Joshua Chin 8:31
I think that correct me if I’m wrong. But the first, early, early day, in the early days, the first kind of major breakthrough was with QVC.
Ric Kostick 8:41
So so even pre QVC, the the absolute first account we had, and I have to think that they’re like the antithesis of natural formulas, but they gave us our start. And that was bath and Bodyworks was our first customer. Right, they launched a concept in 2004. That was to compete with support. And not a lot of people know this because they killed the concept. About a year or two later, they changed 100 of their top doors. So their best looking stores, they changed into multi brand. We were a top brand in those doors that gave us our start introduced us to the public. And from there, they wanted exclusive. And then at a meeting, I remember thinking that you know TV shopping is great exposure, it should actually raise ourselves in the stores if we’re on TV shopping, so I asked, you know, the bath and Bodyworks buyers during your meeting. Do you think it’s okay if we go to QVC and I had I never even talked to QVC I didn’t know anyone there. I just asked them because I wanted to be there and figure it out figure out a way if they say it’s okay. And they said yeah, we think QVC is great. So I called called QVC and at that time we developed a technology using the pigments for Fruits and vegetables. So Susie was picking blackberries. And she showed me the BlackBerry pigment on her finger. And she said, Look, Rick, look at this pigment. If we could put this in cosmetics, that would be really cool. And it would be. And I said, let’s try it, and we put it into a base formula. And it worked. And we can make a blush, we can make a lipstick. And it’s not just Blackbird fitness, you know the color in any plant, you can isolate. And that’s the antioxidant is the color as well. So it has health benefits. On top of being the pigment, it’s very difficult to stabilize them, and make them lasts a long time. We’ve perfected that over the years. But it worked. And so we brought this to QVC. And this is what convinced the QVC buyer in 2006, January to launch our lip gloss using group pigments. And yeah, we sold out in our first show, and they scaled us up until 2009. So from 2006 to 2009, we started scaling the brand, we had supply issues back then because that, you know, getting the pigments and developing this technology was a bit of a challenge. And even scaling up our own manufacturing, we were making things ourselves we weren’t using contract manufacturers because they couldn’t get it they didn’t understand how to make natural products and in the way that we can, you know, at our standard, our level of standards.
Joshua Chin 11:30
Do you manufacture your products today? Or are you currently working with?
Ric Kostick 11:36
that’s that’s even, that’s another journey. So we we originally it was the three of us making the products out of our house in Napa, we converted our garage into a manufacturing. And until we outgrew it and then we got to warehouse. And we started, we manufactured all our skincare, we didn’t do our own makeup manufacturing, because it required a lot of specialized equipment. So we couldn’t, we had to find a partner and makeup. And then more recently, in around 2015 1617, we made the decision to get out of manufacturing, we just wanted to be out of it. James was physically working in there in the manufacturing at the time, as we split up our job functions. He ran manufacturing, his family didn’t want him in manufacturing, they thought okay, the way to get out of manufacturing is we just stopped. And so that’s what we did, we decided, Okay, we’ll stop manufacturing, it’s going to really hurt our margins, we knew that because working with contract labs, they’re going to be a lot more expensive than doing it ourselves. And what I did learn with that lesson when we got out of manufacturing is that contract labs are a lot more difficult to deal with than I expected. In, in, I would say in the natural, very, very clean side of things very, very pure side of things, there are a lot more difficult, you can find factories for traditional cosmetics is very easy. And they’re very easy. There’s a lot of established ones that are very easy to work with. But when you’re when you have such high standards on your formulas, it’s really difficult to find the reliable ones that can supply it until it costs massive out of stocks across our company. It also we lose some of our innovation, because we’re relying on other people for your innovation now, instead of yourself. Yeah, and so slow down our product development at the same time. And so I realized how critical it was to bring it back. And so we launched our own manufacturing, again in 2019. And we do really in a small way, just kind of a pilot. Yeah. But our goal for for quarter three of 2021 is to double our manufacturing that quarter, just because the demand is so high. Just from our own, our own demand from our own products is so high and and we have a few other brands that want us to manufacture for them and we have manufactured for them in this space because our quality standards are really high.
