DTC Success and Beyond: Matt Bertulli on High-Performance Teams and Acquisitions

Matt Bertulli is the Co-founder and CEO of Pela Case, which makes iPhone cases out of waste, and Lomi, a certified B-corp on a mission to eliminate food waste. The company is backed by Jay-Z’s Marcy Venture Projects and has been named the Top 10 in the Canada Business Growth 500 ranking and #1 in Deloitte’s Fast 50. Alongside his entrepreneurial success, Matt hosts the Nine Figure Operators podcast and is involved in angel investing, sharing and gaining further insights into the world of entrepreneurship.

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Here’s a glimpse of what you’ll learn:

  • [1:05] Matt Bertulli's effective strategies for DTC brands
  • [2:23] How to decide when it's the right time to sell your company
  • [6:12] The real worth of CEO roles and the seven characteristics of greatness
  • [7:27] Why curiosity and communication are imperative skills for success
  • [15:04] Identifying your company’s vulnerabilities to protect against competition
  • [24:25] What role does inventory control play in consumer businesses?
  • [29:46] Why you shouldn’t sell your business if you’re experiencing emotional fatigue
  • [37:47] Matt shares his approach to growth and his life-guiding principles
  • [47:01] A rapid-fire round on DTC X controversies
  • [50:11] How the trust level of advertising channels significantly affects consumer perceptions
  • [109:55] The cultural influence of strategic celebrity endorsements

In this episode…

When managing a DTC brand, success is more than just sales; it involves strong leadership, competitive strategies, inventory control, and compelling advertising. How can you scale your DTC brand to new heights?

Matt Bertulli, a two-time entrepreneur and e-commerce leader, maintains that curiosity and communication are the fundamental characteristics of any CEO or leader. These core competencies build valuable relationships with your employees, stakeholders, and clients and allow you to experiment with new strategies. Leaders must also recognize their company’s vulnerabilities to surpass the competition by focusing on their specialties. A scalable DTC strategy includes assessing and managing your inventory and diversifying your advertising channels to target consumers effectively.

In today’s Up Arrow Podcast episode, Matt Bertulli, the Co-founder and CEO of Lomi and Pela Case, joins William Harris to talk about sustainable growth for DTC businesses. He shares why building trust is foundational for high-performance teams and what it takes to scale effectively in the e-commerce world.

Resources mentioned in this episode

Sponsor for this episode

This episode is brought to you by Elumynt. Elumynt is a performance-driven e-commerce marketing agency focused on finding the best opportunities for you to grow and scale your business.

Our paid search, social, and programmatic services have proven to increase traffic and ROAS, allowing you to make more money efficiently.

To learn more, visit

Episode Transcript

Intro  0:03  

Welcome to the Up Arrow Podcast with William Harris, featuring top business leaders sharing strategies and resources to get to the next level. Now, let's get started with the show.

William Harris  0:13  

Hey, everyone, I'm William Harris, the founder and CEO of Elumynt, and the host of the Up Arrow Podcast where I feature the best minds in e-commerce to help you scale from 10 million to 100 million and beyond, as well as help you up arrow your business and your personal life. And my guest today is Matt Bertulli, the co founder and CEO of Pela Case and Lomi. They are a certified B Corp have Jay Z's Marcy venture projects as a notable investor were named Top 10 In the Canadian business growth 500 And are number one and Deloitte fast 50 for clean tech businesses in Canada. He's also one of the hosts of The Operators Podcast, it's fantastic. You should definitely want to check that out. And today we're talking about his tips and tricks for DTC success ideas for being a better CEO acquisitions advertising in operations, the full shebang, these my fratello from another Madre met virtually it's great to have you here.

Matt Bertulli  1:05

Right on, man. I like it. Good touch.

William Harris  1:09

We talked about the Duolingo we're both learning Italian here. Yeah, it's gonna be fun. Yeah. So I also want to give a shout out to David Herman, the brilliant David Herman, one of my best friends, incredible marketer, la police chase connoisseur, because he's the one who put us in touch.

Matt Bertulli  1:24  

Yeah, David is a good dude. I like him a lot. Yeah. Everybody

William Harris  1:28  

who knows David likes David. I want to get into the good stuff. Before we do, I want to announce our sponsor. This episode is brought to you by Elumynt. Elumynt is an award winning advertising agency, optimizing e-commerce campaigns around profit. In fact, we've helped 13 of our customers get acquired with the largest one selling for nearly 800 million and won that IPO recently. You can learn more on our, which is spelled e l u m That said, I gotta start off with the backstory. I always like hearing back stories, but one in particular for you. Because you you're really good at talking about a lot of your stuff on Twitter. So there's a lot of stuff I could pull from. And 2018 sold your first company for what you said was a life changing amount of money, but it almost didn't happen. And you were the reason why you said I got to know more of the story you went into on on Twitter. But for those who hadn't seen this, I'd like to know what's what's the story here? Yeah,

Matt Bertulli  2:23

man, I think most I wouldn't say most, I know a lot of founders who've sold their companies. And inevitably, the question that gets asked afterwards is like, could I have gotten more? And I know, just as many founders and I've talked to so many that have blown up deals, right? Like they've literally walked away from the process because I can get more. And I was definitely one of those people, you know, like, looking at the process thinking, geez, like, I can absolutely sell this company for more money. Let's grow it a little more. Let's go further. Like what if, right, and I think when I talked about that tweet thread is, you know, I read this, this piece called, I think it was called Richard King, by Jason Cohen, who's the founder, I think it's WP W promote now. But at the time, it was a company called smart bear. And this was like one of the best lessons I've ever had is like reading this thing. And then talking about it with like, my brother and my co founder is this like idea of of the box game, right? And it's when you're selling your company as an entrepreneur. You know, we're inevitably like, we are optimists. We're eternal. We're eternal optimists. Yeah. Every founder I know is like, even if they're like, they seem negative. They're an optimist. So when you're in the like, when somebody comes along and says, like, I will offer you this amount of money for your business. And here's the terms. That's like, they're putting a box on the table, and they're putting some amount of money in that clear box. Well, a simple version of the box game is like you and I could play it right now. We could just say like, okay, look, I'm going to put two boxes on the table. Once clear what's not clear. In the clear one, I'm going to put $1,000. And in the opaque one, I'm going to say there's a 50% chance if 10 grand and a 50% chance of zero? Well, you as a business owner right now. And depending on where you are in your life financially, you'd be like, I'll roll the dice, I'll go after the 10 Grand because Because 1000, like 100% guarantee of $1,000 doesn't really change your life. Well, when you start to scale, the dollar amounts up when somebody comes along and says here's a 100% guarantee that I'm going to give you 5 million bucks or 10 million bucks. But in the other box that you can't see there's a 50% chance that at zero there's a 50% chance that it's like double that amount, maybe it's 20 million. Well, most founders who've never sold a company before are going to be like, I will now take the guarantee of five or $10 million because it changes your life. Right? And the end you have to play the game. Here's the trick you have to play this game. And you can do this with It doesn't need to be selling companies it can be all, like risk adjusted, you know, I'm I'm trying to evaluate opportunity, you have to play the game honestly, you can't say, well, it'll never be zero. That's not true. Like, there's lots of things out of your control that can totally send your company to zero. I don't give care how good of a founder you are. So I like to talk about it. Because I feel like I've been an entrepreneur now 1516 years, like, I have been kicking the teeth enough to know that you just your plans are never right, like, you're gonna be wrong. And the goal is to be wrong to the upside, not the downside, and that you should protect against downside. And I think that when founders get a chance to take chips off the table, our optimism and our greed can often get in our way. And so I tell the story a lot because I want people to know the lesson. Yeah,

William Harris  5:53  

that's very true. And this idea of like, this offset risk, kinda reminds me a little bit of even the cryptocurrency game or whatever to right where it's like, oh, well, you know, you can you can put this into this meme coin and whatever and yell, but there's this chance of 1,000% or whatever,

Matt Bertulli  6:12

you know exactly what was bull. Lambo totally. And you know, the thing is to you hear about the one or two people that it did work for. And then that gives everybody this bias that like that could be it's no different than buying lottery tickets, right? It's the same psychology. And when you're building a business, you're kind of buying a lottery ticket, but you have a little more control over the outcome. I think the other side of this too, man is like, I think culturally, this like founder entrepreneurial thing. It's almost like we're not okay with bass hits or doubles. Like, just really, it's like, if there's no grand slam, I'm not interested. Yeah. And I just strike out, that's, you know, like, like, Rich is good, dude. Like, you don't need to be king. You don't need to have the biggest exit, just like, be rich. It's better.

