55 - Dan Reich, TULA Skincare & Troops

Conor Begley: Dan was awesome today. His depth of knowledge across consumer, software, social media is something that I learned a lot from, I think you guys are going to learn a lot from. So I hope you enjoy today's show. Remember if you enjoy it, be a friend, tell a friend and subscribe. Thanks guys.

Speaker 2: Explore the minds and marketing strategies behind today's winning brands and businesses. Tap into the power of the Creator Economy with Earned by CreatorIQ. Here's Conor Begley.

Conor Begley: Hi everyone, and welcome to Earned. Today, we have Dan Reich on the show. Welcome to the show, Dan.

Dan Reich: Hey, what's up, Conor? Great to be here, thanks for having me.

Conor Begley: Yeah, I am pumped and I'm glad that we finally got connected. I think we have chatted in the past maybe once, but hadn't really like connected, connected. And I have to thank Elise Landro was always your biggest fan as well. She was always telling me about all the stuff you were doing, so really pumped to have you on.

Dan Reich: Yes, psyched to be here.

Conor Begley: So for those that don't know Dan, Dan was the co- founder of TULA where he helped scale it to$ 150 million in sales. They were also the number one brand we tracked in the skincare category by influencer coverage, eventually to a big blockbuster sale to Procter& Gamble for a ton of money that wasn't disclosed, but you got to guess. And then prior to that, built and sold a software company, that was your first company that eventually was acquired by Salesforce for$ 700 billion, and then just recently sold another company to Salesforce. Seems like that's a favorite partner of yours there, and Troops, which is another software company you were running side by side with TULA. So excited to dive in. I think I have a personal interest obviously in software and I know a lot of people that are listening do. And then I think the combination of software and consumer founders, just not something that you find super often, and so curious to get your perspective there.

