Brent Freeman | The 5 Lessons Companies Need to Follow to Survive in a Post-COVID World

Brent Freeman is a serial entrepreneur who has been running his own digital startups for almost 15 years. He is the Founder and President of Stealth Venture Labs, a digital marketing team for hire that helps subscription brands to find product-market fit, push through growth plateaus, and integrate social good into their business models. They have a team of proven digital marketing veterans who has worked with brands such as JustFab, Fab Athletics, ThriveMarket, ShoeDazzle, Evite, and Uber and they have generated over $2 billion in online sales throughout their careers.

Brent started Stealth Venture Labs 6 years ago after being frustrated by outside digital marketing agencies and all the empty promises they made. In the last 5 years, his company has generated over $250M in recurring revenue for its brand partners and manages over $1M+ per month in media spend.





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Here’s a Glimpse of What You’ll Learn:

  • The business model of Stealth Venture Labs which is focused on helping outside clients as well as launching their own internal companies
  • Brent’s experience and learnings after starting an international trading company right after college
  • Brent Freeman talks about his digital marketing company, Roozt, and what it was like to enter into a business partnership with his best friend
  • Why subscription box model are booming in recent years
  • Brent’s process for incubating and validating a new idea
  • How Stealth Venture Labs evaluates and adjusts concepts to fit their minimum viable product (MVP) criteria for successful consumer brands
  • Why entrepreneurs need to start inventory before creating a store on Shopify
  • How the current supply chain is disrupting subscription box companies
  • The people Brent acknowledges for his achievements
  • The history of Agile and how a group of software developers came up with the idea
  • How Agile philosophies disrupted the technology space
  • The four guiding principles of Agile
  • The different types of companies that have adopted Agile techniques
  • Things to consider before adopting and implementing Agile in your company
  • How Agile can impact real estate and media companies
  • Tips on how to put together and manage a large team efficiently
  • How Agile compares to Traction by Gino Wickman in managing teams

Resources Mentioned:

Sponsor: Rise25

Today’s episode is sponsored by Rise25 Media, where our mission is to connect you with your best referral partners, clients, and strategic partners. We do this through our done for you podcast solution and content marketing.

Along with my business partner Dr. Jeremy Weisz, we have over 18 years of experience with B2B podcasting, which is one of the best things you can do for your business and you personally.

If you do it right, a podcast is like a “Swiss Army Knife” – it is a tool that accomplishes many things at once. It can and will lead to great clients, referrals, strategic partnerships and more. It is networking and business development; and it is personal and professional development which doubles as content marketing.

A podcast is the highest and best use of your time and will save you time by connecting you to higher caliber people to uplevel your network.

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Episode Transcript

John Corcoran  00:40

All right. Welcome everyone. JOHN Corcoran here and the host of the smart business revolution podcast where I talk with CEOs, founders and entrepreneurs of companies and organizations like YPO, eo Activision Blizzard, lending tree, Open Table, software, and many more. Also, the co-founder of rise25, where we help connect b2b business owners to their ideal prospects and I’m really excited today. My guest is Brent Phoenix. Freeman, excuse me Freeman, who is a serial entrepreneur. He’s the founder and president of stealth venture labs. It’s a digital marketing team for hire that helps subscription bands to find product-market fit. He’s doing some really interesting things, with big brands and small companies, helping them to evolve and adapt in today’s post COVID-19 world that we live in now. They’ve assembled an amazing team of proven digital marketing veterans that generate over $2 billion in online sales throughout their careers at brands such as just fab athletics who really Thrive Market shoedazzle, Eva, Uber, all kinds of different companies like that as well.

