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foreign [Music] well thanks for having me I actually saw some familiar faces I haven't seen since pre-coveted or before so uh nice to do that on a social level as well um uh Lucas and the team asked me to talk today about um Channel diversification which in my judgment and I will say out front for the group's benefit I'm not a marketer by background I'm a I'm a Founder with some other um uh some other experiences I'll share with you but for me that means taking very scarce resources that your company

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has um against an unlimited and growing set of places you can put those resources to get your your brand out there and to acquire customers and uh assessing what to do uh with that with that concoction so I'm going to talk to you today based on some specific anecdotes I've had in my own career working as a founder and with peers in the space um uh and uh and hopefully that'll be interesting and informative my name is John O my career started um in a cubicle at Morgan Stanley which was quite

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painful I left in 2009 and transitioned into a venture Studio which I put together with some other folks called launch in eight years we built six venture-backed companies in the digital native brand space some marketplaces some retail enablement Tech and in 2021 I had Ari which we all transitioned out of launch and just last year I launched a company called in-house that I'll tell you more about which is a Marketplace serving the short-term rental space um so you know talking about channel

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channel diversification my broader observation is that has been that sort of gravity and linear thinking pulls us away from Channels with friction and the way that I conceptualize this is you know I've sat around uh tables um uh discussing sort of marketing and with marketers and generally we go through something resembling this five-point checklist um channels that are appropriate and investable for us tend to be things that are measurable if I don't trust the attribution mechanism it's difficult to

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make investments there it's safe for our brand so our brand is sacred and we have to be very careful about putting the brand out there in in channels and places where we don't want to be seen it has to be maybe not cheap but it has to be affordable or else of course there's no point in talking about a given Channel it has to be simple to the extent that the channel or the approach that we choose isn't a distraction from other priorities that that we all have as particularly in younger businesses and

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it has to be scalable because if it's not scalable who cares right and you know the the thing that I've sort of observed here is that when you follow a framework like that it tends to lead you to places that are are lower friction right so you look for these five factors or some version of them to come together and you determine that things that don't satisfy those factors are are too hard so they so if you can't measure it it's not safe for your brand you can't afford it or any of these

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combinations you tend to migrate away from it and at some point I think down in this end of the spectrum as brand owners or Founders you get into a place of optimization and some very interesting conversations from my colleagues tonight about what happens when you get to a place where a channel is quite mature and quite distributed like for the most obvious example the sort of meta channels you know you get to a place where experts with high high data signal Etc can help you optimize those but this middle comfort zone where

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we feel like we're getting something that is um that is viable but not not yet overly mature is where a lot of dollars seem to go and a lot of people feel like they're making a sensible good choice my thesis and and framework which I'll offer you for to be a bit provocative would be that if you're actually leaning into friction when you're choosing channels to approach there's a high probability of doing something right and I'll offer a few anecdotal examples of um again entrepreneurs and other folks

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who built great companies or accomplished marketing goals by leaning into friction where it looked like you should be steering away um so I'm going to start with this guy right here who is both a client of dark room and a long time collaborator of mine named Eric Gerard in 2019 he came to me and my my teammates and said he wanted to build a new steel-toed boot business that later became known as Brunt and we said okay sounds good you know pretty crowded pretty crowded space figs was in market and lots of activity

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already and with takovas and uh and the in the Workwear space generally but um we said fine uh and he said and here's how I want to launch it I'm going to do a podcast and we're not going to talk about brunt or our boots at all we're going to sit on buckets turned upside down and I'm going to bring on a part-time mechanic and guess every every single session and we're going to kind of talk about the trades and our side hustles and how we how what we think about being blue

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collar and trade workers in the world and I said well I got to be honest Eric that doesn't meet a lot of our criteria around around friction for example um there are 1.2 million podcasts already um in the in the ecosystem if you see it seems highly unlikely you're going to find this to be a scalable approach if you do get customers how are we going to measure them and attribute them I've just learned that maybe we don't we don't have to um and I'm not sure I don't know your

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brand yet um but it seems like it's kind of risky to do this I don't know that this this cohort's even going to be interested in in podcasts Eric said thank you very much for your input I'll be doing this anyway and um you know uh three years later he's running a 100 million dollar run rate company in in brunt they've done 65 podcasts or so and they're a top two percent podcast in the world but a lot of the things that we said here were actually true from a friction standpoint so he never reached that many