Dan Reich: Yeah, it's certainly been a while, couple of years in a very interesting and unique juxtaposition of companies. If you came into our, well, either office was the same office you'd have a beauty company side by side with the software company. You wouldn't see that pretty often anywhere. But it all came about organically just given my background as an entrepreneur, I guess really starting with Spinback. And if we think about what Spinback was, that was a company that started with two buddies from college in 2009 or'10. We were a company that helped online brands and retailers measure how much money they were making from social networking sites like Facebook. Funny enough, if Tribe is measuring Earned media, we were measuring quite literally dollars and cents transacted through Facebook in 2009 and '10. And so this was at a time when every brand in the world needed and wanted Facebook likes, they just wanted them and had no idea what they meant. And so we were able to connect the dots and show in a dashboard that Conor from New York had shared a pair of Nike golf clubs from nike. com onto Facebook, subsequently shared by 245 people, primarily ages 13 to 35, and the various demographics and so on and so on. And also drove by the way, $ 40,000 in sales and so on. So we built a product that did all of that, and as a result, we were able to work with some of the leading brands and retailers in the world, along with some of the OG D2C brands. So our customers included companies like Bonobos and QVC and Lewiston and many more, just a really wide gamut of brands and retailers. And so I had the opportunity to see what worked, see what didn't, both in terms of at the time, primarily social media marketing, but also influencer marketing and just digital marketing more broadly. So that was a really great up- close lens to live through the first wave of social media. And even rewinding a clock further, I had another company in high school that was an online wholesale e- com site, selling urban apparel wholesale on a website drop- shipping. So kind of I lived through this for quite a few years. And so after we sold Spinback to Buddy Media and subsequently to Salesforce, I took some time off and really wanted to figure out what I wanted to do next. That acquisition happened so quickly that I didn't get to realize the full potential that we had at Spinback and I really wanted to get back to the drawing board and build really big and fun startup. And so for about a year and a half, I spent my time angel investing and then ended up co- investing alongside a family office in New York and then ended up working out of that office. And I finally came up with what I thought would be my new software business back in the e- com space, helping brands navigate the newer and updated landscape that is and was social media and influencer marketing. And so I reconnected with all my old customers. I named a few of them, but I went back and I pitched all of them this new software idea. And one of the conversations had an interesting turn it was with QVC. And in short, they were asking me for my help on a strategic initiative and business endeavor of theirs. And that was pretty interesting considering they were at the time the third largest retailer in the world, 10 billion a year in sales. And what they wanted to do and wanted my help with was to prove that they could launch brands digitally. If you think about QVC, they are a retailer with shelf space that is limited to 364 days a year, 24/ 7 with the exception of Christmas. And that's a result of the ceiling they have on TV time. But if they can launch brands digitally, well, all of a sudden you have an infinite shelf space, which by the way, we know is a big thesis for why a lot of these D2C brands emerge, right? Lower- barriered entry, infinite distribution, and so on. Problem is they didn't know how to do it. And here I was with the unique opportunity to build my own brand with everything I had learned over the years, especially at Spinback and Buddy Media, working with the world's leading and largest brands, seeing what works, seeing what didn't. And while I was working out of that family office, doing my own deals and investing and figuring out life, another person that had been working out of that office was doing his own private equity investing and we got to know each other. He started or helped start a company called Bobbi Brown Cosmetics. And so I got to hear his backstory and his experience launching one of the first and most successful indie beauty brands. And when we started to riff on this idea of a digitally native sort of army channel, next- generation beauty company, a lot of what he loved and what worked with Bobbi Brown was apparent. But similarly, a lot of what I loved and what worked within Spinback in our brands was also apparent in the opportunity. So we're both like, " Let's go run at this thing, let's start a new company." I shoved myself for idea, started running towards a new health and beauty company. We quickly realized that I nor he would ever be on the face of any website or any TV show promoting or selling women's beauty products. And so we knew we needed someone to help us provide real credibility, authenticity, science to the brand, and so we started to look for what effectively would be our other co- founder, the other leg to the stool. And so at that time, my wife knew we were looking for such a person and she sent me a video clip over email and the clip was, I believe the Bethany Frankel show. And I watched the clip and I remember seeing Dr. Raj on air talking about, I think gut health, which makes sense, because she's a gastroenterologist. And I remember watching that video clip thinking, she's perfect, I have to get in touch with her. And so I sent her a cold email, cold email, became phone call, phone call became a meeting in person at our office. And probably within a week, we were shaking hands agreeing to be partners signing up for what is now TULA. So yeah, just taking a step back, we invited Dr. Raj into the office and about a week later, we were shaking hands as co- founders and we'd go run at this together. And so we started to dig in. And I remember she came to the office and asked the question if we had looked at probiotics, we said, " That's kind of interesting, why would we look at probiotics for skincare which is what we had settled in on?" And she's like, " Well, of all the patients that I work with, I've noticed that the ones that have the most glowing and radiant skin, they all listen to me and they take probiotics for gut health and I wonder if there's a relationship." And so we looked into it, and as we started to look into it, next thing she's pulling out of her bag a research paper by the American Academy of Dermatology claiming that probiotics were beauty breakthrough. And so we started to dig in and do our due diligence and research, and very quickly we got excited and believed that this could be the next biggest opportunity in health and wellness and beauty and skincare in particular. And we decided to go all in, because the science is there and we felt like there was a lot of white space. And then a couple days later we said, " Okay, what are we going to call the thing?" She came back to the office, the list of half a dozen or so names and sure enough on the list was TULA, Sanskrit word for balance and TULA was born.

Conor Begley: I love by the way that, not to go too far back in this story, but like, oh yeah and then the other business I started in high school, da-da-da. I don't know, I didn't know many people or anybody that was starting businesses in high school, so clearly I feel like entrepreneurship is going to run through your blood even before all the recent successes, it seems like.

Dan Reich: Yeah, that story is hilarious. In fact, when we used to do new hiring onboarding for TULA, one of the questions would be, " Hey, Dan, tell us about the first company you started." And at the time Savannah and others thought that, that was Spinback, but in reality, I had started a few companies earlier. And so that company, I would get up in the morning at 6: 00, I'd run my Yahoo ads, my Google ads, and I'd go to school. And while I was at school, I had my customer support and service rep do order fulfillment and customer management and buy support rep, I mean my mom. Like I literally set up the computer and a credit card processing machine in a room in my house and she would then handle all the customer orders. And then I'd come home and I'd reconcile the orders and I'd review the advertising results and then I'd fine- tune them the following day and so on and so on. And it was a great business until it wasn't. The punchline, to cut it short, turns out that the partner I had quote, unquote, who was doing all the job shipping apparently was just stealing all the clothing off of trucks, classic kind of Soprano style theft. And it got suspicious quickly when I got a death threat from a customer, they really would come after me. So the whole thing unravels very quickly. That was my first business lesson, probably the most important one when I realized, the most important thing you can do in business is choose who you work with. Your partners are the most important ingredient in anything, in any endeavor, in any business. And so it's fortunate to learn that lesson the hard way early on and it's carried with me even to today.

