Missions and Marketplace Podcast
Interview with Paul Jarrett
Hello everyone. I’m Priest Willis and this is Missions and Marketplace podcast episode number 30. I’m joined today with Paul Jarrett who co-founded the health and nutrition subscription box, Bulu Box, in 2012 and serves as its CEO. Paul’s experience spans the country from NYC all the way to the west coast in San Francisco. He has launched million-dollar businesses such as Neebo and executed multifaceted campaigns for Lowe’s and Nike. In 2012 he joined Complete Nutrition where he became the Vice President of Marketing Executive Board Member. He built the Marketing Department, trained dozens of franchisees and positioned Complete Nutrition and its products for success in a saturated market. I think if there was anyone in a position that could do well in this subscription box business, specifically because it deals with nutrition and fitness, it would be Paul. His testimony about losing weight was amazing. His entrepreneurial drive from essentially the mud in the trailer parks to just having the passion to go out and execute his plans is inspiring. I hope you all can sit back and enjoy some really in depth discussions about building a subscription box business, how the market looks today and what he continues to do to drive the business forward. Without further ado, here is my man Paul Jarrett.
Welcome to Missions and Marketplace podcast. Join us as we talk to business and thought leaders to discuss their passion in and outside of business and how it drives them to give and be citizens of goodwill. Let’s get started.
PW: Hey Paul welcome to the show.
PJ: Thanks so much for having me Priest. I’m super stoked.
PW: Yeah I’m excited too. Why don’t you tell the audience a little bit about yourself?
PJ: So, my name is Paul Jarrett. I am the co-founder and CEO of a company called Bulu Box which is bulubox.com. And for 10 bucks a month we ship four to five premium vitamin supplements and healthy snacks samples in a Bulu Box to our customers. They receive that sample box every month. They get to try things out. Tell us what they like, what they don’t like. They can get rewards points for providing feedback to us.
PJ: We do have a little additional angle where the brands that sample with us, we have a platform called Bulu Marketplace and we let them – It’s kind of like Linked-In for consumer packaged goods and we let the brands that sample with us provide all of their insights that they learned from sampling directly to retail buyers. That’s a whole kind of you know segment on how we got to that point which is pretty interesting but that’s something that we launched about a year ago and that’s kind of the business-to-business part that’s taken off for us recently.
PW: Yes. I definitely want to talk about the whole ecosystem of your business there. Let me ask two parts. First, what led you into creating this Bulu Box? And number two, how did you get the name?
PJ: [Laughs] So I have the PR-certified concocted story for Bulu Box and then I have the real actual version. And I’m assuming you guys want the real version.
PW: [Laughs] We’ll take the real man. That’s all we want.
PJ: Yeah. Nobody understands it, for business startups you kind of start executing and it’s never a lightbulb. It’s a process and it’s ugly. And then you’re like “OK we need a good story out of this thing actually started”. It’s not a light bulb. It’s like trudging through the mud.
PJ: And just like who keeps going. So. The honest sincere part of the story is that I worked at a company called Complete Nutrition. I was an early employee there. Complete Nutrition is a GNC for really high end products. We were really fortunate the company took off. We hit everything correctly. We went from a couple of million in sales to tens of millions of sales in a really, really short time. I worked with a lot of franchisees and people running the stores and we knew sampling worked but we didn’t know how to figure out the ROI on handing out a sample packet. And so, I actually ended up leaving that company to go work for – that company was in Nebraska, and I left that company to go work at a startup in San Francisco and they were offering me equity and telling me about fundraising. I grew up poor as hell in a trailer park in Nebraska.
PW: [Chuckles] So they had you had you at equity.
PJ: Yeah and I’m like scratching my head because you know when people didn’t pay the rent in our trailer park their El Camino got towed right? Your shit was taken away right? And they were telling me about venture funding and I’m like “wait! so if you take a million dollars and fail, they’re not going to take your El Camino and your trailer away?”. I’m like “Is this the illegal? And these guys are telling it to me on a yacht because they had purchased a yacht because they just sold the company into EBay and I’m like, “Dude, I’m in some illegal shit. I’m in some Wolf of Wall Street stuff”.
PJ: So, like I had to do my homework and I was like “Whoa! How do more people not know about this?” So anyway, that spurred this whole like “wait why am I working for like a couple of percentage points in equity when I could like have the whole shebang”, right?
PJ: So, then my wife and I, we were actually running the San Francisco half marathon and kind of armed with all this knowledge, we’re just talking about starting a business and whatever and we got to the end of the marathon and we got all these samples. And nobody wrote down shoe size. Nobody wrote down or asked me for my bill. Nobody wrote down “tall goofy bald guy running awkwardly during marathon”. There was no sort of customer sizing up of me and we’re walking home with all these samples and I’m like “this is crazy that people are giving out hundreds of dollars. How do we ship these to people?”
PJ: And just get an e-mail back for these companies. That’s all they want. Like all they want is an e-mail. And that was the nugget of the idea. Started researching, we actually started building the product. Then we stumbled upon Birchbox and we’re like “oh this is super interesting’. We’re kind of there but not as pretty and packaged up. I feel like we would have got to something similar but we’re like “oh this is super interesting and we understood the concept”, so we launched Bulu Box. It took off way too fast. I say that out of respect to other entrepreneurs because I know a lot of people have struggled and given we had 10 years of experience in New York City and San Francisco in advertising, marketing etc. We were the entrepreneurs that actually put a business plan with a hockey stick and actually followed it. Which seems great but also it can be misleading to think that you’re really special but you actually just did a thing. You know you’re great…
PW: What are those core things that you did to make it take off so fast. I know you had the experience but the specific ingredients that you did that made it just shoot out the gate there.
