What Happens When a Former Tesla Employee Decides to Solve Bad Hangovers?

Transcript

Felix:Today I’m joined by Sisun Lee from Morning Recovery. Morning Recovery is a science-backed breakthrough hangover drink that helps detox and counter the negative effects of alcohol and was started in 2017 and is currently based out of Los Angeles, California. Morning Recovery has made over a million dollars in just their first three months and today we’re going to dive into how they did that.

Welcome, Sisun.

Sisun:Hi, Felix, thanks for having me.

Felix:For sure, so yeah, a million dollars in three months. Wow, that is very impressive.

Let’s take it back to the beginning. Where did the idea originally come from?

Sisun:Yeah, this one’s always tough because… so my background prior to starting Morning Recovery was I was in San Francisco doing tech work. The latest before Morning Recovery was building product at Tesla, prior to that was at Facebook. So, in many ways, this is very serendipitous how I got started, and so it’s very hard for me to pinpoint exactly at what point this even occurred as a thing that I wanted to work on.

所以,我认为,如果我们回到开始nning, I’m Canadian, that’s where I was raised since 9, prior to that, I was born and raised in Korea, and I never had a chance to go back to Korea until I was as an adult. And so, two years ago, in 2016, that was my first chance to do so, and when I went, my goal was that was my vacation, take two weeks off at Tesla, really explore the local scene, go meet my old cousins and family, and then just figure out what life is like as an adult over there. I’ve heard all these kind of crazy nightlife stories in Seoul, but I couldn’t fully resonate because I didn’t grow up there. So that was really the goal, but when I went there, the big thing for me that I remember was no matter what activities I did, or who I hung out with, every single night, we would end up drinking tons and tons of soju, which is the Korean version of sake.

所以,醒来感觉terribl的一部分e every single day in and day out, but the people that I drank with, the locals, would drink the same amount, but get up at 6 or 7 AM, put on their suits, and go to work, and then they would swear by these drinks that are bottled in a Five Hour Energy drink format and it would be called like “the hangover drink,” if you translate it literally, that’s really what it would be called. And so, in many ways, I think that’s probably the start of the inspiration, it took a long time until that became a thing that I started looking into, seeing the actual business opportunity, the science behind it, because from that instance in Korea, I never immediately transitioned into “I want to make my own version,” or “perhaps I can sell something like this in the States.” But I think, if I really look back, that was probably the first time that this idea and concept was rooted at the back of my head. And fast forward a couple of months, I just remember, in the States, I was as a consumer almost furious that these products didn’t exist, and so I would purchase a bunch from overseas from Korea and I would use them as a consumer.

And then, over time, I would naturally just give it out to friends and family, I would consume it on my own, and then I would get a lot of these common questions like, “Oh, it works really well, where did you get it? How did you get it? How does it work?” Same questions that I had as a consumer, and so I think that led to me starting to research, and this was in early 2017, that’s how I stumbled across some of the white papers published by Dr Liang.

At the time when she published, she was a PhD student at UCLA. That’s how we got to know each other, and one thing led to another, that’s when we realized that we liked working with each other, we like each others’ company, and maybe there’s something here where we could potentially work together. And so, a couple of months doing this towards the summer of 2017, it just grew really, really quickly when we had the concept and some of the samples, we got launched and featured on Product Hunt, that’s when we had over twenty thousand subscribers join us, requesting free samples, and that escalated to us actually trying to produce this at scale, to see if people would buy it through Indiegogo, which was when we first launched our company and brand in July. And when that campaign raised $250,000 in three weeks, I think after that everything was just very organic, we followed the demand.

Felix:所以,谢谢你的故事。我认为这是非常inspirational where you discover something on this journey of yours where you’re trying to figure out what to do with your life and you came across this product that existed elsewhere and you noticed that, in your market in the US, it didn’t exist and that got the wheels turning in your head.

So you mentioned that you guys are featured in Product Hunt, twenty thousand subscribers, you’re saying that that’s twenty thousand that signed up for your mailing list, or what’s the twenty thousand number?

Sisun:When we launched on Product Hunt, we had a bunch of samples made with Dr Liang at USC, when I reached out to her, she’s since then moved to USC to become a [inaudible 00:05:58] professor and we just needed more people to give this to. We already surpassed the beta testing amongst our friends and family, which is inherently biased, and so we wanted to give to people that we didn’t have close degrees of connection with, which are strangers. And so we created a website where people could enter in their mailing address and we would simply ship out to them a free sample. And that listing is those twenty thousand.

Felix:Okay, so on Product Hunt, for anyone out there that is not familiar with it, can you say a little bit more about what is the Product Hunt website and how it works?

Sisun:Yeah, so Product Hunt, in many ways, is like Reddit for start-ups. It’s a forum where you can introduce new products and new ideas, and the way it works, everyday the viewers and audience would upvote it so that you can increase your visibility, discoverability, and then based on that, get people’s feedback. And so the interesting thing for us is that we didn’t even actually post on Product Hunt, it’s one of our friends who picked it up because we launched the website where we wanted to collect people’s mailing address who thought this might be really good for Product Hunt. I don’t think he knew it either, and we certainly didn’t know, but we definitely went super viral from this. I think part of it is because generally with Product Hunt, some of the products are really focused on software and internet, and so all of a sudden when you have a drink like ours, it’s very unique, so I think that probably got a lot of people’s attention which was to our advantage.

Felix:Right, so what did the Product Hunt listing say? What did it say on that listing that made people interested in clicking over to the website? How do you design- okay so it wasn’t you that created it, but what do you think goes into a good listing or a good post on Product Hunt?

