What Solawave Would Repeat (and Rethink) in Q4 (with Andrew Silberstein)

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Brands like Kitch use triple whale, book a demo at triple whale.com/limitedSupply. That's TRIP LEWHALE.com/limitedSupply. Welcome back to another episode of Limited Supply, I'm your host Nick Sharma, and today we've got Andrew Silverstein, the co-founder of Solarwave. Solarwave is one of the fastest growing performance marketing, oriented, consumer brands that's

existed. They were heavy, heavy, heavy, and very early on places like Meta, Google, YouTube, TikTok, etc. They have built a phenomenal brand, and they've been around for a long time. They used to be a client-of-mind-backed Sharma brands, and so I've known Andrew for a few

years.

In today's episode, we basically talk about everything Solarwave Q4.

What did they do last year that went well? What did they do that didn't go well? What are they planning to do this year? How are they thinking about things differently?

“What are things that are not going to do this year?”

So take a listen. If you have any questions, feel free to reach out to Andrew or myself on Twitter and Instagram, and I hope you enjoy the episode. We have a really legit founder here today. I've known about this guy for a really long time.

His name has made his way around the DTC circle. A lot of really legit media buyers know about this brand and study them. Well, first off, I'm Dan Pantello. I run a company called Marpipe, so I've heard about Solarwave a lot, but I'll let you introduce yourself, Andrew, and hype yourself up a little bit.

Do you want to introduce yourself? Yes, yeah. Hi, everyone. Nice to meet you all. I'm Andrew Silverstein.

I'm one of the two co-founders of Solarwave. We are a red light therapy brand as you heard earlier. We focus on skin care tools and then topicals that synergize with them to help with anti-aging anti-acne. I got really excited to start the brand after struggling with acne.

Most of my life, I still have a little bit here and there. And light therapy is really the one product and topical that really helped fix my skin after trying a thousand other treatments. And so my co-founder and I started the brand in 2020, just at the beginning of COVID, which was kind of a weird time to launch a business, but we had been working on it for two or

three years and really obsessive about how to build better products and bring them to the masses. Yeah, and I've had to purchase your product before for my girlfriend. Had to. Wanted to.

Yes, of course. So you all have such an Instagramable photo-genic photo-friendly product and so giftable. So particularly for you all, we were really great. We could get you in this room because Q4 is big for you guys, big, big gifting type of product.

So I want you to just walk us through a Q4 at solo wave.

“What's like a bet that has really worked for you guys that you'd make again for sure?”

Absolutely. I think we, when we started, it was pre iOS 14, so our business scaled much faster than we anticipated.

And so we're kind of our number one struggle was always how to keep enough inventory

in to serve our customers. And as time elapsed in iOS 14 came, meta became more and more expensive every month, every year, same with Google, same with other channels. And we also were starting to deal with some inventory constraints with parts and materials. And so long story short, in 2022, we were, we had a shipment come in super late just before

Q4 and we kind of had to decide like what do we do? Do we actually pull back our offer and try to hold a better price? Or now that we have a ton of inventory more than we anticipated, should we try a different offer? And so we got together as a team and ultimately decided to test a buy one, get one free

offer, which the premise being at that point, CAC was so high, so much higher than our cogs, which is pretty standard for beauty, like generally people in the beauty operate on an 80 to 90 percent margin.

And we were spending sometimes 60 to 70 percent of our revenue on ads, those months leading

up to it. So we took a gamble, we said, look, let's launch this offer, see how it does.

“And I think a key thing for us in our growth was always to be prepared in case something”

doesn't work out. So we definitely had backup ideas and offers and ads ready to go. But this thing took off insanely, almost immediately within an hour, we were all on our

to the offer. And long story short, we ended up doing about double the revenue that year because of what we did during Q4. And that really helped us rethink offer strategy entirely for the business moving forward. So you guys are, these like, you know, Bogo was huge for you.

And I'm just curious, like, how do you think through the, you know, the economics of like by one get one free versus discounting, right?

“Like, did you test a 50 percent off discount, right?”

Like, how did you, how did you land on that, what did you play with and test before you got there? Yeah, I would say at that point, we were pretty still early on in the business. At that point, we were struggling like we still do today with attribution and really understanding the customer journey.

Like, what was actually converting? And so we looked at a bunch of different metrics like ad to cart rates, CPMs, conversion rate of our landing page of our PDPs, we looked at email, signups, et cetera.

