Investors are giving founders everywhere an ultimatum: just find a way to survive the next few months. This had us concerned about the entrepreneurs who’ve been on this show. Debbie Wei Mullen pitched Copper Cow Coffee to our investors a few years ago, and in this episode Debbie tells the sequence of events that led to a few early, strategic decisions made in 2020 that set up her business to outlast the pandemic.
Today's investors are Alexandra Stanton, Sheel Mohnot, Charles Hudson, and Phil Nadel.
A few weeks ago, the pandemic changed everything for pretty much all of us - and reshaped the investment landscape in the process.
Overnight the startup game flipped from growth at all costs, to keep only the essentials. It’s now a game of survival.
So we were concerned about all the past founders who’ve been on the show. And we wanted to see how they were doing. After asking around, one person immediately grabbed our attention.
Debbie Wei Mullin.
Debbie pitched her Vietnamese coffee startup Copper Cow, to our investors a few years back. But it’s what she did, in early March of this year. Before COVID-19 went from an epidemic to a full out pandemic, that really struck us.
Her business is completely dependent on retail and hospitality, two sectors that have taken such a huge hit. It’s hard to imagine how this business can survive. But she’s finding a way.
But, to understand how Debbie is surviving now, you have to understand how her company was thriving before all of this. So let's listen to some of her original pitch. And then we’ll talk to Debbie about this year.
From Gimlet, this is The Pitch. I’m Josh Muccio.
Our investors today:
Alexandra is CEO of Empire Global Ventures and on the side, she likes to make strategic bets on startups she thinks will strike gold.
As a serial entrepreneur Phil built companies that sold for hundreds of millions of dollars. Now he manages one of the largest syndicates on AngelList.
Charles started Precursor Ventures where he’s invested $20 million in over 100 startups to date.
Sheel has sold 3 startups for over $50 million dollars. Now he’s an angel investor and he’s invested in several companies worth billions today.
The Pitch for Copper Cow, from back in November 2018 is coming up, in just a moment.
Alright, on with the pitch.
Debbie: When do I start?
Phil: How about now?
Debbie: Okay. Hi, I'm Debbie. I'm CEO of Copper Cow Coffee, where we reimagine Asian beverages for your home, office, and adventure. So my mother is from Vietnam. She emigrated here in ’75 as a refugee. And even though I was born and raised in California, I actually ate Vietnamese food exclusively in my house. I actually remember being in college and bringing all my friends home to my mom's house for brunch and people being totally blown away by all of the flavors, especially Vietnamese coffee. And I thought that people would love Vietnamese coffee if it was just presented to them with really, really great ingredients and innovative packaging that fit their lifestyle.
So Debbie started Copper Cow Coffee in 2016, an easy-to-make Vietnamese coffee for people on the go.
And she got a great response. Within a year, her coffee and Thai Iced Tea products were in more than 3,000 stores across the country, including Walmart.
Debbie: But I think that retail success is just the beginning because I think the future of Copper Cow is actually really in selling online as well as into offices. Since launching online earlier this year, we've been growing 20% month over month, completely organically. And then we've also launched an office coffee program this summer, and we're already in over 40 offices. So I'm here today to raise $2 million so that we can have Copper Cow Coffee be a household name.
Phil: Great. Tell us a little bit about the product. You said you made it super convenient?
Phil: So tell us.
Debbie: So actually, why don't I make you guys some coffee.
Debbie: If you guys are ready for it? Awesome.
Alexandra: It's very attractive, the packaging.
Debbie: Thank you.
Alexandra: Well done.
Debbie tears open a matte black-and-white packet.
She pulls out what looks like a white teabag with a perforated top and paper tabs on each side. Inside the little bag is a single serving’s worth of ground coffee.
Debbie: So the way it comes is a portable pour over so it’s just in this handy little packet. You open it up and it just fits over your cup. You tear off the top. And…
Extending those tabs, she suspends the open coffee pouch over the mug. And starts pouring hot water over the coffee, which filters into the cup. Tada! It’s pour over. And it comes with a little packet of sweetened, condensed milk.
Debbie: If anybody want to try it black first? Okay. Here you go.
Charles: Thank you.
Debbie: It's a little super strength right now.
Alexandra: I’ll do it with the condensed... M-hm.
