EPISODE 2: BRAZE AND CARE/OF

TRANSCRIPT

A: So this is Alex Levin and I'm here from Regal.io, the second episode of the Future of B2C Sales and Marketing. And I'm here with a few friends, so I wanna start with introductions and then we'll jump into questions. Craig and I originally met in 2015 or 2016 when he had just left Bonobos and was about to start Care/of.

He's now gone through the full cycle and sold the company. So excited to have you here, Craig. 

C: Yes, thanks for having me, Alex. 

A: And Mark started Braze in 2008 and again, now has gone through the full cycle and Braze is now a public company and he's gone on now to start his own fund called MXV Capital, and he started a new B2B SaaS company as well.

M: Thanks for having, for being here, super excited to be here, Alex. Thank you. 

A: Great. So maybe to start I, I often like to go through people's history and how they got here. It is very hard to be a founder. You guys know better than anybody. So what in the world possessed you guys originally to even start a company and go on this journey?

So I guess Mark it was 2008 the economy was not in the best of shape. Like, why did you guys start what was then called app? 

M: I think for me I'm just a problem solver to begin with. I, when Steve Jobs was talking about the iPhone and launching the iPhone I just saw a huge opportunity to create software that kind of bridges the gap between the users of apps one day and that whole mobile ecosystem and brands that are entering the ecosystem.

Honestly, I didn't know what I was building at the time. I just wanted to build that bridge. I didn't know what I was gonna build it out of or how I was gonna build. But I'm just like a problem solver. When I see an opportunity with something, I just dive in all in. So we'll get into a little more about that, but that's how it started for me.

A: And I know so we originally met Craig through juxtapose. So I know you, had started in a slightly different way where you had been working a little bit with a venture studio. So how did the founding journey work for. 

C: Yeah I think I initially back in the day, worked in finance and didn't find for me that wasn't personally rewarding.

I wanted, I like creating things. Grew up writing and making music and just generally like the feeling of, creating something. I'd had some business ideas that I wanted to start. Maybe when I was in my twenties, but frankly couldn't figure out how to like, put one foot in front of the other and get it off the ground.

And so then after business school, I went to Bonobos the direct consumer men's apparel business when there was about 10 people there. So it was early stage and. Was there for a number of years initially running finance and then running marketing, and I just learned a bunch from our co-founders there, from Andy, Don and Brian Bailey, of just what it took to actually build a company.

I married that with my passion for wanting to build something myself. And so it took I, think, took a lot of the lessons there. I was there for almost seven years and really took that and felt like, Okay, I have an idea of how I could do this now. Worked with juxtapose the startup studio in terms of landing on an idea and, taking it from there.

But always, liked the idea of creating something I, think I just took needed. Guidance in terms of how to put one foot, one foot in front of the other, frankly. Yeah. 

A: When, friends of yours come to you guys today and ask if they should become founders, if they should start a company is it a resounding yes.

Do you suggest that they go and do it or do you suggest the the venture studio model, for instance, as a way of getting started? I, think for me, I. 

C: I'd say it depends on, it all depends on the individual, where they are in their life stage, what they wanna get out of their career.

And so much of it is risk appetite. I do think a career for me is a portfolio itself of like portfolio, different bets. And if, someone has, if I see someone who's ready to take that risk and, has a good idea and has the passion and is gonna go after it, I would encourage it. 

At the same time, if I see someone who's maybe stumbled and tried to do it a few times and is fumbling around, I might encourage them to get a solid base. I think it depends on, the person, where they are in their life stage and, how much of an itch they have, at least from my per perspective.

I don't know. Mark, what you think? 

M: Yeah I, think it's, for me it's a hard yes, but slow in terms of what it is and how you get there. Like I. I always think you just jump, right in and then you be slow with the idea and the concept of what you wanna build and don't rush that part of it. But if you really wanna, if they already wanna be an entrepreneur and they're just questioning it, I think the best thing to do is just jump in and see what happens.

But to Craig's point, like really depends on where the person is in their life too. Because it's a lot of grit. It's, hard. It's not easy. And I think that's that I think a lot of people don't appreciate. Like, you said, like I started working on Appboy/Braze thinking and ideating on the idea in 2008, 2009.

It didn't go public until 2021. And it took me like two years myself to figure out what the hell is he doing? And then meeting my founders it's a long process and I think a lot of people that just. Just read about the good things that are happening and they're like, “Oh, that person's so lucky. Look what they did.” 

‍A: So, both of you Yeah. Success stories out of New York and have helped the New York Tech scene enormously. But let's talk about this a little bit. It is a rollercoaster. There are difficult times. Maybe talk about one time where you thought about quitting or where really something terrible happened that really made you question the business that you were in, and how did mentally get yourself out of that and continue the business, obviously to success in the end.

M: So one for me, there's several things. But one, every time we were trying to raise money, no one gave us the time of day, or at least to me. I didn't come, I didn't go to Stanford, I didn't go to Harvard. I didn't go to any of the schools that you would typically see, like the tech ceo.