William Harris  7:00

Yeah, yeah, that's wise. And so you're getting into some of the characteristics of a great CEO. You're talking about, you know, one of these is being able to look at risk, thoughtfully. You, you also talked a little bit about kind of what you would define as seven characteristics that make a great CEO. What are, let's just say one or two of your top favorite characteristics that you think are imperative to be a CEO that performs

Matt Bertulli  7:27

on Okay, so like, I think curiosity and communication are probably the two that I I probably biased to those because those are like, the two that I that are probably like my strengths. No, look, I think a good CEO is is forever curious, but good foundries forever curious, they question everything. You know, don't like they don't assume anything is true, right? There's just like a run into this. Like, there's no sacred cows. They don't care about who's right. They care about what's right. So I think that's like, number one to me. I will invest, I do a bunch of angel investing, like I will invest in people on that characteristic. It's like, they are just willing to scratch and scratch and scratch until they find the answer. Like, they'll just run through walls to like, and that curiosity. And their drive makes them do that. You know, the communication thing? I think it's, it's becoming, I think it's actually becoming more appropriately weighted, but I believe for a long time. It's under, maybe it's not, it's actually like well valued, but under appreciated in, like for new founders are new entrepreneurs, like, if they've never done the job before, right? Like when you start a company, you think of yourself versus a founder entrepreneur, then eventually, at some point, if you're successful to some degree, you have to make the transition to like, no, no, I'm now a CEO, like I have to run this thing. And communication is always at the top of my list. Because being when you start building a real company, you have people like so you have employees, you have investors, you have customers, you have stakeholders in your business. And great communication is great comprehension. And if nobody comprehends what the hell you're saying, You're not probably not going to be very successful. Over especially over the long haul, you know, like, you might get short term win. But like long term, like I want to be around and build something that's valuable. I think being able to communicate in the organization out of the organization is at the near top of what the CEO should do.

William Harris  9:31  

Yeah. So let's talk about both of these a little bit. Curiosity. I'm with you, 100%. And I'm somebody who is very naturally curious as well. Even to my detriment, let's just say like as a kid, yeah, as a kid, I remember being curious. It's like, can we clean every part of our body but we never clean our eyeballs and I can remember taking hydrogen peroxide as a kid and being like, I'm going to clean it wasn't a very good idea, but the curiosity got the better of me. Um, but that was one of the ones when we we went through several different iterations of our core values as a team. And one of the ones that I had in the early days was Stay curious. Because to me, that is, there's no way as an agency, we can crush it for our clients goals. If we just say, these are the best practices, we're gonna do these forever and ever and ever. We're not staying curious about what's next. What's next? What's next? What if we could dig a little deeper? That? What about a little deeper here? So curiosity, I'm with you 100%.

Matt Bertulli  10:24  

You know, the, this shows up a lot in DDC, where, especially in advertising in direct consumer, we're like, oftentimes, we'll all I have seen this so many times, right? Something will work. Right? And you look like a hero. And like, Sure, add scale. It's like it just crushes. The funny thing is, is like, if you nine times out of 10. If you ask somebody why at work, they can't tell you. And then, you know, depending on age of company, there's like, if you're a young company, there's a really good chance that if you've got something that works, you either got lucky, right? Or it's actually the best thing you'll ever produce. Whereas if you're a really old company, there's a good chance that you've probably produced all of your best stuff. And now you're just making incremental gains. And that by being curious, right, regardless of stage of business or size of business, you should be questioning like that curiosity is going to force you to question the results, even if they're great, right? If you can't explain why, up or down, you know, you're shooting in the dark man. And that's just like, that makes me uncomfortable, which is why I always put like curiosity near the top.

William Harris  11:40  

Yeah, somebody at Blockbuster wasn't curious enough about what Netflix was doing. Like could have prevented that. Right. They weren't curious enough. And then communication that Okay, so let's say that you are transitioning from that entrepreneur role to the CEO. And communication isn't your strong suit, right? Like, are there tips, tricks, things that you have seen that have helped to elevate? strong communication and CEOs? Okay,

Matt Bertulli  12:08  

look, I'll say this. I think when people think communication, they think like being able to speak or stand up in front of people, you are, you're alive, literally a living creature, because you figured out how to communicate with other living creatures. So like this concept that like, people are bad at communication, that's actually like, I don't buy that for a second. That's like saying, I don't know how to think it's a stupid thing to say, like, everybody can do it, man, like, you exist in this planet. So unless you exist, like, literally, in a basement, you never interact with human beings, of which let's just say like, no founder is doing that. Right, you clearly have some kind of communication baseline. So usually, what I tell like younger founders who are like I get nervous talking in front of people, or I'm not, I'm not a natural orator is like oh, great, and get get get better at the written word. Start there. You know, like, great writing is great communication. And like, you don't need to be the best speaker, you don't need to be charismatic. You just need to have a medium in which you can communicate. And remember, great communications, great comprehension that other people can comprehend. So like, I write a lot on Twitter, because I just like to write a lot, it helps me think. Right? And that's why I think like, I put communication near the top, because great communication means that you are thinking through what you're saying. matters. Yeah,

William Harris  13:31  

it does. It absolutely matters. If you can't communicate what's in your mind, in your vision, in your thoughts, that it's impossible for the team to be able to execute on those as well, you will are implementing. Yeah, I remember implementing EOS traction couple years ago, and it absolutely changed the game for us in such a big way. Because I was finally able to take what was inside of here and put it in a place where people could start executing and creating their own ideas about how to get there. But now we're all at least going to the same direction. To look at like traction

Matt Bertulli  14:04  

is amazing. It's great, like we run a version of EOS as well. I built multiple companies on Eos, it gives you a common language. And it gives you common structure where like things are repeated enough in that structure. And in those rhythms, that information is comprehended more easily, which makes you able to build a company more easily. That's why it's so important is if you can't get a team to comprehend what you're trying to do. You can't get a team to do anything. So you just you won't last without that.

William Harris  14:35

So let's transition into one of the other things that a CEO needs to be able to do. You talked about your one of your top jobs than some not characteristics but one of your top jobs as a CEO is to deter competition. Specifically looking at like seven moats and how you can deter competition. Why is that one of the top jobs as a CEO and like what are your favorite moats that maybe you've employed or that you think just tend to do the best? Well,

Matt Bertulli  15:04

I think, like, look, this is mostly going to be people who are in consumer. In consumer, there's not a lot of, especially for younger companies, there's just not a lot of like moat building, not really. Not in the traditional sense, right. So I think that like, for most consumer businesses, the easiest one to go after is just be the most profitable version of your category. So like, if you sell T shirts be the most profitable T Shirt Company. Because the more cash you generate, the more ability you have to do things in the category that your competition won't. Like most people think that that's like apples ability, apples so valuable because their product, their marketing is amazing, or their product is amazing. No, they're there. They're frickin valuable because they generate weirds amounts of cash. And that allows the captures, they capture an obscene amount of the free cash flow of the entire smartphone category. Yeah, right. That's how that's their moat is like, if there's $1 of free cash flow available in the smartphone, what category, they get 90 cents of that dollar, every other person is competing over 10 cents. So yes, they win. So I think that like for consumer businesses, Cash Generation, for 99% of them is the best mode, like just be great at that. Look, the tour competition is also really interesting one for consumer brands. The I was talking about this, I actually did another show recently for another guy. And this is a topic I liked. I actually do like talking about this because I think we're in a world now where like, building a consumer brand has gotten so easy to start, that it's very easy to knock people off. And that's partly like a tools tech, you know, like the Shopify, you can fire a store up in seconds. That's the thing that they're so proud of. And it's amazing. We're all so grateful to have Shopify in our lives. Amazing. But it's also just allowed a lot of bad behavior, right? And there's no such thing as like, I started a company that works and I don't have any competition anymore. It's like, no, no. If you combined Shopify with like the ubiquity of manufacturing in China, how easy it is to find get white labeled stuff or whatever, you now have an Uber competitive landscape. So I like to, I'm invested in a few companies right now that are, they're not, they don't operate in stealth, but they definitely don't, they're not loud, either. Right? They're gonna go as far as they can, without really letting the world know that they're, they're not going to serve their customer. But they don't need to tell the rest of the world that they're there. And I actually think that's like one of the easiest things that you I think there's, the funny thing is too is like, I think there's way too many people that have businesses that aren't ever going to be brands, they're just like they work at there's a funnel that works of some kind, it's profitable for now, they will never tell anybody what they sell, because they know that there's no way there's no barrier to knocking them off, that somebody can just go on Alibaba and buy the thing, and you're good. And then they're done. Right now the whole category gets competed to zero. So I think what I'm saying is like, you build your company, but do it in a way that like, you don't need to alert competitors that you're around. But if you're so scared of telling anybody what you sell big for fear of a knock off to me, that means you don't have a strong enough value proposition. And you actually don't have something valuable. So like, don't confuse those two things. But I think it's your job. I think your job is to figure out like, what is the mix of ingredients that we have as a company that makes us so unique, that even if somebody created a similar looking, sounding, talking walking product, that the customer is like, Yeah, but it's not the same.

