Podcast: What’s Working & What’s Flopping in DTC - 2025

Written By Sherilee Maxcy

Episode Summary

In this episode of the Free to Grow CFO podcast, Jon Blair and KC Holiday discuss the current trends in e-commerce, emphasizing the importance of product quality, effective offer testing, and understanding customer needs. They explore the dynamics between first-order dominant brands and those with high lifetime value (LTV), as well as the significance of leadership and company culture in e-commerce. The discussion also touches on financing methods for e-commerce brands, highlighting the risks associated with certain loan types and the need for strategic financial planning.

Key Takeaways

  • Product is always number one in e-commerce.

  • Company culture impacts brand perception and customer loyalty.

  • LTV brands require different strategies than first-order dominant brands.

  • Data-driven decision-making is essential for e-commerce growth.

Meet KC Holiday

KC Holiday is an entrepreneur, business coach, and content creator. In 2012, after meeting his wife on a movie set in Los Angeles, he had the idea to disrupt the 16bn wedding ring industry. This led to the creation of QALO, a pioneer brand in the ecommerce industry responsible for the creation of the silicone wedding ring. KC grew this brand to over $150M of sales before selling the company in 2020. After that, he ran a corporate venture fund in Australia for two years before moving back to the states to go all in on coaching entrepreneurs. Now, he does coaches your favorite ecommerce brands and is the head of community for Daily Mentor, a private ecommerce mentorship group for brands doing over $1M in revenue. He lives in Raleigh, NC with his wife and 3 kids.




Transcript

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00:00 Introduction to E-commerce Trends

01:05 The Importance of Product in E-commerce

03:24 Offer Testing and Brand Perception

08:17 Understanding Free Shipping and Offers

12:29 The Money Game in E-commerce

15:12 LTV vs. First Order Dominance

21:12 Creative Strategies for Customer Acquisition

22:53 The Evolution of Marketing in the Age of AI

24:57 Navigating Leadership Challenges in E-commerce

26:45 Building a Strong Company Culture

33:23 Understanding Financing Options for E-commerce Brands


Jon Blair (00:00)

Most Ecom operators only see their own brand's data. Today's guest sees hundreds. We're talking about what's working, what's flopping, and what your brand should do next. Hey everyone, welcome back to another episode of the Free To Go CFO podcast, where we dive deep into conversations about scaling a profitable DTC brand. I'm your host, Jon Blair, founder of Free To Go CFO. We are the go-to outsourced finance and accounting firm

for eight and nine figure DTC brands.

Alright, so today I'm here again with my buddy KC Holiday. KC, what's up man?

KC Holiday (00:33)

What's up dude, it's an honor to be invited back. Doesn't happen too often man, so you know, it's exciting to be back on chatting with you dude.

Jon Blair (00:41)

Heck yeah, man, for those of you that don't know, KC was on several weeks ago, I mean, it's probably several months ago now. I believe his episode is called The Secrets of Elite DTC Brand CEOs. Definitely go back and check that out. But yeah, we're gonna be chatting today about what we're seeing that's working and what's flopping in 2025 in the e-comm world. You know, KC is an e-comm business coach and head of community at Daily Mentor. I run Free to Grow CFO. Both of us see

hundreds of brands a year, maybe more than that, a year, in terms of the kind of membership base of both of our businesses. I'm also a part-time mentor and Daily Mentor which has been tons and tons of fun. And I just thought it would be fun mid-year for us to sit down and just talk about, what are we seeing, what's working? What are we seeing, what's flopping? And in hopes that it gives some of our listeners.

KC Holiday (01:25)

All

Jon Blair (01:38)

kind of some food for thought of how they might be able to take some of those learnings into their business. So just to start, what are you seeing generally in the e-comm industry as some of the big things that are working as you see the hundreds of brands that you guys are working with at Daily Mentor?

KC Holiday (01:55)

man, yeah. So the first thing I'll say is product always wins. Just like no matter what your marketing is, what category you're selling into.

Jon Blair (01:59)

Totally.

KC Holiday (02:06)

Product is always number one. So, you the people that have the great products find e-commerce to be a lot more easier of a business model than the people that are trying to replicate others or sell into a really complicated space. So I always just want to start with product and highlight that. The next, think, goes into probably, I'll go two other areas that are more in the marketing side of things and then we can talk more about like labor and, you know, staffing and things like that. But so the first one I probably would say is offer testing.

And that's one thing that you know when I was running QALO my business previously like we thought about offer testing of you know and that might be you know buy one get one free or it might be you know buy two get one or tiered discounting things like that and But I don't think it was as

required as it is today because there is so much saturation in social media and in the ad space and whatnot that it's not, yes, the ad needs to stand out, but also the offer that's attached to the ad needs to stand out. And one thing that I've seen...

coming up a lot with brands is people are testing different offers more frequently at lower top line revenue marks. So I think if you're like sub one million, you should be testing, absolutely be testing offers and probably find one good one and then just lean into that where as you scale, you know, you're thinking a bit more about merchandising and you know, how you put different products together for the offer. So I think you should probably be testing more, but that's one thing that I've seen where previously I think, you know, people were very concerned with what does an offer do to brand, you know, brand perception and like, if I'm

running any kind of you know reduced rate on any of my products or I'm bundling products together and offering them at a reduced price it's gonna have a negative brand perception and I think nowadays and I'd be curious to see if you feel it if you see something different but nowadays I actually think it matters a little bit less and consumers are used to

you know, buying essentially what they believe to be the best offer, but it's not always directly correlated with negative perception of the brand. So I want to elaborate on that a little bit, but I want to hear your perspective on offers versus brand and what you see on the, even on the finance side.

