5 Things Every CMO Wishes CEOs Knew But Will Never Say to Your Face

All right. Welcome back. Jason and Mike are here with me today. McCoy Merkley, CMO of Portland Leather Goods, is going to put us in the hot seat. We are doing the 5 things every CMO wishes their CEO knew, but will never say to your face. For founders, this is for you guys today. All right. 5 things. Number 1, growth and marketing are both terrible words and can create serious problems in your company. Number 2, most CEOs actually get marketing roles wrong. Titles matter here, guys. Number 3, CEOs say they want a great CMO, but what they really want is an obedient one. Number 4, do you need a nerd or a leader? Let's actually talk about building out the marketing team. And number 5, the most important one, is the relationship between the CEO, the CMO, and finance is critical to building trust and displaying trust as a brand to your market. Let's get into it. I actually like this 5 things every CMO wishes you knew, but will never say to your face. I'm just like, okay, well, what are the things that you won't say to my face? Um, so I think it's actually a good topic, dude. Like this, this should be a fun conversation. I think each of us has a different approach to, uh, marketing org, like Jason, Mike, myself, um, you. So I think it's gonna be good. Let's just, let's just get into it. First off, thanks for being here. This is great, man.

Thanks for having me.

It's like we hang out in real life. Yeah. Like, why has MacCoy never been on the pod? We always get Curtis.

Let's figure out who let him in here, to be honest. Like who let MacCoy in here?

No, listen, I used to view this as the most sacred of places in D2C, and then you guys have gone steadily downhill since you let my boss in. And, um, I just, you know, I decided I wasn't that interested in appearing anymore.

Never meet your heroes.

Okay. So for people who don't know you, maybe just start off with who are you? Where do you work? Give them your role.

Um, my name is McCoy Merkley. I'm the CMO of Portland Leather Goods. Uh, I didn't start that way. Uh, I started 8 and a half years ago as a digital media specialist. I answered like a crazy cryptic ad on Craigslist, believe it or not. I was a wedding photographer at the time and I was just, I was wasting my mornings. Like, 'cause you know, when you do wedding photography, you don't really work during the week and then you stay up late and like you're a dumb kid and you drink beer and play video games or whatever. Um, and so I was like, okay, I gotta give myself a reason to get outta bed. So I went on Craigslist one night and found this crazy ad and it asked for 2 things, a cover letter and a resume. Um, I didn't have a resume 'cause I was a wedding photographer. So it was like one line, it was like, Self-employed, like current, you know, like whatever. It was a dumb resume. So I wrote a cover letter at 9 PM and I walked in the next morning at 9 AM and got like an on-the-spot interview where I met Curtis for the first time. And that was an interesting interview. I thought he was messing with me. I thought he was making fun of me. And so I started making fun of him back. He was calling me young and dumb. I called him old and stupid. And we went back and forth for a while. Oh, I thought for sure I bombed it. And halfway through it, I was like, Nah, I'm gonna stick it to this guy before I walk out. And, uh, it was actually 2 people. So a girl showed up who was actually there for an interview, you know, like you're supposed to. Um, I just walked in and at the end of the interview, he, he looked at her and he said, you stay. And then he pointed at me. He's like, you, you can leave. And I was like, all right, peace. See ya. And, uh, as I like walked out the door, he chased me out and was like, hey, come back in 30 minutes. We'll talk money. The money, by the way, I found my W-2 the other day. Uh, it was $13,000 a year.

That was, that was your first year?

Yeah. I started $13 an hour, which was, um, fine, I guess, at the time, you know, almost 9 years ago. And I was working part-time, 1,000 hours a year, $13,000 a year.

Dude, Curtis really was broke when he started. Oh yeah. That's, this is, this is, uh, backing up his story of—

It is true. It is true. We were doing less than a million on the website, um, when I started and the company was, uh, almost entirely an Etsy company. And, um, We just sat there and grew it. And, uh, this year we'll do just a hair under $250 million. So, um, grew up in the org for the first few years. I was still kind of in that like part-time-ish role, which, um, somewhat became like a huge advantage because I really didn't need the job at all, right? Like I was doing pretty well as a wedding photographer. This is pre-COVID. Um, and it was January 2020 when I had my, my first, uh, my son and I finally went from wedding photography. I hung up the cameras and I went full-time at Leather Goods. But up until then, I didn't need the job. So I, every day I just showed up and tried not to get fired and had fun and made fun of Curtis. And, you know, he's, he's my friend and business partner now. And so it's been, it's been a fun 9 years.

Portland Leather Goods is basically, uh, let's just try not to go bankrupt. That seems to be like a very public thing that Curtis, uh, Curtis has just said more than once. It's like, I just try to like do the least amount of damage in any given day. Uh, and you just tried not to get fired. You, you guys are, uh, the poster children for like anti-goals. So you didn't have anywhere to go. You're just like, I know I can't hit that ditch. That's it. It's not anywhere else. It's like, just don't go right there. That's danger.

Well, I tell it like our, like starting a company for Portland Leather Goods was different because like if most companies, when they want to start, like they buy like a shipping container product or something like this. Like Curtis was literally running down to a little store called Oregon Leather in Chinatown of Uh, the Chinatown district of Portland and buying leather off the shelves and like cutting and making stuff and then listing it for sale. So there was no like mass manufacturing whatsoever. It was like, what can I make today? And that's what I have to sell tomorrow. That was like the origin of the company. So there wasn't, it was never comfortable in during that stage, you know?

Oh, I love it. Okay. So you, you brought us, uh, we got Jason and Mike here and you brought us this like beautifully organized, this is the best docket we've ever had. So you can tell that you have a job. 'Cause, uh, Jason and Mike and I have never put anything together this organized before. So, um, I kind of wanna just start. What's that, Jason?

You should have people for that. I've been saying this for a while.

Well, you know, Jason keeps saying like, why don't we have an employee who does this?

It sounds like I'm the employee who's—

Yeah. Employee. You want another job?

No, I'm good.

I'll give you $13,500 a year.

Can't afford me. I'm, I'm out.

You're invited back.

All right, why don't we start off? Why don't you kick us off? Now, I love this. Growth and marketing are both terrible words and can create serious problems in your company. What do you mean by that?

When I was preparing and just trying to think of, you know, what's interesting, like what can we talk about? I was really aiming this a lot at like the questions I get as like a long-term CMO and a CMO, you know, like there's this big mile marker that we've all established, like 9 figures is cool. That's not the majority of businesses. Like most businesses are much smaller and there's, you know, It's really, it's not that cool to be that big, but in any case, so like I aimed this a lot at like the questions I get from people, whether running like 7, 8-figure companies, like what is, what is a CMO? Like, what do they do? What do you do? How's it different? How do I get somebody like that in my company? And, um, so I started here, which was like growth and marketing are terrible words, right? If somebody walked up to you at a bar and they're like, hey, nice to meet you. I do marketing. I'm like, what the hell? I have no idea. Like, it's like a game of 20 questions to get to what they actually do. And you could, it could be anything from like social media feed curation and management to like hardcore advertising. Um, there's just such a, it's just such a bad word. And growth is a similar word. It's kind of a, like a, a more current word for e-commerce D2C. Um, but it can be similarly just like broad and mushy and not really mean anything to anyone. And so this is where I started, which is like the idea that you really need to narrow in on what these things are. Like, if I go back to my original title, digital media specialist, I still don't know what that means. I literally wrote in my cover letter, I don't know what this means, but I'm a photographer and that's digital media. What do you think? Right? Like, so it's just like getting specific about what each person owns is incredibly important. Um, and it's not as simple as just saying like, I'm going to hire a CMO or I'm going to hire a marketing Or I'm gonna hire somebody for growth. I think we really need to like chop up what that means. I'm sure it means something different to everyone on the call, right?

