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Ask Lumi: Looking Back on 100 Episodes – Well Made E100

November 20, 2019 · RSS · Apple Podcasts

Wow. We made it. Here we are at the hundredth episode of Well Made! To ring in the triple digits, we asked for your questions. In this episode, Stephan and Lumi co-founder Jesse Genet are answering them with producer, Katelan Cunningham, as moderator. 

“Ninety percent of the innovation that we're going to see over the next 10 years is going to come from backing into how we send products to someone in the mail in the most efficient way possible.”

Here are the questions answered on the show:

(3:00) Jareau Wadé asks, How has doing the show while also operating the business gone for you? Challenges? Is worth it?

(8:42) Emily Singer asks, Which guest surprised you and/or impressed you most and why? And Leanne Abad asks, What’s been the most pleasantly unexpected benefit to come from running Well Made?

(14:10) Casey Armstrong asks, If you could only re-interview one guest, who would it be and why?

(16:35) Emily Singer asks, How do you think the direct-to-consumer landscape has changed since you started Well Made?

(23:28) Charlie Carlisle asks, Social media advertising has gotten both more expensive and more competitive in the past two years. What digital or offline channels do you think will be particularly impactful on sales in the next two years?

(31:15) Eric Chu asks, Given the rise of DTC brands, what's one thing that most get wrong with packaging when they're first starting out?

(39:44) Steve Havill asks, What do you suggest for a small companies looking for shipping and packaging solutions? 

(45:05) Heliotropical asks, How can packaging support a cradle-to-cradle manufacturing cycle that eliminates packaging waste going into a landfill, groundwater, the ocean, etc. In other words, shouldn't Amazon et al retrieve packaging/shipping cartons like soft drink makers once retrieved deposit bottles?

(50:46) Ken Tomita asks, What are the pros and cons of making packaging overseas or domestic? How do companies save money on shipping through more intelligent packaging design? What is a ballpark acceptable average for packages lost or damaged in transit? 

(1:07:01) Charlie Carlisle asks, How are more mature startups in ecommerce dealing with fulfillment choices and relationships? (i.e. in-housing, multi-site 3PL, centralized single 3PL, etc.)

(1:12:29) Baptiste Wiel asks, Any international expansions in the pipe?

(1:13:36) Oscar Diaz asks, What do you guys think has been your biggest mistake so far, and what did you do to turn things around and course correct the trajectory?

(1:19:57) Nick Hallam asks, Would love to hear you talk about hiring and growing the business. How did you go about hiring for roles you didn’t know you needed?

Full transcript below. 

Mentioned in this episode: 

Stephan Ango: Welcome to the hundredth episode of Well Made. Oh my God. We have two lovely guests today here in the studio in LA. Jesse, my cofounder is here.

Jesse Genet: Hello.

Stephan: Hello. And Katelan. Katelan making her debut appearance on episode 100. Katelan's been behind the scenes for the entire time booking guests, editing a few episodes in the early days. How many episodes did you have?

Katelan Cunningham: It was just five actually.

Stephan: Really? For some reason I thought it was 30 or something like that.

Katelan: It felt much more traumatic then that.

Jesse: It felt like 95, yeah.

Stephan: For the listeners at home it's Friday night. We just wrapped up our all hands meeting. We've got our cocktails in hand except for Katelan, keeping it dry.

Jesse: Someone needs to hold down the fort.

Stephan: We requested through the Twitter sphere and the internet to get some questions from people to do a little bit of a Q&A, a little bit of a state of the union on Well Made. The brands that we've showcased, the experts that we've talked to. Got a lot of questions and so Katelan is going to be our moderator/keeping us on track, bringing in the questions. And I'm so excited for everyone who is listening at home to get a chance to meet Katelan through the airwaves.

Jesse: This is my third time on. You've done two other episodes together, but in many ways I feel like this is almost, it's appropriate for you and Katelan to be on. It's almost a celebration of Katelan who's been the editorial director at Lumi for many moons now.

Stephan: Four years.

Jesse: That's four moon.

Katelan: Four moons.

Stephan: Isn't moon like a moon cycle?

Jesse: You can Google why people say that.

Stephan: Doesn't that have like 12 times 4 moons?

Katelan: 38 moons.

Jesse: But it's almost celebration of you two and I think that's really exciting because Katelan is intimately aware of all the different guests we've had on and everything else.

Stephan: Number one hardest guest to book Jesse Genet.

Jesse: That's not true. Now I sit across from Katelan and next to you. We're like in one little like desk pod together. It's true that I'm a floater in the office.

Stephan: You're hard to track down. Jesse and I haven't looked too much at the questions.

Jesse: I haven't seen any of them. I haven't read any of them.

Stephan: I quickly looked at them, but I didn't have time to think of any answers really. So, shoot Katelan.

Katelan: So I think I'll start with, we kinda got all different kinds of questions. I think we'll start with ones that are relating to the podcast itself.

Stephan: Oh, meta.

Katelan: So we had a question come in through Twitter from Jero Waddick.

Stephan: Jero used to work at Pinterest.

Katelan: Oh, perfect.

Jesse: What is Jero? I have to say.

Katelan: So he is in growth and marketing and he said he's considering doing a podcast for the company that he worked for. How has doing this show while also operating the business gone for you? Challenges? Is it worth it?

Stephan: I will also throw out there that I think for all of these meta questions we can throw in shipping things as well because I think, Jesse is the fabulous host of our YouTube show. I have a face for podcasts. Jesse handles the YouTube show. Jesse's the one who's been on Shark Tank and all the video footage. So I think we can kind of adapt it to both. I'm curious, how has it been for you with shipping things?

Jesse: Well, this is where I feel like it is sort of meta to have Katelan on because I'm like how's it been for you? Here Katelan is on a Friday night with us at your apartment and then on Sunday Katelan and I will be filming unboxing things for YouTube. So hopefully that's a quick answer to say that it takes quite a bit of balancing, like some spinning plates of schedules to pull it off. It is true that both Stephan and I have like full and then over full work schedules and it requires quite a bit of flexibility from our team and ourselves to kind of find the time. My trick to actually getting it done is that I like doing it. So I think that this is the thing that Stephan and I are sneaky sneaksters in the sense that we do things that we like doing at work sometimes as a trick to actually make sure we keep doing them. And so like, I really enjoy the videos. There's been days, and Katelan can attest this where I've like not feeling it. I mean, there've been times where I look like death warmed over and I try to say something in an excited way and they're just like, try it again. It was fine but you just looked like not fun at all. So I think that it can be a challenge when you're stressed out to also do content and be interesting or have a good ideas or look fun. But the fact that we actually do really enjoy it and we've picked things like, I really enjoy the videos and stuff and really enjoys the podcasts that keep us going.

Stephan: Yeah, that is my answer as well.

Jesse: We are aligned.

Stephan: No, but I was doing another podcast before Well Made and it was very similar.

Jesse: It was called Edge Made. There's always the "made" concept. Recycling.

Stephan: The secret is I would be doing this anyway. The benefit of doing it for Lumi is that, you know, we get to-

Jesse: Is that Katelan gets to help us. Wait, wait. Is it that there's a lot of experts who are like let's do this and then they're like, do it again.

Katelan: Yeah, yeah.

Stephan: Well when I was doing the podcast myself, I had to edit it, I had to book all the episodes and that was all that stuff is so annoying.

Jesse: I know. I feel like we need to turn this back on Katelan and be like, what's it like for you? But what have been some of the ups and downs of like working with two founders on content, is actually something I think people would love to know.

Katelan: Well, I mean you remember in the early days we were doing Shipping Things we would do on a weekday in the back of a warehouse, like an open warehouse where a million people were working and taking calls and microwaving their lunch and washing dishes. I'd have to tell everyone to be quiet in the middle of the day.

Jesse: You'd be like yelling at them like, "No more microwaving".

Katelan: Just give me like 10 minutes in the microwave.