Joshua Chin 14:18
truly interesting. And it sounds like the product is the core of the business. I speak to a lot of entrepreneurs in the DTC space and the Yukon space that have started the business in the recent past five years, four years. And it’s it’s a very different mindset going into it like it’s my thing for the CPA CPC and thinking about how to break even on the front end and making a lot more money in vacuum. What’s your kind of the whole process of evolution from 2004 2005 to pastor 2008 recession. And today, what are some of the major trends you’ve seen in e commerce? And how have you been able to adapt throughout the years?
Ric Kostick 15:12
So there’s a lot of trends, I see any commerce, it’s hard to touch on a few of them. And I’m sure there’s more that I’m aware of. But I would say, you know, in 2004, when we launched, we just launched our website, we’re on Volusion. For those of you that know that shopping cart platforms, oh, yeah. And it was right around the time when Volusion, you know, came into existence. And we actually outgrew them at the time, but I think they ended up improving their product over time. And so, when QVC came into the mix, QVC was much, it’s still big, but you know, when TV was a thing, which I know, it’s very dated now not really a thing anymore for TV QVC was that thing it was the place to be was where you can do massive volume. And so, in 2009, we lost our QVC business during the recession, and all that inventory. So the way QVC works is if you don’t sell you prep the inventory, you own the inventory. And after it sells, that’s when you get your money, if it doesn’t sell, it’s coming back to you, or they decide they’re no longer want your brand, it’s coming back to you. And so 2009 we have this massive amount of inventory, coming back to us that it made me think, you know, what am I going to do with all of this? And I thought, you know, I know, the digital landscape. I know, e commerce. It’s kind of, you know, native to me, why don’t I just focus there? And why don’t I use this inventory? I’ll run promotions. back then. I don’t think segment team was as big. I don’t think even retargeting existed at that time. But so we just ran massive, you know, email was the main thing. And so we just ran massive email campaigns and ran promotions across our website. And it helped us acquire customers doing that. And we did some innovative refer friends back then. And I did some I look to some of the biggest stablish companies, what do they do to really grow their business over time? So looking at who was the dominant player in the space? And what were the key things they did in marketing, not not even ecommerce, just what are the key things that anchor them in their marketing and you know, Estee Lauder, and L’Oreal in department stores, which are also on the the decline, which was the rise of Sephora, they traditionally relied on these massive gift with purchases were really, really big for acquiring customers. So they would put together the sets that are 100 200. I think he did nowadays like $500. And it’s free with any purchase over like a nominal amount. Like I’m thinking they must use their average cart size amount. So like $50 $75. And it made me think, why don’t I put together some of these sets and I can call it you know, super gift with purchase. And that’s what we ended up calling in we and the key is you put together the set back then the value had to be over 100 I had kind of method methodologies to it had to have a hero product in it. So because you don’t want to put together a bunch of products that people aren’t really sure if they want or not. If it has the one hero product. Yeah, they want it they will spend to get that set just for that hero product everything else is kind of just gravy to the elbow. And yeah, and so those events really spurred a sport online doing those and I did those even after you know, we got through the inventory. And I also opened retail stores at the same time. We’re still figuring that out with the pandemic. But on the on the on the e commerce the things that worked were the promotions and then as we evolved you know new things came in like the retargeting which is now going to become an issue with the new updates for iOS and the potential chrome one. Cool one as well. So retargeting, it’s it’s, I want to tell you a story. When retargeting broke out. You know, when it first arrived? I can’t remember the year but when it was first available, I wanted to do it. Yeah, to pixel people, I wanted to follow them around and serve them ads. And my internal team was entirely against it. And they said, No, it’s weird to follow people around, it’s violating their privacy. We shouldn’t do it. And so we hold back. I couldn’t get buy in through my internal team on it. You know, they really thought it was against our principles. So we didn’t return it for a while. But now for most brands retargeting is one of your most highest ROI as your highest ROI
Joshua Chin 19:58
interesting is that it Is that a recurring theme that you see you identifying a trend that you’d want to hop on, but often it might be a challenge in getting buy in from, from your team,
Ric Kostick 20:13
you do a lot of trends. Especially I remember, another time was when I wanted to get as much data on people as possible to really personalize their journey and segment to them. And I knew this was key to marketing, I couldn’t get buy in across my team on it, because they felt that, you know, gathering personal data was this was at a time when data was kind of a bad word to say, you know, you didn’t want to say, I’m gathering data on people, I mean, even now, you have to be you have to tiptoe around it. But it, they said, No, we shouldn’t be keeping so much data on our customers. It’s, it’s not, right. So a lot of things that you see across. As you become bigger, you know, when you’re really small, and you make all the decisions, you can easily do it. But when you’re when you as you grow, and you get bigger, and you have teams of people you need buy in from because they’re they need to execute, it becomes a little bit challenging. And so we’re late to the game on acquiring data on our customers, I would say because of that hold up internally.
