If you ask Sean Frank, the future looks bleak. But if you go beyond that surface-level feeling of doom, you’ll actually find a guy who is thinking ahead and coming up with creative, innovative, and effective ways to build a durable business that can stand the test of time. Sean is the CEO of Ridge.com, a $100-million brand, which you might know for its popular Ridge Wallet, but it’s much more than that, and Sean has plans to keep the company growing. On this episode of Up Next in Commerce, Sean and I talked about how to stand out in the competitive world of ecommerce and what it means to have a good influencer and sponsor relationship. Plus, we go deep on what we think is coming down the pike in terms of inflation, supply chain, and more. Enjoy the conversation!
Main Takeaways:
- The Only Way To Survive: In a hyper-competitive landscape, you have to control your own destiny, which means you have to try to do as much as you possibly can really well and put yourself in a position to get in front of the most eyes. Partnerships, owning your content and having exclusive access to your consumers are all ways to build a business that can stand the test of time.
- Let Them Run: The best way to get a high ROI from influencers is to take a hands-off approach. When brands try to control exactly what their influencers say or post, it comes off as inauthentic. Although it is hard, brands have to relinquish control to the influencers who know their audiences the best and allow the influencers to connect with those audiences in their own ways.
- Localized Manufacturing: In the next few years, technology is likely going to advance to a place where localized, automated manufacturing will be available to brands. Taking advantage of those technological advances will insulate brands from many of the supply chain issues that have crippled businesses.
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
Key Quotes:
“Facebook is still getting 35% of my budget, and Google’s probably getting 35% of my budget, and influencer would make up a smaller chunk of that, but it takes way more people, way more man hours to get that done, but we think it’s a cooler product at the end of the day. If you go on YouTube and type in Ridge Wallet or you go on TikTok and type Ridge partners, you’ll see thousands of videos posted in the past 12 months of people just integrating us in cool ways.” “One of our best performing channels is a guy who owns a farm, and he’s a veterinarian for horses, and he just posts content, and he just happens to have a Ridge Wallet in every one of his videos, and it’s like, no one’s going to think about sponsoring that guy on YouTube, but YouTube is an everything platform. There’s content for everybody, so we’re just trying to sponsor as many people and be their first sponsor.” “The only way to survive is to have the biggest boat possible…The only thing I can do is build a very durable business. So, when I’m thinking about the future, I talk to people when they’re thinking about retail expansion. I have a couple friends. One has 30 stores right now. One’s opening 50 stores in the next two years. Ridge isn’t going to do that. We’re not going to open stores, but we’ll be a partner for store opening experience. I think that’s a good way to do it.” “Something I’ve learned time and time again, is that if you try to grow more than 50% year-over-year, it’s very hard to pay your taxes and then also buy enough inventory for the next year…I think two is a very aggressive target, but can you function at a 1.5? Can you break even or pay your costs? That’s what you need to be looking at.” “I think in the next three years, the technology will be there where localized manufacturing could happen at scale. So by 2025, I think we can have automated domestic manufacturing, and I think more people are going to do that. I think that’s the one big thing that’s going to come out of COVID. People think it’s really cheap to make stuff in China. It’s not, but the whole advantage is they just have machines set up, and they have people to do it. But as they get more automated, it just makes more sense to do more automated stuff here.”
Bio
Sean Frank is the CEO of Ridge.com. He joined the company in 2016 and has helped grow the business to become a $100-million brand.
Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
—
Transcript:
Stephanie:
Hi, everyone. Welcome back to another episode of Up Next In Commerce. I’m your host, Stephanie Postles, CEO at Mission.org, and today on the show we have Sean Frank, who’s the CEO at Ridge.com. Sean, welcome.
Sean:
Great. Thanks for having me. Excited to be here.
Stephanie:
Yeah. After doing quite a bit of research on you, which would be creepy if we were friends, but because we’re not yet, I feel good about this. I was excited to hear all the different opinions you have on this industry and where we’re headed in this conversation, so thank you for coming here. But first, let’s talk about what is Ridge.com. What do you guys do? What do you sell?
Sean:
Yeah. So, we sell a lot of wallets. So, we’ve made a wallet called the Ridge Wallet. It’s probably our flagship product. Last year, we sold over a million of them. This year, we’ll probably sell two million of them. So, we’re selling a lot of them, but we also make bags, phone cases, a key organizer thing we’re pretty proud of, and just premium men’s accessories made out of cool materials. That’s kind of what we do.
Stephanie:
Yeah, and what’s different about your wallets? Why are they so popular?
Sean:
Yeah. I mean, it’s a functional redesign of a traditional wallet. So, if you’re listening to this, you probably have either a cardholder that somebody got you that’s just leather with a couple slots in it, or you have a billfold wallet, which is just really big and bulky, and we make ones that are made out of titanium or carbon fiber or Damascus steel, just really crazy materials, and they’re very, very small. They’re the exact size of a credit card, but they fit 12 cards if you get them. So, we think it’s an improvement of an old design.
Stephanie:
Yeah, I’d say so, especially the little flip wallets where every time I see a man with those in his pocket I’m like, “Oh, I feel bad for you every time you sit. Sorry.”
Sean:
Yeah, yeah.
Stephanie:
So, Ridge Wallet was started on Kickstarter, right, back in 2014?
