Exploring Ideas and Exploiting the Good Ones with Justin Mares of Kettle and Fire

Courtland Allen 0s

Hello everybody. By popular demand, I am bringing back the intro to the show. So, this is Courtland Allen, with Indie Hackers.com and you’re listening to the Indie Hackers podcast.

It’s been so long since I’ve said that. On this show, I talk to the founders of profitable Internet businesses and I try to get a sense of what it’s like to be in their shoes. How did they get to where they are today? How do they make decisions both at their companies and in their personal lives? And what exactly makes their businesses tick? And the goal here as always is so that the rest of us can learn from their examples and go on to build our own successful Internet businesses.

Today I’m talking to Justin Mares. He’s the founder of Kettle and Fire. Justin, welcome to the show.

Justin Mares 40s

Thank you. I’m excited to be here.

Courtland Allen 43s

Yeah, I’m excited to have you on and to ask you all sorts of questions. You know a lot about growing businesses. You’ve worked as the head of growth for a company called Exceptional which was acquired by Rack Space. You started multiple businesses that you’ve grown from scratch to tens of millions of dollars in revenue including Kettle and Fire.

And you also literally wrote the book on growth. It’s called, “Traction: How Any Start-Up Can Achieve Explosive Customer Growth.” So why don’t we start there? From a high level how should founders be thinking if they want their start-ups to achieve explosive customer growth? Justin?

Justin Mares 1m 9s

Sweet. Just jump right into it.

Courtland Allen 1m 9s

Yeah, let’s do it.

Justin Mares 1m 12s

So, yeah, so I think that one of the things that we wrote “Traction”, my co-author Gabriel Weinberg who started Duck Duck Go he and I wrote “Traction” about five years ago now. Kind of what we saw at the time and what we still unfortunately see today is that if you’re a founder in general, you are putting in two to five times as much effort into product development, product, that kind of stuff than you are into marketing and into traction. And the reality is that almost all great value-owned businesses, not only do that have a product innovation but they also have a distribution innovation.

And so, we think – you know what we talk about in “Traction” is that building and developing that distribution innovation, figuring out how to get traction is almost as important, possibly more important, than figuring out like how to make the perfect product.

I know this is something that a lot people disagree with me on but I think if you almost certainly have heard of or found multiple products that you’re like this is just kind of a shitty product. How did this get on my radar? Why is everyone talking about this? And the answer oftentimes is that there’s a really good marketer behind that product.

And so, in “Traction” we talk about how to approach the whole idea and solve the problem of like how do I get traction for my start-up and the way we talk about it is through something we called the bull’s eye framework which is this idea of figuring out what are the one to two core channels that you want to focus on as a business that will get you traction, whether that’s SEO, paid ads, content marketing, influencers, affiliate, anything like that.

And then we kind of walked through a process of like how to test, measure, and then decide what channels to invest in in terms of your marketing mix. Does that make sense?

Courtland Allen 2m 58s

Yeah, it makes perfect sense.

Justin Mares 3m 0s

Cool.

Courtland Allen 3m 0s

There’s a ton of advice out there for growing and building start-ups and a lot of it is very bad but I think if you’re a brand new founder, it’s kind of hard to tell the difference between bad advice and good advice. So, for example, there was a time not too long ago where it felt like every week, I was reading a new blog post on medium about how the only thing that matter is product. Product, product, product. If you want to grow, all you need to do is build something really great.

Not as many people say that anymore. I feel like a lot of people have come around to your way of viewing things where actually there are other variables that matter. Distribution matters. Having a good market matters. Are there any other bad trends or advice or misconceptions that you’ve seen spreading that founders would do better to ignore?

Justin Mares 3m 40s

Yeah, I think one of the things that’s interesting to me right now that I think is a bad trend is – well, two things. So, one, I think that’s a really bad idea in general to have – I think the idea of product managers is often a bad idea. It’s like a way for CEOs to sort of delegate thinking about the product to someone else that has less information and can make worse decisions.

I get product managers and in a lot of ways I think they can be great with a start-up at scale but oftentimes, I think starting out like your job as the CEO is to make the product decisions. To me, it’s to set the strategic vision of the company and a lot of that involves what is your company actually making.

And so, I think early PM hires is something that people are doing a lot of right now and I think it’s kind of stupid. And then another thing that I kind of see out there in start-up Adviceland if you want to call it that is I feel like I’m seeing a lot of people just launching very – I feel like there’s this sort of trending effect that I see a lot of where it’s like something worked five years ago or three years ago.

Someone made a bunch of money or some set of people made a bunch of money on it. They start writing medium or blog posts about how they made a bunch of money and then people start launching those businesses like two years later and they’re almost guaranteed to failure because it’s just a completely different environment. I know that you and I met I guess four years ago now, I think, something like that.

Courtland Allen 5m 5s

Yeah, a while back.

Justin Mares 5m 5s

Yeah, and I think you and I met when like the whole bootstrap, buy a microcap SAS business and grow it was like a thing that 40 people were talking about online. And then we went out and did this – my partner Ryan, and I – bought a business called Fomo [ph] which we’ll talk about in 2014 and now I think like I’m looking at some of this micro-cap SAS companies and they’re so competitive. You’re getting a legitimately horrible businesses that are getting bid up four and seven times even to us, just like oh, my God. There’s too many people making money buying businesses, small SAS businesses and growing them where it feels like that field is much more picked through right now and a way, way worse idea to get into that it was in 2014.

Courtland Allen 5m 53s

Okay, so there’s a lot of depth here and we’re going to go into it. But let’s back up for second. I just want to talk about you how first got into this Justin and how you learned the things that you know now. What were some of those significant early steps you first took?

Justin Mares 6m 5s

Yeah, so when I was in college, I was 20, I basically decided that I wanted to be an entrepreneur. I had like a crazy, crazy year personally. I call it my Justin Vortex where I basically went into the year one person and came out a totally different person.

My dad lost his job and I had a friend commit suicide. I broke up with a girlfriend, broke up with a best friend, went to college, became atheist – just like all this stuff. And so, coming out of that, one of the things that I took was – you know, my dad was kind of a career guy that was working in big corporate America for 30 some years, 35 years or so. And he got laid off in 2009 recession – 2008 recession.

So, as part of that, my dad got laid off, I got rejected from an investment banking internship that I was really hoping I would get and was literally working as a janitor at LA Fitness. And so, that’s pretty much when I decided wow, this really sucks being a janitor. The first day on the job some guy had literally pooped into the shower drain and it’s like and I had to get a knife and it was awful.

Courtland Allen 7m 11s

Nooo. Nooo.

Justin Mares 7m 13s

I still remember that guy but fuck that guy.

Courtland Allen 7m 16s

Oh, my God.

Justin Mares 7m 18s

So I was like yeah, I just need to control my own destiny and I kind of decided then that I would rather do something where I have full control of my time even if it meant I made like $2 to $3 grand a month. I’d rather start my own thing and have control over my time than I would go get a normal job.

So, I started my first company in college. I totally blew up and failed as oftentimes people’s first do. But I learned a lot. And then doing that I managed to meet this other guy Jonathan Seigel who took a big risk on me and hired me and took me under his wing to run growth at Exceptional which like at the age of 23, I was running growth and managing almost 10 people at Exceptional and we sold that business to Rack Space and that was an incredible learning experience. Trying to do it on my own and failing and then learning from someone who knew way more than I did and do was phenomenally influential and important to my growth.

Courtland Allen 8m 13s

Starting a start-up is better than scraping poop out of shower drains. Should change that to the Indie Hackers tag line.