Jon Blair (04:01)

for sure.

For sure, for sure. So really quick, I thought of something as you're talking about product, like product still wins and is really important. I was actually just writing some content this morning about like the top three things that I see, let's call it the top three common attributes of like the most elite brands that I've seen in the last like year or so. And number one is the connection between product and purpose and a true passion. And the reason why that's so important to just build off of what you're saying is because like,

KC Holiday (04:12)

Yeah.

Mmm.

Jon Blair (04:37)

the brands that we're working with that are crushing it, tariffs are not, right? Like environment, like macroeconomic headwinds are not. They have found a gap in the marketplace that for them, filling is a very purpose driven, passionate pursuit and they are going to get these products that they believe that their ICP needs to have. They're gonna get them into their hands and they're gonna do what they need to get them in their hands. And that is both a product

and advertising endeavor, but you can only sell crappy product through decent marketing for so long, right? But what builds a brand and raving fans is, I believe, product tied to that purpose and passion, and the brand founders, they're gonna see it through and they're gonna make it happen, and they're gonna make the world a better place through their products. I just wanted to say that, because I've definitely seen that.

KC Holiday (05:30)

Yeah, and

I think the commonality in that, is, this is a hill I will die on, is you've got to just care about the people that you're trying to help.

like you genuinely have to care about customers. And I think e-commerce, it's sort of this model of how can I maybe spin up a decent ad that isn't really taking into account much of the consumer psychology and why customers are buying and why they're behaving the way they are online and why they even cared about the ad in the first place. It's just like, hey, I saw another company made that ad, I'm just gonna make it with my product in it. I'm not really gonna understand my customer, but I'm gonna hope that it works. And to your point is like, there's just...

Jon Blair (05:39)

Totally.

KC Holiday (06:06)

people that are just building products and selling products without the recognition of customers. So I think for you, the blend between product and purpose is genuinely caring about the problem that you're solving for customers. And that's even if you aren't necessarily a problem solution brand, like a fashion brand, things like that.

Jon Blair (06:10)

Totally.

1000 % and going back to what you're saying about the offer testing and like kind of what I was kind of hearing from a finance perspective is, like is coming up with a really like kind of bundling products and coming together with like a compelling offer that includes a financial component to it a discount or promotional kind of feeling thing is that bad in terms of like brand perception? Honestly what I've read it's funny because what I wrote down in my notes as you're talking was: well you need to know your customer

and you needed to know what else you included in that bundle, right? Because if you know your customer and if you really know what their needs are and maybe you got them in to purchase that hero product, but then you upsold them on whatever accessory two, three, four, if you're doing that based on really knowing your customer, it's going to feel more valuable for them. Even if you give them a financial incentive, but if it's random acts of bundling, I'll call it random acts of bundling, then yeah, it may.

KC Holiday (06:52)

Mm.

Yeah.

Jon Blair (07:18)

it may mess with your brand perception a little bit. But again, if you are, if you really know your customer and you know why they would want to buy that bundle, pushing them over an edge with a bit of a discount does not by any means necessarily bring down the perceived value, right?

KC Holiday (07:36)

There you go. And that's, think I want to make a difference there because I talk about this a lot in Daily Mentor because when I talk about offers with brands, they go, but I want to have a good brand perception. I don't want to just discount my products. I was like, no, I actually believe that discounting and offer creation are two...

different things. So to me, discounting is you are essentially saying, I'm going to reduce the price of my product to try and get you to buy because I have not created enough perceived value on this product for you to spend what it's currently listed at. Right. And that's what you see with a lot of dropshipping products. It's like, Hey, this is actually $149, but it's strike through pricing for 19 bucks for you today. Right. Which is to me, that is a discounting, very finance driven strategy that reduces a lot of your margin. So to me, discounting is like margin reduction with the hope that the conversion increases. Right.

Jon Blair (08:13)

Totally.

KC Holiday (08:21)

what you think about discounting like Black Friday. To me, offer is way more about how do you increase the perceived value of what customers are getting to get them to spend more and therefore allow you to have more margin to play with to create customers. So in some instances, does that mean that...

Jon Blair (08:22)

Totally.

thousand percent.

KC Holiday (08:36)

the price looks like it's less than, if these five items were sold individually, sure. But to me, again, the psychology behind it are drastically different. And I think if you're running a brand right now, don't see it as discounting. See it as how can I create more value for customers where it's like a no-brainer offer? You you've got your hero product and you're actually bundling it with things like, well, I would have bought that. I would have probably added it to that anyway. And they're just throwing it in there for me to get me to convert right now. Like, I'm dialed in. I love that. So just the differentiation between those two things I think is important.

Jon Blair (08:54)

Totally.

