How do you stay ahead in a highly-saturated eCommerce space? How do you prepare yourself for leadership? Speaking to the company’s unique and differentiated product, Joe Megibow, CEO of Purple, talks about their success when he says “this is not a convenience play of a digitally-native company.” He underlines, however, that the other essential part of D2C success is conveying the uniqueness of your product to the marketplace - and almost more importantly - setting and aligning the right culture.
Welcome to the Conversations with CommerceNext podcast, Season 1, Episode One, I’m your host Michael LeBlanc, and this podcast is brought to you in conjunction with CommerceNext and presented by Wunderkind.
How do you stay ahead in a highly-saturated eCommerce space? How do you prepare yourself for leadership?
Speaking to the company’s unique and differentiated product, Joe Megibow, CEO of Purple, talks about their success when he says “this is not a convenience play of a digitally-native company.” He underlines, however, that the other essential part of D2C success is conveying the uniqueness of your product to the marketplace - and almost more importantly - setting and aligning the right culture.
In our debut episode of Conversations with CommerceNext, Joe offers key pointers to retail marketers about educating the market on different and disruptive products, the importance of word-of-mouth awareness, and what he’s learned in his transition to Purple, as well as leadership lessons learned from the Purple turnaround.
Let’s listen in now with my co-host, Veronika Sonsev
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Thanks for tuning into this episode of Conversations with CommerceNext. Please follow us on Apple, Spotify, Amazon Music or your favorite podcast platform where we’ll be sharing career advice and marketing strategies from eCommerce and digital marketing leaders at retailers and direct-to-consumer brands each and every episode. CommerceNext is a community, event series and conference for marketers at retail and direct-to-consumer brands. Through our online forums, interviews, webinars, summits and other in-person events, we harness the collective wisdom of our community to help marketers grow their businesses and advance their careers. Join CommerceNext events to meet other industry leaders and learn the latest ecommerce and marketing strategies. You can find upcoming events at CommerceNext dot com
Have a fantastic week everyone!
Joe Megibow has been at the forefront of e-commerce since the early 1990's and brings nearly 30 years of experience in technology and business. Since October 2018, Joe has served as CEO of Purple, a digitally-native vertical brand with a mission to help people feel and live better through innovative comfort solutions. Joe has also served as a board member of Red Lion Hotels Corporation since April 2017. Most recently, Joe was an advisor for Advent International, the global Private Equity firm, focused on digital best practices for their consumer businesses. Prior to that in 2016 he served as President of Joyus, Inc. and between 2012 and 2015 he served as Senior Vice President and Chief Digital Officer at American Eagle Outfitters, Inc. where he oversaw the transformation and growth of American Eagle’s $550+ million direct-to-consumer business. In this role, he built out a global omni-channel strategy and infrastructure, and led all digital marketing, customer operations, engineering and product management efforts. Prior to that, Joe held several senior roles with Expedia, Inc., including VP and GM of Expedia.com, where he had P&L responsibility for the US business with direct ownership of marketing, merchandising, and operations. During this time, he launched Expedia’s mobile business and was named Chairman of Mobiata, an Expedia, Inc. company. In 2000, Joe was an original employee of TeaLeaf Technology, now an IBM company. He has also held roles at Ernst & Young Management Consulting, and EDS in their Advanced Technology Group.
Joe was honored in 2021 as a Utah Business CEO of the Year, and was recognized in 2011 as Practitioner of the Year by the Digital Analytics Association where he served 4 years on the DAA Board. He earned an MBA from the University of Chicago Booth School of Business and a Bachelor of Science in Electrical Engineering from Cornell University.
ABOUT US:
An ecommerce veteran, Scott Silverman has been active in the industry since 1999 and is passionate about digital retail and the innovation driving the industry. Scott Silverman is the Co-Founder of CommerceNext. Previously, he spent 10 years as Executive Director of Shop.org where he launched the Shop.org Annual Summit. Scott co-invented “Cyber Monday” in 2005 and was the founder of Cybermonday.com in 2006, a shopping site that has generated more than $2.5 million for Shop.org’s scholarship fund.
Veronika Sonsev is the Co-Founder of CommerceNext. She also leads the retail practice for Chameleon Collective and is a contributor for Forbes on how to grow retail and ecommerce in the age of Amazon. Having spent the last 10+ years working with some of the largest retailers and direct-to-consumer brands, Veronika has intimate knowledge of the challenges facing retail and ecommerce today. She is also an advocate for women in business and founded the global non-profit mBolden, which is now part of SheRunsit.
Michael LeBlanc is the Founder & President of M.E. LeBlanc & Company Inc and a Senior Advisor to Retail Council of Canada as part of his advisory and consulting practice. He brings 25+ years of brand/retail/marketing & eCommerce leadership experience, and has been on the front lines of retail industry change for his entire career. Michael is the producer and host of a network of leading podcasts including Canada’s top retail industry podcast, The Voice of Retail, plus Global E-Commerce Tech Talks and The Food Professor with Dr. Sylvain Charlebois. You can learn more about Michael here or on LinkedIn.
