How to Create a Product From Prototype to Launch: Operators Build (E2)

Welcome to episode 2 of Operators Build, where you watch us create a brand from scratch, step by step, doing it in public. Today we are gonna cover what goes into making a product from scratch. In other words, your product development process. And to do that, we're gonna hit on 3 big questions. The first is, what are you making? The prototype, the minimum viable product. The second question, number 2, is how much should you How much market research are you doing to go into this number? What is the actual MOQ of your co-man? The third question is, who is gonna make it? Back to that co-man, who is the partner? Are you sourcing your own ingredients? Are they doing everything for you? What's the product design? All of this is part of product development, and that is what we wanna cover today. And to do that, we are going to go back in time so you can see the real meetings between all of us founders. We recorded the actual work so you can watch it and hopefully learn from it.

I think the main focus of this conversation, uh, needs to be driving towards a PO. So Sean, as to kind of just catch you up to speed, I think that when we were doing the Trevi stuff, and I know you're working on something similar right now, um, I actually was thinking about this just last week because it was kind of like the 1-year anniversary of us going out and doing flavor development on it. And for us, We wanted to move really fast and we started really pushing on a PO around this, uh, probably around end of month, maybe a little bit earlier. And, uh, we got it to market like the last day of November. So for our goal of trying to be around Black Friday, like we've gotta be, we gotta be basically on it right now unless they're gonna execute quite a bit quicker than, than we experienced. So, uh, with that in mind, We, we made some really great progress on packaging last week, and I think we all have gotten very excited about this idea of the kind of more mascot-driven, um, and, and potentially more of the, the kind of family, you know, including kids angle of this thing. Uh, so Sean, if you wanna talk about that, we can kind of, uh, recap that. But then if we're going to do that, we've looped in, uh, Chris with Curtis on text. And Curtis, I think you provided some dial lines. or maybe at the very least some packaging kind of dimensions. And Chris is working on that. It's, it's huge that we have Chris because I will say like this part of the process is actually one of the most time-consuming is just getting the packaging synced up. You can lose so much time here. Um, but what we need to do, I think, is start to make some real like product decisions. Like, okay, how many can— what, what, what's the count? How many flavors? Like, when are we going to put in this PO? Who owns that process? How do we make sure that we get all the packaging on time? Is there a free gift? Where's the free gift coming from? Who's serving? Uh, you know, like that was something that I think you brought up, Sean, which I, I think is very much the right way to go, this kind of free gift. And once we had kind of the mascot, it's like, oh wow, there's a lot of kind of cool free gifts that you could put in here. It could be a, you know, like a sleep mask. It can be nose strips. Uh, if this is really gonna happen, it's July 14th. This PO needs to go in in the next 14 days. So we've got, uh, and, and all of us have other things going on. So, I think that's kind of the focus of this conversation is how do we drive towards Putting something in.

Let's just recap. We're going through this. Yeah, I know, I know you just recapped, but like, I, what, what, what's the actual product? We're going through this right now and it's like, look, every flavor you add, you know, increases cost by 50%. Right. So do we want to do one flavor in— I'll tell you how, look, cause Mike, I would love to hear your thoughts on this. This is, this would help me, you know, in more ways than one. Trevi is competing with, you know, uh, all of the best Gatorades out there, right? So like it, it has to come out in berry and I, I think you launched with 3 flavors, right? A lemonade, a berry, and something else.

We launched with, um, basically 5 variations. We had a variety pack that had 4 flavors and then we individually bought the 4 flavors in the variety pack.

You only sold them as 30-packs?

We did 28 packs and then, um, we also did a couple of 'em in 10 packs. And if I could go back and do it all over again, I think where I would start is just one variety pack on Trevi and then I would branch out. So what we see as behavior is people don't know what they're, the, you know, the flavor they're gonna like.

Right.

Obviously. I mean, this is the hardest part about consumables. So, um, they're very drawn to the idea of a variety pack cuz it's like, okay, I get kind of 4 whacks at the piñata. I can find one that I like. But then the behavior seems to be a portion of those people will continue on with the variety pack and then they'll start to split off like, oh, I really liked berry lemonade, so I'm just gonna buy berry lemonade. So I do think there's a place for individual flavors. Like you're saying, Sean, the investment just scales. And I will say this, um, We really, really, really got our supply chain wrong, uh, right outta the gate on Trevi. Fortunately, and, and we probably, I don't know, we probably have set another, uh, an extra couple hundred thousand dollars on fire, just kind of right-sizing that. Um, and we're almost kind of done with the right-sizing of that. I mean, Prime Day helped a lot. We moved a lot of units on Prime Day, but, um, so the easiest way to get Into supply chain hell is, is to get 7 variations and to, and to be wrong on quantities and distributions.