Joshua Chin 21:21
What do you foresee to be the next biggest trend of thing that you’re currently you may be holding back on?
Ric Kostick 21:30
At the moment I where I don’t think luckily for this, I have support across my company, internally. And I have a slightly modified I would say, you know a lot of my people there, they’ve been with me a long time. And I appreciate them. And I’m thankful to them for that. So the team has changed somewhat from before, when I’ve encountered resistance, I would say people are more supportive more recently, on my current team. One of the big changes that I think is coming to the forefront that I’ve been big about where, since I saw it in China on Taobao. I can’t remember when it was it feels like it was 10 years ago, but it was probably five years ago, was the live shopping. Oh, so the live the live shopping, but it has to be in a way. So very critical to live shopping is you got to have that one button. But it has to have that, click a button. But now this was big. This reminds me of the QVC day, because in QVC, it was all about how easy Can you make it to purchase for the customer. And it was a big thing on the remote when you have that Buy button. And when you call in, you just hit a button. And you get and you buy the product it was about how quickly can you get people to buy so even fundamentals that were back from the UVC home shopping day, apply to ecommerce and the live shopping. If you I think in China that live shopping ecommerce is now live shopping is when it’s streaming live and your big influencer. So for example, in China, we partner with a guy named influencer named Mauston Chachi. Chachi is I think his Chinese name. And he’s also called the Lipstick King. And he can sell a massive amount of products in literally minutes, like half a million dollars of inventory in three minutes. It reminds me of PVC, it’s even to another level. And most of your sales go through these influencer live streams. And they as opposed to through your Whoa, in China, you don’t even sell through your e commerce site anymore. You have closed down our e commerce site in China because it was not worth the overhead to run it. You do everything through the Marketplace through team all global and some other smaller marketplaces. And but the amount we do through the live stream, which is also on Alibaba is ecosystem through Taobao live, dwarfs everything else. So I see that I see us following China in that way with the live stream and other markets. Also, following with that live stream, it’s just a matter of whom is going to win this platform. I know everyone’s finally testing it. Instagram, Facebook is testing it. Amazon was a mess. Yeah. Yeah. I wouldn’t be surprised if Shopify, I know they’ve app plugins in their app store that tested across the Shopify platform. But this is the trend, I think it’s gonna really take over ecommerce and it’s live stream. I don’t know if it’s live stream from your own website. Like you go hop on someone’s website and you see the live stream, just constantly going on. You know, once you hit a certain size, you always have someone on there, maybe during the busy hours, you know, they’re live and they’re explaining the products and they have a you have to for live stream to work you have to have a few things. One is you have to have that button to purchase. And two is you have to have some sort of special draw. You got to create that to kind of aura. It’s limited Time, it’s a special, you know, you need to act now. It’s a lot of things remote Home Shopping playbook apply with live stream,
Joshua Chin 25:10
you can it, it seems like what makes the Chinese model so successful is that the the way life livestream is conducted, it’s it’s mobile first. And it’s also kind of integral in the day to day lives of Chinese people. It’s just a part of day to day life that they’re definitely going to be on these applications at least once every single day. And I think that that could be a challenge in the western side of the world where we’re not necessarily reliant on a single application, like a super app in China, where you’re buying, you’re living and you’re taking transportation, you’re paying for stuff. You’re paying for bills and everything through a single app. I don’t think that’s present in in such a kind of diversified market in the Western Hemisphere.