Yeah, well, and to kind of piggyback off this, let's talk about like free shipping thresholds, because I think this is key in thinking about your offer strategy. I would say that eight years ago when we were starting to scale Guardian bikes, I know for a fact, we argued a bunch internally about whether shipping should be free. Should it not be? Should it be free? But if they order two bike or, you know, should it be 35 bucks? But if they order two bikes, they order accessories, then it's free. I think that

consumers today are a lot more reasonable on understanding that like free shipping isn't a given, right? And that if you buy something that's 20 bucks, like AOV, you might get charged for shipping if it's like a decent sized product, right? That like, hey, it probably costs a decent amount to ship this. And so the point that I just want to make is that like, again, it depends on understanding how to create value in the eyes of the consumer, right? Like,

KC Holiday (09:44)

Mm.

Jon Blair (10:06)

And like I have a brand, they're a coffee subscription brand that I work with and they have really messed with this free shipping threshold. And here's what's interesting. This goes a little bit further and maybe I a segue to another question after this, but because this is probably a whole nother episode, but the founder was a little bit concerned about that. Once you hit the free shipping threshold, the number of bags of coffee that you had to put in the order to get to that can't remember if it was four or was three.

KC Holiday (10:18)

you

Jon Blair (10:34)

But he's like, hey man, we make less margin dollars if they buy more coffee and that shipping threshold, you know, kicks in and we give them the shipping for free. And I go, I know, but did they opt into the subscription? How many people are opting in the subscription? The first order profitability may be lower, but if they're sticking, I'm showing in my cohort analysis that by month three, they're very, profitable. So I actually am thinking,

I'm not so worried about first order loss. I'm asking how much of these people churn versus stick with the subscription, right? And so I think to your point about thinking about the offer, there's an additional component that we're seeing that brands are either, it's either working or it's flopping because they don't understand this connection is don't just be concerned only with first order profitability. Consider

KC Holiday (11:09)

Totally.

Jon Blair (11:29)

how much retention there is on a monthly basis. If you have a high LTV product, because that offer may include, so we have a brand that sells subscription gummies. the CFO on their account actually found out that if they offered a higher discount on their first order to opt into the subscription, there was such strong retention that by month three, they were way more profitable on that cohort than if they didn't offer a discount to opt in the subscription. So counterintuitively, there actually was

a higher value to the brand and I think a higher value to the customer because they were like, Hey, we're opting into the subscription. I don't have to keep reordering every month, but I'm getting a good price for doing this. Right. So anyways, like just some other things to think about there.

KC Holiday (12:14)

I think it's a good plug for what you do and for what I would do as well is that in order to make informed decisions about what that initial margin should be on first purchase, you've got to have access to the information and the data to make you feel confident about the decisions that you're making. And I think that a lot of founders in e-comm that don't have a coach, that don't have a fractional CFO, that don't have people that are looking at those things, don't know how to make those initial decisions, which is where Daily Mentor comes in, it's where Free to Grow comes in. Like it's very much what we're focused on is helping

Jon Blair (12:28)

Totally.

KC Holiday (12:44)

founders make better decisions and I think what I've found a lot of times is that where the offer testing comes in is one is for you is like what behavior do we essentially want these people to take for you in that example like well they're LTV we've got it we just get them in the door like we know that they're gonna be worth X amount to us 90 days later where there's a lot of brands also that are selling a $25 product

Jon Blair (12:53)

Totally.

KC Holiday (13:04)

with no return customer rate or very little. And it's like, you have to find a way to package something together to give yourself the margin to be able to actually go acquire those customers in a profitable way. So understanding margin is like, it's the most boring part of what we do, but it's also the most important thing is like, you've got to understand the game that you're playing.

Jon Blair (13:07)

Yeah.

Well, it's funny you mention that. So one of my colleagues out here in Austin, he's in equipment financing. He had this LinkedIn post like a month ago and I just texted him, I like, hey man, I'm sorry, I'm stealing this tagline or I'm stealing this line from you because like it's so true and I can't believe more people don't say this. He's like, hey, if you run any business, you're playing a money game. So you have to have money people on your team. Like I don't care what business you run, it's a game of money.

And so you have to understand the money. And so I've been telling everyone, hey, aren't we playing a money game? And it seems like overly simple, but it's so true. We're not just, not playing a product game or a marketing game. That's important, but we're playing a money game. This is business, right?

KC Holiday (14:06)

Entirely

and I was the I was thinking about this the other day too Because you actually on my whiteboard so I this big whiteboard back here I blur it out because my children draw all kinds of outrageous things on there, but literally

Jon Blair (14:16)

It sort of might get some money.

KC Holiday (14:19)

At the top of it, no joke I have written, it's all a game. I literally have written, it's all a game at the top. Because if you can switch your thinking to this being your livelihood and flip it and go, no, I'm just playing a game. And before you play a board game, what do do? You read the instructions. You don't just pick it out and start moving pieces around. But a lot of people start businesses because they're excited about becoming entrepreneurs and they have this great idea and all the best intentions, but they don't read the damn instructions for the game. And the people that have the rules mastered are going to play the game exceptionally

Jon Blair (14:22)

Yeah.

KC Holiday (14:48)

It's like, to use sports analogies, like you see it in the NBA. Like, Shai Gilgeous-Alexander whoever gets mad about flopping, the guy just understands how to play the game and what the rules are, and so he's more successful than other people are, and...

to your point around knowing the numbers, like, dude, imagine if we, another sports analogy, imagine if we played football and baseball and nobody kept score and nobody figured out how many home runs this guy had or how many hits he had and like, you'd like, what are we doing here? Like it's the same thing with your business. It's like, you've got to be tracking the performance that exists within it so you can make good decisions. And it starts with that margin.

