#105. Inside the marketing journey of Parachute, which makes goods for the home. We talk with CMO Luke Droulez who joined the company as its first hire to discuss scaling with constraints and experimenting with a variety of channels and markets. The Megaphone Podcast features marketers, analysts and advertising professionals navigating the roller coaster ride of building a 21st-century brand.  

Check out the full transcript below.

Luke: [00:00:01] I am not here to tell you that we’re a good value. I’m not here to tell you we’re luxury for less. That’s your decision. You’re going to tell me what you think we’re worth and that will come out in the NPS score. You know, if we’re not the right value for money, let’s fix that.

Richie: [00:00:15] That’s Luke Droulez, the chief marketing officer of Parachute, a direct-to-consumer brand that launched with just sheets, but has since expanded to sell a range of home goods. Luke was founder Ariel Kaye’s first hire, working in operations and digital before taking the reins of the company’s marketing efforts. For the last four years he’s developed Parachute’s marketing strategy, experimenting with channel after channel in market after market.

Richie: [00:00:30] I’m Richie Siegel, the founder of Loose Threads, which analyzes and advises next-generation consumer companies, and FaceLift by Loose Threads, which provides retail strategy and infrastructure for leading brands and retailers. For our latest analysis and insights, check out our free weekly newsletter at LooseThreads.com.

Richie: [00:01:00] This is the first episode of The Megaphone Podcast, the second show in the Loose Threads podcast network where we talk with marketers, analysts and advertising professionals navigating the roller coaster ride of building a consumer brand in the 21st century. Though the number of digitally-native brands has exploded because of Facebook and Google’s advertising networks, the efficiency of these paid advertising solutions is not what they used to be, throwing a wrench in the plans of those looking to scale quickly and cheaply. Instead, CMOs have a real task on their hands. That’s why I was excited to talk with Luke about Parachute’s marketing evolution over the last five years and how the brand has navigated the chaos. Here’s how they did it.

Luke: [00:01:39] The first year was all owned and earned media, so we are fortunate in that, right prior to me joining, Ariel had hired a PR agency and secured the initial launch press. And then, you know, The Wall Street Journal hit, and it broke our website, basically—ran out of all of our inventory. It was a lot of hard lessons learned in terms of how, when you violate any kind of customer expectations, it really penalizes you. It went from an LTV basis, and I think I—that was a good lesson to learn at such a small scale, cause I’ve never forgotten it.

Richie: [00:02:09] In terms of when stuff goes out, or—?

Luke: [00:02:11] Yeah. When things went out of stock and we weren’t able to fulfill it very quickly, because you’re working on a three-to-four-month lead time. You know, we were so early within planning, and a little bit capital-constrained, where it’s like, we are simultaneously balancing the premise of a preorder revenue with the reality of being able to fill said expectations. You know, it’s like, people who are 100% within our target market are reading about us in The Wall Street Journal and can’t buy anything, or they’re buying something and it’s delayed, or out.

Luke: [00:02:37] So I had to call 50 to 100 customers and explain the situation. It just was a good empathy training, in terms of how important it is to frame customer expectations correctly.

Richie: [00:02:48] So, early on, it sounds like you saw, basically, a direct correlation between press and sales.

Luke: [00:02:52] Yeah. 2014, was a time where press was so important. There was less of the affiliate component, and so like, you could see the press numbers directly and you could see how important they were. As we built that out, we simultaneously focused on kind of owned media. So, our blog, like what kind of content can we use to enrich our ecosystem, social, and then email; those were kind of the big drivers, and then the earned media. Like, I think with the earned media, it was a time again where it was that the whole D2C story, it basically wrote itself. It’s funny now. It feels old and tired, and I would never talk about us as cutting out the middleman.

Richie: [00:03:29] Yeah.

Luke: [00:03:30] Or “luxury for less,” or any of those truisms. But it was very much of the moment. Almost, it feels like two periods in which a ton of brands launched, like 2011-2012 and then 2014-2015.

Richie: [00:03:41] Yeah.

Luke: [00:03:42] And so being a part of that second wave—

Richie: [00:03:44] Phase two, is what—

Luke: [00:03:45] Yeah. Phase Two.

Richie: [00:03:46] Yeah.

Luke: [00:03:46] Being a part of Phase Two, we got the benefit of having our forefathers, who kind of heightened consumer awareness for these types of brands. And then I think that we had the added benefit of being in the home, which was unique. We had seen before us other verticals within the retail world disrupted, for lack of a better term, and the home was the new space. Because these were products that, I’m going to be honest with you, are very mundane.

Luke: [00:04:09] You know, nobody is like, getting excited about sheets; or, at least, nobody was getting excited about sheets and soft goods. Most people think about the home in terms of their living room, the places where you host people and the places where you gather, not necessarily what I think we call in Parachute “closed door environments”—your bedroom, your bathroom. They aren’t places that you want to Instagram about, that you want to show people, that you want to share with people.

Richie: [00:04:34] Definitely.
Luke: [00:04:34] And so, I think, as we brought awareness to that, it was very much press-worthy. I think we are fortunate, in there [were] not that many entrants so we had the first-mover advantage of, any time somebody talked about the home, we would then come into it.

Richie: [00:04:47] How do you build content and run email campaigns when you know you’re out of stock?

Luke: [00:04:52] That’s the million-dollar question! So, content you can still create. The main vehicle for building out our blog content in the early days was consumer outreach. You know, if you’re only selling three or four prepackaged sheet sets in three to four colors and two fabrications, the questions were easier at first. And it’s like, “Does thread count matter?” No, and we created a blog post about it. What’s the difference between percale and sateen? We created a blog post about it.

Richie: [00:05:16] It’s almost turning like, an FAQ into—?

Luke: [00:05:18] Yeah. You know, I think enriching it.

Richie: [00:05:20] Yeah.

Luke: [00:05:20] You know, FAQs, traditionally, are Ts and Cs. You know, you just gloss over them. I’d rather talk to a real person or engage with a real thing. It’s very unique that we always built our blog on WordPress. You know, you can build a blog through Shopify, but it’s not as rich or robust.

Richie: [00:05:36] Right.

Luke: [00:05:36] So we made a deliberate decision to almost create a standalone editorial site. Not to the effect of trying to monetize it, but rather to be perceived as a thought leader within the home space, and that was a vehicle to do so. If you think about the purchase decision—the who, what, when, where, why, how—you know, we also had to explain why the product was more expensive. When you work with multigenerational family factories in Italy, it, it costs more money. When you get OEKO-TEX certification—which is the highest level of sustainable and environmentally-friendly certification for your products—that costs more money. But, for the layman, these are things that you don’t think about. And then the way that we would inject content on the site is we’d almost have these little informative content boxes, that would be on product pages or category pages. So it was an immersive experience.