About CommerceNext
CommerceNext is a community, event series and conference for marketers at retail and direct-to-consumer brands. Through our online forums, interviews, webinars, summits and other in-person events, we harness the collective wisdom of our community to help marketers grow their businesses and advance their careers. Join CommerceNext events to meet other industry leaders and learn the latest eCommerce and marketing strategies. You can find upcoming events here.
Michael LeBlanc
Welcome to the Conversations with CommerceNext podcast, Season 1, Episode 1. I'm your host, Michael LeBlanc. This podcast is brought to you in conjunction with CommerceNext, and presented by Wunderkind.
How do you stay ahead in a highly saturated eCommerce space? How do you prepare yourself for leadership? Speaking to the company's unique and differentiated product, Joe Megibow, CEO of Purple, talks about their successes when he says, 'This is not a convenience play of a digitally-native company.' He underlines however, that the other essential part of DTC success is conveying the uniqueness of your product to the marketplace, and almost more importantly, setting and aligning the right culture.
In our debut episode of the Conversations with CommerceNext podcast, Joe offers key pointers to retail marketers about educating the market on different and disruptive products, the importance of word-of-mouth awareness, and what he's learned in his transition to Purple, as well as a leadership lesson learned from the Purple turnaround.
Joe Megibow
We had no real access to cash, we were a very risky loans. I mean, we couldn't get banks to talk to us. And, we were burning cash at a rate that, you know, our runway for survival was not years it was in in single digit months.
Michael LeBlanc
Let's listen in now with my co-host, Veronica Sonsev.
Veronika Sonsev
Welcome to Conversations with CommerceNext, Joe. How are you this afternoon?
Joe Megibow
Doing well, thanks so much for having me on the show.
Veronika Sonsev
Well, thank you so much for joining us on our very first interview. This is an all-new podcast. And, of course, thank you for being an advisor on the CommerceNext advisory board.
Joe Megibow
It's a pleasure. It's, love the work you guys are doing. Keep up the good work.
Michael LeBlanc
And, and Joe, it's great to hear your voice again and actually see you. You and I had a chance to chat briefly earlier in the year on The Voice of Retail. So, it's great to have the opportunity to have a longer more in-depth conversation. So again, welcome.
Joe Megibow
Thank you.
Veronika Sonsev
So, to dive right in. Joe, you've had a really interesting career journey from a Digital leader, sorry, to a CEO of an innovative DTC mattress brand. You know, tell us about yourself and your personal and professional journey.
Joe Megibow
Yeah, it's um, you know, sometimes looking back, it seems like, you know, there, there was lots of planning and, and structure to get you where you are. And I'd say, I'd say my journey has been much more, much less of a straight line and, and more of just finding opportunities, it shows up. A quote I've always loved, and there are different versions of this, but is, 'Chance favors the prepared mind', and I'd say a lot of my career has just been opening myself up to opportunity and being able to capture that opportunity when it presents itself, which, which takes work and timing.
But I, you know, I started my career actually, as an engineer. I was a electrical engineer originally focusing on, on more on the computer engineering and software development side that was a pre-web. And, ultimately, after a stint at business school pivoted more into the business and consulting side.
In the late 90s, we had the opportunity to join a founding team and help start a really innovative web analytics company that ultimately IBM bought. Which is company called a Tea Leaf technology at the time. Which really, is something I learned in business school, which I graduated Business School in the mid-90s. So, just, just at the birth of the web.
But even at that time, the idea of the intersection of data and marketing was starting to come to fruition. And, a lot of that foundation existed before the web. Really driven by things like loyalty programs, airlines, grocery, and there was a real renaissance of leveraging credit card data for you know, spending, spending patterns and, and, and doing marketing segmentations.
I mean, there was already a lot of data happening. And this idea that you could have this intersection of data and marketing just blew my mind. I mean, I always sort of thought of marketing and the 'Mad Men' way of, you know, these, these rainmakers who could sense the consumer trends and, and lean into them and remarkably creative ways. And, and it was like, wow, there's a data side to this. And it just it rocked my world.
And coming out of that with the birth of the web. I really leaned hard into that and had a chance to spend the better part of a decade building up a, an analytics company that really leaned into leveraging real world consumer behavior. How people engaged with online retailers, and online transactional companies. Which you know, while at its core we were just trying to sell software became the best education I could possibly get on understanding how to better service consumers in the real world.
And, from there, I flipped to the other side and got out of services and software and joined one of our biggest customers, which was division of Expedia, hotels.com. It's always interesting to take your software and then actually tried to use it. Which is a learning exercise itself. Turned out it wasn't quite as comprehensive as I thought it was. But, I've stayed on the operating side ever since. And I've loved it, and did, did a good stint at Expedia. Six years, they're ultimately running the US business running expedia.com.
