Foundry CEO Helen Vaid tackled this question in a recent interview with Armando Roggio of PracticalEcommerce.
Read the article & watch the full interview here.
A transcript of the full interview follows:
Armando Roggio: So by parts of eCommerce, a live interview. We’ve been doing these every Thursday. Hopefully
you’re attending live. If not make sure that you are watching the replay. I’m very excited today. My guests and I were just talking about how it’s very interesting in life that you cannot control how a kitten behaves, but you can.
Your own outlook on the world. That’s great advice from. Well invade. Who is my guest today, Helen, will you just take a minute, introduce yourself. Talk about your company in a second, and then we’ll get started.
[00:00:47] Helen Vaid: Sounds good. Thank you for having me. I’m really excited. I’m Helen Vade.
The CEO of Foundry brands. We are a recent addition to the aggregator space in terms of. Going and figuring out how to go unlock potential for incredible brands that exist out there. And frankly, sometimes I’ve not got to the potential that this earth. For reasons outside their control, which I think we can make a control of a back of the theme of controlling and not controlling.
I have sent. Actually more than I can remember my life in digital physical brands. You know, unlocking potential has been a theme of my career. And it’s one of the reasons why Foundry is such an interesting place for me to be. I have been at Walmart at pizza hut. At Hewlett Packard, large brands, as well as smaller brands, like Snapfish who were a acquisition that HP did. And I came over with that to.
I get it back out. So all my life I’ve kind of worked with brands who are the, at the, at the tether of changing trajectories for whatever the factors are that might be outside Foundry. Is in the space of looking at and building, bringing into his family smaller brands. So we can look at who operates either direct to consumer or on Amazon or any of the marketplaces and, and founders who are interested to.
I do nonlinear growth, but that’s the Foundry about.
[00:02:04] Armando Roggio: Makes sense. It talked to us a little bit about I guess this idea of what a brand is even, right. So you mentioned some brand names that we recognize, but it can be kind of a hard thing to nail down. What makes a great brand, even a great brand that hasn’t, you know, maybe met all of its potential yet.
[00:02:20] Helen Vaid: Yeah, no. See in my mind branding is a really tough thing to sort of articulate sometimes. And a lot of people talk about brands and what makes a great brand. It really is. It depends upon in my mind how you construct. The attraction to what customers are looking for now, I’ll explain what I mean by that.
You know a lot of times. In today’s world, especially dust must have a lot of choice of what they go pick. And choice is becoming harder and harder because the variables with which you make choices and the data and the information you have is also very varied. Gone are the times when you walked into a store and you had three things in front of you, you have to go pick it. Nowadays. The choice is limitless and the paradox of choices that brands and anyone who is operating in this space has to figure out how to stand out.
And become not just a brand that is. Not just a product that’s preferred, but a product product of choice. I believe there’s a difference between preference and choice choices. We think of a product. And you think of a name and you don’t even consider somebody else. Like a lot of times there are people who are avid apple users. They won’t even consider Android. They won’t say I prefer apple over Android. They’ll say.
I’m just an apple user. And the same for Android, right? It’s a brand of choice. Brand is something that creates choice with quiz loyalty. That’s continues to attract more customers, but most importantly has customer basic comes back over and over again. So to me, a brand is one that builds loyalty and choice over time. And it’s not just stuck in a small little period and it’s a one and done. So that’s what in my mind brands are. They have multiple variables to it, but choice by far is the most important thing to think about.
[00:04:03] Armando Roggio: That’s interesting in a way of looking at it because. What are, what I almost hear underlying that. Is that brand is not this intangible thing. But it’s almost like a system or a process for relating to the customer. Is that true? And can you maybe dig into that a little bit?
[00:04:21] Helen Vaid: Yeah. You know you know, somebody I know very well.
One said, you know, great brands are. Our magnets, not mirrors. A long time for a long time. Branding was all about how can I relate to this product, this customer group, and make it look like you will be participating. I am someone who looks like you, and they were mirrors of people and cohorts of customers. These days brands are really about brands that actually attract customers because they are actually have inherent value in themselves.
And therefore to create that value. You have to have a very clear proposition about what, who you are, why you exist, what’s your mission and purpose. And not just about, well, I sell this thing with these 15 features. Right. So this is all about to me more than transactional, but the higher order.
