How to Grow a Brand Profitably with Brandon Park of 100 Thieves

Announcer:

Welcome to Nerd Marketing, an original podcast for ecommerce operators and marketers looking to level up. Drew Sanocki and Michael Epstein will bring you actionable strategies from their decades of running eight and nine figure brands along with interviews and insights from the leaders of some of the most successful brands in the world.

Drew Sanocki:

Hey everybody. Today I talked to Brandon Park who runs marketing at 100 Thieves. Check out 100 Thieves, really cool, brand big in the gaming category. It's rare to talk to another fisherman who fishes in the same lake, that lake being private equity backed holding companies and roll-ups and growing businesses for profitability and not just top line growth. Brandon's done all that and so it was really interesting to hear his insights on how to do it. He was previously the CEO of Homesick Candles, which is a candle brand owned by Win Brands Group. So without further ado, Brandon Park. So what do you want to talk about?

Brandon Park:

I think we have a lot in common, actually. I have seen and been following your Twitter for quite some time, have heard about you from a number of different people. I think your ethos is something I ascribe to, which is basically you don't have to burn cash all the time. DTC is still a business, so at the end of the day, I think you want to make a little bit of money and I think that's something I have ascribed to for a number of years and I think it was probably what was lost over the last maybe three to five years. And I think that's kind of the reckoning that the whole industry's kind of going through. So that's where I always kind of followed along what you had to say with rapt attention because it really rang true for me. 

Drew Sanocki:

Yeah, I was looking at your background too, and I think it's rare to find somebody else who's kind of played in that private equity side. I'm generalizing, but the emphasis is on cash flowing businesses and maximizing the discounted future cash flows of a business.

Brandon Park:

There's also pressures, I think, from investors, the different types of investors that we work with as a holding company and also obviously on the PE side where you kind of have an expectation where you're not going to just burn a hundred percent of revenue every single year to fund growth. I mean, that was never the approach that I took, and so it was nothing that I ever thought was that interesting. I always thought of everything like a grocery store, a laundromat, a gas station. It was just like how do you grow and make a profit? And it's just in the case of DTC and e-Commerce, I think the hurdle rate for growth is just a little bit higher, in some cases, a lot higher, but you're still trying to make money.

Drew Sanocki:

Was Homesick your first kind of turnaround? Would you call that a turnaround?

Brandon Park:

I would call it a little bit of both. So I was at Win Brands, which was just acquiring businesses that actually happened to be our first acquisition. It was a pretty small business, it was about 3 million or so in top line, just about breakeven. So obviously at that size, not making, not really in the middle of the wheelhouse in terms of our thesis of scaling brands efficiently, but I would say it was a little bit of growth with a sprinkle of a lot of p and l fundamentals to help scale and fuel that growth.

Drew Sanocki:

I mean, it's a success story. You got that cash flowing and growing pretty quickly.

Brandon Park:

I always viewed that business through the lens again of just what are the key buckets on the p and l? What are our goals and what levers do I have to pull? And for me, it was always okay, on the revenue growth side, the business was born DTC, so it was the classic A OV basket traffic. How do you maximize those pieces of the puzzle? And for us, day one, it was traffic is the hardest piece of this. And so that was one that we really wanted to hack right away. So our strategy was to leverage everything that didn't have the meta Facebook or Google or Instagram label. So he really tries to minimize spend there to keep things very, very efficient. And how we went about acquiring those eyeballs was through partnerships, through collabs, through other larger brands, PR machines. So our first major project that we did was we did a collaboration with Dunkin Donuts, now known as Dunkin.

And we launched a couple of candles that smelled like some of the Dunkin Classics. And as part of that deal, they leveraged the entire full force of their PR marketing machine on social through TikTok, through PR, just standard press and publications to really shine a light on that. And what was great about that was we were known as the sort of cool Gen Z, millennial vibey fun product. And I think Duncan really wanted to be a part of that. And we of course benefited because just the Duncan brand is so well known that we were able to reach outside of our core onion. So we did that quite early on. That was in 2019, and we quickly realized, okay, hey, we have a stable core of products that are high margin, high volume New York State candle, for example, Southern California candle, the ones that sold all the time.

