Latest / Imagine If with Doone Roisin | Health, Wealth & Wisdom for Women (formerly Female Startup Club Podcast) / GEMS: Mistakes from Growing at all Costs with Three Ships co-founder Connie Lo

Transcript

GEMS: Mistakes from Growing at all Costs with Three Ships co-founder Connie Lo · Imagine If with Doone Roisin | Health, Wealth & Wisdom for Women (formerly Female Startup Club Podcast)

• 0:08
  Okay. I want to go into something that you were talking about when you were going through the aggressive growth phase of, you know, with, I still want to stay on this track of kind of like the investor piece. And, you know, you raised this 1.4 round and you were saying it was aggressive growth and growth at all costs. What did you kind of learn from taking that pathway of growth at all costs? Does that mean you kind of like reduced your profit margins? Does that mean you did grow too fast? What happened there?
• 0:35
  Oh, yeah. We made all the mistakes. So we stopped focusing on profitability, which was a big learning. I think that at the time, I wouldn't necessarily call it a mistake in the eyes of investors because they were like, hey, it doesn't matter what the bottom line is. We just care about top line, which the narrative has completely changed. What year are we talking for this?
• 0:54
  That was 2021, start of 2021, because we closed around in four weeks, I want to say, at the end of 2020. And then we started deploying in 2021. We made our first big hire, I think, in the start of 2021, I want to say spring. And that was a $200,000 mistake, all in all, which was a big learning as well.
• 1:14
  So I think we just spent too fast thinking that we had to deploy the capital faster because everyone was like, well, you need to show the ROI off of this 1.4 million that you raised. And you can't just use it to invest in like inventory has to actually be used for growth marketing. So we spent a lot in like influencer marketing, tested podcast ads and not like on a small scale, like I was saying earlier, it was like, well, if we're going to test influencer, like let's test.
• 1:41
  three macro influencers that were each charging like 15k and see like what happens there. And one's in the food industry, one's in like beauty, one's in health. And those were our tests, but that wasn't like a smart way to spend the money. Another thing is when we hired the senior hire, who was just too senior for us at the time, we really trusted their perspective when it came to where we should spend. So for example, we had a product launch and this person said, well,
• 2:06
  um i have like the best photography studio that i used to work with at my previous company so it was forty thousand dollars for a photo shoot which up until that point we're spending like a thousand or even even that because we were doing things ourselves or she was like well if we're going to launch this product then we need to do this influencer campaign and that was another i think 40k us so like 50 000 canadian and all in all again super expensive and what i realized is
• 2:31
  It took us away from the fundamentals of the company that we had worked so hard to build and the consumers that we had created this trust with. And there was a moment, I want to say in the end of 2021, where Laura and I looked at each other and we're like, this is not working. Like the way that we're spending, I think we were like $800,000 in the red. And we're like, this is not sustainable. Even though we were growing so aggressively, I think at that point we were growing like 500% year over year, something insane.
• 2:57
  So at the start of 2022, we, I think it was January, 2022, we looked at each other. We're like, okay, from now on, we're focusing on profitability. So I'm really proud to share that as of last year, I think 2023, we're a profitable brand now. We have made huge headway in that journey. And now every investor that we talk to, every founder that we talk to, they're like, how did you become profitable? Because in today's day and age, it's so difficult to be a profitable brand. Yeah.
• 3:26
  but we were just so laser focused on profitability and every weekly meeting with the team we're talking about our path to even up positive and every monthly update to the team we talked about that and every quarterly investor update we're talking about that and every quarterly team off site we're talking about that so everyone on the team knew like hey you have to think from profitability first mindset so if someone was looking for a photography studio they would research five like really negotiate them down but work with the one that was the best quality
• 3:53
  If I was thinking about bringing samples for a retailer, I would think like, hey, am I going to be by the warehouse anytime soon? If I am, then I'll just pick them up instead of shipping and spending the $15. Like little things like that really add up. So to answer your question, lots of learnings, but really proud to share. We are profitable now. And if I were to do it again, I wouldn't have listened to all these external voices and noises from investors and other founders. And when I was reading online of people saying like it's growth at all costs because things always change.
• 4:23
  And I also feel like it's kind of like, yes, you raise this capital, but in essence, you're still like a small business. So it's like, you still need to act as a small business owner and use the power of being scrappy. And because yes, if you're this huge, you know, corporation and you do have just unlimited budget to spend on huge photo shoots and things like that, that's amazing. And that's how that company operates with 200 staff or whatever.
• 4:49
  But like, even though you've raised so much capital, you should be still operating from a place of like, I'm scrappy. I'm doing this in a way that's kind of keeping us lean, I guess. Exactly. I think you really, really hit the nail on the head with it.
• 5:02
  We were operating like a large company when we were still a small company. And another thing is one of our core values is hustle, which isn't just like hustle culture. It's more, you know, doing things outside of your job description to help the team, putting your ego aside, things like that. And I think a part of hustle is that scrappiness because it's so part of Three Ships DNA. Having started the company with like $4,000 in my kitchen, like it felt like we just lost that entire part of our identity. And we're so focused on trying to be like every other company to sell online.
• 5:33
  So yeah, I think it was a really good learning. And when we raised again in 2022, which was like a seed round, that capital we deployed way more logically and strategically. And now that we're profitable, our runway is essentially kind of infinite right now because we are burning every month. So I'm really happy with how we've managed that.
• 5:57
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• 6:22
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• 6:44
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