Jon Blair (15:13)

for

So I wanna talk about leadership, but before we do, I feel like there's an obvious question I have to ask. What are you seeing that's working or flopping specifically around LTV, heavy LTV brands versus first order dominant brands? And I wanna ask this, of really get it with the question I'm asking, which is, are you seeing it work out there for both brands that have repeat purchase and brands that are first order dominant with no repeat purchase?

or are you seeing it work for only one of those? Any wisdom that you can impart on that? I've got some thoughts, but I wanna hear what you're seeing on LTV brands versus first order dominant brands.

KC Holiday (15:59)

Yeah, it's an interesting question, man. I, by the way, I said that I had two things that I thought were working right now. So I'm just going to, I'm going to just say it real quick, just so people can know what else I was going to say before we get to the next topic. So I first had offered the other, think is, is whitelisting, in an ad account. So getting, if you can find the brands that are smashing it right now are finding a way to get really inexpensive content created by people on social platforms, whether it's Instagram or Tik Tok shop, and are finding ways to leverage those through advertising and in an ad account to try and increase

Jon Blair (16:12)

Mm.

KC Holiday (16:29)

organic awareness as well as acquisition. So that's been a recent unlock probably in the last, you know, three to six months I think for brands that are smashing it or have maximized sort of the creative, I hate this term, but the creative flywheel through creators that exist in an inexpensive way. So that can be a conversation for a different day. Okay, so you talk about first order versus LTV.

Jon Blair (16:42)

Yeah.

for sure.

KC Holiday (16:50)

I don't want to sound like a negative Ned here. I have a really hard time with LTV brands and Ecom and really like really basing my entire model off of the data that comes with high LTV brands. So let me elaborate on that a little bit. I think that like I mean to your point like I talked to I probably talked to 750 Ecom brands around the million and up to 200 million mark in the last year. I think that

Jon Blair (17:03)

Mm-hmm.

KC Holiday (17:18)

Basing a lot of your decisions around LTV is a tricky one, unless to your point earlier, you have really clear insights into that data and you feel confident making those decisions. And I think the reason for it is, and I'll go into what's working versus what's not, but I think the reason for it is a lot of them are underfunded, You like I think, like you deal with this, like getting access to financing now is, you you've got the...

Jon Blair (17:32)

for sure.

Mmm, yeah.

KC Holiday (17:42)

familiar culprits of the Shopify capital and the way flyers and things like that and the MCA loans and whatnot. But I think it's tricky because it's hard for brands to sort of understand, okay, I'm going to get a customer X amount of months from now and I can fund my business up until that point. So that's just like one thing that I'll call out with it. But what's working versus what's not, I mean, again, I think it all goes back to the way this conversation started, which is product and product category. I think there's a lot of people that are selling products that are people are only going to buy once. It's like I'm out here selling a grand piano and they jump on a coaching

Jon Blair (18:06)

Totally.

KC Holiday (18:12)

session with me and go, how do I increase LTV? It's like, you don't. They bought one. They're not going to buy another one. And so I think to the point of what's working versus what's not is the ones that work is where it's built into the consumer behavior of the product category itself. I have not been able to find a founder that can have a product that is high.

Jon Blair (18:17)

Totally.

Bingo.

KC Holiday (18:34)

First time, one time purchase, first purchase profitability, sell the exact, turn the exact same product into an LTV product. You either have to expand to a new category altogether or you have to build sort of like what I call accomplices to the hero product to allow you to bundle on first purchase and make more money there. But I think if you're out there and you have a single purchase type product and you are trying to jam an LTV model down its throat, I think you're gonna waste a lot of time doing that.

Jon Blair (19:00)

I could not agree more and I've been trying to advise brands on that very, very quickly. Look, back in the day, 10 years ago, I used to think that it was possible to convert from a new customer dominant product to LTV. It's not, I've just seen hundreds and hundreds of brands and it just isn't. It's a product, that has to be baked into the product from the beginning, but like you said, it's also baked in, you have to know that it's baked into the consumer behavior around that product and you can't really change that, right?

Like that's something that exists or doesn't exist. Now, what I want to make clear though to people about what I see that's working and flopping, I don't want people to hear like, ⁓ my brand has no LTV so I can't make it. Not true. We work with brands that are doing tens of millions in revenue and sell products that don't repeat purchase. Let me give you a general list of what's working. High enough first order AOV, right? And ultimately high enough first order gross margin dollars that there's enough room

KC Holiday (19:48)

for sure.

Jon Blair (20:00)

to scale ad spend over time and really grow the business and still have first order profitability because it's required since there's no LTV. That's something that's working. Another thing is really thinking about sales channel expansion earlier than a DTC brand that's got killer monthly subscription LTV, right? And so that means getting to Amazon sooner, probably getting to physical retail sooner is another thing that I see that's working. And I think another thing is like,

I going back to the game analogy, just to be clear on day one, which game you're playing. Am I playing the LTV game, which is I can lose money or be less profitable on first, first orders, right? New customer acquisition. And I make my profit. The game I'm playing is I make my profit on LTV or am I playing the first order dominant brand game, which has different constraints and has a different playbook for scaling and dealing with rising CAC

Right? You can deal with diminishing returns of ad spend and rising CAC differently in those two games. So like being clear day one about which game you're playing and becoming a master at playing that game is what I see is working. What's flopping is new order or first order dominant brands that have like the tiniest amount of gross margin dollars. Like let's say it's $5 of gross margin or $10 or $20 of gross margin to play with.