Sean:
Yeah, yeah. So, I’m not the founder. We can get into the story of how I joined the business, but Daniel Kane and his dad Paul, they were familiar with Kickstarter. They’d done a couple different projects before that. They backed a lot of stuff, and Daniel backed what he thought was the Ridge Wallet. Somebody was making a wallet and he was like, “That’s exactly what I want.” It showed up in the mail, and it wasn’t what he thought, so he’s like, “Okay, I’m going to make my thing then.” So, him and his dad worked on it. That was 2013, 2014. Those are the Kickstarter years, and it worked. They shipped them. People liked them, and then we were able to build a real business out of it. So, pretty lucky.
Stephanie:
Yeah, and even to today there’s no outside investors. Right?
Sean:
Yeah, bootstrap. There were six of us on the cap table, never raised any money, and that’s been hard.
Stephanie:
Yeah, I’d say so. So, what year did you join, and what brought you to the company?
Sean:
Yeah. Daniel and Paul never really wanted to hire anybody. They never really wanted to run teams. It’s not what they’re passionate about. They’re very much product people. Paul was a special needs educator for 30 years. Now he’s fully retired, so he’s out the business, but he definitely didn’t have a background in E-comm. Right?
Stephanie:
Yeah.
Sean:
Daniel did a lot of the stuff himself, but never really wanted to bring on teams and deal with HR and all that type of stuff. So, they outsourced as much as they could. I was a person they outsourced a lot of stuff to. I owned an agency with my current CMO, Connor, and we started just doing all their marketing, so paid media, email, asset creation, that type of stuff, website, and then we expanded that out to… We were doing their customer service. We were doing their imports. We were doing everything. It just made sense to merge. So, they bought my company. I came in, and I’ve been running it as the CEO, and everyone’s still involved. Daniel founded the business just as product full-time. That’s what he likes to do.
Sean:
So, when we merged they went from three people working there, father, son, best friend, to 23 people working there, and it was the 20 people that came over from my agency, so very, very seamless. Everything’s been going pretty okay.
Stephanie:
Yeah. I’d say so from looking at some of your numbers. I want to talk a bit about your growth. So, I’ve heard you mention a few times about tapping into influencers, and I feel like if you would’ve heard that maybe a few years ago, people would be like, “Oh, that’s kind of trendy. I’m going to try it out.” Now everyone’s saying it, but I don’t think a lot of brands are really actually tapping into the potential of it and getting good return on that. So, I want to hear a bit about your process and how you grew with them and found good influencers, all the secrets behind how you grew Ridge Wallets.
Sean:
Yeah. So, I really like influencer. It’s something I’ve been really into for a while. Really, what it came off of was I grew up watching YouTube. That’s the way I spent my time. You know what I mean? I can’t name any famous people, but when I… I probably watch eight hours of YouTube a day, and I was never really into Instagram. So, I think the first influencer bubble was people going after Instagram. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
[inaudible] pay to post, and then stories came around, so people would [inaudible] stories, but we’ve always just been super YouTube-dominant. I mean, [inaudible] was just like… In 2021, I think we sponsored 4,000 unique creators so it took-Stephanie:
Wow.
Sean:
… a huge amount of people, and we got hundreds of millions of views of our influencer content. So, it’s all organic, them posting integrations, and we’re super into it. We’re going to keep scaling that up. I think it’s hard for a lot of brands to do because if you’re pretty hands-off, you can’t really have too much creative control over it. They create content for their audience, so they know it’s going to work. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, you have to just let them do what they’re going to do. A lot of brands can’t do that. The other thing is it’s really hard to scale. It’s not just spending money on Facebook. I could spend a million dollars a day on Facebook because I could just click the buttons to make that happen. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
But to spend a million dollars in a month on influencer, you’re reaching out to thousands of people. You’re negotiating thousands of deals. You’re sending thousands of pieces of product out there. They’re product managing and all that. So, it’s way more like a sales job, and that’s why we have a really big team. There’s probably eight people inside of Ridge that just do influencer.
Stephanie:
Okay. What percent of your marketing budget goes towards influencer marketing?
Sean:
It’s probably only 15%. Right?
Stephanie:
Oh, okay.
Sean:
So, it’s a small percent, but it’s really hard to scale past that. That’s the whole thing, where Facebook is still getting 35% of my budget, and Google’s probably getting 35% of my budget, and influencer would make up a smaller chunk of that, but it takes way more people, way more man hours to get that done, but we think it’s a cooler product at the end of the day. If you go on YouTube and type in Ridge Wallet or you go on TikTok and type Ridge partners, you’ll see thousands of videos posted in the past 12 months of people just integrating us in cool ways.
Stephanie:
So, when it comes to finding good influencers, it does sound very manual. How do you know if someone’s going to be good? How do you discover talent? I mean, I think a few channels or a few people that you’ve gotten to work with kind of blew up. I think there was a comedian that got really big, and a couple other people, but how do you discover the talent early on. How do you feel about that? [inaudible] there’s so many people right now, and everyone’s an influencer, and everyone wants to be one, and so I’m like, how do you even start actually finding the right people?
Sean:
Yeah. So, we say we want to be everybody’s first sponsor, so that’s kind of like the mantra of the influencer program over at Ridge. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, we’ve worked with some really large people in 2021, like PewDiePie. He’s the number one YouTuber. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, we did some deals with him. [inaudible], he’s got 20 million subs. We do deals with him. [inaudible], we do a deal. We do four videos a month. So, we have these really longstanding, really big partnerships, but that’s not the core of the program. The core of the program was people you’ve never heard of making content you’ll never watch. It’s just a really, really wide breadth. So, we’re really trying to give people a… When I mean people, I mean content creators, a really good first sponsored experience. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
They’ll get paid. We send them product. We make it really hands-off. There’s no approvals. It makes it really, really easy, and that’s been the way we were able to scale that out. How we’re finding them, it’s super manual.