William Harris  19:01

Yeah, it's kind of like the magician, right? If you show somebody how to do the magic trick, still doesn't mean I can do the magic. Same way David Blaine does he gets show it to me 800 times, and I'm still not going to be able to do it even remotely as well as he is and and that's one of his most is that his his product of the training that he's put into is just significantly better than mine. Totally. Oh, we see this in the agency world all the time as well. There's nothing that stops somebody from being able to say that they're an agency, for the most part, they run out some Yeah. And now they're like, well, now they're a Facebook ads agency or Tiktok ads agency, and one of the moats I'd say that I would say steer people away from both in service based or or product based companies are moats that are shackles or fake Moats. There are ways you could do this. But let's just say stay away from those one that I know happens in the the agency world is maybe agencies will own the ad account. And as they watch the moat, the moat is you can't leave because we own it. And so you know, you're stuck with us, we've got you. So that's horrible mode. But I see product companies tried to do the same thing here too, especially if they're newer, it's like, well, maybe there's like a way in which they're, they're basically holding you captive against your will. And anytime you're holding somebody captive against their will, not only are you going to end up eventually still losing them as a customer, but you're going to create Bedwell with other people. Now, there's benefits to some of this.

Matt Bertulli  20:29  

Yes, yes, there's laws a limit, right, like so. Yeah. b2b especially, you know, the value of b2b company sometimes does come down to like, how sticky is the customer? Right. Like? And yeah, what you're talking about is like, almost like a false flag lock in. Yeah, yeah. Whereas like, there are there is such thing as like, one of the true moats out there is that it's incredibly hard for a customer to leave you like switching costs are very high, you see that a lot arise, right? Like a lot of enterprise software, it's like that, like SAP is like that, when you spent $100 million implementing SAP, there's a good chance that you're not leaving SAP. Right? So there's definitely some element of like switching cost and lock in, for sure. But I think for consumer businesses, it's rare to have that. Like, it's very rare, even the best subscription companies don't have, like the consumer doesn't have some incredibly high switching cost to switch from like this supplement to this one. Sure. It's not like you've the best thing you could go for is like you have some high version of loyalty. So I mean, service can matter a lot for keeping around. For

William Harris  21:45  

sure. Absolutely. Absolutely. And I'd say that's, that's one of the things that I really appreciate about some of the places that I've shopped at where their service, maybe their price is even a little bit higher. Yep, their service is so fantastic that I don't care. Yes, the service was worth it to me. Yes. 100%.

Matt Bertulli  22:02  

Yeah, I'm that person, right? I will. I don't I care less about the price of something, and I care more about the amount of brain damage, I'm gonna have to have to like deal with the company.

William Harris  22:14  

Absolutely. Um, something else you mentioned. Last one on the CEO stuff before we move on is, as a CEO, there are three things on your mind. One, row sales to reduce costs, three, mitigate risks. This is something you said on Twitter as well. Yep. Why those three things. Everything

Matt Bertulli  22:32  

boils up to those three things. Like I don't care what else somebody thinks they're doing in a company, maybe you can justify saying like there's another activity that will grow shareholder value, like there might be a fourth thing? Absolutely everything, every activity of business will roll up to one of those three, everything it does, whether you're working on product supply chain, you're in sales, you're in marketing, like finance, I don't care what it is, you're always doing one of those three things. So it's actually just a nice filter, if you're trying to figure it like the hard part of our job. Right? When you're building companies is deciding what to do next. Like I think that is the hardest thing is like, what's the next best thing to do? And oftentimes, this simple little filter is like, well, if somebody's like, here's 10, things we could do. If all 10 of those things are in gross sales, and nothing is in mitigate risk or nothing is in reduced cost. You are likely making a misstep, right, like you're too focused on advancing not enough on defense. So I just think that like, it is always going to the right moves are often some mix of those three.

William Harris  23:47  

I think it makes sense. three legs of a stool, I mean, an old metaphor for so many things. But it's just that idea that it's yes, the end if you're just going off on one. Yep. So let's switch into acquisitions a little bit. There's a couple of things you've said that I really appreciate on this topic. And we obviously hinted at one of those up above here when we were talking. But one thing you said is that a lot of founders want to sell because of pain. Yeah. And this is one of the worst things that could possibly do. Why is this such a bad thing? Why do you Well, first of all, why do you think a lot of founders want to sell because of pain? And then why is this so bad? And what should they do instead? Just

Matt Bertulli  24:25  

mean, I think fatigue is a real thing. When you're a founder. And I like I've talked to maybe a few dozen founders looking to sell their company in the last six months. I'm looking to buy you know, I'm an acquire over the long haul. And oftentimes, like when you spend enough time with them, I started to notice this pattern. I'm like, it's you know, they've been at it five plus years, sometimes longer. It's not doing what they want it to do. They've got something else they want to do. There's a bunch of ways that that pain shows up. Right. But it's not hard to suss out. Like, what's the motivation for selling the business? And a lot of companies that especially in consumer, a lot of the businesses that want to sell tend to be smaller, and they tend to not be as old. Like, they're probably at that five year mark. It's like the seven year itch in marriage. Right? It's like, there's just, I think it's a real thing. I think founder fatigue starts to set in between five and seven years. And that most, I think, in consumer right now, too, we have a lot of people who have started consumer businesses that are that are almost like tourists to the industry there, they're likely not going to be here a long time they want to jump over to AI now, they probably have a crypto when that was out. And they're only in consumer, because like it had a moment where it was, it was hot, right? Venture dollars. So I just see a ton of this in the space, I think it'll shake out, I think the tourists will leave. But it's not just a consumer thing, either. I think the founder fatigue thing is more often, I believe, it's actually like, more often than not the reason the founder wants to sell than it is like, okay, the business is at a great spot. You know, I like it's perfect to sell now that all buyers want the ideal business, like the Oh, everybody wants that. They want the ladder. You know, truth is most companies for sale, the person just wants out.

William Harris  26:32

Yeah, I think it's interesting, too, that you called out that idea of, you know, wanting to sell versus needing to sell and finding that right time. You talked about the seven year itch. It reminds me of something Justin mares said, Yeah, I think he actually wrote a book called traction to different traction. But it talks a lot about what a lot of businesses don't even actually hit that traction until about five years in and so they are getting an edge five years in and you're like, I'm kind of done. It might be that you're just literally at that cusp are those five thought year five through seven are the rough patch years that you have to get through. And when you can break through there's there's a ceiling though, that you're up against that you have to push through some of that pain, and a lot of people just maybe don't have the grit push through that. Yeah,

Matt Bertulli  27:22  

I mean, do that. 100% like the so here's the other thing. I understand the argument that, that. So Shopify is probably the biggest proponent of this, right? It's like, they want to help people create and start companies. I understand the altruism behind that statement, like buying those statements, right is like, you know, arm the rebels, make it easy for everybody to do it. The flip side of that is I don't know if everybody should be a business owner, like very fair, that when you've been in this game long enough, and maybe this is just like, I'm getting old, I've got more gray hair, and I'm just getting chromazone. Most people I meet that own companies, especially the ones that want to get out there just they shouldn't be business owners, that they should not be there. Right. And I don't know which end of that spectrum is more true right now that we need to make it easy for people to start companies. Or on the other end of that spectrum is most people shouldn't start companies. I actually I don't know, I'm not smart enough and don't have enough data to have an opinion there. I I'm a little jaded for the folks that are really pushing that everybody should be able to start a business and we want everybody start a business because those people tend to have financial incentive for wanting people to start like Shopify wants 10 million Shopify stores. Let's just all cut the crap and be honest about that. Yeah, that's fine. You know, they're a public company they want to grow. I'm not knocking that. But like, look through the lens of like, everybody should be an entrepreneur. It's like no crap. You want Shopify stores? I just don't know, if it's the right thing for society. Yeah. So I don't have a strong opinion. I just again, I'm curious. I'm asking the question,

