Building A $50 Million Business with Nose Strips Ep 448

Summary Notes


In a detailed exploration of brand and product development, the speakers, including the host and guests, discuss the importance of creating a product that meets immediate needs while also fostering a customer's journey towards personal growth. They use the example of a hypothetical nose strip product to illustrate how high margins, recurring purchases, and personal branding can drive a successful business. The host emphasizes the potential for a product that not only improves breathing but also serves as a daily reminder of personal goals, utilizing motivational words printed on the strips. They also outline a marketing strategy targeting various demographics and leveraging influencer partnerships to scale the business. The conversation concludes with reflections on the broader implications of brand loyalty and identity, suggesting that customers stay with brands that align with the person they aspire to become.

Summary Notes

Transformation and the Customer Journey

  • Customers require a solution to their immediate problem, but long-term engagement depends on a broader journey.
  • The concept of a "journey of becoming" is highlighted as an ongoing process that doesn't have an endpoint.
  • This approach can create lasting customer relationships.

"We have multiple transformations have to occur. We can solve the acute problem of what they're coming for today. But once we solve that problem, they're going to leave unless we have a broader journey that they're going to be on. And some of the best journeys are the journeys of becoming because they never end."

The quote emphasizes the need for businesses to offer more than a one-time solution. By providing an ongoing journey of personal growth or transformation, businesses can retain customers indefinitely.

Business and Wealth Perspectives

  • Business is perceived as a game by the wealthiest individuals.
  • The podcast aims to share lessons learned in building a successful business portfolio.
  • The goal is to help others grow their businesses and potentially collaborate in reaching significant financial milestones.

"The wealthiest people in the world see business as a game."

This quote reflects the mindset of successful entrepreneurs who treat business as a competitive and strategic challenge.

"This podcast, the game, is my attempt at documenting the lessons I've learned on my way to building into a billion dollar portfolio."

The speaker indicates the podcast serves as a platform to share strategic insights from their experience in building a highly valuable business.

Product Selection Strategy

  • Choosing a product to sell based on cost, margin, and customer retention potential.
  • Nostrips are highlighted for their low manufacturing cost, high selling price, and recurring usage.
  • The importance of associating products with daily habits rather than willpower-dependent actions.

"If I were to build a physical products brand, I probably would do a nostrip."

This quote introduces the speaker's hypothetical product choice, emphasizing the strategic reasons behind selecting a nostrip.

"You can sell them for 100 times that price if it costs you two cent and you can sell it for a buck, you're making huge margins on the actual thing."

The speaker highlights the high-profit margin potential of nostrips due to their low manufacturing cost and high selling price.

"You can improve how someone breathes, they're going to buy it again and again and again."

The recurring nature of the product's benefits is underscored, indicating a steady demand and repeat purchases.

"You don't have to remember to do it."

The speaker points out the advantage of products that integrate seamlessly into daily routines without requiring additional effort or willpower from the consumer.

"Every girl wants to look pretty and not have to work out versus having to get the willpower to work out, et cetera."

This quote draws a comparison between beauty products and fitness products, suggesting that products requiring less effort are more appealing to consumers.

Product Differentiation and Branding

  • Differentiation through product quality and branding elements.
  • The idea of incorporating motivational words into the product design for daily subconscious reinforcement.
  • Using personal experience and dissatisfaction with existing brands to inform product improvements.

"Flip side, you can have fitness apparel, which you can wear even if you don't work out, because then you feel like you're somebody who works out, so you actually get the status without having to do the work."

The speaker discusses the concept of "status arbitrage," where a product provides the perceived benefits without the associated effort.

"I would put, like, volume or persist or endure across the bridge of the nose, and I would have it spelled backwards so that in the mirror someone could see it and they could see it every day, and it would remind people of a word that they're trying to focus on for a season."

This quote describes a unique branding strategy that involves embedding motivational words into the product to provide daily inspiration to the user.

"Having a single word on the wall affected performance from the team, even if it was just huge."

The speaker shares an observation on the impact of visual cues on performance, suggesting that a single, powerful word can motivate and improve outcomes.

"I would want my face to be the walking billboard for my eyes. So every time I looked in the mirror, I'd be reminded of this thing, and I would want that to be like, the different flavors of the nose strips would be the words that people are working on."

The speaker envisions a personal branding approach where the product serves as a constant reminder of personal goals or values, enhancing its appeal and effectiveness.