Ric Kostick 26:10
Yeah, if it was in the USA, right, break it up. The you know, the government would say monopoly and break out. Yes, they had a one app system. But yeah, you have you have the rise of tik tok across the US right now, which I see, you know, taking over. But then you have users who are, you have a divide, you have some people who aren’t on Tick tock, they like to stick with Instagram and Instagram stories, and igtv and other people, they, like, tick tock, it’s and then you have some people, and it’s typically the younger generation on, and sometimes it’s generational, younger generation on Snapchat.
Joshua Chin 26:47
Hmm. That makes sense. That makes sense. Ric, you you launch 30 to 50 new products across all your brands every single year, is that true?
Ric Kostick 27:00
Yes. And it’s interesting, you asked that because I, you know, we never measured new products as a percentage of our business very closely. And I recently brought that metric back because in in beauty, and I would say in wellness as its, you know, beauty and wellness are converging. So I consider us a wellness company and wellness, you want newness to be about 20% of your business. And newness is very critical, because that’s what makes it interesting. That’s what brings people back. And we had a little bit of a dearth. So we were at 30% newness back in 2017 in our history, and it’s because we would launch 4050 products a year, we had a little bit of a dearth of newness, from 2020, I would say to the end of 2019, into 20, because we didn’t launch a lot in 18. And, and 19, towards the end of 18, into 19. But we with the launch of our manufacturing, we launched a lab as part of that really cool, you know, good size lab where we’re doing tons of product innovation, and that has spurred again, our product development. So I’m excited that we’re going to be launching, you know, we’ll get back to 1450 products a year again.
Joshua Chin 28:18
I know, I’m super curious, because I learned this in business school, but I’ve never actually seen this being applied in the eCommerce space. But product lifecycle and product lifecycle management, with a company like yours, and that many products that you have, how do you kind of coordinate? What products are going to be phased out? And what is coming in? and replacing? What? How do you plan that all out? Is there a team that runs that for you or? Like
Ric Kostick 28:52
that’s, this is one of the most challenging things because I think we’re a little bit over sorted. You know, we have a lot of skews. And the more you have, the more your overhead goes up, it’s more things, you got to keep track of more things, you move around and warehouses and especially when you’re putting them together. So we’re buying the components and the ingredients and putting them together. So it’s not just the end product that we’re keeping inventory of but we also have the components of that product. So it gets to be a lot. And I would say my, my team’s a little bit overwhelmed from it at the moment. And then you think Well, how do we decide what, you know? When is it time to take it down to retire it? And when we went out of manufacturing, in you know 1718 2017 2018 we discontinued a lot of the products thinking you know what, we’ll just make new products with other labs and bring new products to market and make it interesting and we discontinued a ton of our skincare that we were making out of our own facility. And what ended up happening is we got a huge backlash from our customers that were upset, because these were their go to favorite products, they relied on these for the health of their skin. And we just, you know, pulled the plug on them and, and stopped. And so, in retrospect, that wasn’t the right thing to do I, you know, it would have been better if we somehow continued making them or if we didn’t go out of manufacturing, that would have been the best, but we did. So how do you determine like, if this rose, water face, miss it, see the sales aren’t that high. And say, it’s to the point where, you know, it’s point, a point 1% of total company sales, do you keep it, because you have some customers that are dependent on it, it’s the only thing for their skin that makes their skin feel rejuvenated and hydrated. Already, just continue it because it’s no longer worth the expense of the overhead of holding that inventory. So it’s, it’s really tough because of that, and you want to look at it from a business perspective, and you want to say okay, but it’s not worth the expense of pulling the inventory and overhead, which probably get out of it. But there’s a halo effect of the customers getting upset with you for that. So the smartest thing is to try to think of is there anything alternative that I can pitch to them to migrate them to? And that’s really difficult, it’s more difficult than it sounds, you know, maybe I have a different