Advice Line with Serial Entrepreneur Marc Lore

0:01 This episode is brought to you by Clavio. Clavio helps you build smarter digital relationships with your customers with its unified data and marketing platform featuring email, SMS, reviews, and more. Make every moment count with Clavio. Lear more at K L A V I O dot com. Hello and welcome to the advice line on how I built this lab. I'm Guy Roz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Send us a one-minute message that tells us about your business and the issues or questions that you'd like help with.

0:59 You can also send us a voice memo at hibt at id.wondery.com, and make sure to tell us how to reach you. And also don't forget to sign up for my newsletter. It's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for free at gyros.com. And we'll put all this info in the podcast description. All right. Let's get to it. Joining me this week is Mark Lori, a one time Bobsled champion and also the founder of diapers.com, Jet.com, and Wonder. Mark, welcome back to How I Built This. Thank you, guys. Great to be here.

1:36 Um so you were First on a show uh back in twenty twenty one and we of course heard heard about how you founded Uh diapers.com and then Jet.com And uh and if I remember, you got the idea for diapers dot com back in the early two thousands when uh you had Young kids.

1:53 Even though margins on diapers were were pretty razor thin. I think at one point I remember an investor had said to you, you were selling a dollar for ninety cents. Yeah. Um you you ended up getting acquired by Amazon for over half a billion dollars in two thousand ten, which is which was An amazing but also I think you had sort of mixed feelings about about that that acquisition of that that end at the time. I I did. I did. I um Yeah, we had a we had a big vision for what we wanted to to accomplish.

2:23 And um it was cut short. So Yeah, it was it was I mean you would think after a sale like that We made uh obviously a lot of money, me, my co founder, but

2:33 We said, Do you wanna celebrate? You wanna go grab a drink to celebrate this? And we're like, No, I mean no, I don't want to either. So Um But it shows you what it is to be a missionary versus mercenary. You know, it's not about the money. It was about Okay, the the dream is is basically dead now. You know, and that was that was sad.

2:52 And for those who remember the episode. Uh You went on to take on Amazon. Uh After that happened, you you launched

3:01 Another online shopping platform. uh called Jet.com, which then So to Walmart for over three billion dollars four years later. Um and and these were just uh amazing pivots in both of these stories along the way and and well worth listening to um somebody actually asked me recently I went I I went and spoke at a at a conference and somebody said Name five of just off the top of your head.

3:24 And Mark, you're on that list. No question that I'm gonna be in in all the seven hundred episodes of the show. Uh you are right, you are absolutely on that list. Um, before I we get to our callers,'cause you are going to help us uh answer questions from early stage founders today, which is super exciting.

3:42 So when you actually came back on to how I built this, uh, I think maybe a year and a half ago, you were At the time we're launching, but to launch. Wonderful. Which it was it was gonna be a a a business where trucks like food trucks with full kitchens inside would come out, you'd order food, the truck would pull up in front of your house and make like a perfect, you know, medium rare steak and perfect crisp french fries and delivered to your door from the truck. That has changed a little bit. Tell me what Wonder where Wonder is now and what what it will be.

4:13 Yeah, so you're right. It was um out of a Mercedes spinner van, so very small space. We had one piece of electric equipment and the driver had to cook. And we innovated for a couple years trying to figure out how do you cook. A stake in six minutes to perfect temp. in one piece of electric cooking equipment where the driver has to do it.

4:33 Fast. And you developed all this equipment and all kinds of cool things for this. Yeah, we we I mean, we invested a ton in colonial engineering, food science and tech to be able to do that. And then at some point we tested a brick and mortar because we realized that we can put Thirty different restaurants.

4:52 In a twenty eight hundred square foot kitchen. with the same two pieces of electric cooking equipment and no hoods, no gas, no shafts. And we thought wow, that's gonna be an incredible offering where consumers can order from multiple restaurants in a single delivery.

5:07 So we switched to that model. So it is a brick and mortar like a fast casual sort of restaurant where you can sit down and and eat and there's maybe ten seats and then pick up and delivery. So they are located right in the heart of where people live and we set a really tight six minute delivery radius. So you're getting the food fast. Hot. Really high quality.

5:26 And of course. Multi restaurant. Was it hard? to make that pivot would did it take you a long time to kind of Say, you know what, I'm gonna let go of this thing.

5:35 And focus it focus on this part of it. Yeah, I think You know This is what uh advice I always try to give entrepreneurs, but it's sort of you have to be truly objective. About

5:45 What the risk of the status quo is. Yeah. Because people it's easy to see how risky it is to make a change. because there's unknown and people define Risk as the unknown.

5:58 Whereas The status quo doesn't feel as risky because you're kinda doing it now. It doesn't feel risky to just keep doing what you're doing. But I recognize, you know, being objective, that if we just kept doing what we were doing, that was extremely risky. So it made the decision. To move into brick and mortar.

6:15 Very easy. Even though it meant going into the board meeting. Um and telling the board. four hundred and fifty trucks on the road and thirty million in revenue, we're gonna take that to zero.

