Speaker 1: You know, it's always a really interesting dynamic when you
Speaker 1: meet a founder that's like that. Early in March, a
Speaker 1: woman named Abigail Stone walked into the New York offices
Speaker 1: of a company called red Antler. She wanted them to
Speaker 1: invest in her business. Only this wasn't a very traditional
Speaker 1: investor meeting. She literally just had an idea. She didn't
Speaker 1: really have a product, she hadn't raised any money, she
Speaker 1: didn't have a co founder. It was also different because
Speaker 1: red Antler isn't a traditional startup investor right. It's a
Speaker 1: branding agency that brags on its website quote, we've launched
Speaker 1: more businesses than anyone else. Red Antler owns shares in
Speaker 1: about eighties startups, and about half of red Antler's business
Speaker 1: comes from people like Abigail, founders who haven't officially launched
Speaker 1: their companies yet. Investing in startups is a famously risky
Speaker 1: business to get involved, but if you back the right companies,
Speaker 1: you can make a lot of money. And over the years,
Speaker 1: red Antler has done just that. Only it didn't give
Speaker 1: money to the startups it picked. It gave them man
Speaker 1: hours designing websites, developing marketing strategies, helping get their client's
Speaker 1: brand name on the radar of new customers. Some of
Speaker 1: them might be companies you've heard of Casper Mattresses, All
Speaker 1: Birds Running Shoes, and the wholesale retailer Boxed. But the
Speaker 1: chances aren't you haven't heard of red Antler, even though
Speaker 1: their work could be silently influencing some of the shopping
Speaker 1: decisions that you've recently made. Hi, I'm brad Stone and
Speaker 1: I'm jin Cow. And this week on Decryptive, we're taking
Speaker 1: an inside look at the way some new e commerce
Speaker 1: startups are preparing for launch. Silicon Valley lore is full
Speaker 1: of stories of startups that through out of some Palo
Speaker 1: Alto garage, But today a handful of branding agencies like
Speaker 1: red Antler command a lot of influence behind the scenes,
Speaker 1: shaping brand new companies before they make them for sale.
Speaker 1: And here in New York, new e commerce companies are
Speaker 1: appearing all the time, and it's getting harder to grab
Speaker 1: customer attention. It's part of the reason branding agencies are
Speaker 1: in such high demand, as well as the fact that
Speaker 1: many of these companies will collapse that they can't find
Speaker 1: enough customers quickly. So just how much power does a
Speaker 1: firm like red Antler, really Wheel and what's so special
Speaker 1: about being able to work with them? Stay with us?
Speaker 1: So jing tell us more about Abigail Stone. No relation
Speaker 1: to me. The start of founder we just heard about.
Speaker 1: Abigail is twenty nine. She got her start at Ralph
Speaker 1: Lauren by Ne Eclectic Objects to decorate their stores. She
Speaker 1: exudes a lot of grace, matching sleek outfits with big
Speaker 1: bold earrings. In early as she was finished ing up
Speaker 1: business school, she came up with the idea for startup
Speaker 1: selling luxury candles online. My friends from school set off
Speaker 1: their shiny, fancy new jobs, coushy salaries, bonuses. Um, you know,
Speaker 1: I set out to my kitchen standing table to start
Speaker 1: my company. I think it's fair to say Abigail is
Speaker 1: obsessed with candles. She was all in on her idea,
Speaker 1: but she had trouble convincing investors to back her. So
Speaker 1: I was like blugging around the suitcase of candles nine
Speaker 1: degrees and like I was a subway and listening and
Speaker 1: like nothing was happening, and you're like trying to start
Speaker 1: and you can't get any traction, and so that was
Speaker 1: really hard. Around that time, she approached right Antler. Abigail
Speaker 1: had once taken an online last top by one of
Speaker 1: the founders, Emily Hayward. Ever since then, Abigail had wanted
Speaker 1: to work with them. So I went to read Antler
Speaker 1: with this big tope bag of different candles from the market,
Speaker 1: and I spread them all out on the table and
Speaker 1: I couldn't really read j V um. I wasn't sure
Speaker 1: he was feeling it or not. JB Osborne is Emily's
Speaker 1: business partner. He and Emily started read Antler ten years ago.
