The Next Brand, Episode #6

How to validate an idea, who's more likely to survive COVID, and changing behavior

Hi there, and welcome to The Next Brand - my take on health, wellness and brand building.

In the last 4 years I’ve founded 2 health brands (Kettle & Fire and Perfect Keto), which did nearly $100mm in revenue in 2019. I’ve raised ~$20mm to build Kettle & Fire, gotten into 10k+ retail stores, bootstrapped Perfect Keto, launched 80+ SKUs… and have a small portfolio of Shopify apps I run on the side. Previously, I worked in tech and had no experience in CPG, DTC or any other 3-letter industries.

If you missed past episodes, you can catch up here (Episode 01, 02, 03, 04, 05). Otherwise, let’s dive in.

🆕 What’s new

I wanted not to talk about COVID-19 here, but given that it’s the first pandemic of my life I’ll allow myself just one more time. 

Texas just lifted their shelter in place orders, so it will be interesting to see how people react tonight. Will bars be packed? Parks? Restaurants? Or will people still choose to shelter in place? 

I’m going to be mostly cautious: very little eating out, no bars, and not going to crowded events. 

That said, there is one thing it feels like nobody is talking about: the dangers of COVID for those who are already unhealthy. This article (which I sourced from Nat Eliason’s excellent Monday Medley), points out that being overweight or even pre-diabetic is a massive risk factor for COVID-related complications and death. Some quotes from the research: 

  • "Data from the first 2204 patients admitted to 286 NHS ICU’s with COVID- 19 reveal that 72.7% of them were overweight or obese."

  • "A recent commentary In Nature states that “patients with type 2 diabetes and metabolic syndrome might have to up 10 times greater risk of death when they contract COVID-19” and has called for mandatory glucose and metabolic control of type 2 diabetes patients to improve outcomes."

In many ways COVID-19 is a reality-check for our culture and institutions. No, the stock market going eternally up does not mean the economy is healthy. No, eating whatever you want does not make you healthy. No - regardless what the “body positivity” movement says - being overweight is not healthy. 

Improve your health and you’re less likely to die of disease. Period. 

That’s not to say if you’re healthy you should take undue risks and immediately buy a ticket to your local rave. I’m not. But I do think (and hope) this pandemic sparks a moment of national reflection. Why are we so sick? Why does our food system make the average person sick, not healthy? Why have our healthcare costs skyrocketed? 

I don’t know the answers (though have some suspicions), but hope COVID-19 spurs someone to ask the hard questions. 

*** 

Lastly - surprise - the World Health Organization’s recommendation that you increase your consumption of toxic vegetable oils during COVID will actually make you sicker. 

Watching the WHO during this crisis is reminiscent of the Ministry of Magic under Dolores Umbridge: more likely to be wrong than right. For a healthy you, ignore the WHO. 

💪 Health stuff

Back in February I kicked off a weight loss challenge:

I had 38 people go through a (very janky) MVP where they committed to lose weight over a 28 day period. They sent me $800, installed a continuous glucose monitor (via Levels) and I paid them $25 for every day their blood sugar stayed under a predetermined threshold. 

Though there were challenges (hi, Venmo limits), 90% of people in the challenge lost weight over the 28 days… and the average weight lost was just over 8lbs! 

From what I can tell, this mechanism (pay up front to achieve some outcome, get paid back when you hit goals) seems to work. Everyone in the challenge was highly motivated to eat clean, stay under their daily blood glucose target and earn their money back. 

So much of being healthy is understanding how to change your behavior. Over the years, I’ve noticed patterns from times I’ve successfully changed  behavior vs other times I’ve tried (and failed) to do something. 

Now, when I decide to improve or change a given behavior, I follow a few steps that work for me:

  1. Set Goals - Identify the thing I want to improve and add a specific goal. Ie if I want to get stronger (which I did back in September), I’ll set a specific goal and timeline by which to get there. In my case, I wanted to weigh 170lbs within 4 months of lifting 3x/week.

  2. Get a coach (or identify an expert) - When starting anything new, there’s a TON of resistance and uncertainty. What weights do I use? How much should I be lifting? What the hell is a cossack squat? Your job is to identify and remove as many decisions and questions as you possibly can. Any amount of uncertainty causes me to question things, which takes me out of execution mode and puts me in “info-absorption” mode where I do… nothing. 
    Getting a coach helped me cut through a lot of this “what the hell” process so I could quickly identify and learn the important things I should be doing. I joined the amazing Central Athlete in Austin and got matched with a coach that programmed all my workouts and was there to answer questions and help me with form. All I had to do was open my training app, check out the day’s workout and do it - super low mental overhead.

  3. Set stakes / find an accountability partner - Lastly, I’ve found that setting stakes and finding an accountability partner are key for the first 30-60 when you’re trying something new. In my case, my trainer kept me accountable to not miss a workout during the first 30 days. In the case of the weight loss challenge, participants staked their money on the fact that they would be able to keep their blood sugar below a certain amount. 

