In this invigorating episode, David Lorango, CEO and Founder of Startup Accelerators, shares how to reignite growth when marketing spend no longer moves the needle. If you struggle with flatlining revenue despite bigger budgets and a solid team, you won’t want to miss it.
You will discover:
– What injecting fun and joy unlocks breakthrough campaigns
– Why more ad spend alone kills ROI at scale
– How to shift from acquisition-only to full-funnel creativity
Episode Transcript
Scott Ritzheimer
Hello, hello and welcome. Welcome once again to the start, scale and succeed. Podcast, the only podcast that grows with you through all seven stages of your journey. As a founder, I’m your host, Scott Ritzheimer, and there’s a wall that stage four founders keep hitting, and it’s a little different than what we’ve talked about here on the show, because what’s happening here is predominantly from a marketing standpoint. Though. It’s not just marketing, but what’s going on is you’re working on handing off parts of the business. You’ve got a management team in place, you’ve got your marketing playbook, you’ve done all your homework, and everything should be working right? But you’re spending more and more on ads and trade shows and partnerships and ads and trade shows and partnerships and more and more in marketing, and the revenue growth doesn’t seem to be rising at the same rate. In fact, many times for folks at this stage, it’ll start to flatline despite all the additional money and effort. And so you pour in another 100,000 or two trying to make up for the lost ground, and you end up losing money faster, and then, like, in like, what is, what feels like the craziest thing in the world, your marketing manager or someone else comes to you and says, Hey, I’ve got it. I know the answer, and it’s basically to spend more money. And you just want to pull your hair out, because you know that it’s not going to work, but you don’t know what will Well, if you’ve ever felt like that, or if you’re there today, than about great news, because today’s guest has built his entire career on solving this exact problem for major brands and entrepreneurs alike. David is the director of E commerce at Uniqlo, and the founder and CEO of marketing agency startup accelerators as a high demand coach himself, David has helped over 300 plus startup scale successfully with over 15 years of experience as an innovative marketing leader, David has driven growth for top brands including Chanel, MAC cosmetics, Clorox, forever, 21 and the wonderful company. And his biggest success story was with Nick’s ice cream, which started selling in the Northeast. And by the end of 2022 Nix was selling 14,000 in 14,000 stores, including Walmart, and had raised over 100 million in seed round funding, and the business was doing nine figures. He’s here with us today. Mr. David Lorango, so exciting to have you on the podcast. Been looking forward to this conversation, because it’s maddening, you know, and this isn’t something that I do. I do. I don’t really work on marketing with my clients, but so many of my clients run into this challenge, and they they feel trapped. So for someone out there who’s who feels like they all they got to do is spend all anyone wants them to do is spend more money, but they’re not confident it’s going to work. What would you say?