Yeah. Can you explain what actually went wrong on the supply chain? Was it just misordering?

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Influencer marketing done as one-off campaigns is just another form of rent. The fix is a system. Seed products at scale, convert the winners into affiliates, put your best performers on long-term retainers. That's what Sorare is built for— finding perfect fit creators with their AI, managing personalized outreach at scale, built-in product shipping, one-click payouts, and tracking posts and ROI of all your campaigns so that your team can run influencer marketing Like a machine. We're using them for the new brand that Operators is launching. Check it out at getsaral.com. That's G-E-T-S-A-R-A-L.com. Um, in our case, we were trying, we were gonna do the simple modern angle, so we didn't know like how many people are gonna gravitate over and the adoption was slower. The kind of the way that it worked for us is, uh, like the scaling process was slower at first and then quicker later on than we expected. But then also we didn't really have any feel for how often people would pick variety packs versus single flavors. And what we have found is if somebody just kind of comes into your product, at least in electrolytes, and I think this could be true in sleep also, and they know nothing, then they are going to— you're going to have a small portion of people that are just like, I like grape. And if you have a grape, I'm going to buy grape. But I mean, when we say small portion, I'm saying like 1% of people. Then the vast majority of people everything being equal, we're just gonna say, I'll buy the variety pack. And because that behavior is so strong, like when we're not doing anything with price where it's more attractive to go to other single flavors or whatever, I think we, we fluctuate between 50 and 70% of our volume just goes to the variety pack.

Wow.

Yeah. Yeah. It's, it's pretty big. So, uh, in, in our case, the safest thing to do is to first buy Uh, a pack that has 2 or 3 or 4 flavors, whatever we decide, however many we think are strong. And then, uh, to make our, in our follow-on buys, buy your very best flavor or like, and you're probably experiencing this, Sean. So if you think about it from a manufacturing perspective, Yeah. To the, the problem with going to a variety pack is that you'll have an MOQ. So just, uh, for everybody listening to, kind of make this tangible. Let's say I have 4 flavors. I have cherry, I have grape, I have orange, I have lemon lime, whatever. Um, each of those flavors has an MOQ. Let's say that that MOQ is whatever, a quarter of a million sticks. So if I want to buy a variety pack, I now have to commit to a million sticks of production in order to be able to do that. Whereas if I was just going to do one flavor, I only have to commit to a quarter of a million sticks. This is kind of what you were saying, Sean. This is why it scales up. Now, The other side of that, that's kind of nice is, well, once you've committed to doing a variety pack, it's easy to do really small quantities of individual flavors. So, and that's the way I would do it. So it's like if, well, it's like if I'm already committed to a quarter of a million lemon limes, it's easy for me to break off 20,000 of those sticks or 30,000 of those sticks and bring to market. Now, the complexity there is you do, that's more packaging to work through and every additional piece of packaging we're doing could slow us down. And probably slows down the process. Um, the other is, so anyway, all that to say, I would, I would say we start with how many strong flavors do we have? And if we buy nothing else, we buy a SKU that's a variety pack of the strong flavors. Or if we've got one flavor that we're like, this is really the best, it could be that you just go to market with just that one flavor. Listen guys, what is our brand distinctive? You have to kind of be able to say, what is our brand distinctive? Like, what is it we're rallying behind? And for Trevi, it's like, we are the best tasting electrolyte. The end. That's it. That's like, that's, that's the entire story. And so like, we need to be able to do the same thing with Winx. Just like, what is the thing? What is the problem that we are solving? And then it's really easy to get drawn into trying to solve like 4 problems.

Yeah.

But that actually makes ineffective brands just like, You know, like it should be like an elevator pitch. Like, why, uh, why do you drink Trevi? Or here's why I love Trevi. It tastes the best. The end. You know, here's why I, I take Winks. It knocks me out. It's not like, oh, it knocks me out and it tastes good. It's like, no, it's, it's like it helps me sleep. You know, I get the best sleep ever or, or whatever. And then you optimize around whatever that brand promise is.

Okay.

