Building a successful marketing org - Hosted by Alexey Loganchuk of Deep Ocean Partners

[00:00] All right, it’s trying a sec and I think we’re live. Awesome. So, Fan Josh again, thank you so much for making the time to have this conversation. I think it’s been in the making for coming up on six months now. I’ve really wanted to have this discussion and uh you guys both have very busy schedule. So, I appreciate you

[00:19] uh again for this conversation. Now um the background uh just to recap for this is that um I think there is a ton of material out there on how you can optimize kind of your meta ads on how you can do medium mix modeling better on how you can do this and that. There are a lot of point problems that have a

[00:40] multitude of point solutions each. But if you’re a CEO, if you’re building up one of these companies from scratch and you’re building organization, you’re just ripping out your hair because you’re not quite sure if you should be putting together a jigsaw agencies, helping hiring somebody in house. You’re just trying to figure out like what is the best way to do this in a way that

[00:58] would just leave money on the table and lead to a lot of waste. It’s far from being science. It’s not even an art. It’s just, for lack of a better word, a cluster, I think, for a lot of these these folks. Um and Josh you have obviously a wealth of experience particularly around the strategy of building these teams of scaling them of

[01:18] developing them. So really keen to combine that with bait on your experience looking at the data and kind of the back end the nitty-gritty of how these teams end up operating. So with that kind of out of the way what I want to open up with here is just a very simple question which is why is hiring marketers so hard? I feel like

[01:38] it’s one of the highest churning roles in most organizations. Why why is it so hard to find somebody who you can just scale with from, you know, 5 million to 50? It’s a great question. That’s the billion dollar question. Yeah, marketers are hire hard to hire. CFOs are hard to hire. You know, chief sales officers are hard to hire. Great people, you know,

[01:58] never easy. Um, but great marketers are rare. I mean, full stop. You You’re not just hiring someone to run campaigns. You’re hiring someone who can think crossf functionally, translate brand into revenue, you know, move between creative and quantitative worlds and kind of embed deeply across product sales and ops. It’s kind of a unicorn skill set and it’s evolving. You know, you look at

[02:25] uh so so so I think I think that’s one of the reasons it’s really hard. Yeah. Totally. I’m curious actually thinking about how you’d actually judge market performance. So you bring in somebody I think to your point on you know CFOs are hard to hire but if you hire a good CFO you just see that you know your your

[02:42] financial forecasts are being realized you’re not you know falling way off of uh plan with marketers I feel like it’s going to be tougher like okay your performance is same year on year is it because you know things are continuing to be well is it because you know you’re actually continuing to be subject to the same inefficiencies it because you know

[03:03] your market is fantastic and the rest of your peers are struggling But you guys have been able to keep ship you know going straight. Just figuring out like whether or not a marketer is doing good work I feel like is a pretty difficult question to answer in its own right. So um curious Josh I’ll start with you and

[03:17] I think Faithon you you had a wealth of experience looking at these people in more granular levels. So uh we’ll we’ll ask you next but Josh you first. That’s another great question. Uh, too often marketers are judged purely by lagging KPIs without enough attention to the systems and decisions that got them there. Um, great marketing organizations, you know, look both at

[03:41] inputs and the velocity of learning. You know, are campaigns being launched with discipline? Are we testing and iterating with intention? I mean, really, are we getting smarter every month? If you look at companies like Ciiet Foods that just sold to PepsiCo, like they didn’t just build a brand, you know, they built community. Their marketing wasn’t just about conversations. It was about

[04:02] cultural connection and that showed up not only in loyalty, but in how retailers rallied around their story. Yeah. And I’m curious on your side when you’re working with marketers. I’m not sure how much you’ve interacted marketers versus seuite but have you been asked by let’s say management to figure out like is this market any good like how do you

[04:24] approach figuring this out? Yeah I mean marketing and growth is always topic number one two and three you know and um CEOs and founders are constantly losing sleep over whether or not my marketing leader and my marketing team is performing. And I think usually what I tell them is that what typically even more sophisticated organizations may lack is a unified

[04:53] decision-m framework that is kind of implemented by the executive team first so that there is clarity on what success looks like as a marketer in a company. M so that’s a lot of foundational work from a data and organizational perspective to be like here are the KPIs that we care about and this is how it’s calculated and we’re just all going to

[05:16] align on that. So if that KPI moves up then you’re doing well right? If it’s moving down then you’re not. And I think a lot of the CEOs are waiting for a marketer to come to them and be like, “Okay, we should look at this, this, and this, and because it’s looking good, right?” And that’s going to kind of

[05:33] create perverse incentives to bias towards reporting interfaces that is kind of saying positive things, but of course, your your profit somehow down anyways, even though the the the Facebook rorowass is somehow growing, right? So if you don’t have clarity from a leadership perspective to the marketing team on like no we don’t I don’t care about that right I care about

[05:59] profit or topline or LTV and that’s your job to grow then it becomes a lot more a lot less ambiguous in terms of why am I doing well or am I not doing well you know just double click there really quick so in terms of like what are the best metrics to to really look app. Um, rorows obviously is not it. Is it

[06:23] new customers? Um, you know, full blended CAC, is it CAC payback? Do you have any advice when people ask you like what should these metrics be for us? Yeah, it really depends on the actual mechanics of the business and the stage, right? So, we typically work with businesses that have between 20 to, let’s say, half a billion dollars in

[06:44] annual sales. That’s very different than a brand starting up with, you know, on track to hit a million, right? Um, and then the other thing is around um your AOV, right? So, if you have a low AOV product, let’s say it’s CPG, um, then you’re not always going to be profitable on your first order. So, that’s a LTV