Stephanie:
Yeah.
Sean:
I mean, we have VAs scraping content with a platform called Creative IQ that we pull in whatever lists they have. I mean, it’s mass outreach. We’re sending thousands of emails every single week. We’re on TikTok. [inaudible] like, “Hey, do you want to work with us?” It’s as manual as it gets, but then once people are interested, it’s a very seamless funnel. We’re like, “Hey, look. We probably pay less than everyone else who does influencer.” I think a lot of times people will want to work with somebody, they get a $20,000 quote, and they’re like… They’ll either do it and they’ll get burned because they’ll never see the sales results, or they won’t do it because it’s so expensive, and it’s like, “Yeah. Well, we’re not going to do that deal anyway.”
Sean:
I think that the thing to highlight is beauty influencers on YouTube, their cost per post is so high because… To get into the mechanics of the way YouTube works, there’s a lot of dead channels. So, there’s a lot of people who have massive subscriber bases, but don’t get very many views per video, and it’s because it’s very hard to have a career on YouTube for 10-plus year. Very few people have done it. You can count the people who’ve been able to do it. Most channels just reach their natural endpoint. Their audience ages out or they can’t keep up with trends or whatever else, and there’s nothing wrong with that, but then you’ll have people who want to sell you influencer deals based on subscriber counts, which doesn’t matter. That’s not a real thing, right?
Stephanie:
Yep.
Sean:
At the end of the day, you’re trying to get a CPM based on views like you’d pay for on Facebook. So, anyway, that’s one of the problems with YouTube beauty influencer content. It’ll just be too expensive for the CPM, and also, it’s kind of like tech content. There’s a lot of people who make tech content around new and emerging tech, but you only want to watch one of those videos. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
When a new iPhone’s coming out, you’re not going to watch three videos all talking about the details of your iPhone. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
Beauty’s kind of the same way, where there’s one creator you like, that’s the creator you’re going to watch. They speak to you. So, not a lot of crossover. See, what you see is low views, high CPMs, and I think that’s what people go to when you think about that. That’s not what we’re talking about. We’re talking about one of our best performing channels is a guy who owns a farm, and he’s a veterinarian for horses, and he just posts content, and he just happens to have a Ridge Wallet in every one of his videos, and it’s like, no one’s going to think about sponsoring that guy on YouTube, but YouTube is an everything platform. There’s content for everybody.
Stephanie:
Yep.
Sean:
So, we’re just trying to sponsor as many people and be their first sponsor. So, that’s really long-winded, but [crosstalk] for a couple hours if you want to.
Stephanie:
Yeah. No. I mean, I actually love digging in on this topic because I do think that is the way of the future, but figuring out how to do it right, like you said, most people are probably going to the accounts, trying to find the biggest subscribers, and not actually looking at the details of what’s the engagement in the comments, how many views do they actually get, is it consistent or not, versus your veterinarian dude getting consistent views, probably everyone wants to watch all of his content instead of one great video that comes out once a quarter or something and might do really well.
Sean:
Yeah, and also, humans are designed to be lazy. So, if you want to do influencer and you’re like, “Okay. Well, I’ll just choose the three influencers,” you know what I mean? You’re going to pick the three biggest names, or the three people you might know. As a 20 or 30 or 40-year-old joining a brand, you’ll be like, “Oh, yeah. I want to go after Joe Rogan, Dávid Dobrik, and somebody else,” and it’s like, “Okay, well…” Like you said, everybody’s an influencer. I mean, my wife posts on TikTok once a day, and she’s got 10,000 followers. You know what I mean?
Stephanie:
Wow.
Sean:
So, it’s like there’s this whole world of people that you’re going to miss if you just go after these very, very top, and those deals, while they can be good, I sponsor PewDiePie, I sponsor the biggest people, while those deals can be good, not really good [inaudible] the system. I think you should identify… You can just all them micro-influencers, but then that’s so targeted towards Instagram, and I think Instagram’s not really a good platform. Just find 10 channels, and just try it out. Anyway…
Stephanie:
Well, what kind of CPM ranges would you give for people like that who are newer, but you see potential in? I mean, is it $3 CPMs, or higher than that? What are you guys seeing right now?
Sean:
Yeah. So, there’s been a rush of people getting into the influencer game, and legacy planners are driving up costs. We’re still targeting sub $10 CPMs for YouTube integrations. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
It used to be [inaudible] $3 CPMs, but then it went to five and it went to seven.
Stephanie:
Okay.
Sean:
We’re still targeting sub 10. TikTok, we’re paying like a dollar. It’s a platform where there is no paid alternative, but there’s a lot of good views. So, it’s just really platform-specific, and it also just depends on where the influencer is in their journey of working with people.
Stephanie:
Yeah.
Sean:
But yeah, sub $10 is what we’re trying to pay.
Stephanie:
Okay. So, it makes me think then an influencer marketplace is not the way to go. I mean, there’s a lot of companies popping up right now trying to consolidate influencers, get them on the platform, help you find influencers, but from what I’m hearing from you, that might actually not be the way because everyone’s tapping into those people, and you want to find the other ones who are maybe not everywhere already and not already working with big marketplaces or whatnot.
