Tom Bilyeu, Co-founder, Quest Nutrition
Jake McKeon, Founder, Coconut Bowls
In this very special episode of the Foundr Podcast, we answer all the questions you’ve ever had about building an ecommerce business and more!
The first installment in what we’re calling the Foundr Incubator series, we recorded a live coaching session between one ambitious Foundr community member and the head of a billion-dollar company.
We organized a call with Jake McKeon, the up-and-coming founder of multiple ecommerce businesses, to receive one-on-one coaching from Tom Bilyeu, co-founder of unicorn startup Quest Nutrition and Impact Theory. Like so many other entrepreneurs out there, McKeon was doing well, but looking to grow and not sure how. That’s where Bilyeu, with his years of experience and wisdom, stepped in.
The result is a fascinating and honest conversation in which Jake asks just about every question an entrepreneur might have about how to grow, how to market yourself, and generally how to take an online business to the next level. Tom doesn’t hold back and answers all of these questions and more, sharing his insights on what it takes to create a successful ecommerce business and a thriving community around your brand.
This is an episode you definitely do not want to miss, with so much gold being shared that you can’t help but feel empowered and inspired after listening.
- How to stay relevant in your market and stay ahead of the competition
- Why you need influencers on your side and how to find them
- The metrics you need to focus on to grow your sales
- Where to find A-players when you’re growing your team
- The three things you need to focus on to build a successful e-commerce business
Full Transcript of Podcast with Tom Bilyeu and Jake Mckeon
Nathan: Hello, and welcome to another episode of the Foundr Podcast. My name is Nathan Chan. I’m the CEO and publisher of Founder Magazine. I just want to say thank you so much for taking the time to share your earbuds with me. This is a really cool episode. It’s a little bit different. It’s something that we haven’t done in a very long time. Actually, the last one that we did of these, the Foundr Incubator like Business Breakdown, was episode 56 with one of my mentors, Mathew Michalewicz and Derric Haynie. And a lot of people back then, this was over a year ago, maybe even a year and a half, a lot of people said, “Wow, that episode was killer. Can you do more of these?” And I mean maybe do another one, and it’s taken me almost a 100 episode until I was able to do it.
But this one, you’re in for a treat. One of my friends Jake McKeon, he runs a very, very interesting business, and I’m, you know, another one of my friends, Tom Bilyeu, who’s the founder of Quest Nutrition. I’m sure you guys would know Quest Bars. I twisted his arm and goad him to mentor Jake and help him work through his business because he’s trying to scale it. So very, very cool interview slash kind of me being a fly on the wall. I know you guys are gonna love this. It’s just a good little mix up. It’s always great to add in, you know, just some different kind of content that, you know, is still valuable so you guys can be a fly on the wall and hear what Tom thinks of Jake’s business and what he should do, and his advice for scaling.
So if you’re interested in starting or growing an ecommerce-based business, we are launching a in-depth course taught by one of our expert instructors, also someone that we interviewed, Gretta Rose van Riel. That was episode number 81, and that’s actually one of the most downloaded episodes we ever had. I don’t know why, but everyone loved it. So make sure you check out that. She’s teaching a course how she’s built and scaled four multimillion dollar ecommerce brands. I twisted her arm to teach our first instructor-only course. This is one of hundreds that I plan for us to roll out and built out a whole platform around this to really help our audience and build a household name entrepreneur brand and really build, you know, something of true worth and significance.
This is a big project. It’s gonna take me at least three to four, five good years of really nailing this. And I’m in it for the long haul, guys, and this is the first one. So if you wanna know how to get access to that course, make sure you sign up at foundermag.com/ecommerce. And also, we just released an awesome sneak peek of the trailer on what you can expect. So if you go to foundermag.com/getsas, which stands our Start and Scale, which is the name of the course. So foundermag.com/getsas, you can check out the trailer. And, yeah, I’m pretty proud of it. I’m pretty proud of what’s to come. I think you guys are in for an absolute treat, not only about this course, but also this episode. That’s it for me. Now let’s jump into the show.
Hey, guys. So in today’s episode, we’re mixing it up.And we were lucky enough to have my good friend Tom Bilyeu, who’s the founder of Quest Nutrition, come on today and actually coach someone in our community. Now he’s doing some awesome, amazing stuff at the moment with his new brand called Impact Theory, which he’s gonna tell us a little bit more about. And then we’re gonna hear about Jake, his background. And, you know, I guess Tom’s gonna share with Jake and help him with his ecommerce business because Tom is extremely experienced in this space, and Jake has a new business that he’s been running for the past year, which has a tremendous growth. And I think Jake and Tom will really, really jam really, really well. So, yeah, I’ll just hand it over to you, Tom. Would you like to share with our audience a little bit about yourself, how you got your job, the new venture that you’re working on, and, yeah.
Tom: Yeah, almost definitely, man. Well, thank you for having me on, first of all. It’s very exciting to be here. I’m excited for the chat with Jake. So I am one of the three founders of Quest Nutrition, and that was a wild ride. That sounds like Jake, you’re starting to get a taste for, you know, the hypergrowth with…which, I saw, was over 20% month over month, which, man, you’re downplaying that in your bio. That’s really, really exciting incredible growth. And so we were a hypergrowth company. In our first three years alone, we grew by 57,000%, and that was in manufacturing, which is like unheard of. We didn’t take any outside capital. So that was all bootstrap, and just an incredibly exciting ride.