And we would use these collabs to sort of up the ante every single time, grow that onion a little bit, grow more eyeballs onto us so that down the line we do a little bit of remarketing. We're not having to prospect so much. People are more aware of the brand and they're coming back to the brand. So that was our strategy on traffic. And then the other buckets on the p and l, I mean for me there's three major ones. There's fulfillment, there's cost of goods, and then there's marketing, which kind of gets bucketed in with a whole bunch of different things. But the first area we focused on was on cost of goods. So initially the brand was producing candles, kind of hand poured, running like a few hundred at a time, very, very, very low efficiency. So we quickly dug in there, we said, how can we order just the glass of thousands of pieces of glass?

How can we order the labels and then be able to print on those labels down the line? How do we scale this so that the costs of goods are somewhere where our product margins were 85% plus? So that was number one. Fulfillment. It's a kind of a heavy product. It breaks. So we were very, very conscious of let's minimize breakage. We figured out how to best create packaging where it would be able to make it to its destination without blowing up or cracking basically. And how do we also optimize the number of different products? So we really pushed people to buy two because we knew at two all the carrier rates we scale at one, we are just about breakeven. So that was the area there. And then on marketing, like I said, we tried to do everything but spend money on Facebook, Google, Instagram, so that included a little bit of direct mail in 2019. We were on podcasts, we were on the radio, a lot of pr. We have an in-house, we had an in-house PR team that was just running 24 7 short, medium long leads. And those were the main three buckets that I looked at day in, day out to make sure that hey, we're growing, we got eyeballs, we got traffic, but also the rest of the p and l is looking healthy.

Drew Sanocki:

That's awesome. That's textbook man. The three multipliers on the only ways to increase revenue, more traffic, more customers, higher basket size or AOV and then retention. And it's like you did the top tactic in each one. Did you increase prices at all? 

Brandon Park:

We did. We did, and we debated over that quite a bit because the first time we took price was in 2020, actually April of 2020, which of course was kind of a scary time in the grand scheme of the world, but it was just something that we saw our costs increase. We knew we had to, we hadn't taken price in three years, and so it was part of the plan to do it and we kind of just stuck with it. But I think what helped us was we were very upfront with at least our existing customers in explaining why we were taking price. It was part of the business. We were seeing our cost increase. We had an increased price in three years, and actually what we saw after we increased price was we did a whole analysis price elasticity and looking at what we thought might be the drop in volumes, maybe 25% we estimated, but we actually saw that volume stayed stable and then throughout the course of that summer they grew. It kind of had the natural covid tailwinds, so we didn't really see a drop there, and I think just being open and transparent was really helpful.

Drew Sanocki:

That's great. We did that at Overtone. It worked really well. We increased the price. It worked, and then the first thing the board said was like, okay, increase it again.

Brandon Park:

We actually got the same feedback. It said, it looks like you might have room for a couple more dollars, but we held the breaks at least for the next 12 months.

Drew Sanocki:

What is it? The candle space? The candle categories, surprisingly one of the most innovative I think in DTC. I remember Justin Winter in Diamond Candles, his story 10 years ago or something. It was all about driving down the cost of acquisition. For him, it was rethinking the viral element around opening the box that he had all these customers posting it to Facebook so he didn't have to spend a dime on ads. There was a community around opening the box of candles.

Brandon Park:

I think that's one of the interesting things about anything that's olfactory or has to do with taste is that we had an opportunity to choose whether we wanted to be a scent business, like the Dipti of the world, the super high-end Sr tr Dawns like the French fragrance houses or even the Yankee candles, the mass kind of appeal. Where we decided early on was we were going to be in the business of creating memories and evoking memories. So we never called ourselves internally a candle business. We were in the business of memories. So it was Grandma's kitchen, it was Hanukkah, it was Southern California, it was India, whatever it might be, and then it became Bush Stadium. Now the business is doing Barbie collabs and all these different things. So it's about nostalgia. It's about creating something that's more than just lighting your candle after you cook or something. It's about evoking something every time somebody chooses to light that candle. And I think that's what gave us that advantage was that, hey, look, we're not Diptique. We use the highest quality fragrances. We have the best quality cotton, wicks, organic, all natural soy-based, all of those things. But we were never in the market saying, we're the best smelling candle you will ever buy. We were an affordable candle that brought you back to something that you really loved. And that was what we built our business on.