All you gotta do is hit a $20 CAC and you're making zero. Right? And again.

KC Holiday (21:31)

And that's

where TikTok, Shopify and Amazon have essentially like cut the legs out from underneath the e-commerce products that used to be able to go through Shopify, mine being one example of them. And after this, I'll sort of tell you what we did at QALO strategically to try and create more margin for ourselves with not necessarily a high LTV product. But that's what I say. Like I talked to a brand and they're like, well, you know, like my average order value is $24.

Jon Blair (21:38)

Totally.

KC Holiday (21:55)

And I was like, well, I hope you can drive a ton of organic traffic, right? I hope you have some other mechanism that allows you to drive people to your Shopify store so you don't have to play like where CPMs alone are not even going to create enough space for you if you're driving just through paid media only or go master Amazon and Tik Tok shop where those products have enough margin because the traffic generation essentially is embedded into the platform itself.

Jon Blair (21:58)

truly.

Totally, totally.

I will say this, one thing that I think is interesting, I talked with this, ⁓ I talked about this with your brother at the Final Loop event a month or so ago that we both spoke at, and he's been, as you've seen in his content, he's been talking about these like creating moments, right? Like creating these moments that are not just all ad driven, and I think there's, whatever it be, whether it be some of the examples he's given in his content or the things you've brought up here,

KC Holiday (22:42)

Mm.

Jon Blair (22:50)

whitelisting, it's like, if you're playing a game where you really have to watch your CAC closely because you're first order dominant, you gotta get creative, right? You gotta get creative on how you drive scalable traffic to your site that without CAC just continuing to go up. I mean, that's one way or another, you've gotta figure that out, right?

KC Holiday (23:10)

entirely.

Yeah, and I think, look, I feel like I've been so negative on this podcast. Guys, I'm not negative. I want to encourage all of you. I just like, the first thing is sort of understanding the rules of the game.

I think it's what's happened, and again, I don't wanna sound negative, that's why I went off on that tangent, is because, like, I think that what,

Facebook has done is it's created a lot of people that think they're marketers that are actually media buyers, right? And I think that your point is like it's okay. Facebook is an incredible accelerant for growth for businesses. I think it's so important. It's did that for my business.

Jon Blair (23:36)

Yeah, yeah, yeah, I love that.

KC Holiday (23:47)

But we've sort of just stopped a combination of AI being able to tell us who our customer is, what our angles are, all of that, which I think is wildly useful as well. And then throwing that creative that AI generated into a media account that's now determining who should be seeing it has created a lot of people that are essentially just sort of going through the motions without actually understanding what it means to market and to create a brand that stands out and is different. And, you know, in the early days of QALO, my business, like we didn't have any money. And I think one of the biggest blessings that a brand can have is

to not have any money. And in the early days, not later on, like an entrepreneur, because it forces you to say, well, shoot, I got to figure out a way to get eyeballs. Like, I have to find creative ways to get to people to tell them my product exists. And I think in your instance, if you have a really low margin product,

Jon Blair (24:20)

Totally.

KC Holiday (24:34)

It forces you to have to be scrappier, to have to be more creative, to have to think about marketing to try and get eyeballs there because you can't go spend $50 on it. Where if you have a really high margin product, I think you can actually be pretty lazy with your marketing because it's creating that space for you, but it doesn't mean you shouldn't set, you know, rules for yourself that's like, hey, I don't want to just go blow a bunch of money on acquisition costs because I can.

Jon Blair (24:45)

Totally.

Totally, totally. Well, think there's another thing here too, which is risk, right? You can do things to reduce the risk of scaling ad spend, right? And I've seen brands who've got a bunch of gross margin dollars available for ad spend, or to cover CAC, and they've gotten themselves to 30, 40 million, and got lazy along the way, and then things fell apart because there's a lot of risk in that ad spend. They weren't doing other things to offset the...

KC Holiday (25:21)

The volatility

of it, absolutely.

Jon Blair (25:22)

the volatility

and the concentration, like how concentrated they were in relying on that ad spend, right? I wanna turn our attention really quick to leadership. What are you seeing that's working or flopping with leadership and managing team?

KC Holiday (25:39)

Mm.

Yeah, that's a great question, man. This is a really interesting timing of this question with AI and the way people are structuring teams and e-comm and everything right now. And before I get into it, because again, I made another promise to the people listening, so I want to make sure I fulfill it, is talking about strategically what we did at KALO as a low margin product initially. So our first product was, we sold it for 20 bucks. That's what it was. Now it was 12 years ago. So was the different days of Facebook where it was very audience targeting. We could eliminate people that weren't married and go specific

Jon Blair (25:48)

Totally.

okay.

