00:24 Hey, welcome back to the show. And I am so excited today to have Alex with us because he's got an amazing business. Alex, will you tell us what you do and what problems you like to solve with your business?

00:36 Yeah, no, because my fit business, so I had to bang on a couple of problems before, but this one is dear to me. So what we do at NOLK is we're trying to help people consume better, better product, better goods. And we do that in a slightly different way and buy brand, a DTC brand that trying to bring either product that are more responsible, more recycled, more usable, that are more circular and all that. And just trying those brands to scale within the group and do it together. So it's a collective endeavor. Typically, funders stay with us as well during the process. So that's what we're building at Nolk.

01:21 Love it. Love it. Please tell me you're not involved in promoting paper straws. 

01:24 Yeah, no. You don't like it? Yeah, nobody like it.

01:33 Just kidding. Okay. All right. Good. That's, that's my, you know, I, I'm all for saving the earth and keeping everything clean, but paper straws is where I draw the line. I can't use paper straws.

01:39 No, there's other better material out there, but no, we're not doing that.

01:49 Awesome, awesome. Well, give us some insight. I mean, first of all, why solve this problem? And second of all, tell us about your avatar. Like who are you really trying to help? What kind of businesses do you help bring that DDC play into a more sustainable future?

02:04 Yeah, well, the consumer that we cater to, like, typically like 25 to 50 years old, like, so that's really, the bracket actually cut that 48, like, on the average, it's like 28 to 48. A little bit like more women than men, so 70% women, 30% men, higher income, higher education, typically in North America and the coast or the big cities. And typically people that like to develop a relationship with the brand and the product that they buy Or i'm more curious about like how it's made where it's made what's the story behind it? Like what's the design element to it? So that's the prototype of the people that we cater to and or tree vertical that we're serving

02:48 Cool. I mean, not everybody likes to share that. So how are you getting in with these clients that do want to share that and want people to know the story of how they do what they do?

03:01 Yeah, well, the brand typically that want to join the group is typically founders that maybe they had a job before at a big bank, like or they were accountant, lawyer, engineer whatsoever. It's very diverse, like the entrepreneur that we're speaking to. And typically, those people see the same thing than us. Like they see that there's an opportunity to bring a better product in a market that is a bit more responsible, sometimes like made in the US made of different material better design to it and so on. Nowadays, it's easier to start. You have all the tool, Ben and Wizzle and so on, and getting early capital, and again, maybe you can get to your first one, two, three, five million dollars worth of sales. But after that, problem hit. You need to hire more people, you need to, suddenly there's no capital available at all, custom acquisition and marketing is challenging, and you gotta solve all of those problems at once alone. So that's where we would either knock at our door, we would find them and then engage in conversation. Say you have an entrepreneurial spirit, we're building the same thing. You want to build it like part of a group instead of building alone in your corner. So it's really about what I was saying about the collective endeavor. Like that's where we're about. Like there's tons of things we can utilize that are not unique to the brand. I mean, yeah. Shipping to the customer can be mutualized. Finance can be mutualized. Capital can be mutualized. Tech, all the technology and software stack as well. What remain to the brand is very what you're building as a product and the special relationship you're developing with the customer. So that we keep, like it remains the same.

04:44 Okay, this is really fascinating. This is really fascinating because I'm not sure if everyone caught what you just said, but I heard it loud and clear and that is, no seriously, this is really cool because what you're saying is that many of the operational parts of a business are agnostic to what the business actually does and the problem itself. And what you're doing is you're centralizing a lot of the resources that it takes to run those agnostic parts putting them into one collective and then letting the very specific deliverable that business does be their unique play while all of the things can be centralized. Is that what you're saying?

05:23 There you go. You're hired.

05:28 I love it. That is a really cool model. So the types of businesses you're targeting though are primarily businesses that are trying to be sustainable, businesses are trying to be responsible, mostly D2C people. That kind of, I'm connecting all the dots here.

05:50 Yeah, we do the model is that we like 85% of our revenue like are coming directly with the customers. That's a DTC model where you have a conversation with the customer directly. To be more domain specific, like and less vague, like there's three vertical that we're catering to. Like, so we have a fashion group and that is clothing and so on. We've got the lifestyle group that have many brands, you know, backpack, phone holder the kind of stuff that you bring out of the house. And we have a home group that essentially furniture, kitchen, wear, decor, and those kinds of things. So, tree vertical, 15 brand, this is the seminate between the three of them.

06:34 Wow, I love it. Oh, this is very cool. And a lot of those brands do have very familiar or very similar operational aspects to them, right? I mean, you know, one has a lot of shipping, receiving, one has, you know, this is, I could see how you can marginalize off that. It's very creative.

