On today’s episode, Kunle is joined by Leonardo Caracas, Partner at Jump Ventures, an incubator and VC holistically supporting companies to scale from $1 million to $10 million in revenue.
When Leonardo got tired of working in the corporate world, he turned his attention to entrepreneurship. He contacted his university friend, Rafael, who was working then in Brazil with a startup called Gocase. Leonardo’s love for adventure carried on to his career. Fast forward to five years, Gocase already is in the international market and in addition to it, they also have Jump Ventures.
Jump Ventures is a mix of incubator and venture capital which sets them apart from other similar companies. They help companies from start to planning and achieving their growth plan which is a sustainable strategy for growth. While there is no one-size-fits-all strategy for brands, Leonardo shares how Jump Ventures were able to achieve growth for every company they work with.
It’s an insightful episode as you’d hear Kunle and Leonardo talk more about what Jump Ventures is and does, growth methodology, demand generation, the importance of testing, and what a magic number means.
Here is a summary of some of the most important points made:
On this episode, Kunle and Leonardo discuss:
Q: What have been the most meaningful business contacts of yours in the last five years?
A: My partner, Rafael.
Q: Are you a morning person?
A: Yes, I like mornings.
Q: What does your morning routine look like?
A: It’s my way to get Zen. I wake up a little bit earlier and I spend at least one hour playing with my kids. I have twins and it’s my time to focus on them and have a relaxed start to the day.
Q: Are you into sports?
A: I love football.
Q: What is your favorite team or athlete and why?
A: There have been so many inspiring idols. I’m not even a basketball fan but after seeing that Michael Jordan documentary, I went through a lot of time trying to investigate more. The winning mentality is such inspiring. From everything I’ve seen, that was the most impactful personality in sports that I could think of.
Q: What two things can’t you live without?
A: My kids and wife.
Q: What book are you currently reading or listening to?
A: This is one I’m rereading, I love to reread this one, and every time, you’re in a different situation, The Hard Thing About Hard Things. I’ve reread this book several times. When you’re in different months or phases throughout the years, it’s a nice book to reread.
Q: What’s been your best mistake to date? By that, I mean a setback that’s given you the biggest feedback.
A: Hiring poorly. Hiring has taught me a lot about how to try to find A-players. That’s the biggest insight. It’s not about hiring. It’s not about hiring just intelligent people. It’s about hiring A-players that have a culture fit with you.
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On this episode, I’m joined by an eCommerce expert who has successfully scaled to eight figures, sharing his proven five step framework for profitably scaling your D2C channel to $10 million plus in revenue. It’s a great episode you don’t want to miss.
Welcome to this episode of the 2X eCommerce Podcast. I’m your host and chaperone with the promise to you that when you read any episode we publish, you’ll take on fresh insights you can deploy as an experiment to grow or 2X aspects of your own eCommerce business. This podcast has been specifically produced to support the growth of your brand through eCommerce as a channel. We do this by either you hearing directly from me or through interviews with other eCommerce operators with growth stories and from experts that are part of remarkable growth stories.
This episode was an interview I had with Leo Caracas, he’s a partner at an eCommerce venture growth studio called Jump Ventures, and also a Co-founder at a mid-size phone accessories brand called Gocase that generates over $30 million in revenue annually. I was incredibly fired up after this conversation because Leo was one of the few guests I’ve had on here that impressed me. He shared Jump Venture’s five pillar framework for infusing growth in the eCommerce businesses that they incubate and scale, which, in essence, is their framework to scaling from 6 to 8 figures in revenue. He has achieved this feat in eighteen months for a few brands.
We talk about growth strategy, content strategy, commercial planning, financial structure, data, and tech stacks. Leo emphasizes the importance of understanding the customer journey channel diversification and having a robust content strategy. He also shares valuable insights into the tools and strategies that have contributed to his success. Leo’s expertise and experience in scaling eCommerce businesses offers invaluable lessons for entrepreneurs looking to grow their ventures. He says, “You have to deal with what is going to happen but you can be more or less prepared.”
In this interview, you’ll gain practical advice and actionable insights to help you navigate the ever-changing eCommerce landscape. One powerful quote from Leo is, “Hiring has taught me a lot about how to try to find A-players. It’s not just about hiring just intelligent people but it’s about hiring A-players that have a culture fit with you.” This illustrates his approach to building a successful team.
Don’t miss out on this opportunity to learn from an eCommerce expert who has successfully scaled businesses to eight figures. Focus on this interview with Leo to discover more valuable tips and strategies to growing your eCommerce business. If you want a masterclass on a tried and trusted framework to profitably scale your D2C eCommerce sales to eight figures, pay attention.
