S2 E1 - Dave Johnson, CEO of Thrasio

[00:00:00] Elgato Wave Neo-24: welcome to the middlemen. I'm Tom Limongello, and I'm here with Todd Sawicki. We, as middlemen, live at the intersection of media and e commerce, and we would like for you to join us in our discussions where we turn that chaotic intersection into your comfort zone 

[00:00:18] Todd: Well, welcome to another episode of the middleman and this week we're going to be talking about a company that it's maybe some of you've heard of maybe not Thrasio and Thrasio is a really fascinating company. It is a startup, of sorts, even though they've raised I think like a billion dollars.

[00:00:39] Tom: They've actually raised four, which is 

[00:00:42] Todd: thing. So they've raised four billion dollars as a startup and what they're doing is they were acquiring a bunch of startup brands, Amazon brands, these D2C startups. What did they, I think they bought like a, what, a hundred? How many have they, they bought, Tom?

[00:00:57] Tom: They bought 200,

[00:00:58] Todd: Okay, that's the thing,

[00:00:59] tom-limongello_1_01-30-2025_185438: yeah, [00:01:00] when we heard

[00:01:00] todd-sawicki_1_01-30-2025_155438: Oh, and they bought 200 over what, the course of two to three years?

[00:01:04] tom-limongello_1_01-30-2025_185438: Yeah. Basically they were around for a couple of years and they were buying something like two companies a week.

[00:01:09] todd-sawicki_1_01-30-2025_155438: Jesus, right? So this is like 200 from zero to 4 billion, zero to 200 brands. And, if you're looking at the landscape of the buy side, something again, we want to focus on a little bit. This could be the, one of the next Unilever. Remember the last time we saw somebody even get to that scale, like how many brands is, Tom, you've got it back on the Unilever.

[00:01:28] tom-limongello_1_01-30-2025_185438: They actually, so what's funny is I started my career at Unilever and they were always trying to, I always learned how they just, they swallowed a bunch of brands and then they rationalize them down and shut down plants and brands and made it into a very small number.

[00:01:42] tom-limongello_1_01-30-2025_185438: So like I remember when I was there, we were trying to get to foods nine, so nine brands right now. But right now they have 400 brands and so they're a huge company, but it's also foods, home products, ice cream.

[00:01:56] tom-limongello_1_01-30-2025_185438: So it's a lot of, it's a large

[00:01:58] todd-sawicki_1_01-30-2025_155438: but even then, if we look at it from the [00:02:00] perspective of they're already at 200 brands, right, they're halfway to being a Unilever.

[00:02:05] tom-limongello_1_01-30-2025_185438: And they were only at, their max. Market cap was somewhere between five and 10 billion. It was all on paper cause they were a private company. You look at Unilever and that's 145 billion company. So they're basically 14 times bigger at their highest and they, only had 400 brands.

[00:02:21] tom-limongello_1_01-30-2025_185438: So. 

[00:02:22] Tom: 200 brands for a 10 billion company is nuts.

[00:02:26] todd-sawicki_1_01-30-2025_155438: So it's, and so the point of this is there's these companies, like what does the buy side look like? And there's these emergent. Next gen unilevers, next gen CBG companies. And I think that's what Thrasio has potential to be. And so one of the things that, if you're selling, we've had a bunch of sell side people on so far, and that's been our focus.

[00:02:42] todd-sawicki_1_01-30-2025_155438: And you and I have that background in the sell side or recently, even though you have both, right, you're a two way player in this regard and. From a sell side perspective, I think it's really important that we were going to be in the future talking to more buy side representatives and, hearing the story of Frasio and how they think about their business and how they plan to grow their business [00:03:00] and is going to be really insightful to anyone in the sell side of this space.

[00:03:03] todd-sawicki_1_01-30-2025_155438: What, how do these people think and where are they coming to and how do they look at these retail platforms and what is their size and scale and structure? There's a lot we can learn. One of the benefits of, Tom and I, you were both at You and I were at CES is talking to, we got a chance to meet some of the representatives of, brands are selling to the retailers and they were less than complimentary retail media.

[00:03:25] todd-sawicki_1_01-30-2025_155438: They really think it's they're struggling to make it work for them and they feel like it's being shoved down their throats. So we're really going to make this the next gen of the future of online advertising. There's some work we got to do as a sell side industry and some work to make this successful.

[00:03:40] tom-limongello_1_01-30-2025_185438: Yeah. And now remember in this case, you have Dave Johnson who worked with me at quotient, so he was on the other side, but he started his career at P and G. So he's also a switch hitter like I am, and That's going to be a very tough customer, which is why you're going to hear in this interview that he might say something like, it's a choice of whether or not we [00:04:00] want to be at the retailer.

[00:04:01] todd-sawicki_1_01-30-2025_155438: Well, and I think, it's By the way, the Quotient Mafia is insane across this whole online ecosystem. What, a third of the people we've talked to? Maybe half have some tie to Quotient? It's

[00:04:10] tom-limongello_1_01-30-2025_185438: I was definitely made it easy to set this podcast in motion,

[00:04:13] todd-sawicki_1_01-30-2025_155438: Well, for sure, but it's these people are critical people across

[00:04:17] tom-limongello_1_01-30-2025_185438: No, they're all, they're popping up everywhere now as CEOs of new

[00:04:22] todd-sawicki_1_01-30-2025_155438: CTOs, heads of sales. Like it's amazing. I, the background, I think we're clearly going to look at the quotient mafia as the equivalent of the PayPal mafia in the startup tech ecosystem for retail media. It's really a fascinating pool of folks.

[00:04:36] todd-sawicki_1_01-30-2025_155438: And so yet another one. I think, Dave's doing, doing some really interesting stuff with Thrasio. And by the way, Thrasio hit some bumpy waters, which is, and we're gonna hear their story. Tom and I got to, from our last, right, we place we worked together at Pantastic, which was, in the Shopify ecosystem.

