On this podcast, we talk about AP’s Amazon strategy and why it’s a “necessary evil”, the 2 roles of founders and how to balance them, why AOV and LTV are the 2 most frequently looked at KPIs of investors, and so much more!
Kyle LaFond is the Founder of American Provenance.
Kyle started his career as a wildlife biologist for the Wisconsin Department of Natural Resources but later transitioned into teaching middle school science.
During his years as an educator he became passionate about encouraging his students to use safe, natural personal care products.
This led to the launch of American Provenance from a renovated machine shed on his family’s 4th generation dairy farm.
Kyle is always willing to share his experiences and has continued to help and mentor startup founders across the country.
In his free time Kyle likes to work on various projects around his family farm.
On nice weekends you can find him hiking or fishing on some of Wisconsin’s wonderful public properties.
In This Conversation We Discuss:
Resources:
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Kyle Lafond
Another thing that I preach all the time is ‘Hey control your own destiny on [your] Ecom channels. Try not to get to the point where you’re relying on resellers.
Chase Clymer
Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer. And I believe running a direct-to-consumer brand does not have to be complicated or a guessing game.
On this podcast, we interview founders and experts who are putting in the work and creating real results.
I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your Ecommerce business.
Let's get on with the show.
Hey everybody, welcome back to another episode of Honest Ecommerce. I am your host, Chase Clymer.
Today, we welcome to the show, a former middle school teacher turned CPG entrepreneur, Kyle Lafond. Kyle, welcome to the show.
Kyle Lafond
Thanks for having me, Chase. It's a pleasure.
Chase Clymer
Awesome. So tell me how does a middle school teacher [conceptualize] and start brands? Just take me back to the beginnings where things get started?
Kyle Lafond
I have made a career on the fact that middle school kids stink.
Chase Clymer
(laughs)
Kyle Lafond
(laughs) Doesn't matter, boys or girls or whatever. Those kids are ripe.
At that age, you're going through this very fragile period of human development, where all kinds of funky changes are happening in your body, your hormones... And at about that time, yeah, these kids get ripe.
So the whole backstory, I was really put off by the products that my kids were using to cover up that body odor.
If you think about most middle schools, early in the morning, if you're walking down that hallway, it's oftentimes just this gross, chemical fog of some name brand body sprays. And I just thought, "Wow, this is really noxious."
I remember parents dropping kids off with windows wide open in their cars during the middle of winter because they don't want to smell their kids and all the body sprays they've been using at home.
And then one day, I just took it upon myself to grab these canisters and actually take a look at the back panel. And having the years in the classroom, multiple degrees based on sciences, I can only identify about a third of the ingredients on that canister.
And I thought, "Wow, if I don't know what they're in these ingredients, chances that my kids or their parents have any idea what the harmful chemicals may be in this product are slim to none."
So I designed a project on the spot where I taught my kids, basically modeled how to make personal care products without any harsh chemicals.
And that quickly became the most popular project I've ever put together in my teaching career. I have kids that I wouldn't have in class for years.
So they grabbed me before school, after school, or during lunch and said," Hey, Mr. Lafond, are we going to do your own project?"
"Absolutely. If you guys are interested and want to do it, we're going to keep on going."
That first year, we made some terrible products. I'm not gonna lie about that. (laughs) It was bad all the way around.
But after 4 or 5 years of modeling for 5 or 6 periods. Basically, I had made a whole bunch of stuff in class. I used the foundation for American Provenance.
So it all started based on a simple fact that middle school kids stink and I want to help them out.
Chase Clymer
Oh man, that's a... That's so interesting. One, I couldn't agree more with just the... When you said the fog of an early school morning of middle school, it just took me back to the body sprays of my youth.
And I could... I never thought about it in perspective. bBut maybe I stunk. Who knows? I probably did.
Kyle Lafond
(laughs)
Chase Clymer
And so (laughs)... This is so cool. So you basically got paid as a teacher to do R & D. When did it become more than just a project?
Kyle Lafond
Probably, gosh, about 4 years in. Because over the course of the previous years, I accumulated a whole bunch of surplus and stuff that I had made in classes. I was modeling for my students.
Because in middle school, you have to do everything with the kids. They want to see how you do it, then do it on their own. So I had just a bin of stuff that I had made over the years. And I thought, when are we gonna do this?
And over the course of the holidays, about this time of year, I actually started giving it out to friends and family.