So I’m excited to dive into this topic with them. But first before we get into that this episode is brought to you by rise Phi Phi media which I co-founded with Dr. Jeremy Weiss, and our mission is to connect you to your best referral partners and customers. And we do that through our done for your podcast solution and content marketing. I firmly believe if you have a business, you have a podcast Period. It’s one of the best things I’ve done hands down. And I get to smart talk to smart people like Brent here and pick their brain, which is really a treat for me. And a benefit for all of you listeners as well. So if you want to learn more about how to do it, you can go to rise 25 media.com. Alright, so Brent, I’m excited to talk to you here today. We know each other through a couple of different connections. We’re both involved in eo locally here in San Francisco, San Francisco Bay Area. And you’ve got an amazing, interesting career. Having worked with a lot of different brands, and you’ve got a portfolio company, you have both. It’s an interesting model that you work with you You both Help Help outside clients and companies. And you also launch your own companies as well internally in-house. So talk a little bit about how you landed on a business model like that where it’s both you have your own companies you develop in house and you also help clients.

 

Brent Freeman  02:58

Yeah, awesome. Thanks, john. And thanks Thank you for having me on today really excited to chat and love what you guys are doing at Rice 25. And I also agree on the podcast front. We’re launching one of our own here shortly. So yeah, it’s been a journey. I’m a serial entrepreneur, I’ve been running my own digital startups for almost 15 years and stealth venture labs. My current company for the last six years really was started out of my own frustration, having run my own ecommerce marketplace platform previously, and spent about five years trying to crack the code of digital growth marketing, through hiring of outside agencies and the false starts of trying to build an in house team and really just being frustrated with the empty promises that were being made all along the way. And just really found that the typical digital agency model was not aligned with the typical ecommerce operator From the beginning, and so by the time that I hired and fired over 10 agencies in my last ecommerce company, I really decided to build my own in house team. And then that was its own set of landmines, right. People who were the right place, right time, had great resumes, but couldn’t actually execute the way that we needed them to. People that had great track record experience, but weren’t right for the stage of the business. I mean, you know, every, every issue we hit we ran into and so when I jumped out of that, that company, my previous startup, I became an ER entrepreneur in residence and venture partner at a VC fund in Los Angeles. And I started helping early stage subscription and ecommerce companies build growth teams from the inside out as an advisor. And taking the knowledge I learned in my, in my last company, and applying it to there’s advising turned to consulting which turned to doing and that’s really how stealth began. And so our business model really began as the anti agency growth marketing Team, early days people kind of called us the, you know, the SWAT team of marketers or somebody once called us the SEAL Team Six of growth hackers. And so you know, truly I started it. Also selfishly for myself because I, one of the reasons in my last company wasn’t the financial success I wanted it to be, was because we didn’t move fast enough, we missed the crest of our market wave, because of the issues cracking the marketing code, and by the time we cracked it, we were about a year too late. So stealth I started as the digital growth engine that I wish I had had at the beginning of my previous company selfishly so I could incubate and accelerate my own concepts and ideas. And then we for the last six years have been using this to help co found as well as accelerate early stage subscription and ecommerce brands. From kind of the zero to one phase, meaning I have an idea I want to come to market and find product market fit, or I have revenue and I want to scale And we’ve done several kind of scale up 10,000,200 million dollar revenue run rate phases. Well, so you know the short answer, the long answer. The short answer is I started stealth. Because I wanted to have the engine to incubate my own ideas. And we’ve been doing that alongside of being a service provider for other companies for the last six years.

 

John Corcoran  06:21

I want to ask about that subscription box companies why that concept has been so popular, and where we are in terms of the stage of growth in the market? Is it something like other business models where it’s going to fade out with time, so I want to ask on that, but first, before we get to that, you have a really interesting, you know, when we first connected, we talked about this, you have an interesting background and that you graduated from college and shortly after you graduated from college, you know, I was looking well recently when we first connect those on your LinkedIn and you started an international trading company shortly after college and I thought that was so interesting. Like how Just one. Yeah, I know what I was doing at 23 years old. It certainly wasn’t starting an international trading company. So most curious how someone, especially because you didn’t study like international trade as your degree or anything like that. How did you end up in that right after college?

