Taika (Kal Freese)

Kal Freese is a co-founder of Taika, the beverage brand responsible for the first perfectly calibrated coffee and matcha, which are plant-based, keto-friendly, and adaptogen-infused.

He's also a food scientist who placed ninth in the 2015 World Barista Championships. We sat down with Kal to dive into his experience of rewriting the CPG playbook, diving deep on:

1. Designing CPG products by owning your value chain

2. How to scale customer hospitality and white-glove support

3. Fostering community at the intersection of CPG, F&B, and web3

"We've grown our capacities to the point where we can iterate and improve very quickly. Now, we're evolving Taika so it becomes synonymous with powering creativity, without the crashes of legacy coffee and energy drink brands."

Vertical Integration: Owning Every Step of Your Value Chain

As Kal recounts, he realized early on that a significant number of CPG brands, particularly in F&B, are primarily marketing and sales engines, rather than actual product developers.

Most of those processes are instead outsourced, resulting in slow, costly workflows.

In response, the founding team leaned into their product-driven backgrounds to invest heavily in owning every step of the process, from R&D to testing to manufacturing. Rather than a traditional CPG, they emerged with an approach much closer to that of a lean startup's ethos.

They started by hiring a full-time food scientist and head of product development from Mattson, one of the world's leading F&B product dev agencies, which kickstarted a series of decisions that laid the groundwork for every Taika product to come.

Developing IP Around Product Formulations

While researching user preferences, they found macadamia milk had become the best-selling ingredient in Taika's product range. They doubled down on that insight, developing their own oat and macadamia milk in order to ensure the future quality of development of their core ingredients.

This also resulted in full ownership of that product IP, meaning any future product creation would be straightforward, needing only a few adjustments to existing components.

To highlight this point, in September 2021, Taika officially received its first patent for a novel process they're actively utilizing to streamline and ramp product production.

Building Custom R&D and Manufacturing

The method of retorting in food processing, as Kal explains, is critical for producing shelf-stable, non-perishable goods since this is where cans are pressure cooked to eliminate any bacteria.

However, a retort set typically costs over $100,000.

Rather than biting the bullet, the Taika team was able to step back, research, and build their own retort setup for less than $200 with roughly 95% of the efficiency of a typical market set.

Leveraging In-House Testing Capabilities

As Kal tells it, the average product dev process for an F&B CPG takes roughly four months of formulating a recipe with an agency.

This doesn't include several tasting trials, which require thousands of cans of wasted product and hundreds of thousands of dollars — for a total year-long process to develop a few SKUs.

In response, the team built out a process that allowed for daily iterations, minimum sample waste, and next-day taste tests.

It enabled Taika to power through hundreds of iterations, arriving at a final production-ready and shelf-stable formula within six months.

Taika's Secret Sauce: Vertically Integrated R&D

Following the official launch of Taika in 2021, the brand has elevated its DTC channel from local delivery to a larger 3PL, while also growing its SKU range alongside their distribution.

For instance, Taika's macadamia-milk-based matcha latte was a new SKU that quickly became their most popular product, due to most competing matchas being water-based. The first seasonal Taika product was a pumpkin spice latte, with more seasonal drops on the horizon.

The team's upfront investment of time, research, and capital into an end-to-end, Taika-owned R&D engine allowed for a consistent release of new product SKUs without any loss of quality.

"We decided to heavily invest in product development on our own terms. It just makes sense to me. And now it's quickly paying off since we're developing superior products at such fast paces."

How to Scale Hospitality and White-Glove Support

At the very start of Taika, Kal designed each can label to display a version number as well as his personal phone number, which early users could text to send feedback or further orders.

After all, his founder journey had actually begun as the founder of a cafe and hospitality space.

And once he transitioned to pure CPGs, he realized a lack of access for customers looking to connect with the individuals behind a brand.

As such, although phone numbers or hotlines on product packaging might traditionally be considered a channel for negative feedback, Kal and the branding agency behind Taika decided to flip that notion.

Taika cans prominently display a number on their front, inviting drinkers to send a text which, in the early days, would be directly answered by live team members themselves — rather than the scripted, robotic flows people have come to expect.

As Taika scaled, the team eventually built out a tech stack to handle responses with light automation and human supervision, an idea they've dubbed scalable hospitality.