Conor Begley: Yeah. How did you go about... So let's kind of go to the next step. So that business falls apart, bad partner, sketchy, learn that lesson and you've got Spinback that does really well, Buddy Media sell for a ton. Then you get into TULA and you're thinking about partners. It sounds like you met Ken, Ken Landis, who's a co- founder of Bobbi Brown, and then obviously Dr. Raj. What I'd be curious is obviously you had a background in software, so that gives you credibility. But at the same time, Ken's got a pretty impressive background and Dr. Raj has got a pretty impressive background. So how do you think about working with people that maybe you're like, I don't know, they might be punching above my weight here in terms of who I'm actually working with. Or maybe we're on the same level, but this is a really strong partner. How do you think about working with somebody that... Often people get intimidated by working with somebody that's that strong in whatever their particular field is. How do you think about that?

Dan Reich: Yeah, yeah, it's a great question and it's a conversation I have often with other founders and entrepreneurs that I work with. But when I think about building businesses, especially as the top role or CEO, I always try to be the dumbest person in the room. Like if you were the smartest person in the room, you are in the wrong room. And so for me, it's incredibly important to try to find people that are just better than you and people that you can look up to and learn from. Because if you're not putting yourself in that situation where you're always learning and you're always improving, you're just not getting better. And if you're not getting better, the business can't evolve, business can't progress, you as an individual, more importantly you can't evolve and can't progress. So I always like to find people better than me to work with and I am unapologetic about it as well, I think. And no, I'm not shy, I'm not afraid to get rejected, I'm not afraid to fail. Certainly, I can't count how many times I've been told no, or have been rejected, whether it be from a customer or a potential investor, and so on. But I just think it's really important to check your ego out the door and look for people better than you, because that is, I think how you win.

Conor Begley: Yeah. Well, it seems like you did that as well in the end of transition because you founded or co- founded TULA, but then fairly shortly, call it two, three years after you started, you brought in Julia Straus, who's now the CEO of Sweaty Betty, but was the CEO of TULA for a while. And I remember meeting her, I actually met Julia in New York when it was like you and her, it was like a very small team. And so it's cool to see you go from there to where you are today. And then after Julia, transitioned to Savannah, who really brought it home to Procter& Gamble, acquisition P& G acquisition. So two really strong leaders that were brought in from the outside to help run the company and did a really good job. So that's, it's a tough thing to find somebody to come in, maintain the ethos and accelerate the brand. So how did you... What was the process of like finding Julia, finding Savannah? How did you handle the executive transition out of being the CEO role there? What were your learnings about that process?

Dan Reich: Yeah, yeah, certainly. So taking a step back as you touch on, I was the founding CEO of the company. For the first year and a half, I did all of the heavy lifting, I was at the factory, I was on the assembly line when things weren't going well, and so on and so on. You name it, I kind of did it all. Sent up the first thousand- plus influencer samples and lab samples. And so it was a tall order, and as the brand evolved and grew, it got to the point where two things happened. The first is, I knew that we needed to build out a broader team and then a leadership team. And back to my commentary earlier, specifically, the people on that team needed to be world class, they needed to be A- plus players. So that was given. The second thing that happened was a bit more ridiculous, but important in nature. And what happened was, we had a product development meeting one day and we were in our office in E 60th& Madison and we had our product development partners in the office that day, it was myself and Ken and Dr. Raj. And we were there to figure out and finalize some of our initial SKUs, and specifically the textures of the cream and the fragrances. And I remember seeing about maybe eight to 12 lab samples on the table, and we were all going around the room, rubbing it on our hand and smelling in it and giving everyone feedback. And I just remember being in that room thinking, what the hell am I doing in this room? And what the hell am I doing with my life? It was like a total out- of- body experience. Like I should not be here, and just should... Kind of like a little bit of a freak out moment. And again, I knew the business was doing quite well, but that was a light bulb moment for me that said, hey, I was not put on planet earth to run a health and beauty company day to day. It's not that I couldn't, I just... My passions lied elsewhere. And so right around the time again I knew I needed to build out a team. And so I got connected to Julia through a mutual friend. At the time, Julia was running partnerships at Bubble Bar and they were interested going on QVC and thinking about other retail that we were in the mix with. And so I got connected to Julia and we had a great conversation and I told her about what we were working on at TULA and the vision and how I was thinking about building out a leadership team. And specifically, one where if I found the right person that did a good job, I'd fired myself and promote that person to my job. And Julia's like, " Well, that's interesting, we should talk about that." And we did. We talked about it more and she came on over and she joined TULA and helped us put the foundation and infrastructure in place with me. And once we got into a pretty good place, I handed over the reins, made her the official CEO and I fired myself and went on to cook up my next software business which became Troops, which we just sold to Salesforce on Friday. And fast forward a little bit more, maybe a year or two later, we had a meeting with Julia and in short, she told us that she needed to leave because she needed to move to London for family reasons. So there I was thinking, man, now I'm going to be CEO of two companies at once, which is what I did not plan for. And I knew that we needed to find somebody that could fill those shoes, and they were really big shoes. And so we started to look everywhere. I started to network, I started to ask around, I wrote up a job description and I put up a job description on some job board, and lo and behold... Oh, and by the way, at that time, L Catterton was part of the business as well. So they fired up their recruiting arm and they were on the hunt looking for executives that could play this role. And so we narrowed it down and I remember we narrowed it down to call it about four candidates. One was Savannah and three were much more seasoned executives. And what's funny, if you look at Savannah and Julia, they have almost exactly the same pedigree. Both went to Harvard Business School, both went to Princeton, both were rowers at Princeton. Ken and I joked that any business we would do in the future, we'd set up a recruiting tent at the row house at Princeton, because there must be something.