Luke: [00:06:24] And then, with emails, I think we learned a lot about how and when to email people. We weren’t worried about cadence. It was like, send out an email when you think you should send out an email. And I like that. I still kind of adhere by that policy of less is more. Because, as we would come to find, in [the] ensuing years, it’s just like, once the quality goes down in any kind of associated metrics, then the only way to make up with it is quantity.

Luke: [00:06:49] As far as the organic social, the early years were kind of an exploration. You know, we built our first Pinterest boards, we tested out Twitter. It was just trying to see like, where are we getting the most traction. And I think as we started to post more on Instagram, that started to take fruit. And I think the places in which we saw it is, in the early days, we would handwrite notes to all of our customers, and people would Instagram about it. So it was like, we noticed that, the little touches when making a difference, and we also noticed that people were excited to share about their Parachute experiences.

Luke: [00:07:23] In the early days, it was very much about the unboxing experience. That was a time where like, the novelty of a D2C brand unboxing was very real. So a lot of the, I think, consumer sharing was around unboxing. In later days it would be more about the product experience, and more about like, how do I interact with the product, or how do I style the product, or how does my family like the product, and those created like, much more meaningful moments.

Richie: [00:07:47] So you mentioned, I guess, moving from year one to year two was when you started to invest more into the paid side.

Luke: [00:07:52] Yeah.

Richie: [00:07:53] Talk about the anatomy of that decision. Was it, “We’re doing so much organic that we’re seeing limitations?” Is it, “We can put more muscle behind this if we go into paid?” How did that, I guess, change start to come about?

Luke: [00:08:03] We didn’t have any capital to spend on marketing, so all of our equity dollars were put into inventory. And that is a very inefficient way to buy inventory, but it was the only way. It’s not like we’re going to go to a bank and say, “Hey, we have this limited financial history. Can you give us a lot of money to buy inventory?” So, pretty much all of the equity and debt dollars that we raised went directly in inventory.

Luke: [00:08:25] I think once we were able to close our first meaningful round in, I think, I believe it was March of 2015, then came the opportunity to see, can we scale this kind of base-level of awareness? We’ve proven the product-market fit, we have loyal early adopters, we have traction in all 50 states. We’re even seeing inbound demand internationally. Let’s see what we can do with this.

Richie: [00:08:47] Mhmm. Did you feel that you had product-market fit? Or, how did you know?

Luke: [00:08:51] Prior to joining Parachute, I would consider myself among the very many who had the disposable income to afford what would be that price point but wasn’t aware of the benefits of having nicer bedding. If someone were to show me that price point, it was kind of like, this is a considered purchase. What am I going to do? Because it’s a more considered purchase, my expectation would be that people would take longer to buy it. But what we saw is that like, within interacting with us from a press standpoint, people would buy within a week, or two weeks, from what we were seeing in Google Analytics, and I think that was kind of the—okay, I think we can potentially turn this into a paid media strategy. And so that’s what influenced that decision.

Luke: [00:09:29] And then once we had the capital, it was kind of like, let’s test through the different marketing channels and see which one makes the most sense for the business. Looking back, there was, of course, waste, I think. You’re in a place where, for the first time, you have money to spend, and it almost felt like somebody subliminally sent out a PR newswire to every ad salesperson in the world that we had money to spend. I bet you people just subscribe to TechCrunch notifications, and they’re like, “Okay, they’re ready.”

Luke: [00:09:58] So, we were a part of a—this thing called Google Launchpad. We have found great success with Google now, so this is nothing to knock them. It’s just, during that pilot platform we ended up spending $90,000 on predominantly display ads.

Richie: [00:10:13] Which are known to be kind of a cheap, horrible—

Luke: [00:10:16] Pretty terrible. Yeah, I’ve never heard of a brand that was built on display ads, ever. So it’s like, you know, that burns, you know? That was the first, “Oh shit. Okay.” And you know with banner ads it’s—there’s so many forms of targeting. It’s like keyword-contextual and affinity-based, and none of them worked. We got some good lessons in terms of non-branded search and protecting your brand, given that, at the time, “Parachute” was not ranked number one. There’s a town in Colorado called Parachute. There is a band called Parachute. I didn’t know this, but a parachute is a product that people use sometimes. So it was competing with Wikipedia and all of these things—the brand search learnings were really good, and the display learnings of, “This is terrible,” were good. I got kind of my first on-hands understanding of site engagement. Like, oh, 90% bounce rate means really only 10% of the traffic is good.

Luke: [00:11:10] The other thing that we started testing a little bit was content syndication. So we had all of this great press, and it was clear that the press was resonating. So we started looking for vehicles to syndicate it. It was a time where Outbrain and Taboola were not classified ad sections at the bottom of every website. Clickbait wasn’t what it is today. That did really well for us. We did Facebook for the first time, with content syndication; which, you know, now, content marketing on Facebook is a no-brainer. But at the time that did incredibly well for us.

Luke: [00:11:45] I think the biggest unlock that came was when Facebook introduced Lookalike Audience. Up until that point, targeting was hard. We tried buying likes which, as we all have learned now is essentially like lighting money on fire. We did audience and interest targeting. And yes, the social graph was getting better, but I think it wasn’t until Facebook introduced the Lookalike Ad product—and, essentially, did what a lot of advertisers could have done but didn’t—that the business fundamentally changed.

Luke: [00:12:15] That was, to me, a huge inflection point, because now we were able to scale the business very cost-efficiently. If you think about the two big costs on advertising, [which] are media buying and then creative, our creative was essentially free. We paid for it implicitly through PR but, you know, if you repurpose an article, all you have to do is use the image and use the tagline. There’s not much else beyond that.

Richie: [00:12:40] So, what do they look like? ’Cause you see, I guess, more today—and I’m not sure if this is what you’re describing—where people will boost like, The New York Times article, The Journal. Is that what you were doing?

Luke: [00:12:49] Yeah. Yeah.

Richie: [00:12:49] Okay.

Luke: [00:12:50] Yeah. But this is like triple-OG.

Richie: [00:12:53] Yes. Years ago.

Luke: [00:12:53] This the time where like, boosting someone’s post was hot. It was new, it was fresh.

Richie: [00:12:58] ’Cause you’re sending traffic to the media property, right? Not to yourself.