I recently applied this method to cooking. I’ve historically been a wretched cook and felt bad about myself every time I tried. The feedback loop for cooking is tough: when you suck at it, you’re always eating something that tastes worse than what you’d get at a restaurant. It takes more time, you waste ingredients… the whole thing is frustrating.

With quarantine, my girlfriend and I decided it was about time to raise our cooking game. We set a goal to cook at least 5 meals a week for ourselves, found a recipe book we could work through (Made Whole - highly recommend) and got to cooking. At the same time, I picked up Salt, Fat, Acid, Heat to learn more about the building blocks of flavor that go into cooking… and my girlfriend kept me accountable. Though I’m certainly not a world-class chef, I can now pull together some pretty solid dishes and have been enjoying myself in the kitchen for the first time ever. 

As for the weight loss challenge, we’re opening a new cohort at the end of May. Just reply back and let me know if you’re interested in joining. 

🤑 Brand stuff

A few people have mentioned they want to know more about how exactly I started Kettle & Fire. How’d I get the idea, why did I think it’d work, what did I do in the early days, etc. 

Well, let me take you back to April, 2014. I’m sitting in our HR rep’s office, resigning my 6-figure job. Two weeks later I’ll be out of the workforce, officially unemployed.

Yet, as nervous as others (mostly my dad) said I should be, I was confident I could make something work. Why?

Because, during the last 30 days of my job, I had systematically tested - and proven - demand for the idea that would become Kettle & Fire: a business that now does well north of 8 figures a year. 

I’m going to show you exactly how I tested and validated the idea.

FINDING THE IDEA

Since roughly 2010 I’ve been what I’d call 90% paleo: I usually eat according to a very strict diet (no grains or sugar, minimally processed foods) but have the occasional cheat day. 

Never quite this bad 

Fast-forward to 2014. I’d been hearing a lot of buzz about bone broth from friends at my Crossfit gym. I’d read about the many benefits of bone broth for skin, gut and joint health, and was excited to try it.

The problem was... I couldn’t find it anywhere online. And - given the fact that I was working long hours and didn’t have a slow cooker to make my own - I didn’t have time to make it.

That’s where I got the idea. Surely, given how hard it was to source grass-fed bones and how long it took to make bone broth (20+ hours), there were others like me out there. Others who wanted to try bone broth, but didn’t want to make it themselves.

If this was true, I might have a nice little business on my hands, and be able to help people improve their health at the same time. Win win!

Now all I had to do was test the idea.

TESTING THE IDEA

With the idea in hand, what’s the next step?

Here’s where many people would chime in with…

  • “Try to figure out how to make it!”

  • “Find a supplier of grass-fed bones”

  • “Figure out how to make small batches and start selling at farmers markets”

  • Etc.

I had a better idea. I assumed that - if enough people wanted this product - I’d be able to figure out how to make it. After all, food companies figure out ways to do this every day.

So instead, the first questions I wanted to answer were:

  1. How many people want this product?

  2. Will they spend enough on the product that I can start a meaningful business?

Answering both of these questions is critical. After all, if you have a group of customers that really want something but aren’t willing to pay for it, that’s a terrible business. Hi people selling $0.99 Kindle ebooks!

On the flip side, if you have a customer segment that can spend a lot of money but doesn’t want your product, you don’t have any customers.

Like this candle company here

Ok. So, I had to figure out…

  1. How many people want this product?

  2. Are they happy to pay enough for a product that I can build a meaningful business?

To determine how many people want the product, I looked at places where lots of paleo people hung out. Community sites like PaleoHacks and blogs like Mark’s Daily Apple all mentioned bone broth and it’s health benefits, while Google Trends showed some decent (and quickly growing) interest.

Plus, just by being a member of the community, I knew that it was something that many Paleo people were talking about.

On top of that, I took at look in the Google AdWords Keyword Tool and saw that several thousand people per month were searching for a product (bone broth)… that nobody was selling.

This was enough for me, and I concluded that there were enough people - at least several thousand - that were looking for this product that I could make a business of it.

Question #1 - answered!

Next, I wanted to answer question #2 - Will people pay enough to make this a meaningful business?

To test this, I bought the domain “bonebroths.com”, had the stroke of genius to name the company Bone Broths Co. (awful idea), and set up a VERY basic landing page using Unbounce.

What our landing page (roughly) looked like

I also paid someone on Fiverr to come up with a very simple logo, for $5.

More creative genius

In my mind, this added an air of legitimacy to a very, very simple site. I wanted to make sure that those people that didn’t buy were doing so because they didn’t want the product… not because they thought they landed on a scam site.

After setting up the page and writing the copy, the next thing I did was set a price. I figured that I could easily sell bone broth at a profit if I charged $29.99 for 16oz, and I’d be able to see how badly people wanted the product. If they were willing to pay nearly $30 for 16oz of a product they’d never touched, tasted or smelled… this was probably a good idea. 

