Advice Line with David Neeleman of JetBlue

0:09 Hello and welcome to the advice line on how I built this lab. I'm Guy Raz. 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. Leave us a one-minute message that tells us about your business and the issues or questions that you'd like help with. Alright, let's get to it. Joining me this week is David Neeleman, founder of JetBlue, which he founded in 1998. David is also the founder of Azul, which is now one of the largest airlines in South America, and

0:49 He's also the founder and CEO of another airline in the US. It's called Breeze Airways, which began operating in 2021. David, it's great to have you back on the show. Always great to talk to you, guy. Ah so you've been on the show I think three times in the past. You were first on Back in 2019, uh, when of course you shared the story of how you started your first airline, which was Morris Air, which was acquired by Southwest. And then you got up you ended up getting fired by Southwest, but then you launch Jet Blue

1:18 uh and turned it into this incredible business and then you got fired from that and then you started another airline In South America and another one called Breeze. It's just An incredible story. We will put a link to it in the show notes if you guys have not heard that episode. It's really, really, really good. Uh it's just an amazing story. So thank you for coming back onto the show, David. Um Uh before we get to today's callers.

1:42 Uh I wanna ask you a couple of questions about what's been going on in your life since you were last done. So you Uh you started Breeze and I think we talked a little bit about that when you were last on. Uh it's been now going since twenty twenty one. Um and you're flying I think only Airbus. Uh A two twenties, is that right?

1:59 That's correct. Yeah, we have we have some others, but yeah, primarily uh uh A two twenties. Which is uh amazing'cause it reminds me of the Southwest model with seven thirty sevens. All right, tell me about breeze. What makes it different from Jet Blue and Azul and or or similar or different from other airlines operating right now. Well, I always learn. I learn from everything that I've ever done before. And

2:24 You know, it's uh I learn from my southwest experience that if you bought brand new airplanes It was actually Cheaper than if you got old airplanes.

2:35 And I did that at Jet Blue. And then I learned also at South West that you need to treat your people awesome. So I I did that at Jet Blue and then Um, you know, as as you said, I was some somewhat forced out of jet blue.

2:49 They wanted me just to be the chairman. I said, No way. So I went back to the country of my birth and founded Azul and I learned it's a country's Brazil,'cause you're I think you were born there while your dad was on a mission there, right? Well, he was actually a journalist, but he had served his mission there. Right. Fell in love with the country and came back to work as so many do. Uh when they when they serve their missions. So

3:11 It was amazing. Brazil was kinda like the US airline business when it was in the nineteen sixties So I really learned the value of Being the exclusive person in a market. Uh being the a monopoly market. Even till today, Azul About eighty five percent of their markets, they have no nonstop competition. So

3:30 Uh learn learn that big lesson. And then I looked back to the US and I just saw some interesting trends. That airplanes were getting bigger and bigger. And then the big guys were were uh dominant hubs and really forcing people to fly through hubs. Hundred and twenty five cities had lost twenty five percent of their air service over the last ten years.

3:49 Wow. And I also saw this trend about premium travel. People wanted to pay up for a little better service. And so I just found a a plane that Was conducive to first class That was brand new, that had bigger windows, the two and three seating people loved. And with the twenty five percent lower trip costs. And so we started flying today, we

4:09 We're we've announced eighty nine Cities uh were in thirty six different states. We have three hundred and fourteen different routes. And uh People love flying us. It's the highest MPS score I've ever seen in any of my airlines I've ever started because people are really appreciative of the nonstop. But also we have great people that take care of our guests every day.

4:31 And so for you the differentiator, right, is as you say, is that Of course you want to offer the best value and the lowest prices, but it's real it really comes down to like what is the experience. Like if you know you see these things on on social media all the time. I'm never flying Delta again, I'm never flying American again or United again. It sounds like what you're saying is

4:51 If we If we make the experience better. than all that other stuff, the lines and, you know, just the hassle and T S A issues. Uh that will that will become secondary.

5:04 So I I have this motto that too much overkill is never enough. So it's not enough to have the Omi nonstop flight, but you wanna be able to have the best service. You want to be able to have the most on time flights. You want to be able to have a first class option and an extra seat option. And you want to be able to have Wi-Fi. And so you just layer all that to on top and don't be content. to just have the best of one thing. You wanna have be the best in in as many things as you possibly can. Yeah.