Sean:
Yeah, and also, it’s almost like those were designed to fail because of… Oh, it sounds great. Oh, we’re going to make influencer Facebook ads. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
It’s going to be just like that, how you could just scale and activate all these people and get posts and CPMs. Yeah, but the problem is you’re dealing with individual people. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
You’re dealing with dozens or hundreds of individual addresses to ship to, individual negotiations. People are going to perform differently. They’re going to make content differently. They’re going to drop off at different rates, and also, we’re dealing with assets people don’t really own, and to expand on that, what I mean is you don’t own the reach of your social channel. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, you have an Instagram presence, you have a TikTok presence, you have a YouTube presence, and you have subscribers or followers or whatever on those platforms, but you don’t actually own the distribution on those platforms. It’s not like your email list or whatever, where Ridge could send an email, and it’s guaranteed going to those people, and people will open that, or you can do posts, and they just don’t perform for whatever reason, because the algo doesn’t like it. So, there’s all of those different nuances, and then when you try to do it at scale, it just falls apart. I would relate it to how Zillow lost a bunch of money flipping houses, because individually you can make money flipping houses. People do it all day long, but when you try to do that at scale, it’s like the little details end up killing you, and that’s how I would describe all influencer platforms in most agencies.
Stephanie:
Yeah. I mean, do you see a risk then with the people having a presence on other platforms and feeling like they own that audience, when maybe any little tweak could change everything for you and for them? I mean, it brings me back to, like we were discussing earlier, my Medium days, and I know we worked together back then when we had a Medium publication. It felt like we did not own our audience, and so any little tweak could completely change that. Do you see a risk when it comes to influencers relying on that, just different platforms that they don’t really own either?
Sean:
Yeah, 100%. Yeah. If this podcast ends up being for content creators, it’s like, diversify something you own as soon as possible. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
It can be a Discord. It could be an email list. It could be a Patreon. I theoretically don’t own all those things, but just diversify places where they can actually reach you because your YouTube account can get banned.
Stephanie:
Yep.
Sean:
Your Instagram account can get shut down. All those things can happen, and they’ve happened to really big creators. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
Also, these platforms are petty. I don’t know how much you dive into the space, but Twitch and YouTube will ban… If you go from Twitch to YouTube and start livestreaming there, they’ll shut your account down. They’re like, “Yep, you don’t get that anymore.” Right?
Stephanie:
Oh, yeah. Yep.
Sean:
Yeah. So, it’s horrible, man. So, I think being content creators is probably a great job, but I think you have to be super smart about it and really try to own something. Right?
Stephanie:
Yep. Ever since the Meta handle got taken, to me, that’s the perfect example of Web 3.0, of you do not own these properties. It can literally get taken, and nothing will happen unless you get media exposure on it. The only reason she got her Meta handle back on Instagram that was taken from them was because of a media exposure, I guess. I’m pretty sure that’s the only reason she got it back and returned to her. That to me is what the future looks like as a content creator if you’re relying on other people’s platforms. You say one thing they don’t like, you have a name that they want, it could just get scooped up and taken instantly. You don’t actually own any of that IP.
Sean:
Yeah. You’re building empires on the quicksand. I mean, if we tie it back into e-commerce, that’s what I say about almost every E-comm brand. I’m like, “You think you have community. You think you have reach. You think have all these things. You are just an effective engine at giving money to Facebook. That’s what you are.”
Stephanie:
Yep.
Sean:
As soon as you stop being an effective engine, everything else falls apart. You’re building empires on quicksand. I think content creating is everything. I think Big Tech is insane. I don’t think we realize how big it is. I mean, I think it’s bigger than governments, but…
Stephanie:
Yep. Yeah. I mean, how are you planning for the future then when it comes to owning those first-party conversations or trying to build a different business, especially in a world right now that is very competitive? There are so many people popping up. Anyone can sell anything, which can be good and can be bad. How are you positioning yourself to win in the future?
Sean:
Yeah. So, my clear path for Ridge is we’ll build the next Yeti, so we’ll do… So, we’re a nine-figure brand. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, we crossed 100 million in yearly revenue.
Stephanie:
Congrats. Nice. I saw that 50 million. I didn’t know you crossed 100.
Sean:
Yeah, yeah. So, I don’t want to say how big, but we’re a bootstrap nine-figure brand, very hard to get there.
Stephanie:
Yep.
Sean:
Almost all of that is digital. When I say almost all of it, it’s like 97% of it’s happened on the internet. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
We could talk about how much we hate Big Social or Big Tech or whatever, but that’s what I cut my teeth on in the past 10 years. It’s still going to be a huge part of our strategy. I think you’re going to see them continue to go to war, and I think it’s going to… I think it’s in a similar podcast. It’s like, there’s a massive storm coming, and it’s going to flip a lot of boats. So, the whole reason we’re trying to scale… I just posted this on Twitter. It’s like, bro, I don’t make a ton of money. It’s like the thing is people hear, “Oh, yeah. We’re doing $100 million a year.” It’s like people think I make $100 million a year. I’m like, “No, man.” It’s like, I pay so much money in taxes. It’s an insane thing. So, it’s not for really the personal gain of it. Really, what it is is I think the only way to survive is to have the biggest boat possible. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
But that’s kind of what we’re going towards. I think Apple’s going to launch search. I think Apple’s going to start selling people’s data back to Facebook, and then to Facebook to offset the costs will just hike up CPMs. I think the supply chain will eventually get better, but in the short term it’s going to get way worse.