Drew Sanocki:

It's an organic all natural smell of Bush Stadium in your house.

Brandon Park:

Exactly.

Drew Sanocki:

Kind of curious now, what was Bush Stadium smell like? Is that hot dogs and stuff, or did you guys go like the locker room at Bush Stadium?

Brandon Park:

A great example is early feedback for our New York City candle in social on Instagram, in our stories and everything was New York must smell like fill in the blank. 

Drew Sanocki:
It doesn't smell good. I got to say the subway does not smell good. If you went New York subway candle,

Brandon Park:

Exactly. The subway, the sidewalks kind of in the middle of August can get a little gnarly. We evoked Central Park, the smell of fresh cut grass, pine, all the things that you could relate to on a level that doesn't relate to some of the bad stuff. So similarly for Major League baseball parks, yes, I mean like hot dogs, but the smell of grass if San Francisco, the cool Sea breeze coming in off the bay, those types of things. So we took some liberties in suppressing some of the nasty stuff and really bringing to light and emphasizing the good stuff.

Drew Sanocki:

That's such a fun job. I assume it was somebody, maybe you were coming up with the smell. I don't know. I think stay tuned. We're going to work on a nerd marketing scented candle this podcast. 

Brandon Park:

What would be your scent? I

Drew Sanocki:

Think the smell of freedom. Maybe the smell of data-driven marketing.

‍

Brandon Park:

I love that. So I'm thinking about Mountain Breeze. We should chat.

Drew Sanocki:

So you didn't sell that company. It's still within the Win Brands Group portfolio, right?

Brandon Park:

It's still within the Win portfolio still chugging along and it's been a couple of years since I've been there, but they've since acquired other businesses doing very well, adhering to the same principles. So it's one of the few businesses that I hear of aggregators, so to speak, that continue to stay growing and stay profitable.

Drew Sanocki:

So I mean I haven't checked up on Thrasio a while, but I'm guessing that was one of the more famous aggregators rolling up Amazon businesses that really didn't have a lot in common and I think they've struggled and yet you guys, I ran an automotive rollup that did well I would say until Covid and then it didn't because we ran out of supply. But that's probably not fundamentally related to the thesis around a rollup. What would you say were some reasons why Win Brands is succeeding with the rollup concept? 

Brandon Park:

I think embracing number one, similar brands that have similar audiences just naturally allows the business to target audiences in a more efficient way. Not necessarily through Facebook or Google any sort of paid acquisition, but even just through the adjacencies that are created from a business, Love Your Melon and Homesick, they just go so nicely hand in hand. So I think that's one, and I think number two is I think it was employee three there in 2017 before this concept of aggregator was kind of mainstream. We really embraced this sort of multi-channel approach. So we were never going into a room saying, no, we only sell online directly to customers. We own the first party data. We want to own everything. We were never about that. We always said, look, let's strategically go into Amazon. Let's become a seller in the three P marketplace. We were totally open to discussing all the inbounds that came in.

Actually in the early days we didn't even have the infrastructure to deal with retail, but we had those conversations and we kind of Jerry-rigged, no EDI or anything like that. We managed shipping goods to Saks and a few of the sort of large retailers as well. So we were always open to all of the different channels, but only insofar as the margins made sense to us. So for example, we would always launch into Amazon thinking about how we would assort so that we wouldn't have a hundred percent overlap of SKUs. We could sell some things that were DTC exclusive, we could sell sort of the heavy volume hitters on Amazon to make sure that we were hitting those billions of eyeballs every day who are coming in. And then we wanted to create special items or really put in only the bestsellers that made geographical sense, for example, for retail.