5:31 For sure. Um you know, just just before we get to our our our collar, let's talk about running their line in general. How much of it is about I mean in business and and retail, right? A lot of the businesses that we focus on succeed not necessarily because um you know they're they're they've got the highest margins or the the most foot traffic, but because they're really good at inventory management. So is there a version of that? I mean there must be a version of that with with running an airline, right? Like buying fuel futures or cutting costs in a way that um you know doesn't sort of harm the experience, but

6:04 can benefit you in the long term because it's the math of running an airline is so complex because the margins are Pretty narrow, right? Yeah, they they are and small small as we are, we still burn a hundred and twenty seven million gallons of of Uh Jetfield this year. So a dollar increase in the jet view price is one hundred and twenty million.

6:26 Uh two dollars where we are right now pretty much is two hundred and forty million dollars a year. And United I think came out with an estimate that it could be Fifteen billion dollars and they've only ever made six billion in their in their biggest year. Wow. But for me, I just took it down to the smallest thing to our people today. I said, Look At two dollars.

6:46 We have to get for every hour we fly, we have to get ten more bucks on every ticket. For if it's a dollar, it's five dollars. And so the long haul flights obviously get hit worse and they have to get more. So you move kind of from longer haul to shorter haul. You take all the fringe flights that uh are not making as much money and you say, is it better not to fly these And then you just uh but button down the hatches, make sure you have enough capital.

7:14 But we wanna make sure we have enough runway as we possibly can to make sure that we we can come out of it stronger. Awesome. All right, David, you ready to take our first caller? Let's do it. All right, welcome to the advice line here with David Neelman. Please tell us your name and where you're calling from and a little bit about your business.

7:31 Thank you so much. And I love Breeze Airlines, I gotta say. Um Oh great. My name is Barbara Storper and I'm a nutritionist and I'm a f the founder of Food Play Productions and we're a national touring nutrition education theater company. We bring live theater shows featuring juggling music theater audience participation to schools and communities around the country to turn kids on to healthy habits. And we're based in uh Western Mass and Santa Fe, New Mexico. Nice. Welcome to the show. Uh thanks for calling in. So you do

8:03 You do live theater for Kids around food. Yes, I'm a nutritionist and I'm really concerned about kids eating and exercise habits. As you know, the leading causes of death and disease in this world today are diet related and kids are just doing really badly and It was like forty five years ago when I was getting my master's in nutrition at Columbia University Teachers College and I was asked to give a lecture at an inner city school on nutrition and I was like a lecture to four hundred kids on nutrition? I don't think so. So I was a juggler at the time and really loved theater. And I had been a journalist and I was horrified by all the ads promoting junk food to kids. And I thought, what could be as powerful as these ads and the marketing by the food industry? And I realized that

8:52 Theater. Would is as powerful and really fun. And so that's what we did. And we started doing shows in nineteen eighty two, and it's been a long time. And this is a for profit, not a non profit. It's a for profit. Yeah. And what give me a sense of What you know, how your business is going. Like what what do you guys do in revenue?

9:12 Yeah, it's It's been really hard. I mean, we probably should have been a non profit years and years ago, but I I just have been on the boards of nonprofits and I just really like being an entrepreneur and I hate the bureaucracy. So I never did that, but um We We are a project.

9:31 uh from a fiscal agent so that allows us sometimes to get grants, but the best thing we ever did was realize that we could partner with organizations like healthcare organizations, supermarket companies, that kind of thing. And they would sponsor us and bring us to schools in their region, and therefore schools wouldn't have to pay, which is really the biggest obstacle against us doing these programs, um, you know, in our In our hayday, which was more like

10:00 Two thousand ten to two thousand sixteen or seventeen. We were doing really well, really big staff, lots of programs. We had four vans touring. Wow. And it was so much work though. And with Covid we ended up really downsizing. We did live stream shows which were amazing because they were so much easier. Um But now schools don't want live stream. Yeah. And I'm getting up in years and I'm trying to figure out What?

10:28 How can I keep food play alive somehow in this day and age because You know, in nineteen eighty two things are pretty different. Yeah. And and when you say sort of well, I mean are you sort of what what's your budget your r roughly now? Yeah, well back then we were m our revenue was probably one and a half million dollars and we had a staff of like

10:50 twelve people and we had four vans and each van had like three performers and stage managers. Yeah. And now? And now it's I think it's become a labor of love. Quite frankly.

11:01 Right. Okay. So you are so you're looking to figure out you're trying to figure out how to make it continue and thrive essentially without you in the exact. Okay. Um let me bring in David Neilman. David, um thoughts, questions, ideas for Barbara. Well, first of all I just found out I'm having my thirty ninth ninth grandchild.