[00:04:51] todd-sawicki_1_01-30-2025_155438: And we were starting to build beginnings of a retail media platform for that. And, Thrasio was the darling of the startup D to C space. [00:05:00] And so we as outsiders were like aware of it and we're aware as a roll up they ran into some problems, some funding problems, they, swallowing and learning how to rationalize the 200 companies they bought.

[00:05:09] todd-sawicki_1_01-30-2025_155438: It turned out to be a lot harder than I think they thought. And so they had,

[00:05:13] tom-limongello_1_01-30-2025_185438: And they were Amazon only. And so we're going to go into a lot of detail about what it's like to think outside of just the online world and think about the retail world, but also think about. What is it like to manage insurgent brands or, online brands that have big creator followings, ones where influencers are actually potentially doing stuff on behalf of the brand without any, direction from this insurgent brand.

[00:05:41] tom-limongello_1_01-30-2025_185438: So like just people out there making videos of these brands that maybe have strong claims. So all those types of things, all those trends that we see happening in social and other areas, those types of trends, insurgent brands are actually using those. I think the retailers are they realize that [00:06:00] those trends are there and they actually looking to see if they can bring those brands into the store.

[00:06:05] tom-limongello_1_01-30-2025_185438: David would tell us about like Walmart's Project Milky Way. There's all this, this. chatter around Walmart and other retailers starting to look outside of the data that they have to try to find these online brands. Are they going to get them to come in? Well, these retailers have really strict pricing.

[00:06:24] tom-limongello_1_01-30-2025_185438: They have really strict timing on when you can get in there. You have to invest in retail media. All these things make it hard. So it's a really interesting dynamic.

[00:06:34] todd-sawicki_1_01-30-2025_155438: yeah, there's a lot to, I think, learn from Dave. Again, him like you, Tom, being, having worked both sides of the equation is really fascinating. And as, as retail media builds up, I think there's a lot to learn from this conversation and a lot to take away. And I think anyone who sells to that, will enjoy watching this episode.

[00:06:52] tom-limongello_1_01-30-2025_185438: All right, let's get into it.

[00:06:54] Tom: we are here with Dave Johnson. . Dave, thank you for joining us. We work together. [00:07:00] When you were at Quotient, you ran sales there. I knew before that you were at P& G working on the Duracell brand. You worked on their power relief program.

[00:07:09] Tom: And then I'm definitely going to be excited to hear any sort of military analogies. I know you're West Point graduate. But we reconnected because you were recently named Chief Transformation Officer at Thrasio. A company that I knew about in the e-commerce space a few years ago, and then by the time we got you to join us, you were, you've become the CEO.

[00:07:32] Tom: First thank you for coming. We wanted to ask you what is Thorac? Tell us about the company and and about its meteoric rise and fall, 

[00:07:40] dave-johnson_1_01-27-2025_144436: Thanks to him by Tom. And I'm sorry it took so long to reconnect, but Tom and I had a fun run together at at quotient building retail media. And those are definitely some moments that I remember and will continue to remember for for a long time. 

[00:07:54] todd-sawicki_1_01-27-2025_124436: By the way, it is amazing how many people across the online retail landscape [00:08:00] came out of Quotient. It's like the, a huge part of the middleman is just, it's the journey through, Tom's Quotient Rolodex. And you're another great example of, it's just, it's amazing how some companies really become Like the foundational spores that, that spread and really helped create an industry.

[00:08:17] todd-sawicki_1_01-27-2025_124436: And it's just the amount of talent, super amazing, talented people who came out of quotient and are doing great things and interesting things like you and Thracian. I'm really curious to, hear what's going on there. Came out of quotient. So it's just fun to see this and see how that company really gathered an amazing group of people.

[00:08:34] dave-johnson_1_01-27-2025_144436: yeah, it was a great run. And it's it's always exciting to be on the front end of innovations. I had no holds. Thanks. I had an old boss at Procter Gamble that used to say pioneers take a lot of arrows, right? You just have to make sure it doesn't hit you in the heart.

[00:08:50] dave-johnson_1_01-27-2025_144436: And we were pioneers on that front. And it was a great time. I would like to think too that our retail partners we worked with they learned a lot with us through that process as [00:09:00] well. And so it's been fun to watch that industry grow and, the turn that we saw towards retailers running their own platforms and being enabled enough to do it was not something that we saw when we started.

[00:09:12] dave-johnson_1_01-27-2025_144436: And the fact that they were able to get up to speed the way they did and to build what they built I know a lot of us at Quotient that were involved also take some real pride in that as well. So now I'm at at Thio as you mentioned. And it's been quite a story to get my arms around with the company.

[00:09:31] dave-johnson_1_01-27-2025_144436: For a little bit of background on who the company is. It's this story of crazy takeoff and also a crazy crash of the company. But now a rebuild and a resurgence in the company, which is really exciting. And it's not very common in. Someone's career is all the folks that are involved with Razio now to be part of a company that is truly in a turnaround that is this visible.

[00:09:58] dave-johnson_1_01-27-2025_144436: So it's a really exciting [00:10:00] time to be there.

[00:10:01] tom-limongello_1_01-27-2025_154436: Just so that the listeners who aren't so familiar what was it in the beginning? I know there's lots of acquisitions, but tell us a little bit what it was and then where are we now?

[00:10:10] dave-johnson_1_01-27-2025_144436: So the model in the first place is this concept of a of an Amazon aggregator. The idea was that the company had a central factory per se, right where it had platforms, tech platforms. Us, it was in the areas of pricing and replenishment or ordering and marketing. And there were others as well, but these platforms effectively work together functionally.