Debbie: So Vietnamese coffee is kind of known for its strength. The varietal is very caffeinated. This is probably one and a half to two cups of coffee of caffeine.
Alexandra: So if I’m someone who drinks half a pot of pure espresso in the morning, am I good?
Debbie: Yeah, this would be awesome for you. Yes.
Charles: What's the price point per serving?
Debbie: So it really ranges. So in retail it's pretty high. It's about $2 a cup. And that includes, but that includes the creamer.
Sheel: Okay. So $2 retail. Can you take us through just the numbers quickly? Like what does it cost you? What do you sell it to the retailer for generally speaking?
Debbie: So we have been selling with a consistent 45% margin for wholesale. Because 80% of our business is still retail because of all the retailers that we're in. Historically it's been a higher margin for ecom, though we're going to kind of reconfigure ecom to be a subscription model where you get months supplies of coffee.
Sheel: Makes sense. And what are hearing from the retailers? How do they feel about how sales are going for this category? Are they reordering? Are you at that point yet with Walmart?
Debbie: Yeah. Well, Walmart is selling really well. We're doing about two turns per store, per SKU, per week. So that's really strong for the price point. And it being a brand new product.
Charles: I just have to disclose I'm an investor in DripKit.
Debbie: I know.
Charles: So I just want to be clear in case there's anything you don't want to share or anything like that. I just want to put that out there. So I'm going to have to be out, but I am a big believer in the category.
Phil: You got a free cup of coffee first, though.
Charles: It's very good. It is very good coffee. And I just wanted to put that out there before she goes into the competition, that's all.
Since he’s already invested in the competition, Charles is out. But he’s noting that Debbie is a part of this trendy Third Wave of Coffee.
Third Wave Coffee companies obsess over every bean, from where it's grown to how it's processed. Then they help you PERFECT the brew at home. So even though Charles can’t invest in Copper Cow, his endorsement of the overall trend actually could be good news for Debbie, if she can prove her product is unique.
Phil: What’s your differentiation from Dripkit?
Debbie: Well, first of all it's definitely the blend. Vietnamese coffee has a very different profile than, they’re definitely highlighting a lot of these really light roast single origin coffees, which honestly are a little unforgiving if you mess up the brew. Our Vietnamese coffee, we’re the first people to be introducing third wave Vietnamese coffee. Historically, this is something that’s actually pretty new. Vietnam’s the second largest coffee producer in the world, but just in the past five years have started to have high end beans. So it’s really awesome to introduce that, it’s really smooth, it’s definitely a really, it’s kind of a wonderful foolproof brew.
Phil: What percentage of your current revenue, let's say for 2018, is from online and what's, what percentage from office and what percentage from retail?
Debbie: 80% from retail. 10% from online and 10% from offices.
Sheel: What do you want that to be next year?
Debbie: I would love it be more of a third, third, third.
What the investors just heard is that this business is almost entirely reliant on brick and mortar channels like Walmart.
Phil: What about online? So what's your current customer acquisition cost and what channels are you using?
Debbie: That's the thing, is it's been all organic to date. So we haven't really, and that's one of the things that we're really going to figure out with this funding. Because when we launched the product line, we did at the fancy food show with a lot of my contacts that I had in the retail space, and we've just been falling ourselves trying to like meet that demand, when really we would like to focus on direct to consumer, on online. And so um...
Phil: How are they finding you currently? When you say it's organic, so how are they?
Debbie: They find it in stores and they buy it online.
Phil: I see. Okay. That makes sense. So who are you going to hire or bring on to help with that since you don’t have a lot of background in online direct marketing.
Debbie: So immediately we want to hire a digital growth marketer, someone who can really execute a lot of the Facebook ads, Google ads, things like that. But right now I’m doing lots of ‘dating’ for a more senior head of brand person, or head of ecom. Someone who is experienced building an ecom brand, umm, probably from fashion or cosmetics, based in LA.
Alexandra: Charles, what has been your experience, obviously leaving out any competitive details, in terms of the arc of a brand like this and what Debbie may run into?
Charles: I think the best trend that Debbie has going for her is that I think once you become a pour over person, it’s kind of the only kind of coffee you want to drink.
Phil: Why is that?
Charles: It’s a lifestyle. Like, once you’ve had... I don’t know. I drink a lot of pour over coffee.