Before we go any further, let's talk about what it takes to turn all of that product work into a purchase order. Yes, yes, yes. We are now talking about sourcing and manufacturing. And here are the questions I think you should be listening for. How much do you commit to before you have sold a single unit? We're talking mass production of something. You probably wanna know what you're committing to. Who else is already selling this? So how does Winx even stack up? This is the competitive analysis part of the process. And then who exactly are we making this for? Your target market, your target audience. The ideal customer persona. What changes once real orders and real feedback start rolling in? Should we refine the product? How do we learn from that feedback? That's coming up right now.

We have to, we have to make this decision very fast. I would like to conserve capital and just come out the gate with one great flavor. Okay. I wouldn't do variety packs and I would just hit on the fact that this thing makes you sleep. I would pick the best flavor we got. And I like, we could talk about putting in extras or whatever. It's just like if we want to take capital and put it into that, right? Like that's really probably a second or third order thing. It's like, can we just get this thing in the market and try to sell it first for the sticks? And then we can obviously improve it, right? But I'm incredibly conservative when it comes to that stuff. Curtis, you're doing the dev. Do you think we should do the variety pack? Mike's kind of saying variety pack, but I don't, I don't, I don't know how to make a call here.

I actually, I think you might be right, Sean. I, I think if we're gonna aim at kids, I think you literally just go out there and you say, we pick a cherry or a grape or, you know, whatever like is the most coded to what you would see in kids' products. But this is where it's like, who are we aiming at? Well, because we, we started to feel like last week that like aiming at kids, parents that have kids that are having trouble sleeping or, or like families or whatever is the easiest market to target here. And if that's the case, I, I think you're right, Sean. Like it's like we don't, you know, Tylenol doesn't have like, 10 flavors of children's Tylenol. They have like 2 or something, you know?

Yeah. I mean, being devil's advocate and not disagreeing with what you said, Sean, obviously there's capital costs associated with that. I reach out to our co-man to see what we can get our MOQs down to and what that would look like for, you know, multiple SKUs. Here's the thing. You said it like a gut health or, you know, an AG1 as an example, like it's a one-fit like all-in-one solution and people are solving a pain point that they don't give a shit about flavor. We're looking at habit-forming every single day. Also, are we family-focused or kid-focused? Like, the way I look at it is that we have, I would say, 3 in the front running for like flavor profile, which is lemonade, grape, and peach. Like, far, like, destroyed the other ones that we had, mixed berry, raspberry, and lemon lime. And my wife is like, lemonade is amazing. My daughter's like, I love peach. I'm a grape guy. And so, it's like, for me, a family of 4, it's like, man, I would be like, we're going to pick this. We're going to pick the variety pack all day long because I don't want to have 3 different pouches. And also, if we want to have encourage— I'm curious about behavior. If we want to encourage this as a daily routine, are people going to get tired of— like, if it's AG1 or gut health, you kind of just know that it tastes like shit and you just got to drink it and you're going to feel healthy. If we're focused on a sleep solution, it's not like people are taking NyQuil every single day. Well, some people in the world probably take it every day. But, if we want habit-forming, do people want like, hey, after 20 days, I want to switch it up. After a hot night, I want a little lemonade flavor. versus a grape flavor? Do they want to switch it up so that we can encourage them to really have that adoption every single day? And so, I get torn because removing the capital cost, which obviously is a big decision, what's going to encourage families? Let's say we call it we're the only natural family-focused sleep supplement in the world. I don't know. We're the best family-focused sleep supplement, what does that look like from a flavor profile? Do you— I almost, on one side, we're not going— even though we're 100% organic, 100% natural, it's extremely health-oriented, it's science-backed based on the ingredients, we're also being friendly and accessible with our marketing and our style and who we're targeting to. We're not targeting to the optimizer. We're not targeting to just like that, that health-oriented person. We're actually targeting families that are struggling with a major problem. And so I'm wondering if the variety caters to everybody in the household a little bit more. I don't know.

Yeah, of course. I definitely hear you. I think variety is a better product. But does it make for a better launch? Right? So like, you know, NyQuil comes in one flavor, which is, you know, dark goop.

Uh, yeah.

And this is where like, look, I want to put in nose strips. I want to put in the little stuffy, like you guys sent those things over. I'm like, adorable. Let's get those things made to be awesome.

Yeah.

I want to make the little cup. I want to make the, like all this stuff, but I'm like, I'll actually, that's probably year 2, right? Like, let's like the timeline we're working on of like right now, if we go incredibly fast, We get them here November or sorry, December 1st. We have to start marketing this thing, you know, December 25th so that we can hit, you know, new year, new me, get banned, all the challenges we have to face. And I would just rather do that with a, with a smaller buy off the rip, one flavor. We put it on there that it's, you know, I think you guys said like Grizzy ZZ Grape or whatever, like, and just nail it. I think a very tight launch so we can make sure we have something and then tweak it going forward.

