The Startup CPG Podcast

David Fudge
We really wanted to elevate the non alk experience to the same level of the world's best traditional spirits and cocktails. And so that was a big goal with us with Lynette as were developing the product. These are proxy spirits. So you see some brands out there that are creating non elk gins, tequilas, vodkas, things like that. That's not what we're doing. We're trying to leverage the craft and expertise and history and heritage of great cocktail making to create something new. Because we view the bar of the future as, you know, five, ten years from now, going into a bar and really having maybe 20, 25% of the options being not out. We also wanted people to build brand equity in the liquid flavor so that over time people understood, oh that's applos. Not like oh, that could be a gin.

00:56
David Fudge
But really understand and recognize our flavor profiles.

01:02
Daniel Scharff
Hello and welcome to the startup CPG podcast E commerce edition and Gearing up for dry January. So today we have David Fudge, who is the co founder and CEO of Applos, which is a modern beverage brand, setting out to reimagine the adult drinking occasion for the new generation of wellness minded consumers. David has incredible marketing experience. He was the director of marketing at Bonobos during some of those huge growth years and on this episode we talked about his approach to branding and how that paid off big time when consumers interest in non al caught up to where his product was and also how he launched his brand with a focus on the unexpected niche market of New York fashion influencers.

01:43
Daniel Scharff
We also go into detail on his preferred e comm strategies and recommendations for new brands that he learned from Bonobos and refined over the course of his career to really blast off with app. I think you are going to absolutely love this episode and be taking notes along the way. Enjoy. All right David, my friend, welcome to the podcast. Appos is such an amazing brand. What made you the perfect guy to start this kind of a company?

02:11
David Fudge
Yeah, well I was fortunate to be a part of two startups since 2010, the first one being Bonobos. Andy, the founder there gave me the opportunity to lead brand there and then I moved to Miami and was CMO of a travels startup and that both old really gave me the itch to create something myself. And I've always been, as my co founder calls me, a reluctant drinker. And so it was that curiosity that led me to really imagine is there an opportunity for me to create something that gives me everything I love about the cocktail experience but take out the negative health effects okay.

02:46
Daniel Scharff
And so for me, I look at Bonobos as the OG of digitally native brands. One of the very early ones that was out there online. First strategy, killing it on ads even. Like, I had a friend who was just running his own Craigslist ads with his referral code so he could bank up a bunch of money and just, you know, creating a lot of awareness that way. You must have learned a ton there that really gave you the blueprint for how to do something like this.

03:15
David Fudge
Yeah, I think from a mindset perspective, absolutely. I mean, it was a very different time. Like, it's a lot of times these startups, it is about timing, right? It's about taking advantage of the opportunity. And at the time, there weren't a lot of brands that. Well, first of all, Bonobos was, I believe, the first fashion brand built on the Internet. Andy used to love to say that because people would call him crazy when he said that he wanted to improve the shopping experience for men and make it easier for them. But I think it was also just the time, like Facebook advertising was just starting at the time, and email marketing was very. Not sophisticated as well. And sort of the fundamental building blocks of any commerce business hadn't really been flushed out yet. And it was an opportunity.

04:04
David Fudge
We were working with a ton of really smart people and we took advantage of a lot of. A lot of those opportunities early on. So were one of the first brands to advertise on Facebook and you would see the numbers immediately every single day and see the growth. And were in many ways, like rebels trying a lot of. We weren't afraid to try anything. And a lot of the men's fashion brands out there at the time were not focused on e commerce at all. Their websites were bad experiences and they didn't really take us seriously. And that was kind of a recipe for the magic of how successful bonobos ended up being.

04:43
Daniel Scharff
I love to hear that. One of my most interesting and favorite friends from business school when I graduated in 2009, went to Bonobos, Craig Elbert. And just of all the people in my class was really just somebody I think you might put in that category of like, rebel, but not in a, like, bad behavior way. And just a really free creative thinker. One of the funniest people on the planet, I think. And it was interesting that he was going there. I think it was 2009, like mid recession, people were doing different kind of jobs, but that was not the world of startups that we saw kind of afterwards. So, I mean, are there a lot of interesting people like you and him there is it. Was it more like corporate culture or what was it like?

05:24
David Fudge
It's so funny. I don't know if we spoke about this. Craig was my boss there. So a friend of mine that I'd met when I was at Esquire brought me over to Bonobos. I didn't think I was interviewing at the time, but I got to meet Andy and they offered me a job pretty much immediately. He ended up leaving within I think six or eight months. And then Andy split up Brand and performance marketing. And Craig had like a finance background and I think at the time was the finance director and he make the head of marketing and he oversaw performance and I reported to him and oversaw brand.

05:57
David Fudge
But yeah, I think there's four or five of us from that time at Bonobos that have gone on to start CPG brands which is funny that went from apparel to cpg, but I guess it just worked out that way.

06:09
Daniel Scharff
Yeah. And then Craig who then started care of which then he sold to J and J, although I think he's still there. But that's what I would assume is like from such a pioneering brand like that a lot of the people who made that happen really learned it and went and applied it a bunch of other places. So which brings us to Aplos. So take me through a little tasting here. I'm very well set up here in my studio. I've got some lovely bottles of Aplos right here. I've got the calm, I've got the ease. And then I also have the RTDs here which are very beautiful. So I've got my Mandora Negroni. I've got the Ume Spritz, I've got the Cola Fashioned as well. I don't have the chili one with me because I am a wuss and I don't like spicy stuff.

