00;00;06;23 - 00;00;27;10
Meagan
Hi. Welcome to Dig In the podcast brought to you by Dig Insights. Every week we interview founders, marketers and researchers, from innovative brands to learn how they're approaching their role and their category in a clever way. Welcome back to this week's episode of Dig In. My name is Meagan. This is the podcast brought to you by Dig Insights.

00;00;27;10 - 00;00;33;22
Meagan
And today I'm joined by Kyle Widrick, the founder and CEO of Win Brands Group. Kyle, how are you doing today?

00;00;33;25 - 00;00;35;17
Kyle
I'm doing great, Meagan. Great to be here.

00;00;35;24 - 00;00;52;26
Meagan
Yeah, great to have you. So excited to dive in to your background. It's fascinating. You work like a million different jobs. When you started out, you super excited to get your hands dirty and brands and now obviously you're incredibly successful.

00;00;53;01 - 00;01;11;22
Kyle
Yeah, it's a great, great introduction. So if we go all the way back, I grew up in a super small town into my dad was an entrepreneur. He was a builder. As you mentioned, we were chatting about. I did every job under the sun. I worked at McDonalds, I was mowing lawns over the summertime. I did construction, all the things.

00;01;11;24 - 00;01;35;11
Kyle
And so that continued through college wind brands and I'm running now. This is my first company. And so that I started. So I would say this is the most successful. My previous business was an agency focused on Shopify, so my last two, but focused on Shopify. And so I guess, you know, as an entrepreneur, I do think part of that is is born in you.

00;01;35;11 - 00;01;57;00
Kyle
I think part of that is having good experience that matches up with that. So my father and then I worked for a pretty crazy entrepreneur for a bunch of years at an office called Burch Creative Capital and so was Chris Burch, who at the time was married to Tory Burch and so got lucky. There was able to learn a tremendous amount from him.

00;01;57;02 - 00;02;01;02
Meagan
Why would you say it was? It was crazy just because of the growth.

00;02;01;04 - 00;02;22;21
Kyle
I mean, in that in that instance, literally every meeting that I would come out of people would say is every meeting like that. And I would say, yes, every meeting like that. He is a larger than life personality, very creative, you know, no idea. Too big. And so, you know, if you look at the Tory Burch asset, you know, he and Tory were married.

00;02;22;23 - 00;02;41;24
Kyle
He was co-founder. That business grew from zero to multi-millions within a ten year span, which was a really incredible growth story. And so I was lucky to be able to watch that. But, you know, on the spectrum of entrepreneurs, he's on the far end of a little bit out there. Sheer force.

00;02;41;26 - 00;03;05;02
Meagan
Very cool dynasty. We're going to dive into a lot around you to see today and you've been in the DTC space since sort of the early days of Shopify and you actually mentioned Shopify. When you're chatting about being an entrepreneur, how do you think the direct to consumer landscape has changed some from sort of the early days of Shopify all the way to where we are now?

00;03;05;07 - 00;03;27;09
Kyle
Yeah, it's changed a ton. So I was actually I was with Harley Finkelstein last week interviewing him. He's the current president at Shopify. He's been there the whole time. You know, one of the questions I asked him was, could you have imagined when you teamed up with Tobi that this would be, you know, today an $80 billion business and his honest answer was no.

00;03;27;12 - 00;03;52;14
Kyle
Obviously, it's hard to imagine that. But, you know, we my partner, Dylan and I, we had an agency called BDA, Commerce, and we specifically chose to partner with Shopify back in 2013, which was way before Shopify was what it is today. It wasn't even that popular then. But what we saw them doing was really democratizing access to e-commerce.

00;03;52;22 - 00;04;12;27
Kyle
And so they built a platform that allowed you to have a store, they had an app store component of that where a lot of the things that you needed to build were already built for you. And so it made it incredibly easy to plug in and scale a business without overcomplicating the website design website build. And so the same is true today.

00;04;13;00 - 00;04;34;05
Kyle
Obviously they've made tremendous advancements to the platform. I think the biggest shift, if you fast forward to today, is DTC alone used to be enough use to be able to build a great business, highly profitable DTC has gotten more challenging, it's gotten more expensive. And so I'm a big believer today in omnichannel. And so at win brands, we are focused on DTC.

00;04;34;05 - 00;04;46;29
Kyle
It's still our primary channel, but we're also building big businesses on Amazon and at wholesale retail. And so we're sold that over 10,000 doors everywhere from Walmart to Nordstrom, depending on the product in the company.