And that was all about answering the call to, what would I wanna do every day and love even if I were failing? And, you know, for three very different reasons, my partners and I decided that we wanted to be in the nutrition space. And for me, it was, having grown up in a morbidly obese family and wanting to actually solve the problem, and just looking at what everybody else’s answer was, which was eat less and exercise more, I knew that wasn’t a scalable solution. You know, we’ve been saying that for decades on decades on decades, and the problem is only getting worse. So it seemed to us that the real answer was to make food that people could choose based on taste, and it happened to be good for them. And so that was really the ethos behind the company was to approach the problem from that angle.
And unlike the businesses that we had built in the past, which were all designed to make money and that was, you know, we were a servant to profitability and to making cash, we wanted to be a servant instead to value. And to really create value to people and do something amazing, solve the problem, and just design our organization from the ground up to be all about value. And so that’s what we did, and just was a smash, you know, beyond our wildest dream, certainly from a speed perspective. You know, we always had pretty lofty dreams and goals for the company and thought that it could be really something special, but as fast as it happened was admittedly somewhat surprising.
And, for me, wellness was always meant to be a 360 degree thing, and it’s meant to encompass the body and the mind. And, you know, Quest had gotten so big that to begin to really play in the field of mental wellness was becoming harder and harder. And so it just made more sense to me to spin it off into a standalone company, and so that’s what I’ve done now, which is take the studio that we had built inside of Quest, which was appropriately named inside Quest, which had a show attached to it, and just have this gaining a similar amount of traction from a user standpoint. Fan base was really, really incredible, and wanted to make that the model and incubate companies and content creators and, you know, I think everybody understands incubating companies model. I think it’s less clear for people why we’re incubating content creators.
But for me, we’re living through this age where mythology is in adequate supply. We have tons of it. When you think of movies, comic books, TV shows, all of it is amazing, but people don’t really know how to put it to use in their life. And there was a book that changed my life some 17 years ago now at this point, a book called “The Power of Myth” by Joseph Campbell. And that really became the foundation for my life philosophy and how to live and how to filter ideas and, you know, was one of the driving forces behind the ways that I thought about Quest and just really so foundational to my life.
I wanted to create that next generation, not only of content, but of helping people understand how to use that content in their lives. So I don’t look at Batman and see a comic book. I look at Batman and see an instruction manual for how to live, and lessons that we can take away and apply to business. And, you know, I think people kind of laugh when they hear that. But that’s really how I turned myself into an entrepreneur was through watching movies that changed my life, like “The Matrix,” which is certainly my most famous reference. That movie really gave me a new framework for understanding that my mind was holding me back and that if I could empower my mind and really understood skill development, skill acquisition, that I could do anything I set my mind to.
And so that transformed everything about my life, and I went from scrounging in my couch cushions to find enough change to put gas in my car in my early 20s to generating very substantial wealth and building businesses and having, you know, some pretty life-changing success. So that’s what we’re doing, and yeah, that’s the mission is to bring wellness all the way around to encompass not just the body but the mind.
Nathan: Awesome. And would you like to share a little bit about Impact Theory just quickly?
Tom: Yes. So what that all is Impact Theory, Impact Theory the show is an interview show where I bring on thought leaders, people that have succeeded in all kinds of walks of life. We had just in the last few days, everybody from Amelia Boone, who is, I don’t know how popular this is in Australia, but she’s a obstacle course racer, which here in the US is massive. And she’s also happens to be an attorney for Apple, and she is quite literally one of the toughest human beings alive. And the fact that she’s a very high-achieving professional woman just makes her that much more interesting. Sean White, who’s the most famous and most winning snowboarder of all time, to a business owner who created the Soccet Ball, which basically turns a soccer ball into a power plant and is doing amazing things now in OEM, building out, basically, devices that capture kinetic energy and turn it into power. So, you know, we’ve got people like that, and then one of the most famous neuroscientists of all time, a guy named DS Ramachandran. And then famous people like Michael Strahan, who’s a TV presenter here, and just all kinds of people in between, so it’s really turning into something special.
Nathan: Yeah. No, I can attest to, you know, content. I was actually honored to be on Inside Quest, and I was so inspired that I wanna set up something similar for Foundr. So, no, it’s really inspiring what you’re doing, man, so thank you so much for taking the time.
Tom: Oh, man, it’s my pleasure.
Nathan: Awesome. So, Jake, before we jump in, and I know you got a lot of questions for Tom around where you’re at with Coconut Bowls, would you like to share a little short intro about yourself, what you’ve been up to, and what you hope to learn from Tom.
Which takes me to Coconut Bowls, which is why I’d love to have a chat with Tom about it and get his advice and kind of mentorship. So what we do is we reclaim coconut shells that are discarded as waste, as a byproduct of the coconut oil, water, and flesh industries, and then we turn them, the coconut shells into beautiful, eco-friendly bowls that you can eat from. So it sounds like a little bit of a hobby business, but when you realize that billions of coconuts every year are discarded and burned as waste and 99% of them, you know, aren’t used, there’s kind of a big problem there because the burning of coconut shells, you know, contributes significantly to carbon dioxide and methane emissions.
