You're listening to Cubicle to CEO episode 238. Our show recently made its debut at South by Southwest week in Austin, Texas, with a live podcast recording at the cherub pop up shop. cherub, one of the companies I Angel invested in last year is a platform connecting founders with funders. If you're interested in Angel investing, or you're a founder who's seeking capital, and wants to plug into a network of strategic angels for your next fundraise, shoot me a DM at MissEllenYin on Instagram with the word cherub and I'll help you get started. In this live recording, you get to eavesdrop on my conversation with two founders on the chair of that platform, Shannon Davenport of Esker and Bridgitte Mallinson of Gut Personal, who have both successfully raised money for their businesses, we all see the highlight reel of how much companies are raising and making. But rarely do we hear founders talk about the flip side of the coin? How much are they actually spending and on what? Today we're going behind the business with Shannon and Bridgitte to answer these questions as they get transparent about their company's burn rates.
Welcome to Cubicle to CEO the podcast where we ask successful founders and CEOs the business questions you can't google. I'm your host, Ellen Yin. Every Monday go behind the business and a case study style interview with the leading entrepreneur who shares one specific growth strategy they've tested in their own business, exactly how they implemented it, and what the results and revenue worth. You'll also hear financially transparent insights from my own journey bootstrapping our media company from a $300 freelance project into millions in revenue.
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Hi, everyone. Thank you so much for coming to our live recording of Cubicle to CEO. I'm joined by my two special guests. We have Bridgitte Mallinson and Shannon Davenport, thank you so much for joining me ladies. We're really excited. Today's conversation is going to be focused on how much money these women have raised and more specifically how they've spent it. So I know in the media, we like to talk a lot about how much money we've raised. That's often the highlight that is shown. But I think it's equally important to talk about how we actually utilize that money, the burn rate and that kind of sets the stage for what our conversation is about today. But let me give you a formal introduction.
So I'm going to start with Bridgitte, so Bridgitte Mallinson is the founder of Gut Personal. This is a company that's powered by a women led team of registered dieticians and got healthy experts, and they're on a mission to eliminate gut issues for good, it's something we can all stand behind. Ooh, yes. Their unique personalized approach to wellness involves customized supplements, gut testing and health coaching to help women achieve lasting relief. Welcome, Bridgitte.
I'm so excited to be here.
Thank you for being here. I'm gonna ask you your Cubicle to CEO story in just a second. But first I want to introduce Shannon. So Shannon Davenport spent 12 years as a trend forecaster and consultant in the beauty and retail industries for clients, such as Estee Lauder, P&G, Unilever and target where she analyzed consumer insights industry data and future trends. During her research, she uncovered a massive opportunity to build a body care brand in an emerging space. I actually just got to try it when I went to the bathroom, wash my hands with Esker hands down It was very luxurious. Now as a mom and entrepreneur, Shannon's goal is to share Esker's self care mission with the world. Thank you, Shannon, for joining us.
Thank you.
Super excited to have you both. We like to kick off the podcast by asking our founders, what's your Cubicle to CEO story? If you could sum up in 60 seconds, the catalysts that made you leap from employee to entrepreneur? What would that be?
Yes, so oh, my gosh, where to start. But I was someone I was a registered dietician, I had a lot of gut issues. And I have to start there. Because I really think as entrepreneurs, when we move into that space, we have to have so much passion to be really successful. So I found functional medicine, which really got at the root cause of dysfunction. And I was always creating my own job within other companies. And then when the pandemic hit, I was working for two men that really didn't see my worth. And didn't get that raise I wanted thank God, right. And took my business online, June 2020. And that was my first business where I was a registered dietician doing one on one coaching, and then got personal came about a year and a half later. But it was really the pandemic, I mean, that really accelerated things and got me into the CEO seat.
The shift from services to a tangible physical product, I always find, I mean, it's quite a huge leap, right, very different types of businesses, what made you think I need to go beyond one on one and, you know, really create a product that can reach the masses?
Yeah, it was really the realization, a couple of different things. But the realization that I was helping hundreds of women, when I knew I had the capacity, the drive and the passion to help millions. And honestly, in the business sense of things, I was trading my time for money. And I knew I always had this idea of a supplement company, pre-pandemic, I was a supplement buyer, I was working at a wellness store. And I knew we could do it better, because so many people were coming into the store and saying, well, I took a probiotic. And I felt worse, myself as a registered dietician, I was like, please don't take a probiotic at this point.
And you know, that was four years ago, when a lot of quizzes online, and a lot of personalization was not where it is today, thank God, you know, I think we're in the forefront of that. But I knew I could do it better. And so really, my drive came from helping millions. And then also, you know, on the wealth side of things, building long standing wealth for my family that, you know, I have a seven month old daughter who's here, now some of you have already held her, and I wanted to, you know, at some point, spend more time with my kids and, and be a mom, a mama CEO. So that was really the driving factor. And I think the services side has helped me accelerate the CPG and how I market so much better. So it's been a blessing.
I can absolutely attest to that. I think when you work one on one with people at accelerates, you're essentially your depth that you can go with a customer and really understanding their needs and what the decision points are around, right. So you can really speak their language. So I love that. Shannon, what about you? What was your catalyst that moved you from a corporate job or a cubicle or whatever you were doing prior and into the CEO role?
I never thought I would be an entrepreneur ever, ever, ever. My mom was always a working single mom. And I remember at a really big realization at one point, I asked her like, how should I ask her a raise at work? And she was like, I don't know, Shannon, I've never asked for a raise. And I was like, that is really, that's really sad and unfortunate. And I mean, my mom is amazing. And she did an incredible job.
