Transcript

Josh:

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With us right now is entrepreneur, investor and do gooder Brent Freeman. Brent, you are also the founder and president of Stealth Venture Labs and you are found on the Web at Stealth Venture Labs dot com.

And of course, your personal website, Brent Freeman dot me. Brent, thank you for joining us.

Brent:

Thanks for having me, buddy. Good to be here.

All right. I'll let you give an overview of what you do. I just kind of gave the the very cursory intro. If you could kind of fill in the. Fill in the lines for us.

Sure. Yeah. I'm a I'm a digital marketing entrepreneur. A serial entrepreneur. I've been doing business here for about 15 years. I have co-founded or founded probably north of 20 companies everywhere from commodities, import, export, all the way through to pasta, making experiences with Italian grandmothers and everything in between, in my core focus, this day is Stealth Venture Labs, which is we are a digital marketing firm that focuses on accelerating brand growth e-commerce, DTC brand growth online through digital media ads.

We have a what we call Founder Lab, which is an incubator. We help founders take products to market as well as bring our owns. And then we have our Impact Lab, which is our social enterprise arm, and we teach disadvantaged youth how to do all of the things we do in our for profit through an online course and a mentorship program and a bunch of other kind of thought leadership stuff around how to use your business to create social impact.

And so Stealth Venture Labs, really as a as a holding company growth lab is our agency founder lab is our incubator impact lab is our social good arm. And so that's high level. A little bit about about me, you know, in terms of my professional career, I've been doing this a long time. I've been in the DC world, angel investment world.

Like I said, I've failed more times than I can count, failed my way to got a good success. And I'm really focused as an entrepreneur and not on taking shots at the fences like the, you know, the grand slam, billion dollar market cap feast or famine. I did that and had a company fail out wildly. I'm really focused on lifestyle design and on building value and real businesses and customer acquisition costs, lifetime value ratios, as well as making sure that I enjoy the journey that I'm in along the way, not just planning for one day, but having that one day be today.

So high level a little bit about me.

Josh:

Yeah. Well, so I'd love for you to share maybe some of the companies that you've worked with, some of the alumni that have been through Stealth Venture Labs, because there's a couple that have some name recognition. Yeah, we've done, you know, knocked a few ideas. A few of these have been not, you know, Grand Slams.

Brent:

Yeah. Been ironically, we've had a we've had a couple of those. So one of our early successes in Stealth Venture Labs was a company called Home Chef — meal kit delivery brand. They were late kind of to the Game Boy brand, and those brands were earlier, and we helped them go from 5 million annual revenue to 100 million in annual revenue in about 12 months.

And then they took that ball and ran with it and sold to Kroger for about 700 million.

Josh:

No kidding.

Brent:

That was a wild ride. Wild ride. They did a hell of a job on the operations side as we kind of ramped up the marketing and then had them hire built a team in-house to replace us over time. And then we did the same thing again a couple of years ago. Where the company go Factor 75. Ready to eat meal kit you don't cook it it's shows up at your your door already ready to me ready to eat and then that sold to HelloFresh.

And we now work with the HelloFresh Group and all their brands kind of across the board in various different markets, all the way down to brands like Evite and Poo~Pourri and big brands that we've all heard of, direct to consumer all the way down to brands. Ever heard of that are really crushing it and then brands are between up and comer is one of our big clients is a company called MUD\WTR, a coffee alternative as well.

And so we do a lot of a lot of work helping e-commerce companies scale through growth plateaus. Because I was an e-commerce operator myself, I was really frustrated by the digital marketing agency model. I built an engine in-house when I was running my own brand, and by the time we kind of cracked that code, I went through all the trials and tribulations of hiring and firing.

We ran out of money. We weren't able to raise our next round, and so I was determined to not make that mistake. And so I started Stealth Venture Labs to be exactly what it sounds like behind the scenes. Secret weapon for founders and entrepreneurs to get to scale and grow through growth plateaus. We we don't want to be the biggest we are.