06:54 Yeah. Well, it's a pretty old model when you think about it, like roll up and, or even olding, they were popular in the eighties and the seventies, like, or, and they will be popular now, like, because when in the downturn, since you have less opportunity for organic growth, you will tend to get on organic growth and do consolidation. So the old model typically centralized mostly finance and back office kind of activities where we're pushing it is that now with digital tool and all that, like it's more easier to have a platform with operational layer to it, marketing layer, data layers and software layer. And those things can be neutralized as well.

07:36 Interesting. Interesting, interesting, very cool. Now, if you're one of those people out there and you're listening to this and you're in those verticals, listen really carefully. And even if you're not in those verticals, listen very carefully to the rest of the conversation because I have a feeling we're going to dive deep into some really cool solutions and simplification of sometimes problems that founders have a tendency to make very complicated that can be very simplified. So, let's dive in a little bit. As you engage with a new client like this, what are some of the first problems that you see that you think, okay, we can fix this with our eyes closed? Are there those types of things you see?

08:17 Yeah, the number one thing that we saw the past couple of years are uncontrolled marketing spend. I mean, there's nothing more easier to... Yeah, you probably have that a lot on the show. So throwing tons of... Yeah, exactly. So, oh, you want to stimulate your growth and you say, well, I'm going to just pour gas and Facebook or Google ads or things like that. So there's many problems there. Like first is if you don't have good control mechanism, like anything like that, you're just going to burn money. Like it's not necessarily investment, specifically not like any commerce. E-commerce is you need to make money on every purchase. So your unit economics actually needs to work. And so that's the first thing. So uncontrolled marketing span, number one. Second is nothing you're knowing your unit economics, like contribution margin what remains in your pocket after you paid marketing and gross margin and all that. That's really important because if you're pressing on a pedal. So yeah, pouring gas on ads, that's usually the first problem that we see. 

09:27 Yeah.

09:28 So uncontrolled ad spend, where there's a wishful thinking sometimes that throwing money at ads, it's like something's going to return out of it, like by magic of some sort. Second problem we saw also is a lack of transparency or details. You need economics of every sales. And when you're selling a product, like, yeah, it's interesting, but you would be surprised like most founders, they look at broad sales and then ad spend roughly, but then they don't understand very much their cost of product, the shipping, the return, the discount, some don't even like calculate that and when you count into everything, what really remains in your pocket to reallocate inside the business. So what's the economic contribution of the sales? And when you do the math, some of the business, sometimes, it's out of control and they have lost it. An easy one for your listener, pricing. Pricing is interesting because it's all relative. It's made up. We decide the pricing on things. And most of the time, funders, they tend to want to sell at a much lower price point than they should, just to be more attractive. But the thing is that if you have low margin and you're selling too low, try to defend your product instead of chopping price. You're going to get more profit and you can serve your customer better. So pricing is one thing. And then finally, I would say it's about operation. Some people trying to do everything themselves, there's two cases. There's the one that trying to do everything internally and then end up within a deluge of complexity. And there's the one that they externalize so much that they eat actually like, there's nothing left. Yeah, exactly. So yeah, so four case figures. So ads, knowing your data, pricing, like pricing too low and either trying to do everything in house or everything out, so one idea.

12:51 That's really interesting. I love that you brought up all those points because I totally agree with every one of them. I can tell you personally, I've struggled with all four of those points. I mean, I've been priced too low, I've been priced too high. I've been, you know, I've had poor operational skills before where I didn't really understand how to do what I was doing, you know? And I think every founder out there, specifically people that are in that one to $10 million range, really, have a hard time knowing what their strengths are versus what they should outsource or what they should bring in fractional leadership or have a team like you come in and centralize some things. You know what I mean? So how do you solve that problem?

13:38 Well, typically, the best scenario for us is the founder join us. The way we operate is that we essentially bring the entire business. We don't do passive investment or just take a stake. It's really like you're joining the group. As a founder, you get incentivized, part of the collective. 

13:57 Interesting.

13:58 The idea behind that is exactly so you're joining. Are you going to get the better outcome doing it alone, yourself? or joining a group and working within the collective, like with which solution will grow you better. And then we try to incentivize the founder, depending on what's his driver and so on, to just continue to grow his business, but removing the roadblock, like and what can we take in the group level and voila. So that's one case figure. Sometimes like the founders, they're just exactly. That's the best case. Second case, sometimes is founders just really tired, discovered that they don't have the skill set, but they still build something that is very valuable. And then it's mostly about transitioning out and offering a way out for the founders, or at least a structured transition, I would say. But we really tend to go more for the first time, which is bringing and the team.