Sisun:Yeah, I mean, it’s hard to say because I’m visiting in hindsight. It’s not like we’ve done bunch of experimentation with the post and it did well, so it was just my assumption, but generally, as with anything, when you’re in a sea of multiple, in this case, you’re competing against postings, you have to have a pretty compelling story that’s captivating. I think we just had that advantage of everyone who looks very similar, which is everything is around some kind of usually consumer related internet- or software-based product, ours was a physical drink. And so we probably stood out.

和故事本身通常是大量的时间s, founders are very passionate about the product they’re working on. They’ve worked on it for a long time. Versus ours, in many ways, it was very random. Because I was building probably similar product that is very common with what’s featured on Product Hunt, which is when I worked at Facebook, when I built some of the referral apps at Tesla, these are things that I can relate with, and all of a sudden here I am as the founder of Morning Recovery. It’s completely unrelated, and it’s based on my story of visiting Korea, so I think that was probably a little quirky, probably a little funny. So I think it’s a combination of all of it, which is, “do you have a compelling story that gets people’s attention?” And I think after that the actual upvoting and success is really up to the product itself. So once people go to your website and they view it and it’s compelling, the value prop is there, yeah I think they’ll support you.

Felix:好的,所以你说的是你必须站啊ut from what everyone else is doing and, in your case, you had a product which is different than what the other posts and websites were offering. They were offering more like software, yours was a drink, was a physical product, and you also had a compelling story which was something that seemed to be lacking in the other posts that were on the website.

So people saw your product on Product Hunt, they clicked over to your website. What did your website say to collect twenty thousand emails?

Sisun:It was actually a super simple website that we didn’t even custom build it. I mean, I guess we did, but we used SquareSpace, which is a competitor of Shopify, we now use Shopify. It was something that we could use very quickly to mock up a website. It was a single landing page, you simply scrolled down. We had really three things, key messages that we wanted to tell people. One was, we’re launching this new thing and we want you to try it and give us the raw feedback and it’s completely free. That was the main thing. Second thing is we wanted to explain our science behind this.

The thing that was a little bit different from us vs similar products in Korea was that, the reason why we worked with Dr Liang was we found out very quickly was that how you improve efficacy of a product like this has a lot to do with the actual intellectual property on how do you extract, in this case, certain plants and certain roots, how do you process it so that you can maximize efficacy and control things like bioavailability.

So we knew that what we were building, while it’s the same concept as what’s sold in Korea, it’s very unique. So we really wanted to highlight it, which is here’s actually how the science works, here’s why ours is superior to different competitors, and by the time we launched on Product Hunt, even though this wasn’t a big category in the States vs Korea, we soon found out there were a lot of competitors out there, so we really wanted to stand out and for us the biggest value prop was, aside from branding, pricing, distribution, all of that, which we didn’t have at the time, because it was just samples, we wanted to help people understand in a very simplified way what the science was. So I think that’s the second thing.

And then the third thing is, just by the nature of design, optimizing it so that we want as many people to give us their mailing address as possible because our goal here is to get as much samples sent out as possible so that we could get real feedback.

And so, website, it’s no longer live now, but you can imagine, it’s just a single big landing page with big call to action about samples, with one small diagram of very simplified science, and then a giant button for you to subscribe with the form to enter your mailing address. And then that was it, and then we didn’t really have a big follow up probably. People had no idea how this was going to work, when we were going to give it to you. The mailing address, once you submitted it, went to google spreadsheet that we had, and then, yeah, we just basically followed up and just started sending samples out.

Felix:Okay, so twenty thousand emails, did you have twenty thousand free samples to give out?

Sisun:No, we actually had about a thousand. And so, it was definitely overwhelming, we were pretty freaked out. One was we reached out to the sample recipients once we depleted our samples, basically telling them, “hey we ran out of it.” A lot of people actually were offended by it because they thought this was a marketing campaign done by a brand. “Hey here’s free samples, but hey actually we don’t have samples, we just wanted your mailing address and email address.”

But it is what it is. We definitely underestimated the demand that we could have gotten. But the good thing is, we wanted to figure out what do we do with these other subscribers, because they’re obviously interested in us, and just because we don’t have samples, we don’t want to alienate them. So initially our plan with sample giveaways, we had some structure surveys that people could subscribe to and fill out, but instead we created a Facebook group, which is still live today with active two thousand members, and the group was called Morning Recovery Feedback Group and we asked our one thousand sample recipients to just simply join this group and give us an open-ended real feedback. And then we let the rest of the subscribers who didn’t get the samples be aware of this group so at least they could join and then read and hear about what other strangers had to say about it.

In that way we started creating this community where half of it was real customers, the other half were just people just interested in what people had to say about it. And which was really powerful, because that community ended up really helping us drive our Indiegogo campaign later on.

Felix:I love that. I love that you were able to create this community and they’re just essentially creating a lot of content for you with these discussions and with people who never got the product or didn’t get the product yet because they weren’t a part of that first one thousand, they’re at least able to get an idea of what it’s like from using a stranger, someone who’s unbiased, in their feedback.

So on the Facebook group, how did you manage the feedback? Because as you said, it’s just all open format, and I’m sure you’re getting tons of different things. How did you collect all this data and make use of it?

Sisun:It was very qualitative and the thing with sample recipient is, even though it’s a verbal contract, I’m giving you this so you can give me real feedback, the conversion isn’t 100%, so out of a thousand people we gave, we ended up getting about 250 actually written post about them, which we thought was still pretty high, and so it was a very open feedback. People would write about it. Not everyone had good things to say, but overwhelmingly it was very positive. 90% plus would say good things, other people would say “oh it didn’t work,” but we also had a control group of placebo, at least, that we tested with our friends and family, so that we can see what is the baseline of placebo, because with any product like this, even if it actually works at the scientific level, people won’t report it 100%.