So in New York we would stock it full with the New York State candle, New York City candle, we would do the same in Charleston, we would do the same in Southern California. So we tried to be very strategic and we opened our arms to all those different channels very early on because already at that time you're starting to see the stories of the digitally native, the DN, VBS kind of doing this a little bit and starting to open their own retail stores and trying to figure out the unit economics of being in retail and all that. So I think that was a big advantage that helped us with that. I don't think a lot of the larger aggregators necessarily have embraced yet, though. I think they will.

Drew Sanocki:

It's definitely a theme. I think that's been in our last few podcasts because I mean having worked in private equity, the private equity funds love the concept one plus one equals three. You add businesses onto the portfolio company and can take costs out every time. You only need one accountant, you only need one HR person. And then you've got Warren Buffet who sort of famously has never done that. He owns so many different businesses and he says synergies are kind of BS.

Brandon Park:

I think the key differentiator between the really successful aggregators and the ones that are kind of continuing to find their way is that if I use Win as an example, we really wanted to level set some of the key line items on the P&L. So for example, in terms of fulfillment, every time we acquired a business it was a different 3PL or a different fulfillment sort of like system. We set all of those to be within the same three pl. We use a three PL partner and that just creates scale. We become a business that's doing a hundred million of revenue rather than signing an SOW for a brand that's doing 15 million. So I think that was really, really important. Something that we committed to very, very early on. Some of the aggregators, they might own a hundred brands and they've got 43 different three pls, and I think that's where the larger you get and the faster you grow, it becomes harder to integrate. And then when you're still using QuickBooks for example, and you try to integrate a hundred entities backwards into NetSuite and then you try and figure out all the accounting going back a few years, it gets a little messy. So we really, from the beginning, we believed in growing in a sustainable way. So we never added 20 brands in a year. We took one brand, made sure it was integrated, we're operating efficiently and we continued.

Drew Sanocki:

You left Homesick and Win Brands and you've gone on to now run marketing at  100 Thieves. Would you call a 100 Thieves a rollup? Because there are three brands, three or four that I know of, right? All under the same or at least in the same office in la.

Brandon Park:

I should note that I was at one of the aggregators that is a competitor to Thrasio that was very, very focused on Amazon, only called Branded. Since then, I have joined a 100 Thieves and what I call a 100 Thieves a rollup. It's not the strategy of a 100 Thieves to actively go out and acquire businesses. What I found interesting about Hundred Thieves was that everything that every consumer brand buys for hopes for in terms of creating a community and an organic sort of audience, 100 Thieves has naturally just by virtue of it being a creator led and a creator founded organization. So what I found interesting was that there's so many different eSports organizations out there that don't take advantage of that audience in a meaningful way to create a connection, whether it's through products, selling things, selling products that that audience might enjoy and that might create a connection with those founders and creators.

Nobody else was really doing it, say for a few folks out there selling merch basically. And so it's been very interesting because they have this revenue multiplication. Basically you have those three sort of line items. Traffic again is kind of not at the top of our list of trying to grow or desperately try to solve all the time. We know we have a very active, very engaged audience, and so the key becomes creating products that are truly special that resonate with that audience and then growing that audience into adjacencies where we can sort of build the total scope of people who are interested in our brands a little bit more. That's the thing that I found the most interesting is it's almost got a built-in eyeball machine. And so what we have to figure out is looking at those other levers that we talked about on the p and l, making sure that we're pushing and pulling the right ones and we're scaling in such a way that we continue to be profitable. The growth has not been a challenge, I will say.

Drew Sanocki:

Did you know what they were when Hundred Thieves reached

Brandon Park:

Out? I did not know. And funny enough, I did not know anything about gaming before I joined a 100 Thieves.

Drew Sanocki:

We should probably explain. I have a child who games, so I know John invited me, who is the CE president of Hundred Thieves invited me to headquarters in LA and you go into this big black warehouse-y building, the compound they call it in right Inside are sort of their equivalent of the Super Bowl trophies from gaming competitions, call of Duty, I don't know. You would know the Games now. Better

Brandon Park:

League of Legends and Valant.