Conor Begley: I don't know if you know this, but I interviewed Savannah and Julia for this podcast separately, just totally independently and I made the exact same observation. I was like, " Wait a minute. Wait." As I was going through Julia's background, like this looks really similar.

Dan Reich: Yeah, and both-

Conor Begley: Yeah, inaudible.

Dan Reich: ...like a banking/ consulting background and then made the jump to startups before they made the change to... So it was just, so I'm looking at this resume thinking, this is just too serendipitous and hilarious. And of course, if you reference clothes. And so I put them all through the interview process and ultimately Savannah came out the winner. And one of the reasons she did is, when I think about a startup, yes, experience is important and being able to see the playbook. But just as important, if not more so is just raw horsepower and hunger and a desire to win, emotional intelligence. And to a degree, not having seen the playbook, because it gives you fresh perspective. There's a quote I heard once that I love and I might butcher this, but it's something to the effect of by the CEO Southwest Airlines, like the reason he's most qualified to start an airline is because he's never worked at one before. And so Julia had never worked at a skincare company, and Savannah was adjacently related to the industry through Birchbox, but neither had actually run a skincare company, but they had enough ingredients and where they know that they could apply those ingredients. And they were early enough in their career that they still had a lot to prove, myself included, but also weren't high school kids like I was years ago with my first startup, didn't really know anything about anything. And so that was the set of ingredients that we were looking for and Savannah came on board. And as you said earlier, kind of wrote the next chapter of TULA that brought it all the way through the acquisition with Procter& Gamble.

Conor Begley: And what... In terms of that transition from Julia to Savannah, obviously it was a friendly transition, Julia was leaving on good terms, you guys were leaving on good terms, the business was doing well. So it's a little bit easier than like say, asking a CEO to leave or being asked to leave or them leaving because they're unhappy. But what did you observe through those two CEO transitions you to Julia, Julia to Savannah when it comes to managing the team? What did you see there that was important?

Dan Reich: Yeah. Well, I wonder if you've even seen this in your own day- to- day, but in the earliest days of startup, it doesn't even really feel like a company. It's like a group of people that are just set out on a mission, will do anything it takes to be successful, come hell or high water. It's very familial because you're in the office what feels like 24/7 and it just all very messy figuring it out. And as a startup grows, and this isn't true just about TULA but about any startup, the paradox is, when you do a startup, you do a startup because you have autonomy, you can do everything and anything. But the goal is to be the thing that you never want to become, which is like a big company where everything is digitized, productized and verticalized. So figuring out that balance and that attention is really important. But as we went through that transition with, for me to Julia to Savannah, we went through that phase where, for me it was, get everything done at all costs all the time, always on. Julia came on and she extrapolated that feeling and put a little bit more process in place as we begun to build up the team, and then we brought out Catterton involved and we started to get a little bit more dialed in with numbers and budgets and goals. And then when Savannah came in, we just took that to the next level. We got much, much, much more disciplined with goal setting and budget and accountability. Because at that point, the business was at such a scale where that really, really mattered and we needed to get more specific and we needed to put people in roles that were very verticalized and very specialized. Whereas in my time and even Julia's time, we had many, many more generalists where as if you look at TULA today and the organization, so that's what built our credit. You've got exceptional people in very specific roles doing amazing work. And we could just never fathom having that specialization at that stage because we weren't ready for it. But that was probably the biggest transition moving away from startup life, general athletes to scale, budgets, goals, specialization and so on.