It was super qualitative and we wanted to just understand, I think we, with anything qualitative, we can only draw clear and patterned conclusions, if it was very mixed reviews, there’s not much we can draw out of it, but we wanted to see is this overwhelmingly people are saying very positive things about it, especially under efficacy. Of course, people had some other thoughts on the taste, as well, and things that are a little bit secondary, but generally when we did the math, and went through every post, and ranked whether this was highly positive, neutral, or negative and it was 90% plus highly positive.

我们得出一个结论:工作和意图on why we wanted to get people’s feedback in the first place, is because prior to this, we already tested this amongst ourselves, we knew the science of it, which is something that we study on the mice level at USC, so you can measure things like what’s called GABA potentiation in the brains of the mice, and then the breakdown of acetal which then you can transfer to extrapolate how that would be done on humans. But not only that, we tested on ourselves, we gave it to our friends and family, so we had a huge conviction that this really, really works. But giving strangers at a higher scale sample, for us, was just to say “okay, hold up, we could also be very biased because we want this to work. Let’s just see and make sure that this is true when we scale this to hundreds and thousands samples.” And so it was more validation. And so if we saw that less than 80% said very positive things, then we would have said, “okay, well, hold on, there’s something here, maybe it not working for everyone. Why? Let’s figure out what to do next.” And that was a type of data we wanted to collect, but once we found that it was very positive, we then went very quickly into producing this and launching it on Indiegogo.

Felix:Got it. So you were looking to get that validation to see if you were on the right track you wanted, so you were looking for individual features, or individual changes the customers wanted, unless you saw it overwhelmingly in the comments or in the feedback. You just wanted to see, “is it something we should invest our time and money into?” And you recognized that when you say 90% of the comments were positive and then you decided to move forward.

So what was the next step? How did you, once you guys recognized, “okay, everyone’s, for the most part, saying great things about this, let’s move forward,” how did you guys spend your time moving forward?

Sisun:I think the difficult part, especially for me, building something like this, even though it’s a functional beverage, it is a brand, it is a lifestyle brand that the goal is with mass-appeal, is that unlike tech we can’t really iterate. I’m not building a website or app where I simply launch quickly, figure out what works and what doesn’t. This is an edible product and you have to get it right. Especially because of the safety of consumers. And so the difficult part was we wanted to launch really quickly, but then you have all these questions like, “okay what’s the right pricing? What’s the right flavor? What’s the right amount? Is it 100 ml, which we ended up doing, should we do more? What does the packaging look like?” And these things are really hard because we couldn’t simultaneously launch digitally and get people’s feedback. Yeah, we can do some samples and surveys digitally and get people’s feedback. Ultimately we have to pick and choose what some proxy data and then live with it and know that at some point in the future that we won’t be able to iterate quickly.

So I think we started deciding what is the most important thing here that we just have to get right, and what are other things where if we make assumptions, then we get it wrong, it’s still okay for us to move forward. And for us, that was efficacy, which was what we were trying to test with the sample program, ultimately we knew that the value prop of this was very one-dimensional which is it helps you when you consume tons of alcohol, so that the next morning you can get back on your feet and do more of what you love. And so if we knew that that problem was solved, other things like taste, pricing, the branding, the packaging, we at least thought, at least I did especially with an engineering mindset, we thought they were less relevant.

So, we were wrong for many reasons, because obviously branding is really critical, but we launched really, really fast. We basically said forget about all of it, of course we will use our gut feeling and we hope that we’re ballpark right. We picked peach flavor, the question becomes why peach flavor out of so many, when brands who introduce beverages take six months just to optimize the flavoring. I picked it because I like peach. It was very simple. I thought, “I don’t care about this, as long as it’s not too bitter, and as long as I like it, I think most people will like it, etc.” And so I think a lot of it was just ignorance on my end, because I focused purely on the science and efficacy, and so when I had full conviction on the validation of samples, we just went on and went to launch this. So all these other things, very simple. We pick glass bottles because at the time we were working with coke packers in Korea, and those type of bottle in Korea is the most used commodity and so we would get it for about one cent per-

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Sisun:使用的商品。所以,我们会得到它了one cent per bottle. So, super cheap, why not, let’s use it. So, that kind of reasoning. And, the thing that took us time to launch it was just more on the regulatory stuff, which is, sure, we can decide what to print, what the label would be, what the packaging it, what the flavor is, but we have to make sure when we sell it as a product in the US, we regulate it as a dietary supplement, there’s some rules to follow, certain different places, different factors that you can work with versus you cannot. And so, that was all new to me, and so, that took about three months for us to get it right. And then, once we thought, “okay, we know what we’re doing,” in terms of, “when we sell this, this is safe for consumers, and it’s complaint with the regulations within the US. We’re good to go.” And so, that was in July, so we then launched [Indigo 00:21:53] campaign in July.

Felix:How did you make sure that you were compliant? Did you have to work with anyone to help you understand that?

Sisun:是的,当然。我的意思是,我们和律师一起工作, our own consultants, basically. That’s the way we did it, yep.

Felix:Got it. If someone out there wants to get on the same path, how do you recommend they find experts to help them out with the regulations?

Sisun:Yeah, I mean I think we look at it in a tier system. It’s costly when you work with Lawyers. I think with that kind of industry, you’re paying them by the hour, and it’s cash. And so, I think like for … and that’s a barrier to entry, but when you’re talking about creating a physical good that’s for consumption, there really isn’t an alternative path. You can’t hack your way, which is another thing that was difficult for me to wrap my head around, which is, this isn’t as simple as building MBP and launching something digitally. You are creating something that people will take. If you try to hack your way and speed that up, I don’t think that’s a good idea. And so, my advice is, if you don’t know the regulations, there’s some stuff that you can do to help yourself by just simply reading and learning, and then you can sort of ask the right questions with the attorneys to save some time, and save some cash. But ultimately, I think you do have to rely on experts to make sure that this is perfectly compliant and safe.