Drew Sanocki:

Yeah, the big ones, right? They are a sponsor of gaming teams. The top gaming teams are a 100 Thieves gaming teams. They train in the building. There was a simulator there with a bunch of teenagers, 20 year olds and a coach who had a clipboard.

Brandon Park:

Yes. Oh yeah, full on. We have coaches, general managers, our SVP of eSports runs and manages that whole business. Yeah, it's a major organization for sure.

Drew Sanocki:

There was kind the one-way mirror. You could stand behind the mirror and you'd watch these kids' game and they're taking notes like, Hey, John's a little slow on the whatever. Yeah, that was cool and impressive. And then the whole place had that vibe. There are controllers everywhere in keyboards, and I knew there were three or four brands that you operate out of that facility.

Brandon Park:

Yes, three brands. So kind of our legacy, our kind of claim to fame is the apparel business. So we take merch, we dare not call it merch because we create something that is more akin to sort of a Stone Island kit. This is sort of what we believe our brand can represent and can be. So we have a street wear apparel business called Hundred Thieves, the namesake. We have a energy drink business called Juvie, which was just launched in October of last year and is growing just like a weeded. And we have a gaming peripherals business, keyboards, a mouse pads, all the peripherals that go into your sort of gaming setup and station called High Ground. High Ground and juvie are quite new to the world and in addition to a 100 Thieves, whereas the apparel business is now in its fifth year. So it's a good mix of, I would say channels.

Obviously the apparel business is something we like to keep DTC. The energy business is something that over time is going to scale massively into retail and high ground is a business that could really do any of DTC, Amazon or retail and the audiences are different, but there's a common connector again, which is the Hundred Thieves organization and all of the creators that we have. And so it's kind of interesting to see the hardcore a hundred T apparel person is an arm's length away from the hardcore juvie drinker who drinks a jovia a day. And so that's the interesting part about running brands out of the compound so to speak, is that they're all kind of fueled by the same engine. It's just that the model of the car is just a little bit different.

Drew Sanocki:

That's awesome. And I think the key thing there is you've got leadership sold in that there are synergies there, so it can really be top down because at auto anything we're selling largely commodities for your car. There was nothing that differentiated the brand on YouTube. There was this channel Hogan out of Long Beach that every time they released a video, we'd get as many views as the Super Bowl, right? Drifting videos and it was run by the team from DC shoes and we pitched them and then we ultimately built a store for them and sort of transaction enabled their business. But the challenge we always had was it was two different organizations. And so the creative team at Hogan was always sort of thinking content first and audience first, and they were reluctant to just say, oh, you can buy this online at our store. Even just getting that sort of call to action was difficult. I've seen it work in other properties and certainly for you guys, you control both, which I think is really important. The content generators and then the product. What's the vision for bringing these three brands together in leveraging that funnel? 

Brandon Park:

I think been the interesting challenge for us because they're all sort of born out of the same interests. And so our next challenge and the next step forward for us is to be able to create kind of a standalone path for each of the brands. I think the apparel business by its very nature is always going to be associated with Matt, our founder, Nateshot, and everything that he's accomplished and done throughout his career, it's always going to have that. And I think that's a great thing because it's always going to have sort of its own history and foundation to sort of live on. The interesting challenge now is for juvie and for high ground, how do we push those into audiences who may have never heard of Hundred Thieves or who may have never played a game in their lives? And I think that's where the challenge of the initial growth has been beyond anybody's expectations, frankly, and it's been really good.

But what we're thinking about now is juvie as it competes alongside the Celsius, the Red Bulls of the world and how it finds its own place. And I think we've done a really good job of creating a really deep community for that, which is different from every other energy brand that is in the market. No other energy brand has the sort of engagement on Twitter when RGM Sam tweets something on Twitter that people are going to respond and then Sam's going to respond right away. So that level of engagement is unmatched. And then with High Ground, I mean some groundbreaking collaborations with IP that is just hugely popular, not just for gamers, but in the world of anime, in the world of gaming, in the world of, we've got a lot of really cool stuff that I can't really mention yet, but that's going to expand the onion even further. So that's kind of our next step, and I think we have a great basis on which we can stand, which is kind of that a 100 Thieves core engine, and now it's about revving it and giving each of these brands room for them to run on their own.