06:55
Daniel Scharff
But take me through some of the other stuff. What the experience is going to be like for somebody drinking these.

07:00
David Fudge
Yeah, sure. So our vision with Apple's is to really build the bar of the future and to create functional non alcoholic spirits and cocktails that give you everything you like about the drinking experience. But take out the hangover and so they're better for you. The spirits are very low in calorie, there's no sugar. The cocktails are made with our spirits and we have sort of two lanes of spirits and cocktails. And the reason behind that is cuz we drink really for two main reasons. We're either stressed or we want to have fun. And so we have functional packs that map to those main occasions of why we drink and when we drink. So Aplo's calm and ease are for that relax and unwind occasion, and Apple's Arise is for that social kind of upper occasion.

07:46
David Fudge
Now I will take a step back and say I'm not. I don't come from a beverage background. And my co founder, Emily, we actually met at Bonobos, she doesn't either. And so we knew that the product had to come first and we had to have great product. And so we interviewed dozens of people in the drinks industry, mixologists. And we ended up bringing on someone named Lynette Marrero, who did the masterclass for mixology. She created Speed Rack, which is the world's largest female only bartending competition. James Beard honoree, really well respected in the industry, to serve as our liquid creative director and master mixologist.

08:24
David Fudge
And so we wanted something that could stand up as a lead spirit in a cocktail, have that same depth and complexity and nuance you would get from a traditional spirit and the versatility where you could make an infinite number of cocktails. And so we had those two lanes of spirits. And then this year, we started launching Ready to Drink cocktails, which are crafted with our spirits. And that's where Lynette really shines. She spent decades behind the bar and building bar programs for some of the best restaurants and bars in the world. And so we've had a lot of fun with that. We've launched four this year.

09:00
Daniel Scharff
That is amazing. I know Lynette. She is a pro. She literally does the masterclass for spirits as well. If you know that, like, app masterclass. If you want to go in there and learn about spirits, you can spend some time with her on there. And I know she's done tons of really epic projects, right? Like the one with JLo. Yeah. She was on a program that I did called Reality Israel with a bunch of really epic food and beverage people. So I got to spend some time with her there. I definitely am familiar with her skill set, so that's awesome. Okay, so you've started with the spirit, right, which comes in these very cool craft bottles, and then subsequently went into rtds using the spirit and then other stuff in here.

09:46
Daniel Scharff
And can you just tell me a little bit about what the experience should be like for people? Like, I notice on the bottle, for example, it seems honestly like it's handwritten, like the batch number and bottle number on every one of these. The bottle is just, like, very deluxe, but, you know, it has a really substantial feel. Where if I feel like if I were in a like Harry Potter type pub there, it'd be like a kind of bottle in there, but updated to also be pretty modern. But it just feels like what I'm about to drink is extremely craft. Is that kind of is. Is that in line or what do you hope people experience with. With the spirit line?

10:27
David Fudge
Yeah, exactly. I mean, I think one of the big insights for creating appalos was In New York for 11 years and it's very common after work or on the weekend to just stumble into a great bar and get a cocktail. And I always viewed it as a small luxury, right? Where the experience of sitting down, ordering something and someone making it in front of you and the craft and care that goes into that, but also the presentation of the glass and the garnish. And when I would ask for something non alcohol, I would always either get an eye roll, an offer of a sugary quote unquote mocktail, a soda. And so it felt like there was an opportunity for people who maybe don't want to drink in certain occasions for whatever reason. Why can't they be a part of this experience?

11:12
David Fudge
And so we really wanted to elevate the non alky experience to the same level of the world's best traditional spirits and cocktails. And so that was a big goal with us, with Lynette, as were developing the product. The other thing I will say is these aren't proxy spirits. So you see some brands out there that are creating non elk gins, tequilas, vodkas, things like that. That's not what we're doing. We're trying to leverage the craft and expertise and history and heritage of great cocktail making to create something new. Because we view the bar of the future as five, ten years from now. Going into a bar and really having maybe 20, 25% of the options being non alk.

11:52
David Fudge
We also wanted people to build brand equity in the liquid flavor so that over time people understood, oh, that's applos, not like, oh, that could be a gin. But really understand and recognize our flavor profiles. Now, it's very difficult to create a spirit when you're not doing a proxy. And you want it to have the versatility, the complexity, the length, the bite, that cooling after effect that you get from a traditional spirit. It's very nuanced how to build how the flavors build in a cocktail and how it has some length to it and sophistication. It took us, I think, over 60 iterations for the first product. Took us about a year and a half to get to a point where we felt confident we only launched with one skew. We've added two other spirits, but we've been around since late 2020, really early 2021.

12:43
David Fudge
And so we designed these spirits. They felt familiar, but new. So you drink them just like you would any traditional spirits. So you can drink them neat, on the rocks or mix them in an infinite number of cocktails. It's roughly a shot size. So 2 ounces is our suggested serve. And we wanted it, like I said, to feel familiar so that people weren't having to learn a different experience to enjoy these products. Now the relaxin and wine products ease and calm or more herbaceous. They are more gin like, whereas A Rise has agave, lemon, verbena and a black sarawak pepper. So it's more savory, it's more tequila like. But again, they're not proxies. And so that was our approach of building the spirits to create something familiar but unique and create something that wasn't reinventing how you create a cocktail.