Conor Begley: Yeah, we went through a similar as our business went from John and I to, at the time of acquisition, I think we were around 75 employees. And then now a combined company, we're around 40% of the revenue, they're around 60% of the revenue and we hired, it must have been like 80 or 90 people in the first half of the year. We're at like 360 people as a company and it's like, whoa, specialization that starts happening is crazy. All I do is email marketing, that's it. Because there's 25 people on the marketing team, it's like, whoa, it's crazy to think about that.

Dan Reich: Exactly, I'm living through it right now even with Salesforce. They have an entire M& A team, like an M& A lead for marketing, an M& A lead for real estate. And when you get to that scale certainly Salesforce, even P& G, you need that level of specificity because there's so many moving parts in an organization, especially at that scale that it's important. But look, in the early days as you know as, you are setting up email, you are setting up your support desk, you are checking the mail, you're cashing the checks, you are literally doing everything. And so that was really the transition we had and at each step from me to Julia to Savannah, we accelerated at each part of that phase with fresh eyes and fresh blood due to their being at the company and their addition to the team.

Conor Begley: Yeah, they're also in addition to just being good operators. It just seems like they're really good people. I think that they're both exceptionally nice, smart, empathetic, etc.

Dan Reich: Oh, totally.

Conor Begley: Let's talk a little bit, you and I talked about this on our last call and I want to dive in on a little bit more, because I think it's just so indicative of the pathway we've seen to success in influencer marketing. But obviously, that was a huge part of the success of TULA. Is the work that you did in social and influencers and obviously your background at Spinback and Buddy Media and Olapic, which you helped out a little bit, I think contributed to that. But talk to me a bit about... And then again, number one brand in the whole rankings. So number one we've tracked for at least a year or two now consistently in skincare, so best- performing brand in the whole category. So what are some of the principles behind influencer marketing that implemented that you think drove that success?

Dan Reich: Yeah. Well, this is the thesis we had even for Spinback that just stuck with me. If you think about word- of- mouth marketing, this is the marketing tactic that is as old as time or as old as the caveman. The caveman invents the wheel and he comes out the cave screaming, " Hey, everybody look at my wheel." There wasn't paid as there weren't billboards, none that existed. Marketing was storytelling and still is storytelling and conversations. And when you think about advertising and marketing in general, the things that we talk about the most are the things we talk about the most. They're the things that are worthy of conversation, the things worthy of being brought up in a conversation or a cocktail hour, what have you. And so I saw this at Spinback. In fact, on QVC, I remember one day I saw this huge spike in sales in our dashboard, and in particular at QVC. And I thought our product broke, I thought something was broken. In fact, we scrambled the whole team because we thought we were having this big failure. And when I dug into it, it turns out nothing was broken. We just saw this huge spike in sales from a blogger on one of these very, very old- school forums at the very bottom of some product page on QVC by some person that no one's ever heard about before. And I was like, " Wow, this is really powerful, this is what we could call today a micro influencer on QVC." This person is engaged in real authentic conversation and meaningfully drove sales. And when I saw that, I just remember thinking, this is that caveman story just happening digitally and that's probably going to accelerate. And so when we did the Buddy Media to Salesforce acquisition and part of why I was hovering back over this idea in another software company, it just seemed to me like we hadn't even begun to scratch the surface. Like Facebook was super early, they had gone through multiple iterations of their product and their platform and their monetization strategy. But no matter what phase that they would go through, what to me would always be true is that idea of influencer marketing, word of mouth marketing, but it was probably going to accelerate and just that the mediums would change. And we actually see that today with Facebook to TikTok now, for example. So at TULA, the thinking was, how can we harness the power of that word of mouth marketing that we saw at Spinback across these brands, but really make it core to the brand from day one? How do we institutionalize that? And so at the time, a lot of brands I think were thinking about influencers like as another person that the PR person has to have a relationship with. It's like they'd have their list of publications and the editors and writers at those publications and then maybe a short list of influencers. But for me, it was a new retail channel, it was a new performance marketing channel. These would be the people that would fuel the brand and create that buzz. And so I just wanted to do a lot of that as quickly and as aggressively as possible, and I wanted to treat it like a sales funnel and a performance marketing channel. So in the first days of TULA we did that. We had funnel metrics, we had tracking against every stage of the outreach to conversion, to relationship and we just carried that forward throughout the history of the organization. And as time went on, we just got a little bit better and a little bit better and a little bit better. And again, more specifically in the early days, although we were building a beauty company, I did not want to go fish where everybody else was fishing. So while all the beauty companies were looking for the beauty bloggers, I was looking for mommy bloggers, I was looking for fitness bloggers, I was looking for health and wellness bloggers. I was looking for people that weren't beauty people per se, but certainly had beauty and skincare in their routine and in their lives. And that worked. Like we hit a pretty good beachhead with a couple of, I remember good, we call fitness influencers. And that became a segment that really helped catalyze that influencer machine at TULA, and then from there, you get into other networks and other derivative groups and on and on and on we go. And if we fast forward today at TULA and Savannah and Julia have done a great job talking about this publicly, that has contributed to probably 50%- plus of sales at TULA because to us, we always thought about it as this channel. And why that's important is in today's world, a lot of brands think that if they go D2C and if they launch a Shopify channel, because it's direct, it's much more cost effective and cheaper, there's no middleman, there's no retailer. But that's not true, there absolutely is a middleman because while it's free, while the distribution is free, you are certainly paying a lot more for the eyeballs and attention on Facebook and on Instagram. And so there's that balanced and calibration that has to happen that a lot of brands don't really get right and then they wonder why their customer acquisition costs don't make sense and certain lifetime values don't make sense and so on and so on. But in short, that earned media concept that you guys are so good at tracking to us was always mission- critical and part of the brand identity and how we build a brand from day one.