Come from. And we also then had, we were going out there, we had Kauna who just raised from Sequoia. There were other. CEOs that were starting to come in that I think even it was Kleiner invested in Lean Plum. You had oh man. There's another company, I forgot who it was, but again, we were just the underdogs and nobody was giving us the time of day.

Eventually we raised a million and then it got a bridge, and then for our series A, this is where it got crazy, we had two more weeks of payroll left. And I'm sitting in my office, we have. I wanna say at that time, 18, 20 people. And we had no, no term sheet, every single fund we spoke to, which is no, And it just came down to this one fund. Tom Peterson with Rally Ventures, they just closed their first fund. And things were going good. I'm sitting in my chair in my office, he calls me and I'm like, thinking this is. Calls me and says, “Hey Mark, we're gonna pass”. And my whole heart just dropped.

And I'm sure you guys have had that with fundraising, like you're anticipating some great news and I'm looking in the room like, “Holy cow, what am I gonna do?” Like we only have two weeks of payroll. So on the call I'm like, “Tom, are you in your office?” In SF and I'm in New York and our meat packing and not meat packing our flat, our in Hell's Kitchen office.

He's like “Yeah”. I'm like, “Can I see you tomorrow morning?” Can I just come to your office and we can talk about this? He's Sure. So I just booked a ticket right there. Went to Newark Airport, told my wife, I'm not coming home. I'm going straight to the airport. And I went there and at the end of the day it came down to just evaluation.

He liked the company, he wanted to do it, and we got it done. But that was like the scariest moment for me. And thank God I was in a position where I was able to flow payroll till we closed. Around. So it was pretty wild. But after that, I think for me the hardest part was Mix Panel was all, everything everyone was talking about at that time, and nobody was interested in retention marketing for their brands.

Everybody was just so focused on customer acquisition analytics and we just couldn't get anybody to come buy our product. It took about a couple years for us to get that product market fit or for the product or for the market to really. In our favorite, where you now had acquisition marketing and you're like, “Holy shit, I just spent all this money acquiring these customers, but I'm seeing them all just leave.”

I'm like, What am I doing for retention? So that was a long answer, but it took a while for us to really find our place. I'll stop there and just kind let, 

A: Yeah and, just to say at the end, you ended up going public in 2021. It's now publicly listed business at 3 billion and massively underpriced at that, so you can't comment.

M: No, I think it is too. I don't have any confidential information, but I think it's an incredible company and it's massively underpriced. I think there's a, I think it could be a billion dollar AR business one day. Amazing. 

C: Yeah, I think two, two moments come to mind for me.

One, actually, when I was an early employee at Bonobos and then one, actually one here at care of when I was at Bonobos, I remember I was in charge of finance and so I managed the bank account. Andy, our co-founder, was out fundraising and. Someone on my team cashed or sent out a check that I had not authorized them to send out.

And I realized, like the waterfall impact of, oh no, if we don't get money in the bank by this time we can't pay payroll, and then we can't pay our fulfillment center. And you, just see how the dominoes all start falling over. And I think particularly as an employee, as a founder, Founders often instinctively have to have this feeling, but as an employee you just assumed a company, Oh, this company will exist.

But it's like companies don't have to exist. They can go out of business in a very practical way. And I think that was one where I had the realization that this doesn't just exist because we wanted to, this could go out of business. Thankfully, Andy was a great fundraiser. He got it.

Got some checks closed to everything and we live to find another day. But that was one where I realized existentially that companies had how, practically they'd go outta business at care of yeah, definitely had different stressors at, in the fundraising world. Like I'd make a joke with our team that some companies are good with just in time inventory.

I feel like we'd master just in time capital where we would get capital for it as it's going out. But probably the moment from a mental standpoint I'd it was before we'd launched and I had an amount of seed capital that I was burning through needed to get a launch date.

Again, those two aren't familiar. The product is like a direct to consumer personalized vitamins and supplements. But I didn't have anybody on my team who could really formulate and actually create the product I and. I had recruited someone who I was incredibly excited about, who had great experience, who gave us a clear path towards how we would get launched, and I was just like, “All right, this is it. We've got this guy signed up.” And he called me to tell me that I had him agreed, I had a verbal commitment, and then he got a counter offer and wound up pulling out. And so I was just like, fuck. Like I have no, I have nobody who can create the product. I have no path to launching this business.

And I'd quit my job at Bonobos while wife was pregnant with our first kid. And so this is he had just, my son had just been born and I was just, I think I made a mis like this is a career mistake. Like I can't, like I have no path to launching this business. We're gonna run outta money. I just lost this major recruit and I just remember sitting down in Madison Square Park after, just after one of those fundraise meetings that I knew hadn't gone and, just this real question of like, how is this gonna move forward?

And then thankfully, that person who I recruited put me in touch with two other people who I was able to hire who then helped us create those, create the initial line of vitamins and supplements, Got it off the ground. 

‍A: Who helped, who'd you turn to in that moment?

Was it your wife, was it other people? The company, other founder? 