[07:04] play. But, I come from a world where we sold I sold mattresses and we got all of our LTV in the first order. So that’s a very different um that’s a very different approach in terms of what you’re going to have to look at, you know. So it really kind of depends. Got it. Josh, one more thing is your camera

[07:24] keeps panning left and right. Is there a way to turn that off? I think I’m getting a little seasick. My camera’s panning. Yeah. I don’t know what’s doing that. Huh. This is the first time on this platform. Let me see. I was like, that’s a cabin. That is a very impressive. No, I’m not on a boat. I’m I’m on land. I wonder what I think

[07:48] it might be doing facial tracking. Um, and it’s getting confused. I don’t think we actually have facial tracking in the platform as a feature, though. I think it might be hardware. I don’t know to be honest. You might have to just move me to audio. All right. Um, I mean, yeah, I honestly I’ve never been on this platform before, but

[08:11] it is doing it on on its own. All right. Yeah, good stuff. Um, I don’t know. Actually, I have no idea. I I’ll go into settings again, but yeah, it’s not like Huh. That’s bizarre. Uh, I guess maybe. Did that fix it? I think so. Yeah. Oh, no. It’s still moving. Jeez, that’s so weird. Anyway, I don’t know. All good.

[08:36] All good. Um, I guess maybe building on that, um, I I think there is a a variety of criteria that apply depending on whether you’re talking about somebody who’s in the trenches and doing campaigns themselves or somebody who’s more CMO suite. Um, I’m curious, Josh, from from your perspective, how do the characteristics, the traits of a successful marketer change as you go up

[09:00] in seniority? Um, what is a good kind of senior marketer versus what is a good junior? Um yeah. Um I think like you kind of think about scale. I mean what you this is for any function not just marketing. What you need to get to a million-doll business is much different than what you need to get to a

[09:27] $10 million business. And what you need from a to get to $10 million business is very often uniquely different than to get to 50 and then to get to 200. So there’s very often you see like changeover in teams, just skill sets. People love what they do at that specific point. Um, and I think this is all about scaling your marketing team.

[09:45] Um, and you have to be really honest about what people are good at and where they love to spend the time and kind of their zone of genius. A lot of people say, “Oh, you know, I was with I was with Vital Proteins or I was with O Positive or I was with this massive company and I did all these things.”

[10:00] Like what did you actually do? What do you love to do? And I think from a marketing team, you kind of scale in proportion to your complexity, not your ambition. It’s like when the business gets noisier, more fragmented, a little bit more nuanced, that’s when you scale, not because you raise a series B and feel like you should. Yeah. And so

[10:22] that’s very, you know, like if you look at like a vital proteins and, you know, Kurt was a front row seat there and is a very close personal friend. you know, they stayed super lean early on and only started laying in functional depth like influencer content performance. Once their DTOC and retail flywheels were really spinning, you know, yeah, it’s

[10:45] like if you look at like Ghost Energy, which we’re a part of, um, you know, they focused on building a lifestyle brand rooted in authenticity and then they started scaling up marketing talent when the market, not just their budget, demanded it. So there’s nuances, you know, based on the business. There’s not a playbook there. People think there’s a

[11:03] playbook just based on like based on a a fundamental like fund raise and that’s not every company isn’t at the same stage based on the fund raise and when you actually bring capital in. So you know I think that requires a deeper dive based on skill sets within the team what the founding team has what the new hired

[11:21] seuite team has and you really have to you really have to build upon that. Yeah. Um, one I guess overarching subject when you’re talking about building organization is is resourcing. Um, so I would imagine one of the biggest frustrations if you’re in marketing is being underresourced and not having the ability to put out content to do the kind of brand building

[11:40] work you want to be doing. Um, but I’m kind of curious again looking at it from the perspective of a CEO. How do you balance it? How do you balance, you know, optimizing bottom of funnel, trying to close people versus building a more holistic brand and investing into that? Um, what are the mental models do you typically use for

[12:01] well? Great. The couple that’s a couple different questions I think if I’m attacking this appropriately. I mean, let me know if I am. So, a lot of times I don’t, but um, you know, kind of how to split resources between top of funnel, bottom of funnel. I mean, this is really where strategic sequencing really matters. You know, if you’re

[12:19] early stage or launching a new category, you’ll likely overindex on top of funnel, but once there’s traction, you know, a lot of brands underinvest in bottom of funnel, the stuff that actually converts attention into dollars. So, it’s really understanding your funnel. And this is I mean this is basic fundamental stuff. Um, right? But so that’s maybe one part of the question

[12:44] and then as it relates to resourcing and feel free to stop me anytime. Um no that’s great. You know I think resourcing internally externally. My feeling is and what I’ve seen work this is only an experience share because I would never say what someone should do or should not do because everyone you know builds a company that you know kind

[13:03] of fits their DNA. Um but typically you want to inhouse what’s core to your brand DNA. you know your voice, your values, your customer understanding. You outsource executional tasks until they become way too strategic where you need to own them internally. And some of those things you keep externally forever and that’s amazing. Um but that’s where you have to

[13:34] really be honest with yourself, you know. um your voice, your values, your customer and then outsourcing all the things that can make you much more efficient um as a business until you got to bring it in house. I’m curious, what do you consider strategic? Like what is what is what makes um a certain functional um set of capabilities

[13:56] strategic to a brand um within this framework? are strategic. I mean, you know, it’s really all about like um owning functions or the most important areas of your business, right? Like you I don’t think you ever want to, you know, outsource the most important pieces of a specific function in your business. If you truly truly truly want someone to