And basically, came to the conclusion that we were likely to spend somewhere between $60

to $70 to acquire a customer. And the big question was how much would that change if it was by when get one free versus a discount? And at the time, we made the decision, let's just test by and go and free to see. And what we found was that the cac actually came down.

So we spent less to acquire a customer by about $40 and given our costs, we were basically generating almost at that specific product, like $25 to $30 extra profit dollars per order. And also because of how quickly it's scaled, we were able to basically sell about three times as much inventory as we anticipated.

So that was really the economics that worked. And to give an example, we easily could have like we do in most normal times give a 15% email opt-in or maybe a 25 30% black Friday offer. And the economics really are like, you're bringing your A/O V down by 25 to 30%. And your hope is going to be that the cac dramatically changes in your favor to make

up for that. And so it was great about how we're going to free offer is you're really getting the full retail value of the original, like actually higher A/O V than what you're used to because there's no additional discount like you would normally have. And something interesting we found is about 40% of our customers actually checked out

with a second item that was significantly cheaper than the primary item they were paying.

So it wasn't 50% off too. It was pay for the more expensive one, get something free. So we loved those orders when some of my $200 product and maybe a $30 serum to it.

“And that really helped lift that's why we just can't really didn't end up being 50% it was”

actually better. Amazing. One of the things we were doing breakout sessions earlier today, and a lot of people were talking about, I heard chatter about the dangers of discounting, right? There's a lot of brands who are skeptical of discounting because they think that if you

have a really good offer, if you have a really good discounting strategy, you're just training your buyers, your customers to wait until the next discount, right? How do you think about that? Do you think you're just training customers to just wait until the next discount is available or walk us through your thinking on that piece?

Yeah, I think it was definitely a concern going into the business. I think sometimes as your business is growing, you start to question like am I saturating this audience? But the reality was we continue to grow a lot of our biggest year get this year with 150% of your growth largely from new customers and what that really means is there's

a ton of people on this planet.

“And you might think that that's what you're doing.”

And of course, if that's what you're, if you're constantly sending massive discounts to your existing audiences and sending ads, then you may train them to do that. But really what our, where our business thrives and grows is every year we're hitting intentional different audiences and we come up with different offers, specifically for existing customers.

I do think there's probably a decent chunk of our customers that we've trained when they think about buying gifts for people to come to solo it. That's something we wanted to train them for. You know, there's a 10,000 brands they could buy from and we have heard from our customers

like it's always in the back of their mind when they need to stock up on gifts to shop

during that offer and we're happy to be part of that. Aren't you the most talked about light therapy brand on Reddit? Is that true? We just learned that from Reddit. Yeah, but there's, I mean, I think a lot of people are discussing our brand and comparison

to others because of the topicals that synergize that the mass that's something that they're not really seeing from other brands. And we've seen a huge lift in now, chat to VT recommending us and other channels because of all the conversations on Reddit. So it's something really excited about and, you know, the good news is it's really our customers

are mainly talking about or potential customers about feature comparisons and specs and benefits. So going back to your earlier question, it's not like, you know, people are talking about the discount. I think that that's also something that we see in our data as people are really talking about the brand, the efficacy and the products themselves.

Now, your product, it's like a device, you know, decently high AOV, right? Like, once someone buys it, like, I think you all had a challenge of how to keep the customers coming back, right? So you have a great offer.

How do you get client, like, what's what's the real reason you give people to keep coming

“back and buying from you because, you know, they don't need another one, right?”

Yeah.

I think the, this is always a challenge for our business is what is the longevity of that

customer look like? And so early on, when this was really an idea, it was kind of a side hustle that we started when we were thrilled with kind of the initial results we saw from a clinical study, we were so focused on can we get people in the door in the first place? That's where all of our attention went and that worked really well.

And so we kind of immediately built up a team of engineers and scientists on our team to basically start planning out what does this whole ecosystem look like? Like, if you come in for what initially was our hero product, the wand, what else would you want? And so that started with a serum that helps boost the effects of the wand.

We saw about a 60% attach rate with the serum. And because that's consumable the obviously runs well to subscription and re-order rate, the challenge there is really the education piece, like really helping someone understand, like not only what this wand does, which was light therapy and three other technologies, but also what is this serum?