Leo, welcome to the 2X eCommerce podcast.
Hi, Kunle. Nice to be here.
It’s a pleasure. I had come across Jump Ventures a number of times and I was like, “Who are the two geniuses behind this?” I realized it was you and Rafael. This conversation had to happen for a good case. Where are you based?
I’m based in the Netherlands, Amsterdam.
How’s the weather?
The weather here is bipolar. Some days you have amazing weather and other days you have a rainy outlook.
Fair enough. It’s the same as England. You have quite an interesting background in the sense that you used to have an agency and now you have a growth vehicle, you have almost like a growth investment venture. Do you want to take us back to how you got started, your childhood, and your uni days? What were the fundamental building blocks of where you are now? How far would you go to attribute your current state and success? How far back would you want to pick on that?
Let me go far back and accelerate the story. I’m a person who always loved adventures. Since I’m 14 or 15, I’ve lived in different countries either as an exchange student from high school level to university level. I traveled a lot. I always like to push myself and be exposed to new things, new people, and new outlooks, and have a lot of adventure in my life.
That took me to different countries and it also took me to a job in the corporate world for around five years where I traveled the whole world, Middle East, Europe, and Africa, as a consultant.I got to play around a lot in my business life as well as in my personal life and to be exposed to a lot of different things. My true nature is I’m a person who likes challenges and I’m a person who likes adventure, both personal and the business side.
I got to a point in my consulting life after five years that I got tired of it. I wanted to have a different type of experience. I wanted to maybe taste a little bit of the entrepreneurship life. That entrepreneur bug was starting to hit hard on me. One of my best friends from University, Rafael, which is now one of my partners at Jump, went straight away after university and started his startup life. I went the corporate way and he went the startup way but we always kept in touch. We always kept checking up on each other, “What are you doing? What are the interesting things that you are up to?”
When five years hit, I said, “Let’s do something together because I have reached my limits in the corporate world and I like to try and do something new for myself.” He said, “We have this projectthat is working well and this was three months of launch, which is Gocase.” Fast forward, Gocase is the market leader in Brazil and one of the top brands worldwide in the tech space for electronics. At that time, it was a startup, and it was still validating its value proposition.
We started in Brazil, we think it has a lot of potential, “Why don’t you open an international office?” We started the company and we internationalized within one year. It was already a huge challenge to try to make an eCommerce company and a brand work in a lot of different countries. We started this journey of entrepreneurship with Gocase, which was back in 2015.
What did you sell at Gocase?
We sell phone accessories. We started with phone cases and then we quickly expanded to a bunch of other products like power banks, airport cases, cables, and wireless car chargers. The main value proposition is designing customization. If you go to the website, you’re going to see thousands of designs and you’re going to see several ways to customize that you don’t see in any other eComm website like putting your avatar, your name, a picture, using filters, and using even AI.
We even integrated AI engines to create differentiated products there. This was our ground to play and to play an entrepreneurship life, having an experience as an entrepreneur to try to grow a brand for the first time online and focus on the D2C part. This was back in 2015. Fast forward, we have gone through an accelerated journey of growing this brand.
We grew it bootstrapped, self-investment, and made our own mistakes throughout eight years. Within a timeframe of three years, we had already hit eight figures. It was an accelerated growth path. It was a growth path that we had a lot of help along the way from mentors and coaches but a path that allowed us to have the experience and commit all the mistakes that could be done to try to grow a brand and a company from scratch.
After seven years, I started having another bug, and I wanted to have another challenge. I was starting to understand, “How can I get a new challenge in my professional life and get exposed to something new?” What I took with me was, the way we grew Gocase was we were able to jump a lot of obstacles with the help of mentors and coaches.
We were helpful to get into different networks, business entrepreneurship, and eCommerce networks where we could have conversations with people that were 5, 6, and 7 steps ahead of us and understand how to think about cashflow, hiring, content creation, and diversification of channels. We got a lot of help there.
What I proposed to do years ago was to do the same, we took companies that were in their nascent stage, they were in the six figures. I went into my networks and I said, “If you’re an entrepreneur, which is still in the six figures, and you would like to have coaching and mentoring sessions to help you unlock certain things or think along, I’m here and we’ll do this pro bono.” This was an experience I had years ago. I helped more than 30 or 40 companies along the way.
Within one year, it was already twenty companies. It got me inspired and I got a lot of energy from it. I was able to help quite a few of these companies to scale and some to significantly scale. For others, if they were not ready for scale yet or we could not help them scale, at least structure them financially, structure their thinking, and their prioritization methods. I got a lot of energy from this exercise and I thought, “Maybe there’s something here.”