[00:10:36] dave-johnson_1_01-27-2025_144436: And enable this central this central nervous system for the company per se that they could adopt any brand or most brands or most ASINs or SKUs into this factory and they would leave the back end of the factory better off than they were when it began. So the same factory concept is repeated in many other places, right?

[00:10:58] dave-johnson_1_01-27-2025_144436: It came from data [00:11:00] the data world prior was it was data analytics is a similar story there. There was a central factory. Data came in, got pieced together, delivered out in the back end as analytics very similar type of story. Thrasio when it began actually was one of the, in some places we'll say it was the, but was one of the fastest tech unicorns in the U S.

[00:11:21] dave-johnson_1_01-27-2025_144436: And it went from. At the right time or the important time around the time of COVID was all of a sudden seen probably as the leader in the space and became a became a target for private equity to come and invest. And those investments came in upwards, around 4 billion of investments came into the company.

[00:11:42] dave-johnson_1_01-27-2025_144436: And the purpose of those investments were to build this company to become. The company of the future was valued around between five to 10 billion at the time. And the idea was, is with this investment, they'd go out and they'd buy these brands. They'd get, the company mindset of as many brands [00:12:00] into the network as possible that fit within the investment criteria.

[00:12:05] dave-johnson_1_01-27-2025_144436: And through that time built up over 200 200 brands,

[00:12:09] tom-limongello_1_01-27-2025_154436: Wow. Okay.

[00:12:10] tom-limongello_1_01-27-2025_154436: It was a lot, but I don't know. 200 is a lot.

[00:12:13] todd-sawicki_1_01-27-2025_124436: 200 brands and 4 billion is just massive, right? That's I don't think people who are loosely familiar with ratio and Tom and I were in terms of our e commerce background at fantastic. We're aware that Thrasio had acquired a lot, but 200 is a ton. And, I think there's a lot of challenges around what that means in terms of how do you pull that together?

[00:12:37] todd-sawicki_1_01-27-2025_124436: Because I've, since we bumped into Thrasio being in, in our former space and the Shopify Amazon ecosystem was that it was just herding cats over there, 200 brands, trying to get them all like 200 Amazon accounts, 200 warehouses, 200 logistics pipelines, like the promise of this. add brands to a consolidated back end or consolidated, logistics [00:13:00] stack was sounds good, but it really sounds like they struggled to a large extent to actually execute on that strategy.

[00:13:05] todd-sawicki_1_01-27-2025_124436: And and here we are today, almost with you being the one to maybe deliver on that promise today.

[00:13:12] dave-johnson_1_01-27-2025_144436: Look, there I can't name any company that I'm aware of that could could operate and operationally integrate that many companies at that speed.

[00:13:23] tom-limongello_1_01-27-2025_154436: Yeah, my, my experience at Unilever was, they wanted to rationalize ice cream down or foods down to nine brands or something, and it was, like the idea of having that many, it was, that would have been, all the supply chain guys have been salivating to how to shut everything down.

[00:13:38] todd-sawicki_1_01-27-2025_124436: How many brands is like Unilever have, they probably only have a couple under brands on a global basis, right? Like the idea of having 200 brands is, I don't think people really understand that just. The enormity of that, because if Unilever is trying to get down to nine brands of ice cream, they probably only have a couple hundred brands total that they keep at any one point in time.

[00:13:56] todd-sawicki_1_01-27-2025_124436: Is that fair? So

[00:13:58] dave-johnson_1_01-27-2025_144436: I think they have, I [00:14:00] would say far less than that number. I, I would.

[00:14:02] todd-sawicki_1_01-27-2025_124436: 200 is a lot. That's crazy, right? When you think about that. That's really interesting. I don't think people understand the scale. Like when we say 200 brands, that's a huge number.

[00:14:11] dave-johnson_1_01-27-2025_144436: It's an enormous number. And and again, part of the question about how you operate those many brands is start getting into the depths of a fair amount of those were being products being shipped from China. So your supply chain becomes extremely complex. You start figuring out how many full container loads versus partial container loads do you have? And, that makes material material difference in in your PNL, the number of warehouses where you store your goods, warehouses that may look like someone's garage.

[00:14:42] dave-johnson_1_01-27-2025_144436: And how do you manage inventory totals when you don't have all the systems to track them and all these things? So all of these things can get out of hand very quickly.

[00:14:51] tom-limongello_1_01-27-2025_154436: yeah, but you had private equity investors, so it all would have just gotten fixed at that point. 

[00:14:55] dave-johnson_1_01-27-2025_144436: I would have said, I would tell you that this would be a very difficult endeavor [00:15:00] for anyone to get there to get their arms wrapped around.

[00:15:04] tom-limongello_1_01-27-2025_154436: Yeah. I think I mentioned that because there, there was an open letter out there from Oak tree capital management where they assumed that this would have run, been run better, even though they had white shoe firms involved. It sounds like from this discussion so far.

[00:15:17] tom-limongello_1_01-27-2025_154436: that it's, it was very difficult, even if you consider the fact that it was a, a new world, like you say, it's, brands coming from, like supply coming in from China or whatever. It was just broke all the rules. It seems 

[00:15:29] dave-johnson_1_01-27-2025_144436: Yeah, look, I think it was a very, and I think it still is, by the way, it's a very exciting thing. Industry, and it's a very exciting new area of opportunity.

[00:15:39] tom-limongello_1_01-27-2025_154436: Let's, yeah let's get to that then. Like what? What is, now that you're at the helm, what is the new strategy? And tell us a little bit about how you're going about changing what's, the focus.

[00:15:51] dave-johnson_1_01-27-2025_144436: Yeah. So two part strategy. Number one has been a lot of the work we've been doing. It's a lot of the work that I came in to do on the [00:16:00] transformation side, which is simplifying a very complex business. Okay. So what I didn't share before is the company emerged from bankruptcy. Earlier in in around mid 2024.