Conor Begley: And how did you think about... Because obviously, so you got this mix of an earned media performance marketing and then obviously long- term relationships. Like you said, there's a few that we hit on that just like, oh wow, this is really working with them. What did you observe about the ones that worked versus those that didn't? And then how did you think about... I'd imagine some of these people are people that you built a relationship with when TULA started and that are still big supporters of the brand, both from an earned and a paid perspective.

Dan Reich: Yeah, yeah, also great question. So going back to an earlier comment, I think in the early days, when a lot of people thought about these influencers as like press people or editors. In my early days, I thought about less like that, more like, I'm like, actually these people look more like their own media companies. And then it's actually, if they're not their own media companies, they're their own media companies because they are entrepreneurs. That's what they are, they're entrepreneurs.

Conor Begley: They're both the advertising department-

Dan Reich: They are.

Conor Begley: ... andthe editorial, right?

Dan Reich: They're advertising-

Conor Begley: That's good.

Dan Reich: ...they're editorial, they're distribution, they're legal, they're negotiators, you name it, they do it all. And the-

Conor Begley: What you do with one impacts the other. Like-

Dan Reich: That's right. And what I observed is the people that drove the best results for TULA were the most entrepreneurial and just got it. Like they played all those roles really, really well, they're authentic, they're genuine. They're not just doing this because it's a vanity thing, their community are highly engaged because they truly, truly care. And they're entrepreneurs. Like what I am or inaudible. And so one of those people, for example, is Courtney Shields. She is now doing her own brand. Ken and I are involved with, and part of why we're excited to be working with her on her own brand is, for these reasons. She crushed it, because she's a great entrepreneur, she's a great person, she's authentic. And so I think the people that rather the influencers quote, unquote, that think that way, tend to do really, really well. And the ones that do it because it seems fun for or they just for whatever reasons and aren't as invested or don't care as much, so by surprise, it doesn't work as well. So at TULA and even now DIBS, the new beauty company, we tend to think about these people as real entrepreneurs in which we'd like to build real relationships that are long- lasting, where there can be one- plus- one- equals- three scenario. We can help them build their brand and their business, and they can help us build our brand and our business. And in fact, with Courtney, when we started at TULA, I think just as a baseline, she started working with us. I think she had maybe 70, 000, 75,000 followers. Today she has closer to a million. And if you look at other metrics associated with her, they're just much, much larger today than they were there. I think she's already at like a 100,000 TikTok borrowers and she just started a couple of months ago. So point is, we bet on each other early in the early stages of her career in the early stages of TULA as a brand. And at DIBS, we'd look to pursue a similar strategy, which is we're looking for real people that we could really partner with and find a mutually beneficial working relationship.