And I said, "Hey, this is stuff I've made in class. Just give it a shot and let me know what you think. No harm, no foul. I want to see if this stuff is made in the future."
And basically, every person I gave stuff to came back to me a month or two later and said, "Hey, remember the deodorant that you gave me or that aftershave you gave me? That's better than anything I bought in the store in a long time. You may have something here."
So based on the really positive feedback from friends and family, we decided on the business.
And I was very fortunate at that time I had access to an old machine shed on my fourth generation family farm.
And at that point, I asked my mom, if I could actually do some renovations. And she said, "Yeah, go for it."
So I spent a few months updating that old machine shed, and that's where we launched. And so we were born in a barn and not in the boardroom, that's for sure.
Chase Clymer
Oh, that's amazing. So what was the first product that you actually took to market?
Kyle Lafond
So the first products included a whole bunch of different things.
So basically, it was deodorant, aftershave, hair pomade, and a beard balm. And what I did was... I realized at that point that most of our competitors or smaller companies out there, really were just launching online.
They were basically running ads on Facebook or Instagram and putting some money down in digital advertising campaigns. I didn't want to be like those folks. I want to really start off with a brick and mortar backbone.
So I took it upon myself to actually jump in my car and go visit local grocery stores and pharmacies, especially shops, and pitch.
So I would take bags and samples, I'd hand them off, I'd say, "Hey, I want you to try these things out. I'll come back in a week and we can talk about getting back on the shelf."
And basically what we did with some local partners here, 3 Hy-Vee stores in the Madison area, got on those stores' shelves right away. They made independent decisions, and the buyers buy our products.
And I remember, I put everything out on a Friday. I did a little demo that afternoon to talk about the products and doing the "hype work". I came back on Monday.
And even though I had put 36 of all of our products on the shelf, every single one of the deodorants is gone.
So that very first weekend, I realized, "Hey, we're going to be a deodorant company.” It's great to have all kinds of other men's new products.
But guys are really looking for alternatives to the traditional stuff we've been wearing ever since we've... So that's the foundation story.
Chase Clymer
That's amazing. And so something I want to highlight there is that you took it upon yourself to get out there and actually sell the product, to go make these connections with the small independent retailers, and try to get your product in the store.
And what I want to point out there is that like you weren't waiting for, you know, something happened to you, you were getting things done, and you were going out there.
How long were you hitting the bricks and making these wholesale connections --is what they ended up being-- before you started to pivot and look at direct-to-consumer?
Kyle Lafond
Yeah, that was about 3 years, actually. My weekly routine was I had to load up my truck on a Sunday afternoon, Sunday evening, hit the road either late Sunday or early Monday morning, and I'll be gone till Thursday.
So I had a bunch of routes throughout the Midwest here that basically I would drive and stuff out.
And I think that really helped out because a lot of the buyers and the owners at the stores when I would walk in and tell them, "Hey, this is a company I founded. We're making products on my family farm. And we're making products that are better alternatives, healthier alternatives than what's on their shelves right now." I think it really resonated.
So coming from the founder and being the guy saying, "Hey, your business is so important to me that I'm standing here in your shop. I'm not asking you to come to me, I'm here coming to you. I want to establish a relationship and I want all your employees. And I want to help you sell our products on your shelf."
Because very early on, I realized that a shelf wasn't the end of the story. That was just the very beginning.
The consumer has to pick them up, the consumer has to buy them. So for me being on the road and being visible and doing demos really helped out. I'm very fortunate, very glad that we did that from 2015 to 2018.
Because given how the world has changed over the course of the past two, two and a half years, I don't know if that strategy would have worked. I don't think I could have gotten into stores, I couldn't have done demos. I couldn't have gotten in front of people. So timing really was key.
And then in 2018, we actually took our first round of investment. That first 3 years, I bootstrapped the entire operation. We got to a point where if we really wanted to grow and scale, we needed some outside funding.
So prior to bringing in outside funding was to launch on these different Ecom platforms and really push the digital aspect of our business.
Chase Clymer
Oh, that's... Alright. So that's where a lot of our listeners are definitely at. Definitely more of a D2C focused audience here. And you said, something that I've kind of wanted to dive into is platforms. So not just one.
So I'm making an assumption here. And please correct me that obviously, you've got your own store built out. I believe it's on Shopify. But are you also in other marketplaces such as Amazon?
Kyle Lafond
That's correct. So yeah, we've built our own site on Shopify. And I preach Shopify to everyone I run across. If you're gonna be serious about Ecom, Shopify, Shopify, Shopify. That's the platform you have to use. We learned that the hard way.