It just comes down to when do you do this? We could’ve done this earlier on, but I think that would’ve been a waste of money. We did it when we sort of had the real demand behind us, even though it was samples, the real community behind it, to kind of know that … okay, we know that when we launch this, there’s some sort of lower boundary of people who would end up buying, because that’s the community that we’ve been interviewing and asking, and they’re behind us. And so, when we kind of had that belief that there is demand out there, it made things easy for us to drop some money to … I think we ended up paying like $30,000 in that three months, which was quite a bit for a project at the time, which is $10,000 a month.

Felix:Wow, yeah. That’s definitely a big risk. But like you were saying, because you had that community that you built already, and you had those 20,000 emails, and recognized that there was some kind of interest, some kind of demand in the market place, you de-risked yourself by at least putting that up front work in. So, you mentioned that there’s some important questions you have to ask these experts. Do you remember any important questions? What are some of the most important questions you should be asking experts that you’re working with when you are interested in releasing some kind of food or beverage product?

Sisun:Yeah. I mean, I think for someone like me who’s never done this, it was just about understanding the whole thing end to end in terms of starting from why are you being regulated? And then, kind of going into which category are we being regulated under? Food and beverage is different from dietary supplement, which is different from pharmaceuticals. And, you’ve got to make a deliberate choice on which route you want to take. For us, we could’ve taken the pharmaceutical approach, but there is a much more down side in our opinion than going into dietary supplement. But, when you choose your path, it also limits some of the things you can do and advertise. By being a dietary supplement, we can not make claims like, “this solves hangovers,” for example. 100%, because then it would be sort of classified as a drug. And so, there are some down sides and up sides. So, you need to just fully understand it, and that’s more on the compliance side. So, I think it’s just understanding from the FDA … I guess in Canada it would be Health Canada. But, in the US, what are they looking for? Why? And, once you sort of understand that, subsequently when you work on different products or new releases, it makes things just much more simpler.

Felix:Got it. So now, you then launched an Indiegogo. What made you choose Indiegogo as the crown funding platform?

Sisun:You know, this is the first time I’m actually making this very public, but hopefully this is a fun story for anybody who wants to launch their own product. We were going to use Kickstarter from the very beginning, just because that was a bigger brand, and you can use a launch in any platform of your own, but we thought based on the community we had. We then got an official business insider, we thought we could sort of demand an account manager in Kickstarter to help us, really guide us. So, we reached out to them, and we soon realized that Kickstarter actually doesn’t support dietary supplements. It’s just based on their risk profile, it’s not something that they’re willing to support under form. We found out three days before we were supposed to launch, and we never told people where we were going to launch. Actually, it was part of a … we just wanted to let them know that it’s launching, without telling them where. Which, ended up being in our favor because we found out three days ago we couldn’t launch.

And so, we then knew the only option we had was Indiegogo. But, what’s really funny is that we then reached out to an account manager in Indiegogo, and sort of made this bold stance where we said, “hey, in three days we’re launching in Kickstarter because they’re bigger, and they’re going to give us more reach than Indiegogo, but can you convince us why we should choose you guys?” And then, they gave us bunch of amazing promos. Put us on the front page, gave us two email shout outs, gave us a discount in the fees that we had to pay them, but we had no choice. We were only going to go with Indiegogo, but we tried to leverage as much as we can get, and then we got it. Thankfully they didn’t realize I guess, that we weren’t allowed on Kickstarter. And so, we sort of made it seem like we made the last minute change. We launched with Indiegogo, but ended up getting all these perks because they were … ultimately for them, they’re losing key clients to Kickstarter, and they wanted to give them more promos. And so, on top of getting that, we were able to launch on Indiegogo on time.

Felix:Wow, very bold, but certainly paid off. What did you have? What did you guys bring to the table that made them go after you so aggressively?

Sisun:是的,对我来说,我们发现很多it was an existing customer base. What the account managers on both sides actually told us in the beginning was that the success of your campaign is going to really come down to sort of the first 24 hours, and after that, it’s just this virtual circle where if you do really well, you get more visibility in the platform, and then people who view it, they like to back products that’s already trending, and has the most likelihood to being successfully funded. So, it all makes sense, and so the question becomes, it’s a chicken and egg problem. How do you get it off the ground in the beginning? And, it just comes down to existing customer base. If you have a large email base of people that are already interested in you, and then you can sort of blast them and email, let them know your existing community, and they kind of come in even if it’s a small amount, and sort of uplift that campaign in the beginning, that’s going to drive a lot.

And so, we kind of came with … I mentioned we had 20,000 email subscribers, but that was just the first week when [Product Hunt 00:29:28] launched. In the following subsequent months leading up to Kickstarter or Indiegogo, we had about 60,000 email subscribers. And so, I think that really got their attention, and by that time, some of them already knew about us because they were familiar with product hunt. They saw our article on business insiders. So, I think that’s their proxy to figuring out if this is going to be successful or not, which is how much existing hype to they have, and how can they leverage that to bring in early consumers in the very beginning stages of the campaign?

Felix:So, you guys grew your email list by three times between the initial product hunt launch, and then the Indiegogo campaign. What were you doing during that time to continue to grow that email list?

Sisun:Yeah, I mean part of it was sort of rooted back to product Hunt. So, once product hunt did really well and we got the early customers, then we then got picked up by other press and media outlets, un-crate, which is sort of that highly engaged but very niche journal that discloses new products, they picked us up because they saw us on product hunt, and from there, we got a whole bunch. And so, it as sort of this discreet … not continuous or any kind of exponential growth, but rather, product hunt started, and the un-crate picked us up, and then business insider picked us up. So, between those three, we definitely got huge number of traffic.

Felix:And it was all driving to the same [inaudible 00:30:55] page.

Sisun:Exactly.

Felix:Okay. And, did you pitch them or did they just find you through product hunt? How were you able to get on these big publications?