PJ: I think that a lot of it had to do with the maturity of my wife and I and us working together on other projects. You know we had been working in some form or fashion either at same companies or contracting each other out. and she was always the creative and I was the project manager. And that allowed us to- I don’t think we were great at anything specifically but probably our strengths were marketing and branding. So, we understood that operations wise. We ran a tight ship on our freelance project so that was nice and then as far as recruiting help and recruiting team members, we had worked with so many people from San Francisco to New York City, we knew how to outsource and get the right people. And then finance – we always wanted our freelance projects or other work products to be on budget, on time, and over deliver. And I’d say the biggest thing that we struggled with and I don’t care who you are everybody has strengths and weaknesses. Ours was just really projecting forward financially, we always kind of thought that there was like this magic formula and everybody can sell you whatever. But at the end of the day I always tell people I’m like – we’re working with people on projections or whatever. I make this joke but I’m serious I’m like “hold on let me get my crystal ball”.
PJ: “I’ll get these projections up”. What the heck! If somebody could figure this out like Google and everything else, nothing would exist, right?
PJ: And that’s very specific to businesses starting out, right? It’s not like a coffee shop where there’s other coffee shops to learn with. It’s not like there’s 20 years of history. It’s fresh so you’re just figuring it out. So, I think that our experience working together on different projects et cetera really was the thing that propelled us and then tons of hard work. And I don’t believe in luck but I think that we got lucky in the sense of we understood that for every 100 things that we try or do one of those things might work kind of. And when that thing works, figure out why and then keep doing it. And I think a lot of entrepreneurs they get their teeth kicked in once or twice and they turn around and go home. And we understood that it’s less about making a few home runs and it’s more about you know base hits and bonds. And then very once in a while we might get a homerun. I think that mentality – we always say – for every 100 ideas you have if one of them works out or you learn something from it, you’re doing pretty damn good. And I think that’s the failure that entrepreneurs have; that kind of grit to keep going, and then the courage to keep going and we have that naturally built in after doing freelance projects with people. And as far as the name goes, it is a secret that only four people know. That’s our PR story because we don’t really have a good story about it. [Laughs]
PJ: But it’s not an acronym, it’s nothing negative but it’s kind of fun that only four of us know. And three of the people still work at Bulu Box and one of the persons that knows, she’s moved on and that’s remained a secret. We say when we’re acquired we’re going to tell everybody someday. But I will say a big part of Bulu Box in the name was built out of understanding a CEO, understanding functionality kind of. It was less of what do we love and more of how many boxes does this check as far as being a good name.
PW: So, the B in Bulu, you kind of figured out “OK how high would we rank, on what page if people are looking for subscription box, and if they were to put it alphabetically…”
PW: That was one part. But then there were other pieces to it as well.
PJ: Yup. There’s about seven things and then we narrowed it down to about three names and then we’re like we’d like Bulu because of this and “Oh cool. Let’s keep that a secret” but I felt we fell in love and I think this is really important for people to understand and I’ve worked on enough brands and enough logos in enough companies where it’s dangerous to fall in love with your business.
PJ: I actually fell in love with the name Buku Box a lot but then as I was just kind of sitting in a user seat googling it and how well I looked for buku. I was like “Oh, Buku – that’s a French word Beaucoup. And OK. And there’s Bulk-U-Box that doesn’t look right and how do you spell this thing?” You know like actually sitting down or like having a conversation where I would mock tell my co-founder and wife Stephanie, I’d say “hey have you heard about Buku box, tadadada” and then trying to explain how to spell it or find out. I was like “yeah this is not going to work”.
PJ: I see that with people where they get super connected to their business and it’s their baby. And I say to people all the time to think of it more as you’re the owner of a franchise and this is just one of your stores or this is one of your team players or whatever. And I also say that, it was totally inappropriate, but like “oh our babies are always up for adoption”. And that goes if people want to acquire, but also if companies want to acquire it, but also other people internally to kind of take over. Right. And I think people get way too emotionally connected. I mean I’m not going to lie, there’s levels I’m emotionally connected to our company but just being aware of that and being aware of how dangerous that can be I think is really important. And I’ve seen way too many founders lose themselves in trying to protect their baby and they shield it. And that actually is bad for the “baby”.
PW: It’s a really good point. I mean there are a lot of businesses out there that probably have held on for too long either as founders and CEOs or they held on too long. And it was just a bad business idea in general so I think you do need to have a healthy sense of “this can go at any time and when it does and if it does I’m willing to let it go”. Whether that’s true acquisition or it’s just not working and we have to close the business down because I need to fail fast and move on to the next thing. I think that is the best way to survive in business and in what I found after talking to a lot of CEOs and entrepreneurs and people along those levels. Those are the most successful ones right because they leave everything out on the field. And if it works it does, if it doesn’t they’re OK with that and they move on to the next thing.