Phil: Just because it’s easier?
Charles: No, it’s better. It’s actually not easier. It’s a better coffee experience than French press. And drinking drip brew is yeach. I used to carry a filter and an electric kettle in my suitcase and it was a lot of space.
Alexandra: Yeah, seriously?
Charles: No, no, I'm not even kidding you. I used to carry this with me. And like Phil, this will give you a point of reference, a good cup of pour over coffee in New York or San Francisco is going to run you 4 or $5 in a coffee shop.
Debbie: Or more.
Charles: Or more. So if you're a pour over person, the idea of being able to have pour over in your office or on the go with you, it's a lifestyle. And once you become a pour over person, it's what you want to drink.
Debbie: And this is something that takes 60 seconds to make and offers really, really great flavor. And so this is what I think is really beautiful about a lot of the great ecom companies that I'm trying to aspire to, is that they really maximize kind of price point as well as luxury. And I feel like Copper Cow does that. We're not the most expensive coffee on the market. We're really, really great coffee that's really easy to make that empowers anybody to make their own coffee without having to think about - do I already own a French press? Do I own a Chemex? Do I own a drip coffee maker?
Phil: But how difficult would it be for Starbucks to offer more pour over options? And make it more of a mainstream part of their product mix?
Debbie: I would say that the typical consumer that we're going after, is somebody who wants something better than Starbucks. This is much better than Starbucks coffee. It's much higher grade. You'll be able to taste the difference between a Starbucks or our pour over.
Phil: Well, let me get a third party opinion. Charles, you're a coffee snob. You just tasted it.
Charles: I avoid Starbucks at all costs.
Phil: But I want to hear what you think of the quality of...
Charles: I think this is excellent. And I think that this is a very, and I drink, I like Vietnamese coffee, I think this is a very good expression of Vietnamese coffee.
Alexandra: So on some levels, Debbie, to succeed over some of these other brands, is not just have to get the other small emerging brands, but she has to persuade on some levels Starbucks drinkers to switch.
Charles: I disagree. I mean, Blue Bottle was a $700 million outcome with maybe 30 or 40 retail locations at the time that they sold. But a very loyal, high LTV.
Sheel: They built a brand. The acquisition was not about how many stores they had. It was about the brand that they built.
Debbie: If you’re familiar with coffee company acquisitions, they’re always quite large.
Charles: The multiples are fantastic.
Debbie: Coffee companies that you haven’t even ever heard of are selling for 300 million.
Phil: There's a lot to like here. You know. Everyone's looking at me. There's a lot to like here. Umm. I guess, you know, I wish, I find myself wishing that you had more traction online.
Alexandra: Me too.
Phil: Or at least that you had the team in place with that experience to build the online presence. I just would love to see more traction in that area. Ah, so I’m having trouble with it. I’m having trouble. I’m conflicted.
Debbie: Let me ease your troubles. Tell me.
Phil: I’ve shared with you. Well, this is your chance. Give me, give me your best shot at why I should invest. I’ve told you what my concerns are, I’ve told you what I like about it. I think the valuation is reasonable. It sounds like you have good institutional support. So there are a lot of pros. But I’m concerned about some.
Debbie: And I think that’s something that’s come up with investors a lot. And I think that the rebuttal for that is a couple of things. One is that my background, I’m like analytics all day. I went to Berkeley, I went to MIT, I was an analyst at the World Bank. Honestly, I think my skill set is going to be growing online in an iterative analytical strategy. And even though I haven’t done it before, I know that I’m going to be able to find the right partners to do it and really conquer this space. So I mean, I know that it’s not something that I have necessarily a background in, but I also didn’t have background in food and
Phil: You know, like you Debbie, I’m a numbers person. I’m an analytics junkie. So I like to see customer acquisition costs, I like to see lifetime value, I like to see all the numbers from the online sales channel. We’re just not there yet. So I think I’d rather. I’m passing for now. But I’d like to look at this in the next round.
Phil: Great. Great. I hope so. Thank you.
Sheel: So I, first of all, I love you. I can’t believe, I’m, I think the fact that you’ve built this and got it in 3,000 stores basically all by yourself is incredible. And I think you should get a ton of credit for that. For me, it’s just a category I don’t know well enough to make an investment. I wish you the best. But for me personally to invest in this round, I’m passing.