Sisun:Yeah, well business … they all reached out to us. Un-crate, they just picked us up, and then wrote about us. Business Insider reached out to us. We did an interview, and then they featured us. And so, I think just everything goes down to product hunt really. That’s really what sparked it all. And then, we definitely leveraged on our story which we though was pretty unique. It’s kind of cliché, working in silicon valley where this was a small side project, but everyone viewed this is a niche biotech stealth company, which that was hilarious. But yeah, we leveraged it, and we went along with them. And then, part of the reason why I think product hunt is successful, which [inaudible 00:31:47] is, we didn’t know who our demographics customers were. We had some ideas, but this is the first time we’re even giving samples away at scale. We didn’t know who to target. But it ended up silicon valley was perfect.

These guys are people with high disposable income, who work really hard, and they also like to go out and-

Felix:Party.

Sisun:Yeah, and go back and be productive. And then, it’s very similar to [inaudible 00:32:14], and then not only that, I think people could probably resonate because I was from silicon valley, and I worked at companies that they are very familiar with. So, I think it all sort of tied together.

Felix:Yeah, I think your kind of success is certainly hard to achieve with an initial boost, and then the subsequent big publications. But, I think the kind of lesson here is the same, which is to focus your attention on getting some kind of attention on one platform, and then leverage that. And in your case, they reached out to you. But, I don’t see why someone out there, if they have some success on a platform and some buzz, I don’t see why they wouldn’t be able to go and just try to pitch a publication if they’re not getting picked up just by a publication finding them. I don’t see why they wouldn’t be able to go out and just try to get that free press. So, I think that lesson is the same, which is to try to find success in one place, and then try and use that build on top of it by reaching out to these publications and say, “hey look, we’re buzzing. There’s a lot of attention here, and I’m sure your readers might be interested as well,” and then go from there.

So, one thing that you mentioned is that you kind of like riding this wave, where people recognized you, almost categorized you in a certain way. Why didn’t you just say, “hey, that’s not what we are. This is what we are,” and kind of define it yourself? What made you guys decide, let’s just go with what people are attracted to, and what they are really, I guess, to really categorize you guys as?

Sisun:所以,我将回答这个问题,但有一件事是已经ry critical here is that, I think whatever you’re selling, regardless of all this buzz and hype that you can get, it’s all very temporary. At the end of the day, I think you have to sort of deliver a very clear value prop. Without it, nothing really matters. And, I think one thing that was pretty compelling for us is that once we started opening up our Facebook community group, we actually updated our website to showcase the reviews within the website, so people can read it. It’s very hard to provide an attribute of … well, how much of that created an incredible impact on people signing up for the emails, but one thing for sure is that when you have 90%+ people who try your product taking their time to give you a review, and these reviews were one sentences, they were literally paragraph after paragraph. And, they were very emotional customers saying, “I’m a mother of two …” they kind of went a little over what we expected.

And so, I think it definitely has that impact. There are also the ones that ended up buying Indiegogo as well. So, 50% of our sample recipients that we tracked by email ended up purchasing us on Indiegogo. And so, how much of that versus the media exposure we got is what led to the initial growth...it’s very hard to know. But I think without the product actually having a functional benefit, and without the [inaudible 00:35:16] and community, I don’t think this would’ve been sustainable. And, sort of going back to your question, which I forgot.

Felix:Yeah, no. I was just asking, you mentioned that you guys really didn’t have a clear definition of what you were initially, right?

Sisun:是的,当然。So, I think the true answer is we didn’t know either. We decided to quit our jobs. My co-founder was Uber at the time. I was at Tesla, we quit our job at the end of July after Indiegogo was successful. So, leading up to that, this was a side project. Our definition of side project obviously grew from early days to realizing that we’re spending more time doing this than our actual jobs. But, we kind of were curious ourselves to, what could this be? What is this? Why do people like this? How much would they pay for it? What should the branding be? So, these are all questions that we had going into it, so if we sort of cut this angle of, “oh my god, this is a product that we want to work on, and we’ve been working on it for a long time,” and go with sort of a very strong conviction of what it should look like, I think we would’ve definitely came out with a stronger branding. And, that’s kind of why eight months later, post our Indiegogo, we did a rebrand update, based on, okay, this is what we learned, this is who we want to be, here’s a gap, and here’s a rebranding.

So, in the early days, I think it was just generally, we didn’t know what this could be either mentality, but we wanted to keep the momentum going, and then see what it could be. So, it took some time.

Felix:Got it. So, real quick to cover the Indiegogo success, so you raised a quarter million dollars on there, backed by almost 5,000 backers. How much of that was happening … ’cause you mentioned the first 24 hours is the most important. How much that was happening the first 24 hours?

Sisun:I believe we got the first quarter of it in the first 24 hours.

Felix:Okay, and then from there, did they promote you guys right away from the launch time? At the launch, or was it sometime later in the campaign?

Sisun:It was sometime later in the campaign, but the … when we first launched, it’s a soft launch, right? Indiegogo really isn’t featuring us. Yeah, but it was crazy because I have the Indiegogo app, and it vibrates every time someone buys. As soon as the launch, we sort of sent our email blast to 10s of thousands of our customers. The first hour was ridiculous. The phone would vibrate so often, that it just doesn’t seem like it’s vibrating, ’cause there’s no pausing anymore.

Felix:Yeah, it’s funny. [inaudible 00:37:58] where you get that first ca-ching when you get a sale. There’s no … a lot of times I hear from merchants, that there’s no high that’s better than that first one. So, after a while, you get a little immun to hearing it. So, you mention that you guys rebranded, but it almost sounds like you were just creating the brand for the first time after already having a business that was selling a product. For anyone else out there that does have a business, and kind of just launched without a clear definition on what they represent, who they represent, their brand, what tips do you have for them. How do you begin the process of creating a brand after you’ve already started your business?