William Harris  29:10  

or for that individual person. And in all fairness, like you said, it's like, I'm not smart enough to know the answer there where that line is, but I have seen a lot of people who were successful in spite of themselves. And oftentimes, I would say, even in my own stuff, if I knew how hard it would actually be, I maybe wouldn't have started this or this or this, right. And it's like, you break through those ceilings, you say, Okay, I'm glad that I did. But you would have you would have run into some situations and I'd say a lot of people do and in situations where you almost have to go into it a little bit naive and say, I'm gonna do this because I absolutely want to do this. Yeah,

Matt Bertulli  29:46  

naivete, and some masochism goes a long way. And yeah, look, I think so the flip side and I was like, the part of me that wants it to be easier and easier to build companies is like, it's cool. The year that entrepreneurs shaped the world and that, like free market capitalism is largely responsible for everything good in our lives, right? Like it advances society. And I'm a big believer in that, like, I am a free market capitalist through and through. So I can absolutely take the side of this, which is, you know, the more entrepreneurs, the more likely we get more surface area for better society and progress. I won't argue that. I do. However, in I guess, like where I am in life. I do see a lot of folks that have gone down this path that are now in it and saying, like, I don't want to be here, right? Like, I just don't do

William Harris  30:40  

this. Yep. So let's talk about on the acquisition side of things, you mentioned that there are two ways that acquirers are looking at your business offensively defensively, and you break that down for me a little bit more about like, what an offensive defensive, yes, like,

Matt Bertulli  31:01  

you don't see it as much in consumer. So this is like this may not be super relevant to consumer, but it does happen. So you don't see the defense part. Like your companies, I know of companies who have been acquired and then shut down. Straight up, they got bought by a very large company who just didn't want them to exist anymore. I know that, like, I have friends who have been those acquisitions, that within 12 months, they were shut down, because it was better for the incumbent, just just like killer. So in consumer that tends to be less of a thing, because most consumer companies acquired some amount of it is like there's brand value. And then more most amount of it is just like financial performance. Most most acquisitions are offensive, they are about like a creative financial gain to the acquire those defensive acquisitions, though, like they happen, and if you are a non consumer entrepreneur, like sometimes that's actually an interesting way to think about positioning your business is like, you're gonna piss off an incumbent. And then incumbent either wants to own you to capture the value of you eating their lunch, or they want to own you because they want the option of throttling you or shutting you off. Like, not as common. But I think anybody's saying that that's like, silly and what a waste of money is just never they'd haven't played the game long enough. Right? They haven't talked to enough founders who've had their businesses acquired and shut down. Yeah.

William Harris  32:33

So like you said, to your point, it's less common in product based businesses. Oh, yeah.

Matt Bertulli  32:40  

It's super unclear. I don't even know of an example in a I can't think of

William Harris  32:43  

one either. Maybe, maybe something like at the level of Apple would potentially buy something that's, you know, disruptive in their space. But

Matt Bertulli  32:51  

are they want IP, right? They want to exact competition, like that's what I mean by defense. It's like, they may they may want it to exist, but they want to own it. And they just don't want their competitors to get their hands on it. So they're playing defense with the acquisition as opposed to like, I want to own this because I want to expand the market. Right?

William Harris  33:07  

Yeah. In in the DTC side of things. What have you seen to be some of the bigger reasons? Let's say that you are running a DTC business $10 million a year and you're wanting to look to be acquired? Your books are great, like you've done everything, right. What are the ways that you would say that they should start positioning themselves that acquirers would be looking at their business in product based businesses,

Matt Bertulli  33:32  

a $10 million a year DTC, like privately if that's your primary distribution channel, most of your acquires are going to be broker like wholesalers, so wholesalers, in this case, like, let's just I'm calling them wholesalers, most of those are gonna be private equity guys. They want to buy you low and flip you for higher and that's why I call them wholesalers. They're like literally the middlemen of the industry, right to a terminal buyer, which is a strategic or an IPO. So, the way a business that size gets acquired as multiple people, you know, to dream of anything other is, is an improbable dream. So like, a strategic, like strategic acquisitions? Yes, they happen. But they typically happen for larger companies. Most of the acquisitions that we hear about as an industry and that you see announced on Twitter or whatever in the news, they're usually private equity. in Beauty, you might have like, even bigger, like it depends on the category like beauty has like very big buyers, like terminal buyers of brands, that once you get to certain size and scale and growth rate, they just scoop you up and they roll you up. Right. Most people that are listening to this show and most people I talk to and listen to our show are not that your buyers are private equity buyer. It's a pure financial buyer who is like they want to see a growth rate they want to see an EBITA they want to see But even beyond the beta, what they want to see is a reasonable growth rate that's consistent and stable, and they want to see growing gross margin. So like your contribution dollars, your gross, it's like it is an expandable thing is they want to see that.

William Harris  35:15  

Yep. To put it in terms for DTC folks, a lot of what's happening here is let's just even say bundling to a point, right? So we bundled products on the website, it helps things. Same thing happens here. They, the investor says I could buy this company, this company, this company, bundle these together, sell it for a higher multiple to a more strategic buyer. And that's kind of where you're going through the broker, they're coming in saying, I'm going to put this together. Now it's an actual real thing that

Matt Bertulli  35:41

a wholesaler man, like private equity to is their great buyer, like they're very savvy. These are like some of the best capital allocators in this modern economy. At least the ones I know and deal with like, they're very, very good. So I don't see private, I actually see private equity as a great buyer of a business like high probability of a transaction happening, they typically got access to lots of capital and debt to do it. A lot of PE guys have rinsed and repeated the same formula over and over and over again, like when I sold my first company in 2018, I sold it to a PE group who had a 20 year track record of buying companies like ours, rolling them up and then selling them again. And you know, and that's ultimately why we did the deal we did because we thought, like, instead of saying like, let's go get more money, it was I had a high confidence in their ability to take us make us better and sell it again. So I took a lot of cash off the table, and I kept a piece of the new thing. And then when they sold it again, I got a phone call like years later saying, Hey, we seven we at we multiplied your money by 700%. And I'm like you did exactly what you said you would do? Yeah, we're better at this than I was. So I'm a fan of private equity as a as a as a buyer. For most founders. I think it's the right way to look at it. Yeah,

William Harris  37:04  

I'm right there with you. We work with a lot of private equity groups, we do a lot of the buy and sell side analytics for DTC brands that are looking at being purchased. And so they have a system, they know what they're doing. They have a team in place. They've done this repeatedly. Yep. It's a great situation for a lot of people totally. Um, let's transition into advertising. There's a couple of things you said that I like there. One was you said, and this is maybe a trigger alert for people who are in advertising. You've never clicked on an ad and purchased something. Never, never? Well,

Matt Bertulli  37:38  

I guess like the context. There's a social ad. I'm sure I clicked on a Google ad because I was like in a rush. But actually try not to click on Google ads, because like as a guy who's paid for a lot of them. I hate it when I Google a brand. And somebody clicks like, I don't want you to click on my brand ad. So I try not to do that in Google. Little Google karma there. But social advertising. I don't trust it. Just because I haven't clicked on shirts influenced my purchasing. But I would say that, like, the vast majority of the things I buy are because I've had a recommendation from somebody else. Yeah.

William Harris  38:14  

So I'm with you. And here's the thing, I we run advertising this way. I don't know that I can actually remember the last time I clicked on a social ad and purchase something. Now I know what happens, like we track click through conversions on all of our clients, right? They know this. So then the question then is, if this is true for you, it's true for me, it's likely true for other people. Is advertising pointless? Or what do you think?