Purpose that that particular value stands for. This is one of the reasons why you see so many more mission-driven brands doing so much better. Then products that are just transactionally get commoditized because then that category is commoditized. I don’t know if you answered the question. But to me, branding is very, very difficult to just figure out this from a list of checklists of features. And functionality.
[00:05:31] Armando Roggio: I like what you said there actually reminded me of good degree, the book. Good to great. There’s that hedgehog concept in there where you really have, Hey, what’s the thing that we’re passionate about. We do a better than anybody else. We can make money at it. That’s purposes. Like for example, when Foundry is looking at a potential acquisition,
How do you identify if the company has that purpose? Driven brand, if you will, versus they’re just trained to near some audience segment.
[00:05:57] Helen Vaid: Yeah. Yeah. That’s a great question. So in my mind great ideas can come from anywhere. They are not the right of large corporates and frankly The greater collective of people out there have some fabulous, fantastic ideas. They just don’t get to be at the level that they are at. They deserve to be. So Foundry’s mission.
Is to unlock potential. Unlock potential where sometimes people don’t even see it. Right. So it’s not all about going and finding those signals of greatness. In, in brands that might not yet be where they deserve to be. And to do that. There are three things we look at. Okay. The first. Is one of the vectors of growth that this brand has not tapped into.
Typically these businesses. Are either operating in one marketplace or a direct to consumer business, but haven’t really expanded channels, which is a massive vector of growth. Right. If you think about social, if you think about being on Instagram, if you think about international, if you think about physical retail, they’re just factors of channel growth.
That’s typically solopreneurs. And smaller entrepreneurs can’t get to. Not because it’s not it’s not right. It’s just that they don’t have the capacity to get to it. Right. So our first goal is to look for growth patterns in a brand where vectors haven’t been actually tapped into. So that’s the first element we look for.
The second is we are building a whole bunch of capabilities with data. And the technology platform that can make that process faster. Right. Because sometimes people are not there because they don’t have the resources available to them sometimes because they don’t have the time. Because there’s only so many hours in the day, then one individual can take a breath to, so we allow with, with platforms, the ability to accelerate that growth pattern. So second for us is the data and platform that we add value.
But the third and the most important value for us. Are the founders themselves. Okay. The reason that. Even exists is because someone came up with a brilliant idea. And it has taken something sometimes to tens of millions of dollars in revenue. And they are just the brains behind this incredible idea. If only they could, they could spend more time doing what they love as opposed to all the administrative stuff.
That takes over the life. So we want the founders to join Foundry. We are not going to be one of those aggregators where it’s you go sell your business to us. And now you can take a long vacation. You can still take that long vacation. I hope you do. Well, if you come back and join us in some capacity, and that could be a day a month, that could be a full time.
Working with us and being a shareholder in Foundry itself. So our goal as a business is to unlock potential by leveraging these three elements of. Growth engines. If you may call it the vectors of growth in the brand value itself data and the platform and the founders and what they bring. To us.
[00:08:45] Armando Roggio: It’s interesting that you mentioned if the founders, because as you were saying that what came to my mind was looking at, do you have a visionary? Right? So often some of these products have a visionary or brands.
have a visionaryand that’s a person who identified some need in the market and sees things a little bit differently. So you’re saying that that’s actually part of that brand is being able to in effect, I don’t know if I’ll use the word capture, but talk maybe a little bit about that. Like what it means to envision that brand to be in.
[00:09:11] Helen Vaid: You know like I said, a lot of time, the founders who have come across you know, sometimes, see the solopreneurs. So literally it’s one individual who has created a ton of value and grown an idea from nothing. If we could figure out a way to provide them a think tank kind of structure. And I almost think about it with the founders in residence program that we almost provide these.
Right. And join other like-minded individuals and founders either in the same vertical or other verticals, because now you get these incredibly creative people together to say, what else could we do now? Typically these folks who build these kinds of businesses have more ideas in them. They just don’t get to it because they’re just, again,
Administrative bogged down in all the stuffthat they really, don’t, should not be doing. That’s not where the value lies. So to unlock that potential, we want them to come into this group of individuals that will build over time as we acquire these businesses to come and think about the next big idea and the next big idea. Now we could support them.