Luke: [00:13:01] Yeah, it was a little—yeah, it was very counter-intuitive. But if you have the Facebook pixel, and you can, you know, stretch out your attribution window to seven days—which we had proven was roughly how long people were taking to decide—that actually made the most sense. It kind of was informed by kind of, what I was talking about before. Social proof is really important. When you make purchase decisions you look to other people for advice. And so yeah, Parachute can tell you to buy their product, but we never had first-purchase discounts.

Luke: [00:13:30] The only levers that we were really playing with back then were free shipping for email capture, and that’s not so compelling that people are gonna buy. So it really was, I can’t tell you why to buy the brand. I think—what if we use the authority of other companies to do so? And the nice thing with the earned media is that, because it wasn’t paid for, it was legit content that said “Parachute is great.” And then what was cool is it creates this nice flywheel where people come to the site, they purchase, you feed that into a lookalike algorithm, you then amplify content, rinse and repeat.

Richie: [00:14:01] Right. It was kind of like a true, almost network effect.

Luke: [00:14:05] Yeah.

Richie: [00:14:05] To advertising for, for—

Luke: [00:14:05] Yeah. I mean it’s the same vehicle that built BuzzFeed and Mic.com’s audiences is the same vehicle that built our customer base. And you know, it didn’t feel dirty because we weren’t buying the articles. The hard part within advertising is there’s a fine line between selling and deception. We never wanted to be on the wrong side of that.

Richie: [00:14:24] Yeah.

Luke: [00:14:25] So that’s why anytime we did promote an article, we would just verbatim take everything there. Because if we tried to put our editorial spin on it, or change any of the copy or anything, it was just like, wait, what?

Richie: [00:14:35] Yeah. This is more of a theoretical question, but, if the idea of the Lookalike is, as it is stated, “We’re going to find more people like your customers, over and over,” does that ever end? I’m trying to think. If you take a brand like Goop that is very polarizing for what it is, do they have a finite audience that they can run Lookalikes on? Or they are always more people that fall into the bucket?

Luke: [00:14:55] I think that there is a finite audience. If you somehow had this god mode where you could segment the entire U.S. population into affinity groups, I think that there is. I think what’s interesting about Lookalike Audiences is it’s nonlinear in the approach into “unlocking them.” It’s not always as straightforward as, “these are the people that spent the most money,” or “these are the people that bought this product.” We have found success with Lookalike Audiences that seemingly are too wide in their application. I think it’s almost the learning is like, let the Facebook algorithm, sadly, you know, do its thing. Hand over the controls. And, and that was kind of interesting in the early days, in terms of thinking about, if we were to work with an influencer, if we were to advertise on a site, what would be that site?

Richie: [00:15:44] Got it.

Luke: [00:15:44] ’Cause, you know, we did dabble in some sponsored content. And so it’s like, knowing where somebody did visit is where we would do the sponsored content. Generally an email or something kind of transient. Because, again, nothing is as good as real press. Again, as it should be.

Richie: [00:15:59] Yup.

Luke: [00:16:00] Or, nothing is as good as somebody saying, “I really love this brand,” without it saying “#ad” or “#sponsored.” You know, true authenticators genuinely loving your brand is what we want, and it’s like, a lot of advertising is trying to understand how people would do that organically.

Richie: [00:16:20] In the first year of the paid strategy, was the sentiment like, “Oh wow, we just unlocked this thing. Like, this party can go on forever.” Was it, “Wow this organic stuff was really nice. I hope you don’t get away from it.” What’s going through, I guess, your mind then?

Luke: [00:16:33] Once we got investors and had some more adults in the room, it was kind of like, don’t lose track of your organic traffic and your organic site-direct and brand search. Because if those numbers start to diminish, you have to literally build the entire business on paid media. And, I think, as we’ve seen in the past, that is completely unsustainable. The freewheeling days are going to end, and they did, and you need to make sure that the base of your business works.

Luke: [00:16:58] And so the thing that we did, basically all in Excel—it would break my computer—would be looking at cohort analyses for the first time and saying, “What are the repeat rates looking like?” Looking at Google Analytics and making sure, are we still getting high-quality traffic that is unpaid? And I think what was good is that, even once we introduced paid media, the paid media traffic would be really shitty. But the percentage of conversions coming from brand-organic and site-direct would still be very high quality. And from a last-click basis, we’ve benefited as a brand where the majority-to-the-vast-majority of our conversions from year one to present have come through organic brand-search and site-direct.

Richie: [00:17:41] Right. Which means you pay less.

Luke: [00:17:42] Yeah, it creates an attribution problem, but it’s a happy attribution problem.

Richie: [00:17:45] Right.

Luke: [00:17:45] Because it means that—I like to think of it as, if your advertising is working, you should expect that you need less engagements and touchpoints. And therefore, click stream is shortened, where yeah, you’re gonna see the ad and click, but the next time you come back it’s gonna be for free. Or you’re gonna see the ad and click and then you’re gonna tell your friend, and then that person will come for free.

Richie: [00:18:05] Or follow us on Instagram.

Luke: [00:18:06] Yeah. There’s a ton of engagements that we realized we could unlock. With Facebook we kind of went all-in. And I will say, one thing that we did benefit from is, at the time that we launched, Casper launched, and Casper came out with a bang. It was because they were able to raise so much money, we saw them spending, basically, in real-time. If they do listen to this: Thank you for spending money everywhere. ’Cause then we got a sense of where—not real competitors but pseudo-competitors are advertising—where is the market going?

Luke: [00:18:38] I think having both these cohorts of companies from 2011, 2012, and then also cohorts of companies from our era who raised more money spending in more alternative spaces was good. We’re fortunate that one of the people on our board lives in New York, and so we kind of had ears on the ground here. It feels like there’s kind of this New York D2C mafia where everybody knows everyone. Everyone is sharing information and intel. And at the time, California had a much smaller ecosystem, specifically LA. And so we did rely heavily on his intel to be like, where do we go next? At that time, podcast advertising was just starting to pick up, so we invested there. I would say that we over-invested, the—another lesson.

Richie: [00:19:18] Why?

Luke: [00:19:18] I don’t think you need to be on 50 podcasts. And we were. We went from being on no podcasts to, I want to say, 30 to 40 podcasts at the same time. Not all of them were big, and we had some runaway successes, but there’s a point [at] which there is audience saturation. Or, if not audience saturation, audience duplication. If we’re on Marc Maron’s podcast, do we need to be on every other comedy podcast?

Richie: [00:19:43] Joe Rogan, and stuff like that.

Luke: [00:19:43] Yeah, it’s like there’s—and I think we learned that lesson the hard way. And then, I don’t know why, we had this second-city test, where—media is too expensive to buy in New York. We wanted to do a subway campaign and hang with the big dogs, but we couldn’t, so we did a subway campaign in Portland, Oregon.