So we sold our very first bowl in January 2016, and ended up selling over 25,000 throughout the year, including 10,000 in the six weeks leading to Christmas. In terms of revenue, you know, our first month, we just took over a thousand dollars, and by December, we turned over 50 grand. So as Tom said earlier, we have grown 20% month on month, sometimes over a 100%. So we have experienced quite strong growth, and what I have identified myself and through my mentor is, you know, America is a huge market for us. And, basically, what I really wanna talk to Tom about is, you know, how we can help penetrate that market. Are there online retails and, you know, any ideas he has based around that?
Nathan: Awesome. Well, look, I’ll leave you guys to it. Let’s kick it off.
Jake: Cool, cool, cool. So, basically, Tom, my products, it sounds very unique, but we’ve already had a handful of businesses trying to copy what we’re doing. I think we have first-to-market advantage and I’ve secured all the domain names and social handles, but do you have any advice on how we can maintain our market share and kind of make our competition irrelevant?
Tom: Yeah, I think you have one…there’s a few things, but there’s one thing that you guys gonna wanna target right away, and that is to build the community. And at Quest, one of the things that I always saw as our competitive advantage, the one thing that, you know, what people might be able to begin copying our formulations, one thing that they wouldn’t be able to copy is the investment that we had made in our community over time. And when I think about our customer base, I think of it like a marriage. And here’s a truth about whoever you marry, they’re gonna age, and one day they’re gonna be a big bag of wrinkles. And once you accept that trading them in for a younger model is not a long-term winning solution because there’s nothing more valuable than shared experience, you begin to understand how you can inoculate your business by building a community.
Now I think there are things you need to do for your community, with your community, in order to really get them to invest, in order to make that relationship meaningful and more than just, you know, some fleeting social interactions. And I think you guys can look to Toms Shoes as a potential model for that, because one of the things I know that we might get to this later in your questions, but I’ll just bring it right upfront is, you know, how do you get some more urgency in the product line, you know. It’s something that other people can come into. They can do what you’re doing. But I think that if you…are you familiar with Toms Shoes, by the way, and what their model is?
Jake: No, I’m not. No, no.
Tom: Okay. So Toms Shoes is a really, really fascinating story. There’s already been like business reviews done of it. And what they’re looking at is how this guy came into the shoe industry, which is dominated by massive players that just have millions of dollars to throw on, you know, quarterly budgets for their advertising, and just came in and really disrupted them. And I think at one point, it was like the kind of a fourth or fifth largest shoe company in the world, and it’s just crazy.
Jake: Wow. Neat.
Tom: And the way that he did it was he was on a trip to South America, and he was in this village and realized that there were these kids that couldn’t go to school because they couldn’t go to school without shoes. And they only had one pair of shoes for, say, three kids in the family, so they would either take turns so they would pick the kid that they thought was gonna do best in school, and that was the one that got to go. And he just thought, “Wow. Like, I really wanna help these people.” And so it didn’t even start as a business model. He just wanted to find a way to give shoes to people, but he didn’t believe that philanthropy was gonna be the way to do it. He wanted to have sustainable, you know, commercial model where he wasn’t asking for handouts.
So he came up with this model that at least in the U.S. is referred to as One for One. And so his promise was for every pair of shoes that we sell, we’re gonna donate a pair of shoes. And so it was this very easily transmitted idea where he could go into a store and say, “Hey, if you buy 10 pairs, I’m gonna donate 10 pairs.” And then they would tell that story to their customer who signs up in the store and things like that, and it just got this kind of crazy snowball attention because people were so excited. It wasn’t just about the shoe anymore. It’s about the urgency of helping these people.
And I think you have, because your story is so compelling, man, and when I, you know, go in your website and I read about why you’re doing what you’re doing, I feel like the pitch is more than this is the bowl you need. This is a solution to an ecological problem. So you’re not actually asking me to buy the bowl just for the sake of the bowl. Like that’s there, and that’s maybe value proposition two or three, but value proposition was “do good in the world.” And I think that you’re gonna get a lot of people that resonate with that, but there’s not gonna be urgency, you know, and you don’t want your business to essentially become a carbon tax credit, right, which is cool. And when I’m thinking about it or if I’m a certain type of person, I might be really motivated by that, then I’ll do it. But there’s only so many bowls that I’m gonna need, right?
Tom: So you’re going to, in order to create the urgency for people, and whether that’s, by the way, selling and we’ll definitely address whether you should be going online or retail, but whether you’re selling online or retail, I think you can create some real urgency by doing something like that. It doesn’t have to be a One for One and your margins are gonna determine whether or not you can actually pull off a One for One. But that’s just an example of one of the ways that you can really make this tangible for people is if you can tie it to something else.