 

Brent Freeman  07:16

Yeah. So right after college, I launched this international commodities trading, import-export business with my best friend, he and I were co-presidents of the entrepreneur club, our senior year in college. And I went to school, I went to University of Southern California, USC, and took out about a quarter-million dollars of student loan debt to fund it to go through that. And it was an investment for me. And so coming out of college with that much loan debt to pay back it was like, Oh, crap, I need to do something to pay this back. And my best friend had worked for an uncle of his who had was in the business and he had made a lot of money the previous summer. And I was like, Wow, that’s really, really interesting. Tell me more about it. I was determined to be an entrepreneur because I believed very passionately in how businesses should be run, how employees should be treated and the ethical kind of social consciousness of how to run a business, then always wanted to be an entrepreneurial business owner and

 

John Corcoran  08:17

become entrepreneurs. Yeah. So family.

 

Brent Freeman  08:21

Yeah, so so my stepmom who raised me, she was an entrepreneur for 20 plus years, amazing role model and how to run a small to medium-sized business. From Home on the last one, it was like not apropos and we weren’t sheltered in place. And my father who ran his own kind of sole proprietorship he was an independent filmmaker, direct director photography. So I came from that kind of freedom, world of kind of creativity. It’s the entrepreneurial and the freedom connecting and I always knew that I wanted to apply that I wasn’t going to kind of work for the man so to speak. It wasn’t in my DNA. But I wasn’t the kid that started lemonade stands and all That kind of stuff that wasn’t me. And so you know, when I, when I actually got to the the opportunity to start that commodities business, we didn’t know what the heck we were doing, man, we were just running full speed into the dark. And I remember the we took out a lawyer to say, you know, ask him some questions. We like we have this idea for a business. We think we have another business partner. How do forming entities work? You know, what is a C corporation what is an LLC and we took him to lunch. And after lunch, he gave us great information that he said, you know, boys, the difference between entrepreneurs and entrepreneurs is what you do next? Are you going to come back to my office and incorporate or are you going to go home and think about it, think of all the reasons why you shouldn’t. And so we went to his office and we incorporated

 

John Corcoran  09:42

course loads on the lawyer.

 

Brent Freeman  09:45

lawyers know what they’re doing. You know, he was, I give him I give them a lot of credit. And, you know, he in terms of his mentorship and he’s been a very strong entrepreneurial lawyer in Los Angeles, and We didn’t know what the heck we’re doing, man. That’s the honest truth. And for two and a half years, we through almost three, we kind of chase our tails chasing the money. And what I realized in that whole process long story short on that business, we had an office in Dubai and in La 20 to 23 years old, is that chasing the money for its own sake, just chasing money was an endless, never-ending endeavor. And it was filled with a lot of loneliness and a lot of sorrow actually, in age 24. So we closed the $10 million deal. We had worked for three years for it. And I remember being on paper and millionaire the next day and waking up just feeling completely empty, can feel really lost, and was expecting to feel really full and, you know, excited and all of that. And this was right at the global financial crisis. And so it wasn’t too long thereafter that the GFC kind of took that business down and what was 10s of millions became millions became hundreds of thousands And I think I ended up walking with about 50 grand or so from that. And it was the best life lesson I’ve ever had about the importance of money, but also the the finite happiness that just money can bring.

 

John Corcoran  11:15

Hmm. So what did you do next after that? It looks like it was a little while after you found a

 

Brent Freeman  11:21

roost Bruce. Bruce. Yeah, Bruce. Bruce was the digital marketplace platform. And so what I was determined to do in my next venture, when I got back to Los Angeles was to use for profit business to create social impact as well as profits. And so after that, I started a marketplace, an online marketplace like Etsy for socially conscious fashion brands. There were lots of them popping up in in Los Angeles at the time following kind of the Tom shoes business model. And we aggregated them and put them under one roof in a SaaS based marketplace. And the hypothesis was if we embedded social good into the shopping experience, we would If we embedded social good, we would be able to increase conversion, increase lifetime value and increase sharing. And it was a heck of a ride. I didn’t know anything about technology we you know, building technology.