13:43
Daniel Scharff
So you were largely ahead of the huge shift that we've seen in non elk behavior from consumers. I think you could look back and say, okay, there was seedlip, obviously that had a pretty big exit and created a lot of the appetite from, let's say, big beverage companies for stuff that could be non out but still have a pretty high price point and still appeal to consumers and have really high level marketing on it also. But you couldn't possibly have predicted what was going to happen in the last couple years, which is just hordes and hordes of consumers deciding, hey, I'm going to drink less. Right. And especially the younger generation, a lot of them just not drinking at all.

14:24
Daniel Scharff
And plenty of my friends and if I have a party in la, literally half of the people are not going to be drinking at it. And I have to make sure I have tons of non alk options for all of them to be happy because they still want to have fun. So how do you see it evolving now and what's it like for that to catch up to you where you've been developing these products, waiting for them?

14:44
David Fudge
Yeah, I mean, I still think we're in early innings. Right. If you look at a lot of the major retailers and honestly a lot of the bars and restaurant hospitality groups, hotel groups nationally and internationally, the UK is still ahead of the US even though it's much smaller in terms of the size of the non elk market. So we still are in early innings. I think you and I know a lot about it because we're in the industry, right? We're in the CPG industry. And so what we're seeing now is next year a lot of the national retailers are really maturing their sets in the NA category, which again to pull back is segmented just like traditional alcohol. So beer, wine and spirits and the emerging category of RTD cocktails, which is also very fast growing on the alcohol side.

15:34
David Fudge
And so I think as more products start to show up on shelves in retailers and on menus in bars and restaurants and it becomes table stakes, it's just going to be, it's going to continue to snowball. Right. And so I think that we're continuing to head down a path which I view as really sort of the next phase of this 15, 20 year macro wellness trend that has hit every single category. I mean it's fashion. With the rise of athleisure, it's hit all the major food categories and beverage categories as well. And so I really think in the next year to 18 months you're going to start to see non alk much more on menus and you're going to see more mature shelf sets at retail that are specifically defined and segmented within the category for beer, wine and spirits.

16:32
Daniel Scharff
I agree with you 100%. I think I also probably am a little bit biased or I feel it more than everybody else because I lived in California up until four months ago and that's, I mean over indexes hugely on people who don't drink, who go do ice plunges instead of going to bars and like sound baths. And so yeah, I definitely see it there. But I mean, yeah, it's going to come everywhere, especially just the high percentage of Gen Z that we see not drinking as much. So then another question I have for you, which is, okay, that generation, they go to a party and they're not going to drink. They're looking for what they want to drink that isn't alcoholic. Let's say there are options. You have like kind of spirits and RTD's.

17:17
Daniel Scharff
And then you also have other things that aren't alcoholic but aren't marketed as, let's say alk alternatives. You have like poppy soda, you have a juice. What's going to make them pick something like a spirit, like a non alka spirit over another drink that might be flavorful or just a sparkling water or something like that. How do they make that decision?

17:40
David Fudge
Yeah, I mean it is about where it's merchandised and where it's placed on a menu. Right. And I think that the consumer is ahead of a lot of the buyers across both on and off premise. And so you see some grocery stores, some retail chains where Olipop is merchandised on the same shelf as some of the non ALK RTD's which is confusing for customers. It's really important that customers understand where and how you fit in their lives. And so we always advocate in retail to be merchandise next to the traditional spirits with our spirits and to be merchandise next to the alcoholic RTD cocktails with our cocktails. So I want to sit next to the kettle one and soda at Whole Foods. I don't want to sit to next to, no offense to Poppy and Ollie Pop because it's a different occasion.

18:35
David Fudge
And when someone is going into a retail store and buying something for a nice meal, they're looking for a great bottle of wine or a great spirit or wanting to take a gift to a friend's house. It's really important where you sit in the store. And then similarly you see some bar directors and national hospitality groups, hotel groups unsure where to put Nao cocktails on the menu. We actually advocate putting them in a cocktail traditional cocktail menu and similar to how you see gluten free or dairy free sort of noted on the menu to actually note the ABV of the cocktail. Now we're not there yet, that's a little bit more of a challenging thing. We're happy to at least be in a non out cocktail section.

19:21
David Fudge
But often some of our for example RTD cocktails have been merchandised alongside sodas which we think is confusing for the customer. But these things are starting to change and you're seeing a lot of these national groups really rethink not only the retail sets but also you're seeing a lot of calls and RPs for national hospitality groups and hotel chains that are starting to build their programs around nft.

19:50
Daniel Scharff
Yeah, it's interesting to think about. I remember being in Erewhon when I was demoing right next to the front cooler beverage set and this was, I don't know, two years ago or something and just watching a woman come up and they had little saints on the cooler there and she just cleared like 20 of them off into her cart. I just was, because I know the brand and they actually used to be across the street from us in Santa Monica. And I was just like looking at her doing this like where are you going with all those little saints? Like what's going on? I'm like, okay, she's going to a Party or she's having a party and so she'll be. It's like a party. And so she's stocked up with these non al cocktail mixers rather than like.

