Cofounder of Chubbies + Loop Returns | Now, Marathon: A managed technology platform + bespoke services offering helping you exit the short-term direct-response hamster wheel to find your balance of Brand and performance

Chubbies and Loop Returns co founder. Now, applying those lessons and mistakes to help consumer brands transition to a balance of Brand and performance with software that measures the future rev impact of brand, incrementality studies to validate; and the media management and creative production to actually execute on the vision. MarathonDataCo.com

Classic AI software + services combo. 

This is all informed by our firsthand experience and a desire to help brands go through the transition that transformed our business and helped us get acquired for a massive number and continue to grow super profitably today...but without all the pain and heartache we had to go through...

You see, Chubbies almost went out of business because of the exact problem we're trying to solve at Marathon.

In the early days at Chubbies we built Brand because we had to. We had no money. We were scrappy, creative, dynamic. 

And we built an awesome Brand.

Then we monetized that Brand with performance DR. 

We convinced ourselves that that was the source of our growth. 

We almost went out of business.

We righted the ship and built, brick by brick, to a >$100m exit, culminating in a >$1B IPO, and now, doing well over $100M / year at nearly a 30% EBITDA margin, but to do that we had to overcome the overwhelming pressure to take a short–termist approach.

As we've seen this direct–to–consumer brand market evolve over the years, we've seen the same cycle happen to nearly every other business out there: Starting hot, pushing performance marketing, then stalling out and never getting to long-term sustainable growth.

This was the problem we felt absolutely compelled to solve because we felt for these brand builders and entrepreneurs. We were in their shoes. And but for a whole lotta luck and a gritty–a** team, it would have sunk us.

Then we looked around and realized there just isn't anything on the market that helps companies do this — this most important thing imaginable.

So that's what we're working towards, would love your feedback.

Preston 🩳 Rutherford

Founder: Wholesale is dumb. DTC scales forever.

CMO: Bestie, you just fell into the TAM trap.

Founder: We can reach anyone online.

CMO: Only 16% shop online. Big 10 own 60% of that.

Founder: That's impossible.

CMO: Do the math. We're fighting for 6% of commerce.

Founder: But everyone's moving online.

CMO: Another trap. Shopping habits are sticky.

Founder: What do you mean?

CMO: Brick and mortar shoppers stay brick and mortar.

Founder: That's not what the VCs said.

CMO: VCs also said Facebook ads would stay cheap forever.

Founder: Attack my soul why don't you.

CMO: Speaking of attacks - our CAC is up 40% year over year.

Founder: But revenue's growing.

CMO: Yeah, at 2x the cost with 3x the discounts.

Founder: I feel seen and I don't like it.

CMO: Want to know what stage we're in?

Founder: There are stages?

CMO: The DTC growth lifecycle. We're in stage 3.

Founder: What's stage 3?

CMO: Over-rotating to short term tactics. Thinking discounts will save us.

Founder: Okay fine. What's the escape plan?

CMO: First, build brand strength.

Founder: Before channels?

CMO: Brand strength determines channel success.

Founder: How?

CMO: Strong brands drive organic growth everywhere.

Founder: But won't wholesale kill DTC?

CMO: That's channel conflict fear talking.

Founder: But our margins...

CMO: Actually improve at scale through wholesale.

Founder: That makes no sense.

CMO: Neither does spending 40% more for 20% growth.

Founder: When do we know we're ready?

CMO: When organic traffic grows faster than paid.

Founder: And how long does this take?

CMO: Depends on brand strength investment.

Founder: So my "DTC Till I Die" tattoo was a mistake?

CMO: Face tattoos generally aren't a good idea.

Founder: meh. how do we escape?

CMO: *Ariana Grande voice* 
This is the part when I say I don't want ya 
I'm stronger than I've been before 
This is the part when I break freeeeeeeeee 
Cause I can't resist it no more

Cofounder @Chubbies ($100M+ brand). Now, MarathonDataCo.com: The Modern Brand’s Full Funnel GrowthOS™

If you're looking to get more profitable, navigating the diminishing performance of your "performance" marketing, or if you know that investing in building brand is essential, but the "how" is less clear, this post is for you. Here are my mistakes and biggest learnings around finding a balance of Brand building and DR in hopes you can skip the pain and get to the balance that works for you. 