And if I already use a different serum, how should I, you know, how do I layer this with other products? So that was kind of the initial product mix. And then since then, we've launched more tools and products for the face, for the body, the neck and chest, and so really it's like once we've gotten you to fall in love with

light therapy and solo wave and you have the trust that we can deliver the results you're looking for. What we're trying to see as our customers are coming back for more, you know, either devices to treat their full body and/or they're falling in love with our topicals. At this point, every device has at least two topicals that can boost the effects of the

product they're using. And we're finding a lot of our customers if they're going to invest the money and the time

to get these results, either for the first time, or maybe it's in replacement of Botox

or other medical meds about treatments, they're going to want to invest in the ecosystem that really accelerates the results they're looking for. You can spend an hour working through your ad budget with AI and still have to make every change yourself.

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that's great. One thing I just had though, it is really challenging. It's not easy to go. Oh, great. Of course, I'll add this other product to the mix and people are going to buy it because

my customers love us. There's so much education required and it's finding the balance of, at what point in the journey. As it, in the beginning, when we launched the topicals, we were put it all on the same page and we ran a bunch of CRO testing and found that we really needed to get people to understand

the device first and only once it was in cart, would we try to upsell them and introduce

them to the topicals? Our suspicion is because it's already was a lot for them to wrap their head around how they're going to use this tool. So when you throw two things that they have to make a decision on, especially like a higher education product like ours, it presumably overwhelm them.

And then a lot of them didn't convert even when it was upsold in cart. So it's really like putting a very segmented, targeted, intentional email and SMS strategy. We've also more recently incorporated phone sales as well, like really walking customers through what they just bought and how to get the best results they're looking for.

“And then once they have it, the next challenge is how do we get them to buy more of it?”

And so that's it's definitely been a fun challenge for last couple of years. I really had a continue to build the LTV component up. And you're crushing it, you're doubling year over a year, but let's talk about the challenges and mistakes along the way too, right? So what's like a Q4 decision that you made, that made sense at the time, but that like

you regret and you wouldn't, you wouldn't make again. Yeah, I'd say my background is in marketing and I feel like it's so exciting how much marketing technologies available to us, but in the early days, I, well, I used to actually do our email the very, very beginning. Then we brought in an agency that was just so much more dialed in on how to use these tools.

In hindsight, I didn't really realize like the metrics looked good the first major black Friday that I just mentioned, but they were sending out emails sometimes twice or three times a day to everyone on the audience. And I think we can all agree if you were on the receiving end of that, that's extremely annoying. And so we had a pretty high unsubscribe rate from those campaigns.

So high level out performed, that's great in terms of like your email list health. That's a disaster. So something that we've really worked on and brought in new life cycle experts to help us help guide us on is really, I kind of mentioned this last question too, like thoughtful targeting.

Like if someone, if we know that someone opened the email clicked some element of it, presumably got to our website, like let's not annoy them for the next week, perhaps like they clearly

There's only a perfect answer to how to do this other than to test, but I find that losing a subscriber is so costly to businesses like ours that it's so much more, I guess, productive to really be thoughtful about the sequencing of the messaging. Also when do you incorporate SMS, like if we have signals that they're really just not getting our emails or opening them, trying it with SMS, but really being careful because

it's expensive to grow those lists. And once they're gone, it's very hard to reach them again. So you don't want to blast your email list because then people will leave everyone who's set like I run a newsletter and every time I send one, I just watch that unsubscribed

account and there's always someone subscribes and I'm like, damn, like how, like, let's

“drill in a sec, like, how did you, like segmentation strategy for your email list?”

So important. Did you work with the team for that? Did you work with the vendor that like helped you, you know, figure out your strategy there? We did and we, we've, we've moved through a lot of different email agencies.

I would say it's, it's the best balance is in, is having an expert or expert team, but also just for instance, if you're a founder or you're perhaps not necessarily as marketing prone, that doesn't mean you shouldn't also be really looking through everything with the fine tooth comb. And so I think it was really the collaboration of our internal team with these vendors as kind

of the execution and strategic arm that really helped us navigate. And then the other kind of fun, but sometimes overwhelming part is all of these platforms are evolving constantly. So at this point, we probably use about 50, maybe 75 SaaS tools for different purposes. We are using just on the email side probably about 10 and they're helping enrich all sorts

of data about our customers, predictions about what they're going to do next, like pulling in their social comments from one place, pulling in their social profiles from another. And so now in the world of AI, there's even more you can do to personalize and segment. And that's where I harp on that because a lot of these agencies, it's too hard to be fully ahead of the curve on that.