Conor Begley: Yeah, it's something I've talked a lot about or we talk a lot about is, if you look at companies that do well, so companies that outperform when it comes to influencer marketing, what you find is they actually over- index with micro influencers. So they over- index with the little guys, because what happens is, when you start working with them early, when you invest in each other, a certain percentage of those people grow. And so the graduation rates are about 6%, it's about 6% of micro influencers, which are people with under 100,000 fans will graduate each year to above 100, 000 fans. Once they get past that, it's like a rock rolling downhill. Once you're past that, you've got credibility, people trust you, etc. People usually go full- time once they hit that threshold and so it's like one out of every four we'll surpass 300,000 fans the next year. And then one out of every three we'll surpass a million fans the following year. So it becomes pretty high- hit rate at that point. And so that's really cool to see. And again, consistent with what we've seen. So I think one of the most fascinating angles that you have in terms of your understanding of the space and maturity in the space is, if you go back to like 2009, 2010, Instagram didn't exist, social media was about getting likes. It was just not... It was a very different kind of time. But at the same time, Buddy Media was acquired for a ton of money, $ 700 million, Vitrue was acquired by Oracle for 300 million, and then Wildfire was acquired by Google for a ton of money. That was that kind of initial cohort of big winners in the like owned media social space. But I think what's interesting for me is, my perception of that in the years following was like, eh, didn't work out that well for the acquiring companies. And I think some of that... So I'd love to hear your perspective. Obviously, you weren't running it, you were helping, you were part of the team, but whatever. What do you think didn't work then for those companies in those acquisitions, as well as they would've expected? And alternatively, what do you think is working right now? Because you got Sprinklr is a public company, Sprout Social is a public company, obviously it's having huge impact on brands like TULA and others in terms of just economic outcomes. So what was different then, 10, 12 years ago and now in terms of maturity in the social space?

Dan Reich: I think you hit the nail on the head, the word maturity, I think that's it. When you rewind the clock and you look at those acquisitions, you're right, we all got taken out right around the same time, there was a big frenzy. But also right around the same time, shortly thereafter those deals, Facebook in particular made huge changes to their platform. In particular, they killed Facebook pages. So for anyone listening at the time think about websites, customizable websites on Facebook. You go to facebook. com/ cocacola, you got this whole beautiful Coca- Cola experience. We helped design and build and manage and host and measure that entire experience at Buddy Media and measure with Spinback as well. And I remember having this conversation with one of the lead PMs at Facebook years later, who was working with Mark on this. And what he told me was that at the time, for every$ 10 million spent in the ecosystem, 7 million was going to these third- party companies like Buddy Media and three was going to Facebook. And he is like, "Huh, that math doesn't sound right, we should fix that. Mark, do you agree? Can we fix that and kill pages so we could recalibrate the dollars?" And Mark is like, " Yeah, we should totally do that." And they did. And so overnight they killed Facebook pages and that got rid of a huge portion of our product and I know it did for others. And the march to own the monetization, at least that Facebook began rightfully so to their credit, they absolutely should have done that. That's what Google did and why Google is Google, is why Facebook is Facebook. And they began to bring those really important advertising products in- house to monetize. And so that was the first wave that rode and crashed quickly, but that some of the other companies that remained as independent companies because they weren't so fully- vested in that first wave had the benefit of having a bird's eye view on the evolution of the space, and they were able to recalibrate their products and their business models to address those changes. In addition because there were fewer independent companies, there was less competition in the space. So all of a sudden, instead of P& G getting calls from Buddy Media and Vitrue and Wildfire and Sprinklr and, and, and, they were getting fewer calls because Buddy Media, Vitrue, Wildfire, etc, were all going through their own integrations at those bigger companies which we know can take some time. So I think just the space matured, but, and we talked about this earlier, what is still consistently true is that idea of word- of- mouth marketing and influence of marketing, which is as old as time. That is not going anywhere anytime soon. And with these new mediums, if anything, it's accelerating. It's why, for example, if you look at TikTok and their revenue compared to let's say Twitter, it is meaningfully more in a much shorter period of time because of how quickly the demographics and mediums have shifted to a new medium, like TikTok talking about all of the same things people were once talking about on Instagram and Facebook and Myspace before that, and sort of Web 1.0 before that. So that evolution is going to continue, but what will also remain true, I believe is that idea of influencer marketing. It's just the tactics will shift, the mediums will shift, and in lies the opportunity for brands to figure out, where does the puck go in? Where is the arbitrage opportunity? And I think that's why you see a lot of the entrepreneurs from that time, but immediate ecosystem are really excited about, let's call it Web 3. 0 and NFTs, because to them it represents a new digital medium of opportunity and new surface area for brands and artists and creatives and influencers to put their stamp or put their mark on the internet, which then in turn can be monetized in new ways. And it's just going to continue to evolve again. Just the new mediums and tactics will change, but I think the principles will remain true over the years.

