Tina Sharkey: Live more. Brand less @ Talks at Google (Transcript)

Here is the full transcript of Brandless’ co-founder and CEO Tina Sharkey’s fireside talk: Live more. Brand less @ Talks at Google conference. This event occurred on January 29th, 2018.

Moderator: Jorge Cueto

JORGE CUETO: Thank you, everyone, for coming to our Talks at Google event today with Tina Sharkey. It’s great to have you, Tina.

TINA SHARKEY: So psyched to be here. And we brought Brandless snacks. So if you’re on the live stream, we’ll figure out how to get them to you later. But anyone in the room, feel free to get up, get some snacks. I won’t feel insulted. I’ll be really happy, actually.

JORGE CUETO: Tina is the co-founder and CEO of Brandless, which is an e-commerce startup that’s looking to shake things up in the industry by offering high quality products at a really affordable price point. Great to have you, again.

TINA SHARKEY: It’s awesome to be here.

JORGE CUETO: Can you tell us a little bit about Brandless in your own words?

TINA SHARKEY: So Brandless– my co-founder, Ido Leffler, and I, we were sort of feeling like modern consumption was just very, very broken. And that meant that if people really understood what things cost versus what they pay for them, they’d be, in his words, rioting in the streets. I don’t know that I thought people would be rioting in the streets. But that there was just this perception that better had to cost more. And it actually really doesn’t.

And so when we founded Brandless, we were really trying to– at this very high level– try and make sense of consumption. There was a sense that there were the haves and the have nots. And that people couldn’t actually find what they were looking for, shop the values they believed in, whether it was their dietary values, like, I’m gluten free. Or I’m kosher. Or I’m vegan. Or I like to eat organic. Or with their belief systems. I don’t want animal testing. I want non-GMO.

I want certain foods, certain things that I reach for every day to sort of live up to my value system. If, in fact, they were to use that as their shopping filter, they would definitely be paying a premium for everything. Because their value system actually comes at a premium. But it doesn’t have to. And so at Brandless, at the highest level we’re trying to democratize access to goodness, starting with everyday essentials, which is — everything on Brandless is $3. Sometimes it’s two for $3 or three for $3. And all of our food is non-GMO. Most of it is organic. Tons of it is gluten free. And all of our beauty and our personal care, our shaving gel, our shampoo, our conditioner, our hand creams, et cetera, are all completely clean.

Which means in the case of beauty and personal care, it’s free of animal testing. It’s free of SLSs, of phosphates, of sulfates, of synthetic dyes, et cetera. And every single category that we develop at Brandless, we use that filter to say, what really matters in that particular category? So for example, when we do cleaning, our cleaning products like our multi-surface cleaner, our toilet bowl cleaner, they are EPA Safer Choice certified. And everything that we do is just $3. Or two for $3 or three for $3. But everything is very much created for what we consider the modern lifestyle.

JORGE CUETO: How do you set yourself apart from other e-commerce startups that have been coming up over the last few years? For example, the Honest Company, which I think is doing similar non-GMO healthy products?

TINA SHARKEY: So as a startup, first and foremost, we’re a community. And we’re a community of people who believe that everyone deserves better. I can’t really say what Honest is doing, because I don’t know a ton about that company. Other than to say that the pricing structure at Brandless, everything that we sell is brand tax free.

So what we mean by that is we’ve eliminated all the inefficiencies in the system for what things cost to produce versus what you’re paying for them. And so I don’t know how Honest does that. By being a community that goes directly to the consumers and makes things for the people that we serve, we are developing the products. We’re putting them into our distribution centers. And we’re sending them directly to you.

And so if you were to look at national brands that have the same quality as ours, organic coconut oils, organic olive oils, organic feminine hygiene, all the non-GMO food, on average you’re saving 40% of brand tax savings of national brands of similar quality. When it comes to things like clean beauty, clean personal care, and clean hygiene, it’s as high as 300% to 400% savings. So I can tell you what Honest’s system is and how they do that. But ours is really about a community that is connected around a higher purpose, which is that the doing is what matters in life.

When you check out at Brandless, there’s something extra in your shopping cart. And that’s a meal that we partner with Feeding America to buy on your behalf and in your honor to feed those who don’t have $3. If you’re a member of BMore, which is our membership– and I’ll talk about that a little later. Because there’s a surprise coming for all of you. We’ll donate 10 meals in your honor. And every time you shop, we donate two meals if you’re a member. In the first 18 weeks of being in service we’ve already donated over 150,000 meals to Feeding America, both to be deployed to the disaster relief zones in California, and Texas, and Florida, and Puerto Rico, where we don’t ship, but we still are trying to do what we can. As well as to the people facing hunger in this country in everyday systems all over the nation.

JORGE CUETO: You mentioned the brand tax. Well, maybe a few of us here aren’t familiar with that term. Can you tell us a little bit about that?

TINA SHARKEY: Yes, you wouldn’t be familiar with it, because we made it up. And we trademarked it. But we were trying to find a way to actually describe to people what we meant by that inefficiency in the system. So when you think about the cost of, let’s say, in our organic tomato sauces as an example. So we make three different kinds of tomato sauces Arrabiata, garlic, and tomato and basil. They’re all organic. And we work with our partner to do that. At that point, we then send them to our distribution center, or we send them to you. That’s not how most other tomato sauce is distributed. It’s often created at that manufacturer. Sometimes the brand owns the manufacturer. Sometimes they partner with somebody who’s making it for them. They then have to distribute it.

So sometimes, especially in organics and naturals market, you can’t sell directly to a store like a Whole Foods. You have to go through a distributor. And then that distributor takes a percentage. Then you sell it, let’s say, to Whole Foods. And let’s say it’s a special tomato sauce that you want to have on a special shelf.