But in my mind being raised the way that I was raised, it was always like, kind of a pipe dream to be an entrepreneur, like how do you actually do that? How do you actually make that work? I didn't grow up with a lot of money or resources or like lots of successful entrepreneurs around me. And so I had a 12 year career before that. And there's a reason that I did that. And, you know, a lot of it for me was financial security. I still, I had student loans. I didn't have any help. I had gotten a crazy credit card debt when I was in my early 20s. So I never saw this as my path until I had really, really worked in the corporate world saved money, which is virtually impossible in New York, but somehow.
And then, I kind of had like an itch because I was a trend forecaster. And my job was to be looking for newness on behalf of my clients. I started to get really cranky and salty around my clients because especially when I would talk to them about sustainability. I go into these big companies and they were like, well, there was a study three years ago that says that, like everybody wants sustainable products, but they're not going to pay more for it. And so like that was like the one white paper that like every corporate company just kept using and using again and again and I was like, Guys, you're just just wrong and you're kind of being assholes. And this, I'm tired of talking about this again and again.
So I just kind of banging my head up against the wall like talking about trends and talking about the future consumer with corporate companies. But I was very shy and timid about like wanting to actually be an entrepreneur and feeling like I could do it financially. Right. And so I, my husband is my creative partner. And one of the things that we talk about is, when you have an idea, like try not to talk about it, because sometimes you get the high of having an idea by talking about it to other people, you're like, hey, I have I do it all the time. I'm like, I have an idea for a startup for like, whatever, like, I'm not going to do it. But it's like, my next idea is like a lip gloss that kids can eat, or whatever it is. And by talking about it, sometimes you get that serotonin boost.
And so for me, what really led me to actually starting something was like, being quiet, putting my head down. I worked nights and weekends, I didn't talk about it until I had something ready.
Yeah.
And it wasn't until I like did that did all my research had something to say. And to do that I was actually able to like, finally make the leap. And because I'm very fiscally conservative, or at least I used to be now throw all caution to the wind. But in terms of like having a salary and being able to pay myself, I wanted to make sure that I had a viable concept before I quit my six figure job in New York City. So I actually showed it to some buyers first and made sure that they were like, yes, this is good. And so I remember, after having my first baby, I put some pants on. For the first time after living in sweats. And I, I was I met with the goop buyers, and they got it, they understood the concept. And I was like, okay, I get it. I'm not totally crazy. Now, I will take the leap.
That's awesome. You know, I really stand behind that. Because I think a lot of times, it's it's so easy to like you said go out and like seek input from people. And everyone can tell you, you have a great idea. But I always say it doesn't really matter until someone gives you the first dollar, right? Like you can validate your idea all you want. And people may be encouraging and tell you like I love this, I buy this, but it's like, show me the money like show me that you actually really believe in this thing by paying that first dollar. So I'm so glad you went and truly validated your idea with a buyer before you went full force publicly into this venture.
Yeah, yeah. So I was like a very risk averse person for multiple reasons. And I managed to do it and push myself off the ledge. So like, even if you don't have that entrepreneurial spirit, or you weren't raised around that, like you can still do it, you can still make it happen even if you're basically scaredy cat, which is what I was.
Super encouraging. Okay, let's, let's get into some of the numbers here. I would love for each of you to share, how much have you raised in capital and at the time that you went and sought funding? What was the primary purpose that you intended to spend this capital on? Like, why did you need the funding? So Bridgitte? I'll pass it off to you.
Yeah. So we're in the middle of our second seed round. So we've raised $590,000, to date, congratulations. Thank you so much. I'm kind of the opposite. I like love risk. And I love like I'm an Enneagram. Seven, I'm like, Get behind me. So this will be a great conversation, because we're very different.
I like the perspective.
Yeah. So I had this mentor, when I was going to start my company who, you know, I was going to start my bootstrap my company. And something that he said to me was really powerful. He's like, do you want to do this quickly? Or do you want to do it slow with your own money, and I always liked doing things fast. I grew my first business very quickly. And so it was to launch the company. So our first seed round was $425,000. We were gonna raise much more than that. We didn't need it. So I stopped it early.
So in total 590,000,
590,000.
You've raised today, and you said you wanted to use this money to increase your speed right. But speed to what speed for product to market?
Yeah. So product to market. We were three and a half months.
Wow. From from ideation through development. Yeah. Like I have a tangible product.
Yes. Because I was I already had built the company in my mind. It was a conversation I had with a girlfriend who was a business coach at the time, who said Bridgitte, you've always had this supplement idea, do it. And it was I'm very quick to take action when something is aligned for me. And so it was a conversation. I started talking to marketing agencies because what I knew I couldn't do was the design of the labels. Like that was the thing that was like holding me back or I couldn't build a website. And so I hired a marketing agency and yeah, about $100,000 was to get that mark, product launch and you know, we launched 11/11 2021 So we're kind of removed from that but right yeah, that was to get it launched and runway for a year and a half.
Very impressive that speed to action. And I love that I tend to lead more risk. diverse as well. So I totally can relate and understand the idea you just want to eat. We want to test and see what happens, right, like we learned from experimentation.
Shannon, for you how much to date have have you raised and what was the primary intention for the capital you were raising?
So we've raised I would say, in relation to how long we've been around not very much money, we've raised a little over a million dollars to date. Our first raid was raised was a preseed raise that was 600k. And then we're raising a seed round now. And we have over 500k trying to raise a million. And the first time we raised I mean, I bootstrapped till like 700-800k in revenue. I mean, nobody would give me money. And I didn't know how to ask for it anyway. So I just sometimes it's a necessity. Yeah. So for a while there, we just sold product and just sustain the business kind of just mostly me. And then I the first raise was really to hire a team. So we I brought in my first marketing hire, I brought in my first operator, support on the operation side, and then kind of tried to get myself out of the weeds a little bit, I'm still very in the weeds. But that was the first and foremost use of funds was to build a team.