Speaker 1: Now they have eighty employees in an office in a
Speaker 1: large industrial building in Brooklyn. And then the next day
Speaker 1: j V sent an email and he said, um, we're
Speaker 1: still thinking about candles, not totally sure. We would really
Speaker 1: like you, you want to get to know you better,
Speaker 1: and like Simsis is pretty early on, Like let's keep
Speaker 1: the conversation throwing. What was the initial sort of skepticism, right,
Speaker 1: she yeah, so I remember this part. This is Emily here.
Speaker 1: I remember j B said to me, I want you
Speaker 1: to meet this founder. I absolutely love her, but are
Speaker 1: candles enough to launch a business around? I mean, that's
Speaker 1: my initial reaction to our luxury candles really a thing?
Speaker 1: You know? I felt the same way at first two.
Speaker 1: But yeah, they're actually a thing. How much do they cost?
Speaker 1: At the high end, a candle can cost about a
Speaker 1: hundred Wow. The only candles I buy are those blue
Speaker 1: tinted Hanukah candles and they cost twelve dollars at Walgreen's.
Speaker 1: It's because they don't have the luxury sent Candles are
Speaker 1: actually about a three billion dollar business just in the US,
Speaker 1: and it's growing, and the high end candle category is
Speaker 1: growing the fastest. Abigail thought she could make candles that
Speaker 1: looked and smelled just as good as those, but sell
Speaker 1: them at a better price. JB and Emily might sound
Speaker 1: strangely critical for a brand the agency vetting a potential client.
Speaker 1: In most cases, it's the client who picks the agency,
Speaker 1: not the other way around. But red Antler is actually
Speaker 1: in such high demand j B and Emily can basically
Speaker 1: choose who they take on, and they're taking a big risk.
Speaker 1: While they do charge a fee to cover costs, and
Speaker 1: those fees can be pretty expensive. By the way, red
Speaker 1: Antler often gives a profit to take shares in the startup,
Speaker 1: just like a venture capitalist would, and a stake in
Speaker 1: your company is just about the most valuable thing a
Speaker 1: founder can give up. In Abigail's case, Emily and JB
Speaker 1: also needed to be convinced that there were enough candle
Speaker 1: fanatics out there to make the business idea viable. Hey, guys,
Speaker 1: welcome to another video. Let's talk candles. I'm borderline having
Speaker 1: a candle addiction. I am obsessed with candles. Hey guys,
Speaker 1: it's me Drew and I am here to do a
Speaker 1: Yankee candle hall and I picked up the World Journeys
Speaker 1: Sonoma Helly red Little. Today We're going to do a
Speaker 1: blindfolded candle challenge. I'm a candle over candles. Eventually they
Speaker 1: decided there was an opportunity, so Abigail and Red Antler
Speaker 1: started working together in October of That opened up resources
Speaker 1: for Abigail that most founders can only dream up. How
Speaker 1: many people on the red and art team or working
Speaker 1: on this U s okay, let's see, uh so Daniel
Speaker 1: and Grace on the creative side, Um, Jonah and Molly
Speaker 1: on strategy, there's Caroline, there's Debbie was there at one
Speaker 1: point on production? Um Scott chaps. It took Abigail another
Speaker 1: minute to finish listing everyone, but in total it was
Speaker 1: more than twenty people. Most startups can barely afford a
Speaker 1: branding agency, let alone getting access to so many people.
Speaker 1: Red Antler served as fragrance testers, package designers, cheerleaders. They
Speaker 1: helped create the brand, developed the strategy, build the website.
Speaker 1: They even came up with the name. Our team was
Speaker 1: really excited about other Land, but it definitely felt like
Speaker 1: the wild card in the bunch. Yeah. I always wondered
Speaker 1: about in strategy and we were like, wouldn't it be
Speaker 1: cool if Abigail shows other Land, but she's probably not going.
Speaker 1: And when she did, I remember our team being so
Speaker 1: excited and I'm trying to remember what the other names?