[00:16:13] dave-johnson_1_01-27-2025_144436: So that time frame between unicorn to emerging from bankruptcy was around four years that all this huge uptick and then quick downtick happened. So again, we're had a very complex business. We'd gone through bankruptcy and through part of the bankruptcy process, it really enables a very quick transformation on how your assets are now valued, et cetera.

[00:16:37] dave-johnson_1_01-27-2025_144436: We went through a process to , really speed up the process of reducing our 3PL position. The company at one time had over 300 warehousing positions. We're now down under 10, I believe we're at nine

[00:16:52] tom-limongello_1_01-27-2025_154436: Oh, wow.

[00:16:52] dave-johnson_1_01-27-2025_144436: and we're. Getting down to four by the middle of this year will be too domestic and into [00:17:00] offshore positions.

[00:17:01] todd-sawicki_1_01-27-2025_124436: And again, for those listening, 300 is insane. I can't even imagine how you imagine a team of people just to call and find all the people that they're working at. Just, holy crap, that's a, that's just astronomical.

[00:17:14] dave-johnson_1_01-27-2025_144436: And then on that, so then on the cost base to understand what inventory you need on those, some of them have inventory systems that you can track automatically. And some of them you have to audit. And so now every time you have to audit, there's incremental costs that go into the system and it just, it balloons out really quickly.

[00:17:30] todd-sawicki_1_01-27-2025_124436: Even imagine, just, I'm getting the heebie jeebies just thinking about managing that many, that diverse. a network of suppliers and 3PL Oh, like ulcers. This is just Oh my God,

[00:17:43] tom-limongello_1_01-27-2025_154436: So you're talking about reducing costs. That's one part of it, right?

[00:17:47] dave-johnson_1_01-27-2025_144436: Yeah, that's one. That's one part of it. And that goes top down with the company. That's also simplifying your portfolios. So we also went through the process to sell off some brands that, [00:18:00] that were not fitting directly into our go forward strategy as a company. We also went through processes to reduce our legal entities.

[00:18:07] dave-johnson_1_01-27-2025_144436: You think our warehousing, Okay. Reduction is crazy. You should see the legal entity changes that we've had to make as well. So again, significant changes in overall business goes down to selling accounts on Amazon goes down to our vendor accounts at retailers. Tons of work to go and simplify the business from a very complex base.

[00:18:31] dave-johnson_1_01-27-2025_144436: So that think of that part of the business that says, Hey, this is how we get profitable. As a company, this is how we produce cash as a company is through that simplification work. The second part of it is brand growth. And so we're very fortunate as a company. through the aggregation phase of our company and now to a brand phase of our company is we both acquired and built some very strong brands.

[00:18:57] dave-johnson_1_01-27-2025_144436: Okay? Which we're very fortunate to [00:19:00] have those brands because those become the core of our business going forward. In those core businesses are in a handful of categories that allow us to now position ourselves as a consumer goods company that has a category focus. With the focus of really creating winning competitive brands that make everyday tasks enjoyable for our consumers,

[00:19:22] todd-sawicki_1_01-27-2025_124436: Is the plan then that it sounds like right to an outsider. I'm not a, like you, you and Tom have backgrounds in the CPG space and that world from an outsider's perspective. It, I would say, Oh, you're looking to build the next Unilever and PNG and maybe the new age version of that. We haven't seen a large CPG.

[00:19:41] todd-sawicki_1_01-27-2025_124436: Company emerged at that scale. And I want to say 50, 40, 50 years, maybe 75 years. And it seems like there's an opera, I get maybe the thought behind the beginnings of Thrasio and its competitors at the time, because it wasn't the only one in the Amazon aggregator space was, Oh, we can go build the next gen Unilever PNG.

[00:19:57] todd-sawicki_1_01-27-2025_124436: Is that what you guys are thinking? Or is it slightly different?[00:20:00] 

[00:20:01] dave-johnson_1_01-27-2025_144436: slightly different. But we're, but we do all play in the same space. I guess the other term is I hope to say to you someday that we all bid for the same space on a shelf at a key retailer, right? We have to be competitive with those brands if and where we play with them in their categories.

[00:20:20] dave-johnson_1_01-27-2025_144436: But hey the difference comes in this, there are some real benefits to being a digitally native brand. There are some real benefits of growing up on Amazon and in DTC. There are some real benefits to hearing directly from your consumer in a very fast digital way and innovating on your product very quickly.

[00:20:45] dave-johnson_1_01-27-2025_144436: It's almost this idea like I, I left CPG because I lost I maybe have a short attention span, but I lost patience a bit with the speed at which CPG moved. And when I returned back into [00:21:00] CPG after being in tech for tech and data for a handful of years what it got me really excited about this company is this concept of CPG but CPG moving at the speed of technology.

[00:21:13] dave-johnson_1_01-27-2025_144436: So at Thrasio. We do innovate quickly. We have partners that allow us to innovate quickly. We have insights from consumers that give us the reason to innovate quickly. And I believe that's a true differentiator in the marketplace. There are things that work really well in the CPG. The big CPG, as you were talking about handbook.

[00:21:34] dave-johnson_1_01-27-2025_144436: I know those. I know those handbooks pretty well. We will. We have to do those. Those are those air. That's that's the foundation of doing great consumer goods. But there are also things on the agility side in the speed side that companies like ours are just uniquely able to do differently than those type of big companies.

[00:21:56] tom-limongello_1_01-27-2025_154436: Is this is this the show and tell time, show us some packaging or what give us [00:22:00] some examples.

[00:22:01] dave-johnson_1_01-27-2025_144436: Example I like to give is we have a product called hate stains and fantastic product if you haven't used

[00:22:07] tom-limongello_1_01-27-2025_154436: I bought, I bought some.