Oh yeah, for sure. Uh, you know, the funny thing, I've always enjoyed all job titles in marketing because all job titles in marketing are just good marketing. Like you don't really know what's just, what, what just happened. You know, like Jason, here, let me ask you this. Who owns growth at HexClad? Like in the, in the org chart, do you have a strong opinion on who owns growth?

Yeah. Well, Connor's the global head of growth and Connor reports to me, so we own growth.

And do you guys, like, Mike, would you agree? Do you think the CEO of every company is in charge of growth? Like that's their job?

Man, I don't know if this is the way it works in other companies, but like, I'm the person that keeps us on offense all the time is the way that I think about it. And, uh, 'cause I think growth is like being on offense. Um, now there are other CEOs where like they really view their role as more having the right people on the bus and risk mitigation. And I think that that can work. But you've gotta have somebody that is keeping you front foot and keeping you towards identifying new opportunities and charging hard after those. The reason why it's easier if it's the CEO is because you have the operational authority to reorganize priorities. And this is really the tension that you usually recognize in growth is that growth means, hey, we're going to take some of the capacity that we were focusing on all the normal stuff. and we're going to put it over here towards this new thing because we think this new thing can grow. And that's kind of moving everybody's cheese. And so the further down the org chart they are, the harder it is for them to actually go to say their peers or maybe even somebody that's over them in the org chart and say, hey, no, no, no, you're not going to work on that. You're going to work on this new thing. Um, and I need some of your resources in order to do it. When the CEO says it, everybody's like, well, that's just kind of Mike being Mike. You know, he's, he's going to charge after the new opportunity. And so I guess we'll do it.

McCoy, respond to this for me. Like, I have always thought that growth marketing as a job title, like I'm a growth marketer, it's very weird to me because does that, to me, that implies that there's a non-growth marketer, right? So like, uh, and I'm like, well, what kind, is there marketing that doesn't grow a business? You know, like, and why are we calling that marketing then? Can't we just call that the charitable arm of the business? Like art projects, like something else. So, yeah, like arts and crafts, like I'm in charge of arts and crafts cuz I do marketing. It doesn't grow a business. Like what the fuck? That's my response. So what, how do you break this up? How do you define like your job marketing inside of a consumer business? Like educate the CEOs on the call.

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I agree with both those points, like especially Mike's too. The, the problem is not that people are confused about what to do and that like They don't know which way is up. But, and if you're clearly, if you're clearly defining what these terms are and they make sense inside your organization, I think that that's fantastic. I think that's, that eliminates the problem almost entirely. Where I see a lot of the problems stem from is 8-figure businesses looking at like, or any, any size businesses looking and saying, okay, I need one of those, whatever that is. I need growth, I need marketing, and then not really understanding exactly what it is they're sending somebody out to do. Um, and then not having, actually having the authority, like Mike mentioned, to organize the pieces of the business around that activity of like growth. Again, whatever that means, uh, for your business. Um, is there marketing that is not growth? I hope not. Like, I hope there's not somebody just like blowing money out into the system. Um, but this is, this department is special inside of every, I'll say specifically e-commerce, right? There, as I'm, as we're getting bigger and we're, we're sort of like Leaving just the simple definition of e-commerce. Now we have retail stores. Like, I've had to readjust my— exactly. I've had to like readjust my definition, but especially e-commerce companies. This, this position is special because it is the fastest way to lose profit in a business. If you key in accidentally a million dollar budget into Meta, I swear to God, they'll take it. They will take it. I swear. I've seen it happen so many times. You can key in any number.

Have you heard my story on this, McCoy? That— No.

Did you, did this happen to you?

Well, we, back with Quibids, we accidentally keyed in a $5 bid cap or a $50 bid cap instead of a $5 bid cap, uh, for a key term. And you better believe they delivered the maximum amount of clicks they could at $50 a click.

Yeah.

So I don't know what the CPM is on $50 clicks, but it, it ain't great.

Yeah.

Number one, uh, number one topic is like growth and marketing are both terrible words.

I had actually really never heard of growth marketing until I got into, um, HexClad, right? And got into this business because I was a, I was a banker, I was a lawyer, I was a finance guy. But growth marketing came about like in, in the tech world originally, you know, to, because like traditional marketing was just boring, right? Like, oh, how do we market this product? And it's like, you know, it's like, well, how do we sell more? How do we use marketing to sell more? So I think, um, now maybe it's kind of gone way in the other direction. And I kind of see that here in the sense that everyone is so performance marketing driven. Like I had a conversation with, with one of our teams recently and And they're talking about, you know, sessions and conversion rate and spend and all these things. But I'm like, yo, let's zoom out, you know, and that was the tweet from yesterday. It's like, let's zoom out and say, okay, what is driving these things? Like, just because our con— great, our conversion rate is up and great. Our sessions are down. Conversion rate is up. Spend is down. Guess what? Revenue is not up, right? So like, what are we even talking about here? So, you know, it's like there's, there's, um, you can get really in the weeds on those numbers. And, and, um, I, Danny made a really great comment recently too. It's like, I've, he, sometimes we feel like we have all these great performance marketers, but we don't have any like real creative marketers in the business.

All right, Jason, what you're saying I think brings us to number 2, which is how many CEOs and how often CEOs get these like marketing roles confused and we don't know how to define them. So McCoy, maybe kick us off. Like, what is the difference between performance marketing, what Jason is talking about, which is like, I call it like capital M marketing. Just break it all down for us.

I mean, these are only my opinions, but I think Jason's correct about this, right? Like there is the marketer who understands like culture and product positioning and like how to fit in with all of these things. Like that's the capital M, or at least that's how I define it loosely. There is the performance marketing, which is largely data-driven. It's hard to do that if you're overly creative, and on the flip side, the same is true, but that's the really technical, mechanical form of marketing, and that's how a lot of us, I think, start, so we can kind of dissect that, but this lends itself to the point really well, which is how we actually get these roles wrong, and what actually is the difference between a VP or a director of marketing or performance marketer, all the way up to a CMO? And, um, as I look at these is they're just varying levels of business involvement. You know, Mike touched before on like the authority factor of somebody to rearrange the business according to like what's gonna make the thing grow. Jason talked about this meeting where everyone's kind of in the weeds on the numbers, and that's extremely healthy and proper for certain people, but you still need the growth force, which is Jason coming to that meeting and saying, guys, we need to look at the bigger picture, and that's the growth mindset. And so sometimes that's present inside like the job description of a marketing role, and other times it's not. And neither of those are bad things. Like you need people in chairs performing duties. Um, the question is whether we define them well and whether we title them well to give them the authority to rearrange the business around their priorities. And who's exactly going to do that? Is it gonna be the CEO? Which is sort of my like hot take and baseline opinion is like the CEO really is the the growth factor here? Um, or in certain instances, is it a CMO? Is it a VP? Like, these are all different local levels of priorities and authorities that the business has to like manage and mitigate to get the business to do what it wants to do because it doesn't want to, it wants to stay in the weeds. It wants to move small numbers, you know, small margins on small numbers. And that's not necessarily gonna move the big needle the way that we want it to be. So, um, I think people get this wrong all the time. I think most people, and this is like really, One of my hot takes is that like most people actually are probably looking for a VP of marketing, that that's the correct title for them, um, based on all the things that we just said. But I think CEOs get this wrong all the time. They want somebody to come in and explode their business, and sometimes they look to an agency to do that, and sometimes they look to a person that they give a big title to do that, and it just often doesn't really go well.