[14:28] eat, drink, and you know, sleep on this 24 hours a day, you know, there’s certain things that just constantly require like full attention, head space, and so it really it depends on the organization, honestly. I mean, you know, um I’d love, you know, to get feedback, you know, on this panel about that. You know, what you see is being strategic, but a lot of

[14:51] times I see I see strategic stuff is like your your your values, your voice, and like real understanding of of your customer is so important. Um in P&L management you know the way you manage your budgets the way your dollars flow you know um financial discipline fiscal discipline like creating the architecture of your marketing function as a business you know um there are

[15:15] pieces you can outsource but you need architects that are so accountable and so focused on delivering based on the principles of your business you know you know first principles and sales sales, marketing, finance, operations where those people, you know, are stewards for you because as a CEO, the most important thing you need to do is hire the right

[15:39] people around you so you can make yourself replaceable, right? I mean, that’s what great CEOs do. So, you think about those important functions in each specific area and say, who’s going to own that? And that person has to do that. That has to be their life, the one of the most important things to them. Yeah, it’s very helpful. Fhon, sorry.

[15:56] Um, I wanted to kind of complete that that arc of thought uh with Josh, but really keen to get back uh to you on this. Um, so in terms of first of all optimizing bottom funnel, top funnel work um content investments. I’m curious from from a more datadriven perspective, how how do you think about this when when talking to brands and advising?

[16:16] Totally. Yeah, I think the original sin would be trying to be good at everything. You know, I think oftentimes brands don’t understand what their true differentiators are and how to sort of double down on those, you know, so I think just to give a few examples, we’ve worked with Ollipop from the very early days back in 2020 and you know that if you’re

[16:40] optimizing for paid marketing and direct response ads, you know, sodas and drinks are infamously bad for DTOC. So that would have that tanked many beverage brands that we’ve that we’ve seen and we’ve worked with. Uh ultimately the the strategic uh differentiation is retail penetration and brand building and fandom building right that is a very different set of

[17:08] capabilities than a large DTOC brand that you know is basically differentiated on their ability to look at data and spend paid marketing dollars very confidently which would be like basically that was the core competency of my previous company, a resident home. That’s what our advantage was was we were the most confident in just dumping dollars into the right channels and

[17:36] being profitable on the other side. And our competitors were not just because they don’t have their math sort of worked out internally, right? They don’t have their KPIs mapped out internally and that’s not clear to their internal folks what actually success looks like. Um, so you know, we didn’t really care about brand until well into the nine

[17:57] figures in sales and and then you get to a certain point where you do get to sort of do things like that. So focus and understanding where your levers are and just tripling down on that is ultimately what’s going to drive success. But how do you figure that out? I mean you’re a young brand. I mean even when

[18:17] when when you’re getting into eight figures a lot of time these these brands they are very capital constrainted. Um I think the days of uh DDC brands consumer brands being bankrolled by VCs in a large scale at this point largely gone. So they have to be very thoughtful to every dollar you spend. So let’s say you’re investing into into a bottom of

[18:35] funnel and you’re finding that just the economics are difficult. Um, I think at that point in time to if you’re the CEO to say, you know what, we need to instead try investing in a brand. That’s not something you can really try in like a week or or even a month. I feel like a lot of that kind of work, it takes a

[18:53] while. It’s kind of like SEO. It takes a while to really take off. How do you even think about like mentally approaching that? And this is a question for you both. Um, how do you think about like figure again what is the right what what is that optimal mix? Um, I hear you on kind of what worked very well for

[19:09] companies that you know were more bottom funnel focused, top of funnel focused, but how do you find what is the optimal point for your brand in particular? Josh, you want to go first? Go for it. You take it first. All right. Uh, yeah. I mean, again, I think the answer is it depends because I think oftent times the

[19:31] the leadership has to be able to get honest about why are people not buying, right? Is it actually the marketing conversion machine that’s broken, the messaging? Or is it actually the product? Is it the pricing? You know, is it the discounting strategies? Is it your inability to compare yourself properly with your competitors, right? Without truly truly understanding what is

[19:58] actually causing a lack of conversion, right? Or it could just be unit economics, right? And that means you kind of have, you know, if you kind of have that insight, that means you have to go back a lot farther on the drawing board than, you know, just rejiggering your marketing strategy. But let’s just assume that the product and price and

[20:21] everything is good, but you’re not doing it profitably, then that’s probably a data problem, right? So that’s kind of uh you know with the recent kind of earnings call from solo brands you know that’s one of their issues was they didn’t have a unified decision-making framework across all their brands to properly kind of understand profitability and that’s like right but

[20:49] I think they have certain amount of confidence that the products that they’re producing because because they have pretty decent scale is like has a place in the right and that it it’ll move if you just fix the company. Uh and that that becomes a whole other sort of situation because you know Solo actually tried both very focused on performance

[21:10] marketing discounting strategy but they were not tracking the ROI on the discounting strategy. they’re not tracking the attribution and then they tried the uh the brand uh campaign with Snoop Dogg which actually you know made a lot of positive waves but even then they had no idea how profitable or whether or not it was successful so it’s

[21:29] not repeatable in that case right so maybe Joe please you go first I’ll ask so my question actually was going to be maybe just to shift angle here a little bit I There there is one modality where a company that is really struggling that is really you know hurting is thinking about you know what can we do better to

[21:51] know got a business a modality that I’m also thinking about is one where companies doing okay they’re they’re growing a bit um they’re making some money but they’re trying to figure out like are we in an upload point or do we need to like go out and and try something as fundamental as you know changing this like top bottom funnel