20:32
Daniel Scharff
Yeah, I mean, a poppy might fulfill that occasion, but you're probably not going to roll into a party where you want to bring something with you to contribute to the party with just something like a poppy. Right. You're probably. It's more likely to bring something that has a festive flair to it or functional, something like that where like, you're like it says on the back of your can, liberate yourself from usefulness with this lovely Apple's ume spritz. So just something that feels a little bit more special.

21:00
David Fudge
Yeah, it's typically drinking a cocktail is a more ceremonious occasion. Or think about often that relax and wine occasion during the week when people want a glass of wine as that sort of transition from work to play. But when you're going to a friend's place, you want something that feels a little bit more special. And so there are fewer of the occasions than there are the soda occasion. But yeah, I mean, I think that the intention is to elevate the experience and to give people a sophisticated option that isn't just a Diet Coke.

21:34
Daniel Scharff
Okay. So that all makes sense to me. But David, I brought you here because I wanted to pick your brain on e comm strategy. So let's get into it, man. Let's do it. Let's unpack all of the good stuff. Because even so, let's say early days, you just had the one sku, but I know you were doing good business with just that one sku, even without people getting to try it in tons of demos in stores. You knew how to do this just from day one. So can you just talk me through your E comm strategy? How did you blast off and already have a really effective machine to acquire consumers and ship expensive product places, but still be making money doing that and growing your brand even as you evolved the SKU portfolio and all of that?

22:17
David Fudge
Yeah, well, I think the benefit of the launching with the spirit, aside from being a big part of our strategy of wanting to elevate the cocktail occasion and non alk was we could be a lower volume, higher margin business. And it is a challenging channel for ready to drink because it's just sort of the logistics and the how heavy liquid is. Right. And how much it costs to ship something relative to what people expect to pay for it. Right. And so but I love E Comm and we always wanted to launch an E Comm and direct to consumer because you can control the experience more.

22:59
David Fudge
I'm in a category where the incumbents can't have direct relationships with their consumers because of the three tier system in the US So for those of you who don't know, the alcohol brands have to go through devop distributors and in some states it's even there could be a fourth tier. They can't sell directly to the consumer. And so I love E Comm because it gives you direct access to the consumer. It's really easy or easier for me at least to test product market fit. And that first year for us was about really understanding the core unit economics of the business. Like what is it cost us to acquire a customer, what's the repeat rate, what's the average order value, like is their product market fit.

23:45
David Fudge
And I think we also wanted to control the experience of our site and what our brand looked like and that was a big part of it as well. But even though I learned so much at Bonobos, the thing about Ecom is what worked yesterday doesn't work tomorrow. And so it's really about having the right mindset because I could give you some tips today that are going to be irrelevant in a couple of months. And that's just the nature of how fast this industry works and also quite frankly how fast a lot of the major advertising platforms change their algorithms to optimize, like Google and Meta and TikTok. So I think you have to be really entrepreneurial and scrappy and curious and move quickly when you want to launch something in E Comm because like I said works yesterday won't work tomorrow.

24:39
Daniel Scharff
Okay, so if those tips are going to become irrelevant, then you don't have to worry about your competitors hearing them on here and stealing them. So can you just give me a couple examples of what some of those tips are, things that you have learned recently that have really helped you be effective on E commerce?

24:54
David Fudge
Yeah, I think for us like really taking the time to really solidify our brand strategy upfront. Like we're not competing on price convenience, we're competing on desirability. Right. And so in the quality of our product. So we really took the time to invest in the brand and the experience and the packaging and the liquid obviously. And so that is number one, like if your product isn't great, then it's a non starter. I think the other big thing that we did that I would advise anyone to do even today is pick a niche and go really deep in a niche. I think you can't be all things to all people. Like I'd rather if everyone likes you, nobody loves you, right? And so I'd rather have 10,000 crazy fans than a hundred thousand or a million that buy from me once and never come back.

25:45
David Fudge
And so you have to have a point of view, particularly in the media environment we're in today, you have to get people's attention and to have a strong point of view. And it's important that you sort of have that strong sense of self early on. But more than that, when we did our influencer seating at the start, we picked a niche of consumer and we over indexed and influencers in that niche. And the reason we did that is because we had a big background, my co founder and I in fashion. And so we really over index in New York fashion community people. And the reason we did that is because the person that's following a guy named Patrick in New York is likely following six to 10 other people in that niche.

26:33
David Fudge
And so people see it multiple times and they assume it's bigger than it is. And the frequency is really important and you have to be really efficient early on. And so it almost doesn't even matter what the niche is. I mean obviously it needs to align with your brand and your product. But like really picking a niche and going hard versus like I chatted with a few other founders before they've launched and they're like, I'm getting gifting 50 people in fitness and 50 people here and 50 people there. And I'm like, that is going to be less effective in my opinion because you want to saturate one market versus in one consumer cohort versus trying to spray and pray and reach everyone. It's just not going to work when you have a limited budget and limited resources.