Matt Bertulli  38:39  

No, of course not. I'm a big I'm a huge spender on advertising. I believe in it. I do however, I just I'm just you know, Man, I hate dogma. I hate it all. I hate like that. Which is funny, because that of itself is a piece of dogma. It's like, but I just don't like absolutes. Yeah, because they tend to not hold up to reality in most cases, right? So for me, the ad thing is more about like, it's probably more to do with my age. Like I'm in my 40s I'm a I'm a bridge generation so like I was born analog and kind of grew up mostly digital. Most of my shopping happens offline. Right? I'm a higher net worth person. Which means even more of my shopping happens offline. I just don't buy a lot of stuff. I think that's the other like I don't buy a lot not a bit like I'm a good consumer in the total dollar amount I spend but I'm not a good consumer in the total transaction amount I I consume right there with you. So because of that it's like most social advertising is just not targeting me. Facebook's trying to trying really hard to sew a show me cuts clothing like they are really by cuts great cover like founders amazing but I never have I'm just not an I'm, I don't buy that way. Like, I go to a store. And that's where I get my clothes. So, yeah, it's just I happen to be one of those people. And I believe there's a lot of me where most of and honestly, like, if this is breaking someone's brain, they are they just don't know the data, like 85% of transactions happen offline. In consumer offline. Yep. So yeah, it's not totally inconceivable that is a significant amount of the population that just doesn't click on ads on Facebook. Yep, this totally, it's a reasonable thing to say.

William Harris  40:38  

It is it is. But it's, I appreciate it. Because it's a very honest thing to say that I don't think it's said very often in our space. But I'm right there with you. That's why I liked it. In similar to you, I consider myself to be a good consumer in terms of like total dollar amount and things. But I'm not somebody who jumps on the bandwagon of things very easily or quickly. Just because part of it is maybe there's the jadedness of I know what went into creating that ad to make you think that you absolutely need to buy this. And so there's part of me that is like, well, I'm pretty sure that I can actually see through part of that. And the other part is just to your point, I'm more interested in, you know, what people are actually saying who who have used this. That said, to your point, I guarantee have been influenced by ads, there are a lot of ads that I'm sure I think that's a thing to make sure that we're keeping track of where it's like, you know, we optimize towards click through rates on purchases for ads. And the reason for that, I believe, is because it creates a it makes the algorithm work harder at finding the ones that are likely to click right. Those view throughs still happen. And I think being able to understand how that's being impacted by your business, in things that are less easily attributed is still important. And one of the ways we do that is with geo holdout tests, I think that's still one of the Oh,

Matt Bertulli  41:52  

yeah, I'm a huge fan of a holdout, like for sure. I'm a big fan of Local Marketing, Local advertising. Because like, really word of mouth is what we're all chasing. and word of mouth happens offline. It doesn't happen on as much as like, the social networks want to tell us that? It's like, no, no, this it happens in chat. And that happen? No, it doesn't. It happens when you're at somebody's house, like the majority of the purchasing power in America, at least, is still in the two older generations. It's Boomers and Gen X, that's the majority. Some of it, a good chunk of it now is in millennials and very little purchasing power at the present moment is with Gen Z. And the other very little like as a percentage basis. So when you if you like, just sit down and talk to your parents and ask them how they shop, they got all the money. And unlike my older friends who are in their 50s, they also got all the money. And I look at them and I'm like me, none of you. Like none of you have any consumer brands, not like DTC brands. And the ones that you do have are because somebody recommended them. It's not because you clicked an ad. So it is funny like I the reason I tweeted that was like I spent this is just where I'm a nerd as I went through our house, right? My wife and I were like we were looking at like, Okay, what do we own? So we looked at like clothing kitchen, like Office kid. And I was like, I was trying to make it sort of like a note of like, what What brands do we buy from? Where does most of our share of wallet go? And then how did we find out about these products? And we started looking through all of our clothing. And I'm like right now like I'm wearing jeans from monton bow. Right, shout it out. 100 great entrepreneur, great brand. That's a DTC brand. I bought them because I'm in a chat group with him. Didn't shop with him before that. I'm sure I saw an ad. But I didn't remember. Right. But it's a great products. It's not knocking the product. And it's not knocking the people who run ads for him. It's just why I own it now. And I don't actually know if I would own the product. If I didn't. It wasn't like him. And I him and I were chatting. And he's like, just try it out. And he sent me a couple pairs and I'm like great now I'll buy more like this is a good product. Yeah. Right. So most things that it's like no one so like, I'm one person, my wife was one person. But dude, like, I have a big enough social network. And I always like to ask people like, what's the latest thing that you bought that you saw on the internet? I just I always ask that question to my friends. Answers are hilarious. And it just I almost do it at a masochism because it makes me feel awful. I'm like, I've been in this business for 1516 years selling things on the internet. And the number of people that tell me they buy things on the internet is so low. It's heartbreaking. Yeah. So, yeah, I'm one of them.

William Harris  44:51  

I'm right there with you. One of the other things you sent that I appreciated was that there's a Hart ads related lesson that you learned recently, about not all channels hear the same level of trust. And I agree with you. But I gotta know what happened to inspire that tweet.

Matt Bertulli  45:11  

Oh, Lomi dude, like, man, there's such an old business. It's been around two and a half years, like been in market not even two years yet. That has been incredible diff incredibly difficult product to advertise on meta. And there's a lot of context to that new category. Older customer. But what we found is like, and television, TVs nice for that product. And I started when it became when I realized how hard it was to advertise that product on meta. I started looking around my network to see like, Who else has a hard time with this? Who else in my network has built companies in consumer not on meta, and then why? And you start to, like, there starts to be patterns that form right? Like, I spent a lot of time on Twitter and Twitter's a bit of a meta echo chamber. And like everybody's Izaak fashion and a metal fan. And of course, like it's an amazing ad platform, like, I spend a weird amount of money there too. But, you know, the more people I found that sell 250 plus year olds, the more brands and companies I found that spend almost no money on meta. And could they make it work? I mean, maybe, but their businesses are incredibly profitable, nine figures plus, like they just there's no reason for them to turn around and be like, well, I guess I'll throw out what's working. So as I started to scratch around, I started to notice patterns and like, where do they advertise? Television, radio, podcasts, like all of these things started to bubble up TV, mainly in TV gets a bad rap on Twitter, because it's not trackable, blah, blah, blah.

William Harris  47:01  

Compare them as if you do I was geo hold out? Pretty good idea.

Matt Bertulli  47:04

I know. Yeah. So I just I started, it's my own thesis. I don't know if there's any reality to it. But I look at what other companies are when when a user is on a medium digesting content. And that that medium has advertising. Right, the other types of ads in it. Again, this one it makes sense to me will influence the perception of yours. So in a Facebook feed or an Instagram feed or Tik Tok Good God talk about the cesspool the internet, like in a tick tock feed, if most of the content that they see is hot garbage, and you all of a sudden show up as an amazing product. It's hard for me to get my head around how that doesn't color the user's perception of that ad. Yeah. Whereas you run a television ad and it's like, the NFL playoffs or MLB, or it's the Food Network or HGTV or pick one, right? And the thing that they saw before your ad was like Ford, or p&g, Huggies, like things that people know and trust and have for a lot or Amazon. And then there's your spot. I I don't know how somebody could reasonably argue with me that that doesn't have that would have no impact on the person's perception of your business. So yes, I think I believe strongly that the medium, every medium of advertising has a different trust rating. And I think that there's some color to add there and context around the age of the person viewing it said again, I'm in my 40s my parents think everything on Facebook is a scam. Sure. And I have sat in their neighborhood and Phoenix. They live in a golf like a golf community as you do, and that's what they do. They play golf with all the old people. And I've talked to dozens and dozens and they all believe that everything they see on Facebook is a complete scam. Like across. So I just started to like it again. It's just pattern recognition, and you talk to enough people and you're like, man, you know, this is what I even asked Shawn this on our pod like, you know, what percentage of commerce Do we believe is actually influenced by Facebook ads? I know what percentage all DTC brands spend on Facebook. All we hear about on Twitter conversations, it's like how much money do you spend on eBay for 70 80%? Don't spend any money anywhere else. It's a waste of time until you've mastered Facebook that is the current dogma and DTC. But what I don't know I want to is what percentage of total commerce offline and online is influenced by Facebook ads? And I bet you we would all be pretty depressed at the number. Because much of our value and self worth is tied up in it.