PJ: Yeah that’s when you – man, when you get to that level that’s powerful stuff, that’s like some next levels and CEO share. And when you understand that it’s like if you had a child or you’re going to be the person that birthed it, the same person that watches it at day school that it’s the kid’s babysitter, It’s its teacher it’s its college professor. Now you can’t do all this. Very rarely is there like a Mark Zuckerberg that can do that, right? Less than 25 percent of the population probably. But I think of it like that. I know you’re a ballplayer, I try think of everything in those terms. “What coach am I or what player am I right now in this company? OK. We clearly need offensive coordinator. Like I’ve been doing defense and offense for way too long. And we have no good playbook for offense. I need to get that coach in here. And get a coach that dominated offensively like USC or Nebraska. I need that person here.” I think that’s a safe way to think about it and probably just internally for me to become ok with it. Right. Using that analogy of I don’t have to be a god at everything for this business. I need to be smart enough to understand my strengths and weaknesses
PW: And that’s why I think most of those businesses succeed is because…
PW: …your ego isn’t in the way and you’re admitting to yourself in a lot of ways that I’m not good at everything. I may have the marketing side but I definitely don’t know the developer side of the UX side or whatever angle you’re dealing with at that point. And where a lot of businesses fail is because you’re trying to be the accountant, the janitor, the everything. And I understand that if you’re kind of bootstrapping but I don’t understand it if you’re trying to grow a business and you have some revenue coming in and you’re trying to scale that business. It’s really time for you to let go of some of those pieces.
PJ: Ego. ego’s a bitch.
PW: Yeah, it is. It is.
PJ: Totally. Feeling embarrassed – that sucks, that sucks.
PJ: And that’s the kind of when you get comfortable with those things, that’s when actually you start seeing. And it doesn’t happen overnight. It’s like a process you have to repeat and always continue to force yourself to get comfortable with.
PW: What I really like about you is that – So first of all I know you’re passionate about Bulu Box. I know what that means to you. I’ve read other interviews and things that you’ve done so I know it means a lot. I don’t want to be dismissive when I say this but what I most love about you is you’re just an entrepreneur at heart. So, you’re kind of doing this five-mile race with your wife and going along and you see a need and you see all of these curated products but no real way to funnel it or get it back in to turn it into a real system for people and make that truly customized. And so, that to me as an entrepreneur. An entrepreneur is someone who sees a need even if it’s an already existing system of sorts you’re finding a way to make it work. People are handing out freebies you’re like “hey we can do this but we should do this in a more systemic process”. That’s an entrepreneur’s mindset. But how do you go from being in school for journalism to moving into an entrepreneur mindset? And again, you could have been then at 12. I don’t know but I’m trying to get into the mind of Paul that way.
PJ: Before I have to add this to what you just said. This will blow your mind but before the iPad came out there were over 3000 MP3 players really. So, the iPod – everybody thinks the iPod was first. Now there was over 3000. I actually worked in New York City on something for Panasonic. I can’t even remember what the MP3 player was called and I worked for like six months on it. It was like e player, some crappy name like that or eWalkman or whatever.
PW: That’s just hitting on the point so my mind is blown That’s hitting on the point that – So they just took something that was already existing. Just made it cooler and better.
PJ: Totally. Apple is the king of that. But then you start looking at other businesses like Tesla did in the car. Our chief product officer and our co-founder, we always talk about that. So very rarely is you know the person that came up with the idea, or the person that optimizes it or the company or whatever. I’m like a reluctant entrepreneur or maybe I didn’t have enough self-confidence or maybe I just needed kind of a push off the cliff. I feel guilty in a sense of I don’t really feel like I ever kind of took the full leap off the cliff. I feel like I was kind of pushed. Somebody actually said this to me yesterday morning. He was an entrepreneur and he is talking; super interesting dudes, small town in Nebraska, makes metal plates. The one beautiful thing about entrepreneurs is it does not matter what you do, we’re all equally weird. Overall really strange. And he referred to it, he just said it in passing he’s like “yeah well I wish I didn’t have the entrepreneurial sickness – you get it, you don’t want it, you’re just stuck with it”. And I heard Reid Hoffman of LinkedIn say “normal people don’t want this. And when they get it – kind of being an entrepreneur – when they try to get it they realized like oh that’s not for me. Why would anybody ever want this kind of life”. Actually, as a kid we grew up poor as hell in a trailer park. So, whatever we wanted we had to work for it. But also, we’d work for it and get paid. And I’m talking like, I’d mow a lawn and I get a dollar. And this is 1989. My first memory of my parents; my dad was a cop; my mom was a nurse. And they actually were entrepreneurs that failed. And so, they got normal jobs. But my first vivid memory of my parents, I don’t think I’ve ever seen them fight really in person, but they were arguing and I could see them from outside into the kitchen about if I was old enough to be mowing yards because I couldn’t see over the lawn mower.
PW: How old were you?
PJ: I couldn’t see over a lawn. I’m six foot five and I couldn’t see over a lawnmower so I don’t think I was in school.
PJ: And my dad my dad came out and he’d just spray painted orange on the edge of the lawnmower and he said “don’t let your toes or fingers get within”. And then he held the spray paint can the long way around the edge.
PJ: He says “don’t let your toes or fingers get this close to it. And if you do, just let go of the lawnmower and I’ll come you know fix whatever you need”. And I was like “awesome!”. And I mowed like one yard and got like a buck and thought that I could go buy – I don’t even remember. I think I wanted a ninja star or something. And I thought I could go buy a ninja star and my dad took me into the flea market next to the trailer park. but I’ve said like to me there’s some serious white trash right now.
PW: [Laughs] No, it’s fine.
PW: And it was like a flea market next to the trailer park and I went up there and it was like $5. And I looked at my dad and he’s like “looks like you have to mow four more yards” and he did that to me all the time. Like he put me in a position to succeed, but he never did the work for me. Then I just started thinking like “Well this sucks – mowing yards”. And then he starts talking about “Well, you got to get gas for these things”. And I just thought “this is terrible, there has to be a better way”. And then the hustler in me kind of kicked in naturally and I’d go to the flea market, buy stuff sell it to my friends for more. Good Lord, that BMG Columbia House thing, the CDs?