kind of tonic that I can cross sell to them to migrate them away from the rosewater mist into, you know, like a, maybe I have a lavender mist and yeah, but maybe they really like rose. So yeah, sometimes it’s I really discontinuing products is really difficult. The one thing I will say that it’s very easy to discontinue on is when a product gets bad reviews. So we’re known for our formulas, and one of the things I did that I’m very happy that we did is we implemented our NPS score. And we do it through stamped IO, a Shopify app. Yep. And from doing the NPS score, we realize that what resonates with our customers is our formulas. Because when they give us feedback, it’s always excellent formulas. I love your formulas, I love your ingredients. I love your quality, it’s all about the quality of our formulas are, sometimes they don’t like our packaging, but that’s not about us, we’re all about the quality of the formulas. Sometimes they’re frustrated with the the use on the site. Most of them are frustrated, because we’re out of stock, or we ship too slow. And what the NPS score has told me is that if there’s a product on our website that has low reviews, we need to exit that product that makes it very easy decision. And I remember back from my QVC days that that’s how QVC operated. I remember that if a product, you launch a product on home shopping, if it doesn’t get good ratings, they pull it, the ratings mean a lot. So those reviews are really critical.
Joshua Chin 33:10
Ric, How do you price products, and you go through so many different products every single year? And it sounds like it’s only going to be increasing from now on? What what factors go into deciding what, what a product price?
Ric Kostick 33:25
Yep, so pricing, pricing is really, really important. The first factor is always costs, but in certain products are willing to give up more margin than others. So there’s factors that impact that decision. So one is I, I always have a tried and true, okay, you need a multiple of your costs that works with your business. And you start there, that’s your starting point, what is your multiple that works with your business, because you have so much overhead so much, you know, costs that go up as your sales go up, you know, both fixed and adjustable costs. So you start with that multiple. And then I always do a competitive analysis, and I see what else is on the market. And or someone on my team doesn’t know. And then I look at other things on the market. So I’ll go to, you know, multi brand sites like Sephora Ulta, and look at other products that are similar to the product I’m bringing to the market, what are what are they selling? What’s their price points? And I’ll I’ll go on Amazon and see you know, what’s selling on Amazon, similar to this product and what’s the price points? And then from there, I’ll make adjustments based on Do we need to lower our margins to be more competitive, because there’s other you know, how unique is this product? If it’s very unique and different from what else is out there? You can price it higher. You definitely want to try to do take that margin because that will support your marketing efforts and the growth of your business you need profit to grow your business
Joshua Chin 34:57
what what are some of the What are some of your favorite mistakes? Or failures that we haven’t talked about today? Oh my goodness. 15 said so many 17 years long.
Ric Kostick 35:12
Oh my goodness. Yeah. Oh, I’ve had so many mistakes
Joshua Chin 35:18
like top three, highlight
Ric Kostick 35:19
what area, in what area from? Gosh,
Joshua Chin 35:24
Let’s do a personal as an entrepreneur, one for business. And that one were bonus if you if you got any anything.
Ric Kostick 35:36
Okay, so one person well as an entrepreneur, I would say a big mistake is not being persistent with some of the new ideas we had. So, for example, within our company, a couple of things I’ll give you, I’ll give you a couple of these are just side by side projects we were doing. And I wish I was more persistent with it, it could have spun out other businesses, that would have been a lot of fun, and actually really rewarding. We launched, we made our own software internally in our company, that was very much like a project management software like, you know, an Asana Monday.com we call it info at the time, we should have stuck at it, I lost my two engineers, because they gave up on it. And I should have kept going after that. And we just wrote off that project and let it go. But it was pretty cool. And we built in a lot of functionality and just needed an improved UI and it would have really done well. So that’s one
Joshua Chin 36:41
less that a mistake. Or why is that a
Ric Kostick 36:44
mistake is just not being is is not being not persevering on it. So you know, just giving up too early, I just wish I kept at that project, just let it keep going.