Preference for Disposable Products

  • Discusses the convenience of disposable products over reusable ones.
  • Highlights the problem of losing reusable items and the inconvenience it causes.

"I've seen the ones that are like, I've used the ones that are like pieces that go with it. Not a huge fan because I lose."

This quote expresses a preference for disposable products due to the speaker's tendency to lose reusable ones.

Importance of Product Stickiness

  • Emphasizes the need for a product to adhere well to different skin types.
  • Describes the necessity for the product to work on both non-oily and oily surfaces.

"And by far the biggest thing that would have to work is it has to stick. It has to stick all the way through. So it has to work on non oily surfaces and oily surfaces alike, because people have different nose whatevers."

The quote stresses that for a product to be successful, it must reliably stick to the skin, regardless of skin type.

Concept of a Physical Product with High Margins

  • The speaker is considering selling a physical product with high gross margins.
  • They envision creating a unique brand with additional benefits to the consumer.

"I have really high gross margins. It's really sticky. I would have a unique brand that was built around it, and I would have ancillary benefits, like the words that are beneficial to the person outside of just the strip."

This quote outlines the speaker's business strategy for a physical product, focusing on profitability, brand uniqueness, and added value for consumers.

Mental Benefits of the Product

  • Discusses the long-term mental benefits of the product through daily reminders.
  • The product would serve as a subconscious cue for personal improvement.

"Not only do they have the immediate benefit of breathing better, but they also have the long term mental benefit of the thing that they are trying to work on. Being reminded of that every day, every moment, hundreds of times a day."

The speaker believes that the product could offer mental benefits by constantly reminding the user of their personal goals.

Financial Projections and Pricing Strategy

  • Projects potential earnings based on the selling price and manufacturing costs.
  • Discusses the importance of price testing and creating various package options for upselling.
  • Calculates customer acquisition, retention, and churn to estimate monthly revenue.

"So if I just did my own promotion, if I get, let's say 10,000 people a month would go to a page... That means that every month I would sign up 500 and then I'd lose 10%... So I would be making $80,000 a month. So a million dollars a year in profit from the no strips."

This quote provides a detailed financial projection of the potential earnings from the product based on various business metrics like traffic, conversion rate, churn, and cost of goods.

Customization as a Unique Selling Point

  • Proposes offering customization options for the product at a premium price.
  • Suggests this feature as a competitive advantage in the market.

"So what I would really want to do is build the capacity to make the words easy to print on there so we could have people put their own custom word in. So you can choose from one of my five words, but if you want to put your own word in, it's $30."

The quote highlights a unique selling proposition of allowing customers to customize the product, potentially increasing its perceived value and market differentiation.

Business Model Innovation

  • Developing a unique manufacturing capability that allows for on-demand customization can significantly increase product value.
  • Offering customers the ability to choose custom words for products creates a personalized experience.
  • An automated system that receives customer text responses and fulfills orders enhances efficiency and customer satisfaction.
  • High enterprise value can be achieved through a business model that leverages customization and automation.

"But if you develop a manufacturing capacity that can, on demand, create the word that someone wants, you can literally two x, three x sometimes the price of the thing, because it's a unique thing that other people have and the value is there for people."

This quote emphasizes the importance of unique manufacturing capabilities that enable on-demand customization, which can lead to higher pricing and increased value for customers.

Influencer Marketing Strategy

  • Collaborating with influencers can augment the business's reach and credibility.
  • Offering influencers a significant revenue share incentivizes them to promote the product.
  • Influencers can contribute to business growth by tapping into their communities and driving sales.
  • A successful influencer campaign can multiply a business's revenue and expand its market presence.

"And I would probably ship the nostrips with two or three variations of influencers that I thought were words that their communities dug."

This quote suggests using influencer marketing by shipping products that resonate with the influencers' communities, thus leveraging their reach and influence.

Financial Projections and Valuation

  • High gross margins allow for generous partnerships with influencers and potential for reinvestment.
  • Even with shared revenue, the business model can yield substantial profits.
  • A business with high gross margins, recurring revenue, and a competitive moat can command a premium valuation.
  • The enterprise value of such a business could be substantial based on EBITDA and top-line revenue.

"So now we're probably looking at a three or $4 million EBITDA business that is recurring, that is not dependent on one single face, that has very high gross margins so that they can go into new channels, that has a unique and competitive moat, that allows it to have a premium pricing, which I didn't even factor in."