David Lorango
Yeah, well, Scott, thank you for having me excited as always to chat. It’s a problem. So all you owner founders out there know that you’re not alone in this. It is a unique challenge, but it’s also one that’s very common. It’s unique to your particular business, right? So as you’ve done this, like, why isn’t scaling? I’ve had so much success now all of a sudden I’m flatlining. We in really kind of start to define the parts of the reasons why. Right? So spending into oblivion and trying to spend your way out of this problem, it doesn’t work. And there’s a particular reason why we can look at predict marketing channels like meta or Google. But ultimately, what you’re doing is, when you reach this certain point, you’ve probably already maxed out your your your addressable market and serviceable market, let’s say not addressable. What you’re doing is you’re taking what worked and you’re trying to then scale that out to a new demographic or a new audience. Well, you haven’t really understood well, what’s the next layer, or what’s the next audience, or what’s the next cohort want, actually, so if you could take something like we can use I was not unpopular, maybe we use Nix, right? We started at Nix. We were a business that was highly focused on those that wanted no sugar in their ice cream, right? For basically diabetics and then keto. But then as we had to scale outside of that, right? We couldn’t just be the Keto brand. What happens? Not enough customers maybe care or want no sugar ice cream or keto ice cream, right? What we had to do is become a more broad brand, and so when you start to spend extra you need one of the elements you need to look at is, who is your market? How do you start to reach a new market? Because you’re probably over saturating, and instead what you’re doing with more spend, it’s the same message to a different consumer, and it’s not resonating. You have to think about changing your strategy, changing your approach, diving deeper into understanding what your new target market is going to look like spending more and then. So that’s just element one. Now let’s talk a little bit about the technicals. Right? When you’re in meta and you’re in Google, they’re actually great platforms to be able to start testing this. So let’s say with Nick’s ice cream. We wanted to be we didn’t, but we’re gonna use example of this of other brands that I’ve worked with. Now we’re gonna be the protein ice cream. We’re heavy on protein. That’s a different audience than for moms and kids or for those that like to snack or premium snack. You can throw that in there. You can do you can do ads that test into a new market segment. If all your marketing team is doing is coming back and saying, we just need to spend more, you’re going to see diminishing returns period if you don’t change it, the algorithm is now Google and. Meta allow you and have some opportunity to test into new market segments by doing that through new creative but you’re going to have to think through strategically at that point, right? A lot of what happens when you’ve grown and scaled, maybe you’ve gotten lucky and haven’t really even thought about something like target market. I also have found that that is also where owner founders just aren’t thinking about this, they aren’t really understanding how to scale into the next level. And it’s not you can’t do that at luck anymore. And I you know not that any of you had just luck, but you can hit lightning in a bottle, but to be able to be the next to grow in the next phase your business, you really have to understand what that looks like, right? Who probably did this? Some of the best is Poppy. You look at Poppy when they started, they were kind of this niche, soda. Now, I would say, like the hipster, the earthy, crunchy person, and then became for everybody, right? That was a value prop that expanded, expanded, if you look at early Poppy and then the branding. Now, it is completely different. It is a different brand, but it’s still the same product that everyone loves. So I would say that’s certainly one of them, right? Spending on these channels and platforms, you’re not going to get better results just by doing it. I would stop my advice. My advice is, don’t spend more. Spend those dollars on strategy. Spend those dollars on thinking through what you’re going to do, because you’re just going to throw money into a furnace.
Scott Ritzheimer
Yeah, that’s so good. There’s so many ways to go with that. You touched on something that we’ve not talked about on the show, and I’d love to share with our listeners, but you, you started saying total addressable market, and switched to total serviceable market. So talk to us. What did those terms mean, and why they’re so relevant to this conversation?
David Lorango