Understandable. I have to play devil's advocate here, since you were already generating significant revenue on your own as a bootstrap business. Is there any reason why when it came time to hire team that you chose to go the funding route versus saying, Okay, let me figure out my first key hire, reinvest the profits in that into that role, and then continue to, you know, build and bootstrap why why give up the equity at that stage?
Well, I mean, I think in CPG, CPG, is kind of a separate category in terms of fundraising, because you need to have free cash flow in order to always support your inventory.
Yes.
So I couldn't necessarily hire people that I needed to, and also pay for my inventory. At that time, we were doing wholesale and not a lot of DTC and so when you do wholesale, you have a longer cash conversion cycle, you're buying your inventory months in advance, and you're selling it and then you're getting you paid back, you know, 30-45-60 days after so you can be making sales, but still have no cash.
Yeah.
So that is that was for me, you know, I was doing pretty much everything on our own. I mean, we I never made the product in my kitchen, but we came fairly close to it. Like my, my whole family was like bottling body oils at one point. And we have like stories about bubbles in our stickers and like all kinds of things that like we're way, way, way crazy in the weeds. So it just needed to be something where I just, you know-
Yeah, no, that makes sense.
Like, get above the fray a little bit.
Yeah, I think that's one of the first key lessons that I learned in entrepreneurship is that revenue and cash flow, or even profit and cash flow are not the same thing. Like you can look at your p&l. You can look at your books, and you can see a positive, you know, line item for your profit. But you look in the bank, and you're like, where's that money? Like, I know that it came in, but where you know, the timing of like, when expenses are due when accounts receivables and invoices are paid? It's it's a very, it's an art and a science. Right. And so I'm really glad that you brought that piece up.
Yeah. And a lot of it too, is like, you know, you might have something that's a 10,000 piece minimum. And so, you know, yes, you just got a Pio. But now you have to go by, you know, $40-50,000 worth of inventory. And now you have no cash again-
Yes.
So it's it is difficult, especially if you don't have a background in finance, which I don't, I definitely don't. So, you know, it's a dance. But thankfully, we were able to that was at the end of 2021. And it was a lot easier to raise money then. So thankfully, I did, I was able to do that had some great angels back then. And then we started building our team. And then once we started building our team, we started building our agency partners too.
Very nice, I want to circle back to who your first hires were, maybe as we break down how that money was spent. But before we get into that kind of granular data, Bridgitte, I did want to just say I think it's really admirable that gut personal is not only female, founded and female led, but that the majority of your investors are also women.
Was that a priority for you when you were seeking investors? And how did that play into your decision process of who to pitch and who to prioritize?
Yeah, so at the beginning, when I was fundraising, I my goal was 100% Female investors actually, I had a girlfriend who had just fundraise $2 million from all female investors. And I was like if she can, and this is this is honestly a big part of my journey that I want to say if she can do it, then I can do it too.
Which I want you know anyone listening to this to understand that if you're hearing our stories, and you're inspired by it, you can do it too. So that gave me the confidence to go fundraise in general but then all So I was like, Wouldn't it be so cool if they were all females as well? Well, my godfather, who's in private equity, who helped build dry bar and TRX, we can see child, so many others, he wanted to invest. And I was like, Well, you know what?
Well, can you say no to your godfather?
Yeah. You know, nine figure wellness brands. And so it was an absolute Yes. And then my mentor who's also a male wanted to invest too. So we have 18 investors and 16 are female, it was a huge, very, very important for me. And when I'm building up personnel, we have two missions, it's really health and wealth of women
ooh I like that.
Yeah. So not only, you know, for my family and my team and what we're building, but for investors, too. And I have this goal that all of my investors, whether they've, you know, invested 10,000 or 50,000, that they can buy a house with their investments. So that's like a driving factor for me, too.
That's incredible. Congratulations on a very successful raise of powerhouse women and your godfather. Huge shout out, shout out to great family. Circling back for a moment, Shannon. So you said, you know, a key, I guess, trigger for meeting to fund was the the hire of team.
Can you break down for us out of the million that you had raised up to that point? I know, you're currently also in a new raise round, but like for the million that you had raised? How did you deploy that capital? Can you break it down into categories of where that spend went? Maybe we'll start there. And then on the team side, we can kind of go even more granular and talk about like, Who were those first essential hires and why?
So I guess this is very nitty gritty. And tell me if this is to nitty gritty-
Oh there's no such thing is to nitty gritty, it has to be like as much data as possible.
Okay, yeah, so I was raising, or I still am raising on a safe note, which is a simple agreement for future equity. And as opposed to like, when you get bigger, you define a price for your shares. And you know, there's a big transaction lawyers and all that stuff, when you're raising like a couple of $100,000, or $500,000, doesn't make sense to go through all of that legal stuff. And you also don't have necessarily enough data and enough background to be able to fairly value a company that is that small.
So I raise on a safe note, which is basically like a two page document. It's something that is like kind of standard across the industry from Y Combinator. Y Combinator.
Yeah, that's correct.
Yes. Okay. Sorry, I did get for three weeks ago, and I can't remember any words, literally. So that's great. Because like, you can get a safe note, you can download it online, you can, you know, I, I have a lawyer and I always have my lawyer look over everything. But like, basically, it's, you know, you can get your lawyer to file it for you for a couple hundred bucks. But the other nice thing about a safe note is you can open it up and you can bring in checks as they come. So I have never had like, I'm raising like $500,000. And here's the date that it comes in, here's the date that it closes, we will get to that point eventually. But But the nice thing about safes is you can just kind of have an open safe note, you can bring in checks. So I have never brought in bigger than a couple 100k at one time. So it was lots of little 25k checks, because my very first check was 25k.