00;04;47;04 - 00;05;08;00
Meagan
And when I come back to Shopify in a second, because I've kind of like I feel like I've missed the boat on like what it is when brands is and and sort of what you do. So talk to me about how you set this up, why this is a unique model. You know why. And it's it's relevant for a lot of the direct to consumer brands or a lot of the sort of newer consumer brands that you work with.

00;05;08;02 - 00;05;35;11
Kyle
Sure. So sold the agency in 2018 and wanted to stay in the Shopify space still. So a lot of opportunity to build. And so the obvious step for me was, you know, for every Kylie Cosmetics and BMT watches, that scales from 0 to 100 million quickly. Lots of great brands don't get quite that big that fast. And so could you build a platform and an operating system to allow brands to scale as part of a portfolio?

00;05;35;13 - 00;06;03;15
Kyle
95% of that work is all work that all brands do, whether you're selling candles or rings or hats. And so build the platform and then go and build a portfolio. And so that's what I've done with Win Brands. The first brand that we bought was Home Sick. I bought that from BuzzFeed back in 2018. We then acquired Halo Silicone accessory business, then Gravity LiDAR and weighted blankets and then Love Your Melon was our last major acquisition.

00;06;03;18 - 00;06;18;28
Kyle
And so we'd like to say we'd like to think we're building the LVMH of Shopify. It's a very ambitious thing, but all brands that are category leading that customers love and then powering all of that with this shared operating system.

00;06;19;03 - 00;06;34;16
Meagan
Talk to me about the benefit for the brands. I mean, I know that there are several when it comes to acquiring those brands, like what are the sort of unique opportunities for them based off the back of the way that when brands operates?

00;06;34;22 - 00;06;58;24
Kyle
Yeah, I think the main the main thing is team. I mean, we've built an incredible team across all areas of operations. Most typically if I'm taking a general situation, I'll meet an entrepreneur or set of entrepreneurs of scale the business from, let's say 0 to 25 million of revenue. So they've done tremendously well. Most of that was DTC, and five years ago that was much easier than it is today.

00;06;58;27 - 00;07;27;26
Kyle
And so they're trying to figure out what to do and the obvious answer becomes, you know, really expanding omni channel, pushing on Amazon, pushing, pushing at retail, wholesale. The problem is each of those channels requires significant investment in resources. You need experts to run each of them. And so they end up at a crossroads. And they either have to dip deep into their pocket or raise that capital from outside to fund that expansion.

00;07;27;29 - 00;07;56;05
Kyle
Or they say, look, we've actually done really well. Win already has an incredible team. We obviously, you know, introduce new entrepreneurs to our team before any transaction takes place. But all of our component, whether it's free shipping, logistics, product sourcing, demand, planning, all of these people have ten plus years experience just doing what they're doing. So that level of experience applied to these businesses is an incredible growth opportunity.

00;07;56;08 - 00;08;03;02
Kyle
And so they end up with a decision partner with us or someone like us or try to go out and still do it on their own.

00;08;03;07 - 00;08;30;17
Meagan
Yeah, we talked a lot about this idea of like doing it on your own, and I think the last time we chatted I was talking about how I went to our was it a brand week? Like it was like the year before COVID and I saw the founder of Casper do a talk and it was brilliant. It was just like several years ago now, but it was like this giant arrow of the DTC brand, like everyone being like, Oh my God, how did we not see this opportunity?

00;08;30;19 - 00;08;54;03
Meagan
Why did we not sort of run with this? And then we all kind of at this point know the story of how challenging it's been for a lot of brands like Casper? And I'm assuming that when you talk about this focus on omnichannel, just being direct consumer sort of not not doing that anymore, it's because we've seen a lot of what happens when you sort of put too many eggs in one basket, so to speak.

00;08;54;06 - 00;09;01;26
Meagan
So when was that transition where you realized, like, okay, we have to offer this, we have to sort of operate from an omni channel perspective?

00;09;01;28 - 00;09;26;21
Kyle
Yeah, I think it's been a an evolution in the DTC space. I did a talk recently where I talked about phase one, Phase two, Phase three, and so phase one would be bonobos. Actually, I got to know Brian and Andy way back when, back when they were launching, people were looking at e-commerce as infinitely scalable. There's no costs, you're selling it on the Internet.