OK, well, then Whole Foods gets their markup. And that shelf has a special cost. Let’s say there’s already a sauce on that shelf. Well, you have to then remove that sauce, potentially, and put your sauce. Let’s say you want to do an end cap, which is at the end of the aisle.

Sometimes you see those specials. Or you have somebody out there sampling the sauce for you. The point is that all of those touches– and there’s many, many, many, many, more– you end up paying for that, which is all on top of the cost of the sauce to begin with. So by the time that sauce leaves the manufacturer and ends up on your pasta, it could be two, three, four times what it actually costs to make. I mean, everything is different.

But if you’re benchmarking it against a brand like an organic of similar quality, you’re going to see, on average, those types of savings. So we roll that into this idea of brand tax free. Which is to say that we’re trying in every which way that we can to eliminate that middleman. Every product is different. Because most products are sold differently.

So the way a tomato sauce gets distributed might not be the same way– you know, we also sell plates, and bowls, and cups, and knives, and things like that. So every system is different. But in general, wherever we can be completely efficient and pass on whatever our costs are to you by offering everything at one simple $3 price.

JORGE CUETO: I think something that characterizes Googlers even though we work at a big company, is that we’re pretty entrepreneurial in nature. And people are always thinking about what kind of product they could potentially go out and start making, or what kind of startup they’ll go and found.

So maybe can you tell us a little bit about your journey that led you to come up with the idea for Brandless and how your previous work experience influenced your decision to start this company in particular?

TINA SHARKEY: Yeah, well I would say that, first of all, the only reason I was even keen to start another company– because I didn’t think I was going to do that. I sort of liken being an entrepreneur, especially as a woman, to childbirth. If you remembered what it felt like, you would do it again. So somehow there’s some gene in your brain that helps you forget that. Because I do have two awesome sons.

So clearly that didn’t happen to me. And I think entrepreneurship and startups are very similar, which is that it’s a birth process. And it’s hard. And it’s unpredictable. But it’s completely awesome. I decided that if I was going to do another one, that I was going to do it with the– first and foremost, with the people I wanted to be on that journey with. And so my extraordinary co-founder Ido Leffler was somebody that I wanted to change the world with from a business and scale perspective. And so we had been friends for many years before. We lived in the same town. Our families were friends.

I was at the hospital when his daughter was born. Like, just really somebody I admired. And I admired his career. And he built a bunch of CPG companies that had not just great success, but also had purpose and meaning. And everything that I try and do in my life is rooted in sole purpose and meaning.

So I said, I’m going to start a company with this person. And it’s going to be for profit and for purpose. And we’re not going to do purpose as a campaign. We’re not going to do purpose as something that’s like a caboose that we’re going to jack on to the back of it when it’s Giving Tuesday, which it happens to be today. I think Giving Tuesday is amazing. But I think every day should be Giving Tuesday. And that that’s just a new way of thinking about the way we actually can live our lives. And so that journey started with the right co-founder.

The second thing was, as my tour of duty as a venture capitalist– everyone in here, I’m sure, in some way– and you’re a product manager. I’ve been a product manager– is about building things. There’s features. So many of you may be working on features. I’ve worked on many. Some of those features– if you go through YC, or you have one of these other incubation opportunities, those features maybe become products. If that product actually has a life, that product could get funding, potentially. It could become a company.

So of those companies that go from feature, to product, to company, the rare exception get to be brands. Meaning something that people understand. It means something more than any individual product that they ship. Very few of those brands actually have the opportunity to be category leaders. So we’re disrupting a category. We’re going to be a leader. Or even better, are we going to create a new category? So in the case of an Airbnb or a HomeAway, that was like, wow, it’s an alternative category to the travel category. We’re going to create a new one, I would say Uber, and Lyft, and those companies all fall in that category, too.

The highest order if you get from feature, to product, to company, to brand, to category leader, would be a movement. That actually, not only are you creating a new category, but you’re inciting something that’s bigger than your entire company, that’s actually about something that’s about people, and moving them, and moving society and culture to a place that you want to see.

And that your company becomes one of the people in that movement. But not necessarily the only person in that– or the only thing in that movement. That ladder, as an investor, I was always looking for things that actually I felt could pass through. I wasn’t interested in investing in features or even products. And if it didn’t have the potential to be a brand or a category leader, it didn’t feel like something that was sort of worthy of really venture capital, which is what it’s there for. Because it’s the long term play.

So when Ido and I landed on this idea, I felt like in my soul this was a movement. This was something that was bigger than any individual piece of its parts. Which leads to the idea of Brandless. Like, are we generic? Are we not a brand? No. We are unapologetically a brand. But we’re redefining what it means to be one. And we’re saying we’re a brand that’s based on truth, that’s based on authenticity, and that’s based on being in direct collaboration with the people that we serve.

So I would say that when Google– and Larry and Sergey founded this company, it was the idea of democratizing information. That’s a big, lofty goal. And mission accomplished. Extraordinary. For us– but they’re not the only ones doing it. But you guys are clearly the category leaders in a category that didn’t even exist. Or maybe it did, but it was very, very early. At Brandless we’re trying to democratize goodness. And that’s this movement, this idea that everyone deserves better. And better shouldn’t cost more. That’s just not fair.

But it’s a very hard thing to get your brain around when somebody tells you that this premium that you’ve been paying, you don’t need to pay. And this isn’t about going wholesale. We’re actually engineering everything from the ground up. But we’re in direct relationship with the people that we serve.

And so in doing that, in being a community first, we think about every single person that we have the privilege of working with. They’re members of our community. And so the love letters, the notes, the engagement that we get back all the time, like every minute coming into our Slack channels and all of our social channels– they can’t believe that they’re in conversation with the company that they’re buying organic tomato sauce from, or organic feminine hygiene from, or clean beauty from, or other things like that.