[22:08] split. Um I’m curious again thinking through just broad mental models how you would think about directing a brand that is doing okay. Um how do you help them understand whether and what they should be looking to improve? Well, I mean if there’s one pattern I’ve seen across the best marketing organizations, it’s discipline. They they don’t they don’t

[22:33] just chase growth. They they sequence it. You know, they know what to own. you know what to test, when to scale, when to pause. Yeah. And they embed marketing across the whole org. It’s not like a silo. It’s a strategic driver of clarity within the organization. So very often if you’re blaming on a specific, you know, if it’s a specific

[22:58] funnel issue, then it can very often be much more rooted in the organization strategic initiatives. And so yeah, I think that you know making sure that you have crossf functional collaboration is critically important. Pause pull back you know because one thing is connected to the next you know and it’s top of funnel might be correlated to their

[23:18] content strategy correlated to their brand mission correlated to their repackaging correlated to the new price point. So there’s so much built into it. So um the best organizations don’t look at as marketing as being a silo you know it’s fully integrated into the org which requires deep cleansing work. Yeah and also I’d imagine like both of you have mentioned uh financial planning

[23:45] being a pretty important part of uh effective marketing strategy. I feel like a lot of CFOs that can be actually a very difficult battle to to to fight. Like there’s actually a battle that CFOs fight with with marketers. Um I’m not quite sure how that comes about, but yeah, that that to me should be something that’s table stakes, you know,

[24:04] in terms of basics. Um and for some reason that’s an area where I’ve seen a lot of brands really struggle. It you know, if a CFO is battling with a head of marketing, the CEO has not set the stage appropriately. They are partners. They they they they are they are locked in arms. They are not they need to be on

[24:23] the same side of the table. If any function of the business is battling with another function of the business, you have a dysfunctional business. Get on the same side of the table and drive growth together and plan together. That’s just a fundamental leadership flaw to be honest. And that’s not pointing to one specific organization because there’s lots of them and

[24:44] organizations learn. That’s where you bring in a coaching practice. Yeah. To really think about leveling up initiatives as an organization because the closer they by the way this is all happening so fast. The transformation of these organizations is like nothing we’ve ever se we’re we through AI we are transforming organizations and if if finance and marketing and sales and

[25:06] operations and supply chain and human resources are not connected these these businesses will sink and they’ll be operating the way they were not five years ago six months ago. So the future is faster than you think and therefore they all need to be leveling up together to say what’s the most important thing to the organization? How can we support

[25:27] each other? And a big part of that is fiscal responsibility. Yeah. One of the things that’s a bit of a tangent, I’m sorry, but I I’ve seen a number of companies now that have gotten to, you know, some level of success. They’re in the tens of millions of dollars in terms of revenue. Um they have um a visionary founder who’s very

[25:43] much a product person. fantastic product, good market, product market fit, but you start seeing these frictions where which I think mostly boiled down to um the product focused founder just wanted to say like okay there’s my marketing like you do your thing and here’s my fin organization you guys do your thing and just like they really want to just put this into their

[26:02] silos and go back to thinking about how do I keep building better product and I guess in situations like one of the questions I would have would be I mean is it just coaching is would a COO be an appropriate kind of person to step in with the CO? Does it really have to go up to the very top?

[26:20] Does the CEO have to be the one who’s uh implementing and overseeing this cross collaboration? Well, just think about it. Like at the end of the day, if a company doesn’t work, whose fault is it? It’s the CEO’s fault, right? You can point fingers all day you want, but you have the wrong people in the wrong seat

[26:39] with the wrong coaching in the right point way, but it’s your organization. it’s your job. So yeah, if you don’t rally the troops and say like I have five or six functions or direct reports in my organization that I’m responsible for ensuring they have all of the strategic support and guidance they need to be successful because one here’s one

[27:01] thing that’s for sure. They’ve never done this job before. They might have done this job in a different organization but they’ve never done this specific job today in this fast changing environment. Yeah. And so if you don’t lean in to support them and bring in coaching or executive leadership kind of advisory like groups, cohorts to work through these challenges, you’re just

[27:25] expecting one person or two people to figure out the problems of the business together without including everyone else. It’s critically important to the business. So yeah, I think it’s 101, you know, and and I think it’s like what I again like the best CEOs, whether they’re founders or hired CEOs that come in, you know, at the next chapter, they’re the

[27:50] ones that ask for help. The best executives are the ones that ask for help. Those that think they have it all figured out are working solo. It’s really re Yeah. It’s really not as productive. Yeah. Yeah. In a team environment perspective. Yeah. It’s really helpful perspective I think. Um to just go down this tangent one more step coaching. you

[28:15] have any coaching practices you you can recommend? Um like any any tips on how to approach coaching? Because it does seem to be like I would love to in the cases of these like product driven brands that that we we talked to, we’ve spoken with, you know, be like, “Hey, you should really consider bringing somebody on, but without more uh

[28:32] immediately actionable stuff like, hey, email this person and set up a session.” I I feel like a lot of my advice would be falling on deaf ears. So like to clarify, you mean coaching advice as far as structures to use to taching coaching firms? Coaching firms. Yeah, there’s some great ones. We’re we’re working with quite a few. I mean,

[28:52] we’re we’re um yeah, there’s some excellent ones. We have one for our organ for one of my organizations. Um there’s a there’s a guy named Charlie Jones who’s amazing. Um he works with a bunch of founders. Um he probably works with 15 20 clients of ours. Um he’s fantastic. Um we’re probably going to end up putting a little practice in

[29:12] place too, working with guys like Charlie, just because it’s it’s it’s arguably the most important way to level up, you know, you know, and um I can share more with you offline, too, like some great um but Charlie comes to mind. He’s fantastic. Um we use a gentleman in our organization at Force called Asa Hoffman, but I work with Asa and