My belief, and I know we've talked about this in the show in the past, my belief is that CEOs in consumer businesses are in charge of growth. And they can come at that a lot of ways, right? Like Mike had a way of describing it. If you've ever watched Danny at Hexclad speak about the brand, you can kind of see like he's very growth-minded and he's very brand-first. Like he's a brand guy. You know, brand people are hard to spot, but when you see one, you're like, oh, that's what you are, right? Like it's very hard to just like pinpoint them, but Danny is like a brand guy. And I think what you are hitting on is That a lot of— there's a lot of CEOs in consumer that are not natural growth people. So what they want is they want somebody to come in and just take it over from them. They're like, oh, I just want you to do this. You know, I— and because nobody actually wants this job, I figured this out, you know, 20-some years in business, like nobody wants to own revenue growth. It's the shittiest job in the company. So Mike, maybe I want to go to you here. Can you, for, uh, for McCoy, like describe your marketing org, like the titles, like we know you have Chris, 'cause we've all met Chris. He's your CMO. What does Chris's team look like? 'Cause you, I think you're gonna look a little different than Jason's team.

So the way that our marketing org is built is that we have a CMO, Chris Hoyle, and then Chris has a creative director and that he manages. And then that creative director really manages a team of a lot of different contributors that are doing things like photography, creative, and social falls under him as well, like all of our influencer. So there's a variety of different things that fall under him. We did not have a chief title for marketing in the first 5 years of the company, maybe even 6, because we really had to build the company more around demand capture and existing channels. than kind of demand creation. And as we've matured, it's made a lot of sense to invest pretty deeply in the brand. There was even a period where we had 2 creative directors and we kind of split it out around branding and packaging and then kind of everything else. But we've consolidated that into one. But I think that the thing that we've learned as we've wrestled with how do you structure your organization is what is the level of autonomy and authority that you want to entrust to the leader who is primarily driving the marketing side of your organization. And a VP title to me is somebody who is very, very capable, probably should not be reporting directly to the CEO, although sometimes that happens, but needs, in my opinion, some direction and guidance. Insanely capable, needs probably more tracks to run on, more kind of spelling out, hey, here are the priorities. And then when you get to the C-level, if I'm having to explain priorities to them, or if I'm having to weigh in too heavily, then they're probably not actually behaving as a C-level. So my conversations with my C-level leaders tend to be more, they come to me in our one-on-ones and say, here are the things I'm working on. Here are a few things that I am kind of trying to decide how I want to handle, and I'd love to get your input on. But they're really fully empowered decision makers, and that's what we have. having Chris as somebody that's a fully empowered decision maker. He's setting the strategy and then he's also managing the execution of that strategy. We also have some really great VPs, but it differs in that those people still are getting direction from somebody that's an executive level person and that are not reporting directly to me.

Mike, I love that description. I love that definition. That is That is so good. Whether it's someone is like empowered to just go make decisions or someone that needs to come help, get help, get approval, et cetera. That's, um, that's perfect.

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Yeah, we don't even have a VP of marketing. You don't have a CMO? Well, we have a great head of growth who everyone knows. And he's, you know, he does a lot, right? Because we're a very D2C business. We've always been a very D2C business. We have very small retail footprint, which is kind of run in a separate silo. And so like at the end of the day, it's performance marketing, head of growth reporting to me. And then we have this kind of brand side, which is Cobbled together in the sense that we have an amazing content creation operation. Like we have our own studio, we have a team, you know, when we do Gordon, we don't, we may hire in some people, but like we really run it when we shoot with Gordon or anyone else. Like we don't have to go to some agency. There's great agencies out there, right? You know, we all know them, but we don't do that. And they pitch, we don't do that. So we have that piece. And then we have, we kind of call it brand partnerships and events piece because we do do a lot of events. And, but what we don't have is we don't have brand marketing per se. So that's kind of, but that, those 2 pieces, they report up to Danny. So, and it's the rest of it is just like, you know, Danny and me and the rest of the C-suite for that matter, because we have like a, we have a good C— really solid COO. We have a head of International, commercial, and we do a lot of this stuff together, but we have been struggling with like, okay, we definitely need more senior leadership in the marketing org. Some of it is that Danny and I are both very hands-on, but, you know, with the right people in place, we would probably be able to let people run and we let Connor run pretty hard at stuff, right? But at the end of the day, I find in our org, the best decisions get made in the C-suite and the guidance comes there. And so we've struggled with the thought of, okay, do we need a CMO? Do we need a VP of marketing? And we've tried, and I think the CMO at At HexClad is a very, very, very hard job.

Well, especially right now, like your brand content is in under Danny, performance growth, all that stuff's under you, right? Like they're not even rolling up into the same part of the C-suite.

Right. So if we had a CMO, they would take it over, right? That, that would be the—

Right.

So, but getting some, getting someone to fill those shoes is not, is a tall order.

No, because it's 4 freaking feet. At the moment, right? Like, okay, so McCoy, take it, take it, wrap this, this like kind of tie this all up for me. Mike gave you a bit of a framework for how he thinks of like a VP versus a CMO. Could you also introduce like a director-level person? Because I think a lot of people hire first at a director level, like director of performance or director of growth. How do you think of like these tiers? of these roles in marketing.

Okay. I'm gonna weave back and forth between Mike and Jason here, and then I think, I think this'll segue like beautifully into our second point. Um, for me, a director is somebody who runs a team of individual contributors. Now I'm gonna go to Jason. Jason, does Connor run, does he lead leaders? Does he have multiple people underneath him who have teams underneath them?

Yeah, our growth team is, is pretty large at HandyClad, so Uh,

so my like counterargument is like, that is a VP level role. Somebody who is leading leaders who run teams. So director, again, on the local level, they have a crew of people to get stuff done and they direct those people. VP levels in my like personal definition would be somebody who has multiple of those figureheads underneath them. So multiple directors. Um, to, um, Mike's point, I think that, that it, Functionally, what you described sounds completely correct. I would make one disagreement. I think that your VP of marketing, if you have one, or whoever represents the VP-level role, can only report directly to the CEO. As a, as a, as just a, a pure construct of what the permission he needs or they need to, to move the pieces of the business, to speak opportunity without a layer of translation, to talk about what, what could be and what's not, what's a good place to avoid. I think the VP of marketing can only report up to The CEO, and I've seen it go through COOs. I don't think that works as well. They're focused on something else. They're engineering-minded. They're not as growth-oriented typically. Again, there's always, every good marketing advice, by the way, needs to start with the, the, the, the, the T up, like it depends. But generally speaking, I think that they should report up to the CEO. Okay.