This quote outlines the potential financial success of the business model, highlighting recurring revenue, independence from a single influencer, and the ability to enter new markets due to high gross margins and a competitive moat.

Branding and Market Positioning

  • Targeting the entrepreneurial community as an initial market due to accessibility and willingness to pay a premium.
  • Positioning the brand around personal development and the aspiration to embody certain character traits.
  • The brand would be inspirational and inclusive, appealing to a diverse audience with varying personal goals.
  • Focusing on universal themes such as patience and forgiveness to connect with a broad customer base.

"And so I think it could be a much wider brand if you focus on the deficiencies that people want to fill."

This quote suggests that by concentrating on common personal development goals, the brand can have a broader appeal and cater to a wide range of customers, thereby enhancing its market potential.

Engagement and Community Building

  • The business is engaging with its audience through social media platforms like LinkedIn.
  • Encouraging listeners to connect and interact with the business strengthens community ties.
  • Tagging and sharing posts expands the network and fosters a sense of belonging among followers.

"So send me a connection request, a note letting me know that you listen to the show and I will accept it."

This quote invites listeners to actively engage with the business on LinkedIn, promoting community building and direct interaction with the audience.

Branding and Product Identity

  • The importance of a brand name that resonates with customers and aligns with the product's purpose.
  • Branding should focus on the problem being solved and the aspirational identity of the customer, not the founder or the company.
  • A successful brand makes customers feel better about themselves, which is a powerful motivator for purchase and loyalty.
  • The concept of a "wedge product" that introduces customers to the brand promise.

"Like better nose strips or like, be better be better. No strips. And then something that's short and simple that people could understand and share." "Because you don't want it to be about mosy, right? You don't want it to be about you. You don't want it to be about the founder, you want it to be about the prospect and more specifically about the problem that we're solving and the person that they want to become and the promises that we're fulfilling."

The quotes emphasize the need for a brand name that is easy to understand and share, and that the branding should focus on the customer's problem and aspirational identity rather than the company or its founder.

Customer Experience and Loyalty

  • Brands should offer an initial product or service that attracts customers, but also provide additional value that retains them.
  • The initial offering is a gateway to a deeper relationship with the brand, often tied to personal growth or community.
  • Brands across various industries can use this strategy, as seen in fitness, dating, and other sectors.
  • The concept of "coming for one thing and staying for something else" is a powerful customer retention tool.

"They buy us for the breathing, they stay for the betterment, they stay for the person they're going to become." "People come for one thing and they stay for something else."

These quotes highlight the dual nature of customer attraction and retention strategies, where the initial product serves an immediate need, but the long-term value and identity associated with the brand create loyalty.

Storytelling and Moral Lessons

  • The story of "The garlic and the ham" illustrates the principle of wrapping what people need in what they want.
  • Effective storytelling in marketing can convey important lessons about customer needs and desires.
  • The story serves as a metaphor for the customer journey and the importance of addressing both immediate and long-term needs.

"The garlic and the ham. He said, there's this little boy and he really wants a dog... And so the moral of the story is that you have to give people what they want in order to give them what they need."

The story is used to convey the lesson that customers are initially attracted by what they want, but they will stay if they receive what they truly need wrapped in an appealing package.

The Customer Journey and Transformation

  • The customer journey should include multiple transformations and address both acute and long-term problems.
  • Brands that facilitate a journey of becoming have the potential for a lasting relationship with customers.
  • Customers support brands that reflect their desired identity and values, which in turn reinforces their loyalty.
  • The concept of purchasing as a reflection of personal identity and beliefs.

"We have, multiple transformations have to occur... And some of the best journeys are the journeys of becoming, because they never end." "And so when they pay for the products that they have, they're really buying into the identity they want to associate with and want to be."

These quotes discuss the ongoing nature of the customer journey, which should evolve and adapt to the customer's needs and aspirations. They also touch on the idea that customers buy products as a way to express and reinforce their identity.

Brand Strategy and Application

  • When building a brand, it is crucial to consider how the brand and product will align with the customer's identity and ongoing journey.
  • This strategy applies to both physical products and services.
  • The ultimate goal is to create a brand that customers believe in and want to continuously support.

"And so when we're building brands, if I'm thinking through that and applying to physical products, applying to service, et cetera, that's what we want to build."

This quote summarizes the overall strategy for brand building, which is to create a brand that resonates with customers on a deeper level, beyond the initial product or service offering.

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