[00:22:08] dave-johnson_1_01-27-2025_144436: What's here? Um, Miss Miss Mouths. Um, So great product. Um, you know, I'm not sure if I can say it's a miracle worker, but it sure feels like one. Um, And you know, this product already in already in this size bottle.

[00:22:26] dave-johnson_1_01-27-2025_144436: We have other sizes as well. But this size bottles already pretty portable and you can stick into the bag and take it with you. But we also developed along with it. Another fit format based on consumer insights. And that new fit format is a wipe. And so if I were to use the other common product in the market, in a pen form that product, number one, doesn't necessarily fit into a pocket as easy as a wife actually have.

[00:22:56] dave-johnson_1_01-27-2025_144436: Um, I was using some the other day [00:23:00] on uh, um, my daughter got a new sweatshirt and had a stain on it. So this fit of a wife, right? Can it's very fits everywhere. You need it to be a great first moment of truth. If I can,

[00:23:14] tom-limongello_1_01-27-2025_154436: you call that a sashay? I used to love all these CPG terms.

[00:23:18] dave-johnson_1_01-27-2025_144436: What?

[00:23:19] tom-limongello_1_01-27-2025_154436: You call that a sashay? It was like I remember 

[00:23:21] dave-johnson_1_01-27-2025_144436: don't know that one.

[00:23:22] tom-limongello_1_01-27-2025_154436: Unilever was very international. So I remember with Hindustan lever, they would have shampoo in sachets or packages

[00:23:28] Dave Johnson: Oh, okay. Yeah. Yeah. It's probably similar packaging to that. This, This is more of the, the towelette um, side, but um, so anyway so, so this product, first moment of truth again, very portable very, very usable. Uh, Second moment of truth. Uh, When you actually use the product, it um, it works great. It works again.

[00:23:50] Dave Johnson: It can work miracles yet with yet it doesn't leave all of the messy, halo effect and it dries very quickly. And in all these things come out of [00:24:00] insights that you see about the, these type of competitive products and if you can quickly if you can quickly mine insights.

[00:24:09] Dave Johnson: And you have the ability and the partners to then go and turn that insights into a product and you can do it quickly that is a it's a major game changer in the market and look, I believe it's I believe it's a path forward and it's continuing to be a path forward for insurgent type brands.

[00:24:24] tom-limongello_1_01-27-2025_154436: Those insurgents are getting those benefits because they're in a highly Competitive online marketplace where there's lots of ratings and reviews. Whereas on the store shelves, you're stuck with the packaging or is that sort of where that's coming from?

[00:24:38] dave-johnson_1_01-27-2025_144436: Yeah, that's where it starts. And. And look, it's also, I would say the more digital focus brands or let's say the, let's say the digital native brands have a reason to form a relationship with a consumer in a digital format from the get go. Brands that introduced digitally digital.

[00:24:58] dave-johnson_1_01-27-2025_144436: Second don't [00:25:00] always use that platform for the same reasons, right? They can get trapped into what is my retailer think of that and etcetera. And what we're finding is we're finding that the digital first space is very much an avenue that big retailers are watching, and they're watching it very closely.

[00:25:18] dave-johnson_1_01-27-2025_144436: And so it's, it just feels like it feels like the world is turning here on how how brands get discovered and what it takes to really run a successful brand. And and I think that we're on the forefront of doing some really cool things on that front.

[00:25:32] todd-sawicki_1_01-27-2025_124436: Are you seeing that? Online digital native retail migrate to in store. Recently Tom and I talked about this in earlier episode, target now has an app, a Shopify app. And the point of it is it's really meant as a research function. So if you install it, they can see your Shopify stats and allows their merchandisers basically to.

[00:25:53] todd-sawicki_1_01-27-2025_124436: To discover it's really, and as a discovery product for the merchandisers and because Shopify stats are in [00:26:00] public, it's not like Amazon, right? Decentralized platform. Is that something where you're starting to see the targets and Walmart's come knocking your door when they see something on Amazon or whatever storefront and wanting to pull things in store is that now starting to happen in a bigger way?

[00:26:18] dave-johnson_1_01-27-2025_144436: Yeah, without a doubt. There it's it's too big to not pay attention to anymore. And I'll give the example and this goes back a little bit in my time, but I was. I was running brand marketing at Walmart for Gillette and I remember I was seeing like, a point per year starting to disappear out of out of the Nielsen ratings or I was out of the Nielsen numbers.

[00:26:45] dave-johnson_1_01-27-2025_144436: And you start digging into what's happening here, where's this 1 percent going? And it's the emerge, it becomes the emergence of at that time, brands like Harry's and brands like Dollar Shave. And whereas you couldn't measure them [00:27:00] completely, you knew where they were going and that it built that but it sent this kind of a bit of a, an awakening within this data set to say, Hey, this isn't all in all encompassing.

[00:27:11] dave-johnson_1_01-27-2025_144436: It's not all inclusive. There's something else going on here. What do I do about it? And I would tell you right now, very much like I was in that state, back in 2014 10 years later. Retail retailers are trying to get as strong as a grip on what's going on in the third party markets as they possibly can, right?

[00:27:32] dave-johnson_1_01-27-2025_144436: And it's really fascinating. A lot of the questions that we get when we'll be out talking with, with large retailers, it almost comes down to this degree of Hey, how are you? What? What's really going on? And how did you do it? How did you get? How did you get hundreds of thousands of reviews on a pillow? 

[00:27:48] Intro-todd-sawicki: Yeah. This is the part I wanted to dig into a little more because I think there's this amazing online momentum that you have, but that's not just The fact that it's on Amazon, it's the creators or the [00:28:00] influencers that are powering some of this, right? I think you mentioned when we were chatting before the Miss Mouths brand, there's like somebody smearing their sheets with blackberries , 

[00:28:09] dave-johnson_1_01-27-2025_144436: yeah. Look people love the again, if miss mouth, there's a degree of a miracle worker on it and people want to go out and prove it. They either want to prove it right or they want to prove it wrong. But we're seeing a lot of these prove right. Moments where someone will go on and to, to your point, someone had white sheets.