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people with the podcast to matter to the uh matter matter to his growth goals um and it was hard to attribute even if he had done that the interesting thing was um one of his guests on the podcast ended up being the owner of an extremely influential construction business and another one of that and and he wanted his son to have an internship at brunt and another one ended up being someone who joined their team full-time and so my my learning from from Eric's work there was you may think that that you

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understand how to diagnose some of these factors but oftentimes it's the second order effects that come out of doing something authentic like this that end up delivering on all the metrics and more that you hope for from a uh from a sort of low lower friction undertaking um one more from from Eric since he deserves it um he came to me the next year before brunt was really on its way and he said I've got an idea and here's a here's a he texted me a picture of an of a NASCAR that they were going to

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sponsor and I said I don't know a lot about NASCAR I'm a I grew up in the Upper East Side of New York we you know we don't we don't do a lot of that kind of thing here but uh it sounds brand right Eric but it but it sounds it sounds wallet wrong um and I I think Not Having learned my lesson out of hand sort of dismissed that I said we're never able to do that I looked it up today it cost 10 to 20 million dollars to full rap at NASCAR and um you know two months later Eric invited me to their tailgate at New

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Hampshire Motor Speedway um to watch the brunt car uh you know uh drive and I was there with my uh with my wife and we watched the first lap of of the brunt cargo around and then she wanted to you know get a get a drink or something if I came time I came back I couldn't find the brunt car and I kept waiting and I was like what happened what happened here and it turned out that one lap into the race the car crashed um but Eric in the process got really good pictures and everyone who was wondering what how

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how serious his his company was saw that Brun brunt was sponsoring a NASCAR and instead of taking the Pains of being the NASCAR that crashed on the on the first lap he spun it into an Underdog Story and he said you know um brunch supports underdogs we're underdogs against Red Wing and Carhartt in the boot business and wouldn't you like to come join us in that journey and years later he's he's gone back he's come a permanent sponsor of the brunt of the brunt NASCAR he sponsors

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professional bull riding right next to Yeti and he also sponsors professional cornhole which I didn't realize was a sport um so really interesting guy I've learned a ton from um so this is a story about um belly Welly uh and Facebook Community acquisition which onto its you know on face value which would seem like um was not something I even knew was a possibility so I called up a friend about a year ago um and I would told him I was trying to sponsor some some Facebook groups and they had a lot of anti-solicitation and

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anti-promo rules um and I just couldn't figure out how to either message people behind you know behind the scene or pay enough pay enough to get our um you know our posts sort of featured there and I I basically concluded that as far as we were concerned hot even highly active authentic Facebook communities um were too complex to circumvent and they were going to be too expensive to post at a Cadence that would ever deliver Roi and he goes why are you posting there why are you messaging people just buy the community

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um and he told me the story of belly Welly which is a gut health snacks company which as I understand um went and found some of the most important gut health Facebook groups and rather than rather than sponsor them or try to message and sort of circumvent the system they actually went out and bought bought these groups and maintained a level of authenticity but also started to spread their own message through super Advocates of gut health so my lesson from this this woman Katie who I don't actually know was

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um was oftentimes you can find channels that aren't for sale buy things that aren't for sale make them happen and friction that you thought existed turns out to be just a reason for a lower purchase price we've obviously seen this play out in lots of other formats uh early you know social handle exchanges and things like that but I thought that was an interesting lesson um I worked for a while with a woman named Esther park at one of our companies Rockets of awesome um she's a incredible product leader and

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has since become a uh a Founder in the um organic uh organic baby formula space and she explained to me one day that she would be launching a new kind of baby formula and I said Esther how like that sounds hard things like the kind of thing that would be quite regulated and she goes oh yeah we raised a little bit of money but it's going to take us like three to five years to get to Market um and I my radar went off and I said that sounds awfully expensive and awfully complex to do and even once you

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get there what you no one's heard of your product and aren't they going to be inclined to buy the Similac formula that they grew up on or felt was safe and um what I didn't know was happening was that behind the scenes um Esther had had been incubating simultaneously another product solution for her customers called Nara baby which is a um which is a breastfeeding uh tracker and and she was able to build what ended up being the number one uh for a period of time breastfeeding tracker in the App Store

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um and you know the the thing that I thought was super interesting there is sometimes when you have an ultra complex Channel and the friction's very high because it seems impossible to overcome you can disaggregate some of those complexities break them off into individual pieces first solve the um you know first get to know your customer get your name out there she now has hundreds hundred thousand or more parents who know Nara and are excited to trust her down through the next step of a process so rather than fighting it all