Sean:
I’ve said 2022’s going to be the hardest year for E-comm. I think a lot of brands are going to go out of business because they’re not going to be able to get stuff, they’re not going to be able to compete in a more expensive environment. People looking for silver bullets, they’re like, “Oh, yeah, TikTok.” It’s going to be like the old days where I can acquire customers for $20 and I can do drop shipping again. It’s like, nope, that’s totally gone. Right?
Stephanie:
Yep.
Sean:
The only thing I can do is build a very durable business. So, when I’m thinking about the future, I talk to people when they’re thinking about retail expansion. I have a couple friends. One has 30 stores right now. One’s opening 50 stores in the next two years. Ridge isn’t going to do that. We’re not going to open stores, but we’ll be a partner for store opening experience. I think that’s a good way to do it. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
I think continuing to embrace marketplaces… I think Amazon’s the biggest opportunity in E-comm right now. I think it has been for the past three years. I think it’s going to be for the next three years just because, because of the supply chain issues, people can’t get stuff in, so if you can get stuff in, you have an unfair advantage. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, I think it’s going to disproportionately punish foreign sellers. Yeah. I mean, we’re working on doing stuff to actually build community and reasons to come back and reasons to shop again. People always talk about subscription. They’re always like, “You need to have subscription in your product,” and I think the original subscription was just making good stuff every year. If you look at… I’ll use Buck Mason because I buy a bunch of stuff from Buck Mason, but you could also use J.Crew or Brooks Brothers or whatever else. Legacy men’s retailers for seasonal drops, their LTV is huge. It’s like $800 for a customer because they just keep making stuff, and people keep coming back and buying it.
Stephanie:
Yep.
Sean:
So, anyway, I talked a lot, but that’s the way I’m thinking about it. We’re going to keep making stuff and keep trying to sell it to people.
Stephanie:
Yep. I like that. I mean, that’s what everyone should do. Right?
Sean:
Yeah, yeah.
Stephanie:
High level, there you go. That’s all you need to know, everyone. Keep making good stuff, and sell it. I want to go back to the Apple Search piece. I mean, when thinking about that, how are you guys even preparing for that? Because to me it just means whatever you’re going to be seeing as a customer is just whatever they decide is best, and whoever’s paying the most ads. I mean, it’s already kind of like that, but where will it move to then, because… I mean, in my viewpoint I don’t see that lasting for long, especially as the world is becoming more decentralized.
Stephanie:
I feel like something is going to pop up that’s going to make for more of an equal playing field to get back to the original days of the best product actually shows, the product that has the lowest return rate’s going to show, or the best reviews, whereas right now it just feels very jumbled. I don’t even know if something’s good or not when it’s showing up, and I think the trust is lost. So, my thought is getting to a new version of that that is more decentralized, not reliant on one big tech company, and not just based off of ads. What do you think?
Sean:
Yeah. So, I would love the world you’re talking about, but ads is-
Stephanie:
Look in my head.
Sean:
Yeah, yeah. Ads is the best business to be in. Out of the, I think, four companies, maybe five companies that have ever been worth a trillion dollars, besides Saudi Aramco, the oil company, the five US trillion-dollar companies all have a major ad component, with Facebook and Google only being ad companies. I think ads is the best business to be in, so I think this world where they’re not going to extract extortion fees for ads is never going to come, and then the problem is that the people who are going to be leading decentralization are the Big Tech companies. Oculus was the bestselling video game system last year.
Stephanie:
Yeah.
Sean:
So, beating Xbox, beating Sony was Oculus, so 20-something million units, beat the Nintendo Switch. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, anyway, I think ads is the best business, and I think people building decentralization are actually the same people who we’re talking about, but they also know what you’re talking about as a problem, where Google Search is the absolute worst experience. I type something I want in, and then I’m sorting and choosing, and people can pay to give me a bad experience. It’ll actually end up being an existential threat to Google when Apple Search launches. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
But everyone’s going to work towards the one best answer, and Marc Lore talks about this. Marc Lore did Jet.com, and now he’s just a smart billionaire guy, but in the future, you’re just going to say what you want, and then that’s going to be given to you. It’s like the one true answer. It’ll just be where you’ll be like… You won’t see any ads at all. You’ll just be like, “Hey, I need paper towels,” and it’ll know everything about you because Apple already knows everything about you. Google knows everything about you. Facebook knows everything about you. They’ll just be like, “Oh, yeah. Those are the paper towels you like. We’re just going to ship them to you,” and there’ll be some sort of bidding backend system, and you’ll just be served one answer, and it’ll kill most small brands. That’s what I think we’re going for.
Stephanie:
Yep.
Sean:
This is me being a conspiracy theorist where I’m like, “Oh, yeah, dude. The only way I’m going to survive the next 10 years is just to be a Yeti or bigger.” Yeti’s almost worth $10 billion. I’m like, “Yep, I got to get there,” not even for personal gain just because that’s the only way to survive the coming tech apocalypse or whatever.
Stephanie:
Yeah. I mean, how are you thinking about getting there? Because I know on another show you were talking about your ROAS and what every company should be at. I think you said maybe 2X or something, and you also had really good numbers of revenue per employee. At one point you were at $2 million of revenue per employee, which is very good. Where are you guys at now? How are you viewing that, and how should brands be thinking about the revenue per employee and their ROAS and all that?