00;09;26;21 - 00;09;50;25
Kyle
This is great. Let's go. You know, tons of money poured in to accelerate that growth. Ultimately, bonobos sell to Wal, Walmart just resold it to IP. But that was a time the face to time would be Casper away luggage. You know, some of these businesses that were similarly venture backed, grow, grow, grow, get as big as you can, as fast as you can.

00;09;50;27 - 00;10;13;09
Kyle
That's actually proven not to work across the board. And mainly because that growth when you're forcing that scale. So quickly, you really don't have a focus on profitability. And at the end of the day, and especially like markets like today, you know, profitability matters a lot and so for them to get back to that place is actually very challenging, if not impossible.

00;10;13;11 - 00;10;34;00
Kyle
And so I like to think we're now in phase three where you can have sustainable growth matched with sustainable EBITDA, with actual profitability. You know, call me crazy if you're selling products over the Internet, I think you should be able to make money doing that. Otherwise, you know, what's the business purpose? And so we've always been focused on that.

00;10;34;03 - 00;10;50;24
Kyle
And by the way, I believe in the world we're in today, it cannot be just Walmart and the dollar store with Amazon, right? You need these brands to be strong. You need them to exist and to carry on. And so a platform like ours that win really allows these brands to be their best.

00;10;50;24 - 00;11;14;00
Meagan
So I was just thinking, as you were talking about, we can just be a world of Walmart sites. We need brands. Now. Truly, I'm obsessed with brands. So when we talk about me going to Brand Week, I went to that Casper talk because I was obsessed with the Casper brand. I'm sure that comes from interest because I was obsessed with I mean, I work in marketing, so take this or leave this.

00;11;14;00 - 00;11;33;27
Meagan
But I was obsessed with their typeface and the way that they structure their website and all of their ad campaigns. I'm wondering with the portfolio of brands that you work with, even when you're thinking about which brands do you would like to acquire, how important is brands or where does brand come into the conversation?

00;11;34;03 - 00;11;38;28
Kyle
That brand and I know Phil, by the way, from Casper, and I appreciate their story very much. I think.

00;11;38;28 - 00;11;41;09
Meagan
Oh my gosh, I'm Fangirling right now.

00;11;41;11 - 00;12;02;04
Kyle
Yeah, I think that they were not served by the investors they took on. I'm not blaming the investors. I'm just saying from a timing perspective, they raised too much too fast with too too high of expectations. I do think there's a good brand that lives there and I congratulate them in any case on getting to the size and scale that they did, which was impressive, too, for us.

00;12;02;04 - 00;12;22;13
Kyle
Back to your question on brand brands, everything. And so my job across the board is making sure our customers are willing to pay, let's say, ten times what they would be able to buy a commodity product for, right? If we're looking at home sick, they're spending $38 on a home scandal when they can walk into Target and buy an end cap candle for five bucks.

00;12;22;19 - 00;12;45;02
Kyle
Right. So why are they doing that? They're doing that because the brand really speaks to them. They want to give this special gift to themselves or to someone else. And so that is worth the premium that we charge. And so that's the case across all the brands. So whether we're selling on Amazon, which we do, whether we're selling at Walmart, which we do, I love Walmart, by the way, wasn't meant to be derogatory for me.

00;12;45;04 - 00;12;51;29
Kyle
I love Walmart, but if you walked into Walmart, it's all private label different than walking into Walmart and seeing brands that you know. Right. That's the that's.

00;12;51;29 - 00;12;53;06
Meagan
The total reason.

00;12;53;09 - 00;13;20;13
Kyle
And so for us, brand is everything. When we go to acquire a brand, it's a binary outcome. We either believe that there's a real brand there or we don't. I think that's been a lot of the challenge with some of these Amazon aggregators. Frankly, they have Amazon category leaders, but there's no brand value there at that category leader were to drop off today and another one replaces it tomorrow and you go to search for that category, you're probably not even thinking about it, right.

00;13;20;13 - 00;13;30;16
Kyle
You don't even remember who was there yesterday with real brands. You do remember people are seeking them out actively. And so we are definitely all about them.

00;13;30;18 - 00;13;49;12
Meagan
And I think categories where you think brand is less relevant or any categories where just because you think brand is everything for the portfolio companies that you have, like you'd be less likely to invest.