"My co-founder thought of brand hotlines as a last resort, like something you'd call if the product gave you food poisoning. So we wanted to turn that upside down, to invite people to text us for a fun, human-to-human conversation."

How Taika is Bridging CPG, F&B, and Web3

Looking toward the future of Taika, Kal admits the team is eager to continue innovating and breaking the mold as a company sitting at the intersection of CPG and food & beverage.

In his words, the general company ethos — one founded on seeking out a balanced approach to fueling yourself for work and creativity through balanced caffeine products — has resonated strongly with younger generations.

A key driver to continue connecting with these audiences, he explains, is collaborations with forward-thinking creative communities, whose built-in audiences can also be leveraged by Taika.

On the Web3 front, the brand will be launching a collaboration with Friends with Benefits, a crypto-powered cultural community.

As Kal puts it, while Web3 is generally considered a dense topic for mainstream audiences to try to break down, CPG brands are actually an efficient tool for onboarding users to the concept, since they're products and entities with which people interact every day.

For instance, Taika's co-branded release with FWB will be a premium, Web3-inspired take on Club-Mate, a popular yerba mate in Europe that's also the most common rave drink in Berlin.

The product will entail two phases of FWB community member participation.

Phase One: Co-Creating with Community

In Kal's words, the model of CPG brands of Web 2.0 (much like the platforms of Web 2.0) is based around extracting value from customer communities.

For instance, users who participate in referrals or create UGC receive little recompense, and a company's billion-dollar acquisition does not benefit their existing customers in any way.

As such, if Web3 platforms are built to be owned by their users, why should CPG brands not function in a similar fashion?

Why not allow customers to partially own or benefit from the success of a brand?

In the spirit of this aspiration of communal collaboration between "owners" and "users," Taika will ship various versions of their recipe to FWB members, who'll vote on which formulations should be put into production.

Phase Two: Launching an NFT Collection

As for the most well-known element of the web3 ecosystem, the second phase will see Taika and FWB releasing an NFT, while purchase comes with the chance to claim product drops.

NFT holders will be able to taste and vote for one recipe to become the official Taika product release.

While the collision of CPG, F&B, and web3 is still in its early innings, there's no doubt in Kal's mind that this movement will fundamentally reshape how customers interact with brands for the next handful of decades to come.

"This is the kind of innovation we're striving for now. We want to connect with great brands to test new ideas, step into new audiences, and really just have some fun while still centering our ethos of fueling creativity."

TBH (Elena Guberman)

Elena Guberman is the CEO of TBH, the snacking company dedicated to radical transparency from start to finish and better-for-you, better-for-the-planet product. TBH was founded by actor Noah Schnapp, in partnership with Umana Venture Studio (UVS).

Prior to TBH, Elena led operations for F&B startups for a decade, as a managing partner at Rodeo CPG, and co-founded Rubbish, a data-driven app that evaluated litter trends (the other side of CPG).

She sat down with us to dive into the ethos and development behind TBH. We cover:

1. How a celebrity-founded brand is built

2. Leveraging social media communities

3. What defines a brand as "Gen Z"

"Of every generation, Gen Z is voting with their dollar and putting money toward brands who've earned their trust. We want to establish ourselves as that honest and conscientious brand."

Celebrity-Founded Brand Meets High-Value Product

TBH was the first project to launch out of UVS, a studio working with celebrities and athletes to generate large-scale impact through purpose-driven brands.

With TBH, UVS took an authentic approach and strove to identify Noah's passions and value system to work together to create an aligned product — and wound up 16 months later with the concept of an environmentally friendlier, healthier vegan form of Nutella, the actor's favorite breakfast food.

Thereafter, they quickly realized what the concept at hand could become: a Gen Z-powered brand with a social mission, as well as the genuine taste and nutrition profile that would make TBH appetizing to snack lovers of any age demo.

The Typical Trials of R&D

Given the association with Hollywood of the brand's origins, Elena took care to demonstrate that TBH underwent a rigorous R&D process, similar to that of any F&B brand.

After all, a food product on shelves must first and foremost be delicious. That was important to both Noah and to Elena and necessary for the growth of the brand.

Elena worked with the manufacturer to experiment with the formulation of the product, and after 13 iterations, landed on a formula that Noah loved and would eventually launch as TBH's flagship product.

The primary draws of their spread include the fact that it's palm oil-free and has hazelnuts as their first ingredient, unlike leading market competitors which are greatest in sugar content and contribute to deforestation through the use of palm oil.