So if pollution is really the thing that you wanna make your central focus to like what are you doing with some portion of your profits to combat that. So not just, hey, they’re not gonna burn this one. And that’s how some of the language reads on your website, is essentially you’re rescuing that one bowl from the incinerator, which, you know, stops it from going into the atmosphere, which is awesome. But like, what’s the next step, right? So could we do something like, hey, not only are you rescuing this one from the fire, which is sort of the Disney-esque anthropomorphication. I’m totally butchering that word.
Jake: Making it more human, right?
Tom: Yeah. And that is gonna work, but then, hey, on top of that, we also have this program going where either it’s one for one, where for every bowl that you buy, we do…we pull something else. We plant something in Beijing. You know what I mean?
Tom: So it’s like if you what’s going on in Beijing with the vertical…it’s not farring [SP], but it’s like they’re building these towers that are basically the entire facade is plants to combat pollution, right? So if you got into that game, and it’s like for every bowl you buy, we plant a plant. For every 10 bowls, we do a plant, whatever.
Tom: But you find some.
Jake: Yeah, well, instantly when you said that, so basically we have quality control and all the bowls that don’t pass quality control, we do nothing with. So that’s a perfect opportunity to gift them to, you know, like, I think bowl naturally fits with food. So we could potentially find people that, you know, underprivileged, may not be able to have clean tableware basically like that and gift a bowl to somebody in need. So that’s a great idea.
Tom: That’s really interesting. And so you have to be a little careful. You don’t wanna get sort of in the mix messages and having the clarity of marketing, like, because, yes, your bowl does go into food, and I saw that you have some recipes. And some of this is just gonna be you just need to decide. I don’t think there’s a right answer or wrong answer.
Tom: But what do want me focused on? Do you want me focused on food or do you want me focused on the environment, right? So you’re gonna to have to sort of pick a road. Just for argument’s sake, let’s pretend that it’s gonna be the environmental pollution angle. You know, there’s so many ways that you could get involved, and I’m spitballing here, man. But, like, okay, this all goes back to where we started, right, which is community. You wanna be doing things that allow your community to really connect with you, to create a sense of urgency in the community that we’re really doing something. You can imagine like going to the UN and either everybody at the next summit to discuss the environment, they all get bowls. The bowls are waiting there on their table with an explanation of who you guys are and what the bowl means or…
Tom: …you deal with a country that maybe has pollution and poverty, and, hey, we’ve just done a deal with Thailand, Indonesia, Vietnam, you know, one of the places that you’re working in, where we’re actually donating the bowls to entrepreneurs who are working in green startups in their country, and we give them the bowls to actually sell and supplement their income, whatever. You know what I mean? But it’s like you’re using your waste like to be this ultimate green company that’s then fueling other green companies. And, you know, not to be crass, but like that’s how you make marketing work for you. Like don’t squint your attention. Don’t try to solve every problem. Like, pick one problem, and, like, just go hard down that road. That doesn’t need to be pollution, but you can see how if it is that, now you can just, you can tell that story in like 10 other ways that your community will really rally around.
And now if you’re doing that, you can imagine somebody else comes into the space, what does it matter? It’s like I, as your community member, I’m invested in you. I get your vision. I see how you’re working to actually make the world a better place, like no B.S. And so I’m invested in helping you do that. So the competitor comes out. Maybe their bowl is shinier. Maybe their bowl is cheaper. It doesn’t matter. They don’t mean what you mean.
Jake: Yeah. I appreciate it. That ties in to kind of that long-term mission, so I love to look at that further. I want to take it a little bit more business kind of questions now. So we’ve achieved most of our growth with very little marketing spend. I haven’t taken any outside capital, and basically relied on cash flow to fund the business. But I know that paid acquisition is vital to foster growth. And with that huge cash operatives, you know, I listened to a podcast with Nick Robinson, which is your Chief Marketing Officer I believe. And he said that you guys would basically be happy for every dollar that you spend turned into two dollars, three dollars, and five dollars is, you know, a really strong return. For business like mine with, you know, not strong cash behind us, what do you think is a good return investment target for every dollar that we spend on marketing?
Tom: I really think that your goal is gonna be to break away from the belief that you have to spend money to make money. And I’ll, you know, even though you’re quoting Nick, who was our CMO, we really, especially in the early days, we just were not spending money on advertising or marketing. The only dollars that we really spent in that was giving product away. And that’s why I think that a big part of where you’re gonna have to focus is getting the influencers out there spreading your word and, you know, that’s what worked for Toms as well, was people were so excited at the idea that, hey, I bought this pair of shoes and a pair of shoes was donated to a kid in this very specific village in South America, and I feel like this connection in every…I can’t remember what they do twice a year, but certainly at least once a year, they would do these trips down to that village to hand out the shoes. There was like this real, visible, visceral sense of what I have done has gone to help these people.
And if you guys can catch the imagination of people, then you can break away from that, because I don’t think you’re gonna be able to throw money at this without taking outside capital. And I think taking outside capital for you guys, it’s certainly an option, man. And look, if you just can’t get the influencer strategy to work without throwing dollars at it, which, by the way, I would really push you. I think you got the story. I think you could really light the right people on fire for this, and they would just be super, super jazzed by what you’re doing. But if you can’t, it’s just not working, and you had to bring in outside capital, then, okay, fine. So be it.