[00:28:26] dave-johnson_1_01-27-2025_144436: As someone on my team showed me this a couple of weeks ago, I had white sheets and took blackberries and was, smudging blackberries into their white sheets. Why? I don't know. Like we, they weren't a partner of ours. They weren't, I guess they were doing it just to prove that it worked.

[00:28:42] tom-limongello_1_01-27-2025_154436: Yeah, it's interesting to see the online culture of, trying to create controversy, builds traffic, builds this following. But then there's also the thought about, it, it builds this following on Amazon. And I think what we were talking about, earlier, whatever [00:29:00] what does it look like when you try to bring those brands with these followings into mass retail?

[00:29:05] tom-limongello_1_01-27-2025_154436: What are the challenges there?

[00:29:06] dave-johnson_1_01-27-2025_144436: Yeah. So there's a, I'll hit on that. There's a big hurdle to, to do that. But, I want to make sure I share more on this concept of real people going out and effectively demoing and testing your product. So back in my old days, if I was in CPG, you spend a lot of money to get those products demoed, you spend a lot of time to get those products demoed, it turns into a claim, which then on shelf will be a reason that someone will buy a product over another, right?

[00:29:36] dave-johnson_1_01-27-2025_144436: Job is making me question all of those things, right? All of those things, because there's such a power when people on their own can go and be the voice of your claim. and can prove your claim versus you doing it yourself. There's a trust factor that comes with an influencer. In that environment, that is that again, I don't know how to put a, I don't know how to put a value [00:30:00] to it, but I can tell you on the brands that go truly viral, it's one of those.

[00:30:06] dave-johnson_1_01-27-2025_144436: It's one of those factors that happens in every single one of them. And it's not just happening on brands like Miss Mouths. It's happening. There's cleaning brands that I follow that I'm seeing the same thing happen. It's really remarkable to watch. So there's this, there's a special thing that we do in this space between affiliate and influencer which is which is a unique thing that this company figured out during its phase on how to raise digital brands.

[00:30:30] dave-johnson_1_01-27-2025_144436: And it's really a powerful tool. 

[00:30:32] tom-limongello_1_01-27-2025_154436: Before you get into sort of the getting into retail, then there's a discussion about those influencers and creators. I'm seeing people talk about in store media. So you got guys like Andrew Lipsman saying that, the best ROI you're ever going to see or the best ROAS is going to be an end cap with a digital screen on it.

[00:30:50] tom-limongello_1_01-27-2025_154436: And after Walmart did their their time well spent pro campaign to try to pull the screens out of just the electronic section into the [00:31:00] grooming section or apparel and other places. Now you have the ability to do that. And the first thing I was thinking was like, what are you going to throw their 30 second commercials in there?

[00:31:08] tom-limongello_1_01-27-2025_154436: Probably not. Influencers could finally have a place in the store, to, to voice those claims or, a sign, signage up of those claims if you don't want audio or whatever, but, there's lots of opportunities to do that. Do you see that happening or is it, is that something that's just too early?

[00:31:25] dave-johnson_1_01-27-2025_144436: At the end of the day, a lot comes down to who makes decisions on, on, on what content can be where. If I were advising a retailer knowing that this is a big hurdle that a retailer sticks. If I go back to one of my old, one of my old jobs. I think the most important question for them to ask is what is it about the online environment that makes someone make a decision on a product and gets them excited to buy it?

[00:31:50] dave-johnson_1_01-27-2025_144436: And how do I bring that to life here? I don't think it's a Yeah. bestseller badge. I don't think it's a, [00:32:00] most, most number of items or units moved in the last X of time. I do think there's some real value to the number of positive ratings that a product gets. I do think there's something to positioning.

[00:32:14] dave-johnson_1_01-27-2025_144436: When it's on that, when it's on that shelf or on that digital shelf, that really matters. I'm having all these things reexamined right now within, within Thrasio right? There was an old book on how to sell things on Amazon. And I tend to think that the Amazon world is also. We got to look at that uniquely different than maybe we did in the past.

[00:32:34] dave-johnson_1_01-27-2025_144436: Both sides have a big hill to climb. Okay. Large retail stores have a hill to climb that they want to integrate. The the popular, convenient digital environment where there's a lot of, there's a lot of data available to make decisions, they want to integrate, they got to find a way to integrate that into their system, right?

[00:32:54] dave-johnson_1_01-27-2025_144436: They want to find a way to take brands that are doing well in Amazon and bring them into [00:33:00] their retail environment. At the same time,

[00:33:03] todd-sawicki_1_01-27-2025_124436: it easy to do that? I think that's one of the things that, why don't we see more of these brands showing up in Walmart and Target or, the Thrasio's Is it just are they afraid of it? Or are there other sort of structural issues that are preventing this migration from digital storefronts to physical storefronts?

[00:33:19] dave-johnson_1_01-27-2025_144436: both it's not traditional, it's not the traditional way of doing business. And I think for the retailers that are really going to figure this out, they're going to do it by by going in and trying some things with some partners, with that, with companies that know how to do it online.

[00:33:38] dave-johnson_1_01-27-2025_144436: And it may not happen in year one. It may not happen in year two, right? This is a journey. But this is a big hill to climb. And I think the only way for them to to fully break through in this world is you have to take some, you have to take some tries. And they may not always work, and it may be done in a non traditional way.

[00:33:56] dave-johnson_1_01-27-2025_144436: So as an example, let's say there's a [00:34:00] product that is selling on Amazon. And let's say that product, if you moved it into your aisle, was a two, two X more expensive, right? The price was two X more expensive than the next competitor. The immediate response for most retailers. We'll tend to be like, no, that can't be that expensive.