As such, the final formulations of TBH were, in Elena's words, merely marginal tweaks in terms of protein and sugar percentages in order to hone in on the most delicious hazelnut cocoa spread possible, while also maintaining solid macros for the product.

"We knew our vegan version of Nutella had to be equally, if not far more delicious, to succeed in the market. Noah and I tasted every single formulation, committed to finding the perfect texture and taste."

Leveraging Digital Communities & Influencers

Amid filming, high school graduation, and being accepted to Penn State - Wharton School, Noah has remained enmeshed in TBH product development and brand building, with UVS ensuring his authentic voice and opinions are preserved as the company scales.

By doing so, the honest traces of Noah found in the TBH ethos have lent themselves to leveraging a separate component of his work: his community of fans who've carried over to TBH and are excited to amplify his projects, mainly through social media.

A large element of TBH's success in distribution as a DTC brand has been celebrity and influencer marketing, with efforts in the area including:

• A campaign of pre-launch teasers for Noah to publish on his personal profile

• Sharing press kits with Noah's close network, who also have large audiences

• Sending products to chefs and recipe creators to create video content

Conversely, TBH's community of users and buyers (not influencers) has also driven a great deal of ideation for the broader vision and capabilities of the brand. And this will likely only grow as the team continues targeting diverse customer profiles.

"Many brands struggle with good exposure during launch. We were lucky to have Noah at the helm. Everyone he shares TBH with is excited because Noah is excited. It is a holistic opportunity for everyone to get amped about the same cause."

So What Makes a Brand Gen Z?

Right away, one can point to the founder of TBH being born in 2004, and the socially relevant mission behind the product, which wouldn't feel out of place in an Instagram infographic.

Social Media Presence

In that vein, it only makes sense that the most strikingly Gen Z aspect of TBH is its proactive social media presence, driven by Noah's pre-existing audiences and what Elena describes as intentional branding and marketing for Instagram, TikTok, Snapchat, and so on. It's clearly paid off.

• TBH has garnered roughly 85,000 Instagram followers and counting in the two or so months since launching.

• The brand boasts 36,000 TikTok followers after just one video upload.

In Elena's words, these dozens of thousands seem to simply be waiting for the next post. She also revealed that active TikTok engagement will be starting up in the coming months.

And from these thousands of followers, TBH has enabled a self-generating community through dozens of fan accounts for the brand, plus loads of UGC — including fan art, product shots, and homemade recipes — which will be leveraged to continue compounding brand reach.

A Brand to Believe In

Furthermore, as Elena puts it, Gen Z votes with their dollar, by putting their money behind purchases and brands they can trust — an element that's very much influenced decision making in the TBH board room.

For instance, the video content they're planning isn't simply about TBH, but rather the broader social context that fans resonate with and which inspired Noah and UVS from day one. The commitment to honesty and the planet are pillars.

While young folks with sizable followings and communities are pondering how to utilize their platforms to uplift and educate their peers, how can TBH, a company helmed by and geared toward Gen Z, leverage its user base to teach about palm oil products, deforestation, and more?

"Having that social media engagement has been a key part of our strategy. We want to keep nurturing these relationships through UGC, limited drops, and more. Noah and I want to make everyone a partner on this journey!"

Jones Road Beauty (Eli Weiss)

Eli Weiss is the Senior Director of Customer Experience at Jones Road Beauty. Eli has spent the last 8 years building and operating early-stage startups. He is particularly known for his work around Customer Experience and Retention at DTC brands such as OLIPOP and Simulate (NUGGS).

We sat down with Eli to dive into his deep domain expertise. We cover topics including:

1. How startups can launch early retention efforts

2. His KPIs and how he implements them

3. Why data is at the core of great CX

"Ultimately, I find data is the most crucial component of great CX. To do my job well, I'm consistently exploring how I can leverage the numbers to put effective changes in place that will genuinely help our customers."

Structuring Your Startup for Early Customer Wins

In the earliest stages of a company, regardless of category, CX is typically handled directly by the founder. It's a great move, says Eli, since you'll intimately understand what is or isn't functioning up to snuff within your business.

But once customer support needs stretch beyond your bandwidth, Eli also strongly advises against outsourcing CX labor while you're scaling.