Justin Mares 8m 21s

Yeah, that was a terrible job, let me tell you.

Courtland Allen 8m 23s

Not all jobs are that terrible though. Exceptional seemed to go really well. It seemed like you learned quite a lot there. Why decide to become a founder after doing that? Why not just continue to take your skills and get better and better jobs?

Justin Mares 8m 35s

Yeah, that’s a really good question. I think that I – a couple of things. I would say that I went into Exceptional with the mindset of like how can I learn the skills that it takes to be a founder. I still was very on board and wanted to have complete control of my time and I also like candidly, like my upbringing like we didn’t grow up with a ton of money and I wanted to be financially secure and I thought that being an employee is a good way to do that at a time when – this was 2014 when I moved to San Francisco. I thought that I had to be a developer to make money which I don’t believe anymore but at the time I did.

So, I was like I don’t know how I’m going to make money as a non-technical employee so I guess I just have to start my own thing. It also kind of fits with my lifestyle way more like I knew that I wanted to be a founder. I knew that I wanted to try and solve problems. There’s like a certain set of problems in the world that I get really passionate about solving. And I think that as an employee you’re always somewhat replaceable. You can be an insanely talented employee but the nature of a business is to make the business not dependent on any one employee.

So, if I look at the world one of the things that’s really missing in the world that is generally – there’s a lack of good ideas and talented people chasing really hard problems. And so, I wanted to try and be one of the founders that like if I wasn’t starting a certain company no one else would be. And try and like make a small impact on the world. That was kind of like what drove me to hop back into being a founder.

Courtland Allen 10m 13s

Part of being a founder is doing what’s sometimes referred to as this explore and exploit algorithm. So first you explore, you try lots of different things and then you exploit which means you pick the best thing and you really focus on that.

You’ve been really good at both sides of this coin. Let’s talk about just exploring for a second. Can you walk us through some of the exploration phases you’ve been through and give us a sense of the variety of the businesses that you’ve tried to start?

Justin Mares 10m 37s

Oh, my, God, yeah, for sure. So after the Rack Space acquisition I stayed there for a bit, did an earn out for about a year, quit three days after my earn out and then went to Brazil and was trying to figure out what I’m going to do next.

So, I was exploring a bunch of different ideas. At one point, I probably looked at 15 or 20 ideas during that year. At one point – and kind of narrowed them down to three things which were all completely different.

I was looking at starting – well I guess it was five things. So, I was looking at starting a software app that would help people recover from drug and alcohol addiction. I was looking at starting a real estate play that basically takes advantage of something called – like a somewhat esoteric log called a 1031 Exchange and like a public market liquidity premium. Very random idea.

But I was looking at that. I was looking at doing a coconut – like an alcohol kind of spritzer company. This was like in 2014, 2015 and I think like White Claw—I should show you the designs. They’re super closed to White Claw. Everybody’s like fuck!

Courtland Allen 11m 45s

Oh, yeah? Did they rip you off?

Justin Mares 11m 50s

I don’t know. I mean hey man …

Courtland Allen 11m 51s

They found the lost designer.

Justin Mares 11m 51s

They launched it, I didn’t. Good to them. But I was like even doing a like 5% alcohol, kind of bubbly, slim can of white alcohol drink that was more healthy and low carb which is almost exactly what White Claw is.

Courtland Allen 12m 7s

Is that just a coincidence that the designs were similar or is there some sort of underlying reasoning why that design would work well?

Justin Mares 12m 13s

I think the underlying reason is there it’s kind of two-fold. If you look at a craft beer and alcohol, everything goes hard alcohol, kid od dark colors for the most part. And it’s only in the last couple years that the white, more pastel, design thing that looks very bright and vibrant and healthy has started to infiltrate the alcohol space at all. And so, I wanted to do that to kind of signify hey, this is clean and healthy.

And the other thing I wanted to do was this slim aluminum can so that if you know someone who’s trying to be healthy and not gain weight, holding a slim can while you strut your slim little figure, that actually is something you feel good about.

And so, I was looking at doing that. I was looking at doing Kettle and Fire and then I think that’s it. Then there was like a software business I was looking at doing in the enterprise space.

Courtland Allen 13m 5s

You’ve also done a lot of writing. I know you started a business with a pen name and you were selling books on Amazon that weren’t necessarily written by you. Tell us about how that went down.

Justin Mares 13m 17s

Yeah, not – it’s hilarious you found that. So that’s like an inside joke with some of my friends but basically there was one phase when I was in – kind of in that year off. I was looking at what are long-term businesses that I can do and be really excited about. And in the interim what are some like short-term kind of passive income things that I can also get going?

And so, one of those was I realized that there were a couple topics that I knew a good amount about that there were not good books out for just yet. And so one of them was I hired a ghost writer to write a book for using Neutropix [ph] for mental performance, published it on Kindle for like $2.99 and so I did that under a pen name because I didn’t write, wasn’t necessarily super proud of it. Just did that as a passive income thing which sort of worked but sort of didn’t.

Courtland Allen 14m 10s

How much money does it cost to hire somebody to write a book for you?

Justin Mares 14m 16s

Yeah, so when you think book you’re probably thinking like “Principal” by Ray Dahlia. This is probably way more like a fifth- grade book report. You know what I mean? I was like 70 pages. It cost me $550 to get the guy to write it. Took about three weeks. I edited it, did a pass through and published it for $2.99 and I think people probably get $3.07 worth of value out of that book.

Courtland Allen 14m 42s

[Laughs] You did good.

Justin Mares 14m 46s

Yeah, and it did – I think it did about $1,400 in revenue in the first six months.

Courtland Allen 14m 50s

Oh, okay, that’s not bad.

Justin Mares 14m 52s

It’s not bad but it’s like do you really want to spend your time making $900 for every piece of shit book that you launched that you’re not really proud of? No, not what I want to do.

Courtland Allen 15m 4s

Probably not. So, you obviously have gone on to start much more substantial businesses that have generated a lot more revenue and provided a lot more value for people. What didn’t you know back then that was stopping you from starting these kinds of businesses?

Justin Mares 15m 16s

Good question. I think the – I think that the biggest thing that I didn’t appreciate then is I had a real kind of scarcity mindset around money when I was looking at starting these businesses and so I had this kind of mindset that if I don’t outsmart the world and figure out how to achieve some value and, you know, make some money, then I’m going to be broke or unhappy or whatever it is. I think that’s totally not true now.

I think that had I just been like okay, what do I care about more than the average person? For me, health and wellness is way up there. If I’d of said well I’m going to do something in health and wellness because this is a space that I love. I care about it. I’m going to work harder than the average person because it’s something that I’m interested in and care about but I’m just going to dig into this space super hard core and figure out how to create value there, it would have worked out great. I kind of just stumbled into it but I never should have been looking at real estate things or looking at doing enterprise marketing software tool.

It’s just like a good personality kind of founder market fit type thing. So I think that now I way more value founder market fit and way less value – I think it’s way less important personally to try and figure out how do you hack the world of figure out an idea that works in the space that might be one you’re not interested in.

Courtland Allen 16m 38s

I had kind of the same transition where I was very opportunistic. I thought it would be so hard to come up with an idea that there was no way I could limit myself by only working on ideas that I was interested in. But it turns out that if you apply that constraint you’ll come up with even more ideas and you’ll be much happier working on them because you actually care about the subject matter.