Jesse: So there was the big transition to doing weekends, which the big production transition, which is batching the episodes. Whereas before we were sort of doing it piecemeal and now like for example, we're going to shoot six episodes on Sunday. And that's kind of our norm is like four to six episodes at a time. Production of Well Made hasn't changed a ton, up until we got Evan to be our editor and that was a big thing as well.

Stephan: Shout out to Evan.

Jesse: We've been filming and like do I look stressed or like you just know like, Oh this isn't a good day.

Katelan: Usually you catch yourself before I do. Whenever we did our last show you were feeling sick. So you were like we can't do this anymore. No, I don't really think so. Like you're usually way harder on yourself than I think other people would be. So that makes sense.

Stephan: I don't know if this is a question that's been asked, but people will say stuff like, how has doing content converted customers to your business or something like that.

Jesse: And we're just like, we don't know.

Stephan: Pretty much. I mean, we have anecdotal data but it's really hard to get the actual attribution stuff. Like we're doing some testing around that at the moment to try and figure out if we can connect the dots between those two things. But it's really hard because someone may have listened to an episode at some point and then they shared it with someone on their team and said like, "Oh, I heard about this thing Lumi". So it's like really hard to connect the dots sometimes. But the thing that keeps you going is that you want to do it in the first place.

Jesse: It's so aggregative. Yeah. And having so many people that you admire and having a conversation with them that isn't just a sales conversation. We work with a lot of these folks on their packaging, but having conversations with founders just about them is like really cool.

Katelan: So I'm going to kind of like pair two questions together. We have a question from Emily Singer who's a marketing manager and then we have a question from Leanne Abad who works at Ash&Erie. She is in growth. He, sorry.

Stephan: Emily by the way, she's got her own newsletter. What is it called again? Oh gosh, I should know this.

Katelan: Chips+Dips?

Stephan: Chips+Dips, yeah.

Katelan: So Emily asked which guest has surprised you the most and or impressed you? And then Leanne asked what's been the most pleasantly unexpected benefit connection thing to come from running Well Made? So I'm going to kind of combine those two because it might be the same.

Stephan: In the beginning Well Made was a container for me just in my random people that I wanted to have. So I feel like our guests have gotten less random over time.

Jesse: No offence to our early guest. Some of our early guest might be saying, well I feel really random.

Stephan: No, but those are my favorite ones and I feel like just to give the listeners some insight into how we pick the guests. There's a handful of categories, but one of the big categories is obviously founders of ecommerce businesses. That's probably the biggest category. Then we have people who are experts in their fields. Some of them are journalists, some of them are people who are experts in say sustainability, like Jeffrey Hollander or someone like that. And then we have like bucket number three, which is surprise guests.

Jesse: Give us a bucket three name.

Stephan: Well like Yacht was on the podcast. They're a band. My friend Adam Lisagor who has an awesome video production company called Sandwich Video. The people like that who come on, we tend to have conversations that go in a really interesting and random place. We had Kevin Kelly was one of our favorite guests. He is an author and futurist and thinker, almost like more of a philosopher than anything. And I like the balance of those two things because our listeners are primarily in the ecommerce world. So I want us to continue inspiring them, not just with stories from people that are similar to them, but also stories from people who can introduce a little bit of cross pollination. So with Yacht for example, we talked all about SciFi and crazy concepts and you know, maybe that kind of can spur an idea for a direct to consumer brand. So I really enjoy those. I think it's good that the ratio of those is low, but when they come in, they're some of my favorite episodes.

Jesse: What was the part two of it?

Katelan: The part two was: An unexpected benefit, connection or thing?

Stephan: I don't know how to answer that question. I'm a little bit of an introvert or a lot of an introvert, so the podcast format is really good for me because I feel like I get to express myself in a one-to-one scenario and when I go to a conference or a trade show, it can be kind of overwhelming for me. I kind of like revert to my introverted nature. So it's nice to have had conversations with people that are long form in that setting. At a conference it might be the first time I ever meet that person in real life because we did the episode over Skype and then I get to go to them and it's like I have a connection with them and that's kind of special for me.

Jesse: I think the thing that is kind of fun about the podcast is so much of business can be very transactional. You are emailing someone to ask for a favor, a business contact or referral. It's sales, it's business development, it's an event. People are speaking, there's marketing and that stuff is all like great. I mean, to the extent that we're all like all ships arise together, it's really great. And we work with a lot of these people on the podcast on business things, but there's something just really raw about like, Hey, want to have a conversation and we'll record it? And there's nothing transactional about that. It's like, sure, we promote the podcast and hopefully that has some fringe benefits for that person. But honestly we do it because we love to do it and it's just like this really non-transactional thing to include in the business that spurs dialogue. And I just think that feels really, really nice.

Katelan: Yeah. I've had calls with a couple of different companies who are like, how do you do this? Like how you run the podcast and they want to know a lot about software and the systems that we use. And I'm always like, you gotta want to talk to the person that's the main thing.

Jesse: The main thing is the talking part.

Katelan: I'm always like, you know, people like the conversational nature of the show. So if you don't want to talk to the person then it's not gonna sound like a fun conversation.

Stephan: Yeah. I mean over time, in the beginning when we were booking the show, it was every guest was like a achievement. And now we've been really lucky that a lot of people come to us and that's pretty cool. That's a big shift over the past year and a half or so that we have so many more like amazing guests that are coming to us. But that is also a challenge in its own right. Because I hate having to say no. But sometimes that no comes from, I don't instantly have like a connection to that brand or to that person or to that company and doesn't initially make me interested in having a conversation. It's not that they're not an interesting person. It's more that I know that to make the episode exciting and interesting for people, I'm going to need to be like engaged in it.

Katelan: So the next question I'm going to preface. So the question is if you could reinterview one guest, who would it be and why? And I have a few people who've had as repeat guests because we've had several. We've had Matt Alexander in couple episodes. Very far apart like episode five and episode 85 or something like that. Webb Smith, Emily from Baggu, Eva from Odd and then Jesse.

Stephan: I mean all of the above are great. Matt is a wily one because he in real life is so different than he is on the podcast. And I feel like I have not cracked him. I feel like I need to talk to him another time.

Jesse: Is the makes a good repeat guest?

Katelan: No, it's, who would you want to of the people who you haven't already repeated. That's just me adding that little end.

Stephan: I will say that I would want to have Matt again because I feel like he's a challenge.

Katelan: Over and over again.

Jesse: He's going to do five episodes in a row next. Just him and Matt.

Stephan: I want to get to the point where people get to discover his personality. Beause he's so funny in real life and it doesn't come through as much in the, in the episodes he gets very businessy. Emily is a repeat favorite and we could have her as many times as possible. She's amazing.

Katelan: Yeah, she's great.

Stephan: I don't know like some of the earliest episodes are people that I would want to have back on. Like Tobias Frere-Jones, like he is one of my heroes.

Jesse: Stephan has a lot of type heroes. This is why Stephan does the podcast.

Stephan: Well, I don't know. It's like you walk around in every single day you see his work and you don't even notice it and I find that so inspiring.

Jesse: When you say you don't even notice it. I would like to record the fact that Stephan is looking at me. Stephan definitely notices it.

Stephan: For the people who haven't listened to that episode. Tobias Frere-Jones is the most important typographers of our time. Has designed some of the most important fonts.

Jesse: I feel picked on at this point because I also do notice type. I feel like far more than just an average person walking around with their average type knowledge. But no one can eclipse your level of current noticing.

Stephan: I was surprised. I will say that he did not have a favorite Pangram. That was one of the most shocking revelations of the entire podcast.

Katelan: I remember you asking that question.

Stephan: Yeah. Okay. We're not going to go into the details of what that means.

Jesse: This really giving you insight into why Stephan is hosting my show. Yeah.

Katelan: Okay. Alright, so next question. I got another one from Emily Singer. She asks, how do you think the DTC landscape has changed since you started Well Made?