14:59 So, are people then just bringing in chunks of equity into the NOK group? Or what does that look like exactly? I mean, it sounds fun, but are people, to what cost are they bringing things into the NOLK family here?

15:16 Yeah, the, uh, well, there's always four components, like when we structure a deal and when we try to find the right equation for the funders. So there's a cash portion, like, uh, what, what can you get today? There's what can you get later in the form of a earn out. There's a portion sometime if we don't, we don't see the value the same way we can say, well, you know, maybe we can build some kind of differential and you can get a chunk later if you hit certain lights up and then there's a stuck component. As you mentioned, which is the incentive, also part of the group. So it's really like those, one of those four components blended together. Yeah.

15:54 Fascinating, fascinating. That's definitely different than most people would imagine going. A lot of people feel like they've just gotta go raise money or they've gotta raise some type of capital to get some help with their business, but you're saying bring in your operations and as a team, as a group, we'll collectively hone in on the areas we're best at and build each other's up to a certain level. Is that what you're doing?

16:18 Exactly. Yeah, that's exactly that. Of course, after that, you're no longer the sole owner. You're part of a group. But there's many other owners that are part of a group like I'm an entrepreneur, like all of our also investor, our entrepreneur as well and all that, like, so we're all in it together. So I think it's all about like what thinking collectively and thinking like a single, single funder mindset.

16:40 Wow, wow, interesting. All right, so this sounds cool. What kind of challenges have you hit? Like trying to build this, it doesn't sound like a very easy thing to talk people into.

16:53 No, no, no. Yeah, for real. The, well, first was calibrating and finding what's the exact characteristic of a good NOLK brand. So in the beginning, we say, oh, we're going to go after interesting brands that are on Amazon and then we'll help them, like, we're going to develop the relationship outside of Amazon. That doesn't work that way. You don't really have a conversation with your customer on Amazon. So that thesis, we left it away. Then the second thesis was, oh, okay, we're gonna try to find brand that have unrealized value. So let's say they're not profitable, there's some issue and we're gonna fix this. This is very difficult if you haven't found your product market fit or show some kind of scaling or growth. So the first initial years were test, trial and learn, I would say the first three, four years. And then eventually we find our model. Okay. So we're, we're best when the brand, uh, has found this product market fit. They already experienced some growth, but now they have growth pain. Uh, but there's a team and a founder and all that. And we can, we can get this, uh, inside the group and we're going to be able to make it more enjoyable for everyone. Like the customer, the team, and also from an investment.

18:17 Cool, cool. And so, I mean, are you seeing people around you trying things like this? Like this is a very fast standing model. Like is this something that you guys are kind of at the forefront of or what are you doing?

18:32 Like I said, it's an old model and the financial language. 

18:36 I guess so.

18:37 Yeah, exactly. It's called a roll up, but then as I said, we're more operating. From 2000 to 2021, there was kind of a craze of so-called e-commerce aggregator. There's a couple of big names that went on market that raised billion dollars like Trazio in New York, Perch in Boston, Salarax in Europe. So I think, billions of dollar were raised to aggregate, but they were mostly doing Amazon like we thought we were supposed to do in 2018. So it's interesting. So they started later with more capital and they took the route that we decided to abandon in 2018. 

19:18 Interesting.19:19 And to be fair, those guys typically they approach it from a pure financial, okay, let's build a big group. The differences with NOlK is that we selected from the beginning that we would be about premium brand, not luxury, but premium brand with premium design and an element of sustainability and the broad sense like is the product that we're selling answer one of the three R or is made locally or things like that, but to the point where it can be scammed. So I would say like, yeah, there is other player out there, but they're not like us.

19:55 So, no, no. So as you, you know, the industries you're targeting make a lot of sense to me. How have you been able to, like, it's always a challenge to break into some of these verticals and hit as hard as you want to, but I gotta think that at this point, you know, you've got yourself some solid client base. How do you see this growing next three, five years?

20:18 Yeah, well, the good thing is that there's, you know, there's Tailwind and Edwin. So the Edwin, most people knows about it, like the interest rate, the economy, there's some level of uncertainty. But there's a lot of tailwind as well. Consumer, actually, if you look at the consumer study, that consumer are willing to spend more on product that have sustainable pieces and are made different. So the team support in our portfolio is actually stronger today than it was three, four years ago. Second, e-commerce purchase and engaging directly with the brand, it's a long-term trend. So people continue to be more engaged with brand online and on the channel and all that. So that's also something helping. And also from the beginning, we wanted to operate like a profitable group. So instead of over leveraging the entire group, we've made a lot of effort actually to manage a profitable group. And today that's all about that. Like when you have hardship and uncertainty in the market, if you make profit and you can operate at a profit, you're a master of your own destiny. If you're over leverage or you need your next round of VC, you don't control your investing that much.