To come up with the new idea because it’s an adjacency or they could go and think about how else they want to bring it to life. But we believe that. That creates a potential growth pattern. That. We don’t even see today. This is the whole point about latent growth. Ideas that not visible in just the acquisition of that particular brand.
That’s where, to me the real secret sauce lies about what we can do over time.
[00:10:34] Armando Roggio: How do you get from this idea phase to a financially successful business? One of the things that’s popping through my head, just because it’s been reviewed recently is the, the whole jobs to be done framework. And that’s a product development framework. The idea behind that is that it’s not just about ideation, right?
There’s a process by which you can identify. So knowing that that’s the context from which I’m asking the question. How do we get from idea to something financially viable?
[00:11:00] Helen Vaid: It’s fascinating. I literally used. Jobs to be done framework with my team a week ago to have this conversation. So it’s incredible. You say that.
In my mind, there is a lifecycle. From the time it, Brian joins our business to the time they get to a run rate of growth, right? There’s an element of stuff that needs to happen and the jobs to be done for us. As, for example, as a business is identifying and looking for these signals of great brands, right?
So we literally have a squat that does the identification. The actual deal making to be done. So actually sort of acquiring the business. So we want to acquire. But then we have an integration squad and the purpose of this integration squad is to come in and run forensics with the brand. We just call it into a system and say,
What are the various elements? You haven’t tapped it to. Right. And do a full 60 on the spread and find all the opportunities that this brand can tap into. Short medium and long-term. So we almost think of where this sort of low effort, high impact, and let’s get those activated in 30, 60, 90 days. Right. Because that’s what comes in and literally acts like a SWAT team on your brand and say,
How can we help you go faster, better? Right. It looks at that. At the same time in parallel, there’s a scale team that will start to build out the plan. For a more run rate basis for this brand and come in and start to build out a annual plan for the next 12 months run rate and say, okay, now that we know the short term opportunities, have we tapped into it quickly accelerated.
What does it run rate business in a nonlinear way? It could look like. What would this growth, extra speed that we now are high effort, high impact, but not need to be the run rate plants. And they almost act like category leaders. They will sit down with you. And look at all these opportunities and create a plan and we’ll start to work through them. Some of which are easy to do someof which are harder to do.
At the same time we have some horizontal capabilities in terms of jobs to be done. Like fulfillment. Which is typically a very large part of the challenges that these Morans face, because forecasting planning, sourcing. Good to be very hard for small teams to do, especially if it’s sourcing is being done in China or distant areas where you have to not just plan, but you have to plan for customs clearance or what is inventories on the water, et cetera, et cetera.
So we have a group of people who focus mainly on operational excellence, that how to help these brands. And another one is a technology platform. So we start to leverage these various pieces that I’ve fit in. For Foundry or jobs to be done, to help this brand and put together squads that go out and help these businesses in an agile way.
As opposed to just a functional structure. Of people that we have marketing department and a finance department. And those things are, some of those things are necessary, but really the rest of the framework, really around jobs to be done now, the marketing team is also going to identify for the brand. What are the users?
Thinking about for jobs to be done. Right. So that would be part of that framework back to your question. Is that I am leveraging almost it’s for our own business, as much as for the particular brand. What is it the end user is trying to do with this particular product. Hope that makes sense.
[00:14:00] Armando Roggio: It does. I’m going to try to say it back a little bit, just to make sure that I understood.
Because again, this is the context of how do we go from an idea or, you know, to something that’s very successful in growing, as you said, nonlinear growth, right? It’s really curving up into the right. Here’s what I heard. And you tell me if I got this right. So the first thing I heard is that, is that.
The idea itself, right. Had to have some visions. Viability, et cetera. And that that’s what half the. Yeah. Find all of the areas of weaknesses, whether it’s logistics is the one you brought out, for example, and really seek operational excellence. As you also expand the number of channels you’re selling through.
Does it get better?
[00:14:36] Helen Vaid: Okay. Actually you said it much better than I did. I said, I’m going to listen to the recording. So like,
But I would not call them weaknesses. These are just opportunities that this brand has not been able to get to for really legitimate reasons, right. Because he’s a small businesses, they just don’t have access to capital, commitment or capability. Our job is to give them that, all of that, but there’s also capital access to capabilities. Acts of suit. The fact that we would have a long-term commitment of this brand.
We are not trying to destroy the value that the founder came to us with.