Alexandra: I have watched Glossier with...
Debbie: One of my faves.
Alexandra: Exactly. Right. They’ve built that channel. But those audiences and how they tested early were everything. I think I'm a little stuck around the marketing piece of it, as well. Because you do, I agree with you, the Lyfts and the Walmarts of the world are very attractive and great for a year-old company to get someone's attention saying okay, there's some retail stickiness here. And they're sticking with you. But that online piece is going to be everything. But I’m passing for now. But I’m a huge, as Sheel said, I’m a huge fan of yours. I think you’re a badass.
Phil: In a good way.
Alexandra: No, that, that, that is a good term.
Sheel: I do think that you guys, seriously, like she built this to a million dollars in revenue all on her own, and you're like, oh, I need to see more proof?
Phil: Proof online.
Sheel: Proof online. Yeah, like...
Phil: Third party retail is not a business.
Sheel: I've hired growth markets. She could hire a growth marketer. I don't think that she needs that skill set as a cofounder. Like, and this is a seed deal. I don't know what you're expecting.
Phil: That's a good argument. Right? But if you're an investor who likes to invest in direct-to-consumer companies, this is not yet it.
Sheel: That's fair.
Phil: She's moving in the direction of the kind of company I want to invest in, but...
Sheel: But it's not there yet.
Phil: Not there at this time. It's early.
Alexandra: But you’re tremendous. And congrats.
Debbie: Thank you. Thank you guys for the opportunity.
Phil: Congratulations. You’ve done a great job.
Alexandra: Thank you.
Charles: You've built a great product.
Alexandra: Yeah, we’ll stay in touch.
Debbie: Awesome. Thank you guys.
Back in November 2018, Debbie left the room without investment. And it all came down to the fact that our investors wanted her to be more focused on selling directly to consumers online and not be so dependent on retail stores.
Not long after she came to the pitch room, Debbie raised the rest of her $2 million seed round from other investors. And so with a fresh injection of cash, she got right to work building Copper Cow.
When we come back, we'll learn how 2019 went for Debbie, and how her early, strategic decisions in 2020, are keeping her company alive.
Welcome back. Alright, before we jump ahead to the current situation, I’ll pick up where the pitch left off. It’s January 2019, and Debbie had just closed her round.
Josh: You had just raised two million dollars. So you're flush with investor money. What happens next?
Debbie: So we first hired a growth marketer and then actually I ended up hiring a COO.And then we had to hire like a junior ops person to help things day to day.
Debbie: And a customer service person, a sales person just focused on hospitality. A copywriter, two designers. And then we also had a social media manager.
Josh: That's a real company right there like, what did you feel like having that many people working for you?
Debbie: It felt really great. I mean, especially like I remember, right. We had a really, really crazy Q4 because, you know, we're very giftable. It’s very intense. And so I remember just wrapping up. We give everybody the week off right after Christmas and, you know, feeling like, Wow, we, like, I have this, like, whole team. And, you know, we, we grew the company a lot. So the company grew 4X in 2019 and so half of that was eCom and half of that was the wholesale part of the business doubling.
Josh: What, what did it end up being exactly?
Debbie: It ended up being 2 million.
By February 2020 Debbie had scored contracts with not one but two huge grocery store chains, Whole Foods and Sprouts -- in addition to Walmart. Her team also signed deals with offices like Tinder and Headspace. And then there was Hilton.
Debbie: We had just signed a deal for a three-hotel opening for Hilton. So we were really excited. It was our first, like, 12-month contract. Real, recurring revenue at a hotel. We were so excited and that was signed in February.
Josh: Oh, so this would be like Copper Cow would be the coffee in the hotel room instead of people using K pods or whatever?
Debbie: Yes, exactly.
Josh: Or K cups.
Debbie: Yeah. K pods.
Josh: Wow! That's clutch! That's huge!
Debbie: Yeah. So we were just gearing up to, to raise our series A. So kind of with a great 2019, hospitality finally taking shape. And then this like great big account coming, we were like, OK, we're gonna go out and raise our series A. We were really excited.
Josh: What do you expect sales to look like in 2020 at this point?
Debbie: [00:08:04] So we forecast for sales to be about 6.5 million this year. And that next year we would break into profitability in 2021. That was the forecast.