PW: Oh, man that was made by the devil.
PJ: But I had the hardest hustle that. I figured out like they would never come after you. God, I hope they’re not listening right now. I could use any name I wanted, so I’d have John Jones and I would get like 12 CDs on to me and I’d go sell them to all of my friends at retail price. Then I just cancel and never buy the $60 CD and just start a new account. And I made way too much money.
PJ: And my parents found out and they’re like “yeah that’s illegal. That’s not a business, that’s illegal”. And I’m like “I’m sorry”.
PW: So, you did streaming before streaming was actually…
PW: Yeah. You did it live up close.
PJ: A few times I’d make enough money to actually mark everything up so high that I’d actually have enough money to buy the one CD. But also, I’m super into music and it was because I started running out of CDs so I have to convince my fifth-grade friends that “Beethoven’s Fourth Symphony in B flat is like the best thing they’ve ever heard”.
PJ: Which it actually is. But it’s like when you’re in fifth grade…
PW: It’s not, yeah.
PJ: We’re a bunch of like white kids. All we wanted was N.W.A and that was it.
PW: You made some theme music from the mainstream to the trailer park.
PJ: So, that was kind of like you know just being poor growing up and wanting things and I that was I think the foundation. And then I was really pushed and I think this is a very Midwest thing. I grew up in Nebraska and I think it’s a very Midwest thing to like people talk about benefits and your retirement plan and be a doctor or a lawyer or an insurance salesman or be a teacher or a police officer or a firefighter. Nobody in our school talked about do you want to be an animator? Here’s how people draw. Do want to be a singer? That didn’t even seem…
PJ: It was so not real to me that the question never came up of how do I sing? or how do I become animator? how do I do something creative? It was just a cop, firefighter, doctor, lawyer. That was the extent of the conversation.
PW: I agree. I’m from Wisconsin and I can attest to. Yeah. Totally.
PJ: So, I just you know kept forcing myself to believe that way and I played football, I played football in college. I look back and I don’t even know if I really enjoyed football. I just happened to be – my wife calls me the biggest nerd and a jock Safadi you’ll ever meet. I just happened to be good at it. And I also loved working out the process of getting better as an athlete. So, I did that and then I became a starter at Iowa State University the Cyclones back when we had some really good seasons. I actually ballooned up to about 307 pounds. I was a starting nose guard and then I quit. I was starter, top of the world, all that stuff and just didn’t like it. I just didn’t have fun and then had a bit of a breakdown of like “why am I doing this this is fun, this isn’t fun”. And “yeah I might go to the NFL but is that what I want to do?” And you know neck injury, knee injury, and there was never one thing that made me quit but I was just “I just don’t enjoy this. I don’t even know if I ever have”. And so, I gave it up. Gained a bunch away. When you’re that big, you either gain or you lose all the weight. And I got up to 315 pounds and then that started the process of vitamin supplements. I’d always use stuff to get big but I never really use stuff to kind of shrink and lose weight. And so, I did try stuff and stuff did work and I educated myself and ended up losing over 100 pounds. But then I’d yo-yo back 60 pounds and then I’d lose that. And I finally figured out through a process of discovery, and trying different vitamin supplements, learning about sleep, learning about how caffeine impacts the body etc. etc. And at the same time, I was working at companies that were selling vitamins and supplements because I kind of fell in love with fitness and health and that sort of thing. And really just optimizing the human body. I had a friend I was living when he moved to San Francisco to start that business. I just had a friend and I started talking to him about things and I didn’t know at the time. I just knew him as my pal Brian. I didn’t know he was like Brian super entrepreneur of like a $700 million plus business out of New York City.
PW: How did you not know.
PJ: You know I met him at a trade show and I was like just hanging out talking to somebody at the trade show and he was in the corner and it was close enough and I was like “man you want to bail and like go grab a drink or whatever” and he said “yeah totally” and so I think he was trying to sell me on something for my company and I was just trying to like get out of there and we just sat and had lunch and he was just chill and you know we texted afterwards, e-mailed. You know when I get to New York we’d visit and you know I just never ever started the relationship off with him knowing or understanding how important in his realm he was and he came to see how I knew if somebody saw me having lunch with him in San Francisco and texted me and said “Howdy holy shit how do you know Brian?” Cause they saw me having lunch with him and I just looked up at him and I’m like “Are you important. Should I google you? like what happens if I’m going to google you?”. And so, anyway we started to have a conversation. And he always was asking me, “when are you going to become an entrepreneur? You’re an entrepreneur, I know them well enough and you’re weird like me” and ” this is why you’re bouncing from job to job, state to state” and just enlightening me of the whole world and understanding some of the things that I’ve said in this podcast or previously like” it’s a sickness and entrepreneurs are all alike” and he identified that in me and we had a conversation walking and I think sometimes he’s not from the Midwest but he knows plenty of people are and he said “I think sometimes like Midwest people kind of grow up”. He said something to the effect of conservative and they’re never encouraged to take risks and that and whatever. So, he’s like “it’s kind of unfortunate because somebody like you really should be an entrepreneur but not sure if it’s going to happen because of nature versus nurture versus nature”. Then I started just unloading business ideas and that was something really great for me because I’ve always kept the ideas secret from people and by letting us…
PW: You felt free with him.