Richie: [00:20:01] I didn’t even know they had a subway.

Luke: [00:20:02] They have a light rail train that takes you through the city. And so, we were like, we’re going to do a train rep in Portland. And, you know, really, for the tenth of the cost of a brand train, we were able to run for eight weeks. We saw some lift, a delayed lift, but I think it was a time where we were like, we were testing everything. And we learned a lot about like, execution, and creative, and lift analysis and attribution. Not everything was a success.

Richie: [00:20:30] In terms of location, are you focusing just across the country? I mean, it sounds like there was some selectivity in terms of, more of the, a little bit of the out-of-home stuff.

Luke: [00:20:37] What’s interesting, and this is where the use of lookalike models is both efficient but potentially scary is, bit by bit, you can change the makeup of your audience. So with The Wall Street Journal in the early days, we skewed more male. But then, as time went on, and you’re promoting more like, MyDomain or Remodelista, or more female-skewing content, then your audience makeup becomes more female. Or let’s say you’re promoting articles to older consumers, then it skews older. And then that, all of these little changes will inevitably change purchase behavior.

Luke: [00:21:12] We got this incredible article that it was like, “Parachute’s robe is the best thing that I’ve ever used,” and robe sales just went through the roof. Or when we launched towels, there was still a novelty in like, a direct-to-consumer towel brand, but then we basically sold out of towels a hundred times through. You have to be careful because the decisions you make could have broad-reaching—

Richie: [00:21:33] Right.

Luke: [00:21:33]—effects, when you’re in a position where inventory is not real-time. We really started trying to understand and like, building into our feedback loop—what are people buying, in addition to how are they being introduced to the brand?

Richie: [00:21:45] Yeah. So, I guess, moving into 2016, 2017, talk about kind of, how the strategy you kind of, channel-mixed evolution—

Luke: [00:21:52] Yeah.

Richie: [00:21:52]—started to go. I guess you dabbled in a bit of out-of-home in 2015?

Luke: [00:21:57] Yeah. Yeah. It was such a small spend in Portland, in retrospect. It was like, we married it with a couple of newsletters from Portland Monthly. So, we were aware [that] you need multiple touchpoints to make it work, but I think we were just playing in too small of a pool. And so, going into 2016, and especially 2017, it’s like, okay, we need to break even or better on first purchase and CAC is back.

Richie: [00:22:21] So how did that manifest, I guess, in terms of doubling down?

Luke: [00:22:23] 2016 was, I think, when we had to like, get our shit together. And so, by that stage, towards the latter half of 2015 we built out our initial marketing team. And so, in 2016 it was like, taking the strategies that we learned and running with it. Which meant, really, running with this Facebook content marketing play. And then, at different times, trying to throw in native advertising, or content syndicators or promoters like Outbrain and Taboola, and just continuously running that.

Luke: [00:22:52] What we started to run into, though, during 2016 is, affiliates started to grow. Business Insider started creating insider’s picks and promoting people, and so we had a couple of huge wins out of that. But, I think, from Business Insider’s perspective, they were like, “Okay, this works for Parachute, why don’t we do it for their competitors?” And so we saw within a couple months of our articles, Brooklinen got one. And then Brooklinen started doing the same exact strategy, and amplifying it at an even larger level.

Luke: [00:23:22] So as we started going into 2016 there was this kind of [this sense that] this isn’t going to work forever. We’re gonna have to come up with a more distinct point of view, we’re gonna have to invest more in creative and we’re gonna have to be more thoughtful about our marketing. And so, you know, without that first-purchase promotion, we had one less lever than our competitors. And that was a decision that we’ve decided to make.

Richie: [00:23:46] Yeah. Talk a bit more about that, because we’ve studied the effects of discounting for a very long time.

Luke: [00:23:50] Yeah.

Richie: [00:23:50] You have a lot of these brands that just, out of the gate, condition people to enjoy discounts. Very few actually abstain from that. But talk about how you decided that. And I’m sure there are times where you regretted it, but stayed strong.

Luke: [00:24:04] In the early days, the only reason that we used discounts were for tracking offline marketing. So when we first tested podcasts, we would give a, a tangible discount.

Richie: [00:24:13] ’Cause otherwise you have no way.

Luke: [00:24:14] Yeah. And then for out-of-home we tried those—I like to call it the “elevated value pack.” You’d get the mailer with seven cards in it, and it’d be seven different brands and they’d each give you a discount. And we figured like, if you’re going to be included in that pack, you might as well give a discount. But, really, the more I thought about it, it’s like, why am I using discount codes to solve an analytics problem? I should become more rigorous about my analytics, I should not be using discounts. To me it’s fake science when people say that giving discounts increases conversion rate, because of course it will; It’s [a] self-fulfilling prophecy. If I stood outside any building, anywhere, and tried to offer people free money, you better believe everyone’s going to take free money. That was the whole irony with these Bounce X’s landing pages, where it’s like, “No, I don’t want free money.” Or there is a yes or no question.

Richie: [00:25:01] When they try to get you to click out of the signup. Yeah.

Luke: [00:25:03] And it’s like, “Do you want free shipping, or $10?” It’s like, no.

Richie: [00:25:06] No, I like paying more for shipping.

Luke: [00:25:07] Yeah. It’s like, “No, I’m an asshole.” And you like click “no,” and it’s like, “Okay. Well, you can keep shopping.”

Richie: [00:25:13] Yeah.

Luke: [00:25:13] I think we try to avoid that traditional CRO mindset because the brands that I love, like Patagonia, never did that to me. False urgency or false scarcity don’t seem to be kind of motivators that encourage brand loyalty. And so we are always trying to think about, how do we make people happy without having to constantly remind them that our products make them happy? As it related to new customer acquisition, it was always, what is the story we need to tell? The reason content marketing and content syndication works so well is because we had other people telling the story for us. The reason influencer marketing works so well in the early days is that we had other people telling the story for us. The reason that some podcasts would do really well is that the host had an amazingly engaged audience and they would tell the story well for us. There was like a very clear throughline between what we did and what happened as a result of it. And, you know, now we’re in a place where we have enough years of financial performance where people aren’t questioning the lack of discounts.

Luke: [00:26:12] As the market has changed, we have sometimes changed the discount amount. We have introduced a second sale for Memorial Day. And I think there is just a broader discussion internally. How do we want to classify these sales? We don’t want consumers to think that by naming a sale Black Friday, Cyber Monday or Memorial Day, that there will be more sales. It does feel very American to pair national holidays with sales.

Richie: [00:26:34] With capitalism.