Speaker 1: Do you remember? Yes, please consider dedication. And then my
Speaker 1: other favorite was Mammal that Abigail also got to take
Speaker 1: advantage of red Antler's address book even before she had
Speaker 1: the money to officially hire them. So I introduced her
Speaker 1: to a bunch of um you know, angel entrepreneurs funds
Speaker 1: and said, like, hear all the people I think you
Speaker 1: should talk to. That's important because JB said earlier that
Speaker 1: when Abigail first approach red Antler, she had no funding.
Speaker 1: JB and Emily connected her with more than fifteen people,
Speaker 1: and once Abigail started name dropping red Antler, investors started
Speaker 1: paying a lot more attention to her candle company. It
Speaker 1: gives you a little bit more legitimacy. UM. The meetings
Speaker 1: available tomorrow instead of in a couple of weeks and
Speaker 1: doesn't get rescheduled. Still, Abigail got about fifty knows from
Speaker 1: investors who didn't want to commit, but several investors told
Speaker 1: me that red Antler's endorsement matters. Like Brian Nicholson, an
Speaker 1: l A based investor who has worked on deals with
Speaker 1: brands including Refinery twenty nine and Reformation, if if I
Speaker 1: know that JB and the team has invested in this
Speaker 1: business through through their work, UM, I think that says
Speaker 1: a lot about the chances of the company's success. Brian
Speaker 1: was one of the contacts on red Antler's list. He
Speaker 1: did a end up investing because of timing issues, but
Speaker 1: said red Antler was a big reason he looked seriously
Speaker 1: at Abigail. Had I met her without um knowing that
Speaker 1: red Antler was behind her, and secondly, not being able
Speaker 1: to see the kind of visuals that they helped her create,
Speaker 1: I would be skeptical on the ability to disrupt the
Speaker 1: candle category. After about six months, Abigail had backing from
Speaker 1: a Vemo co founder, founders of plus size brand Deah
Speaker 1: and Co. And all five founders of the mattress company, Casper,
Speaker 1: one of red Antler's existing clients regulars. Role here sounds
Speaker 1: a lot like an incubator, like a white combinator, more
Speaker 1: than a branding agency. Right. A program or startups apply
Speaker 1: for the chance to work with mentors and meet investors.
Speaker 1: Except you don't usually hear about branding agencies offering these
Speaker 1: kinds of services or getting this involved. Helping startups fundraise,
Speaker 1: preparing the slides for investor presentation, and brokeering intros in
Speaker 1: first place. That's becoming a key service red Antler offers.
Speaker 1: And not just read Antler. I mean there are other
Speaker 1: agencies I've heard of. There's one called gin Lane that
Speaker 1: launched the Razor brand Harry's for example. We've helped out
Speaker 1: with a lot of investor decks. In many ways, the
Speaker 1: investor deck is the perfect microcosm of the story of
Speaker 1: the brand. But redd Antler has gotten pushedback from startup
Speaker 1: investors who think the agency is overstepping its role. As
Speaker 1: we got to now more vcs. They were like, yeah,
Speaker 1: that's nice. Why don't you just stick to what you're
Speaker 1: good at. One investor told me he didn't think red
Speaker 1: Antler should be taking equity on top of charging for
Speaker 1: their services. I think their opinion was just there's no
Speaker 1: way that we could understand how to do it, or
Speaker 1: that our deal full would be good enough for whatever.
Speaker 1: They're like, their selection bias, if you name it. Others
Speaker 1: said the firm has a reputation for being expensive, so
Speaker 1: startups that ultimately fail end up with buyer's remorse after
Speaker 1: spending upwards of hundreds of thousands of dollars for the service.
Speaker 1: But several people conceded that red Antler gets to take
Speaker 1: shares because they just have that much leverage. They have
Speaker 1: their pick of new clients and limited slots to fill.
Speaker 1: Jing we're able to find out how much equity red
Speaker 1: Antler is able to negotiate it. Yeah, I asked JB
Speaker 1: about it. Can you share the range of equity that
Speaker 1: you would typically take? Jan I love it. Um, Yeah,
Speaker 1: I mean it really ranges depending on the station of business.