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up at once you can you can do that just one or two more examples um so uh after launch and after Ari as I mentioned um I ended up building a company called in-house um and the inspiration for in-house we had um we had been running uh a company called Trade coffee which is one of the largest specialty coffee marketplaces um in the world uh and when 2020 rolled around a bunch of our customers started to spend much more time at airbnbs and we started to see coming through our funnel these very large orders that look

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like offices but we knew no one was in the office in 2020. and I said what the heck is going on like are these work from home stipends what what's what's happening with these orders that don't look like any other order we've ever had and it turned out that with the with the Airbnb boom um hosts were starting to buy coffee as an amenity for their guests on stay and about four weeks after we saw these spikes in orders by the hosts we started to see post-purchase surveys come through saying that guests who are new

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subscribers to trade coffee actually had found us in the context of their Airbnb stay and I looked at that together and I said wow we got to scale this up with with Trade coffee we can do this there are two million airbnbs in America let's go for it and um and we started to try and do it and it was absolutely impossible there was no way to get the contact information for the hosts there was no way to get in front of them Airbnb wouldn't work with us and so um what I ended up doing was building a

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new company called in-house which literally does this for a living and what we do is we help the host side of the equation we let hosts access a catalog of several hundred thousand skus that they can buy at deep discounts for their properties and then we activate an in-home uh Commerce experience for guests to buy the products that they experienced on stay while they're in the geographic radius of that of that home for deep discounts and it's an acquisition tool for the brand so for me personally sometimes you know this was a

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interesting case where the scalability and complexity led me to say hey maybe this is a channel that should exist that doesn't exist and sometimes there may be Channel opportunities in addition to channel channel distribution opportunities in in some of this friction um this one's more of a throwaway but again growing up this is what I saw in Subway ads in New York it was either a fortune teller um or a attorney and the interesting thing is now when you go into the subway the only thing

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you see is the most sort of modern distributed forward-thinking technology Brands and consumer brands that you could imagine and as crazy as it sounds because now we're all very comfortable with the idea that that this is where great Brands live there was a time when the brand risk friction of the subway was so high that nobody would do it the inventory was cheaper and yet no one was doing it so my my takeaway from there as soon as it's helpful to look in plain sight for things that just seem

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off that might in fact be on um you know another quick observation before I wrap up you know sometimes in addition to the first sort of primary benefits of going into some of these higher friction channels than you might be inclined to is that there are these second order effects so one thing you know from Eric's example and otherwise you get and from from Esters you get really close to the customer when you're in high friction channels you can't step away from them in the way that you can

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with automated automated more mature markets in many cases and that ends up leading to a lot of incremental customer listening and learning um team members tend to like to be part of companies that are operating in some of these kinds of channels so of course end of the day we're all solving for Roi and bottom line but I've been Amazed by how important it is for some of our team members to um to want to be part of of pioneering sort of approaches and finally like I mentioned with the The Internship

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sometimes there's magic or Serendipity that comes out of doing things that are hard in this regard um and uh and I don't I wouldn't underestimate the fact that just because you can't measure it or or in advance determine what it might be that it is invaluable um you know I felt it was like inappropriate not to at least offer up you know an answer to where is good friction today honestly I'm not sure but I will say that I I'm I am quite sure that it exists somewhere at the intersection of all the reasons why

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not to participate in a given space so you know there are unadulterated channels the GP like GPT currently is a solution or the the tools that come out of it it is a space being used for productivity one day it's going to be polluted in the way that all other High Velocity channels are today it's not so what does that mean for us you know division Pro is an unproven ecosystem Scott Galloway says it's not going to work Cara Swisher says it does like what's the what's the right answer

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um mashups so uh you know mashups would these are some Modern versions perhaps of brand risk Canal putting your product onto another company's uh uh site and treating it like a Marketplace distribution or disco and then also finally what what's old is new I I would say that this is a dirty word right now to be talking about web3 for most people it's probably exactly the time that there's really interesting stuff going on there and then finally there's a limit because friction can

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sometimes go too far probably a lot of validity in a company that like wrapable that helps you get paid to wrap your car probably less so in Old Bay when they invite you to uh to get paid to tattoo old day seasoning on your calf thanks [Applause] [Music]