Jesse: I think that it is kind of incredible to be a fairly young startup ourselves, like sub five years and be noticing things that feel like the world is a truly, fundamentally different place than it was when we started or that it was when we started launching some of our packaging offerings three, four years ago, et cetera. And something that we see in direct to consumer is the approach angles from founders, the sort of tools that they're using, the playbook that they're using, the way that multiple companies now are aggregating multiple brands under one umbrella because they're recognizing that the skill set that's required to launch these brands is equally applicable to one brand as another oftentimes. So for instance earlier this week I was in New York City and I was with the founders of Very Great, which is like a product studio and platform. They have a brand that has like plastic free lifestyle products like cups and bowls and different things. And they have another brand that's charging devices, another brand that's dog and pet products. But like all launched with the same teams, the same teams who are doing things. I just feel like what we're seeing is that this extreme proliferation of people who are learning the science and methods of bringing products to market, challenging traditional CPG categories. And it's like just a rapid iteration and learning is incredible. So I think that watching that over the past three, four years already the playbook is getting so much stronger than it was when we started.

Stephan: Yeah, I agree the playbook is becoming clear and some of the companies that did a great job early on, like the Warby Parker's and Everlanes really established some of the basic rules and best practices. But I still think it's so early.

Jesse: It feels like we're witnessing just like the baby steps of something.

Stephan: Well, I don't know. I think for some, for some companies it feels like there's a lot more competition. So there are certain markets, like we've had a couple of different DDC paint companies for example. Or you know, dog food or all kinds of different kind of food companies and things like that, that have emerged and it feels like is it becoming overcrowded? But at the same time, I look at new categories that are still things that I buy every day or like every month in retail that haven't translated over. And when you look at the stats, still such a small fragment of the entire pie, it's still 15% to 20%.

Jesse: I think you also see an evolution in what people are worrying about who are starting these brands. Like, four years ago someone may have been worried about whether Amazon was just going to like eat their business. And it's not like someone starting a brand now is not worried about Amazon. But I do think that the playbook of how you, how you sort of brand, how you compete in a world where Amazon already exists. Like it's a little bit more fleshed out. And there's a lot of other brands you can point to that have different strategies on Amazon. Like going to Amazon, not going to Amazon. Should we go to retail?

Katelan: That one's changed a ton.

Jesse: That one's changed a ton, right? So you watch brands where three or four years ago it was like, Oh, this is an online direct to consumer rent. And that meant they were just shipping to doorsteps through carriers and that was a business model. Now it really is after like Andy Dunn's digitally native post, which was also several years ago, you watched the evolution of that where a lot of the brands that reach scale, who are DTC are now doing retail, doing a lot of like other channel type sales. And it's just the fact that they're digitally native that makes them an ecom brand in our brains. So I think you see an extreme proliferation of selling in different, looking at retail and other channels as customer acquisition because a lot of these brands started to try to get off of their Facebook spends. And so I just think like everything, it's an evolving story but it's certainly changed a ton in the past three or four years.

Stephan: For a lot of these brands that got started in the past few years. Being online was what made them different. But now as that becomes more of the norm, your differentiator has to be something that's more interesting than that. It's something about the fundamentals of your business model. Like we've talked to some interesting brands like Blue Land recently with what they're doing with eliminating water from certain products that we're buying or how you're approaching like a multichannel approach.

Jesse: I think it does. Just to dwell on that for a second, I think that does represent a phase shift where if four or five years ago you have a brand like Casper, where they're taking a category that was never online and bringing it online. Like there was no such thing as buying a mattress online, then there was such a thing. Now there's been an extreme proliferation of that, but it was just mind blowing. Like what I can like buy a mattress online that's crazy. And then you have a company like Blue Land where it's cleaning supplies. The concept of buying cleaning supplies is not crazy online. You can buy all sorts of cleaning supplies online. You can buy them from Amazon, you can buy them from really great brands like Seventh Generation or whatever. They're all online. But what Blue Line represents is now the direct to consumer is an established playbook and you know that the brand is going to ship direct to doorsteps. You can actually do the entire product development cycle for that and question everything. We do not need to have water shipping to your doorstep because it's wasteful and it's heavy. We're just going to have tablets and then you can fill the water at home. If you're not familiar with this, is blue lens business model. It's represents a phase shift of like not just squeezing a product down into a box and saying you can come to you. Although I'm not trying to say that that's not important as well. I think that's really, really radical and cool. But now to say like, let's just question what the product even is. Why do we all buy Windex or something? Let's do product development from scratch, assuming a direct to consumer business model and it really changes how you even think about product development and brands are launching that way now.

Katelan: Okay. We have a question from Charlie Carlisle from Love Your Melon. He was on the podcast. Do you want to guess what episode it was, Stephan?

Stephan: 47.

Katelan: Well, you're way off 64.

Jesse: You're bad at this. What episode is this?

Katelan: Charlie says, social media advertising has gotten both more expensive and more competitive in the past two years. What digital or offline channels do you think will be particularly impactful in sales in the next two years?

Stephan: Wow. I mean, I think you got to go creative. Really think outside the box. I think we should just start listing off all the possible things that we could imagine being good because, well actually Charlie was one of the people remember, Love Your Melon had a billboard outside of our office. When we had him on a podcast. He was explaining that some amazing things that are possible now with some of the offline abilities. Another concept that comes to mind is what Craig Elbert from Care/Of shared. He explained how marketing via printed catalogs has evolved quite a bit. And I get these mailers in the physical, in my mailbox all the time that are catalogs from people who've found me through some sort of ad tracking and start sending me physical mail. I think lob.com is how a lot of that stuff is powered. People have started doing like combo collaboration's where I will get a postcard in the mail that has five different ecommerce brands and I don't even know how. Yeah, I don't know how they all get like stacked into that thing.

Jesse: I've been on email threads like that. Email threads where founders of ecom brands. I get looped into some randomly. Are like talking about grouping up to do a promotion like that. They're like, Hey, we're all like non-competitive and maybe they're non-competitive. But we have similar audiences. Let's do physical mailings together. Let's do events together. I mean, I think that events and experiences, physical retail is becoming an outlet for bringing people together. I think that you see other interesting companies that are not ecom, but everything is converging. Like a, what comes to mind is Quilt. Quilt is bringing women together for in-person interactions. There's actually several really great companies doing things of that nature for different demographics. But like what's the separation between like Quilts, The Wing. Outdoor Voices are really great. Glossier. These things are converging into, I want to get out of my home and I want to meet like minded people and I want to experience something. Like I'm willing to do that with a group, a brand, an app, a startup. There's a convergence there. And so I think that there's some things that are interesting, because you have to inspire people to take a step outside their house unless you are trying to reach them online.

Stephan: Yeah. I mean, I think that one of the most overlooked open-ended thing in the US is just right now DTC startups are super focused on the coasts. There's so many people in the rest of the country who are not getting the same amount of attention and it really depends on what do you want to build your audience around and what are those people reading? What are those people listening to?

Jesse: It's also about empowering different groups. So like for instance, another company that comes to mind that's doing something very interesting as a growth strategy is Part & Parcel. Part & Parcel is a clothing brand for plus sized women. And the sellers are women. I'm assuming they're probably in that core demo cause they're like relating to the brand. But that's probably not a core equirement, but they are actually become the sellers. And so they are effectively starting small businesses by becoming the sellers and the theory there and I'm sure the founder could speak to it a lot better production, but maybe she'd be a great guest. But, the theory there is like this is an underserved audience like from a fashion standpoint and the person who knows a lot about it also knows other people with that need and they're a better communicator of that need than any advertising campaign. They have a network, they have a way of communicating about an authenticity that no ad campaign or no event could do. And the reason I'm thinking about that and mentioning it when you were talking about this Stephan, is that I saw them do a launch event in Alaska. Like Alaska I guess is potentially a place where there's a need for their audience. But Alaska is not something that comes to mind when you think about where a direct consumer brand would do a launch event. So I'm seeing that kind of thing too, which is like find your core audience, give them power, maybe even economic power.

Stephan: Or flip it around. Focus on the audience first. Like why are people in Alaska not being focused on and what their needs are and then think about what product that audience needs. So back into it the other way around. I think a lot of people are thinking, what do people in New York need right now?