Conor Begley: Yeah, I remember when they killed Facebook fan pages, it was not a good day. Okay, so I'm going to do one fun end- of- show question. So I remember getting asked one time, I was in an Uber and chatting it up with the driver and he goes, " So what are your hobbies?" I was like, " I don't know. Is business a hobby? I don't know, I don't really have any hobbies." And I have a feeling that business is also a hobby for you, just something you generally enjoy. So I'm going to force you to not talk about business for a minute. So what outside of business, investing, entrepreneurship, all that stuff, how do you unwind? What's your guilty thing you do on Saturday mornings when you don't want to look at your inaudible?

Dan Reich: So I like to play video games, I've been playing a lot of StarCraft lately, which is a game I grew up playing and I'm still playing it. So that's a big one for me. And then, especially during the winter, I'm a big skier and rider, I do ski patrol in Southern Vermont as a volunteer. I think last year, this past year was my 20th year doing that. And then in the summer-

Conor Begley: Wow.

Dan Reich: In the summer and nice weather, I'll try to get out and golf, which-

Conor Begley: Nice.

Dan Reich: ...my wife loves when I'm out of the house for six hours.

Conor Begley: So what's funny is that question, the answer I gave him, I was like, " Okay, let me really think about this." I really wanted to think about it and I was like, I feel like the thing that runs consistently through my interests is the idea of competition, that's what I enjoy. And so the things that I enjoy, I enjoy sports, I enjoy games, both video games, board games, games of any variety, as well as business, which I frankly view as like a really high- stakes game. Not to trivialize what you're doing or the process or the people or anything like that, but it's just like, it's high stakes, there's infinite competition, there's infinite choices in terms of what you can do, what direction you can head. And so the complexity and the competition is just fascinating. So-

Dan Reich: I love that. I love... It's so funny, I was having a conversation with another very successful founder, CEO, and I was asking him about his plans for his business. It's like his third and fourth company, and he doesn't need to do this. And I'm like, " What are your plans? Dude, you've done this many times." And he's like, " I love playing video games." And I was like, " Yeah." And he's like, " My business is a video game. Growing up, I played video games, this is just another video game for adults that I get a bunch of money from investors to play. And if I win, I am able to make a lot of money for myself and for my team and for my investors and it's just a really fun video game." And I'm like, "I'm definitely going to steal that one from you." And I couldn't agree more.

Conor Begley: Yeah, the two things, one, I remember playing Madden, is the old NFL game and they had franchise mode where you get to run the team. I loved that, I was like super into it. You have all the levers and you have different things you can do and strategies, whatever. And then the other one is, so the Shopify CEO, Tobi, has a similar mindset where he's like, " I don't really agree with the philosophy of not letting your kids play video games." He's like, " You learn about resource allocation, time management, efficiency, puzzles, solving problems. It's fascinating it's actually a great mental gymnastics." So-

Dan Reich: I completely agree.

Conor Begley: ...I'm glad inaudible.

Dan Reich: Video games and poker, two great tools for me.

Conor Begley: Oh, yeah. We got to get some poker going. I'm a big... I don't have anybody to play with. I've had a group that we've played on and off with over time that are mostly entrepreneurs, but we should get a game out.

Dan Reich: I'm in.

Conor Begley: Awesome. All right, Dan, well, I really appreciate you taking out the time. I know you got a lot going on with the acquisition and everything else that you've got going on in the world, so appreciate you taking out. I learned a lot, I'm sure everybody else learned a lot as well, and congrats again on all the success. Not surprised.

Dan Reich: Thanks Conor. You too, man. Congrats in everything. And appreciate it, this was great.

Speaker 2: Be a friend, tell a friend and subscribe, Earned by CreatorIQ. CreatorIQ is your all- in- one solution to grow, manage, scale and measure your influencer marketing program. Ready to unlock the power of the creator economy, get started with a demo today at creatoriq. com.