C: Yeah, I have a co-founder, Akash, So Akash, and I feel like, and he'd co-founded a couple businesses before, whereas I'd been an employee but had never successfully done zero to one. He'd gone through that zero to one stage a few times.

And so I think just that, that was probably my easy answer there. Cause I didn't wanna take something like, Home to my wife, frankly, just stress her out with it. So I shared it with my co-founder, by the way, like a lot of times when a recruit doesn't work out, it's all for the best.

M: I think a lot of like first time founders, they freak out. They're like, What am I gonna do? I was gonna hire this person. I've learned that it's like it's all for the best and it actually works out really well. You don't want anyways. You don't wanna have to bring someone in that was maybe not thinking about it.

Yeah. Like a hundred percent, 110% even though, and you wanna win it because it's like your ego that wants to win and you're like, I wanna get this person. But I've learned just from my experience of building the entire team at BRA and, just we, wanted some people and it just didn't work out.

And it was actually because we didn't hire that person, we were able to get the other people that were, I think a lot. Influential and a lot better fits for the culture of the company and just helps the company grow. Yeah, it's hard to kinda see that. Yeah, it's hard to see it at the moment. It's hard to see it at the moment.

Hopefully these people take stories to heart that there is life. It's the same with investors by the way. It's the same when investors start to cut you off. But it's the same with investors a lot of times, if you want this fund and they don't work out, It's all for the best. Like you'll find you, you want the fund that wants to be there with you.

Not, the ones you're saying. So sorry Alex, what were you saying? 

‍A: Say, I have a rule as my co-founder that if ever anything bad happens, that I know something good is gonna happen. Cause the world has to even out. So I try to stay optimistic that if something very bad happens, something very good is gonna follow.

And yeah, usually that happens over some period of time. For sure. So I want to go back to saying, you were talking about Mark when you were talking about how you saw the transition of marketing teams from being very acquisition focused to adding. More of a retention focused. And I remember the same transition I'd say there was also a big transition from really more of a batch and sending methodology and email to an event based methodology that everyone now has made with this sort of segment coming out and Mparticle coming out. Braze, Iterable, really most B2C companies have switched to that sort of marketing methodology.

So before we go into technology, I wonder how you guys think about structuring a B2C marketing team today? Or what do you see as the most common structure? So like I care/of today, like how do you set up your marketing team? 

C: Yeah, so we have we have I'd say, co-leads. We have a chief customer officer and then a chief revenue officer.

And so the chief customer officer is thinking about where do we want to build the brand in three and how do we drive revenue in. Next 6, 12, 18 months out, how do we want to build a brand? What does brand voice look like? Basically staying close to the customer and filtering the product roadmap through that customer.

And then the chief Revenue Officer sits on top of acquisition and retention and basically has all the lovers. Across acquisition, retention, pricing to, basically say how do we hit the plan that we've got in front of us over the next 60 to 90 days? And so that's the team that is, you know, looking at acquisition, but also looking at, to your point, driving retention and what are different levers that we have across the business.

And I do think that to the point earlier that Mark was saying is I think. Historically, it's like that focus on acquisition has been the big one. But then I think as a company grows you, you realize the importance of retention. And then also I think as the market has shifted in terms of the acquisition cost and just Facebook becoming less efficient and.

I think there's a lot more focus these days on, on retention. And so for us, I wanna give that revenue officer all the different keys to drive revenue. So it's not just like acquisition, but it's okay, we can trade and shift between these. What's our best chance of hitting that? That revenue target.

A: Yeah. And do you wanna expand Mark on what you were saying? Like obviously very early in this and helped force this trend towards having more people and now there's a role at every company CRM marketer. Yeah. And so Braise and Iterable Re really help bring that role to life.

M: Yeah, it was really hard in the early days. We didn't know who to sell to. Like we were one day we were talking to the engineers and product team. Then the next day we're talking to someone in marketing. When I say someone, it was anyone there wasn't like a specific role that was focused on retention or crm.

Eventually you started seeing what we call the digital natives. Brands that were started off digitally, they ended up hiring that growth marketer. I don't know if you remember, like all the Ray around we're a growth marketer. Yeah. So we identified them as really good people to kind of champion what we were doing at braze.

And, that worked well. And then on the enterprise level, you actually had CRM and they had budget for the CRM because you had the exact Target that Salesforce had purchased. It was very rudimentary, it was a very cookie based desktop email. Like you said, just send out a whole batch of emails and you did your job and you come back in and do the same thing the next day.

But once we started seeing that we were able to sell into the digital natives and the mobile tight ends, we called them and we start seeing them as being the influential brands to the enterprise. Which was very interesting cuz the enterprise wanted to follow and see what are these other, what are these brands coming in that are coming and disrupting the space, like the Tinders of the world, the SoundClouds of the world, the Spotifys of the world.

What are they doing to retain and grow their user base? And once we started getting that kind of customer base, we started seeing the CRM retention folks pay attention to the growth folks at those brands, which I thought was super interesting. I think now today it's just gotten so hard.