Instead, consider keeping your CX efforts internal, in order to maintain the most accurate possible insight into what's thriving and what's breaking as the company grows. Unfortunately, this valuable insight can get lost with external help, context matters when solving problems. He recommends following this flow of operations as you build out an internal CX team:

Export Your Early Work

While an internal CX unit is ideal if cost and structure in the early stages don't permit it: Find a freelancer who's willing to commit to longer-term, in-depth efforts, rather than contracting the cheapest-rated personnel you can find. An added bonus is if they believe in the company mission, rather than thinking about customer efforts as completing tasks.

Bring on a Part-Time Generalist

As workloads scale with the company, Eli advises bringing on a generalist — likely part-time and new to the workforce or trying to get their start in your industry — in order to take on actionable (but time-consuming) tasks across support tickets, operations, marketing, etc. Whether it be you teaching them the basics or their natural ability, being able to give beginner-level reports will make life that much easier.

Aside from gaining an extra set of hands across teams, this will teach the cross-effects between various cogs of the company that ultimately make up the end-to-end customer experience.

Hire a Full-Time CX Position

Once your brand has the capability, you can convert a part-time role into a full-time one to maintain that consistency of company knowledge, or bring on a fresh hire entirely.

Creating the Bridge Between CX and Retention

In Eli's experience, CX and retention have often been approached as highly segmented focus areas (i.e. paid acquisition versus organic growth versus other buckets).

Yet, in reality, the problem of preventing customer churn can typically be answered by deep familiarity with the actual customer experience.

As such, Eli recommends merging the two focuses by either:

• Having one person handle both CX and retention — similar to the OLIPOP structure

• Having the two teams function interdependently and but accountable to one another

"If you silo them, the retention team wonders how to win back users. And CX sits there with all the answers, because they've observed opinions on shipping times, return policies, and everything else that affects customer satisfaction."

Good to Great: How Data Can Boost Your Existing CX

When it comes to designing for exceptional CX, Eli considers answering support tickets to only be the tip of the iceberg.

Meanwhile, harnessing data insights, both qualitative and quantitative, to continually improve the customer journey is the true core of an efficient engine.

As he tells it, that could be as simple as ensuring the data points on your website, i.e. discount rates and fulfillment times, are not setting you up to fail. One of the biggest red flags of a potential customer is not delivering on expectations, and they will always associate that with the brand.

This is a straightforward way to either fumble or drive your LTV — and even more of a reason to, again, keep CX efforts internal to maintain deeper access to all elements of the user journey.

In terms of specific tooling, his team at OLIPOP primarily utilized Source Medium to track performance metrics from end to end. This allows them to better isolate what exactly drives an OLIPOP customer to return for more.

"Data can answer questions. But I find it's more impactful when it proposes questions, like when I see a cohort of very sticky customers and get to investigate what we did correctly — maybe a certain campaign or promotion."

The Dos & Don'ts for CX Performance Tracking

When Eli was at OLIPOP, these were his core KPIs:

LTV

OLIPOP can track LTV by segment, i.e. where customers come from, their first-purchase characteristics, subscription vs. non-subscription, etc. LTV also goes hand in hand with repeat purchases and subscriptions. Eli describes a tool like Repeat as crucial for nailing consumer timelines for CPG reorders and providing a simple — and non-irritating — path for repeat purchasing.

NPS

The company also tracks NPS by factors like customer service scoring in order to practically gauge CX efficiency and profitability. Other elements include site quality, fulfillment speed and quality, and basic value prop. There are also a lot of theories and numbers that can provide false signals.

And, here are Eli's metrics to deprioritize:

AOV

In Eli's words, AOV is overrated for gauging retention due to its short-term frame for insight, hence his focus, from a CX perspective, on LTV.

Margins

Beyond a fundamental healthy margin, agonizing over ratios of shipping to unit pricing is also a short-term solution for CX and attempting to drive repetition.

How to Leverage Metrics & Take Action

Rather than relying on costly methods such as paid ads, Eli recommends leveraging your most loyal consumers for acquisition. For instance, he'd segment buyers who've purchased OLIPOP 10+ times and offer discount codes for free cases which they could share with friends.

Even more so, he believes the OLIPOP user can explain the product, and thus evangelize, far better than he could, simply because the buyer can actually communicate the experience of purchasing and truly loving the drink. User-generated Content (UGC) from your biggest fans goes further than you think when connecting with your next new customer.