And look, anything that’s giving you a return of, say, north of 30%, you should call a win. I don’t know your margin, so like some of that may break down. But I’m talking like real, real profit. Anything north of that on a pure ecom play, is reasonable. So, you know, as long as you’re north of that, great. If you’re doubling your money, and that was always what we aimed for at Quest, you know, if I spend a dollar, I wanna make two, but that didn’t always hold. And so much of marketing is soft. It’s not like that hard ROI where you can really track, it’s getting better. But since I think a huge part of your strategy should be social, it’s always gonna be a little soft for you.
Jake: Yeah, great. One thing I took from…I’m not sure if it was a podcast or an interview that I read, but some people believe in what you’re doing because they’re paid to. Others just believe in what you’re doing. And I think that we’ve had some success with influencer marketing and partnering with people within our kind of target market. But I think what you said earlier about building that community and that kind of social initiatives in terms of what we can give back to the community, I think that’s gonna really obviously help us kind of foster bit of a relationships with these people so that they want to continually help us and be aligned with our brand.
Tom: For sure. And also, usually the only people that you have to pay are people that are big. And I think if you’re prepared to really…I’m making the assumption, by the way, that this is a forever company for you, and you’re not just looking to build to sell it because I might give you a different advice. If you’re trying to build to sell, velocity becomes more important, then I’m less worried about you taking outside capital, because the reason I fear outside capital isn’t because it won’t accelerate growth. It will, for sure. It’s that you now have a ticking clock, and they’re gonna expect a return on that, and they’re either gonna be looking for you to go public or sell. And that can make people start making very short-term decisions, and I think a company like yours, which feels so focused on real impact, that just seems like it would be a mistake. But if I’m wrong about that, you know, just let me know, and we can adjust strategy.
But assuming that this is a forever company that you really wanna have impact, that you want momentum, you want growth, to be sure, but that’s subservient to the building the company right, growing at a pace where you can hire the right people, really build some sound infrastructure, I think that I would worry less about going after big influencers, and I would go after die-hard people that are trying to build a name for themselves, right? And it’s the difference if…I don’t know how familiar you are with music, but, you know, if you think about music, there’s two ways to go about it. You can Incubate talent. Find somebody when they’re young and help develop them. Or you can go to somebody that’s already had a smash record and try to buy them over to your label.
And that’s how I think about influencers. It’s always best, if you’re in it for the long haul, to find somebody that you look at and you can just recognize, like this person is going somewhere. They’ve got like a real knack with their audience. They’re really doing something special. Their audience may only be 7,000 people or 15,000 people, but they’re doing something special, and you can project out your two years and know that person is gonna have a 100,000 or 200,000 followers. I’m gonna establish a meaningful relationship with them now, invest in them, help them get to that point. They’re helping me as well by spreading the word to people who aren’t already in my ecosystem, and now we’re doing something special together. And if two years from now, if you’ve got, you know, maybe you developed meaningful relationships with 50 influencers, and six of them actually turned into something, but now you’re getting the friends and family rate. They’ve been helping you all along. That’s how the stuff really, like really smash that out of the park.
Jake: Yeah. I think if you asked me three years ago when I first went to ecommerce, it was definitely trying to build something that I could eventually sell. But now that I’ve actually got a product that people love, and I see how much it means to them, It’s really kind of got me believing in, you know, a lifelong business and, you know, making a real difference to society. I wanna move on to…so basically I’m spending March, April, and maybe May in the U.S. It is a big market for us, and I’m attending a few expos and exhibiting at a few different places. I wanted to get your thoughts on whether we should focus on online sales and retail or one and the other?
Tom: The answer in today’s world is always, always, always gonna be both. But if you have to lean on one, a 1000% lean online. And the reason is you need to build that community, and there’s no better way to build that community than to have a direct sales funnel with them to see what’s working, to see what they go for, what message resonates with them. And if you’re going into retail, you’re always working through somebody, and the feedback that you’re gonna get is so dramatically skewed and distorted, whether intentionally or totally unintentionally, by their lenses and the way that they do the world. So having that direct relationship, it is so critical. And also online sales, you know, grow and import every day.
But I think that if you’re really doing your business right, you spend the year to two years more building the pull through demand online, so making sure that, you know, people are walking into stores and saying, “Oh, you know, have you ever heard of these Coconut Bowls? You guys should really be carrying these since its right up your alley,” so that you’re getting now people coming to you. Like that’s the ideal scenario. Or that when you say, “Hey, we’re now available at Crate Barrel,” or, you know, wherever you go, that people then immediately, like they already understand the product. They know it. They’re going and getting it. They’re telling their mom, you know, so that you get that immediate hit, because if you don’t sell a certain number from day one on the shelves in those retailers, they’re gonna pull you. And it’s so much harder to ever get back on the shelves than it is to get on the shelf the first time.
So focus online for now. Get the users, but be strategic. Price now thinking about where you’re gonna be three years from now in retail, where you’re gonna need the margin for the wholesaler and the distributor, and all that good stuff. That’s super important. And pricing is the one place you’ll kill yourself. And that’s really the only drama with starting online is people usually price incorrectly, and then they just can’t go to retail. But if you price right, you can do both.