Like I think at marketing teams, it's not about one role. You have so many channels. You have email, you have push, you have sms, you have customer acquisition across all the social channels, you have retention on social channels cuz you want to communicate with them through direct messaging. You have, and you have all the emails that you're sending out.

And then, like you said, like events based just creates so much more personalization too. So to me, I, like I always said, when we started to Braze, the marketer was a very easy role to fill, but now I think it's a very difficult role to fill because you have to be so much more data driven as a marketer, and it's a different mindset than what I think it was even like five years ago.

And then it's also thinking about the different channels and being able to orchestrate all that and think about it. Yeah, it's a hard role. It's a hard role to fill within any brand. But I think if you have that data mindset, you can start filling in the gaps and you start thinking about it like that.

A: Yeah, for sure. Part of what I'm starting to see also is that not only has there been the split of acquisition marketers doing top funnel channels for paid marketing and sort of the CRM teams that were focused on retention aspects of the business and cross sell aspects.

More and more companies have really split out a team that's focused on conversion, especially now as they're lowering their marketing budget at the top of the funnel. The importance of converting people that are coming to the site has just come way up and it's a cross-functional team.

Often it's a product person and a marketing person. And if they're an industry like in our case, a lot of industries have sales teams, so a lot of companies have sales teams. So it's the sales person, the marketer, and the product person together working on how we combine our website and app with the typical one, one-way marketing channels with a conversation with a customer.

Most engage as efficiently as possible. Because every marginal dollar spent on the acquisition market. It's very expensive today, to your point on Facebook and on Google. It's much cheaper to be focused and spend dollars even in that conversion funnel than anywhere else in the funnel.

I'd say today. So I think if anything, like I'd say I'd see more push in that part of the funnel as it's the lowest marginal dollar to get an incremental user today. 

‍C: Yeah, I think that's right. And that and, I do think that to your point, that has changed where it used to all be about channel management.

Now there is that, Yeah. Big push on. How do you optimize that conversion rate optimization, that looking at the full funnel, how do you use the, leads that you've already generated? Yeah. 

A: Yeah, completely definitely shifted more so I don't hear of a role yet. Like I don't know what that role is called cause it's so cross-functional.

But it definitely has become more of a focus So, let's talk a bit about text act then. So you guys have both referred to it, the transition batch and send to these event based systems. I guess you were living it at Braze for years. I'm sure you must have been like butting heads with people trying to explain why this was so valuable to switch to these new systems.

What ultimately got people over the line? Today every marketer's used to using personalized messaging across email and sms, but it wasn't a thing 15 years ago. So to get people there. 

M: Yeah I think the customer journey got so fragmented that the brand started realizing that there's a lot of data slipping between the cracks and the old is not able to pull it all together. And when I say the old, it's more the incumbents and the larger platforms that were built for a cookie, platform with desktop and email. If you think about customer journey and, care/of, me, they come to the website or they interact on mobile or, and then they have a native app and, there's so many ways that they're interacting with you as a brand and communicating with you that I think what happened.

The market's like “Holy cow”. Like I have no idea where all this data's going and where it's sitting, and I can't even leverage the data because I'm not set up for it. So I think naturally what happened was bras came in and were like, Hey, we can actually pull this all together for you into one place. And then as soon as we came in, then we had companies like Amplitude coming in and you had companies like Segment coming in and, particle.

And then everyone starts talking together. And I think what happened was a lot of. These platforms operated in silos. And I think what happened with this new kind of entrance in the market was we broke down those barriers and said, “Look, we all wanna talk to each other. I think we all wanna integrate into each other because the tide kind of rises up for all of us if we're all kind of holding hands together and coming to market.”

And I think because. The vendors started talking to each other and started integrating to each other. I think that's what kind of evolved the market to getting the marketers to adopt the, whole holistic platform that we are all into and using today. That's kinda in my view of what happened the last, I would say, 10 years or so.

A: Yeah. And Care/of is on a very modern marketing stack if you're willing to share, like how did you guys set up your marketing stack? And how's it working for you? 

C: Yeah. And I'll probably botch this because I'm not as close to it in a day to day. But I think initially one of my big focuses when we launched the company was having data engineers and data scientists to get our data set up clean.

One of my lessons at Bonobos was managing analytics, so this is on me, I think there at some point. But like the, our data was not clean and so trying to pull everything together, get an email list or like even just set up BI tools on top of it, was a challenge and.

One of our first 10 hires here at care of was a data science slash data engineer who could get the pipes all set up for us. A guy named Neils who was great. And so he got us set up, I think Redshift from a data stack standpoint. And then flowing everything into Redshift.

We did have a Segment. I actually don't know if we still have Segment plugged in or not. And then from. Customer messaging standpoint, Iterable and so Iterable, then we are plugged into our customer shopper like all the different data from the quiz. But we also have a mobile app where we can track people who are tracking the, their sort of their vitamin taking, their vitamins and, tracking how they're feeling.

And so all of that gets flows through and I believe it flows through Redshift into Iterable. And obviously Alex, we've worked with you guys on Regal too, to as part of that stack too. 