That’s when we came up with the idea for Jump to help companies that are in the 6 figures to go all the way to 8 and possibly 9 figures if they have the potential and we have the resources and assets to do so. We created this company, which is a mix of incubator and venture capital where we go along the entrepreneurs and we execute their growth path.
Jump is a combination of an incubator and a VC incubator, meaning that you’re putting these six-figure businesses in which you identify certain potential and you’re investing your time. You then have an equity stake through an investment. The goal is to scale them from under $1 million to over $10 million in revenue over a time horizon of about maybe 2 to 3 years.
We have the track record that we’ve been able to do so in one year. The companies that are within $1 million average yearly revenues, we’re getting to 10X them to get to $10 million within one year. We are a mixture between an incubator and a VC because we don’t just help them in the beginning stages, product validation, and product-market fit and then leave. We are there for the full ride.
We’re not someone that just will invest time or money or anything and start demanding results and leave the operation completely up to them. We are there full-time. We are bringing our teams, our resources, and our networks to support the growth. We are executing the growth of these companies in several layers be it advertisement, content creation, and other things as well. We’re working together with the entrepreneurs to help them scale from 6 figures to 8 figures.
How many companies have you worked with under Jump Ventures?
In the mentoring and coaching space, which we do a lot, we do an average of 3 to 4 companies per month helping out with mentoring. Over two years, we have over 50 companies we have mentored.
You’re formalizing that now in Jump Ventures.
We accelerate a small portfolio of companies throughout the year because that’s the focus that we can have. We can not accelerate at the moment 10 to 15 companies at the same time because we don’t see that our focus is going to go the right way. We have a limited amount of companies, which we truly believe have a scalable business, and we truly believe have an eager and right work ethic founders. When we have this combination, we have something powerful to go fast. When we put together the founders’ expertise on the product on the customer and the experience with our expertise on the growth and how to push the product to the next level, we get something powerful.
That’s an important point you made where you’re talking about the fact that the founder has that focus on the product and the customer, which itself is a customer experience. That is separate but should be integrated with growth, which is what you bring. I’ve not seen anyone articulated that way. You do all of this while also running Gocase now. To give people some context of the size of Gocase, you’re over 200 employees there. Do you want to speak to the growth trajectory and where Gocase is as a company and how you built it into what it is?
We are in the mid-eight figures. We have almost 200 employees or a little bit over 200 employees at the moment. We have completely grown the company as a full-fledged company at the moment having a production facility, production employees, finance departments, developments, engineering departments, design, growth, and marketing. It’s a full-fledged company that we grew from scratch.
This was the company where we had a lot of experience on what is necessary to have in-house and what we should try to outsource. This was also a company that we got to play with the full scope of an eComm ecosystem from supply chain and production all the way to sales and marketing. We were able to build the company’s departments and people from scratch. This is the scale of the company, which doesn’t operate only in Brazil but worldwide. It’s a company that sells to the whole world with a bigger focus on the North American market, European markets, and Brazil.
What is mid-eight figures? Is that $30 million or $50 million?
$30 million to $40 million.
You’re bringing that expertise into Jump Ventures.
What is the growth methodology? There’s no one-size-fits-all but there is likely going to be an approach if I bring my six-figure brand, you have that roadmap to my 8 or 9 figure. Do you want to break that framework if you do have one?
We have a framework to see how to work and consistently improve the brand. What we try to understand from the beginning is, “Do we have a validated product? Do we have a product market fit here in this brand? Does this brand has the assets to scale over time?” We see this with KPIs. First of all, we look at the product reviews, this is the first KPI that is going to tell us the level of product market fit that the brand currently has.
If it has above 4.6 or 4.7 out of 5 stars, it’s a product that has been validated by its customers. If we see that the retention rate and repurchase rate are above 30%, meaning that people are coming back to the brand to repurchase new products or the same product, it depends on what the brand sells, if we see that the AOV is around $75 or has the potential to continuously increase over time. We see brands that have an AOV of $20, $30, or $40 but if there is the potential to continuously increase this AOV or also to continuously increase the repurchase rate, we see a path for growth.
This is important because at the state of digital marketing at the moment, it is tough to make a profit if you have a low repurchase or if you have products that are below $50 or €50 euros AOV. Last but not least, depending on the context as well, you need to have a high conversion rate. Depending on the traffic sources you use, how much organic traffic is coming along, and what is the AOV?