Josh: Got it. And then.
Debbie: And then. And then COVID-19 happens...
Josh: When did it, like, do you remember the first time you were like COVID 19 is real?
Debbie: Literally. I remember my partner, my husband saying to me, because he had been doing a lot more research, because he lived in China until two years ago. And he has a lot of friends there and he was able to really talk about, like, what had been going on...
Josh: Oh wow.
Debbie: ...and what we were not doing as a country.
Josh: So he’s talking to his friends there who'd already been through it.
Debbie: So he was just like, Debbie, this is like a serious situation and it's gonna get really, really bad. And like, you need to be prepared for this. You should really have your team work remote. And I was like, Well, I don't want to just have everybody, like not be around each other. What's that gonna do to morale?
Debbie: And he was like, I don't, I think this is a lot bigger than that. And it took him about like 24 hours for him to kind of like walk me through like what was about to happen to the US.
Josh: And he's like, read this article, listen to the podcast.
Debbie: He’s like, Let me show you what's happening. And this was kind of like the very beginning of March, like, umm like March 2nd, I think. So then we decided to be like, okay, I think this is what's about to happen to the country. I think this is what's about to happen to the economy. And we have to be crazy aggressive to change the business to this reality. That, like, there's no more hospitality for a while. And even when they come back, who knows what state they're gonna be in. And I have no idea what the access to capital is going to be in the next six months. And we have runway to raise the series A. But we don't have runway to like, be like, well, let's just go through a big recession and figure out. And so we're like if we keep spending the way we do.
Josh: So you're saying your husband did a great job of scaring the shit out of you?
Debbie: He did a great job! And you should have seen me. I was like, No! I did not like it. It is. No one wants to have to hear about this, like, insane inconvenience to your business and your team. You know? And he was just like, this is going to change people so like profoundly for the next twelve months that you can't really bet on anything. And let me tell you something that I know about investors is like they want to de-risk. And this is the riskiest environment possible to invest in. And so just knowing that the access to capital is going to be limited for a while is just something that I need to be completely prepared for.
Josh: Yeah. Can you describe the moment, Debbie, that it clicked for you and you realized what you need to do?
Debbie: When my, I had my hospitality salesperson, when we were sitting and having a check in and he was like, Nobody's getting back to me. Because he's just selling into offices and hotels. And it went from being like, Oh, man, things are heating up. And he was like, There's nobody getting back to me. And people are canceling now, you know, because these offices are beginning to go remote.
Debbie: And him just being kind of beside himself. He's like just, I don't know what to do with my time anymore, I think, was when I was like, Our company has to completely change right now.
Debbie: No matter how hard we work to get this like sales funnel going, like it's over. Like we can't pretend that it's going to be back in a month from now. You know?
Josh: What? So what was the feeling in that moment?
Debbie: It was total dread. You know, like this great guy who had been working really hard, who had been sitting side by side with us, like, brainstorming constantly and, you know, taking chances on, like, reaching out to people and trying to be as fearless as possible in a new sales channel. To be like, I'm going to have to let this guy go. Is really, it’s really hard.
Josh: Wow. So before you laid people off, did you talk to your investors? Did any of them advise you to make some changes to the business? Or was this all done on your own?
Debbie: I called all my investors to let them know what I was planning to do. And they were all like, 100 percent right move. One of them is like my first original investor from 500 Startups. He was just like, you know, Just do everything you can to, like, conserve your cash. That's the most you can do for your company right now. There is one thing that he said that was when I was like debating over a couple people. He was like, If your finger is hovering over anybody, I would advise you to let them go. And I thought that was, like, the right move.
Josh: So what’d you do?
Debbie: So we decide to, like, let go of half the team. So we cut four people. So we were ten and now we’re six.
Josh: Got it. Alright so, it was originally you, your husband convinced you that COVID-19 was like a real thing. And this was on March 2 right? When did you do the layoffs?
Debbie: March 6th.
Josh: Four days later. Wow.
Debbie: Yeah. Super rough.
Josh: Now, March 6th. Like this is very early on. Like, I'm hearing about all the companies now, just now, halfway through April, finally laying people off. And you did this way back then. Like why? That seems not aggressive, but maybe.