6:27 We're selling the trucks, we'll take revenue to zero. Um But Being able to have conviction and know that It's still the smart decision, and that the brick and mortar had

6:37 much bigger profitability potential. higurn on capital. Like all all the things that you would you would want, plus for the customer it unlock multi restaurant ordering. Better on time delivery. You have to have the mentality that you start off a startup and you're sort of digging for silver.

6:54 But you gotta be on the lookout for gold. All the time. And you might just You might just see gold and when you see it, you gotta go for it. And it doesn't matter What it

7:05 Egg on your face, it doesn't matter, money you lost, everything's a sunk cost, it doesn't matter what you told the board, what you told the press, what you told em employees, you have to go after the gold. Yeah. Um Mark, why don't we go ahead and bring in our first caller? Okay, great. Um hello hello, collar, welcome to the advice line on how I built this. You were on with Mark Lori.

7:23 Uh please tell us your name, where you're calling from, and just a little bit about your business. Hey guy and Mark, my name is Ben Bailey. I'm the founder of Chop Chocolate in Salem, Oregon. We are a cocoa bean to bar chocolate factory doing the whole process, and we make vegan milk chocolate for everybody. Amazing, Ben, thank you for calling um chomp chocolate. Okay. So you are a bean to bar. chocolate and that means that you uh you manufacture the chocolate bars everything, you do everything yourself?

7:52 Yeah, I actually built a chocolate factory and didn't know what I was doing, um, but figured it out piece by piece and We do the whole process from roasting the cocoa beans to packaging the bars in the in the factory and um we do oat milk chocolate bars, uh peanut butter cups, and then we just uh did a pivot to um build your own chocolate bar. Kind of like a build a bear workshop only for chocolate. Wow. Okay, cool. And and you're in Salemore again. Yes. Yeah and tell me uh I ha um tell me how you d how you did this. I mean, b you you have a chocolate factory, there's machinery, it's expensive.

8:28 This you know, most people who start chocolate brands They outsource it and they just kinda sell the chocolate, right? They'll have the recipe. Tell me how you Got into this. Long story, but keeping it short, I'm an entrepreneur. Mark, I sold basketball cards when I was ten years old, went to all the card shows, um, sold

8:46 Candy to kids on the bus, took their lunch money, don't feel great about it, but uh learn some moral moral lessons, you know. Mercenary versus missionary kind of stuff. Um, started two e commerce companies in New York City. Uh very small exits. Uh took a little bit of time um to get away from New York City and back to Oregon, my hometown. And uh growing up in a small conservative um farming community, I Saw that um a lot of things have changed in the environment. I came back to an orange sky because of the wildfires here on the West Coast. And I also had a a little bit of a confrontation with factory farming of animals and it didn't really sit right with me. Um, and I love chocolate. I have a sweet tooth, so I um set out uh to create the best vegan milk chocolate replacement. Uh so it's not a compromise for people when they have the choice between our chocolate

9:38 and uh traditional milk chocolate, then it's an easy switch for them. Um And yeah, so it kind of a big overreaction, but I had sold two e commerce companies uh and put every single penny I had and then some into chomp. Wow. I'm curious. So can you give us a sense of how much it costs to buy that factory? So I put seven hundred thousand dollars in is everything I had, and that got us open. So basically from from a a concrete box uh rectangle, I kinda sat on the floor the first day. documentated it on Instagram, um, and then learned everything from, you know, anti microbial floors to shatterproof bulbs and the whole process, bought the equipment. Uh a lot of ups and downs just to get open, and then we open September twenty one.

10:19 Okay, and so now you're you make chocolate bars and you sell so first of all, you y I wanna get to this other builder bear side to it, but do you sell chocolate bars To consumers or in stores? Yeah, so my wheelhouse is direct to consumer online, so that's kinda why I took the plunge into building a factory. Um And I knew I could kickstart the company with email marketing, paid advertising. Um so about seventy percent of our business is currently direct to consumer, and then about Um thirty percent is wholesale uh retail. Uh we're in about four hundred grocery stores ish right now. Um but yeah, we did four hundred thousand dollars the first year we opened, um and then seven hundred and fifty thousand last year.

10:58 And uh this year we're set to do a million dollars, um, and seventy percent of that's coming from e commerce. So Well, and and so you and now tell me about this build a bear model here. You're you can build your own Chocolate bar?

