Honest Ecommerce

201 | Aim to Break Even on Ads Before Aiming To Scale | with Jimmy MacDonald

Episode Summary

On this podcast, we talk about the correlation between cave diving and Ecommerce, how listening to Honest Ecommerce framed Authenticity50’s mindset, what they learned from the 100,000 Masks Project, and so much more!

Episode Notes

Jimmy MacDonald is the Co-Founder of Authenticity50, which he launched with his wife Stephanie MacDonald. 

Prior to Authenticity50 he worked in the Hedge Fund industry in Los Angeles, San Francisco, Hong Kong and Tokyo, Japan. 

When he, rarely, has free time he loves to cave dive and train Brazilian Jiu Jitsu.

In This Conversation We Discuss:


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Episode Transcription

Chase Clymer  

Before we get started, if you're enjoying this content, you can do us a favor by subscribing to our YouTube channel and ringing the bell.

That will let the algorithm know that you like this content and it will help us produce more.

Jimmy MacDonald  

You need to identify why you exist and why it's important that you exist, and then figure out a way to convey that to your customers.

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'm your host, Chase Clymer. And today, welcome to the show, Jimmy MacDonald

He is the co-founder of Authenticity50, a brand focused on making great products in the USA. Welcome to the show, Jimmy. 

Jimmy MacDonald  

Hey, Chase. Thanks for having me on. Appreciate it.

Chase Clymer  

Alrighty, so your introduction skipped over the part about what the products actually are. So for listeners to get a little bit of a grasp on what we're talking about here, what are the products?

Jimmy MacDonald  

Yeah. So Authenticity50, my wife and I co-founded the business back in 2015 with the goal of making the best bedding and bath products in the world but doing it 100% what we call Seed-to-Stitch®, made in the USA. 

So everything from the growing of the cotton, to the spinning of the yarn, to the weaving of the fabric or knitting of the fabric, to the final finishing, and cut and sew, it's all done 100% domestically. 

And we sell really nice bed sheets, really nice bath towels, really nice pillows, blankets, comforters, and hopefully a few more products launching this year down the line, too.

Chase Clymer  

Absolutely. Awesome. So thanks for laying that out for us. 

Now, take me back in time. Where did this idea come from to launch --for lack of a better... or maybe a simple approach-- a bedding brand? 

Where did this idea come from? What was going on?

Jimmy MacDonald  

Sure. So my history, my work history is actually in the hedge fund industry both on the buy side and sell side. My wife and I got married in 2011. 

And as we were outfitting our apartment at the time, we were just trying... 2010 - 2011 was the bottom of the financial crisis so the world was not in a happy place. 

And we were just trying to buy everything for our apartment made in the USA as much as possible, whether that was our cutlery, our furniture, our mattress, our clothing... You name it. We were just trying to buy everything made in the USA, and we were looking for bedsheets and there was nothing available. Literally nothing available at any price point. 

We were Googling all kinds of places. Sorry, Googling for it, trying to find made in the USA bed sheets, there was nothing available. 

We stayed at a bed and breakfast in Carmel, because we were living in San Francisco at the time, and they had these amazing bed sheets. We just looked at the tags and saw that they were made in the USA. 

So we asked the owner, "Hey, where did you get these sheets?" And she said "I stockpiled them 15 years ago and we've just been working through our stockpile for the past 15 years. You can't buy them anymore. They've been out of production for 10 years." 

And I was like, "Do you have any source for made in USA bed sheets?" 

And she's like, "No, there's nothing available." So this was 2011. We sat on it for a while, just digested that, and it was kind of the early stages of Ecommerce. 

Shopify was around, but it wasn't the powerhouse that it's become. And then 2014 - 2015, we really started to put time and effort into building the supply chain out, figuring out how we can make it. 