[29:35] Charlie. I have two different coaches. um yeah just for for different areas of life. So um and I also think like if you’re a founder or not just founder, if you’re a CEO and you have a company that’s doing over, you know, 20 25 million bucks a year, you know, or you’re, you know, um your valuation based on your most recent fund raise is,

[29:57] you know, 25 million and you have at least like two and a half million bucks in payroll and 25 employees, you should look at joining YPO. Um, and YPO is amazing. And YPO is an incredible cohort of community support for executive leaders to then lean in and become better coaches for their teams. And it’s not a country club. It’s a club of

[30:19] professional leadership advancement. And it’s awesome. And so there’s a lot of things to tap into. And everyone’s so busy building their products and going to trade shows and, you know, they’re like, “Oh, how could I ever find the time? I have no time.” It’s like, make the time. you know, if you don’t make the time to go to the gym and you don’t

[30:35] make the time to meditate or eat healthy or coach yourself, you’re gonna end up spiraling. And so, it’s really important. These are these are marathons. These are not sprints. So, definitely, you know, and again, these are things I love to talk about. We’re building a whole transformation division leveraging AI and high level human touch organization with a new CEO we just

[30:56] hired and it’s it’s awesome, man. I mean but these are the things you know is is so much of the work becomes commoditized and so much of the operational executional work that used to take us hours can take us minutes and things that used to take eight weeks can take eight hours. Where do you spend your time? You spend your time leveling up

[31:16] the people around you not getting caught in your operational you were doing six months ago because those days are done. Yeah, I think so. The the ongoing transformation within marketing as an industry, I think it’s something we should definitely speak to next. Um, but I just want to say that I think one thing I’m beginning to realize is

[31:37] talking about the big picture for marketing, the overarching objective for kind of the this this discussion is kind of almost missing the point, which is that the real metagame isn’t an even further step up from there. It’s this more holistic organizationwide kind of exploration. How do you ensure close collaboration, alignment, etc. So, um, again, great to hear that Josh um, your firm is already

[31:59] working to establish a separate practice to really kind of address that need in the market because it’s it’s massive. I could see we’re all over. That’s where the interesting work happens, you know. That’s where that that’s where that’s that’s where the transformation and shifts occur, you know. Yeah. people are so many Well, anyway, you guys have, I’m sure, real

[32:18] strong perspective here, too. I think it’s I think it’s I think it’s a great time. It’s the best place to ever be in business. It’s the best time to ever be alive. It’s the most opportunity ever in front of us. We can harness tools that we’ve never had to focus on our zones of genius as marketers, as leaders and organizations. What do

[32:39] you do with that? Which is a great segue. So Pon, you’re a computer science guy. You mentioned that you’re using a lot of AI in your own coding. Obviously being so deeply embedded within the marketing organizations of the firms you’re working with. I’m sure you’ve seen the the change has been brought about uh by LMS by AI within marketing. I would just

[33:00] love to get your take on what is the other land, what is a bunch of vaporware, what is just unfounded buzz, what is actually creating value, what is the future kind of beginning to look like with these tools that are coming online and yeah, that is a big question. Um, you know, we are also having this conversation in the week where uh,

[33:26] Chachi BBT40 image generation dropped. That’s kind of rocking the world right now, right? It can pretty much create spot-on uh, creatives in one shot. So, a lot of the things that used to require headcount to scale is just no longer really relevant. You know, I think one thing that I that one thing that I see is AI adoption is going to be very very

[33:54] uneven because most leaders are still with the mindset that scaling the business also comes with scaling headcounts and you know the future is really you know for my own business we’re actually at 30% of headcount that we were at a year ago and we actually have a larger business and larger accounts And on average, people are actually happier,

[34:21] you know, so that so we’re kind of on the extreme end of like actually we’re trying to get smaller while getting bigger. I think, you know, um for brands, you know, I think the biggest thing is really kind of understand what are the workflows today that are expensive, human intensive and unpredictable and have a long lead time.

[34:46] So creative generation is literally one of those things. And of course with Meta uh Meta’s Andromeda and all of the uh uh mobile app games that needs additional creatives and YouTube everything else, right? The the creative arms race is basically going to be 10 100x, right? So if you could make 30 creatives in a week before with a team of five, you know,

[35:14] now you can make 300 creatives with a team of two, but your sales are not going to go up by 10x, right? Yeah. So, you know, and you’re not going to be able to spend 10x just because you have 10x more creatives, but your competitors are also going to be turnurning out three, four, 500 creatives at the end of

[35:33] the day, right? So what doesn’t change is you still have to have taste. You still have to have you still have to understand data, right? And you still have to have a source of truth in terms of like how do we actually attribute revenue, right? And that actually kind of increases the need for firstparty data aggregation, having internal source

[35:57] of truth, having internally consistent KPIs and decision-m frameworks, having an internally validated and thoughtful attribution methodology. So when you do 10x your creative, you know, you actually know, well, what is the incrementality of this effort here at all? You’re so spot on, man. Yeah. I mean, it’s so that’s so so right. So right. And it’s like you is the leader. You’re

[36:24] the strategic thinker, but you can use these AI tools as your strategic thought partner, but don’t like outsource it all. Don’t have them come up with all the ideas because they’ll come up with great ideas. You have like you have like a hundred Elon Musks you know the like within the seconds but like don’t let them do all the things because you are

[36:43] the one driving it. Yeah. I mean it does not replace judgment whatsoever. You know with engineering you know we we have dramatically reduced our engineering headcounts while dramatically increased our engineering output. But what I say is every line of code that you commit, you’re you’re personally responsible for, you know, you can go ask a thousand AIs, I don’t