We built some sites on other platforms and most of those sites are great for main street businesses. But if you're really wanting to do Ecom and D2C, Shopify. Fire away.
The information analytics that platform provides are so far superior. So anyone that's serious about D2C, yeah, I am a Shopify proponent to the max. So yeah, we're on our own website.
We also have a price list on Amazon. And we have a handful of other sites where we list our products. What we try and do is we try to maintain as much control of our own sales as possible.
What we try to do is we try to limit resellers as much as we can because if you look at the customer reviews, anytime there's an issue with our products, it's not because of us. It's because of our resellers.
It's because retailers either failed to ship a product, don't provide a refund, or just completely out of touch. So another thing that I preach all the time is to be in control of your own destiny on these Ecom channels. Try not to get to the point where you rely on resellers.
Chase Clymer
Absolutely. And so with the decision to sell your products directly on Amazon, I feel like that's a decision that weighs on a lot of founders. "Should I or should I not put it here?"
So what would you say are the advantages of selling on a platform like Amazon and then if you if you want, you don't have to answer this one. And maybe the disadvantages of selling on like a marketplace?
Kyle Lafond
Yeah, the way I look at Amazon is that it's a necessary evil. And I hate to even say it that way. We have to realize that Amazon is now the second largest search engine in the world behind Google.
So if people are actually looking for products --even if they're not going to buy-- they turn to Amazon just to research and read the testimonials, read the reviews. So you really need to be on Amazon to make your brand legitimate.
So for us, it's one of those things where we've placed products there because we need to be visible. Of course, we don't have the budget to compete with a lot of these larger companies on Amazon.
The thing that a lot of folks don't know or that isn't talked about much are the costs of advertising and listing on Amazon. And it's gotten to a point where it really isn't a very fair playing field at all.
These major international corporations that have unlimited ad budgets and marketing budgets where they can afford to run ads and marketing people time and time and time again. We just don't have those dollars. For us on Amazon it has to make sense.
So we're always taking a look at our ad costs, and making sure that Amazon's actually a breakeven or sometimes hopefully a profitable source of revenue for us. But again, we can't compete with larger companies.
So we list just to be visible and to show up, and we try to get to a point where we're showing up on searches that are relevant to our categories.
Chase Clymer
Absolutely. I think there's a secondary consideration with listing on these marketplaces, as well is just your sales velocity and economies of scale. Does that come into the picture as well?
Kyle Lafond
It does. So for the first couple years, we listed products on Amazon just as our own entity.
We didn't hire any type of outside firm, any type of Amazon management agency to actually run ads for us or gauge our performance. And that was fine.
But if you really want to make inroads, you really need to find an agency and specialists to help you out.
It's something where every day I'm trying to figure out when the right time is to bring that in-house, to actually have a dedicated Amazon professional on our team that can run that platform and run it.
But yeah, you get that point where initially, you just list products, just to have them there. So they show up.
And then you hire these management firms that can basically run campaigns for you. And then when you reach a point large enough, yeah, that makes most sense to bring in-house and have some actually run those campaigns for you day in and day out.
So for us, that's kind of the progression that we've had. And talking to other founders and entrepreneurs of CPG companies, it's very similar. The devil is in the details, though. Finding that firm that can actually run these campaigns.
Because we get these listings all the time, every one of us from different marketers that claim to have such dramatic success on Amazon.
But until you actually dive in and work with these folks and get to know them, you're never going to know.
So I spend a lot of time, just basically doing my own due diligence, in figuring out who we're going to work with, or who we should be working with to actually grow us and revenues.
Chase Clymer
I think that that sentiment goes beyond just Amazon. That's just growing agencies and consultants out there.
So that's actually something I'd love to ask your thoughts and opinions on a bit more, because I have my own [thoughts] where it makes sense to go in-house. And I'd love to see how it compares to yours.
So my perspective on the lifecycle of direct-to-consumer brands is you're zero to a million dollars a year, you're a startup, in my opinion.
Sorry, if that makes you feel a little or bigger than you are, who knows.
But I think at that stage and things, you should be doing everything you possibly can do yourself just to increase sales, and invest in yourself in your own education.
Because as you shift into the next phase of things, --which I'm going to call the scaling phase, which I would say is like a million to $10 million a year-- that is when you should probably look to work with consultants and freelancers and partners, agencies, whatever you want to call them.