Because our attitude is if you want to be D to C, direct to consumer, then you have to be P to P, which is person to person. And so everybody that comes into our community, we consider a member of our community. And everyone that’s not in our community we see as an awesome stranger that we have best intentions to hopefully bring them along our movement.

JORGE CUETO: What do you see as being your biggest success of the first few months? Because you guys just launched in the summer, right?

TINA SHARKEY: Yeah. We’re still here. So the biggest success I would say that 60 hours after our launch we got this incredible number back. And that number was 48. And that number has held every single day since then. What does that mean? It means that we ship to 48 states every day. And we weren’t targeting 48 states. We weren’t advertising to 48 states. We would like to ship to 50. But we can only ship in the contiguous US right now. That’s why Puerto Rico gets our efforts, but doesn’t get our product yet. And Alaska and Hawaii are not happy with us. But we’re trying.

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The Canadians we really love. But we keep asking them to make friends with people in Detroit or Seattle that have a large minivan, because I just can’t get into Canada right now. But the point is that that success, the idea that the people that we built this for found it, whether they were in Tallahassee, or Tennessee, or parts of Texas, they found it. And the notes that we get back, people who have affordable luxuries and could choose to get and shop anywhere but don’t have access, people that never thought they could have access, because they could never afford organics for their family, people that have dietary restrictions that didn’t know where to get these things and now can find them at affordable prices, and people who are shifting their behaviors.

For example, we sell tree-free toilet paper, which means that no trees were cut down or recycled to make toilet tissue. It’s made from bamboo grasses and sugarcane. And so that are just things that people love. They didn’t know that they could actually shop their values at affordable prices. They didn’t have access to things. And so some of the communities that have shown up early– like the gluten-free community is a very active community online.

And so they found us. And that was exciting. The vegan community, they found us. I think it was our first week. We had gluten-free brownie mix, gluten-free pancake mix, and gluten-free blueberry muffin mix before we did any of the rest. Like the regular pancake or whatever. And they sold out in three days. And we were so surprised. Like, what just happened? And then we learn that one of the gluten-free, very active online groups found Brandless. And boom, we sold out.

I mean, we’re back in stock. And we just didn’t know that those were going to be interesting gateways. Or for example, our first SKU of toothpaste is fluoride free. So we thought, you know what? There is a growing community of people who believe that there shouldn’t be fluoride in their toothpaste. And so we know that is a niche community. But it’s an important and growing one, and one that’s very vocal, believe it or not.

And so we launched a fluoride-free toothpaste. Well, what do you know? People like– it blew up. And they were using that as a doorway into the entire assortment of Brandless which has that intention on every single bag, box, or bottle. So they’re just some early insights.

Because we’re only– I don’t know– 18, 20 weeks in. But those are some of the fun nuances and stories that we’re starting to learn every day.

JORGE CUETO: Yeah, that brings me to the general question of how you think about the specific products that you pick. Because personally, a lot of my friends who are really excited about Brandless, it’s because they’re vegan. And they’re just so excited that it’s so easy for them to access a wide variety of vegan products at a pretty affordable price. When usually, I think, vegan products either tend to be really hard to find, or they tend to be expensive relative to other products. So this is a really good venue for them to reach out to and have easy access to what they need. So how do you think about that? Because I know you also have organic feminine hygiene products and office supplies. So it’s a wide range of things. But it seems like it’s very thought through.

TINA SHARKEY: Yeah, so what’s really interesting– and when you go to buy shoes, whether you buy them online or whether you buy them in a shop, the likelihood is you’re probably just going, and you’re buying the shoes, and you’re done. Whether it’s a check out at an online store or whether it’s a physical store. And maybe if you’re buying them from an online store, and you don’t know your size, and they have a good return policy, maybe you’re buying two sizes, and you’re returning one. That’s a possibility. It’s very different in the consumables business.

In the consumables business, it’s about the mission and the trip. So what does that mean? That means that these are the things that you reach for every day. Whether you reach for them in your pantry, whether you reach for them under your sink, whether you reach for them in your laundry room, or your bathroom, or even your purse. They’re the things that you consume every day. They’re the things that you replenish all the time.

And so when we created this initial assortment of products, we were really intentional in saying, OK, what do people buy 52 weeks a year? And how many households in America– we took a very analytical approach. How many households in America buy that product? What’s the– what we call HHPs, the Household Penetrations. And then we study that based on every single thing that people buy. And how could we make sure that, unlike shoes– which is what I would call a one and done, right? These are the baskets that people are building. How can we make sure that our shelves are stocked with just what mattered, where we were creating selection and assortment, and where there was what we call expandable consumption.

So in the case of snacks, for example. Snacks is something that 988% of American households buy. And they buy them 52 weeks a year. And if I was to ship you a box of 10 different kinds of snacks, whether or not you personally would eat those snacks, you might try them. If you didn’t want to try them for whatever reason, you might bring them to work. You might bring them to the soccer game. You might host a Monday Night Football party. There’s lots of different ways that you might eat that snack. So that’s a place where we’re launching jalapeno cheddar quinoa puffs along with olive oil and sea salt popcorn.

All of these are non-GMOs. Some of these are organic. And we’re launching quinoa chips alongside of tomato and basil hummus puffs. All kinds of yummy things. And they’re all– some of them are here. And so we’re trying new things. We’re experimenting with new things. There are other places where you don’t need to be paralyzed by 50 feet of salad dressing when the truth is you probably just use one, two, or three. And so in that particular case, our organic Italian dressing, our organic balsamic vinegar dressing, and our organic poppyseed dressing are the three that we know are the most popular.

And then we introduced one that we’re crazy about. And it’s a ginger dressing that may not be everyone’s taste, but it’s a way to try new things. And so in that category, we’re doing just what matters. In the case of oils and vinegars, we launched an organic extra virgin olive oil and an organic balsamic vinegar. Might we do other ones? We might. But we knew that was the most important thing to do.