Justin Mares 16m 56s

Totally, man. I mean with the real estate I kind of had a realization that even if this was the best real estate idea in the world if t hat were true, I would start doing it for six months, someone else would see that it was a really good idea who actually liked real estate and they would crush me. Or I would become a miserable person doing something I hate for four to six years. It’s just a good outcome either way.

Courtland Allen 17m 20s

It’s a slippery slope back to scooping poop out of shower drains, huh? [Laughs]

Justin Mares 17m 25s

[Laughs]

Courtland Allen 17m 27s

But you get to blame yourself in that case because you started the business.

Justin Mares 17m 29s

Totally, man.

Courtland Allen 17m 30s

Most people don’t have any ideas because they can’t seem to think of anything unique and then there are people like you. You’ve got dozens and dozens of ideas. What’s the difference?

Justin Mares 17m 41s

Man, I wish I knew the answer to that. I think my ideas have gotten a lot better over the last seven years since I’ve been thinking about it. I think probably the answer is some combination of having really good conversations with people who are smarter than you, working with people who are smarter and reading a lot probably. But I don’t know the – I don’t know the exact thing. Whenever people say they don’t have ideas, I’m like oh, God, that sounds so nice because I don’t know come to me, please, I feel like I come up with a couple ideas a week that I think are interested and could work. It’s just the average idea requires a lot of hard work and time which I just don’t have right now.

Courtland Allen 18m 21s

Is there any sort of pattern or formula for how you typically come up with ideas?

Justin Mares 18m 27s

So, I think that one of the biggest things for me in terms of coming up with ideas is I have become much more sensitive to what things are hard in my life or what things I don’t like doing and thinking about how can I potentially solve this. Kettle and Fire is a great example. Making bone broth is a pain in the ass. I’m a terrible cook. If there was a high-quality packaged option that’s probably something that would work and if there’s any number of people like me it should be a decent business.

I think there’s a ton of things like this and t hat’s sort of puristic. Like what is hard for you? What do you not like doing? Something that solves any of those problems could potentially to be a good business.

And then the other thing I think is interesting is assuming you’re not one of the Clausen Brothers or like a Jeff Bezos or Steve Jobs, you’re probably – but you’re probably not. No offense. It’s hard to come up with super visionary ideas and so I think the other thing that works really well is seeing what is actually working in one industry and applying it elsewhere.

Like one of the things that we actually saw and that I’m seeing multiple times is like okay, wow SAS – you know, being in software, SAS is taking over people’s workflows, it’s doing all this stuff yet moving in the CPG and the space that we’re playing in right now like physical retail, there’s almost nothing in software. Great. That’s probably a huge opportunity to apply an existing technology to something that doesn’t exist.

My partner, Ryan, and I are actually doing this right now with – we both worked in like tech kind of developer workflows and developer tools. You know, get commits rollbacks, like a lot of this developer management stuff that’s incredibly common when you’re building software. However, it’s still important but it doesn’t actually exist in ecommerce.

So, one of the new companies that we launched is called [Storic] UA which is a basic way to management and managed your kind of ecommerce worksites’ workflow and tell you is this thing broken. Are checkouts working? Are coupons working? Just do the basic continuous kind of testing and QA process that is really standard at existing software and tech companies. That didn’t exist in ecommerce. Now we’re building it. That’s probably a good idea.

Courtland Allen 20m 48s

This reminds me of a quote. It’s a little bit morbid because I’m pretty sure Joseph Stalin said it but he said, “Quantity has a quality all its own.” I don’t know what he was talking about when he said that but …

Justin Mares 20m 59s

Probably something very, very dark.

Courtland Allen 20m 59s

Probably something not great. But you apply it to business and you think about you talking to all these different people, working with all these different industries, coming up with so many different ideas, I just think there’s a lot of reasons why this is so much better than becoming wedded to one specific idea and sticking with it no matter what and not really going through this exploration phase.

Justin Mares 21m 17s

Totally.

Courtalnd Allen 21m 19s

For example, if you start lots of different companies,, then you develop kind of a familiarity with what an average business feels like which makes it way easier to recognize when something really stands out and also gives you kind of a scientific testing ground where you can start to recognize okay, this principle that I’ve heard about seems to hold true for this particular industry but not for that industry.

It gives you the breadth of experience to do what you were talking about and kind of cross pollinate ideas where you can learn the best tactics or business that people are privy to in one industry and then apply them to another area where nobody seems to know about it. What are some of the advantages that you saw from trying so many different businesses and how did it help you narrow it down to just one?

Justin Mares 21m 57s

So I think that one of the things that I realized is kind of what you were saying where if you are – like after seeing and testing a couple different ideas I realized that when I tested – another thing that I tested that I didn’t talk about was basically this idea that I think I called [Optimonks] or something like that but it was basically this idea that a bunch of software companies spend millions – hundreds of thousands to millions of dollars a month on their AWS, another server hosting bills. Those are generally relatively easy to negotiate down and so if we were doing a service or testing a service where you would – if you were spending $50 grand on an AWS bill, we’d get it down to $38, we’ll take about half of those savings and be the assholes on the phone that are negotiating your cloud service provider thing.

After testing that idea – and there were some people that were excited about it. But it was somewhat of a lukewarm response. I had a couple of customers that were game to try it but at the same time we launched a landing page for Kettle and Fire or for what would become Kettle and Fire that was just kind of testing interest in and how excited people were to buy bone broth online.

When we launched that we were spending $5 a day on ads and were driving people to a landing page for a product that didn’t exist that was drastically overpriced where they had to pay PayPal to preorder something and people were converting like crazy.

We were spending $5 a day on ads and making probably $100 to $150. So, for me I was like that’s a really good response. This is the world’s shittiest landing page. I’ve paid someone $5 on Fiber to photoshop a logo that I paid another Fiber person to make up onto an exiting competitors’ box. The whole looks trashy and scammy and we’re doing really, really well from a return on ads spent standpoint. This thing probably has legs if we can actually figure out how to make the product.

Courtland Allen 24m 1s

So this idea of a smoke test, putting up a landing page, driving traffic using ads comes straight out of the book, “The Lean Start-Up”. What are your thoughts about running successful smoke tests like this in 2019? How do you avoid getting a smoke test wrong?

Justin Mares 24m 14s

Yeah, that’s a good question. There are a lot of people that have different thoughts on this, kind of the lean start-up concept. I think Keith Boyd is someone I really respect who hates “The Lean Start-up” and thinks it leads to suboptimal outcomes.

I think he’s actually right if you’re trying to win the start-up Olympics and build the billion dollar business. You probably just need really high conviction in an idea and fact checked or idea check that idea with a bunch of other smart people. Then if it’s a big enough idea and you have to raise a lot of money to go for it, fuck yeah, go for it.

But if you’re chasing something smaller, I think that the risk most companies run into is market risk. Is this product or is this idea something that people actually want? And I think if you’re at all worried about market risk then in that case you want to do some sort of smoke test and figure out what is the response like? Is this something people are actually excited about.

And in the case of Kettle and Fire at the time there was not really an existing comp that we could point to online where people selling bone broth and hey, if we do this better, we’ll probably capture some percentage of this market. It was very uncertain if people actually wanted to buy bone broth online or how big that market was.

And so, given that, I think that in those cases, doing smoke tests makes a lot of sense and you want to look for like how excited are people by the response that they’re having to the smoke tests. And if the answer is blazingly obvious like you put $5 into the smoke test machine and it spits out $150, that’s a really, really, really good indication that this is something people actually care about.

Courtland Allen 25m 54s

There’s this continuum between on one hand entering a proven market where perhaps customers are already paying for a solution to this problem. Perhaps you’ve got lots of competitors and you can see that their businesses are working pretty well and on the other end, blazing a new trail.