Flipped over into classic retail, vertically integrated retail with a terrific apparel manufacturer, American Eagle Outfitters. Got back into a couple startups, and did some work, advising through private equity and ultimately led my way to Purple,
Veronika Sonsev
You've had quite the career journey, was it a big leap to kind of move into that top chair with the CEO role at Purple?
Joe Megibow
I think any real career shift, whether it's into a new company, a new industry, or a new level, I mean, going, you know, my, from my first Vice President job, to, to this job. With that leap comes higher standards, higher expectations, and some degree of the unknown. I mean, it's, you know, by definition, anytime you go into a new role at a new level, you're doing something you've never done before. So, I, you know, I think anyone as their career progresses, deals with some of these things.
I will say, and it pains me to say it, as you're getting, getting that first job at any level is always a challenge, you know, who's willing to take that bet on you? And, with CEOs, you, either you're coming in from the outside, which more often than not means there's a problem. It's, it's not common, a company says, hey, we've got a great CEO, everything's going great, let's replace them. You know, or you're building up from within, you get promoted up from within, and I will, that wasn't an option for me. So, it was coming in from the outside.
And, there is a strong preference in industry to place a CEO who's been there, done that who's done it before. So, there is a really big leap into that first time CEO job. And, one of the reasons are is it is, it's a job that is very difficult to truly appreciate from the outside in. And, even someone who perhaps hasn't had the greatest success at being a CEO, just knowing the job and knowing what they're getting into, in some ways makes it a more risk averse, or a less risky way to approach to the hiring. So, it is a big leap. And I started saying it pains me to say I, you know, I would love to say that they're all wrong. And, it turned out it's exactly what I expected. But it turns out, there's a whole lot of this job that I have had to learn as I've gone and I couldn't possibly have truly comprehended until I got into the role. So, there's a little bit of truth to it. And I wish I could say otherwise.
Veronika Sonsev
And I think sometimes that's the opportunity where you really grow the most where there's the that kind of gap between, you know what you expected and what you step into.
Joe Megibow
For sure.
Veronika Sonsev
So, let's, let's shift gears and talk a little bit about the Purple business. For those that are not familiar with the Purple mattress and Purple overall. Can you talk about the brand and how you go to market?
Joe Megibow
Yeah, happy to. If you don't mind, I'm going to start with the product?
Veronika Sonsev
Yeah.
Joe Megibow
As we are, at our core, a manufacturer of a highly differentiated product. I mean, most of our, In fact, it's interesting, despite the nature of this group in this conversation, we have a right to exist as a company and likely would have been successful even if we had launched 30 years ago, without the web. This is not a convenience play of a, of a digitally-native company. We are at our core inventors of differentiated product that we manufacture ourselves. And that's important in our go to market strategy.
Our mattress is made of materials that we invented. So, I mean, we believe we've come up with the first contender to displace memory foam. We don't use foam in the sleep surface of our mattress. It's, it's elastic polymers that we invented. And our founders who, who built this business initially invented consumer gels. I mean the blue gel, you see in everything, they have the initial patents on all those blue gels. So, you know, we have sort of superpowers in inventing these, these innovative, highly durable and flexible materials.
But the way we put them together in, if you have seen our advertising in this grid formation that has remained markable ability to support weight, but still, you know, still be soft enough where your pressure points to relieve. And, the physics of this, it's called buckling columns. It's really hard to take gels and manufacture this. And, I mean, 90% of our revenue is as a result of manufacturing processes and machinery that we had to invent to make these things. So, I mean, we not only had to invent new product, we had to invent new manufacturing equipment to make it. And, the majority of our revenue is on machines we build that takes, you know, that's, that's many, many months of work and millions of dollars of investment just to build the machines to make the product. So, at our core, we are first and foremost, a creator of innovative products and a manufacturer.
Now, the challenge is, how do you convey that to the marketplace? How do you educate the market on something that's different or disruptive? And how do you do that at scale? And that's where digital comes in. And, a lot of our go to market is at its core. it's an education campaign. It's an explainer campaign on how do we identify what, what the opportunity, where the problem is? And, and how do we bring that to life? And, we were one of the first to really arbitrage video.
I mean, we really built this business on some novel video that, you know, on the surface is, you know, is very humorous, fun, you know, video designed for virality which, which we've been successful. I, we've been, you know, we're literally have crossed 2 billion views across all our videos.
Michael LeBlanc
Wow
Joe Megibow
Which, if you're a media company would be nice. But I mean, we're, are we, these are mattress commercials. I mean, it's, it's somewhat, somewhat mind boggling.
Michael LeBlanc
Right.
Joe Megibow
But, you know, but, but at their core underneath, as you sort of dissect and unpack them, they are explainers. They are, they are creative attempts to identify whitespace in the market, a consumer need and our novel approach to solve those problems. And that's really been the core of our brand. It's we've got something better, big, we've got something different. We've got something that we believe is better.
And, more and more, as we went over customers, despite our substantial marketing spend, and our marketing efforts, word of mouth continues today. I mean, we were guiding to as much as 900 million in sales this year, word of mouth continues to be our number one source of awareness in our product. And, you know that, that is a sign of both our product effectiveness, our product quality and satisfaction, but also our ability to convey this narrative so that our consumers know how to talk about us.