Katelan: I think a lot of the people are the people in New York. It's not like a person in Arkansas wondering what people in New York want. It's someone who lives in New York saying, what do I want people.

Jesse: Exactly, people design for their own demographics, which is a whole other conversation.

Stephan: Well, we have had a few interesting brands like Porter Road comes to mind. I mean, I think they're designing for a coastal person, but they are based out of Kentucky. And that's like a fascinating thing. I constantly am fascinated by brands that are in companies that are being started, not on the coast. So I think there's a huge opportunity there. Another thing that comes to mind is the one that we talked about with Paul Munford from LeanLuxe. He talked about companies innovating in like building communities. So we talked about Rapha as a company doing a great job.

Jesse: That's why I mentioned Quilt.

Stephan: Yeah. I mean they've kind of like combined the aspect of retail with the aspect of community. Glossier obviously everyone kind of thinks of as a great community first brand.

Katelan: I think we're in this age of like mindful consumerism. So people are concerned about the things that they're buying and buying things that they believe in all kinds of different ways. And so it's sort of that same idea that they'd support and sport and wear that brand.

Stephan: I think everyone's kind of coming to realize that Facebook, Instagram, Twitter, that these platforms where we have this single kind of mass personalization of media is a challenge for marketing. It owns the pipe. And so how can you create your own community that is specific towards a certain topic. In the episode with Paul Munford, we talked about The Sill, they sell plants online. I have a lot of plants in my apartment. You know, I care a lot about plants. I'm always looking for advice around what kind of plants I should grow, what they like and we can know what to water. That can be the beginning of a community. And there's so many opportunities around that. There's so many different communities that could exist that right now are maybe happening through Twitter or Instagram. But if you can create some really interesting content and own that space, you can start from there as a brand.

Katelan: Okay. Now we're going to pivot to packaging. We have a question. We have a question from Eric Chu. He's an LA designer. He says: iven the rise of DTC brands, what's one thing that most get wrong with packaging when they are first starting out?

Jesse: I'll take this. The thing that I see brands get wrong is actually overdoing it a bit. I know it sounds counter intuitive, but because we sell packaging and then you'd think we would be interested in people using more. In fact, we are not really like that. We would prefer everyone to optimize and I think customers would as well. Lumi's in it for the long haul. We'd love to see waste reduction and people use packaging that's very efficient. Brands are just starting out. They tend to kind of like act as though everything they're doing is kind of a special gift. And you can have a gift mentality without actually treating your ecom packaging like a gift. And there's two problems with overdoing it. One waste meaning you overuse components like it's tissue paper with a sticker and it's all wrapped in another piece of paper and it's put in a bag and that's put in a box and then there's fancy things on top. And so it's just like actually too many components. And consumers see that as wasteful. The secondary problem with that that people don't anticipate is that it's a fulfillment problem. Your customer's experience of your brand will be how fast did it arrive. Did arrive in good shape and did I get it efficiently and getting something three days late, but wrapped in a bow. The bow doesn't help the three days late part. And the problem is that fulfillment is complicated. So you really want to make it as simple as possible to put together. So I think that's like something that I see. It's something you really have to try to fight your urges to overdo it when you're first starting a brand.

Stephan: There's so much open space in backing into your product development from the packaging. So, you know, we talked about Blue Land for example, they started with the concept of we want to reduce as much of the water as possible in this product. So their main packaging is around these little tablets and how can we put them in these sachets that go into the larger box alongside the empty bottles. And I think there's a ton of room for innovation where you think about how you're going to ship this to the consumer as the starting point for the product design as opposed to the end result of, okay, I invented this thing, now I need to ship it. I think 90% of the innovation that we're going to see, especially in the CPG over the next 10 years is going to come from backing into how do we send this to someone in the mail in the most efficient way possible and create a product that actually achieves that in the most efficient way possible

Jesse: On that subject as like a minor aside here. In the same way that it took decades for cars to stop looking like horse and buggies, it will take hopefully less time but years for packaging to stop looking like shop packaging. It's the same thing like human beings were habitual. We like to make something to make us feel like it's real and like it's safe. And for some reason, you know, people who had been riding a horse and buggies felt like cars were safer if they looked like horse and buggy. Like felt safer and felt more familiar. That is the same with shelf packaging. Like, why is a squat giant Tide bottle like make you feel like your clothes will be cleaner and like the graphic and the big thing makes you feel like my clothes are cleaner because I have this big bottle. When that bottle was designed to market at you from a retail shelf at a high level, you don't need that and effectively it will take a little bit of time to wean ourselves off of that. And it cascades from product development to designers to actual consumer behavior.

Stephan: If the basic concept is not completely something you would reinvent from scratch for ecommerce, then your product, let's say you're like selling a shoe or something like that, like maybe your shoe is not going to be designed for shipping through ecommerce. But you're thinking there's plenty of opportunities there too, but your product is the shoe. So when you are out there kind of in the early stages of your company, the packaging, like how you make it so exciting to unbox your product is not the core thing that you should be focused on. Where you should be focused on is making the best possible shoe.

Jesse: I think habits like the shoe industry though is a funny example of habits as it relates to packaging because shoe boxes are something that have existed for decades and we all have memories of like shoe boxes are where parents kept like photos or whatever. I don't know where everyone's from but that's what my parents.

Stephan: I have a lot of shoe boxes in my closet.

Jesse: Yeah, shoe boxes were in closets and like for some reason it was like a sturdy box where you're like, let me keep all of my life's momentos into this Nike box. I don't know why someone did that, but they did and they're still doing it. And but what's fascinating is everything deserves reconsideration because of that mental model that how important is shoe boxes. You still see a lot of companies making a shoe box that is like pretty and interesting, putting it into another box and then shipping it to you. But you see brands that are digitally native, like Rothy's and Allbirds start with a shoe box that is the outer shipper. That's actually like, I'm not trying to take anything away from those brands, but that's pretty basic. It's like not the most innovative thing in the world, but it takes a stretching of the mind to just be like, what if there was no second box? So I think that's a type of thinking that we see and it might feel very normal to us, like at Lumi, like watching this stuff occur. But I recognize that it takes time. It's breaking down habits.

Stephan: But I think if I were starting Ruthy's today and I was in my first six months or something like that, my focus would be to make the best possible shoe. And yeah, I would throw it into whatever the easiest thing that I can do might be. Because what I want to figure out is are people going to wear my shoe and enjoy it? Like 99% of the experience of the shoe is actually wearing it. It's not like the moment that you're unboxing it. So if you can do a great unboxing, yeah you're going way above and beyond and now the consumer is having a great experience but that's not the core for that particular product category of how you're interacting with the product day to day. So I would make sure to like think about the product first before you go into the packaging. I see you frowning, you disagree with me.

Jesse: I feel like what you said is not correct in any way. And also misguiding the audience. Because I actually think that people are looking for cues from the brands they're shopping about what the priorities are and how that brand was founded. And Ruthy's had their ecom box from day one. And I think that they needed it from day one, because it was a statement of like, we are making these shoes from recycled plastic. Our shoe box is not a double box, but it's a recycled box. It's a single component. It's very like low waste. And we are digitally native brand and all of those signals are sent. The person who receives the box appreciates that. I definitely agree with what you're saying, that to the extent that a brand doesn't nail the product, the packaging can never make up for that. But I do think that the packaging has become an extension of the product and to the extent that it actually misrepresents the brand, the brand is in trouble. So you have to take it into account.

Stephan: Don't disagree with anything you just said.

Jesse: This is why I'm the CEO.

Katelan: All right. Do we want to do the next one? Okay. I'm kinda going to kind of combine two questions. We have a question from Steve Hayville. He says: What do you suggest for small companies looking for shipping and packaging solutions? And then we have a question from Allie and she asks: How to source packaging when you're a small company. So similar questions. How do you source, you guys know all about that. How do you source packaging when you're a small company?

Stephan: Depends what you're shipping, I think. I mean it really depends.