Sean:
Yeah, dude. I just said this, and I think people put it the wrong way. I’m like, “You should try to take out less than 1% of top-line revenue in personal net income, half your taxes and everything, per year for your business, and not because you can’t take out more, but because it’s shortsighted to take out more. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
The whole thing is… The reason why you need to be at 2X ROAS is because that’s how you can… All of this is through my lens of being a bootstrap scaling business. Okay?
Stephanie:
Got it.
Sean:
Some life lessons I’ve learned from that is if you grow more than 50% year-over-year, you will run into problems. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, that’s just something I’ve learned time and time again, is that if you try to grow more than 50% year-over-year, it’s very hard to pay your taxes and then also buy enough inventory for the next year. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
We’ve had that problem four years now. Right?
Stephanie:
Yep.
Sean:
But then at the same point, you need to be able to survive, I think a 1.5X ROAS. I think two is a very aggressive target, but can you function at a 1.5? Can you break even or pay your costs? That’s what you need to be looking at. Then the revenue per employee piece, we still target… Our target is sub two million per employee.
Sean:
we offset that by not having a 3PL. We offset that by using a lot of vendors. We offset that by having a bunch of VAs. Right now we’re at 43 people, but we’re at 15 VAs, and by the end of Q2 I’ll be at 50 VAs in the business.
Stephanie:
Yep.
Sean:
So, still trying to hire more people, though.
Stephanie:
Yeah. That’s a constant struggle of today, I feel like, for everyone, trying to hire good and the right people. I mean, I was listening to something the other day that said every… You want to learn soft skills because hard skills change every two to three years, and so there’s not really a point in learning hard skills anymore because they change so quickly, and it’s like, oh, no wonder it’s so hard to hire people, because you need a mix of both, but things are changing so quick that I can see why there’s a struggle with companies finding good people.
Sean:
Yeah, that’s interesting. I didn’t think about that, but-
Stephanie:
Yeah, yeah.
Sean:
But yeah. I mean, really, just people who can learn new skills, that’s the most valuable skill.
Stephanie:
Exactly. Yep.
Stephanie:
So, when thinking about building a durable business, you also mentioned retail, which I want to hear more about how you all are exploring that because there’s a lot of interesting things happening in retail right now, good and bad, and so I want to hear how you guys are thinking… When I say that, I’m more thinking about what companies are doing to make their numbers look better. I think I saw something about Saks Fifth Avenue was separating out their e-commerce business, which to me is like going back to old school of… Why would you pull those two apart and act like they’re different businesses? I know it’s for valuations, but they’re calling them two different things, and the world of retail’s starting to feel weird to me, but I want to hear how you’re thinking about it.
Sean:
Yeah. I think it’s legacy people trying to survive. I mean, I don’t really know how I feel about physical in-person retail. I mean, I talked to a couple brands. I’m not going to blow them up, but there’s a couple high-profile brands I’ve talked to, and one of them’s like, “Yeah, we do $8 million a year per store,” which is best-in-class, way better than-
Stephanie:
Wow.
Sean:
… Warby Parker and Allbirds and all of them. I think Allbirds is doing three-and-a-half million per store or whatever.
Stephanie:
Okay.
Sean:
I mean, for some brands it totally works. Right?
Sean:
But my big hangup is I really don’t want to be locked into expensive leases, and I don’t want to have to manage in-person teams. Ridge is a fully remote company. We’ve always been remote first, and we have a couple values, that if you’re willing to work here for three years, you have a clear path to $100,000 a year. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
It’s way harder to keep those values with in-person employees because it’s way harder to have the growth required for in-store associates. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, we have to change the way we think about those values to expand into retail. Also, we make wallets that are designed to be small, so it’d be really hard to build store concepts. But I have friends… I mean, I brought up Buck Mason. I don’t think I brought this up, but TravisMathew. I have friends that run both of those businesses, and they do retail extremely well. I think if Ridge does retail, it’s going to be a part of what they do. I’ll do exclusive SKUs for them. I’ll put in marketing dollars. I’ll put in event dollars. [inaudible] to really highlight their retail experience and just be associated with that. That’s the way I want to do it.
Stephanie:
Got it. Okay, cool. Tell me more about supply chain, then. Are you guys building here in the US? You said that you didn’t want to be messing with shipping things and getting caught up like that. What are you you all doing to maybe not have to go through what everyone did the past year or so?
Sean:
Yeah. So, just really lucky because… I probably come off like this, but I’m a paranoid person, so I’ve always-
Stephanie:
You don’t, no.
Sean:
I’ve always had a couple of years of inventory on hand. We’re nonseasonal. Stuff doesn’t go bad, so I can have a bunch of stuff on hand. So, we’ve been very much sheltered throughout the supply chain stuff, and we have small units that I can air freight if required. We have a lot of stuff coming from basically every country, but I think in the next three years, the technology will be there where localized manufacturing could happen at scale.
Sean:
So, not this year, but 2025, I think we can have automated domestic manufacturing, and I think more people are going to do that. I think that’s the one big thing that’s going to come out of COVID, is… People think it’s really cheap to make stuff in China. It’s not, but the whole advantage is they just have machines set up, and they have people to do it, but as they get more automated, it just makes more sense to do more automated stuff here anyway. So, anyway, that’s where I think we’re going to, 2025, making a lot of stuff in America.