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Yeah.

You know? And so being able to pick something like grape or lemonade, that's really obvious and accessible to them, I think is fine. I think you're right, Curtis. Like if you're going to drink this every night, you're eventually going to want variety. But also to make the initial first purchase, like really one of the things that has been helpful to me over the years is to learn there might be 10 questions I have to answer, but I don't have to answer them all at once. The thing we need to solve for right now is like, what, what do we need to answer in the next, you know, before February 1st? And I think the number one thing we need to answer is, do we have product market fit with this formula when it comes to helping people sleep? And can we find an effective way to cost affordably acquire new customers? And if the answer to both those is yes, all the other stuff we're going to be able to work out the distribution questions, the flavor questions, the scaling questions. Yeah. And if the answer to those is no, then we're done. You know, so we need to put all our kind of wood behind those 2 arrows of like, does the formula really work and cause people to rebuy? Can we cost affordably acquire new customers? And that's why I, Sean, I actually will defer to your opinion here. You're running marketing. So I, I wanna make sure that you have the material you feel like you need to go and, and tell us, hey, I can do this or I can't, because that's the most important question by far. And this is also why I think the positioning of like, the positioning matters a lot because it really impacts who we're marketing to and how we're marketing it. A conversation that's worth having right now. I am a big first principles thinker and I'm a big, you start with what's the end goal and you work backwards from that. And we haven't really talked about, hey, what is the goal of this brand? Is the goal of this brand that we try and hit maximum velocity in 12 months and sell the thing? Is the goal that we turn this into a cash flow monster? Um, the, is it the goal that we grow to the point that we can hire a management team and we can be passive owners? Because I do think that that will impact the way that we approach some of these questions. Um, I mean, do you guys have any thoughts on that?

We're never gonna sell the flavor. Okay? Because when you're selling flavors, I, I brought this up. I'm like, okay, Pepsi wins. You co— Coca-Cola wins. It's like Gatorade's gonna win. They're gonna put sugar in their thing and they're gonna have a better tasting product, right? Because Mike, you're selling flavor, but you're also selling hydration and all these other things, right? It's the best tasting hydration thing. Uh, and that's your angle to win. It's not the only angle to win. What we're gonna sell is put your kids to sleep.

Yeah.

Sleep better. I'm gonna post about my 100% sleep score because I use this product, right? The flavor just needs to be good. Like it's, uh, on the list of value props we're gonna sell, it's like, okay, what problem does this solve? Get deeper, better sleep, non-habit forming.

Yeah. Well, and, um, I think to, to expound on that point, Sean, if what you're trying to sell, I mean, it is interesting. Like if you're selling, hey, your kids will sleep and so you will actually sleep. That's an actually an interesting value prop of like, as much as you taking it so you'll sleep, you know, the number one thing that wrecks your sleep if you have young kids, it's your kids waking you up in the middle of the night. Yeah. But, um, to your point, Sean, if you want non-habit forming, you almost don't want it to taste awesome. Like we have a problem with, uh, Trevi. I mean, I'm gonna use problem loosely, but we'll have people send us notes like, how many of these can my kids drink a day?

Yeah.

Because they're just constantly like, I want more, I want more, I want more. So it's like you don't necessarily want to optimize this thing where kids are like, I want to drink 7 Winx, you know, today. Um, so I think you're right. I think, I think it's like really clear value proposition is like, this puts your kids to sleep, you know, this'll put you or your kids to sleep, boom, end of story. And then that, that it tastes good enough that nobody's gonna have taste be a blocker.

But Mike, going back to your original question, like, are you talking about, you know, when you talk about like goals and, and reverse engineering what we want to try to achieve, like, are you talking about actually the impact that we're having and how we go to market? Or you, I, I, I thought you were talking about actually, I am, I am like the exit. Like, what does that exit look like?

We were just talking about this other business, um, uh, kind of anonymously and they're, they're looking at selling or whatever. And I think the way that you go about scaling this could be different depending upon what our outcome was. Right. If we were like, hey, let's launch this thing in Q4, let's scale it for a year and then sell this thing for $50 or $100 million. I think that's one kind of playbook. I think if the playbook is, hey, we're trying to turn this into a cash flow monster or eventually go really, really big with this, it's a little bit of a different playbook. I don't think it impacts the way we do this initial order, but it, it will impact some things. And Sean, I totally agree. I mean, one of the reasons why I'm excited about doing this is that I think I think you're exactly right. You can do exactly what that other brand was doing in this vertical. And, um, and I think that what that shows is that this is clearly a 9-figure opportunity.