[37:08] care, but you don’t get to commit trash code, right? And that goes for everything, you know? So that that’s where, you know, I don’t know if you guys have heard of this barrels versus ammunition analogy from Keith Ra Boy. Um, so I’ll do a a real quick like explanation. You know, barrels are, you know, people that are able to direct

[37:30] resources into the directionality where it’s going to make an impact. And then ammunition are people that just needs to be like, okay, what do you what do you need me to do? I need more specific instructions, right? So in the in the pre-AII era you know you have in the bullets is your headcount and you may have you have barrels that’s your VPs

[37:51] and directors and seuitees and you have to scale your ammunition by hiring but now that the marginal cost of increasing your ammunition is basically zero. So what do you do in that world, right? And how do you sort of help your existing ammunitions transition into barrels, you know, and that’s kind of what a lot of the reskill reskilling has to happen

[38:16] because if you’re used to just doing this thing, you know, f taking something through a workflow, through a comb on board, right? That’s just no longer really something that will bring about job security. Um, so a lot of implications there. So that’s really good. That’s really good. Thank you. So I’m curious in Nan state, it sounds like well if I’m wrong, but it sounds

[38:41] like a lot of these AI tools will basically replace agencies. So what you’re going to have is going back Josh, you were talking about really strategic roles being inhouse, everything else being outsourced. It sounds like strategic roles. So figuring like you know what is onbrand creative for example. um figuring out this budgeting that can stay inside and then everything

[39:01] else is just going to become AI agents. Well, you know, it depends. I I wouldn’t, you know, it depends how good the agency is. You know, it depends how if the agency the agency is that strategic and they’re able to harness these tools to create that much better of a product and that’s all they think about and they’re maniacal 24 hours a

[39:21] day. there’s they are going to outpace all the people doing internally that also have to deal with supply chain and product and finance and operations. So that’s zero sum game. It’s like everyone can level up if they harness it and provide much more valuable services and much better quantitative and qualitative creative. So I don’t think it puts

[39:40] people out of biz. I think it puts people who aren’t good business in the first place. But absolutely, you know. Yeah. So, it’ll just create new roles and like to do more impactful work, I think. Yeah, totally. Yeah. I mean, the qu the first question I’m like, I don’t care if it’s an executive, a full-time employee, a

[40:00] contractor, or agency. Are they a barrel or are they ammunition, right? I think most agencies are used to being ammunitions. Like, I’ll turn out 30 creatives for you per week for this much money, right? And that’s a very clean sort of bill of goods that then they invoice the clients for but like what is the result right? So if you can find a

[40:22] barrel in the form of an agency or a person then their salary or pay capacity is technically infinity because they can create ROI that is way beyond any dollar that you’re going to give them. Um, so and those are really going to be the winners, you know, like no matter what it is, how you provide your services and

[40:43] expertise, even as a SAS product, even as a technical product. Um, that that’s what’s going to win in the future. I’m curious in terms of the brands you worked with, Ivon, how many of them are heavy users of AI LM? How many of them are just, you know, playing around with the just very rough like gut sense

[41:02] percentages? Where are we you know on this front with smaller brands call it like you know 10 20 30 million mature brands where what is the current state of the market? Yeah, most brands are not really adopting AI. Let’s just be honest, you know. That’s not to say they’re not using ChBT. That’s not to say they’re not using other consumerf

[41:24] facing um AI apps. Like we all use it, right? Like I think that’s the baseline that that doesn’t mean that you’re adopting, right? If I hear, you know, I just was hanging out with one of my customers that’s kind of scaling from 60 mil to to to nine figures this year. you know, he’s still mostly concerned about how am

[41:45] I going to scale a headcount and they already kind of scaled ahead on headcount expecting the growth. Uh so that’s that’s just going to be the norm in business thinking, right? So that’s going to take a long time to actually change, you know, to to to kind of get to this other way of thinking which is like no, we don’t more headcount doesn’t

[42:04] really bring us anything. Some might argue, right? Yeah. Mhm. And it’s also like we were talking about this, we’re building this huge transformation division now and we’re talking about this with a really huge supplements company. It’s like make no mistake like what you’re hiring for right now is not what you’re going to need in 12 or 24 months. So you better

[42:27] think about how you’re transforming your entire organization and strap on your seat belt and make sure you have the right people there. Like so you got to get way ahead of it. That doesn’t mean spending more money or spending or hiring more heads. It means to really think about role involvement and how that collaborate like collaboratively supports other functions in the

[42:48] business. So what you I think you’re going to see what I’m so excited about is organizational design transformation now the way organs are built that’s where we’re sitting. We’re like this is awesome. And by the way no one has it all figured out yet but if you’re not thinking about it I like I’m most people are using chat GBT for emails. That’s

[43:08] what they’re doing. And by the way, that’s a great start. Don’t I don’t think you should ever give yourself a hard time because you’re not at the destination yet. Just get started. Like my thing with my team and even my kids is like they don’t my kids don’t listen to me. But if they did listen to me

[43:24] would be spend 20 minutes a day, no noise, no distraction, just work on an AI project every single day. If you do something 18 minutes a day with no distraction, you will be in the top 5% of the world at that. 18 minutes a day. It’s fact. Anything could be playing pool or playing. So, so just real

[43:48] focused attention every single day. Now, there’s lots of people spending weeks on this So, you know, AI might be a little bit different, but the point is just take little incremental steps and don’t give yourself a hard time. Get better at it. Get better at it. Get better at it. And then what you’ll find is it allows you to do the stuff you