KC Holiday (26:11)

after them from an advertising perspective, but our game was essentially just product development was the way that we got ourselves out of the margin game. We were always in it. Our average order value even when we were mid eight figures was like $32. So we were never playing a real game where we had a lot of space from an acquisition cost standpoint. But if you're in a category where you've got a hero product and it's 20 to $25,

And it's working for you right now. What you have to think is turn everything into a math problem and think, how do I create more margin for myself? Well, if I can't do it with this product, how do I create a better version of this exact existing product? Like a good, better, best model? How do I create a better version down the line that allows people to spend $10 more? Because even that small margin is enough to get it for you. And for us, we created better versions of what already existed. We created variants of our primary ones. So if everybody was buying black, we created color ways and then tried to bundle them together to get people to spend more.

We created 2.0 versions of the Hero product so people will, oh, I want that better one because of X, Y, and Z features. And then we also added customization and personalization to products as well, which was something that we could do too. So all of a sudden, our AOV went from $20 to now $30 to $40, and the game's entirely different with a product that sits in that range. I'm also a Dinosaur, and Amazon was really early, and TikTok didn't exist. So that's a different... Okay, let's get into the leadership side of things. Look, man, I think...

Jon Blair (27:26)

Totally.

Hahaha!

KC Holiday (27:36)

There's a couple of elements that I'll touch on here. One, I think, is that if you are an early...

I still think that companies are built through people. I will believe that forever even when AI exists. It may be substantially less people than it used to be, but I still think at the end of the day it's your ability to put really talented people on the right tools to do the most high contribution, to do the highest contribution activities in the business. That's still the game at the end of the day. The tools change, where the people are changed, the remote versus in-person changes, but I believe that's still true no matter what. So I think what I'm seeing is work

is people that are able to find low-cost labor, really high-quality people that are the equivalent, that bring also low-cost labor. So whether that's overseas, ⁓ whether that's part-time work, things like that. it is a superpower in the early days of building an e-comm brand if you can find really great people at really low cost. And now in this globalized space that we have, especially in the e-comm game where in a given week I'll talk to people in 20 different countries,

Jon Blair (28:31)

Totally.

KC Holiday (28:43)

there's a lot of opportunity to find really skilled people in different places. And I think that's the first challenge for people to do that, to the delegation of those tasks. And then I think beyond that is, okay, now where do I go now? So once I've had that people, but I actually need more people managing and handling areas of responsibilities in the business, how can you make that transition from a remote team on let's call it the ground floor to actually bringing in the management and areas of responsibilities layer into a business? Does that make sense?

Jon Blair (29:06)

Mm-hmm.

Yeah, yeah. One way I like to think about that is first there's like levels of delegation. At first we tend to be delegating tasks, like do this, do it this way, right? And then eventually when you start to delegate, when you start to graduate to delegating outcomes or delegating functions, right? Delegating, hey, the finance team, the finance function in our business, your mission is this, your purpose is this. So as you go,

KC Holiday (29:31)

Yeah.

Jon Blair (29:40)

up the levels of delegation, you're actually becoming less task oriented in your delegation and you're becoming more guiding principles oriented, conceptual, right? So you're more a coach of concepts and guiding principles and then you let that person or people work their, get tasks done their way, what they believe is the best way within those concepts or those conceptual frameworks, right? One other thing that I'll say is,

KC Holiday (29:48)

Yep. Yep.

Jon Blair (30:09)

that as you're growing your business and your team is growing, especially if it's largely remote, which is by and large, mean, most of the e-comm brands we work with are mostly or exclusively remote. You really do need to be champion of the guiding principles in your business more and more as the business grows. As you start getting to 10, 15, 20 people, you need to be able to remind everyone.

what the business exists, what's the business's mission, what are your core values? This is how we do things here, right? This is what makes us different because the culture, I personally believe that the culture in an e-comm brand alongside product is a differentiator and the consumer can feel it, right? And it's not everything, but when you deal with an e-comm brand, like as a consumer that has a culture, like a really strong culture and really strong guiding principles,

KC Holiday (30:48)

Hey

Jon Blair (31:02)

the way that that company interacts with you feels different as a consumer and it shows up in all their messaging to the market and to their customers, 100%. So I think that's really, really important on the leadership side of things as well.

KC Holiday (31:11)

entirely.

Yeah, culture and brand go hand in hand. They absolutely do. And I think that that's why we see fewer brands is because people are paying less attention to culture internally because everything is becoming so transactional. And I think that at the end of the day, business is transactional. That's okay. Most things in life are. But if you can bring people in a way, into the business in a way that isn't entirely transactional, I think you can build really cool things. And one example of this, Jon, that I see a lot is...

Jon Blair (31:27)

Totally.

KC Holiday (31:45)

just because you are in the United States or you're in Europe and you are hiring somebody in a different place. I don't care if it's in the same country as you or in a country that, you know, maybe cost of living isn't quite as high as where you are. It's like they're all part of a culture of the business.

It doesn't matter if they're five hours a week or if they're full time with you working in an office. It's like people shouldn't be treated differently. They should be held to the same standard. They should have the same training. They should have the same level of access to information that's required for them to do their jobs. And I think a lot of times people just go, I'm looking for somebody to just, I don't want to do this anymore. I'm just looking to give it to somebody. And they just give it to somebody, but they don't train them and they don't vet them properly through the hiring process. And they just, they don't bring them into an environment or a culture that's actually them feeling like they're a part of something bigger.

Jon Blair (32:01)

Totally.