Yeah, dude.

And okay, so to tie the 2 things together, we have to figure out what the fuck we're ordering. I'm team, we should do the smallest minimum order possible, make sure it works, and then improve on it, right? Like, so I'm, I'm in favor of let's have awesome packaging, awesome photography possible, one flavor. No matter what we do now, we're gonna change it. Like, that's the reality of every product you ever launch. Like, we can make all of these decisions in a vacuum we wanna put out in the world, and we're gonna be like, never mind, we have to do this thing, right? Yeah. So I think Curtis is probably right, where we will need more flavors and it'll be important. But I'm like, we haven't proven that yet. Like, what we should do is just get it, get it out there, get the response. And it's like, if we can get that done for 75 grand, like, and we can spend 200 grand on marketing, we'll have some sick metrics to understand where this thing can go.

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If I wasn't, if I had not launched Trevi inside of Simple Modern, like let's say I was positioned just like I had to make every dollar count, I would absolutely have just ordered our very lemonade flavor and gone all in on that. 'Cause I know that it's like if people can choose berry lemonade or they can choose the variety pack, they'll choose variety pack. But it like, I just would've gone single SKU if I was trying to be capital efficient. For sure.

No matter what we do right now, we're gonna have to change it, right? Yeah. Like once we get it out there into the world and get real customer feedback response, whatever, we're gonna have to tweak it anyway. So I've just, I'm in, I'm team smallest capital shot. Most money for marketing so we can figure this stuff out.

Yeah.

So that's the product side. To tie it to what the goal of the company is, look, I think we can get to, it took the other brand, it's like, you know, I think the first year actually, so this actually would be the second year of business, but the first year they did $0. It was like they were just bumbling around at like $50K a month or whatever. And then they're like, okay, we figured something out. then they went into it. And then the, you know, the second year of operation, they went from $50 grand a month to $5 million a month. Um, I think we could totally do that. And I can totally get us an offer for, if we're putting up that gross numbers, 10x revenue, like, like 10x run rate or whatever. And I think we take it. Okay. Unlike the other brand, if, if anyone offers that, we're taking it.

Well, and here's one of the reasons why I was, I was talking actually to a guy who owns a very valuable business. He was kind of thinking through this question earlier this week. It's a friend of ours. He's trying to figure out what to do. And one of the things I was explaining to him is if you really think you're going to sell a business, his question was kind of like, do I expand? Do I hire sales reps and expand into convenience and international and all this stuff? And I was saying, well, it depends on, are you trying to cash flow this thing or are you trying to sell it? Because if you're trying to sell it, you actually want to leave some cards on the table that aren't flipped over. 100%. Because an acquirer's going to see that and they're going to say, oh, I can do X and Y. I, in some ways, flavor is the same thing, you know, that like what you want is you want to kind of intentionally create a picture for an acquirer of like, oh, there's all this stuff that we haven't done because we're so busy running these other businesses and, you know, whatever else. And so I'm with you, Sean. Like, if we can do that, I love the idea of creating an unoptimized business because I actually think we can use that to create a bigger multiple on exit.

100%.

Oh, dude.

All you're doing you're just showcasing that you've only addressed a certain part of the market. Like, that's it, right? So if your TAM is this big and you've only gone after a sliver, whether it's flavor profile, verticals of which you sell, distribution, you name it, then you're gonna just give the opportunity where anybody's gonna look at that and realize that they can instantly expand it in, you know, multiple different verticals or different channels. I think also like right now, Although sleep and magnesium, you know, there's a lot of brands and products that have this as a SKU. No one's really built a brand around it. Even AG1, like, okay, great. They're coming out with AZ1 or whatever it's called. It's still— people know the brand of AG1. Tasting morning health routine. And I don't know what their adoption is going to be like. We're launching a family-friendly brand in the sleep space and sleep's having a moment right now. Longevity is having a moment right now. CPG is having a moment right now. Like there's a lot of tailwinds that we have right now that I think it's like, you know, let's optimize to scale this and sell it because we've all got busy lives, families, other businesses, you name it, that if we can show and demonstrate that we can go from, you know, seed to sale, like in a, whatever, less than a 24-month window, why not? Like that's just a, that's gonna showcase, you know, it's the world and, you know, all these creators out there, they can do the same if they want. Like I love the storyline and education component as much as I love the actual opportunity itself.