So I wanna ask a question about that. Would you say that if you had, is, is the construct that you would either have a VP of marketing or a CMO?

Yes.

Okay. And that makes sense to me. Like, I think saying that whoever your preeminent marketing person is has to report to the CEO, I think is golden advice because my take is being that there are 2 roles that are, at least in our organization, the hardest from a perception standpoint. And that is being in charge of product and being in charge of marketing because when things aren't going well, those are the first 2 places that everybody's gonna look. Right. Even if sales is struggling, people don't typically go to the chief sales officer. And usually those people are charismatic and they can tell you, oh, well, you know, really the reason that Target didn't buy this much is we didn't have the right products or whatever. They're not seeing us on Instagram. That really the, those 2 people are kind of uniquely vulnerable in the organization because they tend to be the scapegoats when things aren't going well. And so I think they need to have the direct approval and blessing of the CEO, or they're going to just kind of get hung out to dry when Performance is rough.

Absolutely. I agree 100%. They bring the hatchet first. So like for my final weave back to Jason, Jason, I think what you described and, and where certain responsibilities lie is gonna segue into point number 3, which is I think you might actually be a terrible candidate for a CMO to have a CMO, period. I think that's why it's so hard for you is I don't think that your business is like ready for a CMO based on the way that you described it. And what is precious to who. So I'll leave it there for now. I mean, maybe we can unpack it, but I think that probably segues well.

Can I actually take us to that? So the question I had, and I think this is a perfect tee-up, uh, McCoy, is tight, like level of marketing hire at stage of business. And clearly that, that may not be true. It's always like an, it depends because HexCloud is a monster company in revenue size, in market, like number of markets they sell into, their logistics offer. Like they are a sufficiently complicated business at their size. Uh, how would you guide a 7-figure brand new to the 8-figure tier brand in where they should start at each of these levels? Like, is there a broad rule that we could apply or is it always, I don't know, depends?

I think there's, I'll, I'll state what I think is a good rule and then I'll state the exception, which is Um, if you're in the 7 figures, no C titles. Period. You get one, you get one, it's CEO and that's it. And that's 'cause his ass is out to dry if the company goes, you know, bankrupt, right? Uh, 7 figures, no C titles. Don't give 'em out. It doesn't make sense. Um, 8-figure titles, you better really think hard about it until you get to a certain scale or complexity or whatever it is for that individual and unique business. Um, and here's the reason for why is By titling somebody with a C title and giving 'em the chief, you're signaling to the business that everything, and this goes back to point number 1, which is why these words are so confusing. Everything that happens in marketing or finance or in operations rolls up to that person, to that ass in the chair. And when you're that small, or if you're, and again, if you're, if you're a complex and mature business at 8 figures where I'm not talking about you, it depends, right? I'll get it tattooed across my forehead. Um, but you're signaling that everything needs to roll up to that person eventually and in some way. And you don't even know what the business, the shape of the business is. You don't know how complex it is, and you don't know if this person's well built for that. So maybe, and here's where the exception is, maybe you're recruiting somebody from a much larger business and pulling them down into your business, and they've been where you want to go, and they understand what's up ahead. That's probably not what you're doing, 'cause you're probably not ready to shell out, you know, the multi-six figures for their salary and the blah, blah, blah, all the stuff that comes with it. I agree. I agree. No C-titles, right? So you're probably hiring somebody and growing them up. In the business. And if you give them director VP title, and if that fits what they're actually doing, you always have the option to shape the business around them. Whereas if they're stuck in the, you're stuck with somebody who's C-titled, it's extraordinarily painful if they can't do the job. And it's reasonable as the business grows, if they don't keep exact pace with the business, or if you decide to move the business one way or the other, that they might not be well suited for what those challenges are. Like, it's just extremely rare. To go from a very small company to a much larger company and complexity to increase out of control, 'cause it just does. And that person still be the correct person for that role. And you need flexibility and they can grow into it. Great. If that's there for them, awesome. If they had earned the C title, give it to 'em. But if they don't, you as the owner of the business or the CEO, you're gonna have to make moves to keep the business moving. And that's extraordinarily painful if somebody's occupied the C title and they're not Doing what they need to do as a chief whatever.

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I want to jump in here and make the observation that when we were growing Simple Modern, I was very laissez-faire with titles. I just didn't think they mattered. It was like, we're guys, we've got a bunch of stuff to do. What do you want your title to be? Great. That's fine. And I really regret it because now I understand, like when you're the CEO, you're like, who cares what everybody's title is? Our job is to just grow sales and to just make this thing like not die. But what you don't think about is that titles are kind of like an internal passport that helps people to do what they want to do. And it, it is very important. to people what their title is because this is the thing at a cocktail party that they're going to tell other people. This is the thing they're going to put into ChatGPT and say, hey, what's my market value? This is the thing that's going to go on their resume. And this is the thing that they're going to say to their peers about why they should listen to them on a particular subject. And so titles never go down. They only go up. You, you, I, I don't think I've ever seen somebody, a situation where you could go to somebody and say, hey, I know you have a VP title, But you're really not a VP, you're a director. We want to change that. And then being able to kind of come back from that, it just doesn't work. So you cannot get demoted like that in an organization and just kind of emotionally stomach it. So my advice to people is that you have to be, I love the thought process, McCoy, that you only have one C title early on because it's easier actually to have title creep early on because there's There's so much untaken territory and everybody's going to want to try and take it. And you as the leader have to say, no, we're not actually giving those titles out right now. Those titles are earned and those titles are justified in the business with us getting to a certain scale. And if you keep doing X, Y, and Z, then I think you can be on a path to someday earn that title. But so don't go and hire people that are coming from a C title into your organization. where they're from a much bigger organization. It won't work. I don't even know how many times we've heard about it not working. You're like, oh, but they were at, you know, company XYZ that's bigger and they're gonna help us grow to that. And it's like, no, they're not. They're used to being in a position where they had 8 direct reports and now you're asking them to do a lot of individual contributor stuff and they're gonna be bad at it and they're not gonna like it. So there's, there's a lot of really practical— if you had talked to me 7 or 8 years ago, I would've been like, why are we spending so much time talking about titles and where people sit on the org chart? That stuff doesn't matter. We need to get to like doing things and making creative. But now I understand the value in all of this and being intentional and deliberate here, especially early on.

Mike and McCoy, I think with what we're hearing from Jason and what we're hearing from you guys, this makes a lot of sense to me in that you don't want people with C titles early on. So I have a rule. I don't know where I got the rule, but the rule is that when you hire a C title, you're basically hiring 1 to hire 10, right? If you bring somebody into a C-suite seat, they are going to want and need 10 people, minimum 10 people. So if you're not ready to build that org from that seat, then you should not hire that seat. That's like probably a good frame for people listening to this. And this brings me to number 3 on your list, McCoy, which is that a lot of CEOs say they want a great CMO. But what they really want is an obedient one. And I would, I have my own take on this, but I would really like for you to give us your, what that, what does that mean?