11:21 My oldest grandchild. Eighteen years old, so I've got a bunch of kids in that in that grandkids in that age. And I really applaud the work that you're doing. It's just critically important. I mean Maybe you may want to convert it to a nonprofit.

11:37 Um and and make it a nonprofit. That's uh what I would do if you wanted to take a step back so that people could um donate to it. and they could get the tax write off and then it becomes Uh, I think your your funding source becomes much bigger. And it doesn't mean you can't make money, you personally, from salary or advising fees from doing that. But uh No, it's interesting. Um

12:01 School kids, if you go to Brazil. And you I go into a bathroom after lunch in Indy business, everyone's in there brushing their teeth. Uh huh. And I'm like, Why is everyone brushing their teeth at lunchtime? They said, We learned to do that in school.

12:14 When we were in school we brushed our teeth and those habits. Continued. um on so what you teach those kids In school can continue on. Um and so I really I applaud what you're doing.

12:26 Well you know. Brazil has the best dietary guidelines of any country in the wow in the globe because it's all about sustainability and it's about whole foods and it doesn't have the influence of the food marketers. Wow, amazing. Yeah, I you know I I I tend to agree with you, David, I mean uh about this nonprofit idea. Barbara, I have a different completely different side of my world, which is I've got how I built this, but I also have a kids

12:52 media company which I started ten years ago with two friends and we have a kids podcast called Wow on the World. And it's a very, very popular kids podcast. It's one of the Top. Podcasts. You know, for kids full stop. But kids is a as you know, it's a

13:08 It's challenging. There are all kinds of rules and regulations around how you advertise to kids and kids as an advertising um category are less valuable to marketers depending on what what you're selling to them. So it's tricky. Um in your case, I mean there are a couple of options. You could uh sort of come up with a a plan and a system and license that out to other people, which you may have thought about. Uh you could try and sell

13:33 Or merge. your business with an education company, but it you know, it may be tough to find somebody who wants to buy it. These are comprehensive, but a a third option would be to go. either convert to a nonprofit or spin out a nonprofit part.

13:50 which really I agree with David enables you to attract donations, small donations and uh and also larger grants and and and donations because to me it seems again, I mean, the way you describe it is this is a mission driven Labor of love.

14:09 And Uh and so it's it's it's possible to have that hybrid model where maybe you spin out a nonprofit wing. Uh if you're not comfortable fully transitioning to a non profit. But it sounds like you are also kind of you've done this since nineteen eighty two and you're ready to move on.

14:27 Yeah. Do you think that it makes sense in this day and age to continue to do live theater? When everything's digital, should I think about just putting it on video and putting it on social media instead of live theater? Because it's so much work. Yeah. It's not either or. You can do both. It can be and. Yeah. Um, you should definitely have a social media aspect of it.

14:54 Yeah. If the schools are willing to let you in and do a live performance, That's great. And you have sponsorships to be able to do that. foundations, um because obviously you've got the the food companies on one side that are making processed food. Will kind of be but the antithesis of the other people finding passionate people that believe in children's health.

15:16 is is just a i a really important mission. So Yeah, I I would definitely have a big social media presence'cause that would attract a lot of people and then have Yeah, if you can get in there. and and do it live and you can it really affect behavior. You have to prove that it really changes behavior. People will beat a path to your door if you can prove that. Yeah, we have evidence based results from USDA and C D C, you know, and we have like ten national awards. So

15:43 We have a great reputation. And you know one one option also, Barbara, if you don't want to go down the nonprofit route is to f to Really spend time now. Focusing on finding that person. who could take it over and maybe, you know, they

15:59 they you give them fifty percent ownership and you retain some ownership, you retain fifty percent and you let that person sort of run with this, you know, and see what they can do with it. Last thoughts, David? No, that's it. Good luck to you and Congratulations on all the great work you've done. It's it's so important.

16:18 Yeah. Barbara, thanks so much for calling in Barbara Storper. The uh the company's called Food Plate Productions. Good luck. Thanks. Thank you. We're gonna take a quick break, but when we come back, another caller, another question, and another round of advice. I'm Guy Roz, and we're answering your questions right here on 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 my guest today is David Neilin, founder of many, many different airlines, including Jet Blue and Breeze Airways. Uh David, are you ready for another call? Yeah, let's do it. All right, let's bring in our next caller. Welcome to the advice line. You're on with David Neeleman. Uh please tell us your name, where you're calling from and a little bit about your business.