Well, one of the things that being in the electrolyte market has taught me is that these markets are just so, however big you think they are, they're just infinitely bigger. I mean, it's just like consumables. So much stuff gets consumed every day. I'm in the, you know, the insulated drinkware market and we might see 500 million units sold every year in the United States, which it's like, that's, that's a lot. Let me, let me give this answer in the US each year. So how many, how many bottles do you think if there's 500 million reusable insulated drinkware bottles, how many single-use plastic bottles do you think get sold in the US every year?

Oh, 4 billion. No, more. $10 billion.

$50 billion. So it's just like, it gives you a feel for like, once you get into consumable, the numbers literally just go up like 1,000x. And we, I actually just today was looking at some Trevi numbers and we're like closing in on $1 million ARR, but growing really fast month over month. Like really, really fast month over month. We, it, the, the, the gap between here and, um, $2 or $3 million ARR is not very far. And, uh, I, I was looking at our numbers and it's like, we've got probably about 20,000 peop— help people, households that are kind of on our thing. And so like, you just kind of start doing some math and it's like, to get to $100 million valuation, you probably need 50,000 to 100,000 households that like this. And that is like not that many people.

Yeah.

Um, so it's like the other thing that's encouraging here is honestly, guys, it doesn't matter what Ollie's doing. It doesn't matter what AG one's doing. All we have to do is find 0.5% of households that like what we're doing. That's it. $100 million.

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Totally. Um, so look, scrappy, quick launch. We just, good packaging, good product that works. Simple SKU, one SKU. Let's just get it out there in the market. That's all we need to get our first million-dollar ARR. I think I can deliver that.

If I'm going to pick a flavor profile, it's going to be great. I mean, think about it. You don't want, I don't think cherry. I think there's a negative association with medicine around cherry, but what's the second flavor that most Most have, like, it's usually a grape. I think grape's pretty universal and I think it's, it's likable.

I think the grape really fits with the color profiles we looked at on packaging. We were already looking around purple and our, our little monster. And so, yeah.

Association of lavender, sleep, like purple's closer to like a bunch of things. Like imagine, yeah, I just don't think it would be the same having a little yellow guy.

Oh, for sure, dude.

Well, here's what we're talking about. PO needs to go in in 2 weeks. We're gonna do single flavor. What we need to do, what, what are the MOQs here we're looking at, Curtis? How many, how many sticks do they need to make?

I wanna say it was, it was low. It was 5,000. I gotta bring it up. And I just emailed this morning, uh, yesterday actually to get final, final numbers if we had 1 versus 3 and a variety pack. So I'll get all that.

Okay. But I mean, how much is it per stick? What's our cost per stick?

Hang on one second. I wanna give you accurate numbers.

So Yeah, absolutely. Well, that's where I'm like, I think we just, we plot this thing all the way out. 'Cause Sean, like you said, we'll do a, somehow a capital contribution here, but we can go ahead and budget this thing out right now. I mean, let me ask this question while Curtis is pulling this up. Sean, you have any opinions about, uh, bag stick count? 'Cause I'm really curious how you're gonna market this. Like the, the thing that, that other brand we were talking about was doing. And is that they got their contribution profit per sale up to like $40 or $50, and that obviously makes a big difference. So we need to kind of pick a course here. If we're trying to get contribution profit to equal our acquisition cost, I think you've gotta figure your acquisition cost is gonna be $50 or $60. So it kind of gives you some ideas of price points and margins and, and we need to kind of work backwards from how we're gonna do that. Or you can do what we've done on the Trevi side and just say like, we're not trying to be first order profitable because we feel confident that people are gonna like this and come back, but we need to kind of build out the offer based on how you're, how we think we're gonna market this.

Yeah. So I want it to be a premium stick. So Curse will get us the cost per stick, but like, I want to go in the market. I think Element might be the most expensive and it's like $2 a stick or something like $2.50.

Yeah, it's, and depending on how many you buy, it can be more than that. I mean, I, I don't know, Curtis, you got a number on this?

Yeah. You know what, we, our original quote was just based on 30 servings, not on sticks. So a 30-serving pack, uh, like bag, minimum order, 5,000, uh, 5,000 bags for a 30, uh, for a 30-serving, and it was $15.59.