A) Why I got overly-reliant on bottom-funnel, short-term revenue-maximizing strategies and tactics: 

The early days of Chubbies coincided with good ol' days of Facebook ads. They did work at driving revenue, which was my definition of success at that time.

The dopamine hit from putting a dollar in the Meta Machine and getting 6-10 out was ridiculously addictive

However, as with any addiction, the need for more dollars in to get the same dollars out kept gradually increasing

But it was hard to feel that pain since the change was so gradual, peppered with times where performance would improve, which roped me back in and kept me convinced that if I just wrote a better tagline or found the perfect static asset CTA position, we'd unlock the ROAS we saw in the early days. 


B) How I found out it was no longer working 

I started to learn about vanity metrics, metrics that matter, and to update the definition of success to go beyond maximizing ROAS and Revenue

One example was the composition of new customer revenue traffic sources. 

A larger and larger portion was connected to paid traffic sources.

Therefore, the proportion of new customer revenue from owned and organic channels was decreasing as a percentage of the total, making it more and more expensive to hit growth goals. 

Stepping back and looking at that data over a number of years made it clear that change was needed.


C) As the importance of growing a resilient base of owned and organic new customer acquisition became clearer, it also became clear that greater growth, and more profitable growth, could come from that balanced approach. 

To be clear, a balanced approach does not mean you have to immediately turn off all DR ads, discounts and promotions. 

They're essential *and* accretive when they're driving growth on top of a stronger and stronger foundation of that resilient base of owned and organic new customer revenue.


D) How to find that balance 

Being prescriptive here wouldn't be helpful since all brands are different. 

But if your answer to any of the following questions is no, it might make sense to start spending more time thinking about building that resilient base of new customer revenue coming from owned and organic traffic sources (AKA explore some shift from 100% DR to some version of a balanced approach): 

1. Are your contribution dollars AND contribution margin both increasing? 

2. Are you increasing the dollars and % of new customer revenue coming from owned and organic traffic sources? 

3. Is the % of your revenue on discount going down over time? 

hope this helps

VP Growth: more ad variants will fix our CAC problem.

CMO: bestie, that's the trap.

VP Growth: what trap?

CMO: CAC up 20% three years straight.

VP Growth: hence more variants.

CMO: our competitors tried that. know what happened?

VP Growth: enlighten me

CMO: everyone optimizing the same way. same audience. same tactics.

VP Growth: isn't that just marketing now?

CMO: branded search was 50% of revenue back then.

VP Growth: and now?

CMO: 20%. traded real fans for rented ones.

VP Growth: but revenue's up 20%

CMO: on 40% more spend.

VP Growth: still converting tho

CMO: at 20% contribution margin vs 50% from organic.

VP Growth: but brand doesn't show in attribution

CMO: neither does bankruptcy.

VP Growth: bruh

CMO: remember when we didn't need discounts to grow?

VP Growth: ancient history

CMO: our discount rate tripled in two years.

VP Growth: that's just market standard

CMO: everyone's in the same trap. mo' variants, mo' discounts, mo' CAC.

VP Growth: so what's the move?

CMO: 20% of budget to brand. content that makes people remember us.

VP Growth: like what?

CMO: stop looking like every other brand fighting for the same clicks.

VP Growth: CFO will delete me

CMO: you want quick clicks or a future?

VP Growth: but how do we know it works?

CMO: Warren Buffett knew

VP Growth: don't quote him...

CMO: "The single-most important decision in evaluating a business is pricing power."

VP Growth: meaning?

CMO: we 3x'd our discount rate in 2 years. that's the opposite of pricing power.

VP Growth: ok that hit different. but how do we fix it?

CMO: stop trying to convert everyone today. win their hearts before they shop.

VP Growth: sounds expensive

CMO: more expensive than our current CAC death spiral?

VP Growth: but ROAS...

CMO: short term ROAS obsession is why we're here.

VP Growth: what's step 1?

CMO: make content that would work even without a "shop now" button.

VP Growth: that's terrifying

CMO: so is our contribution margin trending to zero.

VP Growth: when you put it that way...

CMO: congrats. you just escaped the variants trap.

VP Growth: why do i feel like i just took the red pill?

CMO: once you see it, you can't unsee it.

#brand #marketing #redpillmoment

Jeff Veldhuizen

Growing consumer-first digital businesses.

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