17:13 Hi Guy, hi David. Uh my name's Jeff Pijak. I'm calling from the beautiful city of Chicago. Uh my wife Jackie and I we started a Gym called Ultimate Ninjas, uh basically on the Sales behind the wind of American Ninja Warrior and the gyms have exploded in popularity Um right now in twenty twenty six we're franchising both domestically uh and internationally in the country of China. And uh finally we are uh about to embark on a capital raise to launch uh professional sports league. Wow, congrats. Thanks for calling in, Jeff. So

17:49 Uh Ultimate Ninjas it's an indoor gym where kids can like replicate what they see on American Ninja Warrior, that the T V show, basically. You got it. Yeah. Amazing. And and you uh you started this in twenty sixteen. How many locations do you have now?

18:04 Uh fifteen total. Uh six corporate gyms and nine franchises. We just began franchising out of Covet. And it's really exploded in popularity way beyond uh American Ninja Warrior. There's hundreds of thousands of kids competing. U against each other internationally and nationally and

18:23 In twenty twenty eight, uh, this is gonna be an Olympic sport. So is there going to be a ninja event at the Olympics? I there is, okay. Yeah, it's gonna be put into the modern pentathlon in twenty twenty eight, so it's gonna replace equestrian. And then in twenty thirty two, the thought is that it would be its own standalone. Competition. Wow.

18:44 So you are okay, so you With your Business. This is a franchise model, basically. You've got some corporate owned locations, but it's a the idea is you you want to use the franchise model to expand. Correct. And uh with the Olympics, um, there's a lot of interest out there. We just began franchising, so we're really building our infrastructure to uh launch.

19:07 The early franchises are all friends and family and the early results have been Rather good. Uh in fact they've been great. So you've got this model and you've got a s you've got a system in place and it it's basically turnkey. I mean you You help somebody identify a location and and how to build the gym and and then that's it. They're on their own. I mean not on their own, but but it's fairly replicable.

19:30 Yeah, we've got uh a curriculum library, uh a couple of the famous American Ninja Warriors from the show, Jesse Le Brec and Mike Selenzi have been with me since the start and are still with me today. Jesse's the greatest of all time on American Ninja Warrior. And so she's part of the franchising, she onboards the franchisees. Teaches them the curriculum. Um Ninja is a complex sport uh very similar to gymnastics. Uh so it does take a little bit of a learning curve to learn it, but um and the the the model is uh what you pay a f a fee, a a membership fee?

20:06 Yes, so we ha offer classes, camps, um and Birthday parties to some degree. Uh we also have adult fitness. That's a monthly membership. Kids come once a week. And we also have travel teams as well. Mm. What are your biggest costs? Is it personnel? Is it is it maintenance? Really at the end of the day it's labor.

20:26 Um and that labor is very variable depending on the volumes. Right. So you can control your labor costs. We do not have cost of goods sold. So what what w roughly what like what kind of revenue or qu what kind of sales do to each these locations do per year. Um so we have two offerings with our uh our model. One is our bigger gyms these are mostly warehouse sized gyms ten to fifteen thousand square feet. Those are about a million to a million and a half in top line revenue. Mm-hmm Uh the smaller gyms the academies which are built more for the younger kids three to seven years old. Those just launched uh in November of twenty twenty four, and that's where we're seeing the majority of the interest. But um

21:07 Yeah, healthy margins and uh you know, we're we're We're promoting youth fitness. Um kids are overcoming obstacles and uh it's a timeless uh sport. We all remember going to the corner and on the monkey bars, right? Well this is just a monkey bar Gym on steroids. Okay, and before we we bring in David, what's your question? Sounds like you're expanding and want to expand further. So

21:32 Tell me uh tell us what you're what you're looking for help with. So we're We're embarking on a capital race of nine million dollars to launch a professional sport, especially with the Olympics headed this way. It's eminent that a professional sport is about to be created. We've gotten As far as finding strategic partners with this professional sport, um it's a healthy, you know, ask to

21:57 Two To go out and raise nine million dollars. Last month literally Uh, one of the grassroots leagues, an amateur league, gave me a call and said, Hey, why don't you fold our league into this and we can already have a vertical of amateur league gyms

22:12 And then we can start this professional league together. So I'm actually in you know, I'm looking for your perspectives on these two Uh pass. Um Amateur league that opportunity to raise that nine million dollars just kinda goes by the wayside and you're fulmitted. On the other side of the spectrum, you know, if I go another year um or two to try to raise the nine million dollars, then I've lost that time.