[00:34:19] dave-johnson_1_01-27-2025_144436: We have to reduce, we have to reduce price, right? I have to get it within a within a certain margin compared to the or a certain threshold compared to the other product. Because if I have that product, that two X price is just not going to sell and we're not going to go through the number.

[00:34:33] dave-johnson_1_01-27-2025_144436: Of units per week per store, and it's just not gonna work.

[00:34:37] tom-limongello_1_01-27-2025_154436: And this is also just the buyer doesn't seem like they're doing their job. It's almost like the procurement function or something.

[00:34:42] dave-johnson_1_01-27-2025_144436: Yeah, partly, right? It's a test. It tests everything, right? But maybe that product at a two X that's already success successfully selling on Amazon at a two X. Maybe that product could come and actually lift your category. Maybe that product could [00:35:00] actually come and do all the things that you wanted to do.

[00:35:02] dave-johnson_1_01-27-2025_144436: In your store. But man, it's really hard. And I understand this completely. It's really hard to to integrate that into your current system. And that's where I think that's where I think the real problem is probably generating from is just the change that it creates because these are two very different environments.

[00:35:23] dave-johnson_1_01-27-2025_144436: And it's just not an easy pick and replace model.

[00:35:27] todd-sawicki_1_01-27-2025_124436: that's what people as a non retail background, my background is on the digital media side. So I get into retail media coming from a guy who's been in AdTech and MarTech for 20 years. And I look at retail and go, it seems like you could just, if I'm the target merchandiser yeah, I just go to Ms.

[00:35:44] todd-sawicki_1_01-27-2025_124436: Melts and you guys, and suddenly it's in store. And, hearing from you today, it's no, Todd. It's actually way more complicated than you think. And those structural issues I think are fascinating to learn about that. There's, the ways of doing business have to change and the way they need to think [00:36:00] about doing business.

[00:36:00] todd-sawicki_1_01-27-2025_124436: They can't just pluck a product and drop it in. And, that might be one of the limitations because you're right. In terms of Miss melts is a hugely popular brand. On amazon online, to your point about the influencers smearing blackberries on the sheets By the way One of the fascinating things about getting into the world of online retail Has been learning about the emergence of things like tiktok shops and those creator videos and their impact and how they drive Huge amounts of sales, which is really interesting implications for the future retail media and how you leverage that, how you turn those into creatives and ads.

[00:36:32] todd-sawicki_1_01-27-2025_124436: I think that's one of the next big evolutions is how do you take and turn and you're beginning to see these like on YouTube, right? You see these greater commercials showing up, but we're not seeing them necessarily in retail media just yet as much. I do think to Tom's comment about the in store experience and do we pull those in and is that the future retail media putting that blackberry?

[00:36:50] todd-sawicki_1_01-27-2025_124436: Video in an end cap seems like that's a natural extension of what we're doing. But to pull that off, there's so many things that have to change and [00:37:00] evolve. And I think this is a fascinating lens into not just it's the future retail media, the future of product discovery from a merchandising standpoint and how things have to evolve.

[00:37:09] todd-sawicki_1_01-27-2025_124436: I don't think anyone realized that how much change would have to happen for these insurgent brands to really be successful in a much broader. landscape.

[00:37:21] dave-johnson_1_01-27-2025_144436: You look at what's been going on for years now with with insurgent brands, right? Brands that grew up in direct consumer that maybe, I think like the native brands one of our board members from the native brand. And you think of these brands that formed up in DTC found a good strategic retailer to work with.

[00:37:42] dave-johnson_1_01-27-2025_144436: And now that brand is a. A very well off brand at Procter and Gamble that is at all retailers that is, growing consistently year after year. Insurgent brands have very much been very active part of what we know is CPG for the last and retail for the last, [00:38:00] I don't know, 10 feels like 10 ish years.

[00:38:02] dave-johnson_1_01-27-2025_144436: They've really taken off walking to a haircare aisle. I was still focusing in my company, walking to a haircare aisle and look at all the different brands you haircare aisle. It's really dramatic how these insurgent brands have made such an impact.

[00:38:15] todd-sawicki_1_01-27-2025_124436: Makeup's obviously another one, right? Very creator influenced in that regard. And I think what's fascinating to me is You know, I, it's interesting the scale of where these brands can go. And again, as an outsider, you hear the stories of, okay, if I'm a successful, call it a creator brand or a merchant brand, I go from zero to 5 million and maybe I sell to a Thrasio and Thrasio goes from five to a hundred million and you're like, holy crap.

[00:38:41] todd-sawicki_1_01-27-2025_124436: Like I didn't even know some of the brands you guys have could do that went from five to a hundred. And then you're talking about like native gets acquired by Procter and Gamble, whatever it was, and goes from a hundred million to a billion in global sales. And, again, we went from zero to five, five to a billion, eventually.

[00:38:57] todd-sawicki_1_01-27-2025_124436: Like I can see why this is a really fascinating and [00:39:00] interesting category of business. Like you could take a 5 million brand and turn it into a billion dollar brand. That's a pretty crazy outcome. And do

[00:39:07] tom-limongello_1_01-27-2025_154436: Yeah, 

[00:39:07] todd-sawicki_1_01-27-2025_124436: brands. Holy crap. That's a

[00:39:08] tom-limongello_1_01-27-2025_154436: I think, yeah. So based on that, initially in the beginning of the conversation, you said, Hey, we're not trying to be the next PNG or Unilever. The only other example I have of something like that would be Campbell's buying Sovos. And I think that was a house of brands concept.

[00:39:24] tom-limongello_1_01-27-2025_154436: It's on the food side, which is what I'm more used to. And I always get a little bit turned off when I hear about, those acquisitions, because then the packaging guys come in and be like, Oh, we're going to have great new packaging. We're going to take all the good ingredients out. From that perspective, like thinking about.