William Harris  50:11  

Totally. I don't know that I've seen a study like that. I think this is a credible study that I really hope somebody takes up to put together the study of even just the trust factor of the different ad platforms, which one has like this higher trust rating, broken down by age, demographics, things like that? I think it would be a wildly interesting study. Yeah, man,

Matt Bertulli  50:31  

I think it's yeah, totally, yeah, broken down by age would be the one I would want to see. Right? Like, what I see on this versus what I see on a television versus what I hear on a radio, or what somebody tells me, really, all of those things have a different impact on my perception of the thing.

William Harris  50:47  

Yeah, and I can say, anecdotally, we don't have a whole lot of companies that are running TV, but we do have a couple, the one that runs is an insane amount of TV, that are also pretty much targeting people that are 50 Plus, like you said, and we cannot catch up to have losses running the TV spots. We don't do you know, traditional TV buys. And we can't catch them. Like they still spend more on TV and crush it there. And we're doing very well on the digital side. But every year, we cannot catch up to what they're doing their looks outperform.

Matt Bertulli  51:20  

And there's no question that like, you know, Facebook share of advertising, what, like, what is that number? I think Facebook's got? I don't wait, it's like they account for like 10% of us digital ad spend? Yep. Think about that. 10%, of digital ad spend in the US is Facebook. That's like a quick Google search. I don't know how much if that's accurate or not. Maybe it's like, I don't know, more. So Google and Facebook have like some big Google's got a huge percentage of digital ad revenue. Then there's Facebook, then there's Amazon. And then you look at like total advertising, that's just advertising and then you look at like marketing. It Facebook's just not that big. Even though it's really important to all of us DTC brands. So I think a lot of that has to do with age and demo, I think a lot of it has to do and that that to me immediately becomes a trust thing is that the older you are, the less you trust digital, the more you trust analog. The younger you are, so like long term digital becomes more and more trustworthy, I think. Although I don't know, man, like, again, I go on tick tock, and I'm just like, how does anybody trust anything they see on this platform?

William Harris  52:39  

Sure. Yeah, I look like crap. It's wild. It is. Yeah, it is very different. And I'm, I'm right there behind you. I turned 40 later this year. So we're in a similar situation. I will say, as an advertiser the channel, I think, I do think that Facebook tends to outperform most of the other digital social channels so far. Yep. I think that that is a demographic that can sway my opinion on that boards tick tock for certain demographics. I think that there's also the content that you're watching, like you were saying, with TV, in the digital world, I would say that's why I sometimes see some really strong performance on YouTube. Because oftentimes, when you came to YouTube, you came to watch a little bit of a longer length thing. That was maybe higher quality production, there was more trust, even in the thing that you came to watch versus, like you said, scrolling through garbage after garbage after garbage. And so I'd say that we do see some strong results on YouTube, depending on what it is. And I think that that may have something to do with the trust there. Yeah, man, I

Matt Bertulli  53:45

mean, we're talking about is like, a broken down version of the product market fit thing. You know, the product is easy to understand, it's what you sell the market piece, I think it's too often simplified into the customer. So like, Do you have a product that customers want, but really what product market fit means is you have you have a customer and a distribution channel to reach that customer. And ideally, you have multiple distribution channels to reach that profile of that customer. And I think in D to C, it's more often than not the default is Facebook. Rightly so not arguing that. But there's a lot of product, a lot of product categories that are consumer, where Facebook is not the ideal place to go to market, even though you have product customer fit. To get the market, you need to figure out the channel and distribution and I think we would all be shocked at how many don't work on Facebook. Yeah,

William Harris  54:43  

I'm right there with you. I'm gonna transition us into some operations of the short. You said this was on your operators podcast episode 38. Inventory can make or break a consumer business inventory. I agree with you. But break this down for me why inventory,

Matt Bertulli  55:03  

there's a for a consumer business, it's where most risk lies. So it could be quality issues, it could be you bought too much you bought too little, you put it in the wrong place. So like it's at the wrong distribution center for where you're selling it right now, the wrong market could be a change in duties and import fees like inventory is where most risk in a consumer business lies. So I think it's totally fair. Like what Mike and I were talking about is like, it's the place that it's unsexy. But it is where the rubber meets the road in this kind of company.

William Harris  55:43

Yeah, I see businesses who have done very well scaling up to 5 million, without any focus whatsoever on that, let's just even say, especially in apparel type companies, where inventory is more of an issue, because there's seasonality components, they bought too much of the wrong thing. Yep. And then, you know, there was actually a company that was an apparel company, I want to say they crossed the 30 million mark, and we got to be part of that ride from them from from somewhere like 5 million to 30 million. And inventory became such a big problem where, you know, they over ordered a massive amount of the wrong products under ordered on the on the wrong products. And it created a situation where they had too much inventory, that they couldn't sell that they had to sell through that they discounted that discounting then creates, you know, less people buying the stuff that you actually want and the but it turned into a very interesting thing. And there's very little that we can advertise to the business,

Matt Bertulli  56:39  

which can impact your banking agreements and covenants, like, right, so much behind building consumer businesses that have to do with the product and supply chain. That is like life or death. And it's, yeah, it's just, I'm happy we talked about it, I actually want to like, I want to go even deeper on this, it's like and bring on other people and how they think about supply chain and inventory because it doesn't get spoken about enough. Advertising takes over the bulk share of the conversation in consumer. Obviously, like distribution is important. But it is the place where like, man, if you're going to make a mistake is going to kill you, it's probably going to be there. It's always it's the slowest. I think that's the thing that like, when you're if you're new to consumer, the thing that the slowest moving thing in your business, and DTC is this is the physical thing. Like that's what you ship. It's what you make and what you ship. So from the point where you place a Pio to when you get a thing to sell, you are dealing in months, right? Whereas every other action, you take in the business, turn this add on launch this email, send this SMS, ask this influencer, all that crap is hour by hour. So like time unit, months, time, unit minutes, you cannot react as fast with inventory. So you need to be more precise and more calculated,

William Harris  58:11  

and align the inventory with the advertising. The other thing that we ran into for brand one time was silos and the inventory. The advertising team weren't talking to each other at all, of course, and you know, the marketing team says, Hey, our goal is to double or whatever it was, what we did year over year, the inventory team had only ordered 50% more inventory. Yes. So this isn't going to happen. And that ad budget that you've set as a marketing team is going to be wasted now, because you actually can't reach the the revenue goal that you set because you don't have the product to make that happen when

Matt Bertulli  58:46  

your revenue goal should be actually backed out of it. Too often than not growth and revenue targets are based on what is possible. Yeah, not what is reasonable. And what is reasonable is the inventory and the finance piece, which is like, what is the amount of growth that we believe we can attain for a reasonable amount of risk. And that reasonable amount of risk is what changes brand to brand industry to industry founder to founder age of company. But super, super important that that is a constant conversation in your business.

William Harris  59:23  

Yeah, yeah, I completely agree. And I like that. You also talked about building a high performance team, there are four levers. What do you think? Let's just even say if we dial back the four levels to just one, what are two, what are the top things that you think need to happen in a DTC business to build a team that gets into perform at a high level?

Matt Bertulli  59:51  

The context of DDC look the biggest thing with everything teams trust are Anybody who's done it can back that up. There's definitely books written on it like Patrick Lencioni is a good one, like five dysfunctions of a team, and they're just a great book. So I think that there's no such thing as a high performance team without trust first, you can hire the very best people that you can get nobody's I don't think it's possible to hire the best person. That's weird math. And just as you know, so like, what it comes down to is like, you need to build a team that you can trust to execute to plan. And that like that everything back said that like culture and fit and humble, hungry, humble, hungry, smart, like all those things, but like, to me, it's just trust. And I've watched it like, even when, when I don't trust somebody, it really impacts the performance of myself and that person, because there's no trust. So I think it's the thing that you should think about most, when you're building a team.

William Harris  1:01:02  

Let's say that you are coming into a business, and you're trying to help them grow. And you see that trust is maybe eroded. Yeah, what are the best ways to handle that? Is it replacement is worth through? It? Is sorry,

Matt Bertulli  1:01:17  

best I'm gonna go with best means fastest, fastest, or at least you can. You can rebuild trust, you can like work on that stuff long term, but it takes time. It's very hard. Yeah. You know, it's more often than not what I'm telling people is like, Look, you just have the wrong people in the wrong seats. That's just like the sad reality of it. I got a guy right now that I've been coaching advising for three years now. And like, he's got a couple people in his company that they need to go. They've gotten him so far, like where they are, but the business has outgrown the person. And because of that, he's like, I just can't trust them to do their job anymore. Like he's doubting all the work output of these two people. And they're in two different functions of the business. And I'm like, Look, I get it. They've been here a while, but like, the company outgrew them and they didn't keep up, and they didn't grow with the business. And that eroded trust and like to rebuild it means that those people would need to grow to a level that that founder is like, I now trust them again. And I'm like, that's just unlikely man. You should just go hire somebody who's been at the party before. So it happens it's not a the people side of businesses messy right, but like it is important part. And it might sound heartless what I'm saying. But like, it's true. And it's it's common.