00;13;49;15 - 00;14;19;18
Kyle
But I think when you look at things through a DTC lens, DTC is the hardest to build as a channel because it only works if people are raising their hand and asking for your product specifically. It's not a category search. It's like I want home sitcom, I'm not looking for a general candle. And so if you can build DTC, which is why we look for DTC strong brands, you can then build Amazon and you could apply that to retail.

00;14;19;20 - 00;14;41;17
Kyle
It's very hard, if not impossible, to go the other way. And if you find a business that's doing well just on Amazon, try to stand up a DTC site. It's very hard to do, if not impossible. Try a brand that's just selling at Target and try to take that the other way. It only really works downstream one way, which is DTC first.

00;14;41;19 - 00;14;54;04
Kyle
I'm sure others will hear this and say that I'm wrong. From my experience, you have to start with a strong DTC brand and then apply the other channels accordingly. So if we find.

00;14;54;04 - 00;14;55;03
Meagan
Them based on.

00;14;55;03 - 00;15;11;17
Kyle
Strong DTC but only strong on Amazon, if that's a tuck in where we can buy it as a part of an existing brand, still interesting. If it needs to be fully built without a strong DTC, then very difficult for us to get comfortable.

00;15;11;23 - 00;15;33;13
Meagan
Interesting. I mean, that makes total sense to me. And I'm going to kind of go back to this just because I'm curious, are there specific industries where you think DTC is particularly interesting? I know because it sounds like your portfolio of companies, it's like runs the gap. It's not just one sort of space, but if someone's listening to us and they're like, Oh, I wonder what Kyle's where Kyle's looking or focused on next.

00;15;33;13 - 00;15;38;10
Meagan
Like, is there anything that you can say in answer to that question?

00;15;38;13 - 00;16;04;03
Kyle
Yeah, we've stayed in what, today's three lanes, which are home and gifts, outdoor and then wellness. And so we have brands that fit within each of those verticals. In the short term, we will stay in one of those three lanes and those verticals just to stay focused. Generally, we look for category leading brands with strong optionality to expand on a cross-channel basis.

00;16;04;03 - 00;16;23;10
Kyle
So if they are concentrated on DTC without a strong presence on Amazon wholesale, and that's actually good news for us. Strong back story, strong founders, these are all requirements that we have. We have to see if at least 5 million of of revenue to understand that there's a real business there. There's some sustainability. And so that's our entry point.

00;16;23;10 - 00;16;54;01
Kyle
And then we, you know, we look at where can we actually add value and expand these businesses. And so that ends up being an analysis on cross-channel, on building out each segment, things that just generally work online versus don't all of our categories happen to be low return categories? You know, the idea of doing fashion apparel where someone's buying six dresses to send back five, that's not great on your e-commerce panel shoes, same thing.

00;16;54;01 - 00;17;11;24
Kyle
And so I have purposely stayed away from fashion retail trend driven. I do have friends and peers in the space that have done more of that. And so we've tried to stay with simple products that just work, that have a great core messaging that we can build from core retail.

00;17;11;26 - 00;17;39;00
Meagan
What's that's really fascinating on someone who doesn't live in this world on a day to day basis. Okay. Switching gears slightly, we're talking about those three stages, and thanks for letting those out. So stage one, Stage should stage three, you feel like we're in sort of stage three now in terms of timeline, what do you think the end goal is for most direct to consumer companies?

00;17;39;02 - 00;17;53;10
Meagan
Right now? Would you say that it's people are still looking to become sort of the Casper Allbirds or away? Are they looking for something completely different? I'd love your perspective on.

00;17;53;12 - 00;18;23;06
Kyle
I think there's a lag time of folks as far as, you know, catching up to to where things are and market. If you look at Allbirds Q4 results, you know, they lost $100 million in Q4. And so that is not sustainable on any level, especially with where they're sitting today, you know, balance sheet and otherwise. And so that to me is a perfect example of that Phase two just not working anymore and folks actually waking up to that.

00;18;23;08 - 00;18;40;04
Kyle
It's not to say Allbirds is not a great business. I have several pairs of their shoes. I actually love the products. To me, that's a great business. At a smaller size that's profitable. There's a way to make that work that actually is sustainable. It just does not serve the investors and what they were looking to have as an outcome.

00;18;40;06 - 00;19;08;12
Kyle
And so that's where you get into that conflict. You know, I think today any brand that's unable to scale to north of 100 million in revenue profitably on their own is better served. Being part of a community of brands at a portfolio, whether that's Win, whether that's someone else, there's just a lot of synergy, a lot of things you can tap into, or it's going to be really hard, really expensive to build that on your own.