Jesse: I have one suggestion, tape. Okay, I'm being a little facetious, but my goal in saying that is when you are a scaling company, I do think that you should put your budget on custom packaging. Two things that have a really high impact and allow you flexibility. Custom tape historically, is something we've learned at Lumi that does those things. You can spend several hundred dollars as opposed to several thousand dollars even more on custom tape. It can be beautiful. It's made with the real true production processes. You can order one to two cases. There's a lot of local vendors and places you can find online that will do that for you. And when you get an Amazon box with that gummed paper tape that has printed with Amazon prime and stuff, you can get the same stuff for your small business for several hundred dollars. Flexibility in the early days is so key. You don't want to over-invest. Another thing that is tape adjacent is custom labels and stickers that can look like tape. There's a brand doing custom labels really, really well. A brand new work with named Dwin. Dwin uses a custom label. The box I believe doesn't have any printing. It's an unbranded box. So you can buy unbranded boxes, use a custom label and it looks so classy. If you're curious what I mean, you can just go check out the box. We also did an unboxing episode so you can see more detail. Long story short, getting clever with small details like tape, like hang tags on products, like little printed pamphlets. And tape can allow you to not over-invest but to make sure you're spending your customization money appropriately when you're scaling.

Stephan: I think this relates a lot to the previous question because there's kind of two criteria that I would throw in there. One is how experienced are you as a founder if this is your first business versus you've done this a couple times before? I think the answer is slightly different. I think Jesse's answer is excellent for most companies that are like a first time founder, you want that flexibility, you want time to iterate. If you are a repeat founder and you've done this before and you know what you're doing you might approach it slightly differently. I think that it also depends on if you're a VC backed versus if you're bootstrapping. Like you might approach things differently. I think that there's an angle of flexibility and iteration and approaching it from stuff that you can get off the shelf and customize with like small amounts of tape or stickers or rubber stamps. Like you can create a really interesting and unique unboxing experience that way and focus on the product. Or if you think you have a really awesome innovation that relies on an amazing first unboxing experience and you're a slightly more advanced founder, you can approach it from that angle too. But I think that experience really does matter when you're thinking about that because it is quite challenging. Like coming up with that level two or three unboxing takes a certain amount of sophistication that at least in our experience we've found people struggle with when they're doing it for the first time. And having thought through like the supply chain and the structural engineering before, I dunno. Do you do agree, disagree, Jesse? How do you see that?

Jesse: I think giving yourself the flexibility when you're scaling of not over-investing in something that you can't store that might not last with the business. Like something that we see too often with young companies is them predicting what their customers will do. It's very hard to do. You don't know exactly what your customers are doing. What I mean by that is, maybe you are launching like let's say a vitamin company and you assume that everyone will buy one bottle and so you design and box it's beautiful for one bottle and then your average customer buys two bottles. Well now all of your one bottle boxes are completely irrelevant. And now what do you do? Do you ship everyone two different boxes? Do you put the two boxes into a bigger box? Your entire unboxing concept, which is blown. And so back to like tape stickers, keeping flexibility, doing user testing on your shipments and like what your basket size is or your typical order is before like severe in large investments into custom packaging and custom packaging engineering. That's really, really key because otherwise you can find yourself with a beautiful unboxing for an experience that no one needs because that's not how your consumers are behaving.

Katelan: Alright, moving on. This one's a little dense. Okay. It's from someone who goes by Helio Tropical on Twitter. We have no name but it's a great question. How can packaging support a cradle-to-cradle manufacturing cycle that eliminates packaging waste from going to a landfill, groundwater, ocean, etc. In other words, shouldn't Amazon at all retrieve packaging, shipping cartons like soft drink makers once achieved deposit bottles? So should all the people who shipping us all this packaging pick it up?

Stephan: I think this is an awesome question. I'm seeing a radical shift over the past, even just 12 months in the amount of conversation that's happening around packaging and how people relate to like the day to day. What I see being a challenge is that the conversation really depends on the product category. Like if you are buying milk, right? We talk about the milk man model as a concept. Milk is something is a liquid. How do you send that in the mail? How do you send that to someone when they're buying it? Jesse seems like you have an opinion.

Jesse: Well I think that what you're getting at is that I can kind of double down on is the supply chain of that product and the realities of that product dictate whether that's a reasonable strategy. So something like Rent The Runway and their garment bag that ships back to them and can make many, many, many trips is a beautiful business model. And it's a beautiful expression of what you're asking about as it relates to that brand, really taking that packaging back, taking care of it, getting it sent back out. Really reduces the amount of stuff, making it to the recycling machine, making it to the landfill. At the same time that business model makes sense. They're renting dresses out and so that product needs to make a return cycle. The thing you want to be very careful about is wanting a company to come pick packaging back up or use it in some way when that act would end up using more energy or taking up more resources then letting it go into the local system. So these are very complicated subjects and the reality of sustainability is that there's so many levers and it's like when you pull on one string, another one loosens. So it's not simple by any means, but I would say that what I'm trying to paint as a portrait of some companies using things like corrugate boxes, it truly is the most efficient thing they could do. And in fact companies that are prioritizing curbside recyclable packaging is quite efficient compared to and it's more realistic that that packaging makes it back into the stream of materials in an efficient way then a company using something that they do need to pick up or that isn't recyclable in any way. So it's a multivariate equation. I do think we'll see more people starting business models where some kind of local economy component is a part of it. Like I heard of some thing relating to plant nurseries where it's like, okay, there are already like amazing plant nurseries, so we're going to sell the output of plant nurseries. So instead of plants coming from like two distribution centers, there's plants nearby you and you're only going to see local inventory. And so like that's an example where packaging and distance is reduced because it is coming from local, even though it's sold online. I think we're going to see more of that. When you think about it logically that's very efficient as well.

Katelan: Something else that's pretty interesting is people use a lot of packaging throughout their supply chain before it even gets to the customer. And so businesses can take more responsibility recycling that hard to recycle stuff in the right way before it even gets to the customer, which is like a whole other can of worms.

Jesse: Another debunking. Thank you Katelan. Another debunking concept is people view ecommerce as just as in general as using more packaging than something that you see on a store shelf at like Target or something. When the reality is that like you feel like it's more because you have to recycle it like it comes to your house. But if you have ever seen like a shipment manual or like a guidelines manual for how what it is like to package and send things to a distribution center for traditional retailer, everything has to be packed into like three different boxes and then it's on pallets and it's all like plastic wrapped and all this crazy stuff in order to get into the distribution center. And the distribution center is throwing out and/or recycling a tremendous amount of packaging literally in the back of office, like part of the store before the product gets sat on the shelf. So the concept that your ecom packaging is more is like not just so simplistically true and that just adds the complexity.

Stephan: There has not been a comprehensive study of this yet. And we're looking every day at the news and the studies that are coming out of this industry and trying to understand it better, but even just the carbon emissions that come from you driving to the grocery store with your empty car, you know, and putting your groceries in your car and driving back. How does that contribute to the total carbon emissions of what you have purchased is quite a complicated equation to balance. And so I think that the data around that is still emerging and it's going to take another five to 10 years for us to see the total impact and how it balances out net-net.

Katelan: Okay. So we have a question from Ken Tomita. He was on the podcast.

Stephan: Grovemade founder.

Katelan: Yes. Trying to see what episode it was.

Stephan: Let me guess, 41.

Katelan: 32.

Stephan: I almost said 32.

Jesse: Stephans face was like actual shock.

Stephan: The reason why almost said 32 but then I thought that feels like it was so long ago.

Katelan: Jesse and I are skeptical. Alright, so Ken's question. He has a really stacked question. I'm going to break them down one by one. They kind of go together. They kind of don't. But they're all about packaging stuff. He wants to know about some case studies, about brands making the decision to make packaging overseas versus domestic. Saving money on shipping through intelligent packaging design. Some examples of that. And protecting products from breaking in shipping. What is a ballpark acceptable average for packages lost in transit?