[00:15:10] Armando Roggio: So a couple of things. Now, as we talk about this growth that are coming to mind, I’m going to start with the first one here. Which is how are you measuring growth? Like, is this. Are you looking strictly at topline? Are you looking strictly at bottom line? What are some of the KPIs that tell you the businesses growing and going in the right direction?
[00:15:27] Helen Vaid: Yeah. At great question again. I always measure. Success by two metrics, this performance metrics and perception metrics. Right. I mean by that is performance is literally what it says from the tip. Very fact-based. Like EBITDAR growth, right? It’s a performance metric. GMV growth is a performance metric, and those are important metrics.
Because they tell you how a scorecard of how business is doing. And for us, those things absolutely. Are those two, right? We look at EBITDA. Outgrowth first because. It’s such a thing as bad growth, right? You can grow at an expense that you know, is not sustainable and that’s just doesn’t work. So it has to be sustainable growth. So EBITDA and GMB both matter.
But the metric there, that’s also an important performance metric that gets forgotten is frequency. And frequency is important because it tells you it’s a brand building advocates or people coming back over and over again. Or is this a brand of constantly going to depend on customer acquisition? And if that funnel dies, the brain dies, right? Because it’s a one and done.
And that’s actually an important filter to understand. So for us, the obsession metrics are really, if you think about it, Growth and frequency. ’cause GMV. Right. So those two would be performance. For perception, metrics is all about customer satisfaction. Right. And that is a perf. It’s a, it’s a perception metric because it is customers telling you whether it’s NPS or C-SAT or however you measure it is.
How happy he goes. I, with the interaction with the brand. Because that again, drives frequency. So that perception metrics drives the performance metric of frequency. So ultimately if you had to ask me to pick one for both, I would say it’s frequency and C-SAT. Right. That drives the business. But really the underlying businesses health for that would be EBITDAR growth, right. In terms of overall. And then therefore, how does the GMV growth happens across the success system?
[00:17:17] Armando Roggio: I want to hang on to that frequency idea for a second, because I think. It’s an interesting topic. Like I hear this, I’ll hear this from two categories of businesses, right? So I just briefly there’s the category that I think of having a replenishable product. This is someone who’s selling a skincare product, a supplement.
And there’s an obvious, you know, Hey, you’re selling a 90 day supply. They need to be buying every 90 days. But if I sell shirts, That’s why identify what is an appropriate. Frequency. Great idea.
[00:17:47] Helen Vaid: Great question. And that’s true for electronics as well in lot of times where they don’t have printer and ink relationships, right? Because those are obviously the frequency attached rates to a hardware product.
It depends if you D if you have a product category by nature where the usage time is longer, and it’s not a replenishable, then it’s all about adjacencies. It’s about thinking, what else does this customer wants to buy from a brand like me? That will help me build a bigger relationship than selling you five shirts.
And go to talking to you for the 12 months, right? We’re selling you. A hardware item that I know that you will eliminate something from. So it’s all about finding adjacencies and things that ideally there’s attach rates to it’s right. Then you could say. I bought this, but I might also want to buy this.
Some of them can just sometimes be just merchandise. Right. If you buy a product like a, I don’t, I’m trying to think of an example. All of a, an outdoor product, like a camping gear or something. And then you might want to say, Hey, I wouldn’t mind buying a t-shirt with that brand on it. Right. So you’re now creating an eight adjacency.
Often attached products. That is because you care about the brand. You don’t mind. Wearing something, a wearable that actually has the right association on it. So it’s very, it’s hard to find for some categories, frequency drivers, but they’re always possible. And then the other end decency is completely different category decencies because you can take that product into completely different lag lanes as well.
So those are the ways I would look for frequency driving factors. Help me understand the category of decency a little bit better. Give me an example. If you can. I’ll give you an example. I mean, you say to this, I used to say this to my team at Walmart all the time. If someone is searching for a drill bit.
On the website. Then don’t show, keep showing them, just drove it because they are most likely. We decorated their house. Right, because now you have understood the intent behind the purchase. So if they are looking for a drill bit, see what else they could want to, they’re looking for curtains or they’re looking for curtain rails.
They’re looking for paint. Are they looking for other adjacencies that need to be now when you have a portfolio of businesses? The best way to build a portfolio is to look for those. Adjacencies that have synergies across your portfolio, as opposed to buying a business that sells diapers. And then sells drove.