So they're asking for 50 cents basically. Is this, are you, is this like a scoop, like powder, like loose powder, or is these, this is individual sticks in there?

No, that was loose powder.

This is loose powder.

'Cause when we originally went and started working with this whole man—

Yeah, this sticks, this—

Yeah.

And the sticks add some cost there. So, um, maybe 5 more cents. So maybe somewhere between 50 and 55 cents, depending on if it was loose or sticked. I'd stick it for sure. Because, you know, like this is like, hey, take it with you when you're traveling or whatever. I mean, like people's sleep gets disrupted a lot of times when they're on the move. So, um, kind of to, to your point, Sean, like, uh, I, I don't know what we want to do on our, uh, like if you just figure like you want to be at 5x that, gosh, that would be a lot per stick.

Well, dude, 50 cents a stick is a, is a lot of money. So like, we should just talk to— the other thing is we should make sure this company can do sticks. You need special machines to do sticks.

They can do sticks.

So let's just get the quote on that. And maybe it's like smaller servings or something. Like, I would really like to get this to like 30 cents if possible. And also 5,000 is a really small quantity. So like, that's them doing us a big favor. If we have to launch at 50 cents, it's totally fine. We can improve that margin over time. Um, but yeah, like, you know, I could, I, it could look, it could be a $3 stick. We, we could sell, we could sell, uh, 30-day servings for $99, right? And then subscribe and save for $50. And that could, that could work. We'll try that.

Say that, say those numbers one more time, Sean.

Oh, I, I am the least price sensitive. Okay. Because we're, because, because it's a health product, I think we can tackle a very high AOV. So I'm totally fine. Going at $3 a stick. So a 30-count for $99 basically, right?

Yeah. I think it all depends on how frequently you're trying to get people to use this. If you're trying to get people to use this as a daily product, I mean, I think that the electrolytes industry's kind of showing this, that it's like somewhere between $1 and $2 is great. If it's more like the, this kind of infrequently, like, hey, use this when you need it. I, like you said, Sean, I think then you can be 3, 4, you know, maybe even more per stick. And I, and this is where like the quantities and like, what is a subscribe and save? Is it, am I buying 30 of these packs? I mean, if you did a 14-count and it's $3.50 a, a stick, that'd be right at $50, which is kind of like what you were talking about. But that's, it, it's pretty, it's pretty steep. But it, it's like also if it works and I'm not trying to take it every night, it's like, yeah, I'll pay $3.50 for my kid to go to sleep or for me to go to sleep when I'm having trouble.

Oh, dude. Yeah. And like, that's the ad. It's like, how much would you pay for, for, you know, to end those sleepless nights? It's like any amount of money.

Yeah.

So I want to, at the rip, I'd probably be incredibly expensive, but then a really aggressive subscribe and save offer. So it's like $3 a stick, but then $1.50 on subscribe and save. So if it's 14 packs or whatever, I mean, it probably would be $50 if you buy it, $29 if you subscribe. And we would try to get people into 30 packs, which would be $100. But $50 if you subscribe.

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Okay, so real back of the envelope math. If I said $100,000 for an initial inventory purchase, is that too high or too low, Sean?

Oh, well, I think, I think we're budgeting like $75,000. Okay.

So if we did $75,000, And let's say that we can talk them from the number. Let's say we can get it down to $0.45 a pack, a stick pack with— because we're buying a little bit more volume. That would be— I mean, that's a lot. That's— it looks like that's 160,000, 160,000 packs. So 166,000 packs. And if we put those in, uh, I don't know how we want to divide those up. One thing we're saying here is that like what we have found is the gusseted bag actually is a lot of the cost. Um, so the bigger your stick counts, like the, the smaller your, your gusseted bag per, per unit. Um, if you, if you made these 28 counts, you got like 5,000, 5,500. Yeah. You, you got right at 6,000, 5,950. 6,000, and that probably gives you enough to work with, right, Sean? So 6,000, we put in $75K, we buy 6,028 counts, and we try and prove the concept.

And you do 28 versus 30?

Yeah.

You would do 28?

I'm indifferent. Okay. I'm really indifferent about count. I think Sean's point of whatever we do, you need to be able to sell $50 or $60 order values just to make all the numbers work.

Yeah.