Michael LeBlanc
If I was looking for your product, Joe, would I find it on both sides of the border in the US and Canada or you, do you have an international business? Talk about that for a few seconds.
Joe Megibow
And it's tricky as a, as a manufacturer going, of a product that weighs hundreds of pounds and is difficult to, to ship, I mean, most of our revenue is products that FedEx and UPS can't ship, it's too heavy. So, I mean, we're more like a furniture company manager, you know, we live in a world of freight.
So, we go, going global, poses some unique challenges for us. Right now, we are in the US and Canada. We, we've partnered with a terrific Canadian retailer, called Sleep Country. It hasn't been the greatest year to launch with them, as Canada is still not open back up. Nearly half of our scores of theirs are still closed. But we're predominantly domestic.
What we have taken is a very omni channel strategy. When you're selling a considered purchase, that's a durable good, that the value proposition is something different, something unfamiliar, experiential, selling matters a lot. And oh, by the way, in this category 85% of sales happened brick and mortar. So, you know, it's just it's another interesting challenge as a, as a company that, that was born on the web, is we've realized the importance of having our product out there and it's one reason we've leaned in hard into retail partners as well. While it's only about a third of our revenue, we are sold in over 2000 retail stores now. And those, that's, that's not CPG. That's not boxes on shelves. You know, we're, I love Costco, I shopped there regularly, but we, you know, we haven't put sealed box mattresses in Costco. We are in furniture stores and mattress stores where we get significant square footage on the floor, where you can actually try experience our mattress and have the benefit of well-trained associates to help explain what we've got.
Michael LeBlanc
We'll be right back with our interview with Joe Megibow right after this message.
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Let's turn our minds to your time at, at Purple. So, it's about two and a half years since you arrived, and you arrived at CEO. And, I want to parse that into two parts. One is kind of when you arrived, were you a change agent? Were you there to bring something you already alluded to, you know, someone coming in from the outside for the founders? Maybe it was a degree of sophistication. So, talk about the changes that you made, or brought with you, in the past two and a half years. Not an ordinary two and a half years by any stretch of the imagination.
Joe Megibow
No.
Michael LeBlanc
And then we'll, yeah, and then, then we'll kind of talk about the, the culture and, and but first, let's talk about the, you know, from a strategy perspective,
Joe Megibow
Sure.
Michael LeBlanc
From a go to market perspective,
Joe Megibow
Sure.
Michael LeBlanc
Talk about that for a bit.
Joe Megibow
And it, believe it or not, it's closing in closer to three years now than two and a half, it's time keeps flying. The, so almost, I mean, yeah, the last year was challenging for everyone in ways,
Michael LeBlanc
Sure,
Joe Megibow
That none of us could have predicted. And, that said, the year and a half prior to the pandemic, in many ways were much more challenging and, and much more critical for us in our survival. And frankly, the work we did over that period of time is, is really the only reason we're talking today. It, how we were able to weather the pandemic and actually ultimately grow through the pandemic.
When I came in, we, you know, give starting as a manufacturer, the kind of growth that we had, I mean, we finished 2018 with 285 million of net revenue. And, at that time, we're barely a three-year-old company. You know, to grow that much, that quickly, as a manufacturer, breaks companies. And, we were broken.
Michael LeBlanc
Right.
Joe Megibow
We were tragically broken. And this was a company that was nowhere near profitability. We had just gone public. In, I joined in October of 18, we'd gone public in February of 18. We've just gone public through SPACs, SPACs are suddenly all the rage right now. But back then, for a bunch of reasons. SPACs were much riskier, and nearly all of the risk, we were realizing.
You know, we were very thinly traded. We had very little access to public markets. We had lost half our valuation from when we had closed this SPAC. So, we're trading, you know, our stock was in the in the mid fives, and we had closed at roughly a $10 price. So, we're worth half. And, we limited cash. We had no real access to cash. We were a very risky loans. I mean, we couldn't get banks to talk to us. And we were burning cash at a rate that, you know, our runway for survival was not years, it was in in single digit months. So, I mean, insolvency was a risk. And, and there wasn't a very clear path to get out of this. And you know, a lot of it was just operational challenges. In our main manufacturing facility, we couldn't even keep people. We had over 100% attrition. I mean, ever, we were burning through the entire plant annually and in towns that you put manufacturing, you know, you have a finite labor pool that is not sustainable. We were investing,
Michael LeBlanc
And, it's not like you're, it's not like you could have resolved a whole lot of issues either with insolvency as a strategy. Because it's not like you could get out of store leases that were burdensome or anything,
Joe Megibow
No, exactly,
Michael LeBlanc
Right, the core business.
Joe Megibow
And it was mostly self-inflicted. You know, it's, its waste, it's an efficiency. It was a lot of spend on things that, you know, you're doing a whole lot of a lot. You know, we had many different simultaneous initiatives all going on at once. Most of which weren't resource for success, and all of which were burning cash. And, just a lot of waste and inefficiency.