[00:39:38] tom-limongello_1_01-27-2025_154436: Successes and exits and things like, what, how do you think about this? Cause I'm assuming you have to think about this in the PE environment. So what does it look like? You're building these brands up as Todd was saying, five to a hundred million what does it look like in the end?

[00:39:52] dave-johnson_1_01-27-2025_144436: What does it look like the infrithoracium?

[00:39:54] tom-limongello_1_01-27-2025_154436: Yeah. What, 

[00:39:55] todd-sawicki_1_01-27-2025_124436: or any of these insurgent brands. What is it, what's the landscape look like and how does [00:40:00] it is it. Just selling to a Procter and Gamble the goal, or can Thrasio, you're like I don't want to exactly be Procter and Gamble, but is there a future to be something at that global scale, which again, would be a hugely successful outcome.

[00:40:11] todd-sawicki_1_01-27-2025_124436: You could be a publicly traded company.

[00:40:14] dave-johnson_1_01-27-2025_144436: Yeah, it looked so multiple directions for any of these companies, right? There are some that are built, I would say purely as a as a start build up and then carve out. Okay. There, there are some of those that you see you S you've seen acquisitions for over the last handful of years.

[00:40:34] dave-johnson_1_01-27-2025_144436: A lot of times there are single brand Maybe they build portfolio within that brand. Maybe they stick just to their thing and they will, they'll go and usually go to a competitive sale. There's also others, there's, there's whole groups within private equity firms now that have companies that look similar to us, which are going to be multi brand multi category sold. Through multichannels, [00:41:00] maybe globally, maybe domestically there's a couple of, there's a couple of private equity firms that I watch and they own some pretty, they own some pretty strong brands, right?

[00:41:10] tom-limongello_1_01-27-2025_154436: Yeah. So one thing that I was interested in hearing you talk about insurgent brands is the model has been, at least recently, it's been, you have to grow up online and then you can come to the retailer. But previously to that, it was like you went to the retailer to audition for your product.

[00:41:26] tom-limongello_1_01-27-2025_154436: And I think that's like the shark tank, model versus the online model, or maybe they're, you're doing both, but I would love to know. Do you get to be an insurgent brand forever or like, how do you look at this?

[00:41:37] dave-johnson_1_01-27-2025_144436: Probably difficult to be an insurgent brand forever. Because someone else is going to, play that role against you as you get larger, right? I think there is a point where you turn from a from an insurgent to a strategic from to a strategic brand. However, I think the conversation about what makes a brand insurgent, right?

[00:41:57] dave-johnson_1_01-27-2025_144436: So to me, I don't know if this, I don't know. Does [00:42:00] insurgent brand actually have a definition to it? Not sure

[00:42:03] tom-limongello_1_01-27-2025_154436: Yeah. You're talking about the DTC brands are always insurgent until they get into the retailers at this point. 

[00:42:08] dave-johnson_1_01-27-2025_144436: So the idea of how you get into retail, if first of all, you got to ask the question whether or not you want to be in traditional retail. And I think it's okay for some brands to not want to be in traditional retail. Okay. So again,

[00:42:22] todd-sawicki_1_01-27-2025_124436: That's an interesting observation. I think that's really worth exploring.

[00:42:26] dave-johnson_1_01-27-2025_144436: Yeah. So if you're a brand that does pretty well on its own you're delivering the goals, you're in growing categories in a growing in a growing medium or a growing channel. Depending on where you want to take that brand maybe it's okay to keep that brand in a digital first space.

[00:42:43] dave-johnson_1_01-27-2025_144436: Maybe you don't want to exit digital only until your fundamentals are right. So that you can step into retail and continue on an upward trajectory of your brand, right? I don't think all brands are necessarily built [00:43:00] to sit on a on a shelf that is not unlimited. Okay. So I'd say, first of all, it comes down to your decision on whether or not you see an opportunity to be in retail, right?

[00:43:12] tom-limongello_1_01-27-2025_154436: Maybe that some of those products are niche enough where it just doesn't make sense to be on a retail

[00:43:17] dave-johnson_1_01-27-2025_144436: That's right. But you can still run, but you can still run a very healthy business off those, the second question comes to how to retailers find brands now. I went back 10 years ago I'd tell you that retailers were part of the innovation cycle years into or years prior to a brand being launched.

[00:43:36] dave-johnson_1_01-27-2025_144436: Okay. So the re the retailers, the key retailers were always going to be bought in and the upfront, and they always knew what was coming. That was the day of, the day of old. We're not in that case. We don't have those same type of relationships and we're not built off them. But what we do have is the ability to.

[00:43:53] dave-johnson_1_01-27-2025_144436: Launch products on our time, right? Not on a retailer's time at this current point to [00:44:00] launch them on our time to the needs of the to the needs of the consumers that are willing to buy our product at the price that they're willing to buy our products. At the, at the, with the packaging that they're willing to build a product, etcetera.

[00:44:14] dave-johnson_1_01-27-2025_144436: It's very much a I talk about a little bit like beta mode, right? So in tech, you think of beta as in That spot where maybe it's not fully locked. Maybe it's not fully ready to go. But it's good enough and you can learn from it. We have some products in that space and I actually enjoy that space.

[00:44:31] dave-johnson_1_01-27-2025_144436: I think it's one of the best things about tech. From my experience was the idea that everything doesn't have to be perfect. Things can be right and you can evolve them, but it doesn't have to be perfect. 

[00:44:42] tom-limongello_1_01-27-2025_154436: I think that's probably a good place to call it. I know that we didn't get this perfect, but I learned a lot. So thank you for joining us.

[00:44:50] dave-johnson_1_01-27-2025_144436: hey, my pleasure.

[00:44:51] todd-sawicki_1_01-27-2025_124436: Thank you, Dave this is awesome.

[00:44:53] 

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