We saw brands like American Giant come out, tell the story behind made in the USA, show that you can still make a great product here. And we saw other direct-to-consumer brands. The Casper Mattresses

And we saw this evolution going where brands can have direct relationships with the customers, tell the story of the products, and generate sales that way. So we spent 2 years --one or two years-- working on the supply chain. 

We launched a Kickstarter in 2015 with a goal of raising $20,000 and we doubled that. And from that point on, we were off to the races.

Chase Clymer  

That's a fantastic story and a very authentic story. It came from solving a problem that you as an individual encountered and realized that there was a gap in the market. I have heard that on here dozens of times.  

Jimmy MacDonald  


Chase Clymer  

So you answered a few of my immediate follow up questions there. You're iterating on this for about 2 years, and you launch on Kickstarter. 

Alright, so the Kickstarter goes great. How do you now pivot from a Kickstarter campaign to a direct-to-consumer business? There's a few steps in between. 

Jimmy MacDonald  

Yeah. So I have to preface this and say, we didn't know what we were doing at the time, right? We didn't come from retail, we didn't come from PR, so this was new to us. 

So what we focused on at the time was,  "How are we going to get traffic? What do we… How are we going to get high-intent to interesting traffic?" 

So Google was a natural starting place for us writing lots of content, not really with the intent of promoting our product, but was trying to educate the customer, because there's so much misinformation out there in the bedding and the bath space, that if you just set the record straight on light on that thing, you'll get a lot of eyeballs. 

So we're working on dispelling the thread count myth, dispelling the Egyptian cotton myth, telling people about what really mattered in the bedsheets space, and then also advocating for the Made in USA side of things, telling the story. 

And fortunately, our customers liked our product and spread the word amongst their friends a lot as well. 

That, combined with a good focus on PR, we knew we had an interesting story that was unique. So we tried to get that out there as much as possible. We did a lot ourselves. 

We hired a few small PR agencies as well that work with smaller companies like ourselves at the time and still, in many ways. We like to work with a smaller, scrappier PR agency. And we're able to get some great press hits. 

We're on the front page of the LA Times, we've been in Martha Stewart's, been in ABC World News, David Muir... A few of these things came later on but we had a steady stream of bloggers and press hits  that helped us raise awareness as well.

Chase Clymer  

That's fantastic. Now, you guys have had a great trajectory building out this brand, is there anything that comes to mind when I bring up maybe mistakes along the way that you want to help our listeners avoid?

Jimmy MacDonald  

Yeah. (laughs) Man, we've made every mistake in the book. I think one of the mistakes that we made was,  we didn't diversify our product portfolio early enough, so that we were very reliant on just a few SKUs

And then another thing, another mistake that really stands out to me was not building our team early enough. When you're young and don't have children, you can brute force your way through a lot of issues and get a lot done just by grinding, right. 

But as you grow, as you have children, you can't do that anymore. Not if you want to have a presence in your kids' lives. 

So we would have done a lot better if we grew our team earlier, helped nurture our team, as well [as] help them train so that they can get better at what they're doing. Not necessarily going out there and hiring a $150,000 graphic designer. 

But getting somebody in, working with them on customer service, working with them on Shopify, and helping them to get up the learning curve because there's so much... 

There's so many ways where you can learn skills out there nowadays, without having a degree. And this podcast is a perfect example of [how] you can learn a lot without going out there and spending money on a course or getting down the [route of] going to a university to learn stuff.

Chase Clymer  

Yeah. Well, I appreciate the kind words and I hope that all the listeners out there are getting value out of this. 

I try very hard to ask the right questions and probe where I know that we should dig a little bit deeper. 

I'm gonna switch gears though here a little bit. You guys did something pretty amazing. Can you tell me about the 100,00 Masks Project?

Jimmy MacDonald  

Yeah, sure. So 2020, as... So I lived in Hong Kong for a while so I have a lot of friends in China. We could see early on that --just from my friends there-- that the COVID outbreak was happening and it was going to be a real thing. It wasn't going to... It wasn't something that was going to be contained within China. 