Maybe no one’s ever sold bone broth before. Maybe they’ve never sold it online before. There’s a lot of uncertainty there as to whether this could even work. A lot of people in order to mitigate this uncertainty will raise money from investors. Why didn’t you consider raising for Kettle and Fire?

Justin Mares 26m 20s

That’s a good question. I think it was two things. I think one of the things was I have somewhat of an aversion – or had somewhat of an aversion – to raising money. Now I think I have less of that aversion.

But the second thing was I really was not certain that Kettle and Fire would be a meaningful business. So, in my opinion, the worst thing that you can do as a start-up founder is raise money for a business that ends up being mediocre or just too small of a market. I think its fine if you raise a bunch of money and you blow through it and you die quickly or if you raise a bunch of money and you sell, obviously that’s great.

I think the worst thing you can have is raising money for something that just doesn’t take off but you sort of have a fiduciary duty to run for four to six years. That’s just sounds like hell to me.

And so, I didn’t want to be in that situation and I was also fortunate enough that our first production run was $100K and I was able to take some of my earnings from the Exceptional acquisition and plow that into paying for our first production run. I didn’t have a lot of leeway after that but I felt pretty strongly that if I didn’t want investors. I was concerned the market wasn’t going to be big enough so it would make raising a bad idea.

And then, after all of that I was also majorly concerned that – or I read the numbers and I saw that if these ad metrics hold true the worst case scenario of me starting this business and plowing all this money into inventory is that it takes a year to see through and I’m making my money back and I’ve wasted a bunch of time but I’m financially fine. And so that kind of gave me the confidence to be willing to invest in the inventory and not going to raise money.

Courtland Allen 28m 3s

So we are now at the exploit part of the explore-exploit algorithm. You’ve hit on Kettle and Fire. The smoke test went really well. How do you exploit a great idea like this once you’ve hit on it?

Justin Mares 28m 13s

Yeah, I think you move quickly. Optimize for moving as quickly as you can. So, for us, we realized that we had a pretty meaningful advantage. The first month we launched – coming into Kettle and Fire, I thought this was going to be a $5 to $10K a month business after one to two years. The first month we launched we did like $20 grand; the next month we did $40. The month after that we did $60 and we’re like wow, okay, this is really picking up steam.

And that was very, very minimal amounts of paid advertising. So, we just pressed on and we got to pretty hard and we’re willing to aggressively invest in growing our distribution, growing our business, investing in new products, investing in a team. I did not take a single dollar out of the business until I started paying myself a salary in 2016 which was about a year and a half after we launched. So, we got pretty aggressive on the growth front.

But it also meant that we did like $280K in the four months that we launched in 2015. We did like $2.8 the next year; we did $10 the year after that and have continued to grow. So, it’s just been – yeah, we’ve been pretty aggressive about growing.

Courtland Allen 29m 22s

So a lot of your experience came from the tech world obviously you were the head of growth at Exceptional. Kettle and Fire sells bone broth. It’s certainly not tech. What’s different about getting into consumer-packaged goods and what’s the same?

Justin Mares 29m 35s

There’s a lot of things that are different. One of the things that I think was advantageous was I came from a teach background. Most people in CBG kind of world – consumer package goods which is what our industry is called – they will start a business like Kettle and Fire and the road map historically has been I have this nice little bone broth product. Now I’m going to sell it in the 10 stores around and in the neighborhood that I live. Then I’m going to sell it to 50, then I’m going to Save a Lot, then I’m going to try to go in the region I’m in, then eventually nationally and it’s like a multi-year scale-up kind of thing.

I knew pretty quickly that I wanted to leverage my skills with online marketing and so we went online as soon as we could and built out a direct consumer capabilities that even today very few food brands have on their – you know, internally. So, we exploited that advantage and in a lot of ways it’s like a bone broth brand uses best practices from like the tech growth marketing world. It works really well and it works even better because you’re not competing against incredibly well-funded other SAS businesses that are using the same tactics.

At the same time, things that are different – at Exceptional we had like financial reporting that was basically hey, here’s how much we made this month. Here’s how much we have to pay in salaries this month. That’s about it. It’s really hard if you are making more money than you are spending, it’s really hard to go out of business if you’re a software company.

If you’re making more money than you have expensive-wise in a CBG brand you can die instantly. It’s crazy. And so, figuring out how to do financial controls has been, by far, the biggest learning and is so different from tech because – do you mind if I give a quick example of what …

Courtland Allen 31m 21s

Yeah, yeah, go into the details.

Justin Mares 31m 23s

Yeah, so to give you a sense when we were growing in 2016, I guess 2017, we went from like $2.8 in 2016 to $10 million in 2017. So, we grew more than 3X that year. What you have to do if you’re in that position is if you do a million in revenue in January you basically have to plan – and let’s say you’re growing 3X so effectively you’re doubling the business every, I don’t know, what is that three months, four months.

So, you basically have to – if you have a million dollars in January – you have a million dollars that hits your bank balance, you then have to pay as if you’re going to grow to $1.4 million the next month and so you have to overspend on inventory assuming that you’re going to grow.

And so, as your business grows faster, the more and more money you have to throw at inventory which means the less and less money you have in the bank. So, I had a very memorable meeting with one of my advisors that year who was like kind of experienced in CPG and I was like, we’re crushing it and we doubled last month. I think we’re going to have another huge month.

And he was like how much cash do you have in the bank and I was like I don’t know couple of hundred grand, we’re fine and he was like oh, so you guys are about to be out of business. And I was like what do you mean? He was like, just trust me, you need to get out a line of credit right now. And he was totally right. It was just weird growing nuances when it comes to building inventory for a physical product brand.

Courtland Allen 32m 55s

Did you ever read “Shoe Dog” by the founder of Nike?

Justin Mares 32m 58s

I did. Too late, but I did.

Courtland Allen 32m 59s

Yeah, that book was a nightmare. It was like oh, there’s no way I’m ever selling physical goods because it was the same story. He kept selling more and more shoes and eventually he was doing $30, $40 million in revenue and had like no money in the bank and was on the verge of dying and the growth was amazing. And it’s just such a foreign concept for somebody coming out of the tech world.

Justin Mares 33m 18s

It’s crazy. The only way—in these businesses – the only way that you actually get a bunch of cash out the door is if you stop growing which no one really wants to do or if you have like done a poor job of planning inventory and you’ve massively under bought, then you can take cash out.

Courtland Allen 33m 38s

It’s ludicrous.

Justin Mares 33m 39s

Either way, it kind of sucks.

Courtland Allen 33m 39s

Crazy. So let’s talk about growth. I look at the parallels between your story and Nike for example. At that point in time people weren’t really running and the running shoe was like this newly popular thing and everybody was kind of getting into. So, growth just continued to accelerate and never really stopped.

With what your doing you’re sort of riding on a trend as well. People are eating healthier, people care more about what’s going into their bodies. That fact that you could come onto the scene and start selling this very friendly keto-friendly bone broth that others weren’t selling is kind of an indicator that you’re a little bit early to the market. What are some of the bigger factors that helped you grow Kettle and Fire and keep growing so you didn’t go out of business?

Justin Mares 34m 14s

Yeah, I think one of the main factors is that we were earlier we were like the first shelf bone broth and so if you’re someone who makes bone broth at home and you realize it’s a huge pain and you realize it takes 24 hours to make and it’s something you want to have as a staple of your diet, we’re a really good way to solve that problem.