Sisun:Yeah. I mean, I think the core thing is, I think for any commerce, it’s a trade off. Someone is trading their cash for some product or some service I guess. It doesn’t have to be a real tangible product, and it just has to be super compelling. So, even though we didn’t have a very clear definition of what this branding was, it was very clear what the functional benefit was. It’s a hangover drink, at least in the minds of consumers. And so for them, I think, the people that bought it, even if they haven’t with all of the risk of it maybe not working, but with all of the upsides and sort of de-risking it by looking at what other people have to say about it, positive reviews, paying five dollars so you can have hours back, or maybe for some people multiple days back, was a compelling value prop. And so, I think that has to be the most clear thing, in my opinion. But again, this is something that I’m reasoning in hindsight, this is … we launched and, a lot of things we learned as we went.

So, it’s very hard to do a comparative analysis. But at least for me, as a consumer, that’s what it comes down to. Am I willing to pay for X amount for this. And so, even in absence of sort of clear branding … and I think branding is really important. In the early days, I think it’s really over emphasized. No one knew what morning recovery was in the beginning. Even, we get obsessed … I get obsessed as a founder, ’cause my first thousand customers of community, I’m so actively involved with them and I hear them. So, I feel like we already have an established branding. And, if I deter away from it, that’s all of our efforts shifting to building something completely new. But in reality, in the grand scheme of things, even today 10 months later, and actually 6 million revenue in, most people don’t know morning recovery. And so, if we have to revisit and sort of revamp our branding, I don’t the loss is as big as we think.

I think there is this bias there. So, if you’re just kind of launching it, I think the general sort of default is, no one knows your brand anyways. And, I would rather over emphasize on experimenting the branding early on rather than trying to stick to it with this bias that, if you switch, you’re going to lose a lot of what you already gained, which I don’t think is true. Because to you, that’s your baby, that’s what you think about. For most people, they just simply don’t know what it is. That’s kind of how I view it, yeah,

Felix:我喜欢这种方法,因为它会回来to getting that feedback, and really involving your community, involving the customer, and you’re just basically saying, “yeah, experiment with the branding in the beginning.” And, it sounds like what you really tried to focus on was emphasizing the value prop and trying to answer that question. What is the promise that we’re making, are we delivering on it, and then making that very clear. And then, letting the customers kind of surround around that value prop. And then by looking at the audience, then the customers that you’ve built, the branding kind of comes out of it. So, once you have an understanding of who your customers are, who your demographic is, who the market is, what would the steps towards creating … I guess make that branding more concrete? What actual task or-

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Section 3 of 3[00:42:00 - 01:01:41] (NOTE: speaker names may be different in each section)

Felix:… to I guess make that brand name more concrete. What actual tasks or activities did you guys have to do to make sure that you guys solidified this new brand?

Sisun:Yeah I think branding is a little bit more … it’s a mix of art and science. And I think the biggest thing, especially for a startup, is that you have the luxury because you don’t have that many customers early on, and hopefully you stay close to them. You can hop on a call with them and just ask them. And that’s what we did. Our entire team, myself, my co-founder, we would email people for permission based on surveys, and then we would just hop on a call and talk to them. And we wanted to learn, understand for people that didn’t like it, why? For people that kept buying us and referring other people, what do you like so much about this?

And part of it was understanding who they were. And you don’t have to ask very direct, functional, multiple choice type of questions. They could be very open ended, and you’d be surprised how much they’re willing to help you. For these consumers, they’re early adopters, that are sort of finding value in not just the product, but being the first ones to try this. It’s cool, they’re the first ones to back you in Indiegogo.

所以,当创始人特别是伸出them and gives them the time of the day to hear their response, what I found was that instead of them being annoyed … because it’s kind of like free … giving away their time for free. But for many ways … many times, they were very glad. And with many of my customers, what was supposed to be a five minute phone conversation became 20 minute, 30 minute, multiple 30 minute calls, it was sometimes an hour depending on how it went. And I think that the benefit you have as a startup is that not everything is at scale. You can do things that don’t scale because clearly this isn’t something you could probably do at this level when you tax your customer base.

When you talk to them, I think you learn two things, clearly who they are, like what is their demographic. And then the two is just like, why are they buying this? Aside from the functional benefit. Because it’s the same for everyone, functionally you buy this for the same reason. When you go out and drink, you do this because you want to wake up at the top of your game. We understand that. But emotionally, what resonated with you to buy this in the first place, and have you come back.

And we learned something very interesting. Demographic wise, it was very broad. On average, our actual segment of customer is in the late and up … middle to late thirties. And then it goes on from the early twenties all the way to late fifties. Which we thought was odd at the beginning, because with this type of drink mainly college students, fraternities and sororities in the U.S. would be the peak. But it actually turned out it was very broad and people were-

Felix:Yeah, I feel like they might not need it, right? People in college recover a lot faster.

Sisun:And then the second thing is, we found out … We asked key questions like, “Well how much alcohol do you normally consume with or without morning recovery?” And generally most of our consumers don’t actually drink a lot, which was very bizarre to us. Why are you buying Morning Recovery when you’re taking two glasses of wine? We don’t understand. But for them, I think with age, and especially … They have so much responsibility to take care of the next morning. They have to wake up, take care of their kids, prepare for their work, that important presentation, or go for a run, or exercise. They just … Time is very valuable for them. So for them, paying $5 so that even though they might only be very slightly tired the next day if they don’t take this, and not necessarily have to rest on bed for 24 hours. Even saving that time, being extra productive, was a very important, sort of emotional thing for them. Being able to do more the next day of whatever it is that they love to do.