Luke: [00:26:35] Yeah. It’s like consumerism plus remembrance. Nothing says “I love America” like spending Presidents’ Day at the mall.

Richie: [00:26:44] Yes.

Luke: [00:26:45] So you may see us change to our biyearly sale. I think what Macy’s and Nordstrom and a lot of these retailers did really well in the past is, it was very clear when they had their sales. And we’ve gone so far as to put it in our FAQ, because we want people to know. It’s like, if you are price-sensitive, I get it. I respect your decision to buy or not to buy our product. So there will be times of year where, where we feel and find it amenable in terms of consumer sentiment, general marketplace, to hold sales. But for the rest of the year, I would prefer if you like the product for what it was. And I think a lot of that mindset fermented in 2016, where it was, if you can’t get somebody to like your product and like your brand for what it is, you have much longer-term problems than simply the size of your discount.

Richie: [00:27:28] So you said you realized that you had to solve the attribution problem without using discounts. How did you go about that?

Luke: [00:27:34] You know, for podcasts there’s a vanity URL, still. So it’s like, you can still track attribution in that way.

Richie: [00:27:39] Right. It’s like, “marc-maron-dot-com-slash-Parachute.”

Luke: [00:27:42] Yeah. And so, when you then think about it it’s like, how do we craft the copy in a way where, when somebody is listening to the podcast, they’d—it still feels like there’s a call to action. Like, “Visit Parachute.com.” So, what we decided [on] is talking about free shipping and returns. It’s like, “Go to Parachute.com/xyz for free shipping and returns.” So consumers would listen to it, it’s like, “Okay, let me check out that website.”

Luke: [00:28:03] And it was true. I mean, we do offer free shipping and returns, but we offer it to everyone. And then, I think anecdotal evidence is still important. We find that when we make some of these larger brand investments that everybody seems to be talking about the brand, and I don’t think I need to run a brand-lift survey in order to like, completely understand the lift, because it, it’s clear that like, it made an impact.

Richie: [00:28:27] Yup.

Luke: [00:28:27] I like to say to my team and to others, “The hardest thing that we have to do at Parachute is cross the awareness chasm.” If you don’t know about me, then you can’t even consider me. And I think a lot of what startups have to do is cross this awareness gap before they can tell the story. And so a lot of what we do when we think about advertising is getting people intrigued about the brand without saying exactly what we do.

Richie: [00:28:49] Hmm.

Luke: [00:28:50] 2017 kind of marks this watershed year where we start to really think about, how do I get people interested in the brand without exactly saying what we do?

Richie: [00:28:58] Is that a shift further away from direct response and more towards brand advertising, or is that not necessarily a tradeoff?

Luke: [00:29:04] I think the moniker that I’ve heard used is “brand response.” It’s like, how do you turn direct response into a branded experience? In my opinion, traditional brand response has that “act now” element, but there’s nothing to act upon with a lot of our advertising. It’s kind of like, “If you like the way that this ad makes you feel, click to learn more. If you like what you’re hearing on this podcast, click to learn more. If you like that our subway ads are irreverent and speak to the idea of comfort, come check us out.” There’s so much heavy lifting that our website and our content and our other mediums have to do, but I’d rather have it that way. I’d rather have you speak to a real person in a store or a customer experience than have an ad be like, “We do this, this, this, and this. These are the five reasons you should buy Parachute.” Because everybody has different reasons, and to me, within marketing, you establish this touchpoint that brings someone in and then they provide signals that let you know like, “Okay I’m, I’m a store shopper. I’m looking for towels. But this I like. I don’t like this.” And you use those signals to inform the customer journey and not vice versa.

Luke: [00:30:12] I’m not telling you what you want, you’re telling me. I’m just telling you that we exist. And if you like what you’re seeing, we’re here.

Richie: [00:30:20] Do you think there’s been an over-indexing—given direct response as a tool from the platforms is relatively new in the grand scheme of advertising—that many companies have over-indexed on the ability to be like, “Hey do you want this thing now? Buy it. Here’s a price?”

Luke: [00:30:33] Yeah.

Richie: [00:30:33] Versus, kind of more of a softer—?

Luke: [00:30:34] Yeah. You go on the website, there’s a timer, there’s—you see the ad.

Richie: [00:30:38] And even, interesting, I guess, jumping forward a bit to Instagram checkout, and Instagram product ads and so forth, there seems to be an increasing suite of tools getting built that are just like, “Here is the product. Do you want to buy it?” Right? It’s compressing the awareness and the decision into almost one moment.

Luke: [00:30:54] Yeah.

Richie: [00:30:54] It sounds like you started to figure out, “We actually should elongate that.”

Luke: [00:30:57] Yeah. Or you just need to respect whatever that decision is. Consideration is consideration. We still find ourselves to be a middle-market brand. But I think as our brand has grown to the point where we may be bigger than some of our higher-price-point competitors, we have to acknowledge that we, for some people, occupy the high end of the market. We are a premium brand. Premium brands carry a price tag. It’s not a brand tax. We’re not making exorbitant amounts of money off of you. But, you know, knowing that means that it’s like, I have to do that much better of a job at storytelling. I want you to be like, “This is exactly what I want.”

Richie: [00:31:29] How did the messaging, I guess, evolve almost three years in? In terms of, you said, “we had to stop talking about, cutting out the middleman,” and that whole stuff.

Luke: [00:31:37] Yeah.

Richie: [00:31:38] In, I guess 2017, 2018 now, what’s the M.O.?

Luke: [00:31:43] Yeah, so that’s—2017 was the first time we worked with the outside creative agency for our subway ads, and that involved a deep dive into “Who are we?” At different times during the prior three years, had talked about being a home brand, but it was kind of comical, because we were only in maybe two rooms of the house. And so we kind of came to settle on very comfortable bedding and bath linens. And it made a lot of sense, ’cause it was like, that is exactly what we do. We’re gonna be a home brand, we’re still Parachute Home, the vision is there, but we were alternating too much in the early days between home, and bedding, and home, and bedding, and it was like, let’s just be bedding and bath right now, ’cause that’s who we are and that’s what we do.

Luke: [00:32:23] At some points we used to talk explicitly about quality, but we kind of found that like, if you see our factory footage, if you see our products, if you feel them, if you go to the website, the concept of quality will be conveyed implicitly. And value and price, in a world with us and Brooklinen and Target, we occupy very different price levels, and so the concept of price—and, therefore, value—is entirely subjective. So we decided like, I’m not here to tell you that we’re a good value. I’m not here to tell you we’re luxury for less. That’s your decision. You’re gonna tell me what you think we’re worth, and that will come out in the NPS score. You know, if we’re not the right value for money, let’s fix that. And if we are, that’s great. 2017 marked us leaning into how the products make you feel and not what the products are.