Jake: Yeah. Just one more question on that. Now I don’t really had much experience with…or we run 80 stores at the moment in Australia and only a handful overseas. Just say we have the opportunity to meet with a Whole Foods or something like that, what would your advice to me be in that meeting, if I was trying to get out our products on their shelves?
Tom: Be willing to say no. Be willing to walk away. And the reason is, so in the beginning, the way the stores are gonna look at you, they’re gonna look at you like they’re a key maker. And they’re right. They’ve got a lot of pull. They attract a lot of people into their store, and getting on their shelves can be very beneficial. But where people go wrong in, and I’ve seen this enough, like I’m begging you to like hear me out on this one, is selling a lot of units is not the same as being profitable. And what happens is people end up, they get in, they look at the deal, and they say, “Hey, I’m profitable. I’m making, you know, maybe 10 points, 15 points. I can live on that. Like, 18 points. Okay, as long as I have 80 points, I’m good.”
And then what happens is the retailer then begins, “Oh, sorry, we have breakage.” And they take the breakage fee automatically, by the way. They don’t have to prove anything to you. They just take breakage. And, hey, we need you to advertise in the flyer, and suddenly, you’re 18%, which is sort of the bare minimum needed to eat by, becomes 12%, and now you’re either breaking even, doing a lot of work to break-even, or worse, you’re losing money. This happens all the time. So just know whatever deal you go in with, that is not your net effective price. I promise you, it’s just not. So it’s gonna be significantly lower than that. So making sure that you work with them to establish like what do you expect me to participate in? What are all the things contractually that sort of come off the top? And then does that really work for me long-term? And if it does, then do it, man. Retail’s amazing. But if it doesn’t, and it ends up being, you know, where you’re making 5 or 10 points, it’s like, wow, that’s almost certainly not gonna be worth all the effort.
Jake: Yeah. I really appreciate that. So right now it it’s myself, I didn’t mention earlier, but I also run a social media agency with an employee here in Melbourne, and I have a contractor that helps me, and both of the girls work with both businesses. You know, as our business grows, do you suggest we look at employees on the ground here in Melbourne or somewhere else, or we work with contractors?
Tom: I do both, and I’m a big believer in both, and I think they each have their place, and this is where I think their places are things. If this is a forever company, and you’re gonna be building it and growing it for the long term, I think you want a base of full-time employees, because they will feel that you’re committed to them, and hopefully, you show that in your every action. They, in turn, if you’re treating them really well, if they believe in the mission, if they know what you’re trying to accomplish, they can see a career path, they understand how they grow with you, then they’re in turn gonna invest back in you, and they’re gonna invest back in the company, and you’ve got the stability and the good things that come from the continuity of it being the same players. And they’re there every day, and you guys are fighting side by side. You believe in each other.
But then there’s things that need to expand and contract all the time, and a very classic example of this for us, anyway, is art work. And so there’s times we’re feast or famine. So there’s times where I need, you know, a 100 hours worth of work done in, you know, one week, and then there are times where I need 20 hours worth of work done in that week. And so having one person on staff who are either hating their life on the heavy weeks, or I’m, you know, really mismanaging my funds on other weeks.
So what we do is we keep the minimum amount that we need where we know I’m gonna have this amount every week. I have people staff for that. And then instead of beating them into submission when we have spikes, those are the times that you then bring in the contractors, which I strongly encourage you to have relationships with people so that, you know, I try to always have three to five contractors that we’ve established a good working relationship with. We know what their work is like. We know what their turnarounds are like. And the reason we keep more than we need is you never know when somebody is gonna be available. If you’re only using them part-time they’re gonna be taking other jobs. So, and then, you know, over time, if you’re growing, then slowly, sometimes, you’ll move a contractor into a full-time position if they’re local, or they can telecommute. Or you’ll just find somebody and hire that full-time position. But, yeah, I think it’s a balance between both, so.
Jake: So I think I have a question here, and I think you already answered it, but of all the marketing issues and campaigns that you’ve done with Quest, I think the working with the influencers and sending out product to people was something that was really successful for you. Can you shed any light on, first of all, your approach, and then how you continually keep in contact with these people to make sure that they’re, you know, still part of the brand long-term?
Tom: Yeah. So you’re absolutely right. Those are the two things that I would say that we were most successful with. The way that we approach everything with influencers is who can we add value to? So it’s not just who can add value to us, but like who can we provide something to that’s valuable? And at Quest, that was, you know, really, really easy to establish. It’s maybe more exciting on Impact Theory, but it’s very different. So the way that I looked at Quest was we would find people typically in the health and fitness community that really wanted the legitimacy that we as a brand can provide them because we had a great product, so we had a lot of cache in the industry.
So even just giving them products so that they could say that they were sponsored athlete, was a really big deal. And we would get to know them, get to know their feed, get to know what they were putting out in the world and how we could be useful for them, and we would try to help them out any way that we could. And sometimes that was letting them come in and use our studio, our equipments, and our staff, and other times, you know, we’re just giving them product or if they were holding an event or something to make sure that we sent reps to the event, to hand our product, you know, just things that really made them feel well taken care of.
