Color Capital | Creating Commerce Opportunities

TL;DR

Jamie Schmidt and Chris Cantino, founders of Schmidt's Naturals and partners at Supermaker and color Capital, discuss their experiences in the e-commerce industry and provide valuable insights on topics such as retail strategies, funding options, and the role of community building.

Transcript

foreign I'm Mike Devoe partner at Greylock Welcome to our podcast gray matter and our mini series on Commerce where we've been exploring different aspects of the quickly evolving e-commerce landscape today we're here with Jamie Schmidt and Chris cantino who previously founded and Guru Schmidt's Naturals into an acquisition by Unilever and are now P... Read More

Key Insights

• 👻 Wholesale strategies can be beneficial for D2C brands, allowing them to reach a wider audience and leverage retail partnerships.
• 🤑 Community building is essential for brand loyalty and word-of-mouth marketing.
• 🍉 Funding decisions should be based on the brand's financial needs, growth potential, and long-term goals.
• 📺 Founder should consider their readiness for an exit or acquisition and align with potential acquirers that share their values and vision.
• ❓ Retail strategies are evolving, with a focus on creating unique and immersive experiences for customers.
• 😮 The rise of live video and social commerce presents new opportunities for brands to engage with customers and drive sales.
• 🤩 Innovation and differentiation are key in the competitive e-commerce landscape. Brands should constantly evolve and adapt to changing consumer preferences.

Questions & Answers

Q: How did Schmidt's Naturals navigate the transition from D2C to wholesale?

Schmidt's Naturals started as a D2C brand at farmers markets and gradually expanded to other retail channels. The founders saw an opportunity to make natural products more accessible to mainstream consumers and actively pursued partnerships with retailers. They adapted their branding and product line to cater to different retail environments.

Q: What role does community building play in the success of a brand?

Community building is crucial for building brand loyalty and engaging with customers on a deeper level. Schmidt's Naturals focused on creating a strong community around their brand, especially through social media and newsletters. Engaging with customers and incorporating their feedback led to increased brand loyalty and word-of-mouth marketing.

Q: How should founders approach funding options in the e-commerce industry?

The decision to bootstrap or seek external funding depends on the individual circumstances of the brand. Bootstrapping can provide more control and flexibility, but external funding can provide resources for faster growth. Founders should carefully consider their financial needs, growth potential, and long-term goals before deciding on a funding strategy.

Q: What should founders keep in mind when considering an exit or acquisition?

Founders should focus on building a strong brand and achieving product-market fit before actively pursuing an exit. It is important to align with potential acquirers and consider how the brand's products and values fit into their ecosystem. Prioritize long-term success and explore potential partnerships and integration opportunities.

Summary

In this podcast episode, Mike Devoe interviews Jamie Schmidt and Chris Cantino, founders of Schmidts Naturals and now partners at Supermaker and Color Capital. They discuss the founding story of Schmidts, their early marketing strategies, the shift towards wholesale, the importance of community building, the role of funding, the acquisition process, and the future of commerce.

Questions & Answers

Q: Can you provide some background on the founding story of Schmidts Naturals?

Jamie Schmidt shares that she started Schmidts Naturals while living in Portland, Oregon. She was inspired by the creative community in the city and wanted to create products that were natural and safe to use. She initially started selling her products at farmers markets and noticed a demand for natural deodorant. She saw an opportunity to create a natural deodorant that was effective and innovative, which led to the birth of Schmidts Naturals.

Q: How did the marketing strategies of Schmidts Naturals set them apart in the early days?

Chris Cantino, who joined Schmidts a few years in, explains that their marketing strategies focused on more than just functional benefits. They emphasized the sense of the products, the packaging, and the better-for-you ingredients. They also invested in grassroots outreach, cold pitching, and content marketing. They collected data about their customers' preferences and used machine learning and AI to improve targeting and retention.

Q: How has the landscape for cpg brands and e-commerce changed since the early days of Schmidts?

Chris Cantino notes that the e-commerce landscape has become more competitive with the rise of marketplaces like Amazon. He believes that it's becoming harder for D2C brands to compete with these marketplaces unless they have unique IP or a strong D2C experience. He emphasizes the importance of being omni-channel and embracing wholesale as a way to reach more customers. D2C is still important, but wholesale should be considered as a complementary channel.

Q: When is a brand ready for wholesale, and what should they consider before pursuing it?