Speaker 1: How you know, how we're involved while we're delivering, But
Speaker 1: you know, generally we're taking positions anywhere from like one
Speaker 1: to five. Ticking equity is definitely unusual, but startups do
Speaker 1: sometimes give up shares in exchange for services like pr
Speaker 1: or legal help. And it's not like venture investors always
Speaker 1: get their bets right. E Commerce is a notoriously difficult
Speaker 1: sector to succeed it. Several er e commerce startup that
Speaker 1: got a lot of hype and raised a lot of
Speaker 1: money from experienced tech investors have collapsed. All that easy
Speaker 1: money fueled fast growth, creating a grow at whatever cost.
Speaker 1: Mentality in the startups couldn't keep up, like fab dot
Speaker 1: com once valued at a billion dollars but sold in
Speaker 1: for only fifteen million, or Guilt Group sold to Hudson's
Speaker 1: Bay in early two and fifty million dollars. That's just
Speaker 1: a quarter of what is once worth. I don't think
Speaker 1: vcs are trying to screw up those businesses intentionally, but
Speaker 1: the reality is if someone gives you a million dollars
Speaker 1: and says like, oh, like do you want it, and
Speaker 1: you spend it, you're like cool, but not not any
Speaker 1: two million. It's like a drug. And they learned to
Speaker 1: operate as a company that has the means to do
Speaker 1: things that they maybe shouldn't be doing red Antler's former client,
Speaker 1: One King's Lane and online furniture store. They went through
Speaker 1: just that kind of experience. One King's Lane is probably
Speaker 1: one of the biggest flops in right Antler's portfolio. I
Speaker 1: think it was the first thing we ever worked on
Speaker 1: that was a household name. One kings Lane raised on
Speaker 1: twelve million dollars from investors at evaluation of nine million dollars,
Speaker 1: but less than three years later, the company sold a bed,
Speaker 1: bath and beyond for only twelve million dollars. A whole
Speaker 1: bunch of money started pouring into these fast growing commerce businesses,
Speaker 1: but it was all based on off price merchandise and
Speaker 1: discounted pricing, which was great for the customer, but there
Speaker 1: wasn't much margin. Uh, there was no way to become
Speaker 1: the billion dollar business that you know, it was sort
Speaker 1: of promised. So venture capitalists have started to reevaluate their
Speaker 1: approach to e commerce investments. At the same time, other
Speaker 1: investor types, private equity firms, family offices have also started
Speaker 1: backing some of these emerging brands and flops like One
Speaker 1: kings Lane haven't deterred startups from wanting to work with
Speaker 1: Right Antler. J B says they advised companies to become
Speaker 1: profitable sooner and make sure the business has decent margins.
Speaker 1: The biggest challenges it's just getting harder to stand out.
Speaker 1: I mean, here in New York, we're seeing an explosion
Speaker 1: of tiny e commerce brands, and they're all competing with
Speaker 1: each other on price and for a piece of the
Speaker 1: customer's attention. So jing what about girl fashioned product differentiation
Speaker 1: or innovation. Randler told me that increasingly these companies are
Speaker 1: actually copying each other's business models. So it's your brand
Speaker 1: and your marketing strategy that helps you differentiate. I mean,
Speaker 1: think about how many mattresses in a box have popped
Speaker 1: up since Casper started up. This is you know, it's
Speaker 1: it's a candle We didn't reinvent the candle um were
Speaker 1: we made some choices along the way that became with
Speaker 1: a lot of thought and make it a little bit different,
Speaker 1: But it's it's a candle um. So really like differentiating
Speaker 1: it with this brand experience is kind of all we
Speaker 1: can do and in the category, but there's no guarantee
Speaker 1: a slit website and some cool images will be enough
Speaker 1: to make other land a success. Coming up next to
Speaker 1: the luxury candle seller other Land officially launches and we'll
Speaker 1: see whether the brand that red Antler built is enough
Speaker 1: to help Abigail's company cut through all the noise welcome back.