22:37 In terms of trying to build a professional league from the ground up. Yeah. All right, David, I wanna bring you in. Um So Uh really cool concept. Right, indoor gyms uh but but like ninja style gyms. Potentially this is gonna become a professional sport. Um

22:54 And so, you know, Jeff is trying to figure out does he go all out and and try to build build his own league or does he So Thoughts, questions, ideas for Jeff? So

23:09 Um First of all, my my wife turned me on to American w ninja warrior and I watched quite a bit of it and it's it's really impressive, uh amazing stuff. I love Anything that gets the kids Off the video games, off the screen time.

23:24 Be it eating healthy and then working out. And having the confidence to do this, but also the ph the physical exercise. So that's that's really commendable to to to this next generation. So I assume if you go down the Samuel

23:40 um thing. Do you give and you said you give up The ability to raise money's'cause the amateur is going to get a percentage of the league, is that it? Yeah. Yes. Yeah. Exactly. Yeah. I mean I What I would rather do sometimes I always say I'd rather own a smaller piece of a bigger pie.

23:56 Uh then no pie at all. And so I would lean towards doing that. I don't know enough about you know, what they bring to the table, but it seems like I w if it was me. I w instead of trying to raise the money and kinda do it on your own, it's a great platform to go from amateur and then the best of all those amateurs become

24:15 professional and it would allow you to get some sponsorships. Um and get people in there. That that's what I would be leading to. And it sounds like maybe you might be leaning towards that as well. Yeah, it's it's uh the the time factor moving towards the Olympics in twenty twenty eight, it's just trying to get my arms around uh the timing of this. Um I you know, internationally Uh there's a a lot of interest in this and I have to

24:41 Like I said before the I think it's imminent that this is going to happen. Okay. I mean look, the the Olympics introduce all kinds of new sports every I mean I remember when surfing was introduced, right? Um and so it it doesn't mean that that you your timeline is so compressed simply because it's being introduced this this next Olympic Games. Um I think, you know, because right now I'm looking at what how you're describing ultimate ninjas, right, these these gyms and

25:08 You're describing recurring revenue, right? You're describing strong unity economics, I m I mean you're you know, million, million and a half, but with with with healthy margins. Um you've got an obvious obviously a clear path to expanding Um A professional league is a different business. Right.

25:26 you know, all kinds of things. I mean media rights and sponsorships and uh capital intensive and so I wonder whether it you know, it it it makes more sense to really Sort of Think about what you're already doing.

25:43 As kind of a Uh uh A form of a league, like a like a little league of ninjas. And I wonder whether

25:51 You can think about what you're already doing with ultimate ninjas. as a way to build a A league or or a Some kind of um even a a youth league.

26:02 out of what you already have. Sure. No, that's great advice. I I I Definitely feel like that's the Path of least resistance. Um, we do have some pretty good partners on the capital raise for the professional league. However,

26:18 That's a big ask. And if you're going to you know, ask for nine million dollars in tranches of, you know, three million dollars per year. That's uh That's significant for an emerging Sports League, right? Yeah.

26:31 Yeah, David, what do you think? Uh I mean Uh, it sounds like he's got a good business going. I don't know. I mean I I I like the idea of of a professional league, but if there's a way for you to

26:44 create it m s more slowly and really focus on just expanding what appears to be a really successful business. Yeah. You know it it You have a great business. I think that would become a natural outcrop of it.

26:59 Yeah, sometimes when you raise money Uh, you get a bunch of people in there that maybe not have the same vision you do. It's it's it's not a panacea. Really. Um you know, pr it be it private equity or individuals.

27:14 And you're gonna have to give it up, give up a big chunk of it anyways, uh, maybe half or more than half, if you're raising that kind of money. But I just I I agree with Guy, just focus on your business. R like crazy and then if you're the leader in that business, and then things will come your way for sure. Awesome. Great advice. Thank you.

27:35 Yeah, for sure. Uh the company is called Ultimate Ninjas. Uh Jeff Pijak, thanks so much for calling in. Good luck. Thank you. Appreciate it. Alright, we're gonna take another quick break, but we'll be right back with one more caller. Stay with us, I'm Guy Raz, and you're listening to the advice line right here 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 your calls with David Neilman, founder of five airlines, including JetBlue, Breeze, and Azul.

28:19 David, uh let's bring in our next caller, you ready? I'm ready, absolutely. Uh, welcome to the advice line you're on with David Nealman. Tell us your name where you're calling from and just a little bit about your business, please. Yeah, firstly, thank you both so much for having me. My name is Vince Speroni. I'm calling from Northern Virginia. I'm twenty-five years old and I'm the founder of Gotchis.