Jesse: Let's start with international. Okay. So, on that question I'll share a couple high level thoughts on how to think about it. So one thing that we believe in at Lumi is you should make the product in the plant location, the facility, the actual factory where the equipment and the knowhow for producing that item exists. So, that's a landscape where some items, the production capacity is really well established in the United States, in North America. Other elements and types of products the capacity exists overseas and maybe the equipment is better. Maybe the knowhow is better. So that's a lens where like you need to order the product from a facility that can produce the product. There's a physical reality, a plant level, like where are these factories reality?The other lensing on it that is also practical is that products that are bulkier, like actually in volume are harder to buy from overseas and have it make sense both financially and economically and sustainability wise. The reasoning there is that if you buy like 10,000 polymailers for instance, fit into very small actual volume envelope, like several kind of boxes that a human being could like pick up and hold. 10,000 boxes that are kind of large might be sitting on like six or 10 different pallets. Well six or 10 different pellets, that's a whole portion of a shipping container. Whereas the 10,000 polymers is like just a shipment that can easily ship. You could even air freight some of those and it's not that crazy. So those considerations, like what is the volume that that product takes up? Where does the equipment exist to produce the product. Is the first lens on whether it makes any sense to even explore it overseas? For obvious reasons it's very kind of wasteful to produce something overseas that's really bulky, ship it across in like many different shipping containers when it could have been made nearby distribution center domestically for a very similar price. So we take all those factors into consideration, but it's not just a simple equation.

Stephan: The case where it does make sense to say buy your boxes, not domestically. We're assuming a very US centric view on this conversation. But first of all it's important to note that a lot of the paper pulp production actually for the world happens in the United States and much of the paper pulp production ends up going to China. So you might be buying a box made in China from American pulp, which is a whole complication in itself. But a case where it might make sense and you know, if you go to best buy or something and you buy a TV, it probably comes in a corrugate box that was made in China. And the reason why, even if it was made out of a portion of American paper that it makes sense to do so is that that TV was made in China. So you want to use a local factory to produce the packaging that's going to go around your product. So that's a situation where that might make sense. And if the capability to make that product that is like an electronics is happening in Chen Zen or something like that, then using the production capabilities of the box factories that are nearby Chen Zen would make sense.

Katelan: So it's distance, it's volume and then it's the capabilities you need to actually make the packaging itself.

Jesse: Yeah, I think that's a good distillation.

Stephan: Katelan bringing it together.

Katelan: Bringing it together. He also asked about money saved on shipping through more intelligent packaging design.

Jesse: One of the things that is comes into consideration is the business model itself. Like you can always take a product and try to optimize the packaging. So less weight and less volume is pretty much the playbook for optimizing the packaging and therefore the shipping costs. And the cool thing is that the more you optimize the weight away and the more you optimize the actual volume of the package, you usually save money on freight and therefore the customer benefits. And usually it's more sustainable. So assume that that's just a good idea and you should always be optimizing that for your brand. But the nuance is have you thought about everything as it relates to the way your customers order the actual business model of your company to make sure that that is optimized. That's like the meta optimization. Coming back to Blue Land for a second. The first box that you buy from Blue Land, the kit with the bottles in it, it's a box that has some volume to it and has three bottles in it. But when you receive your refills, they're these really tiny tablets and it's just a small shipper envelope with the tablets in it and it ships so efficiently, so cheaply and it takes up so little space in a mailbag in a UPS truck. And that if you're wondering what the proxy is for, whether shipping is efficient, imagine a UPS lady or man, like carting boxes down a hallway of an apartment building. It's like how many packages can they hold? How much can they fit in their truck? How many of those packages can fit in the belly of a 747 those are your answers, right? So the Blue Land tablets, so many of those packages could put in the belly of a 747 or in the mailbag of a carrier. And that is efficiency because that's reality. So reality meets efficiency when you've made your business something that's easy to transit and when something takes into account the realities of human transit.

Stephan: And Ken is a product designer as a person. So I think that in general, backing into the packaging is such an interesting design space as a whole. I know a lot of companies have done this over the past few years where they're looking at what are the volume metric tiers for UPS or USPS and looking at what the different cutoffs are, where there are, you know, opportunities for leverage there. Like if you hit that 13 ounce tier for USPS can you design something that fit within that envelope and just hits that weight limit? That's an opportunity.

Jesse: Something that we talk about a little bit on unboxing things is there's a growing number of brands that speak to the carriers on their boxes. Like they'll say cute messages about like, be careful with this one, or thanks for the heavy lifting or something kind of cute where it's like, clearly that note is for the carrier, it's for the UPS person who's delivering it to the doorstep and stuff like that. The anti example of that, and I won't name brand names, but I once saw a UPS person carrying a box and they say out loud, "I hate these boxes. I hate carrying these boxes". And it was a kind of a heavy product, but it stuck with me and I was like, this is the reality of this brand. And you don't want to run a brand where the person who delivers it to the doorstep says, I hate this because now the thing that is crazy is we build these companies. If you're a direct to consumer founder, you're starting this brand, you design the box, you put TLC into the product. But to the extent that the mechanism of getting it to the doorstep, which involves human beings involves pain for them or involves something where they're like, I hate this. You've got a problem. That's like a design problem. You have a problem because that's the package that's gonna like do the proverbial fall off the truck or you know, not make it on time or something because it is uncomfortable for that carrier. So I just think there's like some really interesting things to think through about the reality of what your packaging lives through and who lives with it along the way.

Katelan: Great. The last one he asked about was this kind of ties in: A ballpark acceptable average for packages lost in transit or damaged in transit?

Stephan: I mean, it depends on the cost of your product and the cost of your packaging and the lifetime value of your customer. Like there's so many variables at play. Like, an idea that comes to mind is we were working with a brand that was shipping chocolate in the mail. And so they're sending chocolate to someone and in the summer they send chocolate.

Jesse: Send chocolate to someone in Phoenix.

Stephan: There's a certain amount of math that needs to occur at that point, which is what are you okay with in terms of percentage of customers who are gonna be upset with the melted chocolate that arrived on their doorstep and is it worth it for you to ensure for that case?

Jesse: Oh my gosh, that's such a math problem, isn't it? Because to Stephan's point, like are you shipping cameras or chocolate? Like was the retail value, $12 or $1,200. If it's $1,200 your tolerance for having a package lost or damage is going to be very, very low. If it's $12 let's just assume it's chocolate. You might be able to be like, you know what, like I'm okay in the summer having to reship 20% of these because someone complains but I want them to feel happy.

Stephan: 20% is a little high.

Jesse: I'm being extreme. I'm just saying if you're running the camera company, it's $1,200 your tolerance is like 0% to like 1%. You want it to be this really rare case. Whereas you might accept like kind of what sounds extreme. Like I use 20% because it sounds extreme. I'm not saying 20% across the board. I'm saying 20% to like Phoenix. You're like in Phoenix in the summer, whoever is the crazy bastard who is like, I'm going to buy chocolate online today because I live in Phoenix. You know like and then you're like, you look at that order that comes in at your com shop and you're like, that crazy bastard and you're just like, fine, I didn't recognize the 20% of the time. I'm gonna have to reship that beause they get it and they're like, it's melty. I don't remember why. And you're like, because you live in Phoenix. But you don't say that. You just say something really sweet about like, Oh my gosh, some accident may have happened.

Katelan: But what do you do the next time? It's still August in Phoenix. You add a freezer pack.

Jesse: It's a great question. You do adapt. I do think that because of the proliferation of these problems, there's better insulation, there's gel packs, there's all these things that you can do to get shipments to arrive on time. Which I think Katelan, thank you for bringing that to my attention. Instead of just the futile effort of like redoing something, optimization, backed optimization, you can solve for something. I was talking to a brand recently who has a completely different set of packaging for seasons. They have one set of packaging that requires installation and one set of packaging that does not because of summer in Phoenix effectively. Because of that thing. So I do think you take a certain level of risk for customer experience. You reship a certain amount of packages and then you optimize until it gets lower and lower. So what's the acceptable level of damages? Kind of like zero like but acceptable for your business might start higher as you work your way to zero.