“And so I think I would just, if I could do it all over again, I would spend a lot more time”

really understanding how all the directions you can push email and SMS because once you have those subscribers, it's obviously an extremely low cost channel compared to traditional meta, Google and other paid acquisition 60 to 70 SaaS tools. That's the big SaaS dream, dream client for your SaaS tools. And the disdain of my CFO, I have to constantly defend myself.

And a lot of them are bullshit to be clear, like they're not there, they're not all perfect, but like we have gained so much value from some of these, some of them I kind of hold on to longer just to wait and see like maybe this wild value.

But the reality is there's a lot of interesting technology out there to help guide marketers

to make better decisions. And I think as much as I have to defend those investments, conversely, we have spent so much money. We have made Mark Zuckerberg very wealthy over the last six years. And I would love to make other people more wealthy than Mark Zuckerberg.

“So the point is these tools exist for a reason, and I think it'd be used them intentionally”

and thoughtfully, it can really help drive your EBITDA and overall revenue. One more thing that I wanted to hit was you guys must have an attribution nightmare, right? Because like I bought one of your products, but like I never saw any of your ads, my girlfriend did, right? And so like I'm buying a gift for someone else, and that's a really common challenge

which was gifting, we were in a breakout session before, and I was talking to a founder who runs an engagement ring company, right? And usually it's the, it's the, the women browsing and getting hit with the ads, but they're not the ones buying the engagement ring, right? You guys have a similar kind of attribution challenge, right?

Was gifting into for how do you, how do you think through that? Yeah, it's been an interesting journey because I think we early on didn't really, like we didn't really pay that much attention to the data on mail versus female shoppers, then we started to see a spike in male shoppers, and we were kind of confused, like, are they buying for a partner, are they buying for themselves?

I mean, frankly, to be clear like their piece, unisex, and more and more men, especially from like the rise of biohacking and other areas are using it, but, you know, long story short, we learned, yes, most of it was from gifting and that was more of a cue for issue. So there's a kind of a blessing and a curse there, men are for whatever reason, a lot

cheaper to target on meta, like the cost to reach a man is like a third of what it is

to reach, I mean, on the latest current metric, but it's kind of crazy. I think there's just a lot less competition, perhaps it's men for the beauty segment, it's a little bit of a black box hard to say. So it actually helps us that men are shopping more in this category, then. And then what we invest a lot of time is, what is the unboxing experience?

Because it's not just a D to C issue. We also sell at Ulta and Nordstrom and even Marcus and Walmart and all sorts of channels, retail channels where we don't own that customer relationship. And so something I wish I'd done earlier that we probably launched two years ago is really thoughtful kind of unboxing experiences to give a reason for someone to scan a QR code

or go to your website that could be for an extended warranty or just to read the instruction manual.

our shopping retail are making a back to our website and with that, they kind of get put into our retargeting pools.

“So it's in a way it is challenging, but at the same time, the more you invest and giving them a”

reason to come back, it can really, you know, you can get that information and then be because of the

gifting piece, there's like at least a million people so far that presumably received a

solo product as a gift that have then become part of our referral system of our ecosystem

“of customers and just basically building out our brand awareness. So it's challenging, but I think”

it's in many ways really helped boost your business. That's like just, it's just so clever. Make the unboxing experience so irresistible to scan that the end user comes back into your pixel data. Like, that's killer. It's, yeah, it's great. I mean, it's actually funny. Now I'm buying things

“on Amazon where they literally don't have an instruction manual and I'm very angry. So to be clear,”

we have an instruction manual, but the point is we want to give you a reason to come to our site and engage with us. And part of that, too, is also like, if you go to an altist store because you're having a problem with their solo a product, like they're not trained to really answer that, they'll just process a return and it returns, we're just mentioned the last conversation. We really want to be more connected with everyone who has our products because that's really what

drives all of our optimization, all of our product strategy is really having these conversations

with customers. Amazing. Amazing. Cool. Well, Andrew, thank you so much, man. Thank you.

Thanks for listening. We'll be back next time to cut through the noise on cpg, retail, and ecommerce. If you enjoyed this episode, why not share it with a friend and be sure to subscribe wherever you listen, so you don't miss the next one.