11:12 Yeah, so um back in March, um cocoa bean prices just went through the roof. Um seventy percent of the world's chocolate comes from West Africa. We actually don't buy from that region because of some um ethic issues, but a lot of the bigger companies Um that usually buy in West Africa. They had crop failures, uh which drove the prices up. So we had done something at the chocolate factory a year before where we invited the community to come through the factory and build their own chocolate bar. There's nothing like it, it's so much fun. You get to pick all your mixins, you get to name your bar, choose your wrapper. And I thought, uh, what if we could take that online and uh

11:48 Wait. On a deep dive through Build a Bear Workshops business model, and uh they do it online too, and it actually does performs very well. And so now you can go on our website and we found a way to kinda like um you know offset the margins we lost uh during the cocoa bean crisis until Either hey, maybe this is a permanent pivot we take, or maybe we go back to the other stuff, or maybe kind of a combination of both. That's cool. I'm I'm looking at your website now and uh

12:14 I kinda wanna do like a Gummy Swedish fish chocolate bar. Sounds really delicious, actually. I think it'd be like that chewiness. Um all right, well t and tell us what what's your question. What question are you brought for us today? Yeah, so my question is um, you know I This is definitely my mission era of my life, um, with this company. And my my initial goal was to get this out into grocery and um retail. Uh and that's proved to be s a super crazy challenge, uh, especially doing the whole process and not using the Copacker since we are

12:44 You know, doing doing every part of the production and fulfillment and marketing in house. So I'm wondering if I should um even if Coco prices, you know, come back down if we should continue and lead with this build a bar model. Um it's doing really well and um and so I'm wondering what the best option for us uh to do is All right, let me bring in Mark Lori. Mark, you don't have to answer Ben's question just yet. You may have questions of of your own, but please

13:13 Wait, let's let's So let's bring you in. Yeah, sure. Sure. I have I do have a couple of questions. Uh nice to meet you, Ben. Uh very cool what you've built. I'll have to have to try it out. Who is your mm primary competition in sort of the vegan chocolate bars.

13:28 How do your costs compare? Yeah, our primary competition, I'd actually say now is mainstream chocolate, because like um some of the bigger companies launched plant-based versions of their chocolate. Um we Is Unreal a competitor? I would say Unreal is. Um they're not strictly vegan though, so we're like I think we're one of the primary only vegan uh companies, which I'm not sure how much you know of a difference that makes to people. What we've noticed like with distribution is

13:56 Um taking a chance on a smaller company. Um, even though if our quality in my opinion and our taste is better and we we have um uh more of a special process. They're still only gonna carry the big companies that put out that version. Uh like Hershey's even Hershey's does a uh But oat milk. They do, yeah. They put out like a little bit after we launched, our peanut butter cups are the the best seller for us, and they they launched plant based releases too. We've also had to say no, um to like a lot of big stores, uh like over two thousand stores in the last year because

14:26 You know, I can't I have the factory and the production equipment and technically we could produce more chocolate, but funding another crew And then the purchase orders that are thirty to to you know net thirty to net ninety is just really difficult. Um, and we're doing our own fulfillment too, and it's it's been a I've raised a little bit of money friends and family. Um

14:45 Um but I I feel like build a bar might be a way to to have this higher margin model that funds the back side of the business. Um and we can kinda take control of our own destiny, um, being primarily an e commerce business. Yeah, I I personally been just hearing hearing your whole story, I mean It's gonna be difficult, I think, to compete on a commodity basis. doing it yourself. Um it's gonna require a lot of capital. I know I'm I'm I'm pretty close with some of the big

15:11 manufacturers and they've invested, you know, hundreds of millions, if not billions, of dollars in in plant and equipment to get the cost down. Um And I I'm not sure just the sort of the the higher quality on a commodity basis that people are gonna pay that much extra

15:29 To get vegan chocolate. I think the way you're set up though, you can do what no one else can do. There's no way a big company Can do the sort of build a bear type approach in chocolate. And so you could really own that market.

15:42 Um and you have the ability to be so much more flexible and your system's built for flexibility. And that flexibility will give you margin pricing power. Right, and people will pay for it. It's gift. I think the market for build a bear chocolate is still massive if you owned it. So I I I if I were you, I would push that hard.

16:02 And um and see how big you can get it. And then you could always you know, move into other areas um if if you start to tap out, but I think you've got a long runway there, personally. Essentially customization. And and we should me I should mention the the when you build a bar, you get a customized label, you can put your name on it and to who right, you can do all that things. Incredible, incredible game. A lot of business to business opportunities too, we've seen. And Mark, I think you're right, like Um, you know, competing with this commodity level, like and I think I know guys talked about this too, is

16:34 Well you kinda find out what consumers care about, or at least what they're willing to to pay for. And unfortunately some of these mission based things Um and I don't blame the consumer, but they don't really matter as much as you initially think they do. So I think build a bar is kinda my way to almost kinda go into the back door and build a brand that's really fun. Maybe even open physical locations where you get to go build a chocolate bar and go to it. Yeah. And like have these really fun experiences with your family and and maybe there's other experiences you have when you walk into a Chompville You know, I uh wedding favors, showers, things. I mean just like you could think of a customization in chocolate, endless possibilities there.

17:13 Um I I guess um what it what I think is is interesting is I think you're right, Ben, that that consumers don't really care so much about you know, mi you know, where you're sourcing it from and the mission and unfortunately, you know, they're not gonna care if you're buying ethical chocolate. I some people will, but most people don't. But I do think what they would care about is the fact that you're doing everything. You're You're buying these virgin beans, you're roasting them. Um, you know, you control the process, your

17:41 Grinding them, you're you're using, you know, your ingredients, I think y you should push that a little bit more, uh, especially on your website. I mean I I think that knowing that level of quality does matter to a consumer, they might not care so much about the ethics right now. I don't you know, some people do, but I do think that quality people do care about it. They know that that's what differentiates you aside from the the fact it's customizable.