Generally speaking, if you have a conversion rate of about 5% and you have an AOV of around $50 to $75 and you haven’t pushed that hard on paid media, you are in a good space to continuously grow. We have to contextualize a lot. It’s not to say this is the defining metric and figure for each brand but when we are able to contextualize all of that, we start our framework for growth.
That’s a prequalification before even the framework is applied. They must have found product-market fit, ideally not through paid. It could have been through influencer marketing or through the community for instance and then an AOV of $50 to $75 or more, a repurchase rate of 30% minimum. A conversion rate of 5% is quite high.
You’ll be amazed at how many companies are sitting with that conversion rate and don’t know the power they have on their hands. I talk about 5% to give people an anchor. If you are at $50 and you have 5%, what does it mean to have $150 AOV? The conversion rate can be way lower but it means it’s still powerful.
At the same time, if you have a $20 or $10 product and your conversion rate is 8%, you can also be comparable. I’m pretty confident that if you are around the same proportions, once you start pumping in paid media traffic, this is going to severely go down. This is a safe state. The rule has to be like this. We have seen different cases of course. This is a state where you’re in a comfortable situation to scale.
Let’s jump into the framework.
Framework-wise, the first thing we try to analyze is what is the growth strategy put in place here. Which channels are available? Which technology can be behind the brand? Which type of revenue? It can have subscriptions or a one-off. Is this a product or brand that can grow through Meta, TikTok, and Snapchat? How big is the CRM pie that we can unleash here? We try to understand on a bigger level where the brand is, what is the size of the market, and then how can we push this on paid media. This is the growth strategy and eComm channel level.
The second step is content strategy. For us, there is no growth without content. It’s a crazy amount of effort but it pays off on the content side. How can we enable content creation, build machines behind content creation, bring a lot of UGC and a lot of influencers, and have a system to constantly test new content? If we can build a content machine for these brands, then they have the fuel to burn for the scale. If they don’t have, for us, it’s like, “Forget about it. We cannot scale it.” If there’s no good amount of content, it’s not part of our playbook on how to scale this brand. Content is a big part of the playbook.
What is a good amount of content from your point of view?
We work with brands that are shipping at least 15 to 20 creatives a week to be tested. We know that to get that outlier content, that content that can be scaled to crazy levels, they’re not showing up one time out of 3 or 4. It’s once out of 50 or 100 sometimes. If you don’t have this consistent method to test, you’re never going to find the diamond in the rough. We’re looking for the diamond in the rough, not the average content. We’re looking for the outlier. 15 to 20 content tests per week for us is a good level to find the diamond in the rough. It’s a big part of the playbook.
What is the breakdown of the content from UGC to a brand to IGC? How do you ensure that there’s an equitable contribution from various content sources? Do you recommend any formula?
We believe every brand has a formula and there’s no one-size-fits-all. Our job is also to get to that formula. There are brands that have a lot of UGC. There are brands that the product itself brings a lot of attention from the customers and it’s natural for customers to be posting, sharing, etc. There are other brands that are not and you need to rely a lot on studio-type of footage. Studio means self-made internally created content.
You also need a healthy mix of influencer clips and influencer creatives. For every brand, we believe there’s a formula to sell that product the right way and in a converting way. There is no right amount of dosage for every single element of the formula. It’s not like it has to be a 30% UGC, 30% influencer, and 30% studio. Sometimes it’s 100% customer base. Sometimes we see the outliers that the ways that the customer are talking about the product and selling the product in the US piece to everyone else.
We have seen a brand that relies completely on customer testimonials, completely on how the customer is doing it. The customer does a testimony of two minutes, you edit a 30-second version and a 15-second version. You add a little bit here and a little bit there. Overall, it can be 80% UGC and 20% studio. There is a formula. Getting that formula is one of the biggest challenges.
Going back to the framework, you started with paid media, and then we moved on to content strategy. Are there any other key elements in there?
After the growth strategy and the content strategy, we go to the commercial plan. The commercial plan is thinking along, “What is the pricing of the products? What is the merchandising? What is the type of bundling? What is the repurchase plan? What are the type of upsells and cross-sells we can have?” Thinking along with the entrepreneur to say, “What do you have in terms of portfolio? How can we price it? How can we bundle it? How can we propose it at different times and at different customer journeys?” This is key to constantly increasing AOV and constantly increasing the conversion rate. This is the third part that we work heavily on.
From a pricing standpoint, I do get the commercial plan, 100%. You’re looking at the price, the product, and the bonding opportunities. Have you seen situations in which their existing prize and strategy is not fit for purpose and you come in and re-engineer it and that in of itself, excluding content strategy or paid media, changes the AOV for instance, or it changes the repeat customer rate? How important are pricing and merchandising in optimizing growth?