Jamie Schmidt suggests that brands should start considering wholesale when their customers express interest in buying offline. If there is demand for the product and product-market fit has been established, exploring other channels like wholesale can help scale the business. She advises not to make assumptions about the customer and to always stress test the limits of different marketplaces. Starting with niche markets and gradually expanding can be a successful approach.

Q: How did Schmidts Naturals approach international expansion, and what challenges did they face?

Jamie Schmidt shares that international expansion was an unexpected opportunity for Schmidts. They had to navigate different regulations, labeling requirements, and marketing norms in different countries. They sought guidance from regulatory bodies and made sure their products complied with local standards. Having a backup co-packer was also important, as it minimized risks associated with in-house manufacturing.

Q: How did Schmidts Naturals navigate the acquisition process with Unilever?

Chris Cantino explains that while they didn't start Schmidts with the goal of being acquired, they focused on building a strong brand and reaching as many people as possible. When the acquisition opportunity with Unilever arose, they ensured their product and category extensions aligned with Unilever's vision. They also had to consider factors like in-house manufacturing and the integration process. Overall, they had a positive experience and found new opportunities within the Unilever family.

Q: What advice do you have for founders who are scaling their brands and considering an exit?

Jamie Schmidt advises founders not to start with the goal of being acquired but instead focus on their brand vision. She suggests staying flexible and open to opportunities that align with the brand's growth. Chris Cantino emphasizes the importance of maintaining a strong core customer base and considering the compatibility of potential acquirers. He also mentions the responsibilities and liabilities that come with integration and advises founders to think about the long-term implications of an acquisition.

Q: How do you view the trend of mini conglomerates and brand roll-ups in the industry?

Chris Cantino believes that mini conglomerates and brand roll-ups are becoming more prevalent, leading to the emergence of next-gen house of Brands. While there may be failures, the leaders in these markets will grow larger and more sophisticated. Jamie Schmidt adds that aggregation of demand and marketing efficiency are key factors driving these trends. She encourages brands to explore and participate in these opportunities.

Q: How do you view the role of live video and social commerce in the future of e-commerce?

Jamie Schmidt sees live video as both a standalone network and an additive engagement layer for existing platforms. She believes that brands have an opportunity to connect with their audience in more authentic and interactive ways through live video. Chris Cantino mentions the rise of microtransactions and the increasing trend of transacting on social media platforms. He suggests that brands and creators should invest in these platforms and use live video as a means to engage their audience and offer unique experiences.

Q: How do you balance the use of different channels and community mechanisms for brands and creators?

Jamie Schmidt advocates for brands to focus on platforms that speak to their target audience and resonate with their brand values. She emphasizes the need for authenticity and selecting platforms that align with the brand's message. Chris Cantino suggests that brands should test different channels and be open to exploring new opportunities. They should aim for a balance between relevance and avoiding spreading themselves too thin. It's important to prioritize the channels that drive the most ROI and engagement.

Q: Are there any specific brands or creators that you look up to in terms of their approach to community building and linear Commerce?

Chris Cantino mentions Glossier as a brand that successfully built a community around their products and vertical brand. He also highlights Mischief, which focuses on creating cultural moments through storytelling and limited edition products. Jamie Schmidt mentions Goop as a brand that effectively incorporates content and community building. They also discuss the importance of influencers and content creators in community-driven commerce.

Takeaways

Jamie Schmidt and Chris Cantino highlight the importance of omni-channel strategies for brands, with a focus on embracing wholesale as a complement to D2C. They emphasize the need for brands to listen to their customers' preferences and consider the opportunities in different channels and marketplaces. Community building, live video, and social commerce are seen as valuable tools for brands and creators to engage their audience and offer unique experiences. Overall, the key is to stay flexible, test different approaches, and maintain authenticity in the ever-evolving e-commerce landscape.

Summary & Key Takeaways

• Jamie Schmidt shares the founding story of Schmidt's Naturals, starting as a small D2C brand at farmers markets and eventually expanding to wholesale channels. She saw an opportunity to bring natural products to the mainstream and create a unique brand identity.

• Chris Cantino discusses the early days of marketing Schmidt's Naturals, focusing on creativity, grassroots outreach, and data-driven strategies. The brand experimented with various marketing channels and embraced an omnichannel approach.

• The duo emphasizes the importance of considering wholesale as a growth strategy, especially in the competitive e-commerce landscape. They highlight the benefits of partnering with marketplaces and retailers and stress the need for constant innovation and customer feedback.