William Harris  1:02:39  

While it can sound heartless, I'd say having gone through situations of firing people, things like that. And that is it's the hardest thing that I've done as an entrepreneur is the people side of the business. Yeah. It can feel heartless, maybe on that one to one relationship. But allowing that to continue in the company is heartless towards every other person impacted by it the whole rest of the team, your own family, their family members, your customers. It is it is the heartless thing. It let's say it's the Cutlass thing

Matt Bertulli  1:03:12  

that Yeah, yeah, your job is to take care of the whole, not the one right now if that means yourself too. But yeah, that's a big part of the job is to look at the entire the whole, that's your job. Right.

William Harris  1:03:23  

Um, we are getting close on some of the time here. And so I have a couple of other things I want to do. I've never done this with anybody on here before. You're one of the first people I've interviewed that I feel is actually deep into the DTC Twitter space, love it or hate it for what it's worth. And so I just wanted to do some DTC rapid fire questions here. These are things that if you guys are listening, and you're not involved in the DD C's Twitter space, maybe that's good for you. There are some heated arguments that can happen from time to time, over absolutely ridiculous things. So I'm just going to ask you the hot button topics, cost gaps for against.

Matt Bertulli  1:04:04

Oh, right. Every answer is going to be depends. I'm gonna do I'm actually for them. I think they're, they're a great tool in the belt. Yeah.

William Harris  1:04:14

Yep. There's a lot of great that you can do with that. Yep. Attribution was a big one attribution. What are your thoughts?

Matt Bertulli  1:04:22  

I got to, I think having a third party tool to help you validate what you're seeing in platform is usually not a bad thing can be useful. But ultimately, if you're spending money on advertising, the only thing you should care about is what the platform sees, because the only thing they can optimize on so Facebook can't see your data and third party tool. Doesn't matter how good it looks. Facebook can't see it, therefore, it's not optimizing on it.

William Harris  1:04:47

Or touch grass.

Matt Bertulli  1:04:51

I don't even know what that started. It's just the idea of like, get off Twitter on the weekend or do something fun again. I'm old so like what the weekend was around, I'm skiing or mountain biking and I have an eight year old daughter, I like to spend time with her. So I think the touch grass thing was like everybody just needs to chill out and go have a life. That's not, you know, Twitter,

William Harris  1:05:13  

instead of arguing about attribution on sunk

Matt Bertulli  1:05:16  

cost gas and

William Harris  1:05:19  

yeah, last one ugly ads for against, oh,

Matt Bertulli  1:05:23

I'm broadly against, I don't like the what we've called them. Right. I'm against that term. I'm for I'm for a great advertising. Like, a great ad is a great ad no matter how it looks. But I think this like ugly ads thing is like, we're shooting for the wrong thing. And that as marketers, we should aspire to a lot more than an ugly ad. That's my old man talking here.

William Harris  1:05:56  

That's fair. There are good ads that are ugly, bad ads that are ugly, there are good ads that are not ugly, beautiful, that are high, highly produced. And there are bad ads that are highly produced. Just

Matt Bertulli  1:06:06  

make great, great ads. Yeah, you know, I just yeah, I'm, I think where I'm at with this, like the broad ad creative space right now is it all looks the same and talks, the same quacks the same? And it's just yeah, it's a lot of the same. And I think there's a reason for that. It's like, to a degree, it works. But it's also behind the statement that marketers ruin everything. Right? It's like, we take something that works, and then we pervert it and use it and over abuse it and it's like, we ride the crap out of it, put it away. And like that's, I just think that like, great marketing is different, not better. It's not like, I believe in that statement to my core. I think the very best marketers produce unique work, right? The greatest example, for a young brand. Modern would be liquid death. They do Totally agree. It's legendary, great creative, that's different. There. And I don't know the business that Well, I don't know the financials. I know that they've grown very fast. And they don't make ugly ads. And they, they just they make great marketing. It's great creative. So like, I would love to see all of DTC take up this challenge of like, let's make really great ads, like things that make people be like, I remember that. Yeah, you know, like we should aspire to a an ad that is worthy of a Super Bowl level of spend. Hmm, I think the DC space has been like, I can't spend more than $5,000 on an ad, therefore, I'm only going to spend 50 bucks making it because that's what the algorithm wants. What an aspiration as a marketer.

William Harris  1:07:55

I like what you're saying. I agree. I want to see something that makes me go wow, that was absolutely amazing. It the thing that I think about sometimes would be even print ads. Like that was an advertising format that you'd like you see it in a magazine. And that was like, beautiful reward sometimes, but the imagery that went into it, you're just like, wow,

Matt Bertulli  1:08:15

what are my best resources for ad inspiration? I go to magazine racks. Yes. Look at the covers. And that's like, that's what I go to for copy and and getting attention. So yeah, get off the internet man. Go back to the touch grass thing just like get outside. And, you know, like I buy I buy magazines. I have like, I've talked about it on the pod but like, huge fan of Monaco. I just got this latest issue. I just yeah, I'm looking for like design and creative inspiration. And like, people say Louis Vuitton doesn't advertise right. But like that's, that's a great ad.

William Harris  1:08:48  

Yeah. Right. So very little words. There's no such thing literally obsessed. There's no I'm literally obsessed. Little Words.

Matt Bertulli  1:08:58  

Yep, I know.

William Harris  1:09:02

Okay, so final segment is all about who is Matt virtually getting to know the personal side of you? This does not have to do anything whatsoever with the e-commerce side of stuff. But let's talk about childhood. What was your childhood like? And how is that maybe impacted who you are today?

Matt Bertulli  1:09:20

Yeah, man, um, my pre normal childhood, like, great family, super lucky to be born where I was born, who I was born into. I grew up in a retail family, my mom, my whole whole side, her parents. They were all business owners, entrepreneurs, right? Like, I grew up in the back rooms, retail stores. So like, I've just kind of always been in this space, like just selling things, marketing things. I love Congress man. Like I grew up in a family that like, we just found our livelihood was commerce. So because of that, I'm just like, I'm a student of it. And I've just I like it like it's my hobby, I really like it. When I travel, that's what I pay attention to. Guys, I read books on it, like I just, I'm a student of it. And I think that commerce is like, is a is an art form that we don't appreciate it as such anymore. It's become far too transactional. It's like a major part of culture. So like my childhood was, childhood was very formative to like what I do today. But it was also super boring, like, middle middle class family, you know, my parents play golf. There's nothing fancy about it. I ride mountain bikes and ski and, you know, there's nothing about me that's like, ooh, that's intriguing. It's like, no, no, not at all.