Stephanie:
Yeah. I mean, I do too. That’s where I think people probably think I sound paranoid, when I’m like, “If you look at the trade deficit, it’s worse than it was in 2008.” We went obviously a very bad recession. A lot of it was because of that. I mean, obviously, we’re not making much and we’re not sending it out and we’re not getting paid for it. I don’t think great things happened, and it’s worse than it was back in 2008, way worse. So, I’m like, something has to change, or else we’re headed into bad territory, which you already think we’re headed that way, so I guess we can both be pessimistic together.
Sean:
Yeah, yeah. Pessimistic at different ends of the coin, right?
Stephanie:
Yeah.
Sean:
I think the E-comm ad market is going to be very difficult to maneuver, but I think China’s going to implode, is what I think is going to happen. There’s a bunch of dark debt. It’s going to just not make financial sense to do business there, and then I think we’re heading towards a global recession that’s going to not hurt the US as bad because of this thing called the milkshake theory.
Stephanie:
I have heard about this.
Sean:
Yeah, yeah.
Stephanie:
But explain it for people who don’t know.
Sean:
I mean, I’m not the right guy to explain it, but it’s 88% of all global trade happens in US dollars. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
So, we have this very unique problem where… I mean, it’s a global problem. Everyone has US dollar debt, and there’s this massive demand for US dollars, and we just printed a bunch of US dollars, but… Everyone freaks out that we just printed a bunch of money, but everywhere printed a bunch of money. So, it’s like the whole money supply rose pretty evenly, but then there’s no demand for… Name a country’s currency. No one actually wants that except for people inside that country, but Saudi Arabia is buying weapons from us in US dollars and then selling oil to Europe in US dollars, and they’re all servicing debt in US dollars, which means there’s this massive demand of US dollars, and that explains why the dollar is at a 52-week high, even though we just printed $2 trillion. It just keeps going up. So, anyway, all that’s going to happen, I think it’s going to lead to a… Inflation will happen just because there’ll be a massive demand. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
I think US asset prices are just going to keep going up, but then I think the global economy’s going to be really, really hard because they’re servicing US dollar debt.
Stephanie:
Yeah, yeah. It’ll be interesting to watch because I’m still watching that inflation number. I’m like, “I don’t know. This isn’t looking good,” and they already said before inflation was transitory, and it was going to go away, and then it didn’t. I mean, it went away for a little bit in… I think it was Q3, and then it just came right back, and lumber prices shot back up, and they revised it, and they were like, “Oh, yeah. Sorry. It’s not transitory inflation issues here,” and now they’re going to adjust the CPI numbers to make it look a little bit different, a.k.a., to me, they’re just going to try and make it look better than it actually is. That’s the only part I don’t trust. I’m like, “If you’re adjusting CPI numbers, something is happening that’s not good, if you have to make something look different than it is, unless you’re actually including more things in it that need to be included.” But we just got very off topic, which I thoroughly enjoyed, though.
Stephanie:
So, what are some maybe big bets that you’re making right now within the company that you don’t know if they’re going to pay off or not? I mean, I heard big on influencers, you’re on TikTok, you’re Google, Facebook, pretty, I’d say, what a lot of other companies are doing. What are you doing right now that’s maybe different and a moonshot that you don’t know if it’s actually going to work, but you’re excited about it?
Sean:
Yeah. I mean, the biggest gamble we’re making, very transparently, is in product. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
We sold millions of wallets last year. We’ve very much been about selling this particular wallet design to people. We launched a key organizer, and that did extremely well. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
The big thing that we’re doubling down on is just making new stuff for people, taking the same DNA of the wallet with the materials and just bring it over to more stuff. I mean, everything else I don’t even consider a big, crazy bet. We’re really going to market it. We’re going to keep marketing. Right?
Stephanie:
Yeah.
Sean:
I’m going to keep making content. I’m going to keep hiring it best people, and we’re at 40 something people right now. We’ll get to by the end of the year 80-ish people, something like that. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
I don’t consider any of that a gamble. I’m like, “Yeah, we’re going to hire people. It’s going to be great.” Right?
Stephanie:
Yep.
Sean:
Every year we have themes at Ridge, which I know probably sounds stupid or whatever, but this year’s theme was endurance. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
We’re trying to build the foundation of the business that can go on for a very, very long time. Right?
Stephanie:
Yep.
Sean:
We’re trying to IPO in 2026. That’s the clear path I have for this. Right?
Stephanie:
Mm-hmm (affirmative).
Sean:
Last year was about professionalization, so getting real accounts, getting real lawyers, getting all that type of stuff that big companies need, and then this year it’s about the processes to endure the next five-plus years or whatever.
Stephanie:
Yep.
Sean:
So, all of that’s what we’re thinking about. None of that I consider a risk. The biggest risk is we’re going to make watches this year, and I feel really good about them, and I hope customers feel the same.
Stephanie:
Yep. Oh, that’s cool. Yeah. I mean, do you make laptop covers yet? Because I was reading a whole article about how your information can just get swiped off a laptop when you’re, I don’t know, traveling, walking around on the street or whatever, just by people with their scanners, kind of like what they can do with their phones. I’m like, “I think I need a laptop protector.”
Sean:
No. I haven’t heard that. Send me that article because I’ll probably make that.
Stephanie:
Okay, make that. I don’t know if it’s true or not, but either way, it sounds true. If you can get it off my phone, you can definitely get things off my laptop probably, so just need a good little covering to make sure no one can swipe my awesome kid photos, and everything else important. All right. Well, let’s move over to the Lightning Round. Lightning Round is brought to you by Salesforce Commerce Cloud, and this is where I ask you a question, and you have a minute or less to answer. Are you ready, Sean?