And we started trying to figure out how we can have an impact. We wanted to build Authenticity50 into a brand that we'd be proud of, that our grandparents would be proud of, that our children would be proud of, that always focuses on doing the right thing. And we were... 

We had fabric that we knew we could use for face masks. And because of our connections within the domestic manufacturing scene, we knew that we could find cut and sew shops to sew masks, if we could raise the funds to pay them because they needed to keep their lights on and pay their workers. 

So we did a fundraising campaign, just via our audience of customers to try and cut and sew as many masks as we could with a fabric that that Authenticity50 donated. So I think we raised or didn't quite hit our 100,000 masks goal. We hit... 

So we launched it right in the summertime, as people were like, "Oh 2020. It's summer. Everything's going back to normal." which was not the right time for... 

If we would have launched it maybe 6 weeks earlier, we would have got a ton of press, it would have been huge, and we could have sewn a lot of masks. 

But we raised almost $30,000, just from our network. These people got nothing in return other than knowing that they were supporting a good cause. 

We use that to pay a cut and sew shop to cut and sew a bunch of masks, which we then donated to children's hospitals and communities in need across the country. 

So I think we finished with over 20,000 masks. 21... I don't remember what the... 21,000 maybe? I don't remember exactly what the precise number was now. But yeah, it was... 

We're proud of it. I'm still proud of it. And it's great to see that... We wouldn't be able to do that without our domestic connections in the supply chain. And it's cool to see what can be done. 

And I think people now realize how important it is to support the domestic supply chain. It's [exactly] because of this reason.

Chase Clymer  

Well, yeah. Even at the tail end of the pandemic, the supply chain got way out of whack. And a lot of people that had reliance on international supply chains, they kind of got the shit end of the stick, you know what I mean? 

Jimmy MacDonald  


Chase Clymer  

So did you guys see any issues with the supply chain with having a whole domestic setup?

Jimmy MacDonald  

Yeah, it was challenging for us as well. Make no mistake, the domestic supply chain challenges are real. 

And we're still experiencing it to a certain extent. In fact, in some ways, it's even worse now than it was in 2020 - 2021 because now the effects are starting to really play out. 

But we haven't been impacted by, for example, the container ship prices that all the other importers have had to deal with. But still a challenging environment on the supply chain side. 

That depends on the products. It depends on what kind of yarn in particular, what kind of cotton you're using for the product. So some products are easier than others. 

But yeah, it's not easy. It's not easy at all.

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Chase Clymer  

Alright, let's shift gears back to growing the business, and scaling it, and just marketing in general. I know that the audience loves tactical...

Jimmy MacDonald  


Chase Clymer  

...questions, right? So what's your guys mix and approach to marketing and advertising? Acquiring new customers, A, and B, retaining existing customers?

Jimmy MacDonald  

Yeah, so you always want to diversify your sources of customers as much as possible. 

So for us, we've invested heavily in content for Google, SEO, organic and paid. We've invested quite a bit into PR to try and spread the word of our product. And we consistently get PR hits, which is really important for us. We were just listed as the... 

Our blanket was listed as the Best Blanket by the Good Housekeeping Institute just last week. So invest in that kind of PR press because that also.... 

So the goal is really to energize this flywheel where you are generating content, which generates traffic, using that content to then post it on social, post to your email list, give people actionable and helpful content that bring them back to your site, use the PR to promote on social, promoting your blog posts, get people back to your site, use all this with email, caught with email marketing, SMS marketing, all those owned channels, and generate this flywheel that's spinning up constantly. 

And I think, Chase, you talk about this stuff all the time. It's like you want to... 

It's very attractive to just rely on one source of advertising and try and scale that as aggressively as possible. 

But the more effective way of building a business over time is to have a diversified source of content and marketing: that flywheel that spins up where it's you're creating --I hate the word synergies, but-- synergies amongst your different channels so that everything performs better. 