PJ: Yes. And by being authentic and letting those ideas and feelings are stupid and he was so awesome. Just so awesome about it. I called him up at one day and I said “Hey I’m working on this thing” and I sent him some images of it and I was like “I think my wife and I are going to do it and you know we actually went and bought some products to sample, to test if the website’s up”. And he was like “yeah I want to put a little bit of cash in”. And it wasn’t. I thought it was a ton, right, like that it never happened. And he walked me through term sheets and putting cash in and wire transfer and all that stuff.
PJ: So, grateful for that. I get emotional, I get choked up thinking about it right now. Because who does that? Right? You know I do that now for various few people but over three years I’ve done that for. There’s a guy I’m working with, he’s probably the third person I’m helping him out with right. And so, that’s why I say maybe I was the reluctant entrepreneur or maybe I just needed the push and he was that guy. I was always kind of standing over the cliff looking over the edge and he just came up and gave me a push off the edge. After that he was awesome enough to be involved but then he knew when to step out of the way and just go back to friend mode not advisor or mentor stuff. Just so fortunate to have him in my life.
PW: That’s really amazing because people spend so long looking for mentors and business partners or somebody to at least teach them. Because you brought up entrepreneurs’ sickness and in a lot of ways it literally is. I mean people deal, and this is kind of the unspoken thing in the business world, where people deal with anxiety and depression. And real mental issues because it can be brutal. I mean entrepreneurship is a contact sport with no doubts. And to find somebody to help you navigate the waters is pretty crazy especially when you’re not looking forward or tweeting people. You don’t even do anything about the guy or anything or the gal.
Hey guys continue to hang on. Paul has some great information to share with you. We’ll be back right after this.
PW: So, Paul lead us into how do you think your business and others like it like Birchbox and others. How do you think it’s changing the way we shop? And more importantly do you think it’s here to stay or is it just another fad?
PJ: Man, that’s so interesting. If you would have asked me that question a month or two or three ago the answer would have been so different or two years ago would have been different from that answer you know. I think really, I am starting to look at sample boxes as almost like specialty stores and I don’t want to use the word boutique because that implies small but it’s like these specialty shops. I’m trying to think it’s like a soap shop franchise. I think it’s called like Lush or something like that.
PW: Yeah. Lush and stuff like that.
PJ: Yeah. I kind of like think of it like that or I think about Complete Nutrition and we serve – that grew into hundreds of millions of dollars but we served a very specific market, a very specific person. And I think people are just, even now, I just I can’t wrap my head around how much money is out there to be made right. And you just have to get it right. And so, I think absolutely sample boxes are here to stay. I think that it is now an industry in and of itself. And this isn’t me talking. This is reports that I read, these are consultants, private equity people. There are people contacting me now and there may or may not be like a company that rhymes with Google but is all of a sudden interested. And those, the quality and the type of people and companies that are contacting us now being interested in our company I think is indicative of; first of all, sample boxes been out for a hundred years. People don’t understand that Sears did the first sample box a hundred years ago. It was a buck. And what you got was a bunch of left over threads and cloth etc… So, there’s been kind of different forms of them and then they’re popular in other countries and the gals at Birchbox just brought it over from France kind of reignited it in the U.S. So, they’ve been around awhile. I even argue that through our research sample boxes are just magazines done differently.
PJ: What do you get in a magazine that you’re super excited for? A sample of your perfume or cologne or lotion. Those are the best magazines or the magazines of like plastic around them that have something added to it or a gift with purchase. Those are the best magazines. And we have actually seen through our research that our biggest competition, next to other sample boxes of course, is actually magazines. And I think if you want to get really specific, our competition isn’t necessarily other sample boxes. It’s competing with sample boxes and magazines in a similar category. We wouldn’t be competing with another vitamin supplement sample box the same way we would be competing with a magazine that specializes in vitamin supplements and healthy snacks, right? So, that’s actually the competition. This also explains why a lot of magazines are contacting us and reaching us and trying to partner with us. Magazines are doomed. I mean they’re so old and to try to get anything done with Hearst or American media or anything. It’s absurd. And they just kind of run you over as a sample box. So, industry to me is here. It’s here to stay. I think that the evolution if you want to see a parallel example of an industry; external hard drives are the best thing in my research that are mimicking the sample box industry. External hard drives, the little thumb drives you pop in your computer, right?
PJ: Those things, you know a few people started and then boom there was this explosion and there were thousands of them right. And then out of the other side, if you’re looking at a timeline, at the end of the timeline there ended up being three companies. Really like three big companies and one was a company that raised enough capital to buy out everybody else. One was a company that just remained doing the same thing keeping a cheaper product just doing the same thing and just kind of grinding it through. And another one was just the company that bootstrapping, collected all the failing businesses that were handed over. And I looked at the sample box industry like that and there are people out there right now rolling them up which is great because their sample boxes are being required. But also on a roll up strategy, it’s a bit of, it gets a bit Mafioso and that takes this money or else you know you’re going to get steamrolled anyway. Right.
PJ: So, that’s been interesting and I think that’s still going to take about five years to evolve. But that’s where I see historically. But I’ll tell you, when we started and we are number seven and then five, six, seven, 10, 20, 30, hundred, two hundred, thousand it was scary. We didn’t talk about it because we didn’t want to acknowledge it and we just wanted to focus on what we’re good at. But man, we’ve seen a lot of competitors come and go.
PW: In the recent years, there’s been tons that have come out. You guys actually do it unique. So, for full transparency here, I’ve you know ordered a box, I’ve had a couple boxes in fact. And I love what you do it, really does. You talked about it earlier in terms of curating a sample process. It really is something a little bit different than we see in other boxes especially if you’re in – well for me, I’m into vitamins and trying to eat healthier and losing weight and really finding some good products out there without making a full-on investment at least initially. I think that’s really key. So, I think what you guys have is certainly here to stay.