Maybe those have adjacencies too , but you see the point I’m making rights. You have to figure. You have to figure out. The customer intent behind purchases. If you want to build a portfolio, that’s around frequency. So that’s how I would look for things. In terms of what is it that the brand is trying to get into?
[00:20:20] Armando Roggio: And again, just to make sure I’m tracking. So I have. I have a business that sells online. You know doghouse kits for your backyard and adjacency could be a bird house kit, or a backyard bench kit, something that. Okay. Got it.
[00:20:36] Helen Vaid: The adjacency could be dog treats and dog choose. Right? Because now I’m getting into other things that this. Because I know this person has pets. I know they need more than just a dog house. If they have a dog, they probably need to buy dog food. They probably need to buy other stuff that they need for this particular pet to be flourishing in your house.
Right. So what else could they want to be looking for? And can you grow the category? Adjacency is a portfolio as a business around the user factory jobs to be done. What is this user’s jobs to be done? Right? They have a pet. They want to take care of it. They want to make sure they’re healthy. Make sure it’s fed.
Make sure it has all the other amenities. Could you build a portfolio as a business? If you’re a business owner that can actually go with those adjacencies for you?
[00:21:22] Armando Roggio: Makes sense. So, so far we’ve talked about. You know, in terms of building this brand, there’s. There’s some sort of needs recognition ideation. There’s this this example of looking for adjacencies, we know what we’re measuring now.
What. If I’m the founder and I’ve started to have some traction. What are the indications? That it could make sense for me to join Foundry or, or An aggregator in general or even cell, I guess, generally.
[00:21:47] Helen Vaid: Yeah. No, those, those are tough decisions for founders because remember it’s their baby, right? It’s something that came up.
It’s something they’re very close to their heart. They clearly care about it. I say the advice I would give to the founders is look, if you’re reaching and hitting Challenges where you can’t solve problems on your own, but you might actually see the solutions clearly in front of you, but you can’t get to them back to my three CS. Right?
Whether it’s the capital challenge is a challenge that it is, you know, Capabilities. And I don’t know, or I don’t have people or I can’t hire people. I only have three people and they’re doing everything they can, or it could be really just the, you know, the time commitment I can give to it, which is why the commitment piece is important. If you start to hit those challenges.
And, you know, you have the potential you’re not tapping into that’s the right time to go talk to an aggregator and go say to them is because if you go to them and you’re in trouble, You’re not going to get the return. You’re looking for. If you go to them, when you know, you have opportunity for growth.
You can’t get to it. It’s a great time to have a conversation because you go and say, I know what I can do. I know what this business can do. I just can’t get to it because.
Tell me how you will help me figure this out. That’s the conversations we have with brands. When they approach us, we are like, okay. I sit down, understand how good flow business is doing. Tell us, what do you see as growth levers? So you are not getting to. And how can we be your partners? To get to those growth levers. The idea is not for us to not get you the value you deserve.
The idea for us is how do we actually, at least the value in the brand. That you have built out and did you can’t get to it? So I would look at those. Challenges and hurdles that they are getting to. But all of them are not, but just capturing those at the list of things that they need to get to.
[00:23:34] Armando Roggio: What about, you know, Valuation it’s always comes up. How do I know what my brand is worth when I’m approaching someone like founder?
[00:23:44] Helen Vaid: Yeah, that is again tough. It’s very tough. Now there’s a mathematical exercise that one can do. Right. And right now a lot of the people talk in terms of Milton multiples of EBITDA, right. Because that’s how most of these valuations are done.
And that depends upon a whole bunch of other variables, right? How much competition is in this category? How many other players do what you offer? Do you have a proposition? That is growing faster than the others that you see. On the chat channels you’re growing at. If you have access to that data.
So a lot of them. Where you’re at. And what are the signals of growth patterns that you see? Because what the valuation is trying to get to is can the run rate for your growth change by being part of a bigger portfolio? That’s what the people are trying to ultimately figure out, right? Because no one wants to buy your business only to grow it less.
We’ll also check. That’s not what people are trying to do. Right. So people are trying to buy a business that they can grow faster. Because they believe the white spaces exist. So if you can come back and demonstrate, and even if the growth is not happening today, what is causing for that growth? Not to happen.
