Invest Like the Best with Patrick O'Shaughnessy
· Tom Digan
[00:00:00] S2: Probably four years ago when we're trying to figure out growth, we've built a product. People love it. They're using it. They're telling us what we need to build and what features we need to evolve to improve it. But we still haven't figured out how to grow. The way you get from zero to $1 million in ARR is very different than the one to ten. For us, Greg's view was, look, let's go run some experiments. And so we're looking at some different ways to grow, saying here are the different options right now. There's SEO, and we're thinking about how to go and start to create content on search. We have a lot of assets in the app that we can leverage there. We're looking at some different channels, TikTok being the most obvious, where it's just all the eyeballs are there, but the brands aren't there yet. That was compelling to us. We understood that the consumer was very interested in engaging with short-form video. Meta hadn't quite copied that with their Reels product yet, but it was obvious that that's where the consumer was going with their attention. And yet the brands weren't there spending yet. We partnered with coaches, these world-class coaches who were all creators. None of them knew TikTok yet. They were all Instagram native. In fact, I don't think any of them at this moment were even on TikTok. And we were excited to go figure this out. And it was hilarious because, Greg, I don't know if you've seen his Instagram. It's not particularly cool. He's not a creator. But he was like, I'm going to go and become the TikTok guy. And I'm like, alright, Mr. TikTok over here. I was like, you got to go hire somebody. I'm like, I'll figure it out. So he goes all mad scientist on trying to just understand every aspect of TikTok to the point where, fast forward two years later, and the big dog engineers from China are in our office. Because Greg would be calling and being like, the algorithm is broken. And they'd be like, no, it's not. And then Greg would go get a bunch of information from Ryan Mott and send it through. And they'd be like, oh, wait, he's right. There's something wrong with ads manager because the ad tech was very new. And so Greg was very much triaging and troubleshooting their ad tech in real time.
· Tom Digan, Patrick O'Shaughnessy
The other story that I just speak to Greg going into his cave, it is winter 2021, probably March or February. And I don't remember like the Texas freeze when the entire state shut down. We had an inch of snow, but we lost the power grid. So anyways, Greg goes into a cave because there's nothing else to do. And he's reading the book Crossing the Chasm, great book that I think all founders have read. But Greg's output of reading the Crossing the Chasm was a 100 page slide deck that he sends me when the power comes on. And we finally have internet again. And he's just like, I figured out who our customer is. Ultimately, that was very important work because it set up what we were about to go do on TikTok that you couldn't have success without understanding who that customer is. [00:00:00] S0: What did you find in the book?
· Patrick O'Shaughnessy, Greg Stewart
[00:00:00] S0: What did you find in the book? [00:00:00] S1: Not trying to be all things to all people, especially early on. You can go after a big market problem, but you don't have to start there. We were trying to tell a story to everyone. The world was upside down. Consumers were up for grabs because your gym folks were at home. Everything was a mess. All these other companies are launching and we're saying, we're weights, we're body weight, we're gym, we're home. It was all things to all people. And it wasn't working. Like we weren't getting to the right person. Crossing the Chasm just helped me zone in on who is the most important person that we're talking to right now and who's finding success. And how do we speak specifically to that person and not go try to tell a story that's relevant to a Peloton user? It just helped me move away all the noise and narrow in on what mattered for this person. [00:00:00] S0: You have unlimited time right now to talk to us about solving this problem. How you cracked the code of growing through something like TikTok, the more detailed, the better. I just think obviously it was an A or the critical moment for the business early on once you had figured out the product. Just riff on the experience, literally what you did and what you learned.