Hiring them to work events. So we were gonna hire somebody anyway. So, hey, let’s hire somebody, you know, that’s in our influencer community. That went a long way. On Impact Theory, it’s a little bit different, and what we do is…so because we each… we start with, in some cases, we’ll actually help them for free. We don’t ask for any money, equity, nothing. I would just help them add value if we believe that their company is delivering a powerful service. And I’m of the belief that you just…if you can give away your value in, you know, a few interactions a week, a month, or even a year, like you probably don’t have that much value.
So I never tend to give something away for free, you know, and I mean, like this call, right? Like, I’m literally trying to give you as much as I can, as fast as I can, to make sure that, you know, I give you as many of my tricks as humanly possible because I know that the real juice is in the execution. And that’s what it’s all about. I’m just trying to give as much value, as humanly possible. And that’s one of those, it’s super simple. A lot of people are saying it right now, but not a lot of people are actually doing it. So when we were…in fact, just today, we had a company coming today. They have a medical device. Very interesting. I think it could have huge implications in weight loss. Already FDA-approved for weight loss. It could have implications in disrupting anxiety and depression. I mean, it could just really, really, really be amazing. And I’d been helping them develop a strategy, and gonna help them do some social content, all kinds of stuff. And, you know, we haven’t asked for anything.
And so you can sort of see them like waiting for the other shoe to drop, but there is no other shoe. And the thing is, if we can deliver enough value and we can see that their product is real, then, you know, we worry about making something contractual. But between now and then, like I just wanna give, give, give. And that’s how you attract high-caliber talent, because you’re not putting up any guards. There’s no defenses. There’s no walls. You know, it’s just value. If you live with that, then you’ll find some amazing relationships. And, look, 80% of them are gonna turn into nothing. And it would have been you putting value out in the world, getting nothing for it. But the 20% man, where it clicks and it turns into something, it really turns into something.
Jake: Yeah. Great. So we’ve had a handful of the influencers that we do work with, one to sell the bowls on their blogs and websites. Do you guys do any affiliates with Quest, or do you advice us to kind of pursue that? I’d been reluctant to do it so far, but what are your all thoughts on kind of affiliates?
Tom: I love it, man. Anybody that wants to get out there in the right way, represent my product correctly, bring value to their consumer base, and sell my products, I’m all for it. Now if somebody is just trying to trade on my branded terms and their sales strategy is to wait for me to advertise on my name brand, to go out there and build it, and the only keywords that they bid on are, you know, my terms, then that’s parasitic, and that is totally meaningless.
So, number one with affiliates, never let them bid on your branded terms, but if they can make something happen without touching your branded terms, like, that’s amazing, you know. Nine times out ten is because they’re adding value to their community. They’ve gotten good at affiliate marketing. There’s something, you know, that they’re doing. And I would be very specific about who I let into my ecosystem. I wouldn’t just take anybody on as an affiliate, but like if you decide to go down the path of, you know, pollution and really helping with the green movement, finding affiliates, you know, that are blogging about that, and they just don’t have a way to monetize, right? Like they’re so passionate about being green, about educating people on this. How do they make money, right? And so it could be this perfect marriage where they have your product and a bunch of other products that they really believe in, so there could be new credibility. You’re giving them a revenue stream. And it just really becomes this wonderful symbiotic relationship.
So if you’re careful, you’re attentive, and you really just, you know, ask who can I offer value to, I think you could find some very meaningful ones. But I don’t wanna be Pollyanna. There are a lot of parasitic people in that space. And so, you know, when it comes to affiliates, you have to be very, very careful.
Jake: Yeah. And do you think that with, you know, bidding on your keyword and key terms, do you think when I have, if there’s any other online retailers of their products, we should also have a contract that stated they can’t bid on the same words that we are?
Tom: Yeah, you should. They’re gonna do it anyway, and it’s, you know, what we call whack-a-mole. And you, in the beginning, almost certainly won’t have enough resources to pursue and chase them down. So you’ll have to make some criteria. You know, at Quest, for us, we didn’t want people that were web only. So we were looking for people that were brick-and-mortar as well. But here’s the truth, if you’re not selling on Amazon, you’re just missing such a huge opportunity. The truth is, people, and I speak for the U.S., here in the U.S., if you’re gonna try to crack the U.S. market, you’re gonna have to be on Amazon. That is where people wanna shop. Amazon is brutally difficult to deal with. They will not let you do minimum advertised pricing, which is one way that, you know, here in the States, we can keep our prices from being eroded too much. So you really have to control them by the price you sell at.
But if you can get them to carry you their experience from a shopper’s perspective, it’s so good. And once you go to Amazon, it’s like what grounds do you have to tell other people no that are pure web plays. So you really have to think about, you know, how you’re gonna handle that. Nobody has a great answer to the Amazon conundrum because your retailers are gonna hate that you’re selling on Amazon. But I just think the truth is unless that retailer is willing to guarantee sales, like it’s pretty tough not to be doing stuff on Amazon. Amazon is not only a great sales channel, it’s a great marketing vehicle. So, yeah, if it were me, I would definitely be selling on Amazon. Okay.