PJ: Thank you very much.
PW: Yeah no problem. So, I guess this is a bigger question. And so, I don’t I don’t mean to ask you to try to shrink it down, but is it hard to get venture backing?
PJ: Yes. Yup.
PW: You were blessed to get a Brian in your life. You didn’t hesitate to say yes so I’m already seeing where this going. Is it the fact that you have a subscription box company and people are a little hesitant to kind of back you that way? Or how is the atmosphere out there in terms of people wanting to back subscription-based companies?
PJ: Incredibly difficult right now and it’s terrible. The one thing that my first investor Brian did that I didn’t realize is he understood the weight and power of his name and his background that it would bring to the table. Raising capital is a very intricate process. I don’t think anybody will ever fully understand it. It’s so much of art and science and everybody tries to break it down to a science and the numbers. And the easiest thing that I say is there are specific numbers and requirements. It’s like applying for a job; you have to have the resume, the experience and you have to be the best in your field. But furthermore, you have to be able to sit down and be the best storyteller ever. So, you not only have to have amazing metrics, science and all that stuff on the back end but you also have to paint the most beautiful picture. You need to be like Einstein and Van Gogh to investors right. The other thing is you want to talk about getting shot down. Man, I was listening to startup podcast, that Gimlet Media.
PW: Oh, yeah, Gimlet Media.
PJ: And Season 2, I literally stopped listening to when there were some gals in there with a dating thing and she was like “I’m about to give up or I don’t know if this is worth that we’ve pitched 40 investors and only three are interested in term sheets or whatever”. And I was like “Yep fuck that”. I was like “Man, I’ve talked to like five hundred. Hooray!”
PJ: Why shut up, shut up, like shut up.
PW: You’re like”40? Come on”
PJ: Yeah I was like “40? I did 40 on Saturday. Literally, I did 40 on a Saturday. What do you call that? I call the I call that Saturday. Yeah that’s just another workday.”
PJ: But you know in the beginning we had a lot of things line up properly for us and there was a lot of momentum and we actually leveraged the success of Birchbox to raise capital. So, we said, “Look at these people doing this. here’s what we’re going to do”. The unit economics of our business it all worked out where we had the customer acquisition cost, we had the lifetime value, we had all of the things that you needed and we were out to raise in the neighborhood of five to eight million. We didn’t get what we wanted but I’ll follow up with that in a second. So, we went out to the market. We said TA-DA! We have the market like look at what we did, look at the growth. We’re doing over five – I’m ok with sharing numbers now because enough time has passed and our business model is completely changed. But we were doing like over 500000 in revenue every month. And I’m like who does that? And you read like, I now call it business porn and it’s like all of that stuff which I love; I like Guy Kiyosaki, I love Gary Vaynerchuk, I love all those people.
PW: Rich Dad, Poor Dad Guy Kiyosaki and Crush It!
PJ: You look at all of those metrics that they’re saying you need to head and a lot of them are like “if you can do this like you’re golden”. The investors will be lining up and just do these things and tadadadada. And I say bullshit to all of those things. You know when people say sales solve all, I was the guy that said sales solves all. Bullshit! No, it’s so much more complex than that. And I actually went back. We were fortunate enough to find investors that understood the value of the data that we’re collecting and they’ve made an investment on us developing a platform Bulu Marketplace that shared that data. So, we went and pitched them one idea and they actually said, “you know what -“One of them, he had experience with using data from a company and twisting that and building something else and selling it to Google. And he was like “I think we can do the same thing here”. And so, we shut up and listened to them and we were like “oh my God you’re right”. And so, then we tested some things, we got traction with Bulu Marketplace and that’s when they came on. So, I’m super grateful for them like identifying our value. But also, I will say, I think it was my list that I actually verbally talked to was like over 200 investors. I actually went back, I e-mailed a lot of them. So, it was keeping me up at night. So, I e-mailed about 50 of them and said “hey 90 days has passed, please give me the real reason why you didn’t invest in us”. The reason they didn’t invest usually is when they tell you you have to wait till time passes and then they’ll be straight with you. And I actually got answers that I expected and didn’t expect back. And for us specifically, that came down to almost equal parts but kind of the dissenting reasons of why people didn’t invest with us. We’re number one which is also our strength but it’s our weakness. We are in the vitamins and supplements category and that is very polarizing and scary for a lot of people. You know they’ll set up alerts or they’ll hear a story from their cousin or their wife or their husband or their child about some terrible thing about supplements. Which I could go into hours what kind of bullshit all of that is. A few bad people in the industry making it look bad and you know all the legal things and things we do right. I’m so proud of our company in this industry for forcing some change. They got skittish about that. Number two, I was talking to a lot of tech investors about consumer package goods which is such a face palm idiot move by me but nobody told me. Nobody told me “hey I think this is more a consumer package goods”. Because we always believed in the data and the customer acquisition to lifetime value, we didn’t really think of the physical – we don’t have a warehouse stock for products right. So, we always thought of ourselves more as a technology platform versus an e-commerce company and they would always kind of fall into that thinking with us. And so, I thought I was talking apples to apples and they told me that I had oranges in there actually had apples. And so, those were the first two things. And then the third thing, which sucks to say but it’s reality, is we’re in Nebraska and it’s just hard for them to either get here. They don’t like taking two planes. They like to keep their investments close. They don’t want to be laughed at by other people that say they invest in a company in Nebraska, there’s not a lot of success stories around here. That’s a real thing and that happened and I understand, getting a plane from you know California or New York and you know two trips, eight hours before you are here. I get that. But all of that is what excites me about Nebraska. Like being a pioneer is exciting to me. Not being another fish in the pond, being a big fish and somebody plowing forward right. So, the whole vitamin and supplement industry talking to tech people when they were viewing us as a consumer package good. And then the Nebraska thing all just kind of added up. And I always say you can get over one, maybe two hurdles with a potential investor but if you put three perceived hurdles in front of them you can have everything you want. You can have momentum, the numbers, the story all of those things but by the time you’re trying to get them to jump over the third hurdle they either get tired of it or there’s somebody else that came along or they just don’t want to go back to their team in their Monday morning meeting and go “OK here’s the last thing why we should invest in Bulu Box for the third time. right?” Those are all on me as CEO, right? That’s not an investor problem. I can’t point the finger at them. Those are me. But also, it has made me a better entrepreneur and now I understand the strength and weakness of being in the vitamin and supplement category. I understand how to find the correct investors for a business moving forward. I understand the challenges of being in Nebraska but also the opportunity of being in Nebraska and just going through, that’s the whole thing, you’ve got to fall in love with the process. It’s not about whether you win or lose, it’s about how you play the game. And I’m really grateful for that experience and I actually can’t wait to apply that or help apply that for other people or people listening to this podcast. Or down the line, as most likely a serial entrepreneur to learn from those lessons and to just be better the next go around.