So, I mean, you know, some advice I gave, I was given as a new CEO, you know, it was take 90 days. Talk to everyone. Listen to everyone. Make sure everyone's heard. Come up with an informed point of view, and you'll know what to do, then rip the band aid off and go. I realized,
Michael LeBlanc
Right.
Joe Megibow
30 days,
Michael LeBlanc
RIght
Joe Megibow
Into the job, that I didn't have 90 days. By 90 days, it'd be too late. So, 45 days into my job, I, you know, through a series of natural attrition and forced attrition through layoffs. I mean, we in downsizing, we reduced the company by more than 15%.
Michael LeBlanc
You know, on a scale of one to ten, as you were coming into this opportunity, a ten being you had perfect knowledge about the storm you're entering and the timeline, more importantly. A one being, 'Everything's fine, we just need your new perspectives.' What, where, where, when you arrived that first day, where were you on a scale of one to ten?
Joe Megibow
Yeah, it's a good question. It is easy to get caught in that trap of 'Holy cow, I had no idea how bad this was' or something like that. I'd made that mistake earlier in my career. And I, it's one of those mistakes you, I believe mistakes are a foundational part of learning and growth and success. But, that means learning. And that was a mistake I was never going to make again.
So, I sought out executives and those with knowledge in the company. The only way I could describe it is to try to talk me out of joining. Tell me, tell me why we're going to fail. Tell me why I won't be successful. Tell me what's really broken. So, I'd actually say on a scale of one to ten, I'd probably give it a seven or eight. And the delta, why I wasn't a ten out of ten, what I hadn't anticipated was the rate of burn, the urgency. That it was broken in ways I expected, but the, the need to move as quickly as we needed to move what, was a surprise. And, I don't even think the board was fully aware of that time.
So, we had to take some very swift action. And, that, that time to listen and learn and formulate just wasn't there. I mean, it's, you know, it's trying to figure out how you're gonna keep warm in a snowstorm doesn't help while you're freezing to death. You know, it's, it's a, so it was, it was fine some blankets quickly and keep warm.
Michael LeBlanc
And what's your, what's you’re talking about, what, what you're getting to, I think is, is the culture right?
Joe Megibow
Yeah,
Michael LeBlanc
So there's, you've already talked about some, some tactics, perhaps some tactical things, like too many projects all at the same time. But, that does seem to point to a culture that was a little bit more ready, fire, aim.
Joe Megibow
It was, it,
Michael LeBlanc
But don't want to put words,
Joe Megibow
That's right. And, you know, I mean, there were I think posters at the time, which, you know, alluded to things like beds, on trucks. Just at whatever it took. I mean, that, it was a startup, it's what you do. At a startup, it's just whatever it takes to get the job done. Who cares what role you're in, what function you're in, who cares what your day job supposed to be, just get, get product out the door. You know, and, but, but that only works for so long. And, and it can be very, very toxic to a culture, especially if that is at the expense of people, and safety, and, and growth, growth of people, growth of talent.
Michael LeBlanc
Turnover of employees,
Joe Megibow
Absolutely,
Michael LeBlanc
I mean,
Joe Megibow
and by the way.
Michael LeBlanc
Now, you describe, you said ripping the bandaid off.
Joe Megibow
I looked at, I looked at Glassdoor and other sites before I joined. And I mean, the approval ratings were about as low as they could be. And, there were some themes and like one of them was communications. And that, you know, part of building the culture up as you're simultaneously causing, you know, things that cause grief, like letting 15% of the company go, it was dramatically shifting communications. It's like, I mean, I put a rule out, almost actually, I think it was on the day I joined, which is, 'You're going to hear from me a lot. We're going to talk as a company, and it's going to be a conversation. And here's my deal. If you're willing to ask the question, I'm willing to answer it.' And, you know, you know, that, that has to be tested. But, I've been pretty true to that. And it's at all levels.
We, I brought all of the directors and above together within a month of joining. Just because that's you know, that, that is the extended leadership of the company. If you don't have that level bought in,
Michael LeBlanc
Right.
Joe Megibow
You know, that level aligned, all sorts of bad things are gonna happen. And, it was fascinating to me, when I brought them together, many of them had never met each other before. In fact, they'd never been together as,
Michael LeBlanc
Wow
Joe Megibow
A group before. To which all I could say is, 'I'm sorry.' But, you know, that's, that's not ever going to be that way again. And, it's just again, we had grown so fast, those, and had grown up from within, just a lot of folks didn't know any different. And, it was just a matter of maturing, and, and building the foundation.
So, I, we could talk for hours on this, but a lot of the first year and a half was getting the structure, and foundation, and process, and focus in place to get the unit economics aligned, to get everyone working on, on leverage, and value, you know, value creation and getting us all, all focused on the right things together. And, that's what we did.