18:06 That you really are doing everything in this process to bring consumers the best tasting chocolate bar. That that's something that I think it'd be interesting. Yeah, I I I agree there. I I agree with you, guy. I also think

18:20 Being able to make a case that you're sourcing literally the highest quality beans in the world. um and and maybe even different grades. I mean, maybe even educating people the way they do with with wine. You know, like where these these

18:35 grapes are from this very specific region of Oakville in Napa at this, you know, elevation and like almost a terroir of like the cocoa beans and literally charge some some crazy price because of the exclusivity of it and make it almost like a beautiful box, a beautiful, you know, almost like instead of giving a a thousand dollar bottle of wine or really high end cigars, you're giving this like really high end multi hundred dollar Pieces of chocolate.

19:04 And tell a story around that. I think there's something Potentially they are. And and again, you're you're uniquely positioned to do it. Yeah, I know. I think those are great ideas. And I've always kind of thought about how my farming background ties into it as well. So I I think, you know, um Chocolate is a lot like wine and it has terroir and it has a story too. And a lot of the beans we're buying are from

19:25 um small farmers as well, um, because we're not buying these big commodity beans. So I think those are Amazing ideas. I think um there's a lot of untapped territory there. So yeah, thanks, Mark. Tap you into all of his rich friends and then you can sell all those bars. Sounds good. Ben Bailey Chomp Chocolate. Congrats, man. Good luck. Thank you, guy. Thank you, Mark. I've been listening since the beginning and thanks for getting me through two other businesses and hopefully uh number three. Thank you so much for listening. We're gonna take a quick break, but we'll be right back with another collar and another round of advice. Stay with us, I'm Guy Roz, and you're listening to the advice line right here on how I built this. Welcome back to the advice line on how I built this lab. I'm Guy Roz, and my guest today is Mark Lori. He's the founder of Diapers.com, Jet.com, and

20:24 Wonder Uh, what do you say, Mark? Should we take another call? Sure. Caller Hello, welcome to the advice line. Please tell us your name, where you're calling from, and a little bit about your business. Hi, I'm Lindsay Shores. I'm calling from Salt Lake City, Utah.

20:38 I'm the founder of Baby Go Go, a company that provides and creates innovative baby products to make parent life easier on the go. Cool. All right. Well welcome to the show, Lindsay. Baby a go go. Uh tell me what your product's product or products are. What do you sell? Yeah. Currently have two products. We have a diaper kit that fits in your back pocket. It's a vacuum sealed compact diaper kit, has one diaper, five wipes. And after usage you wrap it back up.

21:03 Seal it up with a sticker provided on your wipes, and it becomes an odor free, sustainable bag. So easy way to stash in your purse or if you're in a public bathroom, a way to seal it up and make it a lot less gross. Um and then our other product is a magic wipe. It's a small disc that fits in your hand. It's an on the go wet wipe and once you puncture the middle It slowly grows into a full size wet wipe. So that's very useful for parents on the go and all consumers on the go. So if you're familiar with the

21:32 Do you remember those washcloths that you throw in like a tub of water and it expands? Yeah. Similar to that, but it's a little more magical because it's very unexpected. Wow. Okay, so these are like uh travel diapers and it's a one off, right? Because I remember my kids are now teenagers, but We would uh always pack uh I can't remember what they were that there was different brands. We would pack the diapers in there, one or a few few of them, and then the there were the thin wet wipe. We'd put that in there and Right, but there's not there this is just everything in one simp simple package. It's one diaper Some wipes. So it's designed really for like I guess if you're at the airport and your your baby's just like

22:10 Pooped all over the place. You gotta go to the bathroom and talking about the subject, I don't know. I love it. I I love it. Yeah, it's definitely I know Mark's a big lover of diapers and the disasters and messes. Um Yes. Exactly. Um I have to know how you c I mean, I I have to know you came up with the idea because it's a great idea. And and you know so much of it. So much of how I built this is those moments where people are like we We have a uh an episode about uh Larry and Lenny's cook protein cookies and uh really these guys were bodybuilders and one day they were like, I'm sick of chick chicken and And and egg whites. Like can we put the chicken and egg whites in a cookie? That's how it started, you know? Yeah, and then it got to a hundred million dollar business. How did you uh how did you come up with this?

22:57 Yeah, so I j I was traveling a few years back with my family at the time. My youngest was one years old. And we went to a family resort, a beautiful, very family friendly place. I always pack diapers for two to three days and then Get to the destination. Go stock up. No no brainer. That's always how it works. So going to this destination, I thought, of course I'm gonna find diapers. Um I was running out on day three of our day eight trip. And I searched and searched and searched the stores and nobody had anything accessible for babies or infants.

23:27 Food, diapers, wipes, all the stuff. So My next best option was to take a half a day and go into town. Take an Uber, pay the cost of that, leave my family. It was like This is crazy. Then it hit me.