Yeah. So this, this goes back to everything we've, we've talked about, right? And it's, it's autonomy and it's, um, organization and it's the, the keys. I call 'em the janitor keys cuz they're not actually all that cool. Like you just have a lot of keys and you have to walk around and like clean up all the time, right? It's just a janitor set of keys, right? It's not, it's not that awesome. Um, and it's, you can waste, a lot of people, they'll get this itch, like, I need a CMO, I need a CMO, I know that's a proper thing to do for a proper company, and that's what I want to be, so let me go find one. Um, and they go out and they look for somebody with either credentials or somebody that they, they bring into their organization, um, who's got a lot of potential. They, they wind them up and they wind everybody up. Okay, maybe you'll be an owner of this thing or there's shares or blah, blah, blah. And then they bring them in and for either good or bad reason, by the way, Because the business is running at full speed and you have a lot of things going on at the time and this person, you know, jumps in, um, they just turn around and like ignore what they have to say. And again, maybe for good or bad reason. And that's a signal to me that what they're not really actually ready to pass that over, or the organization is not well built for that CMO to arrive, right? You, all of us on this call could get hired in very, very small businesses and have really no place to put, no vessel to put our value, right? I could get hired out at my local pet store. I can't help them grow. Can't turn it into a, you know, a leather empire. Like they just, they're not wet ready for me. And some businesses aren't ready for great CMOs. And on the flip side, some CMOs are not that great. Um, but it really has to do with the level of autonomy, which again, we've already discussed and how I look at, and we talked about like, when does someone become like a C title for, in the marketing? I have what I, my center point of responsibility to the business. is spending money, right? Like we have a lot of money to spend on ads next year. And if we don't spend that money, it's not reasonable for us to assume that we're gonna hit our revenue goals. So my center point, the, the thing that I hold dearest is the money that we let go out the door, especially on like a digital placement. It's not concrete, it's not, it's not labor, it's not a warehouse that we need to buy. It's not product, it's digital impressions. I can't even individually guarantee are happening. I'm just assuming that the dashboard's working, right? It's an extremely dangerous position. I think Sean spoke to this in the episode where you guys talked about like how hard it is to hire this role. And that's one of the reasons why is like you're literally blowing money into this digital ecosystem and you're just kind of taking their word that it's happening. And I think it is. Um, but the point is, is like the CMO really needs to own first and foremost, in my opinion, the marketing spend. And there is a whole lot of stuff that can make that go either right or wrong across the entire business. They're in charge of media buying, right? Like that's media buying. You think about spending money, but there's so much more to the business that can make it efficient or, and/or inefficient. So many decisions you all make as CEOs about which direction we're gonna go, how we're gonna get there, what the style and the shape of the company looks like, the next products we release that are really out of their control. And they need to have the level of autonomy and the maturity to speak to the C-suite and to the CEO and, and communicate. The benefits or the downsides of all of those decisions and stand up tall and say like, I'll be accountable to, for this level of performance. I can't be accountable to this 'cause it's really outta my control. And if you're not ready to like have those conversations, or if the business is not well built for somebody to step in and take those keys, you might not be ready for this, a CMO. Just, I'll kind of leave it there, but that's kind of my general baseline view.

But maybe Jason, like this is a good point for you to address because you guys don't have this seat. You say you want this seat. My question to you, knowing you and Danny, is like, can you even put a person in this seat? Because like the way that you guys run the company is like you and Danny, and there's probably one or two other people, you guys are attached at the hip and you are very like, this is what we're doing. This is the direction. This is the vision. Like, here's how I want things to go. And Jason, you've been on the show how many times saying like, yeah, I just showed up and said, no, we can't, we should spend, we should spend less money. Right. And what McCoy is saying, Is that this seat is going to want and need a level of autonomy and they have judgment and they're the ones who are gonna be saying, yes, we should, or no, we shouldn't. And my question to you is like, do you think that works in the style of company you have at HexClad? Like with the style of leader you are and how in the weeds you guys are, 'cause you guys are very in the weeds operators.

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I think the observation, Jason, is that And yours is a good one, is this is about trust. And McCoy has said like the thing that he is most concerned about is how much capital he is going to deploy into this like digital ether, right? And at all of this scale here, we're talking about like, we are talking tens and or hundreds of millions of dollars that are being deployed. So what you're hitting on, Jason, is like, I need somebody or I want somebody that I am like, I'm going to trust. So you say credibility, but ultimately this comes down to trust that I trust to allocate capital in a prudent and effective way. And that what we have long said on the show is that like when you grow somebody up into the seat, that process of growing them up and the time in the oven is what earns the trust.

Well, trust is built through a series of data points, right? And to like, it's not a single line item on your resume, it's hundreds of data points and showing ability to exercise good judgment over time. And I think that you nailed it. HexClad, my advice to you, Jason, would be you and Danny have very strong opinions about your brand and about how your brand should be portrayed. And so I think the word trust is the entirety of the problem. How many people can actually earn your trust that their judgment is up to your standard? And I think that the reality is it's almost impossible for somebody that you have not seen a lot of data points and track record from to ever get to that level of trust. It doesn't matter what other organization they've maybe led in or what else they've accomplished in their career. That's not HexClad, that's not your baby. And so I really think I would center in on that word trust, and I think that you're probably going to end up having to have somebody that that comes through the ranks internally, I really doubt the ability, or like you said, or somebody that's earned your trust in a different way, like Sean, although I think Sean has a day job that you would be willing to trust.

Let's double-click on that for one minute, 'cause I think this could be useful.

That is rare. So let's keep going. I said something that Jason could use.

Yeah, yeah, yeah, yeah, yeah. I know, I know. So the point that we've focused on, and I think a lot of D2C brands who kind of suffer from the same thing is it's again, that's growth marketing mindset versus like market, more general marketing. And how do you find someone who can really do both? And like, no, I don't know McCoy really well, but I know that McCoy is a really solid growth marketer. I know Connor Mack even better, and he's a PMO, but he, what he really is, is like an incredible Growth marketer, right? And so for us as a brand that's a couple times bigger and has different objectives and is trying to just do things differently, like that, our biggest issue has been this. So even with that VP level higher, it's like, okay, what does that person look like? Because that's the same issue with CMO and VP. It's like, what does this person look like? Clearly, Getting the VP person, um, it gives you more time for them to build trust, but it, it's still the same problem.

I don't think you have a problem, by the way.

I think like, I love working because it helps me, right?