Our focus is to try to be the best. So and that's that's what we do. So it's companies that are kind of stuck trying to get, you know, growth into the next phase. It's usually step function growth and and then founders who have ideas and want to bring it to market and find their first kind of million dollars in revenue.

In our incubator, in our Founder Lab, we call it, we help companies come to market, start our own, as well as help brands come to market. And an example of that is we helped Kevin Hart, the actor comedian, take a supplement brand. He anchored by The Hustle and bring that to market. And that's one of our projects now.

So we we have a lot of experience. We've been doing this a long time, quiet behind the scenes crew. You know, cargo has no shoes. We don't do a lot of marketing for ourselves. It's mostly business and things like this.

Josh:

Yeah, yeah, yeah. So, you know, just talking specifically about e-com and some of those growth hurdles that happened or those kind of those plateaus, which are maybe one or two of those very common where it's like they're go, go, go, go, and all of a sudden they hit that wall. What are some of those very common walls that you've seen in e-com?

Brent:

The first is establishing your your product market fit, your first kind of thousand customers, you know, at a reasonable customer acquisition cost. And then, I mean, it's like you have a business idea, business hypothesis, and then your business realities and those two things are very, very different. And so hurdle number one is taking an idea, translating it into an actual product and bringing it to market.

That's just getting it to market is a hurdle. And then once it's in-market, actually getting people to buy it at a rate that is reasonable to acquire. And that that right there is where a lot of companies die on the vine. They don't ever get to that first could be 1,000, 2,500 of customers that allow them to say, yep, people want this and they want this in enough of a rate where we think we can scale this over time.

So that's one that's kind of first step function hurdles are step one and two. And then after that, it's really kind of getting to your first million in revenue because everything changes after that, right? The 0 to 1 get your first hundred, $200,000 of revenue that shows you have something. But getting into that next million dollar run rate of revenue shows that you have something that can try to scale.

How big of scale? Unclear, but it can start to actually scale into a more sustainable business. And everything changes your personnel. You're the amount the entrepreneur can do and get done in for a day versus having to delegate an element to their team members to your customer acquisition costs. A lot of times people think that, oh, as I grow in scale, my acquisition costs will become cheaper because I'll get better at it.

The opposite as you grow in scale, your early adopters are your cheapest and your most effective customers. The concentric rings thereafter actually become more and more and more expensive. So you have to diversify your channels and increase your lifetime value to combat that. As there's outward pressure on your demand curve of your of your customers or your customer acquisition costs, you need to match that with increasing your ability to pay more for customers.

So these this is what happens kind of in that that $0 million in revenue and then it's like 5 million, 10 million, 20 million, 50 million. It's kind of in those those revenue curves. Sometimes a brand who has just their tail on fire and they can do no harm. They blow through all of those. And in one phase, because they have such product market fit.

But oftentimes it it is step function and you hit your head and you what did work what got you to where you are people process is marketing is not going to get you ready to go.

Josh:

Yeah. Talk about the relationship. I'm really curious about this, the relationship with your customers early versus how that might evolve as well because I'm thinking of man those first like 100 and 500,000 customers like I mean, those are some pretty special people.

Brent:

Yeah, they are. Those are those are the early adopters that are not afraid to take the risk on a new brand to try something you're doing. And they're a really good test group to listen to and you have to be conscious of how big is your your population, of what you listen to. The crankiest customers complain the loudest, which don't mean doesn't mean that is it is necessarily statistically relevant.

However it does. It's really important to listen to early customers because they're giving you real market feedback early on about how the market is receiving your product or not. And so it's a delicate balance of not pandering or knee jerk reaction to one bad customer experience. But to see, is this a trend if you have, let's say, 100 customers in ten are saying this is probably pretty relevant.

If you have a hundred customers and there's one person saying something, they had a bad experience. Look maybe look into it, make sure it's not a larger systemic issue, but it may not be pervasive. And so those early customers are your, you know, your your your first early adopters that allow you to get a market pulse. And they should give you a sense of of of do we have product market fit or not?