Sean:
Yeah, let’s do it.
Stephanie:
All right. What’s your favorite Ridge product, outside of the wallet, because that’s what you’re known for?
Sean:
The knife. We have a very cool knife.
Stephanie:
The knife? Okay. What’s special about it? Why is it cool?
Sean:
It’s made out of carbon fiber, and it’s just a really well made knife. It’s kind of like… We were very inspired by [Jamie’s] brand, treating men’s accessories as jewelry, basically, but I’m going to revise my answer, the key case. The key case is really, really cool. It’s a new thing we made. They’re sold out, so you can’t get one, but-
Stephanie:
Darn. Okay.
Sean:
… I really like it.
Stephanie:
Cool. Now we’re all just… You’ll have pent up demand until you get that back in stock, then.
Sean:
Yeah. I think they’re going to sell… We made them November 1st. They were sold out by November 10th, so just immediately sold out.
Stephanie:
Wow. I also need something cool to put on my keys, now that I think about it. I’m like, keys are so lame. Why can’t we make them cooler? I don’t know.
Sean:
For sure.
Stephanie:
Another good product idea for you. Bring it to the company. What is the most surprising thing since becoming CEO? What did you not expect or… Yeah.
Sean:
Man, I don’t know. I guess I don’t get as many emails as I thought I would. In fact, I’ve always been a bit concerned that I would get way more emails, but no. I’m very open. People can DM me on Twitter, and I’ll book time with people to talk about stuff, and most people don’t do it. So, what that taught me is most people like to think they have ideas that are being held back and they just need whatever, but they don’t take the steps to actually get it done, because you can totally DM me and usually get a phone call with me, but anyway…
Stephanie:
That’s good. That’s good. What’s the best piece of business advice you’ve ever received?
Sean:
I don’t know, man. It’s very hard for me to recall off the top of my head. Basically, anything on Twitter I read’s probably pretty good advice. I would just go on there.
Stephanie:
Anything? Wow.
Sean:
Yeah, anything.
Stephanie:
You’re really leaving yourself open there.
Sean:
Yeah, yeah. I don’t know, man. I’m not one for business books, but-
Stephanie:
No?
Sean:
… I talk to smart people all the time. They’re always giving me good advice.
Stephanie:
Yeah, on Twitter? You’re always DMing people?
Sean:
Twitter, or I have a core group of friends in LA, so there’s people running $100 million plus E-comm businesses. There’s very few of us, so I have a friend David or a friend Jeremy. They both run businesses with their wives, and one’s in the female hair space, one’s in the vitamin space, and they’re both super solid guys. I’ve talked to them all the time. So, yeah, just finding little communities I’ve got to talk to, and they’re a couple years older. They’re in their forties, so they’re always just giving me just good advice in general. Okay. Here’s some advice David gave me because I was talking about-
Stephanie:
All right.
Sean:
I have the Delta card from Amex so that I can get diamond status so that I can get first class upgrades. I was explaining this whole scheme to him, and he was just like, “Just pay for it.” He’s like, “I’m telling you, the mental space that that’s taking up, how to game to get first class upgrades,” he’s like, “Just buy them,” and that was like an oh-shit moment. It’s like, oh, fuck yeah. That’s so stupid, that you should just deploy capital in ways that free up mental space. That’s what he was telling to tell me, and that was good advice.
Stephanie:
Yeah, that is good advice. I like that. All right. The last one, what’s a favorite either e-commerce tool or a piece of technology that you’re most excited about right now?
Sean:
Yeah. So, we spent more money on Facebook in 2021 than we ever had, and we did it at a better ROAS. So, our blended ROAS went up year-over-year. So, not only did we scale a crazy amount, we spent way more money on a better return. We did that because of a thing called Northbeam, which is… It’s like a first-party data platform thing that… Basically, when the iOS update fucked over Facebook, we were protected from it because Northbeam had its own pixel, its own data, [inaudible] a lot of stuff out for us. There’s a couple people doing a similar thing. I think Triple Whale did something similar, but we’ve just been on Northbeam for two or three years.
Stephanie:
It’s a good one.
Sean:
I think I’ve been super stoked on that. That’s one thing. The other thing is just a post-purchase survey thing. I don’t know what it’s called. InquireLabs I think it’s actually called.
Stephanie:
Okay.
Sean:
But I think SMS is way to over-hyped. I personal think NFTs and Web 3.0 are a little too over-hyped right now, in my opinion. When people thought AI was really cool four years ago, and then it’s like, “Okay, where’s all the AI that you guys were talking about?” Right?
Stephanie:
Yep.
Sean:
Will I be proved wrong on this type of stuff? My CMO Connor owned [inaudible] so he’s really into the whole thing, so I hope I’m wrong on that, but yeah. What I like is InquireLabs. It’s a post-purchase survey. I think that’s really cool.
Stephanie:
That sounds cool. A little more simple things compared to all the buzzy catchwords right now. That’s great. Cool. Well, Sean, thanks so much for hopping on the show today. This was super fun. Where can people learn more about you and Ridge.com, other than going to Ridge.com, I guess, but where can people learn more about you?
Sean:
Yeah, they can go there. You could email me, sean@ridge.com. I try to read every email that comes in, or I’m on Twitter. You could just follow me on Twitter.
Stephanie:
Got that. All right. Thanks, Sean. That was great. Good job.
Sean:
Thanks.