PW: That’s really good stuff because I’ve always wondered especially from a venture capitalist perspective or a company that’s just talking to venture capitalists, you really brought it up. Because it was going to have that as follow up would have been some of the reasons that people wouldn’t invest with you. Is that an indictment on the subscription box business or was the fact that you were selling, you know curating supplements and different things like that? So, it’s really good to hear that you went back to them to ask for their feedback so that you really could get insight into what we’re missing.
PJ: And sorry to cut you up. The sample box thing did come up and that was a lot of why people said they didn’t invest upfront like “yeah samples, we don’t know. There’s a lot of them out there. We don’t know where it’s going.” And whatever. But again, I think just simple thinking that just say like “oh it’s just because we’re a sample box like”. I would be a lazy CEO if I just said “it’s all this competition and it’s because we’re a sample box so they’re not investing in us”. Bullshit! Go really drill down. So, sample box was probably a smaller hurdle that was actually easier to get them over. But the true feedback 90 days after were those three big hurdles that added up for people. But definitely being a subscription sample box is a little bit burnt out. The interesting thing is they’re starting to catch a little wind right now. People are getting interested in it again and here’s why. Because all of those tech investors made big bets on who the next social media are for dogs. Or Zappa, zap-a-tab you know the next bar app. And those things are not only lost but all their money is gone. And so…
PW: They have to recover somewhere.
PJ: Yeah, well and now they’re looking at us and they’re like well at least if that company fail there will still going to be value and they could create profits and they could get some sort of a margin. Right. And so, what’s interesting now is in the venture capital world a lot of VCs, and this is just picked up in the last couple of months, they’re actually looking at investments with less of a downside. So, if you create a sample box company, you raise enough capital to buy a warehouse. So, if the business fails at least you had bought a warehouse in the process that makes the investors downside a little bit less. So, that’s the interesting development that I never saw coming. Never even thought about it.
PW: That’s interesting for sure. You mentioned in that too about Bulu Marketplace. Do you think that is the value prop that you guys offer? My next question here is, what are great marketing or business strategies that you guys have found along the way to kind of scale your business? And I don’t know of a lot of subscription box companies that, separate from the subscription box business alone, they have a real marketplace outside of that. Is that a value prop that you guys offer separately or how does that work in conjunction with what you’re doing there?
PJ: If I’m being totally transparent. We had a couple of companies that came to purchase Bulu Box. And what’s crazy is even as a poor kid, when millions of dollars can be shoved in your face, it’s just not enough for me. It’s not about the money anymore. It’s about the team. It’s about doing the right thing. It was Warren Buffett that said it takes 20 years to build a reputation and five minutes to destroy it. And so there were a lot of people that came to the table and my wife and I would have done fantastic. And we could have shared that money in any way we wanted to. But we found out that companies that wanted to acquire us were valuing us as e-commerce website. No matter how much we screamed and kicked and yelled and pitched and took private jets and top floors of buildings and told them “no! This is a data company. Look we’ve sampled over five million products now over seven million and we have 24 data points on each of these. We have stuff that nobody else has. Look!” We even created a few products – full size products and put them on our site and they kicked the ass of everything else on our web site. And not because we want to get into building our own products but we just wanted to prove a point to these people that wanted to acquire. So, we know what people want faster than anybody else does. And the valuable lesson in that was we were valued as an e-commerce company and that’s not nearly as valuable as a data science company. And furthermore, the other lesson learned is you have to show people. You can’t tell them; you just can’t tell them. You have to show them how you’re doing. So, that’s when we went back and talked to the other investment company and said “OK you know what, what are we going to do?” And my wife and I were walking a trade show and I just started laughing like “this is crazy how much money people spend at this trade show”. And we have experience in trade show and that’s 50000 there, 20000 there, that’s half a million there. And we just got in this conversation and I don’t remember who said it first but it was like “where’s the LinkedIn for all these products?” So, we actually did our homework and there were some listings sites or some people doing something similar but what we had, what nobody else had was the data on products. And so, that’s when we built Bulu Marketplace and it fulfilled. OK this is a data science company. We can get an original there. There’s some really cool happy serendipitous things that happen. We went back to all the people sampled with us and we created this beta version and just after being in the industry for four and a half years, the retail buyers that have contacted us and figured out. The really big, big, big dogs in the industry have figured out that we know what’s going to sell before everyone else. Actually, a lot of the big dogs in the industry will tell a company to sample with us and then to give them their sampling information back and we’ve helped get people directly on the shelf like that. And I always said “man if we were consultancy we’d be bagillionaires”. But how do we how do we facilitate this right? And it just all came together and we’ve created this huge rolodex of retail buyers. I’m talking like Target, Walgreens, GNC all the way down to like your local mom and pop’s place and a huge database of brands that have sampled and brands that nobody has heard about. And a buyer can’t google, a buyer can’t go to a show, because they’re brand new and nobody knows. And when somebody launches a product they come to us first to sample because they Google and they look and somebody, some investors at Shark Tank has to be sending people are way to sample because we’ve sampled a ton of those products. And so, it just dawned on us that LinkedIn is fantastic. And if we can create that profile for buyers, there’s things that buyers need. They need insurances, they need to see marketing, they need images to download. But furthermore, how interesting would it be if on your LinkedIn profile you said that you did – if I had a LinkedIn profile for Paul Jarrett and I said I did over $1 million in sales but then my company actually had below it. Like a confirmation “yes, Paul actually did 1 million in sales. We’re confirming that, here’s a quick box report.” Or if I said I don’t know… you kind of get the call.