21:39 True, true. So, my mind is spinning with all sorts of questions, but I wanna dive into the fact that as you create this group of other founders and this group of other business thinkers. I personally am a huge advocate of being part of peer network groups, a big, big advocate of that. How much does this look and feel like that? Are your founders communicating with each other? Is there a lot of that kind of back and forth, almost like an advisory board for each person as they kind of pitch the problems of the business each week or month?

22:17 We're always refining that model, but let's say as a basic. So every month we have like a leadership board with every founders and all of my functional like executive team. And we go over, you know, trend, how can we serve more the customer? What's the health check with the team? What's the investment opportunity? And so at a minimum we're doing that on a monthly basis. Then we have specific subgroups, so marketers, for example. So I have a group of every social marketer across, or 140 different employee across the globe. They gather together and then they're gonna share like, okay, what did I do, like in terms of UGC, did you have this problem? And they exchange on that. Same thing with CRM, the email team. So the marketing team is very, very active and sharing. And obviously today with you get Slack channel, you get training practice. We've got two leadership meeting per year as well, where we gather everybody that manage a team and depending on the brand, bring them all together. So we did one this summer, North Montreal. And for two days we spent time together and we bang our head on certain specific strategies. So for example, this summer we've worked on carbon reduction, circularity, how can we reduce the amount of what goes in the landfill coming Christmas season as well. So yeah, so internal peer group, one of the most appreciated.

24:03 Well, I'm glad to say that because I'm a huge advocate and I tell people all the time, if you're struggling to know what your next steps should be, talk to another founder because chances are there's a thousand people within a mile radius of you that have been there, done that. You know what I mean? So I'm a huge advocate. I'm glad that you're seeing that benefit out of that. I love to ask all my guests, who has been that impact in your life?

that has kind of inspired you to make these moves in your business, who did that for you? Like, why are you doing this whole thing?

24:41 Oh, there's a, yeah, you meet different figure in life, some real, some true books and stories, but as you mentioned, you need some role model to get inspired to. Lucky enough to have been raised in a family of small entrepreneur with very, very good core funding, like value, like a couple of the strongest thing that my dad and my grandfather is actually like share with me mom as well and all that is, but if someone can do it, you can do it as well. It's just a matter of how much time you put on a problem and you can learn so that faculty to learn is one. Second is, and my dad was at a retail store, so, you know, sells and stuff like product trade throughout the years. So you got to be resilient. Like it's not because you had a terrible day or a terrible quarter that your life is done, you still have your family, you still have your things, so just keep perspective, fence yourself about what's happening and all that. So that builds resilience. And yeah, good grit. Never get up. You have to be tenacious sometimes. Some problem, if it's a wordy problem and it's the moral thing to do and the right thing to do for the business and so on, just bite it until you get it done. And if you do that over time, that's how you build the stuff. So yes, I would say a lot about the core as a family, then friends and a couple of role models throughout my career as well. It's been helpful with that.

26:22 Awesome. That's, I love it. I think that you've been lucky to be raised in an environment like that. And you know, not everyone does it though. Not everyone catches on to the same vision, same strategy. And I'm impressed that you've been able to do that. That's awesome.

26:37 I don't know, I'm the oldest of three. I've got two other brothers, so maybe by being the oldest, you're trying to, what's the saying? 

26:46 Figure yourself out.

26:47 They say you're trying to live up to your father's dream or make up for his mistake or something like that. But yeah.

26:54 Oh, don't share that with my son, my oldest son. That's awesome. Well, Alex, I really appreciate the conversation we've had today. And for those listening, I got to believe that there is some huge value nuggets you've been able to capture out of today's conversation. Alex, before we leave, is there anything you'd like to leave with the audience of how they can engage with you and what kind of things do you feel like you left on the table?

27:20 Yeah, yeah, yeah. Well, I'm available on LinkedIn all the time on the show if they want to contact and so on. I usually like super open to discuss with any founders about their story and all that. Specifically, if you're in the e-commerce space, know about it a lot. Maybe it's not necessarily a no-brand, but we can be helpful in another way. We're trying to be good citizen overall and helping the community like all that so don't be shy we're responsive

27:50 Awesome. Awesome. Love it. Love it. Alex, thank you so much for the time, buddy. And we look forward to catching up with all of you on the next episode of this, and we'll catch you on the next one. Thanks, Alex.

27:53 Thanks Todd. I appreciate it.