Yeah, see, and, I mean, I think there’s a third one in there. This is kind of marketing lingo speak, but you’re a total serviceable market. So let’s say again, we had keto ice cream, right? Or or no sugar ice cream. Okay, well, the people that care, it’s probably this bubble. There’s going to be people that care. But you know what? You know what, a larger audience cares about friggin tasty ice cream. You know, there’s a reason why Haagen Dazs still does the numbers that it does. Because when people think of ice cream like, well, I don’t want something that doesn’t taste good. I want to enjoy ice cream. Your total addressable market is everybody that would ever want to eat ice cream. Any market that you’re looking to get into you want to understand what’s the absolute scale, or what’s the peak, right? Ice cream is easy. Soda is easy. Everybody is going to probably drink soda, right? But then maybe not everybody wants a healthy soda. Well, it turns out more people want a soda that tastes good but isn’t going to kill you with sugar and everything else that’s in kind of one of those products, like Coca Cola, which I do drink no hate. But you have to understand your total addressable market, right? So now it became, well, just so do people. But then there’s a third second one in there, but it basically the one that you’re going to be able to reach outside of your initially addressable market, initial serviceable, right? So it goes from Okay, well, we’re keto, but now guess what, we’re just a better for you, ice cream. So you go from keto ice cream to better for you. You start to market it out wider, and then you just become the best ice cream, right? It’s ultimately where all of these mass brands become, right? So even think health aid kombucha, they sold and they just built a brand around it, right? I think health aid is a great case study for everybody listening. Take a look at how they did this. So many brands were so focused on narrow ROI, and that works. But guess what happens with ROI? It’s a one to one, at some point you have to invest in brand. What health they did is they partnered with companies like I heart and they scaled the heck out of their brand because they spent on brand marketing, right? So they said, Okay, well, those that really like kombucha may be small or who even knows what the heck it is. So they had to build a category. When they built the category, they also became the owners of the category, right? So this is also where a lot of owner founders are thinking too narrowly. And I get it, it’s scary guys to invest in something like that that won’t show return. I understand that as an owner founder myself, but you can’t win without really thinking about what is your next big move. And next big moves here are going to take some dollars. I mean, that’s the other thing to think about. You’re trying to spend little or add it up, right? All of your excess spend in meta. You could have spent 20, 3040, 50,000 100,000 on something more strategic than blowing it in meta, but it felt safe, right? These are just things that you would think about, and how you want to think about it is start to scale your business outwardly. But again, it takes strategy, right? So it’s a great question. You to grow your business, you also have to grow your market, right? And that’s really kind of how we think about it.
Scott Ritzheimer
I love that, because the the kind of inverse problem is true where I’ll see folks early on who will try and chase the total addressable market and appeal to everybody right out of the gate. So would you say that the this strategy of going kind of TSM niche, and then stepping up is the right, is the right strategy.
David Lorango
I think so almost always. And I know this sounds like marketing 101, and it kind of is right. I mean, the most annoying thing, and this is not new, but every whenever I ask a founder who is your audience, they say, everybody. I’m like, Okay, how much you want to spend on everybody, then you know what that means. You better have billions of dollars to spend, right? Coca Cola can do that because Coca Cola kind of is for everybody. And if you really went niche with Coca Cola, it probably wouldn’t look very good. I mean, like, who would be their niche? Right? Kids, maybe, or kid people that don’t care about that. It’s not healthy for you, but it’s tasty. Okay? So you’re gonna win on. Taste. We all like it when it pairs well with a burger, pairs well with a lot of stuff, right? I always like to start niche for a couple reasons. You win there. You understand the market dynamics. You understand who wants your product. And then you can change from there. You can pivot. You can have other mark. You can have other products within your portfolio, right? It’s it’s marketing one on one. Start there, and also it’s going to allow you to test more intelligently, right? And even think about that now we know where we scale. We now notice target a different market or a different consumer from theirs, right? So there’s you have so much more opportunity to think through your market by going smaller first, but still win there, and then scaling it outward, right?
Scott Ritzheimer
And I think that’s such an important point, because it’s smaller first. And I think what’s lost in the noise, at least, what I’m getting barraged with, especially in my space, as being a smaller shop myself, is this idea that it’s like, niche down, niche down, niche down, niche down. And that’s well and good and true, but what happens is, like you’re saying, you run to the edge of that market. So the question that I have then, if we’re saying, Okay, we’ve we’ve got total serviceable market, we want to move toward total addressable market. We want to expand our footprint. How do you start to from a strategy standpoint, how do you start to craft, okay, what is the next step out? What’s the next ring out toward this larger market.