Speaker 1: So at this point, Abigail and red Antler have spent
Speaker 1: the year developing other Lands candles and brand. Last fall
Speaker 1: they set a launch date of December twelve, two weeks
Speaker 1: before Christmas. All right, we're ready to get a few more. Yes,
Speaker 1: it was crunch time. One of the last pieces was
Speaker 1: an elaborate four day photo shoot the stylish Brooklyn town
Speaker 1: house in November. Because it's the e commerce, you can't
Speaker 1: rely on the set, Like the scents are incredible and
Speaker 1: that's what's gonna get someone to come back, but we
Speaker 1: had to draw them in through something else, Like we
Speaker 1: needed the candle itself to be an object of desire
Speaker 1: without ever having smellment. Just before lunch, boxes and boxes
Speaker 1: of candles were stacked up against the wall of Abigail's
Speaker 1: new office in preparation since other Land was doing its
Speaker 1: own fulfillment to control for quality, make sure. So this
Speaker 1: was like, well, imperfection in the wax, I'm gonna pull
Speaker 1: up aside. There were last minute crises to deal with,
Speaker 1: like the adhesive for the box wasn't sticky enough, And
Speaker 1: it might seem like a small thing, but if you're
Speaker 1: going to ship out product and there's any chance that
Speaker 1: that box is going to open while it's getting shipped,
Speaker 1: that's like a that's like catastrophic failure. And then they
Speaker 1: found out that some of the candles of one cent
Speaker 1: were wrongly labeled and had to reopen dozens of packages
Speaker 1: to figure out how many were affected. So you sort
Speaker 1: of give yourself ten seconds to totally freak out, especially
Speaker 1: being like sleep deprived, and then you figure out how
Speaker 1: to fix it with just days to go before launch.
Speaker 1: Abigail fixed the box issue with extra tape and a
Speaker 1: drywall scraper to increase the fold in the cardboard. Abigail's
Speaker 1: new company faces competition on two fronts. There the actual
Speaker 1: candle sellers like Nest, Diptique, and La Labo, and she's
Speaker 1: hoping to beat those players in part on price. There's
Speaker 1: also the influx of e commerce brands in general that
Speaker 1: she's up against. There's some irony here because in a way,
Speaker 1: Red Antler seems like a victim of its own success.
Speaker 1: JB and Emily had some blockbuster launches early on, like Casper,
Speaker 1: the mattress company, which red Antler took on before they
Speaker 1: launched j B. And Emily told me they've had more
Speaker 1: than thirty requests from aspiring mattress. I was hoping to
Speaker 1: replicate what they did with Casper. I checked in with
Speaker 1: Abigail the day before launch. Right now, I'm tired. I'm
Speaker 1: so excited. Um definitely like running on fumes. We were
Speaker 1: here till four am last night. Abigail set herself a
Speaker 1: few milestones, how do we acquire our first hundred customers?
Speaker 1: And so I'd say, sort of first one hundred customers,
Speaker 1: and then like first one thousand orders are are what
Speaker 1: we are really really focused on. Finally, on December twelve,
Speaker 1: Other Land went live. I was excited, after all these
Speaker 1: weeks of following Abigail attending the photo shoot, a planning meeting,
Speaker 1: to finally see what the website was like, I'm looking
Speaker 1: at it now. There's a big photo from the Brooklyn
Speaker 1: Townhouse with a very handsome, sharp pay feed drinking prominently
Speaker 1: in front of an old marble fireplace. Once other Land
Speaker 1: went live, marketing became all important. Abigail needed to start
Speaker 1: reaching potential customers, but ideally without having to pay for
Speaker 1: promoted post or search ats. That's why I read Antler
Speaker 1: and Abigail worked for months just on the box. It
Speaker 1: is your customer's introduction to the brand. Um ideally it's
Speaker 1: something that's so fabulous and exciting and engaging that it
Speaker 1: might be filmed on a camera and ideally not just
Speaker 1: filmed on camera, but posted to social media, posted to
Speaker 1: the Internet. I have to say, Jing, I was sort
Speaker 1: of ready to be a little cynical about red Antler's
Speaker 1: kind of impact on an e commerce company like other land,
Speaker 1: but it's it's clear to me, like how much work
Speaker 1: had to go into launching a brand and how little
Speaker 1: Abigail came with when she had this idea. I think
Speaker 1: it's an evolution of what is required for e commerce. Right,
Speaker 1: Like you know, five years ago, you can have a
Speaker 1: simple looking website with not very much content and you
Speaker 1: can still make good business out of it. But consumer
Speaker 1: expectations have totally changed. And the other thing that's changes,
Speaker 1: like all the basics are are already done, right. You
Speaker 1: can get cloud storage with Amazon, you can have Amazon's
Speaker 1: fulfillment centers run your business, and so like the differentiator
Speaker 1: piece is really this branding, like how do you stand
Speaker 1: out amid the crowd. It's it's no longer going to
Speaker 1: be like the technical technical stuff or the supply chain stuff.