And someone you knew I'm curious, someone you had a previous relationship with?
I don't really have I didn't have very many relationships in venture or, like the startup ecosphere. Which is funny, because now I things have really changed, but I cold emailed one of my investors, and turns out we know a lot of people now in common, but he wrote me my first 25k check, he had his own small CBG fund. And it was like cold emailing is really hard. And it doesn't often work out. But it worked out. And that was my first real check. And it was he became one of my advisors, and he now is at a16z. And he runs the talent Opportunity Fund there.
So you know, it's interesting, you don't it really helps to have connections, but I did like that was my my very first track and it was cold email like Google search. I think I was looking like CPE and trust me, I sent like hundreds and hundreds and 90% of them 95% of them get no response, but it is possible. So it is you know, it is definitely worth it.
Well, I think to something I've kind of recently. I mean, I've always I feel like in some way felt this way internally, but to actually voice it as a goal out loud. I was reading million dollar weekend by Noah Kagan and the way he phrased something about creating a goal around collecting as much And he knows setting a no goal. So it's like, my no goal this month is 100 or something and you go out with full force to go collect 100 no's. And if you do, just by putting yourself in the position to be considered for opportunities, there's going to be at least one or two yeses that you probably never would have had had you not put yourself out for those rejections. And so I think that's really, really a powerful testament.
And I would be remiss not to ask, I don't know if you can remember because it's probably, you know, a while back, but do you have any inkling of what that subject line was that you put in that email? To catch his attention? Or or if you had to follow up multiple times before he replied, just curious there.
This is so funny. I'm gonna see him in a couple of days. So I should stop by so I want to look at up I don't remember. I'm sure it wasn't very good. I'm sure it was like a CPG company looking for seed funding or something. I was not I've made like every mistake in the book. So I don't I doubt that it was that good. But-
you wouldn't know different had you not right. Had you not written like 100 emails that got rejected?
Yeah.
Yeah.
But the getting used to know Oh, man, it is it doesn't really ever get that much easier. But yeah, I've heard so many no's. I've heard so many no's. I, I tried to explain this because again, I don't have like a family that comes from like a business background. So I try to explain it to my family sometimes. And I'm like, like how hard it is. I'm like, think of it as like, a stand up comic. Grind? Yeah. They're all horrible, or, like, constantly going out on auditions. And like never having my big break. Like, that's kind of like the level of no that you get, yeah. And that you have to keep going and going and getting back out there. So I still don't like hearing knows by any means. But also in my mind, I tell myself like, Okay, I'm gonna have to probably pitch, you know, 50 or 100 people to get two yes's. That's just the data.
And like the reverse engineering of that, because it reminds me kind of more to you know, my background in my industry selling digital products, right. It's like, we kind of have to reverse engineer my two friends that are sitting in the front Hayley, Georgia, they like they get this but, you know, sales pipeline. Yeah. It's like you said a launch goal. And then you think, okay, in order to get this many sales, I will estimate this conversion rate, and then you you know, divide that and you're like, I want 100 sales, I'm going to divide it by point 03. If you expect 3% conversion, which leads to X amount of leads, and then you figure out, okay, what, how much traffic? Do I have to push to that page to even get those leads? And you just kind of start working backwards and figuring out oh, what that volume?
Yep.
Right.
Yeah. 100%. That's, and then, you know, at least it makes the No, it's still not fun. But at least it makes a no like part of your process. You're like, oh, yeah, I'm moving on to this bucket now.
Absolutely. Okay, I'm gonna circle back with you in a moment, the 25k Check. Thank you for sharing that story, by the way, because I really liked to hear you know, where did that first yes come from? But I do I do want to hear the the, you know, the full breakdown of kind of where else that 1 million was deployed. But I'm going to just quickly put over to Bridgitte, your 590,000 that you raised? What are the breakdown of that spend look like? Where were you putting the money in a specific amounts?
Yeah. So I'll go to the first fundraise, because I think it's easier to think about per fundraise. So for the first fundraise, we raised $425,000. My also my journey for fundraising is kind of completely different. So I think it's great to share all of my investors I know deeply and talk to you every week, had a personal relationship with them before they re invested.
So actually, I have gotten less than a handful of no's, which is just a different process, right? Like, I haven't gone out to other people. So I think like I'm listening to that I'm like, Oh, maybe I should be getting more no's. Next 250 that we have, I'll get some no's and I guess It'll sting. Right? So we did 425, 100,000 was really to get off the ground. That was you know, for inventory. Marketing. We hired a marketing agency in the beginning, huge, huge mistake, honestly.
Why?
They were very expensive. I didn't know what I didn't know. You know, they were taking over email marketing social website. They were an all in one. And now what I know, it's I feel like two and a half years, then I'm a little seasoned, but you need experts in all those areas. And I kind of just delegated it felt like looking back. I delegated my whole business to an agency. But we didn't have the bandwidth to do a lot of things. And I didn't know what an abandoned cart sequence was. Right? They're like, we're gonna set all of this up for you, which sounded fabulous. They were also 16 grand a month.
Wow.
Yeah, woof. I'm like, Oh my gosh. Anyhow-
and so a significant portion of that 100k that you spent towards inventory. went also to the agency.
Yeah, absolutely. Like I think about those first couple months and in 100 grand really was to get it off right off the ground. And then runway for team was really huge. You know, we have our lead dietician Jillian. And so she sees our clients, she does a lot of education, she helps me with product and programming. So we had her our first full time hire was a COO.