And it does take longer. There's no mistake about it. It does take longer to do this, do things this way. 

But if you want to build a lasting business over time, I think that's the more effective way to do it.

Chase Clymer  

Absolutely. And I wrote down here to follow up on that. As far as the SEO play goes, how long have you been investing in content and into SEO, which is basically backlinks and content once the technical parts are done? 

Jimmy MacDonald  


Chase Clymer  

How long have you been investing in it, A, and then also, how long did it take before you started seeing results?

Jimmy MacDonald  

Yeah, so we've been investing in it since 2016 when we launched the brand. And for us, we saw results fairly quickly. 

I think part of it was because we knew which niches to focus on: Thread count, what kind of cotton to use for bed sheets... And there just wasn't a whole lot of content that was addressing that in a smart and sophisticated manner. 

And then we also spend time working on good content. That makes a huge difference. If you put out something, and it's terrible, and Google sends it out to some people, and they bounce immediately from your site, it's never going to rank well. 

So focusing on good content will help you rank faster, of course. But it is a slog. I don't know exactly how long it took for us to really start ranking for some of these blog posts. 

But I think we got some of them up in the top three, within a year or two. And those, of course, blog posts link back to our products, too. So that also raised the view of our products in Google's eyes as well. 

So that was the ancillary benefit, which was really the direct thing that we wanted was Google noticing our products. So that's what we... 

We used a lot of that content for that, promoted that content on social media, moved that content on email. And that traffic and eyeballs [ends] things up that way.

Chase Clymer  

Absolutely. And then my other question was... You didn't really directly say at any point in explaining how you guys approach marketing. Really, anything about paid advertising. 

Is that in the mix? Are you guys more heavily relying on more organic sources?

Jimmy MacDonald  

Yeah, so we definitely invested heavily in AdWords. AdWords is just... 

It seems to be the most consistent performer for us. And I don't know, you probably know better than I, but I think a lot of brands like AdWords for its consistency. 

So Facebook has been one of those things that we've spent quite a bit on the remarketing side, but it's always been challenging on the lead gen side for us. 

And I think part of that is a personality thing. I'm highly analytical when I'm shopping. And you have to get in the right mindset for Facebook ads, which is tougher for me. I think also, we just didn't realize... 

We didn't invest enough in the right partners, I think as well, to help us on the Facebook advertising side. Experts who knew what kind of content to create, what kind of ads to create, what's the best practices there. 

And frankly, that's a failure on my part. That's a miss for me, you know, I should have invested more --especially in the heyday of Facebook marketing-- on what the best way to do that is. 

But even now, we're going to be looking at it much more intensely going forward to see what we can do there. I'm sure that we can generate, break even at least traffic there and hopefully be profitable over time. 

But, it's something that I missed. I dropped the ball a little bit to be perfectly honest.

Chase Clymer  

I like how you as a brand founder, your goal with prospecting through a new channel was breakeven. 

Can you explain that to listeners out there that are always seeing these crazy case studies of 5x and 10x?

Jimmy MacDonald  

Yeah. I think... (laughs) I think that was also one of the reasons... We were always able to be profitable, day one, with AdWords. 

Facebook, you have to view in a slightly different manner. 

And the goal is breakeven on the first customer, make money over time via lifetime value. And that's one of those pillars that you need to focus on: How do you get those customers coming back to your site, purchasing a second or third or fourth time? What's your repeat customer rate? Are you... 

If you can acquire customers on break even, man, that's... You're in a good spot. And then the goal is…

The important thing is getting them to come back. That lifetime value. I know that you talk a lot about this. 

And I've learned a lot from listening to you talk about it, and it's framed how we're thinking and evolving going forward.

Chase Clymer  

I'm very much enjoying this podcast, Jimmy. 

Jimmy MacDonald  


Chase Clymer  

I know that you're an avid cave diver, and there's some training that you went through that you thought really correlated well with growing an Ecommerce business. Do you care to share?