28:38 We sell men's certified organic underwear. We're really focused on the health aspect of our fabrics. Uh while still making the product suitable for exercise and everyday life. But uh Really looking forward to talking to you guys. All right, so thanks for calling in, Ben. So so gotchies it's an underwear brand.

28:55 That is Uh made from like Certified organic cotton. Got it. Okay. So so tell me a little bit about this. I mean mm. I'm I'm assuming that most underwear is made from cotton.

29:08 It's it's a but it's a split of Mm. Half the underwear is made from synthetic materials, which if if you ever heard of pyl polyester or nylon. These are derived from petroleum and often full of toxic chemicals and dyes which can overheat and harm your testicular region. And the other half is made from standard cotton underwear. Which can still be sprayed with pesticides and finished with harsh chemicals. So really we're offering third party certified organic cotton so you can trust the materials from farm to skin.

29:34 Got it. Okay. And tell me a little bit about how you s w how you started the business. Yeah, it's kinda crazy. I I had a IT background, but My friends and I uh after we graduated college We did this event on Saturday mornings where you could give a presentation on any subject that you want to. So you could present on how to start an airline company or how to start a podcast or Your religious beliefs or how to cook a steak, a any subject was on the table.

29:57 And I gave a presentation one time on the negative impacts of synthetic clothing on our health, specifically meant underwear, not as a research objective, just a topic I was interested in. And The crowd was like, Wow, this is kind of crazy. I didn't know that, you know, synthetic winter was potentially And I didn't know the answer.

30:16 That's kind of where the light bulb went off. Huh. Uh right, and this it's interesting. I've I see a lot of these um Instagram ads now for like Uh organic gym shorts. There's like a lot of people who are talking about, you know, we're basically wearing plastic. You know, I'm probably wearing plastic right now.

30:34 with my like athleisure wear. Um and so there's a a lot of a lot of these brands are looking at like merino wool You're doing cotton. Um how uh how and how long have you been around? We launched January twenty twenty five. Wow. And how did you do your first year? Our first year we did forty K in revenue, but it was a nice such

30:54 So it was So many rookie mistakes. I was working a full time job for the first half of the year. We knew I knew absolutely nothing about marketing funnels or anything. Uh I would say in September we got a lot more serious and structured and focused. And projection for this year is one hundred and fifty thousand dollars in revenue. Amazing. And you're selling entirely through your website, direct to get it.

31:14 entirely online D to C through our website. And you're making these, you're you're having them they're manufactured in Asia? Turkey. In Turkey, okay, nice. All right.

31:23 Uh, before we dive in further, what's your question? So given that we're bootstrapped and we have limited cash on hand. How do I decide whether to spend that cash on new unproven SKUs that will increase optionality for new customers? And give existing customers more things to repurchase. versus putting it back into what's already selling and using that money

31:42 on building the brand through marketing. Got it. Okay. David Neelman. Uh underwear. So it looks like they're gonna hit a hundred and fifty in sales this year. Do they add another product now or do they what do you think? Do they stick with underwear or

31:55 Questions that you might have for for Vince. Well I I guess skew would be different colours, right? Is that what you're Different colors, different fabric length, like you can go into briefs, you can make your boxer briefs longer, different styles of boxers. Um'cause we've had a lot of customers say, Hey, I love your company, but you don't have this preference of mine. Um so they won't purchase because we're very limited. Mm-hmm. Yeah, I mean, I guess there's the in and out model where you just keep

32:18 You find what works and just keep doing it over and over again. Um, and then there is You know, the the the model where you just I would maybe just get a couple of different SKUs and if you're it's working well.

32:32 And just hammer that away and and and be like in and outburger. And just keep bootstrapping it that way as opposed to spending more and more money on going wider just because Obviously it's not something that It's not a fashion statement like uh you know, something an outer wearer would be. So that's just my instinct that that I would do and and uh As opposed to just you know going to more and more skews.

32:55 Try and limit the SKUs and If it's working and if you really believe in it. Then it it should work out. Yeah, I I I agree with David on that. I mean, I think before you Really expand, right?

33:08 Um you've got to ask yourself a few questions. So what uh what's your like do you have any any uh data around re uh sort of repeat purchases. Our repurchase rate is pretty good. It's seventeen percent right now. Uh we wanna get it up to twenty five. Um but we've only been we've only been

33:25 really selling for like eight months now legitimately and underwear is very hard to predict when people are gonna repurchase so we're thinking with time Repurchase rates will go up. Um and are people buying multiple pairs per order? Yeah, the average order value is over a hundred dollars, which is our four pack.