27:17
Daniel Scharff
That is very interesting. So really concentrating a lot of your marketing efforts around one niche and it might be something unexpected as well, but just that really plays to the strengths of the founders, right? And then just going for a penetration strategy there to then start building that core group of people who are going to know your brand well, talk about it as if it were already a big brand, not some scrappy upstart from some really strong entrepreneurs. But like no, this thing is big. You know, everybody's doing it and create interest then from that way to come and order from you directly. So tell me a little bit more about the branding because you are definitely a brand guy and this is a very advanced brand.

28:01
Daniel Scharff
I would say if I look at this, compared to most beverage type startups, I would say this is a very sophisticated brand and it always was on day one, even though you've evolved, the liquid inside the branding was always just extremely strong. So how did you create the branding and how were you thinking about the branding specifically for an E. Comm strategy?

28:24
David Fudge
Yeah, I mean a lot of this is putting a stake in the ground and that personal taste. Right. So we always wanted appos to feel like a fashion brand made a spirit. I really love brands that make you dream, that show more than tell. And for a long time there was a very overt kind of, I would say almost like business schooly approach to introducing a brand where it was like, I have this problem and like I went to solve it. Very founder driven brands. We intentionally didn't want the brand to be founder driven from the start. We wanted it to feel really aspirational and we also wanted to do something that felt really different than traditional, quote unquote, spirit advertising.

29:09
David Fudge
So if you look at brands like Grey Goose or Kettle one, any of those traditional sort of luxury spirit brands to be somewhat formulaic in the creative. And so we wanted something that felt interesting and more immersive and kind of like I said, shows more than tells. And so we worked early on, like we spoke to a few people about building the brand and we worked with this woman, Sarah Kissel, who has a small agency in LA named Pure Magenta. And she just has an incredible taste level but also experience in a lot of experience in building brands and sort of the DNA behind the brands. We also brought in a strategist, one who helped build the Aesop brand and was there for many years in house. And so we invested in building the brand strategy from the start.

30:02
David Fudge
I think a lot of people overlook that and I in my career have had challenges in that regard with other founders where they don't understand the value of brand. And many people think it's the logo and the colors and the imagery. It's much more than that. I think of brands as multidimensional as people, right? Like you have a certain tone of voice, you have a look to you have certain values. And if you don't really know those things up front, then if you're doing things as you go, people inherently sense whether or not something is authentic or not. And people will perceive that, like, hey, these things all don't go together. And it's because maybe it hasn't been thought out of the full kind of breadth of the brand.

30:47
David Fudge
But our intention was to launch apples and it not feel overly trendy for it to feel like something that could stand the test of time and felt modern, but also not to sort of at the time, like very sort of millennial. Right. We've gone beyond that now. But something that felt like, oh, this is like a real mature brand if you came to our site. Not something that's like a tiny little startup. That was our intention.

31:15
Daniel Scharff
So looking at your Instagram and some of the visuals that you guys have, that makes sense to me because it looks, it's not like so product forward. It's more like, here is how app fits into the life of an interesting person who has very good taste and interesting friends. Well, what do you think?

31:35
David Fudge
That's very kind of you to say. I think, yeah, I mean, I think we want applos to, like I said, elevate the. The experience of having something non alcoholic. And visually, it is a brand. Aplos is a Greek word. It means simple. And our brand is really about an appreciation of celebrating the simple things in life, which we think are the things that often bring the most substance to our lives. And so in a world that is sort of obsessed with optimization and being constantly connected, we wanted app to be a brand that was about appreciating those simple things, doing things with your hands, getting offline, creating products that help people connect. And so that's what we try and communicate and evoke with our communications, both visually and with content and copy.

32:25
Daniel Scharff
Okay, that's cool. And now I can see because, yeah, I'm just looking through the Instagram and I can see how that explains a lot of the stuff that I'm seeing here. There's like analog clock with some chess pieces on top. Right. And then there's an old rotary phone that's like designed for it, but it's a rotary phone. And then somebody winding a watch, a charcuterie board, and very simple, like you're saying type imagery and then you have applos in them, but not in an in your face kind of way, but the whole thing. Yeah. Even when you have like the people who seem kind of like cool and interesting, but they're doing simple things, you know, they're just kind of like enjoying themselves and their friends or just taking kind of creative experiences. So that makes sense. Thank you for explaining that to me.

33:10
Daniel Scharff
Now I understand why the Instagram looks this way.

33:12
David Fudge
Yeah. Or some of that content you're referencing as our teaser content for our Negroni that just launched. And so the campaign we did for, we actually shot our full collection this Fall, we'll begin rolling out. And what we tried to do with that shoot was we called it a collection of curiosities. And the idea was to represent different types of Personas and people with each different product. And the idea was often the things that bring us joy are little memories and like objects that we collect over time. And so each product was meant to be representative of a diverse set of personalities. And so then a Groni was more of a writer kind of. I forget the exact. I think Joan Didion might have been the inspiration for it, but that was kind of where that came from.

34:00
Daniel Scharff
That's cool. Well, I encourage anybody to check them out on Instagram at Applos World. It's very cool. And you'll see what I'm talking about here. And you can tell me if you see what I see or you see something very different, if you know more about this than I do, which is not hard. Okay, so getting back to just some more specific E comm strategy, like what would you tell some brands then today? Like, hey, I'm starting. I feel like I have a good brand and I want to hit E comm pretty hard. Like what's some of the highest ROI stuff I can do in addition to some of this, say niche influencer seating strategy?