 

John Corcoran  12:15

We make shift to go from trading commodities and Dubai to creating you know, software and

 

Brent Freeman  12:22

I didn’t give two craps about commodities in Dubai, if I’m honest, I really didn’t I what I liked and love the most about building that business was working with my best friend was traveling and was building an actual business like taking care of employees and setting up health care and all of that.

 

John Corcoran  12:36

How was it by the way, the partnership with your best friend How did that work out? Fantastic.

 

Brent Freeman  12:40

He’s still my best friend. I was the best man in his in his wedding. And we have you know, we look back on that experience with fondness and laughter and we both agree what idiots we were and

 

12:51

you still work together?

 

Brent Freeman  12:52

We don’t know he went further into the commodities world and I went into the tech marketing side okay. He now runs a company called urban mining company where they turn magnets use magnets into reusable magnets for commercials. So, yeah, he’s doing I call him Magneto. He’s just doing all sorts of crazy stuff in that world. And I went the opposite direction. I wanted to be in an evergreen evolving world that was never gonna go away, meaning, you know, it tech and always be kind of constantly evolving. And I just felt a strong calling to merge the philanthropy world and the entrepreneurial world. It was just what felt right for my soul. And that’s what drove me to start roost and build that platform. And to try to be a pioneer in the for-profit, social, social enterprise world.

 

13:41

And how did it work out? It worked out

 

Brent Freeman  13:43

well. It was the passion of my life. financially. I lost my shirt. But it was, I mean, we did over 200 public speaking events, a TEDx on social enterprise. I was on the Today Show twice. Forbes 30 under 30 list La Business Journal 3230 those sorts of amazing accolades for kind of the work we were doing. But we, I learned a lot about being an operator and try and what it means to listen to the market. And I made almost every mistake in the book, operating that business from not listening to what the market was telling us to be overly passionate about my idea being too in love with my baby, to making the wrong hiring decision, you name it, right. And we raised money about 1.5 million bucks over five years. And the largest check size before the last six months of business was like, I don’t know 20 grand, most were like five grand. So it was kind of death by paper cuts on the fundraising side. We never could hire appropriately the way we needed to. And so you know, I had all these landmines and then we ended up selling the platform to a company in Santa Monica, for pennies on the dollar. And I was determined it was not the financial exit. We wanted I was determined to never make that mistake. And if I wasn’t going to make the money we had expected to, I was damn sure to take the lessons to apply it for my next business journey, and that’s really what stealth has been about. It has been, you know, we’ve been in the trenches taking the lashings and the webbing for 10 years, and now we’ve been applying those learnings in a positive manner to young brands and brands that are in growth stage, helping them move faster, helping them find their market opportunity quicker and catch that wave. And it’s, it’s been a fantastic ride the last six years.

 

John Corcoran  15:37

So subscription box companies, let’s talk about that. Why do you think that has been such a popular trend in recent years?

 

Brent Freeman  15:45

So the subscription industry has been around for a long time, right? It’s been around since music and CDs and magazines, Omaha Steaks, right? Like this is not a new business model. It’s just been updated. flied in mass recently, to a lot of different ways and a lot of different products. During the boom of the economy, everything was seemingly a subscription. And in that boom, really what people were tapping into was the convenience factor or the discovery factor. In this post COVID world, what we’re seeing is that the nice to have subscriptions are struggling. Yeah, and the must haves or need to have the things that are on the kind of bottom of Maslow’s hierarchy of needs. Those are doing really, really well. And so when people say is subscription going to go away? The answer is no, the subscription model is not going to go away. It is an incredibly powerful business model. Excuse me, but

 

John Corcoran  16:43

but perhaps the the luxury art subscription box that you get every month. It’s gonna go,

 