I'm curious about that decision. So yeah, you know, there's kind of two ways to hire right? There's like, top down, like, we're gonna bring in like executive leadership, and then they're building out the team under them. Or your your hiring, the way that as a bootstrap business, we kind of worked was we hired fulfillment first, those like those, you know, repetitive tasks. And then if there was a need, you bring in, you know, a leader or a manager above if there was a large enough, I guess, Department under them. Yeah. But um, I would love for you to kind of shed a little insight, why is your first full time hire a COO at that point?
At that point, I was running another business as well. And I needed a leader I needed. So if traction, if you know, you're familiar with traction, you have a visionary, and then an integrator. And I'm a great visionary. I've also found like, I can sit in the integrator seat, but I needed an integrator. And, you know, at the time, we also had a three PL. So for example, for fulfillment, we didn't need those smaller roles. I needed a leader that I think, yeah, that's what I needed at the time.
That makes sense, especially given that you are running another business. Yeah. If you're comfortable sharing, what was your average, labor burn at that time? Monthly? How much were you spending on team whether they were contractors or full time?
Yeah, at the time, my burn was about 30 grand. Okay. I'd say in the first year, it was it was steady around 30 grand? And I'd say in the last just to be so transparent in the last of it.
Yeah.
My CFO is gonna kill me. So in the last two and a half years, we've fluxed from anywhere of $30 to $55,000 per month.
And is that just on labor or across all expenses in your business?
Mainly labor. I mean, we labor has been our biggest expense.
Okay.
Yeah. Mainly labor for that. So what we're working on actually, right now is like pulling back that burn rate and becoming more efficient. So I think most people think burn rate just continues to elevate. Last year, I would say at the beginning of the year was our highest burn rate, you know, we had four of us full time, we actually just let go full time position, which helped with the burn rate, you know, could just becoming more efficient.
Yeah.
Yeah.
No, that's a that's a very interesting perspective that just because your company scales doesn't mean your expenses have to in tandem scale at the same or at least at the same ratio. Right?
Absolutely. And I think hiring a fractional CFO showed me that because I would, I would say and actually, I was like hesitant to do this podcast, because I'm like, my belief is I'm not good with numbers, which I think a lot of people moving from a Cubicle to CEO space do. But then I decided I want to do this podcast because I'm, it's not my strong suit to say the exact numbers, right?
And show other people that like, you know, we can be a CEO. And we can also, you know, hire an incredible fractional CFO to help us understand those numbers. Because truly, for a long time, I just kept hiring and hiring and hiring and spending more and more and more and not being efficient. And so really, this third year for us is efficiency and actually bring down that burn rate making much much more profit.
I love that bloated team can be one of the greatest killers of you know, of margin of just the sustainability of your business as a whole if you hire too soon, hire too fast, wrong roles, all these things. So that's okay. Let me just really recap. So 100K agency slash inventory, you're spending about 30k a month at that point on team and labor and then where was that remaining, uh, spend being allocated?
A small amount of marketing spend? You know, we like-
Paid advertising is that what you mean?
No.
Oh okay.
We honestly haven't we haven't done any paid ads.
Oh, wow.
At all. So we're actually coming up on like, doing that, because we've grown mainly through affiliate marketing which is awesome because we've brought in sales and then we pay of course and we just love that energy as a company is like if you love this, tell your girlfriend tell your followers so majority of our growth has been through affiliate marketing. No paid spend. events have been really big for us. So about $50,000 were events and-
Sponsorships?
Yep, and getting my team there and, and everything like that. So that's pretty much I mean, the 425K. Yeah, was all that.
Thank you for being so transparent. Yeah, I hope your CFO it's one of those like What has they asked for forgiveness? Not permission. That's what we're doing here.
Yeah. I don't think I'm gonna go Okay. By the way I run the company, right? Yeah, I was like so this is my decision. Yeah. Like we start hiring team that, like, one of my girlfriends reminded me recently she's like by the way, its your company. Yeah, you can decide. And I was like, Oh, I'm doing it. So-
You get to call the shots. There you are. Yeah. Well, we appreciate that.
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Shannon turning back to you. So you got that 25k Check in you raised about a million just really broad, like high level kind of where where did that pie end up falling?
So definitely Talent Team. Kind of again, like you were talking about bootstrapped I like to bring in younger people a lot of times freelancers who I've worked with for a while, who I know really well, I know they're legit. I know they have a good attitude, and then bring them in and grow with them. So my first marketing director started out with me as a freelancer. And then she came on full time stayed with me for like three or four years, until someone poached her. So annoying.
But you could look at it as a compliment that you developed and raised her talent enough to be enticing to another company.
And she's a freakin rock star. So maybe I'll poke her back. But yeah, so operations, marketing, things that I was doing myself that I needed to kind of again, like get myself out of the weeds, and then you know, was able to give people raises and allow them to grow and take on more responsibility. And I'm not a micromanager person, I really want to like, I've had a lot of great mentors in my career, that gave me a lot of chances. And so I want to always create that within my company to make make people feel like they have an opportunity to grow and to share in the success together.
So that was my two full time hires, operations and marketing. And then we started out with an email agency, that was the first agency I ever brought on because email is basically like your own channels, so you don't have to pay to play. You're acquiring those emails, you're building up a list, you're setting up your flows, all of that. And a lot of that revenue that comes in from emails can be set it and forget it. So I wanted to start there with email. Then I brought in a PR agency with beauty in particular beauty is like a super, super trend driven industry.