Again, this was a very basic site. For the test, when you hit the Order button it took you to a 1995-era PayPal checkout, where it asked the user if they wanted to PayPal $29.99 to jwmares@gmail.com for “Beef Marrow Bone Broth”.

Literally, this was the flow for someone coming to the site:

  1. End up on the site

  2. Click “Order Now”

  3. Get prompted to send money to a stranger’s email address

It was a UX designer’s worst nightmare. But people did it! 

After buying about $50 worth of Bing ads, people were actually PayPal-ing me money!! 

Even without a product - and with the world’s sketchiest checkout flow - people were actually converting!

What’s more, the number of people clicking the Order Now button on the Unbounce page was insane. Literally 30% of people who hit the site (from a cold Bing ad!) ended up clicking the Order Now button:

To me, this validated that enough people were compelled by the offer that - even if they were scared off by the janky checkout flow - this was a product they wanted.

Not only that, but over the course of my test (that lasted 2 weeks), I netted nearly $500 in revenue.

Question #2 - answered.

Perfect. So, I’d had an idea, tested it, and validated it. What did I do next?

Well, the first thing I did was send everyone who placed an order an email that looked like this:

"Hi name,

I’m the founder of Bone Broths Co. I wanted to reach out to say I’m really excited you ordered our bone broth. However, we don’t have the product in stock at the moment. So, I’m happy to refund you in full, or give you a 50% discount and we’ll ship in just a few weeks.

Thanks, Justin”

Bam. No customer complaints, everyone was happy. Those few customers that didn’t answer, I took the liberty of refunding them. 

Surprisingly, most of the customers decided to take the 50% off deal, and we were in business!

All we had to do next was 4+ years of work building the company, operating, sourcing and fulfilling the promise I’d made to customers years ago when I tested the idea. But there you go - what’s become a very real business started with some online ads and a terrible landing page years ago. 

Dope stuff on the internet

Some of my favorite things since the last newsletter (note: I don’t get paid to recommend anything here):

  • 📰 Article - The PARA Method is Tiago Forte’s methodology for organizing and managing projects, personal knowledge and todos. For nearly a year now I’ve been feeling a bit overwhelmed with everything on my plate, so signed up for his flagship course Build A Second Brain a few weeks back. I’m only about 20% into it, but if you’re the type that can read and apply an article, this one is worth reading. His concept of Projects vs Areas has already been extremely helpful as I think about all I have going on, and I’m excited to get further into the course.

  • 📚Book rec - Caveat: I haven’t finished this book yet, and it’s a looong one. But The Path Between The Seas (a book about building the Panama canal) has been enthralling so far. It’s actually insane to contemplate the scale of ambition that kicked off the project: we’re going to embark on a $300mm+ project (in 1880 dollars!!) that will take 8-10 years, cost over 20,000 lives (mostly due to malaria and yellow fever), cut through another country and connect the Atlantic and the Pacific. It’s wild to contrast the challenge of the  Panama Canal with simpler projects like extending the San Francisco Bay Bridge (11 years, $2.5b) or the decades-long saga to rebuild Penn Station in NYC. I highly recommend reading it both for entertainment value and because it’s inspiring as hell to read about a time where huge projects like this were undertaken.

  • Cool product - Just a few weeks ago, Perfect Keto launched their keto cookies and my god - these are absolutely delightful. I’m not just saying that because I co-founded the company, but because I’m genuinely blown away by the product. In late 2018 we saw the opportunity for a keto cookie when there was only 1 competitor on the market and… took 18 months to finalize a formula we actually liked. Making a low-carb, no-sugar product for commercial scale is HARD, and we decided to keep iterating and make the best product we could rather than launch quickly and be among the first keto cookies out there.

    Well, unfortunately for us we’re now like the 8 or 9th low-carb cookie on the market. However (having tried literally every cookie out there) I’m also confident we’re by far the best. It tastes almost exactly like a cookie you’d make at home, has 2g of net carbs and no sugars. I’m a huge fan. We’ll see if taking the extra time to make the best product pays off, but either way I love this product and am really proud of what the team launched.

  • 🎵Music - Another killer Cercle mix: this one from Lee Burridge playing at Omnia Bali. We’re only 6 weeks into corona lockdowns and already I feel squeamish watching all these people packed together. Wondering when this feeling will go away.

  • 🏀 Random - A bunch of people I respect have told me how much they’ve been loving The Last Dance: a documentary of Michael Jordan’s last season with the Bulls. And they were right - it’s incredible. I’d compare it to a sports-oriented version of The Defiant Ones (which is similarly incredible). Michael Jordan’s tenacity, focus and will to win is unbelievable, and makes me appreciate just how much harder I could push myself. Worth the watch. 

***

That’s all for this episode! If you enjoyed this, I’d love it if you would forward this email to a friend, or have them sign up free here. Reply back with questions, thoughts or other interesting stuff - otherwise, enjoy the week 🙏

Justin