light of day from Drew Sanocki or or we we thought about doing when we were. Some of these launched and they just didn't didn't do so well. Like I would say number number one or we'll do it. We'll do reverse or number five. The fifth failed nerd marketing course was SEO shortcuts. How to rank number one on Yahoo, Ask Jeeves and Squidoo Lenses. Yeah, Squidoo Lenses, Mike. So Seth Godin started this thing called Squidoo. It was essentially like a page where you could aggregate stuff. You know, if you were in the SEO game in. 2005 or something, you put a lot of effort into Squidoo lenses because it was like it would drive you traffic. And so I had the course on optimizing your Squidoo lens.

That's the short that is the SEO shortcut. It's still applicable today. Forget Google. . Forget even Bing. We should get an expert on Squidoo lenses here. Like there's probably still an expert out there.Yeah, and they're probably charging.They're probably charging for a course. Well, they don't they they don't exist anymore. Google killed it. The Penguin. I was reading this last night. The Penguin update killed Squidoo lenses. All right. So that was number five. Number four. The ultimate guide to AOL instant messenger prompts. And that was a 20 DVD set I had. This is right before. The precursor to chat. Yes. I had this whole course, a 20 DVD course on how to optimize for AOL instant messenger prompts.Yeah. The head of your time. Yeah. If only people had taken that course, they would have been killing it on GPT-4 today.I probably in the garage have about 5000 DVDs. If anybody wants this course, let me know. Number three. This is I remember this course. Well, this was probably 2002, but I had a great course. The 10 best Yahoo store themes for conversions.

So it was like how to optimize your Yahoo store for conversions. I said I'm going all in on Yahoo stores. We had a complete suite, I think. This was conversion rate on this store and one click upsells and all the bells and whistles for your Yahoo store. That course I think is still available if you...I'll give it to you free. You're looking to optimize your Yahoo store. Yeah.Okay. What are we at? Five, four, three. The second most popular course I've ever had. Popular failed course, that's a thing. Latest design trends, powerful clip art, comic songs, animated mailbox icons. This was a design course. I remember like animated mailbox icons were a thing. Like when you had mail, the flag went down on your site. Do you remember this? Yeah, of course. And yeah, comic sans, always the go-to font. Sans or sans? Sans. I'm not sure. Sans or sans.Yeah, that was a great design course. Can learn a lot from a course like that. I would say number one, the number one top failed nerd marketing course was optimizing your MySpace funnels.

This course ran from 2000 to 2005. It was all about the things you could do with MySpace, MySpace funnels. I was kind of like this MySpace funnel and conversion expert. Had a whole agency around it. And just like Facebook, we would only optimize by taking the recommendations from the MySpace ad support reps. Right. That's how you learned how to optimize those funnels was you just listened to exactly what they said and implemented exactly what the reps told you to do.Right. So those were five failed courses, probably still all available in some form or another. Reach out, got any questions, happy to give them to you. But that concludes this segment. Give me a cowbell. Cowbell segment.

Well, that's a wrap, Mike. It's good to be back, man. It's so good to be back. We have some kicks to work out. We got to work on the transitions. We talk over each other maybe a couple times, but that's to be expected. But you know, it's been five years. Crazy. It is crazy. So next week, let's wrap this one up. Next week, we're going to just really go deep into the five things we do when we turn around a company. I think it's a great episode because it's sort of our playbook. Turnarounds are applicable to a lot of businesses because it's essentially how to get profitable quickly. And with that, if you have any questions, because this one is live, I would say ask some questions. For the podcast audience, we'll talk to everybody next week. Thanks for joining us on the relaunch of the podcast.

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