And an MVP, a minimum viable product type of an environment release, quick release, often take your hypothesis, get it out there, test it, try it, break things, see what people want, test the price, the promotion, the positioning, rinse, repeat on all of those. And then ultimately it comes down to how much does it cost to acquire a customer and how much do we think we're going to make over the lifetime value LTV of that customer?

And those early those early customers should be should be a strong indicator of of success for the future.

Josh:

And we're recording this interview or, you know, in the middle of 2022. And you know what what I mean, obviously, the past couple of years have been quite transformative for the market. But but what have been some of the key learnings of where we are today and how are we different today than we were, say, three years ago? If we're talking specifically about e-com and a lot of the companies that that you tend to mentor around.

Brent:

Josh, we don't have hours in the day to discuss those things. But, you know, if you if you think about it, so I'll work my way backwards from like where we are today. I think we're June 28 and June 28, 2022, today. What's happening is it is very expensive to acquire a customer online summer and e-commerce is generally pretty slow summer in e-commerce post post includes quotes COVID where people are traveling and eating out again, enjoying again is becoming a very volatile environment.

Tack on top of that, iOS 14 and privacy and tracking gaps that have have rolled out. And you create a really difficult environment for new brands to come to market in a profitable manner. Established brands who have momentum in data and own audience in multiple channels, they're getting hit, too, but they're feeling it less as a business than those who only have a ten or $20,000 marketing budget versus 1 to 2 million.

And so right now, what's happening is we're in this environment where the world tilted on its axis the last two years and people the consumer behavior has shifted and changed in a manner that is accelerated online. But behavior even more. However, we're in a little bit of a pendulum swing back moment where people are outdoors doing things more back again than they normally, typically would and like a normal e-commerce year.

And so we're in a little bit of a pendulum swinging side of things where I think next year it's going to come back to the new normal. But the new normal is, is change. You know, talking about the CPI inflation with the friend a moment ago we were talking about, you know, they say inflation was an all time high 7%.

It hasn't a 7% increase. For me. It's been like a 20 or 30% increase. Yeah. Across the board. And when you come to media, sometimes it a 50% increase. And so we're dealing in this very, very weird market that is ripe with opportunity for the right people who know how to connect the dots. There's going to be a series of billion dollars in multimillion dollar businesses built over the next 2 to 3 years in web3 and services, in crypto, in the metaverse.

In all these areas, in analytics, it's in tracking who see the turbulent, choppy waters and don't run for four clear current shores. But get in there and say, I know how to swim. Right? And let's let's build as we go. So where we are today is is a changing time where the pendulum swinging back. There's a lot of challenges in tracking and understanding how to be nimble.

But if you go back to the last last three years, it's not so different than it was March 2020, March 2020, when everything shut down. There was widespread instantaneous panic. You know, we lost about 30 plus percent of our business overnight. Not knowing what we're going to do, not wearing, knowing where is it going to go, more where this is going to go.

Now, fast forward to today. We're in market turbulence where it starts, valuations are right 50% off the bar. The stock market's crashing. Bitcoin's down and it's panic, panic, panic. But yeah, but the reality is, if you go back in the history of anything, we go through cycles. There are there are four seasons in the economy. And we're in one of those winter seasons right now where we have to weather the storm.

It's not time to sell things. It's time to buy. It's time to build value. It's time to create. It's time to say, yeah, all of that noise is out there. It's not a problem. It's an opportunity. How do we take the market and do judo and turn it into the next, you know, how how do we adapt? And so and so we're doing that as a as a service company.

We're doing that as product companies. One of our portfolio companies is called Nonna Live. It is a online cooking school with Italian grandmothers teaching that live stream from Italy with real Italian grandmothers and a translator, their grandkids, a seven figure business. It's a real business, but it was all online and COVID. Right now we've come back.

We have five times as many people happening in-person. Right. So how do we adapt now to a hybrid world and open it up to have a bigger market opportunities? Doesn't matter of your physical product, your in-person making process with grandmother or you are doing digital ads right? It's about adapting it. And the last thing I'll say here is, you know, there's a there's kind of an eastern philosophy of way.