Really the next step is we need to get on the phone with the co-man and more or less say, we're gonna buy $75 grand. We want to buy about whatever this is, 160,000, 170,000 sticks with that. And we need to really kind of think, talk with you and understand the cost ramifications of different types of packaging. And I think Ideally, the way this works is we really quickly, Curtis, we turn that around really quickly so that then we can get Chris to, uh, be starting to put this stuff on whatever packaging we, we decide on. And that maybe by next Monday we've got some like finalized packaging from Chris to look at. And we, we kind of have all the numbers and we can kind of, we can press go on getting the PON, uh, next week.

Beautiful. All right, let's, let's do it. Um, we talked for about an hour. I think we covered a lot of cool stuff. The takeaway is we just need to nail down by the end of the month the order. Yeah. We got—

yeah. And really the only thing I think we need to nail down at this point is, um, box or bag and count.

Yes.

The, the count of sticks that'll be in there. Oh, and also I guess we need to confirm they can make sticks. So if we can, We can via text nail that down over the next 2 or 3 days. Curtis, your point on getting all the information we need to nail that down. And then I'll make sure that Chris has stuff ready for us next Monday and then we'll be in great shape.

Yeah. If you can follow up with Chris around the, if you're going to talk to him anyways, around the one flavor strategy.

Yeah, absolutely.

Yeah, absolutely. Because I sent him a bunch of things.

Hopefully I could miss you What's that? I agree with grape. I agree with grape one flavor. Hopefully I convinced you. I haven't tried it, but dude, purple is sleep color.

So, well, that's the thing. Well, lavender, everything else, like it's, it's, and you know, like I say, if you're going to launch with one, I think that's the one that you launch with. I actually do like the mixture. If we were, if we were going to expand flavors, I actually kind of like the, the, um, like grape, peach, and lemonade kind of feel like it's like a really good like variety, uh, nothing too— one on the citrus side, one on, you know, more of the fruit side and one, you know, obviously grape. Um, but yeah, one, one, if I was to do one, I would, I would just do grape for multiple reasons. And I like it. I mean, I mean, if you just search, it's an easy way to, to like launch with, and we can expand quickly knowing that we have these, you know, on the back burner if we want to.

Yeah. If you just search children's Tylenol, for example, like they have a cherry and they have a grape, but it's clear on Amazon that grape crushes cherry. Like, you know, I don't know, 5 to 1 in sales or something. And so, uh, I, I think, I'm telling you, like, if you're gonna do one flavor, it has to be grape. I think we're making the right decision.

If you got kids, grape, purple Gatorade, first one to go. Purple Freezie, usually the first one to go.

Like it's Absolutely.

Yeah.

Grape, grape is the right choice. I, I feel really confident in the decisions that we made.

All right. Thank you, Mike. Thank you, Curtis. You guys are killers. Talk to you later.

Yeah. Thanks, guys.

[Sponsor Content] You have been listening to us talk for years about building 9-figure durable goods brands, HexClad, Ridge, Simple Modern, Pela. When we sat down to build Winks, there was never a question. It had to be a subscription brand. And being the veterans we are, we could work with anyone, but we decided to work with Skia. To build Winks. Working with the team over at Skio has been awesome. We get to see all of the stuff that the fastest growing CPG brands are actually doing to acquire more subscribers and keep them longer. My favorite example of this has been incentivizing new customers to go from a monthly subscription to a quarterly subscription right after their first purchase, but before they get their first order. The team at Skio has been sharing insights on how much in-portal flexibility to give subscribers, when to change frequency, when to offer products, When to do gifting, what rewards should look like, what is cancel flow optimization. The list is freaking endless and they have shared it all. They have been incredible to work with. They are bringing so much value to this partnership. It almost feels a little unfair. If you run a subscription brand, you should be talking with the team over at Skio. They know their stuff. The last thing I want to chat with you about is this temptation that I think we all have when launching a new brand, and that is crowdfunding. This is the Kickstarters and the Indiegogos of the world. I actually did this with Lomi, one of the brands I've co-founded. And when we did this, we actually laid out a full marketing plan. This is not as easy as you think it is. We knew exactly how much money we wanted to spend before the crowdfund campaign even started, and it wasn't a small amount. This is not for the faint of heart. And then finally, you'll notice that we haven't paid a lot of attention to patents or intellectual property at this point. Honestly, none of it is important if we can't nail the thing that we've already talked about, which is our product market fit. We think customers will love the product, but before we invest all these other things, I think we need to prove it. That is why we are documenting this entire process in public. We want you to see us struggle with all of the same things that every founder does. If you liked this episode and you're enjoying watching us build, please like, follow, subscribe, drop any comments, any questions you have. You know what to do. We will actually answer them and we will take them into the next episode if it makes sense for us.