A: Yeah. I'd say that the stack most often now is people, whether it's Redshift or Snowflake, that they have an underlying choice there in terms of model.

They are then using Segment or mParticle or a home built event system of some kind so that they can get the data around to different systems. And then I'd say Iterable or Braze as a cross channel marketing product. And obviously If they're in an industry where they do need to have conversations with their customers, I think that's where Regal fits in.

We play very well with Iterable and Braze. If Iterable and Braze are doing all the one way marketing channels, then Regal would be doing sort of conversational channels in SMS and in phone to help with the conversion. I'd say only the new, not the only, but one of the new sort of things I'm seeing a lot in the market is people are talking now about reverse ETL.

And whether companies like Census or High Touch are necessary instead of the CDPs to be pulling data out of Snowflake so that there's only one source of truth instead of Snowflake is one source of truth and segment or and particles. The other interest. So it's more, I'd say, prevalent on the B2B side than B2C.

And it's funny, M particle just came out saying they just launched their own reverse etl, so you don't need a census or high touch . But I'd say that's kinda the newest debate that I see going on right now. 

M: Craig, I didn't hear anything about Shopify for you guys as a commerce brand. Did you guys do anything with Shopify?

C: No, we're on Solidus or Spree, which is like an open source shopping cart. Mostly because when we were building it a key part of Care/of is going through the quiz and getting your recommendations. And you've got a subscription and we wanted to build all of we round up building that and needed some freedom that we didn't have on Shopify.

And I think. So that was the initial choice and so that our devs continued to Yeah. It's just like a different flow. I would've definitely shopped. I debated and I'm not technical enough to Yeah. Totally weigh in. But that was definitely one of the lessons that we had at Bonobos.

Andy will often say, this is we built out a whole engineering team and we built out like a lot of an engineering team that we wound up shutting down in California. Because there was not a great shopping platform and Andy would say Oh, we should have just been on eventually if Shopify was around, that would've been the solution.

So that was my default leaving there was like, Oh, we should probably just stand up and take care of Shopify. But I think given kind of the, how all of our. Recommendations flow and how our e-commerce experience works. 

A: I will say, I think that's a cycle that happens at companies that are good at marketing or good at some of these product things where the product and growth and marketing team come up with an idea and have to build it themselves.

At Handy. One of the examples of this was around direct mail, so we thought that there'd be more opportunity in direct mail, even though it wasn't very commonly used. And we started doing our own direct mail where we did shared mailers and we would get other startups to work with us and together send a piece of mail, different things in it.

We built all kinds of infrastructure around that to be able to do, it ultimately made no sense for that to be like us doing it. And actually the team spun out and is now a company called Share Local Media, and they also have Poplar and obviously people use LO and Pebble posts. So I take no credit for LOB and Pebble Post or the success share local media has had, but.

I think there is that trend where if you're in growth, you're on the edge of what's possible. So even I'd say within phone sales, in our case, we built a lot of custom technology at Angie after hand. He was acquired by Angie to be able to do phone sales and ultimately started Regal because we saw there was much more opportunity and thought it was silly.

The teams were building custom technology to use such a huge channel. So I think, yeah, there is that transition from it's so bleeding edge that your engineering team has to do it. Oh my God, I don't wanna be doing this anymore. Let's get some . 

M: That's also something we dealt with at Braze.

It was like, engineers were always like, We don't need you. We can just build our own push and email. But eventually it gets to a point where I think, and going back to the marketer and the stack and all that. People wanna buy the best in class. Yeah. And I, this is something that I think changed.

I think a lot of times they always say that the best product doesn't win. But I look at our competitors that aren't around now, and in many cases they were trying to be a Swiss Army knife to the marketer where they did like marketing attribution. They did analytics, they did AB testing and they did marketing, crm.

And I think in this day and age, if you're best in class, that's what the marketer wants to buy. I think they're a lot more intelligent, a lot smarter, a lot more data driven. Which again, in your case with Regal, it's best in class. And for us in Brave, it's best in class. And I think you look at the stack amplitude for product analytics best in class, right?

So I think it's really interesting to see how it goes, where they wanna build it themselves, but eventually they're like, You know what? Let's go find the best in class platform for this and I'll start purchasing. 

A: The argument I ultimately made internally, it was two things when I used to run a marketing.

One was I would, I, the old school companies of a hundred years ago were a thousand employees and 10 vendors. Like I would much rather today be 10 employees than a thousand vendors. It allows me to make sure that the people who are working in the company are working on the hardest problems and most interesting problems, and have more opportunities to move up.

I can pay them better salaries and I can externalize more things and put pressure on vendors. So first of all, I think that shift is powerful and it's part of why it has been so successful. The other. Any time we have a project that is gonna really have legs, if I have the choice between investing our internal resources 5% of our time on making something better for let's say phone sales by building a custom thing internally.

Why would I do that when I could go to a group like Regal that all they do all day is think about phone sales. All they do exactly about every single engineer, the company's moving it forward. So sometimes when we as regal are in a build versus buy discussion with people, I just say, Okay your engineers are telling you they could build the thing that we have.