23:39 That there's multiple moments. Up malls, you're at the zoo, you're at the aquarium, you're at Disneyland, you're in all these places that you need these diaper kits. That are not convenient. So I jokingly told my husband the end of that week of our trip that like I can't believe This is such a huge void in the market. I'm gonna start a business tomorrow and

23:59 Fix this and I did. That's awesome. And and really can you give us a sense of how you guys are doing right now? What what I mean, have you have you broken a hundred thousand dollars in sales yet? No, not necessarily, but we are definitely in the small startup phase. Very excited though. I love the advice you guys have given. Yeah. This is such a great idea. Where are you selling these right now? I'm selling these online and then we just recently onboarded with Arias, which is one of the largest travel and

24:25 hospitality companies um globally. So we have we're now in their airport stores as well as a bunch of their turnpikes. How many of their airport stores? Uh six. In in which airs? In Atlanta, which is the number one airport. What's your question for us today?

24:42 My question is there's always a really positive response when I'm speaking to retailers and buyers about these products. They're really excited about them. They immediately understand the need for them. Um, but because they are new products and a new space, there's not much to compare it to. So My question is how to take the risk and build more credibility in an untested product market and um get within the door without offering a discount or a testing phase that might not necessarily be the hook they need and could be a big loss for our company.

25:14 Okay. Mark Lori, I think you know a few things about diapers. Is Is the margin structure in such a place that you feel good about like the retail selling price. Well what is the retail price? Yes, the retail selling price is five twenty five.

25:33 It's a good price. By twenty five. Yeah. Can you can you do it for four ninety nine? Um, it was four ninety nine actually about a year ago. And because of um inflation it's five twenty five, but depending on who

25:45 Retailers we're talking to, yeah, the four ninety nine is still a possibility. Okay, and you make good margin at that. Yeah, good. Mm-hmm. I mean

25:53 Have you made it have you offered it as returnable? And that's always uh protection for the retailer. Yes, um that's not something necessarily highlighted, so that's a great idea. Yeah, I mean that's that's the easiest is like put it on the shelf, make it returnable and

26:09 Like it's not the kind of thing that Yeah, spoils, right? So so they return it to you, you just sell it somewhere else. In fact I mean I would even probably start on consignment to get some sales history. Um But if you're if you're really strapped on cash and there's no possible way to do that.

26:24 The next best thing is to say um Yeah, make it f hundred percent returnable. uh no period of time to return it. If it doesn't sell, we'll take it back. Tell a retailer you will stock all the shelves, make sure You know, you got kind of one shot to make a first impression, so make sure you have good shelf space. It's on the counter

26:43 Where the right it You know. Customer I level. And uh

26:48 uh and have a little maybe point of purchase kind of display unit that looks really cool and literally have that box of of of twenty or have wherever you put in there and have it right there on the counter. Okay. Awesome idea. Yes. Yeah, I mean I just feel like this is a no brainer. No brainer. I mean I mean we it's such a great idea. If you're saying that the demand is there Then it's a home run, but

27:17 I would think that at at massive scale if you're doing you know, uh millions of these that they would you'd be able to get the cost I mean sort of the retail selling price down even below four ninety nine. We can do that. It's um I mean just speaking to and testing out Speaking to a lot of retailers and buyers, that's often the response is, Oh, we gotta do these for four ninety nine and now five twenty five.

27:39 And you know, depending on what airport you're in, some have suggested seven fifty. And a lot of people I talk to during, you know, testing period and phase, it's like You guys are dads, you know. It's at the point That you need it. You're gonna pay. Whatever the cost. You don't care.

27:56 It doesn't matter, yeah. Hey, I'll pay whatever because this is a necessity right this second. And then there's also the price point where it's like, hey I'll I'll take a few of these. You never know, I might need'em. You know, but it's hard it's hard to like say, you know, I'll take you know, three or four of these and suddenly it's twenty bucks. You could buy a whole box of diapers for that. So

28:16 I'm just trying to think about how to make the market size much bigger. It's more really what you can do at scale. I'm always thinking about scale and working backwards and I would say You know, at sort of ten million units. What's your cost

28:29 uh of the of the display and the and the packaging, you know, like and then figure out what the retail price would be off the back of that. And obviously your cost A is a lot higher, but I would sort of grow into it. I would basically take no margin in the beginning. Um

28:44 You know, and and and uh get the right price point, create much bigger market size and then eventually get the scale you need. So so the combination, I would do the airport thing and the sort of emergency charge we need to charge, make a good margin on it, but simultaneously be working on the much bigger opportunity Um uh of a of a scaled version of it. Okay, love that.

29:04 Um, definitely consider that. We started at the DDC idea of subscription model, but to Mark's point, it was just too pricey to stock up. I ha you know, we have customers that do it. It's not the everyday customer. And so Um Yeah, definitely excited to roll out into airports and start getting vending machines in the bathrooms. Yeah, yeah.