People that are smarter than you at their, whatever their subject matter expertise is, I think that the investment that you make in your education early on, and making mistakes, and learning about your product-market fit, are only going to help those partnerships when you find the right people.
And then I think when you get to that 8-figure mark, that's when things makes sense to bring stuff in-house.
And as an agency, on our end of things, when they... When we help businesses get to that point and they bring stuff in-house, we feel great about it. And it's like we did our job.
So that's my perspective, how does that fall in line with how you guys are doing things?
Kyle Lafond
I agree with you 100%. That makes sense from a brand-growth perspective. The only caveat there is you have to look at AOV. If you've got a product that you're only selling for $10 bucks, maybe a little bit lower than that, like us.
But if you got that, you sell $150+, yeah, then the numbers go the other way. So it all depends on AOV.
But those are really good guidelines in terms of how you should be approaching Amazon, and what kind of strategies and tactics you should be employing?
Chase Clymer
Absolutely, AOV is one of my favorite numbers to manipulate. So you are correct, [especially with] CPG's, getting the AOV online is a lot harder.
So what are some of the strategies and tactics that you do to try to increase that average order value or that cart value on your Shopify experience?
Kyle Lafond
Yeah, so number one, trying to figure out what our breakeven AOV even is. So we've done a bunch of work in the back and are trying to reverse engineer.
So if we get this point where we're... Let's say, we're at x... Say $45 before AOV. At that point, we're actually generating a fair amount of revenue and being profitable. So for us, in order to get to that goal post, we have to figure out different strategies.
So it could be bundling, it could be like a build your own, and it could be seasonal or limited editions. Anything we can do to get products put together so we raise the AOV.
Sometimes we even thought about bringing in products from other companies. So companies that we call our favorites or that we want to push and help grow as well, or companies that want to help us.
So a lot of it's bundling, packaging, limited releases... Sometimes it may include new products. Obviously, we're making a new product.
It's not all about "Hey, how much can we charge for this?" There has to be a customer need there first.
But looking at the full spectrum of things that are available to raise the AOV, looking back and knowing now what I do, we probably should have started off selling products that are a little bit more expensive than $10 a unit. And that's just one of the things that you learn over time.
I see the evolution, I see folks that have started multiple companies and you always see that they start with a lower-end product, a lower priced product. And then those products tend to gradually get more and more expensive as they start other companies' other endeavors.
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Chase Clymer
The unfortunate truth is with higher priced products, you have more margin to invest back into the business.
Kyle Lafond
Yup. That's exactly it.
Chase Clymer
So with the increasing the AOV and trying to get to that $45 average order value how much does lifetime value come into play as well with when you're making some of these decisions?
Kyle Lafond
I knew that question was coming next. You can't talk about AOV without LTV and especially from an investor perspective.
So when I'm out and pitching and talking to potential investors, those are two questions that come up right away AOV, LTV. So we've actually done a lot of work to try to better determine what our LTV is. There's a handful of calculators out there.
There are some that are very simple in terms of figuring out what your LTV may be and others that are very, very complicated. The more complicated, I tend to think, the better off you're going to be.
So for us, I've had to go through this evolution of thinking about "Hey, the first time we make a sale to someone, I'm alright losing money on that transaction because we actually have a returning customer rate at about 70%."
So I'm really happy that that actually speaks to the quality of the product. And given the nature of our products. If you find a deodorant or an aftershave or a beard balm that works and you'd like...
If you're a guy --and I can say this because I am one-- we're pretty simple and stupid. And if I have something that works, I'm going to keep on going back to that time and time and time again.
So for us, I've really refocused on, "Hey, I'm not concerned about making money on that first transaction, maybe even that second transaction."
But knowing that we have customers come back 3 - 4 - 5 - 6 - 10 - 12 times, that's where we're going to be profitable.
So we focus more on building customer relationships, and making sure they can buy our products.
Chase Clymer
That's... Yeah, that's amazing. So you're using your return customer rate? And are you just manipulating that against your AOV and bouncing it out a few times from there?
Kyle Lafond
That's exactly it. Yep.
Chase Clymer
Yeah. And that's the thing just about... Average order value is a little more cut and dry. You go "Here are your sessions, here your sales, divide."
But with LTV, that one is definitely... It's something where it's like there is no one way to do it. You build it and you got to be comfortable with it and it's like your gut as a founder.
With CPGs, obviously, you have a higher repeat purchase rate because it's consumable. But if we're talking about, I don't know, bookshelf/desktop speakers, I don't think someone's coming back and buying one of those within the first 90 days.