Brent Freeman  16:50

right you know, we joke the underwater basket, Weaver’s box, that kind of stuff is nice to have. Now what’s interesting if we go back to Maslow’s hierarchy is that in this post COVID world when we look at the bottom of the pyramid, that is the the safety, the psychological and physiological safety needs that people need to get in place, right? It’s your food, it’s your basics, it’s your shelter, it’s all of that. But as you start going into the kind of middle of the pyramid, you start getting into the sense of like belonging, right, and the need to have tribe in the need to have, you know, a sense of community. And so some of the products that previously were looked at as nice to have actually become must haves. And so it’s what’s interesting is there’s been this major psychological shift in the last month in consumer behavior that has actually made some subscription brands boom, more than they ever have before. Right? You only need

 

John Corcoran  17:39

this belonging piece, which is actually a good segue into one of your businesses, which is yoga Club, which may be perhaps on the surface. Some people might think well Yoga is a nice to have. But there’s also is an element of belonging, community, being part of a tribe, people who all have have a common interest when you think of people who are into yoga as the As an interest area Yeah,

 

Brent Freeman  18:01

so when you going back so yoga club we founded and came up with the idea inside of stealth, and then it spun out to become its own company with its own operating team and capital and fund funding and all of that. But we incubated and validated the concept inside of stealth. And it was really centered around how do we take the value chain of the of the supply chain of yoga apparel for women, and cut out the middleman cut out the distributor cut out the retailer and go direct and if we could do that we could pass along the savings to women who want this yoga apparel not just as athletes not just as like yoga apparel, but athletic apparel and kind of do sweatpants and casual apparel and around the house and you can go into work and things like that. And so what we did is we specifically engineered This was one of the you know, the in house brands we’ve done is we specifically engineered that business model to be focused on disrupt update humans athleisure market. So instead of going to Lulu lemon and buying a pair yoga pants for $120. With yoga club, you get a curated outfit of brand name, not Lulu. But other brands. There are other brands. You get a curated box just for your exact style, up to three pieces an outfit for about $89. Right? Originally, when we launched the box, it was 45 bucks for $100 worth of value. And then we just kind of grew it from there and saw what people wanted. And that business started out just as an idea, a crazy idea over a weekend. You know, I built a Shopify storefront and we drove some traffic to it on Facebook to validate it. And within a week or two, we saw that there was incredible demand for it and so actually started to build that into its own property and now it’s running with its own management team and growing like crazy, but that’s subscription. It is a in a booming market. It becomes a nice to and kind of in-between nice to invest In a down economy, people say, Well, you don’t need yoga apparel that much true, you’d probably under your frequencies probably going to change, you’re also much, much, much, much less likely to buy $120 pair of one pair of yoga pants. So focusing on the value chain inside of subscription business models as a whole yoga club aside, is critical to having longevity and thriving during a downturn. And if you look to kind of the comps of 2008 2009 2010, the big retail brands that made it through that didn’t just go through it, but that thrived where TJ Maxx Marshalls Ross Walmart, right, because people still needed that stuff but didn’t want to pay full price. Right?

 

John Corcoran  20:41

How do you what is your process for incubating validating a new idea? You mentioned just brainstorming and putting up a bare bones Shopify site throwing traffic on Facebook to it but even before that,

 