34:36
David Fudge
Yeah, I mean the gifting really does show a return. So that is something I would definitely invest in. I mean there's the. The sort of basic building blocks of E commerce that most people know. Right. So Shopify, Klaviyo, you want an SMS platform, you want a reviews platform. A lot of those kind of things I think of as like basic building blocks. I think you can't over estimate the power of creative and so you really need to be testing a lot of different things and it has to be creative that's optimized for the platform and it's constantly evolving. Right. So something that works on TikTok is not going to necessarily work on another channel.

35:17
David Fudge
And so the one thing I would encourage anyone that's interested in Ecom or starting a business now is really about sort of being super curious about AI products because there's so many coming out every single day. Specific to Creative, there's a new tool called Butter that allows you to root really pretty seamlessly, create like dozens and dozens of iterations of creative for testing with your assets in a much more seamless way than it would have just taken days and days of time before. But also just these generative models and using them as thought partners. I don't think you can think of them as replacing people on your team, but as an idea generator and thought partners, they're really powerful.

36:09
David Fudge
And so I really think this is obviously, as everyone is talking about in technology, the next wave, but the ad tech tools that are coming out, that are AI enabled, the customer service tools that are coming out are all super interesting. And there's one every week, if not every day that comes out. And So I think 2025 is going to be where some of them really break out and become really powerful tools. But in that sense, I think it's a really exciting time and could be a time like early bonobos, where is the beginning of something that nobody else was really using yet. And so you have to be really curious and like looking into that stuff every single day to find the next gem. I mean, TikTok has been that as well for a while.

37:00
David Fudge
I mean, we'll see if it gets banned actually, but. But still, like producing incredible results for people. And most people are not doing TikTok ads effectively yet.

37:09
Daniel Scharff
Yeah, that's totally true. Getting back to just that gifting point one thing, let me ask you this kind of candidly, like anyone who doesn't know David is a lovely guy. He's the kind of guy who people would want to do nice things for. If you, like, are gifting to your friends in the fashion world, it doesn't surprise me at all that they would be like, let's help David. He's a great dude, very likable guy. Let's support him. Do you feel like that strategy is going to work similarly for most founders if they have a good outreach strategy, or do you think it requires the kind of relationships that you've built over time for people to be like, yeah, I'm going to, like, use my resources and help this guy.

37:45
David Fudge
I think early on it was maybe a dozen, a couple dozen people that I knew directly that would sure help us out. But now I think building the foundation of the brand and having people Instagram is a point of discovery for a lot of people. So they often go to your Instagram before they go to your website or your TikTok or something like that. And so making sure that you have a presence there that feels fully representative of your brand. And honestly, were gifting for dry January, hundreds of people, and it really is just us DMing people saying, hey, we'd like to send you something. Are you interested? And they say yes or no.

38:21
David Fudge
And we get their address and we send it to them and we send them a nice package and we hand write a note and it's not as overly produced as you probably think it is. And I don't know, 99% of the people that we're going, we're gifting personally. So yeah, I think that it just takes dming someone and saying, hey, I'm doing this thing. Would you be interested if I send you something? And I think you can't put a lot of pressure on them posting it. Right? Like, we assume like 30 to 35% of people are actually going to post it. We don't write on the note like, hey, can you post this? Because we wanted to feel authentic. If people like the product, then they will share it. Or if they like what they we send them. Right?

39:04
David Fudge
We often send them little gifts or something that feels a little bit more special. And so you do need to think outside of the box because these content creators are getting hundreds of things every month and so early on, definitely leverage some relationships. But. But even to this day, like, we're constantly DMing people being like, hey, we like your vibe, we like what you're doing. Like, do you mind if we send you something? And we got a lot of no's. People only see the positive stuff. But we get hundreds if not thousands of people who just don't respond to us or explicitly say no. And I think that's part of entrepreneurship. You have to put yourself out there and it's constantly pitching things and getting a lot of rejections and being okay with that and learning from it, moving on.

39:54
Daniel Scharff
That is very true. And I also wonder if there's something just about how nice the package is that's going to come because I got a sample set here and it's just very nice. You're like, whoa, this is a very high value thing that they've sent me. And let's say, okay, yeah, some people are going to say no because they're like, no. I just do things like, I get paid to do this for a living. You're not just going to send me something. That means you should be offering to pay me already for something even though you don't know me.

40:20
Daniel Scharff
But if you send them something this nice, it makes me think because like, yeah, if I, okay, if I start like chips brand and I send an influencer a couple bags of chips, I would bet that they are less likely to post about it than if I send them something that just seems like super nice gift with these beautiful bottles, thoughtfully done with a postcard. So it doesn't surprise me that you would get A pretty good percentage of them sharing. Even people who have pretty sizable followings. And obviously you guys go out of your way to make sure it's special and little gifts and stuff like that. I bet that's a pretty high return for you.

40:55
David Fudge
Yeah, absolutely it is.

40:58
Daniel Scharff
So, okay, now we've talked about some of your high ROI tactics, but I'm sure you've made some mistakes here or at Bonovo's or wherever. So what are some low ROI tactics that you learned from like. Well, that didn't work. I wish we had that one back. Anything that you can cite?