Whether or not that's true, let's ignore, let's assume they built it. Now let's fast forward a year in a year. What's gonna happen? They go, Oh yeah, Regal had built all these other features and we won't have moved forward at all. So I think people forget that over time it's much better to be with a vendor who's hopefully thinking about that problem and is gonna continue to invest and innovate.

C: Yeah. I'm curious too do you guys see, I assume you see when you're selling in products, some of that tension where oftentimes the marketers might want it, but they're, but the engineers don't, or someone on the product side that, tension across, 

A: Yeah, I say that, one of the places that I think the tension is fascinating in phone sales that I talk about a lot with marketers is in email marketing.

Braze and Iterable have helped make the transition from the old school, like you keep saying Cookie desktop, email, batch, and send world into this very personalized. Ingest every piece of information about the customer in real time, trigger exactly the right message and the right channel at the right moment.

In email that's happened in phone sales. It hasn't happened. So really over the last 20 years, there's been no innovation in technology because everyone thought that voice was dead. Brands weren't gonna be using conversations. Turns out that in things like your health, your wealth, your kids, your pets, when you like to bring those industries online, it's not gonna be like retail.

It's not gonna be a photo and a price and a review. You're still gonna wanna talk to somebody about your mortgage or talk to somebody about your healthcare before you go and purchase. And so these companies were working on 20 year old technology in a paradigm, which was, “Hey, let's just take every person that comes to our site and call them and treat 'em all the same.”

And so we're educating a lot within the phone sales world around what is this paradigm shift that already happened in email. So it's fascinating in organizations. We'll bring in a sales leader and a market leader. The market leader gets it immediately cuz they're already doing this. The sales leader goes, “Oh my goodness. Like how I did not know about this is fantastic.” Of course because these days people are having a hard time, marketers are having a harder time or sales people are having a harder time engaging customers and they need new levers to be able to engage them in a way. Is responsible and respectable and is gonna lead to good outcomes.

And so when we can give them new tools to personalize calls, text messages, brand them and make sure they're aligned with other marketing people get very excited by that. So it's odd to say they're excited by it but, yes, they are. That's awesome. 

So why don't we shift to the channels that you guys use?

So one question I always like asking is what channels you're seeing people explore? So the example I gave was that at Handy we started doing a lot of direct mail and shared direct mail particularly. So now that Facebook is, let's say, less effective, are there new channels that you're exploring at Care/of?

C: Yeah I think it's, really thinking about. I think not just at Care/of but across, I think there's became an over reliance on paid customer acquisition at, because when it's working and the math is working, it's the classic LTV to CACC, it's if you, can say Oh, here's my LTV, here's my CAC, and the math is working.

It's just an investment, but the reality is, Prices, change assumptions are underneath some of those calculations. And I think right now the focus is really on how do we drive a decrease in reliance on paid acquisition by focusing on organic. And I can talk about what that means. And then also to the points earlier, thinking about retention, which is we've got a set of customers, how do we improve it and improve their retention.

And so I think from an Organic standpoint. I think it's looking at old things like SEO that's one where we've, we're making an investment there then making more investments in how do you create more virality in the product. So it's like, how do you adjust the product so that people want to change?

And the way that my co-founder heard someone say it recently is to move, from a one player game to a two player game. And so that there's more people sharing different things and not just like a traditional referral program, but actually building that into your product experience.

And then I think from a retention standpoint, I think there's all the tactical stuff that we were talking about here, which is like, how do you get the right messages to people at the right time? How do you have conversations with customers? How are you? Think about that whole flow of the user, but then for us it's also how we think about I don't know if this is the right way to put it, but like the product is a channel, which is like, how do we evolve the product and make it stickier over time?

So I think for us it's like taking some of those dollars that maybe historically would be invested in. Facebook or Google, and actually let's put that back into the product and improve the product experience. Make people wanna stick around more, talk with customers. So I think those are for us how we're thinking about things right now.

A: I love the sort of one person versus two person analogy. Particularly in healthcare. I'm seeing this more. This idea. If you are going to be helping with somebody's healthcare, you really can't only think of that one person as the customer. You have to think about their significant other, let's say it's a parent.

You have to be thinking about their adult age kids now who are helping with their care. Traditionally, all B2C marketing had one user, right? You had an email address and that was your. Unified identifier or maybe you had a phone number and that was our identifier, but it was one user. So how are you guys thinking about starting to move into a world where there are multiple people involved in the healthcare decision and it's not just one person, perhaps?

C: Yeah I think there's one, there's straightforward things like family plans, which is like we see customers where, you know, the husband or wife are both taken care of, vitamins and. Now those are two separate users. Can we give them more value if we're sending that all together as one?

So there's something like that, but then there is also. How do we, and this is harder over time, but how do we build any kind of either community or gamification? So right now we have an app where you can track the vitamins that you're taking, you get rewards for that. It incentivizes you to build a streak.

And that, that is one play or mode you're playing against yourself and you're earning rewards based on that. But what if there was a leader board and we've started sharing with people, like where do they rank in their. Habit across the people in their state. And we find that people like to share that.