33:43 Got it. Okay. So you really once you hit thirty percent. of returning of repeat purchases of returning customers, that's a really good sign. Um the other question is are you are you ever stalking out? Are you running out of things? We have not run out of things yet. We can We went all in on inventory with all of our money. Got it. Um. Okay.

34:03 So that's another sign when you're when you start to get close to stocking out. And then the third one is Customers. Listen to your customers. Are they ask you sounds like they're are already starting to ask for other things and that's an important sign. So I think when you hit all three of those That's a really strong indication that it's time to

34:21 Expand because you've you know, every time you add a skew you're talking about Uh That you can tie up. And

34:30 You're gonna have manufacturing minimums probably. Mm-hmm and there's a risk, you know, inventory management is always a challenge, although with underwear a little different because it's more of an evergreen. product. But you know, I do think that I agree with David that you want to really Focus on just getting this right.

34:48 And maybe slowly Introducing a brief. You know, or s so you you're using the same s fabric, right? But a different cut, essentially. Ah and so Uh that's w that's where I would sort of

35:02 Go, but I I would really target maybe one more By the end of the year. Yeah, our our plan the the the debate we're having is to launch briefs and then also undyed boxers, which is the two things that you guys have mentioned, which is interesting. Um but our our current products are are crushing it. Um in terms of

35:23 how much the customers love them and the feedback we're getting on them. So that's just kind kind of why I'm wondering'cause we've really historically struggled with marketing efficiency. Um just getting our brand out there. So That's just that's just kinda the dil the dilemma I've been working through.

35:37 Yeah. I mean, David, uh you I mean, you know this be because of what you do with the airlines, but you're you know, I think a lot of a lot of um D to C brands. focus too much on customer acquisition and and customer acqu acquisition costs are really, really high right now. And I think not enough of them are focused on doubling down on their existing customers, you know, reminding them, sending them emails, or

36:02 a newsletter or really creating content um that's valuable for them. I mean Even a newsletter talking about toxicity, you know, or Tips for b better fitness, healthier living. I mean when you are establishing that'cause you probably have emails, right? I'm sure you do. You've got that relationship with your customers.

36:20 you really wanna double down on those existing customers to be repeat purchasers because that's really where the value is and and it costs so much less to do that because you already have them on board. I totally agree. Um And also

36:35 You know, if you do have a lot of people asking for briefs, for example If you could do a survey and say You know, If on your website you could say, Are you interested in briefs? Uh then you could know

36:48 What percentage? If you said twenty five percent of the people aren't buying because we don't have briefs. Then Obviously catering to that. to that vertical and having'em somebody who's already you're engaged with. Uh you know, I I think that's really the best way to to to harvest those customers and then

37:05 Also Underwear wears out, obviously. And so being able to kind of come back with an offer Or some subscription model or something that every six months they'll you'll send them some some new ones, I think that Rabidly loyal to your brand and your product.

37:27 Yeah, that's that's exactly why I was so excited to talk to'cause my instinct was if I have more SKUs, I'll be able to get more out of my existing customers'cause I'll have more colors, I'll just have there'll be more excitement and Um You know, maybe maybe they love gotchis but they don't want to rebuy the same color. You know, maybe maybe they want to try briefs.

37:45 Uh maybe they've tried breeze to another brand they like it. So My instinct was more skews equals uh a better relationship with existing customers. Um

37:55 But it's it sounds like Maybe there's not a I don't I don't think that's entirely wrong. No, I th I I I actually I think that's a good instinct. Um And but you want to go go about it slowly because you you're gonna have to tie up our ca it sounds like you've already tied up quite a bit of cash in your existing inventory. Is that fair to say? Yep, all of it.

38:14 So you wanna be careful, right? Uh you really want to manage your cash well. And you're dealing with a product that is not um It's not fast fashion, you know, it's not gonna go out of fashion next year. People are still gonna buy underwear that look like looks like this. But I think you you want to really um You know, yeah.

38:34 Part of it is you want to double down on community. You're also building a community of looking at your website and the people here who are You know, talking about how much they love the shorts and stuff. I mean, these are people who go to the gym, who work out, who are healthy. uh who uh I'm just looking at the pictures, everyone looks really healthy and and I'm sure they're into health and fitness because they're buying non toxic underwear. So uh you know, down the road, uh you can want to, you know, look at women's um you know underwear too probably, but

38:59 For now I I think you really want if you're not doing it, you want to communicate. with your existing audience with your existing customers. And just You know, send out a newsletter every

39:12 Just And that ask him. If if I had different colors, would you buy more? I mean you can survey those people as well. You're small enough you could actually Set up calls in focus groups with them.