It’s one of the most important things an entrepreneur has in terms of power to constantly play with. We’ve seen increases of 100% month over month, 50% on AOV, from playing with pricing bundling strategies. The first concept I would like to share is the magic number. There’s a magic number for every product but many entrepreneurs don’t think about that. They put a number for the product that is completely broken.
There’s a lot of psychology behind product pricing. I had read some books and it’s enlightening how you have to think about product pricing. Overall, if I have to summarize it, there’s a magic number. There’s a number that you put there, it’s a round number, and it’s a number that’s close to something that is understandable to the customer and he’s going to make a quick decision.
If he has to think and interpret that number, “What does that number mean to me? What is this number compared to what I usually buy?” When it starts to get too difficult and the customer has to interpret the number to make the decision, you’re in the wrong place. This is why there’s a lot of $99. This is $49.99. It’s below $50. $50 for me is a night out, a dinner, and this is going to give me this much more. You have to constantly test and find what is the magic number for the product. Try and find that magic number, it’s super important.
The second point is the AOV for the bundling. If you don’t constantly try to bundle products or bundle offers to get to higher state AOV, you’re not setting yourself up for success in terms of profitability. We know the paid media way is tough to make a nice profitable order if you’re not in the right AOV state. It’s Playing around with how can you do merchandising of 1 for this and 3 for that. If you buy above the threshold, you get free shipping. If you buy this one, you get a free gift. If you buy this one, you get a surprise.
If you’re not playing around with the merchandising and bundling, you’re missing out on a huge opportunity to immediately increase your AOV. We had a case and we completely changed the company scenario from a $35 or $38 AOV to an immediate $60 AOV from one day to the other because we added bundled products to the mix. That changed the balance of the AOV of the company.
Where is the best place to offer a bundle in onsite CX or onsite customer experience?
There are two basic machinery that we use to increase the AOV. You have the upsells in the product page, that is a checkbox, and that’s a quick and easy growth of AOV but we don’t believe this is the most impactful one. The most impactful one is coming up with bundled products that are visible on the pages that people are lending. If that’s the homepage, if that’s a category page, if that’s a specific landing page, you need to give high visibility to a bundled product. If that’s going to be the category, landing, or home, it doesn’t matter.
You speak to the benefits of that bundle together. I never went deep into the first point, which is the paid media/growth plan. Do you want to quickly break that down from your methodology, please?
Can I speak about the last point of the framework to finalize the story? It’s the financial structure because it’s super important for entrepreneurs as well. After we do all of this, we have to think about how is the company set up for success in terms of finances. How are they thinking about cashflow? How are they thinking about the P&L? Do we have room to optimize where we see things are unsustainable?
Overall, if you have to scale, you need to set profitability targets and you need to set revenue growth targets. Overall, it needs to be sustainable. You need to be able to afford your own growth. We come in and we try to understand the P&L. We have a clear picture of what a good eCommerce company P&L should look like in terms of percentages and growth levers. We try to see and match where’s the company at the moment and how they’re thinking about financing, how they’re thinking about cashflow forecasts. This is a super important piece of the framework.
Last but not least, the data and tech stack. We take a lot of decisions based on the data. We use a lot of different apps and have a tech stack to support analysis on the customers, channels, AOV, and products because these are the everyday insights that we’re going to take to fuel our activities. Overall, if you have the growth strategy, the content strategy, the commercial plan, the financial structuring, and then the data and tech stack, we have all we need to take the company to the next level.
What does a good eCommerce P&L look like?
We talked about a couple of figures here that are key for entrepreneurs to get. Let’s start with the gross margins. We do differentiation at the start of the P&L. Companies that have a product that has 70% and above gross margin are companies that we can place in the demand generation sector. These are companies that have so much more room left in the P&L to spend on advertisement that they can afford paid media and they can afford to play the demand generation game, the game of Facebook, TikTok, Snapchat, and so on and so forth.
Companies that have 60% or 50% and below gross margins are in a tough space to play the demand generation game. Ideally, they should be in the demand capture game, which is the Google part. The demand is coming. You’re not generating that demand. The product has to sell itself. We separate there if you’re in the 70% of your demand generation and if you’re 50% and below your demand capture.
You should always try to understand how can you optimize there so you have more room for advertisement. This is how we think. If you don’t have enough gross margins yet, let’s think about the pricing, let’s think about the production costs you currently have and the import costs you currently have so you have more room to advertise. If you cannot, it’s going to be tough to systematically grow.