In the case of the holidays, starting in October and taking you all the way through the year, we have a maple collection. So that maple collection is what we call LTO, limited time offer. And so we have the most incredible maple twists. Highly recommended Maple cookies.

Even maple lip balm, maple coffees, and maple syrup. The maple syrup is organic. It’s amazing. And it’s $3. “Good Housekeeping” just said it was, they’re number one or number two pick for stocking stuffers, as like the best gift of the year. It’s a beautiful bottle, et cetera. So looking at every single item with that lens of just what matters. Not to do the over-proliferation of choice. But create choice where we know that you actually want choice, and you want trial. Versus an area where you’re locked into one thing or two things.

And we don’t need to create waste. Don’t create waste there. So we’re very intentional by product, by category, and by SKU. How we create them. What the formulations are. And how we live up to our own sort of filter of just what matters.

JORGE CUETO: Is there some sort of feedback cycle with what customers want? Do you ever get requests for specific products?

TINA SHARKEY: Oh my gosh, yes. So the initial assortment– when we launched, we launched with about 114 what we call S-K-Us. You know, items. And now we’re probably north of 200. We’re probably around 220. But everything since our launch has been based on the feedback of things that people were looking for. So there was very much high requests for oatmeals. And so we launched oatmeal in September, organic oatmeals. We launched them in packs, and we launched them in flavors.

There was a big request for soups. So we just launched our organic chicken broth, vegetable broth, and beef broth. What I love about our soups as an example– you know how you can buy in the store those cartons of soup? The thing I hate about those is if I’m not cooking for my kids, I open one, and then I feel like I’m wasting it. Because if I don’t use the whole carton I have to throw it away. What’s great about Brandless is for $3 you actually get three individual sizes.

So you can just open them for what you need. We also launched two for $3 of a vegan and organic. We have a tomato soup. We have a butternut squash soup. We have a red pepper soup. They’re awesome. And they come in these little individual boxes. So we’re very intentional about that. And people really wanted soup. But we needed to do soup the Brandless way.

And so if we can do it the Brandless way, where we can be brand tax free, and we can land it at a price that makes sense, and it lives up to our own values, and we love the partner who can scale with us, we’re good. But all of that feedback that we’re getting for our future assortments, we’re co-creating with our community.

JORGE CUETO: What has been one of the biggest challenges that you’ve faced since starting out?

TINA SHARKEY: I would say that in the context of talking to the Google audience, both here and in the stream– and I’m sure this will live on YouTube thereafter– is that we, in being not a feature, or a product, or a brand, or a company, or a category leader, but a movement, we really need to get big fast. And so I would say that scaling the company and the team– because at Brandless, we put people first. And that starts with every single person who works at Brandless.

And so growing our team and growing it quickly, but with the right people and the right filter– you know, I say that when I look at my own algorithm for recruiting, I totally weight it at the awesome human I don’t care– yes, of course, you need to be qualified. But qualifications do not trump awesome human factor. And so finding the right people who not only have the skills, and the confidence, and the scale to want to be part of a startup, but also understand scale and how to get to scale. And they’re excited about going to scale.

But they believe that the doing in life is really what matters. And they want to make a difference, not only by day in what they’re shipping and deploying, but in the company that we’re building, which we believe is going to change the way people think about things. And really try and just keep focusing on the idea that everyone deserves better, and that we can actually democratize goodness with every shipment, with every box, with every post, with every tweet, and with all of our intentions.

JORGE CUETO: So with Brandless you kind of exist at this intersection between commerce and then also technology. Do you ever feel like there’s a conflict of interest between the two sides? And how do you decide which side to give in to at any one point?

TINA SHARKEY: I would say that there’s a very good chance that might happen in the future. But because we barely have deployed version 1, I would say we’re in an MVP-plus right now. So we haven’t hit that place where those two are in conflict. But we definitely want to give people the runway to pursue their passions and to pursue their interests. And so the more data that we can play with, the more people are enabled to use that data to tell the kinds of stories that are going to help them move their piece and the larger piece of Brandless forward. So I’d say that we’re all sort of data scientists underneath it all.

Some of us have the skills. And some of us have the desire to understand those insights. So triangulating between, who are our shoppers? And how are they part of our community? What are in their baskets, so that we can give them more of those things? And how can we deploy the features and functionality to make that automagically possible for them in a mobile environment? So that we can make it just super easy, and mitigate click fatigue, mitigate scroll fatigue, and get them in and out really fast.

So the smaller the screens get– as you know all too well– the harder it is to get all those features into one scroll. And so given that the universe is mobile-first, how do you think about that in a non-app world? Because we weren’t interested in our first deployment of building an app. Because I didn’t want to put a download in front of someone who hadn’t met us yet. But that will come over time.

So thinking about that balance between the roadmap, the features and functionality, and always, always, always putting people first. And so that means both letting the employees kind of scratch their data and curiosity itches and try things. As well as the users, who we want to make it as simple, and fluid, and easy as possible.

JORGE CUETO: In terms of features and functionality, you recently announced BMore, which is an annual membership program I think, in my eyes, I see it as being similar to Amazon Prime. So how would you say you set yourself apart from Amazon Prime? And how did you decide to start implementing this annual membership model?

TINA SHARKEY: So I have to say that being compared to Amazon Prime I take as a complete form of flattery. So we should have such problems. More people have Amazon Prime memberships than they have landlines in America. So I think that would be awesome. Having said that, we launched on 7-11 which I thought was funny. Because it was 7-11. Little did I know that it was free Slurpee day and Amazon Prime Day. But somehow we had already set the date. And that was it. But it didn’t seem to matter.

Having said that, like I said, Brandless is building a community. And so when we launched BMore, our goal with BMore was to give people an opportunity to do more, to get more, and to give more. And so for $36 a year, which, if you do the math– and everyone in this room I know can– it’s $3 a month. And it’s free shipping with any BMore order, no matter– no shipping threshold.