39:28 And and listen to what they're they're they're saying to you. So Um You know and you can learn a lot from your customers. That's a great idea, David. You know, I um I bought a a shirt from a brand I that I was stocking on Instagram called Scene or S E N E And they make T shirts.

39:46 Uh I I noticed that the um CEO of the company has been emailing and saying, Hey, I'm the CEO and founder of the company, I'd love to hear from you our customers please click this link and set up a call with me. Which I thought was cool. You know,'cause they're small enough where They're clearly looking for feedback from customers. And uh

40:04 And I just thought that was cool. It was a cool idea. Yeah, I've I've emailed my customer base with my phone number and I've said please call me if you have any thoughts on it on what we what what you'd like to see or what we can do better. The link to the to the calendly is Yeah. Send them a link to your calendar. Say set up a time. And um we'd love to hear what you think and I'd love to get your ideas and Uh we'll give you ten percent off.

40:25 You're next order if you do this. Awesome. Well, thank you very much. Um I appreciate it. Absolutely.

40:31 Vince Broni, the brand's called Gotchis. Good luck. Thanks for calling him in. Best of luck. Um yeah, I mean I don't wanna give you too much information about what I'm wearing underneath my clothes, David, but I do wear I've gotten into this this stuff. I'm I wear like really gotten interested in like non-toxic fabrics. I really am bullish about this category'cause it's the the products are getting better and better and better.

40:57 Yeah, I'm and you know, it's like I'm I'm cognizant of what kind of deodorant I use now and right. You know, if it makes me itch and and shampoo you use and uh Yeah. No, it's really interesting. For sure. Um David, before I let you go, a question f that I ask all founders who come on the show, which is

41:13 If you could go back to David Neeleman, you know, back in the day when you were just, you know, starting Morris Air and you know, really getting getting you know, experience in this business. If you could go back to to that time, knowing what you know now. Especially about this industry. What kind of advice would have been helpful for Him to know, for that young David Neilman to know.

41:33 You know, I think just Um I talk to entrepreneurs a lot and You know, a lot of people say they want to be entrepreneur. But they just don't give

41:46 They're just not passionate. They're not willing to wake up in the morning thinking about it, being in the shower thinking about it. Um and and just being completely Immersed in what you're doing and then

42:00 Be the best. I mean we're we're going through a difficult time right now in the airline business because feel spiked. And I just keep my the mission is Let's be flawless on what we can control. If we can do that we'll be good. So I think it's it's just absolute flawlessness in all that you do and being the best. Um and then it would be very difficult to for anyone to

42:23 To defeat you. Yeah. I love that. That's David Neilman, founder of JetBlue, Azul Breeze Airways, WestJet. More and probably

42:32 some others in the future. And by the way, if you haven't heard David's original How I Built This Episode, you've got to go back and check it out. It really is so good. I know I say that every time, but I they are all so good. This is such an amazing story about a guy from, you know, Nowhere who went on to found all these airlines. Uh, you can find a link to it in the podcast uh show notes uh and here is one of my favorite moments from that episode. Herb invited me to Ruth Christ Steakhouse in Dallas and said, This isn't gonna work. You know, you're driving everybody insane in this company. And he reached across the table and held my hands, and I was crying and

43:08 said everybody, even your even the people that were biggest supporters said I You had to go. Ha ha ha. Hey, thanks so much for listening to the show this week. And by the way, please make sure to check out my newsletter. You can sign up for it for free at guyroz.com or on Substack. And of course, if you are working on a business and you'd like to be on this show, send us a one-minute message that tells us a little bit about your business and the questions or issues that you're currently facing, because we would love to try and help you solve them. You can send us a voice memo at hibt at id.wondery.com.

43:43 Or call us at 1800-433-1950. One two nine eight. Leave a message there and make sure to tell us how to reach you and we'll put all of this information in the podcast description as well. This episode was produced by Sam Paulson with music composed by Ramteen Arablui. It was edited by Casey Herman, and our audio engineer was Quasey Lee. Our production staff also includes Alex Chung, Carla Esteves, John Isabella, Chris Massini, Elaine Coates, JC Howard, Catherine Cypher, Carrie Thompson, and Neva Grant.

44:15 I'm Guy Roz and you've been listening to the Advice Line. on how I built this lab.

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