Yeah. I think that it's working, right? Like you have a CMO force, like you're getting the result of a CMO cuz the company's obviously very healthy, right? It's that who's, but whose shoulders is it on? It's on yours and Danny's shoulders, right? And so it's effectively happening. And so my point is, is like, hey, if you're not ready for it, don't put yourself through all the pain of bringing somebody in and then trying to turn over trust and autonomy too quickly if you need to keep hold of it for a lot, for longer, right? Like, just save yourself the pain or readjust your expectations, like multi-year run-up cycles into when this person actually gets all the keys. Like, just go in with clear-eyed, you know, point number one's about clarity and definitions. Go in with clear-eyed expectations. Like, I might kill you off in 2 years and start the cycle over again. Like, I, I'm not quite sure. how long it's gonna take before I decide to trust you or not trust you. I think Mike's advice is better, which is Mike, probably somebody homegrown, right? Um, and, but this, especially for like the, the, the businesses who are not at this stage of business and where it's maybe not going well, right? Where you have a CEO who's too precious about things and they don't have evidence that their perspective on the thing is working. The company's not growing. The company is stagnant. That's when you start to look and go, okay, do I have a problem here? Am I holding these things too precious? Am I, do I need, am I bringing somebody in here and then basically forcing them to do what I want and then asking them, you know, to put their head on the chopping block when it doesn't go well? Or like, what, what's, is there a, is there a mismatch in their autonomy, both perceived and actual? Like, am I making them do what I want and then they get roasted for it going wrong? I think CMOs, VP of marketing, whatever it is, they get way too much credit when it's going well and they get way too much blame when it's going wrong.

This is such a good point and this is why like this is the, worst tenured C-suite in all of business is the CMO, right? And it's not even close.

Like, not even close. It's, I saw a friend of mine who just left a CMO role. He said it is the worst job ever. And he's not, he's not wrong. I mean, everyone kind of feels that way about their job, but it's a, it's a little bit like brewing whiskey, right? You fake your resume and it takes 12 years to, to, you know, brew a nice batch. So if you fake your way into one job and you stay there for long enough, by the time they figure out you have no idea what you're doing, you've got another 12 years on your resume and you just go con the next guy, right? Like CMOs take multi-year cycles to acquire customers and bring them through the business and product journeys and 24-month LTV and retention rates, all these things. And then they bounce and plop the plate of mess onto the next guy's area, put it on the next guy's plate. And you find out like they don't actually know how to run a business over a decade successfully at all. They just know how to come in and like tweak some knobs and call themselves a marketer.

Well, and the problem, one thing that we've gotta call out here is that being a successful marketer is so dependent on things that they don't control. Like in our business, I have found marketing and product to be Siamese twins. And you know, you know, when our marketing team kills it, when we have a great product that people already want. And you know, when our marketing team struggles, it's when we don't have the right product in market. And so they're just like completely captive to it. And I, so like being successful in marketing is a lot of times like, hey, I happened to be in a marketing seat where I was the person who was responsible for pushing the spend behind behind something really successful that had great product market fit. And I've just kind of come to believe that product market fit can make really incompetent people look pretty smart, and a lack of product market fit can make geniuses look like idiots.

I mean, partially guilty of that. Okay, listen, no one in the world has ever seen my tweets, but Mike, I tweeted something. I think you'll agree to this. I tweeted that the marketing team is in charge of purchase 1, 2, and 3, right? Assuming you have a decent product, you can create some repurchase rate. I then said, the product team is in charge of purchase 4, 5, 6, right? Like by purchase 3, I've emptied the tank. You bought everything you want from my brand. And if I'm gonna keep re-engaging audiences over and over again over multiple years, I need help from the product team. Like I, I, I'm just flat out not in control of that.

This is proof that the X algorithm is getting better. I actually saw the tweet and liked it because I think that's exactly true. And I think it's the underestimated, like if, if I had to say like, what is the one thing in D2C that's the most unhealthy and the most likely to change in an AI AI world, it's that we're way— we're like the guy who only does arm day and always skips leg day. It's like, so if you think about like your upper body is marketing, but your lower body, which actually matters more, is product. We're like the dude that's just jacked and running around, you know, where he's like totally imbalanced upper body, lower body. And I think that we're moving into a world where it doesn't matter what fake ratings you put on your site or what you do to make your product look better. Great product is going to be what wins, and great marketing will flow out of great product. And if you're not, if you don't have great product, it doesn't matter how well you can kind of tell your story. You're not going to be able to win in the market because your lifetime user values aren't going to allow you to be competitive in auction.

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Can I then ask you that, Claire? Maybe you guys can all chime in on this, but I think part of the reason that part of the thing that you're getting at, guys, is that we as a consumer, I don't wanna say DTC, like consumer, we spend so much time and energy and conversation on marketing because it is such a massive chunk of our P&L. Like if you look at like, where is all the energy going? And money is energy. It's like 25, 35, like there's just huge percentages of revenue that go into this bucket. And I would, I'm curious to get Jason, maybe start with you, but like with what Mike is saying is that we've all said it a million times, product is everything. McCoy, you're saying it, Mike, you're saying it, Jason, you've said it a thousand times and we're all right here. But if AI is going to make the marketing piece easier or different, it's like more like outsourced, I guess, like it's just going to be so algorithmic. Is this ever gonna be true? Or psychologically, is the percentage of our P&L on marketing always gonna drag us back into everything is marketing? That's all we should care about. Once you get the product right, everything is marketing. Jason, how does this ring to you? Like with what everybody's saying?

I mean, there's a lot to unpack there the way you talked about it. I, when you build a good brand, it really allows you to do way more, right? And it allows you to, in some respects spend less. You have this kind of virtuous cycle where I think like some of the best brands, they don't need to market as much. And part of it is because you have a great product and part of it is because you built a great brand. We saw that, you know, that organic feedback loop to me is something that's really important and special. You know, the problem is like that it, no matter what, there's competition in the marketplace. Like, it's hell out there, right? It's hell out there. And so you have to constantly be firing on all cylinders and innovating from a product perspective and continuing to market well. Like, and that, so that's never gonna change. And I don't think AI is gonna change that too. I mean, AI is, it maybe make, will make everything better, but at the end of the day, like, there's gotta be humans. Making calls.

The way— just to clarify my point, I was reading an article last night where Drew Fallon was talking about this, that like with supplements before, you could just say, this'll make your skin better. And I think we're moving into a world where like I can— everybody's personal agent is going to be like, yeah, what are your ingredients? Like, what are the reasons why I'm to believe this? And what, what are the Kind of pieces of corroborating evidence that might exist across the internet. Like, so that's what I'm going to start asking my agents is just like, hey, what is the best product for this? Why do you think that? What are the ingredients in it? You know, things like that. And so I just think there's going to be more ability to get as a consumer a wide variety of feedback on a product, and that's going to inform purchasing decisions more going forward than it did in the past.

Number 4 is, do you need a leader or do you need a nerd? And how are you building out your marketing team? What do you mean by a nerd?

Okay, so a nerd is, it's, it's more like that VP of marketing, right? It's somebody that you need to be in the weeds, constantly focused on where the money's going, constantly focused on metrics. Um, somebody who's, who's obviously still like capable of spotting opportunities and communicating up to the, the C-suite or to the CEO. Um, but this is somebody who's probably a little more analytical. Minded than creative-minded, maybe, but definitely somebody whose chief concern— I asked, I asked my team, this is a fun thought exercise. I'm like, if everyone got raptured to heaven tomorrow besides you, for whatever the heck you did in your life, what are you going into the office and doing because you think it's the most important thing in your department?