Joshua Chin 36:56
What could what could it have been like today, it’s persistent. A
Ric Kostick 37:02
lot of us if you think about it, if you take a company like Genie, which is Ancestries competitor, they, that’s where Yammer came out of. And, you know, the separate businesses, but you had like, sometimes inside of your existing business, you can develop a new, innovative business out of it. And to me, that’s really exciting that you can actually use your existing business and develop something entirely new. And maybe the best thing is, if you can develop something inside your business that ends up destroying your business, that would be the best to disrupt the industry, something that would just destroy the industry. I don’t know what that is yet in my industry, I hope to figure it out. But that would be the best. But I would say my mistake is just not sticking to something like that. It’s like my, my engineering team had a they did a mining rig to mine Ethereum, and well Bitcoin and aetherium, back in the day, and they decided to let it go. And they sort of stuck. Because it would have been extremely profitable would have had a lot of currency, they just did it for a little bit and then gave up on it tore it apart.
Joshua Chin 38:16
So that’s a that’s a personal one, or is that was that this is what
Ric Kostick 38:20
I was. For me. That’s I guess that crosses the lines, it’s going to personal and business, you know, just you got to keep at it. It’s really difficult to know what what do I give up? And what do I keep doing is a really tough decision.
Joshua Chin 38:35
Do you have any guidelines are principles that you rely on right now to make that call? like, Alright, it’s time to wrap things up and move on? Or is it time to kind of persist?
Ric Kostick 38:47
You know, I do now. And it’s, it’s really you got to trust yourself. So there’s gonna be a lot of noise around you. And most people, you know, don’t follow I, one of the things I’m true to myself and this is a personal learning is that you don’t listen to the masses, you know, you can you can listen to them, but you don’t follow the masses are doing it’s like when investing, you don’t buy when everyone’s buying, you don’t sell when everyone’s selling. You really got to follow what you think. So listen, you got to take in all the data. So you got to listen to everyone, but you don’t have to do what they say. You do. Listen to yourself. Listen to everyone, analyze it, and then do what you feel is right. And make the call based on what you think inside. If you think you should keep going, keep going. Don’t do it just because everyone’s telling you to quit, so you quit. If you feel you should keep going and you keep going.
Joshua Chin 39:41
I think that’s often the hardest part because sometimes you don’t even personally I don’t even even know if my opinions like actually mine or if it’s just like a combination of other people’s ideas and opinions. that’s affecting my judgment.
Ric Kostick 39:58
And so when that when That happens. I encourage you to, I don’t know how much you meditate or do mindfulness. But try to get yourself to the stage where you separate. The true you, as observer observing the you that’s going through life. That’s, you know, basically doing everything in life and get to that observer mode and ignore the noise. And that clears everything out. If you can get really grounded and ignore the noise, you can make really clear decisions. It’s more difficult than it sounds.
Joshua Chin 40:32
I get that. No, no, I get that. Yeah, it’s it’s, you’re right. And I guess often it’s, it’s a matter of getting down to understanding what what’s truly coming from within you. And what’s an external, like, reaction type of thing to something that’s external. That’s, that’s a good reminder to to open up my headspace app. But uh, yeah, that used to be a part of my morning routine. It kind of just drifted away from it. But that’s a really good reminder.
Ric Kostick 41:10
You really want to do it for two minutes. You don’t even have to do it for 510 minutes. If you can just do mindfulness for one, two minutes. It really helps you I did. So I can give you an anecdote on it is that in 2016, I won something an industry event, Beauty Pitch. And as part of winning this event, the judges were Mark Cuban. John Paul Dejoria, who is the founder of Petroleum and also Paul Mitchell. Yeah, and, yeah, and a couple of editors. And what you win is Mark Cuban gets to be your mentor for a year. And so before the event, you know, you prep for it, you go through rounds to get selected, we were selected to go on stage and present our pitch. And, you know, we we were concerned like, how are we going to stay focused? power, we know Susie and I presenting how are we going to win this? You know, we’re nervous. What if we say the wrong things. And behind the stage, before going live, I said, Look, close your eyes. And I walked Susie and myself through mindfulness. And we just cleared our minds completely. And then we went on stage, and we killed it. And we won. And Mark Cuban became our mentor for a year, which was pretty cool.