Drew Sanocki:

It certainly has been done in sports. I would think like NBA apparel comes to mind where everybody wants to wear Jordan's and they've never played a lick of basketball.

Brandon Park:

Right. That's exactly right.

Drew Sanocki:

I guess we talked a little bit about growth, but what would you start today if you were starting over, what opportunities do you see out there?

Brandon Park:

I think that is a really interesting and fun question. I think my experience is such that rolling things up, I just see massive, massive benefits to that. What I would do would be to look at a rollup of DTC first businesses with channel scalability, so viable on Amazon, viable through retail as well, but in a really mid to long tail niche. So if I pick candles for example, I would pick something that's not even, I would even call Homesick right now, middle of the pack to very popular, those types of candles are now all over the place. I would pick something that Gwyneth Paltrow did something a little bit funky a couple of years ago, probably people can Google it or they already know it, but something that is so different and so evocative in that way that it has the potential to spark something in people that's a lot longer tail.

And then I would start to just collect all of those different brands, put them under a single platform, and I think it's so simple and easy to start to create scale with those just by ticking through the line items. I think fulfillment is the one that a lot of founders, CEOs of brands, they just are so focused on customer acquisition, cac, AOV, how do we build the basket? All those are obviously very fundamentally important. I think it gets missed a lot is all those other things down below that are not so sexy that people don't really talk about or write blogs about or write huge Twitter threads about. Those are what make you money at the end of the day, whether it's you want to grow the business and exit, whether it's you want to just start your own thing and be able to cash flow and live off it, whatever the goal might be.

That's what I think is really important. So for me, the rollup play long tail. I have sort of specific rules I kind of touched on, but high product margins, fulfillment, sub 15% is probably a good target. And I think some great examples of finding those niches and doubling up would be like a Congo Brands, which owns Prime Hydration, Alani Nu, 3D Energy are really, really focused and specific on what they know, and then they're able to scale that really, really efficiently. The other one that comes to mind is actually a PE fund called WM Partners. They're wellness focused. They sell a lot of their goods on Amazon, so they've sort of chosen a channel and they've got Ultimate Replenisher, Jade Leaf, FGO or some of their bigger brands, but they really doubled down on that channel. They know what their expertise is and they're able to scale it. So if I were starting today, I wasn't part of a 100 Thieves and I was just doing my own thing, I probably would look to acquire something kind of similar that's longer Tail and then just kind of keep going from there. 

Drew Sanocki:

That's awesome. I would do the same thing. I think buy versus build, there's a lot to be said for it. And I don't know, I feel like now entrepreneurship in my 50s is buy and optimize. It just removes a lot of risk out of the equation when you buy something that already has cash flow, already has revenue, already has customers. Well, thanks Brandon. I really appreciate you taking the time.

Brandon Park:

Thank you. It was a privilege and a pleasure to be on with you.

Drew Sanocki:

Get out of here. How can people get a hold of you? Do you want people to get a hold of you first of all? If the answer is no, that's fine. 

‍

Brandon Park:

Sure, yeah. LinkedIn is probably the best channel, but I can leave my email or anything if people want to get in touch. I'm very, very open to new connections, to talking shop, swapping ideas, learning all those good things.

Drew Sanocki:

Yeah, everybody check it out. Check out a 100 Thieves. Really interesting business and it's just different, which is kind of exciting and I'm excited for what you're going to do there.

Brandon Park:

Thank you very much. Thanks for having me.

Announcer:

Thanks for listening to Nerd Marketing. Don't forget to check out all of the other great episodes, some of which include interviews with e-commerce Marketing Masters, working with Mr. Beast and Joe Rogan, plus Drew and Michael's experiences in private equity, advice from VC firms on what they look for in investments and so much more like share, subscribe, and tune in every week for a new episode.

‍