Stephan: We see a lot of brands over spec Packaging because they're afraid of the negative results. Like they want 100% of their packaging to arrive perfectly, but then they end up spending, you know so much more than they would have if they accepted that say like 1% of their packages are not quite right, but if you ended up spending 50% more because you want to avoid 1% of the cases, then your math is not right.

Jesse: Like there is a certain degree of like trust in the consumers reasonability that I advocate for. Like I think some brands don't trust the consumer as a reasonable person. It's like I need that us have such a low error rate that I'm going to way over spec my packaging. Because I don't want anyone to have like a technical like "bad experience". But unfortunately for that brand, sometimes that's the bad experience. Sometimes receiving this like really ginormous box. It's hard to recycle because there's so many components is the bad experience. And if that same company were to have the packaging be a reasonable spec, they would have an error rate. There would be like 5% let's just say, or 3% in a certain season that has an error rate and they'd have to reship and they have to explain to that consumer, Hey, sorry, like not everyone experiences that we're going to reship it right away. But if that really is let's say 3% that 97% of your other packaging didn't need that overspending. And so everything is intention. Just like most complicated decisions in life. Everything is intention. Over specking a package, customer upsetness over some customers receiving something wrong or melted compared to all customers receiving something that is potentially wasteful.

Stephan: And I think as entrepreneurs it takes a certain Zen mindset to be able to accept that because you want every single person to have a perfect experience. You want 100% of your people who are going to receive something in the mail to have the perfect experience. But the ROI on the math of all of that may not make sense. And it may make sense for one person, 1% of your consumers to get a not ideal experience, but you're going to be prepared for that. You're going to be ready to accommodate that case. And ultimately like net-net, it's the right decision for the population of customers that you have.

Katelan: I think a really big part of the experience because we talk about the experience and the bows and this and that and a big part of the experience is the responsibility of having to get rid of all of this stuff. Like that's a really big part of the experience as well. So going back to like what you were saying with over specking. It's like here's a pile of stuff and whether or not you're into recycling and zero waste and all that. Just having to physically take all that stuff down to wherever you throw it is real work and then have it and consider, does it go in the recycling bin? Does it go here? Where does it go? All that stuff becomes part of the experience for sure.

Jesse: Yeah, that's an excellent point, Katelan. Because people think of the unboxing experience as just like the moment that the product is lifted out of the box some of the unboxing experiences over, but it's like unboxing your proximal one thing. Unboxing your house is another. Like de-boxing your house. We should have another show called de-boxing where I show me de-boxing my house. De-boxing is like a really intense activity. My house especially, I order so much crazy stuff. Especially because of like Lumi and de-boxing is like an activity. I've made kids do it like break down boxes. Well we don't need to-- We'll do another a series called de-boxing. It's only kids just like literally breaking down boxes.

Katelan: Okay. We have another question from Charlie Carlisle from Love Your Melon. Very specific question: How are more mature like $30 million and over in revenue each year startups in ecommerce dealing with fulfillment choices and relationships? I.e., in in-housing, multisite, 3PL's, centralized, single, 3PL's, etcetera. So how are these big ecommerce companies dealing with fulfillment choices?

Stephan: Again, depends on your business model. I think what we found, and you can listen to say Function Of Beauty on the podcast, they were forced because of their business model to invest early on in their own distribution centers. Because a big part of Function Of Beauty is they want to make personalized shampoo. They want a way to send an individualized bottle to each customer, right? And so to do that effectively you have to have your own distribution. So some business models are going to necessitate you going into that earlier with other products. You don't have to do that. You know, you can build a business off of a 3PL the entire time. You don't have to build your own DCS if you are optimizing for getting squeezing out. If you're in low margin product category you might have to do it because you know, you just don't need. You just don't want a 3PL to be taking a certain cut out of your overall margin. So it depends a lot on the product category that you're in.

Jesse: I think also there's another component that I see coming into focus more. Previously it was purely easy to consider your 3PL based on costs and service level. Like they're getting things out fast enough and how much does it cost per shipment. And so you'd run quotes with those partners and you'd pick someone. There's a couple of different things that are really important. One that 3PL partnership is a marriage for your business. They have all of your inventory on hand, which really puts you in a vulnerable position as a business in that partnership because you can't just ship your customers what you need to ship them if that 3PL isn't performing. So their service level is your service level. So it's really key. So you have to take it very seriously. The component I see brands focusing more on is software. So something we think a lot about at Lumi is of course is software. We're more of a software company. As it relates to a 3PL. What are they using? Do they have their own software? Are they using a warehouse management system, a WMS that is like something off the shelf that you've heard of that can be integrated with other things? At Lumi we're thinking I lot about this like how do you monitor the inventory levels, not just of your product but of your packaging. So I think that people are choosing 3PL's based on this level of sophistication that it offers. They're scaling business, not just price and service. So I see that sophistication level of consideration amping up as well.

Katelan: Charlie's second question is, he's saying that Lumi functions on a per-order basis. While some other companies they allow bulk manufacturing, multi-month ordering, draw schedules for materials and some other things. Basically would Lumi ever consider this path forward for some of their larger customers?

Jesse: That's an excellent question. The answer is 100% yes. This is something that we're thinking a lot about, but our mental model for what Lumi would consider is: How can Lumi provide leverage to that need via software. So a lot of the partners that offer bulk production and then draw schedules, they're doing so based on some physical assets that they have. They have big warehouses, they have a fleet of trucks and they're kind of saying like, order from us and we will produce a bunch of stuff, put it in a building and you can order from it whenever you want. And that is like very actually convenience. Like we would not argue with that. It's convenient, but it isn't necessarily a software oriented solution to a very complicated problem, which is that you simply need the packaging that you need when you need it and you don't want to overstock or over store. And we witnessed that some of the solutions that big packaging companies provide are rather simplistic. They're actually kind of over-producing and over storing, because they don't have a nice tracking mechanism. And so I think that our solutions that we're working on internally are how can we balance your needs? How can we make sure that from the plants that really deserve to run the items, you get as much of that as possible directly from them. And then when you need safety stock, when you need a complicated delivery schedule, you need something just in time because you don't have storage space, you also have access to that additional storage or access that complicated delivery schedule. You'll see announcements from us in coming quarters and in 2020 about some of our solutions to those problems. But it's going to be a balance of software solution and some physical solution to make sure that we never advocate for overproduction and over storage.

Stephan: Yeah. As the person running the software side of the company. I think it's a great question and the answer is yes.

Katelan: Perfect. Okay. We have three more questions. They're very like Lumi HQ, Lumi business focused. We have one from Baptist Whiel. He just asks: Do we have any international expansions in the pipeline?

Jesse: I do think that it's good to clarify that we produce globally. We always have. So we try to service brands who are based in the US and we say have a US bank account. The reason for that is very practical, making sure that we can converse with them business wise. We actually like to visit a lot of our customers and we like to offer a certain level of service to them, make sure that we don't have language barriers with our customers. We don't have, aside from Stephan speaking French, we don't have someone on the team who speaks every single language in Europe, et cetera. So I think there's some practical realities to that, but there isn't a real reason why Lumi doesn't operate globally, aside from bandwidth. Like our team's bandwidth and just making sure our business practices can operate that way. So I think you will see us operate in other geographies, but I can't give you any specific timeline.

Katelan: Okay. We have a question from Oscar Diaz. He's a designer in London. He asks: What's been your biggest mistake so far and what did you do to turn things around and change the course of the trajectory?

Jesse: What's this person's name?

Katelan: Oscar.

Jesse: Wow. Oscar. There's just so many things I want to say to you. There's no answer. I'm one cocktail in, but not enough. What do you have to say for yourself, Stephan?

Katelan: What's been most recent one?

Stephan: I don't, it's so hard. We've made so many huge mistakes.

Jesse: It's a mistake a minute over here, Oscar. Yeah. I can't rewind.

Stephan: We can point to specific things. You know, like every major category of the business you could point to specific mistakes about like business model mistakes, hiring mistakes, you know, strategy, mistakes, what we've built. But I mean, I don't know if that's a very helpful answer. Like, I think that, I'm guessing that Oscar's question is he's trying to avoid what are things that you're seeing that might be around the corner from where I am today? And like how can I avoid them? And I think that those are things that--

Katelan: I think he's saying, how do I fix them? Not how do I avoid them?