And so in addition, when you join, we give 10 meals to Feeding America. Every time you check out there’s two meals that are in your shopping cart that we provide as priceless, as part of your Brandless experience. And we’re just trying to remove any of the friction to try and make it easy for people to have access to Brandless products, to be able to afford the things that they want, and to be able to feel like every day is Giving Tuesday. In that they can actually give more, share more, and be more engaged.

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Over time BMore will be a platform for partners to actually be able to maybe share more. So for example, on Black Friday when everyone else was slashing prices, we gave away a meditation app. And gave– we let people sort of think about, what does Brandless life mean? Because when we say Brandless, we’re not generic. We’re not private label. We’re saying, just live more and brand less. Don’t let somebody else tell you that you should be taller, that your hair should be straighter, that your teeth should look a certain way, that you should shoot the ball a certain way. We think you’re already awesome. And just be more. Be more of who you already are.

And so Brandless is really about empowering people to just sort of live their best lives and not have to make a choice between what they want and what they can afford. Because people shouldn’t be forced to choose.

JORGE CUETO: We have our microphone here. And so if you have a question, raise your hand, and we can get the mic to you.

QUESTION-AND-ANSWER SESSION

AUDIENCE: What percent of your products do you have to take a loss on to get that $3 price point? And then as you — I don’t know much about how the distribution process works. But I assume you have a limited number of warehouses. Or I don’t know if you can contract through other people’s warehouses or how that works. But as you grow, can you bring the cost of those products below to actually make a profit or whatever on those $3 products?

TINA SHARKEY: So the thing that will blow your mind is that the answer is zero. There’s not a single product that we are underwriting at Brandless. Not one.

Now, having said that, there’s different margins on different products. But because you’re not– it’s not like shoes where it’s a one and done. You’re buying a basket. Because you are finding the things that you reach for every day. And so it’s a blended margin for sure. But there’s not a single product that we are losing money on. If that’s the question.

In terms of distribution centers, right now we have distribution centers in California and in the Midwest. And that enables us to sort of try and do two days or less wherever we serve in the continental US. And we’ll be definitely scaling that as we grow. And so we’re working with partners who can help us do that. Because we are in the consumables business, it’s not like you can just go to any place that’s also packing shirts, shoes, and– clearly I’m obsessed with shoes. But it’s a different kind of distribution when you’re packaging up grocery-like items, even in the non-perishables space. But we definitely will be able to scale that. We are not shipping directly from our manufacturers. Because like I said, nobody buys one item. People buy baskets.

Because when you go on Brandless, you’ll see it’s the things that you reach for every day. And usually a better version of that.

JORGE CUETO: There’s a question related to that in the Dory. How do you select suppliers behind Brandless products? What fraction of the products come from small businesses versus large corporations? Does Brandless plan to source more products that are produced locally or at least in the US?

TINA SHARKEY: So that’s a fantastic question. We have very, very strict and sophisticated sourcing policies and strategies. Because we never want to be to the point of that small shop. We never want to have our tomato sauce produced in someone’s kitchen. Not to suggest that the formulation can’t come from a fabulous recipe there. But we kind of want to be– I wouldn’t say the smallest customer, but one of those.

Because we want to be able to expand and grow. We also make sure that the partners that we work with live up to all of our standard. So organics, non-GMOs, et cetera, et cetera. And that all the certifications that we put on the label and tell you about that product has passed through all of the QA that they have to go through. And so all of the partners are very much put through that filter and that standard.

In addition, we try and source as much as we can here in the US. And I would say the majority of the assortment is developed here. But there are cases where, for example, our pastas, our organic pastas, and our organic olive oils come from Italy. And so we are sourcing outside of the US. But it is our desire to do as much as we can here.

AUDIENCE: So I think I see a very strong value proposition for users who actually have restrictions. Like my sister is allergic to gluten. So having that wide variety is really exciting. So I’m thinking for the consumer who actually doesn’t have a lot of restrictions, or who doesn’t really necessarily care about whether something is gluten-free or non-GMO. Pound for pound, are you actually cheaper than similar competitors?

TINA SHARKEY: Pound for pound– so it’s a fantastic question. Which is, yes, for those affinity groups, the gluten-frees, the vegans, et cetera, we have extraordinary products at very fair prices. But also there’s not a single person in this country that couldn’t benefit from the on average 40% brand tax free savings on national brands of equal quality. So our organic peanut butters, our organic oils, our organic sauces. If you’re comparing those to organic products at a retail location, you’re paying on average 40%, sometimes 200% more. So the quality is extraordinary. And there’s savings across the board. And you shouldn’t have to pay more for that.

One thing I failed to say, and this is relevant to everyone in this room and everyone on the livestream– but I know this is going to be on YouTube for the public. So I can’t give away the code. But tomorrow when you get your perks email, we provided a special code for all Googlers to get 33% off of BMore. So that you can have it for your families. And that you can always get Brandless in your homes. And that’s for every Googler across the continental US.

So definitely please tell your lunch mates, your cube mates, people you see in the hallway, people you see on campus, and your friends across the community. Brandless is only going to be a community if the community helps us build it. So we really wanted you guys to be able to participate in that way.

AUDIENCE: I was wondering if you can tell us — and it’s not confidential information, of course — the most capital-intensive part of your business.

TINA SHARKEY: Because we have over — we’ll have by the end of the year probably like 250 products. And then we’ll be growing to more. Definitely securing the inventory, putting the inventory into our distribution centers and turning that is something that we’re very, very aware of. But because sales are great, and — we’re in the nonperishable business, but we’re turning those things all the time.

But because we’re a startup, and we went from literally a 100% cold start, we are doing everything from scratch. So we’re building everything for the first time. So it’s not like we’re optimizing our website, or our servers, or our data, or anything. We’re creating it.