Double Down on High-Repeat & High-LTV Buyers

In a similar vein, the OLIPOP team abides by the rule of thumb that once a customer hits the benchmark of placing three single orders, they're more likely to convert to a long-term buyer.

Meanwhile, the opposite indicates their first or second-order will likely be their last.

Another insightful metric Eli finds most brands don't test for: Users who've purchased OLIPOP 1–2 times in single orders before they subscribe are ten times more likely to be retained than subscribers who sign up right off the bat.

Steer Clear of Relying Too Heavily on Discounts

By successfully driving conversions through email, SMS, and similar channels, the OLIPOP team has been able to steer clear of repeated discounting. It's a standard eCom tactic for retention — but one Eli advises any brand with a high-value CPG to avoid.

For instance, many DTC brands will attempt to retain a user who's been absent for some time by sending them a noteworthy discount.

But with a soda product like OLIPOP, that's priced at $2.49 (compared to a 75-cent Coke), a shopper will likely assume a marked-down can of OLIPOP is more reflective of its true value than the original pricing — implying your brand is marking up low-quality products for a profit. The result is not only a devalue of the brand, but the team going down a misguided growth path.

"We're doubling down on the channels we own, like email and SMS, because no one wants to rely on Facebook every time they need purchases. Can we drive 30% of our revenue from our listservs? If we can, we're in a terrific place."

MuteSix (Moody Nashawaty)

Moody Nashawaty is a Partner and the Chief Strategy Officer at MuteSix, a performance marketing agency that specializes in driving growth for DTC eCommerce brands through data-informed creative and targeted media buying.

MuteSix clients see an average 359% increase in revenue after six months, while Moody has helped brands achieve a collective $4 billion in trackable revenue growth and worked with names like Disney, Goop, and Zumba throughout his career.

We sat down with Moody to learn from his immense domain expertise on topics such as the advantage for brands going the agency route, what factors determine the best ad plays for your product, and why MuteSix prioritizes creative rather than quantitative strategy at the core. Here's what we cover:

1. The Upside of the Agency Route

2. Ad Strategy 101: User Behaviors & Product Elements

3. Leading with Storytelling & Strong Creative

"We work with every performance marketing channel you can imagine. But while others in the space are hedging their bets on AI and other tech, we very much believe creative is the be-all, end-all — and that people buy from people."

The Upside of the Agency Route

As Moody tells it, most MuteSix clients, prior to signing on, are already spending something in the wheelhouse of $25,000 per month to achieve decent ad traction and experiment with freelancers or an in-house team, before they decide it's time to truly optimize and scale.

Making that switch ultimately means companies gain access to a wealth of resources that are typically exclusive to established agencies, one of which Moody calls the network effect.

For instance, seeing as MuteSix runs roughly 500 unique accounts at any time that are spending on Facebook, the team has an unmatched, sweeping view of the landscape.

Alongside the agency's connections to folks with an in at the company, this awareness enables MuteSix to gain rapid knowledge of particular headwinds and trends building, plus the best responsive pivot strategies.

Even aside from shifts in the market or tech, Moody stresses the impact of detecting ripples from a creative strategy standpoint.

For instance, within the last few years of massive digital presence, methods have broadly shifted focus from viral videos on Facebook (think Business Insider-type producers) to UGC.

And now, Moody describes a newfound emphasis across eCom on TikTok-style content, i.e. vertically-shot videos with voiceovers, due to the platform's dominance across younger demos, who are almost universally accustomed to the fully digital commerce experience.

Even more so, according to Moody, TikTok-style content is more likely to drive conversions on Facebook, rather than the actual TikTok platform.

In his words, a brand would likely only possess this key piece of platform strategy if they boasted an incredibly well-connected marketing team that was plugged in with other performance marketers — or if they employed an agency who'd already sussed out this info.

As such, the necessary timeline for a brand to achieve scale is typically cut by six months with the help of an agency, simply due to the network and resources which are readily in place.

After all, the average MuteSix client will have roughly half a dozen team members touching their account — from funnel building to strategy to execution — and building out that equivalent as an in-house team would, predictably, require exorbitant time and capital.

"For years now, our job has been knowing what's on the horizon so our clients don't have to, as well as utilizing that knowledge in the best way possible to help them achieve unprecedented scale."

Ad Strategy 101: User Behaviors & Product Elements

To determine an ad strategy that'll drive the greatest ROI for your brand, Moody recommends taking careful stock of your target demo's behaviors plus the core components of your products, such as where you'll encounter users, the specificity of your branding, and your pricing, purchase frequency, and resultant margins.