And if those challenges. Not structural. I think most aggregators would give you more value. Then not. Whereas, if you have a structural challenge, you’re declining your business, you can’t figure out how to grow them. You’re just going to struggle with David Dell multiples. The other thing I would say is COVID has been unusual for everybody. So when you go talk to aggregators, sure. Your COVID comps obviously.
But show your non-COVID comps as well. ’cause that’s why looking at two-year three-year stack of your data. It’s very important to show what the run rates are because last year was funky for a lot of people. Right. And it’s one of those things I always say to folks, come and show us if you have that kind of history what’s your business was doing before the unusual patterns started to happen, which are going to throw a lot of forecasts.
[00:25:40] Armando Roggio: It makes sense. Helen. Are there some questions that I should have asked about growing the brand that I didn’t.
[00:25:48] Helen Vaid: I asked this question in interviews. And when I say to people, this is something I should’ve asked you that I didn’t ask you today. So I should have expected you to ask me that question. But no, I think, you know, the thing I would say that I would love to have this audience understand. Is that.
Every brand. Has some value. Right. So don’t ever go and sit there and say, this brand is not worth anything. The reason you are very war is because you’ve got some, an idea to a very good stage. What do you have to get better at figuring out when you talk to people outside? Is this element of, can I do a 360 of my brand across all vectors?
And having a list of those 360 elements, whether it is marketing and demand generation, whether it’s conversion and actually converting customers coming, but not buying and understanding why. Or whether it is retention. Right. But they’re not customers coming back or not. Right. So I was thinking of.
Acquisition conversion retention as a three buckets in which to evaluate your brand. Go think about those three buckets and say, where are my opportunities and where am I really good at? Right. And then also write down the core competencies that you’ve built for this brand. Is it sourcing, is it the fact that you have got something different than others? Write those things down.
And then come and have a conversation because, because that is important for the aggregators that you speak to, to understand. And also figure out if these aggregators are interested to actually invest in your business. Or is it just a purchase and stripping value? It’s rubbing on the overhead out. So if you want to stay and build a brand over time,
Then understand your fit. With the aggregator as well, as opposed to just looking for an exit for it. But I would say that was the one thing is do your homework. As you get and speak to these, these aggregators, because I think that will just only put position to your better.
[00:27:38] Armando Roggio: I like what you said there, because I think even if you are not trying to necessarily exit your brand, if you take the time to do that 360.
That’s going to give you a really good view of where your opportunities are, where your challenges are. How often should I do that? If I just want to build my brand myself.
[00:27:53] Helen Vaid: You know I always say to folks, that’s, you should. You’re planning cycles. Shouldn’t be so far out that they’re wrong.
The minute you’ve done that by the way, every forecast is wrong. The minute you finish doing it. So for whatever it was. You know, the longer you do it, the more wrong you’re going to be. So try and do a quarterly plan, right? I always say to folks that your planning should be quarterly, figure about a north star and say, I want to grow at X percent or Y percent. And then on a quarterly basis, check if your assumptions are right.
And the more you check your hypothesis, the more you can actually give true signals of growth patterns and always understand the drivers. I understand that. Screw sales. It did because it was an unusual pricing activity you did or something, or is it actually sustainable growth because your customers are growing. And for that factor always, always, always do new and repeat analysis.
Because if your business is not growing, it’s repeat customer base, there’s something unhealthy is happening in your business. I have people not going back to frequency. Right. So I will always say due to the quarterly cycle, be clear about a north star aim high. I always say, shoot for the moon, you will enter the stars you plan low, you will do less. Right. So figure that out.
And then come and talk to people. Frankly, some aggregators will be prepared to talk to you, even if you’re not ready to sell. Because they want to build a relationship or at least boundary does, right. We are prepared to build the relationship, even if you’re not ready to sell today. And we will give you frankly, free advice.
What can you do? And so there’s nothing to lose by engaging with with the aggregators right now.
[00:29:18] Armando Roggio: Hold on. I feel like I’ve already gotten free advice. So. I can’t. I can’t thank you enough for joining me today for this interview. I appreciate it. Not very much. So thank you so much for happening.
All right. Well, everyone who was watching. Thank you. I thought this was great. I hope you did too. I hope everyone has an excellent day. Thank you all. And thank you again. Thank you. Bye bye.