PW: I like it that’s a great idea. Yeah.
PJ: And so, we built that and we started it and it’s only nine bucks a month for brands to use. Literally for nine bucks, you can create a Bulu Marketplace profile. Get that in front of retail buyers. Retail buyers get it absolutely free, they don’t even enter a credit card and they get access to all of this free data. And so, we started doing that and it’s just like a flywheel of people getting interested. And then something interesting happened. I wish I could say I was smart enough to figure out that this would happen. But people started uploading products that had never sampled with us, never sold on our site, because they heard that that’s where you put your product to be in front of buyers. We actually picked up the phone and called some people and said “hey, sorry. We didn’t intend for you to sign up. You have no sampling data etc. etc. And they’re like “oh I don’t care. For nine bucks, if Target stumbles upon my product, that’s totally worth it for me”. And we’re like “OK cool! I guess”. And so, we had to kind of rebuild the machine and then we didn’t know this happened but one day like a frozen food uploaded and then like children’s toys and then make up and we’re like “what the hell’s going on?” So, we called up all these places and they go “oh no. the buyer found out that I heard of another product and they wanted another buyer to look at it so we just put it on here for them to look at it”. And I’m like “holy crap, we have something super interesting”. And so, we originally thought that providing the data would be enough but now we just decided to rebuild our platform and be that place where people can sample with us, get in front of consumers, really what we say is we help your product be discovered by consumers but we also help your product be discovered by retail buyers and a little bit of data in a nice, quick, fast platform to use. It is clear that the future of our company is Bulu Marketplace. We just made 8 hires on the team in the last two months. We’re hiring a few more. So, that’s the future of our company and now other sample boxes are coming to us wanting to put their data on the platform and resell it or put their data on Bulu Marketplace just as an added value. And we’re trying to figure out how we’re going to handle that right. In some companies, they say “look, you can do all of our shipping fulfillment etc. of the sample box. You guys are really good at that. You can use the data put it on the market place”. And then we’re just going to go back to the brands and say “hey we did you a favor and made you a product profile, put your data there to show to retail buyers just as added value”. And of course, the brands don’t have to show their sampling data. They can show whatever they want. And it’s been an interesting evolution and my wife is my co-founder and I joke with her and I say “yeah it’s totally normal to run two businesses and have a baby all within a one month period”.
PJ: But it’s a sickness man. And it’s like, we love what we do. In over your head is the only way to be. And the products work so well together. And it’s really exciting to see the flywheel of both companies kind of spin up at the same time because they’re supporting each other. So, it’s really cool.
PW: I don’t like this word because it is a cheesy word but it is a great synergy between the two and it makes perfect sense between the two. Paul, before we wrap up here first of all let me say I think you’re an amazing entrepreneur. I love your business. You’re a really cool dude too.
PJ: Back at you Priest.
PW: And I really appreciate that. So, guys go check out Bulubox.com. That’s the area where you can go get the vitamins and all that stuff. Supplements. It’s a site that’s really dedicated to health as he gave his personal testimony about why he looked into fitness and how important it was for him to lose weight and some things that he tried out. This is really good stuff. It has sections for energy, sleep, all that kind of stuff. So please check out bulubox.com. And then we just talked about Bulumarketplace.com. You guys go check out those two sites. Paul Jarrett is the CEO. Paul, did you want to share anything else? How can people get in touch with you if they are supplier or if they’re a buyer, whatever they want to do? How can people reach out? Is there anything else you wanted to share with people today?
PJ: Yeah I love connecting with people. I just warn people that I take a little bit of time but it is me and I will get back to you. Just drop me a line. It’s just Paul, P-A-U-L, @bulumarketplace.com. B-U-L-U-M-A-R-K-E-T-P-L-A-C-E.com.
PW: There you go. Paul thanks again. You’ve been a pleasure to talk to. I really appreciate it my friend.
PJ: Thank you so much. I’m very grateful for this. And thanks to everybody if you’ve made it this long listening to me. And man, I look forward to connecting with you a lot in the future. This is awesome Priest. Thanks.
PW: Definitely. Thank you my friend.
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