If hypothetically you were eternally damned, what— I love that as like a hypothetical you're throwing out to people on your team, by the way.

So, if you were sure you were not gonna be saved, and what would you go in? Of course, you'd go into the office, right? And then what would you do first thing in the office, right? Um, and so, for me, that, that thing is, is like, I gotta spend money. Like, I gotta spend money and get the, the, the brand in front of eyeballs that day, right? So, the VP, that's what they're focused on, right? Um, and then their, their counterpart is like the leader. That's more like when you're trying to homegrow somebody. And I think a lot of this is personality based on who you are as a CEO. This And the difference between like a nerd is somebody you can sit in a chair and you say, obsess about marketing, uh, KPIs forever. Just spend the damn money as best as you possibly can. Get the large margins outta these things and, and tweak it as much as you can until it's as best as you possibly can imagine. Okay. A leader is like somebody where you're looking ahead and you say, hey, we're gonna be a big company someday. We're gonna be HexClad, the Death Star of D2C, right? We're gonna have 100 people running around here in your marketing department. And you need, right, just this big object. It's planet-sized, right? Okay. And you're gonna need to run this 100-person team. And so I need to invest in you differently than the guy I plan on leaving in place, differently than the guy who's gonna sit here and focus on the marketing stats. I need to teach you leadership. I need to teach you management. I need to teach you how to develop leaders who are running people themselves, right? This is a different core skillset. And how you hire or what your subject of conversation with these people, I think is just fundamentally different. This is a problem that comes when companies scale fast, is you have people who may be good at a thing and then they catch some wind and the company grows, but then all of a sudden you wake up and you're whatever scale of business you choose. In this figurative example, let's say it's 9 figures, and that's a big organization and you don't want that thing to go belly up. And it's a good idea in a big organization to have really capable leaders leading really capable leaders. Leading really capable people. And if you don't invest in that person differently than the person you plan to leave in place, which is an okay thing to do, then you might have a mismatch of opportunity. So, my question is like, if you are still the de facto CMO, expect to, uh, to lead, expect to help this VP or whoever, the director, it doesn't matter. Expect to teach them things about hiring and onboarding and all of these things. That's okay. And then let them cook once they're in place. If you need a CMO or you're trying to grow somebody up, You're gonna have to communicate with that person differently. And it's not just about marketing capabilities anymore. It's about how to grow into the people that you all are as executives with, you know, complete autonomy or founder mode or whatever you call that. How to take risks, how to, you know, they're gonna be fireproof to a certain, uh, extent. They can take risks and fail and still survive, whereas an individual contributor may not. Um, that's just a fundamentally different way to bring somebody up in the business than somebody you plan on leaving in place.

I like this. This is the classic, uh, you need to grow your people faster than the company, right? Otherwise, like the, everything will break because you just don't have people that can grow. They just can't do the job. Um, Jason, do you have a take on this? Like, do you think this changes, or Mike, I'm not sure who, but like, do you think this is changing now? Like this idea that we have to grow talent and we have to be thinking about like the people in the company, how we grow that talent. Do you think it changes with AI in the picture? And how we think about organizational structure and adding people and like leadership, like how much layers of leadership, like this is what's top of mind. I'm listening to McCoy, I'm reading his thing and I'm like, yeah, but what about AI?

[Sponsor Content] Here is what I am observing on the ground that when, as AI commoditizes certain things, other things are going to appreciate rapidly in value. And I can tell you for a fact, the thing that is appreciating rapidly in value across a number of different vectors is trust. It's trust that in a world where you can offload more and more of the doing and more and more of the cognitive load, trust is appreciating rapidly. And it's easy to understand why that, for example, I can now automate way more of what's going on in my business, but that means that the person who is in charge of architecting that and designing that, I have to trust them more than ever before. Whereas before there might be 10 people doing it, now it might all be flowing through one person. And so, you know what, that person and my ability to trust them has to, I have to have 10 times the level of trust in them, right? That in a world where dead internet theory is coming true, the influencers online that we know are real people doing real things in the world, like the amount of trust that we have in them is going up. Exponentially. We've seen this with the pod and the way that people respond to us. The fact that we have real businesses and we're real people, that matters a lot, that we're not just some anon account that's, you know, being powered by Opus 5.5. And so I think that in your business, trust has always been the most important thing, but I think it's going to be more than ever before. And this kind of goes back to the fundamental of like, how do you actually build with AI? And AI can build anything, But at the root of it, you have to make a lot of qualitative decisions that are based on subject matter expertise. And either you trust that person's judgment on making those decisions or you don't. This is also why not every organization should be building software, because it turns out that there are people who are subject matter experts that are going to have the best taste and the best judgment about how the qualitative trade-offs in a system should be built. And you should pay for that, and you will pay for that. You'll be happy to pay for that. Like the way that I've been saying it recently is just because you can make a burrito doesn't mean you're gonna stop eating at Chipotle. And it's the same exact thing with software. So I would just encourage everybody to understand that trust is going to be more important than ever before in a world where it's gonna be harder and harder to trust most of the content we see. I mean, I can't even trust if a phone call comes into me right now that the person on the other side of it's actually a person and not a model. So the things I can trust are gonna really matter. If you're scaling an e-commerce brand today, ads alone aren't enough. AfterSell focuses on the one moment that every brand already owns after checkout and turns the post-purchase moment into more profit. Monetize every order with post-purchase offers and thank you page experiences without disrupting checkout or hurting conversion. Enterprise-grade tech used by Gap, Ticketmaster, Macy's, and Target, now driving results for brands like True Classic, HexClad, Ridge, and Jones Road. I would know. This is the reason I ended up buying 3 pans from HexClad instead of 2. AfterSell has already generated over $1 billion in additional revenue for e-commerce brands, revenue that doesn't require more traffic or higher CAC. So check out AfterSell and tell them that The Operator sent you.

I hear this a lot now with my CEO founder friends that like we're going from an attention economy to a trust economy. And that trust is actually, in a weird way, AI is this downward pressure on trust, or maybe we'll call it like inherent trust. So like, I'm gonna default now to, I don't trust you, or I don't trust this thing. Whereas maybe before I would default more to like, obviously this is okay, right? So that sounds like a problem for marketing.

Yeah. I mean, here's this famous line, it depends, right? So when you're buying supplements online, and I do this all the time, I buy supplements, you buy skincare, whatever it is, you go to ChatGPT or whoever your LLM is, And you're looking, as Mike pointed out exactly correctly earlier, you're looking for the best ingredients, right? And so you can have a brand that doesn't have great market positioning. They're not looked at as prestigious. They don't have Kim K. They don't have all these traditional trust signals that you might expect, but they win on the LLM because their ingredients are good and the product works. Okay. So that flattened, that it magnified their lack of trust. It's CeraVe, right? It's the Walgreens brand, but they happen to have the best ingredients. So all of a sudden people are consuming them through LLMs. And on the flip side, things like reviews become much more important for brands. It reinforces trust. So I think, again, it depends. I think that there's gonna be great opportunities for newcomers who make great products to rise to the top, especially in things like supplement and skincare. I think for other people, it's gonna erode trust because you need to, or you need to build up a big body of trust. You need customers who speak positively about your products. In order to win market space. I don't think it's one side or the other in totality, right? I think it's gonna go both ways.