29:25 Yeah, vending machines, that's smart too. Yeah. Super cool idea. Lindsay Shore's baby a goby. Yes. Yes. Yes. Definitely. Um congrats. Thanks so much for calling in. Thanks, you guys. I'm the biggest, biggest fan of the show. So happy to be here. So great to be you both. Thank you. Thank you.

29:45 Um, I like that idea that you're saying about putting it next to the register. Like you've got Your five hour energy Your slim gems, your pickles. And then the diaper. Yeah. Right next to that.

29:56 Yeah. I think I think this probably the actual cost though at ten million. She she she hasn't, I guess, gotten that yet, but I mean it's gonna be a fraction. of of what she's getting now. And I just think that that could be a big market. Like if you get that price point down You could just imagine every parent having a few of those in their purse, pocket, whatever, right? Like, you know, where it's just kind of Part of you know.

30:18 Part of your diaper spend, right? I I mean how of I I I find myself buying like shaving cream or deodorant at the airport all the time. I always buy snacks because I don't eat what they're serving on the plane, so I'm like looking for nuts. And you pay like thirteen dollars for the Pistachios that be like 15 bucks. And I'm like all right, so it's available. We're gonna take a quick break, but when we come back, another collar, another question, and another round of advice.

30:46 I'm Guy Raw, stick around, you're listening to the advice line on how I built this lab. Welcome back to the advice line on how I built this lab. I'm Guy Raz, and today I'm taking calls with Mark Lori. Um so Mark, let's let's bring on our next caller. Okay. Hello, welcome to the advice line. You are on with Mark Lori. Please tell us your name, uh where you're calling from and a little bit about your business. Hi Guy, hi Mark. Thank you for having me. Nice to uh chat with you guys. My name's Ryan Thompson. I am from Vail, Colorado Two tausin fourteen I started Tenth Mountain Whisk and Spire Company.

31:31 We are a philanthropic award winning Craft a story. Named in honor of the historic Tenth Mountain Army Division. Thanks for calling in. Tenth Mountain Whiskey. Tenth Mountain I believe is is no longer in Colorado. I think they're in they're in Fort Drum, New York. They're in on the border with Canada today.

31:47 You're exactly right. Yeah, I'm impressed with your uh many years ago I cover I was a reporter, I covered the Pentagon, so that's the only reason why I know that. But uh cool so cool I cool name. And and uh You s tell me how you ca got into this business. Yeah, when I first moved to town in the late nineties, I uh bartend around town under the ski bomb lifestyle, skiing uh the eighty, ninety hundred days a year and bartending at night in two thousand and two, I started a uh restaurant That I still have my thumb on today with my two uh original business partners twenty three years later. Uh about twelve, thirteen years ago, I was watching what the craft distillery movement was doing.

32:21 I home brewed just for fun for friends and family. And uh was watching what uh couple of competitors and other ski uh uh resorts were doing. Uh, and I thought someone in this town was gonna make whiskey sooner or later and uh just thought might as well be me, right? So you guys bought a still and you bought uh me all the things that you need? Yeah, that's correct, guy. You got it. We uh distill, we mature, we uh bottle

32:45 All in house. We have a tasting room at the distillery where we hold events. uh do tours uh and uh whole tasting classes And we have a off site tasting room which is at the base of Vail Ski Resort in Vale Village as well. All right, cool.

33:01 Um I I I'm curious, right, because there's a lot and I'm in in in n Northern California where the wine industry is going through some some challenging headwinds right now, right? Because There's all every stay there seems like there's another article about alcohol being bad for you and and and you know, uh I know that younger people aren't drinking as much as, you know, people my generation, um an older Are you seeing any headwinds at all right now?

33:29 Yeah, certainly you nailed it, guy. There's uh almost every day an article comes out in regards to Uh alternative opportunities to relax and enjoy cannabis or no and low movements, uh the high and dry movement, if you will. Uh and so that uh is part of my question. Uh so uh we're at a pivotal point within the business. We're uh just celebrating our 10 year anniversary. Uh we're doing well, thank you. We're doing well here in the state of Colorado. We self distribute in the Vale Valley. We have a uh large distributor that uh distributes outside of our area, but within the state. And so about eighty percent of our sales comes from uh within the state of Colorado. Uh about twenty percent are in a number of other d states and distributors.

34:11 Uh however, eighty percent of my headaches comes from from that as well. So a little uh a little bit about the eighty twenty rule, right? And so I own a hundred percent of the company I've gotten this far without having to sell equity. Um I have an SBA loan. Bag bar and scraped as much money as I could put together over the last ten years. However, uh I'm to a point where if we continue to grow, Uh do I uh look to sell off some equity and bring on some investors. or given the structural uh market uh shifts within the industry Do you think it'd be smarter to maybe pull back some of our distribution in uh some of these

34:45 uh outlying states and just focus more locally and then our direct consumer models as well. Hm. A lot to think about here, because Mark obviously um uh you you know I know you know a little bit about this this market too and um It's complicated. Every state has different regulations Uh so the question I guess is should he double was a couple questions, should he bring on equity partners, but also should he double down on on where where they're doing the best or or really try to push push into the into expanding into into some of these markets that uh are also proving to be a bit of a headache. Yeah, I I have a couple of questions. Um

35:18 First first nice to meet you, Ryan. Uh Uh great great story. Um What percentage of the market are you in your current state? In Colorado. Uh a percentage the overall market, uh I'd say we're about ten percent. So there's certainly some room for growth there.