And, you know, when the pandemic hit, we were actually really well set up to do whatever we need to do. Whether we needed to scale back, or lean in, we had the team. I mean, it was still a young team, and a new team, but we had the team that at least was organized and set up to react. And, as it turned out,
Michael LeBlanc
Right.
Joe Megibow
We had tremendous opportunity to arbitrage and where many others took conservative responses, or pulled back, and protected. We leaned it hard. And, be it, you know, call it, 'The rest was history.' But, I mean, it really helped set us up,
Michael LeBlanc
Yeah.
Joe Megibow
From a business with no cash in the bank and unprofitable, to a business that is wildly profitable and over 100 million in the bank.
Veronika Sonsev
That's incredible. So, it sounds like a lot of that cultural shift was around, kind of creating clear lines of communication and helping kind of the different departments within the company start to communicate and help prioritize the initiatives that were going on in the company.
Joe Megibow
It is, and culture is a long-term problem to solve. Like, it starts at the top. Tone at the top matters a lot. And, and I set that early on, and I push it. But, at the end of the day, if the only communications is happening at my level, and it's not truly getting pushed throughout the organization, you know, is your team leader, or your line leader, at, sharing and being as communicative, or are they using knowledge as, as a source of leverage or power? You know, how you truly transform an organization top to bottom, it is hard, it takes time.
Some of it is, we've had the advantage of growth. This is one place where, where high growth can be your friend. I mean, more than 50% of our employees, right now, we're, we're over 1600 employees now, I mean, more than 50% of our current employees have been hired since the pandemic began. I mean, in fact, it's crazy how many of employees, whether they're on the floor, in our manufacturing operations center, or in corporate, you know, I've never even seen what the pre-pandemic company looked like.
Veronika Sonsev
Yeah,
Joe Megibow
But, but it gives opportunity on culture setting. It's, it's, you know, you get a lot of people coming in that they only know what you're saying today. And, it's just making sure the anchors who have been here long are, are bought in. And it takes time. And we're not there yet. We have a lot of work to go. I mean, one way I measure it is, I, you know, I'm on a mission for us to be recognized in one of the, you know, Best Places to Work surveys that are out there. And those are hard, because the way those surveys work, are they survey the actual employees. And, we haven't won it yet. We've entered a couple for the last couple years, and we get the results, and we have seen steadfast improvement. But, I don't want to, you know, and that's, that's it, it's forward motion. It's you make it better, and you never stop pushing forward. But we haven't earned that honor yet. So, I mean, by no means do I want to say we've got this amazing culture here yet. What we've got is an amazing trajectory.
Veronika Sonsev
That's great. That's awesome. Well, I want to switch gears again for a second, because as you know, CommerceNext focuses on marketing. So, we would definitely be remiss if we didn't ask you about how Purple approaches marketing these days. As you mentioned, kind of earlier, previously, you know, Purple was known by the, the funny marketing videos that you would put out. How has your approach changed? And what would you say is unique about your approach today?
Joe Megibow
Yeah, it's, I mean, and this is something else that often breaks companies, the very things that work at one point in time, or drive success at one point in time, without being careful and continuing to read the market, can become liabilities in the future. You can't, I guess the cliche is, 'You can have too much of a good thing', you know. And, and that happened to us. We had remarkable success with our early videos, partly because we just, we nailed the execution really, really well done. Just the right teams, in the right place, at the right time, with the right messaging. But, we also had a moment in time opportunity for arbitrage.
We got into digital video when it was a underutilized and highly efficient channel. I mean, it was basically, Dollar Shave Club and us. I mean, we are the two poster children that are propped up. And, in a lot of ways, I think we'd actually outperformed them. It's just when they got bought by Unilever put a big spotlight on them. But, you know, we, we were, you know, within, within the Googles and Facebooks, we're still to this day held up as examples of what's possible there.
But what came out of that with some interesting things. There sort of a, there's a feedback cycle that is very compelling on this kind of engagement and viewership. And, what we discovered is funny works. And, we kind of forgot that it was about the product. And, we started leaning harder and harder into funny, and frankly, wackier and wackier into funny because the bar kept getting higher on what it took,
Michael LeBlanc
Right, right.
Joe Megibow
To stand out, as everyone else started to copy and follow. And in fact, when I joined, if you signed up for our email, so you could keep informed, one of the primary benefits of the email was to be notified when we had new content published. Which, I I don't think it's the core,
Michael LeBlanc
Yeah right.
Joe Megibow
Of our business. You know, there isn't a clear map, we're not a high repeat purchase business, you know, it's the,
Michael LeBlanc
Tail wagging the dog, right. It's the tail wagging the dog a little bit.
Joe Megibow
That's exactly right, that's exactly right. And, another thing that came of that, unfortunately, is, in being more internet relevant, viral, funny, wacky, guess what? We were indexing younger. And given the nature of our sort of sophomoric, almost like the School of Monty Python style of humor, we not only index younger, we index more male. While the very strategy,
Michael LeBlanc
Not the decision makers, right?