And so there's new beauty brands popping up all the time, there's roundups, there's all these different influencers and categories. And you just look at like Sephora, the new brands that come in and it's like, you have to be top of mind. So I brought in a PR agency that works specifically with beauty brands still work with them to this day. It's been like four years, I still work my email agency today. It's been like four or five years, I was one of their first clients and now I probably can't even afford them. I'm grandfathered and then like really, really well. So I try to find partners that like see the potential in me and in my company and like see the opportunity for growth and then when and those relationships are good. I try to work with people for a long time that matters a lot to me is to have real partners for the long haul, as long as it makes sense.
So like the agencies, for example, yeah. Of the a million, what would you estimate you spent on agencies in that first year, let's say.
The first year, we didn't spend very much we really only had email and we had a little bit of paid, then maybe PR, we brought in like the second year, I would say now, and this is something that I talked to a lot of other founders about, because I am always trying to figure out this balance of when do I bring people in full time? And when do I continue to use agencies? There's like pros and cons to both. And so I'm always looking for like the right balance for us in particular.
So right now, I would say like my agencies, we now we've gotten, and again, the reason I mentioned that safe note thing, yeah, is that I've always just brought in checks as they come. So it's more kind of like, you know, a rolling base, a rolling basis. Exactly. Which makes my answers kind of slippery. And I don't mean to be it's just that Oh, like, well, this check came in this time. Yeah. So I would say probably I spend like 50k a month on agencies right now. And I don't overpay for any of my agencies. Also, I like really do my homework. And
Yeah, I mean, they've been with you for four years. So obviously,
yeah, yeah. But I mean, but agencies can also like come in and be like, hey, like, we're going to do everything for you for $20,000 a month and over promise, and hey, I used to work at an agency, it's fine. But I think that's important, too, to make sure that like you're paying you do your homework that people but the hell out of agencies, that's the scary thing with an agency is that they're not part of your internal team, and you are placing a lot of trust in them.
And so you really have to vet people and make sure like, talk to their other clients make sure that like, these people are people that stay with their clients for a long time, I just signed up an email, Amazon agency, and I just like, vetted the sh- out of this guy, I talked to like four different companies that all work with him, it's they he works in my industry, beauty and personal care on Amazon. And like every client I talked to has been with him for like two or three years, and they're making a lot of money. So I think it's really, really important to do that. And just like you can't take people at face value, it's your baby.
And you once you're outsourcing some of these important decisions, business changing decisions to people, you really got to know like, okay, this person, we're set up for success, and this is going to be worth the money because otherwise with agencies, not only are you losing money, you're losing time, right? So and I actually had a very different experience with a fractional CFO, I had a fractional CFO, I said that told myself the same thing. Like, I'm not good with numbers. I'm not a business person, I don't understand this or that, like, I just needed somebody to like feed it to me.
And I had a fractional CFO, that to me was not bad by any means. But I realized that I was allowing somebody else to make financial decisions about my business that I then looked back on later. And there were certain things where I'm like, Why did I let myself prioritize paying that thing before this thing? Or whatever. And it's like, at the end of the day, it's my cash, it's my money. It's my business. I'm the one out there getting the checks. I'm the one out there selling, I'm going to be the one who is going to decide, you know, what I pay? And when and I now I learned the hard way for sure. I mean, there was some drama around various things in terms of cash flow. I mean, cash flow is is cash is king, right? Yeah, cash can't run out of time.
Yep.
And so we had some scary moments that are now I realized, like, at the end of the day, I'm never letting anybody take over those important decisions, until my business is like way bigger. And I can hire people that are way smarter than me. Which like-
But even then, even then I just have to say like, I think you can hire people who are more experienced than you in certain areas. But it doesn't mean the complete outsourcing of all decisions, right? I think that's a mistake, like a lot of us can go through when we feel less confident in our knowledge in a certain area. Right? We feel that, oh, you know, it'd be better if someone else made the decision. But I really do. And we were talking about this earlier on the cherub panel this morning about how you can outsource execution of something, but really you at the helm of your company still need to be driving those driving those decisions forward.
And speaking of decisions, I want to know for the two of you, what is the best thing you have spent money that you've raised on the best thing where you're like I would double down if I could go back in time. In fact, I would. I would, you know triple what I spent because it worked so well. And what is the worst thing you've spent money you've raised on, and what did you learn from that?
I think the best thing I've ever spent money on, there's two things. I'm like trying to decide like, I mean, like incredible team, you know, I have my incredible lead dietitian who's been with me since the beginning. And she's my right hand when it comes to like, building the company who we're marketing to. So, great team, which also, well, I'll say the other thing, that's the best thing, events, you know, we've been told to do paid social, you know, for two years. And for me, I know that scalable. And I know it's important, which is why we're moving into it.
But what was really important to me was building relationships, which really panned out, because we not only connected and saw direct ROI from events, right, we then connected with affiliates who are incredible. For us, we've built a community where a lot of online brands don't have that community, our customers are ambitious women that we are so driven by, we've connected with them in person, they know us, they've hugged us, one came up to us at an event this morning, when never met in person is one of our top affiliates.
So that's really important for us. So incredible team. And then events, I would say on the flip side, the worst thing that I've spent money on has been team in the way of unaligned partners, unlike teammates, which means I think the worst hire I ever had, it was very much a core value misalignment.
And you know, did you sense that from the get go? Or was it something you only discovered, when they were already-
When they were already on the team? It? It became apparent about month two, how, you know, our core values are everything is figured out-able? Gratitude, always, not only for ourselves, our teammates, but our customers. And that core value couldn't have been further from the truth, even though we were interviewing, you know-
Right.
Based on those things you just don't know,
Until you see it in practice, because anyone can say anything in an interview.
Right? Exactly. So yeah, I would say those are mine.