I like the point on demand generation and the 70% gross margin, which gives you a lot to spend across, and then the 60% for demand capture. That is interesting. Are there any other points in the financial structure that readers should be aware of when it comes to assessing their financial health?
The three important points we try to stabilize or work with the interpreters are the following. The first is MER, paid media cost. We believe that going up to 25% at the start should be the maximum to find a stable and profitable operation. If you’re already going 30% or 35% and you’re not making that much revenue yet, you’re getting to no man’s land because you haven’t found a profitable way to operate and you’re already going above a threshold. when you’re able to go a maximum of 25% and consistently grow with profitability, this is what you should aim for.
The second point is logistics, B2C logistics to the end customer. We try to work with a maximum of 15% but target 10%. If you are between 10% and 15% of your cost structure is your shipping cost to the end customer, you are at the okay level. If you’re 15% above, it’s a tricky situation to be profitable. You’re losing too much money on shipping and you should find a new pricing structure or renegotiate with couriers.
The third one is the payroll side of things. We aim at a maximum of 10%. If you’re going way above 10%, it’s complicated to scale. You’re putting a lot of weight in the payroll and you should find a way to be more lean, to work more with freelancers, with agencies, or whatever it might be. That is a variable cost and it’s not heavy to carry month over month. When you work with a 10% maximum payroll cost, you are a lean company that can achieve profitability by the end of the month. If you start deducting those swings, you see already that you’re not left with that much profitability. These are the baselines and borders that we tell entrepreneurs to think about.
Spend 25% on marketing, 10% on shipping, ideally, and another 10% on payroll, which comes to about 45%. There’s not much left.
If you think about the demand capture business, there’s not much left, it’s almost nothing.
Already it’s 55% left if you’re not covering cross on there. For a $1 million company, you should be spending a maximum of $100,000 in payroll. I want to go into the nuance of the P&L. In many stores, you might have some SKUs that are high margin, 80%, 70%, and then others are low margin. Looking at the average might not do you enough justice in terms of your marketing strategy. Would you execute demand generation on a product, one product, or a group of products that are 70% or 60% over gross margin versus others? Where do you look at the gross margins? At the product level or P&L level?
P&L level. Overall, you’re going to look at consolidated figures. In the end, what you want is to have a good and profitable business and not a good and profitable one-purchase. When you look at the whole picture, how do you bring traffic? How much does this traffic cost? What is your AOV? You then start to play the right buttons to get to the net profitability. If you’re going nitty gritty and making a calculation of how much gross margin you have on this product and you cannot even sell the product itself, you wasted time. You need to think even if this product that you are able to advertise.
Our formula is thinking about, “What is the hero product that we have and how can we create hit content with this hero product?” This is the baseline. If you can get that to work, you can get traffic to the website. If you can get traffic to the website, now it’s working on the eComm side. What is the pricing? What is the bundling? Make sure that you’re going to get the right AOV to get the right profitability. I wouldn’t go nitty agree. Of course, you need to give boundaries to not have something that is not making money at all. Having that comparison for us doesn’t do any good.
Let’s speak to your first point, the growth strategy. Do you want to give a quick rundown of what a growth strategy looks like from Jump Ventures’ point of view?
Looking at several companies, we understand what is the potential of CRM channel. One of the things people overlook a lot is how much power and how much good does email and SMS do for your bottom line and your repurchase. We try to look at the growth strategy first looking at how they acquire traffic, how much has been paid, how much has been organic, and then how much they are monetizing from their CRM channels.
We believe a good company has at least less click and 30% of its revenues coming from email and sms. That’s a healthy level to be at and constantly evolve to make sure that you’re profitable at the end of the day because you have fixed costs with whatever provider you might have. This is pure profit afterward. We think about how the traffic is currently acquired and how are you making use of your CRM. Thinking about how much room there’s still to grow there and depending on the product, how much room for repurchase, how much room for subscription, and so on and so forth. This is the first thing we look at immediately.
The second is we try to think about which paid media channels are available. The initial suspect is always Meta. It’s always possible to sell something with Meta. Depending on the product given violations of policies or so on, you cannot advertise on Meta. We work with products that can be advertised on all platforms. The initial suspect is always Meta. How can you grow on Meta? Is it with videos or pictures? Which channels? What is the actual potential that you have to grow on Meta?
After we investigate and we try to make initial tests with Meta, we understand, “What is the cap that we’re going to have there with Meta channels?” After we have the cap, we double down on Meta, “What’s the next best channel that we have to start diversifying?” This is also something entrepreneurs lose track of a lot. They try to diversify into way too many channels or try way too many things at the same time without even having kept out of their first and initial good channel.