The other thing about Brandless is that we are completely vertically integrated. Meaning that from the label, to the photography, to the packaging, to the everything that you see at Brandless, whether it’s on Facebook, or on Pinterest, or on our website, or in any setting, everything we create ourselves. And so we’re also a content company. Because we’re creating all of this content about how to use it, how to share it, recipes, all of that. And we’re doing that all from scratch. So there’s an investment in building out the company and building out all of the systems, and all of the stories, and all of those pieces and parts of making Brandless a community that you want to participate in.

JORGE CUETO: Another question from the Dory. How do you compete effectively with incumbents like P&G, Unilever, et cetera? And how do you overcome consumer’s emotional attachment to loved brand?

TINA SHARKEY: I love that question. The question is really– I’ll take it in two parts. The first question is, how do we compete with Unilever and P&G, or the– let’s call those the incumbents and the installed base. We’re not trying to compete with P&G and Unilever. Because they don’t have any direct consumer relationships. So those companies, their customers are stores, or what we call channels. So whether it’s Amazon, a virtual store, a digital store, or a physical store, they don’t have any direct consumer relationships. So we’re not really competing with them. Because we’re building a community. And they’re really suppliers to their channels.

In terms of the second part of that question, is for the beloved brands — this stat, especially for those in the room, might come as a big surprise to you, which is that, of the top 100 CPG brands in America last year, 90 — which by my math, is 90% — were in decline. So the problem is that the millennial or perennial– perennial meaning the mindset of that new consumer irrespective of their age– doesn’t want to buy the brands they grew up with. There’s a loss of trust. There’s an openness to wanting to meet companies who actually people want to do business with, who believe are socially responsible, who believe that they are listening and living their values, and that are transparent in the way in which they operate.

So we’re reimagining what those relationships can be. And there are people that love their toothpaste or love their toilet paper. But when you think about the amount of toothpaste and toilet paper that is consumed in this country every day — it’s a very, very big country. And everybody — at least I hope everybody — is using toilet tissue of some sort and brushing their teeth at least once — but recommended three times if you were going to go to the American Dental Association and look at their best practices. So there’s a lot of opportunity to build new relationships and introduce new products and new ways of buying them.

AUDIENCE: So obviously there’s a ton that goes into starting a company, from getting people to fill all the jobs that need to get done, to looking for funding, and just setting yourself for a successful — setting yourself up for a successful launch. Can you talk about the journey from the day you had the idea to the day you actually launched?

TINA SHARKEY: Yeah, so the journey of incubation — so Ido and I met. We both were doing different jobs. I was running Sherpa Foundry, and I was a venture partner at Sherpa Capital. And he was the founding CEO of Yoobi, the stationary supply company that gives back, and Cheeky, the tabletop company that makes dishes, and plates, and bowls all sold at Target and around the country.

And probably many other companies that he was developing with his partners. And we said, we have to do something together. So that was probably maybe even two years before– if not longer– before we actually decided to start to think about what we could do together. At the time that we sat down and said, let’s incubate this, and let’s brainstorm– from the time that we actually launched the company, we probably incubated it for maybe a year or a year and a half before a friend, who was a venture capitalist, said, wait, you’re incubating something? We would love to see that. And this turned out to be a very sophisticated late stage and early stage investor, Jeff Brody at Redpoint.

And he said, I want to seed fund this company. Because I know you. And I believe in you. And I believe in what you’re doing. But even if I don’t believe in what you’re doing, I believe in you. And when you’re funding a seed company, it’s really about investing in the people. Because you’re going to learn, and pivot, and do lots of things before you actually launch that company. So once we secured this seed funding, I knew that I had to transition out of my day job. And so I replaced myself and said, OK, I’m going to be the CEO of the company. Because I was like the acting CEO. And Ido was the acting chairman. But we were still doing all these other things. And we hadn’t made any commitments to launching it. Or we hadn’t taken any capital yet.

Once we started to do that, we said, OK, well, what are the things that we have to learn and prove. To your question of the margin, can we actually source these things at this price point? Can we create a UI and UX for the packaging, which had never really been done in CPG, where everything that we do has the attributes that matter. And the way in which we label things, and the way in which we communicate the values and the attributes of every single product, could we create a system that would scale?

Once we felt like we could do that, we started to recruit the right people who actually had the world-class expertise to join our team. And then once we started to do that, and we realized that we felt like we had a runway, that we saw the path to actually bringing this to market, then Redpoint said, you know what? We want to lead the series A. And so once that happened, I said, OK, I’m going to shift and be the full time CEO, raise that funding, and then really begin to recruit the team. But up until that point, even though we knew our name was Brandless, we were operating under a code name, which is a little-known story.

Actually “Entrepreneur Magazine,” I think, wrote about that, which was funny. They thought that was really interesting, which is that we operated under a faux name. Because we didn’t want to tip our hand to the industries that we might be disrupting. And so until we raised the series A, we were operating under a faux name. We had a faux LinkedIn. We had a faux website. We had faux business cards, faux email addresses, everything. Because we were in sort of supplier conversations, to make sure– and we didn’t want to sort of tip our hand to what we were actually doing.

But then once we raised the series A, then we came out as Brandless. We relaunched the website. Not the commerce site, but the marketing site while we were building it. And then we started recruiting the actual scale team Engineering, product, merch, everybody. Marketing, et cetera. And we were off to the races. We then knew that we were going to launch in July. And we didn’t really need to raise yet. But some folks had heard about our launch. And so some of those folks are actually Google and NEA Google Ventures, not Google Alphabet.

So Google Ventures and NEA came to us and said, we’re very excited about what you’re doing. We know you’re launching in, like, three weeks or whatever. It was very, very tight. But we really believe in it. And we want to be a part of it. And so we raised our series B before we ever launched. And in fact, we announced the launch and the series B on the same day. So that was kind of crazy. And then we launched on 7-11, on Slurpee day and Amazon Prime Day. Who knew?