And what if you can see the leaderboard? Okay, What if you could challenge a friend? What if there were other healthy behaviors and you were to see this with something like Strava is a great example of you could have an exercise app on your own, but what if you've got an exercise app with everyone else and it starts to.

Drive growth where you don't need paid advertising and you even have historical examples like Weight Watchers. There's just like a built on this idea of community and that community is a core part of the product experience. And so for us it's challenging, challenging ourselves to how we evolve that product experience.

It's not just that one player mode. And obviously it needs to serve the customer better. It can't just be, cuz we want it to be a two player mode. It has to be something where it better motivates the customer, It gives them a better experience. And, if we can do that then, it starts to create that sort of shared word of mouth.

And I think it creates longer retention too. 

A: Yeah. It's interesting on our side, we see it from a data model perspective. So where we have customers that are realizing where we brand, where we have brands we work with that are realizing really they need to work with multiple people within a family to make these more considered decisions about a car or buying a house or healthcare education.

They're trying to figure out how they align marketing to that full group, right? If they're gonna send an. How do they make sure they email the whole family and not just the same thing to everybody but the right message to each person based on their role within the family. And it's definitely pushing.

Us to rethink the structure of the data because like I said, historically only market is one person and now you're marketing to a group. So it's definitely, I think the future of a lot of these more considered purchases is a joint decision rather than an individual decision. And we'll have to figure out, I'm sure Bra will have to figure it out as well, how to change the model to support that.

‍M: I think one thing that Craig honed in on was, I think, community. I think that channel. I think at Braze we probably did a little late because it wasn't top of mind, but we built a community of our marketers and our customers, and today it's called Bonfire and I think it has over 3000 members in there.

But I think like today, I think brands are starting to think about a community first approach. Yeah. Whereas like literally, and it goes back to your original question, who do you hire on your team? But I think. Starting to see brands hire a community leader within their first 20 hires to really focus on building that sense of community with their customers and then building some form of communication with them and doing virtual events and doing maybe in person events and in certain communities where they have lots of users.

I'm seeing more and more of this, so I think that's gonna be a massive channel. Moving forward, not just for customer retention, but new customer acquisition and so on, because I think it's, this full sense of community. People wanna be, feel part of something, especially brands that love, right?

Like you think of alo, I'm wearing an ALO sweater right now. But It's like yoga. You feel some sense that you're part of something. But I could tell you if they had something going on at the community where it was like towards their like awesome members I, would probably consider trying to go to one, one time.

But again, I think the sense of community and community first is gonna be massive moving forward. 

‍A: Yeah, agreed. Yeah, the brands are able to capture that, definitely do much better. So it gives to this day, like I love Patagonia and I would definitely go and stump for Patagonia, so to speak, if there was something I could do to help the brand.

They're an extreme example perhaps because they've gone and said they're not a pub, not a poor profit company anymore, basically. But yeah, I agree. I'm trying to think of other good examples of community. Have you found other examples that you've seen of Craig, even at other companies that have been successful?

C: Like I said Weight Watchers you see it often in games. I think mobile games are always great examples of just how. Any great video game like I was Craft. 

A: There's another one that I'm, I've started seeing more and more, so I'll date myself a little bit.

The first time I heard about Mr. Beast was maybe three years ago when I was talking with a financial services company, a startup in financial services. Who had just made a deal with him to give him part, a significant part of the equity in the company in exchange for having him start to promote it. At the beginning, my reaction was like, What in the world are they doing?

And then I started looking into it and realized, Oh my goodness, this is the best marketing channel ever invented. This guy has more access. Because he has a tough personal relationship with people and is gonna be able to tell the story of this brand in a way nobody else could. And of course now Mr. Beast is in the news because they're saying his holding company is worth over a billion dollars. So obviously whatever he is doing is working. But I think like that I look at companies like Community, which is an SMS play that allows superstars to be talking directly with their fans on sms.

Or what's happening like with these companies working with influencers. I think that's another kind of community where, again, you're breaking the fourth wall. You're going from being this random company no one has really heard of to something that you're having a conversation with. Someone about whether it's an influencer you respect or a friend that you have.

My co-founder actually has a vision that one day when you go to a brand, let's say I'm going to a new brand I've never used before, you'll be able to hit a button and say, I wanna talk to a current customer. And actually the brand will enable a marketplace effectively between current customers and potential new customers.

So instead of talking with an expert or an influencer, you're talking with somebody who's really used the product and it's another way of building community. You see it a little bit like in the Q&A community online, like Reddit or like certain Q&A sites where this happens, but it hasn't really moved into the brand as much yet where you are able to, the brand is encouraging you to do it, but I'd love to get to that place where instead of me trying a new thing and listening to Mr.

Beast, I'm listening to somebody who actually is a customer. 

C: Yeah, that is cool. It's if someone. Looking on the site and they wanted to know yeah, if you had a clothing brand, and it's Oh, I wanna know the hand feel of it. Or is it like how heavy the cloth is? Or does it fit a little tight?