Okay, I'm gonna put you in the in the vulnerability hot seat if you if you feel comfortable answering. I know something that in talking with my peers a lot of us have struggled with is exactly that situation. Hiring someone that either isn't aligned with our core values, or maybe is a great person, but just a really bad fit for the actual skill of the role? Right? So like for you, you said about month two, you became aware that this person probably wasn't the right fit? How much longer Did you wait to actually take action on removing them from your team?
Two days?
Oh, wow. Yeah.
I'm an action taker and building my business and also when there's misalignment. I do a lot of and I want to say this, because we're talking a lot of numbers, but I do a lot of inner work, to listening to what is my gut instinct saying? Because it's really powerful?
Yeah.
So two days, yeah. And she was gone. I also want to say with team in knowing they're not the right fit on a similar, you know, point of that is that I had another team member who's my Director of Operations, she was my best friend of 24 years. She came from our manufacturer, so she was in the supplement manufacturing space.
Right.
which was perfect for-
Really well versed for-
yes, it was a perfect role, seemingly, and I knew she wasn't a great fit about a year in. And that decision now this decision of this person, I didn't know two days. But I also want to say that my best friend of 24 years, that was a slow, that was a about I'll say six months that I was dragging that decision. Because it was such a tough lunch. Right? My maid of honor. Yeah, like ultra transparent. So I let her go in January. It was incredibly hard.
Yeah.
Incredibly hard. But
Coming on the other side of it, though, but how does it feel now? Yeah, good?
Yeah. Really good. Really good. Thank you.
Yeah, no, thank you for sharing, I can relate. I also still best friends to this day. And I think our relationship is honestly even stronger for it now that we don't have work in the mix. But I also had hired my best friend. And you know, that was that was tough when when our our business model shifted, and the role I had originally hired for was no longer the role that we needed. And I also you know, because you want to protect the people you love, but ultimately, your business is also something that needs to be protected for there to be a job for anyone, right?
So yeah, I can commend you for following through on the tough stuff that I can imagine because I've been there. And then Shannon, what about you? What is the best thing you've spent? The money you've raised? And the worst, the worst thing you spent?
Well, a regret that I have not that I have money I wish I would have spent is
Oh, that you wish you would have spent and did not?
This is just a little caveat. But I wish that I had spent money on paid ads when it was cheap to acquire customers.
Yeah.
Because it's a whole different world now. I really do though, I look back at and I'm like, Ah, it's like, it's like wanting to like have bought Bitcoin, like 10 years ago or so yeah, like, it's never gonna be that cheap again. Um, so I always was I have a lot of friends who are my co workers, I always wanted to work with my friends. And I never had my husband as my partner. But he does like the fun glamorous stuff. I do like everything else. So I always wanted to co founder and it is very lonely being a solo founder. So one of the things that I would say that I have spent on basically creating community for myself, and also investing in myself, and I'm kind of cheap about a lot of these things. So very specifically, I have a couple examples.
So one of them I have a founders group called Hampton that I'm part of that is basically for founders who have made over a million dollars in revenue or raise more than $3 million. And I get, I have a group of like six or seven founders. In my group, we all have come from different industries, but we all have little kids. And it's kind of like that co founder like friend relationship mixed with like therapy where like, we cry sometimes. And it's guys and girls, and we just like talk about everything and our families and our businesses and so that paying for that it's like between five and 10k. It wasn't cheap. I was kind of like, I probably shouldn't be spending money on this right now. But do I need like therapy and group coaching? Yes. And so it also has led to a network. And it's just like, been a really good tool for me professionally and emotionally.
The other thing that I spent money on for myself is I actually, I felt like I lost myself in the process of raising multiple times. And I tried to be a student of like, how to raise how to run a fundraise. I'm so not don't come from this background. And so I've really like doubled down on it and tried to study it as much as I could. And I went through an accelerator program here in Austin called Skew in 2020, which helped me prepare a little bit for some of that. But at a certain point, I was like, I'm losing my mind, I don't know how to raise like, A, it's so intimidating. And it's so hard. And I'm by myself in this journey.
And so I found a guy who online he runs an accelerator cohort for it's called Fundraise with Confidence. His name was Jason Yay. And he's a really awesome special person. He used to be a VC founder. But he teaches you like, straight up like this is this is an it's like a five or six week course. And it was like 5k, or something like that. 6k which I at the time again, like I remember, I had a conversation with my husband. And he was like, why are you spending your money on this? And I'm like, I gotta I have to, this is something I need to go through, give me a template, give me a curriculum, like I'm missing and
You need like a step buddy.
I need a step by step like, give me those things, and then I can do it. And then I can do it with confidence. And so, you know, those spends on my founder group where I do my group, group therapy, it's not actually called, I always call it group therapy, but my founder group in that community, and then you know, taking this course with someone like Jason who like, really, really like nitty gritty, like I'm taught, we did like three hour classes every single week, homework, like all of this stuff. And so now I know so much about running an investment process, things to look out for valuation, like I learned it, I learned all of that, and I didn't know it before. And I forced myself to and I spent the money on it, because I was like, you know, I'm not gonna be able to, I can't white knuckle this, really.
So spending money on myself where I knew it was like something specific that like I really needed to make me a better founder and person was really important. And then the worst thing I can't I don't know if there's one worst thing except that-
Maybe something you spent money on that you're like, I wouldn't do that. Again.
If I had to do over anything that is just too expensive. And it's too much of a gamble. I mean, I'm just like, and I think that this is the thing, right? We're here all we're talking about angel investors. Like I also am the steward of other people's money. And so I'm not going to go and like you know, It's not just like, I know there's like huge VCs that throw around like hundreds of millions of dollars. But I've raised primarily from angels I've raised almost exclusively from women and from, like, non-white guys, I tried to my job is to grow my company, my job is to take those dollars and turn that $1 into two and three and four, and 10 Eventually, and I just don't want to there's there's a lot of like, flashy marketing opportunities and gifting things and, you know, give the send this to this influencer, this influencer house, that are, you know, have big price tags.