35:36 Ten percent of the whiskey market in Colorado. Correct. Yep. Okay, then what what is it about your product? That is special relative to other whiskies. Uh certainly where our distillery is, we're at sixty three hundred feet in altitude. Uh so it's uh ambient, dry uh air climate with uh some uh diurnal temperature fluctuations uh which uh adds uh some different flavors to our products

36:00 certainly matures our whiskey a little bit uh quicker than others other areas. Uh our uh angel share is mostly uh water that evaporates and so we're able to uh get some higher proof whiskeys and do some special single bar barrel picks. And so uh we're well known for our whiskeys. We make a bourbon, a rye, and a single malt. We make four other additional spirits as well. Uh and then certainly the amount of respect and support we give back to the military, both active and veteran soldiers alike. So one one one last question. In terms of your goals, like would you be happy doubling the size of your business over the next few years, or you know, are you really saying now I I I really want to go for 10 X or a hundred X?

36:43 Or no, you know, in the next few years if I could double the size of the business and keep a hundred percent, I'd be really happy with that. So originally ten, ten, twelve years ago when we were starting, we wanted to be a national brand. And that was the original goal. Given the uh industry uh market shifts, uh I'm thinking it might be small might be smarter to pull back and just be a regional brand. Uh, however, I still have inside me that I want to grow this. I love the challenge of it. Uh it's a tough industry, it's an exciting industry. I love uh all aspects of it, and so

37:14 Uh In one hand, it's uh do we lose the battle to win the war and pull back? Where on the other hand, uh if you're not growing, you're dying, right? And so it's a a little bit of both uh that I'm having to struggle with here. Are you growing, uh are you on on on on a path to grow this year? Uh yeah, guy, we have been growing about ten percent year over year. Uh this year we're gonna be about we're gonna be flat.

37:36 Which uh in the industry, from what I've uh been told is is a win. Yeah. Yeah. So so yeah. So if you're if you're ten percent share in Colorado And ten percent growth, that means you'd be going from ten to eleven Percent.

37:49 share if you just focused in Colorado or twelve share is twenty percent. It feels like just from the outside looking in Given all the things that you've said. where you have a competitive advantage, I would I would double down on that competitive advantage that you have in the state of Colorado. It's working.

38:06 The the the brand you know, resonates in with that audience. You've got physical brick and mortar, people are feeling and touching your brand. Um and if you only have ten chair, I mean you can go to twenty share, that's why I was asking twenty share and double the size of your business.

38:22 That's some pretty good growth over the next you know, a few years if you were able to double your your penetration. I think the level of focus is not to be underestimated. Like it's like you said, it's a lot of complexity in going into other states. You don't have the same um marketing power that you do in in Colorado. And it takes a lot of time.

38:43 And so I think there's a benefit of focusing and saying, Hey, we're gonna double share in Colorado. um and this is how we're gonna do it and it get everyone thinking on the same on the same lines and then after you start getting that real traction there, maybe you pick a second state that's closest in that you think would most likely be a state to resonate. But I I I wouldn't it doesn't feel right to me on the outside thinking about Taking the brand national without the same marketing budget or bang or

39:11 Uh that some of the the the bigger players would have. Right, Mark, exactly. I appreciate that insight and your opinion there. And that's exactly uh what keeps me up at night is trying to figure that out. And uh so certainly respect your your career and love your insight to that. So I really appreciate that. Yeah, the challenge is the next state over is Utah and I don't know how great of a market that is. Yeah, I I think we probably look to go north to Wyoming or south New Mexico first. R right now I I may have missed this, but did you mention your annual sales? Right now? Uh we're uh a little bit north of two point five million. Mm-hmm.

39:45 So w one question I have for you is what what do you what what's sort of the end game for I mean Vail is a really important You know, if you're talking about building a brand, Vail is a great place, especially a whiskey brand, a great place to do that because it attracts obviously skiers from around the world. It's uh you know, it's one of the probably the five greatest ski areas in North America. Um, I mean, is there a world where you wanna you you would one day want this brand to be acquired by a Diaggio or a a a bigger You know, a bigger multinational. Right, guy. I love growing it. I love the challenge. Uh I can see me doing it for a number of more years. Uh, but I get asked this question often and uh everything's got its price, I think, uh certainly.

40:27 Uh uh I I we'll see if if there's a price I can't or an offer I can't pass up, then it might be something I'd entertain. If you are thinking about maybe one day if you are thinking about selling it, then it would be more valuable to have deeper penetration in a regional market than a shallow penetration in a national market. Okay. So that's something to consider. Got it. Thanks, Mark. Yeah. I think that's great advice, Mark. Uh the brand is called Tenth Mountain Whiskey and Spirits. Ryan Thompson, thanks so much for calling in. Guy Mark, I appreciate your time. Thank you very much. Thank you, Ryan, good luck.