Jake: Yeah. It’s in our plans, but I’ve been lazy on that front, so I’ll take your advice and focus on that. I wanna be conscious with your time, so I wanna…I’ve got a couple more questions before we throw it back to Nathan. You’ve already given me some, so I really appreciate it. But do you foresee any challenges for our business as we kind of grow?
Tom: The only one is are you gonna be able to diversify enough to really feed into whatever, you know, if it’s the pollution angle, not to beat that to death. But if it’s, you know, green, that, you know, how do you go beyond the coconuts, because you go to all this work to get somebody into your ecosystem. They love your ethos. They love that you’re rescuing. You know, you’re essentially making something out of sawdust, right? So other people are harvesting the flesh and the water, and you guys are saying, “Hey, this remnant that just gets burned. It’s bad for the atmosphere. We’re gonna take that, turn it into this, you know, sort of beautiful piece of art, which is really one of the cool ways you guys are marketing, that it’s just unique. It’s one in a billion. It’s, you know, really this wonderful thing. Okay, so now you got me, right? I love it. I bought a bunch of bowls. I bought bowls for my family. Like, but now everybody’s got bowls. So what’s next, right?
And I think as you expand that product line, how do you not trap yourself into being just the coconut bowl guys, right? It’s got to be the ethos rather than the specific item. And so I think one of your scaling problems is gonna come down to your name. I don’t think you wanna invest that heavily in coconut. I think you wanna invest in we rescue things that would otherwise not only be just waste, but then the waste is handled poorly. And so how many other sort of “waste” items can we turn into these incredibly beautiful usable items and really show people that there’s this whole economy to, you know, the things that other people think of as just something to be discarded. Now when that becomes your brand ethos and you’ve got, you know, 10, 15, 20 products like that, now you’re a brand. And that’s when I think you’ll really win.
Jake: Yeah. I appreciate the thought always think big, think big. I wanted to kind of…I’ve already got an idea of what your advice is to me and what we should be doing next, but if you could give me one, two, three things I should be focusing on, you know, immediately, what would they be?
Tom: Build the community. That’s just huge, huge. Position yourself for growth. So finding a way around what I’ll call a “branding trap” that you’re in right now, which is overly investing in coconuts. I think that this could expand into just a whole bunch of things. And then the third is really figuring out the cash flow issue, and that’s gonna…with the kind of growth that you’re having, that’s gonna dog you. And until you can either figure out that the growth is gonna sustain, right, without you throwing the additional dollars, which it may, especially if you begin telling this really positive story and you go broader in your product offerings, and now the people that you get into your funnel have more things to, basically, upsell themselves to, upsell others to, get people into your newsletter, which will just be an ongoing way to communicate with them about the problem that they really invested in anyway, which is the environment. And so now you can be, you know, an authoritative voice in that. You can start doing content marketing. And then you’ve always got these new products that you can be getting into the system with that.
If you can broaden your product horizon and maybe even team up with other people that are working in a similar vein to get some sort of subscription, where they’re gonna get a new product every month or something like that on a subscription basis, just ways to get people into an automated, you know, relationship with you would be really, really powerful. And then I’ll just throw in a fourth, which is to figure out, you know, exactly selling online, figure out the Amazon piece. I think Amazon is gonna be huge, huge for you.
Jake: Great. Thanks so much for your time and advice, Tom. I really appreciate it, and I know it’s gonna go a long way to help me as I build that, you know, long-term business.
Tom: Nice, man. Absolutely my pleasure, and I’m super excited about what you’re doing. I think your mission is fantastic.
Jake: Thank you. Thank you.
Nathan: Cool. Wow. That was awesome. Oh, awesome. Well, look, yeah, man. I just want to say thank you so much guys for being so transparent. That was really a fascinating conversation to be a fly on the wall. So next steps, I was going to say is, Tom, would you just like to share, I guess, the best place our audience can find you, and then also once you’ve shared, Jake, would you be able to share the best place our audience can find you and more about what you do?
Tom: Yeah, most definitely. So the place to find me is @tombilyeu, last name is spelled “B,” as in “Bravo,” I-L-Y-E-U. From there, all of our content emanates, so you can follow me on Instagram, Twitter, Facebook, and YouTube.
Jake: You can start by following Coconut Bowls on Instagram, but you can also find me on Instagram as Jake McEon, or my email is [email protected]
Nathan: Awesome. Well, look, that was a fantastic conversation, guys. Thank you so much folks for being so transparent and pretty much just to getting that the mic was on and we’re recording because that was so much gold shit, so thank you so much. And we can wrap there.
Tom: Awesome, man. Well, thanks for having me on, and, Jake, it was an absolute pleasure that I got to talk to you, man.
Jake: Thanks so much, Tom. I appreciate it.
Key Resources From Our Interview With Tom Bilyeu and Jake Mckeon
- Checkout Quest Nuttrition
- Follow Tom Bilyeu on Instagram
- Checkout Coconut Bowls
- Follow Coconut Bowls on Instagram
- Connect with Tom Bilyeu on Linkedin
- Follow Tom Bilyeu on Twitter
- Connect with Jacke Mckeon on Linkedin