And I'm just like, you know, unless I know, and I've done my research that there is ROI in this, my business is too small, and I'm people are invested in me and my business with their hard earned money. And that means a lot to me. So I, you know, I take it really seriously. And I just don't, you know, a 25k sponsorship for a conference or for some big, you know, person who has like 2 million followers, like, I don't know, that kind of stuff would have seemed flashy and fun to me at one point, but now I'm just like, I don't really give a shit like, Yeah, I'd rather just, you know, spend that money, like, in r&d making really cool product, because at the end of the day, that's what I like to do. And that's what like, works for my company. So, you know-
I think that's a lot of wisdom, you know, and two things that I was hearing that I want to pull out for our listeners who are not here live with us, that really stood out to me, one I think is, you know, you are your own best personal asset, always right. So like, the more you can invest in your learning and growth, I think there's never not an ROI on that. So it's like, you're the one thing you can bet on, right? If you're gonna put your money somewhere. And then I think the other thing too, like you said, is like being very clear about what is the pathway to returning the investment? Because, to me expensive is relative, right?
Because I mean, if something's $100,000 Is that theoretically expensive? Yes. But if you knew for certain within 60 days, that would turn into 200,000, would you still consider expensive? No, right? Like, we know, we're gonna feed in $1 and get back to it's no longer a conversation of expense, but rather, how do we where do we go find that money? Right? So I wanted to just pull that out. I know, we are wrapping up. So my final like, answer this in 30 seconds or last? What is the most creative way you have ever stretched $1 in your business?
Okay, so this, this isn't going to be very sexy. But I think when we invest in our affiliates, when we like gift product to the right people, that dollar those couple dollars, let's say we just had a prenatal launch. That was a maybe a $40 to us product. Yeah. Just people sharing it. I think like really, you know, I don't know. For me, that's like amplification.
Yeah.
Right. It's, it's, there's no ceiling to add, right? Is someone saying just even saying to someone else, like, I love this prenatal, it's changed my energy in my hair, then telling another girlfriend like, I just love that type of grassroots marketing. And so when I talk about like, amplifying $1 I think about it in those terms. So-
I love that hope that answered your yes, that's a great take. Okay, Bridgitte. And Shannon, what about you?
I totally agree with you about gifting. gifting is is like sometimes it's kind of a tough pill to swallow because you're like giving away all this free product. Then you think about your cogs and you're like it's not and then every now and then you get like a really big home run. Like I had Halle Berry talking about my bodywash like for like three paragraphs in New York Magazine.
So awesome.
Like that was just an organic thing. We ended up connecting with her she has a wellness platform, like you know, so when it comes back, it comes back in spades, which I think is like so, gift product, you want to get your product into people's hands if you possibly can, especially if your product is good, people are gonna smell it, feel it, love it, try it feel better. And so that is always a good thing that you can do.
And then I guess my other thing is just like do it yourself as much as you can. It is not fun, but like I'm so scrappy, like, I'll tell you a ridiculous story. We were in the Goop Gift Guide. We've been in the group gift guide for the last couple of years and I can't remember what happened with our boxes why were they messed up? They were late oh okay so our boxes for this set that was going in the group gift I was late and it was like stuck like on a plane coming from China like our, it was horrible and the deadline for group was coming up and I was like, I can't not have my Goop Gift Guide because of my freakin bosses. You There was like on a plane and like this isn't really a good example of stretching $1 because there was nothing we could have done, but was like an example of being like crazy scrappy and psycho so we told my husband, it was only like 50 units or something. I was like, we gotta make these boxes. And he was like, What are you talking about? And I was like, we have to make them. So we went to like, Michaels and like every and we literally like had our razor blade and we like, I mean, I'm saying we it was actually not me at all it was totally him. Like we made the boxes. And I know that sounds really weird, but they looked like perfect. And we like printed them at FedEx. We like DIY these 30 or 50 boxes to hit the Goop Gift deadline. That is I was like driving around like pregnant at night like trying to find like the right side like thickness of white cardboard. So that we could go home and pay and it took like, and he was really annoyed with me and it like wasted our entire weekend. But we got
You got it done. Yes.
Yeah, we went to Michael's we got it done. And I mean, this is like six years into my business. And I'm still doing stuff like this. But to me, that's like the thing you got to do is just jump in to all the crazy scenarios. And then hopefully someday you won't have boxes getting stuck on planes. But that's probably not true. So it's all part of the-
I think that wonderfully sums up the experience of being a founder and an entrepreneur, right is that you there was always a new a new challenge a new problem a new boss to be and you just you just keep going. So thank you both so much for your honesty for your transparency today.
Where can our listeners continue to connect with you? Give us give us your website, your social the shout.
So I'm BridgitteMalli on Instagram, which is where I hang out if you connected with anything today and want to come say hi please do and then we're gut.personal on Instagram that's where we share all education on gut health. Female health, women's hormones, all that good stuff. So coming up.
Thanks Bridgitte.
We are EskerBeauty on Instagram. I do not have a public Instagram because it's just pictures of my children. Bear in mind LinkedIn, Shannon E Davenport on LinkedIn, and a little bit of Twitter. Um ff the brave on Twitter. But mostly I lurk on Twitter.
We love a good lurking platform that's threads for me. Awesome. Thank you both so much. And thank you to all of you who are here today live and in person. We love that getting the energy thank you.
Thank you.
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