Richie: [00:33:09] But one of the things that has been clear is that Parachute aims to become—call it a lifestyle brand or whatever term you want to call—of having a wide kind of, product assortment across. As the brand started to launch more products, was that more challenging for you to control the messaging, or was it, “We have so much more surface area to market on, and so many new ways to bring people in, that it actually, it’s a huge advantage”?

Luke: [00:33:30] Well, I think that after the launch of towels in 2016, it became important to make sure that the web experience and the offsite experience was not just talking about bedding. You know, we need to be both a bedding and a bath brand. And then when we leaned into it formally….we need to talk about them the same way, there needs to be a content ecosystem around both of them. We can’t be favoring one or the other. Yes, one drives more revenue for the business than the other, but the viability of the product and the ability to gain trust in another room of the house is predicated on us: (a) making sure everything works for bedding, but also (b) demonstrating the same area expertise, demonstrating this same thoughtfulness with bath.

Luke: [00:34:11] And then I think in 2018 and beyond as we introduce more decor items, as we introduce tabletop, as we introduced baby. And now, more recently, the mattress and rugs, it’s the same thing. We do go through positioning exercises—“Where do our products sit within the market, in terms of price, in terms of features, in terms of availability. What makes them unique? And what are the reasons why somebody would buy them from us?” And I think as we think about our three-year-plan and beyond, it’s thinking about, what are the other product adjacencies that we can utilize that make sense?

Luke: [00:34:46] The biggest danger in our business is that when you talk about newness, people get excited. But when you talk about newness, behind the scenes, you’re adding operational complexity. And SKU proliferation is a real thing. And, again, we’re very thankful to have investors and advisors and people in the company who will start ringing alarm bells if they feel like there’s too much newness, or we’re adding on too much, too fast. Because there is a lot of implicit cost. Every time I add a SKU, marketing has to talk about it, customer service needs to learn about it, logistics needs to understand how to handle it. Retail has to carry it. This concept of infinite shelf space is a fallacy. Every time you add a SKU, you add operational complexity and, potentially, are affecting your bottom line.

Richie: [00:35:25] Right. Yeah. We wrote something a while ago about, the real question on the internet is not that about the shelf space, but about the entry points.

Luke: [00:35:31] Yeah.

Richie: [00:35:31] And there are [a] finite amount of entry points someone can have to a brand, even if you stock a billion products.

Luke: [00:35:37] Yeah. I think that is where we’ve been very mindful. It’s cool to have a lot of new entry points into the brand. And I think, when we think about our products on a need-to-want spectrum, we want to make sure that there’s a healthy balance of need and want. In terms of 2017, the other big theme that has carried over into 2018 and 2019 is we set the foundation for diversifying our marketing mix. I’d like to think that we were a little bit ahead of the game in terms of reducing our reliance on Facebook and Instagram, and a lot of that was just done in response to the arms race. It was like, we’re never going to win this content marketing arms race, in a world in which Insider Picks says, “Brooklinen is better than Parachute,” or in a world in which this blogger likes Boll & Branch better than Parachute. If we only are syndicating content, then we’re basically telling consumers to read content. And when they read content, we’re not always going to win. If Wirecutter doesn’t think we’re the best product in the market, then we’re kind of fucked.

Luke: [00:36:32] So it was kind of like, we need to do real marketing. We need to have legit creative, we need to have a clear point of view, we need to remember the four Ps. Kind of going back to basics. It was good that we went through it. It was a hard transition at first but, by the end of 2017, we had the foundation of our marketing mix. And then 2018 was kind of expanding upon it and refining it, and 2019 has been a further refinement, really, of that. Now we know the channels we need to be in, we know the rough contribution each one makes, and we know what each one needs to do—and, in some cases, not to do.

Richie: [00:37:07] So I’m curious, then, to talk a bit more about, kind of, the out-of-home piece, which I assume has been a big focus along then, and then also about retail, and kind of how you’ve thought about that from a marketing perspective. And then, also, how do you market it?

Luke: [00:37:19] So, out-of-home is—in New York, it’s like, a rite of passage, you know?

Richie: [00:37:24] Or you’re raising a new round, or something.

Luke: [00:37:26] Yeah, exactly. There’s—it’s, it’s surreptitious. I still think it works. I think that New Yorkers take pride in their ability to see media in a world that is saturated with media, they find it endearing. It’s like, there’s a reason why the brands are still advertising on the subway, even in the face of rising costs and increased competition; it’s ’cause it works. Out-of-home helps you to market to people when they’re in their third place. You know, if you consider work and home, you’re the first two places. The third place is the time in between. For a brand that is about comfort, and for our brand that reminds you of the qualities of home and the feeling of being at home, when you’re shoulder-to-shoulder and it’s hot and sweaty and you’re forced to look up, or when you’re in LA traffic and it feels like you’re never gonna move, between our podcast advertising and our out-of-home, like, we want to be a happy distraction.

Luke: [00:38:22] I’m not pretending that you wanted to look at that billboard or that subway card. And that’s where we have decided to do a hard tack away from “use code subway.” I don’t give a shit if I can track it perfectly and granularly. I think what’s very interesting about vanity URLs is the more you look into the use of them, only a tenth of people are actually remembering the exact vanity URL, only a tenth of people are remembering the code. So it doesn’t really solve an attribution problem. And the thing I’m trying to solve, as I said, is brand awareness. I think we’ve been mindful about, what is the cadence for out-of-home? We simply cannot afford to be on the subway every month, as great as that would sound. We can’t be an out-of-home in every market. So I think what we’ve done is make sure, what are the circumstances in which it is okay to run out-of-home, and we kind of now have a checklist. And it’s like, what are the circumstances in which the novelty of out-of-home is superseding its use?

Luke: [00:39:15] Because it’s real, right? As cool as it would be for me to have a wall mural next to Staples Center in Downtown LA, that would cost so much money and it would affect so few people that, that I would just be doing it for myself. And I think the hardest part with some of these larger brand investments is circumventing the novelty of doing it. I’m not doing this for myself, I’m not doing this to keep my job. I’ve heard of stories of people buying billboards on their boss’ route home. So it’s like, “Oh wow, we’re everywhere.”

Richie: [00:39:45] Right. Or, or investors or—

Luke: [00:39:45] Yeah, you know, it’s like, “Oh wow. Parachute’s everywhere.”

Richie: [00:39:48] Yeah.