Speaker 1: So so maybe it is sort of red Andler's time exactly.
Speaker 1: I mean, anyone can do it. How do you think
Speaker 1: they do when it comes to like product number two
Speaker 1: or taking a company like other Land from this launch
Speaker 1: experience into the next phase of its business. Well, so
Speaker 1: what they told me is that they're really really good
Speaker 1: at the launch, you know, figuring out the initial brand, strategy,
Speaker 1: the operations. As the company grows, they get less and
Speaker 1: less involved. The other thing is, you know they they
Speaker 1: obviously were very involved in the launch of a company
Speaker 1: like Casper the the online mattress maker, but like so
Speaker 1: much success in the space after you get past the
Speaker 1: launch is like this, this sort of grisly battle over
Speaker 1: search ads, you know, paying for people to view your content,
Speaker 1: um outbidding your rivals. Like if other Land is successful,
Speaker 1: there might be more luxury candle sellers online, and so
Speaker 1: you know, these businesses tend to mature, and red Antler,
Speaker 1: you know, might have to get its hands dirty switching.
Speaker 1: We're not recording this in late January. Other Land launched
Speaker 1: about six weeks ago. How's Abigail doing. We've seen some
Speaker 1: great press coverage. People are excited about the brand, the
Speaker 1: products for all the reasons that we're excited about it.
Speaker 1: A lot of engagement on social stuff that I think
Speaker 1: is really critical at the stage of the business is
Speaker 1: orders that are exceeding your expectations, which is happening. When
Speaker 1: I spoke to Abigail before she launched, she told me
Speaker 1: she was watching for how quickly she could acquire a
Speaker 1: hundred customers. Now she says she's almost at a thousand
Speaker 1: cost timers, and she sold more than a thousand candles.
Speaker 1: But we saw that was really exciting that people who
Speaker 1: bought the first couple of days, then a lot of
Speaker 1: them then came back and purchased gifts or um. If
Speaker 1: they had gotten one cent, they would get another cent
Speaker 1: or a three pack to try more. Abigail said return
Speaker 1: customers is actually the metric she's most focused on. So
Speaker 1: how many of our customers have come back and placed
Speaker 1: a second order, a third order, a fourth order, a
Speaker 1: fifth order. We've had a couple of those, So it
Speaker 1: sounds like these first critical weeks have gone relatively well,
Speaker 1: it seems so, but the Other Land is still at
Speaker 1: the very beginning of its life as a company. You know,
Speaker 1: success ultimately is getting to a place where you start
Speaker 1: seeing Other Land and your friend's apartments, your friend's home,
Speaker 1: or in a restaurant, in a hotel. And to get there,
Speaker 1: Abigail will need to keep winning over new customers and
Speaker 1: keep the old ones coming back. It usually takes years
Speaker 1: for company needs to start making a profit. And that's
Speaker 1: it for this week's Decrypted. Thanks for listening. We always
Speaker 1: want to know what you think of the show. You
Speaker 1: can write to us at Decrypted at Bloomberg dot net
Speaker 1: or I'm on Twitter at brad Stone, and please consider
Speaker 1: leaving us a rating and review on Apple Podcasts or
Speaker 1: wherever you like to listen. It really helps us find
Speaker 1: new listeners. This episode was produced by Pia gut Kari,
Speaker 1: Liz Smith, Magnus Hendrickson, and Christie Westguard. A big thank
Speaker 1: you to jen Ca, who recently moved on to the
Speaker 1: startup world herself. We miss you Chanting. Francesca Levi has
Speaker 1: had a Bloomberg podcast. We'll see you next week.