41:16
David Fudge
Yeah, there's a few things. So we did earlier this year a subscription quiz kind of inspired by Noom. I don't know if you know Noom, where we thought that would sort of increase our lead generation for subscription and we definitely learned a bunch of things and are optimizing it. But that was a fairly low ROI initially. And I also think getting into channels before you're ready. So we tested in 2023, connect to TV and I think if you don't have the right creative and you're not setting up the test properly, it's just frankly a waste of time and waste of money. And so those are a couple of things that initially come to mind. Yeah.

42:06
David Fudge
And then I think you try a lot of IRL stuff as a brand like ours, as I'm sure you know, because it is about getting people to try the product. Right. And I think that is harder to measure the ROI sometimes. And so I think we used to do some sponsorship opportunities. We really don't do that anymore. We gift products when we feel like it's a brand relevant event or occasion. But often we find that the ROI isn't there when I'm sure you've seen because you've helmed a beverage brand yourself, like opportunities to sponsor things and they charge you sizable amounts of money and then it's really just to offset their costs and you're not necessarily getting an ROI from it.

42:50
Daniel Scharff
And they look cool because they have cool product there. And for anybody who's wondering, we do let people in the startup CPG channel offer opportunities for beverages to sample, but not if they are paid. So just something that we try to do to help everybody out there because, oh, there are a lot of people who would love for beverages to pay to be the cool ones giving out free product for your event. We don't really love to see that. So. Okay, so that's a, that's cool to know. And can you just tell me a little bit more about the connected tv. So that was you running ads through some of the, like, TV ad platforms, looking for specific audiences, and you just felt like you didn't have the right creative.

43:31
David Fudge
Yeah. So you can run ads on connected TV. So like any of the streaming apps, YouTube, things like that, and you can do it almost like programmatic. So we actually at Bonobos were very early in programmatic advertising, which essentially is a network that you can target specific types of consumers. And so you can do that with connected tv. So like, if you're watching Hulu or you're watching Max or even Netflix now has ads, you can run ads on these platforms targeting specific types of consumers. And it's really effective for some brands and when you're at a certain scale. But it is all about the creative. And you really have to invest in the right creative and test it properly and set up the test properly. I mean, I learned this Bonobos too.

44:26
David Fudge
Like the first photo shoot that we did, that was a lifestyle shoot with Ben Watts there. Andy loved the imagery so much, he wanted to try a catalog. Let me tell you, never try and retrofit a photo shoot images into a catalog. You have to shoot for a catalog. Right. You need to shoot for the channel. And so that was a big learning for us with connected tv as we had some image or some video assets that we sort of recut in a way that we felt like would work for connected tv. And. And it just didn't because it wasn't optimized for that channel.

44:59
Daniel Scharff
How would you optimize something for a tv? Give me a sense of what could be great creative.

45:03
David Fudge
Yeah, it depends on the brand and the product. Right. But I think that when you're introducing a product in a beverage, you need to show people consuming it where they consume it. You need to be a little bit more explicit with the introduction of the product and what the value proposition is. And I think that if you look on our Instagram, like, our creative can be much more lifestyle in some sense, and that the video content that we tested was more lifestyle and it wasn't, to use another term, maybe like direct response enough, the creative. And that's why there are agencies that specialize in storyboarding and shooting this kind of thing.

45:44
David Fudge
Not that you need to use a big agency, but because I will say, like, particularly on social, a lot of times, the thing that's so crushing for me as someone who really values great creative is often the worst looking creative and the most lo fi is what performs the best.

46:06
Daniel Scharff
It is destined to be so. And yes it will be. You will feel like you're betraying yourself to go with that high ROI one. So. Yeah, but that makes sense if you have like more. Your imagery does feel kind of more subtle and like simple and cool. Whereas if you think about a lot of TV ads and you know, like, hey, you got to hit someone over the head with this, they're probably not even paying attention that much. Right. So okay, that makes a lot of sense to me.

46:33
Daniel Scharff
And so you mentioned also a couple key things that you have to have as an E comm brand, like reviews platform, some other stuff I wonder, can you just list out some of the vendors that you like for these different areas or top people that you feel like you've worked with that you want to shout out, like what's your tech stack or just a few things you would recommend for somebody just getting like consider these guys or use these guys and you know, don't even question it.

46:59
David Fudge
Yeah. So email. We use Klaviyo SMS as well and Yotpo is a reviews platform I believe a lot of people like Gorgeous as well as one. Shopify obviously is our E commerce platform and we have also had a lot of success with a platform called Fermat which does helps with optimization of acquisition on ads and it sort of streamlines the experience so the consumer doesn't necessarily have to come to your website. It's much fewer clicks and we've had a lot of success with them. So that's definitely one I would shout out. And yeah, again I would mention Butter, the tool I mentioned about creative. We are huge fans of figma. We are just distributed team and so it's just like I'm in it every single day for cross collaboration, for design and comments and it makes our lives so much more efficient.