Brent Freeman  20:55

yeah, so I told you when we shut down roost, and kind of sold the assets and moved on And I became this year at the venture fund. I took a weekend, a long weekend about four or five days and went up to a mountain cabin with my dog and shut off my phone and took all the data from the thousand brands that we had managed under that platform. And the brands that we were working with at that time. And I pored over the quantitative and qualitative data of all the common denominators that I saw to be successful pieces and attributes of these direct to consumer brands, and wanted to see if there are any kind of like find any common denominators. And what emerged from that was five, five criteria that is omnipresent in any direct consumer brand that is successful in growing. And so these five criteria we’ve, we call them our MVP criteria, you know, a viable product criteria. And I’m happy to share those with you, if you want to share those with your peers as well. Yeah, if you just want to go Yeah, I’ll spell them out too. But I have a large article that I wrote for entrepreneur about this because this has become the biggest predictor of success that we’ve seen in working with clients as well as incubating our own ideas. Um, the five are as follows. And they seem really simple. And that’s because they are, first and foremost. Number one, it needs to be a passionate interest group that’s clearly defined, right? So somebody in the way that you can think about that as if we get together, we’re strangers, and we don’t know each other, we can geek out on it. Right? He was a great example of that Yoga is a great example. Right? These kind of clearly defined groups. Second one is that group needs to be large enough needs to be have a scalable enough size for you to have critical mass so that you can create a large enough business and large enough is relative based upon what you’re trying to do. Right. But if you’re trying to acquire customers online, what we find is generally inside of Facebook, it needs to be about 20 million people or higher in a Facebook group or a Facebook interest group. Third, is you need to have a very unique value proposition. And this is really the Why should people care? What is disruptive about this if you think about Facebook and Instagram ads, and Today at stealth, we manage anywhere between two and $4 million of media per month across Facebook, Instagram, Google, Pinterest, YouTube, you name it. And so, you know, when we when we are doing that advertising, it is mostly interruption advertising, right, you’re browsing your social feed, and we insert an ad based upon something in your social graph that we think are the algorithms think is relevant to you. And we’re interrupting your social browsing feed to bring you our ad. And so if your value proposition is not unique capturing or something that gets their attention right away, you’re not gonna get the clicks, right, you’re not gonna get served. So that could be as simple as like a wooden watch that plants a tree for everyone you buy. It could be the yoga club example is a good example of disruptive price point. Right? And there’s, there are lots of others that are out there.

 

23:48

It can’t just be boring, just uh, any other competitors saying that to me, twos

 

Brent Freeman  23:53

generally don’t work and easy to get people’s attention. The fourth one is you need to have compelling unit economics, it’s a two-sided coin, you need to have enough gross profit margin 50% or higher for just product-based gross profit. And you need to have a disruptive price point for the consumer. If you’re priced too high, or you have too low margins, either or you’re either not gonna have enough demand, or if you have your gross product margins are below 40, really 40%. They’re below 30%. It’s the faster you grow, the faster you’ll go out of business, unless you’re just constantly raising capital, right? At about 50% or higher on a gross product basis, you start to have a CAC to LTV ratio, customer acquisition cost, lifetime value ratio, that starts to make sense, right? So this compelling unit economics piece is really centered around supply chain, right? If you have a good supply chain and you figured out a way, some way along the board to actually like disrupt that, chances are you going to pass that price on to your consumer and you’re gonna have good metrics yourself.

 

John Corcoran  25:00

Yeah, now that’s a whole nother discussing what’s happened with the supply chain with China. Coronavirus and all that kind of stuff. So I’ll pause on that while you continue with this discussion, though.

 

Brent Freeman  25:10

Yeah, just I totally agree. But let’s come back to that. That’s a big problem. Yeah. And the last one is very simple, but most people miss it is just, it solves a customer or market pain. It actually solves a pain. So many people build products that are their babies, or they’re nice to have, or they get down this rabbit hole of like, you know, the Field of Dreams. If you build it, they will come It doesn’t work like that. Right? And so in today’s world, and COVID, post COVID-19 scenario, this is even more important, because people don’t are not buying nice to haves, they’re buying must haves, right? And those must haves, solve some sort of pain, right? And the must, like I was talking about the middle of the pyramid is starting to change right once they have their food, their water, their shelter, Right, and they have their toilet paper and all that stuff taken care of. They start to be like, Okay, I’m at home now what? Right? And I need to stay sane and all of that. And so one of our newest platforms called Nana live and oh, ma live.