And so we realized that what we were selling wasn’t really just about solving hangovers so you could drink more. It was really about empowering you to be at your best the next day, so that even when you do consume alcohol, whether it’s little or a lot, we sort of guarantee that you’re at your best self the next day without missing a beat. It became very clear to us that this was more about people buying it to be productive, rather than preventing hangovers. And so we realized that that’s actually really good for us. For one thing is that we don’t just focus on heavy drinking consumption events, and heavy drinkers. This is much more broader, has much more appeal, or the potential of it.

And so after thinking about it, we pivoted into really focusing on that angle. Luckily morning recovery, when you take the first two letters spells “more”. We realized that everyone wanted to do more of different things the next day. Some people wanted run, take care of their kids, go to work. But what was very clear, and that was the common theme was that hey wanted to be able to do more of what they love. It just kept coming, that phrase of “doing more” kept coming back to us. So we jus thought, “Hey, this is great. This kind of aligns with Morning Recovery, in terms of the actually phrase.” Let’s own the phrase of being able to do more.

What we’re offering is a drink that helps you empower you to be at your best so you can do more of what you love. The next cues of the product that we’re gonna launch that’s not related to alcohol, it’s still going to be in the same realm of empowering you to be at your best physical and mental state, so you can do more of what you love. Based on what you learn from your customers, it definitely filters down to what type of brand you should build. But I don’t think it’s very scientific. We could have probably taken two to three different alternative approach. But I think it helps you narrow down, once you actually take the time to talk to customers, especially early on. At least that’s how we did it.

Felix:Yeah. That makes sense. And I think it’s also important to note that you need to … going back to what you said earlier, you need to have a compelling product, an interesting product, or a compelling story which makes people excited to be involved, and excited to be a part of what you’re working on. If you have a very boring product, a very boring story then maybe they won’t be as interested in being involved. But I think having that great product and peaking peoples interest, they want to be involved in something that’s different in their lives.

So I think it’s important that you nail that part down first before you begin doing anything else, which is something you guys obviously did. So after initial Indiegogo’s success, going back to that million dollars in the first three months, where did the rest of that come from? How were you able to continue the revenue growth from there?

Sisun:After Indiegogo, it ended, we decided to launch our own e-commerce platform. We obviously chose Shopify. First few weeks were very, very low on revenue. We were doing a couple of hundreds a day. People just didn’t know where to find us. Indiegogo had that exposure landing page. Once we’d come to our own website, we never promoted it. So it took sometime, but I think ultimately it took down too lots of iterations and [inaudible 00:49:25]. I think this is probably the first time building a company where my skillset actually made an impact, which was I did growth work. And so I looked at this as purely a funnel.

How do I optimize this funnel so that I can get as much throughput as possible, and that means, at scale, what’s the lowest TAC that I can get into? Which is like a cost per acquisition cost. And so early on, when it was just digital and e-commerce, the beauty is that you can measure everything. So we didn’t do anything offline marketing that I couldn’t attribute back towards the actual revenue. So everything we did was performance advertising. We understood that, we have a six pack, so that’s the minimum order you can get. We kind of new what our average order value is based on what people bought at Indiegogo. Not 100% of people buy six pack, some people buy 12 pack, 24 pack.

And so we can sort of estimate pretty accurately with Shopify, what’s going to be the range of average order value that we’re going to generate from a single customer. Which is like, what is that final revenue that’s gonna come into our bank. And then when you subtract all of the costs of goods, fulfillment, whatever other cost that goes into it, you get your gross profit. And then from there, we view that as, “Okay this is the profit that we’re gonna take home if somebody organically came now.” We were willing to spend advertising money to break even. At least that was our thinking at the time.

We didn’t raise our series A yet, so it’s not like we had more money to overspend, and at the sake of growth, we had to actually be sustainable. But given our margin, which is we make single bottle for about 40 cents, we sell it for like five bucks. Which is high, but it’s actually not abnormal in a beverage industry. This is 90–95% margin. When we calculated everything, our AOV came down to be about $45. With everything gone, we were making about $30. So that gave us a $30 per customer acquisition that we could play with. That doesn’t just-

Felix:That’s a lot, right?

Sisun:That’s a lot. Yeah, that’s a lot. But it’s not uncommon. And we then took it and just went with it, just AOV tested everything. We started with just simple things like phrases, creative … but then to us that was a very minor optimization. We were really trying to find what’s the real arbitrage opportunities that we have. Because everyone’s doing the same thing on Facebook.

We found two things that were really compelling that worked for us after testing. One is, we found out that the medium is the most important source of acquisition, not the actual content. We can say all these things that we want from the brand page, but it appears like an ad. Of course, we’re gonna say good things about Morning Recovery, we are the Morning Recovery. And so we would actually pay third party Facebook groups and pages that already had millions and millions of followers to write posts, or anything that we wanted, but in a very neutral way. And then we would pay them. Almost like an affiliacy.

And so we had things like, trending on Kickstarter was a page that promoted some of our content. We found out that they do just like five, six times better in conversion. Which then leads to much lower TAC than if we were to say the exact same thing from our page, which was interesting. And we just found out that it made sense, of course after we did it. Because it’s a skeptical product by nature, and if we advertise it it’s even more skeptical. The more that we neutralize it and work with third party trusted sources, it just did better.

Second thing was directing people to our website, versus directing people to our press articles like Business Insider. The latter was much better, which seems counterintuitive, because instead of taking people to point of purchase, we’re now taking them away, and there’s an extra layer in the funnel. But what we found out is that people need to be able to trust this, and you need to lower the barrier of skepticism. And so when they go to Business Insider article that talks about how a Tesla engineer created this, we found out that then they go to Google, search for this, and then buy it at a much higher end-to-end conversion than if we were to directly somehow get you to land on our website, which then they would just bounce out.

Felix:I like that. So the top of your funnel is building trust, because it’s a product that is not easily understood right away, right? It’s not like a T-shirt you’re selling, or something that people instantly get in their minds. I think that first step is to build trust, and to do that you have some kind of neutral party. In the two examples you gave, some kind of publication wrote about you, some publication that people already trust to write about you, or in a Facebook group.