Are you familiar with with this?

Josh:

No, no, I am. But for someone else who's listening to us, who doesn't know.

Brent:

It's something that I only put I only put I understood kind of what this was over the last few years. We're we're basically just means it's the art of doing nothing. And it doesn't mean don't have a line to actions. It just means kind of surrendering to the market rather than forcing. And any time I find myself forcing something, I it's like grasping at sand.

The harder you grasp, the more fingers you know will weigh. All that means is like, take a step back, take a breather, get some whitespace, get out of the high beta brainwaves and stress and come down and do a little more calmness. Get out of the amygdala response in that fight or flight, get back into a little more creativity and then take a step.

Don't wait too long, don't wait too long. But at the same time don't knee jerk reaction. It's just a little bit of surrendering to the market environment and trying to adapt for the new world that we're in.

Josh:

Yeah, I the Princess Leia quote is coming to mind but I can't slipping through your fingers tighter you grasp Darth the more they just slip through your fingers. So who at this point, Brent would be appropriate to reach out to you and your team at Stealth Venture and why and where might they fit potentially?

Brent:

So there's kind of two tracks on this. One is from a from a business perspective. If there's any consumer brands direct to consumer companies that are looking to scale or grow through growth plateaus, either their in-house team no longer works or the agency they're working doesn't work, or they don't have one. And they're looking to scale and they're looking to they have a product that has some traction.

They need to get to the next level. Our team is excellent at that. If somebody has an idea, they want to bring it to market and they have some budget of how they want to do that. They're looking for a team to help them do that. We're also excellent at that.

And then the other track the other track is we this now that the world's coming back and starting to do more and more kind of public speaking, motivational speaking for companies, organizations traveling a little bit about what we talked about, about how do you take that step back and how do you focus on enjoying the journey, whether you're a professional, an executive or an entrepreneur, and not wait till the one day you know, to happen, but actually invest in it today.

Josh:

Yeah, in real time. Fact checking. Thank you. The more you tighten your grip. TARKIN Princess Leia is talking to the darkened General Tarkin. The more star systems will slip through your fingers. Trust the market. The market knows the market is smarter than any entrepreneurial genius. That's right. Brent, thank you so much. It's been a really valuable conversation. Stealth venture labs dot com.

And then again your personal website is at Brent Freeman dot me and you know one thing I encourage our listener to do is Brent is that not only have you been involved in some great projects from a business perspective, you've also been involved in some great impact causes and in philanthropy. Do you mind just, just since I put you on this, but do you mind mentioning that really quick, maybe some of the work that you've been able to do there?

Brent:

Totally, about 12, 13 years ago, I dedicated my life to using for profit business to create social impact from the inside out of the company and how we treat our team and our culture and things like for months paid parental leave and 100% of health, vision and dental for our team and volunteer days and all that stuff all the way through to how we use our profits, our resources, and our our professional expertise to give back to disadvantaged teens and youth across the United States all the way through to feeding people.

We've worked with Feeding America over the years. We now have in our in our pasta business a one for one model. For every class we sell, we donate a meal to someone in need, and we've donated tens of thousands of meals. And so I really believe that and we use our Impact Lab here at Stealth as the vehicle to to do a lot of this stuff.

And I really believe that it's our responsibility to embed cars into our cars and to use that to create impact in the world. And so that's my mission as a as a for profit social entrepreneur or well, you know, 15 some odd years ago, I call that a philanthropreneur, but, you know, whatever, whatever floats your boat on that number, it's just about making the difference.

Josh:

Yeah, well, and congratulations as well for being named as one of Inc.’s 475 Best Places to work in the United States. That's quite an honor. So congratulations on that very much.

Brent:

Thank you so much.

Josh:

Brent Freeman, again, entrepreneur, investor and do gooder. And again, the the Stealth Venture Labs. You're the founder and president. Thank you, Brent.

Brent:

Thanks, Josh. Appreciate it, buddy.

Josh:

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