Joshua Chin 42:26
That’s insane. And that’s it. What to two minutes, five minutes.
Ric Kostick 42:32
I probably took like, two to five minutes. I’m not sure it was really quick. But it worked. It really grounded, centered. So we’re on stage, we’re focused, where we don’t have anything else on our mind. Except focusing on the judges and winning the pitch.
Joshua Chin 42:48
It sounds it sounds like you’ve developed a practice of your own Are you using an application of some kind
Ric Kostick 42:54
call I’ve used I’ve used various apps, like Calm them and things like that. But I find a there’s one book byShirzad that I really liked, called Positive Intelligence, that, and I took his course he are part of a group called YPO. And, and he offered a course, free to YPO members and nice. I took that course. And that really made an impact on me. So I really recommend this book Positive Intelligence. And he’s the one that taught me you know, you can even do mindfulness in a few seconds. And he trained on how to do mindfulness in a few seconds, even if you only have a few seconds to do it.
Joshua Chin 43:37
Positive intelligence, and I get that. It’s cool that you’re part of YPO I’m actually a part of the the sister organization called EO, us. Yeah,
Ric Kostick 43:50
I really like Verne Harnish who Korea. Yeah, yeah, exactly. I play a lot of his tactics to running the business called scaling up from his book scaling up. Nice.
Joshua Chin 44:04
Very interesting. hasn’t been the go to framework since the beginning or is it?
Ric Kostick 44:10
No, I didn’t know about it. I wish. Okay, talk about maybe personal or business mistakes. I wish I knew about this earlier. This I wish I knew. I didn’t know about the, you know, the entrepreneur. Organization. I didn’t know about YPO until more recently, when I went off to happens to be that James’s wife’s brother is a professor at Harvard Business School. And so he recommended me to do the owner president program there. And so I went over to my first session. Yeah, OPM, and about half of the members are YPO. And so they didn’t know about YPO. And they recommended I joined and that’s how I ended up joining. So I, if I had this framework earlier in the business, I can guarantee you would be a bigger business today. I just I didn’t run into it, I didn’t find it. So I’m very happy I have it now and can use a lot of learnings to drive a faster growing faster.
Joshua Chin 45:09
Do you? Would you recommend someone new to it to read the book? Or would you recommend working with an implementer
Ric Kostick 45:17
of some kind scaler just read the, I would recommend just read the book. Just read the killing of ignorance, you know? Yeah, or Gino Wickman’s Traction that would be depending on the size of your organization, either Gino’s traction, or Verne’s scaling up, I’ve used bits and pieces from both books. So then I created my own purity business system is what I call it.
Joshua Chin 45:41
Nice, very cool.
Ric Kostick 45:43
And then I created my own our own organization training system purity training system. So we develop classes internally in our company based on that, and badges that our staff can earn. And so this is really helping. I’m a big believer in elevating your people, you got to really run your organization, kind of like a university. And I, and from there, you can elevate your people, they they become better and better when they make mistakes. You want them to make mistakes, because that’s how, you know they’re trying hard enough. If they’re not making mistakes, they’re not trying hard enough.
Joshua Chin 46:21
How do you how do you facilitate an environment like like that, a culture like that?
Ric Kostick 46:28
It’s really challenging to change your culture, I would say. But it’s all within mindset. I would say if you’re if you really want to know the answer to that question, there’s a case study I would recommend to read is the Toyota, Harvard Business Review case study on the Toyota Production System, because a TPS Toyota production system is sort of the groundwork behind this kind of methodology, and how you change a mindset. And within that case study, you realize that there’s a plant a car manufacturing plant that’s actually in your binding. And it used to be a GM plant, and it was the worst car manufacturing plant in their portfolio. And they partnered with Toyota, and made it the NUMMI plant in Fremont, California. And when they partnered with Toyota, a year later, it became they implemented Toyota Production System a year later became gmms number one plant in terms of quality output, like all these metrics, and here’s the thing, it was with the same people with the same people, that it was the worst plant, it became the best plan. And it was all about a change of mindset. So it’s really about changing the mindset of your people. It’s not necessarily about changing your people. So it really starts from the top. And, and how you implement and in the culture you build is really, really important. That plan is now Tesla plant.