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AUDIENCE: From the time the idea was conceptualized, did the idea or your execution stay on the same track? Or you had to pivot?

TINA SHARKEY: That’s a great question. No, we actually — it’s remarkable I haven’t talked to Ido. But we stayed on the exact same track. I haven’t mentioned that to Ido recently, that, like, can you believe that our first business plan, everything we thought we were going to do, we did. And in fact, funny story was that we started under embargo going to talk to the media around the March time frame for the July launch, which is really a long time to be under embargo.

And so we had this– and we only had at the time a PowerPoint with JPEGs. We didn’t have all– I mean, the products were being developed. But we didn’t have the products with us. So we would go in, and we would talk to these journalists, many of whom we knew, because we’ve been doing– had relationships from other companies, whatever. And I would tell the story. And we would tell them about these incredible products. They’re organic. They’re non-GMO. They’re this. They’re this. They’re this. And then we’d wait like, three, two, one. They’re all $3. And at that moment then we would go silent.

And the journalists would all say to us, like, you’ve got to be kidding. Get out of here. Stop horsing around, da, da, da, da, da. They were like, stop wasting our time. We’re like, no. They’re really all $3. Like, we swear. In fact, that’s not true. Some are two for $3. Some are three for $3. And so once they kind of processed that idea, and then we got them the samples under embargo.

They were all like, how quickly can I get it for myself? Because they loved it. So then Ido called me up about two weeks before the launch. And he said, I’m mad at you. And I said, what do you mean you’re mad at me? He said, we never recorded all of those meetings. And on July 12 everyone will know. And we can’t do that same story. I said, you know what? It’s not too late. And so our creative director Jen Tank and I said, you know what? We have two weeks. So we put an ad on Craigslist. And we said, we’re looking for some actors to come to a food tasting at a startup in San Francisco. That’s all we told them.

And the reason we wanted actors was because we were on such a tight budget that we were hoping that actors would more likely have good expressions on their faces if we tried this PR thing. But we didn’t– they didn’t know what we were doing. And we did the exact same thing, except a little– they actually got more than the journalists. Because they had more than JPEGs. We took them into our generic conference room. And we just put the food out, just like it’s here. And then they tasted it. And then we walked them into this room. And maybe we can put this on the livestream– I mean on the recorded thing.

The room next door to the conference room is what we call the Brandless lab. And it’s kind of my version of the Willy Wonka chocolate room. There’s no chocolate river. Although maybe in a new real estate I can get that written into the deal. It’s my fantasy to have a chocolate river in the office. But that’s just me.

And so we showed them everything. And we said, all these things you’ve tasted, it’s all $3. And we got the exact same reaction of the journalist. Like, what? Are you kidding me? Stop it. That’s not possible da, da, da. And then we called that, “Awesome Strangers”. And that was the video that we launched with, which were these people coming in, tasting, and then seeing it, and then having that reaction. So in truth we didn’t change it from the beginning.

But we tried to — we found that consistently the reaction — now, maybe if the reaction hadn’t been so good, we might have changed it. But the team has done such an extraordinary job at creating products that people really love.

AUDIENCE: Can you talk about the $3? How did you come to that?

TINA SHARKEY: Why $3? That’s a great question. So I would say three reasons, because we love threes. So the first reason was that, part of the Brandless experience — and when you go and you check it out — is that all of us are completely paralyzed by what’s called now the paradox of choice. That there is like — you go to the drugstore. You go to the supermarket. And there’s, as I said before, 50 feet of salad dressing, 300 sauces to choose from. It’s like, what? Like, how do I even choose? So part of our opportunity was to simplify everything including the price. What’s the difference between $289, $462, $621, $432? Like, it’s just — what is that? That’s like a manipulation.

So simplifying it was one of our objectives. Being completely easy and transparent to navigate. And the most important thing is that, when we studied the organics and naturals market, the sort of what we call better for you — organic, vegan, non-GMO, et cetera, et cetera — that market, if you look at that filter, $3 is not the entry point into that market. And so our goal was to what we call blow the doors off the front of the building and make it much more accessible to a much broader swath of people.

Because our intention was that everyone deserves better. And better didn’t have to cost more. And so we were very deliberate. So it was simplification. It was ease. And making a much broader addressable audience.

AUDIENCE: Hi Thank you for being here, first of all.

TINA SHARKEY: My pleasure.

AUDIENCE: And congratulations.

TINA SHARKEY: Thank you.

AUDIENCE: — on all your success. It seems like with the quality of the product and also the price point, your product is ideal for a low-income community. Do you have plans to, I guess — even with the — well, let me rephrase that. It’s great for the low-income community. However, we know that there’s a digital divide in those communities as well. So are the — do you have plans for your company to really penetrate this market and really reach these customers?

TINA SHARKEY: Absolutely. So I love that question. Because the thing that I was saying about — you said, what were some early surprises? Because when we launched it, we just sort of put it out there, right? We were like, let’s just see. If you build it, they will come. And they did. And so we’ve been hearing from so many people across the country that either were living in food deserts where they didn’t have access to organics non-GMOs, et cetera. Or they couldn’t afford that for their family. And for their first time, they’re able to afford that, and they’re able to have access to it.

And the digital divide is not as bad as the food desert divide. And so what we’re finding is that the installed base of mobile phones and Wi-Fi networks, et cetera is much broader than the food — and deeply penetrated than access to quality organic and non-GMO foods and goods for families. So we totally have plans. But we’re already executing on those plans. But we’re not done. I mean, we’re going to go to every town. We’re going to drive what I call the United States of Goodness tour. And go out and really meet people.