· Greg Stewart
[00:00:00] S1: I had a whiteboard meeting. We're like, what are the growth loops that we think are available to us, that we think we have an advantage on, that we think we can do within our own team, that we can learn fast enough to get proof points and to dive in on, go all in on. And TikTok came out of that as the winner. What we started to do was make content and we knew nothing. I had this breakfast meeting with Edsel, who leads Branding Creative. And I was like, hey, man, do you want to work on TikTok with me? And he was like, sure. This guy is building all of our amazing campaigns. Like he's shooting for Nike and all these things. I need you to make TikToks with me. And it's just going to be me and you. He's got the creative mind. And we grabbed a coach and we said, hey, we're going to start an account from scratch. You're not on TikTok. We want to go learn. Give us all your video that you have on your iPhone. So you have this inventory of video. You have a smart, creative person. We started handles in the coach's names. Then we started to create content. And very, very quickly, we started to learn what was the content that worked. And we were dissecting every inch of it. What worked multiple times in a row? Why? What are the commonalities? How is this product used? It's not Instagram. It's like TV. People are consuming content for entertainment. And it's not a social platform. It's a media company. And so you have to think about what is the right content that is educational, provides value, that gets to the right person. Because unlike Instagram, where you have an audience that you're creating content for, you have to create content that the algorithm knows who to put in front of the right person. So it's all about the content. But the advantage for us at that moment was it didn't matter how many followers you had. You can start from scratch. Nobody knew how to go do this. But that first account that we started, I remember being on the playground with my kids. And Edsel was like, dude, one's ripping. And it was like a million views. And we're like, holy shit, that's amazing. That video took you two seconds to make. And it was like, do it again. We did it again. We took that account from zero to 20,000 people in 45 days. And we weren't thinking about paid at all.
· Greg Stewart
We were thinking about what is TikTok as a product? How is it being consumed? And what content wins? How do we create that content? So we got views. We had proof points of traction. And then we said, all right, we have Blink and Bio. Can we get somebody into the app? And we did very quickly. And we're getting the right people into the app. And all these things were like starting to compound. We started another account, did the same things. We're like, we can do this organically. It was three months. And then we said, let's start putting some money behind this. And see how it goes. We had no performance marketing team. We had no agency. I was absolutely against hiring anybody outside the company. And I just committed to learning how to be a performance marketer on TikTok. Because we didn't come from performance marketing or Facebook, we had no preconceived notions of how things should go. And when you talk to Facebook marketers who are moving to TikTok, they were applying all these rules and heuristics of Facebook and Instagram to TikTok. But these are two separate platforms. You have this Chinese app and a different algorithm. Why would those rules matter over here? I spoke at an all-hands for TikTok. And I was talking about some of our strategy. And I had conviction in what we were doing. And I was like, yeah, I make budget changes seven to ten times a day. And if you talk to the TikTok group, they're like, you shouldn't touch it for two weeks. It's the learning phase and all these things. Well, all those people came from Facebook. And all the rules they were telling me were Facebook rules. And at the end of the meeting, this woman comes up to me and she was like, that was really interesting because the things you had most conviction in are the opposite of what we're telling our clients to do. I realized pretty quickly that everybody is taking this mental model over here and applying it and not trying to figure it out from scratch. If it works, do it again. Who cares what they tell me? It worked. Do it again. That was an important piece of just thinking on our own on how this should go. I launched my first ad. Okay, we can do this. Very quickly, it was getting people into the app and then it just became a drug addiction. I mean, it's like trading. I'm bad at mental math, but I'm also fascinated by traders.
· Greg Stewart, Patrick O'Shaughnessy
And when I was at Goldman, I would interact with traders. It was just magic to me. All the screens and the attention span. Just like, how does this happen? But it felt like that for me, like I'm moving money around, driving growth for the business. And it became a video game. It's like, how do we beat the video game today? And I had this amazing creative partner in Edsel. I can figure out the ugly of how to be an ads manager person as my job. And those two things together unlocked that channel to just keep going, keep pushing on. [00:00:00] S0: I feel like the rewards for doing this in a consumer business are extremely high. And so lots have probably tried, but not lots have succeeded. What do you think it was that let you start to win the video game? Was it the knowledge of how to cut a video together? Was it topics? [00:00:00] S1: No, the creative side, what we learned is the For You page is making a decision on your content of who your content is for, and then shoving it to that person. So the first game on the creative side was, can we create content that gets to the right person for this coach? This is a CrossFit modality. Can we get to CrossFit people using content? And that was just iteration. We would do something. [00:00:00] S0: And so you'd say like, what does a CrossFit person care about?