Joshua Chin 48:02
That that’s really interesting. That’s really interesting. You’re saying that it’s, it’s often not about it, not necessarily always about having like the right people around people, but the culture, the mindset and the system that supports the best of the people you have.
Ric Kostick 48:22
Right? Right. And I’m a big believer in groupthink as well. Yeah, our product development is based on groupthink. So one of the things from scaling up that I really liked, I can’t remember it’s auto scaling up or from one of Verne Harnish his talks, but it’s something we do across our companies called a start stop key. And so we asked our customers, we or maybe it was Gino, I can’t remember who it came from, but I took it and put it in our system. So we asked our customers, we asked our frontlines. What should we start doing? What should we stop doing? What should we keep doing? And then our leadership team, every meeting, we look at that, and we analyze it, and we just, you know, put it in our mind, see if there’s anything we can act on. And it’s a way of groupthink of how you keeping knowing what to improve. Where do we need to focus our time on
Joshua Chin 49:13
That’s incredible. Um, what are no final question, what are some of your favorite brands and businesses in the econ or DTC space that you personally look up to?
Ric Kostick 49:26
I think Allbirds really nailed it. I think they did a great job. I’m impressed with how fast they scaled. Yeah, yeah. They did extremely well. in Beauty space. You know, I would say our biggest competitor just because they’ve done really well on the e commerce space. And they just I just noticed a couple of weeks ago, they sold their company, 2 billion, I think to Unilever. ItsPaula’s Choice is the name. They did extremely, extremely well in the e commerce space. They might have been a few 100 million in revenue, or their cosmetics or skincare. Bow. 2 billion, do you need 2 billion? billion? So you know, I love her. Yeah. And I think it was even a lover. Pretty sure. And then outside of those, there’s the watch company. What’s the watch company Movement? And MVMT living? Yeah. I think yeah, I think they grew really fast. They did really well. There’s another I can’t remember that other shoe company’s name. There’s another one that I really liked. But I just can’t the name caught my eye. There’s always ones that come up really fast. In Oh, another one. Like, you know, I like what Revolve did around influencers, I always admire the ones who effectively used influencers, because influencers is so tricky. And I want to figure this out, it’s always it’s a lot of hit or miss. And a lot of times, you know, you can throw away a lot of money. Or you can nail it and make some good partnerships with some, some caol some influencers that can really help you grow your brand.
Joshua Chin 51:14
Ric, this has been awesome. Unfortunately, we’re at the end of our time. Now, I love to continue on this conversation. I think there’s such an amazing amount of just insights, I took on a ton of notes myself. So awesome. Yeah. Thank you so much. Now, Ric, if people are interested in connecting with you, and perhaps ask you a question to where should they connect with you?
Ric Kostick 51:42
LinkedIn is great. If you, you know, connect with me on LinkedIn that I don’t check that everyday. But I check it you know, every few weeks, that’s a great way to connect with me. It’s probably that’s probably the best way because I don’t you know, I use Instagram, Tik Tok, just to check it out. But I’m not a big user of social media. I just don’t have the time. But I, I need to stay up to date on how they operate. So I looked at them, but probably the social media I use the most is maybe, maybe LinkedIn.
Joshua Chin 52:14
Gotcha, LinkedIn to this. Ric, thank you so much for being on the show.
Ric Kostick 52:19
All right. Thank you, Joshua. I appreciate it. Thank you.
Joshua Chin 52:25
Thanks for listening to the e commerce profits podcast. We’ll see you again next time. And be sure to click subscribe to get notified of future episodes.