Number 5 was the relationship between the CEO, the CMO, and finance is the single most important relationship in your brand. And when I hear you talking about trust with the consumer, I think this starts internally, right? Like this starts with like your top leaders in the business. If you do not have high levels of trust, how could you expect it to ever get down to your customer. So maybe for like, just to keep us going here, what do you mean when you think about the relationship between these roles? Why is it the single most important?

I mean, put it very simply is because you as a business are gonna be spending a lot of money to stay alive, right? Like, and I, and I, to be just plain and simple, like there's a lot of money you're about to, you know, circulate into the economy. I've given this example, uh, my CFO and I have talked about this all this time, like what, Especially as we're, we're talking about what our role is as, you know, chief whatever, right? She's the chief finance officer. I'm the chief marketing officer. And I get, kind of give this analogy, which is like, okay, if you're a business and you're gonna do 9 figures in revenue, and maybe you expect to keep $15 million of that in profit, means you're not going to keep $85 million of it. All of that's gonna get recirculated out into the economy. $85 million of it. You divide that against 365 days and it's $232,000 a day, roughly speaking. Now, that's not like a pile of cash that's just sitting on your desk that you have to like shovel out the door every moment. But the idea is that you have to be an investment company. You have to find the right labor. You have to find the right products. You have to find the right ads. You have to find the right media, uh, channels to get this money out into the ecosystem so that it will come back. And in order to do that at that velocity, this is a $100 million company, right? This, in order to blow $232,000 into some investment every single day, Like you guys have to be in lockstep with each other. You have to know what you're spending your money on, what investments you're taking. Some of these investments, by the way, they're not immediate and obvious, right? It would be great if every day we put just that amount of money in and just that amount of money came back. It doesn't work like that. Sometimes you're investing months or years in advance of R&D. That's an investment that has to be actively made every day by the C-suite, but it may not return itself back. And so you have to be confident and trust each other that like you're going the right direction. This is obviously like an analogy. But if you ever find yourself sitting here and cost savings is, is a noble thing to focus on, it should be someone's job. But it's my opinion that like the C-suite should be primarily focused on long-term investment, long-term investment of capital. Cost savings. Yes, let's do that. Let's knock down the price on cardboard a few cents per box, right? But we got to get this money out into the system so that it comes, finds its way back home to us at the rate and at the levels that we expect it to. You can't, I can't, as an advertiser, I can't cost savings. my way first and foremost every single day. I can't sit there and wait for the right opportunities to present themselves before I load money into the machine. That doesn't mean it's a risk or a gamble, but I have to get that money out there and then optimize the results. I can't sit around, you know, clinching it too tight and saying like, prove to me you're worth spending my first dollar on. It just doesn't work that way. You have to get it out into the system.

Jason, you have long been talked about like you guys are, you have had a great discipline, at HexClad on focus on EBITDA, on focus on profit. Could you, I don't know if this is possible because it's such a big topic, but like, could you talk about how you think about what McCoy's talking about? Like this allocation of capital at the scale that you're at, how you think about the return on that capital, like the velocity of it. Like I've just got, it's such a good topic and you guys have done this at such an excellence. How do you guys work when it comes to like, we're gonna deploy cash?

So you just have to set minimum thresholds that just like can't be crossed, period. You know, luckily we were able to establish, you know, pretty high margins during the pandemic when our MRRs were crazy good. And, you know, our COGS are, are, have always been solid. We've always had really good unit economics. So you start with good unit economics, right? And then you layer in the marketing and then you say to yourself, I just, I will spend up into down to X in margin, but I just will not spend more than that. And even if it means like not growing or growing slower. And so I, because no one knows the right answer, right? No one knows how much to spend, what the right, the right MER is. What the right CAC is, but you just, you just have to say, okay, we draw the line in the sand here and we're not going past that. And we've, we've just always been that way. Part of it is because no one ever gave the founders money for the most part, right? Like the founders basically financed the company. They got a couple of friends to loan them money for inventory, you know, at some point when they really needed it, including me. But like, that's, you know, that's, but these guys did it all themselves. They didn't get any help, blood, sweat, and tears. And that, that creates a level of discipline that you don't get when you have a lot of money thrown at you to do stuff. And I'm sure Mike, you know, kind of has a little bit of the same situation there, right?

Oh yeah, for sure. Like, because it's, it's basically like, how much do you want to grow? How much are you willing to invest? What you're talking about, Jason, is like standards. Right? So like every company has to have standards. McCoy, one of the things I really appreciate today with what you're talking about is like you're a very like mental model and mindset and frame kind of guy. It's like, how do I think about some of this stuff? Which I know Mike is very much like how you run your company. It's like, what are the principles? How do I actually make decisions? And I think McCoy, what you're hitting on is very much like we need to know what the top 4 or 5 questions are that we should always be asking every single day. That governs how we deploy capital into marketing, into product, whatever it is. So I just think like, this is a great place. Maybe we'll end the actual episode on this. Like, this is a great place to end it is like you as an executive team need to be in lockstep on these things because you're talking about allocating lots and lots of money regardless of the size. If you're a $10 million a year business, $10 million, like you're deploying $8.5. In this man, like $8.5 million is a lot of money, just period. Like if you scale it up 100 times, fine. Still a lot of money. You know, so I think this is a, like a really wonderful place to wrap it up. Mike, do you have anything that you want to add on this before we, before we finish?

Yeah, I was just struck by the idea of trust and building trust. And one of the things we didn't talk about is that the platforms have to earn trust with you. Like nobody is going to say, I'm going to go from $0 to $25 million in Meta spend in a year. If you do, you're an idiot. Like, don't do that. Like, it'd be like, hey, let— show me that you can steward $1 million well, Meta, and then let me actually make sure that pulls through to my results. And then, okay, you do a good job, then you get 2, and you do a good job, you get 5. And so we've talked about it a lot through the personnel standpoint, but it also is true of tactics and platforms. And this is the reason why internally growing the, the most successful businesses almost always work this way. They're built through teams that are internally grown from the ground up. And the reason why it's so difficult to just kind of tack on pieces, it's so difficult to go raise a big round and try to go really big, really quick, because trust doesn't scale that way. It doesn't scale that quickly. And so the way that you build into the type of organizations that we're running today is by slowly and methodically, month after month and year after year, building trust in your systems, building trust in your partners, your platforms, The people inside the building. And as you do that, you can look up 3, 5 years in and be like, wow, how did we get this big? How did we get to this point? But less will happen in a month or a year than you would hope, and more can happen in 3 to 5 years than you could dream.

Love that, boys. I think that's the pod. McCoy, this was awesome, dude. Like, love the thinking. Jason, it sounds like Jason even learned something and gave Mike credit for it, which is, uh, always a nice day.

I learned the most from Mike because Mike has the perspective. We are very similar, Mike and I. It's great. And

thanks for the compliment, Jason.

Thank you for coming on, buddy. I mean, I don't know why they let you on, but now I know why they let you on. So,

yeah. We got there slowly. I earned some trust. Yeah, I appreciate it. Thanks for having me.