So these … You mentioned that you want them to write about you in a neutral way. Can you say more about this? Why neutral, rather than in a more positive review?

Sisun:We tried it. We’ve tried both, and for whatever reason, neutral did a lot better. What we found out was that it’s a fine balance, right? It’s still sponsored by us. And so the more we made it seem very organic … So I wouldn’t say the word “neutral”, it was definitely more positive. But it wasn’t overly blown, like a review of it. It was more like, “Guess what. Guess what’s trending out there. Check this product out.” Like that kind of tone.

Felix:I see.

Sisun:Yeah, and so with digital funnels, I think the beauty is that you can have a lot of strong opinions, and that’s great, that’s probably gonna kick start your experiments much faster than other people in the right way. But I think the key is super fast execution and just validating your hypothesis. Because everything can be measurable.

And so, we tried so many things. I think in the first month of our Shopify launch, the actual amount of different variations of funnels that we’ve launched and tested is probably over 200. Definitely over 200.

Felix:So how do you mange all of this? How do you keep track of what experiments you’re running?

Sisun:核心,五、六大不同ent funnels that we would test. Testing something on Facebook, testing something on Google, testing something else for Instagram. And then between those we would then branch it out. On Facebook we would try it on our page versus we would tried it on a different group. And then within that, the content is varied. Sometimes we would try this copy versus that.

So it all just adds up to this massive amount of tests. We don’t have enough budget to simultaneously test 200 things and get statistically significant results. So we would start by two, three, four at a time, and then we would just take out the ones that just didn’t perform as well. And we would keep trying to beat the most efficient funnel at the time.

And in terms of how do we it? Again, I think this is where our skillset came in handy. At the time we also recruited one of our friends who ran e-commerce at Facebook, Canada. This is what he does for e-commerce companies. So between him, and myself, and my friend at Uber, we would just manage it. We were acting like a media agency out there. Because my friend had the skillsets, that’s what he was doing at Facebook, but not on the agency side, but on the actual Facebook platform side. I’ve done similar things just building funnels, and so we would manage it.

The great thing is, because we were using existing advertising platforms like Google and Facebook, we didn’t have to build any of the actual infrastructure. We just used their tools, advertising tools. We look at it, we measure it, we know our Google analytics on our website, so we understand the conversion. It integrates perfectly with Shopify. So with every advertising we can actually see the attribute on revenue. It just makes thing really, really simple. Yeah, I think this is just something that most people … I’m sure all successful e-commerce companies do. It’s performance advertising, you measure you LTB, you measure TAC. You scale this as efficiently as possible. But even for beginners, I think this is something that is just very easy to get started.

Even if you don’t get to the most optimal funnel state, between one versus another, and you have ideas on what might work best, you can simply try it and then figure out. And if you have enough of gross profit margin, the amount of advertising that you spend, you’re actually not losing money. You do need upfront capital investment. So when we’d launched at Indiego, the great thing is, guess what? We made $250,000. That’s money that we can use. But because we understood our average order value, when we spend these ads, yes there is some time lag where, if we spend let’s say $10,000 on advertising in that week, we don’t make it right away, but we do make it pretty soon. And then it goes back to our bank, so really we’re not losing money. And so that just allows you to be able to test more frequently.

Right now, we actually spend more than our gross profit, deliberately, because we raise more money. But I think even if you don’t raise money, there is some level that you can play with. And if the margins are much smaller, all it means is that you probably have a little bit more lesser room to experiment with. So maybe you can’t do 200 experiments like us, but you can certainly start with a couple. And I thinK even just optimizing at a smaller frequency is very powerful.

Felix:Awesome. So morningrecoverydrink.com is a website. What’s next for you guys? What are some big milestones you wanna hit next?

Sisun:Yeah, so two big things, one is we’re finally getting into retail world and wholesale. Right now we’re across about 400 different stores nationwide and U.S. Which sounds a lot, but in grand scheme of things still very small in the retail world. But ultimately when we view our product, we think drinking is a serendipitous event. You go to the bar, maybe you would go to different night life venues. Not always planned, not everything is a big night, but you [inaudible 00:59:38] go out there. And so we want our drinks to be there. We want our bartenders to upsell this, encourage people to drink it.

We think it’s a much better, and healthier alternative than Red Bull, which are things that are being always up-sold in these places. And so I think it’s a matter of when, not an if, the retail world. And we’re finally starting to explore there, and really just learn and navigate.

第二件事对我们来说其实是国际。So surprisingly Indiegogo, when we launched, 35% of the sales came internationally. Mostly set around Western Europe. Basically places where people speak English. But we can’t just launch there, because there is different compliancy rules for every country. For similar reasons why even though I’m Canadian, we don’t actually sell this in Canada because the regulation is different. And so, we can’t launch everywhere at once. It’s gonna come down to understanding both the resources it’s gonna take to get regulations in that country, versus, what our existing demand is there, and potentially what is the upward bound market opportunity. And we’re gonna go one at a time and start unlocking international markets. Because I think that’s huge for us. Even today, we have thousands of customers that are emailing us as to, “Why can’t I buy this at my country?” So I think that will start up big things for us.

Felix:Very cool. So even though you guys have already generated six million dollars revenue so far, it sounds like it’s just the beginning for you, lots of growth ahead. Thank you again so much for your time, Sisun.

Sisun:Thank you.

Felix:Here’s a sneak peek for what’s in-store the next Shopify Masters episode.

Speaker: Most of the content that we now put on Instagram is actually customer created.

Felix:Thanks for listening to Shopify Masters, the e-commerce marketing podcast for ambitious entrepreneurs. To start your store today, visit shopify.com/masters, to claim your extended 30 day free-trial. Also, for this episode’s show notes, head over to shopify.com/blog.