Luke: [00:39:48] And I actually want to be everywhere, but you know you have to make hard decisions. I remember there’s been a couple of times where Ariel’s like, “Why is our billboard there?” And I had to explain, “Well, this is a very heavily trafficked area. People who are driving through this are actually perfect for our customer group. Yes, this billboard’s above a dry cleaner and it’s kind of dirty in the area, but I swear we’re getting the right impressions.” You have to think about out-of-home in that way and be able to like really disassociate what is cool and what is effective.

Luke: [00:40:17] When you get into a buy is realizing the level of a commitment that you have to make. And then, I think figuring out like, how much can you squeeze into there, because there are hard budget parameters that will force you to decide where you’re going to be. I can’t be everywhere. I can’t do kiosks, and taxis, and subway, and billboards and wild postings. I’m gonna have to choose the combination of two or three, or even maybe one, plus a digital component, that I think will do the best.

Richie: [00:40:48] Yup.

Luke: [00:40:48] There is risk involved, but I think that is what makes it have the potential for higher ROI. If you think about the digital world, in my opinion, measurement is directly correlated with success. You know? It’s like, I know what this is worth, so I know how much to pay, and I know what it needs to do. When you start going into worlds where there isn’t a clearly-defined pricing structure, and there isn’t a clearly-defined attribution methodology, to me, that’s where the most opportunity is. You know, the trader inside of me is like, that’s the arbitrage opportunity, is when you’re able to find media that is underpriced within your own estimation value.

Richie: [00:41:28] What about the retail piece?

Luke: [00:41:30] Retail is a billboard, but it’s one billboard. And when I do a billboard buy, I never buy one billboard; I buy many billboards. I think the awareness play is very hyped. And, you know, when our store in Soho is on a main throughway—it’s on Grand Street, Grand and Crosby—so people are gonna walk by it. But we increasingly are seeing it more as an engagement and a retention tool. Because so much of retail is still offline, for home furnishing specifically, and a lot of that’s driven by hard goods like sofas, we need to have stores. You know, it’s a tactile experience. For some people, they just want to see it and touch it and feel it. Yes, we have free shipping. Yes, we have free returns. Yes, we have a 90-day trial. That’s great, we’re reducing a lot of friction, but for some people that just simply doesn’t matter.

Luke: [00:42:17] That same person who wants to go to the farmer’s market to choose their produce and doesn’t like Amazon Prime Now is gonna probably be the same person who goes to our stores, tries it, and then buys it at home. And once they’ve had that proof-point, you can probably get them to buy online, but until they have that proof-point, you’re nothing more than pretty pictures. So like, it’s interesting. The, the similarities between retail and out-of-home is, it’s a very large upfront investment with a longer-term payoff. A retail store is more like an annuity in that it continuously pays off, whereas a out-of-home has a well-defined half life. So when I’m thinking about the funnel with retail, it’s another place for somebody to convert.

Luke: [00:42:58] I am both product- and sales-channel-agnostic. If you want to buy towels in a store, that’s great. Let’s figure out a way to let you know that we have stores, (a), and that we have towels at our stores. And I think as we get a tighter omnichannel tech integration, we’ll have the ability to say all those acronyms, like “buy online,” “pickup in store,” “ship to store,” “ship from store,” etc, etc. And I think that’ll be valuable.

Luke: [00:43:24] And as we think about retail, making sure that we’re in all of our top DMAs. Making sure that, within those DMAs, we’re in neighborhoods that represent who we want to be and where we want to be. You want to be close to your tribe, you want to have the right co-tenants, you want to have the right adjacencies. What we love about being in Nolita is there’s great shops there, there’s great restaurants there. People live there, people work there. So it just ensures that there’s kind of a steady stream of traffic. And because of the way that we advertise, we find that a lot of the people who come into our stores are destination shoppers. It’s like, “I saw you here, and now I’m coming in to see it for real.” And so that’s where it’s this perfect medium where, if you have a diversified marketing mix, a diversified product mix and a diversified sales channel mix, chances are you’re going to be able to find the right combination of the three, to get people to buy something and enjoy the brand.

Richie: [00:44:18] We can talk about the mattress now. I think it—

Luke: [00:44:19] It is THE mattress.

Richie: [00:44:20] THE mattress. The addition of the mattress was very interesting. We wrote something about it, which I think caught the attention of the team. I’m curious just to hear about the thinking behind it. I guess, for a little bit of context, mentioning Casper before, [which] has just burned a few hundred million dollars, effectively, on marketing, trying to build their business around a single product. I think, as you alluded to earlier, they’ve done some trailblazing in terms of consumer awareness and so forth. At the same time, they have now started to go into other kind of adjacent products that, I will say, are probably a little less exciting and much less profitable and interesting than their core products, such as nightlights and a desk stand and so forth. So they’re moving away from kind of the core, a little bit, or attempting to branch out.

Luke: [00:45:03] Yeah.

Richie: [00:45:04] Parachute has said, “We have a wide SKU assortment, and then this is the thing that we’re going to do five years into the business, versus the thing we’re gonna start with.”

Luke: [00:45:12] Yeah.

Richie: [00:45:12] Why?

Luke: [00:45:14] The reason why starts with Ariel. The reason why we started with sheets is that they’re the thing that you touch and feel. Mattresses are incredibly important to a good night’s sleep, but products that you are most intimate with, you know, for lack of a better phrase, are the sheets. A lot of people associate good sleep with good sheets, unless they have a really shitty mattress or maybe no box spring or no bed frame. There can be extenuating circumstances but, by and large, you associate your sleep with your sheets. The Westin heavenly bed. You know, the reason they were able to create this kind of ecosystem of products is, I think, is because of the sleep experience.

Luke: [00:45:51] I think why we didn’t launch a mattress sooner, (a) I don’t think from a technology perspective we would have been able to produce that mattress five years ago, and (b) it would have come off as contrived. I think we had to establish trust with enough people in the sleep space, such that when we completed the sleep experience, it felt authentic. Consumers had been asking, “What mattresses do you recommend?” We knew that the nascent demand was in there, it was just a matter of, how do we enter the mattress wars in a way that feels authentic to us?

Luke: [00:46:24] I think once we had ironed out the positioning, both in terms of like, where does this sit within the ecosystem—technically our mattress is like, an eco-hybrid, which is distinct from a lot of what else that you see—there was, interestingly enough, we have a press story. And we’ve been very fortunate. We’ve, I think, gotten 45 pieces of press coverage on the mattress, bigger than pretty much any single product to date. I would almost argue that we got more press about the mattress than we did as a brand when we launched. And so, part of the reason we found success with the product is that it’s back to basics, right? Or using owned and earned media to sell a product instead of paid media.