Totally.

KC Holiday (32:30)

then they kind of wonder why it doesn't work. And just because somebody's part-time or they're making less money doesn't mean they're any less worthy of being part of what it is that you're building.

Jon Blair (32:33)

Totally.

and they all want to know how their work connects to something meaningful. We're, we're our team at Free to Grow is increasingly the accounting team is increasingly growing in Mexico. And, we, we. They're one in the same as anyone that's in the U S we don't treat them any differently. We bring them into our, we run our business on EOS. So we bring them into our VTO and talk to them about our core values and our quarterly goals and, all of our guiding principles just the same way as anyone else.

KC Holiday (32:43)

entirely.

Woo!

Jon Blair (33:09)

And what I've found is they love it because actually there's it. A lot of their previous employers didn't do that. And some of them have worked for us businesses before where they kind of just treated them as the offshore team. And we're like, no, you're not the offshore team. You're the Mexico team of Free to Grow CFO. You are a key part of this business and incredibly important. And you work with our clients directly. Like.

KC Holiday (33:30)

Exactly.

Jon Blair (33:33)

We're all on the same team here and we all need to understand about the mission that we're trying to accomplish together. And it's so, so important. what separates just going to work every day and punching in and punching out from feeling like you're a part of something. And the difference in the outcome is massive for all involved, you know? So look, I wanna, we don't have a ton of time left here. We're actually going over a little bit. Hopefully I'm not messing you up with any calls. I wanted to ask you really quick.

I see obviously a bunch of reps in this, are you, what are the financing methods out there that you're seeing that Daily Mentor brands are bringing across your desk that are not working that, or that you think brands should like take some pause at before they dive into them.

KC Holiday (34:22)

I think anybody that is, this is not a general, this is maybe not a great rule of thumb, but like anybody that's marketing to you loans, it's like, I would be wary of that. And what I mean is like, you log into your Shopify store and right at the top it's like, hey.

Jon Blair (34:34)

Mm.

KC Holiday (34:39)

You want money? Here's a bunch of money for you. And so I would probably say like, you know, there's a lot of podcasts that have been done on this, like the usual suspects of, you know, things like MCA loans. Any loans that are taking money from you daily before it reaches your pocket, I think is a very risky game to play, because we talked most of this time about margin. And I think when you look at something like Shopify Capital, let's just start there, even though I think Shopify is a brilliant company, obviously, of course, it's unbelievable company. But I think because it's so easily accessible, I think that

Jon Blair (34:40)

Yeah, for sure.

Totally.

KC Holiday (35:09)

people just kind of go get it without understanding the ramifications of it. And it's really tricky when they essentially have first dibs on the money that's coming in on a daily basis before it hits your money. It makes it really difficult to fund the future growth of the business, which is why people go get loans to begin with. And so I think for you, ⁓ obviously, there is a time and a place for every type of loan for entrepreneurs. And I think that MCA loans, like the Wayfliers of the world and things like that, and Shopify Capital and whatnot,

Jon Blair (35:25)

Totally.

KC Holiday (35:38)

create really great, relatively low risk options for founders that don't have access to capital otherwise. So I think that there's really wonderful use cases for them. But I think if you're a founder, think understanding the money that you're taking, and I would in an ideal world, like Highbeam is a partner of Daily Mentors, and what I really like about platforms that are banking platforms specifically for e-comm that have lending built into it is like to me, there's a cohesive component to that that I really like as well.

and a traditional bank, it's near impossible to get an e-commerce, any kind of financing from a traditional bank because a lot of them don't understand e-com. But then there's this other side which is, you know, very aggressive lending, like, again, like in the examples that I gave. So like finding something in between and then if you can use a high beam, for example, as your banking platform and then also have access to capital through that platform, it's a lot more of a relational type of lending which I think is how lending in traditional banks is done in a lot of other industries. It's very

Jon Blair (36:13)

Totally.

Totally.

KC Holiday (36:38)

Relational I know your business. I know what you need. We help you fund it. We make money off of it where these sort of low touchpoint loans. They don't know your business They're actually not auditing as well as they probably should in some instances So I think that relational component that sits between those two is a good way to go Does that is that aligned with what you're seeing?

Jon Blair (36:57)

For sure, one other thing I was gonna just mention that I'm seeing that, you know, if we're talking about on the flopping side of what I'm seeing out there is like, there's a lot of new, there's actually a lot of new MCA lenders that are popping up that are pretending that they're not MCA lenders. They're telling you, they're competing, they're actually positioning themselves right alongside like an alternative to Shopify Capital, and they're like, we're different, we're different. And really, their difference is just that they're supposedly limiting how much they take from you every week.

KC Holiday (37:11)

totally.

Jon Blair (37:24)

but it's literally exactly the same. So I would just say like, if anyone positions themselves right alongside, like tries to compare themselves to Shopify Capital or Wayflyer, they're actually probably an MCA if you really dig into it. honestly like shameless plug, this is why you need a CFO to help you like really weigh the risks and the pros and the cons of different, you know, financing solutions. So. ⁓

KC Holiday (37:48)

Jon, I want to interrupt you because you put up a LinkedIn post the other day and I have a lot of conversations with brands, had one last week of a brand going like, well, do I need a CFO? And it was good because the post you put up on LinkedIn was aligned with what I've been telling people. So it was good. I was nervous, but essentially like thinking about accounting.