[44:03] want to do and removes all this other stuff from your plate that you don’t want to do. And so it’s nothing to be scared about because you’re not at the finish line. No one’s at the finish line yet. So I just like take a deep breath and just get into it a little bit. It’s a blast. I built a I’m not a coder. I

[44:20] don’t do Python. I built an whole app last night in bed next to my wife in 30 minutes. It was awesome. Yeah. Yeah. So that’s the type of stuff you could do. It’s great. I’m kind of curious. So looking at it, let’s say 12 months out. So these these organizations you’re consulting, you’re advising now, uh, you know, make a bunch of make the

[44:47] highs they’re thinking about making. The world changes. Um, some people will have done those 18 minutes of exercise a day and they’ll be, you know, well qualified to keep using to use the these new tools. Others won’t. I guess thinking about it from the other side of these 12 months. How do you figure out you know if the organization

[45:06] is is too large um you were talking about you know the or you were talking to they had already kind of were hired ahead of a expected growth and they were talking about growing the team further. I see this quite a bit companies getting their skis and opex it’s there cross functioning but certainly within marketing as well. Um how can you tell

[45:23] if you have you know fat in your organization if you have fat? Yeah, it’s a great that’s a you want to take a first that’s a great or that’s a great question. I mean it depends on the organs too. It also it also depends on like are you a venturebacked private equity backed business that’s like grow at all costs because it’s a winner take

[45:43] all market or you’re a consumer products business that needs to focus on high gross margin in Ibida you know and so a marketplace isn’t you know commercial platforms are different than launching cookie dough yeah I’m just thinking well let’s see talking about consumer specifically so not a universe where we have you know infinite money to to try and take over world, but but more

[46:06] so, you know, regular people building nine figure businesses. You know, just your average Joe around the corner. Um that’s sarcasm. Sorry, I’m That’s definitely not regular. Yeah. Just just to be clear, but like I’d love to build a nine figure business. So, um but yeah, um one of these folks, how would they think about Yeah. finding like figuring out whether the

[46:29] organization is potentially, you know, too large, too bloated? Well, general could be some vertical. Well, what well like here’s what doesn’t change is financial fundamentals. Like Jad GPD is not changing the financial fundamentals of a business that might be in the supplement space that needs a 65 to 75% gross margin and 15% IBIDA like so so plan accordingly.

[46:56] Think about your operations team, your finance team, your sales team, your marketing team, your trade channel optimization and make money like you know so so none of that’s not that’s not changing now the way in which the the teams you know the teams are structured you know in each specific function will because of skills and you know new

[47:17] upleveling of skills and leveraging tools and things that you don’t need to do anymore but like if you’re I you have to fundamentally um put together a financial plan and business is business you know and so I I think those are just questions you ask yourself on a quarterly ba I was saying this is so funny um

[47:38] it’s really interesting see we just hired a new CEO um forest who’s amazing and um he was saying you know you know what I used to think is quarterly planning quarterly planning we call them rocks Those are monthly. No, those are weekly plans now. Those are weekly plans. It’s not too dissimilar to what’s happened on Sand Hill Road for the past 20 years of,

[48:05] you know, just, you know, weekly standups and sprints. Yeah. So, so but financially as a business like like that requires real discipline, you know, and so business can move really fast, but don’t move your financial objectives ever. Yeah. I guess part of the reason why I’m asking this question is because it’s been really remarkable to me to see

[48:29] I mean the day consumer products there’s variety but there’s a certain limited variety in terms of the the the the things that go into material supply chain having financial planning having marketing etc and in spite of the similarity I’ve seen a lot of orgs where you know allex marketing is single digits and then some where it’s like 35

[48:50] 40 50% and it’s just To your point on the importance of financial planning, I kind of feel like the natural limit a lot of people are just they they push their opex to the point that they they they really can without thinking about whether they really need to hire that additional one or two people. Like they sure they can

[49:07] be helpful, but like is the ROI justified? So here’s what I would that’s a that’s a that’s a great question, man. Um I think there’s a difference between it’s a great question. The difference between a VP of finance and a CFO, an accountant. Yeah. Um, you know, accounting controllers, VP of finance, they look backwards. Yeah. CFOs look

[49:31] forward. They find ways to create and optimize. If you have a CFO in your organization, it’s a chief financial officer. They need to be operators. They need to constantly be this is not about reconciliation of the books, right? This is about moving forward operationally throughout the team. That’s why really good CFOs like John over at Celsius became the CEO, you know? Yeah. I mean,

[49:57] because he’s a great operator and he thinks about each function. So, I think it’s an opportunity for people to level up and like, oh my god, this business is moving so fast, you know, is it you want someone that’s commercially savvy, but you also want someone running the organization that’s got financial chops. Yeah. You know, that can help everyone

[50:16] kind of put stakes in the ground. Does that does that was that appropriate like what what I was that’s helpful. I think that’s helpful. Um I think what about goes back to the big picture which is again I know Josh a point of strength for you. Um Fan going back down to like more kind of grassroots uh level. I’m

[50:35] curious from your perspective again facing the marketing teams um have there been situations where you’ve kind of thought okay this this person really shouldn’t be there like they they don’t need to have a job or I mean if you were going in and and helping the CEOs of these orgs figure out kind of who to put on chopping block this is a terrible

[50:54] question to ask I have a lot of marketers who are friends so a lot of you guys don’t really impair careers but like how would you think about who is and isn’t worth their their key Yeah, I mean the controversial thing that I’ll say right now is 99% of businesses are too fat already and that’s all that that goalpost is only