What I would like to do in those communities is not so much offer them Brandless, because they can get that today. What I would like to do is meet the awesome strangers that live there and really tell them that they deserve better. And really tell them that they’re already awesome. And they shouldn’t have a sense that they’re not or that they’re less than. Because they’re not less than.

And so if everyone starts to believe that they deserve better, and that they’re already awesome, and that they can afford that, maybe that will give them more confidence. Maybe that will create a better conversation at the dinner table. Maybe that will help people sleep better. I mean, we have nutritionals, a men’s multi-vitamin, a woman’s multi-vitamin, melatonin, antioxidants, all $3.

Access to these things that they didn’t have access to before, because they, A, couldn’t afford it, B, didn’t have a store near them, or C, weren’t educated about the values of those types of products, should be changing now. But the most important thing, the business I would like to be in is the confidence business. Because I don’t care how you voted; I don’t care what your socioeconomic class is; I don’t care what your race, your religion, any of that. You deserve better.

And if you strip away all those layers, and all those targets, and all the ways that we have filtered ourselves as people — we’ve forgotten what we’re here for. We’re all the same. And this country was built on that. And this company was built on the idea that everyone deserves it.

And it’s not OK to have a divide. Whatever’s happening in Washington, we can change the system. But not by going into the system. By building another system. I mean, that’s what this company was built on. And that’s what our company is built on. We’re just trying to change a different kind of system and trying to get back to the values that we actually believe in as human beings. We’re the human being business. And all human beings were created equally. And this idea that people have to choose, it’s just not OK.

But that doesn’t mean everybody has $3. And so we want to help those people, too. And that’s why we partner with Feeding America. And that’s why we’re trying to teach people about tangible acts of kindness. Because if you just make eye contact with a stranger, maybe that will make their day better. And if that makes their day better, maybe they’ll work harder. Or maybe they’ll be kinder to their loved ones. Or maybe their kids will feel more inspired and work harder. Who knows? But I just think it starts with a smile, from my perspective.

AUDIENCE: Thank you very much for coming here. I really love the idea behind Brandless.

TINA SHARKEY: Thank you.

AUDIENCE: So since you like threes, I have three questions. But they’re more practical ones. So the first one is about products. I understand for more expensive products like olive oils, what we discussed, three means low quantity. And this potentially could mean more waste for packaging and things like that. Do you have plans to move, I don’t know, $13 packages or something? So that you can get much more paper rolls, or olive oil, or things like that without more– with less damage to the environment?

And then the other two questions are about the company. You said you were using phony names, and emails, and stuff. When did you trademark Brandless, and other related slogans, and things like that, so that you didn’t tip off potential incubants? And the third question is about the capital, building the company. How much did you use off-the-shelf components, systems, like putting things in cloud and things like that, to reduce cost on that since you’re building everything from scratch? Thank you very much.

TINA SHARKEY: So I’m going to try — those are three very unrelated questions. So I’m going to see how facile my brain is in the ability to answer those. The first question is about, have we thought about limited waste in our packaging? And the answer to that is unequivocally yes. You have to remember that we’re only sort of 20 weeks old.

But we are working to create the most efficient, just what matters packaging and sizing whenever we can. And so you’d be surprised. But it’s like the little things. For example, I remember Rachel, who’s our head merchant, and I were talking about almonds sometime in — I don’t know, February or March. And not only did she source and create this incredible assortment of nuts, and mixers, and all of that.

But the almond bag that you buy, it’s resealable. And so what I love about that is that you don’t have to eat all of them at once. But you don’t have to clip it, or throw it away, or serve it. You can actually reseal the bag. So it’s not just about the size. It’s about being very intentional and trying to make your packaging work as hard as it can for you. That’s the first thing.

The second thing is about — you asked – wait. First you asked about the packaging. I know the third question was about the deployment of the capital. Oh, about when we trademarked Brandless. So this is a funny story, too. Which is that we trademarked Brandless way before we ever — just when — even probably before the seed, when we were just incubating the idea. And all of our NDAs — people that were working with us, both suppliers as well as potential recruits, signed these NDAs. And in the NDA it said the name Brandless. And not a single person actually noticed which I think is funny, because we said that the operating name of the company was Dosey. But in the NDA that people had to sign, it said Brandless in the fine print. And nobody ever said anything, which — we just were waiting.

Because I remember having a conversation with the lawyers. No, we can’t put Brandless in the NDA. We can’t disclose. And it turned out that we had to. Because it was the real company that you were in non-disclosure with. Nobody ever saw it.

And the third question was about the use of proceeds, and how we broke down the budget, and what we’re using for cloud computing versus — I didn’t get that last part. Off-the-shelf components. So that’s a fantastic question, too. Because we could have probably launched earlier if we had gone with Shopify or some sort of a turnkey. But we really felt that in order to build the kind of community where we really owned all of our data, and that that data belonged to our ability to be able to create the most remarkable experiences, and that even if we were sort of MVP, it was better to be MVP and to have the kind of owned solutions on the core data and architecture of what we were building.

And then when it came to ESPs, and other places around email scaling, and other things like that, that we could work with third parties. And we didn’t have to build those things ourselves. But when it came to things that were core to the experience, those we felt we really needed to own. And so we made a decision, build by license on sort of every aperture. And we continue to do that.

JORGE CUETO: What about on the product side? Off-the-shelf products that then you brand as Brandless? Do you do any of that as well?

TINA SHARKEY: Well, there is no such thing as an off-the-shelf product. I would say that in the case of what is a proprietary formulation, when it comes to organic brown sugar, organic flour, organic sugar, organic oregano, there’s not a lot of formulation that’s happening there. So it’s like the packaging and the just what matters. When it comes to sort of things where we are co-creating and co-formulating with our partners, we look at everything on a case by case basis.

JORGE CUETO: Great. Well, thank you, everyone, for coming. It was great to have you, Tina.

TINA SHARKEY: Thank you.

 

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