So I think we have really good product market fit kind of from day one and then in terms of how do we keep growing, we’ve got an incredible marketing team that we way over invested in digital marketing, especially from a personnel standpoint to build what I think is truly one of the best growth teams in direct consumer food that’s out there.

And so, because of that, we were doing stuff like investing heavily in Facebook ads, doing subscription programs, doing influencer marketing kind of before people were talking about it. So, hitting these channels before they were overoptimized and overcrowded meant that we were really the first brand to get our name out there as a bone broth brand.

So it meant that as more people found outa about bone broth from their friends drinking it, their favorite celebrity, their trainer, whatever, talking about bone broth, we were one of the first brand that they went to and they heard about which was really cool and that meant that as the trend grew, because we forced our way to the top to being the number one brand, we kind of like grew along with the trend which was really, really helpful.

Courtland Allen 35m 41s

It’s super good to be number one because number one gets like 80 to 90% of the attention share. Number two a few people have heard of, number three no one knows who they are so you really accumulate these great advantages by being number one.

Justin Mares 35m 53s

In a growing category I would say. In a static category, I think that if we wanted to start a chip company, that company is not really growing. I think you could probably carve out an amazing niche, an amazing lifestyle business and you don’t have to worry about being number one. But you grow a hell of a lot faster if you’re number one when it comes to like a trend that’s growing really quickly.

Courtland Allen 36m 13s

So let’s talk about some of these growth strategies in detail. You mentioned advertising, you mentioned influencer marketing and a couple other things. What do you think was most significant for growing Kettle and Fire early on?

Justin Mares 36m 22s

I think influencer strategy was a big one. We launched in 2015 and we were one of the first brands to start really building out a strong influencer program. So that was one of the things that I think really propelled us we had pretty early on several hundred influencers that were talking about Kettle and Fire and talking about bone broth at a time where they weren’t really talking about that many other brands.

Now it’s way common. If you scroll through your Instagram and you’re like oh, whoever – John Mayer is talking about the new brand of undies that he loves. It’s like cool, I don’t give a shit. At the time it resonated way more with people and so we were pretty quick to get out there in terms of building a brand that influencers were talking a lot about and that led to a lot of our growth and I think that was for sure our biggest channel for the first like two years of the company.

Courtland Allen 37m 18s

I think one of the truisms about growth and something that you talk about in “Traction” as well, is that oftentimes you have to kind of switch channels. A channel stops working as well over time as it did early on and you have to sort of leap frog onto something else. Did they ever happen with influencer marketing where it kind of petered out and you needed to switch to something else?

Justin Mares 37m 32s

Oh, yeah, for sure. I mean we saw it get more expensive. We saw it become more challenging. It’s way more crowded now like I just mentioned and so now we’re our super boring brand. We’re in retail, we’re in about 7,000, every Whole Foods, and that’s like our main growth channel. We timed that really well but it’s certainly not a sexy growth hack to say we put our product on shelves at companies that are paid to sell that. It’s like sweet. It’s like pretty standard stuff.

Which is also another learning I’ve had. I used to think about things in terms of growth hacks and a lot of that kind of stuff. Now I think that that’s – I think about that way less. You might have an amazing growth hack around how to sell product and get people to care about what you’re doing on Twitter but for us, that channel is just not big enough to move the needle at this point and so we don’t worry about it. So, we now think of way more – way less about growth hacks and way more about how can we take advantage of large channels that if we get them to work, we can actually make – it will make a material dent in our business.

Courtland Allen 38m 45s

How do you think tech founders should think about brand marketing because when I talk to people working in physical goods I hear the word brand all the time? When I talk to people starting tech businesses, I rarely hear that word except for the biggest companies.

Justin Mares 38m 57s

Yeah, I think that brand is code for companies that have raised too much money and don’t know what to do with it. I think that in general you can talk about a way luggage probably says about how they’re building a brand or are you spending $3 million a month on Facebook ads. And the answer is turn off your Facebook ads. Take your brand marketing every day and I can guarantee what will happen to your growth.

I think that brand is like a word, a term that bad marketers probably do because they feel it’s something that should be done. I think it’s important from a positioning standpoint. I think it’s important from a design and look and feel standpoint. I think it’s important from an acquirer standpoint actually but I do not think that it is something that actually improves or – like I don’t think it has a meaningful impact on a company’s outcomes. I’m super skeptical of brand in general.

Courtland Allen 39m 50s

So brand might be important for some of the intangible things but for actual growth it comes down to distribution, it comes down to advertising, it comes down to products on shelves.

Justin Mares 40m 0s

Yeah, I think it comes down to distribution and it comes down to your product positioning. I think if you’re – Craig’s List is probably a great example of this. Like they’re a – by all accounts – Craig List is the worst brand in the world but they have a strong brand promise and they’re fucking everywhere and so they crushed it.

I think that that type of stuff – I don’t know I just think that there’s so many well-branded companies that just fall flat on their face. To me I just think brand is almost certainly a waste of time for most businesses and that time and energy would be far better focused on investing on building your own unique distribution channel and for moving your product or building a real kind of competitive advantage.

Courtland Allen 40m 39s

So let’s switch gears here or a second.

Justin Mares 40m 42s

Back to [inaudible] Courtland?

Courtland Allen 40m 42s

Yeah, we got to get off this topic. Let’s see, [inaudible] anymore Justin. Jesus. How to make this show interesting. I want people to listen all the way through and not drop the episode 30 minutes into it.

Justin Mares 40m 54s

Not kill themselves after it.

Courtland Allen 40m 59s

Let’s talk about people for a second. People are interesting. I know a lot of founders who built successful companies and they do it in almost total isolation. They’re not part of any sort of scene, they aren’t particularly well connected. I would say you’re pretty much the opposite. You’ve been great at connecting with people who are smart, who are impressive. People hear all the time vaguely that they should be networking. What are some of the tangible benefits that you’ve gotten from it?

Justin Mares 41m 21s

Yeah, so I don’t love the term networking but I think there are a lot of really smart people out there. I’m not a super smart person and so I benefited a lot from being around people that are way smarter than me. I had certainly met people who are off the charts intelligent and can just come up with amazing, interesting, brilliant ideas all on their own. I don’t have the ability to do that.

So, for me, being in San Francisco and being around people that are way smarter than me, meant that I got exposed to a lot of really, really cool things. I think that – there’s no doubt that meeting people – I did a couple things that I think were tremendous from a building my network – if you want to call it that – standpoint. I did two things I probably did pretty well.

One, when I was in San Francisco, I wanted to learn way more about growth marketing. It was something I cared about and so I started organizing a Meet Up. It was totally informal, it was invite only, jut called it a growth group. We met once a month. I was this guy who was running a growth – I had seven direct reports at the time. We had been acquired by Rack Space. We were doing like $3 million in revenue and I was organizing this group where we had heads of growth from [inaudible] Hub, Air B&B, Lyft, Mozilla, and that was insane.

These people were so much smarter than me and I would just sit there and take notes and be like cool, and kind of sit there and moderate the discussion. It was crazy. So, I was surrounded by people that were way smarter than me mostly because I took the initiative to organize groups and do things that these people wanted to do but didn’t have time to organize on their own.

The second thing I think I did well is I tend – I think that there are a lot of people that you can meet – especially in San Francisco – who you meet up with them, you sit down and they’re so clearly ready to just like suck you of all your information and then walk away and then just leave you drained and lifeless in the corner of the café.