40:57 Yeah. It's uh I mean we've we've had a couple of Spirits brands on the show, um that have been acquired and some that haven't. Um, but I think that's exact that's just an important point, Mark, which is better to have uh to to to really be a known quantity. in a region, right? Than to to kinda just be Yeah, to be something special. Like, you know, really stand out. And I think you start going into the twenty share plus and start you know, you're you're start to become a meaningful brand in that region. That's where I would focus. I think also He said before like how eighty percent of his time is outside of the existing region. So just switching focus is gonna help build that brand and he's got a much better chance, I think, of

41:38 doubling in in Colorado than he is, you know, trying to to do it nationally. Um, Mark, before I I I let you go, I wanna ask you about You know Here you are, you're still a young guy. You're only in your fifties and you've to accomplish all these things and you've got a whole new business now that you're

41:57 that you know, we're gonna be hearing about for the next t you know, t twenty, thirty, forty years. If you could go back to when you started diapers dot com and even before with with what you were working on And you could give yourself advice and say, Hey You know, you need to know this. I'm coming to you from the future. What do you think you would have

42:17 Said to that guy. Oh, there's so many lessons. Um if you're asking for like what's the number one lesson. Sure. Yeah. I think I have to I if I could only pick one, I think people.

42:31 I think I think I would I've learned so much about The type of individuals that Can really help. Propel a company.

42:41 And at the end of the day, like you win or lose, it's it's down to execution and it's people. And How do you find the people that are gonna be most successful in an early stage startup? I want somebody that's showed a demonstrable level of success in everything they've done in their career. You know, it they don't have to go to the best school, but but

43:00 In in the workforce they've shown a demonstrable level of success. They're in a company They've been promoted. And when they move from one company to another It's a big step change. Like they make an impact. Yeah, stars make an impact and when they move

43:14 It's noticeable. Like, you know, and uh and those people the ones that I mean twenty percent of your folks do eighty percent of the work. And if you can get those top twenty percenters, even top five percenter if you're lucky enough to get that. That could make the company in every company that I've had, there's always a few people.

43:32 that are top five percent. And those are the people that really drove and made the company what it is. So I would just I didn't really know that back then and just hired people and just yeah, I just I I I I was like Thought I can interview somebody.

43:46 Um, you've been in the workforce, what have you done? That's actually really great advice. It's it's'cause you've got to surround yourself. G great entrepreneurs are not great entrepreneurs, they're great people who surround them. That's really I think the greatest entrepreneurs are often the greatest talent spotters.

44:07 Um but it's but you're right, it's hard. 'Cause you can you can talk to somebody really like them and it just doesn't work out. Yep. It used to be I call honeypot, you know, you you sort of It's like oh I can get a beer with this person. They took a good game and in an hour you're like, Oh, I really connected. I like this person, but then they don't they're not able to like really push the ball forward, you know? And there's only a small percentage of the population that can truly

44:32 Invent create. And make stuff happen. And there's a certain Resume that That

44:39 It shines through. And now I can spot those. And so I would Teach myself how to how to spot that if I went back in time. Yeah. That's great advice. Mark Lori Founder of diapers dot com, jet dot com, and wonder

44:53 Uh thanks so much for coming back onto the show. Oh, thank you, guy. It's great having you. And by the way, if you haven't heard Mark's original How I Built This Episode, You've gotta go back and and check it out. Uh you can find it in the podcast description. Just uh click the link there. Um and here is one of my favorite moments from that interview. I'm happiest when I'm doing something entrepreneurial, building something.

45:13 I mean, it could be inside of a big company building something, it's really about the autonomy to to sort of like, uh just run and build build fast and not have to get you know, um you know traditional corporate buy in before doing everything. Cause uh you know, corporations they just tend to shy away from risk and low probability Uh outcomes. And I sort of gravitate more toward

45:38 Low probability outcome, but But Massive upside. And I think that's where the opportunity lies for an entrepreneur. Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for free at gyroz.com. Each week it's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest entrepreneurs ever.

46:03 And if you're working on a business and you'd like to be on this show, send us a one minute message that tells us about your business, the issues, or questions you'd like help with. and hopefully we can help you with them. And make sure to tell us how to reach you. You can send us a voice memo at hibt at id.wondery dot com. or call us at one eight hundred four three three three three three three three one two nine eight and leave a message there, and we'll put all this in the podcast description as well.

46:34 This episode was produced by Carrie Thompson with music composed by Ramptina Rablui. It was edited by John Isabella. Our audio engineer was Cina Lafredo. Our production staff also includes Alex Chung, Chris Massini, Carla Estevez, Elaine Coates, JC Howard, Catherine Seifer, Devin Schwartz, Neba Grant, and Sam Paulson. I'm Guy Raz and you've been listening to the advice line on how I built this lab.

What you see above is a preview of the first minutes. One unlock costs 10 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.