David Lorango
It’s a really good question. I start with research. I look at a competitor or a like type of brand, what are they doing? How are they talking? What are they addressing that we’re not what? What is the market there? Usually research. I’m going to, I would say, invest in research or do it on your own, one of the two, right? Have teams, have somebody that knows or has done this and say, Okay, what are your core USPS, right? So what is it else about the product, both the physical product, maybe, and also what’s actually in it, right? What are the things that are going to allow us to do that? So like Nick’s ice cream, maybe we actually do win on taste, right? Or maybe we pick a few key flavors that we’re going to make, we’re the best tasting better for you, hands down, right? So that what you do is you do research. Well, because we’re, maybe we’re losing a Haagen Daz because they’re vanilla tastes great. Okay, well, maybe we can win with chocolate, because it tastes better than a competitive set. So we look at the competitors, and we start to craft a message, and then start to scale from there. That’s certainly one sometimes, if you’re in market, right? So let’s say you’re, you have a product that’s not TTC, but it’s in retail. You look at where other retailers you want to get into. So the retail game is a fun one, because let’s say you’re in a particular region, you want to find other similar reasons regions, right, that are like that. So let’s say you’re in Texas and you’re ice cream in Texas. Okay, well, people who bought ice cream in Texas may be a different market than those buying in the Northeast or reverse that, right? The WalMart customer is going to be very different than the whole foods customer, right? So just because you’re in Whole Foods, you’re like, wow, I could get into Walmart. Maybe not. Maybe that’s not the right place to go. So research, honestly, researching your market, understanding your core demographic, and then who you’re going to go on the next rung out and then test it. Right? That’s where your meta, any all your ad spend, should be now on testing, instead of just pouring into the same thing. And also be bold. My other advice on any of this is being, not being, and this is a hard one too. Once you have a know your market, you’re you’re worried about risking alienating who it is, but then you can’t really grow and scale without taking risks. And usually what I see a lot of founders in this stage are is they hunker down right exactly what you’re saying they do. They double down on the same exact thing that they’re doing, and it’s not going to work because the market isn’t responding in the next level. So you have to start being bold and taking some risks. Research is the first one thinking through, taking your time, having your teams, hiring teams. Really want to look at those that are going to help you craft this narrative to be able to go to market in a better way, right?
Scott Ritzheimer
And, yeah, yeah. And David, that actually brings me to this next question that I wanted to kind of pull the leadership lens back on this. You can’t do that alone, right? Especially not with all the other things that have to happen for your business to be successful. And so there’s this added complexity of managing other people who are engaged in this process. And one of the things that that brings is this question of like, do we have a marketing problem, a strategy problem, a team capacity problem, a budget problem? It can be hard sometimes to see through all of the mess to figure out what is the actual problem we’re trying to solve. How do you help founders get to the bottom of that?
David Lorango
Well, that’s a great point. I mean, as a consultant, right? Sometimes I will be that person. Other times I will say, here’s the team to hire to do this, right? Because let’s let’s also go, let’s take it back. You can’t your skill set as an owner, founder, you don’t have it anymore to be able to be able to scale to the next level. You just don’t you have what you have, and you do well, you’re going to need to bring someone or a team in to help you then, because you just don’t know, right? You’re hitting your skill set limit, and that’s a good thing when you’ve done that. Now it’s like, well, what’s the next level? What do I do? Who do I bring in? Who are the operators that now know how to do this? I do this with CPG. I. Have teams that I one particular agency that I partner with. I’m like, these guys are going to get you into retail, because we’ve maxed out your DTC, you need to now be in retail. So finding the teams that are going to do that, because, again, you just don’t know right. So to your point, you know how to operate at this level. Great. Do the exact same thing that entrepreneurial mind you had when you started your business to find the right people. Do the same thing when you’re asking yourself, How do I really scale what do I do next? Right? Because you don’t know, and that is the reality. You can research it yourself. You can take the courses. You going to be smart, but you’re going to need you’re you’re going to want to cut. You’re going to want to cut to the end of it. You’re going to want to cut to the chase and spend. Is not that. It isn’t, it’s the right people and teams that have done it. So that’s it. It’s either going to be me, or, depending on the size of the business or what they need, it’s going to be somebody else. But you kind of that’s usually, Scott, where I find people, right? That’s usually where they come to me, because they’re like, We don’t know how to do any more of this. David, help us, right? And yes, I and the team are the guys, or actually, somebody else is going to be the team.