Like I actually kind of think the opposite. I planned on starting companies for a long time and I really wanted to work with smart, awesome people that I would consider my friends for the rest of my life so I kind of take an opposite approach of try and connect on a personal level with people not because it serves me better or anything like that but because – although it tends, to to be totally honest – but because I really enjoy talking with people and I love learning about shit. I love seeing other people succeed. I was super pumped up when Indie Hackers [inaudible 0:43:52]. Fuck yeah, Courtland did it. It’s really cool.

So I think those are two things that really helped and meeting those people it kind of gives you permission to say hey, we’re kind of in a growth slump right now which we have been in various times. How did you think about getting out of this rut? Is there anyone I should talk to? Is there anyone I should interview? Is there anyone I can connect with to figure out how to get over the next kind of growth hump or how do I solve this very specific problem that we’re having right now?

Courtland Allen 44m 18s

Yeah, I love that point about not always trying to suck everybody dry of all their information like I do on this podcast.

Justin Mares 44m 27s

Yeah, but you’re like giving people a platform. It totally doesn’t apply to you. You’re fantastic at this.

Courtland Allen 44m 32s

You and I have a mutual friend, Julian Shapiro. He’s been on the show a couple times. He did this when I started Indie Hackers. He reached out and gave me all these helpful tips on how I could grow Indie Hackers and increase my revenue and it was crazy helpful. Almost nobody does that. If I get 1,000 emails maybe one of them is from someone who genuinely took the time to figure out what my priorities are and offer some help with the high priority stuff. Why do you think more people don’t do stuff like this? It’s not uncommon advice.

Justin Mares 45m 0s

Yeah, I think that for a lot of people they just get tied up and stuff. They become busy. They make it not a priority. I think a lot of people say that they want something and they don’t actually. A lot of people will say that they want to be in amazing shape but they’re not willing to take the tradeoff of what does it take to actually be in amazing shape? Well it means you can’t eat Oreos after 3: 00 p.m.

A lot of people say that want an amazing network but they’re not willing to invest in that time building relationships and being helpful to people when they have maybe a family they want to go home to or they want to hit the gym or they want to watch Netflix for two hours.

And I’m not judging whether those are better or worse, I just think that for most people time is their maximum constraint and people do a really bad job evaluating what they say they want versus like their actual revealed preferences.

Courtland Allen 45m 50s

Yeah, for a lot of this stuff, it’s just so easy to underestimate the costs. It’s hard. If you want to be helpful to somebody it’s probably going to require several hours if not days of being thoughtful and really working to be helpful.

I know you’ve done this a couple times. You were able to help out Andrew Warner host of the Mixed Review podcast and you also co-wrote the book, “Traction” with Gabriel Weinberg who from his perspective you were totally an unknown quantity at that point. How have you been able to get into people’s radar and be helpful?

Justin Mares 46m 15s

Yeah, that one was super – both of those were super easy. I mean I sent him a cold email and in Andrew’s case, in his onboarding program when I sent [inaudible] the onboarding experience was awful, like comically bad.

So, I just sent him this long email of like hey man, this is your main source of revenue. Like if you can improve this by 20%, you’re killing it. So, I just sent him things that I would do differently, questions I would ask, all this. And he – and I didn’t realize it then, but at the time I was kind of thinking like oh, he’s Andrew Warner and he knows all these business people and he’s running this successful thing. He must know everything I’m about to tell him.

And the answer is yes, he does, but now that I’m like running a meaningful business I way more appreciate how often and how true it is that I know that there are 10,000 about Kettle and Fire that could be better. I just haven’t had time to focus on them and improve them and do all that kind of stuff.

Courtland Allen 47m 16s

So true.

Justin Mares 47m 17s

And so, just being the person that says hey, this sucks, here’s how I would solve it. Want me to do this for you? Becomes incredibly easy. So, I did that with Andrew and then I offered to solve it for him for free and he was like o, I’ll pay you $E200 or whatever the fuck it was. And I did it and it kicked off a long, really good relationship with the two of us.

Courtland Allen 47m 39s

Yeah, I get a ton of emails for Indie Hackers that are also pointing out things that I already know. There’s a bug here or wouldn’t it be great if you had a mobile app.

Well I have a list of 1,000 things that I know are good ideas, that are know are bugs, that I know should be fixed or improved for Indie Hackers but I don’t have time. I don’t have time to work on the 800th most important thing. I have to work on the top most important thing.

Justin Mares 47m 56s

Exactly.

Courtland Allen 47m 57s

So if you just email someone and say, hey, this thing is wrong or this thing could be better, that’s not that helpful because they probably already know. If you want to be helpful, you have to do steps two and three that you laid you which is to say here’s how you can fix it and hey, do you want me to fix this for you?

Justin Mares 48m 10s

Exactly.

Courtland Allen 48m 11s

Let’s talk about your book, “Traction” for a big. You wrote this book with Gabriel Weinberg the founder of Duck, Duck, Go. Again, this is an extremely busy person. You were somebody that was relatively unknown at that time. How did you get onto his radar and how did that collaboration actually work as far as division of labor and other operational stuff?

Justin Mares 48m 31s

It was pretty easy. I think like he had done seven interviews on Traction and the top of getting traction. He bought the domain. Traction.com. He had an email sign-up list and had said on his blog multiple times I don’t have any more time to do this project because Duck, Duck, Go is taking off which he was crushing it. It was crazy. It’s amazing.

So I reached out to him and was like hey, I’m recently graduating college – or about to graduate college – I have nothing going on in my life because I’m not successful or smart yet. Can I help you push this project through to fruition? So, it just turns out that he was near the Philadelphia area which is where my family lives. So we got together twice and basically I was like look, I fully appreciated that you probably don’t think I can write this book. And so, what I’m going to do is give me one interview and one topic and I’ll show you what type of chapter I can write.

And so, I spent a week, two weeks, writing the first chapter of the “Traction” book and just sent it to you and was like hey, is this good enough? If so, let’s actually write this whole thing. And he said it was and so the arrangement worked out really well where my time was far less valuable than his and so I wrote the first draft of almost every chapter in the book. And then I’d send it to him.

He would edit it and we would go back and forth and we would align on the final draft of the chapter and take it to a real editor and just kind of did that through the 26 chapters in the book until we had a finalized book after about a year of writing.

Courtland Allen 50m 2s

Well it’s really blown up since t hen. I feel like everybody I know owns a copy of “Traction”. I’ve got it on my bookshelf behind me somewhere.

Let’s say you could go back in time with all the skills and the knowledge that you have now. Maybe you don’t know about crypto but you know about growth, you know about marketing and starting businesses. Would it still be worth it for you to take the time to reach out to Gabriel and write “Traction” all over again?

Justin Mares 50m 29s

Probably – you know, probably not. It probably wouldn’t have been worth it. I think honestly – I’m incredibly proud of it. I think it massively helped with my learning, my network, I met a bunch of friends and there was just tremendous experience. It’s something I wanted to do forever was just write a book.

But I think that if I look like – we wrote “Traction” which did really well like beyond what I had thought it could have done. Because neither of us really wanted to be authors, we kind of wrote it and then just stepped away. Put it out in the world and didn’t do anything with it.

I think that if I had wanted to be a thought leader or monetize that doing consulting or speaking or whatever it is, workshops, consulting, then yeah, that would have been totally worth it. I think that because that’s not what I want to do from a career standpoint, I probably wouldn’t do it again unless it was something that I think directly – like right now I would write a book on health before I would write another book on marketing because I think that that actually fits with a lot more of the goals and things that I want to achieve in my career. Way more so than a book on marketing.