Specificity of Brand Experience

If the product at hand could be described as a generic commodity — i.e. a coffee product, which could be easily purchased in a grocery store or by searching "coffee" online — Moody advises bringing it to a marketplace setting, like Amazon.

Meanwhile, a more specifically branded commodity — i.e. most apparel or a name like Peloton that's designed to build brand loyalty — would belong on a platform like Facebook, in order to draw browsers directly to your brand's website and actually drive purchase intent.

Overall, Moody suggests companies who are interested in cultivating an elevated brand that could drive large degrees of scale should turn to Facebook or Google as launch points, depending on the amount of existing search volume or search intent one could capture.

Price, Purchase Frequency, and Margins

Put simply in Moody's words, a product that's a one-time purchase with a low price point wouldn't fare well on a platform like Facebook.

For instance, a high-utility but single-purchase, low-cost product like a kitchen item would underperform, simply due to nearly nonexistent margins and little potential to drive repeat consumer behavior.

Similarly, Moody would recommend advertising your branded food and beverage products elsewhere, due to low margins in relation to CPA — it might cost $10 to acquire a customer via Facebook who'll then buy your product for $10.

However, along the lines of gauging for the potential of repeat purchase behavior, Moody would consider subscription products a potential exception to this rule.

Conversely, a user will likely purchase a high-end product like a Theragun once in their lifetime — yet one unit sells for about $400, making Facebook a solid acquisition option for the brand.

And at the extreme end of this spectrum, Moody pointed to Apple as an example of an exceptional CPA to LTV ratio, due to consumers' generally long-term commitment to the brand's products.

Once a user is acquired through a cell phone or a laptop, they return for earbuds, chargers, and more in a seemingly regenerative loop of revenue.

"By really considering every element of your product and your target user's behavior, you'll narrow down how and where to advertise without the excess, expensive trial-and-error phase."

Leading with Storytelling & Strong Creative

In terms of the reasoning behind the MuteSix approach, which Moody describes as creative at the core, he highlighted that crafting a compelling, targeted narrative around a sound product is the key to selling virtually anything in today's inundated market.

As he describes it, a phenomenon Moody witnesses repeatedly across eCom categories is a newcomer choosing to locate a leading brand's manufacturers, i.e. locating Lululemon's factories, and to reproduce and sell a nearly exact replica under a different name.

However, they fail to recognize that these brands produce what's considered a premium product due to their long-standing reputation, and subsequent ability to build on user trust and reliability, cheaper ad costs, and a unique brand identity that mirrors audiences' unique needs and desires.

If your product is entering a space that is already oversaturated, and unlikely to promise steady returns, Moody boils it down to two options.

Return to the drawing board to rework the product into something that's either far cheaper or far more innovative.

Put simply, you'll want to tell the story of exactly why and how you've created this product to meet the niche in an unprecedented way, thus making storytelling one of the most — if not the most — important elements to marketing that will efficiently cut through the flood of noise.

Furthermore, Moody highlighted that attempting to utilize cutting-edge tech or embellishments to sell a product often means you've approached the problem incorrectly, or in other words, you likely haven't invested enough into the actually crucial element of product development.

Even aside from the pure tech of it all, the ability to target, optimize, and generally finesse the user experience through metrics will likely grow more and more difficult due to changes to key platforms, like Facebook and Instagram, on the horizon.

With this, one can only expect the component of creativity to become even more essential to the digital acquisition equation.

"We pivoted MuteSix to be creative-focused about half a decade ago when we realized the storytelling aspect of our work mattered far more than the media buying. Really, the data tells us that 60–75% of the equation is entirely creative."

Disco (Conner Sherline)

Conner Sherline is the founder and CEO of Disco, the network of 500+ brands leveraging long-term, mutually-beneficial partnerships to drive AOV and lower acquisition costs. Notable member brands include The Honest Company, Made In Cookware, Rhone Apparel, Parade, True Botanicals, Haus, and many more.

We sat down with Conner to learn about the culprits behind skyrocketing CACs, what to expect from each round of funding, and why democratizing data is the future of optimized commerce. Here's what we cover:

1. Three Catalysts for Rising CACs

2. The Future of Data is Democratized

3. Stage-By-Stage Funding Expectations

"We're really trying to enable brands to work together in a variety of ways, be it data, audiences, merchandising — we're giving smaller merchants a fighting chance to expand their reach while lowering costs."