Scott Ritzheimer
Yeah, that’s great. So I’ve got another question that I want to make sure folks know how they can get in touch with you, David. But the question is this, what is the biggest secret that you wish wasn’t a secret at all? What’s that one thing you wish everybody watching or listening today knew?
David Lorango
The biggest secret that I think I would say it, is that AI is not going to make your business for you. I don’t know if that’s a secret. I would say that I wish they weren’t. Maybe put it this way, creativity is what’s going to win. That’s the secret. I wish people didn’t. So let’s talk about that just briefly. AI is not as creative as you think it is. Creativity is going to win your day. And if you’re stuck, you know what AI is going to do give you more stuck things you’re not going to be able to be creative. So what do I think it is a secret these days, because everyone’s talking about automation, they’re talking about machine learning, they’re talking about how these are going to solve efficiency challenges. They’re really, actually talking about how that’s going to make you more revenue, and how that’s going to make you relevant, how it’s going to make you different. So it’s a secret to think where we come in. We’re being creative with our solutions. We’re having you be creative as a brand. I think true creativity and market disruption is going to be the secret that all of these brands are going to win on the ones that are doing what they’re doing before and relying on a machine to do it. You can use machines to be creative, don’t get me wrong, but that would be the secret I wish. And I selfishly, Scott, I like fun, creative marketing, and I think it’s gotten a lot of it’s very boring. Now, remember back the 2010, 2011, 1213, 2007, there were fun ads. There were fun brands. Bring it back. That’s your secret. Do that? Have fun and have fun. I mean, maybe that’s the other one. Scott is people forget. We connect with brands because they’re fun and we like what they bring us. We like the joy that they bring us, the happiness that they bring us, right? Coca Cola is drink happiness for a reason. That was at least their tagline. The secret is be creative and have fun. And I wish that that was more of a mantra, because if you’re not having fun and enjoy and I mean, enjoy it, truly. Enjoy the process. Enjoy this. You’re gonna get out of this. You’re gonna find partners that help you get out of your brain. If you’re stuck in that, how do I scale mode? And you’re frustrated, you’re not having fun, you’re not thinking of other ways that people are gonna enjoy your product. You’re stuck in this kind of negative cycle loop. So I would say that in secret, be creative and enjoy the process of what you’re doing.
Scott Ritzheimer
So good, so good. David, there’s some folks listening that would love to hear more about the work that you do and get your help. Where can they find out more about you and your company?
David Lorango
Yeah, thanks. Would I LinkedIn? I do go on LinkedIn, but I would say startup accelerators.io. Just fill out that form, and I am very quick to get back to you. I would give up my number here, but I’m worried about who would spam me. But I’m always available. I love chatting, and I love kind of having these kind of conversations. Scott, so even if you’re looking to get in touch with me, you know, just a 15 minute call, tell me where you’re at. I love just having conversations with any of you guys, so don’t be shy?
Scott Ritzheimer
For sure. David, thanks for being on just a privilege and honor. Having you here today. Really appreciate it. And for those of you watching and listening, you know your time and attention mean the world to us, I hope you got as much out of this conversation as I know I did, and I cannot wait to see you next time. Take care.
Contact David Lorango
David is the director of e-commerce at Uniqlo and the founder and CEO of the marketing agency Startup Accelerators. As a high-demand coach, David has helped over 300+ startups scale successfully. With over 15 years of experience as an innovative marketing leader, David has driven growth for top brands including Chanel, MAC Cosmetics, Clorox, Forever 21, and The Wonderful Company. David’s biggest success story was with Nick’s Ice Cream. When David started with Nick’s in 2019, the company was only selling in stores in the northeast. By the end of 2022, Nick’s was in 14,000 stores, including Walmart. They had raised $100 million in seed round funding, and the business was doing nine figures.
Want to learn more about David Lorango’s work at Startup Accelerators? Check out his website at https://startupaccelerators.io/
Connect with David at https://www.linkedin.com/in/davidlorango/