Debbie: I mean, I you could say it was agre-. I don't think there's any investor who doesn't think that I'm aggressive.
Josh: Like you. Like there were a couple weeks there, you were, you were kind of, out of, on a limb. There was never a moment like, you know, maybe we could have kept so and so and, like, waited this thing out a little bit longer to make sure. Because like, things could have bounced back in, in like a month or so, right?
Debbie: I think that, like, my husband did a really good job at showing me how that was actually an impossibility. And one thing I really didn't want to do culturally for the team was for there to be multiple rounds of layoffs so that people end up working from home like constantly looking over their shoulder, waiting for when...
Debbie: ...the next round of layoffs are going to be. And I was like, I want it, if we're going to do layoffs. I want to do it all at once.
Josh: Right. You want the people that stayed to feel confident in their jobs. That they're not the next ones.
Debbie: Yes. Once they began to realize how crazy this time was going to be. I was like, my job is to create stability as much as possible for my company and for the people who work here. Because it's so scary especially at a startup. And so being able to make people feel like they have a job for the next year and to not. You know, like if we all work hard, like, we're going to be fine. It's just something that I was, like, absolutely laser focused on.
Josh: Can you tell me of, of the layoffs you did, do you remember one in particular that, like, was maybe the hardest?
Debbie: For one employee, she was definitely like the one we really didn't want to let go, but we just didn't have enough work for her. And I remember we told her, told her, I think you're kind of aware with, with what's going on in the world. And we've realized that we really have to focus on sustainability of the company. And we just don't have enough work for you right now to rationalize your salary. And it has nothing to do with your performance or who you are as a person here at Copper Cow Coffee. Like you embody so much of what we want culturally, your attitude, your stamina. I've always been so impressed with you, and we just don't have budget for your role right now. And she just said thank you so much for the opportunity for having gotten to work for such amazing, impressive women. Thank you for giving me the chance to do this. And I was just, like, to be so classy, you know, when we're letting you off in, like, the worst job market in the world. I mean, was just so impressive. And I just will forever just have so much respect for her and...
Josh: It's interesting. I remember laying people off and it was all, every time I did it. It was always like almost a mutual thing. Like they knew that they weren't performing well in their role. But in this scenario where someone is killing it and to have to tell them. We love you, but we just can't keep you, even though you're amazing. Like, that sounds heartbreaking.
Debbie: It is. It totally is. That's the price of being the boss.
Josh: Yeah. So you laid off four people. What did you do, like, immediately after?
Debbie: So we went, we all went out to brunch and just kind of tried to talk about our feelings and, like, what this new stage was gonna look like. And to, for me to just try to really reassure people that, you know, the intention of this, as aggressive and scary as it is, is to, like, make everybody feel really secure. You know, and I know that doesn't feel like that today, but that is like the point of this. And then we went back to the office and just, you know, we have monitors and keyboards and everything. And I was like, Everyone should take things home. And it's funny because like now everyone thought I was crazy because, like, I was pretty early and like my staff were telling me now that they thought I was, like, acting like a crazy person. I'm like, You're gonna be home through at least the end of April. And they were like, Debbie is losing her mind!
She can laugh now, but it was a crazy time, Debbie had effectively abondoned two of her distribution channels, the two that she was most excited about, offices, and hotels. Now she was only selling Copper Cow in grocery stores, and on her website.
But then Debbie, had an idea.
Debbie: I remember when we were having brunch, it was like March 6 on the Friday. And I said, you know, We should have a sale this weekend because I think people are going to be at home and wanting coffee more, like, let's have a sale, you know. And then it ended up being Black Friday level sales. And we were like, Okay, something is different.
Josh: What happened?
Debbie: Basically, you know, there's an 80 billion dollar coffee market, most of which are offices and coffee shops, are suddenly all being displaced. And like people are looking for coffee solutions. So between the ads getting cheaper and people being more like, Oh, okay, like, I'll give this a try. Like, I'm just out of coffee and I just don't want to go to the store.
Josh: I'm bored working from home, browsing the Internet. Oh, let’s try some Vietnamese coffee.
Debbie: It's been, it's been insane. We're growing every day. Like it's like every, every day’s like Black Friday. It's like it's like it's like not to be like. It's amazing. It's not amazing. This is like terrible. But in terms of our, you know, viability as a business, it's like very, very reassuring. We've tripled our e-com revenue and not increased any ad spend...