Stephan: Oh, really?

Katelan: He said, how do you turn things around and change the course of trajectory?

Stephan: That's actually a different question.

Jesse: Let me dip in. I've been joking. But, I do feel like in every really rough or pivotal time at Lumi, it has required a sense of the only way around is through. Like I've said this before, like when I say the only way around is through just for everyone at home. I want you to realize that this scene I'm thinking of is that scene in Lion King where you know the scene, where there's a crazy craggly thorny bushes in the hyenas live in there and he's supposed to and he's like, no, I can't go in there. Simba doesn't want to go in.

Katelan: For some reason that's not a very like landmark scene in my head, but I know you're talking about.

Jesse: Okay. Simba comes upon a scene where he needs to go through the thorny bushes and-- Oh, it's the like unknown. And he's running away from home and he's like, I can't do it. But he's got to do it. And he's got to go through that and then go live the separate life so you can ultimately come back and save the pride. And so basically when I think all the darkest moments at Lumi, I'm like, the only way around is through it. You look across this vast-- It's like a bone scape. It's not a landscape. It's a bone-scape. He looks out upon a bone-scape and it's thorny and he's like this little cute Simba guy and he's like, I've got to go out there in order to come back a full grown lion to lead the pride and he doesn't know what he's left. He doesn't know what Nala goes through. That's a whole other scene. But anyway, the point is when it's the roughest moment, usually you're looking out at something that looks even rougher and you can't avoid it. You can't turn back and be like, nevermind. You have to go straight into that like gross, thorny, bramble bushes zone in order to like learn the next lesson. That is my learning.

Stephan: I mean, I think that in general, my relationship with pain has changed a lot over the past like four years.

Jesse: Have you learned to love it?

Stephan: Well, I think I've learned to accept it and I think that we have decided as a team and as co-founders, that the main thing that we're trying to do is not make the same mistakes over again. That we are generally measuring ourselves by how much we have learned and that any given period of time, so over the past month, past quarter, past year, have we learned something new. So if you're making the same mistakes over and over again, then that's a little bit of a problem. You have to investigate why it is that the same thing seems to be happening.

Jesse: Make fresh mistakes. Be Simba. Come back, save the pride.

Stephan: I think that the change in my relationship to pain has been that as long as I'm making new mistakes that I haven't made before, I'm okay with the pain. You know, I'm okay with, Oh crap. Here's one more thing that I haven't thought about before. Here's one more thing that I never thought I needed to know or I never thought that I would run into, but now that I'm here, I realize that this is what learning looks like. I'm not totally sure where you know Oscar is in his career and what he's up to at the moment. But as long as you're making new mistakes and you are adapting to those and learning and evolving from those, the pain that you're feeling in the moment of that choice that you made. And we listed a bunch of categories, like there's definitely lots of mistakes that we've made on strategy or we've hired the wrong people or we have, I don't know, a million different things as long as we're trying to avoid making that mistake again. And as long as I can look back and say with the knowledge that I had at the time that I made the decision, was I making the best choice? And most of the time, like 80% of the time I feel actually if I ask myself was I making the best choice with the information that I had at the time? The answer is usually yes. It's just that I didn't have complete information so we're always seeking to have better knowledge of what the situation is and those are the things that you'll learn as you as you get further in your career as an entrepreneur.

Katelan: We have one more question. It is from Nick Hallam. He's a product designer and strategist. He says: Would love to hear about hiring and growing the business. His specific question is how did you go about hiring for roles you didn't know you need it?

Stephan: We've had this like name your job description out there for a long time and we've hired people who evolved into a role that we didn't expect quite often.

Jesse: I think that's a better example. I would say it's not as though we ever hired for a role. We didn't know we needed. It's that we hired a person for a role that we knew we needed and then they were able to do way more than we knew we needed. This is real. Let me give a shout out to Melody on our team, a new person on our team. We knew that we needed a VP of growth who would lead our sales organization and help grow the company. That was obvious. I as a CEO is still directly overseeing our sales efforts, leading the sales team. So we knew we needed that role. We had that role posted. But melody as a person, she's a firecracker. She does more than we could have ever put into a job spec. She has more knowledge. She comes from a SAS background. She's helped us transform certain processes. She helps direct efforts on the product team. Like there's things that she knows or that come from her background that weren't in the job spec. Like we couldn't have listed those things out because we didn't know that she existed. We didn't know about Melody, we didn't know about her background. We didn't know what she would bring to the team. We just knew that we needed someone to lead the growth efforts to lead the sales organization. But when she came in to do that, she represents more know-how than we knew existed.

Stephan: That happens all the time.

Jesse: Katelan represents that. I remember I sat down the street with Katelan at a coffee shop talking about copywriting and like doing freelance like articles for Lumi because we wanted to do like some cool blog things like that was a million years ago. We did those things. But here we all are talking about the hundredth episode of Lumi, of Well Made podcast because Katelan is so brilliant. She's knows so much about storytelling and media and like, I didn't interview her for that. I didn't ask her a million questions about her thoughts on podcasts and storytelling. She just is that person and we've evolved together and she represents more than we could have interviewed someone for. And that I think is the nature of all the amazing people we get to the chance to work with because they are more than the job that we ever posted.

Stephan: And I think especially early on a startup. I support everything that Jesse said.

Jesse: The reality is that that's a brilliant thing about being able to work with cool people you respect is that they are people and they are interesting and like you can't encapsulate their skills in a job spec. The job spec was what the business needed, but then the person is like this whole other thing.

Stephan: We've also had many people who've changed their job within Lumi and I think especially in a startup and a fast growing environment. What matters more than the job description is like, is that person willing to learn? Are they willing to evolve? Are they willing to continue growing and getting better or exploring things that they feel uncomfortable with. I think one of the things that we did well was some of the values, and we actually talked about this when the one of the episodes with Baggu. I think it was the second episode with Beghou. And you can see this on any job description on the Lumi website are some of these things that we're not interested in teaching at Lumi. Not that they're unteachable, but something like curiosity is something that we test among anyone that we are looking to hire. And that value comes from the fact that because we are a startup and because you know, our processes are not set in stone, we want people to come in and be able to invent something or invent their relationship to what Lumi is or what Lumi needs in a given period of time. And that's somewhat unpredictable. You know, it's six months from now after we've hired you, the landscape of what we need may have changed. How well are you able to teach the rest of the organization what you have now discovered and are able to like understand better than anyone else in the organization? And how can you adapt yourself to like making that a valuable thing? I don't know if that answers question whatsoever.

Katelan: No, I think it's a good answer.

Stephan: Wow.

Katelan: That's the last one. We did it.

Stephan: Holy moly. 100 episodes.

Jesse: I'm hungry. Stephan doesn't have snacks. I don't know if this is an official subject, but I came in, it was right after work peckish as all get out. And I asked if Stephan had snacks and he has no snacks.

Katelan: He said he had walnuts.

Jesse: He offered walnuts. There's black molasses here for god knows what reason. He offered to make popcorn from scratch. There was one Apple. It was a sad scene. I'm still hungry.

Stephan: We're going to call it. Thank you to Jesse and Katelan for joining me on the episode. Thank you for all of you who are listening, making it through a hundred episodes.

Jesse: Thank you to both of you for doing a hundred episodes. It's a really impressive.

Stephan: What's our next milestone? 1,000 episodes?

Jesse: Alright. Goodnight and good luck.

Stephan: So if you're wondering what's next for the next hundred episodes of Well Made, I like to flip that around on you. Tell us, go to Lumi on Twitter. @lumi. tell us who you'd like to hear. We'll track them down. Katelan's here for us, so suggest those and go to iTunes. Go to Apple podcast. Put us a review. That's what keeps us going. That's what keeps the show alive. I really do appreciate the feedback. So keep it coming.


You can find this and all future episodes on iTunes, Google Play, and here on the Lumi blog. This episode was edited by Evan Goodchild.

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