William Harris  1:10:41  

That's good, though. There's something to be said for vanilla. In fact, vanilla happens to be one of my absolutely favorite flavors of ice cream. My wife thinks I'm nuts. But I'm like, in the subtlety of a really good vanilla. Yep. Amazing. Yeah,

Matt Bertulli  1:10:55

that's probably why I like when I when I talk about marketing. It's like, I like things that stand out just because like, I doubt,

William Harris  1:11:02

sure. So speaking of things that stand out, though, you know, you guys, Jay Z is one of your investors, basically. Right. Have you met Jay Z? And is there any kind of a story that goes along with meeting Jay Z? Yeah, I

Matt Bertulli  1:11:17

definitely have. You know, Marcy, venture partners. So Jay Z, Jay Brown, Larry Marcus, the three partners there. They were early investor in Pela Case. They came in just after I did. Right. So I've spent a decent amount of time with those guys. And he's a savvy man. Like, it's funny, I would say like, one of the things I always say like, they're all three of them are different, right? So like, Jay Z and Jay Brown, are from my perception of it as like, they're so freakin savvy, with anything to do with like culture in America. Like they've got such a strong grasp of it. It's scary. And you see that right away? You know, like, every conversation I've had, that that's on display with them. So which is why like, when you look at their fund, they fund like they're in consumer, they care a lot about where's culture going. So, yeah, like, even though I was the first time I met Jay Z, was at one of their, like, an A, they do an annual event, right. And I remember walking in to the event, and he knew who I was right away. Wow, that's cool. Right? Like, I went up myself when he's like, Oh, you're the Canadian guy. And, and that caught me off guard. I'm like, Yeah, man. So it's like, it just ended automatically, like it level set. I'm like, This guy is he's, he's in it. He's paying attention. Yeah, you know, he knows what they're invested in. At least that's my perception of it. I could be wrong. He might, you know, who knows? Right? But I've got a lot of respect for what they're trying to do. And I will say, like, I they've taught me I've just in a short time I've spent with them. Like, I've learned a lot about like, influencer, like large scale, like celebrity influencer, like how to think about it. Like, I've actually brought, like, you know, what about Pela or Lomi partnering up with this celebrity, and I've literally had them sit there and it's like Jay Brown and be like, now they're terrible. That won't work. And then he'll tell me like, the does a person they're fine. He's like, What you give me the characteristics like this is what you want from a fan base and following and let me show you what what it looks like when it clicks. Like why doesn't Ryan Reynolds work or Rihanna work with what they do, but like, somebody else will just completely fail. Their understanding of that is just so freakin cool. Because that's a world I don't know. And don't follow and like have very little interest in except as a marketer. Right? Yeah. So

William Harris  1:14:11  

it's interesting though, like you said the the idea of like certain celebrities clicking and others not I can remember we ran ads for a coat company called Central or beautiful coats. Buena Center was the creator there JLo but you know, we will be spotted wearing her coat and it's like this. Megan Markel wears her coat and all of a sudden you can't see anything else because it just soars. You have to charge and you think and this is wild that certain celebrities have very little blip there and other celebrities just completely crushed in here. And there's not like a rhyme or reason necessarily. It's not like I I couldn't look at this and say, this one's gonna work. This one's not but it's TJ brown Can

Matt Bertulli  1:14:49

I think they I mean, that's the thing. Like that's their business though. Right? That yeah, I realized early on and like part of what attracted us as as a brand and as founders to them as invest yours was that that is their business and that they've got an expertise that we don't write. And that's kind of what you want when you have investors is like you want people around you that are smarter than you and the things that you're not. So that world of influence, right? Is I'm still like a neophyte in it. They're clearly masters of it, they've made their whole living on it. And yeah, I think when you look at like, certain celebrities or certain creators, and we're seeing it now with like, this new generation of creator on Tik Tok, like, you've got people who have 100 million plus followers that can't sell more than 5000 of something that says a lot. Right? And, and it might just be saying that they haven't found it creator Product Market Fit yet. That could be it. Or it could just be that their audience is built on. Not a lot. There's not a lot of substance, you know, maybe they're overexposed, so they promote too much stuff, therefore, nothing works. But yeah, but then on even on the flip side, you do have the, the Rihanna in the in the Kardashians of the world where everything they touch seems to like, just rip and write. You know, I think there's a lot to learn from them. Or like, what Jason and hex Klein have done with Gordon Ramsay was like, such perfect product. Celebrity Fit, like beautifully executed.

William Harris  1:16:27  

Yeah, totally agree. I don't know if you know this. But the the name up arrow that I have here for the podcast is based on Knuth up arrow notation, which is a mathematical term. Have you ever heard of that before? No. So if I, well, you talked about being nerdy. I'm a nerd as well. So when you're trying to make a number that is massively big, you're going beyond what exponentiation can do for you, you get into Knuth up arrow notation. And what the reason why I picked that is because I like this idea of not just growing your business to this massive degree, but like everything in your life, how do you up arrow your relationships? How do you up arrow, your health? How do you arrow, just you know who you are? I understand that you have a list of principles that you live by, you have upheld your life in this way. What are these principles? Some of them, all of them, whatever you want to share with that too

Matt Bertulli  1:17:26  

many to list to like go through, I actually keep a notion doc, I'll pull it up. And I'll give you a few. Yeah, you know what it is, man? It's like, it's things I collect over time. Right. So like, the first one on my list is, it's like, a lot of them are on business, but they all apply to life. But like, my first one is always accountability is the is the currency of autonomy. You know, so like, Be accountable, and you'll get more freedom. Like if you don't like being micromanaged, to be more accountable, really. Do the unscalable. Like I just I've seen this time and time again, in my career that like doing things that others don't want to do, because they don't look scalable often leads you to finding opportunity, because your competition will ignore it because it looks stupid and unscalable. I think, you know, scale your thinking by scaling your writing has been a big one for me.

William Harris  1:18:25  

Because it was like how you? Yeah, right, like, right,

Matt Bertulli  1:18:30

I got a lot that. I would say like they shape how I think that shape how I act. You know, one of my favorites lately is movements don't start with stopping. So like, for our companies, you know, we're trying to have positive impact in the world. We're not just trying to like, like, I think it was a Henry Ford thing, right? That if like, the sole purpose of a business is to like, make money, that that business has no soul or some version of that. So, you know, for us with Pela and Lomi we do have bigger ambitions that are around impact and which means like we're trying to create movements. And oftentimes what we run into is like, in the world of climate, at least, everything has been about stopping. So like don't fly, don't do this. Canceled that, like all of it. And I keep thinking that that just led me to this whole like movements don't start with stopping thing, because how are we supposed to move the world forward, if the only thing we're ever telling somebody to do is don't. It just feels completely at odds with what we're trying to achieve? Man I probably have like 30 or 40 and I reread these and I check them on the regular and they're often like inspiration for thinking, you know if I've got a problem in the business or in life, I will refer back to like these principles. Strong position loosely held us One that I'm constantly going back to because like, I don't want to be a stubborn mule just for the sake of being stubborn. You know, and like, I might have a belief right now that next year could be wrong. I don't know. So they're valid. It's, I think, like, when you read something, oftentimes what happens is I'll read something, and I'll take it, I'll stick it on the list, because I'm like, it had an impact on me when I read it. And I'd like to revisit and reread it later. Yeah,

William Harris  1:20:24

I love it. It's beautiful. It reminds me a little bit even of, you know, just you're talking about one of those one of those principles that you read was about, I'm gonna butcher it, but like movements don't start with stopping. Yep. Right. And what we've done in the idea of what you're saying, with Henry Ford there about businesses not having sold, the sole profit point is just money at Elumynt, that our company, our mission statement is to amplify joy through profitable business growth. And it's exactly that same concept of what you just said, where there are going to be like, the businesses goal is obviously to grow companies profitably. Like that's, that's the business of what we're doing. But we could do that in a way that is completely soulless, that's cancerous to society, like we could do in a very bad ways. And the reality is, there are going to be times where we don't succeed necessarily, in that goal, there are gonna be times where things just don't work out. Things shut down, Academy shut down. But we can still amplify joy, we can make sure that yeah, we did what we said we're going to do, and we could do it in such a way that we take care of our employees, our employees take good care of our customers. And we amplify joy through that method. And I think that that's where like you said, it's like there's a there's a thing that we can do and I like that verb of like amplify it is a it is not stopping something. It is a starting something. Absolutely. You might not want to do the joyful thing, because it's maybe hard. You might want to react in a negative way when a customer is frustrated with you. But But take that step to be active to amplify joy.

Matt Bertulli  1:21:58  

Yep. 100% man

William Harris  1:22:02  

we are we are at time. If people want to follow you work with you in some way. What is the best way for them to get in touch stay in touch? Follow

Matt Bertulli  1:22:12  

Twitter. You can find me @mbertulli Operators Podcast. We're everywhere. YouTube, Spotify, Apple, all that stuff. Or just go to You can contact me that way. Perfect. I'm easy to find. I'm not.

William Harris  1:22:19  

I agree with that. And we'll link I'm sure some of these things in the in the show notes too. Matt, I really appreciate you coming on here. Sharing your time sharing your wisdom. It's been a lot of fun.

Matt Bertulli  1:22:38  

Super fun, man. This has been good. I like it. Thank

William Harris  1:22:42  

you, everyone for listening. Have a great day.

Outro 1:22:45

Thanks for listening to the Up Arrow Podcast with William Harris. We'll see you again next time and be sure to click Subscribe to get future episodes.

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