 

26:15

Yeah, this is a really

 

Brent Freeman  26:17

yeah, it’s a virtual cooking platform for cooking classes live with grandmother’s from Italy live-streamed, teaching you how to make pasta. And this is absolutely taking off. Because of just people are home. Once they’ve got their food in place, they’re looking for activities to do. They’re looking for pieces of inspiration. I mean, these are like the cutest little Italian grandmothers you can ever imagine. Right? teaching you how to make pasta live, it’s just a great experience. And so is that a must have it’s not a must have in terms of survival, but it’s a must have in terms of a keeps keep its helping keep people sane and inspired in the shelter in place environment. So you know, however you, look at the market as a whole You said how do we? How do we at stealth, evaluate concepts? The first thing we do is we run it through those five. And if it misses one of those five, we will adjust it until it hits all five, and not in a way that we are drinking our own cool Aid. But in a way where we’re like, it’s clearly Yes, yes, yes, yes. If it does, then we’ll proceed forward with the test.

 

John Corcoran  27:25

So do you have these You said you’d launch I think, a couple of brands a year or one a year or something like that? Do you have these brainstorm sessions where you just lay it all out? And you kind of duke it out with other members of the team? Like, no, that’s missing this piece? Oh, but we could adjust it this way and add this piece? Sometimes. Yeah.

 

Brent Freeman  27:41

I mean, sometimes we have these ideas, we’ll run it through and we’ll build and write like a little concept statement, a one-pager and you know, we’ll test it even. You know, sometimes it’ll hit all five. And we will build a little mini Shopify store before we even have products, a little facade to drive some traffic. Take a couple of thousand dollars of traffic to it to see if it works. And then sometimes it dies on the vine after that, you know, so kind of the process chronologically is come up with an idea. We’ve run it through the five. And then actually what we do now what we’ve learned in the last few years is we’ll run a financial planning and analysis exercise before we build a Shopify store. We used to get really excited and build a Shopify store, run traffic to it, and then be like, Oh, well, can we actually make money off this? Or how much money will we need to buy inventory?

 

John Corcoran  28:31

That’s kind of how I think with a lot of entrepreneurs, right? They move immediately to building this Shopify store building the thing before they really, you know, thought through those pieces as you articulated.

 

Brent Freeman  28:43

Yeah, and I’m guilty of that too, right? Because it can be really exciting and you can, you know, build a fake store and have this disruptive spark price point and then you’ll be like, Oh crap, I need a million dollars to buy inventory or, you know, my payback period of customer acquisition cost is Not gonna is going to take me four months or six months, and the cash float is going to be too much too much risk reward. So what we do now is we run through the five criteria, we have a financial pro forma model template that we will plug the numbers into, we’ll make sure that it kind of backs out and makes sense, then we’ll build a Shopify store that we will be very light we won’t have supply chain yet figured out. Basically think like a Western movie set, you know, saloon facade. And when people buy, we don’t actually charge their credit card. It’s authorized, but we don’t capture, right. And so what we’re doing and then we send them an email saying Congrats, you’re a part of an alpha test. We’re launching in a few months, we’ll send you your first box order, etc for free. Right and if we launch we take care of those customers and communicate with them.

 

John Corcoran  29:47

Got it. Got it. Now. You mentioned supply chain let’s circle back to that. What it How is that disrupting? subscription box companies right now.

 