Kyle Lafond
No, not at all. And we've done a lot to figure out "Hey, what is our use? How long does it take a customer to get through our products: beard balm, aftershave, whatever." And we've roughed that out right around 8 weeks.
So there's a whole bunch of stories to tell there beyond that. So when you think about traditional or conventional products --and I'm gonna get on the natural products bandwagon here for just a second, if you don't mind-- We think about medicinal products.
I tell folks when you take a look at personal therapy products, if you look at the back panel, if you see water, or H2O, or agua listed as the first, second, or third ingredients, tell you what, that's just a filler. That's for ease of application and that's to cheapen that product.
So for us in all our products, we don't use water in anything. So [for] our price, [we] tend to last quite a bit longer. We often talking about a dab will do you or a couple of swipes and you're good to go.
Because you can take a look at let's take Axe for example, all their television spots --or Old Spice-- their television spots. What do you see? You see those guys just dousing themselves. Taking a shower in this body spray. You don't need that. That's overwhelming.
And that marketing is very intentional. It's to encourage folks to use as much of that product as they can. So they keep on coming back, and buying it more frequently.
So when I tell folks how are we doing? "It's gonna last you 8 weeks. It's gonna last you twice as long as the deodorant your buying right now. So in terms of cost efficiency, we're actually much more reasonably priced than the traditional deodorants you're buying that are filled with all kinds of garbage."
So talking in those terms, we need the folks to realize that "Holy cow, there's actually companies out there that stress quality, over quantity and repeat purchases.'' That goes a long ways for us building that trust with customers.
Chase Clymer
Absolutely. And now, with everything that we talked about today and knowing our audiences, [is there] something that I forgot to ask you that you think would resonate with them?
Kyle Lafond
I'm oftentimes asked to "Hey, if I were to do this all over again, what kind of advice that I give to myself?'' And the big thing... I steal from Nike, "Just do it.''
I think there are a lot of folks out there that put way too much thought into it. I talked to a ton of entrepreneurs over the years that have brilliant ideas, but just never execute.
So my whole advice is, "Hey, if you got an idea, and it keeps coming back to you 3 months, 6months, 9 months, a year down the road, there's something there and go for it."
Another thing that I talked to a lot of folks about is the importance of roles. So we believe in a book called Rocket Fuel. And Rocket Fuel is a great read. It basically defines roles within an organization.
For any startup, you really have 2 key players, you have one who's a visionary, who sees the plan for what it is and can look out 5 - 10 years and knows where you want to take this thing.
And you have the integrator, someone that actually does the work.
And what I see happen time and time again [with] companies, startups that I talked to, you got 2 visionaries or you got 2 integrators. And you really have to recognize who's going to take on each one of those roles in how are you going to work together?
When we first read that book that really helped our communication internally. Understanding who we are and what our roles are.
So for anybody that's thinking about starting their own business, I'd say yeah. Number one, go for it. Now's a great time.
There are a lot of folks transitioning out of traditional careers and looking to put their own shingle out there and make a go of it. And then yeah, read the book Rocket Fuel. Seriously.
And find out what you're good at and try to recruit your counterpart.
Chase Clymer
Yeah, that's a great book to recommend. So I've read Traction and I haven't read Rocket Fuel yet, and I just wrote it down, and I'm going to download it from my library app the second, we're done with this conversation.
But yeah. No, I couldn't agree more. Kyle, thank you so much for coming on the show today and sharing your insights. If people are interested in the product, where should they go to check it out?
Kyle Lafond
americanprovenance.com. We've got a beautiful website. It's constantly updated. All kinds of special readings.
Go ahead and sign up for the Pit Crew. That's our rewards program so you can basically build points towards future purchases.
And yeah, you can find us in almost 5000 locations nationwide now. So look for your nearest brick and mortar retailer. If we're not there, hey, please talk to the buyer and request that they bring us in.
Chase Clymer
Absolutely. Kyle, thank you so much.
Kyle Lafond
You bet. Thanks, Chase.
Chase Clymer
Alright. I can't thank our guests enough for coming on the show and sharing their knowledge and journey with us.
We've got a lot to think about and potentially add into our own business. You can find all the links in the show notes.
Make sure you head over to honestecommerce.co to check out all the other amazing content that we have. Make sure you subscribe, leave a review. And obviously if you're thinking about growing your business, check out our agency at electriceye.io. Until next time.