48:02
David Fudge
And yeah, I mean I think the subscription to ChatGPT is really worth it. We have trained a GPT for applos to with all of our recipes and our content and we use it as a thought partner. Again, you can't really use it as like giving it a prompt and then copying pasting content and then just using it. It never works that way. It sounds like a AI wrote it but for generating ideas or give me four cocktail ideas for this type of occasion if it's already trained on all of our cocktails. And we write these really beautiful stories about each cocktail, about when to drink it and the experience, the sort of mood and vibe you're in when you want to drink it. It's really Great for things like that.

48:49
David Fudge
So those are the things that I would say are most top of mind for me.

48:52
Daniel Scharff
Okay, that's super helpful. I'm sure everybody is googling any of those ones that they don't know already. And follow up on the SMS versus email. What kind of success do you have with SMS as compared to email? How do you look at it? Do you, do you feel like you're under invested in SMS or over invested?

49:10
David Fudge
Yeah, I mean we're really selective with when we use SMS because I think it's. You can do less frequent communication because people just opt out and unsubscribe. It's really great for timely things and promos or product launches. If you want people to be the first to hear about a product launch to sign up to your SMS program and we use it for order status things, delivery notifications, things like that, and subscription notifications, those are sort of table stakes for your current customers. But I think for acquiring customers you could send a lot of emails, particularly in a month like November and December, really email heavy months. But if you're sending an SMS every day or even every other day or maybe even two or three times a week, your opt out rate is going to be very high.

50:00
David Fudge
And so you really just have to test what works for you. So, so we're big proponents of creating different segments as well. Your most engaged people you can really see who responds to different types of content. So these people only typically respond to promos, but these people love it when we share recipes. So creating segments that identify who's the most likely to engage with the type of content you're sending is really smart both across email and sms.

50:30
Daniel Scharff
Okay, so David, last question for you. Let's say somebody out there is listening and they're really motivated to start their own e comm brand but they're not ready to do it yet. What would you say? Like hey, over the next couple years just try to learn more about X, Y and Z and then you'll be in a really good position to take whatever technology's out there at that point and build a great brand.

50:51
David Fudge
Yeah, I think there's a few things I would say if you're really young in your career, I do think working for someone else that's kind of a young hot startup, like a mid stage startup probably can be a really valuable experience. I know it was for me and just surrounding yourself with as many people as possible that you can learn from finding a community. There's so many slack communities, discord communities, obviously there's startup cpg be active in those communities. And then I think the number one thing, if you're young and early in your career, you. You haven't been in E Comm and you want to get into it, I think is really immersing yourself in AI tools and becoming a student of that and learning it as much as possible. Listen to the Pivot podcast a lot.

51:39
David Fudge
My co founder went to Stern and was a student of Scott Galloway and he often says AI is not going to take your job. The person who knows how to use AI is going to take your job. And so I think learn as much as you can in that world because it will get you ahead for sure.

51:58
Daniel Scharff
And how so to learn about AI, I'm one of those people who probably needs to learn about it. So what are the resources that you use other than getting the subscription for ChatGPT and butter?

52:09
David Fudge
I mean, I listen to podcasts like Pivot with Kara Swisher and Scott Galloway. There are hundreds and hundreds if not thousands of tech podcasts I've listened to Hard for It from the New York Times as well. Listening to those kind of things to really understand what's happening and then, you know, maybe tapping into things like Brand Innovators which does conferences across New York and LA and Miami of brands that are doing really interesting stuff, panels, things like that. And then media outlets, learning as much as possible from some of the tech outlets. And nowadays it's about finding specific reporters that you really like. A lot of people are doing substacks or Patreon or things like that. Casey Newton from the Hard Fork New York Times podcast has his own called Platformer which is really interesting. Believe it's on Substack, maybe it's on Patreon.

53:06
David Fudge
Just Google it and you will find it. Or we'll put it in the show notes or something. I'll share it with you, Daniel. But yeah, I mean I think those are the things I would recommend off the top of my head.

53:18
Daniel Scharff
That's fantastic. Okay, I hope everybody is jotting those things down and already getting started on their AI journey. I will see you on the road as well. I need to get smart on that area also. Okay, David, my friend, thank you so much. I learned a ton on this podcast episode. I'm sure everybody else did as well. If you want to follow along their journey, it's Oplos World on the web, on Instagram, David Fudge on LinkedIn and definitely try their product out if you haven't already. You will probably experience the same thing. I did, which is just really enjoying the craft, the deeply craft experience of getting to try an applos. So David, thank you so much, my friend.

53:58
David Fudge
Yeah, thanks so much, Daniel. I really appreciate it. Good to see you. Let's get a drink with Craig in New York soon.

54:04
Daniel Scharff
Let's do it. We'll get an applos.

54:05
David Fudge
All right, sounds good. Bye.

54:09
Speaker 3
All right, everybody, thank you so much for listening. If you enjoyed the podcast today, it would really help us out if you can leave a five star review on Apple Podcasts or Spotify. I am Daniel Scharf. I'm the host and founder of Startup cpg. Please feel free to reach out or add me on LinkedIn. If you're a potential sponsor that would like to appear on the podcast, please email partnershipstartupcpg.com and reminder to all of you out there, we would love to have you join the community. You can sign up at our website startupcpg.com to learn about our webinars events and Slack channel. If you enjoyed today's music, you can check out my band. It's the Super Fantastics on Spotify Music. On behalf of the entire Startup CPG team, thank you so much for listening and your support. See you next time.