Brent Freeman  29:57

Everyone is affected, you know, with China having gone down and into quarantine before us, and kind of with where everything is today. It is a massive ripple effect. And what we’re going to see happen here moving forward. We’re just talking about this internally yesterday is three pls third party logistics companies are having a hard time staffing because you’re generally staffing with kind of minimum wage or lower-wage type employees. There’s a lot of people inside of them so there are regulations etc. So they’re getting backlogged on their own orders, things that needed to be shipped from China or other areas or other you know, other countries are backlogged or are no longer shipping because they are been the factory has been changed to another direction in some way, shape or form. What that’s done is that’s created a tremendous shortage in certain areas. A backlog and interruption in others and What what’s going to happen is as we come out of this quarantine in the next, you know, I think we’re going to be in some sort of shelter in place, at least for the next 90 days, it may start to ease. You know, it’s April 14, I wouldn’t be surprised if, you know, if things start to ease in July. Right. And, you know, might some cities might be different in some areas, but I think we’re, I think we’re in some sort of new normal for the time being. And so as you start to see these 20 million people that were laid off in restaurants and service and travel, etc, come back into work, and these other businesses start to come back to life, you’re going to see also major supply chain issues, because the demand is now going to be greater than the food supply, then the beer supply, then all these things and so we’re going to have this, a little bit of a chunky economy is what I read is what I estimate, right? There’s going to be this ebb and flow of these, you know, mass demand purchases like toilet paper. We saw that right and hand sanitizer and masks to kind of shortages, right, and then supply chain is going to catch up. So you know from a subscription side of things, the good news being in a, in a subscription brand is generally you’re looking and you have inventory for three to six months already on the shelf. Right. And so a lot of these brands already had a lot of their inventory ready to go. And they’re not buying in just in time, because it’s not, it’s physically not able to kind of have the supply chain match up with their demand and their growth. Yeah, so that’s the good news on a lot of these subscription brands. The bad news is,

 

John Corcoran  32:40

eventually the chickens are gonna come home to roost and just be delayed. Yeah,

 

32:44

exactly. Or they can’t grow as fast as they want.

 

John Corcoran  32:47

So that seems like that might be. There are all kinds of uncertain things happening now. But then that seems like that might be one of them. Well, I know we’re short on time and I know you have to go in a little bit. So we’ll wrap things up with the question I always enjoy asking you this has been great, really insightful, interesting learning about your background. So we’re pretending we’re at an awards banquet, much like the Oscars or the Emmys. you’re receiving an award for lifetime achievement for everything you’ve done up until this point, Brent and Who do you think you mentioned your best friend you mentioned his uncle, you know, who are the people that you wouldn’t acknowledge in your remarks?

 

33:24

It’s a great question.

 

Brent Freeman  33:27

I would be totally remiss to not thank my parents. You know, both my dad and my stepmom who raised me, my mom passed when I was six. And by but my dad and my stepmom gave me the opportunity and believed in me and you know, helped me through college where they could and how they could and kind of showed me the path in their own ways, the best that they could, and they’ve always been nothing but loving and supportive of me to this day, and actually my stepmom works with me. Our CHIEF COMPLIANCE OFFICER. Oh, yeah. So you know, we have her on the team, which is wonderful. I think also I had two professors in college one when I lived in Italy, in Florence, my junior year, he was an entrepreneurship professor that opened my eyes My first entrepreneurship class ever. Actually, when I got back, I ended up declaring as an entrepreneurship minor. And his name is was professor and sell me. And he just opened my eyes to the world of entrepreneurship and thinking differently. And then when I got to school back to USC, one of my entrepreneurship professors there, Patrick Henry was his name. And he, he just helped me really I was with him all four classes for two years. And he was a pivotal person who really believed and pushed me and told me that taught me the power of building my network. And one of the speakers he brought in told me a great quote that always stuck with me, which is your network is your network. And that was rob you kapena. And, you know, so so those are some of the major influences in my life and they’ve been those people from my parents to these two professors have been mentors of mine. And I’m I am very grateful. That’s great. Stealth venture labs.com is the website. Where can people go to learn more about your brand and connect with you and ask any questions they have? You know, I’m on LinkedIn. That’s probably the best way to reach out to me directly. You can also email me directly at Brent dot Freeman at fr e ma n at stealth venture labs.com Brent Freeman at stealth venture labs.com. You can hit me on LinkedIn, you can shoot me an email directly and grateful to be your guest. Great. All right. Thanks

 

35:50

so much, Brent. All right. Thanks, brother.