[51:14] going to be moving super fast in terms of what being too fat is. Yeah. So that’s just a fact. And you know right now when you’re thinking about scaling in terms of adding headcount I’m not even necessarily worried about the money. I’m more so worried about what is that gonna do to to add on as far as

[51:35] baggage is concerning our decision- making process in our communication. Do we need another person in the telephone chain where things are actually going to get dropped? You know, and that’s pretty much every company I’ve ever come across um to be honest with you. Um so, but you know, like for example, if you’re very profitable, you’re going to want

[51:58] redundancy. like that was what everybody was telling CEOs you need redundancy in the organization you need to whatever right it just well it’s still more humans as the solution but you know the the the paradigm shift that is not that hasn’t happened but people will be forced to sort of grapple with it is no more humans is not the solution period

[52:24] pretty much most times right and you know in a in a marketing organiz ganization you know well let’s just even look at CS for example right right now we went from okay US space agents to outsource international agents to robot agents so at what point does the head of CX basically becomes a oneperson department right that is sort of an

[52:50] inevitability but that doesn’t mean that the people that you do have is not useful it’s about repurposing right like they should be repurposed to sales. They should be repurposed to, you know, saving returns, right? And and things that humans are uniquely good at. And that also means, you know, people need to sort of realize like what is my skill

[53:12] set today and what how does my skill set needs to pivot, you know, in the next 12 months, you know, same thing with marketing, right? If you if you look at most uh meta ads sort of junior people or mid-level people, a lot of them are just kind of doing a workflow. Yeah. Because that’s what they’ve been

[53:35] doing. Well, you know, but the thing is Meta’s ad platform is, you know, moving very fast. But really, that’s all there’s no reason, I think, to a certain extent to kind of overthink on am I sick or not. I think but but you still need to kind of be prepared because that the the there is going to be a moment when

[53:58] your competitors are creating 10x more ad creatives than you. When your competitors are winning way more customers than you. When your competitors are able to offer the same product at a at a lower price or less discounts. That’s when it’s too late, right? With less headcount potentially, right? So that’s going to happen and new brands will pop up that is sort of you

[54:21] know instead of saying digitally native we’re going to have AI native brands right and that you know for for for organizations that kind of grew up in the last few years as digitally native which they were able to compete with the more traditional brick and mortar then now they’re going to have to compete with this new crop of brands that are more AI

[54:42] native that’s going to have less headcount that’s going to have Hopefully they people are going to get smarter about the importance of firstparty data, right? Having a a unified decision- making framework, then you can run super super lean, you know? So, there is no reason why a 10 people company can’t build a $500 million brand. There’s no reason

[55:04] why that’s not the case today other than just like you need to lift things and, you know, more physical work that you can’t really outsource that. But, of course, the robots are coming on that side, too. So, um Such such great points, man. I mean, I think I think I think you’re really spot on. I spoke with the supplements company

[55:23] two days ago that’s $80 million run rate with seven employees. There you go. Seven. Now, their seven employees are badasses. Yeah. They’re amazing, you know. But, you know, like it’s it’s not to say you lay people off. You have the right people like Yeah. You know, and you repurpose. It’s like what do people what job should I have? What

[55:45] do you want to learn? Like what skills do you want to develop to futureproof yourself so you can become super valuable to anyone’s organization or your own organization because right well you know sky’s is the limit there. So that type of I think mentality really matters. I chose to just pick on your point on ad creative. One kind of crazy thought I

[56:08] had was you can scrape the Facebook ad libraries. Literally you can just go find fastest growing brands. Um scrape all of their historical ads and like literally just train your alum on those. Uh yeah, there’s multiple vendors out there you can sign up for today that does that. You know what I mean? So yeah. Yeah. That’s the new that’s the new starting

[56:30] point. Like it’s not even like an idea now. Like if you’re not doing it, you’re just slowly eroding your advantage over time, right? And you’re going to be fine for a while, but one day, crap, what are we going to do, right? Uh and and and I think that’s that’s an inevitability right now. Yeah. And that’s where a lot

[56:53] of opportunities in terms of uh transforming businesses will come about. You know, I’m sure private equity will have a lot of opportunities there as well. um you know but not every business will be able to transform in time but a lot of them will so um so you know I’m very cur I’m definitely like watching kind of how businesses are adopting

[57:13] these technologies and and you know and what they’re doing but we’re still early you know I would say most most of our customers are very savvy and very technical and very digital but in terms of truly truly just going ham like kind of what Clara did uh with their fast stack, right? Most companies are absolutely not doing that.

[57:37] I know we’re at time, Josh. Um I think you have something to hop to. Uh do you have time actually for one more just very quick question or do you have need? Of course. Of course. So just um thing I wanted to really just ask really quickly as we’re about to wrap up here is biggest mistake you’ve been you’ve seen

[57:53] biggest mistake you have seen a marketing organization make? Biggest mistake um strategically. Yeah. hiring channel operators before nailing their strategy. Um, scaling paid media before they validated product market fit. Yeah. Yeah. Yeah. And keeping marketing siloed from product finance and ops. Very helpful. Fon, uh, I I’m actually going to echo those three. I think uh, Josh pretty much uh,

[58:26] hit it right on the head. So that those we should hang out more. We got to get to know each other better and figure out how to do some cool things together. Yeah, for sure. For sure. I need to visit your your your uh your cabin there. Looks nice. It looks like a cabin, but it’s really like a cassita in

[58:40] my backyard where no one bothers me. Oh, nice. Nice set up. Yeah. Yeah. Again, um I’m gonna just say thank you if you can just hold on after the stream. Great. We can just do very quickly, but um again, thank you so much for for being part of this and uh thank you for joining us today. Thank you. All right. Thank you.

[58:59] And the