00;19;08;15 - 00;19;31;07
Kyle
And so, you know, part of what I do when I meet with founders and entrepreneurs is just give them a little bit of my direct feedback based on my journey, right? That's all you can do. I'm trying not to give advice. I'm just giving them my perspective. And so I've also tried to change the narrative. If you scale a business from 0 to 25 million less in revenue, that's a tremendous feat.

00;19;31;09 - 00;19;53;21
Kyle
You don't have to sell that for billions of dollars to get a great outcome. You can have a great outcome on a reasonable basis. And most entrepreneurs that I know that we've ended up working with, they go on and they start another business, right? Because then they're blood. Same as me. If I were to sell wind tomorrow, which I'm not expected to do, I would go and start another business.

00;19;53;21 - 00;20;09;20
Kyle
Right? And so that's an exciting new chapter. And so I like to be a really good partner for folks that are willing to partner with us and then open up new opportunities for them on the other side, but have a significant outcome for them and their family in the meantime.

00;20;09;23 - 00;20;28;27
Meagan
Cool. I mean, typically when you start working with these these brands, do you find that your expectations are sort of aligned or does it end up being quite a conversation in terms of figuring out like what the goals should look like?

00;20;28;29 - 00;20;47;23
Kyle
So we try to really set expectations going in. It's a great question, you know, because they're struggling to decide what they want to do or are they still focused on hyper growth, that they try to focus on profitability when they partner with us? But like, look, we do expect growth on the profit side. We do expect growth on the revenue side.

00;20;47;23 - 00;21;12;04
Kyle
We target 20% growth on revenue to allow us to grow sustainably and also keep steady cash flow. Right? So we set expectations up from the partners that we bring in are well aligned with that. Some founders, you know what I like to say to them is, look, if you want to work 12 hours a day, seven days a week, we can make that work.

00;21;12;07 - 00;21;31;03
Kyle
If you want to work 3 hours a month and sit on the beach, the rest of the time, we can make that work. And so we understand it's been a really difficult journey to where they are. And so we're very flexible. But to your question, when they come into our model, very transparent, upfront on expectations.

00;21;31;06 - 00;21;57;14
Meagan
Okay. Yeah, that's fascinating. What we have too many more questions for you. And I'm aware that we're running out of time, but I did want to ask, is there any you talked about you threw out so many interesting facts about some direct to consumer brands and the like ones to watch that we should be on the lookout for, other than obviously not will share the brands that you work on.

00;21;57;14 - 00;22;04;03
Meagan
But any other ones that are sort of up and coming that people should should check out?

00;22;04;05 - 00;22;29;27
Kyle
Yeah, it's a tough one. I can name names mainly for NDA reference, but I can tell you within the categories that we operate in that home and gifting and wellness and outdoor, we're seeing a ton. You know, we have a pipeline of north of a billion of revenue of companies, north of 200 million of it. And so it ends up being a lot of longer conversations because we're not trying to force things.

00;22;29;29 - 00;22;50;22
Kyle
But I listen in my seat, I feel like I have the best job in the world. I get to meet with these amazing entrepreneurs and companies, our portfolio, the companies that we've partnered with to date. Love your melon, Gravity Kalo Home Sick, all incredible brands that are still scaling really well for us. And so this is a long term approach.

00;22;50;25 - 00;23;13;27
Kyle
If we continue to partner with great brands that we can grow and grow profitably, this will be the same story that we're telling in ten years and 20 years, right? There's no reason this doesn't continue. And so from a DTC, you know, we talked about the phases. Things have changed, but I think there's a lot of there's a lot of opportunity for these founders today as long as they can execute on this omni channel strategy.

00;23;13;27 - 00;23;42;07
Kyle
And so I've looked at literally today, I've looked at a pillow company, I've looked at a sunglass company, I looked at an umbrella company yesterday. I mean, everything that's out there, we're fortunate now. We do get a lot of inbound. And like I said, you know, sometimes the time is right to actually partner and get something done. And sometimes it's just building relationships with founders and giving the advice that we can also.

00;23;42;10 - 00;23;51;29
Meagan
Well, thank you very much for joining me today. We'll make sure to include a link to your website so people can check you out and talk to you soon.

00;23;52;02 - 00;23;53;03
Kyle
Loved it. Thank you so much.