Luke: [00:47:01] So all of the shortfalls when it comes to thinking about the margin stack, all of the shortfalls with thinking about what goes into selling a mattress are not problems that we have. We don’t need to sell mattresses to succeed, though we’re selling mattresses anyways.

Richie: [00:47:15] Does that make it, then, more of a retention product then an acquisition product? Or—

Luke: [00:47:19] What blows my mind is that we thought that, initially. And so like, okay, our whole strategy is just gonna be to get everyone who bought sheets a mattress. I think what we found is that whoever bought sheets had already probably bought a mattress and, as lovely as our mattress is, shelling out another $2,000 just wasn’t exactly in their plans. In the early days, the majority of our sales have actually been from new customers, which blew my mind. It’s been really interesting seeing how people are buying the mattress, because one thing we found is [that] people are starting to buy split mattresses. So it’s like, if you buy split mattresses, then you need to have two twin XL sheets and a bed set. So we introduced a split king bedding set.

Luke: [00:47:59] It feels like [a] déjà vu because we’re going through the same process of learning how do customers buy this product? How does that align with our initial hypothesis? How do we update the content on site? How do we update content on the blog? How do we improve the inbound and outbound logistics? What is the in-store experience look like? How do we want to merchandise and present the mattresses? And we’re still working through a lot of that. There’ve been some initial paid-media tests, but until we nail everything, and have been through enough people getting past their 90-day returns window, it’s not mission-critical for us to develop a winning paid strategy. Yeah, we’ve been really fortunate, both in terms of the coverage and in terms of the customer response, and I think we’re really excited for the future of like, what the mattress holds, in terms of building out what we consider to be the Parachute’s sleep system.

Richie: [00:48:48] So, the undertone of this entire conversation is the escalating speed of the arms race—

Luke: [00:48:54] Yeah.

Richie: [00:48:54]—from a marketing perspective. People have talked about, ad nauseum, [how the] internet lowers the barrier of entry, blah, blah, blah. Okay. But the barrier of success is so much higher now, because of that competition. Is this ever gonna slow down, or is this the new normal? And/or, are we gonna look back in three years and go, “This was actually really calm and easy, compared to what’s coming?”

Luke: [00:49:12] For me. I don’t think it will ever calm down, at least internally. Like, we’re always looking for the next big thing. I do think we’re gonna find a point in which, I don’t know if you can invent another Pinterest, or—you know like, if TikTok IPO’s, then it’s like, what is left?

Richie: [00:49:28] Especially with all the negative sentiment around the platforms these days.

Luke: [00:49:31] Yeah. It’s like you have Twitch, you have—the whole world is either acquired, owned or IPO’d. A lot of the media companies have evolved, a lot of influencer marketing has evolved. I think we’re gonna see continued evolution of those things, you know, in the same way that Gwyneth Paltrow took a newsletter and turned it into a marketplace, a D2C company and a publishing house, we’re seeing other influencers do that. I think it’s just a continued evolution. And so I think there comes a point where like, you can no longer go to a marketing meetup and say that you have the hot new idea, and everyone’s like, “Ooh, tell me about it.” I think it’s more everyone’s developing their own recipe books, where the known universe is pretty straightforward, and then it’s [about] what combination of channels are you using to win. And I think that’s changed a lot.

Luke: [00:50:18] We went from, “How much are you spending on Facebook,” to, “What percentage of it is of your budget?” That is the future. It’s not, “What are you all in on?” It’s, “What are you doing, and then what else are you doing about it?”

Richie: [00:50:32] My final question, I guess is, what do you consider the biggest threat to marketing success for you over the next few years?

Luke: [00:50:40] Honestly, I think the biggest changes that could come out would be at a macroeconomic level. Things have been great, but there are like large macroeconomic issues that could start in China and then spread to the rest of the world. They’ve managed to avoid slowdowns a couple of times now, but if something happens there, it will likely be felt everywhere. We still don’t know what the impact of a hard Brexit would be on international markets. That the sense—people’s wealth is tied up in usually securities and property.

Richie: [00:51:08] And back to the trading life.

Luke: [00:51:09] Yeah. So if something happens to either securities or property, it’s going to affect us. Yes. Luxury goods are more recession-proof than others, but we have to remember that we’re a VC-backed company, and a private equity-backed company. We have growth goals. And so it’s like, if there were large macroeconomic changes, it would fundamentally change the way that I marketed, and it would fundamentally change how profitable we need to be, how important retention would need to be and how important acquisition would need to be. So I actually think that’s the biggest. I think the only other ones, in terms of like exogenous factors, would be if one of our direct competitors got acquired.

Richie: [00:51:46] And just had a massive budget funding them.

Luke: [00:51:49] Yeah. ’Cause in a lot of ways like, I think Williams Sonoma group has done a very good job of migrating to online. They are pretty digitally-savvy and, from what I understand, from their financial reports, [they have a] pretty balanced mix. I think another big one would be if Restoration Hardware decided to go all in on digital. It blows my mind, but they don’t have an Instagram account. And their site is not mobile-friendly. And they don’t believe in paid search advertising.

Richie: [00:52:13] It’s amazing how these bigger guys can get away with just not trying.

Luke: [00:52:15] Yeah. And so it’s like, if they did a pivot, that would be scary. Cause it’s like, they have beautiful showrooms. The one in New York is insane.

Richie: [00:52:22] Yeah.

Luke: [00:52:23] I think them building a hotel makes a ton of sense, you know? It’s like, they have brand cache, they make nice products. You know, what’s to say they can’t do it? And we have noticed that more brands are trying to mimic the way that we shoot product, the way that we do our creative. It’s just more like, as there is more sameness, there are less reasons to believe. I guess, to me, the consistent evolution of our brand and our messaging is a constant, so I’m not worried about that. I’m more worried about other bigger, badder players—or if Amazon decided that they were going to fundamentally change their web experience, or go the Walmart route and start spinning off sites. So rather than selling owned brands on Amazon, they sold them on their own DTC sites? That could be scary. The competition will come from outside, and then from us, it’s just making sure that we’re able to react accordingly.

Richie: [00:53:13] Very cool. Thanks so much for talking.

Luke: [00:53:15] Thank you.

Richie: [00:53:20] Thanks for listening to The Megaphone Podcast, a show from Loose Threads. You can read full transcripts of the podcast and join the newsletter at LooseThreads.com. Feel free to leave a review on iTunes, we always appreciate it, and thanks to George Drake, Jr. for editing this episode. We have a great roster of upcoming guests and we hope you tune in next week.