Joe Megibow
For our company, was to go up market. To have a more premium product, commanding higher price for our premium benefits, as we were launching better product. So, you know, part of it was realizing we needed to age up, and we needed to be more relevant for her. And our approach at the time wasn't helping us any.
While the numbers were off the charts, we were continuing to get high engagement, high viewership, it wasn't helping our fundamental goal, which is get more people in our mattresses, improve their health, and educate the world on what's different and better about our product. And we had to really pull back and remind ourselves that funny was a means to an end, it was a way to break through, but the real opportunity was how we were using funny to educate.
And there's a pivot that had to happen, which is let's not lose our way, let's not suddenly go all serious and aspirational. We can still have, you know, some humility and, and joy in our brand and messaging, and we've tried really hard not to lose that. But, but there's a wide gamut of funny, and we realized we needed a more mature approach. And, and, and get back to the core.
I look at Dyson a lot for, for inspiration. I mean, this is another disruptive, innovative company and a company like us that was successfully able to take their core tech and cross categories. There's a lot we could learn from them. You know, but one thing they were always good at is over, and over, and over educating the market on what their core value proposition was. You know, they didn't say, 'Hey, we've got a mattress', or excuse me, 'We've got a vacuum cleaner that looks cool, or industrial design', or, 'Hey, we're really smart people trust us'. So, 'We're the only vacuum cleaner that doesn't lose suction.' And we had to get back to that kind of messaging and that focus. And that's a lot of what you're seeing today is a real targeted shift, some defensively comparison, how we're different than the competition and some just leading into the benefits. But we're, we are getting really laser focused on education and benefits.
Veronika Sonsev
That makes a lot of sense. And it sounds like also focusing on who the customer is, and making sure that the marketing communication is not just designed to get laughs but designed to attract the right kind of customer on the right kind of,
Joe Megibow
That's right, which, which means you're getting into broader messaging, more segmentation, the complexity we have in producing content, and the content strategies to be able to use this content. And, this is also it's a long buy cycle. I mean, traditionally, it's, it's you know, three to four weeks in the buy cycle. And, our average selling price is around $2,000. So, this is a considered purchase. So, how you are educating mid-funnel, bottom of funnel or top of funnel is different content and a different role. And, building content that is multipurpose and leverageable.
I mean, even, and by the way, even there, there was a challenge. When we launch Goldilocks our first video, what isn't obvious from the outside in, is how much data science went into that. So, we used a team of comedians to help us out, and one thing comedians are good at is testing content. You know, marketers don't talk about comedians enough. But, great comedians, even, even top shelf comedians, you know, if you go to a, you go to in a bigger city, a comedy house, you know, you always hope you get lucky that some top shelf name shows up unannounced and goes on stage. Why do they do that? Because they're testing content when it doesn't matter. It's a big multivariate testing, test and learn strategy. I mean, they're not data scientists,
Michael LeBlanc
Yeah,
Joe Megibow
Making up the algorithm.
Veronika Sonsev
Yeah, but they're looking at laughs.
Joe Megibow
They're, they're testing and iterating and refining content. What we had, we had a comedy troupe working with us, and they knew this. And, like we produced dozens and dozens of opening lines. We produced dozens and dozens of versions of the jokes and we actually put up on YouTube, all these different iterations before we put any money behind it and went big. And, we actually knew what the winning formula was before we put any money behind it. And at the time, since no one knew who we were. The cost of getting it wrong was zero. What is this crap? Yeah, since no one knew who we were. And that's the advantage of flying under the radar when you're small and young. But by the time we got it out there, we had really iterated into a winning formula. We had some confidence before we put our very limited and all of our money behind our launch video.
It gets harder, because then the stakes are higher. And, we put more money into fewer pieces of content and just hope they get right. And, you know, I kind of describe it as the difference of making a motion picture versus a sitcom. You know, the greatest sitcoms, not every episode is a winner. But over time, the collection of them work. That's also been a challenge on how we get back to having the confidence and freedom to produce some dogs. And know that it is more about this continual, relentless, relentless testing and production of content, which, which we'd leaned very hard into. We have a very big creative team producing a lot more content now, versus the more traditional approach, if we're gonna have a big agency and spend a lot of money and produce that one anchor piece of content, that goodness gracious, we hope it works, and then hope we can slice it up into as many usable pieces as possible. You know, we've, we're trying really hard to make sure we don't lose where we started.
Veronika Sonsev
So, Joe, one of the things we want to do on Conversations with CommerceNext, is ask for career advice. So, for any, anyone who's listening or viewing, who would also like to become a CEO of a DTC brand like Purple, what important lessons did you learn? And you mentioned some of the mistakes, but anything else that you would want to highlight, mistakes that you made along the way?
Joe Megibow
Sure. Oh, I've made lots of mistakes. it's a, any,
Veronika Sonsev
What do you wish someone told you maybe is a better way of saying it? What do you wish someone told you that you didn't know?