Three Catalysts for Rising CACs

Customer acquisition costs have skyrocketed across digital media platforms — an issue for young brands that's at the heart of the Disco team's mission. As Conner tells it, the reasoning behind the exponential increase in CACs in such a short timespan is threefold.

Monopolized Acquisition Channels

Prior to founding Disco, Conner worked at Facebook for half a decade, during a period where today's default acquisition channels, like Instagram and his then-employer, were still nascent.

Flash forward and conglomerates, like Unilever and Procter & Gamble, with multi-billion-dollar marketing budgets are flooding these now-mainstream platforms, driving up competition in the auction.

With a finite amount of distribution and fierce competition within these ecosystems, smaller, younger companies are simply being drowned out by costs and a lack of room.

Capital Shortages

To put it bluntly, in Conner's words, the amounts of capital at brands' disposal have dried up. Exits within eCommerce have been on a downswing, in both monetary value and frequency.

In addition, VC dollars are mainly being used to fuel aggressive growth benchmarks, among other fundamental differences that have cropped up within the last few years in the ecosystem.

Declining Targeting & Attribution

As Conner puts it, the final cause of catapulting CACs is also the one more folks should be talking about: the sharp decrease of accuracy and measurability in targeting and attribution.

According to Conner, the efficiency of targeting via third-party cookies has dropped about 50% within the last six months, and Disco clients are seeing either radically positive or radically negative outcomes from their efforts at targeting.

This is likely due to the fact that large-player channels like Facebook only capture data for very specific segments of both consumers and industry.

Simultaneously, because of iOS 15, attribution via third-party cookies no longer delivers accurate info to teams, leaving them scrambling for new tools and channels so they can stop operating in the dark.

"CACs are now unbelievably high, in part due to the size of enterprise budgets across acquisition channels. Part of our founding mission is to help solve that."

The Future of Data is Democratized

In terms of priorities for potential upcoming platform expansions, Conner pointed to one core element of Disco's product strategy: helping client brands gain data-driven insights beyond their usual silos and isolated storefronts in the marketplace.

Namely, for Disco members, this means leveraging information from throughout the broader Disco network in order to gain far more well-rounded understandings of their users.

Much like Amazon, Disco wants to help brands leverage the heaps of data present within their network, which depict patterns among specific products, demographics, and other key trends.

As Conner explains, this would build on Disco's already existing AI-powered recommendations software, which provides users with regular insights on dynamic merchandising and discounts, key products to spotlight, other co-op brands to partner with, and additional channels to utilize.

Given the fact that DTC brands are often lacking in cohesive, widespread data analysis, and thus typically relegate acquisition and discoverability tasks to larger platforms like Amazon, building out this concept could be a game-changer for a network as efficiently interconnected as Disco's.

"We see endless interaction patterns within our data sets, which will be really powerful going forward when we democratize access to it for our members. We want all Disco members to have that knowledge. That's a huge focus for us in 2022."

Stage-By-Stage Funding Expectations

When asked how the Disco team has approached fundraising in a time when the cash well has been drying up for DTC brands, he points out that he didn't really agonize over the process.

Instead, he approaches the task of fundraising by prioritizing working with individuals who have deep domain expertise, influence, and connections within Disco's category, as opposed to whoever can just cut the largest check.

More specifically, Conner was drawn to investors who could support Disco's growth through their tactical experience in building large software companies and scaling SaaS businesses, as well as their understanding of what today's brands require from an enablement tool.

He adds that depending on the stage of your growth and round of financing, investors (and VCs especially) tend to play a predefined role. For instance, early investors are more hands-off than young founders expect, given that they're often tending to many other portfolio companies.

As such, they can only spend so much time in the trenches with your company, and your founding team will naturally be the ones dedicating every second to the venture.

Meanwhile, a seed-stage investor will typically ride out the bulk of your initial growth trajectory — say, for the first 6 to 12 months — before taking a backseat and redirecting attention elsewhere.

Finally, a larger Series A fund will often devote a significant amount of time and attention to your company before your Series B lead will jump in the driver's seat and start to get more involved.

"With investors, I've learned that whatever chapter of the timeline you're at, that's what they specialize in: helping you develop before you get to the next level."