Debbie: Since this all happened. And then on top of that, we've been seeing like a doubling in our grocery velocity. So it's. So it does look like by next month we are going to be kind of like moving into profitability. So it's been really, it's been really, really hard adjustment.
Josh: Wait. Hold on a second. You're going to be profitable next month?
Debbie: \Because we are performing so well online.
Josh: So you said originally that you thought you'd be, you were hoping to be profitable by the end of this year after all the changes that you made. And because of the growth you're seeing, you think you'll be profitable this quarter?
Josh: Like Q2? 2020?
Debbie: Q2 we'll be profitable.
Josh: 2020? For the first time ever? In the middle of a pandemic?
Josh: Oh, my God.
Debbie: I remember an investor once said to me, one of our investors, he said, I mean you're doing well in several channels, but you're not doing, like, great in one.
Debbie: But now that we do have that kind of company and how efficient that is, I understand why that's, like, what's attractive. It forced me to focus. And it does, it makes running the company much easier, you know, because it is, like, you can do more with less.
Josh: Yeah. It's just so interesting to me that you did this so quickly and so early. Like, where did you learn to, I guess, be that decisive?
Debbie: I think that um... I have bootstrapped my business for two years. Right. And just being so in tune with what every dollar does. I think that I was able to move pretty quickly with knowing, like, What do I really need? Like, how many times that I have to make those decisions when I was like just one person and one employee. I mean, there, there was a time when I only had like less than $20,000 in the bank and we were like making like hundreds of thousands of dollars a month and I was like, I don't know how we're going to make this work. And so I think that I learned a lot of discipline about being like, What is the minimum that you need?
Debbie: It also feels like such a big step back. You know. Like, you end the year and you're like, Oh my God, I've got all these people and I've got all these channels moving.
Debbie: And you have this trajectory in your mind of where things are gonna go and be. And it feels like a real far step back, a lot of this stuff. And like to even have the moment of being like, What if this doesn't, like, continue, you know, unless I make really big changes? It’s like a really, really scary thing. And to be changing your projections and thinking about like, well, maybe I need to be more modest about how we're gonna grow the next couple years. I think are just a really hard pills to swallow when you've been working so hard. You feel, you feel kind of entitled to those, those dreams.
Debbie realized what many founders didn’t realize until weeks later. Things were turning quickly for the worse. And that investors weren’t going to be there to bail her out.
So Debbie moved quickly to make the difficult decisions so her company could survive.
Originally, Debbie thought her company would hit $6.5 million in sales this year. But now, despite the explosive growth in online sales. She’ll be thrilled to hit $4 million in sales in 2020, which is still an improvement, could be a lot worse.
This crisis is forcing companies everywhere to narrow their focus on the one or two things that they know will work. But sometimes the choices you're forced into can help you see a different path forward. And perhaps, it’s an even better path.
Investor on The Pitch
Phil Nadel is the Founder and Managing Director of Forefront Venture Partners, one of the largest syndicates on AngelList. He has started and sold several companies and has invested in more than 200 startups with several exits.
Investor / original co-host on The Pitch
Sheel is a co-founder of Better Tomorrow, a seed-stage venture capital fund investing in Fintech companies globally. His own startup experience includes 2 successful FinTech exits – a payments company and a high-stakes auction company, and he is GP of the 500 Fintech fund. He formerly worked as a financial services consultant at BCG and started his FinTech career at the non-profit p2p lender Kiva.
Investor on The Pitch
Charles Hudson is the Managing Partner and Founder of Precursor Ventures, an early-stage venture capital firm focused on investing in the first institutional round of investment for the most promising software and hardware companies.
Prior to founding Precursor Ventures, Charles was a Partner at SoftTech VC. In this role, he focused on identifying investment opportunities in mobile infrastructure.
Investor on the Pitch
Alexandra Stanton is the CEO of Empire Global Ventures LLC, which advises Fortune 500 companies, national central banks, senior elected officials, and nongovernmental organizations across three continents. In 2013, Alexandra was appointed by President Barack Obama to the Board of Trustees of The Kennedy Center in Washington, D.C. She currently serves as Vice President of the Board of the Parrish Art Museum and is Vice President of Doctors of the World – USA.