Joe Megibow
It's, you know, there are roles that everyone thinks they want. Everyone wants that strategy job, where all they have to do is come up with good ideas. And it turns out most strategy jobs are highly analytical jobs with a lot of hard work. You know, and same thing with the CEO, it's, you know, I'm still waiting for the executive lunch-room and the golf games. These jobs often sound better than they are. I, I a board member I knew a decade ago, really distilled the CEO down he said, 'There's, there's only three things a CEO should be doing. Everything else should be delegated.' And yet, this is a grotesque oversimplification. But there's a lot of truth to it.
So, one, set the strategy for the company, and ensure that all stakeholders inside and outside are bought in. Two hire the very best people you can. And three, make sure there's cash in the bank.
Now unpacking those three, there's a whole lot of skills that, you know, so setting the strategy, and making sure all stakeholders are bought in, it's that latter piece that's really critical. is the strategy viable? Is it achievable? Will the skeptic see a path to success? You know, will the optimist see a path to success? Can you actually communicate and inspire and convey and just having a North Star, a strategy is not just a vision for the future, it's a journey, it's a path to get there. So, I mean, there's a lot of operational and tactical and, and, you know, and leadership side to that.
And the second, hire the very best people you can. This is an operating role at its core. I mean, the majority of my time is spent talking to stakeholders inside and outside of the company. And, it's, can you find talent? Can you build talent? Can you maintain talent? Can you inspire the right kind of people to come work and keep them? I mean, it is a lot about investment in talent. You know, and the third, make sure there's cash in the bank, you know, that it seems like a simple thing. And, you know, coming into this company, I mean, yeah, I think in all,
Michael LeBlanc
Not so simple,
Joe Megibow
And often overlooked thing is, you know, you hear about these companies,
Michael LeBlanc
Yeah,
Joe Megibow
That are unprofitable, which is really an accounting treatment. But, they still have cash in the bank. When you're out of cash, you're done. There's no negative cash balances,
Michael LeBlanc
Yeah,
Joe Megibow
I can take a loan, and I can have debt, I owe other people money, but I still, the whole point of the loan is they're giving me cash. So, you know, it's, it is understanding the, you know, the financials of a company and understanding, you know, how, what is about the farm and what is acceptable risk? And how to manage for growth.
Michael LeBlanc
Yeah,
Joe Megibow
It is where most companies fail. And, you can have a highly successful profitable company that runs out of cash. It's a classic business school case study.
So, you know, part of what I'd say is, if this is a role you want, think about the skills, think about where you might need to focus and learn because, you know, there's a certain amount of being a generalist in a role like this and, and that means, you know, do you have the experience across the organization to help all areas in the org, if not, where can you hone that out.
But this the final piece of advice I'd give there is, you know, there's sort of a cliche of, it's lonely at the top. And, you know, and there's some truth to that. You have no peers, within your company at the top, and you have employees whom you can lean in, and, and, and pontificate with. But, at the end of the day, they, they are looking to you for leadership and guidance and support.
Michael LeBlanc
Right,
Joe Megibow
And you have a board of directors, typically, whether you're public or private, who are there to guide you, and partner with you and advise you, but they also are your bosses. And you know, that,
Michael LeBlanc
Yeah,
Joe Megibow
You know, and that's it. You know, so I think building a network, which you can do long before you take any senior role and CmmerceNext is a great example of a place to do that. You know, that building a network of peers. And ideally, if you have upward trajectory of peers who are in the roles you aspire to be in, you know, which is partly mentorship, but partly just peerdom. You know, is a critical part of success and making sure you have those people you can lean on, and you have those networks to get the support you need and the learning you need. And, to be able to have some of those conversations that are, that you can't go down and you can't go up to do.
And you know, and part of that means giving back. I mean, I, I'm a big believer in sort of business karma. And, you know, if you're, if you're leaning into peers to only receive but you're not trying to give back and build up talent, which again, is a big part of the role anyway, you're not going to get a lot back. And, I think that is a really critical part of being successful in any new role, and certainly at this level, is have you built a support network? Because if you haven't, you're truly on your own.
Michael LeBlanc
Well, Joe, you certainly embodied the giving back part. You've been very generous with your time and insights. I couldn't have imagined a better first guest to kick off our new podcast. And, you know, a lot of what you say resonated with me both professionally and personally. I remember, I had a board of directors member tell me I'm with you win or tie.
Joe Megibow
Yeah, exactly.
Michael LeBlanc
Okay, I get it. Well, listen, it's been such, such a treat listening and, and hearing the story, the origin story, the cultural change and the tactical part around marketing the brand. So, so once again, listen, thanks so much for joining us on Conversations with CommerceNext, it was a real treat.
Joe Megibow
Pleasure as well. Thanks so much for having me.
Veronika Sonsev
Yeah, it was great to have you on the show.
Joe Megibow
Always a pleasure, Veronika.
Michael LeBlanc
Thanks for tuning into this episode of Conversations with CommerceNext. Please follow us on Apple, Spotify, Amazon Music or your favorite podcast platform, where we'll be sharing career advice, and marketing strategies from eCommerce and Digital Marketing Leaders at retailers and direct to consumer brands, each and every episode.
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