We start with Meta. We start to understand, “What are the levels we can get with Meta?” We’re understanding how to get better at content with Meta and then we try to diversify to a second channel, which usually nowadays is TikTok. We’re getting amazing results with TikTok. We’re seeing the platform getting better and better. It is a volatile quarter over quarter and sometimes even month over month. If you keep your eyes open and you are always testing something there, you are going to find the gold in some months. There are months that it’s performing crazy good and there are months that are terrible.
If you constantly keep your eyes open and test, it can be a good platform to advertise. There are brands that do work on other channels, Pinterest and Snapchat for instance. We have cases that are pretty good with Snapchat. I have to say, with Pinterest, I haven’t touched any business that worked pretty well with Pinterest advertisements. That’s the only thing I can say about that now. That’s the whole paid side. With organic sites, we have seen amazing results with other entrepreneurs that have run businesses completely organically and they’ve made it work on TikTok, Instagram, and Facebook because they build communities.
The organic play is not our play so we are not focused on consistently growing brands via organic growth strategies. It’s more thinking about how to double down on the initial platforms that you have, how to extract the maximum there, and then start diversifying and testing on other platforms that your product might be a fit. I have to say it honestly, we haven’t found out why a product works on Snapchat or it doesn’t work on Snapchat but we are testing. It’s a constant test and iteration business. As long as you constantly test, you might find a new platform to work for the business.
You’re stabilizing the primary channel from a paid perspective and then that gives you leverage to test other channels. Speaking of which, who’s your best expert? What’s the best resource you think, from your opinion, on the organic side of things? From a community-building standpoint, who should we have on this podcast or who should we go and study?
As a brand?
Any experts or resources to learn to build an organic presence?
I would love to know who can teach the formula for organic because we have seen and played this game over the years and it’s a constantly changing game because of the algorithms and platforms. We’re in the era where Instagram was great organic and then it was not. Facebook was great organically because they changed their algorithm and then it was not and then came Instagram for a period of time and then was not. Now it’s TikTok.
Pinterest was also good at some point. Overall, I don’t have a resource that you can look at and say, “This is an expert on organic growth.” I do have brands that I’ve worked in the past and they’re doing a fantastic job either at community building with Facebook groups or the channels themselves, TikTok and Instagram.
Speaking to tech stacks and retention, I noticed that Gocase does run on Ometria. Was that the case? Do you have experiences on Ometria?
We definitely use it.
It’s your eCommerce CRM. How does it compare to the likes of Klaviyo?
Klaviyo is a type of platform that gives you the integration of everything. It is the Shopify of CRM. It’s easy plug and play and a lot of people use it. if you want to collaborate with other people from the industry, it’s easy software. With Ometria, we see it as the specialized type of software to get a lot of CRM. There is a lot of data analytics from Ometria that we can extract. We’re using Ometria for customer data analysis with tools.
We try to find standardized tools to do the same but they can’t and Ometria goes there and analyzes the customer well. We’re able to segment and understand better about customer analytics because of Ometria. We use Ometria as our main channel for Gocase because Gocase is a custom platform, it’s not on Shopify. we see it as a fantastic tool that has specialized features.
Let’s jump finally into the data and tech stack overview in your growth plan. Do you go through zero-first third-party data? What does a refined standardized tech stack look like in the context of all that data and the performance of your store?
We can segment a couple of topics. We need the right tool for attribution. We need the right tool for reporting. We also need the right apps to amplify certain features or certain actions we want on the website. When we think about attribution, we’ve played a lot with different softwares and we played a lot of different attribution windows.
We are comfortable right now with Triple Whale. We love how the product is built and how it’s helping us not to have analysis paralysis. We like the attribution of Triple Whale. We’d run this test as well. After we spent a certain amount of money, we see the alignment between the Facebook data and the Triple Whale data. We are confident that Triple Whale for attribution is good because then we can put all the channels together and have the right ways to compare them all.
When we look at reporting, I have to say, we had to build a lot of internal reporting via data studio. I don’t know if you have ever heard of Google Data Studio but we built several ways to create customizable reports, integrate different data sources, and have good a reporting outlook on different dimensions of the website. We connect Google Analytics, we connect different tools to data studio, and we are able to have quick snapshots of the most important dimensions to analyze on the website and on the customer.