Jon Blair (37:50)

Yeah.

Yeah ⁓

KC Holiday (38:07)

And that function of your company is being very much reconciliation, very much looking in the past, making sure that the T's are crossed, the I's are dotted, and you're compliant with tax obligation and things like that. And then the CFO component very much being a strategic mechanism of the finance of the business, understanding the revenue you think you're gonna be doing, product releases you anticipate in the future, the inventory that's required and the cash that's required to fund the future growth of the company. And I think it was really helpful to frame it

in that. So I just wanted to recap it here for people that didn't see that post of how important like the strategic component of financing is. And I think before you get into, here's one thing I would say is before you go look for a loan, you have to have some kind of plan for the future of your company to understand the amount of money that you need.

Jon Blair (38:40)

for

Totally.

Agreed, you need to make sure you're borrowing the right amount of money. It's actually gonna last the amount of time it needs to last and that you have a forecast of how you're gonna pay it back. If you don't know those three things, you can get yourselves in what seems like the capital you've been waiting for could turn out to be your biggest nightmare. what is Daily Mentor?

KC Holiday (39:00)

Totally.

Exactly.

Exactly.

Jon Blair (39:15)

And where can people find more information about you and Daily Mentor if they want to?

KC Holiday (39:19)

Yeah, so Daily Mentor.

It initially started with a guy named Davie Fogarty, who's the founder of the Ooty in Australia and myself in the early days, just with a desire and a passion to help people that were in the similar stages that we were, which was guys in there, not necessarily young people, but people that are young in their experience of building e-com brands, trying to get some help along the way from some people that have been seasoned. And in my instance, gray beards, you know, that can go back and say, this is what my experience has been and to help you avoid the potholes in the road. And so Daily Mentor is a private mentorship group for brands that

doing over a million dollars a year in revenue. There are some instances where if you're less than that, we're open to having a conversation, but we do it to maintain the integrity of the group on the inside. And in it, you get access to other unbelievable founders. We've got a little over 300 brands in the community currently. That equates to about 700 to 800 people. other peers that are just brilliant, it's global. you can just get so much interesting knowledge and experience specifically around e-comm from other founders as well. And then you also have access to over 20 mentors within the community that have experienced in all the different facets of e-comm. So you have dedicated growth mentors like myself that are a bit more business generalists and e-comm that have experience. And then you have guys like Jon that are CFO experts where you can have very specific conversations around topics that you're struggling with for your brand. genuinely, it's Davie and I both say it's the thing that we wish we would have had when we were starting our brands. And so we build it specifically around that function.

Jon Blair (40:46)

Yeah.

I love it man, I have such a fun time being a part time mentor and like helping brands think through their finances, their financial strategy, their growth strategy as it relates to the finance side of the house and it's tons of fun man. Well, where can people find more information about you, KC Holliday, and about Daily Mentor?

KC Holiday (41:07)

Yeah, absolutely. So dailymentor.co is the website, so really easy to get there. And for me, I'm on all social media platforms at It's KC Holiday on Twitter and Instagram and TikTok, and then on just my name, KC, just the two letters, Holiday on LinkedIn. If you want to jump and give me a follow there or shoot me a message. And if you have any questions about Daily Mentor, feel free to jump on LinkedIn and send me a message, and I'm happy to give any clarification for you to see if it'd be a good fit.

Jon Blair (41:34)

Definitely follow KC's content, he's got some good stuff. man, thanks for coming on again. There might have to do a three-pete, we never get to everything that I have planned for us to talk about, but that's okay, we talked about some good stuff here. So.

KC Holiday (41:43)

I know, I think we should. I think we should. And also on

the next one, I'm gonna try and be very positive. know, like I just, feel like sometimes when you get into the money thing and you tell people why their business might not work if they've got a $15 product, you can come off negative, but it's genuinely just comes from a place of helping you achieve the outcome that you want. That's all that matters to me.

Jon Blair (42:01)

100%,

I totally agree man. I have to deal with the same thing on my end being a CFO and I always tell people like, hey, I'm not telling you that this won't work, I'm telling you to watch out, what to watch out for and give you some food for thought about how to think creatively about how to overcome this, right? So at the end of the day, I'm hoping to impart some wisdom that just helps improve your thinking and improve your decision making and I feel confident we've done that here today.

KC Holiday (42:24)

Yeah,

you've had to do a lot more work to reposition what you are. know, everybody hears CFO, like, that's the wet blanket of compliance that's coming into my company. How do I avoid them at all costs? It's like, you know, but look, man, no, you're right. There's a lot of value there,

Jon Blair (42:30)

He he.

I love it man. Well dude, thanks for coming on already looking forward to the three-pete and Yeah, man. This one's a wrap

KC Holiday (42:47)

Appreciate you, man. Thank you.

Jon Blair (42:50)

I hope you enjoyed today's episode. Don't forget, if you liked the episode, please hit the subscribe button wherever you're listening and leave us a review. It helps us reach more people like you. Also, if you want more tips on scaling a profitable DTC brand, follow me, Jon Blair, on LinkedIn. And if you're interested in learning more about how Free To Grow CFO can help your brand increase profit and cash flows you scale, check us out at freetogrowcfo.com.

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