Jimmy MacDonald  

Yeah, absolutely. So about 10 years ago, I did my first cave diving course with a guy named Jarrod Jablonski

So he's the world's most accomplished cave diver. His world record setting dive was a 26,000 foot penetration into a cave at an average depth of around 300 feet. 

So that's 7 hours of bottom time and about 14 hours of decompression of almost a 24 hour dive. These are huge dives that he's doing. And he does them as part of a team. And his... 

As we were going through our intro to cave diving class, he always kept hammering home to us: "It's the fundamentals that keep you alive. It's not a shortcut. It's not a fancy piece of equipment. It's being rock solid in your fundamentals, planning your dive, diving as a team, having perfect points in control, and staying calm as you're dealing with issues." 

And for example, the way you die in a cave, it's not like the cave collapses, and you have this catastrophic thing and you die. 

What happens is your diving, your primary light fails, it floods or the battery dies, then you don't have great buoyancy control so you kind of lose control of your buoyancy in the dark. You try to get your backup light. You can't get it out. 

You finally get it turned on but by the time you've gotten turned on, you've silted out the cave. You know, you've you've landed in this dusty bottom of the cave silted out, it's completely black even with your light on, you've drifted off the line, you've put yourself in now a life threatening space because you don't know where the line is, you can't see anything... 

And what should have been a very simple issue to resolve...  

What should happen is, okay, your light turns off, pull out your backup light, turn it back on, turn it on, reference the line, start exiting the cave. 

But you've created this, the snowball effect where one small problem leads to the next problem, leads to the next problem, and there's.. 

Nope. Nothing that happens in a cave that you can't make worse by doing the wrong thing. And I think the same thing is true for Ecommerce brands, too. 

You have to focus relentlessly on the fundamentals because that's what's going to keep your brand going during tough times. That's what's going to help you grow your brand over time. 

I think Patagonia is a perfect example of a company that is a billion dollar company that's compounded slowly. 1.4x a year, which is not too slow, but compounded over time by focusing on the fundamentals. 

And I think, Chase, you and I will agree a lot on what the fundamentals are because I've heard you talk about them in the past. But spend time on your product and iterating is necessary. You want to... 

You need to have a good product, if you're going to grow over time profitably. You need to identify why you exist and why it's important that you exist, and then figure out a way to convey that to your customers. 

The conveying part is much easier said than done, by the way. That takes a lot of practice. 

Find great people to work with and work as a team. You need to... You can't... You can brute force your way through things for a while. 

But you really need to have great people on your team that are aligned with your mission, both internally and your manufacturers and supply chain too. We spend a lot of time on the road visiting our manufacturers. 

We just got back from a week long trip to Georgia, South Carolina, North Carolina, just visiting manufacturers, telling them our story, reminding them that we're real people building those relationships. 

And then another one is to diversify your sources of traffic. In cave diving, we say "Two is one and one is none." because you need to have backups in place. If there's a critical piece of equipment and you only have one of them, if that thing fails it's game over. And then one thing... 

You're a pro on this: Focus on customer lifetime value. What's the best way to get them back to your site? 

Keep them purchasing, adding value to their lives so that they continue to support you and tell their friends about you. 

And I think those are a pretty good core set of fundamentals to always be focusing on. And those will help you through tough times. 

And you should spend some time every year working on those fundamentals.

Chase Clymer  

Absolutely. Now, Jimmy, we talked a lot about these awesome products that you are creating. 

If I'm a listener and I'm interested in them Where should I go?

Jimmy MacDonald  

Yeah. So we only sell online at our website: authenticity50.com. And we’re not on any of the big channels yet, the big platforms like Amazon.

But yeah, just go to our website and everything’s there.

Chase Clymer  

Awesome. Jimmy, thank you so much for coming on to the show today.

Jimmy MacDonald  

Yeah. Chase, thank you for having me. I appreciate it.

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.