With reporting, we use data studio. Application-wise, there are many different apps that are complementary to understanding a store. When you’re on Shopify, it’s so much easier. For instance, Lifetimely is a simple app. It gives you good actionable insights about repurchases, cohorts, and so forth. When we think about pop-ups, one easy one that we always use is OptinMonster as well. It gives a lot of flexibility to try out different pop-ups and strategies. There are a lot of small apps that are complementary to run the business and that gives a lot of value for a low cost.
You spoke to CRMs and the need to segment. What about customer data? Are you into zero-party data through surveys and questionnaires?
For sure. It’s important to implement post-purchase surveys to have a constant flow of data and insights from the customers and also as a validation for your attribution. One of the things we had to learn over the years as new players came in like TikTok and we couldn’t figure out from the attribution side if they were working. Where have you met us post-purchase survey? Clearly identifying which channel people found us. We could pinpoint the amount of spend we had in a day or the amount of spend we had in a week in a certain platform and the percentage of customers who said that they have met us through TikTok, Snapchat, or Facebook.
Simple things like this are super important to be implemented. Plus, of course, open direct feedback from customers to say, “Why have you chosen us? What do you like about us? What should we change? How did you hear about us? Would you recommend our product to other people?” Having the star ratings and the NPS is super important to have the feedback loop to constantly improve the product and the experience. I cannot emphasize enough how many entrepreneurs are not thinking about getting a constant flow or a constant loop of information from the customers with post-purchase surveys.
Our favorite is Fairing.co. This is it. I’m privileged to have you on, Leo. Interesting stuff here. I’m going to end this segment of the podcast to ask you one more question. In 2023, there’ve been a lot of headwinds, and things are getting better as I’m seeing. What is your number one strategy for navigating these otherwise tumulus waters of 2023?
For us, every year is the same thing. Every year, something happens. If it’s not Facebook increasing the prices, then it’s Apple releasing iOS updates, and it’s CORONA. There’s always something. With eComm, there’s always something changing the game. It almost feels like every quarter, there’s some big event that changes the game. Overall, if you are paranoid about what can happen later on throughout the year, you keep yourself always alert. What are we testing? What are the new things? What are people talking about? Which podcast can we hear?
Get more expert knowledge. Which blogs? Which Twitter threads? If you’re paranoid about that, you’re constantly testing new things, you’re constantly having a new concept to work on, and then you’re more prepared whenever a new possible threatening event happens in eComm, you are in a better state. That’s the only thing you can do because you cannot control the big tech companies and what decision-making they have. You have to deal with what’s going to happen but you can be more or less prepared. That’s how we think about it.
This segment of the show is the rapid-fire lightning round. I’m going to ask you 6 to 7 questions. If you could use a single sentence to answer each of them, you’d be okay.
What have been the most meaningful business contacts of yours in the last five years?
My partner, Rafael.
Are you a morning person?
Yes, I like mornings.
What does your morning routine look like?
It’s my way to get Zen. I wake up a little bit earlier and I spend at least one hour playing with my kids. I have twins and it’s my time to focus on them and have a relaxed start to the day.
Are you into sports?
I love football.
What is your favorite team or athlete and why?
There have been so many inspiring idols. I’m not even a basketball fan but after seeing that Michael Jordan documentary, I went through a lot of time trying to investigate more. The winning mentality is such inspiring. From everything I’ve seen, that was the most impactful personality in sports that I could think of.
What two things can’t you live without?
My kids and wife.
What book are you currently reading or listening to?
This is one I’m rereading, I love to reread this one, and every time, you’re in a different situation, The Hard Thing About Hard Things. I’ve reread this book several times. When you’re in different months or phases throughout the years, it’s a nice book to reread.
Finally, what’s been your best mistake to date? By that, I mean a setback that’s given you the biggest feedback.
Hiring poorly. Hiring has taught me a lot about how to try to find A-players. That’s the biggest insight. It’s not about hiring. It’s not about hiring just intelligent people. It’s about hiring A-players that have a culture fit with you.
Leonardo, it’s been a pleasure having you on the 2X eCommerce Podcast. For people who want to find out more about Jump Ventures, they will head over to JumpVentures.co. Are you and Rafael active on any social media platforms if people want to intimately connect with you?
Mostly on LinkedIn. You are free to connect with us on LinkedIn and drop us a message. For every entrepreneur that follows the podcast and they are in the six-figure range, who would like to grow, who doesn’t know how, and who would love to have a second opinion, we are there at Jumpventures.com. You have to fill in the intake form and come and talk to us. That’s pro bono, free of charge. We are taking a look at your business and maybe help you with a coaching program later on. Go to the website and come talk to us.
I appreciate it. Thank you.
Thanks, Kunle. Happy to be here.