Courtland Allen 51m 34s

So at some point while you’re working on Kettle and Fire early on, you did something that I don’t think any of my other guests have ever done and that’s that you started a second business that would grow to eight figures while you were running your first business with eight figures of revenue.

Justin Mares 51m 49s

[Inaudible]

Courtland Allen 51m 48s

It’s called [inaudible]

Justin Mares 51m 49s

And then bought a third.

Courtland Allen 51m 49s

And then bought a third. So let’s do – what order did that happen in?

Justin Mares 51m 54s

Yeah, so we launched Kettle and Fire in August of 2015. We bought Fomo in August of 2016? No, April 2016 and then we launched Perfect Keto – or started Perfect Keto in November or October of 2016. So …

Courtland Allen 52m 11s

Okay, so that’s a lot in like basically the span of a year, it’s a little bit over a year. We won’t talk about Fomo as much because maybe I’ll to be able to have Ryan on the podcast at some point in the future. He can go into a crazy amount of detail.

Justin Mares 52m 23s

He would be controversial and awesome.

Courtland Allen 52m 25s

I know. He’s a controversial guy from talking to him on Twitter. He’s one of those guys I have to DM on Twitter because I can’t have those conversations in public.

Justin Mares 52m 32s

[Laughs] He’s great though.

Courtland Allen 52m 33s

How did you – first why did you do that? Why w ould you distract yourself from your first business and start another one?

Justin Mares 52m 41s

Yeah, it’s an excellent question. I think it was probably foolish although it worked out. But I think the reality is that I mentioned earlier that for me the biggest risk and the biggest thing I was curious about with Kettle and Fire is can this be a real business? And at the time – we launched in August, six months later, eight months later bought Fomo I was still not sure that it was going to be a real business. Wasn’t really sure if it would become a business of the size and scale that I wanted it to be.

So I was still contemplating other ideas. We hired an incredible team. We had put the right pieces in place I think or as best as we could knowing what we did then and around that time I also liked being in the space. I was like oh man, there’s this fundamental arbitrage – or the fundamental opportunity – that I think I saw and still see is not that like people want bone broth but can’t get it. I think it’s way more actually that there is a whole set of products that people want that are better for you and actually make you a healthier person that consumer product companies and food companies are just not making.

So, as I had seen with Kettle and Fire, wow, if you make a consumer product that isn’t branded, fine, and meets an actual value proposition and you know how to do online marketing where you can reach people, you can grow a food brand effectively faster than has every been possible in the history of launching food brands. Like year one or year two of most food brands are single digit, hundreds of thousands of dollars if you do really well.

So, with Perfect Keto, being with Kettle and Fire and talking with customers and interviewing people and just being in the space, I saw keto was starting to gather steam, it was something that I was trying in my life and I felt amazing. It was something that high-performance people – Tim Ferris, Dominic Nagacino – a bunch of athletes talk about this stuff were starting to talk about and it was something that if you looked on Amazon there were literally like two products that were serving that niche.

And so, again, this was like I thought Kettle and Fire would be a side business, was wrong but in a good way. My buddy and I made – my partner at Perfect Keto, this guy names Anthony Gustin, we launched the business thinking it would be a side business mainly we wanted to work together and the goal was like let’s launch this thing and when it makes $20 grand in profit we’ll spend it on a trip to Japan just because we want to hang out with one another in Japan. We’ll like that will probably take 18 months and it took like 40 days.

And so, we – and so we saw that trend and we saw that people were excited about keto and we saw that the two existing companies in the space were doing a horrible job, did no online marketing, were putting a terrible ingredients I their product and jut decided to launch it and it took off on us.

Courtland Allen 55m 43s

So explain to me exactly what Perfect Keto is. What were you selling to consumers?

Justin Mares 55m 46s

Yeah, so Perfect Keto is a food and supplement brand mostly for people who want to incorporate a low-carb lifestyle and keto into their life in some way.

So, our first product was what we call an exogenous ketone which is basically when you’re in a state of ketosis which comes from eating a keto generated diet, your body makes endogenous ketones which are like ketones bodies which your body burns for energy. It effectively burns fat instead of glucose aka sugar for energy.

So, what we made was an exogenous ketone which gives you a lot of the energy boosting effects that you get from being on a ketogenic diet but without necessarily being in a state of ketosis. And so, there have been studies that supplementing with exogenous ketones can help with weight loss, can help with – decrease cancer formation, can help with a lot of different metabolic markers and things that people are generally trying to improve their health with. So that was our first product.

Courtland Allen 56m 41s

How different was your playbook for growing Perfect Keto than it was for Kettle and Fire?

Justin Mares 56m 46s

It was the exact same with one notable difference. We fucked up when we launched Kettle and Fire and we totally ignored Amazon thinking oh, we don’t know how to do Amazon. We’ll handle that later. But we didn’t realize that people would buy our product and resell it on Amazon which totally messed up that side of the business for us.

And so, when we launched Perfect Keto we’re going to go ham on Amazon on day one and follow the Kettle and Fire like online growth which we did.

Courtland Allen 57m 14s

Okay, so I want to get a little bit more into the details of launching a food business. Because again, you came from the tech industry, you’re a marketer. You don’t know how to make food, at least you didn’t going into it. How do you – what goes into that? Who do you need to know? Who do you need to contact? How do you get something from non-existing to create a box of bone broth?

Justin Mares 57m 32s

Yeah, it’s tough man. We emailed like 400 something manufacturing partners to ask them hey, this is the product we want to make. Can you help us formulate and actually manufacture it? And it was really hard. We got told no 399 times. We had one group that fortunately the way the dynamic works is it’s incredibly hard to a co-packer. Once you do, oftentimes they’re looking for new business and so if you say hey, can you help us formulate this? We’ll then work with you to actually make this product in production. That’s kind of their bread and butter and so they’re willing to do it.

But yeah, it was a lot of cold email. It was a lot of talking to founders of CPG companies and saying how did you go about this the first 12 months? All of which paid off, but yeah, it was incredibly hard.

Courtland Allen 58m 25s

This again, reminds me of “Shoe Dog” where he was working with basically a manufacturer in Japan to sort of work on the shoe together and then the manufacturer contributed ideas for how the shoe should look and eventually it turned into sort of a competitive arrangement where the manufacturer was like this is going really well. Why don’t we just make our own shoe? Are there any parallels in the food business?

Justin Mares 58m 41s

Some. There definitely are. You kind of have to – we were lucky. We met someone early on who knew a lot of the pitfalls that these emerging brands fall into and so from day one we designed contracts that meant that we would minimize the risk of that happening to us. So that was really helpful.

I thought you were going to pull out another Joseph Stalin quote. So, I’m impressed that …

Courtland Allen 59m 5s

You never know. I’m really restraining myself.

Justin Mares 59m 10s

[Laughs] Maybe Hitler next or something.

Courtland Allen 59m 13s

You know what? Why don’t I go a step further and just quote you, Justin?

Justin Mares 59m 15s

[Laughs]

Courtland Allen 59m 15s

Seriously. You wrote a pretty great blog post that I totally agree with that talked about advice that people give that you don’t really agree with which is the idea that your idea doesn’t matter. It doesn’t really matter what you’re working on. It’s all about the execution. And as long as you execute really hard on whatever idea you’re working on, you’re going to succeed.

I have the polar opposite opinion. You do as well. Go into that. Why don’t you think good execution is enough?

Justin Mares 59m 40s

I think that execution is – and I’m not the first person to say this – but I think execution is effectively a force multiplier. But I think the thing that most people don’t talk about – and maybe I should write a blog post on this – I think that most start-ups don’t get killed on the execution side of it they get killed due to market factors. Like you make a condom for goats and it turns out no one wants them. That is a market …

Courtland Allen 1h 0m 7s

Shocking.