A: Yeah, and would I do that for Patagonia? Probably. I don't know that I would do it 10 times a month, but would I do it every now and again? Especially if it gave me access to certain discounts or certain things early? Yeah. I'd talk to one or two people and tell them what I thought about the products that I'd.

M: I think to your point, like there's new channels coming. Like my kids, they're on YouTube. That's TV for them, right? That's what they, where they spend their time, that's where they learn, like if they're curious about something, they're not Googling it. Although Google owns YouTube, they're going to YouTube and typing it in.

And watching the video around, like, how do you do this? Not really. They're, they don't go to Google. They go first to YouTube. It's all YouTube. I don't even know if they know, They don't even search on Google. They don't type in Google. They open the YouTube app on their iPad and that's where they are. And, honestly, they get so much information from it.

So I think these, like new channels, are coming in really strong. Like I, I've heard, I read something that people go on TikTok if they wanna know how. Bake something. They're not reading the recipe. They're watching how it's made and then following that on TikTok. 

A: Yeah, I mean we, obviously as a brand, have an overarching theory that we should add some personal touches back into this digital experience.

And I think that the best brands will realize that a lot of them take financial services, for example, a lot of the core technology is now standard across the players. That's not the differentiation. A lot of the marketing is now standard across the players. So that's not the differentiation.

The differentiation is gonna be on service and on the things you do to connect with that customer that another brand doesn't. So what I find amazing as a stat within the financial service industry is when it used to be a local bank that people went to, And you had Bob or Sally who was your local banker, if they made a mistake, nobody churned.

Nobody ever left, right? Yeah. Because you knew me and you happily stayed. Now what happens is that people go to the N Bank at the moment. If that bank makes a mistake, immediately they churn and they go somewhere else because there's no connection, there's no service, no relationship. So they go next. So I think brands are gonna have to invest heavily in starting to differentiate on service.

Instead of looking at basically customer service or any conversation as a cost center, they're gonna have to start adding back in these touches. And start asking themselves, is it ROI positive? So in the long run, do I have a better, longer relationship with this customer by having this touch? And if yes, then I should be doing it.

I shouldn't just be unilaterally saying customer service is a cost center. I'm gonna cut it out. So on, on cost. Actually it's before we leave, I'd be remiss if I didn't talk about the uncertainty in the world today. Interest rates are up, there's war in between Russia and Ukraine. There's potentially other things that could happen next year.

What are you doing differently with your teams now to prepare for next year? What do you think about getting everybody ready for what may be a difficult year next year? 

M: I'm going to, I'll start. I guess for me, with our fund and our portfolio of companies, We're very focused on thinking about making sure they have enough runway to get product market fit.

Just the fact that we were investing like pre-seed and seed, right? And just being really thoughtful around that. But at the same point I also tell them, Look, we're not building for tomorrow, right? So try not to pay attention to the macro economy too much. We're building to be disruptive, 18, 24, five years from now and, again, going back to the journey of Braze in terms of how long it took. So I'm trying not to pay attention to it too much. That being said, you still need to have the bar raised, right? And you need to show that you're a real business and you're a must have business.

In terms of what you're building. But I'm trying not to pay attention to it too much and just keep my head down and focus on what was the reason why we invest in this company and what was the reason why those founders really want to start this company and continue to double down on that is what we're trying to do. 

A: Makes sense, meaning Healthcare classically has done well in high interest rate environments, or at least compared to other industries. So are you guys thinking about changing your plan at all based on what's happening or still full steam forward?

C: I think it's less on I think the main thing is like full steam forward, but not, but on the product and the customer problem. So I think it's not, whereas I do think there's been cycles of kind of growth at all costs or put a lot of dollars into marketing.

I think the internal focus is to make sure we're close to the customer problem and make sure that we're iterating on the product and building something that is unique and differentiated. And that might mean taking the foot off the gas in terms of marketing dollars spent within the economy, and then focusing really on being close to the user and being close to that problem and just making sure that we're building a better product.

M: Yeah I think the metrics definitely changed, right? The KPIs. Companies were perhaps focused on maybe a year ago, shifted like growth at all costs. That's out the window, right? Who are the hires that you really need to grow this business and the KPI of how many full-time employees you have?

may not be a good thing to talk about Yeah, we have 20 people, we have 50 people. Yeah. Yeah. I think that's who, who robs around that is gone. It's more about how efficiently you can run a business, but how quickly can you grow as an efficient business? Yeah. So it's a hard balance, but I think that there's gonna have to be big boots worn to really figure out how you can really sustain it because investors are slowing down on growth investing.

They're bo the bar was higher. As long as you can, like I say, build a must have business, not like a nice to have. That's how I look at it. 

A: Yeah. One of our investors says you should make sure you're a painkiller and not a vitamin, but that's just what we get Exactly. You wanna be in the painkiller cycle.

So Craig and Mark, thank you very much for joining me today. This has been great. It's good to see you guys again. So I appreciate you talking about the future of B2C sales and marketing, and I'll talk to you guys soon. All right. Thank you.