Justin Mares 1h 0m 8s

That is a market risk. Right? I don’t know, maybe that’s a huge business. I have no idea. But that’s a market risk thing that you’re exposed to and you don’t even get a chance to execute well on it. And so, if I think about where most start-ups fail, it’s almost always in the market risk phase which is effectively you just have a bad idea.

Like I think of market risk as this hurdle that you have to clear to them try to scale this bouldering wall of executive risk. And so, if you’re idea sucks you’re not even going to get to play the are you a good executor or not?

And so, I think that it’s actually incredibly important and the value of really, really good idea is insanely overvalued. Especially because in today’s environment – you know, 2019 – there’s a huge lack of good ideas and a huge lack of bid ideas and if you have either one of these, you can suck at executing. Like read the “Bad Blood” book by Elizabeth Holmes. By all accounts she was a trash operator, a horrible team, 40% of her team is quitting a year and she had a massive idea that she could sell.

Granted, she was a frog, but still she raised $800 million. I mean if you have aa good idea money will come in this environment and I think that’s never been more true.

Courtland Allen 1h 1m 30s

So I can’t miss this opportunity when I have you on the podcast, Justin. You’re a super healthy guy, super fit, you’re looking well-muscled.

Justin Mares 1h 1m 38s

They’re shirt inflatable.

Courtland Allen 1h 1m 43s

Are they? [Laughs]. We all hear about diet, and exercise and sleep. Obviously, it’s easier said than done otherwise everybody would be super healthy. You seem to do a good job at these and you’re also running multiple health food companies. Why are so many founders getting this wrong and what are some ways that founders can do a better job preventing their businesses from making their health so much worse?

Justin Mares 1h 2m 0s

That’s a great question. I think this is one of the things that a lot of the people in Silicon Valley are stupid about. I think that in general the sort of engineer mind things about the body as this thing that I can act like oh, I need 2,000 calories a day and if I eat them in perfect proportions like I’ll be totally healthy. So, I’ll just drink soy milk all the time.

It’s like no, that’s really stupid. The body is an incredibly complex system. We literally are still finding out new systems, new things about it, like every year. It’s not just something that you can throw [inaudible] McDonald’s and soy milk into and expect that your health outcomes are going to be the same as something who’s eating a paleo non-processed Whole Foods diet.

So, I tend to think that what you put into your body is incredibly important. I dictates your energy levels, your mental wellbeing your emotional wellbeing, clear-headedness, everything. Like one of the most impressive things about Reid Hoffman to me is how much he’s achieved as someone who’s not super healthy. Oh my, God, if that guy got healthy he could run the world and take over America. It’s incredible.

And so, what I do in general is I eat a mostly paleo diet. I focus on getting enough sleep. I try and cut out toxic relationships in my life and make sure that the four pillars for me are like food, stress, sleep and movement. And as long as I’m getting enough o those, as long as I’m moving some, and I’m not crazy stressed which means my relationships are good and I’m not killing myself at work on a daily basis – you know, my sleep is good, my diet is good, I’m good. I think this stuff can be a lot easier than people tend to make it out to be.

Courtland Allen 1h 3m 44s

Yeah, it’s all interconnected and if you’re sitting down and you start up every day you’re brain is foggy and you’re not coming up with good ideas, you’re not able to work or stay focused, it’s probably related to all these other things that you might not think to connect it to.

Justin Mares 1h 3m 56s

Oh, I mean I think it’s crazy that so many tech companies in the valley will serve pizza and a beer at like 5:00 p.m. and t hen have peanut M&Ms and Coca Cola on tap anytime they’re working long. It’s like what a recipe to make everyone at your company tired and super unhappy. It’s crazy.

Courtland Allen 1h 4m 15s

Yeah, so I’ve got the polar opposite thing going on where at lunch it’s a lot of salads and vegetables and protein.

Justin Mares 1h 4m 19s

Love it.

Courtland Allen 1h 4m 21s

It’s very low carb. There’s almost no bread.

JUSTIN Mares 1h 4m 23s

Or course, the Caulsen brothers. They fucking know their shit.

Courtland Allen 1h 4m 27s

Yeah, they know what’s going on. Let’s close out here. One of the goals of my show is just to get more people to start companies and just because I think it would be awesome and life changing for so many people. If t hey can get over that initial hurdle of hesitation.

Justin, what would you say to somebody who’s considering getting started but they’re telling themselves now is not the right time. I don’t know enough. I’m not ready.

Justin Mares 1h 4m 47s

I would say that if your – I would think about lowering your risk. So, for me, I was not sure that I was ready to start a company and so I did it in an environment where failure had a really, really small cost.

Like if you told me when I launched Kettle and Fire, you’re going to launch a bone broth company, I would have been like oh, God, no, that sounds scary, I don’t know what I’m doing. But instead I told myself I’m going to test some landing page for an idea that happens to be a bone broth company. If that fails, extraordinarily low risk, no downside, I’ve lost maybe three hours of my time.

So, for me, at least with the way my psychology works, the only think that’s ever worked for me is like removing this idea of I need to start a massive company and instead just breaking it down into really easy, concrete next steps that at no phase are you risking the feeling of I may be a failure if this doesn’t work out. That’s the only way I’ve ever been able to do anything.

Courtland Allen 1h 5m 44s

Cool, so you just break it down into baby steps so every step you take is not that big and not that risky.

Justin Mares 1h 5m 50s

Well yeah, and I think the biggest piece there, at least for me, is just like not risking my – I think it’s really harder to risk your identity on something unproven. And so if I was like I’m going to launch Kettle and Fire and if I fail, I’m a failed start-up CEO fail [inaudible]. That sucks. I don’t want to do that. That’s super scary to me.

If I’m like testing a landing page and have this identify of someone that is testing an idea and trying to find out what he’s doing next, it becomes a really incongruent if I’m actually not testing ideas. So, I think you want to shape your identity to your perception of yourself to guide you in the direction you want to go and make it so that failure does not feel so costly.

Courtland Allen 1h 6m 32s

Sage advice. Well, listen, Justin, thank you so much for coming on the show. It’s been a pleasure. Hope your not too drained after being peppered with questions.

Justin Mares 1h 6m 38s

No man, that shirt kept me awake the whole time.

Courtland Allen 1h 6m 41s

I’m going to have to put these you YouTube now that we’ve gotten video for the podcast, it’s like a whole other element. Thanks again, Justin. Can you tell listeners where they can go to find more about what you’re up to and ping you online if they want to?

Justin Mares 1h 6m 53s

Sure, yeah, on my website justinmares.com or I’m on Twitter @jwmares. M-A-R-E-S.

Courtland Allen 1h 7m 0s

Thanks so much, Justin.

Justin Mares 1h 7m 2s

Thanks, man.

Courtland Allen 1h 7m 8s

Listeners, it would really help the show if you took a minute to reach out to Justin and just let him know that you enjoyed hearing from him on the podcast. He is, as he said, jwmares on Twitter and I would really appreciate it if you just showed him some love.

I also appreciate hearing from you myself. I am csallen on Twitter. That’s C-S-A-L-L-E-N. If you learned something useful from the podcast, let me know. Or if you have any suggestions for what guests I should bring on, topics I could cover or other ways I can improve the show. I’m all ears. It’s super hard to get feedback on a podcast so I love it when you reach out to me on Twitter. As always, thanks so much for listening and I will see you next time.